# U ni te d S ta te s Co ur t of A pp ea ls

For the Eig hth Circu it

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No. 1 5- 39 76

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In re: Life Tim e Fi tn es s, In c., Tele ph on e Co ns um er Pro te ct io n Act (TCPA) Lit ig at io n

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Pl ai nt iff s’ Lead Co un se l; Pla in ti ffs ’ Exe cu ti ve Co m m it te e

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff s - Ap pe ll ees

Lin ds ey Thu t

ll ll ll ll ll ll ll ll ll ll l Obj ect or

- App el la nt

v.

Life Tim e Fi tn es s, In c.

ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll ee

__ __ __ __ __ __
App eal fro m

Uni te d S ta te s Di st ric t Co ur t fo r th e Dis tri ct of M in ne so ta - Mi nn eap ol is

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Su bm it te d: Octo be r 19 , 20 16
Fil ed : Fe br ua ry

2, 2 01 7

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Befo re RI LEY, Chi ef J ud ge , W OLLMAN and BENTON, Circu it Ju dg es

.

__ __ __ __ __ __

W OLLMAN, Circ ui t J ud ge

.Lin ds ey Thu t ap pe a l s f ro m th e di st ric t co ur t’s or de r award in g cl as s co un se l 1

$2 .8 m il li on in at to rn ey ’s fees an d ex pe ns es in a cl as s- act io n la wsu it a g a i n s t Life

Tim e Fi tn es s, In c. W e aff irm.

In 20 14

, fo ur la w fir m s fil ed fo ur se pa rat e cl as s- act io n co m pl ai nt s ag ai ns t Life

Tim e, each al le gi ng th at Life Tim e ha d vi ol at ed th e Tele ph on e Co ns um er Pro te ct io n

Act (TCPA), 47 U.S.C. § 22 7, by se nd in g un so l i ci te d te xt -m es sa ge ad ve rti se m en ts

to pu ta ti ve cl as s m em

be rs ’ cel lu la r te le ph on es

. The cl as s act io ns were co ns ol id at ed

at Life Tim e’s req ue st an d as si gn ed to th e Dis tri ct of Mi nn es ot a by th e Ju di ci al Pan el

on Mu lt id is tri ct Lit ig at io n. Afte r in fo rm al di sc ov ery, m ed ia ti on , an d “ le ng th y , arm ’s

le ng th ne go ti at io ns ,” t h e pa rti es en te red in to a se tt le m en t ag reem en t in Feb ru ary

20 15

, un de r whi ch Life Tim e ag reed to pa y a m in im um of $1 0 m il li on an d a

m ax im um of $1 5 m il li on to se tt le th e TCPA cl ai m s, to cov er the co st s of set tl em en t

ad m in is tra ti on , a nd to pa y at to rn ey ’s f ees an d ex pe ns es “ in th e am ou nt award ed by

th e [c]ou rt.” The ag reem en t pr ov id ed th at each cl as s m em be r who su bm it te d a va li d

cl ai m wou ld be en ti tl ed t o ch oo se be twee n a cas h award of $1 00 or a Life Tim e

m em be rs hi p award

—ei th er a th ree- m on th si ng le m em be rs hi p or a $2 50 cred it on an

ex is ti ng m em

be rs hi p. 2

The di st ric t co ur t gr an te d pr el im in ary ap pr ov al of th e se tt le m en t ag reem en t on

Mar ch 9, 20 15

, co nd it io na ll y cert ifyin g th e cl as s fo r se tt le m en t pu rp os es , ap po in ti ng
cl as s rep res en ta ti ve s an d c la ss co un se l, an d di rect in g th at no ti ce be pr ov id ed to th e
cl as s. D e s p it e m ed ia ti on an d ne go ti at io n effo rts

, ho wev er, th e pa rti es were un ab le

The Hon or ab le Jo an N. Eric ks en , Uni te d St at es Dis tri ct Ju dg e fo r th e Dis tri ct 1

of Mi nn es ot a.

The cas h an d m em

be rs hi p award s were su bjec t t o a p r o rat a ad jus tm en t, 2

de pe nd in g on th e nu m

be r of va li d cl ai m s su bm it te d. Bas ed on th e 29 ,84 3 va li d cl ai m

su bm is si on s, an up ward ad jus tm en t of 60 p e r c e n t w as ap pl ie d, whi ch res ul te d in a

cas h a ward of r ou gh ly $16 0 a nd a m em be rs hi p c red it va lu ed at r ou gh ly $40 0.

