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Full Eleventh Circuit Urged to Buck Ban on Class Incentive Awards

October 28, 2020

A recent Law 360 story by Allison Grande, “Full 11th Circ. Urged to Buck Ban on Class Incentive Awards,” reports that the full Eleventh Circuit is being pressed to review a panel decision in a dispute over a $1.4 million robocall settlement that found class representatives can't recover routine incentive awards, with the lead plaintiff arguing that this categorical ban would hobble class action litigation and an objector to the deal taking issue with the calculation of class counsel's fees.

Lead plaintiff Charles Johnson and objector Jenna Dickenson in separate petitions filed seized on differing rationales in attempting to convince the appellate court to reconsider a panel ruling handed down last month that directed the lower court to revisit its approval of the contested class action settlement in a dispute accusing medical debt collector NPAS Solutions LLC of violating the Telephone Consumer Protection Act.

In a divided decision, the panel concluded that a pair of U.S. Supreme Court rulings from the 1880s prohibited Johnson from being awarded $6,000 for his role in the litigation and that the district court had failed to provide a sufficient explanation for signing off on the deal or class counsel's request to recover 30% of the settlement fund.

Johnson argued that the panel's clearly incorrect decision to categorically prohibit the common practice of awarding incentive payments to named plaintiffs established a precedent that not only conflicted with every other circuit but also upended long-standing class action practice.

"No court in the last century has ever held that incentive awards are categorically impermissible," Johnson argued.  "That incentive awards are a universally accepted practice provides ample reason for the full court to consider whether such an established aspect of class-action settlements should be held per se unlawful."

Contending that the panel's decision "effects a sea change in class action practice," Johnson stressed the importance of incentive awards in encouraging plaintiffs to step forward to lead lawsuits that enable redress for widespread harm that's "inflicted in small increments" on a large group of individuals that aren't willing or able to bring claims separately.

 "If few plaintiffs would suffer litigation for the hope of a tiny recovery, fewer still would do so for the same possible award alongside the added burdens — including, potentially, paying a defendant's costs — and fiduciary responsibilities that attend litigating on behalf of a class," Johnson argued.  "Incentive payments help attract class representatives willing to shoulder those burdens."

Johnson urged the full Eleventh Circuit to order the parties to provide "full, targeted briefing" on this "vital issue," noting that the parties have barely addressed the topic to date since courts have repeatedly approved incentive awards without incident.  He also argued that the more than century-old Supreme Court cases on which the panel relied to buck this trend "provide no authority" for its novel conclusion.  "The panel majority broke from all other circuits and remade the landscape of class-action litigation on the premise that Supreme Court precedent so required," Johnson added.  "That precedent — if it applies — requires nothing of the sort."

Dickenson, who was the lone objector to the TCPA deal and appealed its approval to the Eleventh Circuit, asserted in her own brief that the full appellate should take a look at the case to clarify the appropriate standard for calculating attorney fees in such disputes.  While the panel held that the lower court hadn't provided enough information about why the fee request was reasonable, it backed the method of calculating and awarding fees as a percentage of the settlement fund, concluding that an Eleventh Circuit case from 1991 that endorsed this practice was still "good law."

Dickenson argued that this holding conflicts with Supreme Court precedent, most notably its 2010 holding in Perdue v. Kenny A. ex rel. Winn, which "directly repudiated" the use of the factors relied on by the Eleventh Circuit and directed lower courts "to recognize a strong presumption that attorneys' unenhanced lodestars — i.e., their hourly rates times the hours expended — provide them a reasonable fee that is sufficient both to attract capable counsel and to equitably compensate them."

Therefore, it's imperative for the full Eleventh Circuit to step in to clearly announce whether lower courts should award class counsel fees based on attorneys' actual time and billings or as a percentage of the common class settlement fund, according to Dickenson.  "Attorney's fees are a critical issue in class-action litigation, and uniform rules governing their calculation are a matter of overriding national importance," Dickenson argued.

