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Category: Fee Award

Class Counsel Lose Share of Fee Award in Dow Pollution Class Action

October 12, 2018

A recent Law 360 story by Juan Carlos Rodriguez, “10th Circ. Tosses Dow Pollution Class Attys’ Fee Appeal,” reports that the Tenth Circuit rejected a bid by three individual class counsel to snag a share of $150 million in attorneys' fees paid as part of a $375 million settlement with Dow Chemical Co. and another company in a nuclear pollution lawsuit.  While acknowledging that Louise Roselle, Paul De Marco and Jean Geoppinger McCoy, attorneys who used to work at the now-defunct firm of Waite Schneider Bayless & Chesley, “significantly contributed” to the litigation, a unanimous three-judge panel said they did not have standing to appeal a Colorado federal judge’s fee award.

“The WSBC attorneys argue they have been injured because they were not allocated personal bonuses separate and apart from the fees allocated to WSBC for their hourly work,” the panel said.  “Although pecuniary injury of that kind usually satisfies the injury requirement of standing ... such is not the case here because the WSBC attorneys do not have a ‘legally protected interest’ in any portion of the common fund.”

Because the attorneys were employees, not partners or other equity shareholders at WSBC, “all proceeds corresponding to their work on the Cook litigation belong to the firm,” the panel said.  And it said the attorneys never showed they were parties to any other contract or agreement with the firm that would have granted them a legal interest in WSBC’s share of the common fund.  “Even assuming a deficiency in lead class counsel’s fee allocation, any injury is to WSBC, not to its employees,” the panel said.  “And because the WSBC attorneys ‘cannot bring suit to vindicate the rights of others,’ they do not have a legally protected right for purposes of standing.”

The attorneys say they spent more than 4,500 hours working on the case at WSBC.  The long-running case, brought by Colorado residents who claimed injuries from exposure to waste from a nuclear weapons facility, was settled with Dow and a former Rockwell subsidiary now owned by The Boeing Co. in 2016.  The residents claimed they were exposed to plutonium releases from the Rocky Flats nuclear production facility, increasing their cancer risks, contaminating their properties and lowering property values.

The Colorado federal court issued final judgment on the suit in April 2017, the same day it granted $150 million in attorneys' fees and ordered lead counsel Berger & Montague PC to allocate them to various class counsel as reflected by their contributions.  The attorneys filed an objection to Berger & Montague’s distribution in July 2017, which was denied by the district court in August of that same year.

According to Berger & Montague, WSBC, although operating in bankruptcy, submitted a timely fee application — including for time worked by the objectors — and WSBC was allocated some of the fee award.  But the three former WSBC attorneys never filed a separate petition on their own behalf.  Berger & Montague had also asked the Tenth Circuit to sanction Roselle, De Marco and Geoppinger McCoy, calling their appeal frivolous, but the panel denied that motion in a footnote of the opinion.

Merrill Davidoff, Berger & Montague's chairman emeritus and managing shareholder, said the Tenth Circuit reached the correct decision.  "The appellants were attempting to collect personal bonuses on the same time for which their prior firm had been paid.  As such they had no 'legally protectable interest' in their time charges and so lacked standing," he said.

The case is Roselle et al. v. Berger & Montague PC, case number 17-1328, in the U.S. Court of Appeals for the Tenth Circuit.

Labaton Sucharow to Return $4.8M in Attorney Fees in Securities Class Action

October 11, 2018

A recent ABA story by Debra Cassens Weiss, “Labaton Sucharow Agrees to Return $4.8M in Attorney Fees After Attorney Finder Fee is Revealed,” reports that Labaton Sucharow has agreed to return $4.8 million in attorney fees to plaintiffs and other law firms in a securities class action against State Street Corp.  The payment resolves allegations of double billing and a failure to disclose a $4.1 million finder fee to a lawyer who helped introduce Labaton to the lead plaintiff, the Arkansas Teacher Retirement System, report Law.com and the New York Times.  The lawyer who received the fee is Damon Chargois of Texas.

