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Category: Class Action / MDL

Judge Approves $2.2M Fee Request in Life Insurance Case

June 23, 2020

A recent Law 360 story by Lauraann Wood, “Ill. Judge Oks $2.2M Fee Bid in Life Insurance Billing Case” reports that an Illinois federal judge gave final approval to a class action settlement and a $2.2 million attorney fee award for a group of Accordia Life and Annuity Co. customers who claimed their life insurance policies unlawfully lapsed during a system transition.  U.S. District Judge Colin Bruce said both the monetary and injunctive relief outlined in the deal between Accordia, its electronic payment collector and nearly 500,000 policyholders are fair and reasonable outcomes for the lawsuit that four policyholders launched in 2017.

The policyholders claimed their guarantees were cut on purpose when Accordia and its electronic payment collector, Alliance One Services Inc., allowed life insurance policies previously owned and guaranteed for life by Athene Annuity & Life Co. to either lapse or be canceled by not automatically debiting those customers' monthly premiums and applying them to their accounts.

Judge Bruce also said class counsel's request for $2.2 million in attorney fees shakes out to compensate the policyholders' attorneys for about 2,261 hours of work at $495 an hour, which "is a reasonable blended rate for counsel of this substantial experience engaged in complex civil litigation of a national scope in the Central District of Illinois."  The settlement, which Judge Bruce initially approved in June 2019, faced challenges from five class members who objected to either the nature of the settlement, its monetary relief or class counsel's fee request.

The judge approved the deal over the challenges, saying the settlement and its monetary relief aren't perfect, but "a settlement is a compromise, and, again, the court believes plaintiffs have attempted to achieve the best possible relief for the class when weighed against the risks of trial or summary judgment."

Victoria Becomes First Australian State to Approve Contingency Fees

June 19, 2020

A recent Law.com story by Christopher Niesche, “Victoria Becomes First Australian State to OK Contingency Fees” reports that Victoria has become the first state in Australia to allow contingency fees—a change the government says will make bringing class actions easier.  New legislation passed by the Victorian Parliament this week allows the Victorian Supreme Court to order that plaintiffs lawyers in class actions receive a contingency fee—a fee that is calculated as a percentage of the settlement or damages.

“We are removing barriers to class actions to allow people with genuine claims—who may not be in a position to take on the financial risks of a case—to bring their class actions to the court,” Attorney General Jill Hennessy said in a statement.  “We’re improving access to justice for ordinary Victorians by making it easier to bring class actions for silicosis, wage theft, consumer harm and other forms of corporate wrongdoing.”

The reforms came after recommendations from the Victorian Law Reform Commission (VLRC), which found the state’s class action regime is underutilized, with an average of five or fewer class actions filed per year.  The VLRC found the risks associated with class actions could be reduced by allowing lawyers to receive a percentage of any amount recovered in the proceedings for their legal costs, in return for indemnifying the other side’s costs.

The new law comes soon after the national Government introduced licensing requirements for litigation funders and began an inquiry into class actions and litigation funders in a bid to reduce the number of class actions.  Some plaintiff firms have been preparing to make use of the new regime and there is some expectation that more class actions will be filed in Victoria as a result of the legislation.

Judge Questions $30M Fee Request in Yahoo Data Breach MDL

June 18, 2020

A recent Law 360 story by Dorothy Atkins, “Judge Koh Questions $30M Atty Fee Bid in Yahoo Breach MDL” reports that California federal judge Lucy Koh declined to approve class counsel's $30 million fee bid for securing a $117.5 million deal resolving sprawling Yahoo data breach multidistrict litigation, demanding more billing information from dozens of plaintiffs' firms — including the "markup" on work by first-year law students.  During a hearing held via Zoom, Judge Koh heard objections to the fee request and said she wants more detailed billing information on the 31 law firms and 204 attorneys and paralegals who worked on the MDL and related litigation consolidated in state court, as well as total costs for hiring experts.

Judge Koh gave class counsel a week to submit a chart on how much time each partner and associate worked on the case, what work they did and how much they billed for the work.  She also said she wanted to know how much staff and hourly workers were paid compared with how much the firms billed, pointing out that they had billed $200 per hour for at least one first-year law school student.  "I need to know how much you are paying to know how much the markup is," she said.

