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Attorneys Awarded $300M in Fees in Forex Price Fixing Settlement

November 8, 2018

A recent New York Law Journal story by Colby Hamilton, “Attorneys Awarded $300M in Fees in Bank Exchange Fee Settlement” reports that U.S. District Judge Lorna Schofield of the Southern District of New York knocked more than three-and-a-half percentage points off the requested attorney fees in the blockbuster $2.3 billion settlement over price-fixing by banks in the foreign exchange market, but that still left the lawyers for the 15 consolidated cases with more than $300 million in approved fees.  As the court noted, the litigation involved several hundred attorneys working over the course five years, resulting in what the plaintiffs claim is the third largest antitrust class action settlement in history.

Class counsel, led by co-lead counsel from Scott + Scott and Hausfeld LLP, were already awarded $22.5 million for litigation expenses.  Schofield granted counsel 13 percent of the settlement fund for attorney fees—which was less than the 16.51 percent sought.  Schofield noted that two class members objected to the proposed fee as being “grossly excessive,” while requesting a fee of no more than 8 percent.  Schofield found that the experts presented by the plaintiffs ultimately showed that comparable settlements of such size had a regressive percentage attached to them, noting that a pair of settlements that exceeded $3 billion had the smallest fee percentages, under 10 percent.

In looking at risk, results and policy consideration, the judge also found that “nothing in the record … indicates that this case is exceptional” when compared with similar cases.  Notably, Schofield pointed to government investigations and criminal prosecutions relating to price-fixing in the foreign exchange market that laid substantial groundwork ahead of the litigation.  Finally, Schofield’s cross-check against the lodestar multiplier, which she said stood at 1.72 and was “within the typical range for megafund cases.”

Law Firms Seek $90M in Fees in Illinois State Farm Judicial Election Case

October 17, 2018

A recent Law 360 story by Diana Novak Jones, “Lieff Cabraser, Others Want $90M in State Farm Judge Case,” reports that Lieff Cabraser, Clifford Law Offices and several other firms have asked for $90 million in fees and expenses for their work representing a class of State Farm customers who settled claims the insurance giant rigged an Illinois judicial election for $250 million.  Counsel for a class of nearly 5 million policyholders who filed a Racketeer Influenced and Corrupt Organizations Act suit against State Farm said that their work on the unusual and contentious litigation — which brought claims straight out of the pages of a legal thriller — warranted a fee award of more than $83 million and another $7 million in expenses.

The suit's allegations date to the late 1990s, when State Farm was hit with a more than $1 billion verdict in a separate class action over crash repairs.  After appealing that judgment to the Illinois Supreme Court, the company funneled millions into the campaign coffers of a candidate for an open seat on the court in order to buy his vote to overturn — and then lied about it in court filings, the suit claimed.  State Farm and the policyholders settled on Sept. 4, the same day opening statements were scheduled to begin, with State Farm agreeing to pay $250 million to resolve the litigation that class counsel said was a hard-fought longshot.

Taking that and the opinions of three experts on attorneys' fees into account, "Class counsel's request is reasonable, customary, and even conservative in large and complex cases like this one — and is fully supported by both the facts and law," they told U.S. District Judge David Herndon.

Class counsel asked for 33.3 percent of the $250 million, which comes out to more than $83.3 million, including interest accrued, but excluding the cost of settlement administration.  They also requested $6,971,852 in expenses, which covered the cost of experts, consultants, document review and more, according to their motion.  Each of the three named plaintiffs should receive $25,000 for their work over the past six years, class counsel added.

The insurance company will not oppose the fee request, State Farm spokesman Jim Camoriano said.  As part of the terms of the settlement, State Farm agreed to leave the question of fees to the judge, he said.  The one-third fee request is not unusual in this circuit for cases this unique or involved, class counsel told the judge.

The allegations surrounding Illinois Supreme Court Chief Justice Lloyd Karmeier and his election to the state's highest court were likely the first time a RICO suit has been filed over so-called "dark money" in judicial elections, class counsel said.  And the alleged scheme was uncovered by class attorneys and their investigators, which is rare, the attorneys said.  Overall, class counsel spent more than 55,000 hours on the case, which translates to about $30 million in lodestar, according to the filing.

