The Seventh Circuit Breaks with Eleventh, Allows Service Awards for Named Plaintiffs
Lindsay Nako, Impact Fund Executive Director
The Eleventh Circuit and Service Awards
In 2020, a panel of the Eleventh Circuit Court of Appeals stunned the class action bar when it ruled in Johnson v. NPAS Solutions., LLC, 975 F.3d 1244 (11th Cir. 2020) that service awards for class representatives are categorically unlawful. Service awards are financial payments to class representatives that have long been used to acknowledge their service to the class. The panel held that Johnson’s request for a service award was prohibited by two Supreme Court decisions from the 1880s and created a conflict of interest between Johnson and other class members. The Impact Fund and other civil rights organizations filed an amicus brief calling on the full Eleventh Circuit to review the decision en banc.
Our amicus brief argued that named plaintiffs should be granted service awards for three reasons:
Service awards compensate named plaintiffs for their unique contributions to class action litigation and for the greater public benefit of their work.
Named plaintiffs play a critical role in the litigation process.
Class representatives may experience reputational risk and other harms.
Although the Eleventh Circuit declined to review the decision en banc, other courts have since considered the question of whether to allow service awards for named plaintiffs and universally refused to follow the Eleventh Circuit. The Seventh Circuit is the latest to contend with this question, and in doing so, put forth an exhaustive legal examination of the issue.
Did the Seventh Circuit Follow the Eleventh?
On April 29, 2024, the Seventh Circuit issued a decision that approved of service awards to named plaintiffs.
…No. On April 29, 2024, the Seventh Circuit issued a decision that approved of service awards to named plaintiffs. The decision, Scott v. Dart, No. 23-1312, 2024 WL 1889533 (7th Cir. Apr. 29, 2024), reversed a denial of class certification by Judge Pacold in the Northern District of Illinois of a Section 1983 proposed class challenging inadequate dental care for pretrial detainees in Cook County Jail. The panel opinion was authored by Judge Wood with a dissent from Judge Kirsch.
Quintin Scott’s Claim
The named plaintiff, Quintin Scott, settled his individual claim shortly after the district court declined to certify the class. The settlement reserved his right to appeal the adverse class ruling and seek an incentive award for his role as named plaintiff, and Scott appealed. The defendant county posited that Scott lacked standing to pursue the class aspect of the case for two reasons. First, that he no longer had a live interest in the case, and second, that incentive awards have been banned by the two Supreme Court cases cited by the Eleventh Circuit: Internal Improvement Fund Trustees v. Greenough, 105 U.S. 527 (1881), and Central Railroad & Banking Co. v. Pettus, 113 U.S. 116 (1885).
The Seventh Circuit disagreed on both counts.
A Stake in the Case
The Seventh Circuit panel “concluded that the prospect of an incentive award is enough to support the named plaintiff’s concrete interest in the litigation.” The panel went into an in-depth review of the caselaw supporting incentive awards, which examined the risks of being a named plaintiff and the services they provide. Ultimately, the panel held that “even modest services justify an incentive reward,” and that the potential of receiving this award showed that Scott had an “ongoing stake” in the litigation.
Disagreements with the Eleventh Circuit
In challenging the standing of class representatives, the County argued that the Seventh Circuit should hold that there is no basis for awarding service payments to class representatives, therefore Mr. Scott had no claim. The panel conducted a thorough analysis of the two nineteenth-century cases cited in Johnson (Greenough and Pettus) along with modern case law and rejected the County’s position. The panel disagreed with the Eleventh Circuit, noting that concerns about incentive awards acting as a "bounty" for litigation failed to consider the alignment of these awards with the core purpose of Rule 23 - to encourage claimants with small claims to defend their rights and ensure that illegal conduct is addressed.
The Seventh Circuit further disagreed with the Eleventh Circuit's view that the widespread use of incentive awards in class-action cases today is merely a result of "inertia and inattention." Instead, the Seventh Circuit argued that the consensus on incentive awards reflected a significant historical evolution in the law. Citing the Second Circuit, the panel emphasized that Greenough and Pettus had been superseded by practice and by the modern Rule 23, which provided a more robust framework for class actions than its nineteenth-century predecessors. In rejecting Johnson, the Seventh Circuit aligned with the First, Second, and Ninth Circuits.
Moving Forward
The Seventh Circuit's decision in Scott v. Dart reaffirms the role and rights of named plaintiffs and their entitlement to service awards. The court’s stance on service awards also underscores the evolving understanding of class representation and its value. This decision not only aligns the Seventh Circuit with a majority of its sister circuits but also enhances the viability of class actions as a tool for addressing systemic issues.