[BreachExchange] Home Depot Gets Another Look at Data Breach Attorneys’ Fees

[Destry Winant]

https://biglawbusiness.com/home-depot-gets-another-look-at-data-breach-attorneys-fees

Attorneys’ fees originally calculated at $15.7 million
Use of multiplier was abuse of discretion

Counsel for the class that successfully sued Home Depot Inc. following
a 2014 credit card data breach will have to have their fee award
recalculated, the Eleventh Circuit said July 25.

Home Depot settled with financial institutions holding the affected
accounts for $25 million. The trial court approved attorneys’ fees of
$15.7 million, in addition to the settlement fund.

But the trial court abused its discretion in arriving at that number,
the U.S. Court of Appeals for the Eleventh Circuit said. It multiplied
the amount calculated by the lodestar method—$11.7 million—by 1.3, to
account for increased litigation risks class counsel shouldered, Judge
Gerald Bard Tjoflat said for the court. The lodestar method uses the
amount of hours worked and a reasonable fee-per-hour to calculate
attorneys’ fees.

The fee structure in the case is unusually complicated, but it’s
ultimately a fee-shifting arrangement that used a lodestar
calculation, the court said. The U.S. Supreme Court has held that risk
generally can’t be used to justify a multiplier in such cases, Tjoflat
said.

Even though Supreme Court precedent focuses on statutory fee shifting
cases, whereas the fee shifting arrangement here is governed by the
settlement contract, the Supreme Court’s reasoning was persuasive,
Tjoflat said.

Not only was the quality of representation already incorporated in the
lodestar calculation even when that calculation is agreed to in a
contract, but enhancing payouts based on risk “would reward lawyers
for taking cases with relatively little merit and incentivize bad
claims,” he said.

The issue will return to the trial court for further proceedings.

Other issues Home Depot raised on appeal concerning the factors
incorporated into the lodestar calculation weren’t successful.

The banks were represented by Doffermyre, Shields, Canfield & Knowles
LLC; Carlson Lynch Sweet & Kilpela LLP; Scott+Scott LLP; and Hausfeld
LLP. Home Depot was represented by Alston & Bird LLP, King & Spalding
LLP, and Burns & Levinson LLP.

The case is In re: The Home Depot Inc., Customer Data Security Breach
Litigation, 11th Cir., No. 17-14741, 7/25/19.