Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Archive: 2019

Judge Trims Attorney Fees in Vertex Junk Fax Settlement

March 22, 2019

A recent Law 360 story by Chris Villani, “Attys’ Fees Trimmed to $1.3M in Vertex Junk Fax Settlement,” reports that two firms serving as class counsel in a junk fax settlement with Vertex Pharmaceuticals should receive less than they requested in fees because they overstated the $4.75 million deal's benefit to the class, a Massachusetts federal judge ruled.  Counsel Anderson & Wanca and Swartz & Swartz PC had asked for a 33 percent cut, or just over $1.58 million, when the proposed class action settled in February 2018.  However, U.S. Magistrate Judge Jennifer C. Boal said that request was a bit too high, dropping the amount to 28 percent, or $1.33 million.

“This court is satisfied with the quality of class counsel; and counsel spent over 1,500 hours in this matter with a lodestar value of $807,148.16,” Judge Boal wrote.  “On the other hand, class counsel overstate the extent of the benefit obtained as it relates to the class as a whole.”  The attorneys who led the suit said it was the largest recovery under the Telephone Consumer Protection Act that the District of Massachusetts had ever seen.  But Judge Boal noted that only 8 percent of the class members made a timely claim, so the amount paid to them will total around $351,000.

“Thus, class counsel stands to receive more than four times the amount of money that will be received by clients in whose name the suit was brought,” the judge wrote.  “In balancing these considerations, this court finds that an attorney’s fee award in the amount of 28 percent of the settlement fund is reasonable in this case.”  Additionally, Judge Boal awarded only $41,000 of $90,000 in requested expense reimbursements, saying the balance lacked sufficient documentation.  She also approved a $15,000 incentive award for the class representative, Cincinnati health care provider Physicians Healthsource Inc.

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

March 21, 2019

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.

Federal Circuit Affirms Google’s PTAB Attorney Fee Win

March 20, 2019

A recent Law 360 story by Tiffany Hu, “Fed. Circ. Backs Google’s PTAB, Atty Fee Wins on Video IP,” reports that the Federal Circuit handed a win to Google in backing the Patent Trial and Appeal Board’s (PTAB) invalidation of claims in a video delivery patent, while separately affirming $820,000 in attorneys’ fees to the tech giant in a related infringement case.  The panel in a one-line order summarily affirmed the PTAB’s May 2017 decisions finding that Google had shown several claims in Vedanti Systems Ltd.’s patent covering video delivery technology to be invalid as obvious based on patents issued more than two decades ago.

In a separate order, the panel affirmed a California federal judge’s October 2017 decision awarding Google $820,000 in attorneys’ fees in a case brought by Max Sound Corp., which had claimed to hold a license to the patent and sued Google, YouTube and another company in 2014 for alleged infringement.

Eric W. Buether, an attorney for Max Sound, told Law360 that he was disappointed by the Federal Circuit’s decision to award the attorneys’ fees, noting that the company had presented several arguments but that the panel issued its ruling without providing an opinion.  “This was not a frivolous appeal that was a simple application of a simple rule,” Buether said.  “We’re very frustrated and disappointed that we don’t feel we got the explanation that we think these parties deserve in why they lost on such substantial issues.”

After Max Sound filed suit in 2014, Google had challenged the patent in inter partes reviews, alleging that the claims were obvious in light of prior art.  The district court case was dismissed after U.S. District Judge Edward J. Davila found that Max Sound lacked standing because it didn’t hold the necessary rights to the patent, a finding that the Federal Circuit later affirmed.  In May 2017, the PTAB issued decisions invalidating parts of the patent for being obvious, rejecting Vedanti’s defense that the patent’s claims were distinct from the earlier patents due to the specific way the earlier patents use data from certain regions to collect and transmit pixel information.

