Steve Chambers v. Whirlpool Corp.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
STEVE CHAMBERS; LYNN VAN DER No. 16-56666
VEER; JOSEPH CICCHELLI; KURT
HIMLER; SUSAN MILICIA; GARY D.C. No.
LEBLANC; JAMES CASHMAN; KEVIN 8:11-cv-01733-
O’DONNELL; GEORGE BLISS; SUSAN FMO-JCG
BATHON; MAUREEN MENEGHETTI;
W. DAVID BEAL; LINDA SAMPLE;
SHIRL MEDERLET; LYNDEE WALKER;
JACKIE STEFFES; RAYMOND PAOLINI,
JR.; ZILA KOSWENER; PAMELA
WALCHLI, as individuals and for all
others similarly situated,
Plaintiffs-Appellees,
CHRISTINE KNOTT,
Objector-Appellant,
v.
WHIRLPOOL CORPORATION, a
Delaware Corporation; SEARS
HOLDINGS CORPORATION, a
Delaware Corporation; SEARS,
ROEBUCK AND CO., a New York
corporation,
Defendants-Appellees.
2 CHAMBERS V. WHIRLPOOL CORP.
STEVE CHAMBERS; LYNN VAN DER No. 16-56684
VEER; JOSEPH CICCHELLI; KURT
HIMLER; SUSAN MILICIA; GARY D.C. No.
LEBLANC; JAMES CASHMAN; KEVIN 8:11-cv-01733-
O’DONNELL; GEORGE BLISS; SUSAN FMO-JCG
BATHON; MAUREEN MENEGHETTI;
W. DAVID BEAL; LINDA SAMPLE;
SHIRL MEDERLET; LYNDEE WALKER;
JACKIE STEFFES; RAYMOND PAOLINI,
JR.; ZILA KOSWENER; PAMELA
WALCHLI, as individuals and for all
others similarly situated,
Plaintiffs-Appellees,
v.
WHIRLPOOL CORPORATION, a
Delaware Corporation; SEARS
HOLDINGS CORPORATION, a
Delaware Corporation; SEARS,
ROEBUCK AND CO., a New York
corporation,
Defendants-Appellants.
CHAMBERS V. WHIRLPOOL CORP. 3
STEVE CHAMBERS; LYNN VAN DER No. 16-56688
VEER; JOSEPH CICCHELLI; KURT
HIMLER; SUSAN MILICIA; GARY D.C. No.
LEBLANC; JAMES CASHMAN; KEVIN 8:11-cv-01733-
O’DONNELL; GEORGE BLISS; SUSAN FMO-JCG
BATHON; MAUREEN MENEGHETTI;
W. DAVID BEAL; LINDA SAMPLE;
SHIRL MEDERLET; LYNDEE WALKER;
JACKIE STEFFES; RAYMOND PAOLINI,
JR.; ZILA KOSWENER; PAMELA
WALCHLI, as individuals and for all
others similarly situated,
Plaintiffs-Appellees,
JAN L. MIORELLI, Personal
Representative of the Estate of
George P. Liacopoulos,
Objector-Appellant,
v.
WHIRLPOOL CORPORATION, a
Delaware Corporation; SEARS
HOLDINGS CORPORATION, a
Delaware Corporation; SEARS,
ROEBUCK AND CO., a New York
corporation,
Defendants-Appellees.
4 CHAMBERS V. WHIRLPOOL CORP.
STEVE CHAMBERS; LYNN VAN DER No. 16-56694
VEER; JOSEPH CICCHELLI; KURT
HIMLER; SUSAN MILICIA; GARY D.C. No.
LEBLANC; JAMES CASHMAN; KEVIN 8:11-cv-01733-
O’DONNELL; GEORGE BLISS; SUSAN FMO-JCG
BATHON; MAUREEN MENEGHETTI;
W. DAVID BEAL; LINDA SAMPLE;
SHIRL MEDERLET; LYNDEE WALKER; OPINION
JACKIE STEFFES; RAYMOND PAOLINI,
JR.; ZILA KOSWENER; PAMELA
WALCHLI, as individuals and for all
others similarly situated,
Plaintiffs-Appellees,
W. ALLEN MCDONALD,
Objector-Appellant,
v.
WHIRLPOOL CORPORATION, a
Delaware Corporation; SEARS
HOLDINGS CORPORATION, a
Delaware Corporation; SEARS,
ROEBUCK AND CO., a New York
corporation,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Fernando M. Olguin, District Judge, Presiding
Argued and Submitted January 23, 2020
Pasadena, California
CHAMBERS V. WHIRLPOOL CORP. 5
Filed November 10, 2020
Before: Richard R. Clifton and Kenneth K. Lee, Circuit
Judges, and Frederic Block, * District Judge.
Opinion by Judge Lee
SUMMARY **
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.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
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.
COUNSEL
Robert W. Clore (argued) and Christopher A. Bandas,
Bandas Law Firm P.C., Corpus Christi, Texas; Timothy R.
Hanigan and Vaughn M. Greenwalt, Lang Hanigan &
Carvalho LLP, Woodland Hills, California; for Objector-
Appellant Christine Knott.
Sam A. Miorelli (argued), Law Office of Sam Miorelli P.A.,
Orlando, Florida, for Objector-Appellant George P.
Liacopoulos.
Christopher T. Cain, Scott & Cain, Knoxville, Tennessee,
for Objector-Appellant W. Allen McDonald.
Steven A. Schwartz (argued) and Timothy N. Mathews,
Chimicles Schwartz Kriner & Donaldson-Smith LLP,
Haverford, Pennsylvania; Charles S. Fax and Liesel J.
Schopler, Rifkin Weiner Livingston LLC, Bethesda,
Maryland; Jeffrey M. Cohon, Law Offices of Jeffrey M.
Cohon APC, Los Angeles, California; Jonathan D. Selbin
and Andrew Kaufman, Lieff Cabraser Heimann & Bernstein
LLP, New York, New York; David H. Weinstein and Robert
Kitchenoff, Weinstein Kitchenoff & Sher LLC,
Philadelphia, Pennsylvania; for Plaintiffs-Appellees.
Andrew J. Pincus (argued), Mayer Brown LLP, Washington,
D.C.; Michael T. Williams, Allison R. McLaughlin, and
Galen D. Bellamy, Wheeler Trigg O’Donnell LLP, Denver,
Colorado; Stephen M. Shapiro, Timothy S. Bishop, Joshua
D. Yount, and Chad M. Clamage, Mayer Brown LLP,
8 CHAMBERS V. WHIRLPOOL CORP.
Chicago, Illinois; for Defendants-Appellees/Cross-
Appellants.
Oramel H. Skinner III (argued) and Dana R. Vogel, Assistant
Attorneys General; Paul N. Watkins, Civil Litigation
Division Chief; Mark Brnovich, Attorney General; Office of
the Attorney General, Phoenix, Arizona; for Amicus Curiae
Nine State Attorneys General.
OPINION
LEE, Circuit Judge:
Is it reasonable to award $14.8 million in attorney’s fees
in a class action settlement that provides $116.7 million in
benefits to class members? But what if the class settlement
is in fact worth only $4.2 million? We face these two
dramatically divergent scenarios in large part because the
settlement here offers “coupons” that may provide phantom
benefits to most class members.
The parties settled a long-running class action lawsuit
about malfunctioning “electronic control boards” in
Whirlpool dishwashers. That settlement provided, among
other things, coupons that consumers could use to buy a new
Whirlpool dishwasher. The parties, however, could not
agree on the value of this settlement, or the amount of
attorney’s fees for the plaintiffs’ counsel.
The district court approved the class settlement and
awarded $14.8 million in attorney’s fees based on a lodestar
calculation of billable hours expended. We affirm the
district court’s approval of the settlement. But we vacate and
remand the fee award because the district court erred in
applying a lodestar-only methodology for the coupon
CHAMBERS V. WHIRLPOOL CORP. 9
portion of the settlement. 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. On remand, the
district court should thus 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. Alternatively, 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.
BACKGROUND
A. Plaintiffs sue Whirlpool for allegedly faulty
dishwashers.
