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Category: Class Action

Class Attorneys Earn $3M in $9.85M in US Airways Settlement

April 11, 2019

A recent Law 360 story by Dean Seal, “Class Attys Get $3M Cut of $9.85M US Airways Deal,” reports that three law firms in coastal California will get about 30% of the $9.85 million settlement they negotiated with US Airways Inc. to resolve nearly decade-old breach of contract claims over baggage delays.  U.S. Magistrate Judge Virginia K DeMarchi said that the $3 million in attorney fees and expenses requested by Karczag and Associates PC, Foley Bezek Behle & Curtis LLP and the Law Office of William M. Aron is fair given the 1,850 hours and $45,000 they’ve spent on settling the somewhat recently revived class action.

“The attorneys’ fees requested in the amount of $2,955,000 represents a multiplier of 3.11, which is reasonable and justified based on: the difficult and novel legal challenges faced by class counsel in this case; the risks and financial burdens that class counsel undertook in litigating this case on a fully contingent basis; and the significant benefits that are being made available to the class members under the settlement,” Judge DeMarchi said.

The judge’s final approval of settlement will net about $14 per person for a class of more than 400,000 flyers who traveled on US Airways between November 2005 and April 2010, reported checked baggage that was lost or delayed and were not refunded their $15 baggage fee.  The airline merged with American Airlines Inc. in 2013. 

The order also allots a $10,000 award for plaintiff and class representative Hayley Hickcox-Huffman.  Hickcox-Huffman said in her 2010 complaint that after she paid a $15 checked baggage fee, she received her luggage a day late following a 2009 US Airways flight from Colorado Springs, Colorado, to San Luis Obispo, California.  Hickcox-Huffman’s case was dismissed in 2011 on grounds that it was preempted by the federal Airline Deregulation Act, but the Ninth Circuit ruled in May 2017 that Hickcox-Huffman properly pled an express breach of contract that US Airways voluntarily entered into, defeating the preemption argument.

The appellate panel, in reviving the suit, cited the 1995 U.S. Supreme Court case American Airlines Inc. v. Wolens, which held that state law breach of contract claims are not preempted.

At a hearing in October 2017, counsel for Hickcox-Huffman argued that she should not have to decide between her implied and express contract claims until after discovery, when the court is expected to learn more about the agreement between the airline and its passengers paying for checked baggage.

A judge ruled soon after that both types of breach could be alleged, but tossed Hickcox-Huffman’s breach of federal common law and “breach of self-imposed undertaking” claims, finding them redundant and not actionable.  The case proceeded into discovery but was ultimately resolved after a two-day mediation session, according to court records.

Class Counsel Seek $12M in Attorney Fees in VW Settlement

April 9, 2019

A recent Law 360 story by Reenat Sinay, “Bernstein Litowitz Seeks $12M in Atty Fees for VW Deal,” reports that Bernstein Litowitz Berger & Grossmann LLP has requested $12 million in attorney fees in California federal court for securing a $48 million settlement for a class of Volkswagen AG investors, ending claims in multidistrict litigation that VW misled them in its financial reporting about its environmental compliance.

U.S. District Judge Charles R. Breyer gave the initial nod to the deal in November and conditionally certified the proposed class of investors who purchased American depositary receipts through VW between November 2010 and January 2016.  According to the terms of the agreement, lead counsel for the investors said they would ask for no more than 25% of the settlement fund.

The investors’ attorneys at Bernstein Litowitz said their request of 25% of the settlement in attorney fees, which amounts to $12 million, was “fair and reasonable.”  Lead counsel also asked for $296,879.86 in reimbursement for litigation expenses and a total of $7,328 to be split between the two class representatives.

“The significant monetary recovery was achieved through the skill, tenacity, and effective advocacy of lead counsel, who litigated this action on a fully contingent basis against highly skilled defense counsel,” the attorneys said.  “The settlement was reached only after nearly three years of hotly contested and difficult litigation, including substantial fact discovery, which required lead counsel to dedicate a significant amount of time and resources to the action.”

