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Lumber Liquidators $10 Million Fee Award Affirmed on Second Look

March 4, 2022, 4:28 PM

A fee award of about $10 million for consumer attorneys in two class actions over Lumber Liquidators’ allegedly subpar laminate flooring got Fourth Circuit approval Thursday, two years after the court sent the request back because of the deal’s “coupon” component.

As they did the first time, objectors argued that the coupon portion of the settlement lacked value, making the attorneys’ fees excessive in comparison to the whole recovery, according to the appeals court. But that contention “pretends that a sizable portion of the settlement negotiated by Class Counsel does not exist,” Judge Robert B. King said for the panel. And this time the trial judge calculated fees based on the lodestar method.

Lumber Liquidators allegedly sold defective Chinese-manufactured laminate flooring from 2009 to 2015, according to the court.

Two groups of consumers, alleging excessive formaldehyde emissions and durability problems, sued. The proposed class actions were consolidated in multidistrict litigation, and a two-part settlement was reached.

Under its terms, early purchasers are entitled to a limited cash settlement, and later purchasers, alleging both formaldehyde and durability issues, can choose between a cash award and vouchers. The cash fund consisted of $22 million and the vouchers had a face value of $14 million, totaling $36 million.

The district court approved the deal, including $10,080,000 in attorney’s fees and $797,397 in costs to be deducted from the cash fund. Several objectors appealed.

The U.S. Court of Appeals for the Fourth Circuit approved the settlement in March 2020 but sent the attorneys’ fees, calculated as a proportion of the $36 million, back to the trial court. The trial court then examined the $10.08 million request under the lodestar method, based on multiplying the number of hours worked by a reasonable hourly rate, and approved it. Two objectors appealed again.

The Fourth Circuit affirmed. The Class Action Fairness Act “authorizes use of the lodestar method in calculating attorney’s fees where ‘coupon’ relief makes up part of a class action settlement,” the court said, joining all but one of the other federal appeals court to consider the issue.

The court didn’t agree with the objectors that the class attorneys should have gotten a lower billing rate because they didn’t show “success” for the class, measured by coupon redemption rates. There’s no express requirement to consider redemption rates, and the district court indicated “that the vouchers were not the sort of valueless trifle that CAFA primarily concerns itself with,” King said.

The objectors also said that the cash amount left for the class after subtracting costs, notice expenses, and service awards—$9.9 million—is lower than the amount for the attorneys. But that alone doesn’t require sending the issue back to the lower court, King said.

Chief Judge Roger L. Gregory and Judge Toby J. Heytens joined the opinion.

The case is Cantu-Guerrero v. Lumber Liquidators, Inc., 2022 BL 72920, 4th Cir., No. 20-2036, 3/3/22.

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

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