In re Lumber Liquidators Chinese-Manufactured Flooring Prods. Mktg., Sales Practices & Prods. Liab. Litig.

27 F.4th 291

IN RE: LUMBER LIQUIDATORS CHINESE-MANUFACTURED FLOORING PRODUCTS MARKETING, SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION (1:15-md-02627-AJT-TRJ)

In re: Lumber Liquidators Chinese-Manufactured Flooring Durability Marketing and Sales Practices Litigation (1:16-md-02743-AJT-TRJ)

Diana Cantu-Guerrero, Party-in-Interest – Appellant,

v.Lumber Liquidators, Inc., a Delaware corporation, Defendant – Appellee,andLaura Washington, Lila Washington, Maria Ronquillo, Romualdo Ronquillo, Joseph Michael Balero, Ryan Brandt, Kristin Brandt, Devin Clouden, Sara Clouden, Kevin Parnella, Shawn Burke, and Tanya Burke, on behalf of themselves and all others similarly situated, Formaldehyde MDL Plaintiffs – Appellees,

and

Erin Florez, Jim Moylen, Kelly Ryan, Karen Hotaling, and Logan Perel, on behalf of themselves and all others similarly situated, Durability MDL Plaintiffs – Appellees.

In re: Lumber Liquidators Chinese-Manufactured Flooring Products Marketing, Sales Practices and Products Liability Litigation (1:15-md-02627-AJT-TRJ)

In re: Lumber Liquidators Chinese-Manufactured Flooring Durability Marketing and Sales Practices Litigation (1:16-md--02743-AJT-TRJ)

Brice M. Johnston, Party-in-Interest – Appellant,

v.Lumber Liquidators, Inc., a Delaware Corporation, Defendant – Appellee,andLaura Washington, Lila Washington, Maria Ronquillo, Romualdo Ronquillo, Joseph Michael Balero, Ryan Brandt, Kristin Brandt, Devin Clouden, Sara Clouden, Kevin Parnella, Julie Parnella, Shawn Burke, and Tanya Burke, on behalf of themselves and all others similarly situated, Formaldehyde MDL Plaintiffs – Appellees,

and

Erin Florez, Jim Moylen, Kelly Ryan, Karen Hotaling, and Logan Perel, on behalf of themselves and all others similarly situated, Durability MDL Plaintiffs – Appellees.

No. 20-2036

No. 20-2037

United States Court of Appeals, Fourth Circuit.

Argued: January 26, 2022

Decided: March 3, 2022

ARGUED: N. Albert Bacharach, Jr., N. ALBERT BACHARACH, JR. P.A., Gainesville, Florida, for Appellant Brice M. Johnston. Robert William Clore, BANDAS LAW FIRM, PC, Corpus Christi, Texas, for Appellant Diana Cantu-Guerrero. Steven J. Toll, COHEN MILSTEIN SELLERS & TOLL, PLLC, Washington, D.C., for Appellees. ON BRIEF: Alexander Robertson, IV, Mark Uyeno, ROBERTSON & ASSOCIATES, LLP, Westlake Village, California; Daniel K. Bryson, Patrick M. Wallace, MILBERG COLEMAN BRYSON PHILLIPS & GROSSMAN, PLLC, Raleigh, North Carolina, for Durability Plaintiffs-Appellees. Douglas J. McNamara, COHEN MILSTEIN SELLERS & TOLL, PLLC, Washington, D.C.; Steve W. Berman, Robert F. Lopez, HAGENS BERMAN SOBOL SHAPIRO LLP, Seattle, Washington; Niall McCarthy, Burlingame, California, Alexander E. Barnett, COTCHETT, PITRE & MCCARTHY, LLP, New York, New York, for Formaldehyde Plaintiffs-Appellees.

Before GREGORY, Chief Judge, and KING and HEYTENS, Circuit Judges.

Affirmed by published opinion. Judge King wrote the opinion, in which Chief Judge Gregory and Judge Heytens joined.

KING, Circuit Judge:

In these consolidated appeals, Diana Cantu-Guerrero and Brice M. Johnston (the "Objectors") challenge — for the second time — the district court's award of attorney's fees in association with a class-action settlement. See In re Lumber Liquidators Chinese-Manufactured Flooring Prods. Mktg., Sales Practices & Prods. Liab. Litig. , No. 1:15-md-02627 (E.D. Va. Sept. 4, 2020), ECF No. 1898 (the "Attorney's Fees Order"). The underlying 2018 settlement resolved two multidistrict litigation ("MDL") proceedings related to Lumber Liquidators, Inc.'s sale of defective laminate flooring products, providing class members with $22 million in cash relief as well as store vouchers with a defined face value of $14 million. Following its approval of the settlement, the district court awarded the lawyers for the MDL class members ("Class Counsel") $10.08 million in attorney's fees, to be paid from the $22 million cash fund.

