Citing inefficient staffing and high hourly rates, U.S. District Judge Ellen Segal Huvelle slashed attorney fees in half for plaintiffs' lawyers in multi-district litigation against daily deal company LivingSocial.
In a March 22 opinion approving a settlement between consumers and LivingSocial over expired deals, Huvelle awarded $1.35 million in fees to the 12 law firms that represented the plaintiffs, instead of the $3 million they asked for as part of the settlement. Co-lead plaintiffs' counsel at Cuneo Gilbert & LaDuca and Robbins Geller Rudman & Dowd did not immediately return requests for comment.
LivingSocial spokesman Andrew Weinstein said in a statement that the company was "pleased to have brought this litigation to a conclusion, so we can focus all of our efforts on creating great local experiences for our customers." The company was represented by a team from Cooley; lead attorneys Michael Rhodes and Christopher Durbin were not available this morning to comment.
Washington-based LivingSocial was hit with a series of class actions beginning in 2011 over expired deals that consumers bought through the company's website. The plaintiffs claimed the vouchers' limited expiration dates violated the federal Credit Card Accountability Responsibility and Disclosure Act, as well as state laws regulating gift certificates. LivingSocial denied its vouchers were gift certificates and argued that even if they were, the expiration dates did comply with state and federal laws.
Class actions filed in D.C., California, Florida, Washington and Minnesota federal courts were consolidated as multi-district litigation in D.C. in August 2011 and settlement talks started soon after, according to filings. Huvelle preliminarily approved the settlement in October.
Under the settlement, LivingSocial agreed to establish a $4.5 million fund to reimburse class members whose deals expired before they were used. The class included about 10.9 million consumers who bought deals between 2009 and late 2012. Any remaining funds would go to the Consumers Union and National Consumers League as cy pres awards.
LivingSocial also agreed to clarify the separate expiration dates for the promotional value of a deal – $5 for $10 worth of services, for instance – versus the actual paid value of a voucher, which would expire in compliance with state or federal laws (whichever was longer).
Plaintiffs' lawyers asked for $3 million in fees, an amount that LivingSocial agreed not to contest. Huvelle wrote that although the four formal objections to the settlement agreement were "largely meritless," she agreed with complaints about the size of the fee request.
Huvelle criticized how the plaintiffs' legal team staffed the case, noting that 46 lawyers, at the 12 firms involved in the case, billed time. "At a minimum, this is a highly inefficient way of doing business," she wrote.
Plaintiffs' lawyers billed more than 4,000 attorney and paralegal hours, a number that Huvelle called "excessive" given that there were only three depositions taken and two briefed motions. She said she was unwilling to accept the high hourly rates charged by some attorneys working on the case, citing the $600 rate charged by Cuneo partner Charles LaDuca as exceeding the established Laffey Matrix amount.
Huvelle rejected the argument that plaintiffs' counsel should be paid based on a percentage of the estimated value of the settlement and its injunctive relief, which the plaintiffs' lawyers pegged at $62 million. She instead awarded 18 percent of the settlement fund, which was estimated at $7.5 million.
"A modest percentage is appropriate in this case given the limited value of the direct benefits to the class members, the small number of class members who will benefit, the proportionally large cy pres distributions…and the somewhat dubious value of the injunctive relief," Huvelle wrote.