August 19, 2017
A recent Law 360 story by Dave Simpson, “Class Attys Score $44.6M in Fees in $210M Salix Settlement,” reports a New York federal judge signed off on $44.6 million in fees for attorneys who secured a $210 million settlement to end a proposed class action by Salix Pharmaceuticals Ltd. shareholders claiming the company misrepresented inventory levels to falsely inflate its stock price.
In approving the settlement, U.S. District Judge Kimba M. Wood greenlit a request from lead class counsel Bernstein Litowitz Berger & Grossmann LLP that 21.24 percent be set aside for attorney fees and an additional $1.9 million for litigation expenses. In approving the fees, Judge Wood cited the complexity of the litigation, the quality of the counsel’s representation, and the risk attorneys assumed in taking the case on contingency.
“Lead counsel successfully challenged the motion to dismiss, vigorously prosecuted the action through a highly contested discovery process, and achieved a favorable settlement against a well-represented opponent,” Judge Wood’s decision said. “Counsel all have ample experience in class action litigation. Altogether, the high quality of representation warrants the requested fee award.”
The case originated from two securities lawsuits that were filed after Salix stock plunged by more than 30 percent following the company’s November 2014 disclosure that it had much more inventory of many of its drugs than management had previously claimed. The suits were consolidated in March 2015, and the amended complaint alleged violation of the Securities and Exchange Act.
The parties agreed to a $210 million settlement in March for a class of shareholders estimated to be in the thousands. The shareholders’ attorneys said in their proposed settlement that fees for a non-class action would typically range between 30 percent and 33 percent of the settlement amount, and argued their requested award of 21.24 percent of the settlement is “well within the range of percentage fees that have been awarded in the Second Circuit in securities class actions and other similar litigation with comparable recoveries.” The requested fee is based on an agreement the firm reached with a lead plaintiff before litigation began, and should therefore be given a “presumption of reasonableness,” according to that filing.
The suit is In re Salix Pharmaceuticals Ltd., case number 1:14-cv-08925 in the U.S. District Court for the Southern District of New York.