The Objectors first appealed to this Court in 2020, at which time we affirmed the district court's approval of the settlement. See In re Lumber Liquidators Chinese-Manufactured Flooring Prods. Mktg., Sales Practices & Prods. Liab. Litig. , 952 F.3d 471 (4th Cir. 2020). We vacated the court's order awarding attorney's fees, however, as the court had failed to calculate the attorney's fees in accord with the "coupon" settlement provisions of the Class Action Fairness Act of 2005 ("CAFA"). Id. at 488. On remand, the court applied those provisions and, in keeping with their terms, again awarded Class Counsel $10.08 million in fees. The Objectors now return for a second appeal, this time contesting the court's application of CAFA and its use of the lodestar method in calculating the attorney's fees. As explained herein, we are satisfied that the court correctly applied the relevant CAFA settlement provisions and did not abuse its discretion in approving the $10.08 million fee award as reasonable. Accordingly, we affirm the Attorney's Fees Order.

I.

A.

1.

The claims at the root of these proceedings concerned Lumber Liquidators' sale of certain Chinese-manufactured laminate flooring products between 2009 and 2015. Purchasers of the flooring began filing suit against Lumber Liquidators in various state and federal courts in March 2015, principally alleging that the company had falsely represented that its flooring products complied with the California Air Resource Board's ("CARB") limits on formaldehyde emissions. The plaintiffs maintained that the flooring released unsafe levels of formaldehyde gas, and that short-term exposure to such gas exacerbated a variety of medical conditions and increased the plaintiffs' risks of developing cancer. In June 2015, the Judicial Panel on Multidistrict Litigation consolidated and transferred the pending federal actions to the Eastern District of Virginia, where they proceeded as an MDL under case number 1:15-md-02627 (the "Formaldehyde MDL"). Extensive discovery ensued and, in June 2017, the district court granted in part and denied in part Lumber Liquidators' motion for summary judgment in the Formaldehyde MDL.

In May 2015, following the initiation of the actions that became the Formaldehyde MDL, a similar proposed class action was filed against Lumber Liquidators in the Central District of California, alleging that the company had also falsely asserted that its flooring products complied with certain industry durability standards. The district court in that proceeding ordered that all non-California plaintiffs refile their claims in their home federal districts, and those plaintiffs then filed suit against Lumber Liquidators in 31 separate district courts. In October 2016, those lawsuits were consolidated into a second MDL and transferred to the Eastern District of Virginia, where they proceeded under case number 1:16-md-02743 (the "Durability MDL").

2.

Following extensive negotiations, the parties in both MDLs agreed to settlement terms in October 2017. The parties thereafter submitted their proposed settlement agreement to the district court for preliminary approval in March 2018. The settlement agreement provided that, in exchange for the release of all claims by the MDL plaintiff class members, Lumber Liquidators would create a non-reversionary "common fund" consisting of (1) $22 million in cash and (2) "store-credit vouchers" for use in purchasing Lumber Liquidators products, with the vouchers having a defined face value of $14 million. See J.A. 407.16.¹

The settlement agreement split the MDL plaintiffs into two classes: a "CARB1 Class" consisting of customers who purchased the Lumber Liquidators flooring between 2009 and 2011 and allegedly were exposed to lower formaldehyde emissions; and a "CARB2/Durability Class" consisting of customers who purchased the flooring between 2011 and 2015 and allegedly suffered greater rates of exposure. See Attorney's Fees Order 4. Members of the CARB1 Class were entitled to claim a pro rata share of a $1 million cash fund, to be set aside from the larger $22 million fund. Members of the CARB2/Durability Class, meanwhile, could elect to receive either a share of the $22 million fund or a voucher representing a share of the $14 million in Lumber Liquidators store credit. According to calculations supplied to the district court by Class Counsel, class members electing to receive a cash award would collect approximately 5.5% of their original flooring purchase price, while those members opting to receive a voucher would recover approximately 59% of the average flooring purchase price.

Relative to the payment of Class Counsel's attorney's fees and costs, the settlement agreement authorized an award of fees of no more than 33.33% of the "Settlement Fund," which the settlement agreement defined as "a total of $22 million dollars in cash and $14 million dollars in Store-credit Vouchers." See J.A. 407.14, 407.33. Accordingly, the settlement permitted a maximum of $11,998,800 in attorney's fees, or one-third of $36 million. The settlement agreement further provided for payment of Class Counsel's costs and expenses, notice and administrative expenses, and twelve service awards of $5,000 payable to the representative plaintiffs in each MDL.

On June 15, 2018, the district court preliminarily approved the proposed settlement agreement, conditionally certified the two proposed classes, and approved the parties' notice plan. A court-appointed claims administrator oversaw that plan, which, by way of emails, postcards, and online banner advertisements, reached approximately 73% of the class members with information about the terms of the settlement.

3.

On August 18, 2018, prior to the district court's final approval of the settlement agreement, Class Counsel moved for an award of attorney's fees, costs, and expenses. Class Counsel specifically requested fees in the amount of $11.16 million (representing a permissible 31% of the defined $36 million Settlement Fund), costs and expenses totalling $797,397.45, and the authorized $60,000 in...