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Category: Fee Award

$503M in Attorney Fees in Syngenta GMO Corn Settlement

December 10, 2018

A recent Law 360 story by Bonnie Eslinger, “Attys Get $503M in Fees for Syngenta GMO Corn Settlement,” reports that a Kansas federal judge gave final approval to Syngenta AG’s $1.5 billion deal to resolve claims filed on behalf of 650,000 corn producers over the agricultural giant's genetically modified corn seed, a deal that handed class counsel a $503 million cut.  The order from U.S. District Judge John W. Lungstrum noted that the case was "hotly contested," with the merits of the corn producer claims "thoroughly vetted through litigation" in multiple jurisdictions.  That litigation included one multiweek class action trial in his court and extensive preparation for other trials.

"This is not a situation in which the parties proceeded quickly to settlement without serious litigation of the claims on their merits, such that there might be reason to suspect that the settlement was not fairly negotiated," the judge wrote.  "Indeed, the protracted negotiation process and the vigor with which the parties litigated the merits of the claims provide additional assurance that this agreement was fairly and honestly negotiated."

The litigation winds back to 2014, when corn farmers and others in the corn industry began filing lawsuits, including class actions, against Syngenta over the company's marketing of two insect-resistant GMO corn seed products, Viptera and Duracade, without securing approval from China, according to the court's order.

"The plaintiffs alleged that Syngenta's commercialization of its products caused the genetically-modified corn to be commingled throughout the corn supply in the United States; that China rejected imports of all corn from the United States ... [and] that such rejection caused corn prices to drop in the United States; and that corn farmers and others in the industry were harmed by that market effect," the judge noted.

Hundreds of suits were brought together in the multidistrict litigation heard in Judge Lungstrum's courtroom.  The nationwide settlement class is generally divided into four subclasses: corn producers who did not purchase Viptera or Duracade; corn producers who did purchase one of those products; grain handling facilities; and ethanol producers.  Of the 650,000 class members, 52 percent have submitted claims and only 17 members properly exercised their right to opt out, and just nine objections by 15 members were submitted in the end, the judge said.

"The fact that the class members have reacted so overwhelmingly in favor of the settlement further supports a finding that the settlement is fair and reasonable and adequate," he said, adding that the court found the objections filed in opposition to the settlement to "lack merit."  The judge also said that the immediate payout that the settlement offers — even after the award of one-third of that amount for attorneys' fees — had more value than the "mere possibility of a more favorable outcome after further litigation."

The first trial in the MDL, which won class certification in September 2016, tested the negligence claims of four Kansas farmers representing 7,000 others who believed that Syngenta rushed Viptera seed to market in 2010, willfully ignoring the importance of Chinese regulatory approvals.

The Kansas farmers alleged that varieties of harvested corn were mixed together indiscriminately on their export journey.  When China discovered the rogue strain in November 2013, they alleged, it immediately rejected American corn cargo, shutting down the Chinese market for U.S. corn and costing the domestic U.S. industry more than $1 billion.  The jury sided with the farmers, finding Syngenta negligent and awarding the class of corn producers $217.7 million in compensatory damages. Syngenta said it planned to appeal.

In July, Judge Lungstrum further consolidated the seven remaining separate state class actions in Arkansas, Illinois, Iowa, Missouri, Nebraska, Ohio and South Dakota.  Syngenta then urged the court to certify the $217.7 million verdict as a final judgment, telling Judge Lungstrum in September that it was necessary to prevent needless delay of the company's appeal since it knew the farmers planned to dispute the finality of the verdict.  The farmers shot back in October by asking the judge not to sign off on the verdict because the outcomes of other classes could influence the appropriateness of the jury's decision.

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.

