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Category: Fee Allocation / Splitting

Uber Attorneys Seek $5M in Fees in Employment Action

May 23, 2019

A recent Law 360 story by Linda Chiem, “Uber Drivers’ Attys Seek $5M in Fees in Classification Deal,” reports that California and Massachusetts drivers who aren't bound by Uber’s arbitration agreement asked a federal judge to sign off on $5 million in attorney fees after they reached a $20 million deal to end long-running claims the ride-hailing giant wrongly classified drivers as independent contractors.

Nearly 14,000 California and Massachusetts drivers for Uber Technologies Inc. filed a request for attorney fees and costs with U.S. District Judge Edward Chen in the Northern District of California, seeking about $3.8 million in fees for lead attorney Shannon Liss-Riordan of Lichten & Liss-Riordan PC.  Five other attorneys and paralegals at the Boston-based firm would receive between $16,200 and $589,000 each based on the number of hours they put into the case, according to the filing.

The total $5 million request works out to nearly 25% of the settlement fund, which is in line with the benchmark for attorney fees that courts in the Ninth Circuit have approved in class deals.  Liss-Riordan said she had no additional comment beyond the court filing.  “This fee request is more than justified by the cutting-edge nature of this case, the skill and creativity used in litigating the issues, the case law made here that has assisted and will assist other workers challenging their mis-classification as independent contractors, the unusually high risk taken on by filing the case, and the significant monetary and non-monetary relief obtained for settlement class members,” the drivers’ attorneys said in the filing.

In addition to the $5 million in attorney fees, the drivers requested $7,500 service awards apiece for plaintiffs Elie Gurfinkel, Matthew Manahan, Mokhtar Talha and Pedro Sanchez, and $5,000 service awards apiece for plaintiffs Aaron Dulles and Antonio Oliveira for their work in representing the class in the litigation.  “These awards are reasonable and well within the range of approved incentive payments in class action litigation,” they said.  “Indeed, merely associating their names with such high-profile lawsuits created a tremendous risk of being blackballed in the ‘gig economy’ industry and beyond.  When searching for their names on the internet, potential employers will likely find reference to the O’Connor and Yucesoy cases.”

Judge Chen greenlit the overall $20 million settlement in March after getting the parties to provide additional information about various aspects of the agreement.  Under the deal, about 11,000 drivers in California and 2,600 drivers in Massachusetts who aren't bound by arbitration would receive average payments of $2,206 each after fees and other costs are deducted, according to court filings.  Uber also agreed to change some of its policies in both states to give drivers more job security, but it did not agree to classify the drivers as employees.

Specifically, Uber will no longer “deactivate,” or block from using the app, drivers who have a low rate of accepted rides.  It will also clarify and give advance warning before deactivating drivers, and will allow a formal appeal process for certain cases of deactivation as well as increased access to quality courses for drivers so they can become eligible for reactivation, according to court filings.

The drivers’ attorneys said they achieved “exceptional results” in nearly six years of hard-fought litigation over the classification issue, despite taking a big hit in September when the Ninth Circuit dismantled Judge Chen’s previous class certification orders covering hundreds of thousands of Uber drivers who claimed they were classified as independent contractors and shorted on tips and work expenses.

Special Fee Master Defends Fee Allocation Work in $1.5B Syngenta MDL

May 8, 2019

A recent Law 360 story by Celeste Bott, “Special Master Defends Fee Divvy in $1.5B GMO Corn Deal,” reports that Heninger Garrison Davis LLC "ignored established law" when it asked for $50 million to $60 million in fees for its work on a $1.51 billion settlement over Syngenta's genetically modified corn, a special master tasked with divvying up the attorney fees told a Kansas federal court.  Special Master Daniel J. Stack, a retired Illinois judge, said the firm mischaracterized and misapplied a district court ruling on the $500 million attorney fee award when it objected to his recommendation it be paid $9.7 million.

The firm had argued it deserved a far bigger slice of the fees — between 65% and 85%of a pool of fees designated for Illinois attorneys, or between $50.7 million and $62.4 million.  An award that high would work out to an hourly rate of roughly $2,500 to $3,200 for Heninger Garrison’s work, Stack said.  “In a comparison that I am privy to from other work on common benefit fees, it is my recollection that the highest hourly rates for the very top leading attorneys is not more than $1,200 per hour,” Stack said.

