Richard Estle Carson, III v. Kathryn Hyland, et al.

“Since the decisions in Trustees v. Greenough, 105 U.S. 527 (1882), and Central Railroad & Banking Co. v. Pettus, 113 U.S. 116 (1885), this Court has recognized consistently that a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980). Any additional payment to compensate representative plaintiffs for their own “personal services” on behalf of a class is both “decidedly objectionable” and “illegally made.” Greenough, 105 U.S. at 537-38. A representative plaintiff’s “claim to be compensated, out of the fund ... for his personal services” was “rejected as unsupported by reason or authority.” Pettus, 113 U.S. at 122. Nonetheless, in the late 1980s lower courts began approving “incentive awards” or “service awards” to compensate representative plaintiffs for their personal service in connection with Rule 23 class-action settlements. Such awards have become commonplace. But the circuits have divided on their propriety. The Eleventh Circuit holds “Supreme Court precedent prohibits incentive awards.” Johnson v. NPAS Solutions, 975 F.3d 1244, 1255 (11th Cir.2020). The First, Second, and Ninth Circuits reject that conclusion, holding this Court’s foundational commonfund precedents inapplicable to Rule 23 class actions. The question presented is: Does Rule 23 abrogate this Court’s holdings that payments in common-fund class actions to compensate representative plaintiffs for their personal services are inequitable, “illegal,” and “decidedly objectionable”?