Petition for Writ of Certiorari — Rachel Threatt, Petitioner v. Ryan Thomas Farrell, et al.

Supreme Court briefMar 23, 2021

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No. _-_____

In The Supreme Court of the United States

_________

RACHEL THREATT,

Petitioner,

RYAN THOMAS FARRELL, et al., on behalf of himself and

all others similarly situated, et al.,

_________

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Ninth Circuit

_________

PETITION FOR A WRIT OF CERTIORARI

_________

THEODORE H. FRANK

(Counsel of Record)

ANNA ST. JOHN

ADAM EZRA SCHULMAN

HAMILTON LINCOLN LAW

INSTITUTE

1629 K Street NW

Suite 300

Washington, DC 20006

(703) 203-3848

ted.frank@hlli.org

QUESTION PRESENTED

A court may award class-action plaintiffs “reasonable

attorney’s fees” under Fed. R. Civ. Proc. 23(h). In interpreting this phrase in statutory contexts, this Court has

disavowed “setting attorney’s fees by reference to a series

of sometimes subjective factors that place unlimited discretion in trial judges and produce disparate results” and

required fees tied to lodestar. Perdue v. Kenny A., 559

U.S. 542, 551 (2010) (cleaned up) (rejecting a 1.75 multiplier of lodestar).

Here, plaintiffs settled class-action litigation over the

legality of $35 overdraft fees charged by Bank of America.

The settlement would refund class members around $1.07

for each $35 fee they had paid. The district court awarded

$14.5 million in fees from class members’ recovery. By

class counsel’s own calculations, this award was for at

most 2,158 hours of work, a rate of over $6,700 an hour, a

multiplier of more than ten times lodestar. The district

court held that it did not have to consider the lodestar in

awarding a reasonable fee, and so it would not.

After objecting class members appealed, the Ninth Circuit affirmed in a 2-1 decision, holding that a district court

does not have to consider the lodestar in awarding reasonable fees under Rule 23(h). The Second, Third, Fifth, and

Sixth Circuits disagree. The Ninth Circuit’s decision in

this case thus continues a circuit split on this issue.

The question presented is:

Whether, and to what degree, a district court must consider counsel’s lodestar in awarding “reasonable attorney’s fees” under Rule 23(h).

PARTIES TO THE PROCEEDING

Petitioner Rachel Threatt was an objector in the district court proceedings and appellant in the court of appeals proceedings.

Respondents Ryan Thomas Farrell; Patrick Michael

Farrell; Timothy Gaelan Farrell; Brooke Ann Farrell;

Ronald Dinkins; Tia Little; and Larice Addamo were

named plaintiffs in the district court proceedings and appellees in the court of appeals proceedings. (The Ninth

Circuit incorrectly listed Joanne Farrell as appellee in the

court of appeals proceedings; she was originally a lead

plaintiff in the district court proceedings, but died in 2018,

and the district court substituted her four children under

Rule 25(a)(1). Dkt. 115; cf. App. 42a.)

Respondent Bank of America, N.A., was defendant in

the district court proceedings and appellee in the court of

appeals proceedings.

Respondents Estafania Osorio Sanchez and Amy Collins were objectors in the district court proceedings and

appellants in the court of appeals proceedings.

Because Petitioner is not a corporation, a corporate disclosure statement is not required under Supreme Court

Rule 29.6.

iii

TABLE OF CONTENTS

Page

QUESTION PRESENTED ......................................

PARTIES TO THE PROCEEDINGS.....................

TABLE OF AUTHORITIES ....................................

OPINIONS BELOW ..................................................

JURISDICTION.........................................................

RULE INVOLVED ....................................................

STATEMENT OF THE CASE ................................

Plaintiffs settle class litigation over Bank

of America’s $35 “Extended Overdrawn

Balance Charges.” ...........................................

Rachel Threatt objects....................................

III. The district court approves the fees. .............

IV. Over a dissent, the Ninth Circuit affirms

and holds a district court may disregard

lodestar. ............................................................

REASONS FOR GRANTING THE WRIT ............

II.

The Ninth Circuit’s decision compounds

the fracture among circuits over the role of

lodestar in Rule 23(h) fee awards and is inconsistent with this Court’s jurisprudence ...

The question presented is important and

frequently recurring .......................................

III. The Ninth Circuit is wrong and this case is

a good vehicle to resolve this important

question ............................................................

CONCLUSION ...........................................................

APPENDICES:

Appendix A

Opinion, Farrell v. Bank of America Corp., N.A.,

Nos. 18-56272, 18-56273, and 18-56371

(9th Cir. Sep. 2, 2020) .................................... App. 1a

Appendix B

Order, Farrell v. Bank of America, N.A., No. 3:16-cv00492-L-WVG

(S.D. Cal. Aug. 31, 2018) .............................. App. 21a

Appendix C

Judgment in a Civil Case, Farrell v. Bank of America,

N.A., No. 3:16-cv-00492-L-WVG

(S.D. Cal. Sep. 19, 2018) .............................. App. 42a

Appendix D

Order Denying Rehearing, Farrell v. Bank of America

Corp., N.A., Nos. 18-56272, 18-56273, and 18-56371 (9th

Cir. Nov. 6, 2020) ........................................ App. 43a

Appendix E

Settlement and Release Agreement, Farrell v. Bank of

America, N.A., No. 3:16-cv-00492-WVG (S.D. Cal. Oct.

30, 2017) ....................................................... App. 45a

Appendix F

Objection of Rachel Threatt, Farrell v. Bank of

America, N.A., No. 3:16-cv-00492-WVG (S.D. Cal. Jun.

18, 2018) ....................................................... App. 77a

TABLE OF AUTHORITIES

CASES

Page(s)

Amchem Prods., Inc v. Windsor,

521 U.S. 591 (1997) ..........................................

Blanchard v. Bergeron,

489 U.S. 87 (1989) ............................................

Blum v. Stenson,

465 U.S. 886 (1984) ..........................................

Boeing Co. v. Van Gemert,

444 U.S. 472 (1980) ..........................................

Bowling v. Pfizer, Inc.,

102 F.3d 777 (6th Cir. 1996) ............................

Brown v. Phillips Petroleum Co.,

838 F.2d 451 (10th Cir. 1988) ..........................

Brytus v. Spang & Co.,

203 F.3d 238 (3d Cir. 2000). ...........................

Burlington v. Dague,

505 U.S. 557 (1992) ..........................................

Camp Drug Store, Inc. v. Cochran Wholesale

Pharm., Inc.,

897 F.3d 825 (7th Cir. 2018). ..........................

Chieftain Royalty Co. v. Enervest Energy Institutional Fund XIII-A, L.P.,

888 F.3d 455 (10th Cir. 2018) ..........................

Detroit v. Grinnell,

495 F.2d 448 (2d Cir. 1974) .............................

TABLE OF AUTHORITIES—Continued

Page(s)

Devlin v. Scardelletti,

536 U.S. 1 (2002) ..............................................

Farrell v. Bank of America, N.A.,

827 F. App’x 628 (9th Cir. 2020) ..................... 4, 6, 9,

10, 19, 23, 24

Forbush v. JC Penney Co.,

98 F.3d 817 (5th Cir. 1996) ..............................

Fresno County Employees’ Ret. Ass’n v.

Isaacson, 925 F.3d 63 (2d Cir. 2019) ............. 12, 15

Fujiwara v. Sushi Yasuda Ltd.,

58 F. Supp. 3d 424 (S.D.N.Y. 2014) ............... 15, 20

Gisbrecht v. Barnhart,

535 U.S. 789 (2002) ..........................................

Goldberger v. Integrated Resources, Inc.,

209 F.3d 43 (2d Cir. 2000) ............................... 14, 15

Hensley v. Eckerhart,

461 U.S. 424 (1983) ..........................................

In re AT&T Corp. Sec. Litig.,

455 F.3d 160 (3d Cir. 2006) .............................

In re Capital One TCPA Litig.,

80 F. Supp. 3d 781 (N.D. Ill. 2015) ................

In re Cendant Corp. Litig.,

264 F.3d 201 (3d Cir. 2001) .............................

vii

TABLE OF AUTHORITIES—Continued

Page(s)

In re Cendant Corp. PRIDES Litig.,

243 F.3d 722 (3d Cir. 2001) ............................

In re High Sulfur Content Gasoline Prods.

Liab. Litig.,

517 F.3d 220 (5th Cir. 2008) ............................

In re Home Depot Inc. Customer Data Sec.

Breach Litig.,

931 F.3d 1065 (11th Cir. 2019) ........................ 12, 17

In re Hyundai and Kia Fuel Econ. Litig.,

926 F.3d 539 (9th Cir. 2019) ............................

In re Lithium Ion Batteries Antitrust Litig.,

No.13-md-2420, 2020 U.S. Dist. LEXIS

233607 (N.D. Cal. Dec. 10, 2020) ....................

In re Optical Disk Drive Prods. Antitrust

Litig., 959 F.3d 922 (9th Cir. 2020) ................

In re Petrobras Sec. Litig.,

828 F. App’x 754 (2d Cir. 2020) ......................

In re Rite Aid Corp. Sec. Litig.,

396 F.3d 294 (3d Cir. 2005) ............................. 15, 16

In re Synthroid Mktg. Litig.,

264 F.3d 712 (7th Cir. 2001) ............................

In re Thirteen Appeals Arising Out of the

San Juan Dupont Plaza Hotel Fire Litigation,

56 F.3d 295 (1st Cir. 1995) .............................. 16, 17

viii

TABLE OF AUTHORITIES—Continued

Page(s)

In re Trans Union Corp. Privacy Litig.,

629 F.3d 741 (7th Cir. 2011) ............................

Johnson v. Georgia Highway Express, Inc.,

488 F.2d 714 (5th Cir. 1974) ............................ 13, 14,

Kater v. Churchill Downs Inc.,

Nos. 15-cv-00612, 19-cv-00199,

2021 U.S. Dist. LEXIS 26734

(W.D. Wash. Feb. 11, 2021) ...........................

Keil v. Lopez,

862 F.3d 685 (8th Cir. 2017) ............................

Moulton v. U.S. Steel Corp.,

581 F.3d 344 (6th Cir. 2009) ............................

Murphy v. Smith,

138 S. Ct. 784 (2018) ........................................ 1, 12

Murray v. GMAC Mortg. Corp.,

434 F.3d 948 (7th Cir. 2006) ............................ 3, 19

Pearson v. NBTY, Inc.,

772 F.3d 778 (7th Cir. 2014) ............................

Pennsylvania v. Delaware Valley Citizens’

Council for Clean Air,

478 U.S. 546 (1986) .......................................... 1, 2, 3,

TABLE OF AUTHORITIES—Continued

Page(s)

Perdue v. Kenny A.,

559 U.S. 542 (2010) ..........................................

11, 12, 13

1, 2,

Petrovic v. AMOCO Oil Co.,

200 F.3d 1140 (8th Cir. 1999) ..........................

Plumley v. Austin,

574 U.S. 1127 (2015) ........................................

Rawlings v. Prudential-Bache Props., Inc.,

9 F.3d 513 (6th Cir. 1993) ...............................

Redman v. RadioShack Corp.,

768 F.3d 622 (7th Cir. 2014) ............................

Rosenbaum v. MacAllister,

64 F.3d 1439 (10th Cir. 1995) .......................... 18, 23

Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co.,

559 U.S. 393 (2010) ..........................................

Smith v. United States,

502 U.S. 1017 (1991) .......................................

Trustees v. Greenough,

105 U.S. 527 (1881) ..........................................

Union Asset Management Holding A.G. v.

Dell, Inc.,

669 F.3d 632 (5th Cir. 2012) ............................ 13, 14

TABLE OF AUTHORITIES—Continued

Page(s)

Wilson v. Playtika Ltd.,

No. 18-cv-5277, 2021 U.S. Dist. LEXIS

26678 (W.D. Wash. Feb. 11, 2021) ................. 24-25

STATUTES

12 U.S.C. §85 ........................................................

12 U.S.C. §86 ........................................................

28 U.S.C. §1254(1) ...............................................

42 U.S.C. §1983 ....................................................

42 U.S.C. §1988 .................................................... 2, 11,

42 U.S.C. §1988(b) ...............................................

42 U.S.C. §1997e(d)(2).........................................

42 U.S.C. § 7401 ...................................................

RULES

Fed. R. Civ. P. 23(h) ............................................ 1, 2, 5,

11, 12, 13, 17, 18, 20, 22, 23, 24, 25

OTHER AUTHORITIES

151 Cong. Rec. H723, S726 (daily ed. Feb. 17,

2005) ..................................................................

151 Cong. Rec. S999-02, S999 (daily ed. Feb.

7, 2005) ..............................................................

TABLE OF AUTHORITIES—Continued

Page(s)

151 Cong. Rec. S1225, S1228 (daily ed. Feb.

10, 2005) ............................................................

Lester Brickman, Effective Hourly Rates of

Contingency-Fee Lawyers: Competing

Data and Non-Competitive Fees, 81 Wash.

U. L. Q. 653 (2003). .........................................

Paul D. Clement, The Ethics of Lawyers in

Government: Lawyering in the Supreme

Court, 38 Hofstra L. Rev. 909 (2010) .............

John C. Coffee, The PSLRA and Auctions,

N.Y.L.J., May 17, 2001 ....................................

Matt Egan, Banks make billions on overdraft

fees. Biden could end that, CNN Business

(Oct. 12, 2020) ...................................................

Theodore Eisenberg et al., Attorneys’ Fees in

Class Actions: 2009-2013, 92 N.Y.U. L.

Rev. 937 (2017) .................................................

Daniel Fisher, Lawyers Won 10x Fee Payoff

By Avoiding Competition, Objector

Claims, Forbes (May 7, 2015) ........................

Brian T. Fitzpatrick, An Empirical Study of

Class Action Settlements and Their Fee

Awards, 7 J. Empirical Legal Stud. 811

(2010) .................................................................

xii

TABLE OF AUTHORITIES—Continued

Page(s)

Neil M. Gorsuch & Paul B. Matey, Settlements in Securities Fraud Class Actions:

Improving Investor Protection (2005) ..........

Laural L. Hooper & Marie Leary, Auctioning the Role of Class Counsel in Class Action Cases: A Descriptive Study, Federal

Judicial Center (Aug. 29, 2001) ......................

Marcel Kahan & Linda Silberman, The Inadequate Search for “Adequacy” in Class Actions: A Critique of Epstein v. MCA, Inc.,

73 N.Y.U. L. Rev. 765 (1998) ..........................

Joseph Ostoyich and William Lavery, Looks

Like Price-Fixing Among Class Action

Plaintiffs Firms, Law360 (Feb. 12, 2014) ......

5 William B. Rubenstein, et al., Newberg on

Class Actions (5th ed. 2014)............................ 13, 18

S. Rep. No. 109-14 (2005) ....................................

Stephen M. Shapiro, et al., Supreme Court

Practice (11th ed. 2019) ...................................

Vaughn R. Walker & Ben Horwich, The Ethical Imperative of a Lodestar Cross-Check:

Judicial Misgivings About “Reasonable

Percentage” Fees in Common Fund Cases,

18 Geo. J.L. Ethics 1453 (2005) ......................

xiii

TABLE OF AUTHORITIES—Continued

Page(s)

Brian Wolfman & Alan B. Morrison, Representing the Unrepresented in Class Actions Seeking Monetary Relief, 71 N.Y.U.

L. Rev. 439 (1996) ............................................

PETITION FOR WRIT OF CERTIORARI

In statutory contexts, this Court has repeatedly opined

on the need for objective standards when courts award attorney’s fees. Its jurisprudence consistently criticizes

multiple-factor tests that give “very little actual guidance

to district courts. Setting attorney’s fees by reference to a

series of sometimes subjective factors placed unlimited

discretion in trial judges and produced disparate results.”

Perdue v. Kenny A., 559 U.S. 542, 551 (2010) (quoting

Pennsylvania v. Delaware Valley Citizens’ Council for

Clean Air, 478 U.S. 546, 563 (1986)); see also Murphy v.

Smith, 138 S. Ct. 784, 790 (2018) (rejecting statutory interpretation that would have reintroduced “unguided and

freewheeling” fee-setting “and the disparate results that

come with it”).

But when it comes to a “reasonable attorney’s fee” in a

class action under Fed. R. Civ. Proc. 23(h), the Court has

not interpreted the phrase since it added the rule in the

2003 amendments. Disparate results are the standard in

the fractured jurisprudence of lower courts. While courts

agree that an award of lodestar—the number of hours the

attorneys and their employees worked multiplied by the

hourly rates prevailing in the community—is presumptively reasonable, they differ widely on when and what size

of a multiplier is permissible, or even whether courts must

consider lodestar at all. The Ninth Circuit’s decision conflicts with decisions of the Second, Third, Fifth, and Sixth

Circuits on the fundamental question of whether and how

district courts should consider attorneys’ lodestar in

awarding a reasonable attorney’s fee under Rule 23(h).

The Ninth Circuit’s decision leads to the “disparate results” this Court has criticized elsewhere. The district

court disregarded lodestar in awarding $14.5 million for

2,158 hours of work—over $6,700 an hour, and perhaps

over $10,000 an hour if petitioner was correct that class

counsel improperly exaggerated the submitted hours. The

Ninth Circuit’s reasoning would permit both an award of

the original fee request of $16.65 million (and perhaps over

$22 million as a percentage of the putative common fund)

and an award of under a million dollars if the district court

had chosen to scrutinize the submitted lodestar and refused to award a multiplier. Both a “thirty-three percent”

award and a “lodestar method” are “reasonable” and

within a district court’s discretion in the Ninth Circuit. In

re Hyundai and Kia Fuel Econ. Litig., 926 F.3d 539, 571

(9th Cir. 2019) (en banc) (citing cases). When the permissible range of “reasonable” fees has such a wide scope,

then district courts have exactly the sort of “unlimited discretion” Kenny A. and Delaware Valley condemned.

The “fundamental asymmetry” between 42 U.S.C.

§1988 standards in civil-rights litigation and the freewheeling Rule 23(h) application in class-action litigation is

especially problematic under the Ninth Circuit’s decision.

