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Category: Fee Award Factors

Class Attorneys Earn $3M in $9.85M in US Airways Settlement

April 11, 2019

A recent Law 360 story by Dean Seal, “Class Attys Get $3M Cut of $9.85M US Airways Deal,” reports that three law firms in coastal California will get about 30% of the $9.85 million settlement they negotiated with US Airways Inc. to resolve nearly decade-old breach of contract claims over baggage delays.  U.S. Magistrate Judge Virginia K DeMarchi said that the $3 million in attorney fees and expenses requested by Karczag and Associates PC, Foley Bezek Behle & Curtis LLP and the Law Office of William M. Aron is fair given the 1,850 hours and $45,000 they’ve spent on settling the somewhat recently revived class action.

“The attorneys’ fees requested in the amount of $2,955,000 represents a multiplier of 3.11, which is reasonable and justified based on: the difficult and novel legal challenges faced by class counsel in this case; the risks and financial burdens that class counsel undertook in litigating this case on a fully contingent basis; and the significant benefits that are being made available to the class members under the settlement,” Judge DeMarchi said.

The judge’s final approval of settlement will net about $14 per person for a class of more than 400,000 flyers who traveled on US Airways between November 2005 and April 2010, reported checked baggage that was lost or delayed and were not refunded their $15 baggage fee.  The airline merged with American Airlines Inc. in 2013. 

The order also allots a $10,000 award for plaintiff and class representative Hayley Hickcox-Huffman.  Hickcox-Huffman said in her 2010 complaint that after she paid a $15 checked baggage fee, she received her luggage a day late following a 2009 US Airways flight from Colorado Springs, Colorado, to San Luis Obispo, California.  Hickcox-Huffman’s case was dismissed in 2011 on grounds that it was preempted by the federal Airline Deregulation Act, but the Ninth Circuit ruled in May 2017 that Hickcox-Huffman properly pled an express breach of contract that US Airways voluntarily entered into, defeating the preemption argument.

The appellate panel, in reviving the suit, cited the 1995 U.S. Supreme Court case American Airlines Inc. v. Wolens, which held that state law breach of contract claims are not preempted.

At a hearing in October 2017, counsel for Hickcox-Huffman argued that she should not have to decide between her implied and express contract claims until after discovery, when the court is expected to learn more about the agreement between the airline and its passengers paying for checked baggage.

A judge ruled soon after that both types of breach could be alleged, but tossed Hickcox-Huffman’s breach of federal common law and “breach of self-imposed undertaking” claims, finding them redundant and not actionable.  The case proceeded into discovery but was ultimately resolved after a two-day mediation session, according to court records.

Second Circuit Upholds Attorney Fee Reduction in FACTA Settlement

April 10, 2019

A recent New York Law Journal story by Colby Hamilton, “Second Circuit Upholds Judge’s Slashing Attorney Fees in Fair Credit Law Settlement,” reports that the U.S. Court of Appeals for the Second Circuit affirmed a Manhattan federal judge’s order to cut down a fee request in a Fair Credit Reporting Act lawsuit, finding she had properly exercised her discretion, over arguments to the contrary from the plaintiff’s attorneys.  The Second Circuit ruling upheld a decision entered last May in which U.S. District Judge Valerie Caproni of the Southern District of New York refused to allow attorneys to collect approximately $83,000 in fees in their Fair and Accurate Credit Transactions Act (FACTA) case.

The plaintiff in the underlying matter, Joan Pasini, had brought two other suits in Manhattan federal court under the exact same premises.  In the Godiva suit, she ultimately secured a $5,500 settlement with the chocolate maker, after opting out of a class action settlement that would have awarded her up to $80.

As Caproni noted in her order, the Godiva action involved “no motion practice, no discovery, no contested hearings, a single status conference, which lasted less than 30 minutes, two telephone conferences, which also lasted about 15 to 30 minutes each, and one mediation session.”

The district court found there was “nothing reasonable” about the $83,000 figure submitted by Glendale, California, attorney Chant Yedalian and local counsel, attorney Sameer Birring.  Rather, the litigators were using FACTA as a “cudgel to attempt to extract an unreasonable fee.”

“Attorneys who take on consumer protection lawsuits are sometimes pursuing a public good—the individual damages are generally quite modest but there is a public interest in ensuring compliance with federal consumer protection laws,” the district court wrote.  “Counsel is entitled to recover reasonable fees, but this court will not aid and abet extortion.”

The 10-page complaint in the underlying suit replicates claims similar to the other FACTA suits brought by Pasini.  She claimed the chocolatier printed out a receipt for a credit card transaction that included the first six digits and the last four digits of the card number.  Under FACTA, no more than the last five digits of the card number are allowed to be on a receipt provided to the cardholder.

