In Villa v. United Site Services of Cal., Inc., Case No. 12-CV-00318-LHK (N.D. Cal. Nov. 27, 2013) (Order Denying Without Prejudice Motion for Preliminary Approval of Settlement), U.S. District Judge Lucy H. Koh, in a FLSA settlement, denied preliminary approval of a $349,676.30 settlement fund for class members where attorneys were requesting fees of $220,000 and costs of $51,176.30—78% of the total settlement fund. The district court was disturbed that this was way above the 25% benchmark used to evaluate the reasonableness of fee awards. We link to a copy of the district judge’s order in case you want to independently review it.
Interestingly, a defense oriented firm posted a blog (Baker Hostetler Employment Class Action Blog, 12/18/13 post by Greg Mersol) did question whether using percentages as a yardstick for class action fees was justified when (1) small amounts were in dispute per claimant, and (2) complex issues were involved. Here are the concluding remarks on the blog: “Class actions can be complicated things. So, too, their settlements. It’s easy to scoff at an award such as that sought in Villa (I did, too, before I started delving into the facts), but the real issue is whether, under the circumstances, the fee is reasonable. Percentages are easy, but they are a rough yardstick at best, particularly at the extremes.”