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5 Law Firms to Divide $214M in Fees in $1.5B Syngenta MDL

March 21, 2019 | Posted in : Billing Record / Entries, Class Action, Contingency Fees / POF, Fee Allocation / Splitting, Fee Award, Fee Calculation Method, Hourly Rates / Hourly Billing

A recent Law 360 story by Ryan Boysen, “5 Firms to Get $214M in $1.5B Syngenta MDL Corn Settlement,” reports that five law firms will receive $214 million in fees from the $1.5 billion Syngenta AG tainted corn settlement after a Kansas federal court adopted those same firms' recommendation on how to allocate some of the money.  Those firms, who all played major leadership roles in guiding the multidistrict litigation to a successful settlement, submitted a report last month on how to allocate a $247 million chunk of the roughly $500 million in total attorneys' fees awarded by U.S. District Judge John W. Lungstrum last year.

In the order, Judge Lungstrum agreed to pay out the $247 million according to the six-tiered structure proposed by those firms, a structure that will see them take home $214 million in fees while the remaining $33 million is split between 59 other firms.  Judge Lungstrum said that despite the "inherent conflict of interest that exists" in having the five lead firms propose the overall allocation, "in that any undercompensation of non-lead counsel would increase [co-lead counsel]'s own share of the fee pool," he nonetheless decided to have those firms take the reins because they "performed the great majority of the substantive work on behalf of plaintiffs in this litigation."

Thus, he added, "they are in the best position to judge the relative contributions by the petitioning attorney to the settlement and the benefit of the settlement class."  Judge Lungstrum said that after reviewing the proposal he found it "fair, reasonable and appropriate," and noted that out of the 64 total firms affected by the proposal only two objected.  The order overruled those objections in the course of approving the report.

The five firms that will split the "Tier 1" award of $214 million are Stueve Siegel Hanson LLP, Gray Ritter & Graham PC, Gray Reed & McGraw LLP and Hare Wynn Newell & Newton, which all served as co-lead class counsel, and Seeger Weiss LLP, which served as settlement class counsel and by all accounts took the lead role during settlement discussions.

The litigation dates back to 2014, when corn farmers and others in the corn industry began filing lawsuits claiming Syngenta caused China to block millions of tons of U.S. corn exports because the Swiss-based agrochemical giant began marketing genetically modified corn seed varieties without prior approval from Chinese regulatory agencies, costing the farmers billions.  The case settled in 2017 for $1.5 billion, and last New Year's Eve Judge Lungstrum entered a controversial order setting aside one-third of that for attorneys' fees and splitting that $500 million fund into four pools.  That order has since spawned fears about how the inevitable appeals resulting from it will be handled.

Those four pools include one that covers the firms involved in the MDL he oversaw in Kansas, one that covers a simultaneous consolidated proceeding in Minnesota state court, one that covers yet another action in Illinois federal court, along with one that will go toward so-called individually retained private attorneys.

The bulk of the overall fund, roughly 50 percent, went toward the Kansas fund, and that's the money Judge Lungstrum asked the co-lead counsel firms and Seeger Weiss to divvy up.  The five Tier 1 firms performed "the great bulk of the work litigating the claims in the MDL," Judge Lungstrum said, in justifying their request to receive $214 million from the $247 million fund.

Tier 2 consists of six firms, "all involved since the beginning of the litigation, whose work focused on litigation of the class and bellwether cases," Judge Lungstrum said.  Those firms will receive a total of $21 million.  Tier 3 consists of "five firms that performed substantive legal work on class and bellwether plaintiff claims," and that group will receive a total of about $6 million.  The 48 firms covered by Tiers 4, 5 and 6 will receive the remaining $6 million.

Weller Green Toups & Terrell, a firm placed in Tiers 4 and 5, objected to its total payout of roughly $1.2 million recommended by the report, claiming it's owed more like $25 million.  Judge Lungstrum shut down that objection, remarking that many of the firm's arguments had been previously denied and were made "largely by cutting and pasting from its previous briefs."

Hossley — Embry LLP also objected, arguing in particular that the $600 per submitted plaintiff fact sheet recommended by the report was too low.  Hossley stands to receive $673,000 for both Tier 4 and Tier 5 work, much of it relating to fact sheets the firm submitted.  Judge Lungstrum rejected that argument, saying it shouldn't have taken more than two or so hours to fill out a plaintiff fact sheet and that the work was easily done by less-experienced attorneys or paralegals, who have lower hourly rates.  The Kansas fund report and its adopting by Judge Lungstrum appeared to be fairly straightforward and agreeable compared with other episodes that have surfaced since the settlement was approved.

One group of 60,000 farmers sued Watts Guerra LLP on civil Racketeer Influenced and Corrupt Organization Act claims last year, alleging the firm conspired to charge them hefty contingency fees on top of what it stood to reap from the $500 million fund that was ultimately established.  Judge Lungstrum dismissed that suit earlier this month, finding that the contingency fees had been voided when Watts Guerra and its clients finally joined the settlement and therefore the farmers didn't ultimately receive any more or less money from the deal than any other firm's clients.

The case is In re: Syngenta AG MIR162 Corn Litigation, case number 2:14-md-02591, in the U.S. District Court for the District of Kansas.