Also, the class asked Judge Herndon to give the final go-ahead to the settlement ahead of the scheduled Dec. 13 fairness hearing.  The $250 million figure was reached after several attempts at mediation, three trips to the Seventh Circuit, dozens of depositions and two rounds of summary judgment motions, they said in urging the judge to approve the deal.  After the fees and awards, the remainder of the cash will be divvied up evenly among the class members.  Many in the class will receive their payments automatically, while others will have to file a claim form, according to class counsel.

The case is Hale et al. v. State Farm Mutual Automobile Insurance Co. et al., case number 3:12- cv-00660, in the U.S. District Court for the Southern District of Illinois.

Appeals Court Upholds Multiplier in Insurance Coverage Fee Award

August 24, 2018

A recent Law 360 story by Nathan Hale, “Fla. Insurer Loses Appeal of Multiplier of Atty Fees Award,” reports that a Florida appeals court rejected Citizens Property Insurance’s appeal of an order applying a multiplier to an attorneys' fees award for a homeowner who obtained a favorable settlement in a coverage dispute, finding the insurer's argument relied on a decision recently rejected by the Florida Supreme Court.  The Third District Court of Appeal concluded that the trial judge had not abused his discretion in applying a 2.0 contingency fee multiplier, which resulted in a fee award of $120,250 for homeowner Agosta Laguerre.

Citizens Property Insurance Co., which is Florida's insurer of last resort, did not dispute that state law entitled Laguerre to collect attorneys' fees after they settled the underlying suit, in which she contested an $8,400.77 coverage payment she argued significantly undervalued her December 2005 claim for wind damage caused by Hurricane Wilma.  Citizens argued against the multiplier based on the Third District's 2015 decision in State Farm Ins. Co. v. Alvarez, which held that courts can apply contingency fee multipliers “only in 'rare' and 'exceptional' circumstances,” according to the opinion.

The appeals panel pointed out, however, that it had held the Laguerre case in abeyance after hearing oral arguments to await the Florida Supreme Court's ruling in Joyce v. Federated National Insurance Co., an appeal of a decision by the Fifth District that had relied on the Alvarez decision.  In its ruling last year, the Florida Supreme Court rejected the idea that contingency fee multipliers are appropriate only in rare and exceptional circumstances, disapproving of that element of the Alvarez decision, the opinion said.

The Third District quoted the high court's statement that “the contingency fee multiplier provides trial courts with the flexibility to ensure that lawyers, who take a difficult case on a contingency fee basis, are adequately compensated.  Citizens had argued that Laguerre's request did not meet the “rare” and “exceptional” requirement because there was no evidence presented at the fee hearing that Laguerre had difficulty finding an attorney who would take her case, that the results she obtained were not enough to warrant a multiplier, and that a multiplier cannot be based on the complexity of the case, the Third District recounted.

The appeals panel found that while the testimony provided by Laguerre's expert fee witness was thin, Citizens' decision not to cross-examine him about the application of a multiplier and its failure to present evidence that there were competent attorneys who would have taken the case without a multiplier meant the trial judge had not abused his discretion in reaching the conclusion that the relevant market required a fee multiplier.  “Although we find that the testimony supporting the trial court’s conclusion was minimal, a trial court generally may rely on 'expert testimony that a party would have difficulty securing counsel without the opportunity for a multiplier' in support of the imposition of the multiplier,” the panel said.

The panel also rejected Citizens' argument that the “relatively small recovery” did not justify a multiplier, pointing to the difference between a $2,000 offer the insurer made and the appraisal umpire's ultimate award of $27,367.63 minus the money already paid to Laguerre.  Finally, the Third District said the Florida Supreme Court made clear in the Joyce decision that it was not wrong for the trial court to consider the complexity and difficulty of a case in weighing application of a multiplier.

“Turning to whether the complexity of the instant case warrants a contingency fee multiplier, we again note that a contingency fee multiplier analysis 'is properly analyzed through the same lens as the attorney when making the decision to take the case,'” the panel said.  “For this reason, the fact, in hindsight, that this case ultimately consisted of two summary judgment proceedings and minimal discovery and did not proceed to trial is not determinative on this issue.”

