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Category: Challenging Fees

Novartis Attacks $3M Fee Request in Whistleblower Case

July 5, 2019

A recent Law 360 story by Bill Wichert, “Novartis Attacks $3M Atty Fees Bid in Whistleblower Case,” reports that counsel for Novartis told a New Jersey state court that an attorney fees award to a former company executive who prevailed on a whistleblower claim at trial should be cut in half because the pharmaceutical giant succeeded on its unjust enrichment counterclaim against her.  More than three months after jurors handed a roughly $1.8 million whistleblower award to Min Amy Guo, Novartis Pharmaceuticals Corp.'s attorneys said her lawyers' more than $3 million in proposed fees should be reduced for various reasons, including because the jury also awarded nearly $350,000 to Novartis on the counterclaim after concluding she violated company policy.

"There is nothing in New Jersey jurisprudence, there is nothing in American jurisprudence that supports a fee-shifting provision being applied to compensate plaintiff's counsel on a count that she was not successful in," Novartis attorney Patricia Prezioso told Superior Court Judge Louis S. Sceusi during oral arguments on the fees application.  Beyond the 50% "limited success" reduction, Novartis is seeking additional cuts in the proposed fees.

The judge acknowledged he "can't pay the plaintiff for losing the unjust enrichment claim," but questioned the company's proposed 50% reduction for Guo's limited success at trial.  "How do you come up with 50%?  How is that more justified than 20%, 30%?” Judge Sceusi asked Prezioso.

Prezioso pointed to the substantial amount of trial testimony that focused on Guo's policy violations, saying "unjust enrichment and the policy violations ... was far more than 50% of the case."  "It was more like 80% of the case," said Prezioso, adding that "asking for 50%, in light of the fact that we prevailed on that and there's no support for fee-shifting ... when they lost on a claim, is fair."

But Guo attorney James K. Webber countered that she is entitled to reasonable attorney fees as the prevailing party on her state Conscientious Employee Protection Act claim, and the award should not be cut because she lost on the unjust enrichment counterclaim.  Webber argued that the issues underlying both claims were the same, since Guo's purported policy violations constituted the company's defense to her whistleblower claim.  "There's certainly no support for defendant's position," Webber told the judge.

The former executive director of the health economics and outcomes research group at Novartis, Guo said she was fired in retaliation for objecting to a proposed study by pharmaceutical distribution company McKesson Corp. of Afinitor's use as a breast cancer drug. Novartis ultimately did not move forward with the study.  Among her claimed objections to the proposed McKesson study was that it appeared to be a kickback to the company to help sell Afinitor.

Guo said she believed the study would violate a corporate integrity agreement that Novartis entered into in 2010 as part of a settlement with the U.S. Department of Justice.  That agreement required Novartis to comply with federal health care program requirements, including a federal anti-kickback statute, court documents state.  Novartis claimed Guo was terminated for violating company policies.

At the end of the more than seven-week trial, the jury in a 7-1 vote on Feb. 26 awarded about $1.8 million to Guo on her CEPA claim.  The jurors then unanimously awarded nearly $350,000 to Novartis on its counterclaim for unjust enrichment.  On Feb. 27, the jury denied Guo's bid for punitive damages.

On March 26, Judge Sceusi rejected the company's bid to set aside the CEPA verdict and, about a month later, Guo's attorneys submitted their fees application.  During a hearing, however, the judge pushed back against the fees request.  For example, Judge Sceusi pointed to Novartis' criticism of Guo attorney Richard J. Murray's request of fees for more than 1,200 hours spent on the case over less than a year, whereas Webber is requesting fees for nearly 1,400 hours spent over five years on the suit.  In that regard, the company has called Murray's fees request "simply glutinous."

NCAA Rips $45M Fee Request in Student Athlete Pay Suit

May 24, 2019

A recent Law 360 story by Dave Simpson, “NCAA Rips $45M Atty Fee Bid in Student Athlete Pay Suit,” reports that the $45 million attorney fee bid from the legal team whose March victory barred the NCAA from restricting student athletes' education-related compensation is unreasonable because it seeks pay for "excessive, redundant, and unnecessary" hours worked, the NCAA said in California federal court.  The NCAA and several of its conferences said that rather than multiplying the requested $30 million attorney fee lodestar by 1.5, as proposed by the student players, it should be reduced by 10% to exclude non-compensable hours from the fee application, and then hit it with a negative multiplier to reflect the fact that the attorneys only scored a partial victory for their clients.

