Filed: Dec. 04, 2015
Latest Update: Mar. 02, 2020
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 14-2006 GREGORY THOMAS BERRY; SUMMER DARBONNE, on behalf of herself and all others similarly situated; RICKEY MILLEN, on behalf of himself and all others similarly situated; SHAMOON SAEED, on behalf of himself and all others similarly situated; ARTHUR B. HERNANDEZ, on behalf of himself and all others similarly situated; ERIKA A. GODFREY, on behalf of herself and all others similarly situated; TIMOTHY OTTEN, on behalf of himself
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 14-2006 GREGORY THOMAS BERRY; SUMMER DARBONNE, on behalf of herself and all others similarly situated; RICKEY MILLEN, on behalf of himself and all others similarly situated; SHAMOON SAEED, on behalf of himself and all others similarly situated; ARTHUR B. HERNANDEZ, on behalf of himself and all others similarly situated; ERIKA A. GODFREY, on behalf of herself and all others similarly situated; TIMOTHY OTTEN, on behalf of himself a..
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-2006
GREGORY THOMAS BERRY; SUMMER DARBONNE, on behalf of herself
and all others similarly situated; RICKEY MILLEN, on behalf
of himself and all others similarly situated; SHAMOON SAEED,
on behalf of himself and all others similarly situated;
ARTHUR B. HERNANDEZ, on behalf of himself and all others
similarly situated; ERIKA A. GODFREY, on behalf of herself
and all others similarly situated; TIMOTHY OTTEN, on behalf
of himself and all others similarly situated,
Plaintiffs − Appellees,
and
LEXISNEXIS RISK AND INFORMATION ANALYTICS GROUP, INC.;
SEISINT, INC.; REED ELSEVIER, INC.,
Defendants – Appellees,
v.
ADAM E. SCHULMAN,
Party-in-Interest - Appellant.
------------------------------
JAMES TAYLOR LEWIS GRIMMELMANN,
Amicus Supporting Appellants.
No. 14-2050
GREGORY THOMAS BERRY; SUMMER DARBONNE, on behalf of herself
and all others similarly situated; RICKEY MILLEN, on behalf
of himself and all others similarly situated; SHAMOON SAEED,
on behalf of himself and all others similarly situated;
ARTHUR B. HERNANDEZ, on behalf of himself and all others
similarly situated; ERIKA A. GODFREY, on behalf of herself
and all others similarly situated; TIMOTHY OTTEN, on behalf
of himself and all others similarly situated,
Plaintiffs − Appellees,
and
LEXISNEXIS RISK AND INFORMATION ANALYTICS GROUP,
INCORPORATED; SEISINT, INCORPORATED; REED ELSEVIER,
INCORPORATED,
Defendants – Appellees,
v.
MEGAN CHRISTINA AARON and the Aaron Objectors,
Party-in-Interest - Appellant.
------------------------------
JAMES TAYLOR LEWIS GRIMMELMANN,
Amicus Supporting Appellants.
No. 14-2101
GREGORY THOMAS BERRY; SUMMER DARBONNE, on behalf of herself
and all others similarly situated; RICKEY MILLEN, on behalf
of himself and all others similarly situated; SHAMOON SAEED,
on behalf of himself and all others similarly situated;
ARTHUR B. HERNANDEZ, on behalf of himself and all others
similarly situated; ERIKA A. GODFREY, on behalf of herself
and all others similarly situated; TIMOTHY OTTEN, on behalf
of himself and all others similarly situated,
Plaintiffs − Appellees,
and
2
LEXISNEXIS RISK AND INFORMATION ANALYTICS GROUP,
INCORPORATED; SEISINT, INCORPORATED; REED ELSEVIER,
INCORPORATED,
Defendants – Appellees,
v.
SCOTT HARDWAY and the Hardway Objectors,
Party-in-Interest - Appellant.
------------------------------
JAMES TAYLOR LEWIS GRIMMELMANN,
Amicus Supporting Appellants.
Appeals from the United States District Court for the Eastern
District of Virginia, at Richmond. James R. Spencer, Senior
District Judge. (3:11-cv-00754-JRS)
Argued: September 15, 2015 Decided: December 4, 2015
Before KING and HARRIS, Circuit Judges, and George J. HAZEL,
United States District Judge for the District of Maryland,
sitting by designation.
Affirmed by published opinion. Judge Harris wrote the opinion,
in which Judge King and Judge Hazel joined.
ARGUED: Richard Monroe Paul, III, PAUL McINNES LLP, Kansas City,
Missouri, for Appellants. William Walter Wilkins, NEXSEN PRUET,
Greenville, South Carolina; Joseph R. Palmore, MORRISON &
FOERSTER LLP, Washington, D.C., for Appellees. ON BRIEF:
Ashlea G. Schwarz, PAUL McINNES LLP, Kansas City, Missouri;
Samuel Issacharoff, New York, New York; Thomas W. Bevan, Patrick
M. Walsh, BEVAN & ASSOCIATES LPA, INC., Boston Heights, Ohio;
Edwin F. Brooks, EDWIN F. BROOKS, LLC, Richmond, Virginia; Adam
E. Schulman, CENTER FOR CLASS ACTION FAIRNESS, Washington, D.C.,
for Appellants. Michael A. Caddell, Cynthia B. Chapman, CADDELL
3
& CHAPMAN, Houston, Texas; Kirsten E. Small, Andrew A. Mathias,
NEXSEN PRUET, Greenville, South Carolina; Leonard A. Bennett,
Matthew J. Erausquin, CONSUMER LITIGATION ASSOCIATES, P.C.,
Newport News, Virginia; James A. Francis, David Searles, John
Soumilas, FRANCIS & MAILMAN P.C., Philadelphia, Pennsylvania;
Dale W. Pittman, THE LAW OFFICE OF DALE W. PITTMAN, P.C.,
Petersburg, Virginia; Ronald I. Raether, Jr., FARUKI, IRELAND &
COX, PLL, Dayton, Ohio; David Neal Anthony, TROUTMAN SANDERS,
LLP, Richmond, Virginia; Marc A. Hearron, Washington, D.C.,
James F. McCabe, San Francisco, California, Michael B. Miller,
MORRISON & FOERSTER LLP, New York, New York, for Appellees.
Daniel F. Goldstein, Matthias L. Niska, BROWN GOLDSTEIN & LEVY,
LLP, Baltimore, Maryland; James Grimmelmann, Professor of Law,
Francis King Carey School of Law, UNIVERSITY OF MARYLAND,
Baltimore, Maryland, for Amicus Curiae.
4
PAMELA HARRIS, Circuit Judge:
The class action settlement at issue in this appeal is “the
culmination of years of litigation and negotiations” between
class counsel and the defendants, LexisNexis Risk and
Information Analytics Group, Inc.; Seisint, Inc.; and Reed
Elsevier Inc. (together, “Lexis”). Berry v. LexisNexis Risk &
Info. Analytics Grp., Inc., No. 3:11-CV-754, 2014 WL 4403524, at
*1 (E.D. Va. Sept. 5, 2014). The dispute centers around
Lexis’s sale of personal data reports to debt collectors.
