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Seeger Weiss Targeted in NFL Concussion Fee Appeal

August 14, 2019

A recent Law 360 story by Ryan Boysen, “First Shots Fired in Seeger Weiss Concussion Fee Appeal,” reports that Seeger Weiss LLP has “hoarded” nearly $65 million for its work on the landmark NFL concussion settlement while punishing rival firms by docking their pay over perceived slights, all through an “improper process” that “lacked transparency and basic mechanisms of fairness,” according to the opening briefs in a contentious Third Circuit appeal.

The appeal was filed over a year ago, challenging an order by U.S. District Judge Anita B. Brody that created a $112.5 million common benefit fund to pay the 24 firms involved in bringing to fruition the uncapped concussion settlement, which has paid out nearly $660 million in claims since it was approved in 2015.  In opening briefs filed, two groups of law firms and retired football players led by Locks Law Firm and Lubel Voyles LLP took aim at Seeger Weiss’ role in divvying up that money.

The firms argued that Judge Brody essentially gave Chris Seeger carte blanche to award himself and other firms whatever he pleased, then rubber-stamped his decisions with hardly any oversight, violating constitutional due process obligations and binding precedent in the process.  Adding insult to injury, Locks Law said, all of the firms involved in the settlement were required to submit time records to Seeger while he determined their final awards, but to this day no other firm “has seen Mr. Seeger’s records” and “neither will this court: those records were never made part of the record below.”

“The court empowered Mr. Seeger … to reward himself and penalize rivals without any on-the-record scrutiny of his own time records,” Locks Law said.  “The court accepted Mr. Seeger’s [determinations] with only minor adjustments.”  “There is no justification for this manifestly inadequate process,” Locks Law added.

While ostensibly separate, the allegations in the briefs mirror complaints about the settlement as a whole, which many attorneys claim has been marred by a lack of transparency and a seeming willingness on Judge Brody’s behalf to improvise when deciding issues of considerable importance to the class of 20,000 retired players suffering from concussion-related brain damage the deal is meant to compensate.

The briefs also underscore the bad blood that’s been building up for years between Seeger and many of the other lawyers involved in the case.  To take just one example, Locks Law was terminated as class counsel alongside five other firms in May, a move many viewed as retaliation for its request that Judge Brody reconsider new medical guidelines that Locks Law had argued would make it harder for players to get paid.  Prior to that, Locks Law butted heads with Seeger directly when it sought to take over the implementation of the deal, arguing that Seeger was letting the NFL steamroll the players with “scorched earth” legal tactics.  Both of those motions were denied.

In a nod to those broader tensions, Lubel Voyles acknowledged in its brief that while “fee fights in class action litigation are, sadly, not rare,” it is rare “for the optics of a common benefit fee award to be so poor that even class counsel are divided on every aspect of the award, not just allocation of the money.”  Locks Law said that before Judge Brody made a decision on how to apportion the $112.5 million CBF, some firms recommended a special master be appointed for that purpose while Locks Law itself urged the creation of a committee.

Instead, Locks Law said, Judge Brody let Seeger make “the sole determinations of what work performed by other [leading firms] qualified for common benefit compensation in his petition.”  “The district court’s decision to delegate responsibility for that allocation to the largest recipient of those fees, co-lead counsel Christopher Seeger,” was an “improper process,” Locks Law said.

Locks Law said all of the firms applying for those fees had to submit their time sheets to Seeger for him to review, but Seeger’s own records were only ever reviewed in camera by Judge Brody.  After approving more hours for his firm than any other, and awarding a higher lodestar multiple — a common calculation used by law firms to determine fees in many instances — for those hours than to any other firm, Seeger ultimately received about $52 million of the initial $85 million payout from the fund.  His firm has since received $8 million more, and is waiting on Judge Brody to approve more than $4 million on top of that, for a total of nearly $65 million.

Meanwhile, Locks Law has received less than $5 million in common benefit fees thus far, despite representing more than 1,000 players in the litigation compared to Seeger’s 20-or-so clients, a common point of contention raised by many other lawyers involved in the case.  Locks Law says Seeger seized on an interview Gene Locks gave to Bloomberg Businessweek for a 2013 article that “infuriated the NFL” as a reason to justify the low lodestar multiple given to Locks Law, but in its brief the firm said that explanation was “not credible.”