Firms Must Evenly Split $11.3M in Fees in Century 21 Class Action

December 6, 2018

A recent Law 360 story by Bill Wichert, “3 Firms Must Evenly Split $11.3M Fees in Century 21 Suit,” reports that three law firms representing Century 21 Real Estate Corp. franchisees in a class action against the company and its former parent must evenly split roughly $11.3 million in attorneys’ fees awarded in connection with a settlement in the case, a New Jersey appeals court ruled in nixing one firm’s bid for a larger share.

A three-judge appellate panel upheld a trial court order that confirmed an arbitration award dividing the money equally between Zwerling Schachter & Zwerling LLP, Keefe Law Firm and Kopelowitz Ostrow PA, rejecting Zwerling Schachter’s argument that it deserved more than a third of the fees due to its work and responsibility in the litigation.  The arbitrator, a former federal judge, correctly found that representation agreements between the firms and franchisees required the firms to equally share the attorneys’ fees even if they did not share the work and responsibility in the class action equally, according to the panel.

The class action, which was initially filed in 2002, alleged that Century 21’s then-parent, Cendant Corp., breached a contract by diverting Century 21 advertising funds to competitors.  The franchisees claimed that Cendant, which also owned Coldwell Banker and ERA Real Estate, misappropriated funds to try to sink Century 21 and build up its other units.  In 2002 and 2004, Zwerling Schachter, Kopelowitz Ostrow and McElroy Deutsch & Mulvaney LLP entered into "attorneys-class representative agreements" with plaintiffs in the case, according to the appellate opinion.

Those agreements said that each firm would receive “33⅓ percent” of any attorneys’ fees awarded in the case and that “each of the law firms named herein shall share the fee which is in accordance with their anticipated division of work and responsibility in this matter,” the opinion said.  McElroy Deutsch withdrew from the matter in 2004, and the firm that ultimately became Keefe Law Firm joined the case, the opinion said.  The parties have agreed that Keefe, Zwerling Schachter and Kopelowitz Ostrow have a right to share in the attorneys’ fees, with McElroy Deutsch to receive its fees out of Keefe’s share, according to the opinion.  After the class action settled in 2012, the three firms could not agree on how to split up the attorneys’ fees, the opinion said.

Zwerling Schachter said the apportionment should be based on the hours worked and the responsibility assumed during the case, while Keefe and Kopelowitz Ostrow said the attorneys-class representative agreements required the firms to divide the money equally.  Keefe and Kopelowitz Ostrow in 2013 made an offer of judgment to Zwerling Schachter, under which that firm would have received $600,000 more than if the firms split the fees equally, but Zwerling Schachter rejected the offer, the opinion said.

The firms agreed in 2014 to submit their fee dispute to arbitration.  In 2016, the arbitrator found that “the attorneys-class representative agreements ‘require[d] the parties to share the attorneys' fee award in equal thirds, even if the parties did not share the work and responsibility in the underlying class action equally,’” the opinion said.

The trial court in June 2016 entered orders confirming the arbitration award and denying Zwerling Schachter’s motion to vacate the award.  In November 2016, the court denied a motion from Keefe and Kopelowitz Ostrow seeking to recoup the attorneys’ fees and costs they incurred after Zwerling Schachter rejected their offer of judgment, the opinion said.  On Zwerling Schachter’s appeal of the June 2016 orders, the appellate panel affirmed those decisions by citing in part the attorneys-class representative agreements, saying the panel agreed with the arbitrator that the first sentence of those agreements “is clear in providing that each of the three firms was to receive one-third of a fee award."

“We also agree with the arbitrator that the key phrase in the second sentence is ‘anticipated division of work and responsibility,’” the panel said.  “Finally, we agree with the arbitrator's reasoning that the second sentence did not undercut or modify the clearer first sentence.”  The panel also noted the arbitrator’s findings that there was no evidence that “any of the firms had ‘failed to contribute at all toward earning the fee award,’” and that “the evidence showed ‘each party contributed thousands of hours to the class litigation.’”

