Case Information
*1 Before B AUER M ANION , H AMILTON , Circuit Judges . M ANION Circuit Judge
. Saul Kaufman, lead plaintiff action, sued American Express Travel Related Services ‐ Company, Inc. (“Amex”), alleging claims breach of con tract, unjust enrichment, and statutory fraud related Amex’s general ‐ use, prepaid gift cards. Just over two years after Kaufman filed action, Kaufman (on behalf of class) sought approval a agreement resolve action. Al most seven years later, after multiple amended motions approval three rounds class, granted final approval settlement. J.G. Goodman Carla Santsche (“Intervenors”), who intervened action, appeal While recognize is not without issues, we con clude not abuse discretion approv ing it.
I. Background The protracted history case began on February when Kaufman filed lawsuit Supe rior Court Cook County, Illinois, against Amex. The arose out Amex’s sale general use, prepaid gift cards. A customer could buy gift card paying amount loaded on card (e.g., $25, $50, $100) purchase less than $5. packaging which gift cards came declared they were “good all over place.”
Kaufman alleges, however, these gift cards were worth stated value (e.g., $25 card actually worth $25) were “good over place.” This because merchants were ill equipped process “split tender” transactions, occurred when gift card holder attempted use his gift card purchase item cost more than value remaining his card, necessitating use two forms tender. inability process those sorts ‐ transactions led to rejected cards languishing balances, gift card holders could use relatively small amounts remaining on their cards.
Those balances languish for long, though, because after twelve months Amex automatically began charging a $2 “monthly service fee” against balances on cards. If holder wanted recover balance his card from Amex, he could request check, only he paid $10 check issuance fee. Because these service check issu ance fees, resulted remaining funds on cards go ing Amex, Kaufman alleged Amex purposely designed its gift card program make difficult for people exhaust balances their cards, thus lowering their value.
On March 2007, Amex removed District Court Northern District Illinois pursuant Class Action Fairness Act. U.S.C. § 1332(d)(2). Once federal court, Amex moved compel arbitration, citing arbitration provision “American Express Gift Card Cardholder Agreement” was included gift cards. For cards purchased stores, this agreement accessible after purchasing gift card opening packaging. denied motion, concluding pro
vision part contract between Amex Kauf man. Amex appealed decision court. Shortly after, Kaufman engaged negotiations through Mediation Program. As result those negotiations, sought limited remand Amex’s appeal purpose presenting approval. On February granted request. ‐
After remand, Intervenors sought entry into ac tion. Intervenor Goodman lead plaintiff in a class ac tion in Eastern District New York that made similar complaints against Amex arising from issues split ‐ ten der transactions and Amex’s fee policies. briefs filed in this appeal, explain intervenor Santsche’s interest in case arises from her alleged purchase a $100 gift card value when she attempted use it. On July granted motion inter vene.
Two days before grant motion, Kaufman, joined by new co ‐ plaintiff, Kimberly Stegich, individually and behalf all others similarly situated (“Plaintiffs”), filed amended class action complaint and motion for preliminary action. But before addressed motion, Plaintiffs amended it. Ac cording amended motion, called for $3,000,000 fund. From fund, class could receive, in exchange for their release related Amex’s gift cards, following payments: (1) up $20 reimburse ment monthly fees actually paid due refused split ten der transactions; (2) up $8 monthly fees paid; (3) up $5 reimbursement any check issuance paid; and (4) up $5 reimbursement monthly paid simply attesting fact were paid. If any $3,000,000 remained after paying claims, up $200,000 would go charitable organization as cy pres . If more than remained, up $650,000 would go Amex reim bursement costs and administration. If still more remained, too go cy pres . addition payments from fund, class members
could take part two supplemental programs: (1) “Balance Refund Program,” which allowed class members less than $25 remaining on their gift cards request refund balance without paying check issuance fee; (2) “Purchase Fee Shipping/Handling Fee Waiver” program, through class could pur chase new $100 gift card without paying purchase or shipping handling fee (a savings approximately $10). entered order on Plaintiffs’ mo
tion December After concluding class certifiable pursuant Federal Rule Civil Procedure certified purposes, defining
All purchasers, recipients, holders users any gift cards issued American Ex press January through date preliminary settlement, includ ing, without limitation, gift cards sold physi cal retail locations, via Internet, through mall cobranded programs. Notwithstanding foregoing, ‘Be My Guest’ dining cards are included within settlement.
