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Category: Fee Calculation Method

NALFA Hosts CLE Program with Sitting Federal Judges

March 24, 2017

Today, NALFA hosted the CLE program “View From the Bench: Awarding Attorney Fees in Federal Litigation”.  This program featured a panel of sitting federal judges.  This is the third CLE program NALFA has hosted with an all-judicial panel of sitting federal judges. 

The U.S. District Court Judges, the Honorable Frederic Block, Senior Judge from the U.S. District Court for the Eastern District of New York and the Honorable David R. Herndon, District Judge from the U.S. District Court for the Southern District of Illinois, discussed a range of attorney fee and legal billing issues in federal litigation.  The panel addressed fee shifting cases, prevailing party issues, and fee calculation methods. The panel also took questions from the audience.

This live and remote CLE program was approved for CLE credit hours in California, Florida, Illinois, and Texas.  CLE credit hours are still pending in Ohio and Pennsylvania.  Over 75 attorneys from across the U.S. registered for this multi-state CLE program.  This 120-minute CLE program was recorded and is available for purchase on-demand.

$175M in Attorney Fees in $10B VW Settlement

March 22, 2017

A recent Courthouse News Services story by Nicholas Iovino, “Lawyers Share $175M Payday in VW Settlement,” reports that a federal judge awarded $175 million in attorneys’ fees and costs to lawyers that helped secure a $10 billion settlement in the Volkswagen diesel-gate scandal.

U.S. District Judge Charles Breyer approved the $10 billion package in October 2016 as part of a larger $15 billion deal, which included $4.7 billion in air quality improvement programs to mitigate the impact of cars that violated emissions standards.

The $15 billion deal was the most costly settlement Volkswagen has paid thus far for its use of emissions-cheating software in some 11 million cars worldwide.  The German automaker has paid more than $20 billion in U.S. civil settlements and criminal fines, and U.S. prosecutors have charged six of its executives over their roles in the scandal.

As part of the $15 billion deal approved last year, Volkswagen agreed to spend up to $10 billion buying back or modifying nearly 600,000 2-liter diesel engine vehicles tainted by defeat devices.  Defeat devices allowed the cars to mask emissions during tests while spewing up to 40 times more nitrogen oxide on the road than allowed under federal law.

Breyer found $167 million in attorneys’ fees and $8 million in costs requested by the plaintiff class lawyers was “reasonable and fair” given the “extraordinary result” achieved for the class.  The judge said the settlement put owners of affected vehicles back into the same position they were in before the scandal was made public in September 2015.  Volkswagen offered to buy back cars based on their pre-public scandal value or to repair them with EPA-approved emissions-reducing modifications.

Awarded attorneys’ fees make up 1.7 percent of the $10 billion settlement package.  The award will be shared among 21 law firms that made up the plaintiff class steering committee, headed by lead counsel Elizabeth Cabraser of Lief Cabraser Heimann & Bernstein.

The lawyers and their staff worked 98,000 hours litigating the case and negotiating the settlement.  They expect to spend an additional 21,00 hours processing claims over the next 26 months, according to Breyer’s March 17 ruling.

The average hourly rate for class attorneys’ work was $529, amounting to a $63.5 million lodestar, or total cost of litigation hours.  Breyer found applying a 2.63 multiplier to the lodestar was justified given “the complexities of this case and the extraordinary result achieved for the class.”

Lead attorney Elizabeth Cabraser said in an emailed statement, “The award will be allocated by lead counsel among firms who performed authorized common benefit work, based upon relative value of contributions to the case and time that was reported and complied with guidelines set forth by the Court.  These fees will not be deducted from any class member’s recovery amount.”

NALFA Podcast with Law Professor Charles Silver

March 17, 2017

NALFA hosts a podcast series on attorney fee issues.  We talk with thought leaders, attorney fee experts, and attorney fee newsmakers who’ve helped shape and influence the jurisprudence of reasonable attorney fees.  NALFA interviews members, faculty, judges, law professors, in-house counsel, and others on a range of attorney fee and legal billing issues.

NALFA’s second podcast featured an interview with Charles M. Silver, Professor of Law at the University of Texas at Austin School of Law.  The NALFA podcast with Professor Silver focused on his empirical research on the setting of attorney fees in securities class actions and economic principles at play in civil litigation.  The podcast discussion centered on fee calculation methods, judicial procedure for awarding fees, and private contingency fee agreements. 

Professor Silver also discussed the politics of class actions and the dynamics of the tort reform lobby.  In addition, Professor Silver also offered several recommendations for the class action world, including employing a more real world, market based approach to awarding fees in class actions.

“These podcasts are the perfect broadcast format to discuss attorney fee and legal billing issues,” said Terry Jesse, Executive Director of NALFA.  “In addition to his research, Professor Silver talked about a range of issues including the creation of a data set for judges to draw upon when awarding fees, fee allocation issues in MDLs, and setting attorney fees early in the class action process,” Jesse said.  Click on the link below to listen to the NALFA podcast:

https://soundcloud.com/thenalfa/nalfa-podcast-with-law-professor-charles-m-silver

Federal Circuit: EAJA Fee Awards Must Use Local Rates

March 16, 2017

A recent Law 360 story by Chuck Stanley, “Fed. Circuit Says EAJA Legal Fees Must Use Local Costs,” reports that awards for attorneys’ fees under the Equal Access to Justice Act (EAJA) must be calculated based on the location where the work was done, a Federal Circuit panel said in a precedential ruling.

