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

$9M in Attorney Fees in Fidelity Workers 401K Settlement

February 27, 2021

A recent Law 360 story by Alexis Shanes, “Fidelity Workers’ Attys Get $9M Cut of 401K Settlement,” reports that a Boston federal court approved $9 million in fees for the attorneys who helped current and former Fidelity Investments employees secure a $28.5 million settlement in their suit accusing the company of loading its workers' 401(k) plans with costly, proprietary investment options. 

In addition to granting the request by attorneys from Nichols Kaster PLLP and Block & Leviton LLP for a one-third cut of the settlement, U.S. District Judge William Young greenlighted $1.4 million in litigation expenses and $115,000 in settlement administration expenses.  The court also approved service awards of $10,000 each for lead plaintiffs Kevin Moitoso, Tim Lewis, Mary Lee Torline and Sheryl Arndt.  The four plaintiffs represented a class of roughly 41,000 current and former Fidelity workers.

In a December motion for fees, the attorneys said they had logged 7,862 hours working on the case.  In that time, they said, they developed the original complaint and amended it four times; reviewed or produced more than 180,000 pages of documents; and deposed a dozen witnesses.

"There is no question that class counsel devoted significant time and effort to this case," the attorneys said in the fee bid.  "Plaintiffs litigated this case vigorously, pursuing the case up to one month before trial was set to begin.  "This court and other courts have approved one-third fee awards in cases at far earlier stages of litigation," they added.

The parties struck the deal in July, after Judge Young set the suit up for trial with a March case stated order, an alternative to cross-motions for summary judgment that allowed the court to draw inferences and reach a decision based on undisputed facts in the case.  The order found Fidelity liable for failing to monitor proprietary mutual funds in the workers' 401(k) plan.  The parties had requested the case stated procedure after filing dueling summary judgment motions in September 2019.

The Fidelity workers sued under the Employee Retirement Income Security Act in October 2018, alleging Fidelity Management & Research Co., FMR LLC and four related entities had loaded their retirement plans with costly investment options that burdened plan participants.  The Fidelity retirement plan had roughly $15 billion in assets by the end of 2016, according to the complaint, ranking it among the top 20 such plans in the nation.

$110M Fee Request Trimmed in $650M Facebook Biometric Settlement

February 26, 2021

A recent Law 360 story by Lauren Berg, “$650M Facebook Privacy Deal OK’d, $110M Atty Fees Trimmed,” reports that a California federal judge praised a $650 million settlement resolving claims that Facebook's facial recognition technology violated Illinois users' biometric privacy rights, calling it a "landmark result," but he trimmed the $110 million requested attorney fees to $97.5 million.  U.S. District Judge James Donato gave his final stamp of approval to the multimillion-dollar deal resolving claims under the "new and untested" Illinois Biometric Information Privacy Act, calling it a major win for consumers in the "hotly contested" area of digital privacy.

The settlement will put at least $345 each into the hands of 1.6 million class members who filed claims, according to the order, and Facebook has agreed to set its "face recognition" default setting to "off" for all global users and delete all existing and stored face templates for the class members.

But Judge Donato also cut back the $110 million in attorney fees that class counsel at Edelson PC, Robbins Geller Rudman & Dowd LLP and Labaton Sucharow LLP asked for, saying the $650 million size of the settlement fund is not a typical case that warrants the use of a 25% contingency fee as a benchmark.  The judge said in this case it would be more appropriate for him to adjust the benchmark percentage or employ the lodestar method instead to avoid "windfall profits" for class counsel.

"To be clear, the court recognizes the skill, dedication and hard work class counsel brought to this case and their clients," Judge Donato said.  "The fact that the court cannot in good conscience award fees on the presumption of a 25% contingency cut should not be read as detracting from that in any way."

"It is simply a matter of fairness and proportion," the judge said.  He said a 25% presumption is just too big to be applied to a settlement fund as large as this one.  The class counsel spent more than 30,103 hours on the case, according to the order — including 9,577 hours by Robbins Geller, 8,103 hours by Labaton Sucharow and 12,423 hours by Edelson.

