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.