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Category: Fee Allocation / Splitting

Third Circuit Declines Hearing NFL’s Fee Allocation Dispute

November 6, 2019

A recent Legal Intelligencer story by Max Mitchell, “Fed. Appeals Court Declines Jurisdiction Over Law Firms’ Fee Dispute in NFL Concussion Case,” reports that the U.S. Court of Appeals for the Third Circuit has determined that the district court overseeing the NFL concussion settlement did not have jurisdiction to wade into a dispute over a firm’s $4.6 million fee awarded for shepherding the class action through the litigation.

A unanimous three-judge Third Circuit panel ruled that the U.S. District Court for the Eastern District of Pennsylvania did not have jurisdiction to rule on Minnesota attorney John Lorentz’s efforts to obtain a third of the multimillion-dollar common benefit fee that Philadelphia law firm Anapol Weiss received for playing a leading role in the class action.

Citing the lower court’s decision in rejecting the dispute, Third Circuit Judge Joseph Greenaway said the matter should not have been filed as a motion to intervene in the class action docket itself but instead should have been brought as an attorney’s lien.

“Here, as a practical matter, Lorentz’s breach of contract claim was not factually interdependent with the underlying claims in In re NFL,” Greenaway said.  “Accordingly, although district courts can have ancillary jurisdiction over attorney fee disputes, because this was a ‘simple’ and separate contract dispute, such jurisdiction does not exist here.”  Judges David Porter and Morton Greenberg joined Greenaway.

Lorentz, who initially represented two-time Super Bowl champion Jim McMahon, argued in a brief filed earlier this year to the appellate court that McMahon was a vocal supporter of the concussion litigation and that he was one of the few players named as a class representative.  Those facts, attorneys for Lorentz contended, helped the Anapol firm win a leadership role in the concussion litigation, which is expected to top $1 billion in recoveries for ex-players.  Anapol Weiss, however, pushed back, contending that the referral agreement did not include sharing the common benefit funds.

5 Law Firms Seek Fees in GNC ‘Phantom Markdown’ Settlement

November 4, 2019

A recent Law 360 story by Matthew Santoni, “5 Law Firms Seek $1.5M in Fees in GNC ‘Phantom Markdown’ Deal,” reports that five law firms representing customers in a $6 million settlement with General Nutrition Centers over the company’s alleged “phantom markdowns” online have asked a Pittsburgh federal judge for $1.5 million in fees and costs.

Attorneys from Ahdoot & Wolfson, Carlson Lynch, Finkelstein & Krinsk, Barbat Mansour & Suciu and Nathan & Associates represented an estimated 3.6 million GNC customers who can get their choice of cash refunds or vouchers for goods on GNC’s website that it claimed were marked down from an inflated “regular” price.

“Despite the risk and uncertainty of class certification and continued litigation, the settlement provides the very remedies that plaintiffs sought in their first amended complaint: monetary relief for the alleged represented discounts and an actual discount of GNC’s everyday pricing that they advertised,” their motion for attorney fees said.  GNC had agreed not to object to the fee request when the parties submitted the proposed settlement in August; U.S. District Judge Mark R. Hornak gave the deal his preliminary approval in September.

In the fee motion, the consumers’ attorneys said they had collectively spent more than 1,800 hours over three years working on the case.  They had attempted mediation in 2017 and could not reach an agreement, but kept working on the potential settlement, the motion said.

“Even though class counsel were experienced in false-discount class actions such as this, navigating through the issues raised required exhaustive investigation of the facts and underlying events relating to the claims, as well as the applicable legal principles bearing on this litigation,” the motion said.  “Class counsel spent significant time reviewing and analyzing thousands of pages of documents and data produced by GNC, which included extensive records regarding thousands of pages relating to the alleged false-pricing scheme during the class period, competitor pricing, pricing history, transactional history, pricing calendars, and advertisements.”

