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Civil Procedure — class actions — attorney fees — intervention

United States Court of Appeals For the Seventh Circuit


Civil Procedure — class actions — attorney fees — intervention

Where an attorney’s motion seeks fees from a class action settlement, the motion should be interpreted as a motion to intervene as a party.

“Watts is pursuing a heads I win, tails you lose, strategy. It wants to be an appellee so that it can defend its right to obtain, from the fund, the full attorneys’ fees that its clients (the individual claimants) agreed to pay it and that class counsel want to take a chunk out of; and an appellee is a party. But it doesn’t want to be a party, so that, should class counsel prevail, the district court could not order Watts to disgorge some of the fees it’s received from the settlement fund. Should class counsel prevail in its appeal, moreover, and the case be remanded to the district court for a determination of class counsel’s entitlement to part of the fees that Watts has received, or will receive, from the fund, the court will have to make sure that this entitlement is not paid from the portion of the settlement fund earmarked for Watts’s clients. When ‘an attorney invokes the court’s equitable power to approve a settlement agreement to distribute the proceeds, the court must scrutinize the reasonableness of the contingent attorneys’ fee contract which affects the net recovery to the plaintiff.’ Toon v. Wackenhut Corrections Corp., 250 F.3d 950, 954 (5th Cir. 2001) (citation and internal quotations omitted); see also In re A.H. Robins Co., 86 F.3d 364, 373 (4th Cir. 1996); Garrick v. Weaver, 888 F.2d 687, 690-91 (10th Cir. 1989). The district court approved the settlements but will have to revisit the issue of approval if class counsel prevails in this appeal.”  “We thus can’t imagine what Watts’s role in this appeal could be other than that of a party. That it did not ask for permission to intervene is of no consequence. Intervention isn’t the only route for becoming a party. Nonparties in a trial court can participate as parties to the appeal without formal intervention if the outcome of the appeal would be likely to determine (not just affect) their rights. Devlin v. Scardelletti, 536 U.S. 1, 7-12 (2002); SEC v. Enterprise Trust Co., 559 F.3d 649, 651 (7th Cir. 2009); SEC v. Forex Asset Management LLC, 242 F.3d 325, 329-30 (5th Cir. 2001). If class counsel prevail in this appeal, money will be transferred from Watts to class counsel. Watts is asserting a right that the judgment on appeal may take away, and this gives it the right it seeks—the right to be an appellee, which means a party, but not a right to have its cake and eat it by preventing the district court from protecting Watts’s clients.”

Motion Granted.

11-3030 & 11-3163 In re Trans Union Corp. Privacy Litigation

Appeals from the United States District Court for the Northern District of Illinois, Gettleman, J., Posner, J.

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