Dan Churney Jul. 1, 2016, 4:10pm

A Chicago federal judge reversed one of his earlier decisions, but at the same time rebuked a member of a class-action suit for the member’s objection to hundreds of thousands of dollars in additional attorney fees in a case against Southwest Airlines over in-flight drink vouchers – a case in which class members have received free drinks, while plaintiffs’ attorneys slated to pocket more than $1.6 million. 

The June 22 ruling was delivered by U.S. District Judge Matthew Kennelly regarding a protest brought by San Diego resident Gregory Markow – a member of a now-settled class-action suit brought against Dallas-based Southwest Airlines – against fees awarded to a Chicago attorney who handled the suit for plaintiffs. 

Southwest Airlines had been in the practice of offering coupons for free, onboard alcoholic drinks, worth $5 each, to travelers who bought tickets through the company’s Business Select program. The coupons did not have expiration dates. However, after a number of years, Southwest announced it would no longer honor the coupons, because redeeming all the coupons in circulation would hurt the airline’s bottom line. 

In 2011, a class-action was brought against Southwest, alleging the airline breached its contract with coupon holders and violated the Illinois Consumer Fraud Act. The suit was settled in 2013, with class members receiving replacement coupons allegedly worth a face value of $29 million. One of the plaintiffs’ attorneys – Joseph Siprut, of Chicago – asked for $3 million in fees. Members were given notice of the request in case any of them wished to oppose it. Judge Kennelly awarded $1.3 million to Siprut; several months later Kennelly increased the amount, at Siprut’s request, to $1.6 million. 

The case went to the U.S. Seventh Circuit Court of Appeals, where the settlement was upheld. Siprut then asked for more fees based on work, including the appeal, he did since his previous fee award. On April 25, 2016, Kennelly approved one-third of the requested amount, which came to $455,294. Markow then filed an objection. He was represented in the objection by attorneys Ted Frank and Melissa Holyoak of the Class Action Fairness Center in Washington, D.C. 

Markow alleged Kennelly did not provide notice to members of the class action that Siprut was requesting more fees. As a result of this alleged omission, Markow argued the requested fees should instead be distributed to class members as a sanction against Siprut for breaching his fiduciary duty to members. 

Markow alleged Siprut committed the breach by colluding with Southwest on the settlement and fees. If Kennelly opted to not distribute the fees to members, the judge should then overturn the settlement. Kennelly replied the collusion claim was “baseless” and noted the appeals court found members of the class action were “made whole” by the settlement.

“Markow’s accusations, which are made in an unwarranted accusatory tone consistent with the way that his counsel, Ted Frank and Melissa Holyoak of the Class Action Fairness Center, have conducted themselves since their first appearance in this case, are without foundation,” Kennelly scolded. 

Kennelly pointed out the first fee notice sent members in 2013 told them Southwest would not challenge fees up to $3 million, and the new fees plus the old ones added up to $2.1 million, which fell under $3 million, so the 2013 notice still sufficed. 

Markow tried to argue around these numbers, but Kennelly said Markow’s math “makes no sense.” 

Nonetheless, Kennelly decided to vacate his April 25 fee award to avoid any confusion. 

“Prudence counsels in favor of providing an additional notice to the class,” Kennelly observed. 

Kennelly told Siprut and Southwest to put together a proposed notice. Kennelly also set a status hearing for Aug. 8, but cautioned he could sign a notice order before then.

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Siprut PC
17 N State St, , Chicago, Illinois 60602

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