Hagens Berman Says It Earned Every Penny of $48M Fee Request

October 27, 2020

A recent Law 360 story by Emily Lever, “Hagens Berman Says It Earned Every Penny of $48M Fees,” reports that Hagens Berman Sobol Shapiro LLP continued to defend its demand for $48 million in attorney fees from optical disk drive price-fixing settlements, saying the litigation was high risk and they deserve a high reward.  Hagens Berman, the lead counsel for a class action accusing Samsung, Toshiba, Panasonic and others of colluding to inflate the cost of optical disk drives, hit back at an objector from the class who said they should get nothing.  "This litigation was extremely risky and it obtained an exceptional result," Hagens Berman said in a brief.

The multidistrict litigation, consolidated in 2010, resulted in three rounds of settlements totaling $205 million.  The firm initially secured $48 million in attorney fees, but the Ninth Circuit nixed the award, saying it was much steeper than the original $21 million bid the firm submitted and it needed to provide "further explanation."

The firm is holding on to the $48 million while the San Francisco federal court takes a second look.  But Hagens Berman should have returned the money, and their "defiant" conduct should lead to their fees getting zeroed out, according to objector Connor Erwin.  "They have no legal entitlement to the funds, which belong to the class," Erwin told the court.

Hagens Berman took exception to what they called Erwin's "vacillating arguments."  The firm argues that regardless of whether the lower court ultimately invalidates the award or finds "some impropriety in the fee arrangement," they remain entitled to recovering the value of their services.  And the value of those services is high, they contend, given that they were extraordinarily successful.

The case ended up being much more difficult than Hagens Berman could have reasonably predicted when it bid for a mere $21 million in attorney fees 10 years ago at the outset of the case, the firm argued.  Hagens Berman said that contrary to Erwin's claim that the length and complexity of the case were par for the course and should have been expected, the case was unusually long and treacherous.  The class was denied certification on the first attempt, and the second attempt was only successful because of the firm's hard work, it said.

Hagens Berman also contested Erwin's claim that it was trying to "manufacture" the appearance that it was receiving a lesser amount than it really was by factoring in litigation expenses into its demand after earlier saying it would waive them.  Just because they are waiving expenses does not mean the court shouldn't consider counsel's net gain or loss when assessing what an appropriate fee should be, Hagens Berman said.

Judge Cuts Fee Request in Half in Boston Cop Bias Action

October 26, 2020

A recent Law 360 story by Chris Villani, “Judge Halves Fee Bid in Boston Cop Bias Suit,” reports that Lichten & Liss-Riordan PC and Fair Work PC will receive nearly $1 million in fees and costs for their work representing Boston police officers in a discrimination suit, or less than half of the $2.3 million they sought, after a judge ruled they could not bill for hours spent litigating a similar case.

The Boston officers were awarded a $484,000 back pay judgment against the city after it was found that they missed out on promotions due to an exam twice found to be discriminatory, capping a case that was litigated for eight years.  The city skewered the initial bid for $2.3 million in fees as "beyond the pale" and called the hourly rates "egregiously high."

U.S. District Judge William G. Young scaled back the initial fee ask by more than 50%, siding with the city on a key point of contention: the officers' inclusion of nearly $1 million in legal fees and costs from an earlier, related lawsuit, Lopez v. City of Lawrence, which was litigated by the same lawyers.  "This court shares the Sixth Circuit's concern about the 'idea of ever permitting plaintiffs' counsel to receive fees for work performed in a completely separate case,'" Judge Young wrote, quoting the 2013 appellate ruling in Binta B. v. Gordon.

"Doing so could lead to all sorts of oddities, as illustrated by this case where counsel would be permitted to recover fees for thousands of hours of time spent litigating a case they lost," the judge added, again quoting from the Sixth Circuit ruling.