Kaufman Am. Express Travel Related Servs. Co. F.R.D. (N.D. Ill. 2009).
Despite certifying class, court denied preliminary Of particular concern court was inadequacy proposed notice, both form (the Plaintiffs had proposed notice publication, but court did accept proposition Amex had personal identifying data provide individualized notice) substance (the notice failed “to satisfy requirements Rule 23(c)(2)(B)”). Id. 445–46.
The court addressed proposed again order August The observed had improved proposed notice, now it too complicated—the ordered it should include concise summary. Additionally, noted that, since initial denial preliminary approval, revealed some personal identifying information gift card holders, so declined excuse individual notice.
Over year later, Plaintiffs filed Second Amended Motion Preliminary Approval. now proposed fund $6,753,269.50. While fund considerably larger than $3,000,000 initially proposed, drawn against costs admin istration, well approved attorneys’ lead plain tiff incentive awards. benefits available (the four types refunds supplemental programs) release remained substantially same. This version 7 maintained cy pres removed the $650,000 reimbursement for Amex. It called for notice by publication and by direct mail to every class member Amex had information.
On September district court granted prelimi nary approval settlement, appointed Plaintiffs’ counsel as lead class counsel counsel two intervening additional class counsel, again certified class purposes
After providing notice receiving responses members, Plaintiffs sought final February 2012. However, response notice had been “abysmal.” Of approximately 70,000,000 gift cards sold, 3,456 benefits had been requested, amounting $41,510.35. As counsel was requesting $1,525,000 fees, claims ratio was woefully imbal anced. district decided issues with notice needed addressed, so determined hire expert. After Intervenors objected appointment recommended expert due her affiliation with firm serving administrator, appointed Todd Hilsee, whom rec ommended.
No. The worked Hilsee create supplemental notice program, and after its implementation Plaintiffs once again moved for final approval of settlement on May 28, 2014. The supplemental notice plan had provided notice approximately 70% class, over 32,500 were filed. While these numbers were ideal, repre ‐ sented an astronomical improvement over results first round notice. There were five objections, eighty chose opt out.
Despite solid improvement response no ‐ tice, district court again denied final approval. The court so for two reasons: (1) though no longer blatant as first proposal, still provided for Amex ‐ imbursed for costs providing first, unsuccessful ‐ tice; (2) court felt bound our decision Redman v. RadioShack Corp. 622, 637–38 2014), decided after Plaintiffs filed motion final ap proval but before issued order, com mand yet another round concerning motions torneys’ fees.
After third round notice, granted final approval on March 2, greater part decade had elapsed since Kaufman filed his com plaint Superior Court Cook County, Illinois, nearly seven years passed since first motion pre liminary approval deter mined fair, reasonable, adequate, referred final “least bad option.” Kauf man Am. Express Travel Related Servs. Co. cv WL *1 (N.D. Ill. Mar. 2016). Based affidavit employee, concluded total value of the claims issue was approximately $9.6 million. It then calculated that, considering the total number received and value the supplemental programs (the waived purchase, shipping and handling, and check issuance fees), total benefit settlement was $1.8 million. The court determined that was within range reasonable given class’s likelihood recovering full $9.6 million. In reaching that decision, court considered Amex’s defenses, most notably its still pending appeal denial motion compel ar bitration.
The court remarked that case continued, extremely costly and difficult, and was, even considering fact notice perfect, small rate opt outs and objectors. After addressing objections had been filed, observed seven years in making and had involved partici pation four mediators expert. light those considerations, found had ne gotiated in good faith, approved set tlement.
Having approved settlement, turned attor neys’ fees. Plaintiffs’ counsel requested $1,235,000 in fees another $40,000 in expenses, claimed amounted 30.7% Additional counsel requested $250,000 in fees. Counsel quested $1,500,000 fees. ultimately awarded $1,000,000 fees $40,000 expenses Plaintiffs’ counsel, $250,000 fees additional counsel, $700,000 counsel Intervenors. *10 10 16 1691
In final tally, attorneys would receiving $1,950,000 settlement, while class would receive ap proximately $1,800,000. district like this, found it acceptable any reduction would go benefit of class. Any excess go either cy pres Amex. Intervenors appeal approval of settlement awards of attorneys’ fees.
