This case originated from a class action filed in the District of Columbia by three nonprofit organizations alleging that the federal judiciary exceeded its statutory authority by charging PACER fees that funded expenses unrelated to the operation of the PACER system. The plaintiffs sought refunds for excessive fees paid over an eight-year period. After years of litigation, including an interlocutory appeal where the Federal Circuit previously affirmed the district court's jurisdiction and statutory interpretation, the parties reached a $125 million settlement. The district court approved the settlement, which provided for full reimbursement of fees up to $350 for all class members, with remaining funds distributed pro rata to those who paid more. The court also approved over $23 million in attorney fees and $10,000 incentive awards for each of the three class representatives. Eric Alan Isaacson, a pro se objector, appealed the judgment, challenging the court's jurisdiction, the settlement's fairness, the attorney fees, and the legality of the incentive awards.
The Federal Circuit addressed three primary issues raised by the objector. First, regarding subject matter jurisdiction, the court rejected the argument that the Little Tucker Act was divested because some class members' aggregate recoveries exceeded $10,000. The court reasoned that under the Little Tucker Act, claims are not aggregated when class members do not share a common interest. Instead, each individual PACER transaction constitutes a separate claim. Citing airline and railroad cases, the court held that because no single transaction exceeded the $10,000 limit, the district court properly exercised jurisdiction. Second, the court reviewed the settlement's fairness for abuse of discretion. It found the district court acted within its discretion by approving a compromise that fully reimbursed the vast majority of users up to $350 while distributing remaining funds pro rata to larger users. The court noted that the settlement was substantial and that the district court properly considered the interests of both small and large users. Third, the court addressed the attorney fees and incentive awards. For fees, the court affirmed the use of the percentage-of-the-fund method, supported by a lodestar cross-check, finding the 19.1% fee reasonable given the complexity and risk of the litigation. Regarding incentive awards, the court declined to follow the Eleventh Circuit's per se prohibition. It held that the Supreme Court precedents of Greenough and Pettus do not bar modern incentive awards, which are token amounts designed to compensate representatives for their unique burdens and are distinct from the salary-like payments prohibited in the 19th century. The court concluded that the $10,000 awards were reasonable and proportionate to the representatives' roles.
The decision solidifies the $125 million settlement, ensuring that hundreds of thousands of PACER users will be reimbursed for fees paid between 2010 and 2018. It establishes a precedent in the Federal Circuit that individual transactions define claims for Little Tucker Act jurisdiction in class actions, preventing jurisdictional dismissal based on aggregate recovery amounts. Furthermore, the ruling clarifies that modest incentive awards for class representatives are lawful and subject to case-by-case reasonableness review rather than a categorical ban, aligning the Federal Circuit with the majority of other circuits.
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