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CEI Applauds Reduction in Attorneys’ Fees in Polyurethane Foam Antitrust Settlement

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Yesterday the U.S. District Court for the Northern District of Ohio denied the indirect purchaser plaintiffs’ attorneys their full requested fees in the Polyurethane Foam Antitrust litigation, granting them twenty percent less than they were seeking. Competitive Enterprise Institute’s Center for Class Action Fairness (CCAF) had objected to the original fee request, arguing that class counsel’s excessive request would transfer to plaintiffs’ attorneys tens of millions of dollars that rightfully belong to class members. CCAF is encouraged by the court’s order that places more of the award in the hands of consumers rather than the class attorneys.

The court order means that consumers will receive $9 million more than they would have under class counsel’s original request. While the final settlement still awards the lawyers more than CCAF’s objection recommended, there are encouraging signs in this settlement. In particular, the court found that overpaid contract attorneys were “the greatest concern” in the fee request and, as a result, reduced fees by twenty percent. In addition, the court held that the fees attributable to settlement funds that will not be paid immediately or that are contingent upon settlements in other litigations will not be paid to class counsel until those funds are paid by defendants.  

CCAF attorney Anna St. John said, “We are pleased the court saw through class counsel's attempt to improperly inflate their fees. Class members should not be billed at excessive hourly rates for work performed by contract attorneys who are paid a fraction of the amount sought. Millions of dollars of unearned fees will now be returned to consumers--rather than providing a windfall for class-action lawyers.”

Although the court found that the failure to identify the cy pres recipients, i.e., the recipients of leftover class funds, in the notice was not a bar to approval because any cy pres distribution will be de minimus, the court noted that "CCAF has nonetheless identified a best practice. Especially because the term ‘de minimus’ carries no precise definition, and also in the interest of full disclosure, this court agrees that class counsel in most cases would be wise to identify in their class action settlement precisely what entities may receive cy pres distributions." The court ordered class counsel to submit a proposal within 30 days identifying the charities or other beneficiaries to whom cy pres distributions will be made.