This case began a long time ago in a district far, far away
from the Central District of California: in the Maryland
home of Steve Chambers and his wife, their 2002
KitchenAid dishwasher unit suffered from a bad electronic
control board (“ECB”) that caused it to overheat and even
emit internal flames. Chambers complained to Whirlpool
Corp., which makes dishwashers under its own brand name
as well as under the Kenmore and KitchenAid imprints.
After his requests went unheeded, he set up a website that
attracted similar grievances from other Whirlpool
dishwasher owners.
Ultimately, Chambers and his wife, along with eight
other plaintiffs, filed a putative class action lawsuit in
California against Whirlpool, 1 asserting breach of warranty
and other state law claims. The complaint alleged that
1
The term “Whirlpool” refers to all the defendants: Whirlpool
Corp., Sears Holding Corp. and Sears Roebuck & Co.
10 CHAMBERS V. WHIRLPOOL CORP.
several of Whirlpool’s dishwashers suffered from a design
defect that caused a small number of ECBs to overheat and
malfunction. While the complaint highlighted the potential
risk of a dishwasher malfunction and even a fire, actual
instances of failure appear to be relatively rare. Apparently,
fewer than 0.2% of the dishwashers have suffered
overheating problems.
The initial complaint sought certification of a nationwide
class of dishwasher purchasers. The plaintiffs amended their
complaint four times. In the process, they added two federal
claims for alleged violations of the Magnuson-Moss
Warranty Act, while narrowing the scope of the class
allegations to 11 state classes.
B. The parties settle — with coupons comprising most of
the benefits.
The district court had not yet ruled on any substantive
motion when the parties reached a nationwide settlement in
September 2015. The settlement agreement provided
benefits to both class and non-class members based on the
type of ECB in the consumer’s dishwasher.
The proposed class included people who bought
dishwashers that used a “Rushmore” or “Rush” ECB
manufactured between October 2000 and January 2006. The
non-class dishwashers contained a “NewGen” or “Raptor”
ECB manufactured between February 1998 and March 2012.
The settlement covers about 5.8 million Rushmore/Rush
class members and 12.6 million NewGen/Raptor non-class
members.
The settlement provides overlapping benefits on a
claims-made basis to both class and non-class members —
with the difference being that class members are entitled to
CHAMBERS V. WHIRLPOOL CORP. 11
more coupons. This difference stems from the somewhat
higher risk of overheating in Rushmore/Rush ECB
dishwashers. Under the settlement, class members receive
benefits and release potential claims unless they timely
request exclusion. Non-class members, on the other hand,
must separately execute a release to receive a benefit.
Neither class nor non-class members release claims for
personal injury or damage to property other than the
dishwasher.
The settlement provides to both class and non-class
members: (i) full reimbursement or $200 for individuals who
paid for an overheating-related repair; (ii) $200 or $300 for
consumers who replaced an overheated dishwasher; and
(iii) $100 or a 30% discount “rebate” (i.e., coupon) for a new
Whirlpool dishwasher if there is a future overheating
incident within two years of the settlement notice date, or
within 10 years of purchase for NewGen/Raptor owners.
Class members also receive a 10–20% “rebate” coupon
to purchase a new Whirlpool dishwasher, which expires
120 days after the claim deadline. And finally, Whirlpool
must revise its service kit pointers and training bulletins to
“emphasize the important safety function” of the thermal
cut-off device that helps prevent overheating, “instruct
technicians and customers not to bypass or disable” the
device, and urge “inspect[ion]” of the device when servicing
an ECB.
C. The district court approves the class settlement.
The district court granted preliminary settlement
approval and class certification. Direct mail notice was sent
to 3,567,542 class members. By the deadline, 133,040
claims had been filed (i.e., a 3.7% response rate based on the
number of direct mail notices sent). Of these, 122,294
12 CHAMBERS V. WHIRLPOOL CORP.
claimed a rebate/coupon, 26,380 claimed cash
reimbursement (overlapping with the rebate group), and 329
were uncategorized. The face value of the 26,380 claims
submitted for cash reimbursement was $10.89 million, but
only 5,249 of those claims included potentially adequate
documentation (which would require further review).
Put another way, only 4% of the 133,040 filed claims —
at most — could potentially involve cash reimbursement.
The remaining 96% (or more) of the claims are for “rebates,”
i.e., discount coupons that customers may use to buy a new
Whirlpool dishwasher. In a stark sign that the parties could
not agree on how many people would redeem the coupons,
the parties’ valuation of the settlement diverged
dramatically: Whirlpool estimated it to be as low as
$4.2 million, while the plaintiffs put the high end at
$116.7 million.
In October 2016, the district court granted final
settlement approval and certified the settlement class.
Evaluating the relevant factors, the court concluded that the
settlement was “fair, reasonable, and adequate” under Rule
23(e)(2). The court also determined that the notice
requirements had been met, and that all of the class
certification requirements remained satisfied.
D. The district court approves nearly $15 million in
attorney’s fees.
The parties agreed that the attorney’s fees should not
come from any funds allocated for class members, but that
Whirlpool would instead directly pay the plaintiffs’ class
counsel. They could not agree, however, on the amount of
legal fees. So the parties took a gamble and agreed that the
court should decide the attorney’s fees amount. The
settlement agreement stipulated that any “issues relating to
CHAMBERS V. WHIRLPOOL CORP. 13
attorneys’ fees and costs” were to be considered separately
from “the fairness, reasonableness, and adequacy” of the
settlement. It also stated that, even if the district court
declined to award attorney’s fees in whole or in part, “the
remaining provisions” of the settlement would “remain in
full force and effect.”
The gamble paid off handsomely for the plaintiffs’
counsel. They applied for a fee award of $15 million, based
on an asserted baseline lodestar of $8,948,487.98 and a
requested 1.68 upward multiplier. To support their request,
the plaintiffs’ counsel claimed a settlement value in the
range of $55.7 million to $116.7 million. Whirlpool
countered that the fee request dwarfed the actual settlement
value, which Whirlpool estimated to be between $4.2 and
$6.8 million. Whirlpool sought a reduction in the baseline
lodestar because, among other things, more than $2.6 million
of the total was for over 8,200 hours of document review.
Whirlpool further argued for a 50% negative multiplier to
reasonably align the fee award with the settlement value.
The district court granted the bulk of the plaintiffs’ fee
request, reducing only $130,038.75 from two lawyers’ time
for billing in quarter-hour increments for simple tasks.
Using a resulting lodestar of $8,818,449.23, the court
applied the requested 1.68 multiplier, for a total fee award of
$14,814,994.70. Noting the widely divergent settlement
valuations offered by the parties, as well as the undetermined
total number of valid claims to be made under the settlement,
the court declined to perform a cross-check of the fee award
to see if it was reasonable.
Whirlpool appeals the district court’s decision to award
$14.8 million in attorney’s fees, but it does not challenge the
court’s approval of the class settlement. Objectors W. Allen
McDonald, Jan Miorelli and Christine Knott appeal both the
14 CHAMBERS V. WHIRLPOOL CORP.
fee award and the decision granting final settlement
approval.
DISCUSSION
I. Standard of Review
We review “a district court’s award of fees and costs to
class counsel, and its method of calculation, for abuse of
discretion.” In re HP Inkjet Printer Litig., 716 F.3d 1173,
1177 (9th Cir. 2013). We review de novo the “legal bases”
of a fee award. Cmty. Ass’n for Restoration of the Env’t v.
Henry Bosma Dairy, 305 F.3d 943, 956 (9th Cir. 2002). We
review the approval of a class settlement for a “strong
showing” that “the district court clearly abused its
discretion.” In re Hyundai & Kia Fuel Econ. Litig., 926 F.3d
539, 556 (9th Cir. 2019) (quotation omitted).
II. CAFA’s attorney’s fees provisions apply to all federal
class actions.
To begin, we address whether the attorney’s fees
provisions in the Class Action Fairness Act (CAFA) even
apply to a class action case based on diversity jurisdiction. If
they do not, then the district court correctly applied a
lodestar methodology for fees under California state law,
according to the plaintiffs. The plaintiffs’ argument lacks
merit.