The firms asked for about $1.45 million in fees and $50,000 in costs, which they attributed mostly to hiring the mediator and experts.  The outcome of the settlement compared favorably to numerous other “phantom markdown” suits that had recently been settled, the motion said, including a $4.9 million deal with Michael Kors LLC in 2015.  At rates of $300 to $950 per hour for each attorney’s time, the proposed fee award also compared favorably to the $1.05 million “lodestar” the firms would get if they had charged by the hour, the motion said.

Justices Won’t Hear Fee Allocation Dispute in VW Settlement

October 21, 2019

A recent Law 360 story by Ryan Boysen, “Justices Won’t Hear Firms’ Fee Dispute in $10B VW Settlement,” reports that Nagel Rice LLP and a dozen other firms that claim they were unfairly cut out of the $175 million awarded to class counsel in the $10 billion Volkswagen AG emissions cheating settlement have hit the end of the line, after the U.S. Supreme Court declined to take up their case.  Nagel Rice LLP, Hyde & Swigart and other smaller firms suing alongside them filed a petition for a writ of certiorari in May, arguing the Ninth Circuit overlooked decisions by its sister circuits that supported their position and created a "glaring paradox" by deciding against them in February.

The Supreme Court announced that it wouldn't take up the petition, however, meaning the Ninth Circuit's decision to fully deny them a cut of the $175 million award will stand.

In an emailed statement, Elizabeth Cabraser of Lieff Cabraser Heimann & Bernstein LLP told Law360 she was pleased the Supreme Court had declined to take up the case.  "On behalf of plaintiffs' class counsel, the plaintiffs' steering committee, and the dozens of law firms who stepped up to perform important work for the common benefit of the VW 'clean diesel' classes in compliance with [U.S. District Judge Charles R. Breyer's] case management and common benefit orders, we are pleased that the Ninth Circuit and district court decisions on this matter will stand as guidance in future MDL and class proceedings," she said.

Nagel Rice and the other firms say they led the charge in filing some of the first consumer lawsuits against Volkswagen in 2015, after initial revelations that the auto giant had systematically gamed emissions regulations by outfitting its diesel engine cars with special software known as "defeat devices" to trick inspectors.  Those suits were later consolidated into a sprawling Volkswagen multidistrict litigation.

In 2016, that MDL was settled for $10 billion, with Lieff Cabraser having secured the top spot as lead counsel for the case. Lieff Cabraser's request for $175 million in attorney fees and costs was ultimately granted, with Lieff Cabraser then doling out some of that money to several dozen other firms of its choosing, whom Nagel Rice has derided as "the chosen ones."

Lieff Cabraser later received an additional $125 million in class counsel fees for its work on a second, closely related $1.2 billion VW emissions cheating settlement.

Nagel Rice claims the suits it filed, the meetings it organized to keep the MDL on track, the consolidated complaints it helped to draft and other work it performed on the Volkswagen case was identical to what Lieff Cabraser did.  The only difference, Nagel Rice and the other firms claim, is that they had failed to secure the all-important "lead counsel" title.  That meant they were ultimately unable to bill for their work at all, an outcome made all the more painful by the $2,000-an-hour rates some Lieff Cabraser attorneys were able to submit, according to their petition.

In affirming Judge Breyer's March 2017 order denying the nonclass attorney fees applications, however, the Ninth Circuit said it was clear they had not performed "work that benefited the class, and that they neglected to follow the protocol mandated by the district court."

In their petition, Nagel Rice and the other firms said that decision clashes with the Tenth Circuit's 1994 decision in Gottlieb v. Barry and the Third Circuit's 2005 decision in In re: Cendant.  They quoted the Gottlieb panel's remark that "we fail to see why the work of counsel later designated as class counsel should be fully compensated while the work of counsel who were not later designated class counsel … should be wholly uncompensated."

Nagel Rice and the other firms also argued that the Ninth Circuit's decision had created "two unequal plaintiff classes: one whose recovery is reduced by attorneys' fees and costs and another, represented by select counsel, who get the full benefit of the recovery with no reduction for fees and costs."

