In the

United States Court of Appeals

For the Seventh Circuit

No. 10-1154

IN RE:

TRANS UNION CORPORATION PRIVACY LITIGATION.

APPEAL OF:

DAWN ADAMS WHEELAHAN.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 00 C 4729—Robert W. Gettleman, Judge.

ARGUED SEPTEMBER 17, 2010—DECIDED JANUARY 14, 2011

Before POSNER, KANNE, and WOOD, Circuit Judges.

POSNER, Circuit Judge. It is a curiosity of class action

litigation that often there is greater ferocity in combat

among the class lawyers over the allocation of attorneys’

fees than there is between the class lawyers and the

defendants. The contest among the lawyers is a zerosum game. But the contest between them and the defendants is a positive-sum game because the class lawyers
2 No. 10-1154

are naturally very interested in the fee component of

any settlement, while the defendants care only about

the size of the settlement, including fees. So the lawyers

may be willing to settle for less for the class if the defendants will help them obtain a generous fee award,

and the defendants will be happy to help them if the sum

of the fee award and the relief granted to the class is

smaller than it would be if the class lawyers pressed for

more generous relief for the class. E.g., Thorogood v. Sears,

Roebuck & Co., 624 F.3d 842, 848-49 (7th Cir. 2010); Vollmer

v. Selden, 350 F.3d 656, 660 (7th Cir. 2003); Reynolds v.

Beneficial National Bank, 288 F.3d 277, 282 (7th Cir. 2002);

In re General Motors Corp. Pick-Up Truck Fuel Tank Products

Liability Litigation, 55 F.3d 768, 778, 802 (3d Cir. 1995);

Weinberger v. Great Northern Nekoosa Corp., 925 F.2d 518,

524 (1st Cir. 1991).

Indeed, class lawyers may try to fend off interlopers

who oppose a proposed settlement as insufficiently

generous to the class; and given the role of such

interlopers in preventing cozy deals that favor class

lawyers and defendants at the expense of class members,

their requests for fees must not be slighted. Mirfasihi v.

Fleet Mortgage Corp., 356 F.3d 781, 782-83 (7th Cir. 2006);

Vollmer v. Selden, supra, 350 F.3d at 659-60; Crawford v.

Equifax Payment Services, Inc., 201 F.3d 877, 880-82 (7th

Cir. 2000); In re General Motors Corp. Pick-Up Truck Fuel

Tank Products Liability Litigation, supra, 55 F.3d at 803.

One such objecting lawyer in the present case, the

appellant, Dawn Wheelahan, was awarded $2.7 million

in attorneys’ fees by the district court for her contribu-
No. 10-1154 3

tion to the generous settlement of the Trans Union Corporation Privacy Litigation. She contends that she’s

entitled to three times as much as she was awarded,

both because the total attorneys’ fees awarded to class

counsel were too little and because her share of them

was too small. She is not opposed by the class action

defendant, Trans Union, because this is a “common fund”

suit; attorneys’ fees come out of the amount of damages

awarded the class, and so Trans Union has no stake in

the dispute over fees. Wheelahan’s only opponents are

some of the other class lawyers, who fear that an increase in the amount of fees awarded to her would come

at their expense. They don’t object to an increase in the

total fees awarded, or indeed to an increase in the

share awarded to her that would not reduce their

fees. With the class members unrepresented and the

defendant indifferent to the overall award of attorneys’

fees, we must decide the appeal with limited assistance

from an adversary presentation. But this is a standard

dilemma in class action adjudication, as we noted at the

outset, and may be unavoidable without elongating

the litigation disproportionately to the stakes in the

fee dispute.

The other lawyers for the class (with one exception) were

prepared to settle the case for $40 million, consisting

of $20 million in cash plus relief in kind valued at

$20 million. Wheelahan opposed the settlement, and as

a result solely of her opposition (she argues) the case

was eventually settled for a little under $110 million

(we’ll ignore the little under), of which $75 million was

in cash and the other $35 million was the estimated value
4 No. 10-1154

of the relief in kind included in the settlement. At the

oral argument Wheelahan told us that she should receive at least 20 percent of the added value of $70 million

as her fee. That would be $14 million, rather than the

$2.7 million that she was awarded. Her brief, however,

asks for only $8.4 million. As that amount is, as we’ll

see, excessive the $14 million is pie in the sky and can

be ignored.

