Considerable Deference With a Caveat: Third Circuit Addresses Fee Awards

Carlton Fields

Carlton Fields

The Third Circuit Court of Appeals recently issued a decision regarding the fee award in the National Football League concussion injury litigation. The decision is non-precedential but still instructive. One takeaway is that appellate courts will show “considerable deference” to district court fee awards. The other takeaway, however, is that district courts still must provide enough of an explanation for appellate courts to meaningfully review the award. When they do not, appellate courts will remand for a fuller explanation of any insufficiently explained aspect of the award.

In this litigation, a class of former NFL players sued the league for failing to protect them from head injuries, both concussive and sub-concussive. The district court appointed lead class counsel, an executive committee, and a steering committee, which is not uncommon in cases of this size and complexity. It also appointed a time-and-expense auditor to monitor the fees and expenses of class counsel.

The parties initially reached a settlement that was rejected by the district court. That initial settlement capped the fund for paying claims of retired players with certain diagnoses at an amount the district court doubted would cover those claims. The parties subsequently reached a revised settlement, which the district court approved.

After the revised settlement was approved, class counsel filed a petition seeking $112.5 million in attorneys’ fees. To aid its consideration of that petition, the district court asked one of the co-lead class attorneys to submit a detailed proposal for how to allocate the fee award among class counsel. Several firms challenged his proposed fee allocation. Ultimately, the district court awarded class counsel approximately $110 million in fees and expenses.

Various firms appealed the fee allocation. The Third Circuit held that the fee award was, in all but one respect, “factually and legally sound and reflected a proper exercise of … discretion.” The court discussed only two of the issues raised by the appellants, reasoning that the district court’s “thorough explanations for each of its rulings” made it unnecessary to “dwell on the numerous challenges.” It justified this deferential approach in part by quoting the Supreme Court’s statement in Fox v. Vice, 563 U.S. 826, 838 (2011), that “we can hardly think of a sphere of judicial decisionmaking in which appellate micromanagement has less to recommend it.”

The Third Circuit found that the district court did not abuse its discretion by seeking a fee allocation methodology from co-lead class counsel, given that the district court “reasonably viewed him as uniquely knowledgeable about the work performed by all counsel and believed that he could provide a perspective about how their work benefitted the class.” Furthermore, the district court heard challenges to that lawyer’s recommendation, did not follow the recommendation in all respects, and provided a thorough explanation of the fee award. Thus, the district court “acted well within its discretion.”

However, the Third Circuit found that the district court did not provide an adequate explanation of the amount it allocated to counsel for certain objectors. It noted that the district court’s $350,000 allocation to these attorneys was a 0.08 multiplier of their $4.3 million lodestar and a small fraction of their $20 million requested fee. But the main reason for the remand was not the amount of the award, but the fact that, in the view of the Third Circuit, the district court did not identify the “factual basis” for that modest award.

In re National Football League Players’ Concussion Injury Litigation, No. 18-2012, 2020 WL 2214131 (3d Cir. May 7, 2020).

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Carlton Fields

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