John Galloway v. The Kansas City Landsmen, LLC
2016 U.S. App. LEXIS 15234
| 8th Cir. | 2016Background
- Plaintiff John Galloway brought a class action under FACTA alleging Budget rental car businesses issued receipts showing more than five credit‑card digits.
- Defendants updated their receipts to comply with FACTA; parties then negotiated a class settlement providing coupons ($10 or $30) and an injunction to comply with FACTA, plus a clear‑sailing fee agreement (fees up to $175,000; incentive up to $3,000).
- 726,210 coupons were mailed; only 326 were redeemed (redemption rate 0.045%), with redeemed value of about $8,000.
- Plaintiffs sought $147,717.75 in attorneys’ fees, $5,699.01 expenses, and $3,000 incentive fee; district court awarded $23,137.46 in fees and costs and $1,000 incentive fee after applying CAFA’s coupon‑settlement rules (28 U.S.C. § 1712).
- District court: attributed a coupon‑based fee component to 33% of redeemed coupons ($2,666.67) per § 1712(a); used lodestar for injunctive relief under § 1712(b) and apportioned 10% of lodestar to injunction; combined per § 1712(c).
- Plaintiffs appealed arguing § 1712(b) gives class counsel the right to elect lodestar for all fees; Eighth Circuit affirmed, finding any statutory‑construction error harmless.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1712 lets class counsel elect lodestar method for fee calculation | § 1712(b) permits counsel to elect lodestar for all fees | District court discretion governs choice of method; counsel cannot force lodestar | Court: Counsel cannot compel lodestar; district court has discretion to choose method |
| Whether § 1712(a) requires coupon‑portion fees be based only on redeemed coupon value | District court misread § 1712(a); statute shouldn’t be read as mandatory sole basis | District court applied redeemed‑value rule for coupon portion | Court: Mandatory reading was error, but harmless here given minimal coupon value |
| Proper treatment of mixed (coupon + injunction) settlements under § 1712(c) | Counsel argued lodestar election should apply to entire fee including coupon portion | Court applied § 1712: coupon portion tied to redeemed value; injunctive portion via lodestar | Court: § 1712 allows discretion to use percentage, lodestar, or mix; district court should explicitly exercise discretion but outcome stands |
| Validity/attribution of the consent injunction as basis for fees | Plaintiffs treated injunction as value-creating equitable relief to justify lodestar portion | Defendants had agreed injunction; court notes blanket statutory injunctions are improper | Court: Consent blanket injunction is invalid and not properly attributable; directs court to vacate if enforcement is sought |
Key Cases Cited
- Hensley v. Eckerhart, 461 U.S. 424 (fee‑award lodestar principles and degree‑of‑success focus)
- Johnston v. Comerica Mortgage Corp., 83 F.3d 241 (district court discretion to choose fee method)
- In re HP Inkjet Printer Litig., 716 F.3d 1173 (9th Cir. interpretation treating § 1712 as mandatory)
- In re Southwest Airlines Voucher Litig., 799 F.3d 701 (7th Cir. interpretation treating § 1712 as permissive/discretionary)
- Buckhannon Bd. & Care Home, Inc. v. West Virginia Dept. of Health & Human Res., 532 U.S. 598 (relief on the merits and equitable‑relief considerations)
- Westerfeld v. Independent Processing, LLC, 621 F.3d 819 (standard for statutory interpretation and review)