-2

-to reac h an ag reem en t reg ard in g at to rn ey ’s fees an d ex pe ns es

. Cl as s co un se l fil ed an

in it ia l m ot io n for an award of $4 .2 m il li on , su bm it ti ng bi ll in g reco rd s to th e di st ric t

co ur t fo r in ca mer a rev ie w in su pp or t of th e m ot io n. Thu t fil ed th e so le ob jecti on by

a cl as s memb e r

. Afte r th e cl ai m s pe rio d cl os ed

, cl as s co un se l fil ed an am en de d

m o t i o n f or at to rn ey ’s fees

, req ue st in g an award of $3 m il li on , or 30 pe rcen t of th e

gu aran te ed $1 0 m il li on m in im um pa y m en t Life Tim e was req ui red to rem it un de r th e

se tt le m en t ag reem en t. Cl as s co un se l at ta ch ed de cl arat io ns in su pp or t of th e req ue st ed

fee am ou nt

, whi ch do cu m en te d th e ho ur s an d va rio us bi ll in g rat es of th e in di vi du al s
who ha d wo rk ed on th e la wsu it an d wh ic h re su lt ed in a lo de st ar o f $6 87 ,92 8.7 5.

On Nov em

be r 17

, 20 15

, th e di st ric t cou rt con du ct ed a he ari ng on th e pa rti es ’
joi nt m ot io n fo r fin al ap pr ov al of th e se tt le m en t ag reem en t an d on cl as s co u n s e l ’s

am en de d m ot io n fo r at to rn ey ’s fees an d ex pe ns es

. The pa rti es an d th e co ur t de vo te d

a si gn ifi can t po rti on of th e he ari ng to th e is su e of at to rn ey ’s fees

, di sc us si ng in de ta il

bo th th e m et ho ds typic al ly us ed fo r cal cu la ti ng fees

. On Decem be r 1, 20 15

, th e co ur t

gr an te d fin al ap pr ov al of th e se tt le m en t ag reem en t. It al so gr an te d in pa rt an d de ni ed

i n pa rt cl as s co un se l’s am en de d m ot io n fo r at to rn ey ’s fees an d ex pe ns es , ap pl yi n g
cl as s co un se l’s req ue st ed pe rc en ta ge -o f-t he -b en efi t m et ho d to cal cu la te th e fee

am ou nt , reject in g Li fe Tim e’s arg um en t fo r ap pl ic at io n o f th e lo de st ar m et ho d, and

ov erru li ng Thu t’s ob

jec t i on to th e fee req ue st

. The di st ric t co ur t fo un d th at cl as s

c o u n s el ha d “ ex pe nd ed su bs ta nt ia l ti m e an d effo rt in th ei r ab le pr os ecu ti on ” of th e

la wsu it

, whi ch ul ti m at el y res u l t e d in a go od -fai th se tt le m en t th at pr ov id ed a “ fai r,

reas on ab le

, ad eq ua te [,] an d cert ai n res ul t” fo r th e cl as s

. The co ur t award ed a to ta l

su m of $2 .8 m il li on in at to rn ey ’s fees an d ex pe ns es —2 8 pe rcen t of th e m in im um $1 0

m il li on am ou nt of

th e se tt le m en t fu nd —an d a ut ho riz ed cla ss co un se l, “ in th ei r so le

di sc ret io n, . . . to all oc at e an d d is tri bu te th e fee s among [th em se lv es ]. ”

Thu t ar g u e s th at th e fee award was ex ces si ve an d th at th e co ur t im pr op erl y
de le ga te d to th e fo ur c l as s- co un se l la w fir m s th e au th or it y to al lo cat e th e award

am on g th em se lv es

. W e rev ie w a di st ric t cou rt’s award of at to rn ey fees fo r ab us e of

-3

-di sc ret io n. See Pet ro vi c v. Am oc o Oil Co

., 20 0 F.3 d 11 40

, 11 56 (8 th Ci r. 19 99 )

