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Category: Fee Reduction / Fee Denial

More Law Firms Enter NFL Concussion Fee Allocation Dispute

September 18, 2019

A recent Law 360 story by Ryan Boysen, “More Firms Pile Onto Seeger Weiss in Concussion Fee Fight,” reports that Zimmerman Reed LLP and Kreindler & Kreindler LLP have added their voices to the growing chorus of attorneys claiming Seeger Weiss LLP shortchanged them for their work on the landmark NFL concussion settlement, in a contentious fee fight in the Third Circuit.  In separate briefs, Kreindler’s Anthony Tarricone and a handful of Zimmerman Reed lawyers said their early contributions to the litigation that led to the massive concussion settlement were overlooked and undervalued by Chris Seeger and U.S. District Judge Anita B. Brody when she determined how to divvy up most of the $112 million common benefit fund in 2017.

“Despite recognizing that 'every attorney involved in the litigation has taken on the risk that work will be performed but no payment will be received,’ the court’s awarded multipliers have almost no correlation to the actual” hours of work performed or the risk of nonpayment inherent in those hours, Zimmerman Reed said in its brief.  “That result is completely inconsistent with the court’s” decision to award Seeger Weiss a comparatively massive risk multiplier for its own hours, Zimmerman Reed added.

Tarricone received a risk multiplier of 1.25 for his hours and Zimmerman Reed received a multiplier of just 1, while Seeger Weiss received a 3.5 multiplier, according to court documents.  That huge 3.5 multiplier, coupled with the hundreds of hours billed by Seeger Weiss for its own work, have allowed it to take home nearly $65 million worth of the roughly $100 million that’s been paid out from the common benefit fund thus far.

Seeger is widely acknowledged as the primary architect of the settlement itself, but most of the 20 or so firms involved in the concussion litigation’s early stages have repeatedly bristled at his perceived heavy-handedness and concentration of power during that process.  While those firms are still able to collect contingency fees when their individual clients’ awards are approved under the settlement, practically all of them were left seething after Judge Brody’s lopsided allocation of the CBF money.

They’ve also taken issue with how that money was divvied up in the first place.  According to an opening brief filed last month that Tarricone, Zimmerman Reed and many other firms have all joined, Seeger was allowed to pour over each firm’s time records and decide what would count and what wouldn’t, and determine their risk multipliers.  That process was then essentially rubber-stamped by Judge Brody with hardly any independent analysis on her part, the opening brief claims.  Meanwhile, all of the other firms involved still have yet to lay eyes on Seeger’s own time records.

The first concussion lawsuit was filed against the NFL in 2011 and the settlement was finally approved in 2015, putting to rest claims that the NFL knew for decades about the long-term dangers of repeated concussions but did nothing to warn its players.  The uncapped deal has a 65-year lifespan and covers about 20,500 retired NFL players, all of whom are potentially eligible for payments ranging from a few thousand dollars to $5 million depending on their age and the severity of their football-related brain injuries.  Thus far it’s on track to pay out roughly $675 million to players, although many attorneys have complained that the process is far more difficult than they bargained for.

While the joint opening brief primarily takes aim at the broader issues that allegedly infected the CBF allocation process, Tarricone and Zimmerman Reed’s briefs focus on their own grievances.  Tarricone says he co-chaired the public relations effort undertaken by the lead lawyers in the concussion litigation and was instrumental in getting retired football players on television and favorable op-eds written, as well as steering reporters to write about concussions in football.

Nevertheless, in the brief, he claims Seeger ordered him to delete 80 hours that should have been payable from the CBF and discounted his efforts when coming up with what he considers the paltry risk multiplier of 1.25 for his other hours.  Tarricone and his firm ultimately received about $1.5 million from the CBF, but Tarricone claims it would have been higher if his actual work and risk were properly accounted for.

Similarly, Zimmerman Reed said the late Charles “Bucky” Zimmerman was instrumental in getting the concussion litigation off the ground in the first place, and then spent many hours from 2013 to 2017 monitoring some lawyers and lenders who were allegedly misleading retired players in an attempt to squeeze money out of them.

“During that time, Seeger Weiss largely ignored the [Ethics Committee’s] efforts,” Zimmerman Reed said.  “Once the issue gained public traction” through an article in the New York Times however, “Seeger Weiss, as was its practice in this case, unilaterally took over the effort initiated by the committee” and then “barely acknowledged the work Zimmerman Reed performed.”

