0% found this document useful (0 votes)
47 views17 pages

Blackman v. Gascho - Brief of The Attorneys General As Amici Curiae in Support of Petitioners

BRIEF OF THE ATTORNEYS GENERAL OF ALABAMA, ARIZONA, ARKANSAS, COLORADO, GEORGIA, INDIANA, LOUISIANA, MICHIGAN, NEBRASKA, NEVADA, OKLAHOMA, SOUTH CAROLINA, TENNESSEE, TEXAS, WISCONSIN, WEST VIRGINIA, AND WYOMING AS AMICI CURIAE IN SUPPORT OF PETITIONER

Uploaded by

joshblackman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
47 views17 pages

Blackman v. Gascho - Brief of The Attorneys General As Amici Curiae in Support of Petitioners

BRIEF OF THE ATTORNEYS GENERAL OF ALABAMA, ARIZONA, ARKANSAS, COLORADO, GEORGIA, INDIANA, LOUISIANA, MICHIGAN, NEBRASKA, NEVADA, OKLAHOMA, SOUTH CAROLINA, TENNESSEE, TEXAS, WISCONSIN, WEST VIRGINIA, AND WYOMING AS AMICI CURIAE IN SUPPORT OF PETITIONER

Uploaded by

joshblackman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 17

NO.

16-364

In the Supreme Court of the United States


JOSHUA BLACKMAN,
v.

Petitioner,

AMBER GASCHO, ON BEHALF OF HERSELF AND ALL OTHERS


SIMILIARLY SITUTATED, ET AL.,
Respondents.

On Petition for Writ of Certiorari to the United States


Court of Appeals for the Sixth Circuit
BRIEF OF THE ATTORNEYS GENERAL OF ALABAMA,
ARIZONA, ARKANSAS, COLORADO, GEORGIA, INDIANA,
LOUISIANA, MICHIGAN, NEBRASKA, NEVADA,
OKLAHOMA, SOUTH CAROLINA, TENNESSEE, TEXAS,
WISCONSIN, WEST VIRGINIA, AND WYOMING AS
AMICI CURIAE IN SUPPORT OF PETITIONER
MARK BRNOVICH
Attorney General
ORAMEL H. SKINNER
Counsel of Record
PAUL N. WATKINS
BRUNN W. ROYSDEN III
DANA R. VOGEL
OFFICE OF THE ARIZONA
ATTORNEY GENERAL
1275 W. Washington St.
Phoenix, AZ 85007
(602) 542-5025
[email protected]
Counsel for Amici Curiae
[Additional Counsel Listed on Inside Cover]
Becker Gallagher Cincinnati, OH Washington, D.C. 800.890.5001

LUTHER STRANGE
ALABAMA ATTORNEY GENERAL

E. SCOTT PRUITT
ATTORNEY GENERAL OF OKLAHOMA

LESLIE RUTLEDGE
ATTORNEY GENERAL OF ARKANSAS

HERBERT H. SLATERY III


ATTORNEY GENERAL AND
REPORTER OF TENNESSEE

P.O. Box 300152


Montgomery, AL 36130

323 Center Street, Suite 200


Little Rock, AR 72201

313 N.E. 21st Street


Oklahoma City, OK 73105

425 5th Avenue North


Nashville, TN 37202

CYNTHIA H. COFFMAN
ATTORNEY GENERAL OF COLORADO ALAN WILSON
1300 Broadway, 10th Floor
ATTORNEY GENERAL
FOR SOUTH CAROLINA
Denver, CO 80203
SAMUEL S. OLENS
ATTORNEY GENERAL OF GEORGIA
40 Capitol Square, SW
Atlanta, GA 30334

GREGORY F. ZOELLER
ATTORNEY GENERAL OF INDIANA
302 W. Washington Street
Indianapolis, IN 46204

JEFF LANDRY
LOUISIANA ATTORNEY GENERAL
P.O. Box 94005
Baton Rouge, LA 70804

BILL SCHUETTE
MICHIGAN ATTORNEY GENERAL
P.O. Box 30212
Lansing, MI 48909

P.O. Box 11549


Columbia, SC 29211

KEN PAXTON
ATTORNEY GENERAL OF TEXAS
P.O. Box 12548 (MC 059)
Austin, TX 78711

PATRICK MORRISEY
ATTORNEY GENERAL
OF WEST VIRGINIA

State Capitol, Bldg 1


Room E-26
Charleston, WV 25305

BRAD D. SCHIMEL
ATTORNEY GENERAL OF WISCONSIN
17 W Main Street
P.O. Box 7857
Madison, WI 53703

