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Category: Contingency Fees / POF

Equifax Class Counsel Defend $77.5M Fee Request

December 6, 2019

A recent Daily Report story by R. Robin McDonald, “Equifax Class Counsel Defend $77.5M Fee Request, Calling Settlement ‘Unprecedented’,” reports that lawyers representing the class of 147 million people whose personal information was compromised in a 2017 Equifax data breach are asking a federal judge in Atlanta to give final approval to a $1.4 billion settlement agreement, contending it exceeds the value of all previous consumer data breach settlements combined.  They also defended their request for $77.5 million in legal fees in court filings.

Calling it the largest recovery in a data breach in U.S. history, class attorneys said the benefits available to consumers meet or substantially exceed those that have been obtained in similar cases.  The attorneys also said people with valid out-of-pocket claims tied to the breach will be fully reimbursed, and all class members may claim credit monitoring.  Calling their fee request “well-justified and equivalent to or below typical awards,” class counsel said people objecting to the $1.4 billion proposal significantly undervalue the settlement and the risks associated with bringing a data breach case.

“By any measure—the size of the cash fund, the minimum cost to Equifax of $1.38 billion, or the total value to the class when considering the value of the available credit monitoring services—this settlement is unprecedented, exceeding the value of all previous consumer data breach settlements combined,” consumer class attorneys argued in the pleading.

Class lawyers also said their settlement negotiations were complicated by separate negotiations Equifax conducted with the U.S. Consumer Financial Protection Bureau, the U.S. Federal Trade Commission and 50 state attorneys general.  Equifax refused to execute the settlement class counsel carved out until it also reached separate agreements with the regulators that included a “take-it-or-leave-it package of proposed changes” and $70.5 million in extra money “but also potentially made class members worse off,” class counsel contended.

“Counsel spent months negotiating with Equifax on these changes and then with both Equifax and the regulators, so that the increased funds could be incorporated without adversely impacting the class,” class lawyers said.  “Successfully resolving those problems did not ensure that the extra money would be available … because Equifax refused to execute the settlement until and unless it also reached separate agreements with the regulators, which it wanted to announce as part of a ‘global resolution,’” class lawyers contended.  But Equifax had difficulty finalizing those agreements, they said.

Class counsel “forced the issue” by setting a hard deadline and threatening to move to enforce a binding settlement deal they reached separately with Equifax that didn’t include federal regulators or the states.  Equifax signed the global deal shortly before the deadline.  Citing class action case law when the government piggybacks off of class counsel’s work, additional fees are justified, class counsel said in their filing.  The filing stated they shared responsibility with federal regulators for increasing the size of the settlement fund “and should be compensated for their effort.”

Under the terms of the consumer settlement, Equifax will pay $380.5 million earmarked for class benefits, fees, expenses and service awards, as well as notice and administration costs.  Equifax also will pay up to an additional $125 million, if needed, to satisfy claims for consumers’ out-of-pocket losses from efforts to defend against identity theft and $1 billion designated to upgrade the company’s data security and technology.  Because there is no cap on the settlement, Equifax could pay as much as $2 billion more if all 147.4 million class members sign up for credit monitoring, the class lawyers said.  No settlement funds will revert to Equifax.

Class counsel also pushed back against an objection filed by Ted Frank and other objectors who said the legal fees are excessive.  The U.S. Court of Appeals for the Eleventh Circuit has approved class action settlements that typically range from 20-30% with a suggested benchmark of 25%, the class counsel said.

Class counsel also contended that claims their fees are disproportionate are “based on a misunderstanding of the settlement.”  Class counsel said it was rather an “historic achievement” to require Equifax to spend $1 billion on data security and related technology.

“That Equifax may also benefit makes no difference. Defendants almost always benefit by doing the right thing. … The key question is whether the class is better off. In this case, that is undeniable as the business practice changes will immediately benefit all class members by reducing the risk of another breach.  And, according to a top cybersecurity expert, Equifax’s commitment to spend $1 billion will ensure adequate funding to secure class members’ personal information long after this case is resolved.”

The class lawyers also took issue with Frank’s attempts to brush aside the value of credit monitoring services.  “The high quality credit monitoring offered here is far better than the free or low-cost services typically available.  Moreover, courts have often recognized the benefit of credit monitoring, use its retail cost as evidence of value, and consider that value in awarding fees,” their filing said.  They also contended that affected consumers have already signed up for an estimated $6 billion in credit monitoring, based on the retail price.

