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Category: Fee Award

Class Counsel Spar Over $2.3M in Attorney Fees in Citigroup 401K Case

February 14, 2019

A recent Law 360 story by Dean Seal, “Citigroup Class’ Attys Spar Over $2.3M in Fee in 401K Row,” reports that, one day after McTigue Law LLP sought court intervention for a dispute with former co-counsel Bailey Glasser LLP over $2.3 million in attorneys' fees in a case for a class of Citigroup 401(k) plan participants, Bailey Glasser told a New York federal judge the McTigue attorney "forg[ot] to mention" that the fee dispute must go to arbitration, not the courts.  Bailey Glasser’s Gregory Y. Porter asked U.S. District Judge Sidney Stein to remind James A. Moore of McTigue that in March 2009, the firms signed an agreement as co-counsel for a class of over 300,000 Citigroup Inc. 401(k) plan participants who scored a $6.9 million settlement in their long-running Employee Retirement Income Security Act suit last August.

That agreement contained a clause stating that any disputes must first be mediated and, if that failed, arbitrated, yet that agreement was unmentioned in Moore’s letter to the court asking for a status conference to discuss Bailey Glasser’s attempt to take back a percentage of the attorneys' fees award, according to Porter’s letter.  "Instead, we urge the court to convene a status conference so Mr. Moore can explain why he failed to bring the arbitration agreement to the court’s attention and why the arbitration clause should not be enforced," Porter said.

In his letter, Moore accused Porter of holding the attorneys' fees hostage as leverage in negotiating for a higher percentage of the $2.3 million award by refusing to give consent for a single dollar of the award, held in escrow, to be distributed.  According to Moore, Porter is contesting the allocation of fees because Bailey Glasser paid roughly 10 percent more in expenses than was laid out in the allocation agreement.  Moore said that Bailey Glasser had already been fully reimbursed for that amount through the total expenses award and has incurred no losses, and even if the minor dispute were merited, it would not be affected by the distribution of the majority of the fees award.

"The timing of Mr. Porter’s communications raising his objections and withholding his approval were apparently calculated to prevent my firm from seeking to have the court resolve this matter through the fee petition and final approval process,"  Moore said before asking that the court either dictate the allocation of the fees or simply order their distribution.  Porter followed up the next day, saying that he would not address Moore’s views on the fees allocations "except to note that Mr. Moore’s firm breached the agreement and its duties to the class in Spring 2018 by failing to pay its share of expert expenses (which share my firm paid)."

According to Porter, McTigue refused to respond to emails from Porter asking to confer on the management and financing of the case "given McTigue’s financial condition."  The letter goes into no further details on the expense dispute.  "In sum, the court should not entertain the issues raised in Mr. Moore’s letter without first deciding our motion to compel arbitration," Porter said.

The two firms secured a $6.9 million settlement last summer for a class of current, former and retired Citigroup employees who claimed since 2007 that a Citigroup committee stuffed the company’s 401(k) plan with Citigroup-affiliated funds even though other funds charged lower fees.  Moore, whose firm was allocated more than 77 percent of the lodestar, said in August, "the case was hard-fought for over a decade, and we think the result is an excellent one for plan participants."

The case is Leber et al. v. The Citigroup 401(k) Plan Investment Committee et al., case number 1:07-cv-09329, in the U.S. District Court for the Southern District of New York.

$66M in Attorney Fees in Fiat Emission MDL

February 8, 2019

A recent Law 360 story by Mike Curley, “Lieff Cabraser, Others Collect $66M in Fiat Emission MDL,” reports that plaintiffs firms including Lieff Cabraser, Hagens Berman and Motley Rice will share up to $66 million in fees and costs paid by Fiat Chrysler and auto parts supplier Bosch in a sprawling multidistrict litigation over the automaker's diesel emissions after the companies reached a settlement with consumers.

