Sixth Circuit Rejects Class Settlement Over Excessive Payments to Class Counsel and Named Plaintiffs

The federal courts of appeals continue to scrutinize class-action settlements closely when the direct benefits to class members are overshadowed by the attorneys' fees that flow to plaintiffs' counsel. The most recent example is Greenberg v. Procter & Gamble Co. (pdf), No. 11-4156 (6th Cir. Aug. 2, 2013). In its decision, the Sixth Circuit provided guidance to practitioners regarding the fee awards and incentive payments to named plaintiffs.

The decision arises from a case involving Pampers "Dry Max" diapers. According to the court, in May 2010, "the Consumer Product Safety Commission began investigating whether Dry Max diapers tend to cause severe diaper rash." On the heels of the CPSC's announcement of its investigation, plaintiffs filed a dozen lawsuits against Procter & Gamble (which manufactures Pampers brand diapers); those cases were consolidated before a federal judge in Ohio.