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Fifth Circuit Disapproves of Secret Class Action Fees

The Decision of the Day covers an interesting Fifth Circuit decision about secret fees in class action settlements. In In re High Sulfer Content Gasoline Products Liability Litigation, Shell Oil had agreed to pay $3.7 million to class members and almost double that as attorneys' fees. To divide up the fees among the 32 firms and 72 lawyers involved in the case, the district court appointed a five-member fee committee, which proceeded to award more than half the fees to its own members. The fee committee also recommended that the district court seal all records related to the disbursement and require all recipients to keep their fee awards confidential. 


The Fifth Circuit vacated the award, writing:

On a broad public level, fee disputes, like other litigation with
millions at stake, ought to be litigated openly. Attorneys’ fees, after
all, are not state secrets that will jeopardize national security if
they are released to the public. . . . From the perspective of class
welfare, publicizing the process leading to attorneys’ fee allocation
may discourage favoritism and unsavory dealings among attorneys even as
it enables the court better to conduct oversight of the fees. If the
attorneys are inclined to squabble over the generous fee award, they
are well positioned to comment—publicly —on each other’s relative
contribution to the litigation.