After opting out of the settlement and an initial figure from the chocolatier of the statutory settlement maximum of $1,000, Pasini demanded a $75,000 payment from Godiva, according to court papers.

The suit was filed March 10, 2017. On Sept. 29, the parties alerted the court that the settlement amount for the plaintiff had been agreed to for the far smaller sum of $5,500, but Godiva stated to the court that attorney fees remained an issue.  Attorneys for Godiva argued in opposition to the fees that counsels’ “aim throughout this case has been to generate the maximum amount of attorneys’ fees possible.”

Caproni agreed, finding the hourly rates proposed by opposing counsel in the “exceedingly straightforward case” exorbitant.  She cut Yedalian’s requested fee range of $550 to $650 an hour down to a “generous” $350 an hour, while bringing Birring’s $350 an hour requested rate down to $275.

Similarly, Yedalian’s 152 hours of billable work was “so out of proportion to the tasks he purportedly undertook” that Caproni said she had to “question the accuracy of the bills.”  All but five hours of the claimed time “was spent on low-level work that could have been accomplished by an associate or paralegal; tasks any competent attorney (much less one with 15 years of experience practicing in an area of the law that is neither sophisticated nor intellectually challenging) could have accomplished far more quickly.”

Caproni ultimately cut Yedalian’s hours billable at the new rate by 90 percent, leaving him with an entitled fee of $5,325.83, while Birring was, at a reduction of 65 percent to his hours, granted $1,020.25 in fees.  With the reduced costs of $620 provided to the plaintiff, Caproni’s order amounted to less than 10 percent of what Pasini sought.

On appeal, the panel of Circuit Judges John Walker Jr., José Cabranes and Robert Sack said Caproni was within her right to the substantial reduction “in light of the pervasive errors and exaggerations in the fee application.”  The panel went on to likewise support the district court’s gutting of travel fees for Yedalian, as “there was no reason local counsel could not attend the initial status conference instead of lead counsel from California.”

Class Counsel Seek $12M in Attorney Fees in VW Settlement

April 9, 2019

A recent Law 360 story by Reenat Sinay, “Bernstein Litowitz Seeks $12M in Atty Fees for VW Deal,” reports that Bernstein Litowitz Berger & Grossmann LLP has requested $12 million in attorney fees in California federal court for securing a $48 million settlement for a class of Volkswagen AG investors, ending claims in multidistrict litigation that VW misled them in its financial reporting about its environmental compliance.

U.S. District Judge Charles R. Breyer gave the initial nod to the deal in November and conditionally certified the proposed class of investors who purchased American depositary receipts through VW between November 2010 and January 2016.  According to the terms of the agreement, lead counsel for the investors said they would ask for no more than 25% of the settlement fund.

The investors’ attorneys at Bernstein Litowitz said their request of 25% of the settlement in attorney fees, which amounts to $12 million, was “fair and reasonable.”  Lead counsel also asked for $296,879.86 in reimbursement for litigation expenses and a total of $7,328 to be split between the two class representatives.

“The significant monetary recovery was achieved through the skill, tenacity, and effective advocacy of lead counsel, who litigated this action on a fully contingent basis against highly skilled defense counsel,” the attorneys said.  “The settlement was reached only after nearly three years of hotly contested and difficult litigation, including substantial fact discovery, which required lead counsel to dedicate a significant amount of time and resources to the action.”

In their bid for final approval of the settlement, lead plaintiff Arkansas State Highway Employees Retirement System and named plaintiff Miami Police Relief and Pension Fund told the court that the deal represented “an excellent result” for the investors and requested that Judge Breyer grant final certification of the settlement class.  “Plaintiffs respectfully submit that the proposed settlement is an excellent result for the settlement class and satisfies the standards for final approval under Rule 23 of the Federal Rules of Civil Procedure,” the institutional investors said.  “The proposed settlement represents approximately 33% of the likely maximum recoverable damages in the action, which is an excellent recovery for the settlement class.”

The litigation stems from the revelation in September 2015 that Volkswagen was equipping some of its diesel vehicles with devices that would allow the cars to pass government-mandated emissions tests, then emit more pollution once they hit the roads.  Soon after the U.S. Environmental Protection Agency went public with the allegations, the company acknowledged it had installed the defeat device software in at least 11 million vehicles, nearly 600,000 of which had been sold in the U.S.  The government filed a Clean Air Act suit against VW and its subsidiaries in January 2016.  Several class actions, filed by drivers, dealerships and stockholders, followed.