II. Analysis A district may approve of class concludes that “is fair, reasonable, adequate.” Fed. R. Civ. P. 23(e)(2); see Isby v. Bayh , F.3d 1191, 1196 (7th Cir. 1996). We review district of ac tion abuse discretion. Southwest Airlines Voucher Litig. , F.3d (7th Cir. 2015). That said, we “require[] district judges exercise highest de gree vigilance scrutinizing proposed settlements actions,” due risk attorneys will “place pecuniary self interest ahead class.” Reyn olds v. Beneficial Nat’l Bank (7th Cir. 2002). Indeed, repeatedly stated district courts should act “fiduciary class,” subject “to high duty care law requires fiduciaries.” Id. 279–80; accord Synfuel Techs., Inc. DHL Express (USA), Inc. 652–53 2006).
On appeal, challenge four decisions court: (A) erred requiring filing briefs support prior dead line object settlement; (B) erred determining Amex’s arbitration appeal posed risk the class’s success; (C) the erred in approving given breadth release; and (D) erred in awarding most, all, at torneys’ fees Intervenors’ counsel. We address each in turn.
A. The Filing Briefs acknowledge that is express re quirement Federal Rules case law requiring proponents a file briefs support prior expiration time object However, argue that pro cedure compelled a matter due process that is a natural extension our decision Redman Ninth Circuit’s decision In re Mercury Interactive Corp. Securities Litigation 2010), upon which Redman lied. We disagree. Mercury Interactive Corp. Ninth Circuit held must “set deadline objections counsel’s
fee request on date after motion documents support ing been filed.” Id. at 993. so held based “[t]he plain text [Rule 23(h)],” provides requests attorneys’ must be made by motion members “may object motion.” Id. (quoting Fed. R. Civ. P. 23(h)). This language implied must “be allowed opportunity object ‘motion’ itself, merely preliminary such motion will filed.” Id. 993–94. Without details provided motion (such amount hours worked tasks com pleted), potential objector “could make generalized ar guments about size total fee.” id.
In Redman adopted the Ninth Circuit’s reasoning reversed approval class action settlement part be cause provided for filing motions seeking attorneys’ fees after deadline class members to object to settlement. See 637–38. We concluded scheduling violated Rule 23(h) by handicapping those who wished to object to fee motions. Id. urge us to extend Redman ’s reach to apply
to filing briefs support settlement before dead line to object. But, Ninth Circuit made clear, plain text Rule 23(h), which deals exclusively attorneys’ fees costs, is what requires parties to file motions attor neys’ fees before deadline object to There no such requirement filing briefs support agreement. On contrary, Rule 23(e), governs approval class settlements, only re quires notice proposed be directed “in reasonable manner members who would be bound proposal,” “[a]ny member may object proposal requires under subdivi sion (e).” Fed. R. Civ. P. 23(e)(1), (5). Rule 23(e) thus re quires be given an opportunity object proposed settlement—the Rule has no provision would require parties file briefs support prior deadline file objections. differing procedures make sense. In request
context, general may give information con cerning total amount requested, no details. To require party object based aggregate number alone fruitless, would be specifics dispute.
Mercury Interactive Corp.
(requiring 16 1691 13 filing motions before deadline for objections be ‐
cause “[i]t ensures court, acting a fiduciary class, is presented with adequate, adequately ‐
tested, information to evaluate reasonableness a pro ‐
posed fee”). On other hand, notice a proposed set tlement should provide class with infor mation they need make an informed decision to file a claim, opt out, object. generally
Phillips Petroleum Co. Shutts
,
B. Arbitration Defense
Though we have elucidated several factors guide dis trict analysis whether proposed is fair, reasonable, adequate, repeatedly stated “[t]he ‘most important factor relevant fairness settlement’ … ‘the strength plaintiff’s case merits balanced against amount offered settle ment.’”
Synfuel Techs., Inc.