The judge adjusted the percentage rate from 16.9% of the settlement fund to 15%, giving the class counsel $97.5 million in attorney fees, according to the order.  The judge said he also cross-checked that number with a lodestar calculation and found the award to be more reasonable than the one requested.  But the judge said 15% of the attorney fee award will be held back pending further order.  He granted the class counsel's request for $915,000 in expense reimbursement, finding sufficient documentation, according to the order.

The judge also reduced the incentive awards for the three class representatives — Nimesh Patel, Adam Pezen and Carlo Licata — from the requested $7,500 each to $5,000 each, saying that even though the requested amount would be a "minuscule proportion" of the settlement, it's still too high in comparison to the amount other class members will receive.

Judge Donato praised the parties' "proposed array of innovative ways to reach class members" and notify them of the settlement, including by direct email, Facebook's newsfeed notifications, publication in Illinois newspapers, a settlement website and an internet ad campaign.  "These were robust measures, and they paid off in spades," the judge said.

Kessler Topaz Garner $41M in Attorney Fees for Snap Investors

February 21, 2021

A recent Law 360 story by Emilie Ruscoe, “Kessler Topaz Garners $41.1M For Repping Snap Investors,” reports that Kessler Topaz Meltzer & Check LLP attorneys will take home $41.1 million for their work representing social media giant Snap Inc. investors in a suit alleging fraud, even as the federal judge who approved the deal opined that the overall fee request process does not face any "meaningful opposition and rigorous testing."

In his order out of Los Angeles, U.S. District Judge Stephen V. Wilson found that the multimillion counsel fee, which comprises a quarter of the $155 million settlement sum in the case, is reasonable "in light of the length of the litigation, a comparison to awards made in similar cases, and the minimal reaction from the class."  Judge Wilson signed off on the settlement sum in the same order.

Though the judge approved the fee total, he also noted in his analysis that, "Ultimately, the [counsel fee request] process fails to create any incentive to ensure that requests for attorney's fees in these cases face meaningful opposition and rigorous testing, thereby rendering a court's task in these situations unusually difficult."

Neither the defendants nor the members of the proposed class are in a position to really scrutinize the requested attorney fee, the judge said.  Defendants would have to pay their own attorneys more to go through the process of opposing the counsel fee, and class members are unlikely to retain and pay additional counsel just to oppose the counsel fee, he said.

While courts are required to undertake their own review of the requested counsel fee, they also "are faced with hundreds of cases per year and must allocate limited time across those cases," Judge Wilson said.  Nonetheless, the judge said, the requested 25% fee is reasonable.  Only two members of the putative class, out of 828,000 who received notice about the case, objected to the settlement, and neither of them objected to the attorney fees.

The settlement ends claims that Snap failed to disclose in its initial public offering that Snap's daily active user engagement metrics had been negatively impacted as a result of stiff competition from Facebook.  Snap's March 2017 IPO raised $3.4 billion, but investors claim that revelations about the company's stalling performance indicators pushed down the company's trading price.

Lead Counsel Defends $800M Fee Request in Roundup MDL

February 19, 2021

A recent Law.com story by Amanda Bronstad, “Lead Counsel in Roundup MDL Defend $800M Fee Request,” reports that lawyers defending as much as $800 million in proposed common benefit fees from settlements with Monsanto insisted that the law firms objecting to their request had painted “an incomplete and inaccurate picture” of the Roundup litigation.  More than a dozen law firms had objected to the fee request, with one of them calling the request a “money grab” by lead counsel in the multidistrict litigation.  In a response, lead counsel insisted that the award was justified.

They said Bayer, which owns Monsanto, would not have entered into settlements last year but for their work, which included obtaining three Roundup verdicts.  “The pleadings and affidavits submitted by the objectors present an incomplete and inaccurate picture of the Roundup litigation,” they wrote.  “The simple fact remains that all Roundup attorneys and plaintiffs have benefitted from MDL leadership’s efforts—irrespective of whether or where their cases are filed or unfiled and whether their individually retained attorneys have cases pending in the MDL, have formally availed themselves of MDL work product, or have entered into a formal participation agreement.”  Lead counsel are Robin Greenwald, of Weitz & Luxenberg in New York; Michael Miller, of The Miller Firm in Orange, Virginia; and Aimee Wagstaff, of Andrus Wagstaff in Lakewood, Colorado.

