IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

GERARDO ARANDA, GRANT )

BIRCHMEIER, STEPHEN PARKES, and )

REGINA STONE, on behalf of themselves )

and classes of others similarly situated, )

)

Plaintiffs, )

)

v. ) Case No. 12 C 4069

)

CARRIBBEAN CRUISE LINE, INC., )

ECONOMIC STRATEGY GROUP, )

ECONOMIC STRATEGY GROUP, INC., )

ECONOMIC STRATEGY, LLC, THE )

BERKLEY GROUP, INC., and VACATION )

OWNERSHIP MARKETING TOURS, INC., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

After the parties to this class action reached a settlement with the assistance of a 

mediator, class counsel petitioned for an award of attorneys' fees from the settlement 

fund. On the date that objections to the proposed settlement were due, but a little more 

than one week before the due date for defendants' response to the fee petition, 

Freedom Home Care, Inc., a member of the class, filed an objection to class counsel's 

fee request. The arguments and cited authorities in the response defendants eventually 

filed were similar to those contained in Freedom Home Care's objection. The Court 

ultimately granted plaintiffs' fee petition but awarded a lower amount than class counsel 

had requested, in part because of the concerns both Freedom Home Care and 

defendants had raised. Based on the Court's ruling on the fee petition, class counsel
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will receive less than the amount they requested—roughly between $3 and $6 million

less, depending on the ultimate number of claims approved. In other words, the class 

collectively will receive between $3 and $6 million more than it would have under class 

counsel's proposal.

Freedom Home Care has moved for an award of attorneys' fees in the amount of 

$59,410 to compensate its lawyers (objector's counsel) for their work in opposing class 

counsel's fee request. Plaintiffs and defendants both oppose Freedom Home Care's 

request. They argue that Freedom Home Care's objection did not materially benefit the 

class because the arguments in the objection were not significantly different from those 

that defendants made—and that Freedom Home Care knew defendants would make—

in response to the fee petition. Plaintiffs and defendants also maintain that even if 

Freedom Home Care were entitled to a fee award of some amount, it has failed to 

provide adequate documentary support for the amount it requests. Plaintiffs also

contend that objector's counsel billed an unreasonable number of hours for the amount 

of work the case required. If the Court were to award a fee for objector's counsel, the 

parties also disagree about whether the fee should come out of class counsel's 

attorneys' fee award or out of the portion of the common fund designated for the class.

In addition to requesting a fee for its counsel, Freedom Home Care argues that it 

is entitled to an incentive award in the amount of $1,000 for agreeing to represent the 

interests of the class as an objecting class member. Plaintiffs and defendants respond 

that Freedom Home Care's efforts in this case were not significant enough to warrant 

any award. 

For the reasons discussed below, the Court denies Freedom Home Care's 
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motion.

Discussion

The Seventh Circuit has recognized that when parties to a class action agree on 

a proposed settlement, objectors often play an essential role in representing the 

interests of the class before the reviewing court. See Pearson v. NBTY, Inc., 772 F.3d 

778, 787 (7th Cir. 2014). Specifically, the presence of objectors can mitigate the "acute 

conflict of interest between class counsel, whose pecuniary interest is in their fees, and 

class members, whose pecuniary interest is in the award to the class." Id. Defendants 

usually have no interest in reducing class counsel's fee because they "are interested 

only in the total costs of the settlement to them, and not in the division of the costs 

between attorneys' fees and payment to class members." Id. Where class counsel and 

defendants have agreed on a settlement and are no longer in an adversarial posture, it 

is therefore "desirable to have as broad a range of participants in the fairness hearing 

[on the proposed settlement] as possible [to mitigate] the risk of collusion over attorneys' 

fees and the terms of settlement generally." Reynolds v. Beneficial Nat. Bank, 288 F.3d 

277, 288 (7th Cir. 2002). 

Courts encourage this broad participation "by permitting [objectors'] lawyers who 

contribute materially to the proceeding to obtain a fee." Id. Another basis for awarding 

fees to objector's counsel who materially benefit the class, in addition to incentivizing 

objector participation, is basic principles of restitution. See id. Though it is in class 

members' interest to be represented at the fairness hearing by lawyers who do not have 

a personal pecuniary interest opposed to that of the class, "high transaction costs 

prevent negotiation and voluntary agreement" between the class and outside counsel. 
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Id. Thus, where an objector's counsel provides "valuable albeit not bargained-for 

services" that make the class better off, principles of restitution "allow [objector's 

counsel] to claim a reasonable professional fee from the recipient of their services [the 

class]." Id. In determining whether an objector's counsel is entitled to a fee, the basic 

question therefore is "whether [counsel's] efforts did in fact create, enhance, preserve, 

or protect the fund under the court's supervision." William B. Rubenstein, Newberg on 

Class Actions § 15:94 (5th ed. June 2017 Update).