"The district court rejected much of plaintiffs' demands, retaining the cost-of-attendance cap on financial aid and permitting defendants to limit the levels of non-education-based compensation that Division I schools may offer their student-athletes," the organizations said.  The bid for attorney fees stems from the key injunction the student athletes won in March.

U.S. District Judge Claudia Wilken rejected the NCAA's arguments that its compensation rules promote demand for college sports and justify its antitrust violations.  She prohibited the association from enforcing rules that she considered "overly and unnecessarily restrictive."

Following that major win, the players' attorneys sought a compensation package of $29.9 million plus the multiplier for what they said was the economic value of the injunction, and submitted an economist's declaration to bolster their argument.  But the NCAA says that the proposal is off-base, starting with the calculation for hours worked by the attorneys.

"Their refusal to provide detailed billing records, submitting instead evidence only of the total number of hours spent by various attorneys by year — or in one instance across all years of the litigation — without identifying the subject matter of any individual's time expenditures has made it impossible for defendants or the court to evaluate whether the time spent on particular tasks was reasonable," the NCAA said.  Likewise, the requested 1.5 multiplier is meritless, the NCAA said, because the players' attorneys don't argue that the lodestar is unreasonably low, nor do they show that they took on unreasonable risks or won an exceptional victory.

The organizations also claim that the $1.3 million sought in costs is "unsupported, inappropriate and unreasonable," saying that almost $1 million of it is not supported "with even a single invoice or document."  Instead, the NCAA claims, the players' attorneys are "simply listing vague categories of purported costs for which they claim reimbursement."  As for the remaining costs, which the NCAA says are accounted for through invoices, much of it is not compensable as a matter of law, the motion claims.

The NCAA says that among these costs are bills for expenses that have already been covered, bills for video services on days when no video services were used, and more than $200,000 in unspecified color copy printing costs, which the NCAA says should be reduced by at least 50% because they are excessive.  "I think the time has come to see what defendants spent to put this in perspective," Steve W. Berman, who is representing the students, said in an email to Law360.  "I have a bet in the litigation team pool that they are twice what we spent!"

The March ruling followed a landmark 10-day bench trial that kicked off in Oakland, California, on Sept. 4 over allegations by Division I college football and basketball players that the NCAA's rules illegally restrict what they can receive to play.  For years, the rules limited athlete benefits to cost-of-attendance scholarships; student assistance funds, which cover certain school-related expenses; some need-based grants, like Pell Grants; and bowl participation awards, which are typically capped around $450.

During the trial, sports economists, former athletes, university officials and NCAA administrators took turns testifying on the impacts of the NCAA's compensation rules.  Three former athletes who didn't play professionally after college recalled how they struggled as students to pay for meals, clothes and trips home, while they spent between 40 to 60 hours a week on their sports, leaving little time for academics.

The case is In re: National Collegiate Athletic Association Athletic Grant-In-Aid Cap Antitrust Litigation, case number 4:14-md-02541, in the U.S. District Court for the Northern District of California.

DOJ Opposes Attorney Fees in Dial Soap Class Action

May 10, 2019

A recent NLJ story by Nate Robson and Amanda Bronstad, “DOJ Opposes $3.8M in Legal Fees in Latest Swipe at Plaintiffs Bar,” reports that the U.S. Justice Department announced it is opposing a class action settlement in New Hampshire federal court that grants a $3.8 million attorney fee award to plaintiffs’ lawyers who alleged Dial overstated the ability of its antibacterial soap to kill germs.

The government said in a prepared statement that the fee award “would afford little value to consumers while handsomely compensating attorneys.”  The department’s opposition to the class action settlement was filed as a statement of interest by trial attorneys in the consumer protection branch, a component of the civil division.  The government argued that the settlement fund of $7.4 million fails to adequately compensate consumers and that the injunctive relief, in the form of changes to the soap’s ingredients, is “virtually worthless.”

“A class action settlement that affords little meaningful consumer benefit while rewarding attorneys with sizable fees is inappropriate,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division.  “Congress intended to prevent these types of unbalanced settlements with the Class Action Fairness Act.”  A final approval hearing is set for May 29.  Plaintiffs attorney Lucy Karl of Shaheen & Gordon and Robert Miller, of Sheehan Phinney, who represents Dial, did not respond to requests for comment. Both are in New Hampshire.