“In short, the plain language of the attorneys-class representative agreements and the extrinsic evidence supports an equal apportionment of the fee award,” the panel said.  Keefe and Kopelowitz Ostrow appealed the November 2016 order, but the panel affirmed that ruling as well, saying “the amount of the arbitration award was not sufficient to trigger the shifting of fees and costs under Rule 4:58, the offer of judgment rule.”

The case is Frank K. Cooper Real Estate #1 Inc. et al. v. Cendant Corp. et al., case numbers A-1482-16T3 and A-1579-16T3, in the Superior Court of New Jersey, Appellate Division.

Attorney Fee Info Needed for $182.5M Euribor Settlement

December 3, 2018

A recent Law 360 story by Dean Seal, “$182.5M Euribor Deal Won’t Get OK’d Without Atty Fee Info,” reports that a New York federal judge said he will not grant preliminary approval for a $182.5 million settlement between investors JP Morgan Chase & Co and Citigroup over claims of a conspiracy to manipulate the Euro Interbank Offered Rate without first seeing what the investor's counsel intends to seek in attorneys' fees.  U.S. District Judge P. Kevin Castel said he thoroughly reviewed the preliminary approval motion and its supporting documents but unless it was an oversight on his part, he was not able to locate the investor attorneys' fees and expenses proposal, leading him to deny the motion without prejudice.

"To folks who make their living bringing to light material omissions by others, these would be fairly glaring material omissions in a submission to the court because the court, in considering preliminary approval, would be deprived of knowing the proposed net settlement funds available to the class," Judge Castel said.

The proposed settlement put before the court less than two weeks earlier would resolve claims from investors in Euribor-linked products that JPMorgan and Citi were among several big banks that conspired to rig the interest rate benchmark, which is used to reflect the interest rate charged on short-term euro loans between big banks.

Making no mention of the merits of the settlement, Judge Castel said the most direct mention of the attorneys' fees proposal came in a proposed "mailed notice" to be sent to potential class members, which contained unfilled blank spaces in lines stating what percentage of the settlement fund would be used for an attorneys' award or incentive awards for the class representatives.  The judge said he hopes to hear back from the investors' counsel that "the court has it all wrong" and that the information he seeks was "disclosed on page such and so of a particular portion of the submissions."

Along with a recently finalized $309 million settlement with Deutsche Bank AG, Barclays PLC and HSBC Holdings PLC, the deal with Citi and JPMorgan, the only remaining bank defendants, would bring the Euribor investors' total recovery up to $491.5 million, although the settlement motion indicated that investors may continue to pursue claims against foreign defendant banks that were dismissed from the action in February 2017 for lack of personal jurisdiction.

The case is Sullivan v. Barclays PLC et al., case number 1:13-cv-02811, in the U.S. District Court for the Southern District of New York.

Eleventh Circuit Reverses Entitlement to Fees in Miami Construction Dispute

November 29, 2018

A recent Daily Business Review story by Katheryn Tucker, “11th Circuit Reverses Fee Award in Miami Construction Dispute,” reports that, in a ruling that the winning lawyer said saved the construction industry from being “turned on its head,” the U.S. Court of Appeals for the Eleventh Circuit has reversed an award of $155,000 in legal fees in a dispute over the superstructure at Miami’s $1 billion Brickell CityCentre.  Senior Circuit Judge Frank Hull wrote the decision joined by Judges Robin Rosenbaum and Julie Carnes.  The panel reversed a ruling from U.S. District Judge Marcia Cooke of the Southern District of Florida granting $154,536 in attorney fees to International Fidelity Insurance Co. and Allegheny Casualty Co. — referred to jointly by the court as Fidelity.

On the winning side is Americaribe-Moriarty Joint Venture, a general contractor on the massive mixed-use development.  The dispute arose when the contractor replaced a subcontractor, Certified Pool Mechanics, called “CPM” in the opinion.  The contractor contended the sub failed to perform and then sought relief under a Fidelity performance bond.  Fidelity sought a declaratory judgment that Americaribe was not entitled to assert a claim against the performance bond and won at the district court level. The Eleventh Circuit upheld that ruling.

