Not To Decide Is To Decide: The 11th Circuit And Incentive Payments

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It’s been almost two years since a divided panel of the Eleventh Circuit held that incentive payments (a/k/a service awards) in class action settlements are unlawful, a startling and controversial result given the ubiquity of such provisions and the majority’s reliance on 19th century Supreme Court precedents that had nothing to do with class actions. Since then, no other circuits have followed the Eleventh Circuit’s approach, and some have continued to uphold the previously uncontroversial terms.

In this blog, I reported on the surprising decision, and on one of the subsequent federal appellate decisions that went the other way, here and here. Personally, I had expected the court to accept en banc review and reverse the panel’s outlier of a decision. Yet the court surprised me a second time by denying en banc review, thereby allowing the decision to stand. While there is not much to see in the denial order, the strong dissenting opinion authored by Judge Jill Pryor and joined by two other judges is worth reading.

The significance of the decision remains unchanged. I continue to expect that, if the issue is raised in other circuits, they will agree with the dissent and uphold district courts’ authority to approve class action settlements providing for reasonable incentive payments to settling class representatives. And, as I suggested before, at some point the Supreme Court may well step in and resolve the circuit split. If so, the conservative super-majority might well side with the Eleventh Circuit panel, driving yet another stake in the heart of class action litigation. Unless and until they do, however, the decision’s impact may well be limited to lawsuits brought or removed to federal district courts within the states of Alabama, Florida, and Georgia, to plaintiffs’ lawyers and their clients who may well decide to take their business elsewhere, and to class action defense attorneys in those states who may wish to rethink their career choices.