(quoting
Gen. Motors Corp. Engine Interchange Litig.
*14
14 16 1691 Cir. 1979)); accord
Isby
, 75 F.3d at analyzing this fac ‐
tor, district court should consider “the range possible outcomes ascrib[e] probability each point range.”
Synfuel Techs., Inc.
,
analyzed this factor giving too much weight Amex’s po tential arbitration defense. district court concluded significant risk would reverse decision send arbitration, where Plaintiffs would likely receive nothing. Because risk, concluded approximately $1.8 mil lion receive reason able recovery. To support conclusion, cited two recent decisions Supreme Court recent decision enforcing arbitration provisions con tracts:
American Express Co. Italian Colors Restaurant
S. Ct. (2013), required enforcement arbitration provision despite fact “the plaintiff’s cost 16 1691 15 individually arbitrating a federal statutory claim exceeds potential recovery,”
AT&T Mobility LLC v. Concepcion
,
It so reliance on our decisions
ProCD, Inc. v. Zei denberg
, F.3d (7th Cir. 1996),
Hill Gateway Inc.
1997). those cases, concluded contract terms contained inside product’s packaging (and thus discoverable after purchase) come part contract between purchaser seller so long purchaser “an opportunity read terms reject them returning product.”
Gateway Inc.
applied rule Cardholder Agreement concluded
*16
16 No. 16 ‐ 1691 not sufficient opportunity reject the terms the agree ‐
ment returning the card, so the terms contained inside the packaging were not terms the contract between Kaufman Amex.
Kaufman v. Am. Express Travel Related Servs. Co.
, ‐ C ‐
contractual horse. Still, do believe abused discretion concluding pending ap peal concerning arbitration provision significant po tential bar class’s success action.
To begin with, our review court’s decision deny arbitration would be de novo. Sgouros TransUnion Corp. 2016) (noting de novo view contract formation arbitration enforceability questions). Thus, inquiry into whether terms included gift card packaging became part contract be tween question decide without deference conclusions. That adds uncertainty surrounding outcome, creases risk class. Williams 634–35 (“The prospect appellate review affects risk costs (in time money) litigation.”).
And we were conclude that arbitration provision was part of contract between parties, then is little doubt enforce it. The do dispute claims issue case fall within scope of provi sion, law clearly favors enforcement of arbitration provisions contracts, noted. See, e.g., AT&T Mobility LLC U.S. 339. light those consider ations, conclusion abuse dis cretion.
C. Overbreadth
The is defined include, with only few exceptions, all those who held gift cards from January through September Per terms settle ment, members are releasing “any all rights, duties, obligations, claims, actions, causes liabilities … relate any Gift Cards issued by American Express (or any affiliate thereof) from January through [September 2011].” Intervenors believe release is overbroad. They contend releases claims are receiving compensation Specifically, Intervenors highlight alleged claim intervenor Santsche, who alleges she pur chased $100 gift card paying purchase fee, then gift card literally unusable because value. Intervenors maintain Santsche’s case one many, constituting “hundreds millions dollars unjustified ‘up front’ fees.” As proposes compensa tion payment $2 per month maintenance check issuance fees, say claims like Santsche’s are giving up while receiving nothing return. *18 18 16 1691 district court acknowledged the release cover the Intervenors’ alleged $0 balance claims “the breadth release is one of problems with the settle ment.” Kaufman , WL at *9. “[B]ut,” con cluded, “on balance, does not believe breadth release justifies rejecting settlement.” Id.
“A offer is compromise may include a lease claims not before court.” Oswald v. McGarr , F.2d (7th Cir. 1980). Nevertheless, because unique situation posed class action—whereby attorneys class may incentivized accept inadequate settle ment terms so long receive fees—it is necessary scrutinize what claims class is giving up what is receiving exchange. See Reynolds 283–84.
Here, court’s conclusion was not an abuse discretion because no admissible evidence purported claims existed. total size case is known, referred an estimated range 17.7 36.9 million people. Thanks decision appoint expert, notice pro vided massive reasonable effective man ner, reaching approximately 70% members. Assuming veracity Intervenors’ allegations, is probable least some persons $0 balance received notice. However, party submitted any admissible evidence those claims—not even an affidavit declaration Santsche herself. Granted, is an objector’s duty show inadequate. Gautreaux Pierce 1982). But burden proponents support should extend affirmative 16 1691 19 duty rebut every allegation an objector makes. id. In absence of any admissible evidence pur ported claims even exist, district court’s conclusion release of these claims not sufficient reason deny not abuse of discretion.