DOUGLAS J. PETERSON
PETER K. MICHAEL
ATTORNEY GENERAL FOR NEBRASKA ATTORNEY GENERAL OF WYOMING
2115 State Capitol
Lincoln, NE 68509

ADAM PAUL LAXALT


ATTORNEY GENERAL OF NEVADA
100 North Carson Street
Carson City, NV 89701

2320 Capitol Avenue


Cheyenne, WY 82002

i
TABLE OF CONTENTS
TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . ii
INTEREST OF AMICI CURIAE . . . . . . . . . . . . . . . 1
SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . 2
ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
I.

THE QUESTION PRESENTED IS IMPORTANT AND


A FFECTS F EDERAL L ITIGATION UNDER
NUMEROUS FEDERAL AND STATE STATUTES . . 4
A. The Decision Goes To A Fundamental
ConsiderationAppropriate Division of
Proceeds Between the Class and Class
CounselThat Is Relevant To Resolution
of Class Actions Nationwide . . . . . . . . . . . 4

II.

THE COURTS GUIDANCE IS NEEDED TO


RESOLVE CONFUSION AMONG THE LOWER
COURTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
A. The Sixth Circuit Confirmed A Clear
Circuit Split . . . . . . . . . . . . . . . . . . . . . . . . 6
B. The Sixth Circuits Approach Is On The
Wrong Side Of The Split And Out Of Step
With The Tide Of Case Law . . . . . . . . . . . 8
C. A Circuit Split On This Issue Is
Particularly Harmful To Consumers . . . 10

III.

THE COURT SHOULD ESTABLISH A UNIFORM


S TANDARD T HAT A LIGNS WIT H THE
EXACTING APPROACH APPLIED IN THE
SEVENTH CIRCUIT . . . . . . . . . . . . . . . . . . . . . 11

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ii
TABLE OF AUTHORITIES
CASES
Allen v. Bedolla,
787 F.3d 1218 (9th Cir. 2015) . . . . . . . . . . . . . 7, 9
Amchem Products, Inc. v. Windsor,
521 U.S. 591 (1997) . . . . . . . . . . . . . . . . . . . . . . . 8
In re Baby Product Antitrust Litigation,
708 F.3d 163 (3d Cir. 2013) . . . . . . . . . . . . . . . . . 7
In re Bluetooth Headset Products Liability
Litigation, 654 F.3d 935 (9th Cir. 2011) . . . . . 8, 9
In re Capital One Telephone Consumer Protection
Act Litigation,
80 F. Supp. 3d (N.D. Ill. 2015) . . . . . . . . . . . . . . . 6
In re Cendant Corporation Litigation,
264 F.3d 201 (3d Cir. 2001) . . . . . . . . . . . . . . . . . 9
Gehrich v. Chase Bank USA, N.A.,
No. 12-5510, --- F.R.D. ---, 2016 WL 806549
(N.D. Ill. Mar. 2, 2016) . . . . . . . . . . . . . . . . . . . . . 6
Grant v. Bethlehem Steel Corporation,
823 F.2d 20 (2d Cir. 1987) . . . . . . . . . . . . . . . . . . 8
In re HP Inkjet Printer Litigation,
716 F.3d 1173 (9th Cir. 2013) . . . . . . . . . . . . . . . 8
Johnston v. Comerica Mortgage Corporation,
83 F.3d 241 (8th Cir. 1996) . . . . . . . . . . . . . . . 4, 5
Masters v. Wilhelmina Model Agency, Inc.,
473 F.3d 423 (2d Cir. 2007) . . . . . . . . . . . . . . . . . 8
Pearson v. NBTY, Inc.,
772 F.3d 778 (7th Cir. 2014) . . . . . . . . . 6, 7, 9, 11