According to a supplemental report filed with a Boston federal court, Labaton should have disclosed the payment to Chargois, who “did not commit to work on, nor accept responsibility for, the representation of ATRS in the prosecution of the State Street case.”  But the report said the payment itself “did not violate the rules of professional misconduct or constitute intentional misconduct.”

Columbia Law School professor John Coffee Jr. told the New York Times that the agreement shines a light on the “rather sordid market of buying and selling plaintiffs” in securities class actions.  “I think the whole arrangement was under the table and dubious,” he said.

The lawsuit against State Street Corp. had alleged the bank overcharged its customers in connection with certain foreign exchange transactions.  State Street agreed to a $300 million settlement, and U.S. District Judge Mark L. Wolf of Boston awarded $75 million in attorney fees to several law firms.

After a Boston Globe report alleged double billing by Labaton and two other law firms, Wolf appointed retired U.S. District Judge Gerald Rosen as a special master to investigate.  Rosen learned of the finder fee payment.

Labaton’s agreement to return the $4.8 million is part of an agreement with Rosen.  Labaton and two other law firms also agreed to pay $3.8 million to cover the cost of the special master probe.  Labaton also agreed to internal reforms, including the appointment of a new general counsel and a chief compliance officer.  The law firm also agreed to hire former U.S. District Chief Judge James Holderman of Chicago for a year to ensure that fee agreements comply with “emerging best practices.”

Labaton also said it had adopted a policy banning “bare referral” arrangements with other lawyers.  Bare referral refers to a fee paid for no work, according to this law review article.  Labaton said in a statement that the payment to Chargois “was outside the norms of a traditional case-specific referral fee” and its disclosure “fell short of emerging best practices.”  But the firm said the special master concurs “that the payment made to referring counsel did not violate any rules of professional misconduct.”

“The master’s recommendation that we maintain our role as lead counsel and that our client Arkansas Teacher Retirement System continue to serve as class representative are important elements of the agreement and hopefully reflect our collective achievement in the substantial recovery secured for the class,” the statement said.

Attorneys Awarded Fraction in Vietnam Veteran’s Experimentation Case

October 10, 2018

A recent Bloomberg Law story by Joyce Cutler, “Vietnam Vets’ Law Firm Awarded Only $3.4M in Experimentation Case,” reports that the law firm that spent nine years fighting and winning health care for veterans subjected to government-administered human testing of chemicals including sarin, mustard gas, and LSD was awarded $3.4 million in fees.  U.S. District Judge Claudia Wilken approved Oct. 4 the fee award Morrison & Foerster LLP negotiated with the U.S. Army that’s $16 million less than the value of the hours the firm said it put into the case.

“For MoFo it’s represents a continuation of the commitment we’ve had over the 43 years I’ve been with this firm doing pro bono cases” that’s the “latest but not the last on the long line of work we’ve done on behalf of veterans,” James P. Bennett, Morrison & Forester partner in San Francisco, told Bloomberg Law.

“The larger impact of the case is we’re proud to have given these class members a small measure of relief through the court system that they were entitled to and the Army was wrongfully withholding.  We’re glad to have thrown further light on this history,” Bennett said in September. “It’s important that the government remember its history so A) as not to repeat and B) to recognize its moral and legal obligations to people who have been victims of our mistakes.”

The fee award is the latest and nearly last chapter in the litigation by soldiers subjected to the government’s decades-long human testing program who were seeking recognition and health care above what they could get at the Veterans Administration for injuries they suffered.  “The settlement amount of $3.4 million is a fraction of the fees actually incurred by Class Counsel.  After over nine years of contentious litigation, the total amount of Plaintiffs’ attorneys’ fees exceeds $20 million,” the firm’s motion said.

Wilken agreed, finding the fees were reasonable “because they were substantially discounted from the original total amount of $20 million down to $4.5 million” under the Equal Access to Justice Act rates and discounting hours.  The amount was further reduced to the stipulated $3.4 million.

Wilken, however, rejected plaintiffs’ requests contained in letters from the class seeking a formal apology and raising concerns about whether the government will abide by the agreement.  “These are not valid objections to the motion for attorneys’ fees and cost and service awards.  Ordering an apology is likewise not within the jurisdiction of the Court.”  The $20,000 award per named plaintiff is higher than what is presumptively reasonable in the Northern District “and a higher amount will not be ordered,” Wilken said in rejecting requests plaintiffs made in letters to the court.  The request for a change in tax treatment isn’t within the court’s jurisdiction.

