Cybersecurity Policy Report, E.D. Wis.: Final approval for Advocate Aurora Health Pixel Litigation settlement granted after attorneys’ fees reduced, (Jul 16, 2024)

By Jeffrey H. Brochin, J.D.

$12,225,000 common fund class settlement approved after court addresses Rule 23 notice and objection processes, and $50 individual claim cap objections raised by an objector and overrules them, while partially granting objection as to attorney’s fees.

A federal district court in Wisconsin has granted final approval to the Settlement Agreement reached by the parties in the class action litigation that arose over the use of third-party tracking pixels by Advocate Aurora Health, Inc. (Advocate) that disclosed patients’ protected health information (PHI) and personally identifiable information (PII). Although the court preliminarily approved a mediated settlement in August, 2023, an objector raised objections to certain provisions necessitating the court’s delving into those issues prior to entering final approval. The objections were overruled except as to the attorneys’ fee provision which was ultimately reduced from that originally agreed to among the parties (In Re Advocate Aurora Health Pixel Litigation, No. 22-CV-1253-JPS (E.D. Wis. July 10, 2024)).

Conditional approval. The parties arrived at a mediated settlement, and in August 2023, the court preliminarily approved their class-action settlement agreement, certifying a class of over 2.5 million individuals and preliminarily approving a $12,225,000 common fund class. In November 2023, the motion for attorneys’ fees, expenses, and class representative service awards was submitted in which the class members sought: $4,278,750 in attorneys’ fees (35 percent of the gross common fund); $23,356.02 in litigation expenses; and $3,500.00 service awards for each of the ten class representatives. Although the request for litigation expenses and service awards remained unchanged, the attorneys’ fees request was reduced to $3,250,000, represented as being 34.5 percent of the net amount left in settlement fund after deduction of fees for the administrator (Kroll), expenses, and service awards.

Presently before the court was the motion for final approval of the class-action settlement, as well as the motion for attorneys’ fees, expenses, and class representative service awards. Although Advocate did not oppose either motion, a class member (Wynnychenko) objected and took issue primarily with the amount of attorneys’ fees class counsel sought.

Proper calculation of fees. The court first clarified the amount of the fee request and how it could most accurately be described. Counsel originally sought $4,278,750 in attorneys’ fees, or 35 percent of the gross (that is, $12.225 million) common settlement fund. They subsequently revised the request to $3,250,000, amounting to 34.5 percent of the net settlement fund after Kroll’s fees, expenses, and service awards were deducted ($9,416,643.98). The class members repeatedly presented their revised request as “26 percent of the settlement fund,” and emphasized that such a percentage was “below the range typically approved by courts within the Seventh Circuit and therefore reasonable.

The court noted that although class counsel’s math wasn’t wrong, the correct way to describe their fee request was as 34.5 percent of the net settlement fund. As objector Wynnychenko pointed out, analyzing the fee request as a percentage of the entire or gross common settlement fund was improper. The proper formula to calculate the fee request for purposes of the reasonableness analysis was as a percentage of the gross or total common settlement fund less administration and notice expenses and litigation costs. Therefore, the ratio that was relevant to assessing the reasonableness of the attorneys’ fee was that of: (1) the fee to (2) the fee plus what the class members received. Administration and notice costs, although paid through the settlement fund, are not deemed benefits to the class and therefore not part of ‘what the class members received.’ Furthermore, costs incurred as a part of the settlement do not shed light on the fairness of the split between class counsel and class members. Accordingly, the court found the class members’ 26 percent figure to be irrelevant, and therefore employed the 34.5 percent figure to describe the amount of the percentage-fee being requested.

Factors cited by class counsel. Class counsel contended that consideration of the results that they obtained for the class, the complexity, length, and expense of the litigation, the stakes of the case, and class counsel’s assumption of the risk of nonpayment, along with their skill and experience, and the time and labor required for the case all militated in favor of a percentage-fee award of 34.5 percent of the net settlement fund, which was in line with those percentage awards typically granted in class action cases. They emphasized that the $12.225 million common fund settlement was a “strong recovery” that compared favorably to other recent pixel cases and that their fee request was comparable to those in similar data privacy cases.

Wynnychenko did not disagree with the general proposition that a contingent fee--calculated as a percentage of the common fund--can serve as the market rate in class actions, and he did not disagree that a percentage fee structure would be appropriate here; however, he strongly disagreed that a fee award as large as that requested was appropriate in light of the early resolution of the case.

Breaking down the expense factors. Class counsel provided a line-item breakdown of the expenses they incurred, which included legal database fees, copies, filing fees, postage, travel, and mediation costs. Wynnychenko had no objection to the award of costs, and, the court found that those costs were reasonable and were necessary to the result achieved in the litigation. As to the $3,500.00 in service awards for each of the ten class members who served as class representatives, Wynnychenko also did not object to those service awards, and, the court had no objection to granting the request in light of its prior endorsement of the parties’ agreement to pay the service awards at that rate. Regarding the $23,356.02 in litigation expenses, class counsel noted that the settlement agreement contemplated that they could seek reimbursement of up to $30,000.00 in such expenses. Again, the court found that they had earlier given preliminary approval to the settlement agreement and noted that expense term, and therefore saw no reason to depart from their earlier finding.

The court found that class counsel provided notice of the fee motion to class members by posting the motion—which disclosed the original total amounts of attorneys’ fees (subsequently reduced), expenses, and service awards sought—on the settlement website and that they therefore complied with what the language of Rule 23(h) required. Wynnychenko referenced no authority conclusively supporting his assertion that Rule 23(h) or any other authority required that the brief in support of the motion and/or billing records be made available to class members at the time the fee motion was filed.

Based on the foregoing, the court awarded attorneys’ fees to class counsel in the amount of $2,824,993.19 (or 30 percent of the net settlement fund), together with litigation costs in the amount of $23,356.02 and service awards of $3,500.00 to each of the ten named class representatives in the aggregate amount of $35,000.00.

The case is No. 22-CV-1253-JPS.

Judge: Stadtmueller, J.

Attorneys: David S. Almeida (Almeida Law Group LLC) for Shyanne John. Daniel E Conley (Quarles & Brady LLP) for Advocate Aurora Health Inc.

Companies: Advocate Aurora Health Inc.

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