Paul D. Clement, The Ethics of Lawyers in Government:

Lawyering in the Supreme Court, 38 Hofstra L. Rev. 909,

916 (2010). The $14.5 million fee comes from a common

fund of $37.5 million intended to partially refund class

members for the disputed overdraft fee—providing class

members a mere $1.07 for every disputed $35 fee they

paid. Class-action settlements are compromises, but the

class—lower-income bank customers paying fees for overdrafting their checking accounts 1—is compromising 97%

of their claims here without any compromise for the attorneys asking and receiving thousands of dollars an hour.

Either the court is richly rewarding attorneys for a “sellout” of their clients’ meritorious claims, or attorneys are

receiving millions of dollars for a nuisance settlement of

meritless litigation. Murray v. GMAC Mortg. Corp., 434

F.3d 948, 952 (7th Cir. 2006) (Easterbrook, J.). Courts

should not encourage either behavior with massive fees,

and neither scenario merits over ten times the fee that vindicating significant civil rights does.

The question is important because the resulting windfalls transfer hundreds of millions of dollars from poor and

middle-class consumers to much wealthier attorneys and

encourages forum shopping in the Ninth Circuit where the

law allows this result.

The Court should grant certiorari to resolve the circuit

conflict, provide “actual guidance to district courts” on

when and to what degree multipliers of lodestar are permissible, and correct a serious abuse of the class-action

mechanism. Delaware Valley, 478 U.S. at 563. The stark

inequities of this case provide an excellent vehicle to resolve this question.

According to the Consumer Financial Protection Bureau, nine

percent of all accounts pay 79% of all overdraft and non-sufficient fund

fees. Matt Egan, Banks make billions on overdraft fees. Biden could

end that, CNN Business (Oct. 12, 2020).

OPINIONS BELOW

The Ninth Circuit’s opinion is reported at 827 F. App’x

628 and reproduced at App. 1a. The opinion of the District

Court for the Northern District of California is unpublished and reproduced at App. 21a.

JURISDICTION

The court of appeals entered judgment on September 2, 2020. Timely petitions for rehearing en banc were

denied on November 6, 2020. App. 43a. Because of

COVID-19, the Court extended the time to file this petition to April 5, 2021. This Court has jurisdiction under 28

U.S.C. §1254(1). As a class member who objected to the

fee request and settlement, Petitioner has standing to appeal the final judgment. Devlin v. Scardelletti, 536 U.S. 1

(2002).

RULE INVOLVED

Federal Rule of Civil Procedure 23 provides:

***

(h) Attorney's Fees and Nontaxable Costs. In a

certified class action, the court may award reasonable attorney's fees and nontaxable costs that are

authorized by law or by the parties’ agreement.

The following procedures apply:

***

(2) A class member, or a party from whom

payment is sought, may object to the motion.

(3) The court may hold a hearing and must

find the facts and state its legal conclusions

under Rule 52(a).

***

STATEMENT OF THE CASE

Plaintiffs settle class litigation over Bank of

America’s $35 “Extended Overdrawn Balance

Charges.”

Under Deposit Agreements with its customers, Bank of

America charges a $35 fee anytime a deposit account

holder writes a check against insufficient funds. When a

deposit account holder thus overdrafts his or her account,

the Bank has discretion over whether to honor the overdrawn check by advancing funds to the payee sufficient to

cover the note. If the Bank advanced the funds, deposit

account holders were obligated under the Deposit Agreement to pay back the Bank’s advance plus any fees incurred. Failure to do so within five days triggers a second

fee, a $35 Extended Overdrawn Balance Charge

(“EOBC”). App. 21a–22a.

Several suits challenged this second fee as usurious,

theorizing that the $35 EOBC exceeded the interest rate

permitted by the National Banking Act, 12 U.S.C. §§85,

86. At least nine courts in six circuits agreed that EOBCs

are not “interest” and dismissed these suits. App. 5a (listing cases). The district court here, however, denied the

Bank’s motion to dismiss, but agreed to certify an interlocutory appeal of that denial, and the Ninth Circuit

granted permissive interlocutory appeal. App. 22a–23a.

While the appeal was pending and before any formal

discovery, the parties settled in October 2017. App. 45a.

The Bank agreed to cease charging EOBCs for five years;

create a $37.5 million fund to pay attorney’s fees and settlement expenses and provide partial pro rata refunds for

about $756 million of previous EOBC charges; and formally provide $29.1 million of debt reduction to class members whose bank accounts closed with an outstanding

balance stemming from one or more EOBC’s. App. 23a–

24a. The roughly seven million class members (App. 26a)

would release their claims. App. 56a–58a; App. 86a n.1.

Class attorneys filed a request for $16,650,000 in fees

on the theory that they were entitled to 25% of the putative $66.6 million settlement value. They asserted a lodestar of $1,428,047.50 for 2,158 hours of work,

acknowledging that they were requesting a multiplier of

11.66, but argued that the district court should not consider the lodestar at all. Dkt. 80-1.

II. Rachel Threatt objects.

Class member Rachel Threatt, who had paid multiple

EOBCs to the Bank in the class period, timely objected to

the fee request through pro bono counsel.

Threatt noted that a multiplier of over eleven was by

itself unacceptable for a settlement that refunded such a

small percentage of class members’ fees because of the resulting exorbitant hourly rate. Threatt also objected that

the 2,158-hour figure was exaggerated because it included

343 hours of work on two other unsuccessful cases, the

hours spent on the fee application, and a bloated 561.75

hours by eight attorneys on settlement mediation, negotiation, and drafting. With a real figure of about 1,400 hours,

the lodestar was about $926 thousand, and the attorneys

were seeking a multiplier of over eighteen. App. 86a–98a.

Threatt also challenged the valuation of the settlement

as a rationalization for the fees, arguing that the

$16,650,000 request as unreasonably more than 44% of the

$37.5 million in real common-fund cash value. App. 99–105.

Threatt argued that the parties overstated the settlement

value because the $29.1 million in “debt reduction” was illusory. The Bank did not pursue or sell the debts of former

customers whose accounts it had closed with outstanding

balances. The Bank almost certainly had already written

off all or most of that sum as a loss on its books. The elimination of EOBCs in the future could not support a fee

award because it was compromising the claims of customers with past injuries for the benefit of different customers. And nothing stopped the Bank from offsetting the loss

of EOBC revenue with a different fee schedule that might

make class members worse off.

III. The district court approves the fees.

In response to objections, class counsel reduced their

fee prayer to $14.5 million. App. 36a.

The district court then approved the settlement and

$14.5 million fee request in full. The district court did not

ask, and the Bank did not disclose, how much of the outstanding forgiven debt the Bank had already written off.

It nevertheless held that the debt relief was not illusory

because the Bank could hypothetically choose to start proceedings to collect, though there was no evidence the Bank

ever considered doing so. App. 35a.

The court held that it “has discretion to not apply the

lodestar cross check” and concluded without additional

reasoning “The Court therefore finds it proper to exercise

this discretion and not apply the lodestar cross check.”

App. 38a–39a. It thus made no findings on hours or rates,

though praised class counsel’s “tenacity” in a “hard fought

battle.” App. 38a. The court noted the “substantial risk of

non-payment in confronting the adverse legal landscape.”

Id. Using the putative $66.6 million value of the settlement, the court held a 21.1% percentage-of-fund request

reasonable, and awarded the full $14.5 million. App. 39a.

Threatt and two other objectors timely appealed. Appellants were supported by an amicus brief of seven state

attorneys general urging the Ninth Circuit to require

lodestar crosschecks. App. 18a.

IV. Over a dissent, the Ninth Circuit affirms and holds

a district court may disregard lodestar.

The Ninth Circuit affirmed. App. 1. The Court found it

noteworthy that all of the previous attempts to bring identical litigation had foundered and thus it was “exceptional”

for the attorneys to recover a small fraction of the disputed fees. App. 5a. Applying Ninth Circuit precedent,

App. 4a, it held there was no obligation to perform a lodestar crosscheck, so there was no abuse of discretion in the

district court’s fee award of thousands of dollars an hour.

The court concluded that “neither the settlement nor the

fee award raises an eyebrow.” App. 6a.

Senior Circuit Judge Kleinfeld dissented. App. 7a–20a.

He agreed with objectors that the debt reduction was

worth “nowhere near $29.1 million” and likely merely “a

way to puff the value of the settlement by plaintiffs’ counsel and the Bank, in order to get the attorneys’ fees approved.” App. 10a–11a. Similarly, the injunctive relief “is

speculative, uncalculated, and likely to be a negligible

fraction of the valuation the district court accepted”; the

court should not have “attribute[ed] any value to the class

of the injunctive relief.” App. 11a–14a. The “economic reality” alone made the award an abuse of discretion even

without considering lodestar. App. 14a.

The dissent also criticized any argument “justify[ing]

the fee in part by the ‘difficulty’ of the case.” App. 14a–15a.

That plaintiffs had previously lost identical cases on legal

grounds suggested that the case was “bad,” rather than

“difficult”: “To treat that sort of case as justifying an extraordinarily high fee because of ‘difficulty’ would reward

attorneys for bringing meritless cases.” App. 15a.

Of most relevance to this petition, the dissent held that

“The district court also erred by not considering a lodestar

calculation.” App. 14a–18a. “Though circuit law does not

necessarily require a cross check, it probably should.”

App. 17a. Failing to do so “breaches the district court’s fiduciary duty to the class.” App. 18a. Judge Kleinfeld

noted:

Now-Justice Gorsuch has recommended reversing

the trend toward percentage fees without cross

checks, and scholarly literature has developed urging the necessity of a lodestar cross check, including

an article co-authored by experienced district judge

Vaughn Walker.

App. 18a (citing Neil M. Gorsuch & Paul B. Matey, Settlements in Securities Fraud Class Actions: Improving Investor Protection 22–23 (2005); Vaughn R. Walker & Ben

Horwich, The Ethical Imperative of a Lodestar CrossCheck: Judicial Misgivings About “Reasonable Percentage” Fees in Common Fund Cases, 18 Geo. J.L. Ethics

1453, 1454 (2005); Brian Wolfman & Alan B. Morrison,

Representing the Unrepresented in Class Actions Seeking Monetary Relief, 71 N.Y.U. L. Rev. 439, 503 (1996)).

On November 6, 2020, the Ninth Circuit denied two petitions for rehearing en banc despite Judge Kleinfeld’s

nonbinding recommendation of the petitions’ grant.

App. 43a.

This Petition followed.

REASONS FOR GRANTING THE WRIT

This petition presents an ideal and timely opportunity

for the Court to resolve a deep circuit split over the use of

lodestar analysis in class-action fee awards and provide

much-needed guidance to the lower courts on a recurring

issue of substantial importance.

The Ninth Circuit’s decision compounds the fracture among circuits over the role of lodestar in

Rule 23(h) fee awards and is inconsistent with this

Court’s jurisprudence.

Rule 23(h) authorizes a “reasonable attorney’s fee,”

which is precisely the type of fee authorized under 42

U.S.C. § 1988(b) and many other statutes authorizing fee

shifting. In the Section 1988 context, this Court has rejected multiple-factor tests because they give “very little

actual guidance to district courts. Setting attorney’s fees

by reference to a series of sometimes subjective factors

placed unlimited discretion in trial judges and produced

disparate results.” Kenny A., 559 U.S. at 551 (quoting Delaware Valley, 478 U.S. at 563). Thus, “the lodestar figure

has, as its name suggests, become the guiding light of our

fee-shifting jurisprudence,” Id. (quoting Gisbrecht v.

Barnhart, 535 U.S. 789, 801 (2002)) (cleaned up). Though

the lodestar approach “is not perfect,” it is “objective, and

thus cabins the discretion of trial judges, permits meaningful judicial review, and produces reasonably predictable results.” Id. Enhancements above lodestar are

permissible, but “rare and exceptional, and require specific evidence that the lodestar fee would not have been

adequate to attract competent counsel.” Id. at 554

(cleaned up).

This Court has applied the same approach in other contexts. In Pennsylvania v. Delaware Valley Citizens’

Council for Clean Air, 478 U.S. 546, 565 (1986), the Court

incorporated the Section 1988 standards into fee awards

under the Clear Air Act, 42 U.S.C. § 7401 ff., noting that

there was a “strong presumption that the lodestar figurethe product of reasonable hours times a reasonable raterepresents a ‘reasonable fee’ is wholly consistent with the

rationale behind the usual fee-shifting statute....” In

Blanchard v. Bergeron, the Court stated that “we have

said repeatedly that ‘[t]he initial estimate of a reasonable

attorney's fee is properly calculated by multiplying the

number of hours reasonably expended on the litigation

times a reasonable hourly rate.’” 489 U.S. 87, 94-95 (1989)

(quoting Blum v. Stenson, 465 U.S. 886, 888 (1984)). Thus,

the lodestar inquiry is “the guiding light of our fee shifting

jurisprudence.” Burlington v. Dague, 505 U.S. 557, 562

(1992). See also Murphy v. Smith, 138 S.Ct. 784, 790 (2018)

(rejecting petitioner’s attempt to “(re)introduce into [42

U.S.C.] §1997e(d)(2) exactly the sort of unguided and freewheeling choice—and the disparate results that come with

it—that this Court has sought to expunge from practice

under §1988.”).

But the Court has not interpreted Rule 23(h) since the

Federal Rules added it in the 2003 amendments. And the

courts of appeals are consistently inconsistent with respect to whether and to what extent district courts must

consider lodestar in awarding fees under Rule 23(h). Several expressly rely on the multiple-factor test precedent

that this Court has repeatedly criticized as subjective and

producing “disparate results”; none follow the Kenny A.

framework in the context of a common-fund award. E.g.,

In re Home Depot Inc. Customer Data Sec. Breach Litig.,

931 F.3d 1065, 1085 (11th Cir. 2019) (citing cases); Fresno

County Employees’ Ret. Ass’n v. Isaacson, 925 F.3d 63,

68–72 (2d Cir. 2019) (same). These courts distinguish

Kenny A. without addressing that case’s reasoning condemning “unlimited discretion” and “disparate results.”2

The Ninth Circuit’s decision is not only inconsistent

with the Supreme Court’s preference for “cabin[ing] the

discretion of trial judges,” but conflicts with decisions of

the Second, Third, Fifth, and Sixth Circuits on the fundamental question of whether and how district courts should

consider the attorneys’ lodestar in awarding a reasonable

attorney’s fee under Rule 23(h). See 5 William B. Rubenstein, et al., Newberg on Class Actions § 15:88 (5th ed.

2014) (identifying conflicting approaches among the Circuits). This Court’s intervention is needed to establish a

nationwide standard for the role of a lodestar crosscheck

in Rule 23(h) awards and thereby prevent class attorneys

nationwide from flocking to the Ninth Circuit at the expense of class members because its law allows them to recover fees disproportionately greater than their time and

effort warrant.

This conflict is stark. The Fifth Circuit uses a mandatory

approach. Like most circuits, the Fifth Circuit allows district courts to choose between the percentage method and

the lodestar method as the baseline method for awarding

attorney’s fees from a common fund created by a class-action settlement. If a district court chooses to use the percentage method, however, the court must also apply “a

meticulous Johnson analysis” as a “crosscheck” to ensure

the fee is reasonable. Union Asset Management Holding

A.G. v. Dell, Inc., 669 F.3d 632, 644 (5th Cir. 2012). The

factors set forth in Johnson v. Georgia Highway Express,

Boeing Co. v. Van Gemert, 444 U.S. 472 (1980), held that attorney’s fees from a common fund were appropriate, but did not discuss

the appropriate methodology for calculating such fees.

Inc., 488 F.2d 714 (5th Cir. 1974), include a calculation of

the time and labor, i.e., lodestar, of the attorneys and, indeed, is envisioned to “be more searching than the ‘lodestar cross-check’ commonly referenced in other courts.”

Union Asset Mgmt., 669 F.3d at 644 n.42. See also In re

High Sulfur Content Gasoline Prods. Liab. Litig., 517

F.3d 220, 228 (5th Cir. 2008) (“When a district court

awards attorneys’ fees it must explain how each of the

Johnson factors affects its award.”).

The Second Circuit, while speaking in less mandatory

terms, aligns with the Fifth Circuit in strongly preferring

that district courts apply a lodestar crosscheck when

awarding fees from a common fund. In Goldberger v. Integrated Resources, Inc., 209 F.3d 43, 50 (2d Cir. 2000), the

Second Circuit reaffirmed its “express goal” of “prevent[ing] unwarranted windfalls for attorneys.” While allowing district courts to calculate attorney’s fees using a

percentage method, the court “encourage[d] the practice

of requiring documentation of hours as a ‘cross check’ on

the reasonableness of the requested percentage” and emphasized that “courts should continue to be guided” by the

time and labor expended by counsel, among other relevant

factors. Id. This holding follows the Second Circuit’s longestablished rule that “unless time spent and skill displayed [are] used as a constant check on applications for

fees, there is a grave danger that the bar and bench will

be brought into disrepute, and there will be prejudice to

those whose substantive interests are at stake and who are

unrepresented except by the very lawyers who are seeking compensation.” Detroit v. Grinnell, 495 F.2d 448, 47071 (2d Cir. 1974). 3

The Sixth Circuit also holds that district courts should

consider the lodestar elements to determine the reasonableness of a fee awarded on a percentage basis. In

Moulton v. U.S. Steel Corp., 581 F.3d 344, 352 (6th Cir.

2009), the Sixth Circuit remanded an attorney’s fee award

in a class action even though the percentage-based award

was not “on its face” unreasonable. The court held that the

district court must provide its “reasons for ‘adopting a

particular methodology and the factors considered in arriving at the fee,’” which should “often, but not invariably”

include, among other things, the lodestar value of the attorneys’ services. Id. (quoting Rawlings v. PrudentialBache Props., Inc., 9 F.3d 513, 516 (6th Cir. 1993) and citing Bowling v. Pfizer, Inc., 102 F.3d 777, 780 (6th Cir.

1996)). Contrast here, where the Ninth Circuit affirmed

such a fee award when the district court failed to provide

reasons for its adopted methodology. App. 38a.

Similarly in tension with the Ninth Circuit standard is

the Third Circuit’s decision in In re Rite Aid Corp. Sec.

Litig., 396 F.3d 294, 305 (3d Cir. 2005). Showing how important the crosscheck is, the Third Circuit remanded a

In practice, since Goldberger, “courts have generally refused

multipliers as high as 2.03” in the Second Circuit. See Fujiwara v. Sushi Yasuda Ltd., 58 F. Supp. 3d 424, 438 (S.D.N.Y. 2014) (cleaned up).

