Reversal of $78.75 Million Attorney Fee in T-Mobile Data Breach: Understanding the Eighth Circuit’s Approach to Reasonableness and the Lodestar Method

Introduction

This memorandum addresses the reversal by the United States Court of Appeals for the Eighth Circuit of a $78.75 million attorney fee award in the T-Mobile data breach litigation. The primary issue is the reasonableness of the fee, particularly the use of a 9.6 multiplier, under the Eighth Circuit’s jurisdiction. The analysis will focus on the legal standards and precedents governing attorney fee awards in the Eighth Circuit, particularly the lodestar method and relevant factors considered by the courts.

Statement of Facts

On July 29, 2024, the Eighth Circuit reversed a $78.75 million attorney fee award issued by the United States District Court for the Western District of Missouri in the T-Mobile data breach litigation. The fee award was based on a multiplier of 9.6, which the Eighth Circuit found to be unreasonable.

Legal Standards/Rules

In the Eighth Circuit, the lodestar method is typically used to determine a reasonable attorney fee. This method involves multiplying the number of hours reasonably expended by a reasonable hourly rate. Courts have broad discretion in awarding attorney fees and may consider various factors to determine reasonableness.

These factors include: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorney; (10) the “undesirability” of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases. These factors are derived from the lodestar method and the Johnson factors, which are frequently used by district courts in the Eighth Circuit. Adventure Creative Grp., Inc. v. CVSL, Inc., 412 F. Supp. 3d 1065Cokem Int’l, Ltd. v. MSI Entm’t, LLC, 2022 U.S. Dist. LEXIS 244602.

Analysis

The Eighth Circuit employs the lodestar method to determine reasonable attorney fees, which involves multiplying the number of hours reasonably expended by a reasonable hourly rate. This method is designed to provide an objective basis for determining fees and to prevent excessive awards.  Adventure Creative Grp., Inc. v. CVSL, Inc., 412 F. Supp. 3d 1065Cokem Int’l, Ltd. v. MSI Entm’t, LLC, 2022 U.S. Dist. LEXIS 244602. In the T-Mobile data breach litigation, the district court awarded $78.75 million in attorney fees based on a 9.6 multiplier. The Eighth Circuit, however, found this multiplier to be unreasonable. The court considered several factors in making this determination, including the time and labor required, the novelty and difficulty of the questions, and the customary fee for similar cases. Adventure Creative Grp., Inc. v. CVSL, Inc., 412 F. Supp. 3d 1065. The lodestar method allows for adjustments based on various factors, but a multiplier of 9.6 is exceptionally high and suggests that the district court may have overemphasized certain factors, such as the results obtained or the complexity of the case, while underestimating others, such as the customary fee and awards in similar cases. Adventure Creative Grp., Inc. v. CVSL, Inc., 412 F. Supp. 3d 1065Cokem Int’l, Ltd. v. MSI Entm’t, LLC, 2022 U.S. Dist. LEXIS 244602. The Eighth Circuit’s decision underscores the importance of maintaining a balanced approach when applying the lodestar method. While the court has broad discretion in awarding fees, it must ensure that the final award is reasonable and consistent with established legal standards. Cokem Int’l, Ltd. v. MSI Entm’t, LLC, 2022 U.S. Dist. LEXIS 244602.

Conclusion

The Eighth Circuit’s reversal of the $78.75 million attorney fee award in the T-Mobile data breach litigation highlights the court’s commitment to ensuring reasonable fee awards. The use of a 9.6 multiplier was deemed excessive under the lodestar method, which remains the primary standard for determining attorney fees in the Eighth Circuit. Courts must carefully consider all relevant factors to arrive at a fair and reasonable fee award.

By Deanna Rahmani
Edits by Bryan Lindsey, Esq.
The author interacted with the following artificial intelligence tools to create or assist in the creation of content included in this blog: LexisAI

Content Supporting AI-Generated Response:

In re T-Mobile Customer Data Sec. Breach Litig., 2024 U.S. App. LEXIS 18598 | United States Court of Appeals for the Eighth Circuit | Jul 29, 2024 | Cases

McKeage v. Bass Pro Outdoor World, L.L.C., 2015 U.S. Dist. LEXIS 195232 | United States District Court for the Western District of Missouri, Southern Division | Aug 11, 2015 | Cases

Benson v. City of Lincoln, 2024 U.S. Dist. LEXIS 85705 | United States District Court for the District of Nebraska | May 13, 2024 | Cases

Association for Retarded Citizens v. Olson, 561 F. Supp. 470 | United States District Court for the District of North Dakota, Southwestern Division | Nov 13, 1981 | Cases

Hashw v. Dep’t Stores Nat’l Bank, 182 F. Supp. 3d 935 | United States District Court for the District of Minnesota | Apr 26, 2016 | Cases