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Category: Fee Jurisprudence

Contingency Fee Percentages in Megafund Class Actions

August 21, 2020

Quinn Emanuel relies mostly on recent attorney fee scholarship and attorney fee jurisprudence in their recent $185M attorney fee request in the ACA class action.  Their fee request reads: 

In one recent case, In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 991 F. Supp. 2d 437 (EDNY 2014), the Court conducted a survey of so-called “megafund’ cases and provided its thoughts on a graduated scale for attorneys’ fees.  The scale set forth in Interchange Fee suggests a marginal fee percentage at various levels if recover; as recoveries go higher, the marginal fee percentage decreases. Id. at 445.  Using that matrix, which is set forth below, the Interchange Fee Court awarded class counsel $544.8 million in fees out of a $5.7 billion settlement fund, representing a contingent fee of 9.56%.

NJ Judge Wrongly Used Past Private Practice to Cut Attorney Fees

July 29, 2020

A recent Law 360 story by Bill Wichert, “NJ Judge Wrongly Used Private Practice Past to Cut Atty Fees” reports that a New Jersey state judge improperly relied on unpublished decisions and her own private practice experience when she gave class counsel a lower attorney fee award than class counsel asked for when it settled a suit against a car dealership, a state appellate panel said Wednesday in nixing the ruling.  The panel concluded in a published opinion that Superior Court Judge Mara Zazzali-Hogan — formerly with Gibbons PC — was wrong to cut the requested hourly rates for attorney Christopher J. McGinn and lawyers and a paralegal at the Wolf Law Firm LLC to about $120,772 in fees and costs, which undercut their request by more than $40,000.

"In rejecting class counsel's submissions and reducing the hourly rate for all the attorneys and the paralegal, the judge relied on her personal experience in private practice, a methodology rejected in Walker ... and considered four unpublished decisions," the three-judge panel said, citing the New Jersey Supreme Court's 2012 opinion in Walker v. Giuffre.  As for Judge Zazzali-Hogan's reliance on the unpublished decisions, the panel pointed to the state Supreme Court's 2008 opinion in Brundage v. Estate of Carambio, which acknowledged that "[state court] rule 1:36-3 'provides that "[n]o unpublished opinion shall constitute precedent or be binding upon any court."'"

"Under these circumstances, we are persuaded that the judge's reduction of the hourly rates was based upon consideration of inappropriate factors, and thus reflects a mistaken exercise of discretion," the panel said, adding in a footnote: "In remanding this matter, we make no finding or suggestion about what hourly rates ultimately should be deemed reasonable for this kind of case."  McGinn and the Wolf Law Firm, representing plaintiff Nina Seigelstein, appealed the judge's decision in the suit against Shrewsbury Motors Inc. and its principal, which claimed the dealership unlawfully charged customers documentary fees that were not itemized, court documents state.

Under the settlement in the case, the defendants agreed to pay $125 to each member of a 2,883-member class, court documents state.  The attorneys sought roughly $162,000 in fees and costs, with hourly rates ranging from $165 for the paralegal to $500 for McGinn and $765 for fellow lead attorney Andrew R. Wolf, court documents state.

To back up the proposed hourly rates, the attorneys submitted certifications from Wolf, McGinn and three other lawyers who didn't work on the case, as well as two state court decisions, court documents state.  Citing the unpublished cases and her "fifteen years of private practice," Judge Zazzali-Hogan in March 2019 reduced the hourly rates, which set McGinn's and Wolf's at $475 and $575, respectively.  The judge also reduced the billable hours and used a smaller contingency fee enhancement percentage than what the attorneys requested.

Attorneys Stuck With Slashed Attorney Fees After USAA Trial Win

July 20, 2020

A recent Law 360 story by Daniel Siegal, “Atty Stuck With Slashed Fees After USAA Bad Faith Trial Win” reports that an Oregon federal judge refused to reconsider his ruling awarding only $179,000 of the $715,000 in fees requested by lawyers who helped a woman convince the court that USAA had acted in bad faith when it refused to cover her crash with an uninsured driver.  In a two-page order, U.S. District Judge Michael H. Simon did not go into the details of the arguments made by plaintiff Peggy Foraker's attorneys, but simply stated the legal standard for a motion for reconsideration and said having reviewed the motion and associated briefing, he found "no basis for reconsideration."