(“ Deci si on s of th e d i s t r i c t co ur t reg ard in g at to rn ey fees in a cl as s act io n se tt le m en t

wil l ge ne ral ly be se t as id e on ly up on a sh owi ng th at th e act io n am ou nt ed to an ab us e

of di sc ret io n.” ). I n a c e r t ifi ed cl as s act io n, a di st ric t co ur t “ m ay award reas on ab le

at to rn ey ’s fees an d no nt ax ab le co st s th at are au th or iz ed by la w or by th e pa rti es ’

ag reem en t.” Fed

. R. Ci v. P. 23 (h ). In e x e rci si ng it s di sc ret io n to award at to rn ey ’s

fees

, a di st ric t co ur t ge ne ral ly ap pl ie s on e of two m et ho ds to de te rm in e a reas on ab le

fee am ou nt : th e “ lo de st ar” m et ho d, un de r whi ch “ th e ho ur s ex pe nd ed by an at to rn ey

are mu l t i p l i e d b y a reas on ab le ho ur ly rat e of co m pe ns at io n so as to pr od uc e a fee

am ou nt wh i c h can be ad jus te d, up or do wn, to refl ect th e in di vi du al iz ed

ch arac te ris ti cs of a gi ve n act io n,” or th e “ pe rcen ta ge of th e be ne fit ” m et ho d, u n d e r
whi ch th e fee am ou nt is “ eq ua l to so m e fr act io n of th e co m m on fu nd th at th e

at to rn ey s were su cces sf

ul in ga th eri ng du rin g th e co ur se of th e li ti ga ti on .” Jo hn st on

v. Co m eri ca Mo rtg

. Co rp ., 83 F.3 d 24 1, 24 4- 45 (8 th Ci r. 19 96 ); se e al so Pet ro vi c, 20 0

F.3 d at 11 57 (n ot in g well -es ta bl is he d ru le th at a di st ric t co ur t m ay us e th e pe rcen ta ge

of -th e-b en efi t m et ho d in a co m m on -fu nd se tt le m en t cas e). “ It is wit hi n th e di sc ret io n

of th e di st ric t co ur t to ch oo se whi ch m et ho d to ap pl y ,” Jo hn st on , 83 F.3 d at 24 6, 24 7
(rei te rat in g th at “ [t]he di st ric t co ur t is free to u t i l i z e ei th er th e lo de st ar or th e

pe rcen ta ge of th e be n efi t m et ho d” ); se e al so Gall owa y v. Kan sa s Ci ty Lan ds m en , LLC, 83 3 F.3 d 96 9, 97 2 (8 th Ci r. 20 16 ) (s am e), as well as to de te rm in e th e res ul ti ng

am ou nt th at co ns ti tu te s a reas on ab le award of at to rn ey ’s f ees in a gi ve n cas e, se e

Trav e l e r s Pro p. Cas

. In s. Co

. v. Nat’l Uni on In s. Co

., 73 5 F.3 d 99 3, 10 02 (8 th Ci r.

20 13 ).

The di st ric t co ur t rev ie wed th e pa rti es ’ su bm is si on s on th e at to rn ey ’s fee is su e,
he ard ex te ns iv e arg um en t on th e m at te r, an d co ns id ered t h e f e es award ed an d th e

m et ho ds us ed to cal cu la te th os e fees in si m il ar cas es

. The co ur t en ga ge d in a po in te d

in qu iry in to cl as s co un se l’s req ue st ed pe rcen ta ge -o f-t he -b en efi t fee am ou nt an d Life

Tim e’s su gg es t e d l o d es ta r an d ap pr op ria te m ul ti pl ie rs an d co ns id ered in de ta il

arg um en t fro m bo th pa rti es

. S e e Pet ro vi c, 20 0 F.3 d at 11 57 (n ot in g th at us e of

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-lo de st ar m et ho d may be warra nt ed to do ub le -ch eck th e res ul t of th e pe rcen ta ge -o fth e-fu nd m et ho d)