Nixing the hours spent by the firms in Lopez shaved $977,951 off the initial fee request.  Judge Young imposed another 20% "global reduction" on the hours billed by each attorney in the Smith case, ruling that the billing was overly vague.  "A more precise description of the topic researched or discussed, or a reference as to what documents were being reviewed would allow a court to determine whether the time spent during the litigation was reasonable," Judge Young wrote.  The deductions left a total of $607,272 in attorney fees and another $346,372 in costs.

"The plaintiffs in this case prevailed at two lengthy trials in 2014-2015 and 2019," Harold L. Lichten of Lichten & Liss-Riordan PC said in a statement.  "Thus, it is not surprising that plaintiffs' counsel has been awarded substantial fees and costs in connection with this litigation.  We respect the court's reasoned opinion."

The officers argued in their initial request in June, which sought $1.67 million in fees and $665,359 in costs, that the high tab was merited because the case, which began in 2012, will have a "profound" impact on police promotional examinations.  They also cited Boston's insistence on fighting even after a judge found years ago that the test in question was biased against minority candidates.

The city countered in August that the hourly rates listed for the attorneys who worked the case were far too high.  The city also argued there was no "legitimate basis" to include billing from the Lopez case, saying it dealt with "different exams, brought by different plaintiffs against different defendant cities … tried to a different judge, and which the plaintiffs indisputably lost at trial and on appeal."

Virgin Flight Attendants Defend $6M Fee Award in Ninth Circuit

October 21, 2020

A recent Law 360 story by Linda Chiem, “Virgin Flight Attendants Defend $6M Atty Fees in 9th Circ.,” reports that Virgin America Inc. flight attendants told the Ninth Circuit that their attorneys were properly awarded $6 million in fees and expenses after they won $77 million in a long-running dispute over California pay and rest breaks, saying their fees were already trimmed down.  The certified class of flight attendants, represented by Olivier Schreiber & Chao LLP, Kosinski & Thiagaraj LLP and Shepherd Finkelman Miller & Shah LLP, filed an answering brief urging the Ninth Circuit to affirm U.S. District Judge Jon S. Tigar's January order awarding them $5.75 million in attorney fees and $250,775.81 in expense reimbursements.

Virgin America Inc., which merged with Alaska Airlines Inc., had appealed the fee award by arguing that Judge Tigar didn't meaningfully assess or dig into whether the flight attendants' attorneys properly justified their hours and calculations.  But the flight attendants argued that Virgin is merely engaging in "rank speculation" and "conjecture" to push for more cuts to the class counsel fees even though the district court already imposed a "haircut" reduction in their hours and compensation after Virgin's earlier gripes.

"The fundamental problem with this attack is that it ignores that the district court upheld Virgin's specific objections below and, as a result, ultimately reduced class counsel's lodestar more than Virgin proposed," the flight attendants argued.  "It is thus judicially estopped from claiming error here."  The flight attendants argued that the district court acted well within its discretion after carefully and appropriately reviewing their submissions, Virgin's objections, and considering the court's own experience with the action and the relevant law in reaching its determination.

The flight attendants' attorneys had initially requested $13.2 million but were awarded less than half that.  They said Judge Tigar cut down the 5,128 hours of billable time that was compensable to 4,723.345 hours, adjusted some of the hourly rates the class counsel had claimed, and reduced their lodestar, according to the brief.  "The record reveals no grounds to disturb the district court's order," the flight attendants said.  "The court, intimately familiar with this multiyear class action litigation marked by Virgin's own litigation choices that 'undoubtedly contributed to its length and its tone,' was in the best position to assess the fees and expenses to which plaintiffs are entitled under California's fee-shifting statutes."

Named plaintiff Julia Bernstein and flight attendants spearheading the long-running dispute have alleged that Virgin America flouted California labor laws by not paying them for all hours worked, including overtime, and denying them state-mandated meal and rest breaks.

Virgin's appeal of the class counsel fees is separate from its ongoing Ninth Circuit appeal seeking to vacate the $77 million damages the flight attendants won in January 2019.  The Ninth Circuit is considering scheduling oral arguments in that appeal for early 2021, court records show.

