Last year, in denying a petition for rehearing in Johnson v. NPAS Solutions, 43 F.4th 1138 (11th Cir. 2022), the U.S. Court of Appeals for the Eleventh Circuit confirmed that class representative incentive awards are prohibited as a matter of law. Although the Eleventh Circuit stands alone in its hardline position on incentive awards, a recent panel decision of the Second Circuit suggests that other circuits may be receptive to adopting Johnson’s reasoning under the right circumstances. Indeed, in a recent class action before the U.S. District Court for the District of Columbia, the Department of Justice challenged the amounts of requested incentive awards for 36 class representatives. Although the department stopped short of asserting that incentive awards are categorically prohibited, it relied on Johnson to argue that requests for such awards should be viewed “with skepticism.”
Moreover, although Johnson prohibits incentive awards, several district courts within the Eleventh Circuit have continued to approve monetary awards to class representatives as part of class-action settlements. In some cases, those awards have been characterized as “general release” payments, while others have held that Johnson is inapplicable in diversity jurisdiction actions where state law permits incentive awards. The Eleventh Circuit has not yet assessed whether payments to class representatives under these circumstances run afoul of Johnson.