According to the plaintiffs, Lexis has failed to provide the
protections of the Fair Credit Reporting Act (the “FCRA” or the
“Act”), 15 U.S.C. § 1681, et seq., in connection with its
reports. According to Lexis, its data reports do not qualify as
“consumer reports” within the meaning of the FCRA, and so it is
not required to comply with the Act.
After three separate lawsuits, extensive discovery, and a
long series of mediation conferences, a deal was struck. Lexis
would make sweeping changes to its product offerings in order to
protect consumer information, and in exchange, the class members
would release any statutory damages claims under the Act. The
district court certified a settlement class under Rule 23(b)(2)
of the Federal Rules of Civil Procedure and approved the
settlement, finding that it would make Lexis “the industry
leader among data aggregation companies in the protection of
5
customer information provided to debt collectors.” Berry, 2014
WL 4403524, at *3.
Now, a group of class members claiming the right to opt out
of the settlement class and pursue statutory damages
individually (the “Objectors”) seeks to undo that settlement. 1
We find no error in the release of the statutory damages claims
as part of a Rule 23(b)(2) settlement, and no abuse of
discretion in the district court’s approval of the settlement
agreement. Accordingly, we affirm the district court’s decision
in full.
I.
A.
The FCRA regulates the collection and dissemination of
certain consumer data bearing on credit eligibility. Its
protections are focused on the sale of “consumer reports” –
communications (1) containing information related to any one of
seven specific consumer characteristics (including credit
standing and worthiness and other personal information), which
are (2) prepared to assist buyers in making certain eligibility
1 The Objectors consist of three separate groups of class
members objecting to the settlement: the “Aaron Objectors,”
20,206 members of the 23(b)(2) class; the “Hardway Objectors,”
another 7,289 class members; and Adam Schulman, a class member
representing himself.
6
determinations, including credit eligibility. 15 U.S.C.
§ 1681a(d).
The Act imposes various obligations on “consumer reporting
agencies” – companies that regularly prepare “consumer reports,”
15 U.S.C. § 1681a(f) – and provides a wide panoply of
protections for consumers. For example, consumer reports may be
furnished only for certain uses, such as credit transactions.
Id. at § 1681b(a)(3)(A). Consumers are given the right to view
the information in their files,
id. at § 1681g(a)(1), and if
they dispute the information they find, the consumer reporting
agency must conduct a reasonable investigation into the
information’s accuracy,
id. at § 1681i(a)(1)(A). None of those
protections applies, however, unless and until a “consumer
report” has been issued.
Lexis is a data broker that sells an identity report called
Accurint® for Collections (“Accurint”), used to locate people
and assets, authenticate identities, and verify credentials.
The Accurint database contains information on over 200 million
people, and millions of Accurint reports are sold each year.
For years, Lexis sold Accurint without complying with the FCRA,
on the theory that Accurint is not a “consumer report” that
triggers the Act’s protections. Whether Accurint reports in
fact constitute “consumer reports” under the FCRA is the crux of
the parties’ dispute.
7
B.
Class counsel and Lexis have a long history. This is the
third national putative class action brought by counsel against
Lexis, each alleging essentially the same thing: that Lexis
violated the FCRA by selling Accurint reports without affording
FCRA protections. Neither of the two prior suits resulted in
any class settlement or court-ordered relief. In Graham v.
LexisNexis Risk & Information Analytics Management Group, Inc.,
No. 3:09-cv-00655-JRS (E.D. Va. Jan. 21, 2011), the plaintiffs
dismissed the claims after Lexis moved to dismiss for lack of
standing. And in Adams v. LexisNexis Risk & Information
Analytics Group, Inc., No. 08-4708 (D.N.J. October 28, 2010),
the parties settled after the district court denied Lexis’s
motion for judgment on the pleadings. Over the course of these
lawsuits, class counsel and Lexis negotiated numerous times,
including at least nine in-person mediation conferences and many
more telephone conferences.
Throughout this litigation, class counsel endeavored to
prove not only that Lexis violated the FCRA, but also that it
did so “willfully.” That is because in addition to creating
liability for actual damages sustained by an individual as a
result of a violation, 15 U.S.C. § 1681o(a), the FCRA provides
for statutory damages of between $100 and $1,000 for willful
violations, id. at § 1681n(a), which would be available to all
8
class members. But willfulness is a high standard, requiring
knowing or reckless disregard of the FCRA’s requirements.
Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 57, 69 (2007).
Unless Lexis was “objectively unreasonable,”
id. at 69, in
concluding that its Accurint reports were not “consumer reports”
subject to the FCRA, then there would be no liability for
statutory damages.
The Adams court’s treatment of the willfulness issue, in
particular, is relevant to the case we review today. Class
counsel focused on the district court’s refusal to dismiss the
case on the pleadings because it would be “premature . . . to
say that [the p]laintiff can produce no evidence to support [a
willfulness] finding,” No. 08-4708, 2010 WL 1931135, at *10
(D.N.J. May 12, 2010). But Lexis pointed to an Opinion Letter
issued by the Federal Trade Commission in 2008 declaring that
Accurint reports are not “credit reports” under the FCRA, see
FTC Opinion Letter to Marc Rotenberg at 1 n.1 (July 29, 2008)
(“FTC Opinion Letter” or “Opinion Letter”), and argued that it
cannot be “objectively unreasonable” to adopt the view of the
federal agency responsible for enforcing the FCRA. And indeed,
as Lexis noted, the Adams court subsequently clarified that
unless discovery showed that the FTC had reversed the view taken
in its 2008 Opinion Letter, the Adams plaintiffs would have
difficulty showing willfulness.
9
C.
This case began in 2011, when the named plaintiffs (the
“Plaintiffs” or the “Class Representatives”), individuals who
were the subject of Accurint reports, filed a putative class
action against Lexis. The complaint alleged that Lexis violated
the FCRA in three ways: by selling Accurint reports without
first ensuring that buyers were purchasing the reports for uses
permitted by the FCRA, refusing to allow consumers to view their
Accurint reports, and refusing to investigate when consumers
disputed information in Accurint reports. The Plaintiffs
proposed three classes to match: an “Impermissible Use” class,
including all persons listed in Accurint reports sold by Lexis;
and “File Request” and “Dispute” classes, limited to consumers
who interacted more directly with Lexis and were refused access
to their Accurint reports or denied investigations when they
filed disputes. The Plaintiffs sought both actual and statutory
damages. But – as has become important to the Objectors’
argument – because the FCRA does not provide expressly for an
injunctive remedy in private actions, they did not seek
injunctive relief.
