We previously covered the Eleventh Circuit’s decision to deny rehearing in Johnson v. NPAS Solutions, LLC, 2022 WL 3083717 (11th Cir. Aug. 3, 2022), which had held that district courts may not approve incentive awards for class representatives in class action settlements.  Since that time, we have also covered decisions from other courts (including the Seventh Circuit) which declined to follow the Eleventh Circuit, leaving that court standing alone in barring incentive awards. The Federal Circuit has now also declined to follow the Eleventh Circuit’s minority view. 

In Nat’l Veterans Legal Servs. Program v. United States, nonprofit legal organizations brought a class action against the United States regarding overcharging of fees for the judiciary’s PACER system. The case settled, and in approving the class action settlement, the district court also approved $10,000 incentive awards to each of the three organizations that served as class representatives.  An objection followed, including to the district court’s approval of the incentive awards.

The Federal Circuit rejected the objection and affirmed in full.  2026 WL 785351 (Fed. Cir. Mar. 20, 2026).  As relevant here, the Federal Circuit “join[ed] the clear majority of our sister circuits in holding that district courts are permitted to approve incentive awards.”  In reaching its decision, the court relied on the history of Rule 23 and incentive awards, and rejected any comparison of incentive awards to “salaries” or “bounties,” finding instead that incentive awards permissibly recognize the “meaningful burden, including facing reputational risks and expending time and effort,” that class representatives take on. 

It has been more than five years since the Eleventh Circuit’s initial decision in Johnson, and since that time no other circuits have joined it in finding incentive awards per se unlawful.  The question remains unsettled in other circuits, however, and  settling parties should be mindful that settlements with incentive awards in such jurisdictions may be more likely to draw objections on this basis.