Judge Koh also questioned the legitimacy of hundreds of hours of work that nine law firms charged after class counsel had filed the motion for final settlement approval in February, and she pointed out that multiple line items appeared to violate her orders, which prohibited class attorneys from billing at various points in litigation without first receiving court approval.  Class counsel apologized for any billings that went beyond her restrictions and said they would withdraw the charges from their fee request.  They also agreed to submit the additional information within the week.

The judge's comments came during a nearly four-hour hearing on a motion to finalize the approval of Yahoo's $117.5 million deal, which class counsel argued in court documents "provides the second largest common fund recovery ever obtained in a data breach case."  The motion compared the settlement with the health insurer Anthem's $115 million deal, which Judge Koh approved in 2018 to resolve similar data breach claims.

If the Yahoo deal is approved, the settlement would end multidistrict litigation in federal court and parallel state court proceedings over Yahoo's alleged multiple data security failings between 2012 and 2016.  During those four years, the company had annual attacks that potentially impacted millions of U.S. and Israeli account holders, exposing some of their logins, passwords, emails, dates of birth, and answers to security questions to hackers, according to the users.  Judge Koh preliminarily signed off on the proposed deal in July, after rejecting a previous version of the settlement for being too vague and inadequately describing the breaches at issue.

Under the proposed deal, Yahoo agreed to provide class members with either two years of comprehensive credit monitoring or alternative compensation for those that already have credit monitoring.  They also agreed to cover out-of-pocket costs such as fraud losses if class members submit proof and said they would make certain changes to its business to prevent future data breaches.

During the hearing, which was watched by more than 100 observers, Judge Koh said she doesn't think the class should have to pay for the initial proposed settlement, because it was "obviously not in compliance with federal rules of civil procedure."  Judge Koh also took issue with apparent discrepancies between the class size estimates and the number of Yahoo users since the case began, which she said seems to have changed throughout litigation.

The judge noted that Yahoo's CEO touted its 1 billion active users in corporate press releases in 2016, but there's been a "pattern in this case" that every time the parties come back to court the number is smaller.  Now that class counsel wants the settlement approved, they're likely going to argue that there are only 10 class members, the judge quipped.  At the end of the hearing, Judge Koh said she would at some point approve attorney fees, but she reiterated that she takes her responsibility very seriously and wants to review the attorneys' billing.

$88M Cut From $157M Fee Request in Namenda Class Settlement

June 15, 2020

A recent Law 360 story by Pete Brush, “$88M Cut From Requested $157.5M Atty Fee in Namenda Deal” reports that a Manhattan federal judge slashed nearly $88 million from a $157.5 million fee award requested by Garwin Gerstein & Fisher LLP and five other firms for guiding wholesalers of the Alzheimer's drug Namenda to a $750 million antitrust settlement with a unit of Allergan PLC.

After hinting she would reduce the payout, U.S. District Judge Colleen McMahon held Monday that six law firms that alleged Forest Laboratories Inc., a unit of Ireland-based Allergan, thwarted generic competition through unlawful "pay-for-delay" tactics are entitled to $69.538 million.  "It is still a handsome payday for counsel," Judge McMahon wrote, after cutting the request for about 21% of the settlement proceeds for plaintiffs' counsel down to about 9.3%.

The judge approved the lawyers' request for $5.8 million of expenses in the nearly five-year-old litigation, but slashed proposed $150,000 payouts for the two Namenda wholesalers that represented the class — Smith Drug Co. and Rochester Drug Co-Operative Inc. — by 50% to $75,000 each.  "Frankly, this was attorney-driven litigation.  All the class representatives really did was sit for a deposition," she wrote, calling the class reps' contributions "minimal."

Reasoning why she slashed the award, Judge McMahon said that the firms engaged in "duplicative work" — "or, in some cases triplicative or quadruplicative work" — and "inflated" their total number of hours worked.  "Class counsel's time sheets lack sufficient granularity to separate the productive hours from the wasted ones," she wrote.