The Trump-era Justice Department has ramped up efforts to weigh in on pending class actions under the Class Action Fairness Act.  In a separate class action settlement with Lenny & Larry’s, the department in February criticized the purported $3.5 million settlement, preliminarily approved Nov. 1, for giving $1.1 million in legal fees to plaintiffs attorneys, while class members received up to $50 in cash or $30 worth of cookies.  Separately, the DOJ also filed a Feb. 4 amicus brief challenging a settlement over allegedly defective Tristar pressure cookers that gave $2.3 million to plaintiffs attorneys and discount coupons to class members.  The Arizona Attorney General’s Office, joined by 17 other states, has petitioned the U.S. Court of Appeals for the Sixth Circuit to unravel that deal.

Plaintiffs in the soap case, In re: Dial Complete Marketing & Sales Practices Litig., alleged that The Dial Corp. falsely advertised its “Dial Complete” hand soaps containing triclosan as more effective at killing germs over other brands’ soap.  Under a proposed settlement reached between the parties, Dial would pay $2.32 million to class members, with most class members receiving up to $8.10 in compensation for previous purchases of certain soap products, according to the statement of interest.  The settlement also provides for injunctive relief that would require Dial to refrain from using triclosan or claiming that its hand wash product “Kills 99% of Germs.”

Under the agreement, class counsel would seek a total of $3.825 million in attorney’s fees without opposition from Dial, including $1.9 million in fees specifically tied to obtaining the injunctive relief.  In its Statement of Interest, the United States argues that the injunction would provide no benefit to consumers, given that Dial years ago voluntarily made the same changes to its soap products that are required by the proposed injunctive relief.  Moreover, the U.S. Food and Drug Administration banned the use of triclosan in such products in 2016.  The case is pending in U.S. District Court for the District of New Hampshire, which must approve any settlement.

The government also complained about the use of cy pres in the settlement.  Under the deal, any unclaimed funds would go to the Ronald McDonald House Charities or Children’s Health Fund.  A footnote in the Statement of Interest said a cy pres distribution is “very unlikely,” given the government’s communication with the parties.  The settlement had no objectors.

The case got attention in 2017 when Dial appealed class certification based on the plaintiffs’ inability to identify class members, particularly in cases where people don’t keep receipts, like consumer products.  The U.S. Court of Appeals for the First Circuit refused to take up the interlocutory appeal, but, in a dissent, Judge William Kayatta warned his colleagues that the court’s recent precedent over how class members could be identified was destined to result in “further mischief” that could challenge the constitutional rights of defendants.

$15M Fee Request Called ‘Exorbitant’ in Shareholder Class Action

April 16, 2019

A recent Law 360 story by Vince Sullivan, “Globalstar Called Shareholder $15M Fee Request ‘Exorbitant’,” reports that satellite communications company Globalstar Inc. said a $15 million attorney fee request from shareholder Mudrick Capital Management LP is far too high given the quick settlement reached in Mudrick’s Delaware Chancery Court suit over a proposed $1.6 billion insider transaction.  In an objection to the fee request, Globalstar said the fee application claimed that a substantial increase in the company’s stock trading price resulted from the announcement of the case's settlement in December, but that claim is based on “unsubstantiated conjecture” and results in an "exorbitant" request for fees.

“Setting aside that there is no precedent for awarding fees based on a claimed stock price increase, plaintiffs’ valuation is based on an expert report that is untethered from reality, as it incorrectly analyzes Globalstar’s stock price movement … ,” the objection said.

Mudrick Capital and Warlander Asset Management LP filed suit in September accusing Globalstar’s directors of acting disloyally in agreeing to a $1.6 billion transaction with Thermo Capital Partners, in which Thermo would be given additional shares of Globalstar.  At the time the deal was proposed, Globalstar board Chairman James Monroe III controlled both Globalstar and Thermo.  He held 53 percent of Globalstar stock and sought to increase his holdings to 90 percent through the transaction, according to court filings.

The fee request claims Globalstar’s market value increased by $80 million upon announcement of the suit’s settlement, which came less than two months after the minority investors’ suit was filed and five months after the Thermo merger was terminated.  The $15 million fee request was based on receiving a percentage of the alleged $80 million in value created by the settlement.

Globalstar argued in its objection that it announced several other pieces of company news that impacted its stock price the same day the settlement was made public.  The objection claims that Globalstar announced the settlement on Dec. 17, but also announced a new financing deal that would stave off loan obligation defaults and that Globalstar had achieved a significant developmental milestone by having its wireless spectrum approved for terrestrial network use.