The case is Citizens Property Insurance Co. v. Laguerre, case number 3D15-2411, in the Third District Court of Appeal of Florida.

Judge Slashes Attorney Fees in Anthem Data Breach Class Action

August 17, 2018

A recent story in The Recorder by Amanda Bronstad, “Federal Judge Approves Anthem Data Breach Case, Slashes Attorney Fees,” reports that after chastising plaintiffs lawyers in the Anthem data breach settlement for their excessive billing, a federal judge has awarded them $31.05 million and approved the $115 million deal.  In a order, U.S. District Judge Lucy Koh of the Northern District of California approved the fees after concluding that the results were “exceptional.”

Koh had hired a special master to review the billing records submitted by plaintiffs lawyers, who asked for $38 million for their work on the case.  The special master had recommended cutting more than $9 million based largely on the billable hours, but Koh based her decision on a percentage of the fund—about 27 percent.  Although still a reduction from the original request, the award is higher than the special master’s recommendation and the U.S. Court of Appeals for the Ninth Circuit’s 25 percent benchmark.

“Here, based on the court’s familiarity with the case, the choice of a percentage does not strike the court as arbitrary or unconnected from the performed work in a way that would create a windfall for class counsel,” Koh wrote.  Also, Koh approved the settlement, the largest ever in a data breach case.

As to the fee order, he noted that Koh didn’t adopt all of the special master’s findings.  “We’re pleased that the judge saw to go with a benchmark,” he said.  “Obviously, we’d like more.  We always want more.  We’ve asked for more.  But I didn’t read the tea leaves one way or the other.  We didn’t know what to expect.  I think she spent her time, gave a well-reasoned opinion for the final order and judgment and, on the fees, as well.”

Koh brought in a special master in February after telling the four lead plaintiffs lawyers she was “deeply disappointed” in their decision to bring in 49 additional law firms on the case.  The special master, retired Santa Clara County Superior Court Judge James Kleinberg, now at JAMS, proposed a 10 percent cut to the billable hours and suggested that the contract attorney rates, which averaged $360 per hour, be set at $156 instead.  Plaintiffs lawyers continued to press for their initial request, while Frank’s objector thought the award should have been closer to 15 percent of the fund.

In this week’s order, Koh continued to have reservations about the rates billed for contract attorneys—remarking “how striking the markup is”—and set an hourly rate at $240.  She also agreed that the hours were “almost necessarily excessive,” particularly given that there were 53 law firms on the case.  She found that was especially true with hours billed for depositions and settlement.  She cut that amount by 13 percent.

She approved a fee award that is more than the Ninth Circuit’s benchmark, however, citing the “novel legal issues and technical subject matter” and the risks inherent in a data breach case.  She noted that while the fee percentages were higher in data breach settlements with Home Depot and Target, those cases also included claims by financial institutions that skewed the compensation to consumers.  She also approved more than $2.1 million in costs and expenses and nearly $600,000 in service awards to 105 named plaintiffs.

In her approval of the settlement, Koh found that amendments in April resolved her concerns about potential money left over from a $15 million fund in the settlement earmarked for out-of-pocket costs.  The original settlement called for $3.3 million going to cy pres organizations, but the amendments said two organizations, the Center for Education and Research in Information Assurance and Security at Purdue University and the Electronic Frontier Foundation, would receive no more than about $417,000.

Watts Guerra Seeks $150M in Fees in $1.5B Corn Settlement

August 7, 2018

A recent Texas Lawyer story by Amanda Bronstad, “Mikal Watts Wants One-Third of Expected $500M Fee Corn Settlement,” reports that Texas plaintiffs attorney Mikal Watts is asking for at least $150 million in legal fees from the $1.5 billion settlement with Syngenta AG, citing his firm’s “unique position in this litigation.”  The Watts Guerra attorney’s fee request, filed last month but updated on Aug. 3, sets up a potential clash over what could be an estimated $500 million in fees in the class action settlement, which resolves claims by more than 600,000 farmers who alleged Syngenta sold genetically modified corn seed that China refused to import, causing farmers to lose billions of dollars.  In a separate request for fees, lead counsel in the federal multidistrict litigation in Kansas are seeking that amount—about 33 percent of the total settlement fund.