Judge Tigar, who rebuffed Virgin's earlier attempts to dismiss the litigation, granted the flight attendants summary judgment on most of their claims in 2018, setting the stage for the subsequent fight over damages.  The judge found that California labor law applied to all work that happened in California and in situations where employment policies were decided from Virgin's previous headquarters in the Golden State.  Seattle-based Alaska Airlines acquired Virgin in 2016.

In his order on the class counsel fees earlier this year, Judge Tigar had acknowledged that the plaintiffs' attorney fee application was too vague, saying "the level of specificity at which plaintiffs have documented their time makes it difficult or impossible for Virgin to raise certain challenges that courts have found justified partial reductions in other cases."  Virgin had argued on appeal that despite that critical flaw, the judge accepted all of the hours that the plaintiffs' counsel claimed and awarded a $5.7 million fee award that was subject to only a 5% general reduction in hours.

But the flight attendants said in their answering brief that they provided the court with detailed charts and summaries of their work.  "In light of the detailed records provided, Virgin's claim that plaintiffs' submissions were 'threadbare' is disingenuous at best," they said.  "This documentation was more than sufficient evidence for the district court to address, as Virgin contends is 'critical,' 'whether the case was overstaffed, how much time the attorneys spent on particular claims, and whether the hours were reasonably expended.'"

Moreover, Virgin argued that the class counsel's flawed lodestar consisted of nearly 4,500 hours of billable time — most of which was billed at an absolute "top of the market" rate of $750 per hour — and the $251,000 in court-related expenses wasn't justified.

"Most of the expenses that the district court awarded were for 'expert fees,' which are not recoverable under black-letter California law," the airline said.  "In addition, the district court erred by ignoring the rule that a party cannot recover expenses without submitting an itemized list and accompanying receipts.  The district court did not identify any exception to this rule, and it candidly acknowledged that plaintiffs' counsel failed to comply with it.  But the court awarded expenses anyway."

But the flight attendants rejected the airline's arguments, saying in the brief that Virgin never raised that argument in the district court so it cannot raise it on appeal.  On top of that, there is no such prohibition on expert fees under California law, they said.

If Virgin wants to play that game concerning attorneys' purportedly inflated hours, then the plaintiffs can "likewise, speculate as to Virgin's reticence to submit its counsel's hours as a benchmark," the flight attendants said, noting Virgin took a "gratuitously contentious approach toward litigation, including unnecessary motion practice."

"Perhaps its counsel assigns partners to do simple tasks; perhaps a significant amount of time was spent pursuing questionable strategies; perhaps its counsel's hourly rates are significantly above its peers in the market," they said.  "Regardless, that Virgin refuses to provide a clear reference point of the expense of litigating this action — which it can easily do — speaks volumes as to the [lack of] merits of its objections."

Election Year Politics Fuel AGs Fee Opposition in Opioid MDL

October 20, 2020

A recent Law 360 story by Jeff Overley, “Opioid Settlements Stymied By Atty Fee Demands, AGs Say,” reports that massive fee demands from plaintiffs attorneys in multidistrict opioid litigation are the main reason settlements haven't been finalized with major drug companies in a broader wave of opioid cases, two state attorneys general said, a provocative claim that drew a fast and fiery backlash.

Pennsylvania Attorney General Josh Shapiro, a lead negotiator in efforts to resolve thousands of opioid-crisis lawsuits, was the first AG to deliver the bare-knuckle assertion.  He did so during a speech in Dauphin County — home to the Keystone State's capital city of Harrisburg — about an addiction-treatment initiative.

"If the private attorneys involved in these negotiations were a bit less worried about the amount of money going into their own pockets, and more worried about the unnecessary lives being lost in Pennsylvania and the other states across our country, I'd be able to stand here in Dauphin County today and talk about the resources that we were bringing back for treatment to Pennsylvania," Shapiro said.  "We'll get there soon," the Democratic attorney general added, "but sadly, too many of those private attorneys are standing in the way of progress right now."