Foraker attorney Stephen Hendricks of Hendricks Law Firm told Law360 via email that his client intends to appeal the attorney fee ruling in addition to other matters going to the merits of the suit.  Foraker, who was hurt when a suspect fleeing from police crashed into her, won two bench trials in her suit against her insurer, which had refused to pay out an uninsured motorist policy.  In the first phase, Foraker obtained a ruling that USAA Casualty Insurance Co. owed her the full $1 million limit of that policy, and in the second phase, Judge Simon found USAA acted in bad faith and awarded Foraker $323,000.

Last month, however, Judge Simon ruled that Foraker's lawyers deserved much less in legal fees than the $715,000 lodestar they requested, because their wins in the second phase were limited — unlike the first phase, where they got $1.31 million in fees.  Judge Simon wrote that roughly three-quarters of the attorneys' time went to unsuccessful arguments and that this was "consistent with the results," and thus it made sense to award them one-quarter of their lodestar figure.  Judge Simon also called the attorneys' 340-page sheaf of submitted bills "massive but poorly organized."

In their motion for reconsideration and supporting briefing, Foraker's attorneys said they understood the case had been "exhausting" and that the court is "weary of this case," but pressed their case that the reduced attorney fee award would have a chilling effect on future bad faith insurance cases under Oregon law.  "As the first publicly watched case on the subject, the court's fee award sends a clear message that all such cases should be abandoned, as even the very successful trial outcome of such a case will be compensated at the rate of 25% of hours incurred," Foraker's attorneys wrote.  "This ignores the mandates of Oregon law and strongly disincentivizes similar plaintiffs from pursuing other meritorious claims."

The attorneys also argued that the supposedly poorly organized time records were organized the same way as the ones submitted for the phase one trial, which were accepted by the court.  Finally, in their reply brief filed on July 13, Foraker's lawyers drew a comparison between their bid for attorney fees and the recent protests for racial justice in Portland.

CA Appeals Court Affirms Fee Award with High Rate But No Multiplier

July 16, 2020

A recent Metropolitan News story, “C.A. Affirms Attorney-Fee Award Not Boosted by Multiplier reports that a California Court of Appeal has affirmed a decision by a Los Angeles Superior Court judge who declined to apply a multiplier to an attorney fee award in an action that produced a $1 million judgment for a plaintiff who sued his employer for racial harassment, saying it assumes that the high hourly rate that was applied takes into account that the case was taken on a contingency basis.  However, the judge who made the award—Victor E. Chavez—made no such indication, saying in his order that the attorneys were worth the rates they proclaimed for themselves, but the nature of the case did not warrant an enhancement.

Justice Dorothy Kim of Div. Five wrote the unpublished opinion.  It upholds a post-judgment order by Chavez assessing attorney fees in favor of the Law Offices of Kyle Todd, located in downtown Los Angeles, in the amount of $592,075, the total lodestar amount the firm claimed based on 1,392.5 hours of work on the case over a three-year period.  The award was made under Government Code §12965(b) which provides for attorney fees to a prevailing party in an action brought—as was the that of the Todd firm’s client, Tracy Scudder—under the state’s Fair Employment and Housing Act.

In particular, Chavez granted Todd the $500-per-hour figure he claimed as reasonable for the 904.3 hours he said he devoted to the case, rejecting the defendant’s protest that such a rate exceeded the $360.27 norm for lawyers in Los Angeles County during the relevant period, from 2015-18.  The judge also honored the rate of $400-per-hour which, it was contended, represented the value of services of an associate in the office, Maximilian Lee, who said he spent 250.5 hours pursuing the interests of the client.

Chavez said that $360.27-per-hour figure, contained in the United States Attorney’s Office fees matrix “is not sufficient to compensate Mr. Todd based on his experience and the facts showing that he is an exceptional attorney” and also found that $400-an-hour was “a reasonable rate to bill for the legal services” that Lee provided.  The amount sought by Todd’s firm, with a multiplier of 200 percent, was $1,184,150. The award which the defendant, the state Department of Transportation, asserted would be appropriate was $289,458.04.

Chavez, a former presiding judge of the Superior Court, said in his Sept. 11, 2018 order: “There is no evidence that the questions in this case were novel or difficult.  This case concerned workplace harassment and discrimination based on race and there were no unusual or complex issues that required exceptional skill to resolve.

“Further, a review of the Court file does not reveal any exceptional skill displayed by counsel that far exceeds the quality of representation that would have been provided by an attorney of comparable skill and experience.  The Plaintiff’s attorneys identify the time that they spent or the case and the above amount of $592,075 will compensate them for their legal services.”  The judge found that Todd “does not provide specific facts to demonstrate that his attorneys were precluded from other employment” by virtue of devoting their concerted efforts to Scrudder’s case. He viewed as inadequate a declaration from Victoria Rolon, a legal assistant in the firm, who said:

“This case took up a large portion of our firm’s time since I joined in early 2016, and by November 2017, as the first genuine trial date approached, our firm’s work on other matters went down significantly.  From then through the end of trial on March 9, 2018, our firm was almost exclusively engaged in work on this case, at the expense of taking in new cases.  For example, I typically provide the first-line intake of new case matters, and for the preparation of trial and during, we were telling prospective clients we were simply too busy to accept new cases at the firm.”