Stack said that while Heninger Garrison focused its objection largely on litigation and in-court hours, U.S. District Judge John Watson Lungstrum made clear in a fee allocation order that compensable work includes other types of work that contributed to the eventual settlement.  “I did not simply give credit for all hours and weigh them equally, but considered whether they in fact truly contributed to the benefit of the class,” Stack said.  “Consistent with the allocation order, I discounted certain hours and recognized that other hours contributed enormously to achieving the settlement.”

Heninger Garrison objected to Stack’s fee recommendation in March, calling it “fundamentally flawed.”  The firm criticized his decision to award Clark Love & Hutson GP, Meyers & Flowers LLC and Phipps Anderson Deacon LLP — referred to in the report as “the Clark/Phipps group” — 80% of the Illinois portion of the fee pool, arguing that Heninger Garrison and several affiliates did the legwork in the case, including taking depositions, completing plaintiff fact sheets and voluminous discovery.  In addition, Heninger Garrison told the court that the Clark/Phipps group never submitted time entries, only summaries, making it impossible to verify the group’s claims for hours worked.

But that ignores established law that permits a court to rely on time summaries and affidavits submitted under penalty of perjury, Stack said. In this case, it was the “reasonable and efficient” approach, he said.  The firm’s argument that courts in Kansas and Minnesota awarded their attorneys fees differently was “beside the point,” Stack said, adding that the litigation was more advanced in those states and that a benefit determination in Illinois couldn’t build on a pre-existing common benefit process.

In April last year, Judge Lungstrum granted preliminary approval of a mediated $1.51 billion settlement agreement hashed out by farmers in all but four cases involved in the MDL.  The deal came after years of litigation over allegations that Syngenta should have delayed launching the seeds until Chinese authorities — controlling a major corn market for U.S. growers — approved importing the GMO corn.

$66M Fee Request in $800M Chrysler Emission Class Action Settlement

May 2, 2019

A recent The Recorder story by Amanda Bronstad, “Plaintiffs Lawyers in $800M Chrysler Emissions Settlement Want $66M,” reports that plaintiffs lawyers who helped craft an $800 million settlement with Fiat Chrysler this year over its “EcoDiesel” vehicles are asking for $66 million more in attorney fees and costs.  U.S. District Judge Edward Chen of the Northern District of California has scheduled oral arguments Friday about whether to grant final approval of the deal, which includes a $307 million class action settlement and $400 million to federal and state regulators to resolve claims that it installed software in 100,000 vehicles nationwide to cheat emissions tests.

In court papers, lead counsel Elizabeth Cabraser said the request for $59 million in attorney fees and $7 million in costs would be in addition to, and not deducted from, the settlement’s $800 million value.  She said the fees were reasonable in light of the complexities of the case.  “This significant result was not easily won,” wrote Cabraser, of San Francisco’s Lieff Cabraser Heimann & Bernstein, in an April 25 reply supporting the settlement.  “Plaintiffs’ claims were hotly contested and vigorously litigated for nearly two years.”

In the class action, Chen early on appointed Kenneth Feinberg, founder and managing partner of The Law Offices of Kenneth R. Feinberg in Washington, D.C., to serve as settlement master.  Last year, the judge allowed claims to go forward against Fiat Chrysler under the federal Racketeer Influenced and Corrupt Organizations Act.  Under the settlement’s terms, Fiat Chrysler Automobiles N.V. agreed to give individual cash payments of up to $3,075 and extended warranties to eligible consumers who brought their vehicles in for software fixes.  Fiat Chrysler agreed to provide $280 million, with software maker Robert Bosch GmbH contributing $27.5 million.

Class members have 18 months after the settlement’s final approval to make claims.  Unlike the $14.7 billion emission settlement in 2016 with Volkswagen, Chrysler agreed to provide a software fix for two years that would allow drivers to continue using their cars. Also unlike Volkswagen, Fiat Chrysler did not admit liability.  “We look forward to finalizing this agreement with the court, which will bring us another step closer to achieving the settlements’ goals: providing consumers the vehicles they were promised plus cash compensation, while also protecting our environment,” Cabraser said in a statement.

In the reply, Cabraser noted that only three out of 100,000 class members objected to the deal and, of the 3,461 who opted out, nearly 90 percent of them came from “vigorous marketing and solicitation campaigns by a handful of attorneys”—in particular, at Stern Law PLLC in Novi, Michigan, and Heygood, Orr & Pearson in Irving, Texas.  Ken Stern, of Stern Law, and Michael Heygood, of Heygood Orr, did not respond to questions about why they recommended their clients opt out.

“This high level of engagement and remarkably low level of opposition is a strong endorsement of the settlement terms,” Cabraser wrote in the reply.  “Under any circumstances, this extremely low objection rate would strongly favor final approval, and it does so with particular force here given the well-publicized nature of this litigation and the significant sums at stake.”  So far, she wrote, nearly 34,000 class members had registered on the settlement’s website.