That October, Judge Davila held that Google was entitled to attorneys’ fees because its behavior — which included opposing the tech giant’s attempt to bifurcate the proceedings to deal first with the standing issue — was exceptional, warranting such fees.  Max Sound had also ignored a series of roadblocks along the way, including fighting Vedanti and trying to join it as an involuntary plaintiff in the action, the judge said.  The company had been “no less than willfully blind” as to its ability to bring the suit, he said.

On appeal, Max Sound had argued that "such hindsight analysis of the reasonableness of Max Sound’s litigation behavior is an abuse of discretion which the court must guide the lower courts to avoid.”  The company also argued that it had added Vedanti as a defendant after it refused to voluntarily join as a co-plaintiff, making it a proper party to the case.  However, the panel affirmed Judge Davila’s ruling a few days after oral arguments, as well as the board’s invalidation of the patent at issue.

The cases are Vedanti Licensing Ltd. v. Google LLC and Max Sound Corp. et al. v. Google LLC et al., case numbers 17-2169 and 18-1039, in the U.S. Court of Appeals for the Federal Circuit.

US Court of Claims Hits Government with Attorney Fees as Sanctions

March 19, 2019

A recent Law 360 story by Daniel Siegal, “Gov’t Owes $4.4M in Fees After Losing $200K Patent Row,” reports that a U.S. Court of Federal Claims judge on tacked on nearly $4.4 million in fees and costs to a since-deceased inventor's $200,000 win on claims that the federal government infringed her patent for a metal treatment technology, finding that fees were warranted because government researchers stole the inventor's idea.  In a 30-page opinion, Federal Claims Judge Charles F. Lettow partially granted the fee request filed by Hitkansut LLC and Acceledyne Technologies Ltd. LLC, two companies owned by late inventor Donna Walker.  Judge Lettow said that under the Equal Access to Justice Act, Hitkansut had to prove that the government's opposition to its suit was not "substantially justified" to be awarded fees — and that the company had done so, through the conduct of the Oak Ridge National Laboratory researchers that did the infringing.

Judge Lettow said the government researchers did not just happen to develop a metal treatment technology and then find that it happened to infringe Hitkansut's patent, but directly took the patent pending technology Hitkansut showed them and "took sole credit for this process, publishing papers and submitting patent applications" without giving Hitkansut any credit, funding or contracts.  Judge Lettow also rejected the government's argument that it was inherently unreasonable to award this amount of fees in a case in which the plaintiff won a $200,000 judgment, and that the fee award should be capped at that amount plus interest.

The judge said the "significant" fee award was justified after the lengthy, hard-fought case, and noted, "Hitkansut’s claim, however, was vigorously contested by the government, involved highly technical subject matter, spanned six years and proceeded through a lengthy appeal.  Hitkansut also faced an opponent with vast resources whose calculus regarding settlement and the value of precedent differs from that of a private litigant."  The judge said although the government may think "it is unreasonable to spend millions to obtain a judgment of $200,000," precedent uniformly says otherwise, and added in a footnote that the government itself "likely spent far more than $200,000 to defend this case."

The judge didn't grant the full amount of fees and costs requested by Hitkansut — $4.51 million — instead making partial reductions in several fee and costs requests, ultimately awarding a total of $4.38 million.  That included roughly $3.1 million in attorneys' fees, $823,197 in expert fees and $434,327 in other expenses and costs.

Hitkansut attorney John Artz of Dickinson Wright PLLC told Law360 that Walker, the inventor and metallurgist behind Hitkansut, was inspired to create a new method for relaxing stressed metal when her son shipped off as a sailor on a U.S. Navy submarine, and then had to see the government take her idea and deny her any credit.  "I feel like the government felt like it could just take the invention, which it did, without there being any repercussions," Artz said.

Hitkansut applied for the patent in summer 2003 and, according to court documents, Walker met a few months later with researchers at Oak Ridge.  The laboratory, which receives about 80 percent of its funding from the U.S. Department of Energy, pursues research that involves metal processing, among other things.