. The di st ric t co ur t al so rev ie wed in ca mer a th e it em iz ed da il y ti m e

reco rd s ke pt b y e a c h at to rn ey an d ot he r le ga l pr of es si on al who pa rti ci pa te d in

r e p r es en ti ng th e cl as s an d ul ti m at el y acce pt ed th os e reco rd s as ad di ti on al ev id e n c e

th at cl as s co un se l “ ex pe nd ed su bs ta nt ia l ti m e an d effo rt in th ei r pr os ecu ti on of cl ai m s

on be ha lf of

” th e cl as s. Tho se e f

f or ts

, th e co ur t fo un d, le d to an ex pe di ti ou s

se tt le m en t of th e cl as s cl ai m s an d an ag reem e n t t h a t was “ fai r, reas on ab le

, an d

ad eq ua te ”; th at ach ie ve d “ su bs ta nt ia l sa vi ng s of ti m e, m on ey , an d effo rt” fo r th e co ur t

an d th e pa rti es ; an d th at “ fu rth er[e d] th e in te res ts of jus ti ce.” The co ur t de te rm in ed

th at a pe rcen ta ge -o f-t he -b en efi t award of $2 .8 m il li on in at to rn ey ’s fees an d ex pe ns es

was reas on ab le

, fin di ng s p e c ifi cal ly th at “ th e req ue st ed award is typic al of th at

award ed in ot he r cl as s acti on s and TCPA se tt le m en ts ,” th at cl as s cou ns el “ ob ta in ed

a s u b s t a n t i a l be ne fit fo r th e cl as s [an d] as su m ed si gn ifi can t ris k in ta ki ng on [th e

la wsu it ] on a co nt in ge nc y ba si s,” th at th e la wsu it “ pr es en te d di ffi cu lt le ga l

qu es ti on s,” th at cl as s co un se l “ de vo te d si gn ifi can t ti m e an d effo rt” to th e la wsu it

, an d

th at “ th ere was on ly on e ob jecti on ,” whi ch was fil ed by Thu t an d was reject ed by th e

co ur t as “ no t wel l fo un de d.”

The di st ric t co ur t’s an al y si s was th or ou gh

, it s fin di ng s were am pl y su pp or te d,

an d it di d no t ab us e it s si gn ifi can t di sc ret io n by el ect in g to us e th e pe rcen ta ge -o f-t he

be ne fit m et ho d to c a l c u l a t e th e fee award or by de te rm in in g th at an award of

$2 .8 m il li on in at to rn ey ’s fees an d ex pe ns es was reas on ab le

. See Gall owa y , 83 3 F.3 d

at 97 3 (o bs erv in g th at “ [c]las s co un se l can an d in va ria bl y do es pr op os e th at th e co ur t

ch oo se a cert ai n” fee- cal cu la ti on m et ho d, bu t no ti ng th at “ th e co ur t ha s di sc ret io n to

acce pt or reject th at pro po sa l” ); P et ro vi c, 20 0 F .3d at 1 15 7 (st at in g th at “ [i]t is well

e s t a bl is he d in th is ci rcu it th at a di st ric t co ur t m ay us e th e ‘perce nt ag e of th e f u n d ’

m et ho do lo gy to ev al ua te at to rn ey fees in a co m m on -fu nd se tt le m en t” ); se e al so In re

U.S. Ban co rp Lit ig

., 29 1 F

. 3 d 1 0 35

, 10 38 (8 th Ci r. 20 02 ) (co nc lu di ng th at di st ric t

co ur t di d no t ab us e it s di sc re t i o n by ap pl y in g pe rcen ta ge -o f-t he -b en efi t m et ho d to

-5

-award “ 36 % of th e gu aran te ed $3 .5 mi l l i o n fu nd am ou nt ,” whe re cl as s co un se l

“ ob ta in ed si gn ifi can t m on et ary rel ie f on be ha lf o f th e cl as s)

.

Lik e w i s e , th e di st ric t co ur t di d no t ab us e it s di sc ret io n by in cl ud in g

ap pr ox im at el y $7 50 ,00 0 in fu nd ad m in is tra ti on co st s as pa rt of th e “ be ne fit ” whe n
cal cu la ti ng th e pe rcen ta ge -o f-t he -b en efi t fee am ou nt

. The S e v e n t h Ci rcu it ha s

in di cat ed th at di st ric t co ur ts sh ou ld sc r ut in iz e ad m in is tra ti ve co st s to de te rm in e
whe th er th ey real ly co nf

er a be ne fit on th e cl as s be fo re in cl ud in g th em in fee- award

cal cu la ti on s. See Red m an v. Rad io Sh ack Co rp ., 76 8 F.3d 62 2, 63 0 (7t h Cir. 20 14 ).

