Fee Request Gets Axed: Western Union’s $8.5MM TCPA Settlement Approved but Lead Class Counsel Receives a Lecture and a Huge Pay Cut

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Busy Labor Day for me, how are you folks doing?

TCPAland’s latest blockbuster settlement came with a lesson to attorneys on the importance of contemporaneous time entries–especially those hoping to recover millions of dollars in attorney’s fees following a TCPA class settlement.

In Douglas v. Western Union Company, Case No. 14 C 1741, 2018 WL 4181484 (N.D. Ill. Aug. 31, 2018) the court granted final approval to a TCPA class action settlement requiring Western Union to pay $8.5 million to resolve the claims of 741,800 class members who allegedly received unsolicited text messages from the money-transfer giant.  While Jay Edelson would surely consider this a “horrible” settlement since it is on a per-number basis and not a per-call basis, those of us mere mortals residing in TCPAland would have to acknowledge that a ~$11.50 per class member settlement in the post-ACA Int’l environment is a pretty good result for the class.

Despite the good result, class counsel will not be recovering the typical multi-million dollar fee award that has become common place in these TCPA class action settlements.  Instead class counsel–Siprut, P.C.–received a scathing lecture and a big fee cut from the Court.

Siprut’s sins–in the eyes of the court–were twofold. First, the Court took issue with Siprut’s loose language in approaching an objector’s history with an alleged cocaine possession. In briefing a motion for discovery from the objector Siprut had come too close to the line of falsely accusing the objector of having been convicted of the crime, at least in the Court’s eyes.  Next, when the matter was brought to class counsel’s attention he failed to apologize to the Court’s satisfaction and instead the court found that Siprut “doubled down” on the argument in a reply brief. This, did not please the court.

The larger problem, however, was with class counsel’s fee submissions. To justify the ~$2.8MM in fees they sought, Siprut and his colleagues submitted documents specifying 2,164 hours of work performed on the case, broken down into 15 separate categories and also broken down by timekeeper.  But the submissions did not include line-by-line time entries and the Court wanted to see those. The Court also requested Western Union submit its own billing records since the Court suspected the hours Siprut requested were excessively high given that the case proceeded quickly to mediation.

The Court received the requested information and found it “disquieting” in two respects.  First, “Siprut and his colleagues reported more than twice the number of hours expended by defense counsel.” Douglas at * 13.  Second, and probably most damaging, Siprut did not have any detailed time records for the case. Nor were the time entries contemporaneously captured. Instead, the Court found that Siprut and his colleagues must have re-constructed their time at the very conclusion of the case after two years of litigation. Douglas at *14. 

The Court then dove into one Siprut’s billing categories, finding it “impossible to credit” the firm’s assertion that it had spent 59.1 hours preparing reports for the court that were “largely boilerplate” and a motion to strike that “could not have required much drafting or much (if any) research” given that it was “largely a cut-and-paste job” from other motions filed in previous cases. See Douglas at *15.

After reciting these perceived misdeeds, the Court notes “it would be well within its rights to deny Siprut’s fee request in its entirety” before eventually awarding class counsel $425,000.00 owing to the “good result he obtained for the class.” Id. 

While an award of $425,000.00 to class counsel may not sound bad to most outside of TCPAland, an award of only 5% of a common fund TCPA class settlement is virtually unheard of.  The Court came down hard on class counsel in this case and the ruling serves as an important reminder to all lawyers–contemporaneous and task-specific time entries are a preferred practice. Failing to maintain such precise records may draw the ire of a Court one day and, in some circumstances, cost you a lot of money.

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