Some people think most class actions exist to reward the lawyers, not the members of the class. Blawgletter doesn't think that, but some people do.
And then a case like In re Bluetooth Headset Products Liability Litig., No. 09-56683 (9th Cir. Aug. 19, 2011), comes along. It likely didn't start as a platform for class counsel to earn a fee out of whack with benefits to the class as a whole, but it does seem to have turned out that way.
The plaintiffs in Bluetooth Headset claimed loss of hearing as a result of using the defendants' products at loud settings. The parties settled. The deal called for defendants to disclose hearing safety facts, to pay $100,000 to hearing-loss nonprofits, to cover as much as $1.2 million in costs to provide notice of the settlement to class members, and to remit up to $800,000 in fees plus $50,000 in expenses to class counsel. The district court okayed the pact and awarded the full $850,000 to the lawyers.
The Ninth Circuit vacated the district court's orders. The panel held that the fee award so dwarfed the (indirect) relief for the class that it called for closer study by the district court. That the defendants agreed not to challenge the fee award unless it exceeded $800,000 and that the award amounted to far more than the Ninth Circuit's "benchmark" of 25 percent of total benefits to the class made the settlement and the award at least suspect. The court remanded the case so that the district court could do a more searching review of class counsel's fee request in light of the (modest) results they achieved and a harder look at the terms of the settlement.
We suspect that on remand the district court will solve the problems by cutting the fee to around 25 percent of the total cost of the deal to the defendants. That would include the $1.2 million in notice costs, $850,000 in fees and expenses, the $100,000 cy pres award, the $12,000 awards to class representatives, and the value (if any) of the safety disclosures. Call it $550,000. We'll see.