Opinion ID: 781228
Heading Depth: 3
Heading Rank: 3

Heading: Incentive Award

Text: 7 Moore's first claim is that the district court erroneously denied him an incentive award. Incentive awards are typically awards to class representatives for their often extensive involvement with a lawsuit. Numerous courts have authorized incentive awards. See Cook v. Niedert, 142 F.3d 1004, 1016 (7th Cir.1998); In re U.S. Bancorp Litig., 291 F.3d 1035, 1038 (8th Cir.), cert. denied, ___ U.S. ___, 123 S.Ct. 108, 154 L.Ed.2d 32 (2002); In re Mego Fin. Corp. Sec. Litig., 213 F.3d at 463; see also In re S. Ohio Corr. Facility, 175 F.R.D. 270, 273 & n. 3 (S.D.Ohio 1997) (collecting cases). These courts have stressed that incentive awards are efficacious ways of encouraging members of a class to become class representatives and rewarding individual efforts taken on behalf of the class. Yet applications for incentive awards are scrutinized carefully by courts who sensibly fear that incentive awards may lead named plaintiffs to expect a bounty for bringing suit or to compromise the interest of the class for personal gain. See 2 Herbert Newberg & Alba Conte, Newburg on Class Actions § 11.38, at 80-81 (3d ed.1992) (noting that [t]he propriety of `incentive' awards to named plaintiffs has been rigorously debated); see also Cohen v. Resolution Trust Corp., 61 F.3d 725, 728 (9th Cir. 1995) (holding that `[w]hen a settlement explicitly provides for preferential treatment for the named plaintiffs in a class action, a substantial burden falls upon the proponents of the settlement to demonstrate and document its fairness') (citation omitted). 8 This court has never explicitly passed judgment on the appropriateness of incentive awards. See In re S. Ohio Corr. Facility, 24 Fed. Appx. 520, 526, 2001 WL 1667267, at  (6th Cir. Dec.26, 2001) (noting that [t]his court has not previously been called upon to approve a grant of incentive awards, and we intimate no view as to the propriety of such awards in general) (footnote omitted). 1 We note that some district courts in our circuit, however, have given incentive awards. See, e.g., Brotherton v. Cleveland, 141 F.Supp.2d 907, 913-14 (S.D.Ohio 2001); In re Revco Sec. Litig., No. 1:89CV0593, 1993 WL 497208, at  (N.D.Ohio Sept.14, 1993); Enter. Energy Corp. v. Columbia Gas Transmission Corp., 137 F.R.D. 240, 251 (S.D.Ohio 1991); In re Dun & Bradstreet Credit Servs. Customer Litig., 130 F.R.D. 366, 373-74 (S.D.Ohio 1990). 9 Although we think there may be circumstances where incentive awards are appropriate, we need not resolve the difficult issue of detailing precisely when they are appropriate — for this case is clearly not a case where an incentive award is proper. As both the district court and the defendants note, incentive awards are usually viewed as extensions of the common-fund doctrine, a doctrine that holds that a litigant who recovers a common fund for the benefit of persons other than himself is entitled to recover some of his litigation expenses from the fund as a whole. See Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 100 S.Ct. 745, 62 L.Ed.2d 676 (1980) (describing the common-fund doctrine); In re S. Ohio Corr. Facility, 175 F.R.D. 270, 273 & n. 3 (S.D.Ohio 1997) (listing cases where incentive awards have been taken out of a common settlement fund). Thus, when a class-action litigation has created a communal pool of funds to be distributed to the class members, courts have approved incentive awards to be drawn out of that common pool. See Enter. Energy Corp., 137 F.R.D. at 251 (approving incentive awards of $50,000 to each of the class representatives out of a settlement fund of $56.6 million); In re Dun & Bradstreet Credit Servs. Customer Litig., 130 F.R.D. at 373-74 (approving incentive awards ranging from $35,000 to $55,000 out of a $18 million settlement fund); Brotherton, 141 F.Supp.2d at 913-14 (granting a $50,000 incentive award out of a $5.25 million fund). Without a common fund, however, there is no place from which to draw an incentive award. Unsurprisingly, we are unable to find any case where a claim for an incentive award that is not authorized in a settlement agreement has been granted in the absence of a common fund. 10 Here there is neither authorization in the consent decree for this incentive award nor a common fund from which it could be drawn. As a result, it is plainly inappropriate to grant an incentive award. We also note that this result comports with our holdings on consent decrees generally. Moore here is essentially asking the defendants to take on the additional burden of an incentive award above and beyond the liabilities they had agreed to in the consent decree settling the lawsuit — for the absence of a common fund here means that Moore would have to obtain the incentive award not from a communal fund belonging to him and his fellow class members, but from the defendants directly. Moore phrases it as merely forcing the defendants to reallocate some of the money from the implementation of the consent decree to his incentive award, but that misses the point. A consent decree, although in effect a final judgment, is a contract founded on the agreement of the parties. Vogel v. City of Cincinnati, 959 F.2d 594, 598 (6th Cir.), cert. denied, 506 U.S. 827, 113 S.Ct. 86, 121 L.Ed.2d 49 (1992). `It should [therefore] be construed to preserve the position for which the parties bargained.' Gonzales v. Galvin, 151 F.3d 526, 531 (6th Cir.1998) (citation omitted). Forcing the defendants to pay the incentive award is certainly an additional expenditure, and it is therefore impermissible. See Lorain NAACP v. Lorain Bd. of Educ., 979 F.2d 1141, 1153 (6th Cir.1992) (holding that an increase of one party's financial obligations under the consent decree beyond [the agreed-upon amount] constitutes an abuse of discretion and cannot stand), cert. denied, 509 U.S. 905, 113 S.Ct. 2998, 125 L.Ed.2d 691 (1993).