In separate declarations, Robert Klonoff, a professor at Lewis & Clark Law School, and Brian Fitzpatrick, a professor at Vanderbilt University Law School, said the fee request represented between 10 to 18 percent of the settlement amount, depending on how benefits are calculated.  Both are reasonable and fall below the 25 percent benchmark established by the U.S. Court of Appeals for the Ninth Circuit.

Cabraser, in her initial motion for final approval, calculated the fee request at 13 percent, when based on a minimum required 85 percent participation rate in the cash fund and cutting the $239.5 million value of the extended warranties in half to account for the government’s role, plus $67.5 million in attorney fees and legal and administrative costs.  When assessed against the total potential value of the settlement—the entire cash fund and value of the extended warranties—the request was 9.6 percent, she wrote.

She estimated that class counsel would have spent more than 100,000 hours on the case upon completion of the claims process in two years, billing at a blended rate of $453 per hour.  “This is more than justified given the intensity of the litigation, the quality of the work, and most importantly, the results achieved,” she wrote.  In addition to Cabraser’s firm, the fees would compensate the other nine law firms on the plaintiffs’ steering committee, plus 10 additional firms who did work on the case, according to a declaration Cabraser submitted in support of final approval.

Judge May Get Involved in Pelvic Mesh Fee Allocation Dispute

April 23, 2019

A recent Law.com by Max Mitchell, “Pelvic Mesh Judge Isn't Obligated to Probe Allegations of 'Self-Dealing' in Fee Fight--But He Might Dive In,” reports that although allegations of fee-padding and self-dealing have roiled the pelvic mesh multidistrict litigation, the judge overseeing the consolidated lawsuits is under no obligation to investigate those claims.  But that does not necessarily mean U.S. District Judge Joseph Goodwin of the Southern District of West Virginia will turn a blind eye either.

According to court watchers, allegations that arose recently in the contentious fee dispute should give any judge pause, and may lead Goodwin, who is overseeing the vast litigation, to call for further investigation of the claims before he allocates an estimated $550 million in disputed fees.  “It seems to me the court more or less has to look into these allegations in deciding the fee dispute, and the fact that the court itself appointed this committee sounds like a further reason why the court should be interested in whether they’re behaving properly,” Rutgers University professor John Leubsdorf said.

Infighting Over Fees

The allegations arose in court filings late last month—about two weeks after the fee and compensation committee and Daniel Stack, a retired Illinois state court judge appointed to review the fee allocation process, issued their final recommendations on how to allocate the fees among 94 firms each claiming they did work for the “common benefit” of the MDL.

Specifically, Roseland, New Jersey, attorney Adam Slater of Mazie Slater Katz & Freeman wrote in a March 26 objection that plaintiffs attorney Bryan Aylstock pressured the chairman of the fee and compensation committee, Henry Garrard, to boost the amount of attorney fees to Aylstock’s Pensacola, Florida-based firm, Aylstock, Witkin, Kreis & Overholtz, which ultimately got $10 million more.  According to the objection, Aylstock threatened that his colleague, D. Renée Baggett, a member of the fee and compensation committee, would not sign off on its preliminary written recommendation if Garrard, of Blasingame, Burch, Garrard & Ashley in Athens, GA, refused to increase the fees for Aylstock’s firm.

Slater and fellow Mazie Slater partner David Mazie filed separate declarations insisting that Stack had relayed the information at a Jan. 3 meeting with them.  “Judge Stack stated that he ‘was sickened’ and ‘angered’ by this conduct, which he described as Mr. Aylstock pressuring the FCC chairman when he was particularly vulnerable,” Slater wrote in his firm’s objection.  “Judge Stack explained that he could not recommend the far lower amount he believed Aylstock deserved since he was, as he termed it, ‘put in a box’ since the agreement with the Aylstock firm included assurance that Judge Stack would not reduce the agreed-upon award.”

The objection also accused Motley Rice of padding its bills in the mesh litigation.  “Similarly, Judge Stack stated that he believed that Motley Rice (like some others in the litigation) had inflated its contributions and had ‘padded’ its time with thousands of phantom hours,” Slater wrote.  Stack told him that Motley Rice did that “in every litigation,” according to the objection.  Shanin Specter, of Kline & Specter, also filed a March 26 objection that raised similar concerns, contending that Stack “simply rubberstamped” the FCC’s recommendations.