The dispute over fees grows out of a litigation that

began in 1998 with the filing of a number of class actions

charging Trans Union, a large credit-reporting agency,

with violating the Fair Credit Reporting Act, 15 U.S.C.

§§ 1681 et seq., by selling information in its consumer

credit files to advertisers without the consumers’ authorization. The actions were consolidated for pretrial proceedings in the Northern District of Illinois. In 2006

lawyers referred to by the parties to the appeal as “MDL

Counsel,” who had filed the earliest cases, agreed with

Trans Union to a $40 million settlement. Wheelahan, who

had filed her own class action in 2005, opposed the proposed settlement, and her opposition, together with that

of class counsel in a case filed against Trans Union

in Texas, persuaded the district judge to rescind his

preliminary approval.

He approved the final settlement of $110 million in 2008.

The settlement placed a ceiling of $18.75 million on attorneys’ fees for the class lawyers (remember that the fees

come out of the common fund created by the settlement). The lawyers urged the district court to award

this amount—17 percent of the estimated value of the
No. 10-1154 5

settlement. The district judge, however, thought $18.75

million excessive and reduced it to $10.83 million, but

later reconsidered and referred the issue of fees to a

special master, who recommended an award of $13

million, of which about two-thirds ($7.8 million) would

go to the MDL counsel and most of the rest to Wheelahan

and to the Texas counsel. The district judge accepted

the recommendation.

The special master arrived at these figures by first

determining the total amount of attorneys’ fees that

would be reasonable to award and then allocating that

amount among the lawyers. He placed little weight on

the contingent fee agreements between the lawyers and

the “clients” (the named plaintiffs in the class actions),

recognizing that named plaintiffs are usually cat’s paws

of the class lawyers. In re Cavanaugh, 306 F.3d 726, 737-38

(9th Cir. 2002); Goldberger v. Integrated Resources, Inc., 209

F.3d 43, 53 (2d Cir. 2000); John C. Coffee, Jr., “The Regulation of Entrepreneurial Litigation: Balancing Fairness

and Efficiency in the Large Class Action,” 54 U. Chi.

L. Rev. 877, 885-86 (1987). That’s especially true when, as

in this case, the prospective relief for an individual

class member is minuscule: the class has 190 million

members!—though most have not filed claims and the

deadline for filing is past. The special master recognized

that his task was to estimate the contingent fee that

the class would have negotiated with the class counsel

at the outset had negotiations with clients having a real

stake been feasible. In re Synthroid Marketing Litigation,

264 F.3d 712, 718-20 (7th Cir. 2001); see also Missouri v.

Jenkins, 491 U.S. 274, 285-86 (1989); but see Goldberger v.

Integrated Resources, Inc., supra, 209 F.3d at 51-52.
6 No. 10-1154

Such estimation is inherently conjectural, and what

the special master mainly did was examine data on

awards of attorneys’ fees in other class actions. He

relied heavily on an academic study which had found that

between 1993 and 2002 the average awards of attorneys’

fees in common fund consumer class actions had been

either 16.2 or 24.3 percent of the amount of the settlement, depending on which of two datasets of such

awards were consulted. Theodore Eisenberg & Geoffrey P.

Miller, “Attorney Fees in Class Action Settlements:

An Empirical Study,” 1 J. Empirical Legal Stud. 27, 51

(tab. 1) (2004). The average award declined in percentage

terms as the size of the settlement increased, in recognition of the fixed-cost component of a lawyer’s activity in

a case—there is an irreducible minimum of lawyer

activity that must be undertaken if the client is to have

a reasonable chance of prevailing, no matter how small

the stakes in the case. In the case of settlements of

between $79 million and $190 million (the range within

which the settlement in this case fell), the study found

that the average attorneys’ fee awards were 17.6 or

19.5 percent of the settlement, again depending on the

dataset. Id. at 73 (tab. 7). The award that the parties to

the settlement in the present case recommended—$18.75

million—was just below that range: 17 percent of $110

million, as we said.

The special master then looked at a group of securities

cases and from the fee awards made in them estimated

that if the settlement in such a case had as in this case

been $110 million the fee award would have been between

3.8 percent and 23.2 percent. He thought this range relevant because plaintiffs’ discovery costs tend to be higher
No. 10-1154 7

in securities class actions than in consumer class actions.

