Opinion ID: 60150
Heading Depth: 2
Heading Rank: 1

Heading: Class Settlement Terms & Attorneys’ Fees

Text: The district court must approve any settlement agreement in a class action. Fed. R. Civ. P. 23(e). The court may approve the settlement, however, “only after a hearing and on a finding that the settlement, voluntary dismissal, or compromise is fair, reasonable, and adequate.” Id. Where, as here, a class action has been certified specifically for the purpose of settlement, “the district judge has a heavy duty to ensure that any settlement is ‘fair, reasonable, and adequate’ and that the fee awarded plaintiffs’ counsel is entirely appropriate.” Piambino v. Bailey, 757 F.2d 1112, 1138 (11th Cir. 1985). The district court’s conclusion that a class settlement is fair will not be disturbed absent a clear showing of abuse of discretion. Bennett v. Behring Corp., 737 F.2d 982, 986 (11th Cir. 1984). “In addition, our judgment is informed by the strong judicial policy favoring settlement as well as by the realization that compromise is the essence of settlement.” Id. 4 We have identified the following factors as relevant to our review of whether a class settlement’s terms are fair, reasonable and adequate: (1) the likelihood of success at trial; (2) the range of possible recovery; (3) the point on or below the range of possible recovery at which a settlement is fair, adequate and reasonable; (4) the complexity, expense and duration of litigation; (5) the substance and amount of opposition to the settlement; and (6) the stage of proceedings at which the settlement was achieved. Id. Although the plaintiffs sought statutory damages ranging between $100 and $1000, statutory damages are available only for willful violations of the FRCA. See 15 U.S.C. § 1681n(a). The district court found, after considering the testimony and evidence presented at the fairness hearing, that “‘willfulness’ on the part of Progressive is seriously debatable and the agreed to settlement reflects that uncertainty.” R. 359 at 5. After careful review of the record and the benefit of oral argument, we cannot say that the district court abused its discretion in approving the settlement agreement. The district court has wide discretion to award attorneys’ fees based on its own expertise and judgment because of “the district court’s superior understanding of the litigation and the desirability of avoiding frequent appellate review of what essentially are factual matters.” Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S. Ct. 1933, 1941, 76 L. Ed. 2d 40 (1983). Yet, the district court’s discretion is not 5 unlimited, and “[a] conclusory statement that a fee is reasonable in light of the success obtained is generally insufficient.” Norman v. Housing Authority of Montgomery, 836 F.2d 1292, 1304 (11th Cir. 1988). “It remains important . . . for the district court to provide a concise but clear explanation of its reasons for the fee award.” Hensley, 461 U.S. at 437, 103 S. Ct. at 1941. In this case, the district court’s only explanation for the fee award was that, “[c]onsidering the years Plaintiffs’ counsel has spent working on this case, . . . an award of attorneys’s fees and costs in the amount of $3,000,000.00 is fair and reasonable.” R. 359 at 7. This conclusory statement does not allow for our meaningful review. See Norman, 836 F.2d at 1304 (“The court’s order on attorney’s fees must allow for meaningful review—the district court must articulate the decisions it made, give principled reasons for those decisions, and show its calculation.”). For these reasons, we vacate the award of attorneys’ fees and remand to the district court. On remand, the district court must explain the method it used to set the attorneys’ fee award and make findings showing the factors and calculations used in setting that fee award. For example, the district court’s order did not indicate whether the court used the percentage-of-the-common-fund method or lodestar method in setting its $3 million fee award. See Camden I Condo. Ass’n. v. Dunkle, 6 946 F.2d 768, 774 (11th Cir. 1991) (concluding that in class action cases, attorneys’ fees awarded from a common settlement fund established for the benefit of the class “shall be based upon a reasonable percentage of the fund established for the benefit of the class” but that “[t]he lodestar analysis shall continue to be the applicable method used for determining statutory fee-shifting awards”). Although the FCRA provided for an award of costs and reasonable attorneys’ fees to prevailing parties in a § 1681m action, see 15 U.S.C. §§ 1681n(c) (willful noncompliance), the district court is not limited to applying a lodestar analysis for a statutory fee-shifting award because the suits were resolved by a class settlement agreement without any express finding as to Progressive’s willful noncompliance with the FRCA. The district court should indicate on remand what method it is using and why.3 Further, if the district court used the common-fund method, the parties vigorously disputed (in the district court and on appeal) the monetary value, if any, of the settlement. Even though we find no abuse of discretion in the district court’s approving the ultimate settlement (which had mainly non-monetary benefits) as fair, the district court, if it was applying the common-fund method, should have 3 Although the negotiated settlement included up to $3 million in attorneys’ fees, the parties have not disputed that the district court has a supervisory role and ultimately must calculate and set the attorneys’ fees award up to a maximum of the $3 million cap. 7 determined the monetary value of the settlement before applying the common-fund method to the attorneys’ fees award. On the other hand, if the district court was using the lodestar method, the district court must explain why it used that method and how it calculated the attorneys’ fee award, including the total number of attorney hours reasonably spent by plaintiffs’ counsel on the matter; the hourly rate used to calculate the award; whether a multiplier was used and, if so, in what amount; and the reasons why a multiplier is warranted or not. Further, even if the district court used the commonfund method, the district court should indicate whether the lodestar method is warranted to double-check the result of the percentage-of-the-common-fund method. | Whether the district court uses the lodestar or the common-fund method, the district court should apply the twelve factors listed in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), abrogated on other grounds by Blanchard v. Bergeron, 489 U.S. 87, 109 S. Ct. 939, 103 L. Ed. 2d 67 (1989), to determine the appropriate statutory fee or the percentage to be utilized. See Hensley, 478 U.S. at 434 & n.9, 103 S. Ct. at 1940 & n.9 (finding that the district court may consider the Johnson factors to adjust the lodestar fee upward or downward while noting that many of those factors are presumed within the initial 8 calculation of reasonable hours by a reasonable hourly rate); Camden I, 946 F.2d at 772 & n.3, 775 (agreeing the Johnson factors continue to be appropriately used in common-fund cases); see also Waters v. Int’l Precious Metals Corp., 190 F.3d 1291, 1294 (11th Cir. 1999) (reaffirming that common-fund “benchmark” may be adjusted using the Johnson factors). In this opinion we expressly do not resolve the issue of what method is appropriate in this case. We simply determine that the district court’s conclusory order as to attorneys’ fees does not allow for any meaningful review. See Burke v. Ruttenberg, 317 F.3d 1261, 1263 (11th Cir. 2003) (per curiam) (vacating order allocating fees in class action suit because “[n]o finding of fact or rationale is provided in the order to aid our understanding of the allocations made”).