In their bid for final approval of the settlement, lead plaintiff Arkansas State Highway Employees Retirement System and named plaintiff Miami Police Relief and Pension Fund told the court that the deal represented “an excellent result” for the investors and requested that Judge Breyer grant final certification of the settlement class.  “Plaintiffs respectfully submit that the proposed settlement is an excellent result for the settlement class and satisfies the standards for final approval under Rule 23 of the Federal Rules of Civil Procedure,” the institutional investors said.  “The proposed settlement represents approximately 33% of the likely maximum recoverable damages in the action, which is an excellent recovery for the settlement class.”

The litigation stems from the revelation in September 2015 that Volkswagen was equipping some of its diesel vehicles with devices that would allow the cars to pass government-mandated emissions tests, then emit more pollution once they hit the roads.  Soon after the U.S. Environmental Protection Agency went public with the allegations, the company acknowledged it had installed the defeat device software in at least 11 million vehicles, nearly 600,000 of which had been sold in the U.S.  The government filed a Clean Air Act suit against VW and its subsidiaries in January 2016.  Several class actions, filed by drivers, dealerships and stockholders, followed.

The instant suit was first filed in Virginia federal court in September 2015 by the City of St. Clair Shores Police and Fire Retirement Systems, asserting on behalf of investors that the carmaker and several executives violated federal securities laws, according to court records.  Along with several similar cases, it was moved to California in December 2015 by the U.S. Judicial Panel on Multidistrict Litigation.

Under the terms of the agreement, the funds allocated to each class member will be determined through a series of calculations.  The value of each ADR purchased will be calculated through artificial inflation estimates and data tracking to determine when each claimant bought and sold VW's ADRs, according to the motion.  Each claim will then be established by subtracting the claimant's gains from their losses, and the distribution amount will be set by dividing the claim amount by the total recognized claims of all recognized claimants, multiplied by the net amount of the settlement fund, the investors said.

Lead counsel highlighted the “significant risk” they faced in litigating the class action against “determined adversaries,” and noted that the 25% fee request is in line with awards granted in similar cases.  Attorneys put in 14,000 hours of work despite the risk of no recovery, they said.  “The 25% fee requested by lead counsel, which has the full support of the institutional-investor plaintiffs, is also well within the range of percentage fees that have been awarded in securities class actions and other complex class actions in the Ninth Circuit with recoveries of comparable size,” they said.

The case is In re: Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation, case number 3:15-md-02672, in the U.S. District Court for the Northern District of California.

$19M Fee Award in Long Running Shareholder Class Action

April 5, 2019

A recent Law 360 story by Jeff Montgomery, “Prickett Jones, Grant Eisenhofer, Kessler Topaz Win $19M Fee,reports that the Delaware Chancery Court awarded $18.7 million in fees to Prickett Jones, Grant & Eisenhofer and Kessler Topaz attorneys who waged an unprecedented, nearly six-year stockholder battle over allegedly outsized stock bonus awards to software company Ebix's CEO.  During a hearing in Wilmington, Vice Chancellor Joseph R. Slights III approved the award — pruned from a requested $25 million — after summarily rejecting a last-minute claim by Ebix Inc. that the court should deny any fee payment based on stockholder attorney failure to acknowledge a purported defect involving two of three class representatives' standing, or eligibility to sue.

Ebix's allegation unsuccessfully invoked the legal doctrine of "unclean hands," a defensive assertion of an ethical failure that could bar a plaintiff from winning a court judgment.  “The litigation was as intense as one could imagine,” the vice chancellor said of the multiyear dispute, adding later that “plaintiffs took risks time and again to prosecute a very complex case,” gaining in the end substantial benefits for stockholders, who alleged breaches of fiduciary duties involving disclosure and corporate governance in addition to the compensation issues.

In addition to the $18.7 million, the court ordered reimbursement for $951,896 in expenses incurred by Prickett Jones & Elliott PA, Kessler Topaz Meltzer & Check LLP and Grant & Eisenhofer PA. The court also awarded $10,000 payouts to two stockholder representatives and $5,000 to a third.

