In the
United States Court of Appeals
For the Seventh Circuit
Nos. 11-3030, 11-3163
IN RE:
T RANS U NION C ORPORATION P RIVACY L ITIGATION.
A PPEALS OF:
JEFFREY B EADLE, et al.
M OTION BY:
W ATTS G UERRA C RAFT LLP.
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 00 C 4729, MDL No. 1350—Robert W. Gettleman, Judge.
S UBMITTED O CTOBER 14, 2011—D ECIDED D ECEMBER 27, 2011
Before P OSNER, K ANNE, and W OOD , Circuit Judges.
P OSNER, Circuit Judge. Beginning in 1998, a number of
class actions were filed charging the Trans Union credit-
reporting agency with violating the Fair Credit Reporting
Act, 15 U.S.C. §§ 1681 et seq., by selling information in
2 Nos. 11-3030, 11-3163
its consumer credit files to advertisers without the con-
sumers’ authorization. The actions were consolidated
for pretrial proceedings in the Northern District of
Illinois and eventually settled for $75 million plus
nonpecuniary relief, but not without producing satellite
litigation over attorneys’ fees. See, e.g., In re Trans
Union Corp. Privacy Litigation, 629 F.3d 741 (7th Cir. 2011).
The present appeals are by class counsel from two
orders of the district court. Only one of the appeals is
germane to this opinion. It is from an order that
approves settlements between Trans Union and
members of the class who were permitted to and did file
individual claims against the company in a Texas state
court, and allows Trans Union, after paying the settle-
ments, to be reimbursed out of the $75 million class
settlement fund. Watts Guerra Craft, the law firm that
represented the individual claimants, though it did
nothing to create the fund out of which the settlements
of its clients’ claims will be paid, stands to receive from
$10 to $15 million in attorneys’ fees, and that money
too will come out of the class settlement fund. Trans
Union is to pay the settlement amounts into Watts’s
client trust account for disbursal to the claimants, minus
the attorneys’ fees specified in Watts’s retainer agree-
ments with them.
The appeal argues that class counsel should receive a
portion of Watts’s fees on the ground that class counsel
contributed to the creation of the fund from which the
fees will be paid. Before us at this time, however, are
only a motion by Watts and class counsel’s response. The
Nos. 11-3030, 11-3163 3
motion asks us to add Watts “to the docket in this ap-
peal” because it is “a proper appellee,” though it is not
a party to the proceeding in the district court, did not
seek intervention in that court, and has not asked to
be allowed to intervene in this court. Class counsel do
not oppose Watts’s motion. Trans Union hasn’t filed
anything.
What’s odd about this dispute between the two sets
of lawyers is that the settlements negotiated by Watts
with Trans Union settle suits (the suits by the individual
claimants) that were brought in a Texas state court and
not transferred. But Trans Union and Watts had agreed
to submit those settlements for approval by the district
court in Chicago; Trans Union wanted both the money
for the settlements and Watts’s fees to come out of the
class settlement fund, rather than being a cost to
Trans Union on top of the $75 million cost to it of the
fund itself.
Watts doesn’t want to give up any of its attorneys’ fees,
but at the same time doesn’t want the district court or
this court to question any of its fee arrangements with
its clients. That is why it didn’t become a party in the
district court, which ruled that merely by participating
in settlement negotiations related to the class action
suit Watts “shall be not deemed to have subjected [itself]
to the jurisdiction of this Court or any other federal
court.” Watts just wants to fend off class counsel’s
effort to take a bite out of its fees.
Watts is pursuing a heads I win, tails you lose, strategy.
It wants to be an appellee so that it can defend its right
4 Nos. 11-3030, 11-3163
to obtain, from the fund, the full attorneys’ fees that its
clients (the individual claimants) agreed to pay it and
that class counsel want to take a chunk out of; and an
appellee is a party. But it doesn’t want to be a party, so
that, should class counsel prevail, the district court
could not order Watts to disgorge some of the fees
it’s received from the settlement fund. Should class
counsel prevail in its appeal, moreover, and the case be
remanded to the district court for a determination of
class counsel’s entitlement to part of the fees that Watts
has received, or will receive, from the fund, the court
will have to make sure that this entitlement is not paid
from the portion of the settlement fund earmarked for
Watts’s clients. When “an attorney invokes the court’s
equitable power to approve a settlement agreement to
distribute the proceeds, the court must scrutinize the
reasonableness of the contingent attorneys’ fee contract
which affects the net recovery to the plaintiff.” Toon v.
Wackenhut Corrections Corp., 250 F.3d 950, 954 (5th Cir.
2001) (citation and internal quotations omitted); see also
In re A.H. Robins Co., 86 F.3d 364, 373 (4th Cir. 1996);
Garrick v. Weaver, 888 F.2d 687, 690-91 (10th Cir. 1989). The
district court approved the settlements but will have
to revisit the issue of approval if class counsel prevails
in this appeal.
We thus can’t imagine what Watts’s role in this
appeal could be other than that of a party. That it did
not ask for permission to intervene is of no consequence.
Intervention isn’t the only route for becoming a party.
Nonparties in a trial court can participate as parties to
the appeal without formal intervention if the outcome
Nos. 11-3030, 11-3163 5
of the appeal would be likely to determine (not just
affect) their rights. Devlin v. Scardelletti, 536 U.S. 1, 7-12
(2002); SEC v. Enterprise Trust Co., 559 F.3d 649, 651
(7th Cir. 2009); SEC v. Forex Asset Management LLC, 242
F.3d 325, 329-30 (5th Cir. 2001). If class counsel prevail
in this appeal, money will be transferred from Watts
to class counsel. Watts is asserting a right that the judg-
ment on appeal may take away, and this gives it the
right it seeks—the right to be an appellee, which means
a party, but not a right to have its cake and eat it by
preventing the district court from protecting Watts’s
clients.
Watts’s motion, which we deem a motion to add it as
a party to the appeal, is
G RANTED .
12-27-11