Thousands of former service members over decades were unwitting subjects of medical testing that left lasting physical and mental injuries from drugs, chemicals, and electrocutions, Bennett, the lead attorney, said in a brief supporting the fee petition.  Until the lawsuit was filed in 2009, the government denied the vets additional care for injuries suffered and held them to secrecy oaths with threat of punishment so they couldn’t even discuss the testing they endured.

“As a result of this case, the Army set up a program to provide ongoing medical treatment for class members, and the Army continues to work toward sharing newly acquired information.  Plaintiffs were also released from their secrecy oaths.  Accordingly, Plaintiffs have obtained excellent and lasting benefits for the class,” the attorney’s supplemental brief for fees said.

The San Francisco-based firm negotiated for the fees and $20,000 each in awards to eight veterans and named plaintiffs who were subjected to experiments.  “After an extensive effort to voluntarily narrow the fees requested, Plaintiffs submitted contemporaneous billing records for attorneys’ fees and costs totaling more than $9 million.  More specifically, Plaintiffs submitted billing records for 16,309 hours and $836,864.71 in costs.”  The amount was further whittled down and doesn’t affect the injunctive relief for the class.

MoFo partner Gordon Erspamer filed the lawsuit for Vietnam Veterans of America, Swords to Plowshares: Veterans Rights Organization, and vets over injuries suffered by soldiers who were subjects in government-conducted tests.  The tests were conducted from World War II to the Vietnam War.  Erspamer died in 2014.  “This action chronicles the chilling tale of human experimentation, covert military operations, and heretofore unchecked abuses of power by our own government,” the January 2009 lawsuit said.

Some 7,800 soldiers between the 1950s and into the mid-1970s volunteered to participate in experiments on the effects of chemical and biological weapons, and research on mind-control methods, plaintiffs said.  “For decades, the Army ignored its legal obligation under its own regulations to provide medical care for class members and to notify them of newly acquired information that may affect their well-being,” the attorneys’ supplemental fee motion said.

Wilken in April 2017 granted the soldiers summary judgment and ordered the Army to provide medical care to those who participated in the chemical and biological substance testing program.  The judgment and fee award are final.

A total of 204 Morrison & Foerster staffers and e-discovery specialists worked on the case.  Plaintiffs in August were seeking fees for time spent by 19 attorneys and six paralegals, totaling $4,515,868, including $422,739 in expert costs before further negotiation.  The fees don’t include work done after the initial June 2017 filing.

The case is Vietman Veterans of America v. Central Intelligence Agency, N.D. Cal., No. 4:09-cv-00037, order filed 10/4/18.

Florida Supreme Court Undo Attorney Fees Over Settlement Offer

October 8, 2018

A recent Law 360 story by Carolina Bolado, “Fla. Justices Udo Attys’ Fees Ruling Over Settlement Offer” reports that the Florida Supreme Court quashed a decision deeming a settlement offer too ambiguous to warrant an attorneys’ fee award, ruling that the lower court’s “nitpicking” of offers adds to judicial workload, which is contrary to the purpose of the law.

In a 4-3 decision, Florida’s highest court said two settlement offers from W. Riley Allen to Gabriel Nunez and his father, Jairo Nunez, in a dispute over a car crash were clear and unambiguous and said Allen was entitled to the $343,590 in attorneys’ fees and costs under Florida’s offer-of-judgment statute after he prevailed in his suit.  Under the law, if a plaintiff makes a settlement offer that isn’t accepted and then wins a judgment of at least 25 percent more than the offer, the plaintiff can recover reasonable attorneys’ fees and costs.

In this case, Allen sent two separate identical $20,000 settlement offers to the two defendants that were rejected.  He then won a nearly $30,000 judgment and asked for an award of fees under the offer-of-judgment law.  The Fifth District Court of Appeal had ruled that one paragraph in the proposals for settlement were ambiguous because they did not make clear if $20,000 would resolve claims against just one or all of the defendants.