iii
Redman v. RadioShack Corporation,
768 F.3d 622 (7th Cir. 2014) . . . . . . . . . . . . . . . . 6
Reynolds v. Beneficial National Bank,
288 F.3d 277 (7th Cir. 2002) . . . . . . . . . . . . . . . . 9
Silber v. Mabon,
957 F.2d 697 (9th Cir. 1992) . . . . . . . . . . . . . . . . 8
In re Southwest Airlines Voucher Litigation,
799 F.3d 701 (7th Cir. 2015) . . . . . . . . . . . . . . . . 5
In re TJX Companies Retail Sec. Breach Litigation,
584 F. Supp. 2d 395 (D. Mass. 2008) . . . . . . . . . 11
Taylor v. Sturgell,
553 U.S. 880 (2008) . . . . . . . . . . . . . . . . . . . . . . . 8
Waters v. International Precious Metals Corporation,
190 F.3d 1291 (11th Cir. 1999) . . . . . . . . . . . . . . 8
STATUTES
28 U.S.C. 1715 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
OTHER AUTHORITIES
Robert G. Bone & David S. Evans, Class
Certification and the Substantive Merits, 51
DUKE L.J. 1251 (2002) . . . . . . . . . . . . . . . . . . . . . 4
William D. Henderson, Clear Sailing Agreements: A
Special Form of Collusion in Class Action
Settlements, 77 TUL. L. REV. 813 (2003) . . . . . . . 5
5 William B. Rubenstein, NEWBERG ON CLASS
ACTIONS (5th ed. 2014) . . . . . . . . . . . . . . . . . . 7, 8
S. REP. 109-14, 2005 U.S.C.C.A.N. 3 . . . . . . . . . . . . 1
7B Wright & Miller, Federal Practice & Procedure
1803.1 (3d ed.) . . . . . . . . . . . . . . . . . . . . . . . . . . 7

1
INTEREST OF AMICI CURIAE1
Amici are their respective states chief law
enforcement or chief legal officers and hold authority to
file briefs on behalf of their offices.
Amicis interest arises from two responsibilities.
First, amici have an overarching responsibility to protect
citizens in their roles as chief law enforcement or chief
legal officers. Second, amici have a responsibility to
protect consumers who are members of class actions
under the Class Action Fairness Act of 2005, 28 U.S.C.
1711 et seq., which envisions a role for Attorneys
General in the approval process of proposed class action
settlements. See 28 U.S.C. 1715; see also S. REP. 10914, 2005 U.S.C.C.A.N. 3, 6 (requirement that notice of
class action settlements be sent to appropriate state and
federal officials, is there so that they may voice
concerns if they believe that the class action settlement
is not in the best interest of their citizens.); id. at 34
(notifying appropriate state and federal officials ... will
provide a check against inequitable settlements; Notice
will also deter collusion between class counsel and
defendants to craft settlements that do not benefit the
injured parties.).
Amici submit this brief to further these interests,
speaking on behalf of citizen consumers who will be
harmed if the rule established below (and the circuit
split it lays bare) stands.
1

Pursuant to Rule 37.6, amici certify that no parties counsel


authored this brief, and no person or party other than named amici
or their offices made a monetary contribution to this briefs
preparation or submission. Counsel of record for all parties
received notice of amicis intent to file at least ten days prior to this
briefs due date and have given written consent.

2
SUMMARY OF ARGUMENT
Certiorari is warranted because the issue raised
relates to a broad category of cases under numerous
state and federal statutes. Establishing a highly
deferential standard of review, the Sixth Circuit held
that in the class action settlement context it was
permissible for class counsel fee awards to be almost
twice the size of the payout made to class members.
The Sixth Circuit concluded that money from a
common settlement fund that was never disbursed to
class members (but instead reverted to the defendant
after the claims period) nonetheless was a sufficient
monetary class benefit to count in the balancing of the
class counsel fee awards reasonableness.
The Courts guidance is needed because this is an
independently important issue that is core to properly
resolving class actions across the country. Moreover,
the Courts involvement here and now is of heightened
importance because the Sixth Circuits approach is
(1) in direct contravention to the Seventh Circuits
approach and (2) out of step with the growing
recognition that courts must take a more active role in
policing common fund class action settlements to
ensure that the threat of economically rational
collusion between defendants and class counsel
(whether overt or tacit) does not reduce class awards in
favor of attorneys fees.
The Sixth Circuits approach places consumers
nationwide at risk (including citizens in states
represented by amici) by laying bare a split amongst
the circuits and blessing a class action fee arrangement
that allows class counsel and defendants to reach a
mutually beneficial settlement arrangement to the

3
detriment of class members. Given the nature of
nationwide class action litigation, and the ability of
class counsel to forum shop cases, even one circuit
applying an under-protective standard to class action
settlements will detrimentally affect consumers across
the nation and undercut any efforts (by amici or others)
to protect consumers in other circuits.
The petition presents an ideal vehicle for the Court
to address the important question presented. The
record is clear, the legal conclusions straightforward,
and resolution of the circuit split will control as to the
validity of the settlement. Moreover, there is urgency
because the circuit split, if left unresolved, threatens to
harm citizens nationwide by leaving them susceptible
to attorneys bargaining away their rights and claims
for insufficient return in districts far from their home,
where inadequate judicial scrutiny may be applied on
their behalf.2