They went on to say that the Ninth Circuit's decision was built atop a "glaring paradox" and a "stark anomaly," namely their claim that "the efforts of non-class counsel in the pre-appointment stage of the case had the exact same benefit for the class as the efforts and work product of those firms that were later appointed to lead the litigation."

Fee Allocation Dispute in BNY Mellon Settlement Can Be Litigated

September 20, 2019

A recent Law 360 story by Chris Villani, “Atty Can Sue for Fees in BNY Mellon Settlement, Judge Rules,” reports that a dispute between Bailey & Glasser LLP, the Howard Law Firm and McTigue Law LLP over a $3 million fee following a $10 million settlement with Bank of New York Mellon Corp. sounds like a breach of contract case to a Massachusetts judge, who invited McTigue on Thursday to sue if it wanted.  Chief U.S. District Judge Patti B. Saris said that, in approving the $3.33 million fee award for the lawyers representing a class of trustees who sued BNY Mellon over alleged excessive charges, she would not resolve a long-running dispute between the lead class attorneys and a lawyer for the named plaintiff in the case.

During a hearing earlier this month in her Boston courtroom, Judge Saris heard arguments from McTigue Law that it was entitled to a 20% cut of the fee under the terms of a co-counsel agreement between McTigue, Bailey & Glasser and Howard Law.  The latter two firms said McTigue violated that pact and should not get the 20% share, and Judge Saris invited McTigue to sort the issue out through a new suit.

“McTigue Law’s motion essentially raises a breach of contract claim against lead plaintiff’s counsel,” Judge Saris wrote in a brief order.  “The court did not resolve that claim in its ruling on lead plaintiff’s motion for attorneys fees and expenses.”  Judge Saris said she would deny McTigue’s motion for a 20% cut without prejudice to a separate breach of contract suit.

The order clarified Judge Saris’ more lengthy Wednesday order giving her blessing for the fee, after which a McTigue representative told Law360 it did not believe the judge’s fee award prevented the firm from going after Bailey & Glasser and Howard Law for the cut it believes it rightfully deserves.  The class of trustees reached a settlement with BNY Mellon in March on the eve of trial, but the accord with the bank did little to stem the disagreements between two class counsel firms and Brian McTigue, the personal lawyer for class representative Ashby Henderson.

Bailey & Glasser and Howard Law told the judge in their fee request that McTigue's firm "did not benefit the class, but rather caused disruption, delay and confusion."  McTigue countered by saying he performed "significant and material work" on the case and argued his cut was agreed to in 2016, when the firms signed a contract stating he “will be apportioned 20% of the lodestar work, awarded 20% of the fees and pay 20% of the expenses in this litigation, all on an ongoing basis, as measured from the beginning of the litigation.”

More Law Firms Enter NFL Concussion Fee Allocation Dispute

September 18, 2019

A recent Law 360 story by Ryan Boysen, “More Firms Pile Onto Seeger Weiss in Concussion Fee Fight,” reports that Zimmerman Reed LLP and Kreindler & Kreindler LLP have added their voices to the growing chorus of attorneys claiming Seeger Weiss LLP shortchanged them for their work on the landmark NFL concussion settlement, in a contentious fee fight in the Third Circuit.  In separate briefs, Kreindler’s Anthony Tarricone and a handful of Zimmerman Reed lawyers said their early contributions to the litigation that led to the massive concussion settlement were overlooked and undervalued by Chris Seeger and U.S. District Judge Anita B. Brody when she determined how to divvy up most of the $112 million common benefit fund in 2017.

“Despite recognizing that 'every attorney involved in the litigation has taken on the risk that work will be performed but no payment will be received,’ the court’s awarded multipliers have almost no correlation to the actual” hours of work performed or the risk of nonpayment inherent in those hours, Zimmerman Reed said in its brief.  “That result is completely inconsistent with the court’s” decision to award Seeger Weiss a comparatively massive risk multiplier for its own hours, Zimmerman Reed added.

