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Class Counsel Seek Recommended Fees in Chipotle Data Breach Case

November 8, 2019

A recent Law 360 story by Joyce Hanson, “Chipotle Customers Want $1.2M Atty Fees in Data Breach Suit,” reports that customers in a class action suit over a 2017 Chipotle data breach that exposed their names and payment card numbers to hackers asked a Colorado federal judge for $1.2 million in attorney fees, saying a mediator proposed that figure as the parties were settling.

The Chipotle Mexican Grill Inc. customers' unopposed motion calls for fees of $1,165,782 after about $34,000 in expenses are deducted, based on class counsel's 2,406 hours of investigation, prosecution and litigation settlement, according to a brief filed.  Also under the fee proposal, six class representatives led by Todd Gordon and five other plaintiffs will each receive an incentive award of $2,500.

Settlement class members would be eligible for out-of-pocket reimbursement of up to $250, including an automatic payment for each affected card, payment for customers' time spent dealing with fraud issues and reimbursement for credit monitoring and identity theft insurance, the brief said.  In addition, class members who suffered other "extraordinary" unreimbursed monetary losses because of compromised information can make a claim for reimbursement of up to $10,000, according to the proposed settlement.

"Without these individuals' investment of time, and their courage to step forward and vindicate the class' rights against a large institution, the class would not have obtained the substantial relief offered by the settlement," the customers said.

Chipotle revealed in April 2017 that it had detected a data security breach in its electronic processing and transmission of confidential customer and employee information.  The burrito chain acknowledged at the time that it may be subject to lawsuits because of the breach that reportedly affected transactions from March 24 through April 18 of that year.

Financial institutions that sued over the breach told the court in March that the parties had reached a confidential settlement agreement.  On June 19, U.S. District Judge Christine M. Arguello granted the customers' June 13 unopposed motion for preliminary approval of the settlement, conditionally certifying the class.

Bennett G. Picker of Stradley Ronon Stevens & Young LLP served as a private mediator after the customers sent their settlement demand to Chipotle in November 2018, according to the brief.  The parties first held several phone calls with Picker before sitting down with him in a full-day mediation session in Florida, the customers said.

After agreeing on the data breach settlement's material terms, the parties turned to the question of attorney fees and costs, according to the brief.  When they reached an impasse and couldn't agree despite significant negotiation, Picker submitted a mediator's proposal that both sides finally accepted, the brief said.

The customers said the requested fee award is consistent with attorney fees approved in the court and in other data breach settlements.  Class counsel's lodestar of $1.44 million through Oct. 31 represents a 0.83 negative multiplier, which "supports the reasonableness of the fee requested," the customers said.

Weil Gotshal Seeks $2M in Fees in PG&E Bankruptcy

October 22, 2019

A recent Law 360 story by Ryan Boysen, “Weil Gotshal Seek $2M for Work on PG&E Case,” reports that Weil Gotshal & Manges LLP is asking for $2 million in fees and costs for its work in August on the massive bankruptcy of California’s Pacific Gas and Electric Co., with billable hours from just two partners accounting for nearly half of the haul.  In a fee application, the firm said it put in about $2.5 million worth of work into the PG&E case throughout August, just as a proposed $24 billion Chapter 11 reorganization plan came into focus.  After a customary 20% haircut is applied, it brings the total to about $2 million.

Nearly $1 million of that comes from the billable hours of just two attorneys: Weil Gotshal’s Stephen Karotkin, who worked 300 hours, and Jessica Liou, who worked 275 hours.  While Weil Gotshal is the primary firm representing PG&E, the nation’s largest power utility has retained lawyers at several other firms in various capacities.  One report estimated in March that PG&E had spent at least $84 million in attorney fees up to that point.  It’s not clear how much more overall the utility has since spent.  That's not to mention the powerhouse restructuring attorneys representing the committees, creditors and other stakeholders who are all vying for an advantage in the massive case.

Earlier this month PG&E criticized the court-appointed fee examiner for attempting to put its attorneys on too tight of a leash, saying the examiner's suggested cost-cutting measures and fee caps were too strict.  PG&E, the nation's largest utility, filed for bankruptcy in January after racking up more than $30 billion in potential liabilities tied to its alleged role in causing a series of wildfires that tore through the Golden State in 2017 and 2018, killing 130 people and destroying billions of dollars in property.