Elizabeth J. Cabraser of Lieff Cabraser, lead counsel for the plaintiffs in the MDL and chair of the plaintiffs' steering committee that includes Hagens Berman Sobol Shapiro LLP and Motley Rice LLC, told the Northern District of California that after negotiations mediated by settlement Master Ken Feinberg, the firms will seek $59 million in attorneys’ fees and $7 million in costs.  Fiat Chrysler Automobiles NV and Robert Bosch GmbH will not oppose the motion, the notice said.  The notice comes weeks after U.S. District Judge Edward M. Chen said he’s inclined to give preliminary approval to Fiat Chrysler's $307 million deal to settle class claims that it illegally equipped diesel vehicles with devices that cheat emissions tests.

The attorneys' fees and costs come on top of the monetary compensation in the settlement, according to the notice.  The fee request is a reduction from the $106 million in fees and costs the plaintiffs requested in January, according to court documents.

Under that proposed settlement, Fiat Chrysler agreed to offer a software update that will fix the issue and ensure the vehicles are in compliance.  Eligible class members who repair the issue and submit a claim will receive $3,075, while former owners and lessees will be entitled to a $990 payout, according to court documents.  If every car owner submits a valid claim, the total value of the deal will be $307 million, according to the motion for preliminary approval.

That settlement deal is one of many Fiat Chrysler has recently cut to end claims over its defeat devices.  Earlier in January, the company agreed to pay the government a $305 million civil penalty to settle claims it violated the Clean Air Act.  Those funds will be divided between the federal government and California.

Fiat Chrysler will also pay $6 million to settle U.S. Customs and Border Protection claims that it illegally imported 1,700 noncompliant vehicles, and it agreed to pay $72.5 million, which will be split among the 49 states except for California, to settle various state law claims.  Bosch also settled its part in the matters with payments of up to $131 million.  Fiat Chrysler and Bosch are the latest companies to face the music regarding the use of defeat devices, joining the likes of Volkswagen AG, which says it has paid almost $23 billion to settle its legal battles.

"Legal fees are subject to the approval of the court, and are in addition to the $307.5 million in consumer compensation, extended warranties and other benefits of the class action settlement," Cabraser said in a statement.  "We are asking the court to approve the class notice which describes all these benefits and to set a fairness hearing for early May 2019."

The case is In re: Chrysler-Dodge-Jeep EcoDiesel Marketing, Sales Practices and Products Liability Litigation, case number 3:17-md-02777, in the U.S. District Court for the Northern District of California.

61 Law Firms Share in $111.4M Fee Award in Chinese Drywall MDL

February 6, 2019

A recent Law 360 story by John Kennedy, “The Firms that Earned the Most in the Chinese Drywall MDL,” reports that this week, a Louisiana federal judge distributed $111.4 million in fees and costs among 61 law firms that worked on multidistrict litigation over allegedly defective drywall imported from China.  The amount covers work done for the common benefit of all the cases in the MDL through 2013 and relates only to matters involving Knauf Gips KG.  Claims involving Taishan Gypsum Co. Ltd. and Tai'an Taishan Plasterboard Co. Ltd. remain pending.

The drywall in question came into the U.S. as a result of a shortage of building materials in the early- and mid-2000s caused by a Florida housing boom and rebuilding efforts in the wake of hurricanes Rita and Katrina, according to the suits.  Homeowners on the Gulf and East coasts, where the drywall was installed, began to complain about foul smells, corrosion of metal objects and the breakdown of appliances and electrical devices.  Many also reported feeling ill and blamed it on the drywall.

The issues spawned a slew of state and federal lawsuits against homebuilders, developers, drywall installers, realtors, brokers, suppliers, importers, exporters, distributors, manufacturers and anyone else involved with the drywall.  The federal cases were consolidated into an MDL in 2009.  Some of the top law firm earners include:

