Koenig v. U.S. Bank National Ass'n

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 01-1217
___________
In re: US Bancorp Litigation, also *
known as U.S. Bank National *
Association Litigation *
--------------------------------- *
*
James D. Koenig, on behalf of himself, *
and the class of similarly situated *
consumers; Phillippa Saunders, on *
behalf of herself and others similarly *
situated; Barbara A. Mans; Michael J. *
Mans, individually, and on behalf of a *
class of all others similarly situated; *
Chris Somers, individually, and on *
behalf of a class of all others similarly *
situated; Anne Bergman; Kathryn *
Rosebear, on their own behalf and on *
behalf of all others similarly situated; *
Jane Korn; Robert Madoff, on their *
own behalf and on behalf of all others *
similarly situated; Brent Johnson; Bill *
Rooney, individually, and on behalf of *
a class of all others similarly situated; *
Daniel P. Mallove; Timothy Gaillard; *
Cynthia Gaillard; Mary Scalise, *
*
Plaintiffs - Appellees, *
*
N. Peter Knoll, *
*
Intervenor Plaintiff-Appellant, *
*
Anne Knoll, *
*
Intervenor Plaintiff, *
*
William J. Lorence, *
*
Intervenor Plaintiff - Appellant, *
*
v. *
*
U.S. Bank National Association, ND, *
formerly known as First Bank of South *
Dakota, N.A.; US Bancorp Insurance *
Services, Inc.; US Bancorp, formerly *
known as First Bank Systems, *
*
Defendants - Appellees. *
___________ Appeals from the United States
District Court for the
No. 01-1242 District of Minnesota
___________
In re: US Bancorp Litigation, also *
known as U.S. Bank National *
Association Litigation *
--------------------------------- *
*
James D. Koenig, on behalf of himself, *
and the class of similarly situated *
consumers; Phillippa Saunders, on *
behalf of herself and others similarly *
situated; Barbara A. Mans; Michael J. *
Mans, individually, and on behalf of a *
class of all others similarly situated; *
Chris Somers, individually, and on *
behalf of a class of all others similarly *
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situated; Anne Bergman; Kathryn *
Rosebear, on their own behalf and on *
behalf of all others similarly situated; *
Jane Korn; Robert Madoff, on their *
own behalf and on behalf of all others *
similarly situated; Brent Johnson; Bill *
Rooney, individually, and on behalf of *
a class of all others similarly situated; *
Daniel P. Mallove; Timothy Gaillard; *
Cynthia Gaillard; Mary Scalise, *
*
Plaintiffs - Appellees, *
*
N. Peter Knoll, *
*
Intervenor Plaintiffs-Appellants, *
*
Anne Knoll, *
*
Intervenor Plaintiff, *
*
William J. Lorence; David R. Jansen, *
*
Intervenors Plaintiffs - Appellants,*
*
v. *
*
U.S. Bank National Association, ND, *
formerly known as First Bank of South *
Dakota, N.A.; US Bancorp Insurance *
Services, Inc.; US Bancorp, formerly *
known as First Bank Systems, *
*
Defendants - Appellees. *
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___________
Submitted: December 7, 2001
Filed: January 15, 2002 (Corrected 1/25/02)
___________
Before McMILLIAN, MORRIS SHEPPARD ARNOLD, and BYE, Circuit Judges.
___________
McMILLIAN, Circuit Judge.
In these consolidated appeals, Peter Knoll, David Jansen, and William Lorence
appeal from the final judgment entered in the District Court1 for the District of
Minnesota, approving a stipulated settlement agreement in a class action suit over
their objections. Knoll, Jansen, and Lorence were unnamed class members who
intervened after the settlement agreement had been approved. For reversal, they
argue the district court judge should have disqualified himself because he had a
financial interest in the litigation, the district court violated due process by giving
class members only nine days to review attorneys’ fee applications, and the district
court erred in approving the settlement agreement and the fee award without stating
its reasons on the record, and in determining the amount of the fee award. They also
object to the costs award for class counsel and the incentive award for the
representative plaintiffs. For the reasons discussed below, we affirm the judgment
of the district court.
In June 1999, five named plaintiffs (the “class-action plaintiffs”) brought the
instant class action on behalf of a national class, seeking injunctive relief and
damages because defendant U.S. Bank National (the “Bank”) supplied confidential
1
The Honorable Jonathan G. Lebedoff, United States Magistrate Judge for the
District of Minnesota, to whom the case was referred for final disposition by consent
of the parties pursuant to 28 U.S.C. § 636(c).
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customer account information to unaffiliated third parties for marketing purposes.