In 2005, Congress enacted CAFA to provide a federal
forum for class action lawsuits in light of a perceived “bias”
in state courts and to curb alleged “abuses” in class action
litigation. See Public Law 109-2, Sec. 2(a). CAFA thus
requires only minimal diversity (instead of complete
diversity) to assert federal jurisdiction over a class action
CHAMBERS V. WHIRLPOOL CORP. 15
with an amount-in-controversy exceeding $5 million. See
28 U.S.C § 1332(d)(2).
Importantly here, CAFA also established specific rules
to govern fee awards for coupon settlements in federal class
actions. See 28 U.S.C § 1712. It states that the attorney’s
fees provisions apply to any “class action,” which is defined
as “any civil action filed in a district court of the United
States under rule 23 of the Federal Rules of Civil Procedure
or any civil action that is removed to a district court of the
United States that was originally filed under a State statute.”
28 U.S.C. §§ 1711(2), 1712. The plain language of CAFA
makes clear that its attorney’s fees provisions preempt any
corresponding state law and apply to any class action case in
federal court, including those based on diversity jurisdiction.
Cf. Hubbard v. SoBreck, LLC, 554 F.3d 742, 744 (9th Cir.
2009) (federal disability law’s attorney’s fees provision
preempts state law). Indeed, it would be highly incongruous
for Congress to expand federal jurisdiction for class action
lawsuits based on diversity jurisdiction, but then in the same
statute prevent CAFA’s attorney’s fee provisions from
applying in those diversity jurisdiction-based cases.
The plaintiffs also argue that the Rules Enabling Act
precludes CAFA preemption of state law on attorney’s fees.
But the Rules Enabling Act limits only rules prescribed by
the Supreme Court, not legislation passed by Congress. See
28 U.S.C. § 2072.
Finally, the plaintiffs contend that California law
governs fee calculations because the settlement agreement
has a choice-of-law provision stating that “the rights and
obligations of the Parties shall be construed and enforced in
accordance with, and governed by, the laws of the State of
California.” But in Murphy v. DirecTV, Inc., we held that
parties cannot use a choice-of-law provision to opt into a
16 CHAMBERS V. WHIRLPOOL CORP.
California law that federal law has preempted. 724 F.3d
1218, 1225–28 (9th Cir. 2013). Under preemption, “the
[preempted] rule is not, and indeed never was, California
law” since “state law is nullified to the extent that it actually
conflicts with federal law.” Id. at 1226 (emphasis in
original) (citation omitted). Thus, the choice-of-law
provision here could not have invoked a California rule
permitting a lodestar-only calculation because CAFA has
supplanted it. See id.III. The district court improperly used a lodestar-
only method to calculate attorney’s fees for the
coupon portion of the settlement.
CAFA sets forth two distinct methods to calculate the
award of attorney’s fees in class actions: (1) the lodestar
method based on the reasonable number of billable hours
spent on the case (§ 1712(b)), and (2) the percentage-of-
value method in which the attorney receives a percentage of
the value of the settlement (§ 1712(a)).
This court in HP Inkjet held that CAFA mandates the use
of a percentage-of-value calculation for any “portion” of a
fee award “attributable to the award of the coupons.”
716 F.3d at 1180–81 (quoting 28 U.S.C § 1712(a)). We
clarified in In re Easysaver Rewards Litigation that the
lodestar methodology may be used in a “mixed” settlement
involving coupon and non-coupon relief only if the lodestar
calculation does not consider the coupon portion of the
settlement or takes into account the coupon redemption
value. 906 F.3d 747, 759 (9th Cir. 2018).
The district court, however, arrived at its $14.8 million
fee award based solely on a lodestar valuation that
considered the work performed for the coupon portion of the
CHAMBERS V. WHIRLPOOL CORP. 17
settlement. We therefore vacate the district court’s fee
award and remand.
A. Attack of the coupons: coupon settlements may
endanger class members’ interests.
Federal courts, as well as Congress, have long viewed
coupon-based class action settlements with a skeptical eye.
And for good reason: counsel for plaintiffs and defendants
have sometimes conspired to craft class action settlements
that benefit themselves at the expense of the class members.
Defendants sometimes favor coupon settlements because
they do not require the payment of cash out of pocket, but
instead offer coupons for the company’s product or service.
Moreover, coupon settlements often impose onerous
obstacles that make it difficult to redeem the coupons. Many
plaintiffs’ counsel also prefer coupon settlements to inflate
the ostensible value of the settlement — and, in turn, ratchet
up their request for attorney’s fees. See HP Inkjet, 716 F.3d
at 1177–78 (noting that coupon settlements “decoupl[e] the
interests of the class and its counsel”). And too often, class
members do not benefit from a coupon settlement because
many of them, not surprisingly, do not want to reward the
offending company by buying its product or service again,
even if they receive a discount. 2
In enacting CAFA, Congress struck back against this
perceived menace of phantom benefits in coupon
settlements. The primary purpose of CAFA was “to curb
2
This is not to say that coupon settlements are always inappropriate.
In some cases, coupons can provide useful benefits to class members,
especially if the product or service at issue is a recurring expense or
enjoys such strong brand loyalty that consumers will likely purchase it
again in the future.
18 CHAMBERS V. WHIRLPOOL CORP.
perceived abuses of the class action device,” such as “the
coupon settlement, where defendants pay aggrieved class
members in coupons or vouchers but pay class counsel in
cash.” Id. at 1177 (quotation and citation omitted). CAFA
thus provided a new hope to “tether the value of an attorneys’
fees award to the value of the class recovery” in coupon
settlements. Id. at 1178.
B. Lodestar wars: percentage-of-value, not lodestar,
methodology applies to the coupon portion of
settlements.
The plain language of CAFA makes clear that a court
should ordinarily use the percentage-of-value, not lodestar,
methodology for the portion of the settlement involving
coupons. It states that if a class action settlement provides
“for a recovery of coupons to a class member, the portion of
any attorney’s fee award to class counsel that is attributable
to the award of coupons shall be based on the value to class
members of the coupons that are redeemed.” 28 U.S.C.
§ 1712(a) (emphasis added). In other words, § 1712(a)
requires fees to be calculated as a percentage of the coupon
redemption value rather than the face value of coupons. That
prevents class counsel from “puff[ing] the perceived value
of the settlement so as to enhance” their award. HP Inkjet,
716 F.3d at 1179.
In HP Inkjet, this court held that the percentage-of-
redemption-value method applies whenever a settlement
“provides for coupon relief, either in whole or in part.” Id.
at 1175–76 (emphasis added). If a settlement includes “in
part” coupons and also non-coupon relief, then subsections
(b) and (c) of 28 U.S.C. § 1712 come into play. Id. at 1183–
86.
CHAMBERS V. WHIRLPOOL CORP. 19
Under § 1712(c) — which governs these so-called
“mixed” settlements involving both coupon and non-coupon
relief — the percentage-of-redemption-value method still
applies to the portion of fees attributable to coupons.
28 U.S.C. § 1712(c)(1) (stating that fees “based upon a
portion of the recovery of the coupons shall be calculated in
accordance with subsection (a),” which sets forth the
percentage-of-redemption-value methodology). But the
remaining portion of fees attributable to “non-coupon relief”
is calculated under § 1712(b) as a reasonable lodestar
amount plus or minus any appropriate multiplier. 28 U.S.C.
§ 1712(b) (stating that where “a portion of the recovery of
the coupons is not used to determine the attorney’s fees,” it
“shall be based upon the amount of time class counsel
reasonably expended”). In short, the total fee award for
“mixed” settlements under § 1712(c) is the sum of: (i) “a
reasonable contingency fee based on the actual redemption
value of the coupons” (§ 1712(a)); and (ii) “a reasonable
lodestar amount to compensate class counsel for any non-
coupon relief obtained” (§ 1712(b)). HP Inkjet, 716 F.3d
at 1184–85.