Amicis interest is limited to the attorneys fees issue and its


effect on their states citizens and the overall fairness of the
settlement; amici take no position on the merits of the underlying
claims. Furthermore, amici speak only to the issue presented: how
to weigh fees in connection with purely monetary, claims-made
settlements. Amici do not address the alternative settlement
scenarios wherein courts determine that valuable injunctive relief
warrants a greater attorneys fee award or settlement funds are
non-reversionary.

4
ARGUMENT
I.

THE QUESTION PRESENTED IS IMPORTANT


AND AFFECTS FEDERAL LITIGATION UNDER
NUMEROUS FEDERAL AND STATE STATUTES
A. The Decision Below Goes To A
Fundamental Consideration
Appropriate Division of Proceeds
Between the Class and Class Counsel
That Is Relevant To Resolution of Class
Actions Nationwide

The issue presented by Petitionerproper


calculation and approval of attorneys fees out of
claims-made common fund settlementsgoes to the
core of how class action litigation under almost any
statute (state or federal) should proceed and conclude.
Class actions are largely resolved through settlement.
See Robert G. Bone & David S. Evans, Class
Certification and the Substantive Merits, 51 DUKE L.J.
1251, 1285 (2002) (noting that most class action suits
settle, and gathering supporting sources as to same).
And in dividing the proceeds of such settlements, the
interests of class counsel and class members sharply
diverge. See infra Section II.B. Class counsel has an
incentive to obtain the maximum possible fee award,
but that fee almost invariably comes directly out of the
class members pockets. Ultimately, [a]lthough under
the terms of each settlement agreement[] attorney[s]
fees technically derive from the defendant rather than
out of the class recovery, in essence the entire
settlement amount comes from the same source.
Johnston v. Comerica Mortg. Corp., 83 F.3d 241, 246
(8th Cir. 1996).

5
Defendants are no help in policing these deals or
counterbalancing the conflict between class counsel and
the class. [A] defendant who has settled a class action
lawsuit is ultimately indifferent to how a single lumpsum payment is apportioned between the plaintiffs
attorney and the class. William D. Henderson, Clear
Sailing Agreements: A Special Form of Collusion in
Class Action Settlements, 77 TUL. L. REV. 813, 820
(2003). To a defendant, the fee award and the class
award represent a package deal, Johnston, 83 F.3d at
246, with the defendant ultimately interested only in
the bottom line: how much the settlement will cost
him, In re Southwest Airlines Voucher Litig., 799 F.3d
701, 712 (7th Cir. 2015).
Therefore, given the conflicts inherent in the
settlement process and the economic considerations
present, setting the appropriate judicial dividing line
between proper compensation of class counsel and
unjust enrichment at the expense of the class is a
crucial issue of broad and paramount importance.
Exacting judicial standards for review of class action
fee arrangements and robust application of such
standards are the key judicial safeguards that ensure
just resolution of cases and the proper protection of
class members rights.

6
II.

THE COURTS GUIDANCE IS NEEDED TO


RESOLVE CONFUSION AMONG THE LOWER
COURTS
A. The Sixth Circuit Confirmed A Clear
Circuit Split

In approving the settlement below (in which class


counsel obtained $2.4 million against a $1.6 million
payout to class members) and establishing a relaxed
standard of review for future attorneys fee awards in
common fund claims-made settlements, the Sixth
Circuit put itself squarely at odds with the Seventh
Circuits mandate on the same issue. Contrary to the
Sixth Circuits approach, the Seventh Circuit, largely
through the opinions of Judge Posner, has taken a hard
line against counting any money not directly provided
to a class member in the calculation of allowable class
counsel fee awards. It is well established in the
Seventh Circuit that [t]he ratio that is relevant [to the
review of the class counsel fee award] is the ratio of
(1) the fee to (2) the fee plus what the class members
received. Redman v. RadioShack Corp., 768 F.3d 622,
630 (7th Cir. 2014); see also Pearson v. NBTY, Inc., 772
F.3d 778, 781 (7th Cir. 2014); In re Capital One
Telephone Consumer Protection Act Litig., 80 F. Supp.
3d 781, 795 (N.D. Ill. 2015); Gehrich v. Chase Bank
USA, N.A., No. 12-5510, --- F.R.D. ---, 2016 WL 806549,
at *1, *14 (N.D. Ill. Mar. 2, 2016).
Indeed, in rejecting the exact approach taken by the
Sixth Circuit below, Judge Posner and the Seventh
Circuit have explained that, in a similarly structured
settlement, attorneys fees represented not 9.6 percent
of the aggregate value [disbursed] but an outlandish 69
percent. NBTY, 772 F.3d at 781. Had the case below

