We previously covered the Eleventh Circuit’s decision in Johnson v. NPAS Solutions, LLC, 975 F.3d 1244 (11th Cir. 2020), in which the Eleventh Circuit relied on two Supreme Court decisions from the 1880s to prohibit courts from awarding incentive or service awards to class representatives in class settlements. Id. at 1255 (citing Trustees v. Greenough, 105 U.S. 527 (1881), and Cent. R.R. & Banking Co. v. Pettus, 113 U.S. 116 (1885). Although the Eleventh Circuit was the first federal appellate court to bar these awards in all circumstances, a recent Second Circuit decision agreed that these awards are “likely impermissible” under Supreme Court precedent, while observing that it would take the entire Second Circuit to overturn prior precedent upholding incentive awards. See Fikes Wholesale, Inc. v. HSBC Bank USA, N.A., 62 F.4th 704, 721 (2nd Cir. 2023). The Department of Justice has likewise implied that it agrees with the Eleventh Circuit’s position, relying on the Johnson decision in an effort to block incentive awards from a class settlement in a District of Columbia court.
Given that the Eleventh Circuit’s decision created a circuit split on the issue, and that the minority view appeared to be gaining steam, the probability of the Supreme Court weighing in seemed to be increasing (particularly given how common incentive awards are in class action settlements). But in April, the Supreme Court denied certiorari in Johnson, keeping the circuit split in place for now. See Johnson v. Dickenson, No. 22-389, 2023 WL 2959369 (U.S. Apr. 17, 2023). As a result, parties negotiating class settlements in the Eleventh Circuit will need to keep in mind that class representative awards are forbidden in settlement agreements that must be reviewed and approved by district courts in that circuit.