See also Fresno County Employees’ Ret. Ass’n, 925 F.3d at 72 (“Fee

requests that deviate wildly from the unenhanced lodestar fee are unlikely to pass th[e] cross-check….”). This approach contrasts sharply

with the lodestar multiplier of more than ten (and possibly more than

sixteen) affirmed by the Ninth Circuit.

fee award in Rite Aid where the district court improperly

applied the attorneys’ billing rates in its lodestar crosscheck. The Third Circuit found such an improperly calculated crosscheck “inconsistent with the exercise of sound

discretion.” Id. The court held that application of a lodestar crosscheck is “sensible,” reasoning that it “serves the

purpose of alerting the trial judge that when the multiplier

is too great.” Id. at 306. The court thus ordered reconsideration of the fee “with an eye toward reducing the

award.” Id. See also In re AT&T Corp. Sec. Litig., 455

F.3d 160, 164 (3d Cir. 2006) (reaffirming the “recommend[ation] that district courts use the lodestar method

to cross-check the reasonableness of a percentage-of-recovery fee award” and reduce the award when the multiplier is too great).

At times, the Third Circuit has used even more forceful

language, “strongly suggest[ing] that a lodestar multiplier

of 3 … is the appropriate ceiling for a fee award.” In re

Cendant Corp. PRIDES Litig., 243 F.3d 722 (3d Cir. 2001)

(rejecting percentage-based fee award that was seven to

ten times the lodestar); In re Cendant Corp. Litig., 264

F.3d 201, 285 n.7 (3d Cir. 2001) (suggesting Cendant

PRIDES may have elevated lodestar crosscheck from being a recommendation to a requirement).

The Ninth Circuit’s approach to lodestar crosschecks

joins the First, Eighth, and Eleventh Circuits on the other

side of a deep fracture among the circuit courts. The First

Circuit held in In re Thirteen Appeals Arising Out of the

San Juan Dupont Plaza Hotel Fire Litigation that “the

approach of choice is to accord the district court discretion

to use whichever method, [percentage-of-the-fund] or

lodestar, best fits the individual case,” with that discretion

including the choice of whether to use a “combination” of

those methods. 56 F.3d 295, 307-08 (1st Cir. 1995). Meanwhile, the Eighth Circuit opined in Keil v. Lopez, 862 F.3d

685, 701 (8th Cir. 2017), that district courts need not conduct a lodestar crosscheck to verify the reasonableness of

a Rule 23(h) award. See also Petrovic v. AMOCO Oil Co.,

200 F.3d 1140, 1157 (8th Cir. 1999) (declining to address

challenges to lodestar data because “the district court’s

approval of the fee under the ‘percentage of the fund’ approach was proper”). Even more recently, the Eleventh

Circuit weighed in, noting that while courts often use a

crosscheck, it is a “time-consuming exercise” and thus not

“required.” Home Depot, 931 F.3d at 1091 n.25.

The Seventh Circuit takes an idiosyncratic approach,

asking courts to approximate a market-based fee and “estimate the contingent fee that the class would have negotiated with the class counsel at the outset had negotiations

with clients having a real stake been feasible.” In re Trans

Union Corp. Privacy Litig., 629 F.3d 741, 744 (7th Cir.

2011); see generally In re Synthroid Mktg. Litig., 264 F.3d

712, 718–20 (7th Cir. 2001). In this context, the amount of

work expended by class counsel bears on the market price

for legal fees. Camp Drug Store, Inc. v. Cochran Wholesale Pharm., Inc., 897 F.3d 825, 833 (7th Cir. 2018). But in

practice, this produces disparate results sometimes divorced from lodestar. E.g., In re Capital One TCPA Litig.,

80 F. Supp. 3d 781 (N.D. Ill. 2015) (awarding over

$3,600/hour for recovery of $2.72 per class member because of the lack of a “competitive market” after attorneys

agreed not to compete for lead counsel status (citing Joseph Ostoyich and William Lavery, Looks Like Price-Fixing Among Class Action Plaintiffs Firms, Law360 (Feb.

12, 2014)).

The Tenth Circuit’s law runs both ways, holding in different cases that courts need not evaluate time and labor

using the lodestar formulation, but also that district courts

must consider all Johnson factors, and that a 3.16 multiplier is enough to shock the conscience. Compare Brown

v. Phillips Petroleum Co., 838 F.2d 451, 456 (10th Cir.

1988), with Rosenbaum v. MacAllister, 64 F.3d 1439, 1445,

1447–48 (10th Cir. 1995), and Chieftain Royalty Co. v.

Enervest Energy Institutional Fund XIII-A, L.P., 888

F.3d 455, 459 (10th Cir. 2018).

In sum, the “various federal circuits” currently “provide different directions to their district courts” and their

overall approach to the topic of crosscheck multipliers under Rule 23(h) “is not particularly illuminating.” Rubenstein, et al., Newberg on Class Actions §15:87–88.

These conflicting decisions and approaches illustrate that

there is nothing to be gained by allowing the issue to further “percolate” in the lower courts. The circuit split is

now well developed. Ten circuits have now opined on

whether and how district courts should make use of the

use of the lodestar in awarding fees under Section 23(h).

The circuits are badly split with disparate reasoning and

results apparent. There is no reason to allow these disparate approaches to persist. See Stephen M. Shapiro, et al.,

Supreme Court Practice, §4.4(b) at 4-16 (11th ed. 2019)

(“well-developed” circuit split consideration favoring certiorari).

II. The question presented is important and frequently recurring.

There is a remarkable discrepancy between what is a

“reasonable attorney’s fee” in civil rights litigation and under Rule 23(h) in the Ninth Circuit’s analysis. In a §1983

case, if “a plaintiff has achieved only partial or limited success, [the lodestar figure] may be an excessive amount.”

Hensley v. Eckerhart, 461 U.S. 424, 436 (1983). In comparison, the class attorneys here settled for a tiny fraction of

the alleged damages under the National Bank Act, but not

only obtained their full lodestar, but an extraordinary

multiplier of tenfold or more. There are two possibilities.

One is that class counsel brought meritorious litigation,

and settled it quickly on the cheap to maximize their recovery at the expense of their clients. The other is that, as

Judge Kleinfeld suggested, this is a “bad” case, App. 14a,

and class counsel have cashed in a lottery ticket that resulted in huge fee award in a suit that the defendant opted

to dispose of with a nuisance settlement of pennies on the

dollar. Cf. Murray, 434 F.3d at 952. There seems to be no

public-policy reason to prefer rewarding attorneys more

for either scenario than for successful litigation vindicating important civil rights against the government, but the

rule of the Ninth and some other Circuits creates these

perverse incentives.

The windfall here is not unusual. In “class actions, effective hourly rates of tens of thousands of dollars an hour

are not uncommon.” Lester Brickman, Effective Hourly

Rates of Contingency-Fee Lawyers: Competing Data and

Non-Competitive Fees, 81 Wash. U. L. Q. 653, 664 (2003).

An expert study showed that attorneys bringing Telephone Consumer Protection Act litigation average $1,275

an hour in fees over dozens of cases, including nuisance

settlements of a few dollars per class member and losses

that paid nothing. Daniel Fisher, Lawyers Won 10x Fee

Payoff By Avoiding Competition, Objector Claims,

Forbes (May 7, 2015) (discussing fee award of $3,600/hour

in Capital One that materially raised the average).

We know that these awards of thousands of dollars an

hour are windfalls beyond what courts need to encourage

attorneys to engage in meritorious consumer or securities

class-action litigation. When courts require attorneys to

submit competitive bids beforehand to obtain lead-counsel

status, high-profile firms consistently submit bids for a

fraction of what district courts award afterward. Laural L.

Hooper & Marie Leary, Auctioning the Role of Class

Counsel in Class Action Cases: A Descriptive Study, Federal Judicial Center (Aug. 29, 2001) at 7-8. “[A] series of

antitrust class action auctions demonstrated that qualified

counsel would generally offer to represent the class for fee

awards in the 10-15% range.” John C. Coffee, The PSLRA

and Auctions, N.Y.L.J., May 17, 2001, at 5. E.g., In re Optical Disk Drive Prods. Antitrust Litig., 959 F.3d 922, 931

(9th Cir. 2020) (competitive bid of 12–13%); In re Lithium

Ion Batteries Antitrust Litig., No.13-md-2420, 2020 U.S.

Dist. LEXIS 233607 (N.D. Cal. Dec. 10, 2020) (awarding

just under 30% fees despite competitive bid for half that

amount).

Courts resolve hundreds of class-action settlements

every year. Brian T. Fitzpatrick, An Empirical Study of

Class Action Settlements and Their Fee Awards, 7 J. Empirical Legal Stud. 811, 813 (2010). Most cases are without

objection, so class counsels are effectively submitting ex

parte applications for fees. Eighty percent of courts

simply grant Rule 23(h) requests without reduction. Theodore Eisenberg et al., Attorneys’ Fees in Class Actions:

2009-2013, 92 N.Y.U. L. Rev. 937, 954 (2017). “Only in rare

instances do courts grant fees that are significantly lower

than the amount requested.” Id. This creates a ratchet of

precedent increasing fees. “By submitting proposed orders masquerading as judicial opinions, and then citing to

them in fee applications, the class action bar is in fact creating its own caselaw on the fees it is entitled to... No wonder that ‘caselaw’ is so generous to plaintiffs’ attorneys.”

Fujiwara v. Sushi Yasuda Ltd., 58 F. Supp. 3d 424, 436

(S.D.N.Y. 2014).

Good-faith objectors are few and far between. “[I]ndividual members of the class have such a small stake in the

outcome of the class action that they have no incentive to

… challenge” settlements or fee awards. Redman v. RadioShack Corp., 768 F.3d 622, 629 (7th Cir. 2014). And successfully objecting to oversized attorney’s fees on a

contingency-fee basis is not a viable business model for a

for-profit firm. E.g., In re Petrobras Sec. Litig., 828 F.

App’x 754 (2d Cir. 2020) (affirming reduced lodestar

award of $33 thousand in fees for successful objection winning $47 million for class after successful appeal challenging $11 thousand award).

In addition, the decision below deepened a circuit split

that already created an enormous incentive for forumshopping by plaintiffs’ attorneys seeking to bring and settle nationwide class actions like this one. Exactly the same

suit and result can be more profitable for attorneys in

some circuits than in others, enabling a particularly “sinister” form of forum shopping. Marcel Kahan & Linda Silberman, The Inadequate Search for “Adequacy” in Class

Actions: A Critique of Epstein v. MCA, Inc., 73 N.Y.U. L.

Rev. 765, 775 (1998). Indeed, one of the motivations for

passing the Class Action Fairness Act in 2005 was to reduce, if not eliminate entirely, the problematic effects of

forum shopping nationwide class actions. See, e.g., S. Rep.

No. 109-14, at 13-23; 151 Cong. Rec. S1225, S1228 (daily

ed. Feb. 10, 2005) (statement of Sen. Orrin Hatch); 151

Cong. Rec. H723, S726 (daily ed. Feb. 17, 2005) (statement

of Rep. F. James Sensenbrenner); 151 Cong. Rec. S99902, S999 (daily ed. Feb. 7, 2005) (statement of Sen. Arlen

Specter). The result costs class members money, because

defendants settling class actions are indifferent between

whether the allocation of the cost of settlement goes to attorneys or to class members. Pearson v. NBTY, Inc., 772

F.3d 778, 786 (7th Cir. 2014).

The decision below permits district courts to disregard

the time—and the value of that time—that attorneys representing a class spend on a case in setting a reasonable

fee and to do so without providing any reasoning. The result is that class counsel bringing suits in the Ninth Circuit

may realize a windfall, which will come at the expense of

class members whose damages claims created the common fund that pays both their own claims and the attorney’s fees. Fee awards that are often a sizable multiplier

of lodestar for unremarkable settlements are a gigantic

wealth transfer from pension funds and poor- and middleclass consumers to millionaire attorneys.

Rule 23(h) is not yet living up to its promise as part of

the “uniform system of federal procedure.” Shady Grove

Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393,

416 (2010). Guidance from this Court is thus needed to create objective standards and avoid the “disparate results”

between different types of litigation and among the circuits.

III. The Ninth Circuit is wrong and this case is a good

vehicle to resolve this important question.

Beyond the mature and well-developed fissure between

the Circuits, this petition provides an especially good vehicle for addressing the need for a lodestar crosscheck.

Experienced pro bono counsel represent petitioner, who

has averred that she has no intention of settling her objection for any sort of personal side payment. Dkt. 85-1 ¶8.

While petitioner contends that class counsel received

over $10,000/hour here, 4 even under class counsel’s calculations, there is no dispute that this $14.5 million fee is at

least a ten-fold multiplier on class counsel’s ordinary

$662/hour blended rate. On either account, Rule 23(h), interpreted correctly, precludes such an unreasonable windfall. Likewise, there is no dispute that in response to

petitioner’s objection, the district court simply declined to

consider lodestar; it provided no justification other than

“that it was not required.” App. 39a. Nor is there any dispute that the panel majority endorsed the district’s categorical discretion to dispense with any crosscheck of the

lodestar. App. 4a. Especially in matters of class-action fee

awards, it is not always so clear what standards trial and

appellate courts have applied.

The panel majority asserts that the thousands of dollars an hour here for a $1.07 refund per $35 fee did not

cause them to “raise[] an eyebrow.” App. 6a. Respectfully,

that conclusion simply demonstrates that the Ninth Circuit has become inured to inflated fee awards. In our view,

a payday of over $6,700/hour (and perhaps more than

$10,000/hour) for a settlement of pennies on the dollar

should shock the conscience. E.g., Rosenbaum, 64 F.3d at

1447–48 (3.16 multiplier despite district court finding that

award was about 16% of estimated benefit); Forbush v. JC

Penney Co., 98 F.3d 817, 823 (5th Cir. 1996) (affirming district court’s fee award limiting multiplier to 2 after finding

Class counsel’s assertion of risk is especially ironic if one juxtaposes with their submission of hours, given that that submission was

larded with hundreds of hours spent on unsuccessful litigation in other

cases. App. 91–93 & n.6.

a 4.6 multiplier to be “outrageous”). Common-fund equitable fee awards must be “made with moderation and a jealous regard to the rights of those who are interested in the

fund.” Trustees v. Greenough, 105 U.S. 527, 536–37 (1881).

The dissent is correct, and roughly seven million class

members have at stake a sizable $14.5 million attorney’s

fee payment from their common fund.

While petitioner agrees that Rule 23(h) fees should be

tied to actual (as opposed to hypothetical) class recovery,

lodestar crosschecks have value. They prevent a trial penalty. See Brytus v. Spang & Co., 203 F.3d 238, 247 (3d Cir.

2000). They discourage risk-averse counsel from entering

into quick agreements that amount to a small percentage

of potential recovery. They incentivize counsel to prefer

meritorious litigation over lottery-ticket litigation nuisance settlements of large claims. And they foreclose

hourly windfalls that a functioning marketplace would not

allow.

It is no answer to say that the panel majority’s opinion

is unpublished. The panel majority and district court expressly relied on Ninth Circuit precedent and that precedent includes multiple published decisions, including an en

banc decision. App. 4a, 38a–39a. Moreover, “[n]onpublication must not be a convenient means to prevent review”;

such decisions often create “lingering effect[s] in the Circuit.” Smith v. United States, 502 U.S. 1017, 1020 n.*

(1991) (Blackmun, O’Connor & Souter, JJ., dissenting

from the denial of certiorari). And indeed, courts in the

Ninth Circuit are already citing the panel majority opinion

as support for declining to conduct a lodestar crosscheck

of their own. See Kater v. Churchill Downs Inc., Nos. 15cv-00612, 19-cv-00199, 2021 U.S. Dist. LEXIS 26734 (W.D.

Wash. Feb. 11, 2021) (awarding fees of $38.75 million);

Wilson v. Playtika Ltd., No. 18-cv-5277, 2021 U.S. Dist.

LEXIS 26678 (W.D. Wash. Feb. 11, 2021) ($9.5 million).

The Ninth Circuit’s attempt to shield its splintered decision from further review is “yet another disturbing aspect

of the [decision], and yet another reason to grant review.”

Plumley v. Austin, 574 U.S. 1127, 1131–32 (2015) (Thomas

and Scalia, JJ., dissenting from the denial of certiorari).

The Court should take this opportunity to address the

circuit split and ensure that Rule 23(h) is applied uniformly and with the “interests of absent class members in

close view.” Amchem Prods., Inc v. Windsor, 521 U.S. 591,

629 (1997).

CONCLUSION

The Court should grant the petition.

Respectfully submitted,

Theodore H. Frank

(Counsel of Record)

Anna St. John

Adam Ezra Schulman

Hamilton Lincoln Law Institute

1629 K Street NW, Suite 300

Washington, DC 20006

(703) 203-3848

ted.frank@hlli.org

Counsel for Petitioner

APPENDIX

App. i

TABLE OF APPENDICES

Appendix A

Opinion, Farrell v. Bank of America Corp., N.A.,

Nos. 18-56272, 18-56273, and 18-56371

(9th Cir. Sep. 2, 2020) .................................... App. 1a

Appendix B

Order, Farrell v. Bank of America, N.A., No. 3:16-cv00492-L-WVG

(S.D. Cal. Aug. 31, 2018) .............................. App. 21a

Appendix C

Judgment in a Civil Case, Farrell v. Bank of America,

N.A., No. 3:16-cv-00492-L-WVG

(S.D. Cal. Sep. 19, 2018) .............................. App. 42a

Appendix D

Order Denying Rehearing, Farrell v. Bank of America

Corp., N.A., Nos. 18-56272, 18-56273, and 18-56371 (9th

Cir. Nov. 6, 2020) ........................................ App. 43a

Appendix E

Settlement and Release Agreement, Farrell v. Bank of

America, N.A., No. 3:16-cv-00492-WVG (S.D. Cal. Oct.

30, 2017) ....................................................... App. 45a

Appendix F

Objection of Rachel Threatt, Farrell v. Bank of

America, N.A., No. 3:16-cv-00492-WVG (S.D. Cal. Jun.

