Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Fee Calculation Method

NALFA: Serial Class Action Objectors Not Qualified in Attorney Fee Analysis

January 5, 2018

A recent The Recorder story by Amanda Bronstad, “$38M Fee Request in Anthem Data Breach Settlement Under Scrutiny” reports that an objection says the fee request, which is 33 percent of the $115 million settlement, was “outrageous on its face” and should be closer to $13.8 million.

A prospective class member has objected to the Anthem data breach settlement, specifically criticizing a fee request of nearly $38 million, and planning to ask that a special master investigate the case for potential over-billing.

Class action critic Ted Frank, of the Competitive Enterprise Institute’s Center for Class Action Fairness, filed the objection on Dec. 29 on behalf of Adam Schulman, who is an attorney at his Washington D.C. organization.  The objection said the fee request, which is 33 percent of the $115 million settlement  was “outrageous on its face” and should be closer to $13.8 million.  He particularly targeted the average $360 per hour rate for contract attorneys submitted by four lead plaintiffs firms, one of which is San Francisco’s Lieff Cabraser Heimann & Bernstein.  A special master in Boston is investigating Lieff Cabraser, along with two other law firms, for potential over-billing for staff attorneys in a $74.5 million fee request over securities class action settlements with State Street.  The special master’s report is due in March.  Frank said he planned to file a motion on Thursday asking that a special master be appointed in the Anthem case.

He wants a special master to look into “the same thing they’re investigating in State Street, which is why this billing happened and whether it’s appropriate and whether there was an attempt to mislead the court.”  He also questioned why 49 other firms not appointed by the court stood to earn a total of $13.6 million in fees and “whether there were side agreements to back scratch or trade favors in other MDLs to get work in this MDL.”

U.S. District Judge Lucy Koh, who trimmed the number of plaintiffs firms appointed to lead the Anthem case, has scheduled a Feb. 1 hearing for final approval of the settlement in San Jose, California.  Two other objections were filed on Dec. 29 that also challenged the fee request, among other things.  Class counsel is expected to respond to the objections by Jan. 25.

Eve Cervantez, of San Francisco’s Altshuler Berzon, who is co-lead counsel in the case along with Andrew Friedman of Cohen Milstein Sellers & Toll in Washington D.C., wrote in an email: “The three professional objectors made the same typical, boilerplate objections we often see in consumer class actions, and neglected the true value of the settlement to the class—protection of their personal data both by mandated improvements to Anthem’s cybersecurity to prevent future hacks, and by credit monitoring to prevent misuse of their personal data by the hackers that stole it.”

In the Anthem case, Koh preliminarily approved the settlement in August.  The deal provides two years of credit monitoring and identity protection services to more than 78 million people whose personal information was compromised in 2015.  It also provides a $15 million fund to pay costs that class members were forced to pay due to the breach, such as credit monitoring services and falsified tax returns.

In motions filed last month, the four lead plaintiffs firms defended their fee request as adequate compensation for obtaining the largest data breach settlement in history.  The case involved “massive discovery” and “complicated factual and legal research,” they wrote.  It also was “extraordinarily risky,” given that many data breach cases have been dismissed.  The fees also were reasonable given the total lodestar—or the amount billed multiplied by the hourly rate—was $37.8 million.  The hourly billing rates of partners were between $400 to $970—rates that Koh has approved in prior cases.

“There is no true comparator to this groundbreaking settlement,” Cervantez wrote.  “Other data breach cases have not resulted in common funds that come close to $115 million, nor have they included the comprehensive cybersecurity improvements mandated by this settlement, coupled with a major, quantifiable investment in cybersecurity.”

The other two objections, one filed by solo practitioners John Pentz in Massachusetts and Benjamin Nutley in California, and the other by a trio of law firms from Missouri and Colorado, raise additional concerns over the cash value of the settlement, a proposed $597,500 in incentive payments to 29 lead plaintiffs and a request on both sides to seal portions of the deal—in particular, the amount of money Anthem has agreed to spend on cybersecurity in the future.

