Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Practice Area: Class Action / Mass Tort / MDL

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%.

$77M in Attorney Fees in $386M Bond Price Fixing Settlement

August 13, 2020

Recently a federal district court in New York granted final approval of a $386.5 million settlement, including over $77 million in attorneys’ fees, in a class action brought by investors alleging that various banks engaged in a conspiracy to fix prices of bonds issued by Fannie Mae and Freddie Mac.  Investors claimed that the banks were artificially inflating the value of new bonds, overcharging buyers and underpaying sellers.  The final order approves five settlements in the case. 

In ruling, the court considered the plaintiffs’ request for attorneys’ fees.  The court awarded over $77 million in attorneys’ fees from the settlement fund to plaintiffs’ attorneys for engaging in roughly 30,200 hours of work.  Attorneys also received approximately $1.7 million in expenses, plus interest on the fee and expense awards.  The attorneys’ fees represent 20% of the total settlement amount of $386.5 million.  In addition to attorneys’ fees, the court also approved $400,000 in service awards to the class representatives, with the lead plaintiff receiving $300,000.

Sixth Circuit Tosses Hourly Rates Citing ‘Community Market Rule’

August 12, 2020

A recent Law 360 story by Emily Field, “6th Circ. Wipes Out Atty Fee Award in Vita-Mix Blender Deal” reports that the Sixth Circuit vacated a nearly $4 million attorney fees award in a class action settlement over plastic flecks in Vita-Mix Corp. blenders, finding that a lower court used the wrong billing rates to determine the award.  The appeals panel said that in its circuit, a "community market rule" is used to calculate a reasonable billing rate.  Under that rule, the billing rate should not be more than what than what competent lawyers in the relevant community charge.  However, the lower court departed from Cincinnati rates, saying that the practice of law is increasingly more national, according to the opinion.

Attorneys have to show why they deserve to recover fees equivalent to those charged by out-of-town specialists, the panel said.  "And here class counsel would be hard-pressed to make such a showing since they are very much in-town attorneys," the panel said.  "Local lawyers litigating a case in a local courthouse should receive local billing rates.  The district court erred when it concluded otherwise."

The rates used by the lower court were based on both local rates and rates requested by the class counsel, attorneys from Markovits Stock DeMarco LLC, Finney Law Firm LLC and Goldenberg Schneider LPA, according to the opinion.  "As a result, a majority of the attorneys received rates of around $500 per hour and the most senior attorneys received rates exceeding $600 per hour," the panel said.

The appeals court also noted that class counsel attorneys with similar experience levels often requested very different billing rates, with some attorneys with less experience reporting significantly higher rates.  "An attorney with twelve years of experience reported a billing rate $450 per hour, while an attorney from the same law firm with nine years of experience reported a billing rate of $530 per hour," the panel said.  "Neither class counsel nor the district court explained these discrepancies — i.e., by unique expertise or the like."  The panel directed the lower court to recalculate the billing rates.

Virgin Urges Ninth Circuit to Vacate Attorney Fees in Wage Case

July 30, 2020

A recent Law 360 story by Linda Chiem, “Virgin Asks 9th Circ. To Ax $6M Atty Fee in Wage Spat” reports that Alaska Airlines and Virgin America asked the Ninth Circuit to vacate nearly $6 million in fees awarded to attorneys for a certified class of flight attendants who won $77 million in a long-running dispute over pay and rest breaks.  Virgin America Inc., which merged with Alaska Airlines Inc., filed an opening brief with the Ninth Circuit claiming that U.S. District Judge Jon S. Tigar in January signed off on $5.7 million in fees for the plaintiffs' attorneys without digging into whether their hours and calculations were properly justified.

The attorneys, who initially requested $13.2 million, but were awarded less than half that, are representing named plaintiff Julia Bernstein and flight attendants alleging Virgin America flouted California labor laws by not paying them for all hours worked, including overtime, and denying them state-mandated meal and rest breaks.  Judge Tigar had acknowledged that the attorney fee application was too vague, saying "the level of specificity at which plaintiffs have documented their time makes it difficult or impossible for Virgin to raise certain challenges that courts have found justified partial reductions in other cases."

Despite that critical flaw, according to the airline, the court accepted all of the hours that the plaintiffs' counsel claimed and awarded a $5.7 million fee award, subject to only a 5% general reduction in hours.  "That decision cannot stand," the airline said in the brief.  "Because the lack of detail in the fee application deprived Virgin of a fair adversarial process and did not allow meaningful judicial review, the fee award must be vacated for that reason alone."

Moreover, the class counsel's flawed lodestar consisted of nearly 4,500 hours of billable time, most of which was billed at an absolute "top of the market" rate of $750 per hour, according to the brief.  On top of that, Judge Tigar improperly approved $251,000 in court-related expenses for the plaintiffs' attorneys, Virgin argued.  "Most of the expenses that the district court awarded were for 'expert fees,' which are not recoverable under black-letter California law," the airline said.  "In addition, the district court erred by ignoring the rule that a party cannot recover expenses without submitting an itemized list and accompanying receipts.  The district court did not identify any exception to this rule, and it candidly acknowledged that plaintiffs' counsel failed to comply with it.  But the court awarded expenses anyway."

Opioid MDL Judge Won’t Set Up $3B Attorney Fee Fund

July 28, 2020

A recent Law 360 story by Kevin Stawicki, “Opioid MDL Judge Won’t Set Up $3B Fund For Plaintiffs’ Attys” reports that an Ohio federal judge refused to set up a $3 billion "common benefit fund" to cover fees incurred by attorneys for the plaintiffs in sprawling multidistrict opioid litigation, saying that now's not the time for a "one-size-fits-all" approach given a possible national settlement.  While U.S. District Judge Dan Aaron Polster agreed with the plaintiffs' view that they deserve fair compensation for litigating the massive MDL over the opioid epidemic, he said the likelihood that separate funds will be provided through a global settlement further complicates how the exact terms of the benefit fund would even look, not to mention other issues like "knotty jurisdictional concerns."

"Because of the inordinate complexity of this MDL, the court is hesitant to enter a 'one-size-fits-all' common benefit order applicable by default to every possible settlement permutation — especially because, at this juncture, both plaintiffs and defendants believe settlement negotiations will lead to a global settlement," Judge Polster said.  After the plaintiffs' executive committee asked the court to approve the common benefit fund in January, pharmaceutical companies like Purdue and Cardinal, along with cities, counties and state attorneys general, lined up to oppose the fee request, saying it could irreparably disrupt progress toward reaching a national settlement.

A group of 37 attorneys general said in a letter in February that the proposal for the fund went "well beyond what is necessary to ensure fair compensation for private counsel" by making some local governments pay more in attorney fees and violating state sovereignty.  Judge Polster recognized that those concerns underscore how difficult it will be to ensure incentives are appropriately set through a common benefit fund, which would have to take into account the settlement amount, which cases settle, what amount of common benefit fund corresponds with particular settlements, and what other plaintiffs' attorney fee arrangements look like.

"It is more prudent to defer entry of a common benefit order than to attempt to re-write those generally-familiar terms to fit the specific, complex particulars of this unique MDL at this critical juncture," Judge Polster wrote.  Paul Geller of Robbins Geller Rudman & Dowd LLP, who represents plaintiffs in the MDL, told Law360 in an email that it's "hard to take issue with the judge's contemplative approach to the entry of a common benefit order.  Seems to me it's a question of timing — a matter of when, not if."