18, 2018) ....................................................... App. 77a

App. 1a

Appendix A

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JOANNE FARRELL; et al.,

Plaintiffs-Appellees,

ESTAFANIA

SANCHEZ,

Objector-Appellant,

No. 18-56272

OSORIO D.C. No.

3:16-CV-00492-LWVG

BANK

AMERICA MEMORANDUM *

CORPORATION, N.A.

Defendant-Appellee.

This disposition is not appropriate for publication and is not

precedent except as provided by Ninth Circuit Rule 36-3.

App. 2a

JOANNE FARRELL; et al.,

Plaintiffs-Appellees,

No. 18-56273

D.C. No.

AMY COLLINS,

Objector-Appellant,

3:16-CV-00492L-WVG

BANK

AMERICA

CORPORATION, N.A.,

Defendant-Appellee.

JOANNE FARRELL; et al.,

Plaintiffs-Appellees,

No. 18-56371

D.C. No.

RACHEL THREATT,

3:16-CV-00492L-WVG

Objector-Appellant,

BANK

AMERICA

CORPORATION, N.A.,

Defendant-Appellee.

App. 3a

Appeal from the United States District Court

for the Southern District of California

M. James Lorenz, District Judge, Presiding

Argued and Submitted March 2, 2020

Pasadena, California

Filed September 2, 2020

Before: KLEINFELD and CALLAHAN, Circuit

Judges, and CHRISTENSEN **, District Judge.

Dissent by Judge KLEINFELD

Objectors-Appellants appeal from the district court’s:

(1) approval of a class action settlement between Defendant-Appellee Bank of America and Plaintiffs-Appellees,

Bank of America account holders; and (2) $14.5 million fee

award to class counsel. We review for abuse of discretion.

In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935,

940 (9th Cir. 2011). We affirm both the settlement approval and the fee award.

The district court did not err in approving the settlement over objections to the failure to create subclasses.

The named plaintiffs “fairly and adequately protect[ed]

The Honorable Dana L. Christensen, United States District

Judge for the District of Montana, sitting by designation.

App. 4a

the interests of the class.” Fed. R. Civ. P. 23(a)(4). No conflict of interest arose when the differences between members of class did not bear on “the allocation of limited

settlement funds” and when the structure of the settlement appropriately protected “higher-value claims ...

from class members with much weaker ones.” In re

Volkswagen “Clean Diesel” Mktg., Sales Practices, &

Prods. Liab. Litig., 895 F.3d 597, 605 (9th Cir. 2018).

Nor did the district court abuse its discretion in using

the percentage-of-recovery method to calculate fees and

refusing to conduct a lodestar crosscheck. This Court has

consistently refused to adopt a crosscheck requirement,

and we do so once more. See Campbell v. Facebook, 951

F.3d 1106, 1126 (9th Cir. 2020); In re Hyundai & Fuel

Econ. Litig., 926 F.3d 539, 571 (9th Cir. 2019) (en banc);

Bluetooth, 654 F.3d at 944; Stanger v. China Elec. Motor,

Inc., 812 F.3d 734, 738–39 (9th Cir. 2016); Hanlon v.

Chrysler Corp., 150 F.3d 1011, 1029 (9th Cir. 1998), overruled on other grounds by Wal-Mart Stores, Inc. v. Dukes,

564 U.S. 338 (2011); Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990). The district court acted within its “discretion to choose how [to]

calculate[] fees.” Bluetooth, 654 F.3d at 944.

The district court considered the most pertinent factors influencing reasonableness, and it did not err in finding the fee award reasonable under Federal Rule of Civil

Procedure 23(h). See Online DVD-Rental Antitrust

Litig., 779 F.3d 934, 954–55 (9th Cir. 2015). The court appropriately considered: (1) “the extent to which counsel

‘achieved exceptional results for the class’”; (2) “whether

the case was risky for class counsel”; (3) “whether coun-

App. 5a

sel’s performance ‘generated benefits beyond the cash settlement fund’”; and (4) “the burdens class counsel experienced while litigating the case (e.g., cost, duration,

foregoing other work).” Id. (quoting Vizcaino v. Microsoft

Corp., 290 F.3d 1043, 1048–50 (9th Cir. 2002)).

Most significantly, the district court concluded that

class counsel demonstrated “tenacity and great skill,”

achieving a “remarkable” result in a “hard fought battle”

despite an “adverse legal landscape” and the “substantial

risk of non-payment.” Indeed, excepting the district court

in this particular matter, no court has ever ruled for bank

accountholders on the controlling legal issue. Compare

Farrell v. Bank of Am., N.A., 224 F. Supp. 3d 1016 (S.D.

Cal. 2016) with Fawcett v. Citizens Bank, N.A., 919 F.3d

133 (1st Cir. 2019); Walker v. BOKF, N.A., No. 1:18-cv810-JCH-JHR, 2019 WL 3082496 (D.N.M. July 15, 2019);

Johnson v. BOKF, Nat’l Ass’n, 341 F. Supp 675 (N.D. Tex.

2018); Moore v. MB Fin. Bank, N.A., 280 F. Supp. 3d 1069

(N.D. Ill. 2017); Dorsey v. T.D. Bank, N.A., No. 6:17-cv01432, 2018 WL 1101360 (D.S.C. Feb. 28, 2018); McGee v.

Bank of Am., N.A., No. 15-60480-CIV-COHN/SELTZER,

2015 WL 4594582 (S.D. Fla. July 30, 2015), aff’d 674 F.

App’x 958 (11th Cir. 2017); Shaw v. BOKF, Nat’l Ass’n,

No. 15-CV-0173-CVE-FHM, 2015 WL 6142903 (N.D.

Okla. Oct. 19, 2015); In re TD Bank, N.A. Debit Card

Overdraft Fee Litig., 150 F. Supp. 3d 593, 641–42 (D.S.C.

2015). This was a “risky” case, and the result negotiated

for the class was “exceptional.” Online DVD-Rental, 779

F.3d at 954–55.

We agree with the dissent that the individual cash

distributions were small, but we take a different view of

the value of the injunctive relief. While it can be difficult

App. 6a

to value nonmonetary relief, we have no trouble finding

that the value here exceeds the $29.1 million assigned to it

by the parties. Even more valuable than the debt forgiveness is Defendant-Appellee’s agreement to refrain

from assessing the fees challenged in this lawsuit—over

the five-year moratorium imposed under the settlement

agreement, Defendant-Appellee will forgo assessing $1.2

billion in fees. We do not struggle to conclude, as the district court did, that counsel “generated benefits” far “beyond the cash settlement fund.” Id. at 955.

Applying the abuse of discretion standard, as we

must, we find that the district court reasonably determined that the relevant factors justified a fee award equivalent to 21.1% of the common fund. It was reasonable “not

to perform a crosscheck of the lodestar in this case, given

the difficulty of measuring the value of the injunctive relief.” Campbell, 951 F.3d at 1126. What is more, the award

fell under the 25% benchmark that we have encouraged

district courts to use as a yardstick. Stanger, 812 F.3d at

738; Online DVD-Rental, 779 F.3d at 955. Even if we were

inclined to question the district court’s motive in approving the settlement and awarding fees, we note that the district court’s prior order denying Defendant-Appellee’s

motion to dismiss is inconsistent with the dissent’s suggestion that the district court streamlined its docket at the

expense of faithful adherence to the law.

In short, neither the settlement nor the fee award

raises an eyebrow. We have settled the issue of whether a

lodestar crosscheck is required, and we would not unsettle

our precedent, even if we had the authority to do so.

AFFIRMED.

App. 7a

Farrell v. Bank of America Corp., N.A., No. 18-56272+

KLEINFELD, Senior Circuit Judge, dissenting:

I respectfully dissent.

The district court abused its discretion regarding attorneys’ fees in two respects: by overvaluing the settlement in applying the percentage method, and by failing to

weigh the percentage method against the lodestar

method. The consequence is an unreasonable attorneys’

fee award. “Because the relationship between class counsel and class members turns adversarial at the fee-setting

stage, district courts assume a fiduciary role that requires

close scrutiny of class counsel’s requests for fees and expenses from the common fund.” 1

Bank of America charged customers in the class $35

for each instance of writing a check against insufficient

funds, and—in the event that Bank of America advanced

the customer funds to honor the check—charged another

$35 if the customer did not pay back the advance within

five days. The second $35 fee, referred to as an “Extended

Overdrawn Balance Charge” or an “EOBC,” is all that the

settlement in this case addressed. The initial overdraft fee

was unchallenged. Plaintiffs’ counsel claimed that the

In re Optical Disk Drive Prods. Antitrust Litig., 959 F.3d 922,

930 (9th Cir. 2020).

App. 8a

EOBC constituted usurious interest under the National

Bank Act. 2

The district court, though acknowledging that every

other court to rule on the question had decided that it was

not, nevertheless ruled that the EOBC did indeed constitute usurious interest under the National Banking Act.

Bank of America appealed, but before any appellate decision came down, the parties settled.

As part of their settlement, plaintiffs’ lawyers and

Bank of America agreed to class certification if the court

approved the settlement. No class had yet been certified.

The class would consist of around seven million people

who, between February 25, 2014, and December 30, 2017,

had been assessed at least one EOBC that had not been

refunded. Bank of America agreed to a “clear sailing” attorneys’ fees provision, that is, that it would not oppose

any application for attorneys’ fees not exceeding 25% of

the settlement value plus costs and expenses. Bank of

America agreed to pay $37.5 million in cash into a settlement fund, to forgive uncollected EOBCs on its books in

the amount of at least $29.1 million, and to quit assessing

EOBCs for five years beginning December 31, 2017, after

which point it could resume the EOBCs as before. Class

members who had actually paid the $35 EOBC would not

get their $35 back. They would get only the $37.5 million—

less attorneys’ fees, costs, named plaintiff additional

awards, and settlement administrator hourly charges—di-

12 U.S.C. §§ 85-86.

App. 9a

vided by the number of class members who had been assessed at least one EOBC which had not been refunded or

charged off, and issued pro rata based on how many

EOBCs each of those class members paid. At oral argument, objectors’ counsel represented that this distribution

worked out to be $1.07 per EOBC for qualifying class

members paid. Each of these class members would thus

get a little over a dollar back for each purportedly usurious

$35 charge that they had paid. For class members who

closed their accounts with an outstanding balance due to

one or more unpaid EOBCs, Bank of America would reduce class members’ indebtedness, but only by $35. This

held true even if the debt exceeded that amount, as when

Bank of America had assessed multiple $35 EOBCs. For

this result, the district court awarded attorneys’ fees of

$14.5 million.

The district court’s rationale for granting this attorneys’ fee award was that it was 21.1% of the cash payments plus the reduction in the amount of uncollected

debt. The district court did not make a lodestar calculation

and did not cross check the $14.5 million against a lodestar

calculation, even though class counsel submitted they had

put only 2,158 hours into the case, about what a new associate at a major firm bills in a year. The $14.5 million fee

amounted to a rate of over $6,700 per hour, as compared

with the $250–$800 rate class counsel submitted as its rate

for attorneys.

App. 10a

We held in Roes v. SFBSC Management, 3 following

earlier decisions, that where a settlement is negotiated before a class has been certified, “settlement approval ‘requires a higher standard of fairness’ and ‘a more probing

inquiry,’” looking for “‘subtle signs’ of collusion” such as a

disproportionate distribution to counsel and a clear sailing

agreement for attorneys’ fees, 4 both of which we have in

the case before us. The district court abused its discretion

by not applying this “more “exacting review.””5

In their settlement, plaintiffs’ counsel and the Bank

agreed that the “debt reduction”—that is, the amount of

uncollected EOBCs that the Bank agreed not to collect—

amounted to $29.1 million. The objectors argued that the

$29.1 million in purported debt forgiveness was greatly

exaggerated or illusory. There was no evidence that the

Bank was suing anyone for or actively attempting to collect these putative debts, and the objectors pointed out

that the bank was highly unlikely to try to collect the $35

“debts.” Indeed, the whole benefit of a class action is that

it is not worth it to most entities to sue for such small

amounts, so it makes no sense to suppose that even though

the Bank’s account holders need a class action to make collection economically practical, the Bank does not. As the

objectors suggest, the Bank’s filing and service fees alone

944 F.3d 1035 (9th Cir. 2019).

Id. at 1048–49 (quoting Allen v. Bedolla, 787 F.3d 1218, 1224 (9th

Cir. 2015); Dennis v. Kellogg Co., 697 F.3d 858, 864 (9th Cir. 2012)).

Id. at 1049 (quoting Lane v. Facebook, Inc., 696 F.3d 811, 819 (9th

Cir. 2012)).

App. 11a

would likely exceed the amounts of the debts in each instance of attempted collection.

The district court suggested that account holders, even

if they were never going to pay the $35, might benefit from

improvement in their credit scores. But this was never

quantified. And because the settlement limits debt forgiveness to only one $35 reduction per class member even

if more than one such fee was charged, the benefit of the

purported credit score improvement is especially dubious

or at least highly speculative. It is worth, if anything, nowhere near $29.1 million.

The district court also suggested that even though the

Bank might never attempt to collect what it had not yet

collected, it might sell the debt. But as the objectors argue,

the sale value of this debt would more than likely be

steeply discounted from its face value because of the impracticality of collecting it. It is hard to believe that the

$29.1 million in “debt reduction” is anything more than a

way to puff the value of the settlement by plaintiffs’ counsel and the Bank, in order to get the attorneys’ fees approved. A debt that is as a practical matter uncollectible,

even if multiplied by a large number of purported debtors,

has negligible or no value. It was an abuse of discretion to

take this pile of worthless debt at face value for purposes

of assessing attorneys’ fees.

The other number the district court used to justify the

attorneys’ fee award was the estimated value of the Bank’s

agreement to an injunction requiring it to stop charging

the EOBCs for a five-year period, to end in 2022. The district court attributed a value of $1.2 billion to this injunctive relief based on the claimed cost to the Bank of ceasing

the practice. In dismissing an objection to giving the debt

App. 12a

relief face value, it stated that even “assuming arguendo

that [the value of the debt relief] was illusory, the Court

finds that the staggering $1.2 billion dollars in injunctive

relief is worth substantially more than $29.1 million to the

denominator.”

In In re Bluetooth Headset Products Liability Litigation, we noted the importance of comparing “the settlement’s attorneys’ fees award and the benefit to the class

or degree of success in the litigation . . . .” 6 Here, no calculation was made of how many, if any, class members might

benefit from this prospective relief, as opposed to nonclass members. Any account holder against whom no

EOBC had been charged during the class period was not

in the defined class, but they would receive some of the

benefit from this injunctive relief. This much of the benefit

of the injunction is to persons not in the class, commensurately reducing any value to class members. For class

members who no longer maintained accounts, the forward-looking injunction would have no value, since the

Bank could not impose late-payment charges on people

who no longer had accounts. The benefit to class members

of the injunctive relief here is speculative, uncalculated,

and likely to be a negligible fraction of the valuation the

district court accepted.

In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 943

(9th Cir. 2011) (emphasis added).

App. 13a

We explained in Staton v. Boeing Co. 7 that “[p]recisely

because the value of injunctive relief is difficult to quantify, its value is also easily manipulable by overreaching

lawyers seeking to increase the value assigned to a common fund.” 8 Therefore, we held, “only in the unusual instance where the value to individual class members of

benefits deriving from injunctive relief can be accurately

ascertained may courts include such relief as part of the

value of a common fund for purposes of applying the percentage method of determining fees.”9 Similarly, we held

in Roes v. SFBSC that “because of the danger that parties

will overestimate the value of injunctive relief in order to

inflate fees, courts must be particularly careful when ascribing value to injunctive relief for purposes of determining attorneys’ fees, and avoid doing so altogether if the

value of the injunctive relief is not easily measurable.”10

Under Staton, the district court erred in valuing the benefit of the injunctive relief to the class at $1.2 billion based

on its cost to Bank of America rather than its value to the

class. Because this valuation of $1.2 billion is in error, the

district court committed legal error to the extent it determined that “the staggering $1.2 billion in injunctive relief”

justified the $14.5 million attorneys’ fee award. Moreover,

Staton v. Boeing Co., 327 F3d 938 (9th Cir 2003).

Id. at 974.

Id.

Roes, 944 F.3d at 1055.

App. 14a

under Staton and Roes, the district court abused its discretion by attributing any value to the class of the injunctive relief, much less the face value claimed.

Considering the value of the settlement to the class—

$37.5 million in cash plus some indeterminate and uncalculated amount in debt reduction—the attorneys’ fees of

$14.5 million constituted perhaps slightly less (but probably not much less) than 39% percent of the putative common fund. Our controlling authority generally sets a 25%

“benchmark” for attorneys’ fees calculated using the percentage method. 11 Thus the award here, even without considering the lodestar, ought to be reversed as an abuse of

discretion once the economic reality of the amount is considered.

The district court, and the panel majority, justify the

fee in part by the “difficulty” of the case. There are different kinds of difficult cases. One is when there is great legal

complexity, or a vast amount of discovery, or coordination

of many parties, or extremely complex damages. Another

kind of difficulty is when it is just a bad case, perhaps a

negligence case where duty and breach of the duty of care

are pretty clear, but there are plainly no damages. Suppose, for example, the driver with the right of way sues the

driver who ran a stop sign and almost hit him but did not,

for negligence. That case would be difficult because it is

meritless and should not be brought at all. It would earn a

costs award against the plaintiff, not an award in favor of

In re Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539, 570 (9th

Cir. 2019) (en banc).

App. 15a

plaintiff’s attorneys. The district court explanation, accepted by the majority, of why this case was difficult, that

all the other courts to consider the question had gone the

other way, sounds more like the no-damages negligence

case than the massive and complex but meritorious case.

This case involved no difficulty at all, in the sense of how

much work was needed from counsel. There was nothing

to it but a legal question, whether the second fee could be

considered usurious, all the established precedent said no,

and plaintiff’s attorney obtained a ruling from the district

court, never tested on appeal, and contrary to all the established precedent. To treat that sort of case as justifying

an extraordinarily high fee because of “difficulty” would

reward attorneys for bringing meritless cases. Difficulty

of that sort cannot justify a discretionary award of extraordinarily high attorney’s fees.