Koh has slashed fee requests in past cases, some involving the same plaintiffs firms.  Last year, she cut fees in a $150 million settlement involving the poaching of animators at DreamWorks and The Walt Disney Co. to $13.8 million after finding the original $31.5 million request to be “unreasonably high.”  In that case, Koh relied on the billing records, concluding that the U.S. Court of Appeals for the Ninth Circuit’s 25 percent benchmark in class action settlements would result in a windfall to the three plaintiffs firms, which included Cohen Milstein.

Law Firms Question Expert’s Analysis of Attorney Fees

January 4, 2018

A recent Legal Intelligencer story by Max Mitchell, “NFL Concussion Lawyers Questions Expert’s Analysis of Attorney Fees” reports that several leading law firms in the NFL concussion settlement litigation are taking issue with an expert report that suggested slashing attorney fee recoveries.

More than 10 law firms have filed responses to a December expert report that recommended capping attorney fees.  Attorneys questioning the report’s conclusions included both Chris Seeger of Seeger Weiss and Sol Weiss of Anapol Weiss, who are co-lead class counsel in the litigation that came to a $1 billion settlement with the National Football Association in early 2015.  Most responses from the attorneys questioned the assumptions underpinning the report Harvard professor William Rubenstein issued last month, and some said that capping attorney fees could damage some of the former players’ ability to recover under the settlement.

Seeger’s response, specifically took issue with Rubenstein’s determination that, since the litigation settled relatively quickly, it was reasonable to recommend that the court reject a proposed 5 percent set-aside that would go toward a common benefit fund for class counsel attorneys.  “Any suggestion that class counsel did not invest sufficient time in this litigation to warrant the requested $106.8 million in common benefit fees is simply wrong,” Seeger said.  “Although this may not have been a typical MDL involving extensive discovery bellwether trials, and the like, all kinds of labor, resources, and ingenuity went into resolving this litigation.”

Last year, class counsel asked U.S. District Judge Anita Brody of the Eastern District of Pennsylvania, who is overseeing the litigation, to approve $112.5 million for attorney fees and costs stemming from the settlement, which is intended to compensate about 20,000 former players suffering from concussion-related injuries.  The NFL has agreed to pay the money in addition to the money for the class members.

The fee request included a 15.6 percent rate for attorneys representing claimants directly, along with the 5 percent set-aside that would be paid to the common benefit fund either from attorney fees, if the claimant had individual representation, or from the claimants’ recovery if they were unrepresented.  Rubenstein, who Brody asked to review the fee request, issued a 47-page expert report in mid-December recommending a presumptive 15 percent cap on contingency fees and that the court not adopt the 5 percent set-aside.

Responses largely took issue with the class participation rate Rubenstein used, and said the report did not take into account how vigorously the NFL would contest some of the claimant’s petitions.  A filing by X1Law said attorneys also said that cutting the fees could have a chilling effect on attorneys wanting to represent claimants who have difficult cases.

“Capping attorney’s fees at 15 percent would cut the legs out from under independently retained plaintiff’s attorneys (IRPAs) due to the time and risk involved in this complex and contentious claims process, essentially gutting their ability to represent class members by making the representation financially dangerous,” X1Law attorney Patrick Tighe said in the filing.  “Professor Rubenstein’s proposed cap would severely chill access to IRPAs, limiting IRPA advocacy and oversight, resulting in a lack of oversight in any otherwise dangerous claims process for class members.”

When reached for comment, Tighe said a 15 percent cap on fees would specifically impact players whose symptoms do not presently show up on tests, but may manifest in a few years.  “It’s going to eliminate a vast majority of class members from being able to present a claim,” he said.

Attorneys Want to Depose NFL Fee Expert

December 22, 2017

A recent Legal Intelligencer story, by Max Mitchell, “Lawyers Want to Depose NFL Fee Expert Over Slashed Attorney Fees,” reports that attorneys from five law firms have asked the court presiding over the consolidated NFL concussion litigation to depose the Harvard professor who recently recommended that fees for attorneys representing individual players be capped at 15 percent.

Attorneys filed two motions with the U.S. District Court for the Eastern District of Pennsylvania, asking the court to reconsider an order it issued last week that barred attorneys from seeking to depose Harvard Law School professor William Rubenstein about his recommendation to limit their attorney fees.  The order that U.S. District Judge Anita Brody issued Dec. 11 had changed course from a prior ruling that had said attorneys representing the ex-players would be able to seek to depose Rubenstein after he issued his opinion.