Lance Lubel of Lubel Voyles claims he was cut out of the CBF fees entirely because he objected to the settlement, something he's done frequently, even though his earlier complaints about the deal’s language led to significant safeguards being put in place to protect retired players.  Lubel echoed many of Locks Laws’ concerns with Seeger’s role in the CBF distribution, but went one step further by also challenging a 5% holdback that’s currently applied to each successful monetary award and a 22% fee cap Judge Brody imposed on attorneys representing retired players.

The 5% holdback is being set aside, and Judge Brody has said she’ll rule at a later date on whether or not to tap those funds to continue paying CBF fees for the implementation of the 65-year-long program, money that would presumably only be available to Seeger after Judge Brody axed the other class counsel firms in May.  Lubel said the $112.5 million should be enough money to compensate the lead firms over the entire course of the settlement’s lifespan.

As to the 22% cap on attorney fees, which works out to 17% after the holdback is applied, Lubel said Judge Brody “has, in the spirit of helping class members, gutted their chances of qualifying for an award through the claims process.”  That’s because many retired players require expensive medical tests before they can qualify for an award, and the price of those exams can easily reach $10,000 or more.  For various reasons, a player’s attorney is often the only party willing and able to front those funds, Lubel said.  But artificially capping their fees at a relatively low 17% rate makes them less willing to spend that money to get the ball rolling on a client’s claim, he continued.

The case is In re: National Football Players' Concussion Injury Litigation, case number 18-2012, in the U.S. Court of Appeals for the Third Circuit.

Special Fee Master to Review Billing Entries in $21M Fee Request

August 8, 2019

A recent Law 360 story by Dorothy Atkins, “BladeRoom’s $21M Fee Bid for IP Win Sent to Special Master,” reports that a California federal judge said he’ll appoint a special master to review BladeRoom's billing records and decide whether Emerson Electric Co. owes the data center manufacturer $21 million in attorney fees after a jury found the company used stolen trade secrets to land a $200 million Facebook contract.

During a hearing in San Jose, U.S. District Judge Edward J. Davila said he doesn’t have the staff or time to review all of the billing records of BladeRoom Group Ltd.'s counsel to determine if $21 million in attorney fees and $3.5 million in costs is appropriate and warranted, but he said a special master would be able to do it efficiently.  The judge also acknowledged that close review of the records is warranted, given the large amount in fees that BladeRoom is seeking.  “Nobody is indicating that this is an insignificant amount of fees in this case,” the judge said. “The plaintiffs say in their motion it’s a big number, because it’s big work done.  We all recognize it’s a large number."

Judge Davila suggested he appoint a local retired state judge, James P. Kleinberg, to serve as a special master, but he gave the parties until Aug. 13 to suggest alternatives.  He said he’ll appoint one within the next few weeks.  The fee request is the latest in a hotly contested legal battle that the U.K.-based BladeRoom launched in March 2015 against Facebook and Emerson. In the suit, BladeRoom accused the pair of stealing its method for manufacturing and installing prefabricated data centers, which it had pitched separately to both Facebook and Emerson in 2011.  After those meetings, BladeRoom claimed the two larger companies began secretly working together to steal BladeRoom's proprietary techniques for the Facebook project.

Facebook settled BladeRoom’s claims mid-trial in April 2018 and a month later, a jury found that Emerson owed BladeRoom $30 million for willfully using two of four asserted trade secrets to build a Facebook data center in Lulea, Sweden.  In March, Judge Davila found that the California Uniform Trade Secrets Act entitles BladeRoom to reasonable attorney fees and costs, but he didn’t determine the amount owed at the time.

In its motion for fees, BladeRoom said it's owed $21 million in fees and $3.5 million in costs to cover its litigation expenses and the time the company’s attorneys spent conducting a year-long investigation leading up to its suit.  But in its opposition, Emerson argued BladeRoom's “staggering” fee request is too high, unprecedented and unjustified, particularly because BadeRoom was only successful on two of the 29 trade secrets it originally asserted against the company.  “There is simply no fee award in an intellectual property case that even approaches what BladeRoom seeks here,” the opposition brief says.

During the hearing on the motion, Emerson’s counsel, Rudolph A. Telscher Jr. of Husch Blackwell LLP, also asked Judge Davila for the third time to let them review Facebook’s settlement so they can determine how BladeRoom's fee request compares to how much Facebook paid.  Telscher noted that if confidentiality is a concern, only the attorneys would review the deal, and they wouldn’t make the settlement public or show it to their client.