But he did not indicate how one might adjust the fee

award in this case to reflect the presumed lower cost of

discovery.

He then considered the noncash portion of the settlement: a choice, valued as we said at $35 million, between

two “free” credit monitoring services that Trans Union

would offer each class member who filed a complaint:

(1) Get six months of free credit monitoring services

(which retails for $59.75) that includes: (a) the ability

to lock your credit report so third parties, such as

lenders or other companies, will not be able to access

your credit report without your consent (unless allowed by law); (b) unlimited daily access to your

Trans Union credit report and credit score; and

(c) credit monitoring with a 24-hour email credit

notification service; OR

(2) Get nine months of enhanced credit monitoring

services (which retails for $115.50) that includes all

the services listed above, plus a suite of insurance

scores (which allows you to see your credit information as insurance companies do) and a mortgage

simulator service (a customized report that shows

the mortgage rates that you should qualify for). 

In re Trans Union Privacy Litigation, “Detailed Notice,” p. 5,

www.listclassaction.com/content/Detailed_Notice.pdf

(visited Jan. 5, 2011) (emphasis in original). The special

master thought this in-kind relief worth less to class

members than $35 million in cash would have been

worth and that the attorneys’ fee awards should there-
8 No. 10-1154

fore be lower than the awards for cash relief—only

5 percent of the $35 million. In contrast, he awarded

15 percent of the cash portion of the settlement.

The $35 million figure is the retail price of the offered

services multiplied by the number of class members

who asked for the services in lieu of cash. The value of

the services to a member of the class could be less

than the retail price. The members of the class were

presented with a choice between cash relief—not

knowing the actual amount they’d receive—and in-kind

relief. (This is a standard feature of settlements in

common fund class actions.) The amount of cash to

which each class member asking for cash rather than

services would be entitled would be $75 million divided

by the number of such claimants. If they are very numerous, the cash that each would receive would be less than

the value of the in-kind relief even if a class member

valued that relief at less than its retail price. Suppose the

class member can obtain cash relief of only $30, and the

retail price of the service he could obtain instead is $60.

Then even if he values that service at only $31, he is

better off choosing it. (On the assumption that the

amount of fees requested was proper and that one

percent of the 190 million eligible claimants requested

cash relief, their individual recovery would be only

$29.60: $75 million, minus $18.75 million in attorneys’

fees, divided by 1.9 million.)

But this possibility need not justify a lower attorneys’

fee award (let alone two-thirds lower) for the in-kind

component of the settlement. The fact that the amount
No. 10-1154 9

of cash that a class member can expect to receive is likely

to be small makes the in-kind option very attractive—maybe not $35 million attractive but the special

master did not try to estimate a lower value.

Next he considered the risk of losing that the lawyers

for the class faced when they embarked on the litigation.

If they lost they would receive no fees at all, and the

higher the risk of failure the larger the contingent

fee that a client would have to pay in an arm’s length

negotiation with the lawyer in advance of the suit. As

we’ve noted in previous cases, the logic of scaling the

fee to the risk leads to absurdity if pressed too hard: it

would justify an astronomical fee in a frivolous suit

in which the plaintiff prevailed by a fluke. Kirchoff v.

Flynn, 786 F.2d 320, 326 (7th Cir. 1986); McKinnon v. City

of Berwyn, 750 F.2d 1383, 1392-93 (7th Cir. 1984); see

also Pennsylvania v. Deer Valley Citizens’ Council for Clean

Air, 483 U.S. 711, 719-23 and n. 6 (1987); Laffey v. Northwest

Airlines, Inc., 746 F.2d 4, 26-27 (D.C. Cir. 1984), overruled

on other grounds by Save Our Cumberland Mountains, Inc.

v. Hodel, 857 F.2d 1516 (D.C. Cir. 1988); John Leubsdorf,

“The Contingency Factor in Attorney Fee Awards,” 90

Yale L.J. 473, 474 (1981). But within the set of colorable

legal claims, a higher risk of loss does argue for a

higher fee. Risk aversion to one side (for a lawyer with

a diversified portfolio of cases should not be risk

averse, Rand v. Monsanto Co., 926 F.2d 596, 599 (7th Cir.

