Award of more than $10M in attorneys’ fees not excessive

Where plaintiffs’ counsel were awarded more than $10 million in attorneys’ fees for their role in settling a class action arising out of Lumber Liquidators’ sale of allegedly defective flooring products, objectors failed to show that the award was excessive and violative of the Class Action Fairness Act of 2005 or CAFA.

Background

In these consolidated appeals, Diana Cantu-Guerrero and Brice M. Johnston  challenge — for the second time — the district court’s award of attorneys’ fees in association with a class-action settlement. The underlying 2018 settlement related to Lumber Liquidators Inc.’s sale of defective laminate flooring products provided class members with $22 million in cash relief as well as store vouchers with a defined face value of $14 million. The district court awarded the lawyers for the MDL class members $10.08 million in attorney’s fees, to be paid from the $22 million cash fund.

This court affirmed the district court’s approval of the settlement, but vacated the court’s order awarding attorneys’ fees because the court had failed to calculate the fees in accord with the “coupon” settlement provisions of CAFA. On remand, the court again awarded class counsel $10.08 million in fees.

Lodestar

This court previously observed a split of authority regarding whether CAFA authorizes use of the lodestar method in calculating attorneys’ fees where “coupon” relief makes up part of a class-action settlement. On remand, the district court concluded that the statute does sanction that approach. The court’s determination on that point is well supported by the text of CAFA and decisions of several courts of appeals. This court agrees with that prevailing interpretation of CAFA and thus approves the district court’s determination that 28 U.S.C. § 1712(b) allowed it to apply the lodestar method in this litigation.

Merits

The objectors assert that the court erred by considering the Lumber Liquidators vouchers as part of the “success obtained” for the plaintiff classes without “looking behind” the vouchers to determine their actual value, based on “coupon” redemption rates — and the objectors submit that value is $0, insofar as class counsel declined to present evidence regarding voucher redemption rates.

Certainly § 1712(a) explicitly requires that, when a court opts to “attribute” — in whole or in part — its award of attorneys’ fees to “coupon” relief provided in a settlement by using the percentage-of-recovery method, the fee calculation must be based on “the value to class members of the coupons that are redeemed.” The alternative allowance of the lodestar method in § 1712(b), however, contains no such directive. Moreover, the objectors overread the decisions that they rely on in support of their position, and those cases also stand apart from this one by virtue of the type of settlement relief involved.

There is accordingly no express requirement — in this circuit or elsewhere — to consider “coupon” redemption rates in assessing the “success obtained” by class counsel as part of a lodestar analysis under CAFA. Rather, a district court applying the lodestar approach must carefully contemplate the makeup of the settlement at hand in deciding whether the calculated lodestar award is reasonable, and that judgment is committed to the court’s discretion. Here, the district court made a sufficiently perceptive assessment of “the Settlement as a whole” in determining that the “success obtained for the class” justified the reduced lodestar award of $10.08 million in fees.

The objectors also argue that the $10.08 million attorneys’ fees award is excessive and violative of CAFA insofar as it represents 45.8% of the $22 million cash fund and exceeds the $9.9 million in cash remaining for distribution to the MDL class members. This court previously considered and rejected substantially this very position. Moreover the objectors fail in these proceedings to demonstrate that the district court’s award of fees is unreasonable or runs afoul of CAFA in any respect.

Finally, the objectors maintain that the district court erred in awarding $10.08 million in attorneys’ fees because the settlement agreement limits an award of attorneys’ fees to 33.33% of the settlement fund, and that amount is more than 33.33% of $22 million. This ignores that the term “Settlement Fund,” includes “$14 million in Store-credit Vouchers.” The district court’s award of $10.08 million in fees constitutes 28% of the $36 million Settlement Fund.

Affirmed.

In re: Lumber Liquidators Chinese-manufactured flooring products marketing, sales practices and products liability litigation, Case Nos. 20-2036, 20-2037, March 3, 2022. 4th Cir. (King), from EDVA at Alexandria (Trenga). N. Albert Bacharach Jr. and Robert William Clore for Appellants. Steven J. Toll for Appellees. VLW 022-2-062. 32 pp.