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Whirlpool Settlement Fee Ruling Needs New Look, Consumers Say

Dec. 16, 2020, 9:45 PM

Consumers suing over allegedly defective Whirlpool Corp. dishwashers want the full Ninth Circuit to review a panel decision that threw out a $14.8 million attorneys’ fee award while upholding a class settlement that reimbursed repair costs and offered rebates on future purchases.

Three judges on the U.S. Court of Appeals for the Ninth Circuit rejected a 1.68 multiplier applied to class counsel’s $8.8 million lodestar, which is their hourly rates multiplied by the time spent on the case.

It also said the district court should have determined the total redemption value of the coupons, and separately calculated fees on that portion of the settlement.

But the panel’s ruling, disallowing multipliers in cases where attorneys’ fees are paid directly by the defendant, contradicts an earlier Ninth Circuit en banc decision that allowed lodestar multipliers in a similar case, the consumers say. This leaves circuit authorities “hopelessly in conflict,” Steve Chambers and others say in a Tuesday filing.

The court in In re Hyundai & Kia Fuel Economy Litig. allowed a multiplier to account for the relative risk undertaken by plaintiffs’ lawyers in a nationwide class settlement involving misrepresentations over fuel economy ratings, Chambers and others say.

“Absent en banc review, district courts will be in the impossible position of having to decide, based on flatly conflicting precedent, precisely when (if at all) risk multipliers are permissible when fees are paid directly by defendants to class counsel,” the consumers say.

And the ruling conflicts with decisions by the Sixth, Seventh, and Eighth circuits, which have held that the Class Action Fairness Act allows the lodestar method without regard to coupon redemption if the case involves a combination of coupon, equitable, and monetary relief, they say.

Separately, two objectors say the panel’s approval of this settlement conflicts with decades of Ninth Circuit precedent that would require reversal of the deal in this case because a lower attorneys’ fee wouldn’t benefit the class.

The decision also splits with other circuits, they say.

Most circuits don’t have any reported cases where a settlement has survived when the court of appeals finds an attorneys’ fee award violation, they say. The Third, Fourth, and Tenth circuits allow a settlement to survive if the reversed attorneys’ fees are paid from a common fund so a reduction automatically benefits the class.

Additionally, the panel allowed the settlement to stand without mandating the heightened scrutiny required for coupon settlements under CAFA, the objectors say.

Samuel Issacharoff of NYU Law School and others represented the plaintiffs. Mayer Brown LLP and others represented Whirlpool and Sears Holding Corp. The Law Office of Sam Miorelli PA represented objector Jan L. Miorelli. The Bandas Law Firm PC represented objector Christine Knott.

The case is Chambers v. Whirlpool Corp., 9th Cir., No. 16-56666, rehearing petition 12/15/20.

To contact the reporter on this story: Julie Steinberg in Washington at jsteinberg@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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