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ARTICLE · 19 JUNE 2026

Third Circuit Pumps The Brakes On Class Action Fee Multiplier

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The Third Circuit Court of Appeals has vacated a $3.7 million fee award for the second time, establishing that strict limits on lodestar multipliers now apply to contractual fee-shifting arrangements governed by federal law.

United StatesLitigation, Mediation & Arbitration
Neal Walters
Neal Walters
Casey G. Watkins
Casey G. Watkins
Daniel Hynes
Daniel Hynes
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Summary

In a decision with immediate consequences for class action settlement practice, the Third Circuit Court of Appeals late last week vacated, for the second time, a $3.7 million fee award in Gelis v. BMW of North America, LLC. The court held that limits on lodestar multipliers from the landmark Perdue case apply to contractual fee-shifting arrangements governed by federal law just as they apply in statutory fee-shifting cases.

The Upshot

  • District of New Jersey Origins: The court vacated a $3.7 million fee award arising from a District of New Jersey consumer class action alleging defective timing chains in BMW vehicles, the second vacatur of the same award.
  • Perdue Is Now the Default: For class action defendants, the decision makes the strong presumption from Perdue v. Kenny A. against lodestar enhancement the default rule in every federal-law settlement fee dispute in the Third Circuit.

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