On appeal from the Superior Court of New Jersey, Law Division, Cumberland County, Docket No. L-0437-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: November 28, 2007
Before Judges Cuff, Lisa and Lihotz.
The primary issue in this case is whether a party granted intervenor status in a class action is eligible for an incentive award. Assuming an intervenor is eligible for such an award, the subsidiary issue is whether the intervenor in this case should have received an incentive award. We also address the fee awarded to counsel for the intervenor. We hold that an intervenor may receive an incentive award if the effort of the intervenor demonstrably enhances the benefits received by the class. We reverse and remand for consideration of the intervenor's application for an incentive award, as well as an explanation of the amount awarded to intervenor counsel.
Plaintiff Mary Machulsky purchased a 2001 Dodge Durango from defendant Lilliston Chrysler Plymouth/Dodge Truck Jeep, Inc. (Lilliston). In her complaint alleging violation of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -166, and common law fraud, Machulsky maintained that Lilliston failed to provide customers with an itemized disclosure of documentary charges (registration and title fees) and overcharged her and other customers for documentary fees. Machulsky brought her complaint on behalf of herself and a class consisting of "all individuals who purchased or leased a motor vehicle from [d]efendants, who were charged Registration and Title Fee[s], who were not given an itemized disclosure of the excess charges such as the Registration and Title Fee[s]. The class . . . also include[s] all individuals who purchased or leased a motor vehicle from Defendants and were charged excessive Documentary Fees." On July 9, 2004, Machulsky's motion for class certification was granted.
Soon thereafter, a proposed settlement was reached between the parties. According to the notice mailed to potential class members, each member would receive a $200 coupon valid for three years to be used toward the future purchase or lease of another vehicle from defendant. The coupon would be transferable to any of the class members' immediate families. Gary Webb filed a motion to intervene and opposition to the proposed settlement. His motion to intervene was granted; Machulsky's motion to approve the settlement and for counsel fees was denied.
Subsequently, another class member sought to intervene, and she and Webb joined to seek to replace Machulsky as class representative; and Webb moved to participate in discovery. The motion to intervene by the other class member was denied, as was the motion to substitute the class representative. Webb was allowed to participate in discovery, and he joined Machulsky's motion for summary judgment against Lilliston. Summary judgment was entered in favor of plaintiffs on the inflated title and registration claim, but Lilliston prevailed on its cross-motion for summary judgment on the inflated documentary fee claim.
Thereafter, Machulsky and Lilliston agreed to a revised settlement. The revised settlement required Lilliston to pay each class member the full amount of any overcharge, to provide each class member with a $200 coupon to be applied to the lease or purchase of a new automobile from defendant, to pay counsel fees, to pay a class representative incentive fee and reimbursement of costs, to pay the costs of administration and notice to the class, and to cease and desist from its failure to disclose and itemize charges. Webb objected to the proposed settlement citing the absence of claim forms. The judge approved the settlement conditioned on the preparation of a claim form by Lilliston and submission by Lilliston of the form to class members.
Machulsky applied for a counsel fee award of $85,000 and costs of $2500. She also sought a $2500 lead plaintiff incentive award. In the settlement, Lilliston agreed to pay fees and costs of $42,500 and an incentive award of $2500 and reserved the right to object to an award in excess of those amounts. Webb applied for a $1000 "objector stipend" and a $30,968.25 counsel fee award. The judge awarded Machulsky a $2500 incentive award and $55,000 counsel fee and costs award. The judge denied Webb's incentive or objector stipend but awarded him $7000 in attorneys' fees, and $1463.25 in costs.
In rejecting Webb's petition for a stipend, the judge stated, "Mr. Webb's status was certainly ultimately uncertain and I don't believe that there's a basis to award any funds for Mr. Webb." He found, however, that counsel for intervenor Webb performed services that benefited and advanced the resolution of the case. He also stated that "the Court believes not only that those -- that particularly those initial efforts and certainly the rejection of the initial settlement, and as far as that's concerned, even the analysis of the second settlement, is the result partly at least of the role of the [intervenor law] firm."
On appeal, Webb argues that successful objectors should receive an incentive award. He also contends that the judge dramatically reduced his request for counsel fees without explanation. Lilliston responds that the intervenor's counsel was not entitled to an award of any fees because it did not represent a member of the class and did not participate in securing the settlement or enhancing the approved settlement.
Lilliston takes no position on the issue of whether the court had the authority to award an ...