The Second Circuit and Ninth Circuit courts have recently issued opinions overturning class action settlements. The pronounced issue revolves around the attorneys’ fees awarded to the counsel of the class. These new developments stem from the cases of Lowery v. Rhapsody Int’l, Inc., 75 F.4th 985 (9th Cir. 2023) and Moses v. New York Times, Co., 79 F.4th 235 (2d Cir. 2023).
The judgements of these cases have brought to light how courts are increasingly inclined to scrutinize attorneys’ fee awards in class action settlements, particularly if they seem disproportionally high compared to the actual relief obtained. This emerging trend could affect future class action lawsuits, demanding a finer consideration of fee proposals from class counsels.
Details of the cases affecting this rebalance are as follows:
- Lowery v. Rhapsody Int’l, Inc. is a Ninth Circuit case in which the attorneys’ fees under question were viewed as significantly incommensurate with the degree of relief accomplished for the class. The Ninth Circuit not only vacated the attorney’s fee award, but also the class action settlement.
- Moses v. New York Times, Co. is a Second Circuit case where the court scrutinized and condemned the attorneys’ fee that was about 30% of the total cash payment. The court found it inappropriate due to its considerable size in relation to the relief achieved.
The legal community’s reaction to these pivotal court opinions is under examination. Lawyers involved in class action suits are advised to diligently align their fee proposals with the actual value achieved for the class, in order to prevent similar challenges in the future.
Law firms and corporations involved in such lawsuits need to reassess their strategies in light of these court decisions. For more comprehensive insights on these incidents, you can refer to this JD Supra article provided.