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Category: Fee Calculation Method

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.

Ninth Circuit Remands BAR/BRI Fee Award for Second Time

November 1, 2017

A recent MetNews story, “Ninth Circuit Vetoes Attorney Fee Award for Second Time” reports that the Ninth U.S. Court of Appeals has, for a second time, remanded a case to the District Court for the Central District of California for a determination as to how much of a $9.5 million settlement fund in a class action against West Publishing Corporation will go to the plaintiffs’ attorneys.

The lawsuit alleged that BAR/BRI, a bar exam preparatory course then owned by West, conspired with Kaplan, Inc. to limit competition in the field. U.S. District Court Judge R. Gary Klausner awarded class counsel attorney fees in the amount of $883,475.50 and $20,734.89 in costs.

Six class members had protested the $1.9 million in fees and $49,934.89 in cost being sought.  Klausner granted the objectors attorney fees in the amount of $7,354.90 based on their success in getting the award pared, and provided for incentive awards of $500 to each of the objectors.  Class members were those who purchased the BAR/BRI course at any time from Aug. 1, 2006 to March 21, 2011.

A three-judge panel, composed of Judges Stephen Reinhardt, Richard Paez and Milan Smith, found in their memorandum opinion that Judge R. Gary Klausner correctly used the lodestar method of calculating the award—multiplying the number of hours reasonably expended by the prevailing rate for attorney fees—as Judge Manuel L. Real had last year when he presided over the case.  An alternative method would have been a percentage of the settlement.

However, the judges said that Klausner, to whom the case was assigned following a reversal of Real’s award, failed “to update the lodestar calculation to compensate for the delayed payment.”  He used the 2016 calculations, without either taking into account the increase between then and now in the prevailing rates or applying a “prime-rate enhancement,” the opinion says.  The judges also faulted him for not using a multiplier based on the risk factor in undertaking a case without certainty of an award.

However, the judges said Klausner was correct in finding the case was not a rare one in which the fee needed to be adjusted up or down to meet the test of reasonableness, and that he was justified in excluding expert fees that were not properly documented.

Fee Allocation Dispute in NFL Concussion Litigation

October 30, 2017

A recent Legal Intelligencer story by Max Mitchell, “NFL Concussion Lawyers Pile on Seeger’s $70M Fee Request” reports that nearly 20 attorneys and firms involved in the NFL concussion litigation are challenging a lead attorney’s proposal for divvying up $112 million in attorney fees, which had allocated the lion’s share to his firm.  According to court filings, 16 firms and one former member of the plaintiff’s steering committee have filed objections to the proposal that Christopher Seeger submitted to the court in mid-October.  That proposal had included more than $70 million for his firm, Seeger Weiss.  Among the firms that submitted objections to the proposal are Anapol Weiss, home to Sol Weiss, who is co-lead counsel with Seeger in the litigation.

Anapol’s response proposed an alternative methodology for the court to use in dividing up the fees.  The suggested formula would not rely as heavily on lodestar multipliers and would accounted for hours spent working toward significant benchmarks in the litigation, rather than applying a “straight-line mathematical computation” that treated all hours equally, the filing said.

The 15-page alternative proposal, which was filed by Pietragallo Gordon Alfano Bosick & Raspanti attorney Gaetan Alfano, said it would more adequately account for Anapol’s role in developing the litigation and hammering out the settlement agreement.

“While Seeger and Anapol shared the role of co-lead class counsel, the Seeger firm’s proposed apportionment would leave one co-lead class counsel firm (Seeger) with 65.4 percent of the attorneys’ fees and the other (Anapol) with 4.3 percent of the attorneys’ fees,” the filing said in a footnote.  “The Seeger firm requests that this court award it over 15 times the fees that it allocated to its co-lead counsel, Anapol.  On its face, Mr. Seeger’s proposed apportionment is grossly inequitable, given, inter alia, Anapol’s extensive contributions to the case.”

In an emailed statement to the press, Seeger said, “We believe this allocation is reasonable and well within the precedent set in similar cases. Judge [Anita] Brody will ultimately determine the final allocation, and we appreciate her consideration of this matter.”

On Oct. 10, Seeger filed a 22-page declaration to the U.S. District Court for the Eastern District of Pennsylvania, asking the court to award his firm $70.4 million.  The money, according to the request, would compensate Seeger Weiss for a total of 21,044 hours that his firm spent on the litigation since he was appointed to represent the class in 2012.