Over a year later, after months of discovery and a series
of negotiations with the aid of “three highly skilled
mediators,” including two federal judges, Berry, 2014 WL
4403524, at *14, the Plaintiffs and Lexis at last reached a
10
settlement agreement (the “Agreement”). Instead of the three
classes contemplated by the Plaintiffs’ complaint, the Agreement
calls for just two. The first, not directly at issue here,
consists of approximately 31,000 individuals who actively sought
to treat Accurint reports as consumer reports under the FCRA by
requesting copies or attempting to dispute information. Under
the Agreement, those class members will release all potential
FCRA claims against Lexis in exchange for financial compensation
of approximately $300 per person. The district court’s
certification of that class (the “(b)(3) Class”) under Federal
Rule of Civil Procedure 23(b)(3) and approval of its settlement
are not challenged on appeal.
The focus of this controversy is the second class,
certified under Federal Rule of Civil Procedure 23(b)(2) (the
“(b)(2) Class”). Much larger than the first class, the (b)(2)
Class includes all individuals in the United States about whom
the Accurint database contained information from November 2006
to April 2013 – roughly 200 million people. 2 And the settlement
2 Given what is effectively a nationwide class, we must
contend with the possibility that we ourselves are among the
members of the (b)(2) Class. At oral argument, counsel for
Lexis and for the Plaintiffs took the position that we are not
class members under a fair and practical reading of the
Agreement, which excludes from the class “the presiding judge in
the action and his staff, and all members of their immediate
family.” J.A. 108. Counsel for the Objectors did not disagree
and also volunteered to waive any potential conflict. While
11
provided the (b)(2) Class under the Agreement differs
significantly from that provided the (b)(3) Class. First,
unlike members of the (b)(3) Class, (b)(2) Class members retain
the right to seek actual damages individually under the FCRA,
though they waive any claim for statutory damages, as well as
punitive damages. And second, what (b)(2) Class members receive
in exchange is not monetary but purely injunctive relief – a
fundamental change in the product suite that Lexis offers the
debt-collection industry that “will result in a significant
shift from the currently accepted industry practices.” Berry,
2014 WL 4403524, at *3.
Specifically, under the Agreement, Lexis is to divide its
Accurint report into two new products. The first, “Collections
Decisioning,” will be treated as falling within the FCRA’s
“consumer report” definition. This means, among other things,
that Collections Decisioning reports can be used only for
those representations may be sufficient to resolve any problem
that otherwise would arise, we need not rely on them here. We
agree with the view expressed in the Compendium of Selected
Opinions for the Committee on Codes of Conduct that “[a] judge’s
inclusion as a class member in a Rule 23(b)(2) class action
seeking only injunctive and declaratory relief, in which a
substantial segment of the general public are also members, does
not require recusal, unless the judge has an interest in the
action unique from that of members of the general public
included in the class.” See Compendium § 3.1-6[4](d). Because
any interest we may have in this litigation is common to the
general public, recusal is not required.
12
permissible purposes under the FCRA, and so will be available
only to buyers that have completed a detailed credentialing
process. Consumers also will have the right to view the
information in their reports, free of charge in certain
circumstances, and to dispute information they believe to be
inaccurate, all as provided by the FCRA.
The second suite of products, called “Contact & Locate,” is
intended only for the “limited purpose of finding and locating
debtors or locating assets,” J.A. 121, and will not include any
of the “seven characteristic” information that makes a
communication a “consumer report.” Id. Accordingly, “Contact &
Locate” is not treated as subject to the FCRA, and the Agreement
stipulates that “the Contact & Locate suite of products and
services do not constitute ‘consumer reports’ as that term is
defined under the FCRA.” J.A. 123. Nevertheless, consumers
will be given certain FCRA-like protections in connection with
Contact & Locate. For example, consumers will be able to obtain
free copies of their Contact & Locate reports once each year,
and they will be able to submit statements disputing the
information they find.
In April 2013, the district court granted the parties’
joint motion for preliminary certification of two classes for
settlement purposes. The Objectors filed motions challenging
certification of the (b)(2) Class and the terms of the
13
settlement itself. After a day-long final approval hearing at
which the parties and the Objectors presented argument, the
district court certified the (b)(2) Class and approved the
settlement.
Certification of a settlement class under Rule 23(b)(2) was
appropriate, the court ruled, because the relief sought by the
class is injunctive, rather than monetary, and “indivisible” in
that it “will accrue to all members of the Rule 23(b)(2) class.”
Berry, 2014 WL 4403524, at *11. The court dismissed the
Objectors’ claim that a lack of opt-out rights from the
mandatory (b)(2) Class precluded certification, emphasizing that
class members retained the right to sue for individualized
relief in the form of actual damages and waived only non-
individualized statutory damages, uniform as to all class
members.
Id. at *11-12.
The district court also approved the terms of the Agreement
as “fair, reasonable, and adequate” under Federal Rule of Civil
Procedure 23(e)(2). According to the court, no concerns as to
fairness were raised by the process leading up to the Agreement,
involving “arm’s-length negotiations by highly experienced
counsel after full discovery was completed.” Id. at *14. But
most important, the court held, was the “relative strength” of
the parties’ claims and defenses.
Id. at *15. Given the 2008
FTC Opinion Letter deeming Accurint reports outside the scope of
14
the FCRA, the district court found that the Objectors’ prospects
of recovering statutory damages for a willful violation were
“speculative at best,” making release of those claims in
exchange for substantial injunctive relief demonstrably fair and
adequate. Id.
Finally, the district court approved incentive awards of
$5,000 each for the Class Representatives and granted class
counsel’s motion for attorneys’ fees, awarding $5,333,188.21 in
connection with the (b)(2) Class settlement.
Id. at *15-16.
The Objectors timely appealed, challenging certification of the
(b)(2) Class, approval of the Agreement, and the award of
attorneys’ fees.
II.
The Objectors first challenge the district court’s
certification of the (b)(2) Class for settlement purposes. We
review a district court’s decision to certify a class only for
“clear abuse of discretion.” Flinn v. FMC Corp., 528 F.2d
1169, 1172 (4th Cir. 1975). An error of law or clear error in
finding of fact is an abuse of discretion. Thorn v. Jefferson-
Pilot Life Ins. Co.,
445 F.3d 311, 317 (4th Cir. 2006). But
short of such error, we give “substantial deference” to a
district court’s certification decision, recognizing that a
“district court possesses greater familiarity and expertise than
15
a court of appeals in managing the practical problems of a class
action.” Ward v. Dixie Nat’l Life Ins. Co., 595 F.3d 164, 179
(4th Cir. 2010).
A.
Under Rule 23(a) of the Federal Rules of Civil Procedure, a
party seeking class certification, whether for settlement or
litigation purposes, first must demonstrate that: “(1) the class
is so numerous that joinder of all members is impracticable; (2)
there are questions of law or fact common to the class; (3) the
claims or defenses of the representative parties are typical of
the claims or defenses of the class; and (4) the representative
parties will fairly and adequately protect the interests of the
class.” Fed. R. Civ. P. 23(a).