“This fee request is based on Watts Guerra’s enormous investment in this litigation,” Watts wrote in his motion.  “It is on the high end of the range, perhaps, but not unprecedented.”  Watts claims to represent 57,000 farmers who could be entitled to between $345 million and $750 million under the settlement.  The requests come as at least four other lawyers have challenged the fees in the deal, particularly those going to Watts.  Oppositions to the fee requests are due Aug. 17.

The Syngenta litigation was coordinated in both federal multidistrict litigation in Kansas and in two proceedings in Minnesota and Illinois state courts.  In their fee request, the lead lawyers in Syngenta want 50 percent of the $500 million, plus about $6.7 million in costs and expenses, which would go to a total 44 law firms.  They want another 12.5 percent to go to the lead lawyers in the Minnesota state court, and 17.5 percent to attorneys in Illinois state court.  The remaining $100 million would be reserved for other lawyers.

The dispute mirrors fee fights that have erupted in mass torts between plaintiffs attorneys appointed to represent members of a class action and those who have brought individual suits on behalf of their clients.  The vast majority of the farmers Watts represents have retainer agreements with him and filed individual suits in Minnesota state court.  Last year, as part of the federal multidistrict litigation, a jury awarded $217.7 million to a class of Kansas farmers in the first bellwether trial.  It was one of eight subclasses of farmers planned for trials.  A second, on behalf 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 federal multidistrict litigation.  The firm did work on the Minnesota trial, however, and Watts was one of four lawyers appointed to the plaintiffs’ negotiating committee.  “That trial forced Syngenta finally to accept that it faced not just hundreds of millions of dollars in compensatory damages but a likely multibillion-dollar judgment based on intentional misconduct—for the farmers in a single state,” Watts wrote.  “Then, in an instant, it was over.”

The initial settlement called for two agreements—one on behalf of the class, and one on behalf of the individual plaintiffs, according to court filings.  But the negotiated deal encompassed four subclasses—two on behalf of farmers, one for grain handling facilities and another for ethanol producers.  Final approval of the settlement is set for Nov. 15.

Earlier this year, two attorneys in Beaumont, Texas, claiming to represent 9,000 farmers filed a motion to delay approval of the settlement, insisting the lead lawyers who negotiated the deal kept their clients in the dark on “how the settlement would be divided and distributed between the class actions and the individual producer plaintiffs.”  In particular, they claimed Watts and another lawyer on the plaintiffs settlement negotiation committee, Clayton Clark of Clark, Love & Hutson in Houston, dropped a more favorable settlement for farmers with individual lawsuits in exchange for higher fees.

Another lawyer, D. Allen Hossley of Hossley & Embry in Tyler, Texas, who claimed to represent 650 farmers, joined the motion, filed by Mitchell Toups, of Weller, Green, Toups & Terrell and Richard Coffman of The Coffman Law Firm (Toups and Coffman are now seeking $34 million in fees, while Hossley wants nearly $2.7 million).

On April 24, Minneapolis attorney Doug Nill sued Watts.  He claimed Watts, firm partner Guerra and Jon Givens, of counsel, who lives in Alaska, and 13 other small law firms or solo practitioners conspired to convince 60,000 farmers not to participate in the class action, and now could end up with $200 million in fees.  The suit asked to void the retainer agreements, which included a contingency fee rate of 40 percent.  In his fee request, Watts said he would drop his contingency fee to 33.3 percent.  When accounting for what he had agreed to pay lead lawyers in the federal multidistrict litigation—referred to as a common benefit assessment—his contingency fee would drop to less than 24.2 percent, he wrote.

But, anticipating that “some of the other common benefit counsel” may demand one-third of the settlement for themselves, he insisted that his fees come out of the $500 million and that he get reimbursed for the $12.8 million in common benefit expenses he paid in the Minnesota state court litigation.  He cited a 2015 joint prosecution agreement that was designed to resolve future fee disputes among lawyers in both the Minnesota state court cases and federal multidistrict litigation.

Watts backed up his fee request, which also includes 332 law firms that worked on his cases, with expert reports from six prominent legal scholars, including Brian Fitzpatrick of Vanderbilt Law School and Geoffrey Miller of New York University School of Law.