Percentage of Common Fund Not Dispositive, But Cross-Check Showed Fees As Measured By Value Of Claims Was Still Within the Ballpark.
In Litwin v. iRenew Bio Energy Solutions, LLC, Case No. B248759 (2d Dist., Div. 1 May 28, 2014) (partially published; fee discussion not published), a class action settlement in a false advertising case produced a common fund of up to $1.3 million and a fees/costs award to class counsel of $215,000 (a .852 negative multiplier for granted fees of $209,778.86 as compared to a total amount of fees actually expended in the amount of $246,206.25). After the lower court approved the class action settlement, an objector appealed.
The final approval judgment was reversed based on a due process notice issue relating to objectors (the published portion of the decision).
However, the fee award was not overturned in an unpublished section of the opinion. Objector argued that the fee award was excessive given that it was 31% of the value of the class members’ claims. The appellate court found no abuse of discretion because the percentage of a common fund recovery is at best a “cross check” on the lodestar/multiplier method in California state courts. (Lealao v. Beneficial California, Inc., 82 Cal.App.4th 19, 45 (2000).) However, even such a “cross check” showed the fees award constituted only 16.5% of the total fund potentially available under the settlement agreement, well within the range of acceptable fee awards. Going even further, a comparison of the fee award to the value of the class claims produced the 31% figure which was within the realm of empirical studies showing fee awards in class actions average around one-third of the recovery no matter whether awarded under the percentage or lodestar method. (Chavez v. Netflix, Inc., 162 Cal.App.4th 43, 66 n. 11 (2008).)
Justice Chaney penned this one on behalf of a 3-0 panel.