But then Fidelity asked for the fee award, which the district judge granted.  “In the first appeal, we affirmed the district court’s grant of summary judgment to Fidelity, holding Fidelity had no liability under its performance bond,” Hull wrote.  “Subsequently, the district court awarded attorney’s fees to Fidelity against Americaribe.”

On a second appeal, Americaribe argued Fidelity wasn’t entitled to recover fees  because the performance bond and the subcontract didn’t provide for it, and the panel agreed.  Richard Chaves of Ciklin Lubitz in West Palm Beach represented the Americaribe-Moriarty Joint Venture, or AMJV.  “The unchecked effect of the district court’s decision would impact not just our client (AMJV) but contractors and subcontractors across the state of Florida,” Chaves said in an email.

“Contractors and subcontractors routinely enter into bonded contracts which contain prevailing party attorneys’ fee provisions and/or separate indemnity provisions, and have asserted (and likely will assert in the future) claims against performance bonds which are typically challenged by the issuing surety,” he said.  “Fidelity’s position that — despite not having performed their surety obligations under their performance bond — they were entitled to prevailing party attorneys’ fees from AMJV under the indemnity provision of the underlying subcontract (to which Fidelity was not a party) is contrary to Florida’s public policy and, if made into legal precedent, would have turned the construction industry on its head.”

Chaves also suggested Hull’s decision may have helped avoid trouble beyond disputes over performance bonds.  “Contracts are governed by common law,” Chaves said. “An errant decision can create havoc in existing commercial relationships and create uncertainty in future ones.”

The case is Fidelity v. Americaribe-Moriarty JV, No. 17-10814.

Special Fee Master Recommends $500M in Fees in Syngenta MDL

November 27, 2018

A recent Law.com story by Amanda Bronstad, “Syngenta Special Master Rejects $150M in Fees for Texas Attorney Mikal Watts,” reports that a special master reviewing fee requests from hundreds of law firms in the $1.51 billion settlement with Syngenta has recommended that lead counsel get half the estimated $500 million in legal fees but rejected the idea that attorney Mikal Watts, who represents 60,000 farmers in the deal, should get $150 million.

U.S. District Judge John Lungstrum on Nov. 15 approved the class action settlement, which resolved lawsuits alleging Syngenta sold genetically modified corn seed that China refused to import, causing about 600,000 farmers and other producers to lose billions of dollars.  Lungstrum oversaw the multidistrict litigation coordinated in Kansas federal court, but many other cases were pending in federal and state courts in Minnesota and Illinois.  Some were class actions, while others were individual lawsuits.  That led to a big battle over attorney fees. On Nov. 21, special master Ellen Reisman issued a report and recommendation on how to allocate fees to about 400 law firms.

“Here, the settlement agreement recognizes that the successful result in this case was obtained through the work of multiple counsel in multiple jurisdictions who collectively applied litigation pressure in multiple forums that ultimately persuaded Syngenta to resolve the various litigations through a nationwide class action settlement,” wrote Reisman, of Reisman Karron Greene in Washington, D.C. “How to allocate the attorneys’ fee award among plaintiffs’ counsel is less straightforward.”

Objections to the report are due Dec. 5, and a hearing is set for Dec. 17.  Reisman’s report largely reflects a suggestion from lead counsel in the multidistrict litigation in Kansas on how to divvy up the fees, much of which was based on a fee sharing agreement in the settlement.  Although other lawyers played key roles in reaching the settlement, 50 percent of the fees should go to 95 law firms in the multidistrict litigation in Kansas, Riesman wrote.  That included lead counsel Patrick Stueve of Kansas City, Missouri-based Stueve Siegel Hanson; Don Downing of Gray, Ritter & Graham in St. Louis; Scott Powell of Hare, Wynn, Newell & Newton in Birmingham, Alabama; and William Chaney of Dallas-based Gray Reed & McGraw.