But Facebook’s counsel, Kristine Anne Forderer of Cooley LLP, disagreed, arguing that the settlement was entered with the understanding that the deal would be confidential.  Forderer noted that the record explicitly says the parties agreed to pay for their own litigation costs, so Emerson's counsel wouldn’t be learning anything new regarding BladeRoom’s fees.

Judge Scrutinizes $68M Fee Request in Wells Fargo Settlement

August 2, 2019

A recent The Recorder story by Alaina Lancaster, “Judge Scrutinizes Plaintiffs’ $68M Fee Request in Wells Fargo Settlement,” reports that disputes over $68 million in attorney fees in a $240 million class action settlement against Wells Fargo & Co. have spurred a federal judge to consider setting new precedents for contract lawyer fees.  In a fairness hearing, U.S. District Judge Jon Tigar of the Northern District of California took issue with a motion for attorney fees filed by San Francisco’s Lieff Cabraser.  The case involves a settlement with Wells Fargo shareholders over the financial institution’s widespread opening of unauthorized accounts to reach sales quotas and artificially inflate the company’s stock.

As co-lead counsel in the litigation dating back two years, Lieff Cabraser had calculated a fee for its contract attorneys that was about nine times higher than the attorney’s rate.  Tigar suggested to Richard M. Heimann of Lieff Cabraser that contract attorney fees should be no different than a plane ticket and calculated as a cost.  With no law or ruling that reflects such a shift in procedure, Heimann asked how it was fair that his team’s fees should suffer because the judge wanted to change the rules.  “If I think that should be the rule, how could I ever do that without an order?” Tigar responded.

Co-lead plaintiffs Fire & Police Pension Association of Colorado and the City of Birmingham Retirement & Relief System represented a class of shareholders who brought the suit to hold Wells Fargo’s directors accountable for putting “unrelenting pressure” on sales members to cross-sell eight products per account holder, resulting in the creation of falsified accounts, according to the consolidated complaint.  Saxena White in Boca Raton, Florida, is co-lead plaintiffs counsel alongside Lieff Cabraser.

The judge thanked Ted Frank of the Hamilton Lincoln Law Institute’s Center for Class Action Fairness for raising the issue in his motion opposing the attorney fees.  Frank pointed out that the co-lead counsel paid contract attorneys between $40 and $50 an hour but requested about $415 an hour to cover their investment.  “The unreasonableness of co-lead counsel’s fee request is confirmed by the lodestar crosscheck,” Frank wrote in his opposition to the motion.  “Using these rates, the lodestar figure is exaggerated by at least $5.5 million, but the precise amount is unclear due to counsel’s failure to submit daily billing records.  This means the lodestar multiplier is actually about 4.04.”

Heimann argued that the work and the overhead costs for staff and contract employees are the same in regard to training, supervision and providing workspaces.  Tigar said the law firm wouldn’t contract out staff if it weren’t more profitable.  “Are you telling me with a straight face that you don’t make more money on contract lawyers?” the judge asked.

Heimann said that taking advantage of contract employees is only marginally more profitable—about 10% to 20% more than staff attorneys—but the primary reason the firm hires contract workers is to handle fluctuating caseloads.  Tigar also set out to address another objection mentioned in Frank’s opposition over a 5% fee allocated to 12 law firms who brought similar cases in Delaware courts.  “The gravy train is so heavy that co-lead counsel has agreed to pay law firms that brought other cases even where they provided no common benefit, who represent plaintiffs who lack any colorable claims,” Frank wrote.

Heimann confirmed the Delaware counsel did not work on the case, and Tigar said it sounded to him like the attorneys were paid to withdraw their litigation, so as not to obtain a ruling that could impact the outcome of this case.  “I can imagine a circumstance in which a class action lawsuit is filed and the claims are clearly unsupported by the law,” the judge said.  “Most sensible judges could see the claims aren’t good, but say you have one case where the lawyers clearly have some momentum, and you just go pay them off.  That’s not good for the development of the law and doesn’t lead to a just result.  Why shouldn’t I be worried about that?”

Article: Texas Blocks Discovery of Insurer Attorney’s Billing Record

July 16, 2019

A recent Property Casualty Focus article by Amanda Proctor of Carlton Fields, “The Privilege Maintains Its Power: Texas Supreme Court Blocks Discovery of Insurer Attorney’s Billing Information,” reports on the recent Texas Supreme Court decision in In re Nat’l Lloyds Ins. Co.  This article was posted with permission.  The article reads:

When (if ever) are an insurer’s attorney’s fees and billing information discoverable in a coverage dispute?  Though the question is straightforward, the answer can vary from case to case and jurisdiction to jurisdiction.  The Texas Supreme Court recently weighed in on the issue and found that an insurer’s attorney-billing information is not discoverable merely because the insurer challenges the insured’s request for attorney’s fees in coverage litigation.  See In re Nat’l Lloyds Ins. Co., No. 15-0591 (Tex. June 9, 2017).

