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Category: Class Action

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.

Special Fee Master Defends Fee Allocation Work in $1.5B Syngenta MDL

May 8, 2019

A recent Law 360 story by Celeste Bott, “Special Master Defends Fee Divvy in $1.5B GMO Corn Deal,” reports that Heninger Garrison Davis LLC "ignored established law" when it asked for $50 million to $60 million in fees for its work on a $1.51 billion settlement over Syngenta's genetically modified corn, a special master tasked with divvying up the attorney fees told a Kansas federal court.  Special Master Daniel J. Stack, a retired Illinois judge, said the firm mischaracterized and misapplied a district court ruling on the $500 million attorney fee award when it objected to his recommendation it be paid $9.7 million.

The firm had argued it deserved a far bigger slice of the fees — between 65% and 85%of a pool of fees designated for Illinois attorneys, or between $50.7 million and $62.4 million.  An award that high would work out to an hourly rate of roughly $2,500 to $3,200 for Heninger Garrison’s work, Stack said.  “In a comparison that I am privy to from other work on common benefit fees, it is my recollection that the highest hourly rates for the very top leading attorneys is not more than $1,200 per hour,” Stack said.

Stack said that while Heninger Garrison focused its objection largely on litigation and in-court hours, U.S. District Judge John Watson Lungstrum made clear in a fee allocation order that compensable work includes other types of work that contributed to the eventual settlement.  “I did not simply give credit for all hours and weigh them equally, but considered whether they in fact truly contributed to the benefit of the class,” Stack said.  “Consistent with the allocation order, I discounted certain hours and recognized that other hours contributed enormously to achieving the settlement.”

Heninger Garrison objected to Stack’s fee recommendation in March, calling it “fundamentally flawed.”  The firm criticized his decision to award Clark Love & Hutson GP, Meyers & Flowers LLC and Phipps Anderson Deacon LLP — referred to in the report as “the Clark/Phipps group” — 80% of the Illinois portion of the fee pool, arguing that Heninger Garrison and several affiliates did the legwork in the case, including taking depositions, completing plaintiff fact sheets and voluminous discovery.  In addition, Heninger Garrison told the court that the Clark/Phipps group never submitted time entries, only summaries, making it impossible to verify the group’s claims for hours worked.

But that ignores established law that permits a court to rely on time summaries and affidavits submitted under penalty of perjury, Stack said. In this case, it was the “reasonable and efficient” approach, he said.  The firm’s argument that courts in Kansas and Minnesota awarded their attorneys fees differently was “beside the point,” Stack said, adding that the litigation was more advanced in those states and that a benefit determination in Illinois couldn’t build on a pre-existing common benefit process.

In April last year, Judge Lungstrum granted preliminary approval of a mediated $1.51 billion settlement agreement hashed out by farmers in all but four cases involved in the MDL.  The deal came after years of litigation over allegations that Syngenta should have delayed launching the seeds until Chinese authorities — controlling a major corn market for U.S. growers — approved importing the GMO corn.

$66M Fee Request in $800M Chrysler Emission Class Action Settlement

May 2, 2019

A recent The Recorder story by Amanda Bronstad, “Plaintiffs Lawyers in $800M Chrysler Emissions Settlement Want $66M,” reports that plaintiffs lawyers who helped craft an $800 million settlement with Fiat Chrysler this year over its “EcoDiesel” vehicles are asking for $66 million more in attorney fees and costs.  U.S. District Judge Edward Chen of the Northern District of California has scheduled oral arguments Friday about whether to grant final approval of the deal, which includes a $307 million class action settlement and $400 million to federal and state regulators to resolve claims that it installed software in 100,000 vehicles nationwide to cheat emissions tests.

In court papers, lead counsel Elizabeth Cabraser said the request for $59 million in attorney fees and $7 million in costs would be in addition to, and not deducted from, the settlement’s $800 million value.  She said the fees were reasonable in light of the complexities of the case.  “This significant result was not easily won,” wrote Cabraser, of San Francisco’s Lieff Cabraser Heimann & Bernstein, in an April 25 reply supporting the settlement.  “Plaintiffs’ claims were hotly contested and vigorously litigated for nearly two years.”

In the class action, Chen early on appointed Kenneth Feinberg, founder and managing partner of The Law Offices of Kenneth R. Feinberg in Washington, D.C., to serve as settlement master.  Last year, the judge allowed claims to go forward against Fiat Chrysler under the federal Racketeer Influenced and Corrupt Organizations Act.  Under the settlement’s terms, Fiat Chrysler Automobiles N.V. agreed to give individual cash payments of up to $3,075 and extended warranties to eligible consumers who brought their vehicles in for software fixes.  Fiat Chrysler agreed to provide $280 million, with software maker Robert Bosch GmbH contributing $27.5 million.

Class members have 18 months after the settlement’s final approval to make claims.  Unlike the $14.7 billion emission settlement in 2016 with Volkswagen, Chrysler agreed to provide a software fix for two years that would allow drivers to continue using their cars. Also unlike Volkswagen, Fiat Chrysler did not admit liability.  “We look forward to finalizing this agreement with the court, which will bring us another step closer to achieving the settlements’ goals: providing consumers the vehicles they were promised plus cash compensation, while also protecting our environment,” Cabraser said in a statement.

