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Apple Fights $87M Fee Request in $500M iPhone MDL

October 8, 2020 | Posted in : Expenses / Costs, Fee Award Factors, Fee Dispute, Fee Request, Lodestar, Lodestar Multiplier, Practice Area: Class Action / Mass Tort / MDL

A recent Law 360 story by Dave Simpson, “Apple Fights $87M Atty Fee Bid in $500M IPhone MDL Deal,” reports that Apple urged a California federal judge not to approve $88.7 million in fees and costs sought by plaintiffs' attorneys in a $500 million deal to end multidistrict litigation over software updates that allegedly slowed iPhones, saying it would shortchange plaintiffs and should be slashed by at least $7 million.  The tech giant pointed to sanctions ordered against two class attorneys as a reason to reduce their fees, and also argued that the request — which includes $87.7 million in fees and nearly $1 million in costs — overshot the attorneys' lodestar by $51 million.

"Counsel ask for a windfall that exceeds their already-inflated lodestar, seeking an amount that is untethered to the results achieved in this case, the work actually performed, or any relevant benchmark in the Ninth Circuit or this district," Apple said.  And "worse" is the fact that the request would knock down the actual settlement amount by at least $23 per device — and possibly more — "taking money out of the pockets of the very group that plaintiffs' counsel represent," Apple said.

In June 2019, U.S. District Judge Edward J. Davila sanctioned two attorneys — Mark Molumphy and Joseph W. Cotchett — from the co-lead counsel firm Cotchett Pitre & McCarthy LLP for making references to confidential materials in open court.  The sanctions included not letting them bill for work related to the confidential materials dispute.  In May, Judge Davila preliminarily approved Apple's $500 million deal but extended the final approval deadlines in light of the coronavirus pandemic.

The parties entered into mediation guided by Layn R. Phillips, a retired judge from the U.S. District Court for the Western District of Oklahoma, and in February informed the judge in a motion for preliminary settlement approval that they had struck a deal.  Under the proposed deal, Apple has agreed to pay up to $500 million in total, depending on the amount of iPhone users to participate in the deal, according to court filings.

Class members would receive $25 each for their phones.  If the payouts, attorney fees and expenses don't add up to at least $310 million, class members will receive up to $500 apiece until that minimum settlement amount is reached.  Apple said that class members have sent "dozens" of letters objecting to the proposed deal, with the attorney fees being the top cited red flag.  Further, it argued that this was not an "exceptional" case warranting a greater than usual lodestar.

"In particular, the size of the proposed settlement is a function of the large number of devices at issue, rather than the result of any specific skill or expertise of plaintiffs' counsel, and the many law firms that vied to represent the class demonstrates that the plaintiffs' bar viewed this matter as a lucrative and desirable — rather than risky and precarious — engagement," Apple said.