Seventh Circuit Vacates $57 Million Attorney Fees Award In Broiler Chicken Antitrust Litigation
10/11/2023On August 30, 2023, a panel of the United States Court of Appeals for the Seventh Circuit vacated and remanded back to the district court an award of $57.4 million in attorney fees in one of several private class actions with claims alleging unlawful price-fixing in the broiler chicken industry via exchange of data through a third-party research compiler. In re: Broiler Chicken Antitrust Litigation, Case No. 22-2889 (7th Cir. Aug. 30, 2023).
The litigation consists of three sets of classes alleging defendant broiler chicken producers violated Section 1 of the Sherman Act by unlawfully agreeing to reduce the supply of chicken so that they could raise the price of broiler chickens. These three sets of classes are: (1) direct purchasers of certain types of chicken; (2) end users who indirectly purchased certain types of chicken from defendants and others for commercial consumption; and (3) end users who indirectly purchased certain types of chicken from defendants and others for personal consumption.
The third class of plaintiffs settled for $181 million, $57.4 million of which (33% of the net settlement after expenses and incentive awards), was awarded to class counsel. In setting the fee award, the district court considered three categories of information: (1) actual agreements between the parties and fee agreements reached in the market for legal services; (2) the risk of nonpayment at the outset of the case and class counsel’s performance; and (3) fee awards in comparable cases.
On appeal, a class member challenged the attorney fee award, contending that the district court erred by discounting bids made by one of the two firms serving as class counsel in auctions in other cases, not considering fee awards in the Ninth Circuit, and by utilizing certain expert reports in setting the fee award without allowing the class member to propound discovery on those experts. Because the Seventh Circuit determined the district court considered this award utilizing the proper methodology, the Court reviewed it for abuse of discretion.
The Seventh Circuit reviewed whether the district court appropriately considered what bargain would have been struck ex ante as to attorneys’ fees and ultimately vacated the decision holding that “the arrived-upon figure of one-third of the net settlement warrants greater explanation and consideration of the information” in the record. In doing so, the Court determined that the district court’s evaluation fell short in two areas: (1) the consideration of bids made by class counsel in auctions and (2) the weight assigned to out-of-circuit decisions. On remand, the district court is instructed to assign “appropriate weight” to both the bids made in auctions in other cases, “recognizing that they may be probative of the price of only one firm’s legal services,” and to fee awards in litigations outside of the Seventh Circuit to “consider where class counsel’s economic behavior falls on [the] spectrum.” The Court did not rule on the class member’s claims as to the expert report, noting that the district court could consider his request for remand. The Seventh Circuit did not express a preference as to amount or structure.