Bayer announced in June that it planned to settle about 125,000 Roundup claims for an estimated $10.9 billion, which included a class action settlement that lawyers later withdrew.  The settlements were not part of a global agreement, however.  Lawyers, including lead counsel, conducted their own negotiations, which have been confidential, and many cases remain unsettled.

In a Jan. 11 motion, lead counsel sought an 8.25% assessment on Roundup settlements to pay for fees and expenses spent on the “common benefit” of all lawyers.  U.S. District Judge Vince Chhabria of the Northern District of California, overseeing the Roundup multidistrict litigation, filed a Jan. 26 order asking lawyers to address four questions about the holdback request, including whether it is even necessary and, if so, how much, and whether it should be lower than the proposed 8% in fees and 0.25% in expenses.  He also asked whether he could issue a holdback “without understanding how much of a premium co-lead counsel has already received on their settlements compared to the typical settlement.”

Several firms criticized the request, particularly on top of an estimated $2 billion in attorney fees they claimed that lead counsel made from contingency fee contracts associated with their own cases, which settled last year for greater amounts than Monsanto is now offering.

In their response, lead counsel noted that the proposed holdback includes an assessment on their own cases, and would compensate about 20 firms not in leadership.  They also said that the assessment pertained only to about 400 law firms that had done one of the following: had at least one case pending in the multidistrict litigation, signed a participation agreement, used “work product” in the multidistrict litigation, or sought help from Kenneth Feinberg, the special master, in settlement negotiations.

“The circumstances of this litigation warrant an expansion of the current scope of the holdback to encompass the entire universe of settlements, because all Roundup plaintiffs have undoubtedly benefited from the efforts and expenditures of common benefit attorneys,” they wrote.  “Indeed, the extensive work that this court has conducted in issuing opinions and managing the litigation have had a direct effect on each and every Roundup case or claim, irrespective of whether or where an attorney might have filed his or her cases.”  Many of the objecting firms had insisted they did not use discovery in the multidistrict litigation and that lead counsel purposely kept the experts to themselves.  Lead counsel countered that they had made work product available on a firm website and provided a “trial package” and experts.

Addressing the objections of specific firms, lead counsel said that Beasley Allen had a pending case in federal court that is part of the trial pool and had coordinated with Weitz & Luxenberg, one of the lead counsel firms, to obtain experts in its state court cases.  Beasley Allen also had asked for an 8% holdback in the multidistrict litigation against Johnson & Johnson over talcum powder, they wrote.  They also attacked the objections of The Lanier Law Firm as “untrue and baffling” given that the firm reached out to lead counsel to retain their experts for upcoming Roundup trials in Missouri state courts.  The Lanier Law Firm also had sought a 10% holdback in multidistrict litigation over DePuy Orthopaedics’ Pinnacle hip implants.

In an email, W. Mark Lanier called the comparison “apples and oranges,” given the amount of work done in the hip implant cases, and disputed claims that he used experts from the multidistrict litigation.  “I find the pleading and allegations a bit baffling as well,” he wrote. “I personally had been told most every expert was being pulled by MDL leadership, and non-MDL cases would have to find their own experts.”  Chhabria has scheduled a March 3 hearing on the fee dispute.

Apple Challenges $87M Fee Request in iPhone Settlement

February 18, 2021

A recent Law 360 story by Dorothy Atkins, “Apple, Ky. AG Rip Class Attys’ $87M Fee Bid in IPhone Deal,” reports that Apple and the Kentucky attorney general joined objectors in urging a California federal judge to reject class counsel's $87.7 million fee bid for cutting a $310 million deal resolving claims over slowed iPhones, slamming it for being millions above the benchmark and padded by unsupported rates.  During a three-hour hearing, Christopher Chorba of Gibson Dunn & Crutcher LLP, counsel for Apple, argued that awarding the fee request would set a "very bad precedent" because class counsel overlitigated the case and shouldn't be awarded for its conduct.