The federal circuit rejected a veteran’s widow’s claim that ambiguity in the statute allows her to adjust upward the hourly rate for calculating attorneys’ fees in a benefits suit based on the consumer price index (CPI) in Washington, D.C., where the case was heard but little other work was done.

Instead, the panel ruled that Paula Parrott should have provided individual rates for work done in Dallas, San Francisco and Washington in order to win an adjustment from the statutory rate of $125 per hour, rather than using the CPI for a single city or the national CPI to calculate a single rate.

The decision upheld the Veterans Court’s decision to award Parrott fees based on the statutory rate because she failed to provide rates for each city where work had been done on the case.

“We think the local CPI approach, where a local CPI is available … is more consistent with EAJA than the national approach.  We therefore hold that the Veterans Court did not err in ruling that the local CPI approach represented the correct method of calculating the adjustment in Ms. Parrott’s attorney’s hourly rate,” the decision states.

Parrott had claimed more than $7,200 in legal expenses in a suit over benefits for her husband, a deceased veteran, based on an upward adjustment from the statutory hourly rate based on the cost of living in Washington, D.C.  Language in the EAJA, which provides for an award of attorneys’ fees to victorious parties fighting agency action, stipulates that a $125 cap on hourly rates can be adjusted upward due to an increase in the cost of living.

But Parrott argued the statute is ambiguous regarding the method used to calculate such an increase.  She further claimed the Veterans Court was obliged to accept her cost estimate because ambiguity in a statute related to veterans benefits must be construed in favor of the veteran.

However, the panel ruled the EAJA is not ambiguous because using the national CPI rather than local numbers would incentivize more attorneys to accept cases challenging government agencies in low-cost areas rather than pricier areas.  Further, the panel found Parrott’s claim the Veterans Court was required to side with her is not applicable to the EAJA since it is not a veterans benefit statute, but applies to all litigants against executive agencies.

The case is Parrott v. Shulkin, case number 2016-1450, in the U.S. Court of Appeals for the Federal Circuit.

MetLife Faces $6.2M in Attorney Fees

March 9, 2017

A recent Law 360 story by Bonnie Eslinger, “MetLife Faces $6.2M in Atty Fees Over Ponzi Scheme Ruling,” reports that a California judge tentatively ordered MetLife Inc. and various subsidiaries to pay $6.2 million in attorneys’ fees on top of a $7.2 million judgment in a “hotly contested" case blaming the insurer for the loss of a retired woman’s savings in a Ponzi scheme.

Christine Ramirez claimed the insurer and its subsidiaries, along with an agent who ran MetLife’s Los Angeles operations, sold her unregistered securities alongside her insurance policies.  Those unregistered promissory notes put her money into an alleged $216 million Ponzi scheme, the suit said.

In August, a jury found the defendants liable for Ramirez's losses in the amount of $240,000 and awarded her $15 million in punitive damages saying MetLife owed $10 million, unit MetLife Securities owed $2.5 million and unit New England Life Insurance Co. owed $2.5 million.  A state court judge subsequently reduced the award to $7,196,710, telling Ramirez that if she didn’t consent to the remittitur, he would grant the insurer's motion for a new trial on grounds of excessive punitive damages.

A hearing was held on Ramirez’s motion for attorneys' fees of $7 million.  At the start, Los Angeles Superior Court Judge Kenneth Freeman issued a tentative written ruling, shaving fees related to attorney hours spent working on a separate, related case against MetLife, in which Ramirez was a putative class member, but finding the time invested in the case to be reasonable.

“In assessing reasonableness, the time required by the opposing party's tactics may also be highly probative,” Judge Freeman wrote in his written tentative opinion.  "Here, it goes without saying that this case was, and remains, very hotly contested.  The MetLife defendants litigated their clients’ case extensively, and there were never any frivolous arguments raised.”

The judge also doubled Ramirez’s lodestar attorneys' fees figure of $3,112,138, saying the requested 2.0 multiplier is appropriate in light of the novelty of the issues presented in the case, the skill of counsel, the extent that the case precluded the attorneys from taking on other clients, and the fact that the case was taken on a contingency basis.  Additionally, the results achieved in the litigation were notable, the judge said, even with the award reduction.  “The significant result warrants a multiplier in this case,” he wrote.

During oral arguments, an attorney for MetLife, Cheryl Haas of McGuireWoods LLP, disputed that any multiplier should be awarded, calling the $6 million a “windfall.”  “A multiplier is simply not justified,” Haas said.  “The prevailing party is only entitled to reasonable attorneys' fees.”

Judge Freeman said he would issue a final ruling after he considered supplemental filings from the parties, but he didn’t offer much hope for a different outcome.  "The tentative is very clear on the court’s reasoning and frankly I doubt there’s anything you’re going to offer in the way of a supplemental brief that will change the court’s tentative,” the judge said.

The case is Hartshorne et al. v. MetLife Inc. et al., case number BC576608, in the Superior Court of the State of California, County of Los Angeles.