“The district court’s failure to scrutinize Seeger Weiss’s recommendation that it be credited for certain work but that Zimmerman Reed not be credited for similar work on the Ethics Committee is clearly erroneous,” the firm said.  Neither Tarricone nor Zimmerman Reed gave precise dollar amounts or other figures in their briefs, but both were adamant that their final payouts from the CBF should have been higher.

For its part, Seeger has not yet submitted a reply brief in the fee fight.  But his response to the initial objections that were overruled by Judge Brody in her 2017 order on the CBF allocation can likely provide some foreshadowing of the arguments he’ll make before the Third Circuit.  “Certain firms disagree with the court’s decision to ask me to submit a proposed allocation, likening me to a ‘fox’ divvying up the chickens, and claiming that I cannot be objective, or worse,” Seeger wrote in that earlier response.

Judge Cuts $3M from $32M Fee Request in $110M Fiat Settlement

September 5, 2019

A recent Law 360 story by Pete Brush, “Class Counsel Takes $3M Haircut as $110M Fiat Deal Gets OK,” reports that a Manhattan federal judge approved a $110 million settlement for Fiat Chrysler investors who sued when the automaker's alleged lies about emissions practices came to light, but he lopped about $3 million from a $32.2 million fee request made by lawyers who brought the class action.  U.S. District Judge Jesse M. Furman, who oversaw the four-year litigation that settled in April, called the recovery for investors "fair, reasonable and adequate," but administered a something of a haircut for plaintiffs' firms representing aggrieved investors in the $27.5 billion automaker.

"Fees in the range requested are less reasonable in a settlement of this magnitude," Judge Furman said, cutting Pomerantz LLP and The Rosen Law Firm PA's requested 30% fee back to 27% and arriving at an award just a hair under $29 million.  "Make no mistake about it, the attorneys in this case will receive a substantial fee.  Counsel has secured a substantial recovery for the class," the judge said.

The settlement proceeds go to investors who bought Fiat Chrysler stock between October 2014 and May 2017.  They claimed the automaker's 2014 filings with the U.S. Securities and Exchange Commission, which said it was "substantially in compliance" with emissions and other safety regulations, were fraudulent.  Beginning in July 2015, according to the investors, Fiat Chrysler's share price began to drop when the misleading statements came to light.  The alleged misconduct cost the automaker $175 million in regulatory fines and subjected it to an expensive recall, according to filings.

Three lead plaintiffs, Timothy Kidd, Gary Koopman, Victor Pirnik, will each receive a $15,000 award on top of their settlement recovery, Judge Furman said.  He also approved roughly $2.6 million in costs for the plaintiffs' firms.  "We're very pleased at the order approving this excellent settlement," plaintiffs' counsel Jeremy Lieberman said after the hearing.  "We look forward to promptly distributing these proceeds to the class."

Feds Oppose Environmental Groups Fee Request in Fracking Case

September 4, 2019

A recent Law 360 story by Michael Philliis, “Feds Slam Enviros’ Atty Fees Bid in Offshore Permit Case,” reports that the Environmental Defense Center and another group that successfully blocked fracking permits for offshore California are prematurely seeking attorney fees, inflating their billing, and seeking reimbursement for matters on which they lost, the federal government told a California federal court.  Not only did the EDC and Santa Barbara Channelkeeper ask for attorney fees before a slew of complicated issues can be hashed out on appeal, but their request also represented an inflated bid to recover money that should never be the taxpayers' obligation to pay, the government said in a brief opposing the groups' fee request.

The environmental groups' hourly rate was allegedly puffed up; they billed some duplicated hours; they wanted reimbursement on claims that had been dropped or where they had lost; and they asked for costs that weren't allowed, including more than 10,000 pages of copying that the federal government painted as outlandish, according to the brief.  And no, talking to the media isn't something the groups can charge the government for, the response said.

"It makes little sense at this time to invest more of the court's or the parties' time and effort into briefing and deciding whether an award of fees under the [Endangered Species Act] is appropriate and, if so, what the amount of any award should be," the government said, asking the court to stay the fees request.  "The myriad potential outcomes on appeal counsel against the duplication of effort inherent in addressing the issue of fees now."

In November, U.S. District Judge Philip Gutierrez blocked the federal government from approving any offshore fracking permits in the state in a consolidated case brought by environmental groups and California.  He said the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement violated the Endangered Species Act and another law in crafting an environmental assessment of a plan to allow offshore well-stimulation treatments, also known as fracking or acidizing, in the state.  The BOEM and BSEE violated the ESA by failing to consult with other parts of the government, the judge said.