In the reply, Cabraser noted that only three out of 100,000 class members objected to the deal and, of the 3,461 who opted out, nearly 90 percent of them came from “vigorous marketing and solicitation campaigns by a handful of attorneys”—in particular, at Stern Law PLLC in Novi, Michigan, and Heygood, Orr & Pearson in Irving, Texas.  Ken Stern, of Stern Law, and Michael Heygood, of Heygood Orr, did not respond to questions about why they recommended their clients opt out.

“This high level of engagement and remarkably low level of opposition is a strong endorsement of the settlement terms,” Cabraser wrote in the reply.  “Under any circumstances, this extremely low objection rate would strongly favor final approval, and it does so with particular force here given the well-publicized nature of this litigation and the significant sums at stake.”  So far, she wrote, nearly 34,000 class members had registered on the settlement’s website.

In separate declarations, Robert Klonoff, a professor at Lewis & Clark Law School, and Brian Fitzpatrick, a professor at Vanderbilt University Law School, said the fee request represented between 10 to 18 percent of the settlement amount, depending on how benefits are calculated.  Both are reasonable and fall below the 25 percent benchmark established by the U.S. Court of Appeals for the Ninth Circuit.

Cabraser, in her initial motion for final approval, calculated the fee request at 13 percent, when based on a minimum required 85 percent participation rate in the cash fund and cutting the $239.5 million value of the extended warranties in half to account for the government’s role, plus $67.5 million in attorney fees and legal and administrative costs.  When assessed against the total potential value of the settlement—the entire cash fund and value of the extended warranties—the request was 9.6 percent, she wrote.

She estimated that class counsel would have spent more than 100,000 hours on the case upon completion of the claims process in two years, billing at a blended rate of $453 per hour.  “This is more than justified given the intensity of the litigation, the quality of the work, and most importantly, the results achieved,” she wrote.  In addition to Cabraser’s firm, the fees would compensate the other nine law firms on the plaintiffs’ steering committee, plus 10 additional firms who did work on the case, according to a declaration Cabraser submitted in support of final approval.

Class Counsel Seek $23.2M in Attorney Fees/Costs in BNY Settlement

May 1, 2019

A recent Law 360 story by Dean Seal, “Lieff Cabraser, Kessler Topaz Seek $23.2M for BNY Deal,” reports that attorneys for a class of investors want 30% of the $72.5 million settlement they negotiated with the Bank of New York Mellon over claims that it overcharged for certain foreign currency conversions.  Counsel from Lieff Cabraser Heimann & Bernstein LLP and Kessler Topaz Meltzer & Check LLP said that the "extraordinary" recovery achieved after three years of hard-fought litigation for holders of BNY-backed American depositary receipts justifies a $21.75 million attorney fee award and $1.41 million in expenses.

The investors had alleged they'd been overcharged on conversions of their foreign currency dividends for more than two decades, presenting their attorneys with a host of challenges for claims that could be time-barred or claimants that lacked standing, the attorneys told a New York federal judge.  "Even if the court ultimately certified a litigation class, it might have held only claims encompassing FX transactions within only a few years of the case's commencement could proceed, which would have vastly reduced classwide damages," according to the motion.  "The requested fee is, in short, commensurate with plaintiffs' counsel's vigorous efforts as well as the end result."

To date, only six ADR holders have opted out of the settlement, and none have objected, the investors said.  Counsel for the ADR holders said they've devoted more than 32,535 hours to the action and are seeking $1.41 million on top of their fees award for expenses, including $35,000 in awards for the ADR holders named as plaintiffs in the complaint.

$16M Fee Request in $100M CR England Class Action Settlement

April 30, 2019

A recent Law 360 story by Danielle Nicole Smith, “Truckers’ Attys Want $16M Cut of $100M CR England Deal,” reports that attorneys for a class of drivers allegedly tricked into giving trucking company C.R. England free labor want a federal judge to award them $15.8 million for their work securing a settlement worth about $100 million in cash and debt relief.  The plaintiffs' attorneys — from Kravit Hovel & Krawczyk SC, Anderson & Karrenberg PC, Harper Law PLC, Wilentz Goldman & Spitzer PA and the Law Offices of Robert S. Boulter — said in their motion that they had been working on the case for eight years and put in more than 25,000 hours.

Under the settlement, which still requires final court approval, class members will each receive at least $1,000 from a pool of about $40 million and benefit from roughly $61 million in debt relief and credit repair, according to their lawyers. U.S. District Judge Robert J. Shelby granted the agreement preliminary approval in January.  “Together, this bundle of monetary and non-monetary benefits comprise a settlement of significant value to the class that is the direct result of class counsel’s expertise and steadfast commitment to the case since 2011,” the attorneys said.

The settlement calls for C.R. England to forgive $48 million of disputed, unpaid debts for certain drivers including those related to permits, licenses and truck leases and to inform credit reporting agencies that the debts have been canceled.  The trucking company also agreed as part of the settlement not to attempt to collect on $13 million in debt for student tuition.

The attorneys argued that the debt relief should be factored into the total settlement amount for the purposes of determining the reasonableness of their fee request.  Thus, their request for roughly $15.8 million in fees was only about 16 percent of the settlement’s $98.8 million value, a figure well within the reasonable range, the attorneys said.

The drivers had alleged in the suit that they were recruited for a training program by C.R. England under the guise of then having a “guaranteed job.”  However, at the end of the program, they were pushed into purchasing the so-called Driving Opportunity, which required them to pay the company for training tuition, truck rental and gas, among other things, leaving with them with little compensation or even in debt, the drivers alleged.  C.R. England denied the drivers’ claims throughout the suit as well as in the settlement agreement. The settlement does not contain an admission of wrongdoing or liability.