In Lloyds, insured homeowners sued the insurer and various claims adjusters alleging that they underpaid property damage claims in the wake of two hail storms that struck Hidalgo County, Texas in 2012.  The homeowners asserted statutory, contractual, and extra-contractual claims, including requests for attorney’s fees incurred by the homeowners in pursuing the relief sought against the insurers.  The lawsuits were eventually consolidated into a single multidistrict litigation (the “MDL”) for discovery and pretrial proceedings.  During the course of discovery, the homeowners sought leave to serve additional interrogatories and requests for production of documents, seeking information related to the insurer’s attorney-billing information despite the fact that the insurer was not asserting a claim for attorney’s fees.  In support of their request, the homeowners argued that the insurer’s attorney’s fees and billing information were discoverable because the insurer’s counsel testified as an attorney-fee expert in a related case, Amaro v. National Lloyds Insurance Co., Cause No. C-0304-13-H (206th Dist. Ct., Hidalgo County, Tex. Feb. 27, 2015), and admitted in his testimony that an opposing party’s fees could be considered as “a factor” in determining a reasonable fee recovery.  The same attorney was also designated as an expert in the MDL to rebut the homeowners’ fee requests.  The insurer later stipulated, however, that it would not rely on its own billing information to contest the reasonableness of the homeowners’ attorney’s fees.

At the trial court level, a special master found that an opponent’s attorney-billing information is relevant to the reasonableness of the attorney-fee request, granted the homeowners’ request for additional discovery, and noted that redaction of the records could preserve any privileged information in those documents.  The Court of Appeals denied the insurer’s petition for mandamus relief.

In a thorough opinion, the Texas Supreme Court granted the insurer’s petition for mandamus and found that the attorney-billing information was protected by the work productive privilege and otherwise irrelevant to the homeowner’s request for attorney’s fees.

With respect to the work product privilege, the court started with the notion that the privilege protects both “the attorney’s thought process, which includes strategy decisions and issue formulation” as well as “the mechanical compilation of information to the extent such compilation reveals the attorney’s thought processes.”  The court found that “as a whole, billing records represent the mechanical compilation of information that reveals counsel’s legal strategy and thought processes, at least incidentally” and, therefore, such records are generally protected by the privilege.  The court specifically rejected the homeowners’ argument that redaction of the records would be sufficient to protect any privileged information.  The court reasoned that “[t]he chronological nature of billing records reveals when, how, and what resources were deployed” by the attorney, and, as such, can reveal a lot about the attorney’s litigation strategy and thought processes even if substantive descriptions are redacted.  The court acknowledged, however, that a party can waive the privilege through offensive use of the information — i.e., by relying on its own billing records to contest the reasonableness of the opposing party’s request.  Given the insurer’s stipulation that it would not rely on its own billing records for that purpose, the court found that the insurer did not waive the privilege.

In addition to the privileged nature of the information sought, the court further held that the insurers’ attorney-billing information was generally irrelevant to the issue of the homeowners’ request for reasonable attorney’s fees.  In that regard, the court noted, Texas courts consider a list of eight nonexclusive factors articulated in Arthur Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812, 818 (Tex. 1997), to determine whether a fee request is “reasonable.”  These factors include “the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service properly; the likelihood … acceptance of the particular employment will preclude other employment by the lawyer; [and] the fee customarily charged in the locality for similar legal services.” Id.  The court noted that an opposing party’s attorney’s fees are not “ipso facto reasonable or necessary” and do not bear on the reasonableness analysis because:

(1) the opposing party may freely choose to spend more or less time or money than would be “reasonable” in comparison to the requesting party; (2) comparisons between the hourly rates and fee expenditures of opposing parties are inapt, as differing motivations of plaintiffs and defendants impact the time and labor spent, hourly rate charged, and skill required; (3) “the tasks and roles of counsel on opposite sides of a case vary fundamentally,” so even in the same case, the legal services rendered to opposing parties are not fairly characterized as “similar”; and (4) a single law firm’s fees and hourly rates do not determine the “customary” range of fees in a given locality for similar services.