More recently, this court in In re Easysaver Rewards
Litigation explained that a district court in “mixed”
settlements may nonetheless opt to use the “lodestar
approach provided that it does so without reference to the
dollar value of [the coupon relief]” or “if it accounts for the
redemption rate of the coupons in calculating the dollar
value.” 906 F.3d at 759. In that case, the mixed settlement
involved a $3.5 million cash fund to refund members’
enrollment fees, and a coupon component providing a
$20 credit to buy additional products. See id. at 752. The
district court applied a multiplier to the lodestar based in part
on a settlement valuation that included coupon relief. Id.
at 759. We thus held that the “value of the coupon relief
20 CHAMBERS V. WHIRLPOOL CORP.
therefore impermissibly informed the district court’s
approval of the lodestar fee.” Id. at 759–60.
As explained below, the district court erred by applying
a lodestar-only methodology to calculate the fees, even
though potentially unredeemed coupons represent most of
the settlement value.
1. The parties’ settlement is a coupon settlement.
First, the plaintiffs argue that CAFA does not even apply
here because the settlement is purportedly not a “coupon
settlement.” The plaintiffs are wrong.
CAFA itself does not define “coupon,” but this court has
established three factors to determine whether a settlement
is a coupon settlement: (i) “whether class members have ‘to
hand over more of their own money before they can take
advantage of’ a credit”; (ii) “whether the credit is valid only
‘for select products or services’”; and (iii) “how much
flexibility the credit provides, including whether it expires
or is freely transferrable.” Easysaver, 906 F.3d at 755 (citing
In re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 951
(9th Cir. 2015)).
In Easysaver, this court applied this test to a class action
settlement that included a $20 credit for use on the
defendants’ websites. Id. at 752–53. We concluded that the
credit was a CAFA “coupon” because: (i) the defendants
offered only 15 to 25 products under $20, and shipping
charges would likely bring the cost of any purchase over
$20; (ii) class members could use the credits to buy a product
only from the defendants; and (iii) the credits expired in one
year and were subject to certain blackout periods. Id. at 756–
58. We distinguished the $12 Walmart gift cards at issue in
Online DVD-Rental because those gift cards never expired
CHAMBERS V. WHIRLPOOL CORP. 21
and could be swapped for cash, or alternatively they allowed
class members to buy a wide range of low-cost products
under $12. Id. at 755–58.
Here, the relevant factors establish even more
persuasively than in Easysaver that the 10–20% dishwasher
“rebate” is a “coupon” under CAFA, despite the settlement
agreement’s refusal to use that term. First, to use the
“rebate,” class members must spend hundreds of out-of-
pocket dollars to purchase a new dishwasher. Second, the
rebate applies only to Whirlpool, Kenmore, or KitchenAid-
brand dishwashers — the very brands that allegedly
contained the overheating defect. And finally, the rebates
expire in 120 days, a third of the useful life of the Easysaver
credits. Id. at 757. Given that a dishwasher typically lasts
at least several years, most consumers likely will not redeem
their coupons within 120 days.
2. The court erred in applying a lodestar-only
methodology.
We vacate 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
it use a lodestar methodology completely divorced from the
coupon portion of the settlement, as permitted under
Easysaver.
The district court reasoned that “CAFA authorizes the
court to calculate attorney’s fees utilizing the lodestar
method” if “the settlement includes both coupon and
monetary relief.” But we foreclosed that argument in HP
Inkjet when we held that the percentage-of-redemption-
value method applies whenever a settlement “provides for
coupon relief, either in whole or in part.” 715 F.3d at 1175–
22 CHAMBERS V. WHIRLPOOL CORP.
76 (emphasis added). The district court also erred in holding
that CAFA’s mixed settlement provision (28 U.S.C
§ 1712(c)) does not apply because it does “not contemplate
. . . settlements that involve coupon relief and monetary
relief.” While mixed settlements “that award coupons and
monetary relief are not expressly mentioned in In re HP,” it
would relegate such settlements to “a no-man’s land” if they
are not included within the scope of § 1712(c). Easysaver,
906 F.3d at 759 n.11 (applying § 1712(c) for a settlement
that included a $3.5 million fund and coupon relief). 3 We
thus held that in such mixed settlements, a district court may
“use the lodestar approach” only “to determine any portion
of attorney’s fees not attributable to coupons.” Id. at 759.
Because we issued Easysaver after the district court had
already determined its award, it understandably did not take
into account that holding.
The district court started off with an $8.8 million lodestar
based on the claimed hourly fees of class counsel, except for
a small $130,038.75 reduction for two lawyers’ time. That
amount encompassed all of the work performed by the
plaintiffs’ counsel for the entire case, and thus necessarily
included the work completed on behalf of the coupon portion
3
There is also textual basis for the conclusion that Section 1712(c)
applies here. Section 1712(c) governs “mixed” settlements that include
both coupon relief and “equitable relief, including injunctive relief.”
While the most common example of “equitable relief” is injunctive
relief, it can also include monetary payments in the form of restitution
(which the plaintiffs sought here). See, e.g., In re Tobacco II Cases,
46 Cal. 4th 298, 312 (2009) (California’s Unfair Competition Law action
is “equitable in nature” because “plaintiffs are generally limited to
injunctive relief and restitution” as opposed to “damages”). The
settlement agreement here is thus a “mixed” settlement because it
includes both coupon relief and “equitable relief” in the form of
monetary restitution.
CHAMBERS V. WHIRLPOOL CORP. 23
of the settlement. And then the court applied a 1.68
multiplier, again taking the coupons into account. See
Chambers v. Whirlpool Corp., 214 F. Supp. 3d 877, 902
(C.D. Cal. 2016) (“impressive” result includes “insurance-
like coverage for future Overheating Events,” i.e., a
rebate/coupon option for new dishwasher if it overheats); id.(“create[s] an incentive for current owners to replace their
Class Dishwashers” by using coupons); id. at 904–05
(acknowledging that settlement value may be as high as
$116.7 million in refusing to cross-check fees). Because the
lodestar amount and the multiplier implicitly and explicitly
took into account the coupon portion of the settlement, the
district court’s fee award conflicts with both HP Inkjet and
Easysaver.
3. The court must separately consider the coupon
portion of the settlement on remand.
On remand, the district court should first attempt to
ascertain the (a) the redemption value of the coupons
(§ 1712(a)), and (b) the value of the non-coupon portion of
the settlement (§ 1712(b)). See HP Inkjet, 716 F.3d at 1184–
85.
a. Percentage-of-redemption value of the
coupon portion of settlement — § 1712(a).
The first component of the fee assessment under
§ 1712(a) is to calculate the coupon redemption value of the
settlement (i.e., the collective value of the coupons redeemed
by class members). CAFA appears to have contemplated
coupon settlements in which coupons are redeemed before
final settlement approval. But as in HP Inkjet, the parties
here “essentially invited the error” by structuring a
settlement where the coupon redemption value was
unknown at the time of final approval. 716 F.3d at 1186.
24 CHAMBERS V. WHIRLPOOL CORP.
Nevertheless, courts are equipped with options — such
as a “bifurcated or staggered” fee award — to address such
a scenario. See id. at 1186 n.19. Bifurcation is appropriate
here, where the class members have a relatively short 120-
day redemption window to decide whether to redeem their
coupons to buy a new Whirlpool dishwasher. Once the
collective redemption value is known after 120 days, the
district court will be able to calculate a “reasonable
contingency fee” based on that coupon redemption value
amount. See id. at 1184.
In setting the “reasonable contingency” fee for the
coupon portion of the settlement, the district court should
give a hard look at the resulting fee amount to ensure that it
is proportional to the coupon benefits provided to the class.
Cf. In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d
935, 941 (9th Cir. 2011) (courts have an “independent
obligation to ensure that the [fee] award . . . is reasonable.”);
Hensley v. Eckerhart, 461 U.S. 424, 440 (1983) (“[T]he
district court should award only that amount of fees that is
reasonable in relation to the results obtained.”). The potential
danger that class counsel may elevate their own interests
over the class members’ always lurks in class settlements.
