Clear Sailing Attorneys’ Fees Provision In Class Action Settlement Upheld.

After the trial court approved a class action settlement, overruling the objections of a member of the class, the class member appealed.  The class member argued the notice to the class members denied them due process because the nature and timing of the settlement approval procedure set forth in the notice was unfair, and because the language in the notice describing a class member’s financial responsibility for attorneys’ fees was misleading. He also argued that, in reviewing class counsel’s request for attorneys’ fees, the trial court erred by using the percentage of fund method and then made mistakes when performing lodestar calculations. Finally, he contended class counsel breached their fiduciary duty to the class members by including a collusive clear sailing provision in the amended settlement agreement. In affirming the trial court’s order, the appellate court held the class notice did not violate the class members’ due process rights, and that the trial court’s method of calculating attorneys’ fees was proper and the amount reasonable. With regard to the amount of fees, class counsel had requested no more than a third of the gross settlement amount, but the class member was concerned there was an underlying agreement the defendant would not contest the amount of fees. Obviously aware of that “clear sailing” possibility, the appellate court stated:  “One inherent risk [in class action settlements] is that class counsel may collude with the defendants, ‘tacitly reducing the overall settlement in return for a higher attorney’s fee.”’ The appellate court concluded: “In the absence of any of the recognized warning signs of collusion or other evidence of collusion, the inclusion of a clear sailing provision in the settlement agreement did not constitute a breach of fiduciary duty on the part of class counsel.”  (Laffitte v. Robert Half Internat., Inc. (Cal. App. Second Dist., Div. 7; November 21, 2014) 231 Cal.App.4th 860, [180 Cal.Rptr.3d 136].)