Steve Chambers v. Whirlpool Corp.
980 F.3d 645
9th Cir.2020Background
- Plaintiffs sued Whirlpool over allegedly defective electronic control boards in certain dishwashers; the parties agreed to a nationwide settlement that covered millions of devices and provided cash reimbursements, extended-coverage benefits, and 10–20% limited-time rebate coupons for Whirlpool/KitchenAid/Kenmore dishwashers.
- The settlement covered roughly 5.8 million class (Rushmore/Rush) members and 12.6 million non-class (NewGen/Raptor) owners; most submitted claims were for coupons, and the parties’ valuation of the settlement diverged dramatically (Whirlpool: about $4.2M; plaintiffs: up to $116.7M).
- The district court granted final approval of the settlement and awarded $14.8 million in attorneys’ fees to class counsel based on a lodestar of ~$8.82M multiplied by 1.68; the award treated coupons within the lodestar calculation and declined to cross-check against settlement value.
- Whirlpool and several objectors appealed the fee award (and some objectors appealed settlement approval); the Ninth Circuit affirmed settlement approval but vacated and remanded the fee award.
- The Ninth Circuit held that CAFA’s attorney-fee provisions apply to federal class actions (including diversity-based ones) and that CAFA requires percentage-of-redemption-value treatment for the coupon portion of a mixed settlement, with lodestar (and any multiplier) limited to the non-coupon relief or otherwise adjusted to account for coupon redemption value.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of CAFA fee rules to diversity-based federal class actions | CAFA does not preempt state law on fees; state (California) lodestar rule governs via choice-of-law clause | CAFA fee provisions apply to any federal class action and preempt conflicting state law | CAFA applies to all federal class actions (including diversity cases); parties cannot invoke a choice-of-law clause to avoid CAFA preemption |
| Is the settlement a "coupon" settlement triggering §1712(a) percentage-of-redemption-value treatment? | Plaintiffs argued the rebates were not CAFA coupons or their coupon component was not material | Whirlpool argued the rebates function as coupons that can be of minimal real value | The 10–20% limited-time rebates are CAFA coupons (limited merchant choice, short expiry, out-of-pocket trigger); §1712(a) applies to fees attributable to coupon relief |
| Proper method to calculate fees in a mixed coupon/non-coupon settlement | Plaintiffs argued lodestar is permissible and lodestar cross-check unnecessary | Whirlpool urged percentage-based calculation for coupon portion and cross-check lodestar against non-coupon value | For mixed settlements, courts must calculate fees as: (1) a reasonable percentage of actual coupon redemption value (§1712(a)); plus (2) a reasonably cross-checked lodestar for non-coupon relief (§1712(b)); a pure lodestar may be used only if it excludes coupon value or accounts for coupon redemption rates (Easysaver framework) |
| Validity of district court’s 1.68 multiplier and use of contingency enhancement when defendant pays fees | Plaintiffs requested 1.68 multiplier based on complexity, risk, results, contingency | Whirlpool argued multiplier was unsupported and inflated by inclusion of coupon value; objectors argued contingency enhancement improper because fees are paid by defendant (no common fund) | Multiplier vacated: district court erred by including coupon value in lodestar/multiplier. Contingency enhancement cannot be routinely applied where fees are paid directly by defendant (Dague concerns); any multiplier must be tied to specific record findings and cross-checked against the non-coupon value |
Key Cases Cited
- In re HP Inkjet Printer Litig., 716 F.3d 1173 (9th Cir. 2013) (CAFA requires percentage-of-redemption-value for coupon relief)
- In re Easysaver Rewards Litig., 906 F.3d 747 (9th Cir. 2018) (in mixed settlements, lodestar permitted only if it excludes coupon value or accounts for redemption rate)
- Murphy v. DirecTV, Inc., 724 F.3d 1218 (9th Cir. 2013) (parties cannot use choice-of-law to avoid federal preemption)
- Hubbard v. SoBreck, LLC, 554 F.3d 742 (9th Cir. 2009) (federal fee statutes preempt conflicting state law)
- Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542 (U.S. 2010) (lodestar carries strong presumption; multipliers rare and must be supported)
- Burlington v. Dague, 505 U.S. 557 (U.S. 1992) (limits on awarding contingency multipliers in certain fee-shifting contexts)
- In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935 (9th Cir. 2011) (court must ensure fee award is reasonable and proportionate to results)
- Hensley v. Eckerhart, 461 U.S. 424 (U.S. 1983) (fees must reasonably relate to results obtained)
- In re Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539 (9th Cir. 2019) (standard for reviewing class settlement approval and multiplier analysis)
- In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291 (9th Cir. 1994) (common-fund reasoning supporting contingency enhancements)
- Yamada v. Nobel Biocare Holding AG, 825 F.3d 536 (9th Cir. 2016) (defendants paying fees may be entitled to access billing records for fairness review)