Cf. Richard A. Posner, Economic Analysis of Law, at 627
(Aspen 5th ed 1998) (“lawyer for the class will be tempted
to offer to settle with the defendant for a small judgment and
a large legal fee, and such an offer will be attractive to the
defendant, provided the sum of the two figures is less than
the defendant's net expected loss from going to trial”).
We recognize that some settlements may involve
coupons that do not expire for many years, or never expire
at all. Here, the settlement also provides continuing
coverage to NewGen/Raptor dishwasher owners for future
overheating events, which extends into 2021. Those who
CHAMBERS V. WHIRLPOOL CORP. 25
experience a future overheating event are entitled to either
$100 or a 30% dishwasher coupon. For coupons with
extended redemption periods, courts may use a “staggered”
method in which the plaintiffs’ counsel is paid periodically
as the coupons are redeemed. See HP Inkjet, 716 F.3d at
1186 n.19.
b. Lodestar value of non-coupon portion of
settlement — § 1712(b).
This leads us to the second component of the fee
assessment under § 1712(b): a “reasonable lodestar amount
to compensate class counsel for any non-coupon relief
obtained.” Id. at 1185. Our court does not appear to have
articulated how to determine a “reasonable lodestar amount”
for “non-coupon relief.” We can think of at least two ways
to do so:
First, a court can take the lodestar for the
entire case, and then use a negative multiplier
to discount that sum because the lodestar, by
definition, includes work done on behalf of
the coupon portion of the settlement. In
determining the negative multiplier, the court
can, for example, seek to assess what portion
of the settlement value stems from coupon
relief. 4
4
For settlements involving extended redemption periods, the court
can estimate the expected value of coupon relief. Because CAFA did
not contemplate coupon redemption after final approval of the
settlement, it is silent about the use of expert evidence to estimate the
coupon redemption value. See § 1712(d) (allowing expert testimony on
the “actual value to the class members of the coupons that are
redeemed”) (emphasis added). But we do not see any bar to using expert
26 CHAMBERS V. WHIRLPOOL CORP.
Second, a court can try to parse through the billable
hours to apportion which hours were reasonably expended
for the coupon portion of the settlement and which for the
non-coupon portion. We acknowledge that there may not be
clear lines delineating between the two portions, but courts
engage in similar tasks to determine attorney’s fees in other
contexts. Cf., e.g., Schwarz v. Sec’y of Health & Human
Servs., 73 F.3d 895, 904 (9th Cir. 1995) (“Once a district
court concludes that a plaintiff has pursued unsuccessful
claims that are unrelated to the successful claim, its task is
to exclude from the calculation of a reasonable fee all hours
spent litigating the unsuccessful claims.”).
Regardless of which method a court uses to establish the
lodestar amount for the non-coupon portion of the
settlement, it should apply a lodestar “cross-check” in mixed
settlements, or in the alternative, articulate why it is not
feasible in a particular case. While we do not ordinarily
require a lodestar “cross-check,” In re Hyundai, 926 F.3d
at 571, the analysis is distinct for mixed settlements
involving both coupon and non-coupon relief. This is so
because the lodestar represents the presumptive value of
class counsel’s work for the entire case, and therefore risks
testimony to estimate the value of the coupon relief for setting a negative
multiplier. While we recognize that this may be a time-consuming task,
courts routinely hear expert testimony to decide valuation issues. Cf.,
e.g., Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (2016)
(approving of expert testimony to estimate the average amount of
uncompensated work performed by each class member to determine
collective class damages); Milgard Tempering, Inc. v. Selas Corp. of
Am., 902 F.2d 703, 711 (9th Cir. 1990) (“Expert testimony alone can
provide a sufficient factual basis for an award of loss of profits. If the
opinion of an expert provides a reasonable basis for inference, the court
is freed from ‘the realm of uncertainty and speculation.’”) (citation
omitted).
CHAMBERS V. WHIRLPOOL CORP. 27
double-counting fees for work attributable to the coupon
portion of a mixed settlement. And even if a court adopts
the second method of pruning the lodestar of coupon-related
legal work, a cross-check would provide assurance that the
court accurately divvied up the legal work.
Thus, to ensure the § 1712(b) lodestar calculation does
not overcompensate class counsel for work unrelated to non-
coupon relief, the district court must ascertain the value of
the non-coupon portion of the settlement. We have
previously held that where “the lodestar amount
overcompensates the attorneys according to the 25%
benchmark standard, then a second look to evaluate the
reasonableness of the hours worked and rates claimed is
appropriate.” In re Bluetooth, 654 F.3d at 945 (quoting In re
Coordinated Pretrial Proceedings, 109 F.3d 602, 607 (9th
Cir. 1997)). This principle is particularly apt in the context
of § 1712(b) — for example, if the lodestar exceeds the non-
coupon value of a settlement, it stands to reason that the
excess amount likely includes fees attributable to coupon
relief.
This is well-illustrated by the vastly contrasting values
that the parties attribute to the non-coupon portion of the
settlement: about $3 million according to Whirlpool,
compared to the $63 million figure advanced by the
plaintiffs. If Whirlpool is correct that the non-coupon relief
is worth at most around $3 million, then the baseline lodestar
amount of $8,818,449 calculated by the district court would
be clearly disproportionate. That would merit a significant
negative multiplier. On the other hand, a lodestar of
$8,818,449 in relation to a non-coupon value of $63 million
appears reasonable.
The district court held that the massive gap between the
parties’ dueling valuations signaled that any attempt to value
28 CHAMBERS V. WHIRLPOOL CORP.
the settlement “would be imprecise to the point of
uselessness.” But it becomes even more critical to cross-
check the lodestar valuation if the parties present widely
divergent settlement valuation estimates. It may admittedly
be difficult to determine that amount with precision, but
courts must try to do so to ensure the fees are not excessive.
In any event, the record provides ample evidence,
including useful expert analysis, to enable the court to apply
reasonable assumptions to estimate the overall non-coupon
value. The court can evaluate evidence on the likely
deficiency rate of the dishwashers, the value of coverage for
future deficiencies, and other relevant factors.
Based on our review of the record, it appears that the
large gap between the settlement valuation estimates can be
narrowed significantly. For instance, the plaintiffs use the
$10,892,286 “face value” figure stated in the settlement
administrator’s declaration to determine the value of cash
reimbursements. But they ignore the declaration’s
accompanying explanation that over 80% of those claims
were deemed to be facially deficient, and that the remainder
had yet to be evaluated for sufficiency of documentation.
Similarly, the plaintiffs’ assertion of a $50 million value
for future overheating coverage assumes 28,000 overheating
claims per year until the end of coverage in 2021. That
projected annual figure, however, outstrips the total
overheating claims over the decade before, and the record
suggests that the rate of such events should decline over
time. Conversely, Whirlpool appears to assume that the
extended warranty has no value if a dishwasher never suffers
an overheating failure, but perhaps that limited “insurance-
like” coverage has some monetary value. Expert evidence
and careful assessment of the record can aid the court.
CHAMBERS V. WHIRLPOOL CORP. 29
The district court also noted that the enhanced safety
warnings required by the settlement “cannot be quantified
with precision, if at all.” We agree that courts need not try
to attach a precise dollar figure to these types of non-
monetary relief. But the district court can, based on the
record, determine the significance of this benefit, and
employ it as a qualitative factor in deciding whether a
multiplier is warranted. 5
The net result of this analysis is that the total fee award
for “mixed” settlements, as set forth in § 1712(c), will be the
sum of the two calculations under (i) § 1712(a), i.e., a
reasonable contingency percentage of the total coupon
redemption value; plus (ii) § 1712(b), i.e., class counsel’s
reasonable lodestar, cross-checked against the value of the
non-coupon relief, and adjusted based on any applicable
multiplier factors. See § 1712(c) (setting forth “[a]ttorney’s
fees award calculated on a mixed basis in coupon
settlements”); In re HP Inkjet, 716 F.3d at 1185 (“the total
amount of fees awarded under subsection (c) will be the sum
of the amounts calculated under subsections (a) and (b)”).
