Chambers v. Whirlpool Corp., No. 16-56666 (9th Cir. 2020)Annotate this Case
In a class action lawsuit regarding faulty Whirlpool dishwashers, the Ninth Circuit affirmed the district court's approval of a class settlement, but vacated and remanded the $14.8 million attorney's fees award. The panel held that the Class Action Fairness Act's (CAFA) attorney's fee provisions apply to all federal class actions; the district court improperly used a lodestar-only method to calculate attorney's fees for the coupon portion of the settlement where that methodology potentially inflates the amount of attorney's fees in proportion to the results achieved for the class because the coupons may end up providing minimal benefit to the class; the district court erred in awarding a 1.68 lodestar multiplier; and the district court did not abuse its discretion in approving the settlement.
On remand, the panel instructed the district court to apply a percentage-of-redemption value methodology for the coupon portion of a settlement, and use a lodestar method for the non-coupon part of the relief. In the alternative, the panel stated that the district court may use a lodestar-only methodology, but only if it does not consider the coupon relief or takes into account its redemption value.
Court Description: Class Settlement / Attorney’s Fees The panel affirmed the district court’s approval of a class settlement, but vacated and remanded the $14.8 million attorney’s fees award, in a class action lawsuit about faulty Whirlpool dishwashers. The settlement provided, among other things, coupons that consumers could use to buy a new Whirlpool dishwasher. The panel held that the attorney’s fees provisions in the Class Action Fairness Act (“CAFA”) preempt any corresponding state law and apply to any class action in federal court, including those based on diversity jurisdiction. The panel rejected plaintiffs’ argument that the Rules Enabling Act precluded CAFA preemption of state law on attorney’s fees. Finally, the panel held that the choice-of- * The Honorable Frederic Block, United States District Judge for the Eastern District of New York, sitting by designation. 6 CHAMBERS V. WHIRLPOOL CORP. law provision in the parties’ settlement agreement could not have invoked a California rule permitting a lodestar-only calculation because CAFA has supplanted it. The panel held that the district court improperly used a lodestar-only method to calculate attorney’s fees for the coupon portion of the settlement. The panel vacated the fee award because the district court failed to follow CAFA’s mandate to use a percentage-of-value calculation for any “portion” of a fee award “attributable to the award of the coupons.” See 28 U.S.C. § 1712(a). Nor did the district court use a lodestar methodology completely divorced from the coupon portion of the settlement, as permitted under In re Easysaver Rewards Litigation, 906 F.3d 747 (9th Cir. 2018). The panel held on remand that the district court should first attempt to ascertain the (a) the redemption value of the coupons, and (b) the value of the non-coupon portion of the settlement. The panel held that the district court erred in awarding a 1.68 lodestar multiplier. Specifically, the district court incorrectly included the value of the coupon portion of the settlement in establishing the 1.68 multiplier for the lodestar value. Further, the reasons cited by the district court cannot justify enhancement and are not tied to the multiplier amount. Whether a downward multiplier is warranted will depend on the district court’s valuation of the settlement, and the panel remanded for the district court to make this determination in the first instance for its calculation of fees under 28 U.S.C. §§ 1712(a) and (b). The panel held that the district court did not abuse its discretion in approving the settlement. While the objectors raised various challenges to the settlement, none of their arguments established a “strong showing” that the district CHAMBERS V. WHIRLPOOL CORP. 7 court clearly abused its discretion by approving the settlement.