The district court also erred by not considering a lodestar calculation. Its only stated justification for avoiding

this cross check was that controlling law did not require

cross checking against the lodestar; it did not claim that

the lodestar cross check would be uninformative or unhelpful. In Bluetooth, we noted that the first of the twelve

Kerr factors for evaluating the reasonableness of attorneys’ fees is “the time and labor required,”12 and we held

that the district court’s discretion in choosing its method

of awarding attorneys’ fees “must be exercised so as to

Bluetooth, 654 F.3d at 942 n.7 (quoting Kerr v. Screen Extras

Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975)).

App. 16a

achieve a reasonable result.” 13 Interpreting reasonableness, we held that, “for example, where awarding 25% of

a ‘megafund’ would yield windfall profits for class counsel

in light of the hours spent on the case, courts should adjust

the benchmark percentage or employ the lodestar method

instead.” 14 In Bluetooth, in part because the district court

did not precisely calculate what the lodestar amount would

be—despite stating that it was applying the lodestar

method—we vacated and remanded. 15 We faulted the district court’s exercise of discretion not only because of “the

absence of explicit calculation or explanation of the district

court’s result,” but also because “the district court declined to reduce the award because the injunctive relief

and cy pres payment provided ‘at least minimal benefit’”

to the class. 16 In other words, because the injunctive relief

and cy pres payment were not calculated, “[w]ith neither

a lodestar figure nor a sense of what degree of success this

settlement agreement achieved, we ha[d] no basis for affirming the fee award as unreasonable under the lodestar

approach.” 17

While not requiring a cross check, Bluetooth notes that

“we have also encouraged courts to guard against an unreasonable result by cross-checking their calculations

Bluetooth, 654 F.3d at 942.

Id.

Id. at 943, 945.

Id. at 943-944.

Id. at 944.

App. 17a

against a second method.” 18 We have held that “[t]he 25%

benchmark rate, although a starting point for analysis,

may be inappropriate in some cases,” 19 and that it “must

be supported by findings that take into account all of the

circumstances of the case.” 20

Our cases holding that a cross check is not necessarily

required do not open the door to mechanical application of

a percentage award to putative common funds that include

speculative and uncalculated value in the form of debt reduction. We noted in Bluetooth that “even though a district court has discretion to choose how it calculates fees,

we have said many times that it ‘abuses that “discretion

when it uses a mechanical or formulaic approach that results in an unreasonable award.”’” 21 The attorneys’ fee

award in this case does not satisfy Bluetooth.

Though circuit law does not necessarily require a cross

check, it probably should. We said in Bluetooth and in In

re Optical Disk Drive Products Antitrust Litigation that

we have “encouraged” a cross check. 22 But at least in this

case, the district court chose to follow the negative pregnant—that we do not require the cross check—rather

Id.

Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1048 (9th Cir. 2002).

Id.

Bluetooth, 654 F.3d at 944 (quoting In re Mercury Interactive

Corp., 618 F.3d 988, 992 (9th Cir. 2010)).

In re Optical Disk Drive Prods. Antitrust Litig., 959 F.3d at 930;

Bluetooth, 654 F.3d at 944.

App. 18a

than accept the encouragement. This is understandable.

In the rare instance of a class action going to trial, the effect on the district court’s docket—combined with the difficulty of trying criminal cases within the 18 U.S.C.§ 3161

statutory deadline and the press of other civil litigation—

is a devastating year in the courtroom. But skipping this

step breaches the district court’s fiduciary duty to the

class. 23

The amicus brief in this case, by the Attorneys General

of seven states—Arizona, Arkansas, Idaho, Indiana, Louisiana, Missouri, and Texas—urges that instead of merely

encouraging a cross check, we ought generally to require

it. Now-Justice Gorsuch has recommended reversing the

trend toward percentage fees without cross checks, 24 and

scholarly literature has developed urging the necessity of

a lodestar cross check, including an article co-authored by

experienced district judge Vaughn Walker. 25 In this case,

the district court gave no reason—such as undue complexity or difficulty of calculation—for not using a lodestar

cross check.

In re Optical Disk Drive Prods. Antitrust Litig., 959 F.3d at 930.

Neil M. Gorsuch & Paul B. Matey, Settlements in Securities

Fraud Class Actions: Improving Investor Protection 22–23 (Wash.

Legal Found., Critical Legal Issues Working Paper No. 128, 2005).

See Vaughn R. Walker & Ben Horwich, The Ethical Imperative

of a Lodestar Cross-Check: Judicial Misgivings About “Reasonable

Percentage” Fees in Common Fund Cases, 18 GEO. J.L. ETHICS

1453, 1454 (2005); Brian Wolfman & Alan B. Morrison, Representing

the Unrepresented in Class Actions Seeking Monetary Relief, 71

N.Y.U. L. REV. 439, 503 (1996).

App. 19a

The only justification the district court gave for not

performing a lodestar cross check was that it was not required. A lodestar calculated using class counsel’s own

submitted numbers—2,158 hours multiplied by hourly

rates from $250 to $800 for attorneys and from $180 to

$200 for paralegals—amounted to $1,428,047.50. That

amount of money is not an insubstantial incentive to bring

claims that settle before discovery, yet the district court

awarded about ten times that much to class counsel.

In conclusion, the district court abused its discretion,

and we ought to reverse, as we did in Staton, Bluetooth,

and Roes. Even without a lodestar cross check, the attorneys’ fee award violated Ninth Circuit law because it overvalued the amount gained for the class. Once the economic

reality of the situation is considered, the percentage fee

greatly exceeded even our 25% benchmark. Because so little litigation occurred before the settlement, and the percentage fee was so high, it was an abuse of discretion not

to accept the “encourage[ment]” 26 in Bluetooth and In re

Optical Disk Drive Products Antitrust Litigation to perform a lodestar cross check, even though cross checks are

not absolutely required.

Bank of America and class counsel did much better

than the class in this case. Bank of America got much more

than settlement of the claim made against them in this

In re Optical Disk Drive Prods. Antitrust Litig., 959 F.3d at 930;

Bluetooth, 654 F.3d at 944.

App. 20a

case. It bought, for $37.5 million in cash, a release and covenant not to sue for usury relating to overdraft fees by anyone anywhere (who did not opt out within the allowed

time period) who had been charged an EOBC between

February 25, 2014, and December 30, 2017. The settlement, once approved, barred the entire class from suit,

even though the class was not certified when the agreement was made.

The reason why this had considerable value to the

Bank was that other class action plaintiffs’ attorneys were

barred from bringing class actions for the putatively usurious fees. Creating a class as part of the settlement,

where none was certified before, vastly expands the value

of a release. In this case, “each Class Member who has not

opted out . . . releases . . . [the bank] from any and all claims

. . . against [the bank] with respect to the assessment of

EOBCs as well as . . . any claim . . . which was or could

have been brought relating to EOBCs . . . and . . . any claim

that any other overdraft charge imposed by [the bank]

during the Class Period, including but not limited to

EOBCs and initial overdraft fees, constitutes usurious interest.” That broad release, extending to a nationwide

class that had not previously been certified in order to bar

such claims across the country, was indeed worth paying

plaintiff’s lawyers considerable money, but the case was

not worth much to the class, just to the defendant and

plaintiff’s counsel.

App. 21a

Appendix B

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JOANNE FARRELL, Case No.: 3:16-cv-00492-Let al.

WVG

Plaintiffs,

ORDER GRANTING (1)

MOTION [Doc. 104] FOR

FINAL APPROVAL OF

BANK OF AMERICA, CLASS

ACTION

SETTLEMENT AND (2)

N.A.,

Defendant.

MOTION [Doc. 80] FOR

ATTORNEYS’

FEES,

COSTS,

AND

CLASS

REPRESENTATIVE

SERVICE AWARDS

Pending before the Court are Class Counsel’s unopposed motions for final approval of class action settlement

and final approval of fees, costs, and service awards. The

Court has considered the motions on file, all timely objections, and oral argument presented by Class Counsel,

counsel for Defendant Bank of America (“BoA”), and

counsel for Objector Rachael Threatt at the final approval

hearing held on June 18, 2018. For the following reasons,

the Court hereby GRANTS both motions.

PROCEDURAL BACKGROUND

This case is a putative class action focused on BoA’s

practice of levying $35 fees against deposit account holders for failing to rectify an overdrawn deposit account

App. 22a

within five days. To open a deposit account with BoA, a

customer had to first execute a Deposit Agreement [Doc.

8-3]. Under the terms of the Deposit Agreement BoA

charged a $35 fee anytime a deposit account holder wrote

a check against insufficient funds. When a deposit account

holder thus over drafted his or her account, BoA had discretion as to whether to honor the overdrawn check by advancing funds to the payee sufficient to cover the note.

However BoA levied the Initial Charge whether it advanced the funds or not. In the event BoA advanced the

funds, deposit account holders were obligated under the

Deposit Agreement to pay back BoA’s advance plus any

fees incurred. Failure to do so within five days triggered a

$35 Extended Overdrawn Balance Charge (“EOBC”).

Plaintiff wrote some checks against insufficient funds.

BoA honored the checks but charged her $35 fee for not

having sufficient funds. When Plaintiff failed to remedy

her negative account balance within five days, BoA levied

EOBCs. Because the EOBCs, as a percentage of her negative account balance, exceeded the interest rate permitted by the National Banking Act, Plaintiff filed this

putative class action against BoA, alleging violation of 12

U.S.C. §§ 85, 86 (the “NBA”).

A significant amount of pretrial activity followed. BoA

moved to dismiss Plaintiff’s Complaint, arguing that the

EOBCs were not “interest” and therefore cannot trigger

the NBA. (MTD [Doc. 8].) The Court disagreed, and

therefore denied BoA’s motion. (MTD Order [Doc. 20].)

BoA subsequently answered and then amended their answer, and Plaintiff twice moved to dismiss certain of BoA’s

affirmative defenses. (Docs. 25, 40, 41, 45.) In part because

every other court to consider the issue had held that

EOBCs do not constitute interest, this Court found that

App. 23a

there was substantial ground for a difference of opinion on

the issue. (April 11, 2017 Order [Doc. 61].) The Court

therefore granted BoA’s motion for certification of an interlocutory appeal of the denial of BoA’s motion to dismiss. (Id.)

BoA petitioned the Ninth Circuit for a permissive interlocutory appeal on April 21, 2017. (Doc. 62.) Plaintiff

answered. (9th Cir. Case No. 17-80072 [“Appeal”] Doc. 4.)

The Ninth Circuit Granted BoA’s Petition. (Doc. 63.)

While the permissive appeal was pending before the Ninth

Circuit, the parties participated in settlement negotiations, exchanged informal discovery, and attended mediation before the Honorable Layn Philips (Ret.), a highly

respected neutral. Through these efforts, the parties successfully reached a settlement agreement in early October

2017. After conducting confirmatory discovery and reducing terms to writing, the parties formally executed the

Settlement Agreement on October 31, 2017 and requested

preliminary approval. On December 21, 2017, the Court

granted preliminary approval. (Prelim. Appr. [Docs. 72,

75].) Plaintiffs now move unopposed for certification of a

settlement class, final approval of the settlement, final approval of attorneys’ fees and costs award, and final approval of service awards for named plaintiffs.

II.

THE SETTLEMENT

In exchange for the release of class members’ claims,

the settlement agreement (“Agreement” [Doc. 104-2])

provides four forms of consideration:

1. BoA ceases charging EOBCs for five years beginning December 31, 2017. (Agreement § 2.2(a).) BoA’s obligation will terminate during this timeframe only if the

App. 24a

United States Supreme Court expressly holds that

EOBCs or their equivalent do not constitute interest under the NBA. (Id.) BoA testifies that this cessation will depress their revenue (and benefit BoA deposit account

holders) by approximately $20,000,000 per month, or $1.2

billion total over the five year period. (Bhamani Decl.

[Doc. 104-4].)

2. BoA provides cash payment (“Cash Portion”) of

$37.5 million to class members who (1) were charged an

EOBC and (2) did not have their EOBC refunded or

charged off. (Settlement Agreement § 2.2(b)(3).) Attorneys’ fees ($14.5 million), costs ($53,119.92), named plaintiff service awards ($20,000), and settlement

administrator hourly charges (approximately $62,242.00

[Doc. 122-1 ¶33]) will come off the top. (Id. § 1.4, 1.24,

2.2(b)(3).) The residue (approximately $22,864,638) to issue pro rata based upon how many EOBC’s each qualifying class member paid as a percentage of all EOBC’s paid

by the class during the class period. (Id. § 2.2(b)(3).) Class

members who do not opt out will receive their payment

automatically.

3. BoA provides debt reduction (“Debt Reduction”) in

the amount of at least $29.1 million. Debt Reduction will

issue to class members whose BoA accounts closed with

an outstanding balance stemming from one or more

EOBC’s levied during the class period. Each eligible class

member will receive up to $35 in debt reduction. To the

extent BoA reported any of this debt to the credit bureaus,

BoA will update the Bureau’s as to the effect of the debt

reduction. This debt reduction will issue automatically to

all qualifying members who do not opt out. It will apply

only to debt which BoA has a legal right to collect. It will

App. 25a

not apply to unenforceable debt, such as debt discharged

in bankruptcy. (Trial Tr.)

4. BoA is paying all settlement administration costs

other than the administrator’s hourly service charges.

These costs are currently estimated at $2.9 million. (Doc.

122-1 ¶33.)

If there is any residual Cash Portion settlement funds

after the first distribution, the residue will go to the class

by way of a secondary distribution, if economically feasible. Otherwise, the residue will go to the Center for Responsible Learning as cy pres beneficiary. None of the

settlement funds will revert to BoA.

Email and / or physical mail notices went out to

7,078,199 class members. (Doc. 122-1 ¶ 21.) Only one hundred class members opted out. (Id. ¶ 26.) Eleven class

members have filed timely objections. (Docs. 82, 84–86, 88,

90–93, 101.) Class member Rachael Threatt (“Threatt”)

was the only objecting class member to appear at the final

approval hearing (“Hearing”), entering an appearance

through counsel Theodore Frank.

III.

SETTLEMENT CLASS CERTIFICATION

Plaintiffs seek settlement only class certification under

Fed. R. Civ. P. 23(a) and (b)(3) of the same settlement

class the Court preliminarily certified: “All holders of

[BoA] consumer checking accounts who, during the period

between February 25, 2014 and December 30, 2017, were

assessed at least one [EOBC] that was not refunded.”

(Doc. 72 § 2.)

App. 26a

“The class action is ‘an exception to the usual rule that

litigation is conducted by and on behalf of the individual

named parties only.’” Wal-Mart Stores, Inc. v. Dukes, 564

U.S. 338, 348 (2011). “A party seeking class certification

must satisfy the requirements of Federal Rule of Civil

Procedure 23(a) and the requirements of at least one of

the categories under Rule 23(b).” Wang v. Chinese Daily

News, Inc., 709 F.3d 829, 832 (9th Cir. 2013).

A. Rule 23(a)

Rule 23(a) ensures that the named plaintiffs are appropriate representatives of the class whose claims they wish

to litigate. “The Rule's four requirements – numerosity,

commonality, typicality, and adequate representation – effectively limit the class claims to those fairly encompassed

by the named plaintiff's claims.” Dukes, 564 U.S. at 349

(internal quotation marks and citations omitted).

1. Numerosity

The numerosity element is met if “the class is so numerous that joinder of all members is impracticable.” Fed.

R. Civ. P. 23(a)(1). Here, the class numbers around seven

million. The numerosity element is clearly satisfied.

2. Commonality

Under Rule 23(a)(2), Plaintiffs must demonstrate that

there are “questions of law or fact common to the class.”

Fed. R. Civ. P. 23(a)(2). The Supreme Court has held that

plaintiffs must demonstrate “the capacity of a classwide

proceeding to generate common answers” to common

questions of law or fact that are “apt to drive the resolu-

App. 27a

tion of the litigation.” Dukes, 564 U.S. at 350 (internal citations and quotations marks omitted). However, “[a]ll

questions of fact and law need not be common to satisfy

this rule.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019

(9th Cir. 1998). “The common contention ... must be of such

a nature that ... its truth or falsity will resolve an issue that

is central to the validity of each one of the claims in one

stroke.” Id. “The existence of shared legal issues with divergent factual predicates is sufficient, as is a common

core of salient facts coupled with disparate legal remedies

within the class.” Id. A single common question is sufficient to satisfy the commonality element. Dukes, 131 S. Ct.

at 2556. Here, the common, dispositive issue of whether

EOBCs constitute interest for purposes of the NBA satisfies the commonality element.

3. Typicality

The typicality requirement of Rule 23(a)(3) focuses on

the relationship of facts and issues between the class and

its representatives.

The commonality and typicality requirements of

Rule 23(a) tend to merge. Both serve as guideposts

for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiff's claim and the

class claims are so interrelated that the interests of

the class members will be fairly and adequately protected in their absence.”

Dukes, 131 S. Ct. at 2551 n.5 (internal quotation marks and

citation omitted). “[R]epresentative claims are ‘typical’ if

they are reasonably co-extensive with those of absent

App. 28a

class members; they need not be substantially identical.”

Hanlon v. Chrysler Corp., 976 F.2d 497, 508 (9th Cir. 1992)

(internal citations and quotation marks omitted). “The test

of typicality is whether other members have the same or

similar injury, whether the action is based on conduct

which is not unique to the named plaintiffs, and whether

other class members have been injured by the same

course of conduct.” Hanon v. Dataproducts Corp., 976

F.2d 497, 508 (9th Cir. 1992) (internal citations and quotation marks omitted).

Here, the named plaintiffs are typical of the class they

seek to represent. They suffered the same injury from the

same course of conduct as did unnamed members. To wit,

like the unnamed members, BoA charged them with

EOBCs. Named plaintiffs therefore meet the criteria of

Rule 23(a)(3). 1

4. Adequacy

To serve as class representative, one must “fairly and

adequately protect the interests of the class.” Fed. R. Civ.

P. 23(a)(4). This requirement is aimed at protecting the

due process rights of absent members who will be bound

by a class action judgment. Hanlon, 150 F.3d at 120; Richards v. Jefferson Cnty., Ala., 517 U.S. 793, 801 (1996).

“Resolution of two questions determines legal adequacy:

Objector Sanchez seeks to raise typicality arguments for the first

time in her response to the Court’s Order to Show Cause, which did

not request briefing on the issue of typicality. She did not raise typicality concerns in a timely objection. In any event, the Court, for the

reasons stated, is satisfied that the typicality element is met.

