Duane Morris Takeaway: This week's episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and special counsel Justin Donoho with their discussion of significant attorneys' fee awards in class action litigation over the past 12 months.
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Jerry Maatman: Thank you loyal blog listeners for joining us for this week's installment of the Class Action Weekly Wire. I'm Jerry Maatman, a partner at Duane Morris, and joining me today is special counsel Justin Donoho. Thanks for being on the podcast, Justin.
Justin Donoho: Great to be here. Thanks for having me.
Jerry: Today we have a little different topic. We're going to be discussing significant attorneys' fee awards in the class action space – sometimes known as mini litigation inside a class action. Justin, how are attorneys' fees generally calculated to class counsel in a class action situation?
Justin: Sure. In federal courts, settlements are approved under Rule 23(h), which allows the court to award reasonable attorneys' fees and nontaxable costs that are authorized by law or by the parties' agreement. Courts typically use two methods: the percentage-of-the-fund method, common in "common fund" class actions, where attorneys receive a fraction – often 25 to 33% – of the settlement or judgment. There's also the lodestar method, where fees are tied to hours worked times hourly rate, often with a multiplier for risk or complexity. Courts also use the lodestar as a reasonable cross-check. Courts must carefully assess fee requests to protect absent class members and weigh results, effort, risk assumed, and any class objections.
Jerry: Our Duane Morris Class Action Review surveys leading class action fee awards throughout the United States. What were some of the significant rulings in your mind over the past 12 months?
Justin: Well, in 2024 there were some record attorney paydays in high-stakes litigation.
In the In Re Syngenta AG MIR162 Corn Litigation, a $1.51 billion settlement between Syngenta and corn farmers resulted in an attorney fee award of $503 million.
In environmental class actions against 3M resolving lawsuits related to PFAS contamination in public drinking water systems, a $10.3 billion settlement generated an attorneys' fee award of $840 million, one of the largest ever.
In a securities fraud shareholder litigation – just one more example – firms representing Dell investors secured a $267 million fee award from the $1 billion class settlement, which was later upheld by Delaware's highest court.
Jerry: Well, suffice to say, 2024 was a banner year for the plaintiffs' class action bar in taking down large fee awards. I know there was also a noteworthy fee award in the past month or so in the In Re College Athlete NIL Litigation, where $515 million in attorneys' fees were awarded in various consolidated antitrust class actions. The court also found it reasonable to allow class counsel to apply for future fee awards in administering the settlement involving student at student athlete-benefits, which will add even more to that number.
What do you see here, Justin, in what's going on?
Justin: That one you just talked about from just last month reflects a broader trend class action settlements of over $40 billion dollars for the third straight year, with 2024 totaling around $42 billion dollars. The size of settlements tends to scale attorneys' fees dramatically.
Jerry: Now, there are some lawyers that police these agreements. They're known as objectors. There are some serial objectors, professional objectors, legitimate objectors – what do you make of that space in terms of objections that are filed to these sorts of fee awards?
Justin: The objections matter. Objectors often challenge disproportionate fees, especially in no-cash or low-claim situations. However, as we discussed recently on the Duane Morris Class Action Defense Blog, the Third Circuit in In Re Wawa Data Security Litigation approved a $3.2 million class fee award for class counsel finding that fees can be based on relief made available to the class and does not have to be capped by a percentage of the relief actually claimed in low-harm data breach security class actions where the claim rate is notoriously low. The Third Circuit also held that clear sailing agreements and fee reversions are not per se impermissible and, rather, there must be evidence of collusion or harm to class members to invalidate a fee award on that basis.
Jerry: In terms of sitting at the mediation table and trying to bring home a settlement for a company in the class action space, do you have any thoughts for companies in terms of negotiating out attorneys' fee awards?
Justin: Certainly. It's important to understand how percentage-of-fund and lodestar methods play out based on settlement type and jurisdiction. Parties negotiating settlements should prepare for objector scrutiny, especially around any clear sailing terms and reversions. And it's necessary to recognize that record-breaking settlements are driving fee awards into the hundreds of millions or close to billions. These cases illustrate just how large and complex class attorneys' fee awards can get.
Jerry: Well, great thoughts and analysis, Justin. Certainly true that these massive settlements are driving the cottage industry of huge attorneys' fee awards that we're probably going to see in 2025 and beyond. So, thanks so much listeners for joining us for this week's Class Action Weekly Wire.
Justin: Thanks for having me on the podcast and thanks to the listeners.
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