In In re the Home Depot Customer Data Security Breach Litig.,the Eleventh Circuit has held that when a defendant agrees to pay class-action fees in a class-action settlement, in an amount to be determined by the district judge, separate from the fund set up by the settlement to compensate class members, the attorney's fee may not include a fee multiplier.
Exactly right, Rob. Points very well taken, as usual. I don’t think it was logically necessary to impose the no-multiplier regime on this situation. In any case, I don’t agree with the CA11 that this situation did not involve a “constructive common fund.” I think it did, even if it the amount of the fund was uncertain. In other words, I agree with Judge Becker on this point.
Sigh. So the Federal Circuit courts are telling us that (1) We should generally avoid “clear sailing” agreements when negotiating class settlements – and if we do include such an agreement, the settlement itself (as well as the fee aspects of it) will be subject to extra scrutiny and some level of skepticism (Bluetooth decision); but (2) Failing to include a “clear sailing” agreement is foolish because it converts the settlement into a pure “fee shifting” situation and thus sacrifices any potential for a multiplier for risk and eliminates the right to have fees included in calculating the “class benefit” when engaging in a percentage cross-check (this decision).