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Attorneys Clash Over $8.3M in Fees in Coffee False Ad Settlement

September 18, 2020 | Posted in : Fee Allocation / Fee Apportionment, Fee Award, Fee Dispute, Hourly Rates, Lodestar, Lodestar Multiplier

A recent Law 360 story by Mike Curley, “Attys Clash Over Fees in $25M Coffee False Ad Settlement,” reports that attorneys who secured a $25 million settlement for buyers in a false advertising class action against Sturm Foods Inc. asked an Illinois federal court to confirm $8.3 million in fees and their distribution, saying another attorney in the case is trying to give himself "a greater piece of the pie."

Attorneys with Ward & Cooper LLC, Maizes & Maizes LLP and Hershenson Rosenberg-Wohl took aim at Peter Burke of Crumley Roberts, who they say is walking back statements made while they sought approval of the settlement and fees in order to get his firm a larger percentage of the money than he'd previously stipulated to.

In declarations and arguments seeking to approve the settlement, Burke authenticated the lodestar fee calculation and its multiplier, as well as the hours spent by attorneys from each firm and their fees, including that attorneys from Ward & Cooper spent more time on the case than attorneys from Burke's firm, according to the motion.  According to the motion, the court based its approval of the settlement and attorney fees on Burke's and the other attorneys' statements about the lodestar, its multiplier and the distribution of fees, so Burke cannot now renege on what he told the court.

"Mr. Burke seems to believe that he can divvy up the court-ordered fee award based upon whatever criteria he wants, even if they are at odds with the facts he himself presented to the court and that the court used to make the award in the first place," the firms wrote.  "Mr. Burke cannot now walk back or disavow those certified representation just because he wants a greater piece of the pie."

The settlement, approved in April, resolved more than eight years of litigation that began with an August 2011 suit accusing Sturm Foods and its owner, TreeHouse Foods, of misleading consumers that Sturm's Grove Square Coffee pods brewed fresh coffee rather than instant coffee.

On the eve of trial, the parties accepted a mediator proposal for a $25 million cash common fund with no reversion, according to court documents.  In September last year, U.S. District Judge Nancy Rosenstengel denied Sturm Foods' objection to how the $25 million would be allocated, saying the question of whether it unfairly favors two subclasses over the others or compensates non-class members is best left to be raised by members of the class.

According to the motion, Burke in May asked the other firms for their time sheets for the first time, and demanded a split based on undisclosed percentages, while stating that his sworn lodestar declaration no longer mattered.  Burke also indicated that he would challenge the hours and rates in those declarations, according to the motion.

But Burke is bound to his declaration under estoppel rules, the other firms argued, saying that he can't change his position to get more funds for his own firm after swearing in the declaration that the original lodestar and percentage distribution were correct.

"In his petition for fees, Mr. Burke argued that the verified hours and rates of all counsel here, combined with a particular multiplier, were a reasonable way to compensate the attorneys for their work," the firms wrote.  "Now, when it comes to dividing the fees with these very same attorneys, he argues that none of these facts is relevant".  If the court does decide that adjustments to the fee distribution are necessary, the firms argued it should appoint a special master to determine those adjustments.