$12M in fees ‘too much’ for Facebook settlement, judge says

A federal judge in San Francisco denied o a request by plaintiffs' attorneys for nearly $12 million in fees for securing a settlement with Facebook requiring it to implement data security measures the company said were already in place before the deal.

Unless there's a "substantial reduction," U.S. District Judge William Alsup warned on Wednesday he will appoint a special master to determine how much the lawyers should be paid for only obtaining injunctive relief and no damages in a case over a 2018 data breach that affected 29 million users.

"This is too much money right now for me to say you get paid all of this," he said.

The litigation arose out of a security flaw that allowed hackers to swipe the personal information of millions of users, including their names, birth dates, phone numbers, gender, hometowns and workplaces.

A settlement was reached last year requiring Facebook to implement enhanced security measures to increase monitoring of suspicious activity and undergo annual independent third party audits for five years.

The company didn't admit liability. Adkins v. Facebook, 18-cv-05982 (N.D. Cal., filed Sept. 28, 2018).

During the Zoom hearing on final approval of the settlement and attorney fees, Alsup asked why 14 law firms that weren't appointed to the litigation are requesting to be paid.

John Yanchunis of Morgan & Morgan, Ariana Tadler of Milberg Tadler Phillips Grossman and Andrew Friedman of Cohen Milstein Sellers & Toll were chosen to lead the case. The judge told them that he typically avoids appointing too many lead attorneys because it leads to overbilling.

"I didn't realize you would farm out work to people outside of those three law firms purporting to do that on behalf of class," Alsup said. "I'm half of a mind to deny all the time to anybody who's not class counsel after the appointment."

Tadler Law partner A.J. de Bartolomeo responded that the bulk of the work was done by the three lead firms. She also said that plaintiffs were "going toe to toe with one of biggest law firms in the country" in Latham & Watkins.

Facebook attorney Andrew Clubok noted that the defense only dedicated 32 lawyers to the case compared to nearly 100 on the other side. Despite this, he said the lawsuit was largely unsuccessful.

"We settled and agreed to continue the very strong commitments Facebook has put into place," the Latham & Watkins partner said. "Respectfully, some of [the fees] should be discounted."

The case was substantially narrowed over the course of litigation.

Alsup certified a class of 4 million U.S. users but ruled that they could only seek injunctive relief to force Facebook to improve its security practice. He barred monetary damages for the increased risk of identity theft, loss of privacy and the diminished value of personal information.

Sixteen of 17 named plaintiffs also had their cases dismissed or dropped their claims.

Alsup, however, said that he was reversed on a case in which he declined to award fees for unsuccessful work.

Clubok countered with a case going the other way.

In Red v. Kraft Foods, the 9th U.S. Circuit Court of Appeals upheld a federal judge's decision to award a small portion of fees requested by plaintiffs' attorneys because their "success was very limited," "most of their claims failed as a matter of law" and "there was no liability finding."

The judge directed both sides to file a brief on the case he was reversed on, which he will provide to a special master to determine how much plaintiffs' attorneys should be compensated.

"If plaintiffs were to come in with a statement saying we reduce our request to x million dollars, I might truncate all of that and say OK," he said.