The motion that Philadelphia firm Locks Law Firm filed said that the deposition would be aimed at probing “the basis for professor Rubenstein’s assumptions and whether his recommendations would change if the assumptions, in whole or in part, were shown to be incorrect,” but the motion filed by Texas attorney Lance Lubel of Lubel Voyles said that allowing attorneys the change to depose Rubenstein was a due process issue.

“Without that process, a deposition and a facts-and-circumstances assessment of a particular fee contract, the cap is a denial of a contracted interest, that is, the benefit of the parties’ bargain, without an opportunity to be heard,” Lubel said in the motion, which was joined by attorneys from Washington & Associates, the Canady Law Firm and Provost Umphrey Law Firm—all of which are based in Texas.  “For the court to consider professor Rubenstein’s report without allowing interested parties to test the methodology, the conflict of interest, or the data will deprive interested parties of their right to participate in this process.”

Lubel’s filing also noted that Rubenstein had previously disclosed to the court that he had done some consulting work for attorneys at Anapol Weiss, which is the firm of attorney Sol Weiss, who is co-lead class counsel in the case.

Earlier this year, class counsel asked Brody to approve $112.5 million for attorney fees and costs stemming from the $1 billion settlement intended to compensate about 20,000 former players suffering from concussion-related injuries.  The NFL has agreed to pay the money in addition to the money for the class members.

The fee request included a 15.6 percent fee for attorneys representing claimants directly, along with the 5 percent set-aside that would be paid to the common benefit fund either from attorney fees, if the claimant has individual representation, or from the claimants’ recovery, if they are not represented by an attorney.

When it came to the 15 percent cap, Rubenstein’s 47-page report issued Dec. 11 gave several reasons for why he recommended limiting the fees.  The report noted that some contingency fees date back to 2011—four years before the settlement was given final approval in 2015—and some agreements are also as high as 45 percent.  He further noted that some players have more than one attorney, aggregate attorney fees in class actions are typically less than 15 percent, the case settled following little litigation, and many of the ex-players—most of whom are suffering from cognitive impairments—will receive “relatively small” recoveries.

Class Counsel for Pharmacies Challenge Attorney Fee Reductions

November 15, 2017

A recent Law 360 story by Diana Novak Jones, “Class Attys Fight Fee Cut at 7th Circ. In Pharmacy TCPA Row,” reports that counsel for a class of pharmacies asked the Seventh Circuit to allow them to collect what a pharmaceutical distribution company agreed to pay after a federal judge slashed attorneys’ fees and the plaintiffs’ incentive awards negotiated as part of a settlement in a Telephone Consumer Protection Act (TCPA) class action.

Counsel for the class of pharmacies that say they received unsolicited faxes from Cochran Wholesale Pharmaceutical Inc. told the appellate court the district court’s decision to reduce their fees and the named plaintiffs’ incentive awards unfairly allowed Cochran to dodge the full amount it said it would pay to exit the suit.

Class counsel Phillip Andrew Bock of Bock Hatch Lewis & Oppenheim LLC told the courtmthat U.S. District Judge Staci Yandle’s decision to base the fees on the amount class members actually claimed and not the amount Cochran agreed to pay put money back in Cochran’s pocket.  Cochran agreed to pay $233,333 in attorneys’ fees and $15,000 to each named plaintiff, but Judge Yandle reduced the fees to just more than $73,000 and the incentives to $1,000 each.

The incentive award in this case is “actually a disincentive,” Bock told the Seventh Circuit, “because the amount is actually less than the person could get [if they sued] as an individual.”  The 2016 suit accused Cochran, a Georgia-based pharmaceutical distribution company, of sending unsolicited faxes advertising its services to pharmacies in violation of the TCPA.

The parties went to mediation not long after the suit was filed, and some discovery revealed that the company may have sent the advertisements to 16,846 different fax numbers between April 19, 2012, and Nov. 1, 2016.  A settlement was reached, and Cochran agreed to pay up to $700,000. That cash would cover $125 per claim from each class member, $233,333 in attorneys’ fees and $15,000 to each named plaintiff, according to the settlement agreement.