Shapiro, who is up for reelection next month, largely echoed those comments at a subsequent speech in Northumberland County.  He has been working with the attorneys general of Tennessee, Texas and North Carolina to broker settlements with pharmaceutical companies facing thousands of lawsuits that accuse them of fueling a catastrophic epidemic of painkiller addiction.

In a statement provided to Law360, Tennessee Attorney General Herbert H. Slatery III, a Republican, said that he was "in total agreement with General Shapiro."  "There is nothing to indicate that the opioid crisis has abated in any way.  The AGs recognize the urgency.  We wish the plaintiff attorneys did too," Slatery said.  "Then we could finalize some things and get significant help on the ground to alleviate the crisis.  Instead, we are spending too much time arguing about attorney fees and costs."

Several top lawyers for local-government plaintiffs in the opioid MDL pushed back on Shapiro's remarks shortly after he delivered them.  "The aggressive and untiring efforts of plaintiffs attorneys against the opioid companies over the last six years are the main reason there even are settlement negotiations," Paul Hanly Jr. of Simmons Hanly Conroy LLC told Law360. "We seek justice and abatement funds for all communities across the nation.  As for ourselves, we seek only fair compensation for a job superbly done."

Paul Geller of Robbins Geller Rudman & Dowd LLP, another top lawyer for the MDL plaintiffs, suggested that Shapiro was claiming credit for settlement offers that only exist because of work done by MDL lawyers.  Geller likened Shapiro to Rosie Ruiz, who infamously snuck into the homestretch of the Boston Marathon in 1980 and claimed to have won the race.  "The AG's actions remind me of Rosie Ruiz," Geller said.  "She jumped in near the end … and hurried to 'win' a race that others actually ran for the long and grueling entire 26 miles."

These developments were the latest examples of infighting that first emerged when the attorneys general in October 2019 unveiled several deals with drug companies.  One of the proposed settlements was a $4 billion accord with Johnson & Johnson; the drugmaker last week upped its offer to $5 billion, and the MDL attorneys reacted favorably.

The other proposed settlements would cover drug distributors McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Drug Corp., which last year tentatively reached an $18 billion deal with the attorneys general.  Multiple sources said that the distributors are now offering more money, although they declined to provide a precise value.  "I will confirm that we wouldn't be talking to them if they weren't offering substantially more than they had offered under the original deal presented by the four AGs," Motley Rice LLC co-founder Joe Rice, a lead lawyer for the opioid MDL plaintiffs, told Law360.

Hunter Shkolnik of Napoli Shkolnik PLLC, another MDL plaintiffs attorney, told Law360 that Shapiro last year "said the plaintiffs were at fault for rejecting the $18 billion settlement they negotiated, [but] it's one year later and billions more have been offered because of our work and our rejection."  It's unclear how far apart the AGs and the plaintiffs lawyers are on attorney fees and costs.  Some AGs and drug companies have said plaintiffs attorneys could reap more than $3 billion in the MDL, which targets several other large companies beyond J&J and the distributors.

"There's a dispute about asking the distributors and Johnson & Johnson to pay the out-of-pocket litigation costs for the municipalities," Rice told Law360.  "The attorney generals got all of their out-of-pocket litigation costs paid.  But they refuse to add the same type [of] costs for the municipalities that have been litigating for years, and there's a dispute over that.  But it's in the tens of millions of dollars.  It's not huge."

The MDL contains roughly 3,000 cases filed mostly by cities and counties that want money for health care and law enforcement costs related to opioid abuse.  Some MDL attorneys also represent cities and counties with similar cases in state courts.  The attorneys general of virtually every state have also filed cases in state courts, sometimes with the assistance of lawyers in private practice.  A source close to the negotiations, speaking with Law360 on condition of anonymity, said that the attorney fees are "a real sticking point" because attorneys general fear they would siphon away badly needed funds for addiction treatment and prevention.