PG&E Bankruptcy Attorneys Blast Fee Examiner’s Caps on Fees

October 2, 2019

A recent Law 360 story by Rick Archer, “PG&E Case Attorneys Blast Fee Application Protocol,” reports that counsel for Pacific Gas and Electric Co. (PG&E), the utility’s board of directors and the unsecured creditors in its bankruptcy case have jointly claimed the court-appointed fee examiner is seeking to impose excessively strict caps and unnecessary barriers to their fee applications.

In a filing with a California bankruptcy court, the parties said the fee examiners' proposal would unreasonably put a flat cap on compensation for time spent preparing fee applications, bar compensation for travel time and place other “unwarranted” barriers to fee applications.  “The protocol and motion together contain a litany of requirements that have no basis in the Bankruptcy Code, rules or guidelines,” they said.

The filing is a response to a September filing by Bruce Markell, the fee examiner appointed by the court in the case, proposing guidelines and procedures to evaluate applications to approve legal fees.  According to the filing, 23 firms had submitted appearances in the bankruptcy case as of Sept. 16, although only eight had filed fee applications.

Markell argued he should be allowed to bar redacted time entries and applications for nonworking travel time, which he said made up about $1 million of the then-current fee applications.  He also sought a cap on payable hours for time preparing employment and fee applications.  “The fee examiner has been impressed by the amount charged for obtaining court approval of employment. In one interim application, these fees approached $200,000,” he said.

In the filing, counsel for PG&E and the unsecured creditors argued the proposed guidelines are too strict, saying the general local guidelines call for fee application preparation to be capped at 5% of total fees, and that standard guidelines call for attorneys be compensated for up to two hours of non-working travel time.  They noted a number of attorneys in the case who are based in New York and others are required to travel around California in connection with wildfire litigation.  They also argued the procedures would unnecessarily penalize late applications and impose other “unwarranted barriers.”

“The protocol and motion should not impose requirements beyond what Congress has commanded,” they argued.  PG&E filed for Chapter 11 bankruptcy in January after racking up over $30 billion in liabilities related to its alleged role in sparking wildfires that charred vast swaths of California and killed 130 people.

PA Court Awards Attorney Fees for Time Spent Seeking Attorney Fees

August 29, 2019

A recent Legal Intelligencer story by Zack Needles, “Pa. Courts OKs Attorney Fees for Time Spent Seeking Attorney Fees,” reports that attorneys can petition to recover fees under the Unfair Trade Practices and Consumer Protection Law (UTPCPL) for time they spent preparing and litigating fee petitions—but only within reason, the Pennsylvania Superior Court has ruled in a case that could prove instructive for litigators across the state.

In Richards v. Ameriprise Financial, a case involving claims under the UTPCPL against Ameriprise Financial over alleged misrepresentations made by one of its financial advisers, a three-judge panel of the appeals court ruled that fee awards for hours spent pursuing fee awards can be proper.  However, the panel added, the $200,363 an Allegheny County trial judge awarded to plaintiffs counsel, Kenneth Behrend of Behrend & Ernsberger in Pittsburgh, for preparing and litigating two fee petitions was excessive.

Judge Mary Jane Bowes, writing for the panel, noted there was a “dearth of Pennsylvania authority addressing the propriety of a fee award for hours spent preparing and litigating fee petitions.”  She added, however, that “federal courts generally permit such fees, but the hours assigned to that task must be reasonable.”

“We find that an award of reasonable attorney fees under the UTPCPL for preparing fee petitions is consistent with the legislature’s aim of encouraging experienced attorneys to litigate such cases, even where the damages are small,” Bowes said in the precedential Aug. 21 opinion, but added, “Nonetheless, we agree with Ameriprise that Mr. Behrend spent an inordinate number of hours preparing the second and third fee petitions.”

While the panel said there was evidence in the record to support Behrend’s requested hourly rate of $600, Bowes, joined by Judge Jacqueline Shogan and Senior Judge Eugene Strassburger III, said the panel found it to be “presumptively unreasonable” that a seasoned UTPCPL litigator like Behrend would need to spend 85 hours researching entitlement to attorney fees under the statute and conducting bill review.

“Mr. Behrend admittedly has expertise and vast experience in UTPCPL litigation and in preparing fee petitions,” Bowes said.  “Indeed, the attorney affidavits he offered in support of his increased hourly rate, as well as his own affidavit in support of his fees in the underlying litigation, were recycled from a 2013 fee petition previously submitted in Boehm [v. Riversource Life Insurance Co.].”

