Friday, December 11, 2015

37.5 Percent for Ten Years

Roos v. Honeywell Intl., No. A142156 (D1d1 Nov. 10, 2015)

Some class members object to an $8.15 million class action settlement in an antitrust case. They say the plaintiffs lawyers are getting too much of the pie and that the cy pres is improper. The trial court found that one of the objectors was too late to complain and that the others lacked standing. But in any event, the objections failed on the merits too. The court of appeal affirms on all of the rulings except standing.
On timeliness, the preliminary certification order set a deadline on which any objection needed to be postmarked. One objection had a metered-type postage stamp date on the final date, but a postmark four days later. That was sufficient to show that the objection was not, in fact, timely mailed.

To show standing to object, the objector needs to be a class member. The trial court rejected standing because the objectors didn’t submit adequate proof, such as under-oath affidavits, establishing that they satisfied the class definition. But proof of membership within a settlement class doesn’t turn on the rules of evidence. It turns on satisfying the requirements set out in the notice approved by the court at the preliminary approval. It’s unfair to hold objectors to a higher standard of proof they were never told about. Here, the objectors did what the notice required to show their class membership. That was all they needed to do to show their standing.

As for the merits, there was nothing wrong with the cy pres. Code of Civil Procedure § 384 specifically permits a judgment following a class action settlement to order distribution of unclaimed or residual settlement funds to nonprofit entities whose mission is consistent with the rights being enforced in the lawsuit. The objectors argued that if claims less than the total settlement fund were submitted by members of the class, the court should have just increased the per-plaintiff settlement amount to reflect the balance instead of diverting the remainder to cy pres. But that isn’t what the law requires. Plaintiffs here got pretty substantial per-plaintiff awards. Claimants to the settlement received more than double what even plaintiff’s expert measured as their overcharge. So while a big cy pres award with little comparable benefit to the class might raise red flags, that’s not the case here. 

Finally, on fees, it is true that the $3.06 million the attorneys’ asked for and received was 37.5 percent of the fund. That’s a pretty high percentage. But this case has been going on for over a decade and the attorneys’’ billed time under a non-multiplier lodestar calculation was in excess of $15 million. So under the facts of the case, the 37.5 percent didn’t afford a windfall; it set a cap. And since a lodestar figure is presumptively reasonable, it’s pretty hard to say that a percentage-based calculation that left the lawyers with a fifth of their billed time was an abuse of discretion in awarding excessive fees.


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