7
proceeded in the Seventh Circuit, class counsel would
have been limited to an award closer to $800,000 or $1
million, instead of receiving approval for a multimillion dollar fee award. Cf. id.
The Ninth Circuit recently echoed the Seventh
Circuit in addressing a similar settlement. Explicitly
examining the proposed attorneys fee award in terms
of economic reality, the Ninth Circuit determined
that a $1.25 million award, which represent[ed] 25%
of the fund created by the settlement, could not stand
in the absence of valuable injunctive relief and a
searching review by the district court because at most
$373,675 was to be disbursed to the class in monetary
relief, meaning the proposed fee award exceed[ed] the
maximum possible amount of class monetary relief by
a factor of three. Allen v. Bedolla, 787 F.3d 1218, 1224
n.4, 1224-1225 (9th Cir. 2015).
As experts in the field of class actions have noted,
there is a divide amongst courts and commentators on
this important issue of how to measure class action
settlements and review fee awards where the common
fund ultimately reverts to the defendant. See, e.g.,
5 William B. Rubenstein, NEWBERG ON CLASS ACTIONS
15:70 (5th ed. 2014) (noting open divide amongst
courts and commentators); 7B Wright & Miller, Federal
Practice & Procedure 1803.1 (3d ed.) (noting
divergent approaches). The Sixth Circuits approach is
in direct conflict with the Seventh Circuit and in
tension with the Fifth and Ninth Circuit approaches.
Meanwhile, other courts have taken positions that fall
on both sides of the issue. See, e.g., In re Baby Prod.
Antitrust Litig., 708 F.3d 163, 179 (3d Cir. 2013)
(noting importance of looking to the actual
distribution of funds that will result from the claims

8
process); Masters v. Wilhelmina Model Agency, Inc.,
473 F.3d 423, 437 (2d Cir. 2007) (noting split of
authority amongst courts; agreeing with treating
whole fund as basis for fee); Waters v. Intl Precious
Metals Corp., 190 F.3d 1291, 1297 (11th Cir. 1999)
(applying a case-by-case standard of review and
approving treatment of entire fund as basis for fee
award). This divide will continue unabated until the
full Supreme Court resolves the issue. NEWBERG
15.70 (5th ed. 2014).
B. The Sixth Circuits Approach Is On The
Wrong Side Of The Split And Out Of
Step With The Tide Of Case Law
[T]he Rule 23(e) inquiry protects unnamed class
members from unjust or unfair settlements agreed to
by fainthearted or self-interested class
representatives. Amchem Prods., Inc. v. Windsor, 521
U.S. 591, 594 (1997). Courts have long recognized
that settlement class actions present unique due
process concerns for absent class members. In re
Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935,
946 (9th Cir. 2011); see also Taylor v. Sturgell, 553 U.S.
880, 901 (2008) (Rule 23 protections are grounded in
due process). Indeed, while [c]lass counsel are duty
bound to represent the best interests of class
members, the interests of class members and class
counsel nearly always diverge[.] In re HP Inkjet
Printer Litig., 716 F.3d 1173, 1178 (9th Cir. 2013). It
is for this reason that, [i]n approving a proposed class
action settlement, the district court has a fiduciary
responsibility to ensure that the settlement is fair and
not a product of collusion. Grant v. Bethlehem Steel
Corp., 823 F.2d 20, 22 (2d Cir. 1987); see also Silber v.
Mabon, 957 F.2d 697, 701 (9th Cir. 1992); Reynolds v.