Second, if the requirements of Rule 23(a) are met, then the
proposed class must fit within one of the three types of classes
listed in Rule 23(b). At issue here is Rule 23(b)(2), which
permits certification where “the party opposing the class has
acted or refused to act on grounds that apply generally to the
class, so that final injunctive relief or corresponding
declaratory relief is appropriate respecting the class as a
whole.” Fed. R. Civ. P. 23(b)(2). “[B]ecause of the group
nature of the harm alleged and the broad character of the relief
sought, the (b)(2) class is, by its very nature, assumed to be a
homogenous and cohesive group with few conflicting interests
16
among its members.” Allison v. Citgo Petroleum Corp., 151 F.3d
402, 413 (5th Cir. 1998). Accordingly, Rule 23(b)(2) classes
are “mandatory,” in that “opt-out rights” for class members are
deemed unnecessary and are not provided under the Rule. See
id.; see also Wal-Mart Stores, Inc. v. Dukes,
131 S. Ct. 2541,
2558 (2011).
Federal circuits, including ours, have held that mandatory
Rule 23(b)(2) classes may be certified in some cases even when
monetary relief is at issue. See Thorn, 445 F.3d at 331;
Allison, 151 F.3d at 413-14. Where monetary relief
predominates, Rule 23(b)(2) certification is inappropriate.
Thorn, 445 F.3d at 331-32. But where monetary relief is
“incidental” to injunctive or declaratory relief, Rule 23(b)(2)
certification may be permissible.
Allison, 151 F.3d at 415; see
also
Dukes, 131 S. Ct. at 2560 (discussing Allison). This rule
follows from the premise underlying the mandatory nature of Rule
23(b)(2) classes: If a class action is more about individual
monetary awards than it is about uniform injunctive or
declaratory remedies, then the “presumption of cohesiveness”
breaks down and the procedural safeguard of opt-out rights
becomes necessary.
Allison, 151 F.3d at 413; see Eubanks v.
Billington,
110 F.3d 87, 95 (D.C. Cir. 1997). And indeed, the
Supreme Court clarified in Dukes that claims for individualized
monetary relief – in that case, back-pay awards under Title VII
17
– are not “incidental” for purposes of Rule 23(b)(2) and may not
be certified under that Rule. 131 S. Ct. at 2557.
B.
The Objectors’ principal argument is that certification of
the (b)(2) Class runs afoul of these limits. According to the
Objectors, the statutory damages waived under the Agreement
predominate over the injunctive relief awarded and are not of
the “incidental” and non-individualized sort, see Dukes, 131 S.
Ct. at 2557, 2560; Allison, 151 F.3d at 415, that may be
certified under Rule 23(b)(2). 3
We disagree. As the district court explained, this is a
paradigmatic Rule 23(b)(2) case: The “meaningful, valuable
injunctive relief” afforded by the Agreement is “indivisible,”
“benefitting all [] members” of the (b)(2) Class at once.
Berry, 2014 WL 4403524, at *11. And the statutory damages
claims released under the Agreement are not the kind of
individualized claims that threaten class cohesion and are
prohibited by Dukes. When it comes to statutory damages under
the FCRA, what matters is the conduct of the defendant, Lexis –
which, as the district court emphasized, “was uniform with
3We can assume for purposes of this opinion that a class
settlement that releases damages claims is on precisely the same
footing under Rule 23(b)(2) and the Due Process Clause as one
that provides for damages. We note, however, that Lexis
contests that premise, and we do not decide its validity today.
18
respect to each of the class members.” Id. at *12. The
availability of statutory damages in this case, in other words,
is a simple function of Lexis’s policies with respect to its
Accurint reports, applicable to the entire (b)(2) Class. 4 If
Lexis unreasonably failed to treat Accurint reports as “consumer
reports” subject to the FCRA, then every class member would be
entitled uniformly to the same amount of statutory damages, set
by rote calculation.
Id.
Indeed, this settlement appears to be structured precisely
to comply with Dukes and with Rule 23(b)(2). There are, to be
sure, individualized monetary damages claims at issue here –
those for actual damages under the FCRA – but those claims, as
the district court emphasized, are retained by the (b)(2) Class
members.
Id. In contrast, the monetary claims released – those
for statutory damages – “flow directly from liability to the
class as a whole” on the same set of claims underlying the
4 Like the district court, we find unpersuasive the
Objectors’ contention that the Adams decision, see supra at
Section I.B., effectively divides the (b)(2) Class into two
groups differently positioned with respect to willfulness:
(1) class members whose claims arose after the Adams decision
put Lexis on notice that its Accurint reports were subject to
the FCRA, making those members eligible for statutory damages;
and (2) class members whose claims arose before Adams put Lexis
on notice. In fact, the Adams court did not rule that Accurint
reports qualified as “consumer reports” under the FCRA, as it
subsequently explained to the parties: “I think there has been
some misinterpretation of what my [motion for judgment on the
pleadings] ruling was.” J.A. 2367.
19
injunctive relief, making them non-individualized under Dukes
and “incidental” for purposes of Rule 23(b)(2). Dukes, 131 S.
Ct. at 2560 (quoting Allison, 151 F.3d at 415) (emphasis in
original).
The Objectors also argue that the statutory damages claims
released by the Agreement cannot be deemed “incidental” to
injunctive relief because the Plaintiffs’ original complaint did
not seek any injunctive relief under the FCRA. Again, we
disagree.
We may assume, as did the district court, that the FCRA,
which does not provide expressly for a private right of action
for injunctive relief, does not permit consumers to seek
injunctive remedies. But like the district court, we think that
is beside the point: “[I]n the settlement context, ‘it is the
parties’ agreement that serves as the source of the court’s
authority to enter any judgment at all.’” Berry, 2014 WL
4403524, at *12 (quoting Local Number 93 v. City of Cleveland,
478 U.S. 501, 522 (1986)); see Sullivan v. DB Invs., Inc.,
667
F.3d 273, 317 (3d Cir. 2011) (court may “approve a mutually
agreed-upon stipulation enjoining conduct . . . regardless of
whether the plaintiffs could have received identical relief in a
contested suit”). And Lexis is free to agree to a settlement
enforcing a contractual obligation that could not be imposed
without its consent. Indeed, many FCRA class action disputes
20
are resolved in part through consent decrees. See, e.g.,
Serrano v. Sterling Testing Sys., Inc., 711 F. Supp. 2d 402, 409
(E.D. Pa. 2010).
Failing to acknowledge the critical role of the settlement
agreement, the Objectors rely on authority from outside the
settlement context that is unavailing here. Specifically, the
Objectors point to decisions from the Fifth and Eleventh
Circuits, each noting that the unavailability of injunctive
relief under a statute would preclude certification of a Rule
23(b)(2) class. See Christ v. Beneficial Corp., 547 F.3d 1292,
1298 (11th Cir. 2008); Bolin v. Sears, Roebuck & Co.,
231 F.3d
970, 977 n.39 (5th Cir. 2000). But in neither of those cases
did the defendants agree to a settlement; instead, the
defendants in both cases opposed certification.
