Attorney fees allocation following a class action settlement; The district court’s approval of the settlement’s “quick pay provision”; Standing; Denial of a motion for reconsideration of the fee award order seeking to cancel the co-lead class counsel’s authority to allocate fees; Whether the district court gave a sufficient explanation for its delegation decision; Whether the district court “abdicat[ed] its allocation discretion to class counsel”; Whether the district court verified the fee allocation

The court affirmed the district court’s denial of appellant-law firm’s (Morgan & Morgan) motion for reconsideration seeking to undo the co-lead class counsel’s authority to allocate fees among the various plaintiffs’ attorneys. But it reversed and remanded for review of Morgan & Morgan’s specific allocation of the total fee award. The appeal involved the allocation of attorney fees after the settlement of a class action arising from a train derailment. All counsel, including Morgan, signed the settlement agreement and there were no objections by the July deadline. Co-lead counsel and Morgan moved for final approval of the settlement, requesting 27% of the recovery as the attorney fee award. The district court approved the settlement and the fee application. Four weeks later, Morgan moved for reconsideration, challenging the settlement’s quick pay provision and co-lead counsel’s role in the allocations, among other things. And during a telephone hearing, it raised an issue about its fee allocation. The district court denied Morgan’s motion. On appeal, the court first held that Morgan lacked standing to challenge whether the district court erred by approving the quick pay provision where it failed to establish an “actual injury.” It was unable to show that receiving its fees ahead of time instead of a year later harmed it in any way. It also rejected Morgan’s claim that the district court erred by denying its motion in regard to the co-lead class counsel’s allocation authority. A motion for reconsideration, “given its post-decision posture, is typically not a vehicle to present new arguments that could have been raised prior to the court’s dispositive decision.” While the district court could have appointed an external auditor or special master, it “allow[ed] counsel to take the first crack at a fee allocation subject to court review later on[.]” The court found no abuse of discretion in that. It also found no merit to Morgan’s argument that the district court failed to sufficiently explain its delegation decision where it was belied by the record. And it rejected Morgan’s assertion that the district court “‘abdicat[ed] its allocation discretion to class counsel.’” Lastly, Morgan claimed the district “court failed to ‘verify’ co-lead class counsel’s decision-making by insufficiently scrutinizing the allocation to Morgan & Morgan.” The court held that Morgan “preserved its fees distribution-based challenge in district court” and that despite suggesting “that it would consider all of the arguments presented during the telephonic hearing, the district court failed to do so.” While it was not clear if Morgan’s assertions were meritorious, the district court abused its discretion by failing to address them. Thus, remand was required for further consideration of this issue.