In most cases, we expect district courts to add the sums
under § 1712(a) and § 1712(b) to arrive at the attorney’s fees
in “mixed” settlements, as set forth in § 1712(c). But in
EasySaver we noted that a district court may still award fees
5
The analysis will be somewhat different in mixed settlement cases
in which the only non-coupon relief is non-monetary (e.g., an
injunction). In such cases, courts should assess the qualitative value of
the non-coupon relief, and compare it to the significance of the coupon
relief within the context of the case as a whole. This assessment will
determine the downward multiplier to be applied to the § 1712(b)
lodestar. For instance, if a court finds that the coupon and non-coupon
relief were equally significant, then the § 1712(b) lodestar should be
reduced by half.
30 CHAMBERS V. WHIRLPOOL CORP.
based solely on a lodestar methodology if (1) “it does so
without reference to the dollar value of [the coupon relief]”
or (2) “if it accounts for the redemption rate of the coupons
in calculating the dollar value.” 906 F.3d at 759.
For the first EasySaver option — lodestar without
reference to coupon relief — it will effectively be the amount
allowed under § 1712(b), i.e., class counsel’s reasonable
lodestar, cross-checked against the value of the non-coupon
relief, and adjusted based on any multiplier factors. This
option potentially shortchanges plaintiffs’ counsel by
omitting the fees due under § 1712(a), so this option should
be used only if there is no reasonable way to calculate the
reasonable contingency percentage of the coupon
redemption rate.
For the second EasySaver option — lodestar that takes
into account the coupon redemption rate — a district court
would start off with the lodestar for the entire case, and then
apply a negative or positive multiplier if warranted. We
believe that a district court should ordinarily try to calculate
fees for “mixed” settlements by following § 1712(c)’s
methodology of adding the sums under §§ 1712(a) and
1712(b). It should choose this second EasySaver option only
if it becomes too difficult to calculate the fees under
§ 1712(c), and it should provide an explanation for choosing
this second EasySaver option.
IV. The court erred in awarding a 1.68 lodestar
multiplier.
Because of a “strong presumption that the lodestar is
sufficient,” a multiplier is warranted only in “rare and
exceptional circumstances.” Perdue v. Kenny A. ex rel.
Winn, 559 U.S. 542, 546–52 (2010) (quotation omitted). A
multiplier “may not be awarded based on a factor that is
CHAMBERS V. WHIRLPOOL CORP. 31
subsumed in the lodestar calculation.” Id. at 553; see also In
re Bluetooth, 654 F.3d at 942 n.7 (many of the Kerr factors
for determining reasonable attorney’s fees are “subsumed
within the initial calculation of hours reasonably expended
at a reasonable rate”) (citation omitted); Parsons v. Ryan,
949 F.3d 443, 467 (9th Cir. 2020) (“Any reliance on factors
that have been held to be subsumed in the lodestar
determination will be considered an abuse of the trial court’s
discretion.”) (citation omitted). Moreover, a multiplier must
be “supported by both ‘specific evidence’ on the record and
detailed findings by the lower courts that the lodestar amount
is unreasonably low or unreasonably high.” Van Gerwen v.
Guarantee Mut. Life Co., 214 F.3d 1041, 1045 (9th Cir.
2000) (citations omitted).
The district court here granted the plaintiffs’ request for
a 1.68 multiplier because: (i) litigating the case “required an
extraordinary amount of time and labor”; (ii) there were
“difficult and complex” legal questions; (iii) the case was
“undesirable” because of “substantial litigation risks” and
the fact that the defendants are “large corporations with
substantial resources”; (iv) the settlement results are
“impressive”; and (v) attorney’s fees hinged on success.
To begin with, the district court incorrectly included the
value of the coupon portion of the settlement in establishing
the 1.68 multiplier for the lodestar value. But as discussed
above, the lodestar — or the multiplier — cannot reflect the
work done for the coupon portion of the relief. Further, the
reasons cited by the district court cannot justify enhancement
and are not tied to the multiplier amount.
A. Time and Labor
We calculate the baseline lodestar figure “by multiplying
the number of hours reasonably expended on the litigation
32 CHAMBERS V. WHIRLPOOL CORP.
by a reasonable hourly rate.” Id. In the fee motion, class
counsel submitted their total number of hours spent litigating
this case, along with proffered hourly rates. Apart from a
minor reduction of two lawyers’ time, the district court
accepted class counsel’s lodestar submission. Thus, because
the time and labor spent by class counsel were “subsumed”
within this lodestar figure, they could not justify an upward
multiplier. See Merritt v. Mackey, 932 F.2d 1317, 1324 (9th
Cir. 1991) (“The time involved is clearly subsumed in the
lodestar figure.”).
Even if a court could consider time and labor in some
cases, it appears questionable to do so here because of the
staggering number of written discovery hours — including
over $2.6 million dollars in fees for document review —
without considering the asymmetrical nature of discovery in
class actions that can lead to excessive billing. In most
complex litigation matters, parties face a “mutually assured
destruction” scenario that theoretically curbs excessive
discovery demands: if one party propounds burdensome
discovery requests, the other side is likely to respond in kind.
See Jorling v. Anthem, Inc., 836 F. Supp. 2d 821, 830 n.5
(S.D. Ind. 2011) (“[I]f two similarly sized entities are
litigating, the discovery process is more reciprocal, meaning
parties have the incentive to reach reasonable agreements on
the scope of discovery. In other words, if they don't live by
the Golden Rule — ‘Do unto others as you would have them
do unto you’ — they could both face onerous discovery
costs.”).
By contrast, class action plaintiffs typically possess no
or very limited discoverable materials, while defendants may
have reams of documents and terabytes of electronic data.
Class action plaintiffs thus have an incentive to seek
aggressive discovery (and log a tremendous number of hours
CHAMBERS V. WHIRLPOOL CORP. 33
in the process) without fear of reciprocally burdensome
discovery. Cf. id. (“The discovery process in securities cases
has often been described as ‘asymmetrical’ because the
defendant has a large universe of documents that are of
interest to the plaintiff, whereas the plaintiff has relatively
few documents of interest to the defendant. Therefore, the
plaintiff has the incentive to pry into every imaginable
crevice of the defendant's records, thus forcing the defendant
to incur substantial costs or settle.”); Boeynaems v. LA
Fitness Int’l, LLC, 285 F.R.D. 331, 334–35 (E.D. Pa. 2012)
(allocating discovery costs to plaintiffs due to “asymmetrical
discovery” where the class had “very few documents” while
the defendant had “millions of documents and millions of
items of electronically stored information”).
This is not to suggest that class action plaintiffs engage
in unnecessary or excessive discovery. Rather, when
considering whether an upward multiplier should apply to a
large lodestar based on a high number of discovery-related
hours, courts should assess the reasonableness of the
discovery efforts in light of the lack of structural restraints
on discovery in class action cases. The district court did not
do so here, and thus the enhancement based on time and
labor is improper for this reason as well.
B. Difficult and Complex Legal Questions
The district court also considered that the “case involved
a number of difficult and complex legal questions.” But “the
novelty and complexity of a case generally may not be used
as a ground for an enhancement because these factors
‘presumably are fully reflected in the number of billable
hours recorded by counsel.’” Perdue, 559 U.S. at 553(quoting Blum v. Stenson, 465 U.S. 886, 989 (1984)); see
also Greater Los Angeles Council on Deafness v. Cmty.
Television of S. Cal., 813 F.2d 217, 221 (9th Cir. 1987)
34 CHAMBERS V. WHIRLPOOL CORP.
(“[T]he novelty and difficulty of issues are inappropriate
factors to use in enhancing a fee award[.]”).
In certain contexts — such as where a subset of class
counsel has borne a disproportionate brunt of the difficult
aspects of a case — we have recognized that “complexity”
can warrant enhancement. See Hyundai & Kia, 926 F.3d
at 571–72 (downward multipliers applied to another subset
of class counsel). The district court here did not identify any
exceptional factor, and instead issued a blanket multiplier to
all class counsel based partly on the general presence of
“difficult and complex legal questions.” In fact, far from
being complex, an enormous amount of class counsel’s work
involved routine tasks such as document review.
Enhancement on this basis was therefore improper.
