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Category: Class Action

Attorneys Seek Attorney Fees in New Balance Class Action

February 15, 2019

A recent Law 360 story by Rick Archer, “Attys Want $650K in Fees in New Balance ‘Made in USA’ Suit,” reports that class counsel in a suit accusing New Balance Athletics Inc. of falsely marketing its athletic shoes as being “made in the U.S.A.” are asking a California federal court for $650,000 in fees and costs for the $750,000 settlement they won for the class.  In a motion, class counsel Schneider Wallace LLP argued the settlement involved “extensive” work and also included “substantial injunctive relief,” making their request for nearly $228,000 in expenses and close to $422,000 in attorneys' fees — split between the monetary award and the injunctive relief — reasonable.

“In common fund cases, the Ninth Circuit Court of Appeals’ benchmark for attorneys’ fees is 25 percent of the fund created for the benefit of the class, plus recovery of costs,” they said.  “Here, if half the attorney fee is (conservatively) allocated to the monetary portion of the settlement, the fee sought by class counsel is close to the 25 percent benchmark.”  Under the settlement, customers who bought the shoes in California can receive $10 per pair of shoes, with individuals receiving up to $50 for five pairs and families receiving up to $100 per household, with unused settlement funds going to the Public Justice Foundation and Consumer Federation of California.  Also under the settlement, New Balance must more accurately disclose where the parts of its shoes are made.

New Balance consumers filed the proposed class action in California state court in December 2017, alleging the company falsely advertises that its shoes are made domestically even when as much as 30 percent of the value of the shoes comes from foreign parts or labor, purportedly violating California’s consumer protection statutes.  New Balance and the customers first proposed the settlement in April after the judge halted proceedings the month before to allow them to pursue negotiations.

U.S. District Judge M. James Lorenz initially denied approval in October, saying there would need to be an “abysmally low” participation rate of 5 percent for each class member to receive the $10 the settlement proposed.  In November, the proposed class responded, saying the $10 represented the maximum recovery possible and that the $3 to $5 class members would receive if 10 to 15 percent participated still represented a good percentage of recovery.  Judge Lorenz agreed and granted preliminary approval in January.  The final approval hearing has been scheduled for June.

In their fee motion, counsel argued the fees and expenses were reasonable, saying they conducted “extensive” investigation and discovery.  They also argued that for purposes of comparison the fee award should be split between the monetary and injunctive relief.  “A 50 percent allocation between the two forms of relief for this limited purpose is reasonable — if not conservative — because injunctive relief is the primary remedy under the California consumer protection statutes that formed the basis of plaintiffs’ claims,” they said.

The case is Sheila Dashnaw et al. v. New Balance Athletics Inc., case number 3:17-cv-00159, in the U.S. District Court for the Southern District of California.

Class Counsel Spar Over $2.3M in Attorney Fees in Citigroup 401K Case

February 14, 2019

A recent Law 360 story by Dean Seal, “Citigroup Class’ Attys Spar Over $2.3M in Fee in 401K Row,” reports that, one day after McTigue Law LLP sought court intervention for a dispute with former co-counsel Bailey Glasser LLP over $2.3 million in attorneys' fees in a case for a class of Citigroup 401(k) plan participants, Bailey Glasser told a New York federal judge the McTigue attorney "forg[ot] to mention" that the fee dispute must go to arbitration, not the courts.  Bailey Glasser’s Gregory Y. Porter asked U.S. District Judge Sidney Stein to remind James A. Moore of McTigue that in March 2009, the firms signed an agreement as co-counsel for a class of over 300,000 Citigroup Inc. 401(k) plan participants who scored a $6.9 million settlement in their long-running Employee Retirement Income Security Act suit last August.

That agreement contained a clause stating that any disputes must first be mediated and, if that failed, arbitrated, yet that agreement was unmentioned in Moore’s letter to the court asking for a status conference to discuss Bailey Glasser’s attempt to take back a percentage of the attorneys' fees award, according to Porter’s letter.  "Instead, we urge the court to convene a status conference so Mr. Moore can explain why he failed to bring the arbitration agreement to the court’s attention and why the arbitration clause should not be enforced," Porter said.

In his letter, Moore accused Porter of holding the attorneys' fees hostage as leverage in negotiating for a higher percentage of the $2.3 million award by refusing to give consent for a single dollar of the award, held in escrow, to be distributed.  According to Moore, Porter is contesting the allocation of fees because Bailey Glasser paid roughly 10 percent more in expenses than was laid out in the allocation agreement.  Moore said that Bailey Glasser had already been fully reimbursed for that amount through the total expenses award and has incurred no losses, and even if the minor dispute were merited, it would not be affected by the distribution of the majority of the fees award.