Christ, 547
F.3d at 1295-96;
Bolin, 231 F.3d at 973. We can agree that in
those circumstances, where the defendant is unwilling to settle
and the relevant statute does not allow for injunctive relief,
Rule 23(b)(2) certification would be inappropriate because the
plaintiffs would have no prospect of achieving injunctive
relief. But simply to describe those circumstances is to
differentiate them from those before us now, where the (b)(2)
Class members indeed will achieve substantial injunctive relief,
by virtue of the parties’ settlement, upon approval of the
Agreement.
21
Nor does the failure of the Plaintiffs to seek injunctive
relief in their original complaint independently preclude
certification under Rule 23(b)(2). By its terms, Rule 23(b)(2)
applies so long as “final injunctive relief . . . is appropriate
respecting the class as a whole,” Fed. R. Civ. P. 23(b)(2)
(emphasis added), and the corresponding Advisory Committee’s
Note likewise focuses on the “final relief” afforded in a Rule
23(b)(2) case, 39 F.R.D. 69, 102 (1966). We therefore look to
the Agreement itself, and to the “final relief” it contemplates,
to assess the propriety of any monetary remedy. Any other
result would not only contravene the terms of Rule 23(b)(2), it
would discourage settlement by binding plaintiffs to the choices
they make at the earliest stages of litigation and foreclosing
the kinds of remedial compromises necessary to achieve
agreement.
That is not to say that the relief requested in a complaint
may never inform the inquiry into whether monetary relief is
truly “incidental” under Rule 23(b)(2). That inquiry is
intended in part to guard against certification when an
“injunction request is illusory,” made only to justify a damages
award that otherwise would be improper under Rule 23(b)(2). See
Thorn, 445 F.3d at 329; Richards v. Delta Air Lines, Inc.,
453
F.3d 525, 530 (D.C. Cir. 2006). So if, for instance,
substantial monetary damages actually are awarded under a Rule
22
23(b)(2) class settlement, then the absence of a request for
injunctive relief in the original complaint may give rise to
concerns that it is the money and not the injunction that is
driving the case. Cf. Hecht v. United Collection Bureau, Inc.,
691 F.3d 218, 224 (2d Cir. 2012) (Rule 23(b)(2) certification
invalid where complaint did not mention injunctive relief and
“damages . . . [were] the only remedy awarded that clearly
applied to every class member”); Fry v. Hayt, Hayt & Landau,
198
F.R.D. 461, 469 n.8 (E.D. Pa. 2000) (Rule 23(b)(2) certification
inappropriate where plaintiff seeks substantial monetary
judgment as part of settlement and did not seek injunction in
original complaint). But here, where the only relief actually
awarded to the (b)(2) Class is injunctive, those concerns are
not present.
C.
In the alternative, the Objectors argue that even if the
statutory damages claims released by the (b)(2) Class are
incidental and not predominant, due process precludes
certification of the class without opt-out rights. Here, the
Objectors rely on dicta from the Supreme Court’s decision in
Dukes, noting the “serious possibility” that due process
requires opt-out rights (and concomitant notice) under Rule
23(b)(2) even “where the monetary claims do not predominate.”
Dukes, 131 S. Ct. at 2559. But as the district court explained,
23
the Supreme Court did not go that far in Dukes, holding instead
only that claims for individualized monetary relief may not be
certified under Rule 23(b)(2). Berry, 2014 WL 4403524, at *12.
Like the district court, we decline to go where the Supreme
Court has not.
As discussed above, federal courts long have permitted
certification of mandatory Rule 23(b)(2) classes involving
monetary relief so long as that relief is “incidental” to
injunctive or declaratory relief – meaning that damages must be
in the nature of a “group remedy,” flowing “directly from
liability to the class as a whole.” Allison, 151 F.3d at 415;
see
id. at 411 (collecting cases). In such circumstances, our
court has held, opt-out rights are not required because
individualized adjudications are unnecessary. See
Thorn, 445
F.3d at 330 & n.25 (“By requiring that injunctive or declaratory
relief predominate . . . Rule 23(b)(2) ensures that the benefits
of the class action inure to the class as a whole without
running the risk of cutting off the rights of absent class
members to recover money damages and class members who want
individualized evaluation of their claim for money damages.”).
We do not believe that the Court’s dictum in Dukes warrants
or even authorizes overturning this established precedent. See
United States v. Ruhe, 191 F.3d 376, 388 (4th Cir. 1999) (Fourth
Circuit panels are “bound by prior precedent from other panels
24
in this circuit absent contrary law from an en banc or Supreme
Court decision”). And we note that our unwillingness to jump
ahead of the Supreme Court in this regard is shared by our
sister circuits. Two other federal courts of appeals have
considered whether, in light of Dukes, Rule 23(b)(2)
certification remains permissible when monetary damages are
involved. And both have affirmed the continued validity of Rule
23(b)(2) certification of monetary claims so long as the
monetary relief is non-individualized and “incidental” to
injunctive or declaratory remedies. See Amara v. CIGNA Corp.,
775 F.3d 510, 519-20 (2d Cir. 2014); Johnson v. Meriter Health
Servs. Emp. Ret. Plan,
702 F.3d 364, 369-71 (7th Cir. 2012); see
also Douglin v. GreatBanc Trust Co., No. 1:14-cv-00620-RA,
2015
WL 3526248, at *5-7 (S.D.N.Y. June 30, 2015).
To be sure, and as the district court recognized, when a
“proposed settlement is intended to preclude further litigation
by absent persons, due process requires that their interests be
adequately represented.” Berry, 2014 WL 4403524, at *11 (citing
In re Jiffy Lube,
927 F.2d 155, 158 (4th Cir. 1991)). But the
premise behind certification of mandatory classes under Rule
23(b)(2) is that because the relief sought is uniform, so are
the interests of class members, making class-wide representation
possible and opt-out rights unnecessary. See
Dukes, 131 S. Ct.
at 2558;
Thorn, 445 F.3d at 330 & n.25;
Allison, 151 F.3d at
25
413-14. And before a class may be certified under Rule
23(b)(2), of course, a court must find under Rule 23(a)(4) – as
the district court did here – that the interests of all of the
class members will be fairly and adequately represented by the
named plaintiffs and class counsel. Rule 23(e)’s settlement
approval process provides additional protection, ensuring that
Rule 23(b)(2) class members receive notice of a proposed
settlement and an opportunity to object, and that a “settlement
will not take effect unless the trial judge – after analyzing
the facts and law of the case and considering all objections to
the proposed settlement – determines it to be fair, adequate,
and reasonable.” Kincade v. Gen. Tire and Rubber Co.,
635 F.2d
501, 507-08 (5th Cir. 1981). We see no reason to depart here
from the general understanding that these procedural safeguards
are sufficient to protect the due process rights of objecting
Rule 23(b)(2) class members.
