Creating a circuit split with the Ninth Circuit’s decision in In re HP Inkjet Printers Litigation, 716 F.3d 1173 (9th Cir. 2013), the Seventh Circuit recently held that CAFA § 1712 permits a district court to use the lodestar method to award attorneys’ fees to compensate class counsel for coupon relief. See In re Southwest Airlines Voucher Litig., 799 F.3d 791 (7th Cir. 2015) (No. 13-3264). In using the lodestar method, the district court should be mindful of the potential for abuse inherent in coupon settlements and should “evaluate critically the claims of success on behalf of the class receiving coupons.” In this case, the district court was properly critical of the coupon relief, but class members received essentially everything they would have received had they succeeded at trial. As a result, the district court approved the settlement, notwithstanding a “clear sailing” provision (the parties agreed to the maximum fee to be awarded to the plaintiff’s counsel without objection) and a “kicker” clause (under which fees not awarded to counsel would be returned to the defendant), and the Seventh Circuit affirmed.
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Seventh Circuit Permits Lodestar Fee In Coupon Settlement
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