Yeagley v. Wells Fargo & Co., 2008 WL 171083 (N.D. Cal. 2008).
Now look at them lawyers, that’s the way you do it
You file a class in a U.S. D.C.
That ain’t workin, that’s the way you do it
Money for nothin’ and chicks for free
The settlement was worthless (about $1m total value by the Court’s calculation) and the case was weak, but that didn’t stop class counsel from asking for $1.5m in fees.
In this FCRA class action, the plaintiffs claimed that Wells Fargo (allegedly) accessed their credit reports without their authorization and without following up with firm offers of credit. In their suit, the class sought both injunctive relief and statutory damages under the FCRA. After the court threw out the request for injunctive relief, the class and Wells Fargo settled the remaining claims for next to nothing.
As part of the class settlement, Wells Fargo agreed to: (1) give each class member an “educational brochure” on credit reports; (2) purchase each class member two free combined credit reports at a cost of $15.50 each; and (3) give a $50 rebate to each class member who requested it.
For the free credit reports, the class members would automatically receive one credit report, but they had to make a separate request if they wanted the second one. However, only about one percent of the total class signed up for the goods. Also as part of the settlement, Wells Fargo had agreed to pay the class counsel reasonable attorney’s fees to be decided by the court.
Class counsel filed a motion for court approval of the settlement. While noting that the class wasn’t going to receive much of anything under the proposal, the court approved the settlement since, by the Court’s estimation, the class was set to receive much or more than it would have received if it had been successful on the merits—i.e. the court noted that the class claims were basically worthless.
Next, the court turned its attention to class counsel’s request for attorney’s fees. In its request for fees, the class counsel, somehow, someway, was able to demand a fee $1.5m with a straight face. (One can only wonder if class counsel held their pinkies up to their mouth as they made their request to the court a’la Dr. Evil).
Using a lodestar calculation, the court determined that the actual value of the class-wide settlement was only about $1m. Per the court, the “educational brochure” may have had some educational value to the class members, but all of the information contained within the brochure was readily available to the class members for free on the internet. When forced to attach a money value to the reports, the court estimated roughly a $500,000 value.
As for the credit reports, the court noted that less than one percent of the class actually submitted a request for the first of the two reports. Wells Fargo paid only $15.00 per report. Thus, assuming that Wells Fargo would provide 35,000 reports, the court calculated that Wells Fargo would pay only $542,500.00 for this portion of the settlement. The second report, the court found, was worth even less to the total settlement amount given that only one percent asked for the first report, and only those who asked for the first report were eligible to request the second report. Thus, given the court’s determination that the settlement benefits to the class were nominal, at best, the court valued the entire settlement value at roughly $1m and awarded the class counsel $326,000 in fees—far, far removed from the $1.5m demanded by class counsel. Somewhere, in the recesses of the courthouse, the financially battered class counsel are still crying out:
I want my, I want my, I want my lawyer’s fee…