Indeed, the particular terms of this Agreement make opt-out
rights especially unnecessary here. The Dukes Court was
concerned about the “need for plaintiffs with individual
monetary claims to decide for themselves whether to tie their
fates to the class representatives’ or go it alone – a choice
Rule 23(b)(2) does not ensure that they have.” Dukes, 131 S.
Ct. at 2559 (emphasis in original). But here, the right to “go
it alone” is built into the Agreement itself, under which any
26
(b)(2) Class member may pursue actual damages resulting from
individualized harm under the FCRA. In this sense, (b)(2) Class
members are “opted out” already, by virtue of the settlement in
question. As the district court explained, the Agreement
“preserves Rule 23(b)(2) class members’ rights to bring claims
for actual damages, thereby preserving their due process
rights.” Berry, 2014 WL 4403524, at *12.
Finally, the practical implications of the Objectors’
position give us pause. What is being sought is a blanket right
to opt out of a Rule 23(b)(2) settlement that provides purely
injunctive relief solely because non-individualized statutory
damages claims are released, while individualized actual damages
claims are retained. That such a rule would discourage
settlement seems undeniable; defendants like Lexis surely will
not agree to settlements like this one if they cannot buy
something approaching global peace. See Kincade, 635 F.2d at
507. And in light of all the other procedural protections
already in place, not to mention the retention of actual damages
claims under this Agreement, any marginal benefit that might
accrue to disenchanted class members is unlikely to be worth
this cost. As the Supreme Court has recognized, procedural due
process is a “flexible concept,” requiring varying degrees of
protection “depending upon the importance attached to the
interest and the particular circumstances under which the
27
deprivation may occur.” Walters v. Nat’l Ass’n of Radiation
Survivors, 473 U.S. 305, 320 (1985). We do not think it
requires the rigid opt-out rule proposed by the Objectors here.
D.
We briefly address the Objectors’ final argument against
certification: that the (b)(2) Class's representation is
inadequate under Rule 23(a)(4) because monetary payments of
$5,000 to each Class Representative created a conflict of
interest between those Representatives and the rest of the
class. Though we appreciate that such awards can misalign the
interests of class representatives and other class members in
certain circumstances, we hold that the district court did not
abuse its discretion in approving the payments here. 5
Incentive awards are “intended to compensate class
representatives for work done on behalf of the class, to make up
for financial or reputational risk undertaken in bringing the
action, and, sometimes, to recognize their willingness to act as
a private attorney general.” Rodriguez v. W. Publ’g Corp., 563
F.3d 948, 958-59 (9th Cir. 2009). They are “fairly typical in
class action cases.”
Id. at 958 (quoting 4 William B.
5 Nor do we find any abuse of discretion in the district
court’s judgment that the (b)(2) Class members otherwise were
represented adequately under Rule 23(a)(4). To the extent the
Objectors argue to the contrary, we find their claims
unpersuasive.
28
Rubenstein et al., Newberg on Class Actions § 11:38 (4th ed.
2008)). The district court found that awards of $5,000 were
appropriate here because the Class Representatives acted for the
benefit of the class, and it cited other cases in which district
courts in our circuit have ordered similarly substantial
payments.
The Objectors point us to cases from other circuits
scrutinizing such awards when a “settlement gives preferential
treatment to the named plaintiffs while only perfunctory relief
to unnamed class members,” In re Dry Max Pampers Litig., 724
F.3d 713, 718 (6th Cir. 2013). And it is true that when
incentive agreements are entered into at the onset of
litigation, see
Rodriguez, 563 F.3d at 959, and particularly
when they are conditioned on class representative support for a
settlement, Radcliffe v. Experian Info. Sols. Inc.,
715 F.3d
1157, 1164 (9th Cir. 2013), large awards may raise concerns
about whether named plaintiffs might “compromise the interest of
the class for personal gain,” Dry Max
Pampers, 724 F.3d at 722
(quoting Hadix v. Johnson,
322 F.3d 895, 897 (6th Cir. 2003)).
In this case, however, the incentive awards were not agreed
upon ex ante, and they were not conditioned on the Class
Representatives’ support for the Agreement. Indeed, they were
not negotiated until after the substantive terms of the
Agreement had been established, making it significantly less
29
likely that the Class Representatives would have been influenced
in the performance of their representative duties. And finally,
this is not a case in which unnamed class members received “only
perfunctory relief,” see Dry Max Pampers, 724 F.3d at 718, –
instead, the district court found that the class members were
afforded substantial relief by significant changes in Lexis’s
consumer-protection practices – and there is no indication that
the highly experienced class counsel pursued this lawsuit any
less vigorously because of the Class Representatives’ fee award.
Under these circumstances, we defer to the judgment of the
district court in approving the Class Representatives’ awards
and finding adequate representation under Rule 23(a)(4).
III.
The Objectors next challenge the district court’s approval
of the (b)(2) Class settlement, arguing principally that it is
unfair and inadequate because it releases class members’
statutory damages claims without providing for any monetary
relief in exchange. Again, we afford the district court’s
decision substantial deference, reversing only “upon a clear
showing that the district court abused its discretion in
approving the settlement.” Flinn, 528 F.2d at 1172 (citations
and internal quotation marks omitted).
30
A.
As discussed above, a key procedural protection afforded
Rule 23(b)(2) class members is that a settlement will not be
approved over their objections unless a district court finds it
to be “fair, reasonable, and adequate.” Fed. R. Civ. P.
23(e)(2); see In re Jiffy Lube, 927 F.2d at 158. The fairness
analysis is intended primarily to ensure that a “settlement [is]
reached as a result of good-faith bargaining at arm’s length,
without collusion.” In re Jiffy
Lube, 927 F.2d at 159.
The district court properly considered the factors we have
identified as bearing on this inquiry: “(1) the posture of the
case at the time settlement was proposed, (2) the extent of
discovery that had been conducted, (3) the circumstances
surrounding the negotiations, and (4) the experience of counsel
in the area of [FCRA] class action litigation.” Id. Noting the
“extensive discovery” conducted through the course of three
separate lawsuits, the district court concluded that the parties
here “reached an agreement through arm’s-length negotiations by
highly experienced counsel after full discovery was completed,”
sufficient to demonstrate the fairness of the Agreement. Berry,
2014 WL 4403524, at *14. The Objectors do not and could not
take serious issue with this assessment, and we see no reason to
disturb the court’s judgment.
31
As to the Objectors’ primary complaint – that the Agreement
is inadequate because it fails to provide any monetary
compensation for the release of statutory damages claims – the
district court emphasized the most important factor in weighing
the substantive reasonableness of a settlement agreement: the
“strength of the plaintiffs’ claims on the merits.” Flinn, 528
F.2d at 1172. In other words, the fairness of a deal under
which class members give up statutory damages claims in exchange
for injunctive relief depends critically on an assessment of the
Plaintiffs’ case that they are entitled to statutory damages in
the first place.
The district court deemed that case “speculative at best,”
Berry, 2014 WL 4403524, at *15, and we think that is generous.