Ameriprise also objected to four specific entries in the fee petitions, including an entry for 11 hours of research and drafting on the subject of “restitution and treble damages,” which was not at issue in that appeal.  The trial court, however, did not specifically address Ameriprise’s arguments regarding those four line items, which rankled the appellate court.

“It is our expectation that a trial court assessing the reasonableness of attorney fees will thoroughly scrutinize the specific line items that are challenged, generally evaluate the reasonableness of the expenditure of time for the services listed in the fee petition, make adjustments when they are warranted, and explain its reasons for the award,” Bowes said.  ”The broad-brush approach taken by the trial court impedes our ability to perform proper appellate review.  Thus, we vacate the orders awarding attorney fees based on the second and third fee petitions, and remand for reconsideration of those fees in light of the foregoing.”

The panel also reversed the trial court’s decision to award $12,000 in attorney fees to the plaintiffs for time spent drafting an unopposed petition to publish the Superior Court’s memorandum opinion on the case’s first trip up to the appeals court in 2017.

“The publication of this court’s memorandum opinion in Richards I did not enhance the likelihood that plaintiffs would ultimately prevail or advance the litigation or benefit them in any way,” Bowes said.  “Moreover, the record establishes that plaintiffs’ counsel almost exclusively litigates UTPCPL insurance cases, and may have had at one time as many as 29 cases involving similar facts against Ameriprise.  Publication of our memorandum decision in Richards I rendered it precedential, a benefit to plaintiffs’ counsel and other clients involved in ongoing and future UTPCPL cases, but not plaintiffs herein.”

Ultimately, the appellate court remanded the case to the trial court “for an overall reduction in the hours/fees attendant to preparation of the fee petitions themselves, a circumspect assessment of the accuracy and reasonableness of the complained-of line items, and the entry of a new attorney fee award consistent with this opinion.”  The appellate panel did uphold the trial court’s award of treble damages to the plaintiff in the amount of $102,019, but tossed out an additional $34,006 in “‘restitution’” damages.

“Herein, the trial court found no liability for negligent and fraudulent misrepresentation,” Bowes said. “Damages were awarded solely for violation of the catchall provision of the UTPCPL. Having ascertained that plaintiffs sustained actual damages of $34,006.44 under the UTPCPL, the trial court had the discretion to award damages up to three times that amount, i.e., a maximum of $102,019.32.  By awarding $34,006.44 plus $102,019.32, the trial court erroneously awarded quadruple damages and exceeded its discretion under the UTPCPL.”

Reached for comment on the decision, Behrend said the ruling provided some much-needed guidance on how fee petitions are supposed to be prepared.  He also pointed out that the court’s ruling clarified that fee petitions for work done on appeal can be filed with the trial court, rather than the Superior Court.

The panel found that Pa.R.A.P. 2744 provides only that an appellate court “‘may award’” attorney fees and delay damages as “‘further costs damages … if it determines that an appeal is frivolous or taken solely for delay or that the conduct of the participant against whom costs are to be imposed is dilatory, obdurate or vexatious.’”  “Plaintiffs made no claim that Ameriprise’s first appeal was frivolous or taken solely for purposes of delay,” Bowes said.  “Rather, they based their entitlement to appellate attorney fees solely upon the UTPCPL.”

Judge: Special Fee Master’s Attorney Fee Analysis 'Flawed' in Syngenta MDL

August 28, 2019

A recent Law.com story by Amanda Bronstad, “’Structural and Procedural Flaws’ Foul Up Fees in Syngenta Settlement,” reports that judges in three states have divvied up more than $440 million in attorney fees so far in the litigation over Syngenta’s genetically modified corn, but their orders have prompted multiple appeals and an unusual rebuke from the bench. 

U.S. District Judge John Lungstrum of the District of Kansas, who is overseeing the multidistrict litigation against Syngenta, granted $503 million in common benefit fees last year as part of a $1.5 billion class action settlement.  He divided the fees into four pools, three of which focused on cases in specific venues: Kansas, Minnesota and Illinois.  Lungstrum allocated nearly $247 million in fees to 59 firms handling the multidistrict litigation in Kansas but allowed judges in Minnesota and Illinois to decide which firms got how much in their own venues.

On Aug. 19, Chief U.S. District Judge Nancy Rosenstengel of the Southern District of Illinois, doled out more than $78 million for law firms in the Illinois cases but criticized the report and recommendation of special master Daniel Stack, whom she appointed in the case, as having “structural and procedural flaws.”

