Appellant Protests ‘Windfall’ Attorneys’ Fees in T-Mobile Class Settlement

The “majority view” among the appellate courts requires “consideration of the economies of scale when addressing attorneys’ fees awarded in class action settlements exceeding $100 million,” said the statement of issues filed Monday (docket 23-2744) in the 8th U.S. Circuit Court of Appeals by objector-appellant Cassie Hampe. She’s pursuing the appeal to protest what she argues are “windfall” attorneys’ fees doled out in the class settlement in the 47-case multidistrict litigation arising from T-Mobile’s 2021 data breach.

The majority approach “recognizes that recovery is frequently a product of class size rather than attorney labor and adjusts the fee methodology accordingly,” said Hampe’s statement. The fee awarded in the T-Mobile MDL “is a manifestation of the problem, compensating attorneys $78 million for mere months of work in a case in which they incurred just $170,000 in costs,” it said.

The fee pays attorneys and paralegals more than $7,000 an hour, “at least 9.6 times their normal hourly rate,” said the statement. The 9.6 “lodestar multiplier,” many times higher than any prior multiplier for a data breach settlement, “far exceeds the outer limit of permissible multipliers recognized” by the 8th Circuit, it said. The court “should follow the majority approach and reverse the windfall fee, returning tens of millions of dollars that rightfully belong to the class,” it said.

U.S. District Judge Brian Wimes for Western Missouri in Kansas City “erred as a matter of law” in striking Hampe’s objection under Federal Rule of Civil Procedure 12(f), which applies to pleadings as defined in Federal Rule of Civil Procedure 7(a), said the statement. An objection to a class action settlement “is definitively not within the exhaustive list of pleadings” identified in Rule 7(a), and therefore can’t be stricken under Rule 12(f), it said.

Wimes further abused his discretion in “ostensibly striking the objection” under Federal Rule of Civil Procedure 1, which doesn’t purport “to authorize the striking of objections, and which no court has ever interpreted as such,” said the statement. The Judicial Panel on Multidistrict Litigation in early June transferred the multiple class actions stemming from T-Mobile’s 2022 data breach to Wimes for pretrial consolidation, saying it was doing so in large part due to his experience in handling the 2021 T-Mobile MDL (see 2306050001).

Though Wimes didn’t purport to strike Hampe's objection under his “inherent authority to sanction,” even if he had, he would have abused his discretion in doing so, said the statement. There’s no evidence of misconduct by Hampe or her attorneys in this case, “let alone clear and convincing evidence to support such an extreme sanction,” it said.

Wimes’ order, “copied nearly verbatim from class counsels’ proposed order that is replete with factual inaccuracies, relies on the conduct of another attorney in earlier cases,” which doesn’t justify striking Hampe’s “meritorious objection,” said the statement. “The only evidence in this case is the objector and her attorneys brought an objection, which is indisputably non-frivolous, to improve the settlement for class members by tens of millions of dollars,” it said.

Wimes’ finding that Hampe's objection and appeal will delay distribution is false “and is the result of the near verbatim adoption” of the plaintiffs’ proposed order, said the statement. “There are no terms in the settlement impeding distribution when an objector challenges only attorneys’ fees, as opposed to settlement approval, on appeal,” it said. Hampe “encourages the parties to distribute funds under the settlement immediately,” it said: “The necessary reduction in excess fees can be delivered to the class through a secondary distribution.”