Americana Art China Company, I v. Foxfire Printing and Packaging, 2014 U.S. App. LEXIS 2930

Defendant sent unsolicited advertising faxes in 2008 in violation of the TCPA; class representative Americana Art China brought a class action.
An initial settlement contemplated an $18 million judgment limited to $75,000 out-of-pocket by defendant, with insurers (Hartford, Continental) responsible for the remainder; Continental intervened later.
A later settlement with Continental made $6.1 million available (calculated as number of faxes × per-fax figure) and provided for attorneys’ fees equal to one-third of that fund (~$2,033,333.33).
After notice, only 1,820 claim forms were returned (covering 7,222 faxes), so Continental’s actual payout was ~$397,426.66; unclaimed funds would revert.
The district court approved the class settlement but, concerned about the small actual recovery, used the lodestar method (accepted counsel’s lodestar and applied a 1.5 risk multiplier) and awarded $1,147,698.70 in fees.
Plaintiffs’ attorneys appealed the fee reduction; the parties later jointly moved to dismiss the appeal under Fed. R. App. P. 42(b), which the Seventh Circuit refused and proceeded to consider the fee issues.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the district court improperly used an ex post facto rationale in applying lodestar (i.e., considered actual recovery)	District court relied on actual recovery rather than an ex ante valuation, which is improper when simulating market agreement	District court merely applied lodestar and a 1.5 risk multiplier; any consideration of recovery in choosing method is permitted	Court held no error: district did not base lodestar on actual payout and may consider outcome when simulating ex ante bargain
Whether the district court erred by choosing lodestar over percentage (common-fund) method	Court should have used percentage method tied to common-fund principles (1/3 of $6.1M)	Circuit precedent permits district courts discretion to use either lodestar or percentage depending on circumstances	Court affirmed: Florin permits either method; lodestar was appropriate given low actual recovery
Whether the appellate court should grant the parties’ voluntary dismissal under Rule 42(b) after oral argument	Parties jointly moved to dismiss and stated dismissal would not alter district judgment	Appellate court has discretion and should review class-settlement fee issues for public interest and guidance	Court declined to dismiss and exercised review, then affirmed district court

Safeco Ins. Co. of Am. v. Am. Intern. Grp., Inc., 710 F.3d 754 (7th Cir. 2013) (Rule 42(b) dismissal is permissive; appellate court may decline dismissal)
Harman v. Lyphomed, Inc., 945 F.2d 969 (7th Cir. 1991) (standard of review for attorney-fee determinations and lodestar methodology principles)
In re Synthroid Mktg. Litig., 264 F.3d 712 (7th Cir. 2001) (ex ante valuation principle for class-fee setting; simulate market bargaining)
Florin v. Nationsbank of Ga., N.A., 34 F.3d 560 (7th Cir. 1994) (district courts may choose either lodestar or percentage method in common-fund cases)
Sutton v. Bernard, 504 F.3d 688 (7th Cir. 2007) (degree of success is relevant but should not be sole determinant in fee awards)
Boeing Co. v. Van Gemert, 444 U.S. 472 (1980) (total benefit rule in common-fund fee analysis)