“Because the report and recommendation placed claimant numbers, expenses, and client acquisition costs at an equal footing with the hours actually expended in pursuit of the plaintiffs’ cause, the methodology does not accurately display the firms’ common benefit value,” she wrote.  “The methodology also carries the risk of blindly and disproportionately rewarding attorneys for marketing efforts, rather than work performed advocating for the benefit of the plaintiffs.”

She then slashed $23.4 million to Houston’s Clark, Love & Hutson and two other firms, Chicago’s Meyers & Flowers and Phipps Anderson Deacon, a San Antonio firm now called Phipps Deacon Purnell.  Stack had awarded those firms $61.6 million, or about 79% of the total fees in Illinois—an amount Rosenstengel called “grossly excessive.”

Rosenstengel’s criticism of Stack, a retired judge on the Madison County, Illinois, Circuit Court, got the attention of Cleveland-based Anderson Law Offices, which is appealing an allocation of $550 million in common benefit fees in the transvaginal mesh litigation.  Stack served as special master in that case, in which Clark Love, whose managing partner, Clayton Clark, served on the fee and cost committee, is set to receive more than $45 million in fees.

Rosenstengel’s order had “strikingly similar circumstances” to the mesh case, according to a filing by Anderson Law Offices before the U.S. Court of Appeals for the Fourth Circuit, and “presents a compelling example of how common benefit fee allocations should be closely scrutinized by the district courts, which plainly has yet to be conducted in this case.”

The Syngenta settlement, approved Dec. 7, resolved lawsuits alleging it sold genetically modified corn seed that China refused to import, causing about 600,000 farmers and other producers to lose billions of dollars.  Objectors represented by two lawyers, George Cochran of the Law Offices of George W. Cochran in Streetsboro, Ohio, and Robert Clore of Corpus Christi, Texas-based Bandas Law Firm, have appealed the settlement’s approval, including the $503 million in fees.  That award, which is one-third of the class action settlement fund, is far more than the average of 5% to 15% in deals involving more than $1 billion, they wrote.

“The unprecedented fees deprived the injured farmers of hundreds of millions of dollars that should have addressed their losses,” they wrote.  “Without a sizeable reduction in fees, approval of the settlement itself was error.”  In a response filed last month, lead plaintiffs counsel defended the settlement and the fees, noting that they advanced $31 million to fund the litigation.  “This was no ordinary class action but one with multiple forums that went to class trial—twice—and the size of the fund was directly related to the work of plaintiffs’ counsel, who imposed ‘unprecedented’ liability on the defendants,” they wrote.

In approving the common benefit fees, Lungstrum largely adopted the report and recommendation of special master Ellen Reisman of Reisman Karron Greene in Washington, D.C.  On March 20, Lungstrum allocated fees to specific firms in the Kansas cases, agreeing with the recommendations of co-lead counsel in the multidistrict litigation and rejecting two objections that questioned whether firms responsible for doling out the fees, including to themselves, had conflicts of interest.

Co-lead counsel were Stueve and 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.  Their four firms, plus Seeger Weiss, collectively received almost $215 million in fees.  On May 30, Hennepin County District Court Judge Laurie Miller divvied up nearly $118.3 million in fees to 188 law firms.  She also relied on co-lead counsel, which included Gustafson Gluek, Bassford Remele and Watts Guerra, which collectively stand to receive $87 million.

Watts Guerra is among the firms that have appealed the allocation orders to the U.S. Court of Appeals for the Tenth Circuit.  Watts Guerra initially sought $150 million in common benefit fees for itself and hundreds of other law firms that represented 57,000 farmers.  Mikal Watts, of Watts Guerra, to which Miller awarded $39.7 million in fees, declined to comment.

The Tenth Circuit abated the fee appeals pending Lungstrum’s final judgment following an allocation of $60.4 million in remaining fees to attorneys with individual clients, referred to in court documents as the “IRPA,” or individually retained private attorneys.  At issue in Rosenstengel’s order this month was Stack’s reliance on using a percentage, along with his “personal experience and observations,” rather than billing records of the law firms.  She also found that, although the Clark/Phipps group submitted 141,663 common benefit hours, more than any other firm, a “large portion” of the time was logged by anonymous employees and lacked records.

She instead awarded $24.2 million in additional fees to nine firms led by Heninger, Garrison & Davis, based in Birmingham, Alabama, which were “at the forefront of the Illinois Syngenta litigation.”  Stack had given those firms, called “The Garrison Group,” less than $9.7 million, or 12.4%, of the fees.