D. Attorneys’ Fees
In reviewing award attorneys’ fees, “‘[w]e review methodology de novo determine whether it reflects procedure approved for calculating awards,’ review reasonableness award for abuse discretion.”
Williams
,
The awarded Plaintiffs’ counsel $1,000,000 fees, additional counsel $250,000 in fees, Intervenors’ counsel $700,000 fees. The Intervenors do not challenge methodology used determine these awards, instead focusing amounts awards them selves. Intervenors (or, perhaps more accurately, their counsel) maintain erred failing award them most, all, attorneys’ this case. They argue that while they were working to further the interests the class, the Plaintiffs’ counsel were colluding with Amex.
“The law generally does allow good Samaritans claim legally enforceable reward their deeds.” Reynolds But, professional “render[s] valuable albeit bargained services circumstances in high transaction costs prevent negotiation voluntary agree ment, the law does allow them claim reasonable profes sional fee from recipient their services.” Id. order claim that fee, value provided professional must “be worth more than fee [he is] seeking.” Id.
Here, court acknowledged that Intervenors were important getting divulge information members, that they suggested notice expert ultimately appointed, that they anticipated attor neys’ notice requirement announced Redman objections. Indeed, went so far say that it is “undeniable” that never been approved without Intervenors. Intervenors take these acknowledgments run
with them, claiming responsibility good case. However, ignore observed filed “a number repetitive meritless objections.” Additionally, considered it “disingenu ous” attribute increase due second tice program (crafted assistance expert using information obtained Amex) entirely them. Finally, noted it unclear what extent interests. We merely remark is unfortunate is way game played.
Intervenors could claim responsibility for the supplemental programs. Considering full impact had on case, district awarded counsel Interve nors $700,000 fees, representing what calculated approximately 34% value they added class.
We conclude abuse discretion awarding attorneys’ fees. Having dealt with parties their counsel nearly seven years, district easily best position determine parties (and which attor neys) had contributed what propor tions. Williams (seeing “no reason dis turb court’s assessment fees” where judge “became intimately familiar with [the] litigation over past eight years”); see Mirfasihi Fleet Mortg. Corp. 687–88 2008) (affirming 50% reduction objectors’ based “irresponsible litigation tactics”).
III. Conclusion The decision affirm today approve perfect individual members (those who both ered submit claims) will receive very little, while attorneys will receive more than combined. But even attorneys come out well hoped. court, throughout case, properly exercised responsibility look out consistently deny
ing inadequate proposals working with overcome challenges associated get set tlement into an approvable posture. end, found itself unenviable position: could either approve adequate—albeit flawed—settlement allow get their meager recoveries, or reject have further exhaust resources (and fund) discovery or them turn litigation where ran risk recovering nothing. It chose former course, abuse discretion. We AFFIRM.
Notes
[1] Four other intervened action: Gordon Jarratt Amanda Rudd, who eventually became co plaintiffs whose counsel became additional counsel, Kambiz Katayoun Kazemi, who eventually reached separate California against were excluded case.
[2] To recover other benefits, member provide proof, cluding gift card number.
[3] definition was amended exclude “Westfield” branded gift cards due Kazemi intervenors pursuing own relief Califor nia. supra note
[4] This number given order denying final approval. Later litigation, provided formation suggesting actual rate much lower even than that—amounting paltry $11,377.
[5] many ways, this argument is emblematic what is wrong with actions. spend vast majority their page brief attacking unfair, unreasonable, inadequate. They claim it releases hundreds millions dollars’ worth without receiving anything for those claims. Yet, when comes time divvy up money, their counsel right open hands, claiming they helped make better than could been, are solely responsible settlement’s success. We do mention chutzpah similar conduct has been called past, see Mirfasihi Fleet Mortg. Corp. 2008), criticize counsel Intervenors—they are just looking out