The Ninth Circuit will now hear appeals and cross-appeals in the case.  Any number of decisions in that venue could impact a fee award, and the EDC and Santa Barbara Channelkeeper moved too soon in their request for money, according to the government.  The move "risks putting the court in the awkward position of having to supervise plaintiffs' repayment in the event that federal defendants prevail on appeal," the government's brief said.

The environmental groups asked for $360,263.  The government, while noting that not all the environmental groups had requested attorney fees, said if the court does decide to award fees, it should provide a maximum of $229,814.  While the environmental groups won on their ESA claims, they lost on their National Environmental Policy Act claims and should not be paid for that part of their work.  The government also said that nearly 25 of the hours requested were duplicative and represented hours when multiple attorneys conferred.

The EDC and Santa Barbara Channelkeeper submitted their request in early August.  After winning the case, they argued the ESA provides them an opportunity to collect fees and costs.  "Plaintiffs achieved the requisite degree of success on their ESA claims" to make a fee award appropriate, they argued.  They added that the request was correct and that they had reduced the amount of hours in their request to make sure it was reasonable and did a line-by-line review to ensure that the time billed wasn't inflated.

Margaret Morgan Hall, an attorney for the Environmental Defense Center, called the government's framing of the fee request "overstated and incorrect."  "We are only seeking recovery of reasonable hours spent on the litigation, after taking significant reductions of our time to avoid any potential duplication of hours.  We likewise only seek to recover reasonable costs that we are entitled to under the Endangered Species Act citizen suit provision," Hall said in an email to Law360.

Ninth Circuit: Judge Properly Cut Attorney Fees in Class Action

August 23, 2019

A recent Metropolitan News story, “Judge Reasonably Pared Attorney Fees From $7.2M to $3.6M in Class Action,” reports that the Ninth U.S. Circuit Court of Appeals, in a 2-1 decision, affirmed an order slashing attorney fees in a class action from the $7.2 million figure agreed upon by the settling parties to $3.6 million, agreeing with the District Court that a 15 percent share of the recovery is more reasonable than 30 percent.  In a memorandum opinion, the majority upheld the decision by Judge Cathy Ann Bencivengo of the Southern District of California who approved the settlement on April 12, 2018 and partially granted the motion for attorney fees and costs.

The plaintiffs alleged securities fraud.  Lead plaintiff was Carl Schwartz and the lead counsel was the West Los Angeles firm of Kaplan, Fox & Kilsheimer, LLP.   At one point in the litigation, the action was dismissed, and Schwartz’s appeal to the Ninth Circuit resulted in a reversal.

Bencivengo said in her 2018 order: “[T]he settlement amount of $24,000,000 confers substantial benefits upon the Settlement Class, particularly in light of the risks associated with continuing this litigation to trial and weighs in favor of the fee amount.  Lead Counsel has achieved success in successfully appealing the dismissal order and the litigation as a whole involved some complicated and labor intensive claims and issues which weighs in favor of the award….The experience of Lead Counsel in litigating class actions of this type also support the request.  Moreover, the reaction of the Class to the settlement has been positive, with only two class members requesting exclusion, which supports the fee application.

“But, while Lead Counsel had responsibility for litigating this case over a seven year period, the Court is mindful of the limited nature of the litigation that occurred in that time period.”  The judge said there was inadequate substantiation for the 6,678.65 hours the law firm claimed it expended on the case.  Kaplan, Fox claimed $251,313.10 in costs.  Bencivengo said the lawyers “provide very little evidence to support” the claim.  Deducting $32,712.33 for “Travel/Meals” and $65,819.00 for “Experts and Consultants,” she awarded $152,781.77.  The judge also denied costs claimed by Schwartz, but ordered payment of a $2,000 incentive award.

The memorandum opinion was signed by Circuit Judges Carlos T. Bea Jacqueline H. Nguyen.  Circuit Judge Johnnie B. Rawlinson agreed with her colleagues that Schwartz is entitled to “reasonable costs and expenses (including lost wages)” directly related to his class representation, but otherwise dissented.  The majority said: “The district court reasonably considered the contingent nature of the work, the procedural posture of the case (which was just past the pleading stage after an appeal), and the lack of discovery and other fact-intensive work in calculating the award.  “Moreover, the district court attempted to rely on a lodestar calculation as a cross-check but was hampered by counsel’s failure to provide reliable evidence.  To the extent the district court did not have enough information about rates and hours, counsel failed to meet their burden to provide reliable evidence.”