In order to recover statutory damages under the FCRA, the
Plaintiffs would have to show a “willful” violation by Lexis, 15
U.S.C. § 1681n, which in turn would require that Lexis have
adopted an “objectively unreasonable” reading of the Act when it
concluded that its Accurint reports were not covered as
“consumer reports.”
Safeco, 551 U.S. at 69. As the district
court noted, the Supreme Court has made clear that where “the
statutory text and relevant court and agency guidance allow for
more than one reasonable interpretation . . . a defendant who
merely adopts one such interpretation” cannot be held liable as
a willful violator.
Id. at 70 n.20. And here, with agency
32
guidance expressly specifying that Accurint reports are not
subject to the FCRA, see FTC Opinion Letter, it is hard to see
how Lexis can be said to have acted unreasonably by adopting
that reading. 6
On the other side of the ledger, of course, is the benefit
to the (b)(2) Class of “substantial [injunctive] relief without
the risk of litigation.” Berry, 2014 WL 4403524, at *15. The
district court described the injunction in this case as
implementing a “substantial, nationwide program that addresses
the issues raised in the Complaint by the [(b)(2) Class] and
will result in a significant shift” in industry practices,
making Lexis “the industry leader” in consumer-information
protection.
Id. at *3. Indeed, the record includes a finding
by an information privacy law expert that the injunctive relief
provided in the Agreement provides consumers with benefits so
substantial that their monetary value is in the billions of
dollars. The Objectors’ exclusive focus on the absence of
monetary relief is unsupported by law and also imprudent as a
matter of common sense: There was no realistic prospect that
6
Nothing about the Adams litigation dictates a different
result. Although the district court in that case denied Lexis’s
motion for judgment on the pleadings on the willfulness issue,
it subsequently clarified on reconsideration that it was “very
persuaded by the FTC’s letter,” J.A. 2377, and that if “the
plaintiffs don’t come forward with authority to the contrary
. . . then . . . [they] have a difficult row to hoe,” J.A. 2368.
33
Lexis could or would provide meaningful monetary relief to a
class of 200 million people. 7
We can find no reason to disturb the district court’s
assessment of the relative strength of the parties’ legal
positions or its fact-intensive analysis of the benefits
provided the (b)(2) Class by the parties’ settlement. In our
view, the district court was well within its discretion in
approving the settlement as fair, reasonable, and adequate under
Rule 23(e).
B.
The Objectors bring one final challenge to the settlement,
arguing that it impermissibly immunizes Lexis from future FCRA
liability in connection with its new Contact & Locate product.
We disagree.
The Objectors’ claim appears to rest on two sections of the
Agreement. In the first, the parties stipulate that “the
7 For that reason and others, the fact that the much smaller
(b)(3) Class received monetary relief under the Agreement does
not by itself render unreasonable the non-monetary relief
provided the (b)(2) Class. The (b)(3) Class, unlike the (b)(2)
Class, consists of individuals who took some affirmative action
against Lexis, seeking to view their Accurint reports or
challenging information included in those reports, putting them
in a fundamentally different position with respect to Lexis.
And in exchange for the monetary relief provided by the
Agreement, the (b)(3) Class releases all of its damages claims
against Lexis, while the (b)(2) Class retains the right to sue
for actual damages.
34
Contact & Locate suite of products and services will not involve
the provision of ‘consumer reports’ as that term is defined
under the FCRA.” J.A. 120-21. In the second, the parties
“acknowledge that the specific design and content of the Contact
& Locate . . . suite of products and services may change over
time to respond to the then current requirements of customers
and the market.” J.A. 122. According to the Objectors, the
upshot is that Lexis has carte blanche to develop Contact &
Locate into a product that is indeed a “consumer report” under
the FCRA, while class members, bound by their stipulation, will
be unable to respond.
We think that significantly overstates Lexis’s freedom
under the Agreement. It is true that the Agreement provides
Lexis the discretion it needs to develop Contact & Locate
according to market needs. But as the district court explained,
it also sets boundaries for the design and implementation of
Contact & Locate, which assure that the product cannot operate
as a “consumer report” for purposes of the FCRA. Under the
Agreement, for instance, Contact & Locate may include only
information that does not contain any of the “seven
characteristic” consumer information covered by the FCRA. J.A.
121; Berry, 2014 WL 4403524, at *4. And in the section of the
Agreement labeled the “Rule 23(b)(2) Settlement Class Release,”
J.A. 129, the parties clarify that their agreement is only that
35
the “Post Settlement Products” (of which Contact & Locate is
one) “shall not be ‘consumer reports’ within the meaning of the
FCRA so long as [they] are not used in whole or in part as a
factor in determining eligibility for credit” or any other
purpose that could qualify them as consumer reports. J.A. 132-
33 (emphasis added). Under that provision, Lexis has no free
pass from FCRA liability; instead, the Agreement applies only so
long as Contact & Locate remains true to the parties’ intent and
is not used in a manner that would make it a “consumer report.”
Releases, of course, are a standard feature of class action
settlements. Indeed, the release of claims that form the basis
of litigation is the raison d’être of any settlement, so the
Objectors do not dispute that it would have been appropriate for
the (b)(2) Class to stipulate that Lexis’s Accurint reports
comply with the FCRA. But it is different and unreasonable,
they argue, to release claims regarding Contact & Locate,
because Contact & Locate does not yet exist. Again, we think
this overstates the case. Contact & Locate is a new name, but
it is a new name for what is essentially a scaled-down version
of the old Accurint reports, without the features that allegedly
made Accurint troublesome under the FCRA. In class action
settlements, parties may release not only the very claims raised
in their cases, but also claims arising out of the “identical
factual predicate.” See, e.g., In re Literary Works in Elec.
36
Databases Copyright Litig., 654 F.3d 242, 248 (2d Cir. 2011).
Although the name of the product has changed, now, as before,
Lexis attempts only to sell information that will enable debt
collectors to locate assets, and not information to be used for
credit eligibility determinations. Because the (b)(2) Class can
release claims against Accurint, it can do so for Contact &
Locate, as well.
IV.
We are left with one final argument: a challenge by one
(and only one) Objector 8 to the district court’s approval of
class counsel’s approximately $5.3 million fee for securing
injunctive relief for the (b)(2) Class. Federal Rule of Civil
Procedure 23(h) permits “the court [to] award reasonable
attorney’s fees . . . that are authorized by . . . the parties’
agreement.” Fed. R. Civ. P. 23(h). We review attorneys’ fee
awards for abuse of discretion only. Carroll v. Wolpoff &
Abramson, 53 F.3d 626, 628 (4th Cir. 1995). That review is
“sharply circumscribed,” and a fee award “must not be overturned
unless it is clearly wrong.” Plyler v. Evatt,
902 F.2d 273, 278
(4th Cir. 1990) (internal quotation marks omitted).
8 Objector Schulman is the only Objector and member of the
200 million-member (b)(2) Class to contest the award of fees in
this case.