App. 29a

(1) do the named plaintiffs and their counsel have any conflicts of interest with other class members and (2) will the

named plaintiffs and their counsel prosecute the action

vigorously on behalf of the class?” Hanlon, 150 F.3d at 120

(citation omitted).

Named plaintiffs and Class Counsel have demonstrated their ability to vigorously prosecute this action on

behalf of the class. 2

Thus, the only question as to adequacy is whether

there exists a conflict of interest between named plaintiffs

and the class as a whole that would render named plaintiffs inadequate representatives. Objector Estafania

Sanchez (“Sanchez”) complains that the interests of the

Debt Portion recipients are “entirely different” and in

conflict with the interests of the Cash Portion recipients.

(Sanchez Objection [Doc. 88] ¶ 3.) In support of this argument, Sanchez cites to Amchem Products Inc. v. Windsor,

52 U.S. 591 (1997). In Amchem, an asbestos exposure case,

the Supreme Court held that there was an insufficient

alignment of the interests of plaintiffs who presently suffered exposure related injury and plaintiffs who had no

present symptoms but could potentially experience them

at a later time. Id. at 626. To wit, the former had an interest in maximizing immediate payment while the latter had

a conflicting interest in maximizing a reserve fund for future claims with built in inflation adjustments. Id.

The Court further elaborates on this point below under the portion of this order approving Class Counsel’s fee award.

App. 30a

Because it seemed feasible that the Cash Portion recipients may have an interest in maximizing the cash value

of the settlement while the Debt Portion recipients may

have a possibly conflicting interest in maximizing the debt

forgiveness, the Court ordered further briefing on this issue. (OSC [Doc. 125].) In their responsive briefing, BoA

and Class Counsel cite to In re Volkswagen “Clean Diesel”

Mktg., Sales Practices, and Products Liability Litig., 895

F.3d 597 (9th Cir. 2018), a decision that issued eleven days

after the OSC.

In Volkswagen, the settlement at issue stemmed from

Volkswagen’s decision to install “defeat devices” in some

of its vehicles. Volkswagen, 895 F.3d at 603. These defeat

devices triggered during smog inspections and reduced

the vehicles’ emissions to a legally acceptable level. Id.

The settlement involved making payments to class members depending in part upon to which of two subgroups a

class member belongs. One subgroup consisted of class

members who had not sold their vehicles. Members of this

subgroup received the option to either have their vehicles

fixed or to sell them back at the pre-defeat device price.

Id. at 604. Members of this subgroup also received a cash

restitution payment of at last $5,100 if they purchased

their vehicle before September 18, 2015, the date the defect became publically known (“Eligible Owners”), and

half that amount in cash restitution if they purchased their

vehicle after that date (“Eligible New Owners”). Id. Another group consisted of those who had sold their vehicles

after the defect became publically known (“Eligible

Sellers”). Members of this group received only a restitution payment, which was equal to one half the restitution

afforded to Eligible Owners and the same as that afforded

to Eligible New Owners.

App. 31a

An objector challenged class certification on the basis

of adequacy, arguing that there was a conflict of interest

between owners and sellers and inadequate representation of the latter. Volkswagen, 895 F.3d at 606–7. As evidence of inadequate representation, the objector

complained that it was unfair that Eligible Sellers received the same amount as Eligible new buyers, given that

the latter made their purchase after receiving construction knowledge of the defect. Id. In finding that the district court did not abuse its discretion in certifying the

settlement class, the Ninth Circuit reasoned that no conflict of interest existed sufficient to render the representation inadequate because (1) the Eligible Sellers had

much weaker claims than the Owners and thus benefited

from the bargaining power of the latter and (2) the settlement fairly compensated sellers for their actual economic

losses. Id. at 608–9.

As with the members of the Eligible Sellers group in

Volkswagen, members of the Debt Portion group here are

fairly compensated for their actual economic losses stemming from unpaid EOBCs. Indeed, Debt Portion recipients will receive complete EOBC debt forgiveness. (OSC

Response [Doc. 128] 8:5–6 n.3; BoA Decl. [Doc. 128–2] ¶3.)

It is true that the Cash Portion recipients, by contrast, will

recover less than one hundred percent of their economic

loss. But this comparably less favorable treatment of Cash

Portion recipients is not grounds for finding an improper

conflict of interest because the named plaintiffs include

only Cash Portion recipients and do not include any Debt

Portion recipients. (OSC Response 7:15–25.) To the contrary, the fact that the least represented group appears to

have received the more favorable treatment would seem

to suggest a lack of self-dealing on the part of the named

App. 32a

representatives. Accordingly, the Court finds that the representation in this case satisfies Fed. R. Civ. P. 23(a)(4).

B. Rule 23(b)(3)

Plaintiff seeks class certification under Rule 23(b)(3).

Where, as here, the requirements of Rule 23(a) are met,

class certification is proper under Rule 23(b)(3) if “the

court finds that the questions of law or fact common to

class members predominate over any questions affecting

only individual members, and that a class action is superior to other available methods for fairly and efficiently

adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3);

Wang, 709 F.3d at 832.

Here, there is no dispute as to the fact that the legal

question of whether EOBCs constitute interest predominates and a class action is the superior method by which

to resolve this common question. Accordingly, the Court

certifies for settlement purposes only the class as defined

in paragraph 2.1 of the Settlement Agreement.

C. Notice

A prerequisite to final approval is a finding of adequate

notice to the class. Fed. R. Civ. P. 23(e). In the preliminary

approval order, the Court approved the form, content, and

method of providing notice proposed by the Parties. The

Settlement Class Notices were thereafter distributed to

members of the Settlement Class pursuant to the terms of

the Preliminary Approval Order. (See Docs. 104–3; 122–

1.) Objector Estafania Sanchez complains that notice was

inadequate because it failed to inform class members as to

App. 33a

how much damage the class as a whole suffered and how

many class members will share in the settlement.

Both contentions lack merit. Through banking records

and notices, each class member should be in a position to

know, or at least learn, how much damage they personally

suffered from EOBCs. Furthermore, the notice to the

class informed members of the amount of the settlement

as well as an estimate of the number of people in the class.

(See Doc. 73–2 pp. 3–4.) Armed with this information, class

members were in a position to roughly calculate the average payout and compare that to their individual damages.

The Court therefore finds that the Class Notices given to

Settlement Class members adequately informed Settlement Class members of all material elements of the proposed Settlement and constituted valid, due, and sufficient

notice to Settlement Class members. The Court further

finds that the Notice Program satisfies due process and

has been fully implemented.

IV.

SETTLEMENT FAIRNESS

In determining whether a class action settlement is

fair, adequate, and reasonable, the Court considers what

are known as the Hanlon factors, which are:

(1) the strength of plaintiffs’ case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action

status throughout the trial; (4) the amount offered

in settlement; (5) the extent of discovery completed,

and the stage of the proceedings; (6) the experience

and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class

members to the proposed settlement.

App. 34a

Gutierrez-Rodriguez v. R.M. Galicia, Inc., No. 16-cv00182 H-BLM (S.D. Cal. 2017) (citing Hanlon v. Chrysler

Corp., 150 F.3d 1011, 1026 (9th Cir. 1998)). When a court

exercises its discretion to approve a settlement, the Ninth

Circuit has instructed:

[T]he court’s intrusion upon what is otherwise a private consensual agreement negotiated between the

parties to a lawsuit must be limited to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by,

or collusion between, the negotiating parties, and

that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.

Officers for Justice v. Civil Serv. Com., 688 F.2d 615, 625

(9th Cir. 1982). “The proposed settlement is not to be

judged against a hypothetical or speculative measure of

what might have been achieved by the negotiators.” Id.

(emphasis in original).

On balance, the Court finds that the Hanlon factors

strongly support settlement approval. As noted above,

every other court to consider the question of whether

EOBCs constitute interest for purposes of the usury laws

has answered it in the negative. Were litigation in this case

to continue, Plaintiffs would face a risk of losing at the appellate level on this legal question. Furthermore, the distance between the present posture of this case and any

recovery other than by settlement is substantial. To succeed, Plaintiffs would need to defeat BoA’s permissive interlocutory appeal of the EOBC/interest issue; engage in

formal discovery; win a contested class certification mo-

App. 35a

tion; survive summary judgment; win at trial; and successfully defend on likely at least one level of post-trial appeal.

Considering Bank of America is a highly sophisticated and

well represented defendant, Plaintiffs would almost certainly encounter substantial difficulty and expense in fully

litigating this case.

The amount offered in settlement also supports approval. Most importantly, the injunctive relief, estimated

at about $1.2 billion, is substantial. Further, the $37.5 million in cash and $29.1 million in debt relief alone amounts

to about nine percent of the maximum amount the Class

could recover through trial. (Joint Decl. [Doc. 104–3] ¶ 30.)

Compared to the risk and expense of continued litigation,

a present recovery of nine percent is meaningful. It is thus

not surprising that only one hundred members of the more

than seven million person class elected to opt out.

Some objections complain that the $29.1 million in debt

relief is illusory because (1) forgiving the debt may cost

BoA very little considering it likely did not expect to recover most if not all of this debt and (2) Debt Portion recipients will benefit little from forgiveness of debt that

they did not intend to pay. While it may be true that it will

cost BoA very little to provide the Debt Portion relief, it

does not follow that the relief is meaningless to Debt Portion recipients. This debt, at present, is legally enforceable. BoA could initiate proceedings to collect.

Alternatively, BoA could sell the debt at a discount to another entity that might be more willing to undertake collection efforts. The Debt Portion relief immunizes

recipients from worrying about or suffering through any

efforts to collect on this debt. The Debt Portion relief will

also benefit recipients in the form of the improved credit

App. 36a

scores some class members will realize once BoA reports

the debt relief to the credit bureaus.

Finally, the quality and tenacity of Class Counsel’s

work on this case (discussed in more detail below) and the

presence of a highly respected neutral in negotiations further satisfies the Court that this settlement was reached

through arms’ length negotiations and not collusion. For

these reasons, the Court approves the Agreement as fair,

reasonable, adequate, and in the best interest of the Settlement Class members.

ATTORNEYS’ FEES

In their Motion for Fees and Costs, Class Counsel

sought $16.65 million in fees, 25% of the 66.6 million dollar

aggregated value of the cash and debt reduction payments. Class Counsel has since reduced their fee prayer

to $14.5 million, which amounts to 21.1 % of the proposed

cash and debt reduction payments. (Doc. 106.) The bulk of

settlement objections focus on this prayer, contending it is

unreasonable.

In common fund cases such as this, the Court has discretion to employ either the percentage of the fund

method or the lodestar method to calculate a proper fee

award. In re Bluetooth Headset Prods. Liab. Lit., 654 F.3d

935, 942 (9th Cir. 2011). In determining fees, “[r]easonableness is the goal, and mechanical or formulaic application of either method, where it yields an unreasonable

result, can be an abuse of discretion.” Fischel v. Equitable

Life Assur. Soc’y of U.S., 307 F.3d 997, 1007 (9th Cir.

2002).

App. 37a

Under the percentage of the fund method, the Court

awards some specific percentage of the fund as fees. The

Ninth Circuit benchmark rate is twenty five percent.

Bluetooth, 654 F.3d at 942. Here, Class Counsel purports

to request only a 21.1% take of the common fund, which

includes the Debt ($29.1 million) and Cash ($37.5 million)

Portion relief (the “denominator”). Objectors contend that

Class Counsel’s prayer for $14.5 million is actually more

than 21.1% because the Debt Portion relief is illusory and

thus should not be included in the denominator. As explained above, the Court does not believe the Debt Portion

relief is illusory. Furthermore, assuming arguendo that it

was illusory, the Court finds that the staggering $1.2 billion dollars in injunctive relief is worth substantially more

than $29.1 million to the denominator. The Court therefore calculates Class Counsel’s prayer at 21.1% of the common fund.

Meeting the benchmark rate does not end the analysis

because “[s]election of the benchmark or any other rate

must be supported by findings that take into account all of

the circumstances of the case.” Vizcaino v. Microsoft

Corp., 290 F.3d 1043, 1048 (9th Cir. 2002). Factors courts

commonly consider in determining a reasonable percentage include the result obtained; the reaction of the class;

the effort, experience, and skill of counsel; complexity of

issues; risks of nonpayment assumed by class counsel; and

comparison with counsel’s lodestar. Ruiz v. Xpo Last

Mile, Inc., 2017 WL 6513962 * 7 (S.D. Cal. 2017) (Sammartino, J.) (Internal citations and quotations omitted.)

As explained above under the settlement fairness analysis, the result obtained here by Class Counsel is remarkable. The value of the Cash Portion and Debt Portion relief

alone strongly supports the requested fee. Consideration

App. 38a

of the $1.2 billion in injunctive relief to class members and

to BoA deposit account holders generally makes the inquiry much easier. Indeed, forcing a bank of BoAs stature

to cease a lucrative banking practice like charging EOBCs

is a meaningful accomplishment. Which would explain why

Class Members seem to have reacted very favorably–only

one hundred members out of the more than seven million

member class opted out. This accomplishment is made all

the more remarkable by the fact that Class Counsel faced

a substantial risk of non-payment in confronting the adverse legal landscape on the issue of whether EOBCs constitute interest.

Class Counsel achieved this result through tenacity

and great skill. In all of their written submissions and in

their presentation at the Final Approval Hearing, Class

Counsel’s arguments were laudably clear and precise, no

small feat given the complexity of the legal questions at

issue here. It is clear that substantial preparation went

into all of Class Counsel’s work on this case. Though Class

Counsel achieved the Settlement before commencement

of formal discovery, a cursory glance at the docket demonstrates that this was a hard fought battle. Class Counsel

had to oppose a motion to dismiss, move twice to strike

affirmative defenses; oppose a petition for interlocutory

appeal; answer an appeal; engage in settlement talks and

informal discovery; prepare for and attend mediation;

move for preliminary approval; effectuate notice; respond

to objections; prepare for and attend the Final Approval

Hearing; and respond to the Court’s Order to Show Cause.

Objectors contend that the Court should nevertheless

apply the lodestar cross check. Here, the Court has discretion to not apply the lodestar cross check. Bluetooth,

654 F.3d at 942 (stating “[w]here a settlement produces a

App. 39a

common fund for the benefit of the entire class, courts

have discretion to employ either the lodestar method or a

percentage-of-recovery method); In re Google Referrer

Header Privacy Litig., 869 F.3d 737, 748 (9th Cir. 2017)

(stating “[a]lthough not required to do so, the district

court took an extra step, cross checking this result by using the lodestar method.”). The Court therefore finds it

proper to exercise this discretion and not apply the lodestar cross check. 3 Because the requested 21.1% is significantly below the benchmark rate of 25%, and because of

how high Class Counsel scores on the factors analyzed

above, the Court finds that the requested fee is reasonable. The Court therefore GRANTS Class Counsel’s motion for fees and awards $14.5 million.

VI.

COSTS AND SERVICE AWARDS

Class Counsel seeks $53,119.92 in costs and $20,000 in

service awards to the named plaintiffs. None of the objectors contest these requests. The Court finds these

amounts reasonable to compensate Class Counsel for the

costs expended in litigating this case and the named plaintiffs for their service to the settlement class and in this action. Class Counsel’s prayer for costs and services awards

is GRANTED.

VII.

CONCLUSION AND ORDER

For the foregoing reasons, the Court OVERRULES

all objections and GRANTS Class Counsel’s unopposed

The Court therefore DENIES AS MOOT Class Counsel’s Motion to Seal [Doc. 110].

App. 40a

motions for final approval of class action settlement and

final approval of fees, costs, and service awards. The Court

further orders as follows:

• The Amended Complaint (Doc. 78) is dismissed with

prejudice.

• The one hundred class members who opted out are

not bound by this settlement agreement. (Doc. 122-1 Attachment 5.)

• Provided it is economically feasible, should any funds

remain after the initial distribution of the class member

awards, the parties shall do a second distribution to Settlement Class members who received their class member

awards, provided it was by direct deposit or by negotiated

check. (Agreement ¶ 3.5.) Should residual funds remain

following a second distribution, or in the event a second

distribution is not economically feasible, the Parties shall

distribute the remaining funds, if any, to cy pres recipient,

Consumers for Responsible Lending (www.responsiblelending.org), a non-profit organization that fights

against abusive financial practices.

• Objector Collins motion [Doc. 119] for leave to file an

amended Reply is DENIED. To properly assess the fairness of the settlement and the requested fees, it is not necessary for the Court to determine whether Objector

Collins’ attorney verbally indicated to Class Counsel that

his client was satisfied by the $2 million reduction in Class

Counsel’s prayer for fees. The Court assumes Collins did

not retract her objection, and overrules it.

• The Court retains jurisdiction over implementation

and enforcement of the Agreement.

App. 41a

IT IS SO ORDERED.

Dated: August 31, 2018

/s/ M. James Lorenz

Hon. M. James Lorenz

United States District Court Judge

App. 42a

Appendix C

RONALD DINKINS; TIA LITTLE;

LARICE ADDAMO; PATRICK

MICHAEL FARRELL; RYAN

THOMAS FARRELL; TIMOTHY

GAELAN FARRELL; BROOKE

ANN FARRELL,

Plaintiffs,

Civil Action No.

3:16-CV-00492L-WVG

JUDGMENT

IN A CIVIL

CASE

BANK OF AMERICA, N.A.

Defendant.

IT IS HEREBY ORDERED AND ADJUDGED:

That judgment is entered in accordance with all provisions

set forth in the Conclusion and Order section of the Order

Granting (1) Motion for Final Approval of Class Action

Settlement and (2) Motion for Attorneys’ Fees, Costs, and

Class Representative Service Awards entered as ECF No.

133.

Date: 9/19/18

CLERK OF COURT

JOHN MORRILL, Clerk of Court

By: s/ L. Fincher

L. Fincher, Deputy

App. 43a

Appendix D

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JOANNE FARRELL; et al.,

Plaintiffs-Appellees,

ESTAFANIA

SANCHEZ

No. 18-56272

OSORIO D.C. No.

Objector-Appellant,

3:16-CV-00492-LWVG

ORDER

BANK

AMERICA

CORPORATION, N.A.,

Defendant-Appellee.