Chavez remarked: “[A]lthough Victoria Rolon states in paragraph 6 that, as the trial date approached, the Plaintiffs firm was telling prospective clients that it was too busy to accept new cases, Ms. Rolon provides no specific facts to show that the Plaintiff’s firm was precluded from accepting such a substantial amount of business that a multiplier should be applied.”

Kim said that some of the assaults by the Todd firm on Chavez’s ruling cannot be addressed owing to the lack of a transcript of the fee-hearing before the judge.  But, she declared, based on the record that was presented, it is clear that the firm is in error in asserting that Chavez “refused to consider the relevant ‘contingency and delay factors’ present in this case” in declining to apply a multiplier.

She wrote: “[W]e…reject any argument by plaintiff that the trial court did not adjust the fee amount in any ‘manner to reflect the fact that the fair market value of legal services provided on [a contingent basis] is greater than the equivalent non-contingent hourly rate.’…The court rejected defendant’s request to lower counsel’s fees to the Los Angeles market rate as calculated by an attorney fee matrix, finding that the full rates sought by plaintiff’s counsel were reasonable.  Further, the court found that counsel, who worked on a contingency basis, would be ‘fully compensated’ by the lodestar amount.  We presume the court concluded that its lodestar calculation already accounted for the contingent nature of the fee award.”

It was conceded by the Todd firm, Kim noted, that Chavez did allude in his order to the contingency-fee arrangement.  He said in his order: “[A]lthough the Plaintiffs attorneys took this case based on a contingent fee retainer agreement, the above analysis of the Plaintiffs fee request demonstrates that the Plaintiff’s attorneys will be fully compensated for the time they spent on this case and this offers no grounds to award a multiplier.”

Kim said the Todd firm is in error in asserting that Chavez was legally obliged to apply a multiplier, and remarked: “The trial court was in the best position to evaluate the reasonableness of plaintiff’s requested attorney fees.  We find the court did not abuse its discretion.”

Ninth Circuit Urged to Uphold $7M Fee Award in ConAgra Case

July 15, 2020

A recent Law 360 story by Kevin Penton, “9th Circ. Urged to OK $7M Atty Fees in ConAgra Label Fight” reports that the Ninth Circuit should affirm a California federal court's blessing of a settlement in which attorneys received nearly seven times what class members obtained in a dispute over ConAgra Foods Inc.'s labeling on oil products, as the deal conforms with legal precedent, the class has argued.  The deal, in which the class received $993,919 while its attorneys received $6.85 million, was fair and reasonable, as the case involved more than eight years of litigation, ConAgra agreed to pay up more than $68 million depending on the participation of class members, and the lawyers received compensation for only a portion of the work they put in, according to the brief by the class.

Objector M. Todd Henderson fails to recognize that the U.S. Supreme Court determined in a 1986 case known as City of Riverside v. Rivera that attorney fees may not only be based on a percentage of what their clients receive, but also based on statutory fees, according to the brief.  The class notes that Henderson's counsel at the Hamilton Lincoln Law Institute Center for Class Action Fairness repeatedly challenge class action settlements, alluding that lawyers and defendants collude to strike deals in which attorneys get paid and companies get to walk away.

"Appellant is eager to continue a crusade that finds plaintiffs' lawyer misconduct anywhere that plaintiffs prevail," the reads.  "No doubt there will be other windmills to tilt at, but this appeal concerns fees governed by specific state laws with statutory fee-shifting provisions, not appellant's 'high-level concerns.'"  In the suit, the buyers alleged that ConAgra mislabeled its Wesson oil products as "100% natural" even though they contain genetically modified ingredients. U.S. District Judge Margaret M. Morrow certified 11 classes in the case in 2015, and the settlement was given final approval in December, according to court records.

In the settlement, class members were eligible to receive 15 cents for up to 30 units of Wesson essential oils product they purchased without having to submit a proof of purchase, according to the brief.  Class members who sought reimbursement for more than 30 units would need to submit a proof of purchase.  Henderson told the Ninth Circuit in April that the Central District of California did not consider the deal's true value to the class when it granted the attorney fees — giving value to an injunction in the deal that is, in reality, worthless.