September 26, 2011 

By: Kymberly Kochis & Francis X. Nolan IV

This article is an interpretation of current law and is offered for informational purposes only. This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.

Earlier this month, the New York State Senate delivered to Governor Andrew Cuomo an amendment to Article 9 of the New York Civil Practice Law and Rules (CPLR), which governs class action lawsuits. The amendment would allow New York courts to award fees to persons other than counsel for class representatives. The key beneficiaries of this law will be attorneys for objectors in class action lawsuits.

Under the current version of CPLR 909, as highlighted by the 2010 Court of Appeals decision in Flemming v. Barnwell Nursing Home and Health Facilities, Inc., 15 N.Y.3d 375, 938 N.E.2d 937 (N.Y. 2010), objectors to class settlements are not permitted to recover fees for their role in contesting settlement agreements. In Flemming, a member of the class objected to the settlement terms and the Third Department altered the settlement agreement as a result. However, the Third Department rejected the objector's counsel's bid to recover fees for protesting the original terms of the settlement. The Court of Appeals upheld the Third Department's decision, finding that Rule 909 only allowed for an award "of attorneys' fees to the representatives of the class."

Following the Flemming decision, a state appointed advisory panel drafted an amendment to Rule 909 that would permit an award of fees in class actions "to any other person that the court finds has acted to the benefit of the class." The amended CPLR 909 would provide financial incentive to attorneys representing class members who object to the distribution of settlement or verdict funds. This would bring New York jurisprudence in line with the Federal Rules of Civil Procedure (FRCP) as well as several states whose laws are modeled after the FRCP.

Proponents of the bill argue that this law is long overdue and will put a more effective check on the reasonableness and fairness of attorneys' fees for class representatives. Opponents have pointed out the possibility of an increase in litigation brought by individual class members challenging settlements.

The amendment has passed through both houses of the legislature and awaits Governor Cuomo's signature. The Governor has not yet indicated whether he will sign the proposed amendment.