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Sunday, January 26, 2020

Appeals panel: $15M fees not too big for lawyers behind $76M Caribbean cruise telemarketing settlement


By Jonathan Bilyk | Jul 27, 2018

Cruise 08

A federal appeals panel will allow a group of Chicago lawyers to keep their potential $15 million to $18 million payday for their work in securing a $76 million settlement from a cruise line and others accused of using nonprofit surveys to mask telemarketing calls, as judges said the size of the fee award doesn’t necessarily mean it is too large.

On July 24, a three-judge panel of the U.S. Seventh Circuit Court of Appeals in Chicago delivered the decision in favor of lawyers from the firms of Edelson P.C. and Loevy & Loevy, rejecting contentions raised by defendants and an objector that a federal judge abused his discretion in granting the lawyers as much as $18 million for their work on the case.

“Defendants are correct that the fee award is bigger than some awards in other suits,” the appellate judges said.  “But that does not mean the award is too big.”

Seventh Circuit Judge Frank Easterbrook

The Seventh Circuit decision was authored by Seventh Circuit Judge Frank Easterbrook. Circuit Judge Ilana Rovner concurred, along with U.S. District Judge William Griesbach, of Wisconsin, who also served on the appellate panel.

The case had been argued before the Seventh Circuit panel in February, about 11 months after U.S. District Judge Matthew F. Kennelly, in Chicago federal court, had signed off on a fee award of at least $15 million for the Edelson and Loevy attorneys.

The fees were meant to compensate the attorneys for their work in representing plaintiffs and a class of thousands more in a class action lawsuit against a group of defendants, accused of violating the federal Telephone Consumer Protection Act by placing about 1 million unsolicited calls through a phone polling company 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 defendant Caribbean Cruise Line. However, those receiving the allegedly “free cruises” were required to pay taxes and fees, and others were offered a different package if they were willing to tour a timeshare facility.

Defendants named in the action included Caribbean Cruise Line, phone polling and telemarketing company Economic Strategy Group and timeshare operators, including the Berkley Group and Vacation Ownership Marketing Tours.

The defendants had argued the calls were legal, because they were made by a nonprofit group conducting political surveys, which is exempt from the TCPA law. Those arguments were rejected, however, and before the case went to trial, the defendants agreed to settle, under a deal worth at least $56 million, and as much as $76 million, depending on how many people submitted approved claims under the settlement.

Along with the settlement, plaintiffs lawyers submitted a fee request of $24.5 million. Kennelly reduced that award, but still allowed the plaintiffs lawyers to collect at least $15 million, and as much as $18 million, depending on the final size of the settlement payout.

He structured the fee award on a sliding scale, basing fees on “risk premiums” associated with various “bands” of the settlement. In this case, the judge allowed the plaintiffs’ lawyers to claim 36 percent of the first $10 million; 30 percent of the next $10 million; 24 percent of the next $36 million; and 18 percent of any settlement amount exceeding $56 million.

The defendants and an objector, identified as Freedom Home Care, contended the fee award was too big, and would “overcompensate” the plaintiffs lawyers. On appeal, they asked the Seventh Circuit to substantially reduce the plaintiffs lawyers’ fees, to “align it with awards of attorneys’ fees that have been approved in other suits brought under the (TCPA).”

However, on appeal, the Seventh Circuit rejected outright any contention the fee awards could be invalidated simply based on their size. In this case, the judges said the defendants and objectors never “identified any abuse” by Judge Kennelly in awarding the fees.

“Defendants’ position boils down to a contention that the fees exceed the market rate, and the district court did not abuse its discretion in finding otherwise,” the appeals judges wrote. “What got multiplied with what else to produce a market-approximating outcome does not matter.”

They further rejected the request from Freedom Home Care to order attorney fees for their attorneys, including attorney Christopher Bandas, of the firm of Bandas Law, of Corpus Christi, Texas. Bandas, through Freedom Home Care, had argued their objection had led to the reduction of fees from the original plaintiffs lawyers request.

Judge Kennelly, however, had rejected that contention, and their request for $59,000 in fees, to be paid from the settlement. And the Seventh Circuit judges said they agreed with Kennelly’s determination that Bandas and others representing Freedom Home Care “did not supply value to the class.”

Bandas is also currently embroiled in a legal action brought by Edelson, who has accused Bandas of being a "professional objector" who uses class action settlement objections to secure attorney fees as a pay off.

Caribbean Cruise Line and other defendants have been 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.

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Organizations in this Story

Greenspoon Marder, P.A.Loevy & LoevyEdelson, PCU.S. District Court for the Northern District of IllinoisU.S. Court of Appeals for the Seventh CircuitBandas LawMayer BrownTabet Divito & Rothstein LLCForde Law Offices

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