"The timing of Mr. Porter’s communications raising his objections and withholding his approval were apparently calculated to prevent my firm from seeking to have the court resolve this matter through the fee petition and final approval process,"  Moore said before asking that the court either dictate the allocation of the fees or simply order their distribution.  Porter followed up the next day, saying that he would not address Moore’s views on the fees allocations "except to note that Mr. Moore’s firm breached the agreement and its duties to the class in Spring 2018 by failing to pay its share of expert expenses (which share my firm paid)."

According to Porter, McTigue refused to respond to emails from Porter asking to confer on the management and financing of the case "given McTigue’s financial condition."  The letter goes into no further details on the expense dispute.  "In sum, the court should not entertain the issues raised in Mr. Moore’s letter without first deciding our motion to compel arbitration," Porter said.

The two firms secured a $6.9 million settlement last summer for a class of current, former and retired Citigroup employees who claimed since 2007 that a Citigroup committee stuffed the company’s 401(k) plan with Citigroup-affiliated funds even though other funds charged lower fees.  Moore, whose firm was allocated more than 77 percent of the lodestar, said in August, "the case was hard-fought for over a decade, and we think the result is an excellent one for plan participants."

The case is Leber et al. v. The Citigroup 401(k) Plan Investment Committee et al., case number 1:07-cv-09329, in the U.S. District Court for the Southern District of New York.

$66M in Attorney Fees in Fiat Emission MDL

February 8, 2019

A recent Law 360 story by Mike Curley, “Lieff Cabraser, Others Collect $66M in Fiat Emission MDL,” reports that plaintiffs firms including Lieff Cabraser, Hagens Berman and Motley Rice will share up to $66 million in fees and costs paid by Fiat Chrysler and auto parts supplier Bosch in a sprawling multidistrict litigation over the automaker's diesel emissions after the companies reached a settlement with consumers.

Elizabeth J. Cabraser of Lieff Cabraser, lead counsel for the plaintiffs in the MDL and chair of the plaintiffs' steering committee that includes Hagens Berman Sobol Shapiro LLP and Motley Rice LLC, told the Northern District of California that after negotiations mediated by settlement Master Ken Feinberg, the firms will seek $59 million in attorneys’ fees and $7 million in costs.  Fiat Chrysler Automobiles NV and Robert Bosch GmbH will not oppose the motion, the notice said.  The notice comes weeks after U.S. District Judge Edward M. Chen said he’s inclined to give preliminary approval to Fiat Chrysler's $307 million deal to settle class claims that it illegally equipped diesel vehicles with devices that cheat emissions tests.

The attorneys' fees and costs come on top of the monetary compensation in the settlement, according to the notice.  The fee request is a reduction from the $106 million in fees and costs the plaintiffs requested in January, according to court documents.

Under that proposed settlement, Fiat Chrysler agreed to offer a software update that will fix the issue and ensure the vehicles are in compliance.  Eligible class members who repair the issue and submit a claim will receive $3,075, while former owners and lessees will be entitled to a $990 payout, according to court documents.  If every car owner submits a valid claim, the total value of the deal will be $307 million, according to the motion for preliminary approval.

That settlement deal is one of many Fiat Chrysler has recently cut to end claims over its defeat devices.  Earlier in January, the company agreed to pay the government a $305 million civil penalty to settle claims it violated the Clean Air Act.  Those funds will be divided between the federal government and California.

Fiat Chrysler will also pay $6 million to settle U.S. Customs and Border Protection claims that it illegally imported 1,700 noncompliant vehicles, and it agreed to pay $72.5 million, which will be split among the 49 states except for California, to settle various state law claims.  Bosch also settled its part in the matters with payments of up to $131 million.  Fiat Chrysler and Bosch are the latest companies to face the music regarding the use of defeat devices, joining the likes of Volkswagen AG, which says it has paid almost $23 billion to settle its legal battles.

"Legal fees are subject to the approval of the court, and are in addition to the $307.5 million in consumer compensation, extended warranties and other benefits of the class action settlement," Cabraser said in a statement.  "We are asking the court to approve the class notice which describes all these benefits and to set a fairness hearing for early May 2019."

The case is In re: Chrysler-Dodge-Jeep EcoDiesel Marketing, Sales Practices and Products Liability Litigation, case number 3:17-md-02777, in the U.S. District Court for the Northern District of California.

61 Law Firms Share in $111.4M Fee Award in Chinese Drywall MDL

February 6, 2019

A recent Law 360 story by John Kennedy, “The Firms that Earned the Most in the Chinese Drywall MDL,” reports that this week, a Louisiana federal judge distributed $111.4 million in fees and costs among 61 law firms that worked on multidistrict litigation over allegedly defective drywall imported from China.  The amount covers work done for the common benefit of all the cases in the MDL through 2013 and relates only to matters involving Knauf Gips KG.  Claims involving Taishan Gypsum Co. Ltd. and Tai'an Taishan Plasterboard Co. Ltd. remain pending.