Class lawyers said that, to date, more than 15 million class members—or over 10% of the class—already have filed claims for credit monitoring, and every class member who submits a valid, out-of-pocket loss claim is expected to be completely reimbursed for losses fairly traceable to the data breach.  “If class counsel were awarded 10% of those benefits, the fee would be much larger than requested,” they said.

$14.1M Fee Award in Airline Price-Fixing Class Action

November 29, 2019

A recent Law 360 story by Matt Bernardini, “Flyers’ Attys Win $14.1M Award in Airline Price-Fixing Suit,” reports that a California federal judge has awarded attorneys for a group of passengers $14.1 million in fees for their work on a $58 million settlement with All Nippon Airways, which was one of several airlines accused of conspiring to fix the prices of trans-Pacific flights.

U.S. District Judge Charles Breyer granted the attorneys about 25% of the final settlement fund, which was slightly lower than the 33% that the attorneys originally asked for.  In his order, Judge Breyer noted that because this was the final settlement after two previous rounds of settlements with the airline companies, the value should be lowered slightly because the financial risk to the attorneys was lower in this phase.

Nonetheless, Judge Breyer noted that during the 12-year-long litigation, counsel for the passengers did exceptional work and that must be factored into the current fee award.  "Because it was not possible to know, in earlier rounds, that counsel's work with respect to ANA would result in the settlement ultimately achieved, it probably makes sense to consider the strength of all work retroactively," Judge Breyer said.  "It is also the case that counsel achieved excellent results for the class — this last settlement, with one defendant, was the single largest settlement in the entire litigation."

The long-running dispute dates back to 2007 when a class of flyers accused a group of airlines of conspiring to fix prices on long-haul trans-Pacific flights to several Pacific nations.  In 2014 multiple airlines including Air France, Japan Airlines International Co. and Vietnam Airlines Co. agreed to settle in deals totaling $29.6 million.  Qantas Airways and Singapore Airlines Ltd. followed suit and settled for a total of $9.8 million later that same year.

$10.1M Fee Request in McDonald’s Labor Class Action

November 28, 2019

A recent Law.com story by Nate Robson, “3 Firms Seek $10M in Fees in McDonald’s Labor Class Settlement,” reports that three plaintiffs firms could get up to $10.1 million in legal fees and expenses as part of a proposed $26 million settlement that would resolve allegations McDonald’s underpaid California workers.  A third of the settlement would go to legal fees, and up to another $1.5 million would cover litigation expenses, according to the proposal filed in Los Angeles Superior Court. 

The plaintiffs are represented by Michael Rubin, Barbara Chisholm and Amanda Lynch of Altshuler Berzon; Joseph Sellers of Cohen Milstein Sellers & Toll; and Matthew Matern and Launa Adolph of the Matern Law Group.  Cohen Milstein is regularly involved in some of the nation’s largest class-action litigation and is among the firms vying for $77.5 million in fees in the Equifax data privacy class action in Atlanta.

The McDonald’s lawsuit was initially filed in January 2013 and has gone through discovery and appeals since then.  A memorandum of understanding was reached in September after “years of fruitless stop-and-go settlement negotiations” as the plaintiffs were preparing for an appeal in the case, according to a declaration supporting the proposed settlement.  That declaration said the negotiations were assisted by mediator Mark Rudy of Rudy, Exelrod, Zieff & Lowe.

A hearing on the proposed California settlement is scheduled for Dec. 3 before Judge Ann Jones.  If approved, the settlement will resolve claims that McDonald’s failed to pay regular and overtime wages, failed to pay employees their full pay when they left the company, and failed to provide time for meals and breaks.

The settlement also includes injunctive relief for the class.  Within 60 days of the settlement being approved, McDonald’s must create a mechanism to pay an hour of premium time to employees who are not allowed to take a full and timely break, and meal time under California law, according to the proposal.  McDonald’s must also allow employees to leave the restaurant on their break, track their break time, and provide new uniforms to employees when their old uniforms become worn or damaged.

Second Circuit Upholds $300M Fee Award in Forex MDL

November 1, 2019

A recent Law 360 story by Anne Cullen, “2nd Circ. Upholds $300M Atty Fees in Forex Rigging Case,” reports that the Second Circuit downed an objector's efforts to lop more than a third off a $300 million fee award for the firms that scored an investor class billions of dollars in settlements from banks accused of rigging interest rates in the foreign exchange markets.  In a short, unpublished decision, a three-judge panel backed the fee award to lead counsel Scott & Scott Attorneys at Law LLP, Hausfeld LLP and other firms, rejecting arguments from sole objector Keith Kornell, who had insisted the attorneys' cut should have been closer to $190 million.