The class-action plaintiffs and the Bank entered into a stipulated settlement which
provided as follows. The Bank would pay to a settlement fund $3 million, plus an
amount equal to $2 million less than the amount the Bank paid in respect to a
product-refund plan negotiated in a related case. (The parties reveal on appeal that
the Bank paid more than $2 million in product refunds and thus this “pourover”
provision did not apply.) The settlement fund would be used to pay class counsel up
to $1,250,000 in fees and $40,000 in expenses; the Bank would provide funds for this
purpose in the amount of 25% of the amount the Bank paid under the product-refund
plan. The settlement fund also would be used to pay the class-action plaintiffs $2,000
each.
The class-action plaintiffs noted that, although over four million class members
had received settlement notices, only a small fraction of the class--0.9%--had raised
objections. Specifically, Knoll, Jansen, and Lorence filed written objections and
testified at the settlement fairness hearing. Knoll contended the settlement should be
rejected because most class members would receive no compensation, the proposed
fee award was excessive and unconscionable, its plan for distributing compensation
was complicated and expensive, and the maximum amount of compensation was too
low. Jansen argued the attorneys’ fees were incommensurate to the victims’ damages.
Lorence claimed he had incurred over $4,000 in costs to change his banking
relationships and to close numerous accounts. (Lorence’s injuries were related to a
former Bank employee’s theft of Lorence’s private files.)
After making all of the necessary determinations regarding the certification of
the class and the class representatives, the district court approved the settlement as
fair, reasonable, adequate, and in the class’s best interest, and rejected the objectors’
comments as insufficient to call into question the settlement’s fairness and adequacy.
The court also found the attorneys’ fees and costs award to be fair and reasonable.
Knoll, Jansen, and Lorence each intervened, and then appealed.
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We initially find that the intervenors have standing to challenge the settlement
award. See Croyden Assocs. v. Alleco, Inc., 969 F.2d 675, 680 (8th Cir. 1992)
(unnamed class members must intervene to challenge adequacy of settlement on
appeal), cert. denied, 507 U.S. 908 (1993). We reject their arguments as meritless,
however.
We need not revisit the intervenors’ disqualification argument, as it was the
subject of an earlier unsuccessful motion for limited remand filed by Knoll. In any
event, the intervenors concede that they failed to raise the disqualification argument
in the district court. See Alexander v. Pathfinder, Inc., 189 F.3d 735, 742 (8th Cir.
1999) (this court does not consider new arguments on appeal).
We find due process was satisfied. All objectors had an opportunity to be
heard at the settlement hearing, and the intervenors raised their objections to the fee
amount both at the hearing and in writing. See Goldberg v. Kelly, 397 U.S. 254, 267
(1970) (fundamental requisite of due process of law is opportunity to be heard);
DeBoer v. Mellon Mortgage Co., 64 F.3d 1171, 1176 (8th Cir. 1995) (DeBoer) (due
process satisfied where class members received notice of settlement proposal and
were able to argue their objections to district court), cert. denied, 517 U.S. 1156
(1996).
We also find the district court adequately stated its reasons for approving the
settlement agreement and the fee award by stating on the record that the agreement
was fair and reasonable and by rejecting the objectors’ arguments. Besides, the
intervenors have not shown the record establishes that the agreement was unfair. See
DeBoer, 64 F.3d at 1177 (in absence of specific findings regarding fairness of
settlement, this court assumes district court did not abuse its discretion unless record
establishes to contrary).
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As to the fee award, class counsel explained that the requested fee would be
25% of the total settlement value if an additional $2 million pourover amount was
paid into the fund, or 36% of the guaranteed $3.5 million fund amount. Because the
pourover amount was not paid into the fund, the $1.25 million fee award represents
approximately 36% of the settlement fund. We have approved the percentage-of-
recovery methodology to evaluate attorneys’ fees in a common-fund settlement such
as this, see Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1157 (8th Cir. 1999), and we
find no abuse of discretion in the district court’s awarding 36% to class counsel who
obtained significant monetary relief on behalf of the class, see id. at 1156 (district
court’s decisions regarding attorneys’ fees in class action settlement will generally
be set aside only upon showing of abuse of discretion; to recover fees from common
fund, attorneys must demonstrate that their services were of some benefit to fund or
enhanced adversarial process).
As to the costs and incentive awards, we find the $40,000 cost award to class
counsel for their out-of-pocket expenses was appropriate, see Keslar v. Bartu, 201
F.3d 1016, 1017 (8th Cir. 2000) (per curiam) (finding no abuse of discretion in
$17,000 cost award when case settled for $70,000), and that the $2,000 awarded to
the five representative plaintiffs also was appropriate, see Cook v. Niedert, 142 F.3d
1004, 1016 (7th Cir. 1998) (relevant factors in deciding whether incentive award to
named plaintiff is warranted include actions plaintiff took to protect class’s interests,
degree to which class has benefitted from those actions, and amount of time and effort
plaintiff expended in pursuing litigation).
Accordingly, we affirm.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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