Background
This appeal concerns the calculation of attorneys’ fees following a settlement in a consumer class action alleging defective timing chains in BMW vehicles. After the parties settled the merits, they could not agree on fees and entered a settlement agreement requiring BMW to pay reasonable attorneys’ fees separate from class relief. The district court awarded Class Counsel $3.7 million using a lodestar method enhanced by a 1.75 multiplier, a decision BMW appealed following a prior remand in the same litigation.
The court’s reasoning
The court analyzed whether the Supreme Court’s decision in Perdue v. Kenny A., which curtailed the use of lodestar multipliers in statutory fee-shifting cases, applies to contractual fee-shifting arrangements. The court concluded that the reasoning of Perdue applies with equal force to contractual cases where federal law governs, as the goal of avoiding windfalls and double-counting factors remains the same. The court found the district court’s application of a multiplier improper because it relied on factors subsumed in the baseline lodestar, such as contingency risk and case complexity, without specific evidence of exceptional circumstances. Additionally, the court found the baseline lodestar calculation unreasonable due to excessive hours billed by partners for tasks like drafting complaints and discovery.
Class action counsel serve a valuable role in our legal system and deserve to be paid. But not twice.
ARTEM V. GELIS; BHAWAR PATEL; CHRIS WILLIAMS; ASHKOCK PATEL; KENNETH GAGNON v. BMW OF NORTH AMERICA, LLC, No. 24-2721 (3d Cir. June 11, 2026)
What it means going forward
The decision clarifies that contractual fee-shifting provisions in class action settlements are subject to the same strict scrutiny regarding lodestar multipliers as statutory fee-shifting cases, requiring district courts to provide specific evidence for any enhancement.