While Kornell had argued that any risk the firms faced taking on the case disappeared just over a year into the litigation when the investors cut the first deal, the Second Circuit found his theory runs counter to well-settled case law that states "litigation risk must be measured as of when the case is filed."  In addition, the panel said, "this contention ignores that claims against the other defendants remained unresolved."

Kornell had also argued that the lower court made a mistake when it relied on total hours in calculating the lodestar, rather than a breakdown of hours by time, task and defendant.  But the panel rejected that argument as well.  The panel said the Second Circuit previously held that "when a court relies on the lodestar 'as a mere cross-check, the hours documented by counsel need not be exhaustively scrutinized by the district court."'

The litigation kicked off in 2013, when investors accused 16 major banks — including Bank of America, Citigroup and Morgan Stanley — of manipulating the benchmark rates used in forex transactions involving millions of dollars' worth of their assets.  Five years later, after settlements totaling $2.3 billion had been reached with all but one of the banks, a New York federal judge ruled that the investor class' counsel could walk away with 13% of the pot.

The fee award was lower than the $381.4 million the firms had wanted, but Kornell indicated in a December appeal notice that he still believed the award was too high, although investors have expressed doubt about Kornell's motive or actual involvement in the case.

$77.5M in Fees Sought in Equifax Data Breach Settlement

October 31, 2019

A recent Law 360 story by Dean Seal, “Class Attys Seek $77.5M in Fees For Equifax Breach Deal,” reports that the attorneys who secured a $380.5 million cash fund for victims of Equifax Inc.'s massive 2017 data breach in Georgia federal court are asking for just over 20% of that fund in fees and another $1.2 million to cover expenses.

More than a dozen firms serving as co-lead counsel, co-liaison counsel, the plaintiffs' steering committee and their state court coordinating counsel all signed off on the request for $77.5 million in fees to compensate them for more than 31,000 hours of work that went into resolving the nationwide multidistrict litigation.

The amount comes in just under the $80.5 million allotted in the cash fund for attorney fees and expenses under the terms of the deal, considered to be the largest data breach settlement in history.  "The requested fee is in line with — if not substantially lower than — awards in other class actions that have resulted in similarly impressive settlements," the firms told the judge.

The settlement, which received preliminary approval in July, also resolved investigations by the Federal Trade Commission, the Consumer Financial Protection Bureau and nearly every U.S. state attorney general into the 2017 breach that exposed Social Security numbers and other personal data of nearly 150 million people.  The deal provided affected customers who filed claims with the option to accept either a cash payment of restitution or a decade of free credit monitoring.

While the FTC originally announced that the payout option would net claimants with a $125 payment, which had been set aside for those who already had credit monitoring services, it followed up in late July with an announcement that "overwhelming interest" in that option would substantially lower the per-person payout.  Of the $300 million set aside for customers in the compensation fund, only $31 million had been allotted for the cash option, the agency said, with the remaining going toward the free credit monitoring — an option the FTC implored consumers to take, even if they already had credit monitoring services.

"This monitoring service is probably stronger and more helpful than any you may have already, because it monitors your credit report at all three nationwide credit reporting agencies, and it comes with up to $1 million in identity theft insurance and individualized identity restoration services," Robert Schoshinski, the assistant director of the FTC's Division of Privacy and Identity Protection, said in late July.

The deal also provided the CFPB with $100 million in civil penalties and $175 million to 48 U.S. states — all but Massachusetts and Indiana, which have filed their own suits against Equifax — as well as to the District of Columbia and Puerto Rico.

U.S. District Judge Thomas W. Thrash Jr. plans to hold a fairness hearing for the proposed deal on Dec. 12 — with a deadline for objectors and challengers set for Nov. 19 — but class counsel said on Oct. 29 that it expects its work to continue well after the deal gets final approval, as it will have to monitor the claims verification process, communicate with impacted class members and participate in any additional dispute resolution.

"Class counsel's oversight obligations and other responsibilities will continue until the settlement is fully implemented, which will not occur until many years in the future," the attorneys said, estimating that they will have to spend at least 10,000 additional hours over the next seven years on closing out the settlement.  The attorneys said their requested fees are reasonable as a percentage of the customers' recovery, in light of the hours of work put in and given the complexity and importance of the case.