The memorandum opinion rejects the contention that Bencivengo abused her discretion in denying a motion for reconsideration, remarking: “The motion for reconsideration provided expert declarations and records to support counsel’s requested hours and rates, information absent from counsel’s initial motion for attorney’s fees.  That information was available to counsel when they filed the initial motion for fees; they simply chose not to meet their burden of providing adequate documentation with the initial request….A motion for reconsideration should not be a better argument for the same position counsel previously put forth, just with better evidence it could have offered before.”  The opinion declares the order for the incentive fee vacated, explaining that “the Private Securities Litigation Reform Act…does not allow for incentive awards for class representatives.”

Rawlinson faulted Bencivengo for failing to explain how she concluded that 15 percent of the class’s recovery was reasonable while 25 percent is the norm.  She wrote: The district court acknowledged the excellent results achieved, the difficulty of the case, counsel’s experience, and the positive class response, all of which weighed in favor of granting the fee request….Yet, the district court inexplicably awarded only one-half of the requested percentage, citing the paucity of activity reflected on the district court’s docket.  The court failed to cite any authority in support of this determination.  More importantly, its ruling essentially penalized counsel for resolving the case effectively and efficiently….Moreover, the district court did not fully take into consideration the fact that counsel successfully obtained reversal in the Ninth Circuit of the district court’s dismissal of the second amended complaint.  Although those successful efforts would not be reflected on the district court docket, we have considered successful appellate litigation as an important factor in determining the appropriate percentage rate.”

Judge Rejects $200K Fee Request for $5K Settlement

August 15, 2019

A recent Law 360 story by Lauraann Wood, “$200K Fee After $5K Deal ‘Makes No Sense,’ Ill. Judge Says,” reports that an Illinois federal judge granted photo agency FameFlynet Inc. $10,500 of its request for $241,000 in attorney fees after settling a copyright suit for $5,000, saying awarding anything more after two-and-a-half years of avoidable litigation “makes no sense.”  FameFlynet and Jasmine Enterprises Inc. stipulated to the $5,000 in damages under the Copyright Act after U.S. District Judge Thomas Durkin ruled Jasmine was liable for publishing three photos of Nicky Hilton and James Rothschild’s wedding on a blog in 2015.

But the photo agency’s case only reached summary judgment issues because it canceled settlement talks and litigated discovery disputes after learning the parties were $1,000 apart during negotiations that happened three weeks after serving of its complaint on Jasmine, Judge Durkin said.  “For FFN to then incur hundreds of thousands of dollars in fees simply makes no sense, and it should not be rewarded for what should have been a straightforward case,” Judge Durkin said.  “This case exemplifies the familiar adage of cutting off your nose to spite your face,” he said.

The fee award represents a little more than the FFN incurred when it rejected Jasmine’s initial $15,000 settlement offer in November 2016 plus its filing fee and process server costs, since “the fault does not lie exclusively with FFN for failing to settle, and its early work advanced the goals of the Copyright Act,” Judge Durkin said.  But awarding FFN its entire fee request “would not advance considerations of compensation and deterrence,” since Jasmine removed the infringing photos the day it received notice of infringement and hasn’t posted to the blog since 2015, he ruled.

The agency argued that declining to award it fees would deter future plaintiffs from pursuing claims, but Judge Durkin said his concerns over awarding FFN's request was different.  “Far from advancing the Copyright Act’s goals, awarding FFN its requested fees would incentivize parties to reject reasonable settlement offers in hope of cashing in on enormous attorneys’ fees down the line,” he said.

Craig Sanders of Sanders Law PLLC, who represents FFN, told Law360 in an email that the judge’s decision to award fees was proper.  But he “appears to have committed reversible error” by failing to comply with Seventh Circuit and Supreme Court precedent by using the so-called lodestar method to calculate a reasonable fee in the photo agency’s case, Sanders said.

Jasmine claimed its photo publication was fair use before Judge Durkin sided with FFN on liability and said Jasmine likely would not win on that defense.  FFN argued that Jasmine’s defense was objectively unreasonable given “existing case law,” so fighting it warranted a fee award.  But Judge Durkin disagreed, saying the agency inaccurately “conflates whether a defense was successful with whether it was reasonable.”

“Losing on the merits does not establish that a party’s position was objectively unreasonable.  Otherwise, a losing defendant would ‘virtually always be found to have done something culpable,’” Judge Durkin ruled, quoting the U.S. Supreme Court’s ruling in Kirtsaeng v. John Wiley & Sons Inc.

FFN had demanded $16,000 to settle its copyright suit, and ended negotiations after Jasmine offered $15,000, according to Judge Durkin’s order.  Jasmine offered $15,000 to settle the case at several other times during litigation, including after the agency filed its bulky fee bid.  But assuming that constitutes poor litigation conduct would mean Jasmine’s offer was unreasonable in the first place, Judge Durkin said.