A Chicago federal judge has signed off on an award of more than $15 million – and potentially, as much as $18.9 million – in attorney fees for lawyers who secured a $76 million settlement from a cruise line and other associated companies accused of using nonprofit surveys to mask illegal telemarketing calls.
However, the award checks in at nearly $9 million less than what the plaintiffs’ lawyers had asked the court to allow them to claim for their work, after a judge partially sided with defendants in the case and others who had argued the lawyers’ original fee request was “excessive” and “unreasonable.”
On April 6, U.S. District Judge Matthew F. Kennelly issued an order giving attorneys with the firms of Edelson P.C. and Loevy & Loevy, each of Chicago, at least $15.26 million in fees for their work on the settlement of a class action that could ultimately include payouts of $500 or more to perhaps as many as a million plaintiff class members.
The attorney fee decision comes as the latest step in the years-long legal battle over accusations a group of defendants, identified as Caribbean Cruise Line, phone polling and telemarketing company Economic Strategy Group and timeshare operators, including the Berkley Group and Vacation Ownership Marketing Tours, attempted to skirt federal law prohibiting telemarketing calls to consumers.
According to the lawsuit, plaintiffs alleged the defendants violated the federal Telephone Consumer Protection Act (TCPA) by placing about 1 million unsolicited calls through Economic Strategy Group from 2011-2012. During these calls, an automated voice told recipients they could be eligible for a “free cruise” to The Bahamas if they took a political survey. At the end of the call, those interested could be connected to a representative of Caribbean Cruise Line. However, those receiving the ostensibly free cruises were required to pay taxes and fees. They were offered a different package if they were willing to tour a Berkley Group timeshare facility.
The defendant companies had argued the calls were exempt from the TCPA because they were made by a nonprofit group conducting political surveys. That contention was rejected by the court, setting the stage for a trial in the case, until both sides presented the judge with a settlement agreement worth at least $56 million, and as much as $76 million, depending on how many people submit approved claims under the class action settlement.
Four named plaintiffs will each receive $10,000, according to the settlement.
Judge Kennelly signed off on that provision in his April 6 order.
However, the judge did not accept the request from the Edelson and Loevy firms for a request to let them claim as much as $24.5 million of the settlement for themselves.
Defendants and one class member, identified as Freedom Home Care Inc., objected to that request, arguing the fee award should be smaller and should be structured on a sliding scale, rather than as a flat percentage equating to about one-third of the total settlement.
Judge Kennelly agreed, ordering the fee award to be structured on a such a scale, with “risk premiums” associated with various “bands” of the settlement.
In this case, the judge said, as the legal proceedings wore on and the likelihood of a large class certification and a finding of liability against the companies increased, the likely size of the settlement also increased, while the risk to the Edelson and Loevy firms of being left with little to nothing, decreased.
“The magnitude of potential liability provided plaintiffs with significant leverage, to be sure,” the judge wrote. “But the settlement negotiation history reveals that this was insufficient to secure a significant offer from defendants at the litigation's early stages.
“When plaintiffs did settle this case, their leverage derived in large part from their pre-trial success and the fact that they had advanced to the eve of trial.”
So, in this case, the judge attached a 6 percent “risk premium” to the first $10 million “band” of the settlement; 5 percent to the next $10 million “band;” 4 percent to the next $36 million; and 3 percent to the remainder.
The judge said this worked out to a minimum payout of $15.26 million to the plaintiffs’ lawyers. However, should the number of claims exceed the minimum $56 million amount the defendants agreed to pay under the settlement, the plaintiffs’ lawyers could earn more, up $18.98 million.
That amount, he said, would give the Edelson and Loevy lawyers about a quarter of the total settlement.
The judge said such a fee award is more in keeping with precedent within the U.S. Seventh Circuit courts, which include federal courts in the states of Illinois, Wisconsin and Indiana.
The defendants were represented in the action by attorneys with the firms of Greenspoon Marder, of Fort Lauderdale, Fla.; Tabet, DiVito & Rothstein, of Chicago; Mayer Brown, Chicago; Forde Law Offices, Chicago; and Rose, Harrison & Gilreath, of Kill Devil Hills, N.C.