“Class action counsel serve a valuable role in our legal system and deserve to be paid. But not twice.” Gelis v. BMW of N. Am., LLC, No. 24-2721, 2026 WL 1691583, at *1 (3d Cir. June 11, 2026) (“Gelis II“). With that admonition, the Third Circuit for the second time vacated a $3.7 million fee award to class counsel in a consumer class action alleging that BMW sold vehicles with defective timing chains. See also Gelis v. BMW of N. Am., LLC (“Gelis I“), 49 F.4th 371, 376–77, 380 (3d Cir. 2022) (“Gelis I“) (first rejection of the $3.7 million award).
In September 2017, plaintiffs filed a putative class action on behalf of a nationwide class and twelve state-specific subclasses. After partial dismissal and four months of discovery, the parties settled the merits after a one-day mediation but could not agree on an amount for attorneys’ fees, though class counsel agreed to cap their request at $3.7 million and defendant agreed not to oppose a fee award up to $1.5 million. The district court approved a $1.9 million lodestar calculation and applied a 1.94 multiplier to reach an award of $3.7 million. The Third Circuit vacated that award in Gelis I because class counsel’s vague, single-page billing summaries made it impossible to assess whether the hours were reasonable. On remand, class counsel supplemented the record but again requested $3.7 million; the district court obliged with a new $2.1 million lodestar calculation and a reduced 1.75 multiplier that—as the Third Circuit observed, “[p]erhaps not coincidentally”—once again produced a fee award of exactly $3.7 million.
The central legal question in the latest appeal was whether the limits the Supreme Court placed on fee enhancements in Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542 (2010) apply equally to statutory fee-shifting cases and contractual fee-shifting cases such as this one. In Perdue, the Supreme Court held that the baseline lodestar already accounts for most fee-setting factors—e.g., case difficulty, risk, and attorney quality—so enhancing it for those same factors amounts to paying lawyers twice. The Third Circuit held that these limits apply in contractual fee-shifting cases and, applying this reasoning, found that the district court improperly enhanced the lodestar based on “risk of nonpayment,” the “complex and technical” nature of the litigation, and counsel’s skill—factors that Perdue deems either subsumed in the baseline lodestar or available only in “rare” and “exceptional” circumstances. The district court also “double-counted” complexity by using it both to approve unusually high hours and to justify the multiplier. Further, the Third Circuit determined that over 80% of the 2,877 claimed hours were billed at a partner’s higher hourly rate—a “startling” proportion—and found that specific entries were inflated. Accordingly, the Third Circuit vacated the fee award and remanded for further proceedings consistent with its ruling.
Gelis II is significant because, by further constraining courts’ ability to enhance the lodestar calculation by accounting for various case-specific complexities, it arguably complicates class counsel’s decision-making about which cases to bring and where. The decision also underscores the importance of defensible staffing allocations in fee petitions, as courts will closely scrutinize whether partner-heavy billing is justified by the demands of the case.