In setting a fee award for class counsel in this case, the Court followed the 

approach of other courts within this circuit, dividing the agreed settlement fund (less 

notice and administrative costs) into "bands" and awarding a declining percentage of 

each band to class counsel. See Aranda v. Caribbean Cruise Line, Inc., No. 12 C 4069, 

2017 WL 1369741, at *9 (N.D. Ill. Apr. 10, 2017). Specifically, the Court awarded class

counsel 36% of the first $10 million, 30% of the second $10 million, 24% of the next $36 

million, and 18% of the remainder. Id. Other courts have referred to this fee structure 

as a "sliding scale" model. Id. at 1. To determine the specific percentages applied to 

each band in the model, the Court adopted the structures used in similar cases as a 

guide but added a "risk premium" for each band's percentage because of the significant 

risk class counsel took on in this particular case. Id. Class counsel had requested a

different fee structure, a flat percentage (one-third) of the entire fund (less notice and 

administrative costs), which would have been higher in absolute terms than the award 

the Court ultimately made. Though the Court reduced the size of the requested award 

and applied the sliding-scale approach as both defendants and Freedom Home Care 

advocated, the Court otherwise largely rejected the arguments made by defendants and 
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Freedom Home Care, both of which argued against the addition of any risk premium. 

Indeed, both defendants and Freedom Home Care have appealed the Court's ruling, 

contending that it was an abuse of the Court's discretion.

At the time objector's counsel filed their appearances in this case on January 23, 

2017, any reasonable observer of the case would have been aware that defendants 

would be opposing class counsel's fee petition and would be arguing for application of 

the sliding-scale method. Because of the structure of the proposed settlement, 

depending on the number of approved claims, the percentage of the common fund 

awarded to class counsel could affect the overall size of the common fund and thus the 

ultimate amount defendants would be obligated to pay.1 Thus it was readily apparent 

that this is not a case in which defendants had no interest "in the division of the costs 

between attorneys' fees and payment to class members," because the percentage of 

the fund awarded to class counsel in this case could actually affect "the total costs of 

the settlement to [defendants]." Pearson, 772 F.3d at 787. Unlike some other 

settlement agreements, the proposed agreement in this case contained no "clear 

 1 The court has discussed the structure of the proposed settlement 

elsewhere. See, e.g., Aranda, 2017 WL 1369741, at *1. The size of the common fund 

depends upon the number of approved claims. Unless the $76 million cap on the fund 

is reached, individual class members with approved claims will receive $500 per call 

received. The common fund consists of the payments for approved claims, incentive 

awards for class representatives, attorneys' fees for class counsel, and notice and 

administrative costs. If, for example, the settlement administrator approves claims for 

100,000 calls, the amount in the common fund will equal $52 million plus attorneys' fees 

for class counsel (assuming notice and administrative costs are $2 million and ignoring 

incentive awards for the sake of convenience). If, in this scenario, the Court were to 

award class counsel 20% of the common fund (minus notice and administrative costs), 

the fund total would be $64.5 million ($52 million plus $12.5 million in attorneys' fees). If 

the Court were to award class counsel 30% of the common fund (minus notice and 

administrative costs), the fund total would be roughly $73.4 million ($52 million plus

roughly $21.4 million in attorneys' fees).
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sailing" provision that would prevent defendants from objecting to class counsel's fee 

request. In addition, by the time Freedom Home Care entered an appearance in the 

case, defendants had already moved for, and the Court had already entered, a briefing 

schedule on class counsel's fee petition. It was thus abundantly clear to class members 

and to potential objectors that defendants would be opposing class counsel's request for 

fees.

It was also foreseeable and highly likely that defendants would be arguing for 

application of the sliding-scale approach. Class counsel's own fee request expressly

acknowledged that several courts in this district have applied fee structures other than 

the flat percentage class counsel advocated, such as the sliding-scale structure. And in 

a report filed with the fee petition, class counsel's expert, Professor William Rubenstein, 

acknowledged that "Seventh Circuit courts tend to award declining percentage as the 

size of the class's recovery increases." Dkt. no. 533-4 at 3. In short, the argument from

Freedom Home Care's objection that the Court credited in ruling on class counsel's fee 

petition—that the sliding-scale approach was appropriate in this case—was the 

argument that Freedom Home Care knew, or reasonably should have known,

defendants would be making. .