1991)), if the market-determined fee for a sure winner

were $1 million the market-determined fee for handling

a similar suit with only a 50 percent chance of a favorable

outcome should be $2 million. E.g., In re Continental
10 No. 10-1154

Illinois Securities Litigation, 962 F.2d 566, 569, 573 (7th Cir.

1992); Staton v. Boeing Co., 327 F.3d 938, 967-68 (9th Cir.

2003).

The special master thought the risk of loss in the

present litigation had been low because in 2001, when

many of the separate class actions against Trans Union

that were eventually consolidated for pretrial proceedings had not yet been filed and those that had been

filed were still in their early stages, and so presumably

the costs that the lawyers would have borne in vain

if the suits collapsed were small, a decision by the

Federal Trade Commission holding that Trans Union’s

practices attacked in the class actions indeed violated the

Fair Credit Reporting Act was affirmed. Trans Union

Corp. v. FTC, 245 F.3d 809 (D.C. Cir. 2001). The special

master thought that outcome made the risk of loss to

the class counsel in this case less than the risk in In re

Synthroid Marketing Litigation, 325 F.3d 974, 980 (7th

Cir. 2003), where we had upheld a 22 percent attorneys’

fee award. Without trying to quantify the difference

in risk (“no one can know”), the special master concluded that the attorneys’ fees in this case should be

limited to 12 percent of the settlement. (Fifteen percent

of the $75 million in cash plus 5 percent of the $35 million

of in-kind relief equals 12 percent of $110 million.)

The 12 percent figure was plucked out of a hat, and a

hat with three holes in it: the unresolved comparison

with securities class actions, the arbitrary reduction in

attorneys’ fees for the nonpecuniary relief, and the perfunctory (less than a page) consideration, also left unre-
No. 10-1154 11

solved, of the relative risk of loss in the present case and

in Synthroid.

Having lowered the attorneys’ fees ceiling to 12 percent

of the settlement from the 17 percent that the lawyers had

recommended to him, thus setting an overall limit on

attorneys’ fees of $13 million, the special master turned

to its allocation among counsel. He thought Wheelahan

and counsel in the Texas suit piggish to be requesting,

between them, $10.8 million of the $13 million. The

request was based on their claim to be responsible for

the entire $70 million increase in the final settlement

over the settlement to which MDL counsel had agreed

earlier. So far as we can judge, had it not been for the

efforts of Wheelahan and the Texas lawyer the class

would indeed be poorer by $70 million. The special

master did not suggest otherwise. But then, remarking

that the premise of Wheelahan’s and the Texas counsel’s

claims was that the initial, rejected settlement had not

reflected the true settlement value of the case—which

was obviously so—he asked: “But who ‘created’ that

extra value [the $70 million]? It was principally the

efforts of MDL Counsel.” The others had “helped unlock

the true enhanced value in this case, but they did not

solely create it,” and “MDL Counsel remain entitled to

share in the value of the case above and beyond the

original $20 million in cash and $20 million of in-kind

value embodied in the rejected settlement.” He decided

they should get full credit for having created the first

$20 million of the cash component of the final settlement, for that was the amount that had been negotiated

in the first settlement agreement, and 50 percent of the
12 No. 10-1154

credit for the additional $55 million in cash in the

final settlement, for a total of 63 percent ($20 million plus

.5 x $55 million = $47.50 million ÷ $75 million = 63 percent)

of the cash component of the final settlement. He used

the same percentages in determining fees for the in-kind

relief, and so ended up awarding MDL counsel 63 percent

of the $13 million total of attorneys’ fees awarded. He

gave Wheelahan 22 percent of that total (hence the

$2.7 million that he awarded her) and Texas counsel

15 percent.

In making these adjustments the special master was

wrestling with a problem of joint causation. The final

settlement was the result of the combined efforts of

MDL counsel and of the other two class lawyers.

The fact that these efforts were successive rather than

simultaneous has no significance. The MDL counsel

created an asset—the expected gain from the lawsuits—

the value of which they did not realize. The efforts of

the other lawyers enabled the full value to be obtained.