He also said it would result in a net reduction of between $19 and $20 for class members who would otherwise receive more than $100 per claim.  Chorba also argued that class counsel failed to go through the factors warranting its large fee request and that its lodestar calculation is unsupported by the billing submissions.  "We're not saying they shouldn't get any fees," Chorba said.  "The fees are just so outside the norm and so in excess of what would be appropriate."

If approved, the settlement would resolve dozens of consumer protection lawsuits that were filed in 2018 after Apple admitted to issuing software updates that slowed certain iPhones.  The suits allege that Apple designed its software updates to slow down some phone models, nudging consumers to buy newer iPhones.

In May, Apple reached a deal to settle the case for $500 million but objected to the plaintiffs' request for $87 million in attorney fees, asking the court to cut it down by at least $7 million.  Since the settlement was announced, dozens of people have objected, arguing that it doesn't do enough for class members and doles out too much to class attorneys.  In December, the federal government also made clear in a filing that it does not object to the proposed settlement itself but views the fee request as over the top.

During a hearing on the deal's final approval, class counsel Mark Molumphy of Cotchett Pitre & McCarthy LLP argued that the fee award is warranted because the case was exceptional and the risks were great, particularly since the plaintiffs' firms were working on a contingency basis.  He also noted that it's the "first and largest" settlement of the Computer Fraud and Abuse Act claims at issue and that class counsel secured significant recovery that's nearly half of the potential $1 billion damages at issue.

Molumphy argued that a 28% fee award is supported by a lodestar cross-check for the three years of litigation, which included "World War III" discovery, 18 motions, including a motion to dismiss, and what he called Apple's unreasonable litigation demands.  "Frankly there was no roadmap.  There's not a case in which there was a government investigation or plea.  We were the leaders in this case," he said.  "We created a roadmap for others, including government investigation that followed us."

But Apple, the state of Kentucky and multiple class members objected to the size of the fee award and how class counsel proposed to calculate it.  Four attorneys representing objecting class members argued that the 3.5% claims rate was "puny" and the fee request should not be based on the initial $500 million deal because Apple is only paying $310 million due to the low claims rate.

The objectors also argued that a fee recovery of between 10% and 18% is more in line with case precedent, and they slammed class counsel for not submitting detailed billing.  They said the information class counsel provided appears to inflate the hourly rate of staff attorneys to $350 per hour when those attorneys likely received less than $50 per hour for their work and that it appeared to include work by dozens of attorneys who weren't authorized to bill for their time.

John Pentz, counsel for two objectors, pointed out that the alleged billing padding caused U.S. District Judge Lucy Koh to "hit the roof" when she presided over Anthem's $115 million data breach deal, and noted that of the eight contract attorneys billed by Kaplan Fox & Kilsheimer LLP only one is listed on the firm's website.  He also said class counsel didn't explain why those who first filed lawsuits in state court were entitled to a cut of the fees.

Another attorney, Robert William Clore of Bandas Law Firm PC, argued on behalf of objector Alexis West that based on class counsel's own information, the aggregate potential damages at issue were over $4 billion, not $1 billion, and the $310 million represents only 5% of the potential $4 billion damages.

Philip R. Heleringer of the Office of the Kentucky Attorney General echoed other objectors' comments and emphasized that the court has a fiduciary duty to step in for absent class members in situations in which there is a "tension" between class counsel and class members.  Heleringer pointed out that in In re. Yahoo litigation, a court rejected a fee request that had a $10 million discrepancy between the lodestar and fee request, but class counsel's fee request in this case is five times larger than the lodestar.

Heleringer also argued that the settlement does not guarantee class members will receive $310 million.  He said the court should use base lodestar without a multiplier.  He added that there are no rare or exceptional circumstances here and that it's not enough that class counsel is going up against a well-heeled, well-resourced opponent to warrant a multiplier or that it's fighting on a contingent basis, particularly since 81 firms initially filed lawsuits over it.