Levin Sedran & Berman: $23.23M

Herman Herman & Katz: $22.34M

Seeger Weiss: $10.2M

Gainsburgh Benjamin: $9.4M

Colson Hicks: $5.3M

Richard J. Serpe PC: $4.4M

Whitfield Bryson & Mason: $3.9M

Potential $550M Fee Award in Pelvic Mesh Litigation

February 4, 2019

A recent Law.com story by Amanda Bronstad, “Judge Grants Potential $550M in Pelvic Mesh Fees, Allocation Fight Looms,” reports that a federal judge has issued an order that could result in about $550 million in common benefit fees and expenses to plaintiffs lawyers in the transvaginal mesh litigation, setting the stage for a possible fight over who gets what.  U.S. District Judge Joseph Goodwin of the Southern District of West Virginia, who is overseeing seven MDL proceedings that at one point surpassed 100,000 lawsuits, granted a request from a fee and cost committee that defendants hold back five percent of all settlements and judgments to pay common benefit counsel.  He rejected three objections from law firms including Philadelphia’s Kline & Specter, which had sought to halve that request, calling the mesh settlements “puny” in comparison to the jury verdicts.

“The court notes that this percentage results in a substantial amount of money awarded to common benefit counsel,” Goodwin wrote in his Jan. 30 order.  “However, based on the numerous factors discussed above and the awards given in similar MDLs, this court believes that the award given is conservative and serves to justly compensate common benefit counsel for their work without unnecessarily burdening the plaintiffs in this litigation.”  In court documents, Henry Garrard of the Law Office of BBGA in Athens, Georgia, who is chairman of the fee committee, had called Kline & Specter’s criticisms “blatant hypocrisy.”

“The court correctly notes that the most important factor in assessing such a fee request is the result obtained,” wrote Kline & Specter’s Shanin Specter, in an email.  “The core of our objection is that the cases were settled for way too little and therefore the lawyers are asking for way too much.  That objection was simply not addressed.  Unfortunately, the court did not look at how much was obtained per claimant and whether these recoveries were good or bad, individually or generally.”

The eight lawyers on the fee committee made their request Nov. 12.  They estimated that about 680,000 of the 900,000 hours that 94 law firms worked on the case was for the common benefit of everyone and sought a hold-back that would grant $366 million in common benefit fees based on the $7.25 billion in settlements so far.  The final settlement price tag, though, could be closer to $11 billion, granting about $550 million in fees in the end.

In a Nov. 26 objection, Specter wrote that the hold-back should be 2.5 percent, noting that the average settlement was about $40,000, while the average award for the cases that have gone to trial is about $9.8 million.  Many of those were in state court, such as a $57 million award that Specter won against Johnson & Johnson’s Ethicon Inc. subsidiary in 2017.  Last week, Thomas Kline and Kila Baldwin of Kline & Specter secured another $41 million verdict against Ethicon.  Specter also found fault in lead counsel’s failure to get a global settlement, which he said was proof that that its work was not for the common benefit.

“The court strongly disagrees,” Goodwin wrote in his order.  “Far from failing to provide a common benefit in the form of a global settlement, the plaintiffs’ leadership facilitated the settlement of tens of thousands of cases through its persistent efforts to weaken the defendants’ factual and legal standing compared to individual women across the country.  Plaintiffs’ leadership also provided the MDL plaintiffs with all the work-product they created and educated individual plaintiff attorneys on how to prosecute a pelvic mesh case.  These are global benefits.”

The judge called other arguments “premature.”  Those included Specter’s claim that the fee committee hadn’t provided certain documents and that work by other firms would be uncompensated.  “K&S is essentially arguing certain slices of the pie are too small before the court has even issued its order determining the size of the pie,” he wrote.  “The purpose of this court’s order is to evaluate the reasonableness of the aggregate proposed award that will be individually allocated in a later order.”

More generally, he found the fee request to be “very reasonable” given the investment of tens of millions of dollars, the complexity of the cases and, most importantly, the amount obtained.  He calculated the lodestar—or the total amount billed multiplied by an average hourly rate of $400—to be less than $272 million.  But the award, he wrote, was comparable to other “super-mega-fund” cases, like the $2.4 billion settlement over Actos, in which a judge assessed an 8.6 percent holdback.  He called the other two objections “untimely.”

One of those, by Andrus Wagstaff, which hired Blank Rome attorney Andrew Williamson to file its objection, alleged that the fee committee hadn’t treated the firm fairly.  Another came from Philadelphia’s Sheller, which on Jan. 18 called the fee request a “ ‘smoking gun’ admission” that the fee committee had been “hijacked by a small band of profiteers, outrageously demanding unsupervised use of the common benefit fund as their personal ATM.”