When reached for comment, Specter said the filings raise serious allegations, and that attorneys should have a right to appeal decisions regarding the fee dispute—an issue that is currently being disputed before the U.S. Court of Appeals for the Fourth Circuit.  “As we said in our filing, firms, especially Mazie Slater, have raised troubling concerns about what’s occurred in relation to the attorney fee issue,” he said.  “Good lawyers are going to be deterred from getting involved in MDLs if they think that the rules can be changed in the middle of proceedings and there’s no right of appeal.”

Slater and Rice declined to comment about the dispute, and Aylstock did not return a message for comment.  Garrard said he could not comment beyond the FCC’s court filings.  The FCC, however, has made counterclaims against the objecting firms, accusing them of collectively making false attacks and submitting bills “riddled with excessive entries, duplicative billing” and other problems.  Garrard also specifically called Slater’s account of Alystock’s fee request false, stating that he “has never felt taken advantage of by this firm.”

“The FCC evaluated the Aylstock firm’s submission by the same criteria as every other firm, which included the opportunity to provide and receive feedback and to be heard,” Garrard wrote.  The use of such “caustic rhetoric” was “unfortunate,” he added.  “It serves no legitimate purpose for these objectors to air personal grievances or what they apparently believe to be ‘dirty laundry’ regarding alleged conversations with FCC members or with the external review specialist save perhaps to embarrass or insult,” he wrote.

But it is unlikely that response will be the end of the dispute.  Objecting attorneys have since filed replies, contesting the FCC’s accounts.  And, although the court has shot down previous requests for discovery regarding the fee allocations, attorney Benjamin H. Anderson of Anderson Law Offices in Cleveland filed a motion requesting a hearing.  “The eight members’ claims of having actually performed the work needed to justify their recovery of two-thirds of the common benefit fund are simply implausible and cannot withstand scrutiny,” Anderson said.

Where Can Courts Go From Here?

Several attorneys said that, although contentious fee disputes are commonplace in big cases, the allegations raised in pelvic mesh are outside the norm, and could lead to a variety of actions by the court depending on what allegations may get substantiated and what allegations might be shown to be false.  Court watchers noted that, unlike in class action litigations, there are no codified duties for judges presiding over MDLs to delve into the particulars of a fee dispute, and often courts simply follow the recommendations of the special master tasked with reviewing the dispute.

However, at least one attorney said there is some case law that might fall in favor of transparency, most recently a decision by U.S. District Judge Robert Kugler in In re Benicar Products Liability Litigation, which, earlier this month, issued an order saying, among other things, that all firms involved in the litigation will be given access to submissions made to the common benefit committee.

The statute governing MDLs is “barebones,” according to Penn Law professor Stephen Burbank, so disputes often arise about exactly what powers a court can exercise.  Courts are also generally reluctant to redo the work performed by special masters who oversee fee disputes, but still, Burbank said, courts generally want to review fee submissions thoroughly.  “The incentives for passing and for unfair allocation on the basis of what I’ll call politics rather than effort are pretty high, and most judges know this,” Burbank said.  “It would be very, very surprising if a judge in any context just accepted what a lawyer is proposing.”

Despite the lack of specific rules, courts generally seek to exercise broad discretion when it comes to fee disputes, Burbank said, and so a credible allegation of impropriety could set the whole fee allocation process back numerous steps.  “That might make me think, well maybe my assumption about the total amount is wrong,” Burbank said.

Among other things, judges facing serious allegations in fee disputes can hold hearings regarding the disputed hours and the rates, attorneys said.  Courts can also call for further evidence and depositions, and, depending on the findings, there could even be disciplinary implications.

Ethics attorney Thomas G. Wilkinson Jr. of Cozen O’Connor said there is little oversight regarding what exactly a “reasonable fee” should be, but, knowingly making false statements can run afoul of ethics laws regarding candor to the court.  “Any kind of knowingly false statement to the court could have disciplinary consequences,” Wilkinson said.

Federal courts are somewhat limited in what they can do if a violation has been found to have occurred, and generally their options are imposing monetary sanctions, or revoking an attorney’s pro hac vice admission.  Any proceedings regarding an attorney’s law license would have to first be initiated by the disciplinary body of the attorney’s home state.  Wilkinson said state disciplinary boards “most always will investigate further” if an issue has been brought to them via a judge’s opinion.

However, he noted that, without a request from attorneys, courts have no duty to sanction lawyers found to have run afoul of the ethics rules.  “There’s no duty on the part of a judge to send an issue to the disciplinary body,” Wilkinson said.  “Even if the judge concludes there was a violation.”

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.”