Contingent business law includes class actions involving commercial disputes. Such as the one over Shell gasoline that, because it left the refinery with too much sulfur, damaged consumers’ automobile fuel guages.
Today the Fifth Circuit considered the contingent aspect of the lawyers’ handling of the ensuing class litigation — the fee part. The district court adopted the recommendation of a Fee Committee on how to divide $6.875 million among all class counsel. The court spent about 20 minutes quizzing the committee members, ex parte, before ruling. Its approval order reflected sparse justification for the allocations to individual firms and didn’t benefit from records showing each firm’s lodestar (hours times rates). Plus the court sealed the distribution numbers so that the firms couldn’t compare their respective awards.
The Fifth Circuit held that the, um, methodology didn’t comply with legal requirements. In re High Sulfur Content Gasoline Products Liability Litig., No. 07-30384 (5th Cir. Feb. 4, 2008).
Blawgletter has a hard time disagreeing with the holding. Class counsel can and should propose fee allocations, but the district court still has a duty to check their work in a transparent process that encourages confidence in the result. Chief Judge Jones got this one right.
