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Thursday, September 19, 2019

Plaintiffs attorneys want too much from IKEA phone survey settlement, group claims

By Adrian Leake | Feb 27, 2018

CHICAGO (Legal Newsline) – The Competitive Enterprise Institute says plaintiffs lawyers have taken too large a chunk out of a proposed class action settlement featuring XPO Logistics.

Through class member Meridith Halsey, CEI's Center for Class Action Fairness filed an objection Jan. 31 in U.S. District Court of the Northern District of Illinois-Eastern Division

The settlement stems from a case over allegedly unlawful automated survey calls. Under contract by IKEA, XPO Logistics placed a series of survey calls to the cellphones of IKEA customers.

Vincent Leung filed a complaint against XPO Logistics in 2015 over the alleged unsolicited, pre-recorded phone messages placed in violation of the Telephone Consumer Protection Act (TCPA). 

XPO Logistics has denied any wrongdoing, but agreed to a settlement of $7 million in order to resolve the matter without the need to go to trial.

Halsey, represented by her husband, attorney M. Frank Bednarz of the Center for Class Action Fairness, objected to the conditions of the settlement on the grounds that plaintiffs' counsel was attempting to seek unfair payment. The CCAF is an organization that objects to class action settlements it believes are unfair on behalf of class members 

In a normal civil case, the two parties agree upon their own representation, enabling them to observe their rights either personally or by proxy. With class actions, there is often a large group of otherwise unaffiliated individuals, providing no such assurance that everyone’s rights are being appropriately observed. 

Halsey alleges the plaintiffs' attorneys are seeking an inequitable percentage of the $7 million settlement agreed to by the defense. Her objection states that separate of applicable costs, class counsel is asking for $2.33 million as a service award — more than one-third of the remaining fund at 34.6 percent. For this reason, Halsey has requested that the court act on behalf of the class in this case to prevent attorneys from applying an unfair lodestar multiplier.

Under the lodestar method of calculating attorneys fees, multipliers are applied based on various factors such as contingency, the quality of labor provided and the hours spent on the case in question. 

Judging by this method, Halsey argues that even a 25 percent award would lead to a significant profit and challenges class counsel to present billing information as reasonable proof otherwise.

Halsey and CCAF have called upon the district court in this instance to act in the interest of class members to modify the attorney award in reduction. They ask that a new rate be applied only after all administrative costs have been taken into account and restricted to no more than 25 percent. The resulting total, estimated at $1.6 million, would result in savings that allow for more appropriate compensation for each class member.

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Organizations in this Story

Center for Class Action Fairness Competitive Enterprise Institute Eastern Division of the Northern District of Illinois