A federal appeals court must have thought they couldn’t be hearing right. Settlement terms in a class action for millions of Bluetooth headset owners provided $962,000 but no money for class members. It gives $100,000 to four non-profit groups dedicated to hearing loss and $800,000 to the lawyers. The class action alleged that Motorola’s Bluetooth headsets did not warn consumers adequately of potential hearing loss from use of the wireless headsets at high volume.
The 9th U.S. Circuit Court of Appeals today sent the case back to trial Judge Dale S. Fischer in Los Angeles and said try again.
“Absent any explanation from the district court, we are concerned that the amount awarded was 83.2% of the total amount defendants were willing to spend to settle the case, viewing the $800,000 allotment for attorney fees, the $12,000 allotment for an incentive award, the $100,000 cy pres award, and the $50,000 allotment for fees as a ‘constructive common fund,’” wrote Judge Michael Daly Hawkins for the panel.
By contrast a normal 25% fee on the $962,000 settlement fund would yield $240,500 in fees, Hawkins noted.
Daniel L. Warshaw, attorney for the class urged the court to accept the higher fee amount because the value to the class was in the injunctive relief – Bluetooth’s agreement to improve its warnings to consumers – not just the dollar award.
Ted Frank, lawyer for the settlement objectors with the Center for Class Action Fairness, argued that the agreement so disproportionately favored the lawyers over the class that it should be tossed out. The court didn’t go quite that far, but the three-judge panel clearly didn’t like the deal from what they could see.
Hawkins said the appeals court can’t say the fees were unreasonable without a better explanation from the trial judge and sent the whole deal back for further hearing.
They want to know if the settlement is a common fund; what method the judge used to calculate a reasonable fee; was the fee reasonable considering the results of the litigation and is the fee award disproportionately high?
Case: In re Bluetooth Headset Product Liability Litigation, No. 09-56683 (9th Circuit)