During a trial in August 2018, stockholder attorneys argued that phantom approvals and disclosure failures propped up a potential $825 million in allegedly backdated stock appreciation awards to CEO Robin Raina beginning in 2009 in the event of a company sale.  The stockholder suit took shape during an eventually scuttled, management-led buyout financed by Goldman Sachs, morphing into a battle over stock rights Raina began nailing down in 2006.  Raina’s benefit became in time what Michael Hanrahan of Prickett Jones said was the largest change-of-control agreement in the nation, until the settlement.

“The settlement is fair and reasonable for Ebix and the class,” Hanrahan told Vice Chancellor Slights.  “It gives broad release of specific claims in this litigation, which involves hundreds of millions of dollars.  The court has to decide if the get is commensurate with the give.”

Under the settlement, Raina agreed not to resign as Ebix CEO for at least two years after the agreement is finalized. Ebix meanwhile dropped a CEO benefit provision that would have paid a “gross-up” supplement to offset any tax amounts owed by Raina for the stock award.  Instead, the company agreed to provide 5,953,975 stock appreciation rights at the base value of $7.95 per share with a determination to be made each year prior to any acquisition if he is owed more rights.

Kevin H. Davenport of Prickett Jones said the provision assured that Raina “can’t ever get a bonus on a bonus” by way of the gross-up, reducing the cost of the benefit by $245 million at an $80-per-share price, or $155 million at $55 per share.  The proposed agreement also includes conditions on Raina’s stock appreciation vesting rights if he is involuntarily terminated and offers full vesting rights if he is still employed at the time of any acquisition. Ebix also agreed to develop a “CEO succession plan” within 180 days of the settlement being finalized and will be obliged to hire a “nationally recognized independent compensation consultant to advise annually on director and officer compensation,” according to court filings.

Paul Fioravanti of Prickett Jones said three attorney teams spent 13,339 hours on the case, including taking 27 depositions on three continents, and accumulated nearly $8.6 million in uncompensated expenses.  The requested award would have totaled about 2.2 times that expense.  The case, Fioravanti said, involved “an unprecedented change in control agreement which was terminated shortly before trial in direct response to this litigation, which was replaced with yet another unprecedented change in control agreement which we litigated through trial.  There is not another case like it.”

The bulk of the vice chancellor’s reductions to the $25 million fee request focused on throttling back assumed benefits from changes to the stock awards to better reflect contingencies and the possibility that Ebix would never have to make a payout anyway.  The court accepted a request for $2 million to reflect the benefit of corporate governance reforms, however, in the second-largest of the fee components, with all other adjustments trimming the award to $18.61 million, which the court then used its discretion to round up to $18.7 million.

The case is In Re Ebix Inc. Stockholder Litigation, case number 8526, in the Court of Chancery of the State of Delaware.

Pelvic Mesh MDL Fee Committee Accused of Self-Dealing

March 29, 2019

A recent Law 360 story by Andrew Strickler, “Pelvic Mesh MDL Fee Committee Accused of Self-Dealing,reports that a group of firms that worked on cases for plaintiffs in the multidistrict litigation over pelvic mesh implants has accused fee committee members of self-dealing and obscuring the process of divvying up the case's proceeds.  In one recent filing, New Jersey-based personal injury firm Mazie Slater Katz & Freeman said the committee's recommendations on a split of the "common benefit" fees had largely ignored its role as one of the “driving forces and largest risk-takers” in the massive litigation.

The firm also said some members of the fee and cost committee had raised concerns that committee leaders — chair Henry Garrard of Blasingame Burch Garrard & Ashley PC, Joseph Rice of Motley Rice, and Clayton Clark of Clark Love & Hutson GP — had “predetermined” to give themselves the lion’s share of the fund at the expense of other firms.  Adam Slater of the Mazie Slater firm also claimed that in the “most glaring example of self-dealing,” attorney Bryan Aylstock of Aylstock Witkin Kreis & Overholtz pressured Garrard to up his firm’s award by $10 million by threatening to stop an Aylstock firm partner who sits on the committee from backing the award recommendation.

