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Category: Fee Allocation / Splitting

Firms Must Evenly Split $11.3M in Fees in Century 21 Class Action

December 6, 2018

A recent Law 360 story by Bill Wichert, “3 Firms Must Evenly Split $11.3M Fees in Century 21 Suit,” reports that three law firms representing Century 21 Real Estate Corp. franchisees in a class action against the company and its former parent must evenly split roughly $11.3 million in attorneys’ fees awarded in connection with a settlement in the case, a New Jersey appeals court ruled in nixing one firm’s bid for a larger share.

A three-judge appellate panel upheld a trial court order that confirmed an arbitration award dividing the money equally between Zwerling Schachter & Zwerling LLP, Keefe Law Firm and Kopelowitz Ostrow PA, rejecting Zwerling Schachter’s argument that it deserved more than a third of the fees due to its work and responsibility in the litigation.  The arbitrator, a former federal judge, correctly found that representation agreements between the firms and franchisees required the firms to equally share the attorneys’ fees even if they did not share the work and responsibility in the class action equally, according to the panel.

The class action, which was initially filed in 2002, alleged that Century 21’s then-parent, Cendant Corp., breached a contract by diverting Century 21 advertising funds to competitors.  The franchisees claimed that Cendant, which also owned Coldwell Banker and ERA Real Estate, misappropriated funds to try to sink Century 21 and build up its other units.  In 2002 and 2004, Zwerling Schachter, Kopelowitz Ostrow and McElroy Deutsch & Mulvaney LLP entered into "attorneys-class representative agreements" with plaintiffs in the case, according to the appellate opinion.

Those agreements said that each firm would receive “33⅓ percent” of any attorneys’ fees awarded in the case and that “each of the law firms named herein shall share the fee which is in accordance with their anticipated division of work and responsibility in this matter,” the opinion said.  McElroy Deutsch withdrew from the matter in 2004, and the firm that ultimately became Keefe Law Firm joined the case, the opinion said.  The parties have agreed that Keefe, Zwerling Schachter and Kopelowitz Ostrow have a right to share in the attorneys’ fees, with McElroy Deutsch to receive its fees out of Keefe’s share, according to the opinion.  After the class action settled in 2012, the three firms could not agree on how to split up the attorneys’ fees, the opinion said.

Zwerling Schachter said the apportionment should be based on the hours worked and the responsibility assumed during the case, while Keefe and Kopelowitz Ostrow said the attorneys-class representative agreements required the firms to divide the money equally.  Keefe and Kopelowitz Ostrow in 2013 made an offer of judgment to Zwerling Schachter, under which that firm would have received $600,000 more than if the firms split the fees equally, but Zwerling Schachter rejected the offer, the opinion said.

The firms agreed in 2014 to submit their fee dispute to arbitration.  In 2016, the arbitrator found that “the attorneys-class representative agreements ‘require[d] the parties to share the attorneys' fee award in equal thirds, even if the parties did not share the work and responsibility in the underlying class action equally,’” the opinion said.

The trial court in June 2016 entered orders confirming the arbitration award and denying Zwerling Schachter’s motion to vacate the award.  In November 2016, the court denied a motion from Keefe and Kopelowitz Ostrow seeking to recoup the attorneys’ fees and costs they incurred after Zwerling Schachter rejected their offer of judgment, the opinion said.  On Zwerling Schachter’s appeal of the June 2016 orders, the appellate panel affirmed those decisions by citing in part the attorneys-class representative agreements, saying the panel agreed with the arbitrator that the first sentence of those agreements “is clear in providing that each of the three firms was to receive one-third of a fee award."

“We also agree with the arbitrator that the key phrase in the second sentence is ‘anticipated division of work and responsibility,’” the panel said.  “Finally, we agree with the arbitrator's reasoning that the second sentence did not undercut or modify the clearer first sentence.”  The panel also noted the arbitrator’s findings that there was no evidence that “any of the firms had ‘failed to contribute at all toward earning the fee award,’” and that “the evidence showed ‘each party contributed thousands of hours to the class litigation.’”