The wholesalers had claimed Forest deployed a two-pronged strategy for keeping generic rivals to Namenda off the market, including unlawful "pay-for-delay" arrangements and "product-hopping" tactics that shielded its profits long after generic rivals should have developed robust sales.  A not-uncommon effort to settle ahead of trial led to the uncommonly large payout — one of the largest in the history of Hatch-Waxman Act generic-drug approval cases. Allergan admitted no wrongdoing in the deal.

"I fully understand why Forest settled this case for a large number.  Its downside was huge; this was a 'bet the company' case," Judge McMahon observed — awarding the plaintiffs' firms "twice the lodestar" but not "anything like the 4.5 times lodestar requested."

Judge McMahon also didn't like what she characterized as a suggestion that the six plaintiffs' firms should get an outsized payday to make up for the times they don't win.  "I am absolutely unmoved — indeed, I am offended — by the argument that class counsel deserves a humongous fee award in this case because 'the winning cases must help pay for the losing ones,'" she wrote.

Federal Judge: More Needed for $3B Fee Request in Opioid MDL

June 3, 2020

A recent Law 360 story by Mike Curley, “Opioid MDL Judge Orders More Briefing on $3B Atty Fees” reports that an Ohio federal judge overseeing sprawling opioid multidistrict litigation adopted the recommendation of a Harvard Law School professor that more information is needed before he can approve a request for a common benefit fund setting aside $3.3 billion in attorney fees.  U.S. District Judge Dan Aaron Polster ordered more briefing following a report from William B. Rubenstein, the professor who was brought in to assess the plaintiffs' request.  The judge issued a set of questions based on the report to the plaintiffs and other interested parties.

Rubenstein told the court in his report that the MDL's "truly unique" structure and nature means the court should proceed cautiously, saying the request for a common benefit fund "tests uncharted waters."  While a common benefit fund is usually put in place in anticipation of an aggregate settlement, at this point in the opioid MDL, it's unclear whether such a settlement is even feasible, what structure it would take, and which defendants will settle, Rubenstein said.

In addition, there are numerous different types of suits in the MDL, some with many plaintiffs and some with few, and dozens of defendants involved in different aspects of the pharmaceutical chain, Rubenstein said.  As such, smaller settlements that might be taxed to support the benefit fund could take very different forms, he said.  "A single common benefit assessment levied on multiple different types of settlements involving many different types of plaintiffs and multiple defendants runs the risk of being too crude an approach," he said.

That many of the plaintiffs include states, counties, cities and tribal governments could pose other difficult legal questions in establishing the fund, he added.  There are also ongoing settlement negotiations going on in the MDL that could be impacted by the establishment of such a fund, Rubenstein said, citing warnings from the National Association of Attorneys General, who suggested the fee might "disrupt" settlement negotiations "irreparably."

To resolve the issues involved, Rubenstein recommended the court seek briefing from the plaintiffs and other interested parties answering questions on how an aggregate settlement might take shape, how likely parties and lawyers in the smaller cases are to reach an agreement on how much to contribute to such a fund, and how much of the fund should go toward the attorneys, given the size of the MDL and the potential size of such a settlement.  Four attorneys general in October unveiled a proposed $48 billion deal with major drug companies and the nation's largest drug distributor, after which drug companies said 7% of the settlement would amount to more than $3.3 billion in fees.

The idea of a common benefit fund has come under fire in recent months. Opioid manufacturers and distributors — including Johnson & Johnson and McKesson Corp. — pounced on the proposal in February, saying it was nothing more than a "transparent" attempt by lawyers on the plaintiffs' executive committee to grab settlement funds.

Rubenstein, who previously worked on the multimillion-dollar NFL concussion settlement and subsequent fee fight, was tapped in March by Judge Polster to help the court decide whether to approve the $3.3 billion in fees.  "A common benefit order is a widely accepted reality in complex MDLs based on the fundamental fairness of recognizing a distinction between those who work the soil and those who grab the fruit," Paul Geller of Robbins Geller, who represents plaintiffs in the MDL, told Law360.