In the settlement of a TCPA class action, the District Court set a schedule that required class members to file any objection to the settlement – including any objection pertaining to attorneys’ fees – before class counsel filed their fee petition. In so doing, the Eleventh Circuit held, the District Court violated the plain terms of Federal Rule of Civil Procedure 23(h).

Secondly, and more notably, the Court of Appeal reversed the award of $6,000 to the class representative as an “incentive payment” to acknowledge his role in prosecuting the case on behalf of the rest of the class.

The Supreme Court in Trustees v. Greenough, 105 U.S. 527 (1882) upheld the suing plaintiff’s award of attorneys’ fees and litigation expenses “but rejected as without legal basis the award for his ‘personal services and private expenses’ – in particular, the yearly salary and reimbursement for the money he spent on railroad fares and hotel bills.”

Central Railroad & Banking Co. v. Pettus, 113 U.S. 116 (1885) came just three years later. “We have described Pettus as the first Supreme Court case recognizing that attorneys – as distinct from the lead plaintiff – had a claim to fees payable out of a common fund which has been created through their efforts, and noted that, in Pettus, a fee was awarded based upon a percentage of the fund recovered for the class. But as relevant to our analysis of incentive awards, Pettus is significant principally as a reiteration of the dichotomy drawn in Greenough: While a class representative’s claim for the expenses incurred in carrying on the suit and reclaiming the property subject to the trust is proper, his claim to be compensated, out of the fund or property recovered, for his personal services and private expenses is unsupported by reason or authority….

“Incentive awards do seem to be fairly typical in class action cases. But, so far as we can tell, that state of affairs is a product of inertia and inattention, not adherence to law. The uncomfortable fact is that the judiciary has created these awards out of whole cloth, and few courts have paused to consider the legal authority for incentive awards. Needless to say, we are not at liberty to sanction a device or practice, however widespread, that is foreclosed by Supreme Court precedent.”

 

Johnson v. NPAS Solutions, No.18-12344, 2020 WL 5553312 (11th Cir. Sept. 17, 2020).