“In short, the plain language of the attorneys-class representative agreements and the extrinsic evidence supports an equal apportionment of the fee award,” the panel said.  Keefe and Kopelowitz Ostrow appealed the November 2016 order, but the panel affirmed that ruling as well, saying “the amount of the arbitration award was not sufficient to trigger the shifting of fees and costs under Rule 4:58, the offer of judgment rule.”

The case is Frank K. Cooper Real Estate #1 Inc. et al. v. Cendant Corp. et al., case numbers A-1482-16T3 and A-1579-16T3, in the Superior Court of New Jersey, Appellate Division.

Some Oppose 5 Percent Attorney Fee Set-Aside in Pelvic Mesh MDL

November 30, 2018

A recent Legal Intelligencer story by Max Mitchell, “Pelvic Mesh Trial Lawyer Slams MDL Settlements as ‘Puny’ Opposing Leadership’s Fee Petition,” reports that as the pelvic mesh MDL has begun to settle, attorneys on the leadership committee have asked the federal court overseeing the litigation’s massive inventory to set aside 5 percent of the awards for common benefit fees and expenses.  With the settlements already topping $7 billion, that means more than $360 million is set to distributed among the firms.

However, at least two firms are opposing the request, with one saying the hold-back amount is far too much.  Attorneys with Philadelphia-based Kline & Specter filed a response opposing the 5 percent set-aside request.  The highly critical filing contends that the federal cases have settled for “puny” amounts compared to the multimillion-dollar verdicts juries have been willing to award both in state and federal courts.  “The leaders in this litigation did the worst possible thing to the detriment of all plaintiff mesh victims and their attorneys: they settled their inventories way too cheaply, making it difficult for other attorneys to settle their cases reasonably,” attorney Shanin Specter said in the filing.

According to the filing, the average award for the tens of thousands of cases that have settled is about $40,000, while the average award for the cases that have gone to trial is about $9.8 million.  Specter’s firm took a leading role in several pelvic mesh cases that were tried in Philadelphia state court, including winning a $57 million verdict last year.  In the filing, Specter suggests that the set-aside amount be halved from the leadership committee’s request.

The firm’s filing also faults the leadership team with taking too many cases to effectively handle, saying the “discounted settlements were driven by the sheer enormity of the number of claims” and the “inability” of the lawyers to fully work up their inventories.  “It’s been an open secret in this litigation that the ‘leadership’ took too many cases to effectively litigate themselves.  By doing so and by not associating other lawyers to help discover and try their cases, they were forced to settle,” Specter said in the filing.  “This wasn’t bad for ‘leadership’ because a large number of small fees on small settlements is still a large number.  But it mistreated the women they represent. And it mistreated the other plaintiff’s counsel who were stuck behind this low bar set by the leadership.”

Andrus Wagstaff in Colorado also filed a notice of intent to oppose the petition for the 5 percent set aside.  The notice did not outline the crux of the firm’s objection, but the notice did say that it hired Blank Rome attorney Andrew Williamson to represent the firm in the dispute.  Georgia attorney Henry Garrard of Blasingame, Burch, Garrard & Ashley, who is chairman of the fee and compensation committee, said he plans to file a response, and declined to comment further, other than saying, “There is a lot to the story that’s not in their objection.”

The pelvic mesh MDL consists of seven separate consolidated litigations against some of the largest medical product manufacturers in the country.  According to federal records, the litigation topped out at nearly 107,000 claims, and, as of Nov. 15, the seven consolidated litigations have an inventory of 37,299.

On Nov. 12, Garrard filed the petition requesting the 5 percent award.  According to the petition, 94 law firms submitted more than 900,000 hours of time, and the committee has recognized nearly 680,000 of those hours as contributing toward the litigation’s common benefit.  The petition also noted that the current value of the settlements is roughly $7.25 billion, and the total amount for settlements is expected to be around $11 billion.  With the requested 5 percent set aside, that would make the total amount expected for the common benefit fund to reach $550 million.

The response from Kline & Specter, however, said the MDL leadership failed to secure a global settlement, and that the petition largely ignores the work done in the state court litigation that benefited the federal MDL, such as obtaining the verdicts, which, the filing said, weakened the defendants’ position and drove settlements.  “Given the paltry recoveries for the injured women in this successful-in-the-courtroom, surrender-at-the-settlement-table mass tort, it is more equitable for the common benefit fee to be half of the requested amount and to remit their proportionate share of these saved funds to the injured women,” Specter said in the filing.

