The Sixth Circuit Says Class Counsel Fees Must Be Earned

In a recent decision – Greenberg v. Procter & Gamble Co. – the U.S. Sixth Circuit Court of Appeals confirmed that class actions are indeed a special vehicle for resolving complex disputes, opening the opinion with the words, “Class-action settlements are different from other settlements.”

The opinion, issued August 2, 2013, included rulings on class counsel fees and incentive awards for named plaintiffs that bring the case, as well as important observations on why class actions are distinct and should be treated as such, especially at the settlement stage. The Court reversed the lower court’s award of $2.7 million in fees when little work had been done, specifically identifying the fact that class counsel did not take a single deposition, serve a single request for written discovery, or even file a response to the defendant’s motion to dismiss. Additionally, the settlement offered no money for class members, a $400,000 cy-près payment, and a mere $1,000 payment to each of the named class representatives. When looking at the proposed settlement for indicators of fairness to the class, the Court said, “The signs are not particularly subtle here.”

Sommers Schwartz fully supports the use of class actions as an important legal tool. Class actions generally involve a single harm that affects many people the same way, and given the large size and scope of these lawsuits, unique procedures and approaches are necessary. Federal Rule of Civil Procedure 23 provides the mechanism to efficiently and fairly resolve class actions in ways that can be beneficial to all parties. Without such a mechanism, the uncertainty and unpredictability of the traditional litigation can become a chronic distraction to the defendant and amount to denied justice for plaintiffs.

Win or lose, parties need closure, and the class action vehicle is the best legal tool to achieve closure in these cases. To learn more, visit the Class Action section of our website.