May 31, 2018
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 11-CV-8176 -
Matthew F. Kennelly, Judge.
Flaum, Manion, and Hamilton, Circuit Judges.
Hamilton, Circuit Judge.
the third appeal regarding attorney fees to stem from a class
action against Southwest Airlines after it stopped honoring
in-flight drink vouchers for customers who bought
"Business Select" fares. We thought the case was
over after the first appeal, In re Southwest Airlines
Voucher Litigation (Southwest I), 799 F.3d 701
(7th Cir. 2015), because the settlement made the customers
whole by giving them a replacement voucher. At least, it made
whole the small group of customers who submitted claims.
the appeal, class counsel-Siprut PC-requested additional
fees. The district court awarded them. Markow, the objector,
appealed but dismissed the appeal after Southwest tripled the
relief to the class-by giving two additional vouchers for
every one claimed-to narrow the gap between the amount of
supplemental fees Siprut would receive and the value of the
relief the class would actually receive. The district court
approved that agreement. Objector Markow then moved for fees
and an incentive award. The district court denied the motion,
reasoning that requiring Siprut to pay Markow's fees out
of Siprut's supplemental fee award "undoes the
settlement." In re Southwest Airlines Voucher
Litigation (Southwest II), 2017 WL 5295372, at
*5 (N.D. Ill. Nov. 13, 2017). Markow has appealed. We reverse
and remand. Unless the parties to a class action settlement
agreement, including objecting parties, expressly agree
otherwise, settlement agreements should not be read to bar
objectors from requesting fees for their efforts in adding
value to a settlement.
Factual and Procedural Background
first appeal, we held that 28 U.S.C. § 1712, enacted as
part of the Class Action Fairness Act allowed the district
court to award Siprut an attorney fee based on the lodestar
method rather than the value of the redeemed vouchers.
Southwest I, 799 F.3d at 710. We affirmed the
district court's approval of the settlement. Id.
at 713. Siprut cross-appealed, arguing that the district
court abused its discretion by awarding less in fees for
Siprut ($1, 649, 118) than the amount that Southwest agreed
not to oppose ($3 million). We affirmed but modified the
judgment to reduce one Siprut lawyer's individual share
of the fee award because he failed to disclose a potential
conflict of interest resulting from the fact that he and one
of the class representatives were co-counsel in another
pending class action. Id. at 714-16.
the district court, Siprut made an astonishing request for
supplemental fees. For its work on the motion to amend the
fee award and the prior appeal, Siprut essentially requested
the difference between the $3 million Southwest agreed not to
oppose and the amount we affirmed as reduced in the prior
appeal: $1, 365, 882. Siprut got to that number by requesting
the same 1.5 multiplier for its post-judgment time as for the
initial fee award and by claiming 572 hours in attorney time
for the motion to amend and more than 970 hours of attorney
time for the appeal-totals that the district court rightly
called "grossly excessive." The district court also
noted its impression that "some of the originally
hoped-for $3, 000, 000 that Southwest agreed not to oppose is
still on the table, and plaintiffs' counsel are trying to
find a way to get the rest of it." In re Southwest
Airlines Voucher Litigation, 2016 WL 1623191, at *5
(N.D. Ill. Apr. 25, 2016). The district court declined to
award a multiplier for the post-judgment work but
nevertheless awarded Siprut one-third of the requested
amount: $455, 294 plus expenses. Id.
moved for reconsideration under Rule 59 and,
alternatively, for vacatur of the settlement approval and
accompanying fee orders under Rule 60(b). The district court
granted the motion for reconsideration and vacated the
additional fee award so that the class would receive notice
of and a chance to object to it. In re Southwest Airlines
Voucher Litigation, 2016 WL 3418565, at *2 (N.D. Ill.
June 22, 2016). Markow appealed.
the parties even briefed the second appeal on the merits,
they reached a deal. In exchange for Markow dismissing his
appeal, Siprut agreed to take half of the supplemental fee
award ($227, 647 plus $3, 529.68 in expenses) and Southwest
agreed to triple the relief to the class (two additional
vouchers for every one claimed). Nevertheless, the district
court was also told-apparently for the first time-that the
correct number of vouchers claimed under the original
settlement was less than one third what the parties
had told the district court earlier about the original
settlement it had approved. The district court approved the
new settlement. Southwest distributed the vouchers and paid
then moved for $80, 000 in attorney fees and an incentive
award of $1, 000 to come out of the more than $1.8 million
attorney fee award to Siprut. Markow describes his request as
"a fraction of his lodestar and less than 5% of class
counsel's total award." The district court denied
the motion. Southwest II, 2017 WL 5295372, at *5.
Markow has appealed that denial.
review attorney fee awards in class actions for abuse of
discretion. Birchmeier v. Caribbean Cruise Line,
Inc., ___ F.3d ___, ___, 2018 WL 3545146, at *3 (7th
Cir. July 24, 2018), citing Silverman v. Motorola
Solutions, Inc., 739 F.3d 956, 958 (7th Cir. 2013). The
deferential standard of review stems from the fact that
"[d]istrict courts are far better suited than appellate
courts to assess a reasonable fee in light of the case's
history." Harman v. Lyphomed, Inc., 945 F. 2 d
969, 973 (7th Cir. 1991). A district court abuses its
discretion when it "reaches an erroneous conclusion of
law, fails to explain a reduction or reaches a conclusion
that no evidence in the record supports as rational,"
id., and "we review a district court's
legal analysis and methodology de novo," Anderson v.
AB Painting & Sandblasting Inc., 578 F.3d 542, 544
(7th Cir. 2009), citing Jaffee v. Redmond, 142 F.3d
409, 412-13 (7th Cir. 1998), and Montgomery v. Aetna
Plywood, Inc., 231 F.3d 399, 408 (7th Cir. 2000). When
the facts are undisputed (as here, where neither ...