JOANNE FARRELL; RONALD

ANTHONY DINKINS; LARICE

No. 18-56273

ADDAMO, On behalf of themselves and all others similarly situ- D.C. No.

ated,

3:16-CV-00492-LWVG

Plaintiffs-Appellees,

AMY COLLINS

Objector-Appellant,

BANK

AMERICA

CORPORATION, N.A.,

Defendant-Appellee.

App. 44a

JOANNE FARRELL; RONALD

ANTHONY DINKINS; LARICE No. 18-56371

ADDAMO, On behalf of themselves

D.C. No.

and all others similarly situated,

3:16-CV-00492Plaintiffs-Appellees,

L-WVG

RACHEL THREATT,

Objector-Appellant,

BANK OF AMERICA, N.A.,

Defendant-Appellee.

Before: KLEINFELD and CALLAHAN, Circuit Judges,

and CHRISTENSEN, * District Judge.

Judges Callahan and Christensen have voted to deny

the petitions for panel rehearing, which Judge Kleinfeld

would grant. Judge Callahan has also voted to deny the

petitions for rehearing en banc, and Judge Christensen

has so recommended. Judge Kleinfeld has recommended

granting the petitions for hearing en banc. The full court

has been advised of the petitions and no judge has requested a vote on whether to rehear the matter en banc.

Fed. R. App. P. 35. Accordingly, the petitions for panel rehearing and rehearing en banc are DENIED.

* The Honorable Dana L. Christensen, United States District

Judge for the District of Montana, sitting by designation.

App. 45a

Appendix E

Farrell v. Bank of America, N.A.

United States Court of Appeals for the Ninth Circuit

Appeal No. 17-55847

United States District Court for the Southern District of

California

Case No. 3:16-CV-00492-L-WVG

Settlement and Release Agreement

App. 46a

This Settlement and Release Agreement (“Agreement”) dated as of October 30, 2017 is entered into by

Plaintiffs Joanne Farrell, Ronald Dinkins, Larice Addamo, and Tia Little (“Plaintiffs”) on behalf of the Settlement Class defined herein, and Bank of America, N.A.

(“BANA”). Plaintiffs and BANA are each individually a

“Party” and are collectively the “Parties.” The Parties

hereby agree to the following terms in full settlement of

the action titled Farrell v. Bank of America, N.A., No.

3:16-CV-00492-L-WVG (S.D. Cal.) (“Action”), subject to

Final Approval, as defined below, by the United States

District Court for the Southern District of California

(“Court”).

RECITALS

WHEREAS, on February 25, 2016, Plaintiff Farrell

filed the Action and alleges in the Complaint that the

EOBC, as defined below, is a form of usurious “interest”

under Sections 85 and 86 of the National Bank Act

(“NBA”);

WHEREAS, on April 29, 2016, BANA moved to dismiss the Action on the grounds that overdraft fees, including the EOBC, are excluded as a matter of law from the

definition of “interest” under the NBA, which motion was

denied by the Court on December 19, 2016;

WHEREAS, on January 6, 2017, BANA filed a motion

for certification of the Court’s order for interlocutory appeal and to stay the case pending appeal;

WHEREAS, on March 13, 2017, Plaintiff Farrell filed

an unopposed motion to amend her Complaint to add

App. 47a

Ronald Dinkins, Larice Addamo, and Tia Little as three

additional named plaintiffs;

WHEREAS, on April 11, 2017, the Court granted

BANA’s motion for certification of the dismissal order for

interlocutory appeal and stayed the case pending resolution by the United States Court of Appeals for the Ninth

Circuit (“Ninth Circuit”);

WHEREAS, on April 21, 2017, BANA filed a petition

for permission to appeal the Court’s dismissal order with

the Ninth Circuit;

WHEREAS, on June 14, 2017, the Ninth Circuit

granted BANA’s petition for permission to appeal, and the

appeal is pending as of the date of this Agreement;

WHEREAS, BANA has denied, and continues to

deny, each and every claim and allegation of wrongdoing

asserted in the Action, and BANA believes it would ultimately be successful in its defense of all claims asserted in

the Action;

WHEREAS, BANA has nevertheless concluded that

because further litigation involves risks and could be protracted and expensive, settlement of the Action is advisable;

WHEREAS, Plaintiffs, individually and on behalf of

the Settlement Class as defined below, believe that the

claims asserted in the Action have merit and that there is

evidence to support their claims;

App. 48a

WHEREAS, Plaintiffs nevertheless recognize and

acknowledge the expense and length of continued litigation and legal proceedings necessary to prosecute the Action through trial and through any appeals; and

WHEREAS, Plaintiffs have also, in consultation with

their counsel, assessed the legal risks faced in the Action,

and on the basis of that assessment believe that the Settlement set forth in this Agreement and as defined below

provides substantial benefits to Plaintiffs and the Settlement Class, is fair, reasonable, and adequate, and is in the

best interests of Plaintiffs and the Settlement Class.

NOW THEREFORE, the Parties agree that the Action shall be fully and finally compromised, settled, released, and dismissed with prejudice, subject to the terms

and conditions of this Agreement and subject to Final Approval as set forth herein.

II TERMS OF THE SETTLEMENT

Section 1.

Definitions

In addition to the terms defined elsewhere in this

Agreement, the following capitalized terms used in this

Agreement shall have the meanings specified below:

1.1

“Administrative Costs” means all out-ofpocket costs and third-party expenses of the Administrator that are associated with providing notice of the Settlement to the Settlement Class, administering and

distributing the Settlement Amount to Class Members, or

otherwise administering or carrying out the terms of the

App. 49a

Settlement, including but not limited to postage and telecommunications costs. Administrative Costs shall not include the Administrator’s Hourly Charges.

1.2 “Administrator” means Epiq Systems.

1.3 “Administrator’s Hourly Charges” means any fees

paid to the Administrator on an hourly basis for its services in administering the Settlement, excluding Administrative Costs, printing, postage, National Change of

Address Database charges, and any other costs not customarily billed by the Administrator on an hourly basis.

1.4 “Adjustments” means, collectively, the Class Representatives Service Awards, the Fee & Expense Award,

and the amount of the Administrator’s Hourly Charges.

1.5 “BANA Releasees” has the meaning ascribed to it

in Section 2.3(a).

1.6 “Cash Settlement Amount” has the meaning ascribed to in Section 2.2(b)(1).

1.7 “Class Counsel” means Tycko & Zavareei LLP,

Kopelowitz Ostrow Ferguson Weiselberg Gilbert, Kelley

Uustal, PLC, and Creed & Gowdy, P.A.

1.8 “Class Member” means a person who falls within

the definition of the Settlement Class.

1.9 “Class Member Award” means an award to a Class

Member of funds from the Net Cash Settlement Amount.

1.10 “Class Notices” means Exhibits B, C, and D attached hereto.

App. 50a

1.11 “Class Period” means the period between February 25, 2014 and December 30, 2017.

1.12 “Class Representative Service Award” has the

meaning ascribed to it in Section 3.1.

1.13 “Complaint” means the complaint filed in the Action on February 25, 2016.

1.14 “Direct Deposit Payment” has the meaning ascribed to it in Section 2.6(b).

1.15 “Debt Reduction Payments” means the debt reduction payments described in Section 2.2(b)(4).

1.16 “Debt Reduction Amount” has the meaning ascribed to it in Section 2.2(b)(1).

1.17 “Effective Date” shall mean when the last of the

following has occurred: (1) the day following the expiration of the deadline for appealing Final Approval if no

timely appeal is filed, or (2) if an appeal of Final Approval

is taken, the date upon which all appeals (including any

requests for rehearing or other appellate review), as well

as all further appeals therefrom (including all petitions for

certiorari) have been finally resolved without material

change to the Final Approval Order, as determined by

BANA, and the deadline for taking any further appeals

has expired such that no future appeal is possible; or (3)

such date as the Parties otherwise agree in writing.

1.18 “EOBC” or, plural, “EOBCs,” means the Extended Overdrawn Balance Charge that BANA applies to

App. 51a

a consumer checking account when that account is overdrawn by the accountholder and the account remains overdrawn for five (5) or more consecutive business days, as

described in the Personal Schedule of Fees, a specimen

copy of which is attached as Exhibit F hereto.

1.19 “Fee & Expense Award” has the meaning ascribed to it in Section 3.2.

1.20 “Final Approval” means entry of the Final Approval Order.

1.21 “Final Approval Hearing” means the date the

Court holds a hearing on Plaintiffs’ motion seeking Final

Approval.

1.22 “Final Approval Order” means the document attached as Exhibit E hereto.

1.23 “National Change of Address Database” means

the change of address database maintained by the United

States Postal Service

1.24 “Net Cash Settlement Amount” means the Cash

Settlement Amount, less the Adjustments.

1.25 “Objection Deadline” means one-hundred twenty

(120) calendar days after Preliminary Approval (or other

date as ordered by the Court).

1.26 “Opt-Out Deadline” means one-hundred twenty

(120) calendar days after Preliminary Approval (or other

date as ordered by the Court).

App. 52a

1.27 “Preliminary Approval” means entry of the Preliminary Approval Order.

1.28 “Preliminary Approval Order” means the document attached as Exhibit A hereto.

1.29 “Released BANA Claims” has the meaning ascribed to it in Section 2.3(a).

1.30 “Settlement” means the settlement of the Action

by the Parties and the terms thereof contemplated by this

Agreement.

1.31 “Settlement Amount” means Sixty-Six Million

Six-Hundred Thousand Dollars ($66,600,000.00).

1.32 “Settlement Class” has the meaning ascribed to it

in Section 2.1.

1.33 “Settlement Fund Account” means the account

into which BANA will deposit the Cash Settlement

Amount.

1.34 “Settlement Value” means, collectively, the Cash

Settlement Amount, the Debt Reduction Amount, and the

Administrative Costs.

1.35 “Taxes” shall have the meaning ascribed to it in

Section 3.4.

Section 2. The Settlement

2.1 Conditional Certification of the Settlement Class

App. 53a

(a) Solely for purposes of this Settlement, the Parties agree to certification of the following Settlement Class

under Fed. R. Civ. P. 23(b)(2) and (b)(3):

All holders of BANA consumer checking accounts

who, during the Class Period, were assessed at least one

EOBC that was not refunded.

(b) In the event that the Settlement does not receive

Final Approval, or in the event the Effective Date does not

occur, the Parties shall not be bound by this definition of

the Settlement Class, shall not be permitted to use it as

evidence or otherwise in support of any argument or position in any motion, brief, hearing, appeal, or otherwise,

and BANA shall retain its right to object to the maintenance of this Action as a class action and the suitability of

the Plaintiffs to serve as class representatives.

2.2 Settlement Benefits

(a) Change to Business Practices

(1) Beginning on or before December 31, 2017,

BANA agrees not to implement or assess EOBCs, or any

equivalent fee, in connection with BANA consumer checking accounts, for a period of five (5) years, or until December 31, 2022.

(2) Nothing in Section 2.2(a) shall require BANA to

violate any law or regulation. BANA’s obligation to cease

assessing EOBCs as provided in this section shall be lifted

in the event a United States Supreme Court decision expressly holds that EOBCs or equivalent fees are not interest under the NBA; BANA’s obligation will be lifted no

sooner than 6 months after any such decision.

App. 54a

(b) Monetary Relief

(1) Settlement Amount. BANA will provide the $66.6

million Settlement Amount as follows:

Thirty-Seven Million Five-Hundred Thousand Dollars ($37,500,000.00) of the Settlement Amount will be

paid in cash (the “Cash Settlement Amount”),

and

Twenty-Nine Million One Hundred Thousand Dollars ($29,100,000.00) in currently owed debt shall be reduced by BANA (the “Debt Reduction Amount”).

(2) Escrow Account. Within thirty (30) calendar days

of Preliminary Approval, BANA shall deposit the Cash

Settlement Amount into the Settlement Fund Account,

which shall be held with BANA.

(3) Calculation of Class Member Awards. Each Class

Member who paid at least one EOBC that was assessed

during the Class Period and not refunded or charged off

shall be entitled to receive a cash payment from the Net

Cash Settlement Amount. The Net Cash Settlement

Amount will be divided by the number of EOBCs collectively paid by all Class Members who paid at least one

EOBC during the Class Period, to yield a per-instance figure. Each Class Member Award shall equal the per-instance figure multiplied by the number of EOBCs paid by

that Class Member during the Class Period. Joint accountholders shall each be entitled to their pro rata share

of a single Class Member Award.

App. 55a

(4) Debt Reduction Payments. For Class Members

who were assessed an EOBC during the Class Period, and

whose accounts were closed while an EOBC was still due

and owing, the Debt Reduction Amount will be used by

BANA to make Debt Reduction Payments toward the outstanding balance on the account that was closed with the

EOBC still due and owing in an amount up to $35 to reflect

a credit for the outstanding EOBC. If the outstanding balance exceeds $35, the Debt Reduction Payment will be

$35. If the outstanding balance is less than $35, the account balance will be adjusted to zero dollars. Under no

circumstances will BANA be required to make any cash

payments as a result of the Debt Reduction or make Debt

Reduction Payments exceeding the Debt Reduction

Amount. To the extent BANA has reported the accounts

to any credit bureaus, BANA will update the reporting. In

the event the Debt Reduction Payment brings the account

balance to zero, the reporting will be updated to state that

the account was paid in full. In the event the Debt Reduction Payment does not bring the account balance to zero,

the reporting will be updated only to state that a partial

payment has been made on the account. No Debt Reduction Payment shall be considered an admission by any

Class Member that the underlying debt is valid.

(5) For the avoidance of doubt, it is agreed by the

Parties that a Class Member may qualify for relief from

both the Cash Settlement Amount and Debt Reduction

Amount by virtue of having paid one or more EOBCs during the Class Period that was not refunded and having

been assessed at least one other EOBC during the Class

Period that was still due and owing when the account was

closed.

App. 56a

2.3 Releases.

(a) Class Member Release. Upon the Effective Date,

Plaintiffs and each Class Member who has not opted out

of the Settlement Class pursuant to the procedures set

forth in Section 2.5 releases, waives, and forever discharges BANA and each of its present, former, and future

parents, predecessors, successors, assigns, assignees, affiliates, conservators, divisions, departments, subdivisions, owners, partners, principals, trustees, creditors,

shareholders, joint venturers, co-venturers, officers, and

directors (whether acting in such capacity or individually),

attorneys, vendors, insurers, accountants, nominees,

agents (alleged, apparent, or actual), representatives, employees, managers, administrators, and each person or entity acting or purporting to act for them or on their behalf,

including, but not limited to, Bank of America Corporation

and all of its subsidiaries and affiliates (collectively,

“BANA Releasees”) from any and all claims they have or

may have against the BANA Releasees with respect to the

assessment of EOBCs as well as (i) any claim or issue

which was or could have been brought relating to EOBCs

against any of the BANA Releasees in the Action and (ii)

any claim that any other overdraft charge imposed by

BANA during the Class Period, including but not limited

to EOBCs and initial overdraft fees, constitutes usurious

interest, in all cases including any and all claims for damages, injunctive relief, interest, attorney fees, and litigation expenses (the “Released BANA Claims”).

(b) Unknown Claims. With respect to the Released

BANA Claims, Plaintiffs and the Class Members shall be

deemed to have, and by operation of the Settlement shall

have, expressly waived and relinquished, to the fullest extent permitted by law, the provisions, rights and benefits

App. 57a

of Section 1542 of the California Civil Code (to the extent

it is applicable, or any other similar provision under federal, state or local law to the extent any such provision is

applicable), which reads:

A GENERAL RELEASE DOES NOT EXTEND TO

CLAIMS WHICH THE CREDITOR DOES NOT

KNOW OR SUSPECT TO EXIST IN HIS OR HER

FAVOR AT THE TIME OF EXECUTING THE

RELEASE, WHICH IF KNOWN BY HIM OR HER

MUST HAVE MATERIALLY AFFECTED HIS

SETTLEMENT WITH THE DEBTOR

Thus, subject to and in accordance with this Agreement, even if the Plaintiffs and/or Class Members may discover facts in addition to or different from those which

they now know or believe to be true with respect to the

subject matter of the Released BANA Claims, Plaintiffs

and each Class Member, upon entry of Final Approval of

the Settlement, shall be deemed to have and by operation

of the Final Approval Order, shall have, fully, finally, and

forever settled and released all of the Released BANA

Claims. This is true whether such claims are known or unknown, suspected, or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now

exist, or heretofore have existed upon any theory of law or

equity now existing or coming into existence in the future,

including, but not limited to, conduct which is negligent,

intentional, with or without malice, or a breach of any

duty, law, or rule, without regard to the subsequent discovery or existence of such different or additional facts.

Class covenant not to sue or otherwise assert any claims

for usury against BANA challenging BANA’s practices

App. 58a

with respect to overdraft fees, including EOBCs and initial overdraft item fees, including, but not limited to, any

claims arising under the NBA or any other usury statute,

during the period of time the changes to business practices set forth in Section 2.2(a) remain in effect, but in no

case beyond December 31, 2022.

2.4 Notice Procedures

(a) Class Action Administrator. The Administrator

shall perform the duties, tasks, and responsibilities associated with providing notice and administering the Settlement. BANA shall pay all Administrative Costs. The

Administrator’s Hourly Charges will be paid out of the

Cash Settlement Amount.

(b) Provision of Information to Administrator. Within

fifteen (15) calendar days of Preliminary Approval, BANA

will provide the Administrator with the following information, which will be kept strictly confidential between

the Administrator and BANA, for each Class Member: (i)

name; (ii) last known e-mail address; (iii) last known mailing address; (iv) the number of EOBCs that each Class

Member paid during the Class Period, if any; (v) whether

the account that incurred the EOBC remains open; (vi) if

the account that incurred the EOBC no longer remains

open, whether there was an EOBC due and owing at the

time the account was closed; and (vii) if the account that

incurred the EOBC no longer remains open, the balance

remaining due and owing. The Administrator shall use the

data provided by BANA to make the calculations required

by the Settlement, and the Administrator shall share the

calculations with Class Counsel. The Administrator shall

use this information solely for the purpose of administering the Settlement.