37
Here, class counsel’s fee was negotiated by the parties,
and the Agreement allowed for a total attorneys’ fee award of up
to $5.5 million to be paid entirely by Lexis. The district
court awarded the requested fee after analyzing it through the
lodestar method. With regard to the Rule 23(b)(2) Class
settlement, the district court found that “a lodestar of
$3,349,379.95 and a multiplier of 1.99 are applicable and, in
light of the fact that counsel allocated approximately 80% of
their time to crafting injunctive relief for the Rule 23(b)(2)
class, an award of $5,333,188.21 is appropriate.” 9 Berry, 2014
WL 4403524, at *15. Objector Schulman argues primarily that
the district court’s explanation for its fee award was
insufficiently detailed and, in particular, that the court
failed to respond to his protests that class counsel’s hourly
rate and number of hours worked were unreasonable. And indeed,
despite our very deferential review in this area, we do require
district courts to set forth clearly findings of fact for fee
awards so that we have an adequate basis to review for abuse of
discretion. See Barber v. Kimbrell’s, Inc.,
577 F.2d 216, 226
9Under the lodestar method, the district court multiplies
the number of hours worked by a reasonable hourly rate. And it
can then “adjust the lodestar figure using a ‘multiplier’
derived from a number of factors, such as the benefit achieved
for the class and the complexity of the case.” Kay Co. v.
Equitable Prod. Co., 749 F. Supp. 2d 455, 462 (S.D.W. Va. 2010).
38
(4th Cir. 1978) (adopting the twelve fee-shifting factors of
Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.
1974), whenever the district court is required to determine
reasonable attorneys’ fees).
We acknowledge that the district court’s explanation of its
fee award was brief, compressed into a single paragraph. And we
stress the importance of addressing fee requests fully and
carefully, so that we may engage in meaningful review. See
Blankenship v. Schweiker, 676 F.2d 116, 118 (4th Cir. 1982)
(vacating fee award where district court did not engage in
thorough review). On balance, however, and under the
circumstances of this case, we think that the district court’s
explanation was sufficient and that the court did not otherwise
abuse its discretion in approving the fee award.
The district court provided the specific basis on which it
awarded fees: that class counsel “expended large amounts of time
and labor,” and “achieved an excellent result in this large and
complex action.” Berry, 2014 WL 4403524, at *15. It went on to
detail why the result was indeed “excellent,” finding that the
Agreement “provides substantial benefits for over 200 million
consumers” and “forces [Lexis] to comply with the FCRA.”
Id.
And the court compared the lodestar multiplier to those applied
in similar cases. That explanation is in accord with several of
the more prominent Barber factors, which “include such
39
considerations as the time and labor required, the novelty or
difficulty of the issues litigated, customary fees in similar
situations, and the quality of the results involved.” In re
MRRM, P.A., 404 F.3d 863, 867-68 (4th Cir. 2005).
As to the reasonableness of class counsel’s hourly rate, it
is not the case, as Objector Schulman would have it, that the
court erred by relying solely on counsel’s affidavit as evidence
of prevailing market rates. On the contrary, the record
contains multiple expert opinions, all backed by voluminous
evidence, that both counsel’s hourly rate and the time spent on
the case were reasonable. The district court’s findings rest
not on unsupported and self-serving assertions from counsel, but
on the testimony of experts like Professor Geoffrey Miller,
comparing class counsel’s rates to those charged in bankruptcy
litigation as well as to rates awarded in similar class action
cases, and opining that counsel’s attestations to the time
incurred were consistent with the complexity and the duration of
the litigation. The court’s reference to “large amounts of time
and labor” may have been brief, but it was backed by substantial
evidence on which the court was entitled to rely.
Moreover, this case does not raise the kind of concerns
that might call for an especially robust or detailed explanation
of a fee award by a district court. There is no reason to worry
here that “the lawyers might [have] urge[d] a class settlement
40
at a low figure or on a less-than-optimal basis in exchange for
red-carpet treatment on fees.” See Weinberger v. Great N.
Nekoosa Corp., 925 F.2d 518, 524 (1st Cir. 1991). As discussed
above, given the size of the (b)(2) Class and the fragility of
its legal position, there was never any realistic possibility of
class-wide monetary relief; put bluntly, there is no reason to
think that class counsel left money on the table in negotiating
this Agreement. And it is not as if the injunctive relief
ultimately achieved for the (b)(2) Class was below expectations.
Again, the district court’s assessment of the injunction as an
“excellent result in [a] large and complex action” may have been
on the terse side, but it is amply supported by the experts who
opined on the fee award, characterizing the injunction as
bringing about a “sea change” in business practices, J.A. 2015-
16, and as a “serious advancement of consumer rights by a
dominant member of the data broker industry,” J.A. 583. See
McDonnell v. Miller Oil Co.,
134 F.3d 638, 641 (4th Cir. 1998)
(finding that the “most critical factor in calculating a
reasonable fee award is the degree of success obtained”
(internal quotation marks omitted)). 10
10Other features of this case further diminish any concern
about the fee award and, accordingly, any need for heightened
scrutiny by the district court. Because class counsel’s fee is
to be paid entirely by Lexis, it does not reduce the (b)(2)
Class’s recovery. Cf. Cook v. Niedert, 142 F.3d 1004, 1011 (7th
41
Finally, the fact that only one of the approximately 200
million members of the (b)(2) Class objects to the award of
attorneys’ fees is relevant to our decision. Notice of the
proposed settlement in this case reached 75.1 percent of the
(b)(2) Class members, but only Objector Schulman raised any
concerns; indeed, the other Objectors specifically declined to
join this portion of the challenge. That almost complete lack
of objection to the fee request provides additional support for
the district court’s decision to approve it. See In re Rite Aid
Corp. Sec. Litig., 396 F.3d 294, 305 (3d Cir. 2005) (noting that
only two of 300,000 class members objecting to fee request is a
“rare phenomenon” and evidence that the district court did not
abuse its discretion in awarding fees); see also
Flinn, 528 F.2d
at 1174 (finding class action settlement reasonable where
“[o]nly five members of the class filed any dissent from the
settlement”).
Cir. 1998) (when attorneys’ fee reduces amount of common fund,
court must carefully scrutinize fee application). Nor, of
course, will it require the expenditure of taxpayer funds, which
might warrant additional scrutiny. Cf. Perdue v. Kenny A.,
559
U.S. 542, 559 (2010) (limiting the use of multipliers in
lodestar-based fee awards against the government under fee-
shifting statutes). Finally, the parties did not even begin to
negotiate class counsel’s fee until after the substantive terms
of the Agreement were finalized, making it far less likely that
counsel could have traded off the interests of class members to
advance their own ends.
42
Again, we should not be understood to minimize the need for
district courts to explain their attorneys’ fee awards and to
take account of relevant objections. But on the facts of this
case, we find that the district court satisfied that standard,
and committed no abuse of discretion in awarding attorneys’ fees
to class counsel in connection with the (b)(2) Class settlement.
V.
For the reasons set forth above, we affirm the decision of
the district court.
AFFIRMED
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