Retired Judge Daniel Stack, who was appointed by the court to oversee fee allocations, “stated that he ‘was sickened’ and ‘angered’ by this conduct, which he described as Mr. Aylstock pressuring [Garrard] when he was particularly vulnerable,” according to the filing.

The litigation accusing Boston Scientific Corp. of making defective pelvic mesh implants was first centralized in West Virginia six years ago as three MDLs covering 150 cases.  It later grew into seven MDLs with some 53,000 lawsuits.  In January, U.S. District Judge Joseph R. Goodwin in West Virginia ordered that 5 percent of all proceeds should be set aside for attorneys at 94 common benefit firms, representing some $336 million.  Stack and the fee committee issued their fee allocation recommendations to the court in mid-March.

In another March 26 filing, personal injury firm Kline & Specter PC also objected to its $3.745 million award from the common benefit fund, and said fee committee members were attempting a “mass taking.”  The Philadelphia-based firm, which has raised previous objections about the fee committee, also accused Stack of “rubber stamping” the committee’s recommended awards and severely underestimating the firm’s contributions in mesh-focused state court litigation.  “Mr. Stack’s methodology, if one exists, is severely flawed,” the firm said, calling his contribution “worthless.”

A third law firm, Ohio’s Anderson Law Offices LLC, also told the court the eight-member fee committee had authorized for their own firms 66 percent of the total pool, leaving the rest to 79 other firms.  Garrard, Rice and Clark “alone are enriching themselves with 41 [percent] of the total fund; an astonishing $143,669,635,” the firm said.  “By definition, this is self-dealing pure and simple.”

Firm’s Fee Request Cut By 20 Percent in NFL Concussion Settlement

March 28, 2019

A recent Law 360 story by Rick Archer“Firm’s 20% Fee Bid Slashed in NFL Concussion Settlement,” reports that the Pennsylvania federal judge overseeing the National Football League’s concussion settlement significantly trimmed a 20 percent fee request by a class member's former counsel, rejecting current counsel's argument that the firm should be cut out entirely.  U.S. Magistrate Judge David R. Strawbridge gave Leeland McElroy’s former attorney at Pope McGlamry Kilpatrick Morrison & Norwood a 6 percent fee, leaving current counsel at Steckler Gresham Cochran with a 12 percent fee.

The judge said Steckler’s post-settlement work was more substantial, but he didn’t buy the firm’s argument that Pope deserves nothing.  “While Steckler correctly points out that it — not Pope — was responsible for the claim package, Pope accurately states that McElroy would not have been eligible to submit a claim package but for Pope’s advice to remain a class member,” he said.

The concussion settlement covers about 20,000 former NFL players who may be suffering from brain injuries stemming from their years on the field.  Under the terms of the deal, players can submit claims for monetary awards that may reach up to $5 million depending on the player's age and the severity of his condition.

In his order, Judge Strawbridge said McElroy’s award would work out to nearly $919,000.  According to the order, McElroy retained Pope in September 2012, after the concussion cases had been consolidated into multidistrict litigation.  McElroy terminated Pope in March 2015, a month before the settlement received final approval, and retained Steckler in August 2016.

Pope requested a 20 percent fee award for its work, and Steckler objected, saying Pope’s case filing had been on behalf of more than 200 class members, not McElroy specifically, and that its work on McElroy’s medical records was minimal.  Judge Strawbridge said Pope’s work on McElroy’s medical records did not play a “significant” role in qualifying him for an award, but the firm had provided individual services to McElroy, including counseling him to stay in the suit.

“As counsel pointed out at the hearing, like many players, McElroy felt a degree of frustration in the process that led to the final settlement," the judge said.  "Had he acted on that frustration and opted out of the class, he would not have been in the position to claim the benefits he ultimately received from this settlement.”  He did say Steckler’s post-settlement work was more substantial, involving assembling and submitting McElroy’s claim, successfully appealing a denial of the claim and resolving a dispute over medical lien reductions.  “These were not ‘mundane legal chores,’ but rather quality work performed that advanced McElroy’s individual interest,” he said.

The case is In re: National Football League Players' Concussion Injury Litigation, case number 2:12-md-02323, in the U.S. District Court for the Eastern District of Pennsylvania.