Special Fee Master Recommends $500M in Fees in Syngenta MDL

November 27, 2018

A recent Law.com story by Amanda Bronstad, “Syngenta Special Master Rejects $150M in Fees for Texas Attorney Mikal Watts,” reports that a special master reviewing fee requests from hundreds of law firms in the $1.51 billion settlement with Syngenta has recommended that lead counsel get half the estimated $500 million in legal fees but rejected the idea that attorney Mikal Watts, who represents 60,000 farmers in the deal, should get $150 million.

U.S. District Judge John Lungstrum on Nov. 15 approved the class action settlement, which resolved lawsuits alleging Syngenta sold genetically modified corn seed that China refused to import, causing about 600,000 farmers and other producers to lose billions of dollars.  Lungstrum oversaw the multidistrict litigation coordinated in Kansas federal court, but many other cases were pending in federal and state courts in Minnesota and Illinois.  Some were class actions, while others were individual lawsuits.  That led to a big battle over attorney fees. On Nov. 21, special master Ellen Reisman issued a report and recommendation on how to allocate fees to about 400 law firms.

“Here, the settlement agreement recognizes that the successful result in this case was obtained through the work of multiple counsel in multiple jurisdictions who collectively applied litigation pressure in multiple forums that ultimately persuaded Syngenta to resolve the various litigations through a nationwide class action settlement,” wrote Reisman, of Reisman Karron Greene in Washington, D.C. “How to allocate the attorneys’ fee award among plaintiffs’ counsel is less straightforward.”

Objections to the report are due Dec. 5, and a hearing is set for Dec. 17.  Reisman’s report largely reflects a suggestion from lead counsel in the multidistrict litigation in Kansas on how to divvy up the fees, much of which was based on a fee sharing agreement in the settlement.  Although other lawyers played key roles in reaching the settlement, 50 percent of the fees should go to 95 law firms in the multidistrict litigation in Kansas, Riesman wrote.  That included lead counsel Patrick Stueve of Kansas City, Missouri-based Stueve Siegel Hanson; Don Downing of Gray, Ritter & Graham in St. Louis; Scott Powell of Hare, Wynn, Newell & Newton in Birmingham, Alabama; and William Chaney of Dallas-based Gray Reed & McGraw.

Reisman particularly praised the work of a lead settlement counsel Chris Seeger of New York’s Seeger Weiss.  “Mr. Seeger was the clear leader of the settlement effort on the plaintiffs’ side, and without his efforts a settlement would not have been achieved,” she wrote.  She rejected arguments from Watts, of Watts Guerra in San Antonio, that he and a group of 224 associated law firms, representing primarily individual farmers with cases in Minnesota state court, should get one third of the pie.

The dispute mirrors similar fee fights that have erupted in mass torts between plaintiffs attorneys appointed to represent the class and those who have brought individual suits on behalf of their clients.  Reisman, in her report, acknowledged those other cases, predominantly the $1 billion concussion settlement with the National Football League.  In that case, she wrote, the judge allowed some portion of attorney fees to go to lawyers with individual clients, and not just lead class counsel, but capped their contingency rates.  “There is significant legal support for the proposition that the courts have the required personal and subject-matter jurisdiction and the legal and equitable authority to modify contingent fee arrangements,” she wrote.

But she found that the Syngenta litigation had some key differences—most notably, the pressure that a large chunk of individual cases had on reaching a settlement.  In her report, she wrote that “no single event or group of plaintiffs’ counsel was solely responsible for pushing this litigation to resolution.”

The Syngenta multidistrict litigation, created in 2014, involved subclasses of farmers in eight states planned for trials.  Last year, a mistrial aborted the first bellwether trial, in Minnesota, but a federal jury awarded $217.7 million to a class of Kansas farmers in a second trial.  Another trial, on behalf of a class of Minnesota farmers, was ongoing when both sides struck a deal.