It is true that Freedom Home Care filed its objection before defendants filed their 

formal written response to class counsel's petition. And in somewhat similar 

circumstances in Reynolds, where a district judge denied an objector's fee because he 

had already anticipated the objector's argument, the Seventh Circuit noted that 

"objectors must decide whether to object without knowing what objections may be moot 

because they have already occurred to the judge." Reynolds, 288 F.3d at 288. But in 
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that same case, the court ruled that a "compelling ground" for denying objector's 

counsel a fee was that other lawyers had made the same objection at the fairness 

hearing, and "the objectors added nothing." Id. at 289. A similar compelling ground for 

denying a fee exists here. Unlike the objector in Reynolds, who could not read the mind 

of the district judge, Freedom Home Care knew or reasonably should have known that 

defendants would be raising the very same argument it intended to make. Thus the 

class's interests would be protected whether or not Freedom Home Care objected. See 

id. at 288. Defendants were, in fact, especially well equipped to respond to class 

counsel's petition, because they had participated in the litigation since the beginning

and could speak from experience about the value of class counsel's services and the 

reasonableness of their fee request. But because the deadline to file objections to the 

overall settlement preceded the due date for defendants' response brief, it appears that 

Freedom Home Care's counsel saw an opportunity to object to the fee petition before 

defendants could, possibly hoping that they could then take credit (and a portion of the 

common fund) when the Court eventually reduced the size of class counsel's fee. 

Given this background, the Court sees no legitimate basis to compensate Freedom 

Home Care's counsel and finds that there is a compelling reason to overrule counsel's 

request for compensation. The Court also notes that principles of restitution do not 

require the class members to pay for services they would not have bargained for, 

because they were already going to receive them for free from defendants.

Plaintiffs do exaggerate when they characterize Freedom Home Care's objection 

as "essentially a boilerplate motion." Dkt. no. 655 at 8. The objection contained a fairly 

comprehensive analysis of the case law regarding attorneys' fees in class action 
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settlements within the Seventh Circuit and within this district, as well as criticisms of 

Professor Rubenstein's expert opinion and the expert opinion of Professor Todd 

Henderson, another of plaintiffs' experts. The relevant question, however, is not 

whether objector's counsel's work was of high quality, but whether it provided a material 

benefit to the class. Cf. Reynolds, 288 F.3d at 288 ("The law generally does not allow 

good Samaritans to claim a legally enforceable reward for their deeds."). Freedom 

Home Care emphasizes that it was the only party to propose applying a sliding scale to

the whole fund, including attorneys' fees but excluding administration and notice costs, 

which is the approach the Court adopted. Defendants, by contrast, proposed that the 

fee award should come from applying the sliding scale only to the portion of the 

common fund designated for class members. Though the Court did not discuss 

defendants' proposed approach in its ruling, it rejected the proposal, which was 

inconsistent with other case law in this district. Freedom Home Care contends that it 

should get credit for being the only party that proposed the fee structure the Court 

ultimately adopted. But the Court would have arrived at that structure whether or not 

Freedom Home Care proposed it, because plaintiffs would have responded, as they did 

in their reply to defendants and Freedom Home Care, by pointing out that defendants' 

proposal was incorrect and explaining how the sliding scale approach should be applied 

were the Court to adopt it. In addition, as defendants point out, Freedom Home Care's 

proposed approach would lead to greater attorneys' fees (and a smaller award for the 

class) than defendants' approach, and thus Freedom Home Care's proposal could not 

have benefited the class, even if it were material. Finally, though Freedom Home 

Care's brief did contain some criticisms of plaintiffs' experts that were not included in 
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defendants' brief, those criticisms did not have any material effect on the Court's ruling 

and were not cited in the Court's opinion.

Because objector's counsel did not provide a material benefit to the class, the 

Court also denies an incentive award for Freedom Home Care. In addition, even if 

Freedom Home Care's objection had benefitted the class, Freedom Home Care has not 

demonstrated how its efforts in this litigation warrant an incentive payment. Cf. Aranda, 

2017 WL 1369741, at *1 (approving $10,000 incentive award to class representatives in 

this case as reasonable where class representatives spent hours "reviewing the 

complaint and other documents, responding to requests for information, and sitting for 

depositions"). Freedom Home Care argues that an incentive award is warranted 

because it subjected itself to a risk of harassment by class counsel, but it has failed to 

substantiate this allegation.

Conclusion

For the reasons stated above, the Court denies Freedom Home Care's motion for 

attorneys' fees [dkt. nos. 635, 637].

________________________________

MATTHEW F. KENNELLY

 United States District Judge

Date: August 24, 2017