“Plaintiffs’ experts’ dismissal of the effect of the latter two announcements on the company’s stock price is both illogical and inconsistent with his own analysis,” the objection said.  “It also ignores the pressure that the lawsuit itself put on the company’s share price … ”  Globalstar claimed that its shares were trading at $0.50 each when the Mudrick suit was filed, but the price had dropped to $0.30 by the time the settlement was announced.  These issues create doubt about whether the settlement created any value for the company that can be the basis for an award of attorney fees from a common fund, the objection said, and raises questions about the amount of work actually done by the shareholders' attorneys.

Globalstar said the fee request indicates those attorneys incurred $1.5 million in actual fees based on more than 2,700 hours of work on the case, but doesn’t provide any details on the work performed.  The objection said that figure is significantly inflated because the lawyers only drafted a complaint and negotiated a settlement.  The defense counsel in the case incurred $260,000 to review the complaint and negotiate the settlement, which, if extrapolated to the plaintiffs, would call for a much smaller fee accrual of $530,000, Globalstar claims.

Plaintiff attorney Gregory V. Varallo of Richards Layton & Finger PA said the benefits realized in the settlement are unprecedented and warrants an award of the requested fees.  "From the defendants' argument, you'd think this was a run of the mill settlement," Varallo told Law360. "But it's unprecedented.  Nothing like this has happened before."

Contractor Challenges Fee Request in False Claims Act Case

April 3, 2019

A recent Law 360 story by Michael Phillis, “Contractor Fights ‘Cash Grab’ Fee Request in FCA Suit,” reports that a joint venture that included Bechtel Group blasted a whistleblower's bid for nearly $2 million in attorney fees and expenses as a "cash grab" after the contractor agreed to pay $3.2 million to resolve claims it lied about its subcontractors at a nuclear waste cleanup.  Washington Closure Hanford LLC told a Washington federal court that whistleblower Salina Savage and Savage Logistics LLC’s request for nearly $2 million in attorney fees, expenses and “fees on fees” was based on an elevated hourly rate of $800 and was generally unreasonable.  According to the memorandum filed, an appropriate fee award would be roughly $300,000 after applying a $150 to $400 per-hour rate.

The U.S. Department of Justice in June announced it settled the False Claims Act case for $3.2 million, ending accusations that WCH — a joint venture of AECOM, Bechtel and CH2M Hill Cos. Ltd. — made misrepresentations about its subcontractors while doing nuclear waste cleanup work at the Hanford Site in Washington state.  Savage and her company Savage Logistics, which received a $643,000 cut of the settlement, originally filed the suit against WCH in 2010 after having unsuccessfully bid on subcontract work.  Any attorney fees awarded would be on top of that amount.

“If the court grants Savage’s exorbitant request, Savage would recover nearly $2.6 million from WCH for a case litigated primarily between WCH and the [U.S. Department of Justice] that settled for $3.2 million,” the memorandum said.  “Savage’s motion is nothing more than a cash grab by a relator whose efforts did little to bring the case to resolution.”  WCH responded to what it said was an overblown request by Savage in March for a too-large share of fees.

According to WCH, Savage’s fee request was based on an inflated hourly rate that was inappropriate for the local area in which the litigation occurred.  It asked for too many hours and Savage was only involved in part of the litigation, which mainly was pursued by the federal government, which intervened in the suit.  “WCH spent its time and resources after intervention defending against the DOJ, not against Savage,” the memorandum said.  “The small number of hours worked by Savage’s counsel reflects only her limited role after intervention.”

In its request for fees, Savage said her efforts and those of her attorneys took years and resulted in an important settlement.  That work should be properly considered and compensated, according to court filings.  “Work performed by the attorneys securing the government’s participation and presenting Savage’s case to the court has created invaluable precedent over the viability of — and measure of damages in — False Claims Act cases predicated on false small-business certifications,” Savage’s March filing said.

Marisa Bavand, an attorney with Groff Murphy PLLC who represents WCH, said the fee request was "inflated."  "[The memorandum] also highlights the highly improper costs Savage is seeking to recover including costs associated with her personal office, undisclosed “interns,” copy paper and various other costs that are not recoverable," Bavand told Law360 in an email.

The case is United States of America et al. v. Washington Closure Hanford LLC et al., case number 2:10-cv-05051, in the U.S. District Court for the Eastern District of Washington.