Fees Too Disproportionate Where Class Counsel Would Obtain Fee Recovery Of $3.45 Million Versus $278,056 In Distributions To Class Members Based On Low Claim Submission Rate.
In Banks v. Nissan North America, Case No. 11-cv-2022-PJH (N.D. Cal. Doc. 203 Nov. 30, 2015), the parties had reached a tentative settlement in a class action involving allegations of braking problems with certain Nissan models. The settlement had provided for a constructive common fund of $4.265 million, proposing that each Nissan class members get payouts of no more than $1,000 under a claim submission procedure and class counsel would be awarded fees of $3.45 million. The claims submission rate was a very low .17-.58%, with $278,056 to be distributed to the class based on the submitted claims—with many of the class members receiving small payouts way under the $1,000 caps (sometimes $20 or lower). All told, 80.3% of the payout would go to class counsel and, when adding additional amounts to the settlement administrator and class representatives, 93.5% went to persons other than class members. The settlement agreement also had “clear sailing” (defense agreement not to challenge a fee award if not over a specified amount) and “reversion” (any fee reduction reverted back to defendant) clauses.
Based on In re Bluetooth Headset Products Liab. Litig., 654 F.3d 935, 941-943 (9th Cir. 2011) (not cited by either side in motion papers), U.S. District Judge Phyllis J. Hamilton of the Northern District of California denied approval of the settlement and attorney’s fees. She found that the fee request was disproportionate to the class member payout and “problematic” in nature. District Judge Hamilton found the clear sailing and reversion provisions to be suspect given the benefits to class counsel versus the class members. However, she did provide a suggestion to both sides: if all class members had received the $1,000 repair cap, then the class members would receive $1.54 million in payouts such that a much bigger fee award would be justified given some litigation obstacles in the case. Back to the drawing board, so to speak. Here is a link to her denial order.