9
Beneficial Nat. Bank, 288 F.3d 277, 279-280 (7th Cir.
2002); In re Cendant Corp. Litig., 264 F.3d 201, 231 (3d
Cir. 2001).
Heeding this obligation, the tide of opinions across
the country has been toward more searching and
skeptical review of class action settlements that appear
to serve defendants and class counsel over the interests
of the class. See, e.g., Allen, 787 F.3d at 1224
(vacat[ing] final settlement approval and remand[ing]
so that the district court may conduct a more searching
inquiry in light of indications that settlement was
product of possible implicit collusion); NBTY, 772
F.3d at 787 (noting shift in recent years toward more
skepticism of class action settlements as judges have
accrued much more experience with class actions and
have learned that class action settlements are often
quite different from settlements of other types of
cases); In re Bluetooth, 654 F.3d at 938 (remand[ing]
so that the district court may conduct a more searching
inquiry into the fairness of the negotiated distribution
of funds, given that the disparity between the value
of the class recovery and class counsels compensation
raises at least an inference of unfairness).
Wholly out of step with this tide in the case law, the
framework established by the Sixth Circuit below
reduces scrutiny of class action fee awards. In lieu of
taking a more realistic look at the value of the
settlement to class members (as other courts are
doing), the Sixth Circuits approach accepted the
synthetic value arguments propounded by class counsel
and the defendant. By diverting in this way from the
growing tide of case law in other courts and approving
a settlement that awarded class counsel the vast
majority of the settlement payout, the Sixth Circuits

10
approach sends a clear message to class counsel and
defendants across the country and an open invitation
for forum shopping.
C. A Circuit Split On This Issue Is
Particularly Harmful To Consumers
If left unchecked, the conflicting approaches taken
by the circuits toward this fee calculation issue will
result in significant harm to consumers nationwide.
Class actions are often national in scope. Therefore,
there is significant risk that class counsel will forum
shop cases into the Sixth Circuit or other circuits that
take less rigorous approaches to the review of fee
awards in claims-made common fund settlements.
This will undermine the protections usually afforded by
our system of divided appellate jurisdiction. By
choosing a forum favorable to their own interests
(rather than their class clients interest) class counsel
will be able to obtain a favorable set of fee review
standards. At the same time, by using the class action
mechanism, class counsel will lock in class members
from across the nation, including those residing in
circuits with substantially more robust protections for
class members (e.g., the Seventh and Ninth Circuits).
As advocates on behalf of their citizen consumers
(and likely future class members), especially in the
class action settlement context, amici respectfully urge
the Court to grant certiorari and establish a uniform
standard on this issue. Amici cannot adequately
protect their citizens when certain circuits split with
the prevailing trend of the law by lowering the
standard being applied to claims-made common fund
settlements, thereby opening the floodgates for
potentially class-harming litigation tactics.

11
III.

THE COURT SHOULD ESTABLISH A UNIFORM


STANDARD THAT ALIGNS WITH THE EXACTING
APPROACH APPLIED IN THE SEVENTH CIRCUIT

Upon granting certiorari, the Court should mandate


that lower courts look beyond the maximum theoretical
common fund distribution in claims-made settlements,
and instead calculate the validity of attorneys fees off
of disbursements actually made to the class.
This approach will not just best recognize the
conflicts inherent in these settlements; it will also
lessen the burden on the entire class action system
(including the courts) by better aligning the interests of
class counsel and class members. Incentivizing class
counsel and defendants to settle these cases in a way
that maximizes disbursements to the class will lower
the risk of economically rational collusion (explicit or
implicit) between class counsel and defendants. This
will help alleviate one of the chief concerns courts
historically have had with such settlements. See supra
Section II.B. While putting in place these formal limits
on settlement
may not instantaneously or completely resolve
the problems that currently inhere in this type
of litigation, tying the award of attorneys fees to
claims made by class members is one step that
judges can take toward repair. This approach
will not only encourage more realistic settlement
negotiations and agreements, but also will drive
class counsel to devise ways to improve how
class action suits and settlements operate.
In re TJX Companies Retail Sec. Breach Litig., 584
F. Supp. 2d 395, 406 (D. Mass. 2008); see also NBTY,
772 F.3d at 781 (Basing the award of attorneys fees

12
on [the ratio of fees to the fees plus what class
members actually receive] gives class counsel an
incentive to design the claims process in such a way as
will maximize the settlement benefits actually received
by the class).
CONCLUSION
The petition for certiorari should be granted.
Respectfully submitted,
MARK BRNOVICH
Attorney General
ORAMEL H. SKINNER
Counsel of Record
PAUL N. WATKINS
BRUNN W. ROYSDEN III
DANA R. VOGEL
OFFICE OF THE ARIZONA
ATTORNEY GENERAL
1275 W. Washington St.
Phoenix, AZ 85007
(602) 542-5025
[email protected]
Counsel for Amici Curiae

You might also like