Suppose the value of an uncut diamond owned by A

is $1,000, he hires B to cut it for $5,000, and after it is cut

it is worth $10,000. Does that mean that B should receive

not $5,000 but $9,000 because he created additional

value in that amount? That isn’t how prices are set in a

competitive market, or, since we’re talking about attorneys’ fees, wages either. The suggestion that they are

echoes the “comparable worth” theory of fair compensation. See Paul Weiler, “The Wages of Sex: The Uses and

Limits of Comparable Worth,” 99 Harv. L. Rev. 1728, 1756-

58 (1986). B in our example received $5,000 because that
No. 10-1154 13

was the competitive price for cutting the diamond. He

was not entitled to the surplus that his service created,

because he wasn’t the diamond’s owner. MDL counsel

correspond to A in our example and Wheelahan and

the Texas counsel to B.

The special master may have had an inkling that his

percentage allocations were arbitrary, because he also

looked at the relative time productively invested

by the different lawyers, multiplied by a reasonable

hourly rate, and came up with an estimate of the relative costs incurred by the different lawyers. This computation, which accords with the evidence, yielded a

ratio of MDL counsel’s costs to Wheelahan’s costs of 4.3

to 1, which is considerably higher than the 63 to 22 percent ratio of fees that the special master awarded to

the two counsel. In effect he penalized MDL counsel

for having proposed an inadequate settlement. Those

counsel aren’t complaining, however.

The special master did fine in his allocation of fees

among counsel, but, as we explained earlier, failed to

justify the $13 million ceiling on fees, and one result—critical to this appeal—is that because a $110

million settlement is large and Wheelahan’s contribution major though not so great as she contends, the

$2.7 million award for her contribution—a mere

2.5 percent—was too small. But as we have upheld the

allocation among counsel, her only valid complaint is

about the aggregate award.

Remember that the special master ruled that as far as

the cash relief was concerned, an award of fees equal to

15 percent of the cash award was proper, and that he
14 No. 10-1154

failed to justify a lower percentage of the value of the inkind relief. An award of attorneys’ fees equal

to 15 percent of the entire $110 million award, which

would correct the special master’s error, would be $16.5

million. But considering that he erred consistently in

favor of reducing fees, we think he did not make a case

that the $18.75 million requested by the lawyers for

the class was excessive.

Consider against that background what Wheelahan

is asking for. She wants an additional $5.7 million,

which on top of the $2.7 million awarded to her on the

recommendation of the special master would give her

the $8.4 million requested in her brief. If we are correct

that she is entitled to only 22 percent of the total attorneys’ fees awarded, the implication of her request is

that the special master should have recommended a

total fee award to all counsel of $38.2 million, because

$8.4 million is 22 percent of that amount. That would be

35 percent of the settlement. She does not defend

that percentage, or complain about the total of $18.75

million in attorneys’ fees agreed to in the final settlement

negotiations, but on the contrary that is the starting

point of the calculation that mysteriously generates her

claim to an $8.4 million award.

We conclude that she’s entitled to 22 percent of the

$18.75 million in total fees that should have been

awarded, which is $4.125 million. Since she’s already

been awarded $2.7 million, she’s entitled to an additional

award of $1.425 million. No other lawyers have

appealed from the fee awards, so they are not entitled to

additional fees.
No. 10-1154 15

The additional award to Wheelahan does only rough

justice, but a remand would produce only speculative

refinements, given the inherent uncertainties of estimation in such a case, and would do so at a heavy cost

in judicial and party resources unlikely to be offset by

any benefit in greater precision, which would in any

event be illusory. We are mindful that the $1.425

million will come out of the relief awarded to the class

members, who are not represented in this appeal, but we

do not think that this litigation should be protracted

further by our appointing a lawyer to represent the class

in place of the existing class counsel, who at this stage

are concerned only with their fees. That lawyer’s fees

would come out of the common fund and so reduce

the amount of relief obtained by the members of the

class. We therefore order the judgment of the district

court to be modified as explained above, and we

remand for the entry of a corrected judgment.

One issue remains to be addressed. The district court

had directed the special master not only to recommend

fee awards but also to investigate complaints that

Wheelahan had engaged in unethical behavior in the

litigation. The special master concluded that although

Wheelahan had behaved unprofessionally in various

respects, she had not behaved unethically, and so he

recommended against the imposition of any sanction

and the district judge accepted the recommendation.

Nevertheless her appeal challenges the judgment on the

further ground that the special master and the district

judge have made unwarranted criticisms of her. Whether
16 No. 10-1154

this is true or not, it is not a basis for an appeal. A

criticism is not an appealable order.

MODIFIED AND REMANDED.

1-14-11