Reisman particularly praised the work of a lead settlement counsel Chris Seeger of New York’s Seeger Weiss.  “Mr. Seeger was the clear leader of the settlement effort on the plaintiffs’ side, and without his efforts a settlement would not have been achieved,” she wrote.  She rejected arguments from Watts, of Watts Guerra in San Antonio, that he and a group of 224 associated law firms, representing primarily individual farmers with cases in Minnesota state court, should get one third of the pie.

The dispute mirrors similar fee fights that have erupted in mass torts between plaintiffs attorneys appointed to represent the class and those who have brought individual suits on behalf of their clients.  Reisman, in her report, acknowledged those other cases, predominantly the $1 billion concussion settlement with the National Football League.  In that case, she wrote, the judge allowed some portion of attorney fees to go to lawyers with individual clients, and not just lead class counsel, but capped their contingency rates.  “There is significant legal support for the proposition that the courts have the required personal and subject-matter jurisdiction and the legal and equitable authority to modify contingent fee arrangements,” she wrote.

But she found that the Syngenta litigation had some key differences—most notably, the pressure that a large chunk of individual cases had on reaching a settlement.  In her report, she wrote that “no single event or group of plaintiffs’ counsel was solely responsible for pushing this litigation to resolution.”

The Syngenta multidistrict litigation, created in 2014, involved subclasses of farmers in eight states planned for trials.  Last year, a mistrial aborted the first bellwether trial, in Minnesota, but a federal jury awarded $217.7 million to a class of Kansas farmers in a second trial.  Another trial, on behalf of a class of Minnesota farmers, was ongoing when both sides struck a deal.

Watts Guerra partner Francisco Guerra was co-lead plaintiffs counsel in Minnesota state court, but no one from the firm had a lead role in the multidistrict litigation.  The firm did work on the Minnesota trial, however, and Watts was one of four lawyers appointed to the plaintiffs’ negotiating committee.  Watts did not sign the fee sharing agreement in the settlement but instead based his request on a 2015 joint prosecution agreement with lead counsel in the multidistrict litigation.  He calculated his request using a reduced contingency rate of less than 24.2 percent and $12.8 million in reimbursements for common benefit expenses he paid in the Minnesota state court litigation.

His request for fees got some pushback.  Some lawyers representing individual farmers, including one who filed a lawsuit with Watts earlier this year, accused the Texas lawyer of cutting them out of negotiations and luring farmers to retain him in order to get fees. Watts called the suit “frivolous.”

In court documents, lead counsel in the multidistrict litigation argued that the 2015 joint prosecution agreement had nothing to do with the class actions and would set Watts up to get as much as $200 million.  They sought 50 percent of the $500 million, with Seeger Weiss getting at least 10 percent, but suggested that 12.5 percent go to the lead lawyers in Minnesota state court and 17.5 percent to attorneys in Illinois.  The remaining $100 million would be reserved for other lawyers.

Reisman agreed on the 50 percent and, as to the arguments from Watts, found that the 2015 agreement was “irrelevant” to the fee award in a nationwide class action.  But she doubled the allocation to the Minnesota group, which includes Watts, assigning 24 percent, or about $120.8 million.

“Unquestionably, the Minnesota state court litigation both advanced the cause of pressuring Syngenta on multiple fronts and, through coordination with Kansas counsel, assisted the nationwide class effort,” Reisman wrote.  Lawyers in the Illinois cases, whose award totaled $80.5 million, or about 16 percent, “presented an important third pressure point on Syngenta,” she wrote.

She also allocated 10 percent to lawyers with individual clients, capping their contingency rates at 10 percent.  She said most of those firms recruited clients and filled out fact sheets, while lawyers in leadership in Kansas, Minnesota and Illinois did the “vast majority” of the work.  “A 10 percent contingent fee is obviously a significant reduction from the typical 30-40 percent contingent fee,” she wrote. “However, it is appropriate given the history of this litigation.”