Other firms did not challenge the hold-back percentage overall but have grumbled about the specific amount that the fee committee has earmarked for them—a fight that could magnify in the coming months as special master Dan Stack, a retired judge on the Madison County, Illinois, Circuit Court, reviews the fee allocation.

“Eight law firms took two-thirds of the money, and 91 firms got the rest,” said partner Adam Slater.  “We are hopeful and optimistic that Judge Stack, and, ultimately, Judge Goodwin, will apply the criteria in a fair and equitable way to fairly compensate all the law firms.”  The fee committee also got support from other law firms.  Those included San Francisco’s Levin Simes Abrams; Birmingham, Alabama’s Freese & Goss; and Matthews & Associates in Houston.

Receiver Attorneys Awarded $15.5M in Fees in Stanford Ponzi Scheme

February 1, 2019

A recent Law 360 story by Reenat Sinay, “Attys Awarded $15.5M in Fees After Stanford Ponzi Deal,” reports that a Texas federal judge has awarded fees of nearly $15.5 million to the attorneys representing a court-appointed receiver and a group of investors in their suit against Proskauer Rose LLP over its former partner's participation in R. Allen Stanford's $7 billion Ponzi scheme.  A team of lawyers from Castillo Snyder PC, Clark Hill Strasburger PLC and Neligan LLP led the investors to a $63 million settlement with Proskauer in August, bringing six years of litigation to a close.

U.S. District Judge David C. Godbey said that the award, which represents 25 percent of the settlement amount, was warranted due to the "extraordinarily complex" litigation involved in the case.  "The court finds that the 25 percent contingency fee agreements between plaintiffs and plaintiffs' counsel is reasonable and consistent with the percentage charged and approved by courts in other cases of this magnitude and complexity," Judge Godbey said.  "The attorneys' experience, reputation and ability also support the fee award."

The court-appointed receiver for the investors, Ralph S. Janvey, and the official Stanford investors committee had Proskauer in their sights because Thomas V. Sjoblom, a former attorney with the firm, allegedly helped R. Allen Stanford's bank hide his shady dealings from the U.S. Securities and Exchange Commission beginning in 2005.  The former financier defrauded tens of thousand of investors in a $7 billion Ponzi scheme in which he misused or misappropriated certificates of deposit purchased by investors and administered by Stanford International Bank.

Stanford Financial Group retained Sjoblom, then a partner at Chadbourne & Parke LLP, to represent several Stanford-affiliated entities in connection with the SEC investigation.  Sjoblom joined Proskauer in August 2006 and continued to represent Stanford Financial until February 2009, when the SEC accused R. Allen Stanford of running the multibillion-dollar fraud.  Sjoblom left Proskauer in September 2009. Stanford was convicted in 2012 and is serving a 110-year prison sentence.

Judge Godbey pointed to the "nature and length" of the investors' relationship with their counsel as further justification for the requested attorneys’ fees.  The investors' lawyers have collectively invested more than $16 million and more than 14,600 hours of work in the Stanford case overall since 2009, according to the order.

"Plaintiffs' counsel have represented the receiver, the committee and investor plaintiffs in numerous actions pending before the court in connection with the Stanford receivership since 2009," the judge said.  "The Stanford receivership and the litigation are extraordinarily complex and time-consuming and have involved a great deal of risk and capital investment by plaintiffs' counsel as evidenced by the declarations of plaintiffs' counsel submitted in support of the request for approval of their fees," Judge Godbey said.

Judge Godbey also held that the requested fees were far less than what many firms would have asked for in a similar situation.  "The 25 percent fee requested is also substantially below the typical market rate contingency fee percentage of 33 percent to 40 percent that most law firms would demand," Judge Godbey said.

The case is Janvey et al. v. Proskauer Rose LLP et al., case number 3:13-cv-00477, in the U.S. District Court for the Northern District of Texas.