The drywall in question came into the U.S. as a result of a shortage of building materials in the early- and mid-2000s caused by a Florida housing boom and rebuilding efforts in the wake of hurricanes Rita and Katrina, according to the suits.  Homeowners on the Gulf and East coasts, where the drywall was installed, began to complain about foul smells, corrosion of metal objects and the breakdown of appliances and electrical devices.  Many also reported feeling ill and blamed it on the drywall.

The issues spawned a slew of state and federal lawsuits against homebuilders, developers, drywall installers, realtors, brokers, suppliers, importers, exporters, distributors, manufacturers and anyone else involved with the drywall.  The federal cases were consolidated into an MDL in 2009.  Some of the top law firm earners include:

Levin Sedran & Berman: $23.23M

Herman Herman & Katz: $22.34M

Seeger Weiss: $10.2M

Gainsburgh Benjamin: $9.4M

Colson Hicks: $5.3M

Richard J. Serpe PC: $4.4M

Whitfield Bryson & Mason: $3.9M

Court Ends Fee Dispute in Acacia Derivative Action

February 5, 2019

A recent Law 360 story by Aaron Leibowitz, “Acacia Shareholders’ Attys End Up with $725K in Fee Fight,” reports that the attorneys who brought a derivative suit against Acacia Communications Inc. and its executives will receive $725,000 in fees and expenses in the litigation after reaching a compromise on the amount with the company, according to a Boston federal court order approving the deal.  Lawyers for the suing shareholders and the fiber optics company reached the compromise before U.S. District Judge William G. Young could bring in a Harvard Law School scholar to testify, a step the judge said he was prepared to take at a December hearing about the fee dispute.

The shareholders initially requested $1.75 million in fees plus more than $30,000 in expenses, a figure that Acacia contended was outlandish.  In putting forward that number, the shareholders' attorneys said the internal reforms proposed at Acacia in the settlement of the case, which involved insider trading allegations, would increase stockholder value.  But Acacia pointed to a settlement in a similar case involving internal reforms in which the plaintiffs' team was awarded about $200,000.

Now, the two sides have reached a middle ground.  "The parties have engaged in extensive arms-lengths negotiations, as per the court’s directive, on the attorneys’ fees and expense award and have reached an agreed fee award of $690,633 and an agreed expense award of $34,367," the shareholders' attorneys said in a proposed order.  Judge Young accepted the order as it was proposed the next day.

The shareholders' attorneys had filed a declaration by Harvard Law School scholar Matthew D. Cain, estimating the internal reforms at Acacia would net between $68 million and $82 million for the company's shareholders. Judge Young said in December that he would like to hear from Cain in person as he took on the difficult task of determining a fee amount for a settlement that isn't monetary, but involves changes to the oversight of insider trading at Acacia.

"You say you are the catalyst that caused [these reforms] to be put in place," Judge Young said to the shareholders' attorneys at the December hearing.  "How are you gonna value it?"  The consolidated cases allege that Acacia executives and private equity backers obtained early releases from so-called lockup agreements, allowing them to sell off their shares two weeks before announcements from the company's two largest customers led to a significant drop in Acacia's stock price.

The settlement, which Judge Young approved in part in December while the fee dispute dragged on, mandates the creation of a trading compliance committee to oversee Acacia's insider trading policy, review requests to waive stock sale lockups and report quarterly to the company's audit committee, which will approve any waivers.  Acacia also agreed to amend its insider trading policy to give the company the right to terminate employees and disgorge profits if the policy has been violated.  And the board will be required to add a new independent director.

Geoffrey Johnson of Scott & Scott Attorneys at Law LLP -- co-lead counsel for the shareholders along with Robbins Arroyo LLP – said in December that finding the right fee amount is more art than science, but he said the Harvard expert used "very conservative assumptions" on how the reforms would boost Acacia's worth.  The shareholders' attorneys said they expended nearly 1,690 hours on the case and used a multiplier of 1.72 to calculate the award.

Acacia countered by citing a settlement in a recent case involving internal reforms at Aveo Pharmaceuticals, in which the plaintiffs requested over $800,000 in attorneys' fees but were instead awarded about $200,000 by U.S. District Judge Denise J. Casper, also in Boston.  "The requested fee here is just way too high," Daniel Halston of WilmerHale, representing Acacia, told the judge last month.  "It's just out of bounds."  In addition to the internal reforms and the fee award, the settlement provides $2,500 to each of the five shareholder plaintiffs who brought the case, to be pulled from the larger attorney fee pool.

The case is Tharp et al. v. Acacia Communications et al., case number 1:17-cv-11504, in the U.S. District Court for the District of Massachusetts.