California Court: $1.3 Million fee request substantially rejected in Kellogg class action settlement, due in part, to lack of billing detail

Posted on January 6th, 2014 by Legal Fee Advisors

In November, 2013, a California district court judge significantly reduced an attorney’s fee award sought by plaintiffs’ counsel pursuant to settlement of a class action suit against the Kellogg Company. The action, originally brought by plaintiffs in 2009, alleged that Kellogg had made false and misleading statements on their website, claiming that consumption of their Rice Krispies and Cocoa Krispies cereals would improve children’s health. The settlement, reached in 2010, established a cash fund of 2.5 million, from which individual class member claims would be paid, as well as a cy pres donation of 2.5 million. Plaintiffs’ counsel sought over 1.3 million in attorney’s fees, more than 50% of the settlement fund. (Weeks v. Kellogg Co., CV 09-08102 MMM RZX, 2013 WL 6531177 (C.D. Cal. Nov. 23, 2013).

Plaintiffs’ attorneys argued that the amount sought represented only 24% of the $5.4 million total settlement amount, a percentage within the 20-30% range normally approved in class action settlement cases. The Court, however, pointed out that the fee request was more than 50% of the fund available to pay class members, as the cy pres donations would go to groups that were not part of the class. Under the settlement agreement, class members would receive up to $15 reimbursement from the fund, but the Court predicted that individuals would receive less than that amount if the 1.3 million request were granted.

In applying the Lodestar method, the Court also found the billing records entirely devoid of description. With the exception of one attorney, the records provided no detail as to how much time was allocated to individual tasks. Instead, the summary tables provided by counsel merely listed attorney names, the total amount of hours worked, and their respective hourly rates. The Court held that a proper Lodestar calculation was not even possible in light of these deficiencies and thus counsels’ fee request could not be deemed reasonable under the lodestar method. Accordingly, the Court awarded only $879,237 in fees, representing approximately 30% of the settlement fund available to pay class members.

The decision emphasizes the necessity of detailed time records in fee awards requests, especially where courts tend to scale down fee awards when the settlement terms are not solely to the benefit of class members.

Erika Bibelnieks

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