Stanikzy v. Progressive Direct Insurance Co.

Docket number: 22-35524 (9th Cir.)

The Hamilton Lincoln Law Institute’s Center for Class Action Fairness submitted an amicus brief in support of affirming a district court’s fee order in a class action settlement involving automotive insurance.

Plaintiff’s counsel have appealed a $1.1 million attorneys’ fee award even though it represents approximately triple their normal hourly rate, with rates up to $1000/hour. Class counsel argued that the award somehow violates the underlying settlement agreement, where defendant had agreed not to oppose an award of $5 million. Class counsel seeks payment of $5 million even though it exceeds actual class recovery and even though the award would cost class members a half million dollars as a “pro rata contribution” toward attorneys’ fees. Class counsel argued that they should be paid for the “virtual common fund” of $19.2 million rather than the actual claims received under the settlement, and that it was reversible error for the district court to consider actual settlement benefits.

CCAF argued on behalf the the absent class members who were effectively unrepresented in the appeal. CCAF argues that the district court did not error in considering fact over fiction. The economic reality of the settlement should be used to set attorneys’ fees because otherwise plaintiffs attorneys have an incentive to settle for an uncertain claims process rather than directed monetary relief, which was possible to achieve in this case.

While the district court should have rejected the settlement for prioritizing fees over class recover, the only issue on appeal is the fee award. Increasing the attorneys’ fee award would not benefit class members—in fact, it would cost them over a half million dollars—and it would create perverse incentives for other attorneys to earmark their fee requests to the detriment of absent class members.

On July 28, 2023, the panel issued its opinion affirming the district court.

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