The Nin th Ci rcu it

, ho wev er, le av es in cl us io n of ad m in is tra ti ve co st s to th e d is tri ct

c o u r t s ’ di sc ret io n, reas on in g th at “ whe re th e de fen da nt pa y s th e jus ti fia bl e co s t o f

no ti ce to th e cl as s[ ,]

. . . it is reas on ab le (al th ou gh cert ai nl y no t requ ire d) to in cl ud e

th at co st in a pu ta ti ve co m m on fu nd be ne fit i n g t h e p l a in ti ffs fo r al l pu rp os es , in cl ud in g th e cal cu la ti on of at to rn ey s’ fees .” St at on v. Bo ei ng Co

., 32 7 F.3 d 93 8, 97 5
(9 th Ci r. 20 03 ). The Nin th Ci rcu it ’s a pp ro ach is i n ke ep in g wit h th e de fere nc e ou r

co ur t a f f o rd s di st ric t co ur ts in award in g at to rn ey ’s fees

. Si nc e Thu t m ak es no
sh owi ng th at t h e ad m in is tra ti ve co st s were un jus ti fia bl e, th e di st ric t co ur t di d no t

ab us e it s d is cret io n b y

in cl ud in g t he m

as p art of t he be ne fit

.

Nor di d th e di st ric t co ur t ab us e i t s d i s cret io n by al lo win g cl as s co un se l

t h em se lv es to de te rm in e ho w t o al lo cat e th e to ta l $2 .8 m il li on at to rn ey ’s f ee awar d

wit ho ut fu rth er jud ic i a l ov ers ig ht or ap pr ov al

. Thu t arg ue s th at th e co ur t was 3

req ui red to m on it or th e al lo cat io n of th e award

, an d sh e ci te s th e Fi f t h C i rcu it ’s

de ci si on in In re Hig h Su lfu r Co nt en t Gas ol in e Pro du ct s Lit ig at io n, 51 7 F.3 d 22 0, 22 7
(5 th Ci r. 20 08 ), in su pp or t of he r arg um en t. Eve n if Hig h Su lfu r were co nt ro ll in g in

th is Ci rcu it

, it is di st in gu is ha bl e, fo r th at cas e in vo lv ed a di sp ut e am on g cl as s co un se l

In he r op en in g br ie f, Thu t arg ue d th at we sh ou ld ap pl y a de no vo st an da rd of 3

rev ie w to as se ss th is cl ai m of erro r, bu t sh e ha s co nc ed ed in he r rep ly br ie f t h a t an ab us e-o f-d is cret io n s ta nd ard of r ev ie w app li es

.

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-ov er h ow t o a ll oc at e a fee award . The Fi fth Cir cu it no te d a “ di st ric t co ur t’s d ut y to

sc ru ti ni ze th e al lo cat io n of a fee award whe n an at to rn ey ob jects to hi s co -co un se ls ’

fee reco m

m en da ti on s,” an d it rema n d ed wit h in st ru ct io ns fo r th e di st ric t co ur t to

de ve lo p th e reco rd an d de te rm in e th e ad eq ua cy of th e pr op os ed al lo cat io n of th e fee

award am on g clas s cou ns el

. Id

. at 23 3- 35 (“ It i s on e th in g for all at to rn ey s to co m e

to an ag reem en t ab ou t di vi di ng up fees

, an d qu it e an ot he r fo r fiv e at to rn ey s to de cl are
ho w an awar d wil l co ve r th em se lv es an d se ve nt y -fo ur ot he r at to rn ey s wit h no

m ean in gf ul jud ic ia l su pe rv is io n or rev ie w.”). Here, b y co nt ras t, t he re i s no di sp ut e

am on g cl as s co un se l ov er ho w to al lo cat e th e award of at to rn ey ’s fees an d ex pe ns es ,

an d th e di st ric t co ur t di d no t ab us e it s di sc ret io n by le av in g th e m at te r to cl as s co un se l

to res ol ve am on g t he m se lv es

.

The jud gm en t i s af

fir m ed

.

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