Rachel Threatt v. Ryan Thomas Farrell, et al.

A court may award class-action plaintiffs “reasonable attorney’s fees” under Fed. R. Civ. Proc. 23(h). In interpreting this phrase in statutory contexts, this Court has disavowed “setting attorney’s fees by reference to a series of sometimes subjective factors that place unlimited discretion in trial judges and produce disparate results” and required fees tied to lodestar. Perdue v. Kenny A., 559 U.S. 542, 551 (2010) (cleaned up) (rejecting a 1.75 multiplier of lodestar). Here, plaintiffs settled class-action litigation over the legality of $35 overdraft fees charged by Bank of America. The settlement would refund class members around $1.07 for each $35 fee they had paid. The district court awarded $14.5 million in fees from class members’ recovery. By class counsel’s own calculations, this award was for at most 2,158 hours of work, a rate of over $6,700 an hour, a multiplier of more than ten times lodestar. The district court held that it did not have to consider the lodestar in awarding a reasonable fee, and so it would not. After objecting class members appealed, the Ninth Circuit affirmed in a 2-1 decision, holding that a district court does not have to consider the lodestar in awarding reasonable fees under Rule 23(h). The Second, Third, Fifth, and Sixth Circuits disagree. The Ninth Circuit’s decision in this case thus continues a circuit split on this issue. The question presented is: Whether, and to what degree, a district court must consider counsel’s lodestar in awarding “reasonable attorney’s fees” under Rule 23(h).