Even if the insurers’ attorney-billing information was relevant to the homeowners’ request for attorney’s fees, the court held that the information would not be discoverable because the danger of unfair prejudice resulting from its disclosure substantially outweighed its probative value.  In that regard, the court reasoned that the homeowners did not need the information to meet the burden of proof on their attorney-fee claims, but allowing the discovery could give rise to abusive discovery practices.

The court, however, was careful to limit its holding to the facts before it. In so doing, it cautioned: “[a]ttorney-billing information may be discoverable by virtue of the opposing party designating its counsel as a testifying expert.” Id.

The import of this case is clear: an insurer, or any another party for that matter, does not waive the work-product privilege for its attorney-billing information merely by contesting the reasonableness of an opposing party’s request for attorney’s fees.  The party, however, should exercise caution in designating its own attorneys as expert witnesses to testify regarding the reasonableness of any fee request.  Though the Texas Supreme Court held in favor of the insurer in this case, the facts demonstrate the inherent difficulty for insurers defending multiple coverage disputes.  Designating an attorney as an expert in one case could subject the work-product privilege for those records to an attack in a related case.

Attorney Fees Trimmed in Tesla Salespeople Settlement

July 12, 2019

A recent Law 360 story by Linda Chiem, “Atty Fees Trimmed in $1M Telsa Salespeople Settlement” reports that a California federal judge trimmed the fees and costs awarded to attorneys representing a class of former Tesla sales advisers accusing the electric carmaker of overtime and meal and rest break violations, chastising the attorneys for "unreasonable" requests before ultimately approving an overall $1 million settlement.  U.S. Magistrate Judge Jacqueline Scott Corley awarded plaintiffs' attorneys at Amartin Law PC and Brennan & David Law Group $160,895 in attorney fees and $13,146.49 in litigation costs, which falls short of the $256,689 in fees and $15,208.91 in costs they had requested in January.

Judge Corley also cut by half the incentive awards for named plaintiffs Brian Wilson, Carrie Hughes and Katia Segal from the requested $10,000 to $5,000 apiece for serving as class representatives in the wage-and-hour action.  The judge also signed off on the overall settlement, but not before calling out the class counsel for discrepancies in their filings.

Judge Corley said the class counsel failed to reasonably explain their lodestar calculations and submitted billing records with "numerous excessive and block billing entries" that didn't adequately break down the time spent working on this specific case or included excessive costs for travel or other expenses, according to the order.  Attorney fees awarded using the lodestar method count "the number of hours reasonably expended multiplied by [a] reasonable hourly rate" determined by the court.

"The discrepancy with respect to plaintiffs' lodestar and billing records is just the latest example of plaintiffs' counsel's carelessness in the presentation of the settlement to the court," Judge Corley said.  "Given the court's concerns, the court finds that the lodestar method, rather than the percentage of the fee method, is the most appropriate method of calculating attorneys' fees in this particular case."

She also ripped the attorneys for trying to collect fees on work the court ordered them to redo after their first motion for preliminary approval was rejected in June 2018 because it didn't explain the logic behind the deal and why it was a good result for both sides.  Judge Corley tentatively approved the deal last September after the attorneys reworked their motion in response to her concerns.

"Counsel's request for fees in excess of $36,000 for the work spent redoing the motion for preliminary approval, traveling to the second preliminary approval hearing, responding to the court's request for a status update, and traveling to and from San Francisco for the status conference is thus unreasonable," Judge Corley said.

Additionally, the plaintiffs' request for $10,000 apiece in incentive awards for the named plaintiffs was too much, the judge said, considering that each of the plaintiffs attested to spending between 75 and 90 hours on this action — the equivalent of two 40-hour weeks of work — but none of them were ever deposed or attended the mediation.  "Under these circumstances, the court finds that plaintiffs' generic statements regarding how they assisted the attorneys in the litigation fail to justify the requested $10,000 incentive award," Judge Corley said.

"The court is mindful that participation in wage-and-hour actions involves reputational risk, but finds that the risk here is not so great as to justify deviating from the standard $5,000 incentive award," she said.  The $1 million deal covers 282 class members, most of whom live in California, who accused Tesla of misclassifying showroom owner advisers and sales advisers as exempt from overtime under California's "commission salesperson exception."

That exemption only applies if sales advisers make at least 1.5 times the minimum wage and if over half of their compensation comes from commissions.  The plaintiffs maintained that their commissions failed to make up over half of their income so they should not have been denied overtime or proper meal and rest breaks, according to court documents.