Class Representative Enhancements

Most class action settlements include a provision establishing an enhanced settlement share for the class representatives, who take all of the risk, and incur most of the time, pursuing the rights of their class. The case law discussing the standards for such an award is quite scant. Last month, in Edelist v. First USA Bank, the 4th District issued an unpublished opinion dealing with the objections of one Rosie Ross, who complained about certain class action settlement terms and attorney's fees in a consumer class action. The opinion did not address class representative enhancements, but apparently, the objector wanted those discussed, too. Hence, this week, the 4th District added a section to their opinion, still unpublished, discussing the representative's incentive award.

Edelist requested an incentive award of $5000. In a footnote in her preliminary opposition, the objector argued there was no justification or support for the award. The trial court agreed, noting that "Counsel has not offered any evidence justifying the $5000.00 incentive award. There is no indication Mr. Edelist participated in this litigation whatsoever (with the exception of lending his name to the caption)." The trial court then reduced the award to $2500 (a common order in Orange County). The 4th District said that "the trial court apparently felt the $2500 incentive award was an appropriate amount for a plaintiff lending his name to the caption in this case, and held that the case law, though scant, supports the trial court’s conclusion. Here is what the court noted about that case law:

In Staton v. Boeing Company (9th Cir. 2003) 327 F.3d 938, the court refused to approve a class action settlement because, inter alia, it awarded the named class representatives damages averaging sixteen times more that the amount to be received by each unnamed class member. The total payment to the class of 15,000 was over $7 million, and ‘29 named class representatives are designated to receive payments totaling $890,000.’ (Id. at p. 977.) The court found the ‘large differential’ in damages could not stand on the record before it. (Id. at p. 978.) “The Staton court remarked, however, that ‘named plaintiffs, as opposed to designated class members who are not named plaintiffs, are eligible for reasonable incentive payments,’ pointing out that it had approved incentive awards of $5000 each to two named plaintiffs in In re Mego Fin. Corp. Sec. Litig. (9th Cir. 2000) 213 F.3d 454. (Staton v. Boeing Corporation, supra, 327 F.3d at pp. 976-977.) In Mego, the incentive awards were approved without discussion; the opinion revealed no evidence of the extent of the named plaintiffs’ involvement in the litigation. (In re Mego Fin. Corp. Sec. Litig., supra, 213 F.3d 454.) “In In re Continental Illinois Sec. Litig. (7th Cir. 1992) 962 F.2d 566, the court upheld the trial court’s refusal to approve a $10,000 award to a named plaintiff whose involvement consisted of a few hours of deposition and a ‘slight risk of being made liable for sanctions, costs, or other fees should the suit go dangerously awry.’ (Id. at pp. 571-572.) The court observed that the risk was slight ‘because the case was a clear winner and ... if the named plaintiff had dropped out because he couldn’t hope to be compensated for his modest efforts there were plenty of others to take his place without demanding compensation. The implicit reasoning is that the market would have produced a named plaintiff willing to charge a price of zero ....’ (Id. at p. 572.) The court observed, however, that an incentive award was not per se inappropriate. ‘Since without a named plaintiff there can be no class action, such compensation as may be necessary to induce him to participate in the suit could be thought the equivalent of the lawyers’ nonlegal but essential case-specific expenses, such as long-distance phone calls, which are reimbursable.’ (Id. at p. 571.) “Here, there was considerable risk that the case would be unsuccessful, thus exposing Edelist to costs or sanctions. Where the litigation resulted in a $7 million settlement fund and the value of the injunctive relief as much as $50 million, the modest $2500 incentive award to Edelist for merely ‘lending his name to the caption’ was not an abuse of discretion.”

With the modification, we are considering asking the 4th District to publish the case so that we can all stop citing (and attaching copies of) 7th Circuit authority in support of our final fairness motions.

Comments

[May]

I received a check (very small from this settlement. Is it for real?

[May]

I received a check (very small from this settlement. Is it for real?

[Chris]

I, too recieved a check for a very small sum. My first instinct was that it was a snail mail form of phishing.....please advise.

[Suzy]

I received a small check too... what is this all about?

[TIM PITRE]

I also got a check for a very small amount. I would like more info, plus why so small?

[Ginger]

Small check. Small info. What is this? Something about wage law and tips. I never had a job working for tips. What's up?

[Laurie]

I also received a check for $1.71. Has anyone found information on this??

[Susan]

Well, whats with the $1.71 check? if we cash it does it rule out further monies that we are really due?

[Dee Owens]

This is what the class action lawsuit was about....

"Class action against credit card companies for improper treatment of consumers including improperly charging interest, late fees, and over the limit fees."

Hope that helps.

[Joe]

Susan,
Do you have to respond in such a rude and uncaring way?

[Laurie]

Thanks Joe, I thought Susan was rude as well. When I Googled the case, it led me to this site, so I figured someone would know about it.

[michael walsh]

People, this is a forum for discussing wage claims and cases relevant to wage claims. Edelist v. First USA Bank was not a wage case, and we were discussing it for the sole purpose of addressing fees and enhancements in class actions, as that issue applied to wage cases. How and why each class member's check amount was determined in the Edelist case is not really any of our business. If they aren't telling the class members, they certainly aren't telling us. No one at this blog knows anything about the merits or the value of the Edelist case. We neither know nor have any way to find out why $1.71 settlement checks are going out to First USA cardholders. You will not find any answers here. If you still have your class notice, look at that notice and call the attorneys listed there. We don't know who sent you the check or why.Emailing us to find out why "we" sent you a check for a dollar isn't going to lead to more information. "We" didn't send anyone any checks. All we did was read the court opinion and discuss the issues raised in the appeal.