Judge Yandle granted the deal preliminary approval, and notice was sent to the more than 16,000 class members.  Of those, 1,765 submitted claim forms, resulting in $220,625 in payments.

In April, Judge Yandle granted the settlement final approval but reduced the fees and incentives.  She used the amount paid out to class members to calculate the one-third portion going to attorneys, resulting in a fee award of $73,468, and cut the plaintiffs’ incentives down to $1,000 because the case didn’t require much of their input.

Sitting on the panel, Circuit Judge Diane Sykes told Bock she thought the court’s holding in another TCPA junk fax case made it so class counsel couldn’t collect on the full $700,000 Cochran agreed to pay.  The ruling found that TCPA cases create discrete injuries, so calculating attorneys’ fees based on a common fund doesn’t work here, she said.

The case is Camp Drug Store, Incorporated v. Cochran Wholesale Pharmaceutical Inc., case number 17-2086, in the Seventh Circuit Court of Appeals.

NCAA Athletes Fire Back at $41M Lone Fee Objector

November 7, 2017

A recent Law 360 story by Darcy Reddan, “NCAA Athletes Fire Back at $41M Fee Objection,” reports that student-athletes suing the NCAA over alleged anti-competitive caps on scholarships pushed back against the single objection to their $209 million settlement over a $41 million cut for attorneys, saying the fee is less than established Ninth Circuit precedent.
 
The class of student-athletes fired back at the lone objector, NCAA Division I football player Darrin Duncan, citing a 25 percent benchmark for assessing the fairness of a fee award set by the Ninth Circuit after Duncan called the request unfair.  Duncan also cited a “mega fund rule” that the class argues runs contrary to established circuit law and if applied would give attorneys less incentive to take cases with inherent risk.

“Duncan simply arbitrarily argues that the fee award should be lower, unsupported by Ninth Circuit law.  And the facts here show that the fee request is reasonable,” counsel for the class said in the filing.  “The fact that Duncan is the only, lone objector also indicates the reasonableness of the fee request.” 

Aside from challenging Duncan’s arguments, the class pointed out that Duncan allegedly objected to other settlements before the court, including O’Bannon v. NCAA and Keller v. Electronic Arts Inc. et al.  In September, Duncan objected to a $41.7 million fee request for the $209 million settlement reached in March.  The lawsuit challenged NCAA rules that prohibit universities from paying students more than a full grant-in-aid, which covers up to the full cost of attendance.  Duncan had argued that the percentage of the award, 20 percent of the settlement, was too high and that a “mega fund rule,” which decreases fee awards as the settlement total increases, should be applied.

The class fought back against this logic, though, stating in the filing that a Ninth Circuit ruling, Fischel v. Equitable Life Assur. Soc’y of the United States, established a 25 percent benchmark as a starting point for evaluating fees that is then subject to five factors.  The class contends that the award is fair when analyzed under these criteria.  The five factors include the results of the case, risk and complexity, whether fees were contingent upon success, similar case results and whether the class was notified of the requested fees.

The class also said that reducing the award simply due to the size of the award “has the potential to disincentivize counsel from risking pursuing even larger awards for the class.”

The request is for approximately $41.7 million in fees, or 20 percent of the settlement's common fund, as well as nearly $3.2 million in costs and expenses, and $20,000 each as an incentive award for the four class representatives.  The rest of the class is entitled to an average of $6,000.

The class characterized the rest of the objection as “absurd,” pointing out that Duncan suggests “subtle signs of collusion” despite the fact that a mediator was used during the settlement process and there is a lack of a clear sailing provision in the settlement terms.

The cases are In re: National Collegiate Athletic Association Athletic Grant-in-Aid Cap Antitrust Litigation, case number 4:14-md-02541, and Jenkins et al. v. National Collegiate Athletic Association et al., case number 4:14-cv-02758, both in the U.S. District Court for the Northern District of California.

National Law Journal Cites NALFA Program

September 11, 2017

A recent NLJ article by Amanda Bronstad, “Judges Look to Profs in Awarding Lower Percentage Fees in Biggest Class Actions,” quotes NALFA’s CLE program, “View From the Bench: Awarding Attorney...

Read Full Post