Faught v. American Home Shield Corp.
668 F.3d 1233
11th Cir.2012Background
- Three consolidated appeals by objectors to a class action settlement against American Home Shield (AHS) over allegedly wrongful claim denials.
- Two parallel class actions originated in California and Alabama; Edleson settlement was rejected by a California court.
- This case settlement provides a Review Desk for resubmitting claims, plus changes to business practices and a fee arrangement for class counsel.
- Edleson settlement was cited as a baseline; this settlement includes substantial improvements and new incentives beyond Edleson.
- Notice and fairness hearings occurred; objections focused on notice adequacy, overall fairness, and attorneys’ fees; district court approved the settlement and fee arrangement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the class notice adequate under Rule 23(e)? | Shepard/Howe: notice insufficient, omits Edleson context. | AHS: notice reasonably informative and not overly detailed. | No abuse of discretion; notice adequate. |
| Is the settlement fair, reasonable, and adequate given factors like likelihood of success and complexity? | Objectors: Edleson similarities render settlement unfair and coercive. | District court correctly found valuable improvements and favorable terms for class. | Settlement affirmed as fair, reasonable, and adequate. |
| Is the attorneys’ fee award reasonable given the 25% benchmark and the $1.5 million lump sum? | Objectors: fee exceeded 25% benchmark; lump sum unjustified. | District court properly applied Johnson factors; $1.5M compensates non-monetary value; total fee reasonable. | Fee award affirmed. |
Key Cases Cited
- In re CP Ships Ltd. Sec. Litig., 578 F.3d 1306 (11th Cir. 2009) (abuse of discretion standard for settlement approval; factors guidance)
- Holmes v. Cont'l Can Co., 706 F.2d 1144 (11th Cir. 1983) (settlement review: fairness, reasonableness, adequacy)
- Camden I Condo. Assoc., Inc. v. Dunkle, 946 F.2d 768 (11th Cir. 1991) (fee awards in common fund cases; 25% benchmark guidance)
- Hensley v. Eckerhart, 461 U.S. 424 (1983) (Johnson factors for attorney's fees)
- Waters v. Intl. Precious Metals Corp., 190 F.3d 1291 (11th Cir. 1999) (guidance on reasonable percentage of common fund fees (25% standard))
- Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (en banc pre-1981 Fifth Circuit decisions adopted)
- Johnson v. Ga. Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) (Johnson factors underpin fee analysis)