App. 59a

Preliminary Approval, or by the time specified by the

Court, the Administrator shall send the Class Notices in

the forms attached hereto as Exhibits B, C, and D, or in

such form as is approved by the Court, to the Class Members. The Administrator shall send the “Email Notice,” attached hereto as Exhibit B, to all Class Members for

whom BANA has provided the Notice Administrator with

an e-mail address. The Administrator shall send the

“Postcard Notice,” attached hereto as Exhibit C, to all

Class Members for whom BANA has not provided an

email address and to all Class Members to whom the Administrator sent Exhibit B via email but for whom the Administrator receives notice of an undeliverable email.

Exhibit C shall be mailed after the Administrator updates

mailing addresses provided by BANA with the National

Change of Address database and other commercially feasible means. The Administrator shall also maintain a website containing the Complaint, the “long-form notice,”

attached hereto as Exhibit D, Plaintiffs’ motion seeking

Preliminary Approval, the Preliminary Approval Order,

Plaintiffs’ motion seeking Final Approval, and the Final

Approval Order until at least ninety (90) calendar days after Final Approval. The Administrator shall send the longform notice by mail to any Class Member who requests a

copy. It will be conclusively presumed that the intended

recipients received the Class Notices if the Administrator

did not receive a bounce-back message and if mailed Class

Notices have not been returned to the Administrator as

undeliverable within fifteen (15) calendar days of mailing.

App. 60a

2.5 Opt-Outs and Objections.

As set forth below, Class Members shall have the right

to opt-out of the Settlement Class and this Settlement or

to object to this Settlement.

(a) Requirements for Opting-Out. If a Class Member

wishes to be excluded from the Settlement Class and this

Settlement, that Class Member is required to submit to

the Administrator at the website address listed in the

Class Notices, a written, signed, and dated statement that

he or she is opting out of the Settlement Class and understands that he or she will not receive a Class Member

Award or a Debt Reduction Payment from the Settlement

of the Action. To be effective, this opt-out statement (i)

must be received by the Administrator by the Opt-Out

Deadline, (ii) include the Class Member’s name, last four

digits of his or her social security number, and BANA account number(s), and (iii) must be personally signed and

dated by the Class Member(s). The Administrator will,

within five (5) business days of receiving any optout statement, provide counsel for the Parties with a copy of the

opt-out statement. The Administrator will, at least five (5)

court days before the Final Approval Hearing, file copies

of all opt-out statements with the Court. The Settlement

Class will not include any individuals who send timely and

valid opt-out statements, and individuals who opt out are

not entitled to receive a Class Member Award or Debt Reduction Payment under this Settlement.

(b) Objections. Any Class Member who has not submitted a timely opt-out form and who wishes to object to the

fairness, reasonableness, or adequacy of the Settlement

must both file a written objection with the Court by the

Objection Deadline and send that written objection to

App. 61a

BANA’s counsel and to Class Counsel at the addresses

listed below.

To be valid and considered by the Court, an objection

must (i) be postmarked on or before the Objection Deadline; (ii) state each objection the Class Member is raising

and the specific legal and factual bases for each objection;

(iii) include proof that the individual is a member of the

Settlement Class; (iv) identify, with specificity, each instance in which the Class Member or his or her counsel

has objected to a class action settlement in the past five (5)

years, including the caption of each case in which the objector has made such objection, and a copy of any orders

or opinions related to or ruling upon the objector’s prior

such objections that were issued by the trial and appellate

courts in each listed case; (v) the identity of all counsel who

represent the objector, including any former or current

counsel who may be entitled to compensation for any reason related to the objection to the Settlement or fee application; (vi) any and all agreements that relate to the

objection or the process of objecting – whether written or

verbal – between objector or objector’s counsel and any

other person or entity; and (vii) be personally signed by

the Class Member. All evidence and legal support a Class

Member wishes to use to support an objection must be

filed with the Court and sent to the Parties by the Objection Deadline.

Plaintiffs and BANA may file responses to any objections that are submitted. Any Class Member who timely

files and serves an objection in accordance with this section may appear at the Final Approval Hearing, either in

person or through an attorney, if the Class Member files

a notice indicating that he/she wishes to appear at the Final Approval Hearing with the Clerk of Court no later

App. 62a

than twenty (20) calendar days before the Final Approval

Hearing. A Class Member who wishes to appear at the Final Approval Hearing must also send a copy of the notice

indicating that he/she wishes to appear to BANA’s counsel

and to Class Counsel twenty (20) calendar days before the

Final Approval Hearing. Failure to adhere to the requirements of this section will bar a Class Member from being

heard at the Final Approval Hearing, either individually

or through an attorney, unless the Court otherwise orders.

The Parties shall have the right to take discovery, including via subpoenas duces tecum and depositions, from

any objector.

who opt-out of the Settlement Class in compliance with the

foregoing, all Class Members will be deemed to be members of the Settlement Class for all purposes under this

Agreement, the Final Approval Order, and the releases

set forth in this Agreement and, unless they have timely

asserted an objection to the Settlement, shall be deemed

to have waived all objections and opposition to its fairness,

reasonableness, and adequacy.

(d) No Encouragement of Objections. Neither the Parties nor any person acting on their behalf shall seek to solicit or otherwise encourage anyone to object to the

Settlement or appeal from any order of the Court that is

consistent with the terms of this Settlement.

2.6 Benefit Distribution

(a) Within ten (10) days of Final Approval, the Administrator shall provide to BANA: (1) for accounts entitled to

App. 63a

receive Class Member Awards, a list of the Class Members who are entitled to receive Class Member Awards,

along with the bank account numbers for each account entitled to receive a Class Member Award and the amount

of each Class Member Award due to each eligible bank account, and (2) for accounts entitled to receive a Debt Reduction Payment, a list of such accounts, along with the

bank account numbers for each account entitled to receive

a Debt Reduction Payment, and the amount of the Debt

Reduction Payment due to each eligible bank account. The

information provided by the Administrator shall be considered conclusive as to which individuals are entitled to

receive a Class Member Award or Debt Reduction Payment and as to the amount of the Class Member Award

and/or Debt Reduction Payment to which each Class

Member is entitled.

(b) Distribution of Class Member Awards. In the event

that the accounts from which Class Members paid the

EOBCs and that make the Class Members eligible for

Class Member Awards remain open, the Class Member

Awards will be credited via direct deposit by BANA to

Class Members’ BANA accounts (“Direct Deposit Payments”). The Direct Deposit Payments will be accompanied by a description on bank statements to be determined

by BANA after consulting with Class Counsel. BANA

shall make Direct Deposit Payments to Class Members

within thirty (30) calendar days of the Effective Date.

Within forty-five (45) calendar days of the Effective Date,

BANA shall provide to the Administrator a list of Class

Members, and corresponding account numbers, to whom

BANA distributed Direct Deposit Payments and the

amount of each Direct Deposit Payment.

App. 64a

Date, the Administrator shall send Class Member Awards

from the Settlement Fund Account via check to all Class

Members entitled to Class Member Awards who did not

receive the entirety of the Class Member Awards to which

they are entitled under this Settlement via Direct Deposit

Payments. If the Class Members who are entitled to Class

Member Awards are joint accountholders, the Class Member Award check shall be made payable to both accountholders.

(d) Mailing Addresses. Prior to mailing Class Member

Award checks, the Administrator shall attempt to update

the last known addresses of the Class Members through

the National Change of Address Database or similar databases. No skip-tracing shall be done as to any checks that

are returned by the postal service with no forwarding address. Class Member Award checks returned with a forwarding address shall be re-mailed to the new address

within seven (7) calendar days. The Administrator shall

not mail Class Member Award checks to addresses from

which Class Notices were returned as undeliverable.

(e) Interest. All interest on the funds in the Settlement

Fund Account shall accrue to the benefit of the Settlement

Class. Any interest shall not be subject to withholding and

shall, if required, be reported appropriately to the Internal Revenue Service by the Administrator. The Administrator is responsible for the payment of all taxes on

interest on the funds in the Settlement Fund Account.

(f) Time for Depositing Class Member Award Checks.

If a Class Member’s Class Member Award check is not

deposited (or cashed) within one hundred and twenty (120)

calendar days after the check is mailed, (a) the check will

App. 65a

be null and void; and (b) the Class Member will be barred

from receiving a further Class Member Award under this

Settlement.

(g) Distribution of Debt Reduction Payments. Within

thirty (30) calendar days of the Effective Date, BANA

shall make the Debt Reduction Payments as described in

Section 2.2(b)(4). Within forty-five (45) calendar days of

the Effective Date, the Administrator shall send notifications of such Debt Reduction Payments to each eligible

Settlement Class Member, which notice shall include the

amount of the Debt Reduction Payment and notification

that if the Debt Reduction Payment brought the balance

to zero the account will be reported as paid in full and that

if the Debt Reduction Payment did not bring the balance

to zero, the account will be reported as having had a partial payment made.

(h) Deceased Class Members. Any Class Member

Award paid to a deceased Class Member shall be made

payable to the estate of the deceased Class Member, provided that the Class Member’s estate informs the Administrator of the Class Member’s death at least thirty (30)

calendar days before the date that Class Member Award

checks are mailed and provides a death certificate confirming that the Class Member is deceased. If the Class

Member’s estate does not inform the Administrator of the

Class Member’s death at least thirty (30) calendar days

before Class Member Award checks are mailed, the deceased Class Member will be barred from receiving a

Class Member Award under this Settlement.

(i) Tax Obligations. The Parties shall have no responsibility or liability for any federal, state, or other taxes

owed by Class Members as a result of, or that arise from,

App. 66a

any Class Member Awards or any other term or condition

of this Agreement.

(j) Tax Reporting. The Administrator shall prepare,

send, file, and furnish all tax information reporting forms

required for payments made from the Settlement Fund

Account as required by the Internal Revenue Service pursuant to the Internal Revenue Code and related Treasury

Regulations. The Parties hereto agree to cooperate with

the Administrator, each other, and their tax attorneys and

accountants to the extent reasonably necessary to carry

out the provisions set forth in this section.

(k) Reports. The Administrator shall provide the Parties with a reconciliation and accounting of the Settlement

Fund Account at each of the following times: (i) no later

than ten (10) calendar days after the Class Member

Award checks are mailed, and (ii) no later than ten (10)

calendar days after the expiration of the 120-day period

for depositing Class Member Award checks.

Section 3. Class Representative Service Award and

Class Counsel’s Fee & Expense Award

3.1 Class Representative Service Awards. Plaintiffs,

through their undersigned counsel, shall each be entitled

to apply to the Court for an award from the Cash Settlement Amount of up to $5,000 for their participation in the

Action and their service to the Settlement Class (“the

Class Representative Service Award”). BANA shall not

oppose or appeal such application that does not exceed

$5,000. The Class Representative Service Awards shall be

paid from the Settlement Fund Account. BANA shall

place the Class Representative Service Awards into the

App. 67a

Settlement Fund Account within ten (10) days of the Effective Date.

3.2 Fee & Expense Award. The Parties consent to the

Court appointing Class Counsel in this Action for purposes of the Settlement. Class Counsel shall be entitled to

apply to the Court for an award from the Cash Settlement

Amount not to exceed 25% of the Settlement Value to reimburse Class Counsel for attorneys’ fees incurred in researching, preparing for, and litigating this Action, and

Class Counsel may also apply for reimbursement for costs

and expenses incurred in the Action (“the Fee & Expense

Award”). BANA agrees not to oppose or appeal any such

application that does not exceed 25% of the Settlement

Value plus reimbursement for costs and expenses incurred in the Action. The Fee & Expense Award shall constitute full satisfaction of any obligation on the part of

BANA to pay any person, attorney, or law firm for costs,

litigation expenses, attorneys’ fees, or any other expense

incurred on behalf of Plaintiffs or the Settlement Class.

The Administrator shall pay the the Fee & Expense

Award to Class Counsel from the Settlement Fund Account within ten (10) days of the date the Fee & Expense

Award is granted. In the event the Effective Date does not

occur or the Fee & Expense Award is reduced following

an appeal, Class Counsel shall repay the BANA the full

amount of the Fee & Expense Award or the amount of the

reduction, for which all Class Counsel shall be jointly and

severally liable.

3.3 Demarcation. It is the intention of the Parties to

demarcate clearly between proceeds from the Settlement

in which Class Members have an interest, which may subject them to tax liability, and the Fee & Expense Award.

Accordingly, the amount paid separately to Class Counsel

App. 68a

for the Fee & Expense Award is independent of and apart

from the amounts paid to Class Members, and Class Members shall at no time have any interest in the Fee & Expense Award. The Parties make no representation

regarding and shall have no responsibility for the tax

treatment of the Fee & Expense Award, or any other payments paid to Class Counsel or the tax treatment of any

amounts paid under this Agreement.

3.4 The funds in the Settlement Fund Account shall be

deemed a “qualified settlement fund” within the meaning

of United States Treasury Reg. § 1.468B-l at all times

since creation of the Settlement Fund Account. All taxes

(including any estimated taxes, and any interest or penalties relating to them) arising with respect to the income

earned by the Settlement Fund Account or otherwise, including any taxes or tax detriments that may be imposed

upon BANA, BANA’s counsel, Plaintiffs and/or Class

Counsel with respect to income earned by the Settlement

Fund Account for any period during which the Settlement

Fund Account does not qualify as a “qualified settlement

fund” for the purpose of federal or state income taxes or

otherwise (collectively “Taxes”), shall be paid out of the

Settlement Fund Account. BANA and BANA’s counsel

and Plaintiffs and Class Counsel shall have no liability or

responsibility for any of the Taxes. The Settlement Fund

Account shall indemnify and hold BANA and BANA’s

counsel and Plaintiffs and Class Counsel harmless for all

Taxes (including, without limitation, Taxes payable by

reason of any such indemnification).

3.5 Residual. In the event that there is any residual in

the Settlement Fund Account after the distributions required by this Agreement are completed, said funds shall

in no circumstance revert to BANA. At the election of

App. 69a

Class Counsel and counsel for BANA, and subject to the

approval of the Court, the funds may be distributed to Settlement Class Members via a secondary distribution if

economically feasible or through a residual cy pres program. Any residual secondary distribution or cy pres distribution shall be paid as soon as reasonably possible

following the completion of distribution of funds to the

Settlement Class Members.

Section 4. Settlement Approval

4.1 Preliminary Approval. On or before October 31,

2017, Plaintiffs will submit for the Court’s consideration a

motion seeking Preliminary Approval of the Settlement

and apply to the Court for entry of the Preliminary Approval Order attached as Exhibit A. In the event the Court

does not enter the Preliminary Approval Order in the

same form as Exhibit A, BANA has the right to terminate

this Agreement and the Settlement and will have no further obligations under the Agreement unless BANA

waives in writing its right to terminate the Agreement due

to any changes or deviations from the form of the Preliminary Approval Order. In Plaintiffs’ motion seeking Preliminary Approval, Plaintiffs shall request that the Court

approve the Class Notices attached at Exhibits B, C and

D. The Court will ultimately determine and approve the

content and form of the Class Notices to be distributed to

Class Members.

The Parties further agree that in Plaintiffs’ motion

seeking Preliminary Approval, Plaintiffs will request that

the Court enter the following schedule governing the Settlement: (i) deadline for sending the Class Notices: sixty

(60) calendar days from Preliminary Approval; (ii) deadline for filing motions for Class Representative Service

App. 70a

Award and Fee & Expense Award: one hundred (150) calendar days from Preliminary Approval; (iii) deadline for

opting out or serving objections: one-hundred twenty

(120) calendar days from Preliminary Approval; and (iv)

Final Approval Hearing: one-hundred eighty (180) calendar days from Preliminary Approval.

4.2 Final Approval. Plaintiffs will submit for the

Court’s consideration, by the deadline set by the Court,

the Final Approval Order attached as Exhibit E. The motion for Final Approval of this Settlement shall include a

request that the Court enter the Final Approval Order

and, if the Court grants Final Approval of the Settlement

and incorporates the Agreement into the final judgment,

that the Court dismiss this Action with prejudice, subject

to the Court’s continuing jurisdiction to enforce the

Agreement. In the event that the Court does not enter the

Final Approval Order in materially the same form as Exhibit E, as determined by BANA, BANA has the right to

terminate this Agreement and the Settlement and will

have no further obligations under the Agreement unless

BANA waives in writing its right to terminate the Agreement due to any material changes or deviations from the

form of the Final Approval Order. While materiality remains subject to BANA’s determination in its reasonable

discretion, material changes shall not include any changes

to the legal reasoning or format used by the Court to justify the substantive relief sought by the Final Approval

Order. In the event that the Effective Date does not come

to pass, the Final Approval Order is vacated or reversed

or the Settlement does not become final and binding, the

Parties agree that the Court shall vacate any dismissal

with prejudice.

App. 71a

4.3 Effect of Disapproval. If the Settlement does not

receive Final Approval or the Effective Date does not

come to pass, BANA shall have the right to terminate this

Agreement and the Settlement and will have no further

obligations under the Agreement unless BANA waives in

writing its right to terminate the Agreement under this

section. In addition, the Parties agree that if this Agreement becomes null and void, BANA shall not be prejudiced in any way from opposing class certification in the

Action, and Plaintiffs and the Class Members shall not use

anything in this Agreement, in any terms sheet, or in the

Preliminary Approval Order or Final Approval Order to

support a motion for class certification or as evidence of

any wrongdoing by BANA. No Party shall be deemed to

have waived any claims, objections, rights or defenses, or

legal arguments or positions, including but not limited to,

claims or objections to class certification, or claims or defenses on the merits. Each Party reserves the right to

prosecute or defend this Action in the event that this

Agreement does not become final and binding.

Section 5. General Provisions

5.1 Cooperation. The Parties agree that they will cooperate in good faith to effectuate and implement the terms

and conditions of this Settlement.

5.2 Judicial Enforcement. If the Court enters the Final

Approval Order in substantially the same form as Exhibit

E to this Agreement, then the Court shall have continuing

authority and jurisdiction to enforce this Agreement. The

Parties shall have the authority to seek enforcement of

this Agreement and any of its aspects, terms, or provisions

under any appropriate mechanism, including contempt

App. 72a

proceedings. The Parties will confer in good faith prior to

seeking judicial enforcement of this Agreement.

5.3 Effect of Prior Agreements. This Agreement constitutes the entire agreement and understanding of the

Parties with respect to the Settlement of this Action, contains the final and complete terms of the Settlement of the

Action and supersedes all prior agreements between the

Parties regarding Settlement of the Action. The Parties

agree that there are no representations, understanding

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