The instant suit was first filed in Virginia federal court in September 2015 by the City of St. Clair Shores Police and Fire Retirement Systems, asserting on behalf of investors that the carmaker and several executives violated federal securities laws, according to court records.  Along with several similar cases, it was moved to California in December 2015 by the U.S. Judicial Panel on Multidistrict Litigation.

Under the terms of the agreement, the funds allocated to each class member will be determined through a series of calculations.  The value of each ADR purchased will be calculated through artificial inflation estimates and data tracking to determine when each claimant bought and sold VW's ADRs, according to the motion.  Each claim will then be established by subtracting the claimant's gains from their losses, and the distribution amount will be set by dividing the claim amount by the total recognized claims of all recognized claimants, multiplied by the net amount of the settlement fund, the investors said.

Lead counsel highlighted the “significant risk” they faced in litigating the class action against “determined adversaries,” and noted that the 25% fee request is in line with awards granted in similar cases.  Attorneys put in 14,000 hours of work despite the risk of no recovery, they said.  “The 25% fee requested by lead counsel, which has the full support of the institutional-investor plaintiffs, is also well within the range of percentage fees that have been awarded in securities class actions and other complex class actions in the Ninth Circuit with recoveries of comparable size,” they said.

The case is In re: Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation, case number 3:15-md-02672, in the U.S. District Court for the Northern District of California.

$19M Fee Award in Long Running Shareholder Class Action

April 5, 2019

A recent Law 360 story by Jeff Montgomery, “Prickett Jones, Grant Eisenhofer, Kessler Topaz Win $19M Fee,reports that the Delaware Chancery Court awarded $18.7 million in fees to Prickett Jones, Grant & Eisenhofer and Kessler Topaz attorneys who waged an unprecedented, nearly six-year stockholder battle over allegedly outsized stock bonus awards to software company Ebix's CEO.  During a hearing in Wilmington, Vice Chancellor Joseph R. Slights III approved the award — pruned from a requested $25 million — after summarily rejecting a last-minute claim by Ebix Inc. that the court should deny any fee payment based on stockholder attorney failure to acknowledge a purported defect involving two of three class representatives' standing, or eligibility to sue.

Ebix's allegation unsuccessfully invoked the legal doctrine of "unclean hands," a defensive assertion of an ethical failure that could bar a plaintiff from winning a court judgment.  “The litigation was as intense as one could imagine,” the vice chancellor said of the multiyear dispute, adding later that “plaintiffs took risks time and again to prosecute a very complex case,” gaining in the end substantial benefits for stockholders, who alleged breaches of fiduciary duties involving disclosure and corporate governance in addition to the compensation issues.

In addition to the $18.7 million, the court ordered reimbursement for $951,896 in expenses incurred by Prickett Jones & Elliott PA, Kessler Topaz Meltzer & Check LLP and Grant & Eisenhofer PA. The court also awarded $10,000 payouts to two stockholder representatives and $5,000 to a third.

During a trial in August 2018, stockholder attorneys argued that phantom approvals and disclosure failures propped up a potential $825 million in allegedly backdated stock appreciation awards to CEO Robin Raina beginning in 2009 in the event of a company sale.  The stockholder suit took shape during an eventually scuttled, management-led buyout financed by Goldman Sachs, morphing into a battle over stock rights Raina began nailing down in 2006.  Raina’s benefit became in time what Michael Hanrahan of Prickett Jones said was the largest change-of-control agreement in the nation, until the settlement.

“The settlement is fair and reasonable for Ebix and the class,” Hanrahan told Vice Chancellor Slights.  “It gives broad release of specific claims in this litigation, which involves hundreds of millions of dollars.  The court has to decide if the get is commensurate with the give.”

Under the settlement, Raina agreed not to resign as Ebix CEO for at least two years after the agreement is finalized. Ebix meanwhile dropped a CEO benefit provision that would have paid a “gross-up” supplement to offset any tax amounts owed by Raina for the stock award.  Instead, the company agreed to provide 5,953,975 stock appreciation rights at the base value of $7.95 per share with a determination to be made each year prior to any acquisition if he is owed more rights.

Kevin H. Davenport of Prickett Jones said the provision assured that Raina “can’t ever get a bonus on a bonus” by way of the gross-up, reducing the cost of the benefit by $245 million at an $80-per-share price, or $155 million at $55 per share.  The proposed agreement also includes conditions on Raina’s stock appreciation vesting rights if he is involuntarily terminated and offers full vesting rights if he is still employed at the time of any acquisition. Ebix also agreed to develop a “CEO succession plan” within 180 days of the settlement being finalized and will be obliged to hire a “nationally recognized independent compensation consultant to advise annually on director and officer compensation,” according to court filings.