Although many of the responses took issue with the lodestar multipliers Seeger used to develop his proposal, some contended that a neutral special master needed to be appointed to handle the fees and others said the proposal was premature.

“To avoid even the appearance of placing their own financial interests ahead of the retired NFL players’ needs, class counsel is urged to join this motion and voluntarily seek to defer any ruling on payment of claimed attorneys’ fees until after at least the majority of the players have been paid,” Tampa-based attorney Steven Yerrid of the Yerrid Law Firm said in his firm’s response.  “With all respect, the undersigned submits this case must first be about the players’ well-deserved compensation and not the compensation of the lawyers representing them.”

Florida Supreme Court Rules on Fee Issue in Insurance Coverage Litigation

October 24, 2017

A recent FC&S Legal article by Steven Meyerowitz, “The Florida Supreme Court Just Made It Easier for Insureds’ Attorneys to get Big Fee Awards,” reports on a recent decision by the Florida Supreme Court in Joyce v. Federated National Ins. Co.  The article reads:

The Florida Supreme Court, in an insurance coverage dispute, has rejected appellate court rulings that trial courts may apply a contingency fee multiplier to an award of legal fees to a prevailing party only in “rare” and “exceptional” circumstances.

The Case

William and Judith Joyce, an elderly retired couple, filed a claim for insurance benefits with their homeowners’ insurance carrier, Federated National Insurance Company, following water damage to their home. Federated National denied coverage on the basis of alleged material misrepresentations made by the Joyces in the application process – namely, that the Joyces had failed to disclose certain losses they had with their previous carrier.

The Joyces hired an attorney on a contingency fee basis and sued Federated National, alleging that the insurer had wrongfully denied their claim. After months of litigation, Federated National finally agreed to settle.  The parties stipulated that the Joyces were entitled to recover reasonable legal fees under Florida Statutes Section 627.428.

At the fee hearing, the trial court heard testimony from the Joyces’ attorney and fee expert and Federated National’s fee expert.  The trial court also examined certain evidence exhibits, including time records for the Joyces’ attorney and a copy of the contingency fee agreement.

After the hearing, the trial court awarded the Joyces $76,300 in attorneys’ fees, using a two-step process.  First, the court calculated the “lodestar” amount – the number of hours reasonably incurred by the Joyces’ attorney, multiplied by a reasonable hourly rate – as being $38,150, or 109 hours reasonably expended at a reasonable hourly rate of $350.  Second, the trial court applied a contingency fee multiplier of 2.0 to the lodestar amount.

Federated National appealed both the trial court’s calculation of the lodestar amount and its use of the contingency fee multiplier.  The appellate court affirmed the lodestar amount but reversed the trial court’s use of a contingency fee multiplier, concluding that the lodestar approach included a “strong presumption” that the lodestar represented the “reasonable fee.”

Florida Law

Section 627.428, Florida Statutes provides:

(1) Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had.

The Florida Supreme Court’s Decision

The court quashed the appellate court’s decision.  First, the court reviewed its precedent regarding contingency fee multipliers and declared that it was “clear” that it had “never limited the use of contingency fee multipliers to only ‘rare’ and ‘exceptional’ circumstances.”

In fact, the court said, it had recognized “the importance of contingency fee multipliers to those in need of legal counsel” and it had made clear that trial courts “could consider contingency fee multipliers any time the requirements for a multiplier were met.”

In the court’s opinion, the contingency fee multiplier provided trial courts with the “flexibility” to ensure that lawyers who took a difficult case on a contingency fee basis were “adequately compensated.”The court rejected the argument that a contingency fee multiplier encouraged “nonmeritorious claims” and said, instead, that solely because a case was “difficult” or “complicated” did not mean that the case was nonmeritorious.  “Indeed, without the option of a contingency fee multiplier, those with difficult and complicated cases will likely be unable or find it difficult to obtain counsel willing to represent them,” the court said.

The court then disagreed that the possibility of receiving a contingency fee multiplier amounted to a “windfall.”  The court concluded that there was not a “rare” and “exceptional” circumstances requirement before a contingency fee multiplier could be applied.  It decided that the trial court’s findings, “which properly considered the complexity of these types of cases and this case in particular,” were not in error, and it ordered the appellate court to reinstate the reinstate the attorneys’ fees award.

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...

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Seventh Circuit Cuts Fee Award in Half

August 18, 2017

A recent NLJ story by Amanda Bronstad, “Fees in Class Action Over Moldy Washing Machines Nearly Halved,” reports that a federal appeals court has slashed plaintiffs' attorney fees by nearly half...

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