C. Undesirability of Case
The district court considered this case “undesirable”
because of: (i) difficulties the plaintiffs may have
encountered recovering on their claims; and (ii) the fact that
the defendants are deep-pocketed corporations. But in City
of Burlington v. Dague, the Supreme Court explained that,
because of the perverse incentives it would create, a
multiplier should not be based on the legal or factual merits
of a claim. 505 U.S. 557, 562–63 (1992). The Supreme
Court also noted that the lodestar typically reflects the
difficulty of establishing the merits of a claim. See id. at 562.
The record also offers no meaningful evidence that the
defendants’ resources made this an undesirable case to
pursue. If the mere fact that the defendants are “large
corporations” were sufficient, then most class action fee
awards would automatically qualify for enhancement —
contrary to the rule that multipliers are for “rare and
exceptional circumstances.” See Perdue, 559 U.S. at 552.
CHAMBERS V. WHIRLPOOL CORP. 35
In practice, deep pockets often create an incentive to sue,
particularly in the class action context. And indeed, the
record here undercuts the notion of undesirability, as five
different law firms pursued these claims against Whirlpool
and collectively litigated this case for many years.
D. Impressive Results
The district court lauded the settlement as “impressive”
based on the relief secured and the fact that “class counsel
began with an 11-state lawsuit and converted it into a
nationwide settlement.” But in Hensley v. Eckerhart, the
Supreme Court determined that a success-based multiplier
could not be awarded simply because of a trial court’s
finding that the relief secured “was substantial” or “of
significant import.” 461 U.S. at 438. The Court required
greater specificity in “the relationship between the amount
of the fee awarded and the results obtained.” Id. at 437. The
Court reasoned that a fee reduction would be warranted if
“the relief, however significant, is limited in comparison to
the scope of the litigation as a whole.” Id. at 438–40.
Here, the district court’s findings did not adequately
support a success-based multiplier because it neither
assessed the actual value of the settlement, nor compared it
to “the scope of the litigation as a whole.” Id. at 440. While
observing that the parties’ respective valuations of the
settlement ranged from $4,220,000 to $116,700,000, the
court declined to determine where in that spectrum the actual
value fell. Given this enormous spread, without at least
estimating the settlement value, the court could not have
conducted the necessary evaluation between “the extent of
success and the amount of the fee award.” Id. at 438.
Indeed, only 4% of the submitted claims involved cash
reimbursements; the remaining claims are for coupons, and
the parties diverge dramatically on the valuation of those
36 CHAMBERS V. WHIRLPOOL CORP.
coupons. Without determining their value, it is difficult to
assess whether the results achieved are “impressive.”
We also disagree with the district court’s conclusion that
the nationwide scope of the settlement made it “particularly
impressive.” First, class counsel did not “beg[i]n with an 11-
state lawsuit.” Rather, the initial complaint sought
certification of a nationwide class, and the plaintiffs later
narrowed the class to 11 states after multiple amendments in
response to Whirlpool’s motions to dismiss. Second, class
action defendants — if they decide to settle — often prefer a
nationwide settlement to secure the broadest release
possible. Not surprisingly, Whirlpool states that it
“demanded” a nationwide release “to prevent copycat
litigation.” And finally, without determining the settlement
value, the district court had an insufficient basis to conclude
that the nationwide scope reflected favorably on class
counsel’s efforts.
E. Contingency Risk
The district court considered the “contingent nature of
success” to be an “extremely important factor” in warranting
lodestar enhancement. We disagree.
In Dague, the Supreme Court held that “enhancement for
contingency is not permitted” in certain statutory fee-
shifting cases. 505 U.S. at 567. The Court recognized that
the rationale underlying a potential multiplier on this basis is
that a contingency attorney “pools the risks presented by his
various cases,” some of which lead to no compensation. Id.
at 565. The Supreme Court rejected this as a proper premise
for enhancement because it would unfairly force a defendant
to compensate the prevailing attorney for “cases where his
client does not prevail.” Id. (emphasis in original).
CHAMBERS V. WHIRLPOOL CORP. 37
We determined Dague to be inapplicable to class action
settlements involving a common fund. In re Wash. Pub.
Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1300–01 (9th
Cir. 1994) (“WPPSS”). We based that ruling on the fact that
common fund cases do not pose the same concerns
expressed in Dague because class counsel are paid “by
members of the plaintiff class” rather than “by the losing
defendant.” Id. at 1300. As a result, a contingency
multiplier in that context adheres to “the equitable notion
that those who benefit from the creation of the fund should
share the wealth with the lawyers whose skill and effort
helped create it.” Id. (citations omitted).
The settlement here presents a third category that neither
Dague nor WPPSS addressed: a class action settlement
where the attorney’s fees are paid directly by the defendants
rather than coming out of the class recovery. See Wing v.
Asarco Inc., 114 F.3d 986, 989 (9th Cir. 1997)
(acknowledging the unresolved question of Dague’s
applicability to a non-common fund class settlement, but
declining to reach the issue because the multiplier was
justified on other grounds). We hold that Dague applies in
this context because the distinguishing feature of WPPSS —
that the class client was paying the contingency premium,
see 19 F.3d at 1300 — is not present here. Any attorney’s
fees set by the court will be paid directly by Whirlpool,
without reducing the class recovery, because there is no
common fund. Permitting a general contingency multiplier
here would thus invoke the same concern articulated in
Dague — that Whirlpool would be subsidizing class
counsel’s losses in other cases. 505 U.S. at 565–67. 6
6
In Hyundai & Kia, which involved a non-common fund class
settlement, we affirmed a multiplier for one firm that “assumed more risk
38 CHAMBERS V. WHIRLPOOL CORP.
F. Downward Multiplier
The “most critical factor” in determining the
reasonableness of a fee award is “the degree of success
obtained.” See Hensley, 461 U.S. at 436. Whirlpool asserts
that a 0.5 downward multiplier is warranted here because of
class counsel’s lack of success.
Because the degree of success depends on the settlement
value, whether a downward multiplier is warranted will
depend on the district court’s valuation of the settlement. We
remand for the district court to make this determination in
the first instance for its calculation of fees under §§ 1712(a)
and (b) based on the principles outlined in this opinion.
V. The court did not abuse its discretion in approving
the settlement.
The settlement provides that “[t]he Court’s or an
appellate court’s failure to approve, in whole or in part, any
award of attorneys’ fees and costs to Class Counsel, or any
Service Award, shall not affect the validity or finality of the
Settlement.” For this reason, our review of the district
court’s decision to grant final settlement approval is not tied
to our reversal of the fee award. See In re Bluetooth,
654 F.3d at 945 (“Approval of the settlement agreement was
not conditioned on the award of attorneys’ fees and costs or
an incentive award, and therefore our vacatur of the fee
than other firms” in the case. 926 F.3d at 571–72. We did not, however,
recognize contingency risk as a general multiplier factor for all class
counsel there. See id. Rather, the enhancement reflected a particularized
relative risk, and it was indirectly offset by lodestar reductions for other
firms based on a careful firm-by-firm analysis performed by the district
court. See id. The record here does not reflect any similar particularized
risk that would warrant enhancement for class counsel.
CHAMBERS V. WHIRLPOOL CORP. 39
award does not necessitate invalidation of the approval
order.”); Easysaver, 906 F.3d at 763 (vacating fee award but
affirming settlement approval).
While the objectors raise various challenges to the
settlement, none of their arguments establish a “strong
showing” that the district court “clearly abused its
discretion” by approving the settlement. See Hyundai &
Kia, 926 F.3d at 556.
A. Fairness of Settlement
Rule 23(e)(2) provides that a court may approve a class
settlement “only on finding that it is fair, reasonable, and
adequate.” Fed. R. Civ. P. 23(e)(2). This requires a
balancing assessment of:
(1) the strength of the plaintiffs’ case; (2) the
risk, expense, complexity, and likely duration
of further litigation; (3) the risk of
maintaining class action status throughout the
trial; (4) the amount offered in settlement;
(5) the extent of discovery completed and the
stage of the proceedings; (6) the experience
and views of counsel; (7) the presence of a
governmental participant; and (8) the
reaction of the class members to the proposed
settlement.
Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th
Cir. 2004). The court must also determine that the settlement
is not “the product of collusion among the negotiating
parties.” Id. at 576.
The district court evaluated those eight factors and
properly found that they each support a finding of fairness
40 CHAMBERS V. WHIRLPOOL CORP.
except for the government participant factor, which is
inapplicable. The district court also correctly determined
there was no collusion because: (i) the parties did not agree
to an amount or range of attorney’s fees, but left the matter
to the court; (ii) there is no common fund that reverts back
to Whirlpool; and (iii) the parties settled via arm’s length
negotiations before an experienced mediator.
Objector McDonald does not challenge any of the
fairness factors or contend that the parties colluded. He
argues instead that, because the settlement provides only
coupon relief to over 99% of the class, the district court
should not have granted approval.
Coupons, however, “may be particularly appropriate in
situations ‘where they provide real benefits to consumer
class members.’” HP Inkjet, 716 F.3d at 1178 n.4 (quoting
S. Rep. No. 109-14, at 31). McDonald acknowledges that
only 0.17% of the class experienced a dishwasher
overheating event. Viewed in this light, the settlement
structure is defensible. For the 0.17% with malfunctioning
products, the agreement provides for repair or replacement
reimbursement. And for the 99.83% who suffered no
malfunction, the settlement provides both a rebate off a new
dishwasher and extended coverage for future overheating
events. Coupons and extended warranty thus reasonably
provide some benefits to class members with fully
operational dishwashers.
B. Intra-Class Conflicts
Objector Miorelli asserts that conflicts between class and
non-class members, as well as between the two subclasses
(past overheating and future overheating), violate Rule
23(a). This argument, however, stems from misstatements
of fact and law.
CHAMBERS V. WHIRLPOOL CORP. 41
First, Miorelli claims that the settlement causes
“improper comingling” by providing non-class members
with “benefits in exchange for the release paid for by class
members.” This is a misreading of the settlement agreement,
which requires non-class members to execute a separate
release as consideration for receiving settlement
compensation.
Second, Miorelli argues that $4,000 service payments to
several non-class members violate the typicality and
adequacy requirements of Rule 23(a)(3) and (4). Those
provisions, however, apply to “representative parties.” See
Fed. R. Civ. P. 23(a)(3), (4). Because the non-class members
receiving service awards are not considered class
representatives under the settlement, their receipt of
payments is irrelevant to the Rule 23(a) typicality and
adequacy analyses.
Third, Miorelli contends that the benefits to non-class
members are evidence of class counsel’s self-dealing, as
they inflate the overall settlement value for fee calculation
purposes while according no value to the class. But as
already noted, non-class compensation is independent of the
class recovery, and requires non-class members to execute a
separate release as consideration. If class counsel overstated
the value of the non-class relief to justify fees, that issue goes
only to the proper amount of class counsel’s fee award.
Fourth, Miorelli relies on Ortiz v. Fibreboard Corp.,
527 U.S. 815 (1999) for the proposition that holders of
present and future claims require separate representation
because of their adversarial positions. But the Ortiz holding
was directed toward a limited fund context in which
compensation for present claimholders would reduce the
relief available to future claimholders. 527 U.S. at 821–59.
Under the claims-made settlement here, the availability of
42 CHAMBERS V. WHIRLPOOL CORP.
relief for future overheating class members is not affected by
the claims of past overheating class members. Ortiz thus
does not apply.
C. $100,000 Payment to Chambers
Objectors McDonald and Knotts argue that Whirlpool’s
purchase of named plaintiff Steven Chambers’ two websites
(which complained about his overheating dishwasher) for
$100,000 undermines his adequacy as a class representative.
But even if we assume Chambers is an inadequate class
representative, this does not affect the validity of the
settlement because there are 13 other unchallenged class
representatives.
In Local Joint Exec. Bd. of Culinary/Bartender Tr. Fund
v. Las Vegas Sands, Inc., we considered a challenge to the
adequacy of two class representatives. 244 F.3d 1152, 1162
(9th Cir. 2001). After finding that one of the individuals was
an adequate representative, we declined to address the
adequacy of the second individual on the basis that “the
adequacy-of-representation requirement is satisfied as long
as one of the class representatives is an adequate class
representative.” Id. at 1162 n.2. Likewise here, the presence
of 13 adequate class representatives renders moot any
challenge to the adequacy of Chambers.
D. Notice Issue
McDonald maintains that an error in 7,485 of the long-
form notices sent to class members — which did not update
the claim, exclusion, or objection deadlines after the court
granted a 25-day extension — deprived those individuals of
due process. Each of those class members, however,
requested a long-form notice either on the settlement website
or through the interactive voice response system, both of
CHAMBERS V. WHIRLPOOL CORP. 43
which provided the correct dates. Thus, the error was
harmless. See Online DVD-Rental, 779 F.3d at 947 (notice
“not perfect” because it did not include a court update, but it
was sufficient since the updated information appeared
elsewhere, including the settlement website).
E. Allocation of Attorney’s Fees
Knott relies on a Fifth Circuit case, In re High Sulfur
Content Gasoline Products Liability Litigation, 517 F.3d
220 (5th Cir. 2008), for the proposition that the district court
had to judicially allocate fees among class counsel. That
case, however, addressed the due process implications of
approving without scrutiny a fee-splitting arrangement at an
ex parte proceeding that excluded many of the affected
attorneys. High Sulfur, 517 F.3d at 230–35. No similar
process took place here, and in any event, issues related to
the fee award do not change the propriety of settlement
approval. See Bluetooth Headset, 654 F.3d at 945.
F. Access to Court
“It is well established that district courts have inherent
power to control their docket.” Ready Transp., Inc. v. AAR
Mfg., Inc., 627 F.3d 402, 404 (9th Cir. 2010) (citations
omitted). While “the inherent powers permit a district court
to go as far as to dismiss entire actions to rein in abusive
conduct,” a court can also “use less drastic measures such as
striking documents from the docket to address litigation
conduct.” Id.The record reflects that McDonald failed to cooperate
with the plaintiffs’ efforts to secure discovery that other
objectors had been required to provide. After McDonald
moved to quash a deposition subpoena, a Tennessee judge
ordered his deposition to proceed with certain limitations.
44 CHAMBERS V. WHIRLPOOL CORP.
Because of the impending final approval hearing, the
plaintiffs offered to accept a declaration from McDonald
instead of a deposition. McDonald’s decision to rebuff this
reasonable accommodation provided ample justification for
the district court to strike his objection. See id. at 404–05.
McDonald’s complaint that he did not have electronic
filing privileges also lacks merit. As he acknowledges, the
district court did not restrict his ability to manually file
documents.
G. Ad Hominem Statements
Miorelli contends that the district court denied her
objection based on class counsel’s ad hominem attacks. We
agree with the general principle that parties to litigation
should refrain from employing ad hominem rhetoric. See
Cal. Attorney Guidelines of Civility & Prof. § 8. Here,
however, the district court made clear that it “considered all
of the arguments set forth by the serial objectors,” and
denied them on the merits. There is no indication that the
district court denied the objection because of class counsel’s
complaints that the objectors’ lawyers had filed objections
to other class settlements.
H. Sealing Billing Records
Finally, Miorelli argues that, based on our ruling in
Yamada v. Nobel Biocare Holding AG, 825 F.3d 536 (9th
Cir. 2016), she is entitled to full access to class counsel’s
billing records. But Yamada held that the defendants — who
would be paying class counsel’s fees — were entitled to
“access to the timesheets . . . so they can inspect them and
present whatever objections they might have concerning the
fairness and reasonableness of Plaintiffs’ fee request.”
825 F.3d at 544–46. Because Whirlpool had unimpeded
CHAMBERS V. WHIRLPOOL CORP. 45
access to class counsel’s billing records, Miorelli’s argument
fails. In any event, because Miorelli did not oppose sealing
or raise the issue in her objection, she has waived it. See
Janes v. Wal-Mart Stores Inc., 279 F.3d 883, 887 (9th Cir.
2002).
AFFIRMED IN PART, VACATED AND
REMANDED IN PART.