Watts Guerra partner Francisco Guerra was co-lead plaintiffs counsel in Minnesota state court, but no one from the firm had a lead role in the multidistrict litigation.  The firm did work on the Minnesota trial, however, and Watts was one of four lawyers appointed to the plaintiffs’ negotiating committee.  Watts did not sign the fee sharing agreement in the settlement but instead based his request on a 2015 joint prosecution agreement with lead counsel in the multidistrict litigation.  He calculated his request using a reduced contingency rate of less than 24.2 percent and $12.8 million in reimbursements for common benefit expenses he paid in the Minnesota state court litigation.

His request for fees got some pushback.  Some lawyers representing individual farmers, including one who filed a lawsuit with Watts earlier this year, accused the Texas lawyer of cutting them out of negotiations and luring farmers to retain him in order to get fees. Watts called the suit “frivolous.”

In court documents, lead counsel in the multidistrict litigation argued that the 2015 joint prosecution agreement had nothing to do with the class actions and would set Watts up to get as much as $200 million.  They sought 50 percent of the $500 million, with Seeger Weiss getting at least 10 percent, but suggested that 12.5 percent go to the lead lawyers in Minnesota state court and 17.5 percent to attorneys in Illinois.  The remaining $100 million would be reserved for other lawyers.

Reisman agreed on the 50 percent and, as to the arguments from Watts, found that the 2015 agreement was “irrelevant” to the fee award in a nationwide class action.  But she doubled the allocation to the Minnesota group, which includes Watts, assigning 24 percent, or about $120.8 million.

“Unquestionably, the Minnesota state court litigation both advanced the cause of pressuring Syngenta on multiple fronts and, through coordination with Kansas counsel, assisted the nationwide class effort,” Reisman wrote.  Lawyers in the Illinois cases, whose award totaled $80.5 million, or about 16 percent, “presented an important third pressure point on Syngenta,” she wrote.

She also allocated 10 percent to lawyers with individual clients, capping their contingency rates at 10 percent.  She said most of those firms recruited clients and filled out fact sheets, while lawyers in leadership in Kansas, Minnesota and Illinois did the “vast majority” of the work.  “A 10 percent contingent fee is obviously a significant reduction from the typical 30-40 percent contingent fee,” she wrote. “However, it is appropriate given the history of this litigation.”

Duane Morris Wins Share of Fee Award in Auto Parts MDL

October 30, 2018

A recent Law 360 story by Anne Cullen, “Duane Morris Win $850K in Cut on $3.1M Auto Parts MDL” reports that Duane Morris LLP saw a fee request granted by the Michigan federal judge overseeing multidistrict litigation (MDL) surrounding an alleged conspiracy to stifle competition in the auto parts industry, scoring just under $850,000 from a $3.1 million deal cut with Robert Bosch GmbH and others.  In a four-page order, U.S. District Judge Marianne O. Battani approved Duane Morris’ bid for nearly a third of the multimillion-dollar deal, which Bosch, Mitsuba Corp. T. RAD Co. Ltd. And Hitachi Automotive Systems Ltd. agreed to pay to settle truck dealerships’ claims the companies conspired to maintain inflated prices on starters, alternators and radiators.

The decision lets the firm pocket a little more than $847,000 — which amounts to 30 percent of what's left in the settlement pool after $246,000 is deducted to cover settlement costs — plus another $33,000 to cover expenses.  It also pushes the firm’s total fee award within the starter, alternator and radiator track of the MDL to $1.17 million, after Duane Morris won $325,000 fees in June as part of a 1.3 million deal with Mitsubishi.  Judge Battani preliminarily signed off on the settlement with Bosch and the three other companies in August, and logged her final blessing for the deal alongside the fee approval.

The settlement stipulates that T. RAD and Hitachi will each pony up about a million dollars, and Bosch and Mitsuba split the remainder.  Case filings indicate the settlement will cover more than 1,000 estimated members of a class that primarily involves dealers of medium- and heavy-duty trucks as well as forestry and construction equipment that indirectly purchased starters, alternators or radiators since 2000.

Another multimillion-dollar deal within the sprawling MDL moved forward when Judge Battani gave Toyoda Gosei Co. Ltd.  The initial go-ahead on its $10.8 million deal with auto dealerships over occupant safety systems, constant velocity joint boot products, automotive hoses, body sealing products, interior trim products and brake hoses.  The expansive litigation began after a U.S. Department of Justice investigation into the alleged scheme in 2011, and has already cost companies within the industry more than $2.5 billion in fines.

