Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

$88M Cut From $157M Fee Request in Namenda Class Settlement

June 15, 2020 | Posted in : Billing Practices, Billing Record / Entries, Class Action / MDL, Contingency Fees / POF, Expenses / Costs, Fee Allocation / Fee Apportionment, Fee Award, Fee Award Factors, Fee Reduction, Fee Request, Lodestar / Multiplier

A recent Law 360 story by Pete Brush, “$88M Cut From Requested $157.5M Atty Fee in Namenda Deal” reports that a Manhattan federal judge slashed nearly $88 million from a $157.5 million fee award requested by Garwin Gerstein & Fisher LLP and five other firms for guiding wholesalers of the Alzheimer's drug Namenda to a $750 million antitrust settlement with a unit of Allergan PLC.

After hinting she would reduce the payout, U.S. District Judge Colleen McMahon held Monday that six law firms that alleged Forest Laboratories Inc., a unit of Ireland-based Allergan, thwarted generic competition through unlawful "pay-for-delay" tactics are entitled to $69.538 million.  "It is still a handsome payday for counsel," Judge McMahon wrote, after cutting the request for about 21% of the settlement proceeds for plaintiffs' counsel down to about 9.3%.

The judge approved the lawyers' request for $5.8 million of expenses in the nearly five-year-old litigation, but slashed proposed $150,000 payouts for the two Namenda wholesalers that represented the class — Smith Drug Co. and Rochester Drug Co-Operative Inc. — by 50% to $75,000 each.  "Frankly, this was attorney-driven litigation.  All the class representatives really did was sit for a deposition," she wrote, calling the class reps' contributions "minimal."

Reasoning why she slashed the award, Judge McMahon said that the firms engaged in "duplicative work" — "or, in some cases triplicative or quadruplicative work" — and "inflated" their total number of hours worked.  "Class counsel's time sheets lack sufficient granularity to separate the productive hours from the wasted ones," she wrote.

The wholesalers had claimed Forest deployed a two-pronged strategy for keeping generic rivals to Namenda off the market, including unlawful "pay-for-delay" arrangements and "product-hopping" tactics that shielded its profits long after generic rivals should have developed robust sales.  A not-uncommon effort to settle ahead of trial led to the uncommonly large payout — one of the largest in the history of Hatch-Waxman Act generic-drug approval cases. Allergan admitted no wrongdoing in the deal.

"I fully understand why Forest settled this case for a large number.  Its downside was huge; this was a 'bet the company' case," Judge McMahon observed — awarding the plaintiffs' firms "twice the lodestar" but not "anything like the 4.5 times lodestar requested."

Judge McMahon also didn't like what she characterized as a suggestion that the six plaintiffs' firms should get an outsized payday to make up for the times they don't win.  "I am absolutely unmoved — indeed, I am offended — by the argument that class counsel deserves a humongous fee award in this case because 'the winning cases must help pay for the losing ones,'" she wrote.