Tarricone received a risk multiplier of 1.25 for his hours and Zimmerman Reed received a multiplier of just 1, while Seeger Weiss received a 3.5 multiplier, according to court documents.  That huge 3.5 multiplier, coupled with the hundreds of hours billed by Seeger Weiss for its own work, have allowed it to take home nearly $65 million worth of the roughly $100 million that’s been paid out from the common benefit fund thus far.

Seeger is widely acknowledged as the primary architect of the settlement itself, but most of the 20 or so firms involved in the concussion litigation’s early stages have repeatedly bristled at his perceived heavy-handedness and concentration of power during that process.  While those firms are still able to collect contingency fees when their individual clients’ awards are approved under the settlement, practically all of them were left seething after Judge Brody’s lopsided allocation of the CBF money.

They’ve also taken issue with how that money was divvied up in the first place.  According to an opening brief filed last month that Tarricone, Zimmerman Reed and many other firms have all joined, Seeger was allowed to pour over each firm’s time records and decide what would count and what wouldn’t, and determine their risk multipliers.  That process was then essentially rubber-stamped by Judge Brody with hardly any independent analysis on her part, the opening brief claims.  Meanwhile, all of the other firms involved still have yet to lay eyes on Seeger’s own time records.

The first concussion lawsuit was filed against the NFL in 2011 and the settlement was finally approved in 2015, putting to rest claims that the NFL knew for decades about the long-term dangers of repeated concussions but did nothing to warn its players.  The uncapped deal has a 65-year lifespan and covers about 20,500 retired NFL players, all of whom are potentially eligible for payments ranging from a few thousand dollars to $5 million depending on their age and the severity of their football-related brain injuries.  Thus far it’s on track to pay out roughly $675 million to players, although many attorneys have complained that the process is far more difficult than they bargained for.

While the joint opening brief primarily takes aim at the broader issues that allegedly infected the CBF allocation process, Tarricone and Zimmerman Reed’s briefs focus on their own grievances.  Tarricone says he co-chaired the public relations effort undertaken by the lead lawyers in the concussion litigation and was instrumental in getting retired football players on television and favorable op-eds written, as well as steering reporters to write about concussions in football.

Nevertheless, in the brief, he claims Seeger ordered him to delete 80 hours that should have been payable from the CBF and discounted his efforts when coming up with what he considers the paltry risk multiplier of 1.25 for his other hours.  Tarricone and his firm ultimately received about $1.5 million from the CBF, but Tarricone claims it would have been higher if his actual work and risk were properly accounted for.

Similarly, Zimmerman Reed said the late Charles “Bucky” Zimmerman was instrumental in getting the concussion litigation off the ground in the first place, and then spent many hours from 2013 to 2017 monitoring some lawyers and lenders who were allegedly misleading retired players in an attempt to squeeze money out of them.

“During that time, Seeger Weiss largely ignored the [Ethics Committee’s] efforts,” Zimmerman Reed said.  “Once the issue gained public traction” through an article in the New York Times however, “Seeger Weiss, as was its practice in this case, unilaterally took over the effort initiated by the committee” and then “barely acknowledged the work Zimmerman Reed performed.”

“The district court’s failure to scrutinize Seeger Weiss’s recommendation that it be credited for certain work but that Zimmerman Reed not be credited for similar work on the Ethics Committee is clearly erroneous,” the firm said.  Neither Tarricone nor Zimmerman Reed gave precise dollar amounts or other figures in their briefs, but both were adamant that their final payouts from the CBF should have been higher.

For its part, Seeger has not yet submitted a reply brief in the fee fight.  But his response to the initial objections that were overruled by Judge Brody in her 2017 order on the CBF allocation can likely provide some foreshadowing of the arguments he’ll make before the Third Circuit.  “Certain firms disagree with the court’s decision to ask me to submit a proposed allocation, likening me to a ‘fox’ divvying up the chickens, and claiming that I cannot be objective, or worse,” Seeger wrote in that earlier response.