After signing a nondisclosure agreement with the lab, Walker disclosed her as of then unpublished patent application to its researchers, who later filed multiple patent applications related to its technique for using magnetic fields and heat to relax stressed metal, according to court documents.  Hitkansut filed a lawsuit in May 2012, alleging patent infringement and, after several years of litigation, trial began in late May 2016.  In February 2017, Judge Lettow ruled in Hitkansut's favor, finding that Walker's patent was valid and had been infringed by Oak Ridge.

The $200,000 that Hitkansut was awarded represented an "upfront" fee that both sides agreed would have been part of a hypothetical licensing negotiation.  Judge Lettow rejected Hitkansut's assertion that it was entitled to an additional $4.5 million and $5.6 million in reasonable royalties, because the $4.5 million the lab received based on the infringed technology was all research funding, not the proceeds of commercialization.

The case is Hitkansut v. U.S., case number 12-303C, in the U.S. Court of Federal Claims.

$10M in Attorney Fees in Subway’s Record $31M FACTA Settlement

March 18, 2019

A recent Law 360 story by Joyce Hanson, “Attys Win $10M of Subway’s Record $31M FACTA Settlement,” reports that a Florida federal judge who signed off on the largest settlement in the history of the Fair and Accurate Credit Transactions Act (FACTA), a nearly $31 million deal between Subway and a class of consumers, has approved about $10 million in attorney fees for class counsel.  U.S. District Judge Cecilia M. Altonaga granted class counsel’s motion for $10.3 million of attorney fees plus $30,837.80 of expenses in the case alleging the sandwich chain unlawfully printed full credit card expiration dates on receipts, handing the award to Scott Owens PA, Bret Lusskin PA and Keogh Law Ltd.

Judge Altonaga agreed with the lawyers that the requested fee award is consistent with other fee awards in the Eleventh Circuit that are equal to one-third of a settlement fund, such as the one affirmed in 2018 in Muransky v. Godiva Chocolatier Inc.  “Attorneys who recover a common benefit for persons other than themselves or their clients are entitled to a reasonable attorney’s fee from the settlement fund as a whole, and the requested fee award is consistent with other fee awards in the Eleventh Circuit,” Judge Altonaga wrote.  “This fee is also consistent with three recent FACTA cases in this district, one of which was recently affirmed by the Eleventh Circuit in Muransky v. Godiva Chocolatier Inc.”

Class counsel moved on Nov. 20  for the fees and expenses, asserting that the lawyers achieved an excellent result for the class.  “Here, the parties’ mediated agreement provides a settlement fund of $30,900,000, by far the largest all-cash FACTA settlement in history, and many orders of magnitude greater than the recoveries obtained in typical FACTA settlements,” the motion said.  “While most FACTA settlements involve coupons or gift cards, this settlement provides cash, and not a penny will revert to defendant.”

Judge Altonaga's order also granted named plaintiffs Shane Flaum and Jason Alan’s Feb. 19 motion for final approval of the settlement with Doctor’s Associates Inc., which does business as Subway.  Each class member who has submitted a valid claim will receive about $56 in cash, and Flaum and Alan respectively will receive awards of $20,000 and $10,000 under the terms of the final approved settlement.

Flaum had submitted the settlement for preliminary approval on behalf of roughly 2.69 million people whose credit and debit card information was potentially compromised by the printed receipts showing the full expiration dates of their cards.  The order gave final certification to that class, which includes all Subway patrons who received receipts upon purchase that showed their credit and debit cards’ full expiration dates between Jan. 1, 2016, and the date of preliminary approval.

FACTA regulations require retailers to omit card expiration dates on receipts, as emphasized in the Credit and Debit Card Clarification Act.  Subway failed to get the suit tossed in August 2016, after a Florida federal judge, citing the U.S. Supreme Court’s 2016 Spokeo Inc. v. Robins decision, said that Flaum suffered a concrete harm to satisfy subject matter jurisdiction.  The suit is Flaum v. Doctor's Associates Inc., case number 0:16-cv-61198, in the U.S. District Court for the Southern District of Florida.