The California Supreme Court has decided to grant review in Laffitte v. Robert Half International (Brennan) (2014) 180 Cal.Rptr.3d 136. The case addresses whether, under Serrano v. Priest (1977) 20 Cal.3d 25, the trial court can anchor its calculation of reasonable attorney's fees in a class action on a percentage of the common fund recovered. The Court of Appeal said yes. You can read the underlying opinion at this link.
The objection was based on eight points: (1) the attorneys’ fee request was excessive; (2) “[m]oney to charity should not be a part of the Court’s attorneys’ fee award calculation”; (3) information necessary for class members to intelligently object to or comment on the proposed settlement was missing from the notice and the pleadings; (4) the clear sailing provision warranted the appointment of a class guardian; (5) the notice to the class was deceptive regarding the responsibility for payment of attorneys’ fees; (6) class counsel and counsel for Robert Half had not filed a report, as required by the amended settlement agreement; (7) the notice did not disclose that unclaimed funds would be donated to a charity of the Robert Half defendants’ choice; and (8) certain other provisions of the settlement were improper.
The plaintiffs' counsel argued that they had sent class notices to 3,996 class members and had received only two objections: an objection from Brennan and an “objection” that was actually a dispute over the amount the individual class member was to receive. The class representatives also filed a motion for attorneys’ fees, costs, and class representative enhancements. The motion requested $6,333,333.33 in attorneys’ fees for class counsel, $127,304.08 in costs, $79,000 in settlement administrator expenses, and $80,000 in class representative enhancement payments. The class representatives explained that class counsel were requesting as attorneys’ fees one-third of the gross settlement, which constituted a common fund for the benefit of class members, and argued that this amount was reasonable and appropriate. Class counsel asserted that their hourly rates and number of hours worked were fair and reasonable and that the successful result, the difficulty of the issues in the case, the quality of their representation, the contingency risk, and the preclusion of other employment justified a lodestar multiplier.
The trial court overruled his objections and approved the settlement, which included an award of attorneys’ fees to class counsel of one-third of the settlement, or approximately $6.3 million. Brennan appeals from the order approving the settlement and entering final judgment, challenging both the class action settlement notice regarding the award of attorneys’ fees and the amount of attorneys’ fees awarded.
The Court of Appeal affirmed.
"As discussed, class counsel received a percentage of the recovery commensurate with percentages awarded in other cases, and the class members received a significant monetary distribution. The clear sailing agreement did not provide for a payment of attorneys’ fees separate and apart from the common fund but provided for a payment of attorneys’ fees out of the fund. Finally, there was no arrangement that fees not awarded would revert to the Robert Half defendants. (See In re Toys “R” Us-Delaware, Inc.—Fair and Accurate Credit Transactions Act (FCTA) Litigation (C.D.Cal. 2014) 295 F.R.D. 438, 458 [“despite the clear sailing provision,” the “absence of a ‘kicker provision’ in the parties’ settlement and the fact that the class is receiving reasonable value reduces the likelihood that plaintiffs and [the defendant] colluded to confer benefits on each other at the expense of class members”]; Larsen v. Trader Joe’s Company (N.D.Cal. 2014) 2014 WL 3404531 at p. 8 [“clear sailing provisions generally do not raise concerns where, as here, the fees are to come from the settlement fund,” as opposed to “where attorneys’ fees are paid on top of the settlement fund”].) In the absence of any of the recognized warning signs of collusion or other evidence of collusion, the inclusion of a clear sailing provision in the settlement agreement did not constitute a breach of fiduciary duty on the part of class counsel."
All seven justices signed the order granting review.