But the Supreme Court said the Fifth District had focused too much on one paragraph in the offers.  When read as a whole, the offers were not ambiguous, the Supreme Court said.  “If two codefendants each receive a proposal for settlement, in which they are specifically named, each codefendant should possess all the information necessary to determine whether to settle,” the high court said.  “In this context, it appears disingenuous to assert that there exists a legitimate question as to whether one codefendant’s acceptance could have settled the offeror’s claim against the other codefendant.”  The Fifth District “unnecessarily injected ambiguity into these proceedings and created more judicial labor, not less.”

In a concurring opinion, Justice Barbara Pariente noted the proliferation of litigation around proposals to settle and urged courts to refrain from “nitpicking” when assessing whether an offer is reasonable.  The three more-conservative justices signed on to a dissent by Justice Ricky Polston, who said the court did not have jurisdiction to review the case because the Fifth District’s decision did not expressly and directly conflict with other appellate opinions on the issue.

The case is Allen v. Nunez et al., case number SC16-1164, in the Supreme Court of Florida.

Ninth Circuit Vacates $8.7M Fee Award in ProFlowers.com Settlement

October 4, 2018

A recent Law 360 story by Dorothy Atkins, “9th Circ. Rejects Attys’ Fees in $38M ProFlowers Deal,” reports that a Ninth Circuit panel vacated a $8.7 million attorneys’ fees award in a $38 million settlement resolving claims that the company behind the websites Proflowers.com and RedEnvelope.com enrolled consumers in a bogus membership rewards program without their consent that charged them monthly fees.

In a 27-page opinion, a three-judge panel found that the lower court erred by considering $20 credits that Provide Commerce Inc. gave to class members as cash rather than coupons under the Class Action Fairness Act.  As a result, the panel said, the attorneys’ fees could be inflated.  "Nothing in the record could have given the district court reason to believe that any class member, let alone all class members, would have viewed the $20 credit as equivalently useful to $20 in cash," the opinion says.

The ruling is the latest happening in a putative class action filed in 2009 claiming that Provide Commerce gave consumers' information to the marketing agency Encore Marketing International Inc. for unauthorized enrollment in allegedly worthless rewards programs that charged customers $14.95 monthly membership fees.  After two years of litigation, the parties struck a settlement under which the companies would set up a $12.5 million cash settlement fund to reimburse 1.3 million potential class members who submit claims.  Provide Commerce also agreed to give all customers a $20 credit with certain restrictions, which the companies valued at $25.5 million.

The district court approved the deal in 2012, but only about 3,000 consumers submitted valid claims, leaving roughly $3 million in unclaimed settlement funds to go to San Diego State University, the University of California at San Diego and the University of San Diego School of Law in cy pres payments.  In January 2013, the district court held a hearing on the final approval of the settlement, which would award attorneys $8.7 million in fees and $200,000 in costs, purportedly representing 23 percent of the total $38 million deal.

Class member Brian Perryman objected to the deal, however, arguing that the attorneys’ fee award did not comply with CAFA’s requirements, since it did not consider the redemption rate, and that the cy pres award is inappropriate.  The district court rejected Perryman’s arguments, and he appealed the rulings to the Ninth Circuit.  The appeals court sided with Perryman on the attorneys’ fee challenge, noting that CAFA requires district courts to consider the value of only coupons that were actually redeemed when calculating the relief awarded to a class.

“Regardless of the substance of the underlying claim or injury, CAFA prevents settling parties from valuing coupons at face value without accounting for their redemption rate,” the opinion said.  “Accordingly, the district court erred by incorporating an improper factor into its analysis of whether the credit was a coupon under CAFA.”  The panel also noted that there were multiple limitations on the $20 credit, restricting the times they could be redeemed, such as before Mother's Day, making them not equivalent to cash.  The court vacated the attorneys’ fee award and remanded the issue for the lower court to recalculate the fees.  The appeals court affirmed the cy pres payments, finding them appropriate and ruling that there was no reason to overcompensate class members who filed a claim.

The case is In re: EasySaver Rewards Litigation, case number 16-56307, in the U.S. Court of Appeals for the Ninth Circuit.