On Monday, the District Court of Massachusetts issued a notable attorney’s fee award decision in a class action arising from a data privacy breach, In re TJX Companies Retail Securities Litig. Along with a class settlement, class counsel urged the court to approve a $6.5 million attorney’s-fees award, arguing that hundreds of millions of dollars in potential value had been created for the class. However, the payout depended entirely on class members making claims, and only a small fraction of the supposed potential – $6 million – were made. The court quite reasonably rejected class counsel’s suggestion that the potential (but unrealized) claims supported the requested fees. That said, the court still approved the fee request pursuant to the lodestar method ($3.3m in lodestar * 1.97 multiplier = $6.5m).
The court finished with a cautionary note, which is where the baby step comes in: “In the future . . . Plaintiff’s counsel can expect that this court, when confronted with reversionary common fund or claims-made settlements, will award attorney’s fees by reference to the value of benefits actually put in the hands of class members.” (emphasis in original). In reality, however, it would have been entirely reasonable for the court to use this standard for attorney’s fees now, without waiting for the next time.
UPDATE: Drug and Device Law also has a November 11, 2008 post about this TJX case.