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Sears, Whirlpool win fee reduction in washer lawsuit

By Jonathan Stempel

By Jonathan Stempel

(Reuters) - A federal appeals court reduced by $2 million the legal fees that Sears Holdings Corp <SHLD.O> and Whirlpool Corp <WHR.N> must pay to settle a class action lawsuit over defective washing machines. The reason: the case was not that complicated.

The 7th U.S. Circuit Court of Appeals in Chicago on Monday cut to $2.7 million from $4.77 million the sum owed to the plaintiffs' lawyers.

Shoppers alleged that Whirlpool-manufactured front-loading washing machines they had bought at Sears, under the Whirlpool and Kenmore brands, were prone to failure because of defective control units and mold.

A lower court judge last September cited the "presence of novel and complex legal issues" as a factor to justify awarding the plaintiffs' lawyers 1.75 times the base fees they charged. Such multipliers are common in class action settlements.

Circuit Judge Richard Posner, however, said the appeals court was "puzzled" by the "questionable" decision to award a multiplier, given that a case's novelty and complexity was typically reflected in base fees.

The lower court judge "concluded that for the most part the case wasn't very complex - it was just about whether or not Sears had sold defective washing machines," Posner wrote.

Lawyers for the plaintiffs did not immediately respond to requests for comment.

The settlement followed nine years of litigation. Damages have not been determined, but Sears and Whirlpool have estimated that the total payout to class members may not exceed $900,000.

In a joint statement, Sears and Whirlpool said the appeals court correctly reduced the "excessive and unreasonable" fee award, and said fees in similar cases should generally be lower than sums the plaintiffs recover.

The case is In re: Sears, Roebuck and Co Front-Loading Washer Products Liability Litigation, 7th U.S. Circuit Court of Appeals, No. 16-3554.

(Reporting by Jonathan Stempel in New York; Editing by Andrew Hay)