In 2017, the firm nabbed two fee awards within the automotive bearings track — $1.3 million in November and up to $2.8 million in April — as well as a $1.5 million award in 2016 for litigation surrounding wire harnesses and occupant safety systems.

The case is Rush Truck Centers of Alabama Inc. et al v. Mitsubishi Electric Corp. et al., case number 2:15-cv-14096, in U.S. District Court for the Eastern District of Michigan.  The MDL is In re: Automotive Parts Antitrust Litigation, case number 2:12-md-02311, in the U.S. District Court for the Eastern District of Michigan.

Law Firms Seek $90M in Fees in Illinois State Farm Judicial Election Case

October 17, 2018

A recent Law 360 story by Diana Novak Jones, “Lieff Cabraser, Others Want $90M in State Farm Judge Case,” reports that Lieff Cabraser, Clifford Law Offices and several other firms have asked for $90 million in fees and expenses for their work representing a class of State Farm customers who settled claims the insurance giant rigged an Illinois judicial election for $250 million.  Counsel for a class of nearly 5 million policyholders who filed a Racketeer Influenced and Corrupt Organizations Act suit against State Farm said that their work on the unusual and contentious litigation — which brought claims straight out of the pages of a legal thriller — warranted a fee award of more than $83 million and another $7 million in expenses.

The suit's allegations date to the late 1990s, when State Farm was hit with a more than $1 billion verdict in a separate class action over crash repairs.  After appealing that judgment to the Illinois Supreme Court, the company funneled millions into the campaign coffers of a candidate for an open seat on the court in order to buy his vote to overturn — and then lied about it in court filings, the suit claimed.  State Farm and the policyholders settled on Sept. 4, the same day opening statements were scheduled to begin, with State Farm agreeing to pay $250 million to resolve the litigation that class counsel said was a hard-fought longshot.

Taking that and the opinions of three experts on attorneys' fees into account, "Class counsel's request is reasonable, customary, and even conservative in large and complex cases like this one — and is fully supported by both the facts and law," they told U.S. District Judge David Herndon.

Class counsel asked for 33.3 percent of the $250 million, which comes out to more than $83.3 million, including interest accrued, but excluding the cost of settlement administration.  They also requested $6,971,852 in expenses, which covered the cost of experts, consultants, document review and more, according to their motion.  Each of the three named plaintiffs should receive $25,000 for their work over the past six years, class counsel added.

The insurance company will not oppose the fee request, State Farm spokesman Jim Camoriano said.  As part of the terms of the settlement, State Farm agreed to leave the question of fees to the judge, he said.  The one-third fee request is not unusual in this circuit for cases this unique or involved, class counsel told the judge.

The allegations surrounding Illinois Supreme Court Chief Justice Lloyd Karmeier and his election to the state's highest court were likely the first time a RICO suit has been filed over so-called "dark money" in judicial elections, class counsel said.  And the alleged scheme was uncovered by class attorneys and their investigators, which is rare, the attorneys said.  Overall, class counsel spent more than 55,000 hours on the case, which translates to about $30 million in lodestar, according to the filing.

Also, the class asked Judge Herndon to give the final go-ahead to the settlement ahead of the scheduled Dec. 13 fairness hearing.  The $250 million figure was reached after several attempts at mediation, three trips to the Seventh Circuit, dozens of depositions and two rounds of summary judgment motions, they said in urging the judge to approve the deal.  After the fees and awards, the remainder of the cash will be divvied up evenly among the class members.  Many in the class will receive their payments automatically, while others will have to file a claim form, according to class counsel.

The case is Hale et al. v. State Farm Mutual Automobile Insurance Co. et al., case number 3:12- cv-00660, in the U.S. District Court for the Southern District of Illinois.

$58.4M Attorney Fee Award in LIBOR MDL

August 16, 2018

A recent Law 360 story by Bryan Koenig, “Hausfeld, Susman Awarded in $58.4M in Libor MDL Fees, Costs,” reports that Hausfeld LLP and Susman Godfrey LLP will decide how to dole out a nearly $60...

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