Paul Fioravanti of Prickett Jones said three attorney teams spent 13,339 hours on the case, including taking 27 depositions on three continents, and accumulated nearly $8.6 million in uncompensated expenses.  The requested award would have totaled about 2.2 times that expense.  The case, Fioravanti said, involved “an unprecedented change in control agreement which was terminated shortly before trial in direct response to this litigation, which was replaced with yet another unprecedented change in control agreement which we litigated through trial.  There is not another case like it.”

The bulk of the vice chancellor’s reductions to the $25 million fee request focused on throttling back assumed benefits from changes to the stock awards to better reflect contingencies and the possibility that Ebix would never have to make a payout anyway.  The court accepted a request for $2 million to reflect the benefit of corporate governance reforms, however, in the second-largest of the fee components, with all other adjustments trimming the award to $18.61 million, which the court then used its discretion to round up to $18.7 million.

The case is In Re Ebix Inc. Stockholder Litigation, case number 8526, in the Court of Chancery of the State of Delaware.

Class Counsel Seek $45M in Fees in Latest NCAA Antitrust Case

March 27, 2019

A recent The Recorder story by Ross Todd, “Plaintiffs in Latest NCAA Antitrust Case Seek Nearly $45M in Fees,” reports that lawyers who recently won an injunction barring the National Collegiate Athletic Association from capping education-related benefits for certain college athletes are seeking nearly $45 million in attorney fees as a result of what they call “a historic and substantial judgment.”  Co-lead plaintiffs counsel at Winston & Strawn, Hagens Berman Sobol Shapiro, and Pearson, Simon & Warshaw submitted court papers claiming plaintiff lawyers spent more than 51,000 hours on the case, which culminated in a 10-day bench trial last year.

The firms claim they put in the equivalent of about $29,944,894 in hourly billings, but they’re asking U.S. District Senior Judge Claudia Wilken of the Northern District of California to apply a multiplier of 1.5 to that amount, based on the novelty of the case, the risks involved and the quality of the defense counsel representing the NCAA and its member conferences.

“Plaintiffs’ fees are reasonable in light of the substantial defense resources (involving more than a dozen of the top law firms in the world) that they had to overcome, the difficulty and novelty of the many issues presented by this case, the enormous amount of factual discovery and expert work that was required to prosecute the claims, and the substantial economic value of the injunctive relief delivered to the Plaintiff Classes,” plaintiffs counsel wrote.

Wilken earlier this month found the NCAA in violation of federal antitrust law and issued an injunction barring the organization and its member schools and conferences from capping education-related benefits such as computers, science equipment, postgraduate scholarships and aid to study abroad for NCAA Division I women’s and men’s basketball players and football players at schools in the NCAA’s Football Bowl Subdivision.  Plaintiffs submitted estimates from their economic expert which claim the injunction could be worth as much as $100,000 for individual class members over a four-year period—as much as $235 million annually in total.

According to a declaration filed alongside the fee motion, lawyers, paralegals and support staff at Winston & Strawn put in 41,152.05 hours on the case over about five years during the litigation, worth about $24,304,240 at the historical billing rates at the time of the work.  Jeffrey Kessler, co-executive chairman of the firm and co-chair of its antitrust/competition and sports law practices, saw his hourly rate go from $1,180 per hour when the case was initially filed in 2014, to $1,515 per hour for work done this year on the case, according to billing records submitted with the declaration.

Hagens Berman, according to a separate declaration filed, dedicated 5,575.20 hours of lawyer, paralegals and legal staff time to the matter, or $2,742,185 in firm time at historical rates.  Name partner Steve Berman put in 514.4 hours on the case at rates ranging from $950 to $1,025 per hour during the case, for a little more than $500,000 worth of total billings.  Attorneys with Pearson, Simon & Warshaw claim they spent 4,754.20 hours working on the applicable portion of the case, or about $2,754,725 worth of firm time.  The most recent rates for name partners Clifford Pearson, Bruce Simon, and Daniel Warshaw all recently hit $1,150 an hour, according to the firm’s declaration in support of the fee motion.

Elizabeth C. Pritzker of Oakland’s Pritzker Levine, whose firm represented two named plaintiffs who played women’s basketball for the University of California at Berkeley and served as additional plaintiffs counsel, filed a declaration claiming the firm logged 198 attorney hours in the injunctive relief portion of the case, or $143,745 in hourly billings.

In the fee motion, the plaintiffs team noted that, in a prior antitrust class action against the NCAA involving the names, likenesses and images of players, Wilken awarded injunctive relief class counsel about $40,794,246 in lodestar fees—roughly a third more than what’s being sought, timewise, in the current case.  The plaintiffs contend, however, that the more recent case has done more “to bridge the ‘great disparity’ between class members and defendants.”