Panel: Settlement Funds and Fees Are Symbiotic
Kimberly-Clark defended the deal by asserting that attorney fees were negotiated separately from the class fund. But the panel rejected that rationale, stating that courts must view attorney compensation and class recovery as interconnected parts of the same settlement structure—especially since most parties negotiate them as a total package.
“The rules of fairness do not hinge on whether the funds come from the same pot,” the judges wrote. “Fees and settlement are symbiotic.”
The panel further ruled that the district court must compare attorney fees with both projected and actual recovery, depending on the structure and outcome of the settlement—a factual determination best left for the lower court.
No Final Verdict—Yet
Importantly, the appeals court did not rule on the fairness of the settlement itself, leaving that question in the hands of the district court. The decision sends the case back to Judge Chen for further scrutiny on whether the settlement’s fee structure unjustly benefited the attorneys at the expense of the class.
The panel included Senior Circuit Judges Guido Calabresi, Susan L. Carney, and Judge Maria Araújo Kahn.
