8th Circuit Asked to Reverse ‘Windfall’ Attorneys’ Fees in T-Mobile Class Settlement

Appellant-objector Cassie Hampe, a class member in the action brought by T-Mobile customers “victimized by one of the largest data breaches” in U.S. history, objected that the $78.75 million in attorneys’ fees awarded in the $350 million settlement fund was a “windfall,” said her 8th U.S. Circuit Court of Appeals opening brief Tuesday (docket 23-2744). Hampe sought an adjustment of fee methodology “to account for the economies of scale evident in settlements over $100 million,” it said.

Hampe brings her appeal as “an issue of first impression” for the 8th Circuit, and she urges it to adopt “the majority position among the circuits to address it,” said her brief. Though the U.S. District Court for Western Missouri addressed her objection, “it also granted class counsels’ motion to strike her objection and to revoke pro hac vice admission of her counsel based on actions of another attorney in the same firm in prior cases,” it said.

Hampe requests 20 minutes of oral argument for each side, said her brief: “Given the uniqueness of the issues on appeal, and the issue of first impression on the appropriate fee methodology for $100 million-plus settlements, oral argument would significantly aid the decisional process.”

The 8th Circuit “should join the majority view among circuits and require consideration of the economies of scale when addressing attorneys’ fees awarded in class action settlements exceeding $100 million,” said Hampe’s brief. The majority approach “recognizes that recovery is frequently a product of class size rather than attorney labor and adjusts the fee methodology accordingly,” it said.

The fee awarded in this case “is a manifestation of the problem, compensating attorneys $78 million for mere months of work in a case in which they had incurred just $150,000 in costs at the time of the motion for attorneys’ fees,” said Hampe’s brief. The fee pays attorneys and paralegals more than $7,000 per hour, and at least 9.6 times their normal hourly rate, it said. The 8th Circuit should follow the majority approach “and reverse the windfall fee, returning tens of millions of dollars that rightfully belong to the class,” it said.

The district court erred as a matter of law in striking Hampe’s objection under Federal Rule of Civil Procedure 12(f), said her brief. The district court committed “further error of law” in 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,” it said.

Though the district court didn’t purport to strike Hampe’s objection under its inherent authority to sanction, “even if it had, it would have abused its discretion in doing so,” said her brief. 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.

The district court’s 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 brief. The only evidence in this case is the objector and her attorneys brought an objection, “which is indisputably nonfrivolous, to improve the settlement for class members by tens of millions of dollars,” it said.

The district court’s finding that Hampe’s objection and appeal will delay distribution of the class settlement is false, said the brief. 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.