By Lawrence W. Schonbrun

Class actions are a judicially created mechanism to protect the “little guys” from abuse by powerful institutions, corporations, and governments.  In a regrettable decision, however, the California Supreme Court has refused to protect the rights and interests of class members by allowing the very attorneys who were supposed to represent them to, in effect, extract excessive attorneys’ fees from class action settlements.  Excessive attorneys’ fees subtract a small portion from a class member’s recovery, thereby creating a second harm that, like the original claim, is not worth litigating individually.  The Supreme Court’s decision essentially legalizes this second victimization of class members by the very system designed to protect them.

The decision, Laffitte v. Robert Half Int’l, Inc., is a victory for special interests over the public’s interest.  It is yet another step in the concentration of power and wealth in the hands of the few.  The California Supreme Court, which has significant influence nationally, declared a new era in class action attorneys’ fee jurisprudence.  The Court’s role apparently is no longer to protect class members from excessive attorneys’ fees, but to protect class action lawyers from class members making effective arguments about the excessiveness of their lawyers’ fee request.

Laffitte is an employment law dispute in which the class settled for $19 million.  From this amount, the plaintiffs’ lawyers were awarded $6.3 million.  The attorneys sought payment for their work equivalent to a partner rate of nearly $1,600 per hour for thousands of hours of work.  My client raised the additional question of whether the Court would enforce its 1977 decision in Serrano v. Priest.  Attorneys’ fee awards before Serrano were based on percentages of the class’s recovery, which it was widely recognized produced excessive fee awards.  Many believed that this seminal case changed California’s fee jurisprudence by emphasizing that to protect the prestige of the judiciary and the bar, fees needed to be based on the actual legal work performed and not the size (more accurately not the outsized) amount of the settlement. Serrano had never been overruled.

In its decision, the Supreme Court has taken a giant step backward from Serrano. Laffitte does not mention the prestige of the courts or the bar as a guiding principle.  Nor does it mention the court’s fiduciary responsibility to protect class members’ interests Laffitte makes no mention of the rights of class members, or the problem of excessive fee requests faced by the court in 1977 (a problem that is far worse forty years later as settlements have ballooned into the billion-dollar range, and lawyers, believe it or not, seek fees that effectively provide them with thousands and even tens of thousands of dollars per hour for their work).

The candidacies of Donald Trump and Bernie Sanders indicate a profound discontent with America’s traditional governing institutions, which no longer serve the interests of the American people but rather protect the powerful (which now include plaintiffs’ class action lawyers).  Interestingly, the California Supreme Court seems entirely oblivious of this public mood.  Apparently, judicial concern about the overpayment of attorneys is a vestige of a bygone era.  The majority opinion in Lafitte does not even mention it.The Supreme Court’s opinion focuses not on class members, but on the needs of attorneys and judges.  The rights and interests of class members are invisible.  The Supreme Court’s explicit message is that class members have no role to play in how much money courts award from class settlements.  The implicit message from the Court is that class members, and by extension the public, do not matter.Although the class action mechanism was created to protect the “little guys,” Lafitte demonstrates that the process has been “captured” by special interests and turned upside down and inside out.  We can only hope that California is not a national trendsetter on this one.

Lawrence W. Schonbrun is the Berkeley, California attorney for the petitioning class member in the Laffitte case.

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