Battle Over Attorney Fees in Home Depot Data Breach Case Returns to 11th Circuit

Customers wearing masks to protect against Covid-19 wait on line at Home Depot in East Hanover, N.J., in April. (Courthouse News photo/Nick Rummell)

ATLANTA (CN) — Home Depot asked an 11th Circuit panel Friday to overturn an order requiring it to pay $15.3 million in fees and expenses to lawyers who litigated a class action case against the retailer for a 2014 credit card data breach affecting 56 million customers. 

The original $15.3 million award was handed down by an Atlanta federal judge in 2017 but the 11th Circuit scrapped it last year, finding that the award improperly included a multiplier that enhanced the fees as compensation for the litigation risk assumed by the attorneys.  

Counsel on both sides appeared anxious to put the matter to rest Friday. 

Attorney Cari Dawson of Alston & Bird told a three-judge panel of the appeals court that her client, Home Depot, is looking for one thing in this appeal: “Finality.” 

“[Home Depot] wants a final end to these serial appeals and the termination of further litigation regarding attorneys’ fees. Finality is what this appeal is about and what Home Depot is entitled to,” she said. 

The class action against Home Depot was settled in 2017. The company agreed to pay $27.25 million to the financial institutions impacted by the breach. At the time, it was the largest recovery in a data breach case for a class of financial institutions.  

After attorneys for the class requested $18 million in fees, Home Depot objected and countered that reasonable legal fees should be set at about $5.6 million. 

U.S. District Judge Thomas Thrash stepped in after the parties failed to agree on a dollar amount. He accepted the $11.7 million lodestar proposed by class counsel and applied a 1.3 multiplier to arrive at the final $15.3 million total. 

After the 11th Circuit’s reversal, Thrash entered a new order in January awarding the class attorneys a percentage of the total class award which again amounted to $15.3 million in fees and expenses.  

The question before Friday’s panel came down to how the fees, costs and expenses should be calculated. Atlanta-based Home Depot argued that the fee award should be calculated without the multiplier, while the class counsel said the original award is reasonable. 

Dawson’s argument Friday relied heavily on one paragraph of the 2017 settlement agreement, which says that if the award of attorneys’ fees, costs and expenses is reduced on appeal, Home Depot will only be obligated to pay the reduced amount of the award. 

She said the district court should have awarded the $11.7 million lodestar plus interest, reminding the panel that “Georgia law makes it clear that settlement agreements are to be strictly enforced.” 

“The language of the settlement agreement is clear, unambiguous and controlling. The district court’s interpretation of the settlement agreement was wrong,” Dawson said. 

Dawson asked the appeals court to exercise its discretion and “tell the district court the award that should have been given on remand was $11,773,000.” 

A failure to do so would “upend Georgia law on enforceability of settlement agreements” and “embolden district courts to circumvent the mandate rule,” she said. 

Arguing on behalf of the class, attorney Ken Canfield of Doffermyre Shields Canfield & Knowles told the panel that the “mandate of the court controls the case, not the settlement agreement.” 

Canfield said that although the settlement agreement “focuses on finality,” the district court ruled that “the language that Home Depot relies upon only applies if there’s a final decision from this court.” 

“There wasn’t a final decision,” Canfield said. “Even if this court didn’t require the $11.7 million award on remand and it wasn’t final, [Dawson] says the settlement agreement relieved Home Depot of any further obligation. The problem is, if it’s not final, Home Depot’s obligation to pay the award never arises. So if Ms. Dawson is correct, then Home Depot has no obligation to pay anything at this point because there hasn’t been a final award.” 

Dawson dismissed Canfield’s arguments in rebuttal.

“The language about finality that Mr. Canfield raises is simply not in the agreement itself,” she told the panel. “The triggering event in terms of Home Depot’s obligation post-appeal is if the award is reduced, which it was. That triggers the [settlement] language that Home Depot is only obligated to pay that reduced amount.” 

Dawson said the fee award has been “examined exhaustively,” adding that there is a “strong presumption of reasonableness of the lodestar.” 

Canfield argued that the $11.7 million fee is not reasonable in light of the length of litigation in the case. 

“We’re entitled to be paid for the time that we spent after July 2017,” he said. 

Friday’s panel was comprised of U.S. Circuit Judge Britt Grant, a Donald Trump appointee; U.S. Circuit Judge Charles Wilson, a Bill Clinton appointee; and Senior U.S. Circuit Judge Gerald Tjoflat, a Gerald Ford appointee. The panel did not indicate when it would reach a decision in the case. 

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