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Category: Fee Fund

Fee Dispute Looms Over $800M in Fees in Roundup MDL

February 5, 2021

A recent Law.com story by ‘Money Grab’: Objections Fly Over $800M in Fees for Lead Counsel in Roundup MDL”, reports that lawyers are pushing back against a request in the multidistrict litigation over Monsanto’s Roundup pesticide to turn over portions of their settlement amounts to provide lead counsel with what some estimate to be $800 million in attorney fees.  More than a dozen firms with thousands of lawsuits across the country, including Beasley Allen, The Lanier Law Firm and Gibbs Law Group, filed objections to a Jan. 11 motion that lead counsel filed asking for an 8.25% assessment on their Roundup settlements to pay for fees and expenses spent on the “common benefit” of all lawyers.

Many said the holdback for so-called common benefit fees equates to $800 million for lead counsel—what one attorney called a “colossal amount.”  “This court should not condone what is essentially nothing more than a money grab,” said Karen Barth Menzies, of Gibbs Law Group in Oakland, California, who filed an objection on behalf of her firm and two others.  Menzies insisted that the $800 million is on top of an estimated $2 billion in attorney fees that lead counsel made from contingency fee contracts associated with their own cases, which they settled last year for greater amounts than Monsanto is now offering.

In June, Bayer, which now owns Monsanto, announced it planned to settle about 125,000 Roundup claims for an estimated $10.9 billion.  The agreements were not part of a global settlement, however.  Lawyers have conducted their own negotiations, which have been confidential, and many cases remain unsettled.  Many lawyers objecting to the common benefit fee assessment argue that lead counsel settled their own cases for much more than everyone else.

“Now you have a defendant who’s offering people $45,000 for a cancer case,” said Hunter Shkolnik, of Napoli Shkolnik.  His New York firm filed an objection with appellate attorney Thomas Goldstein, of Goldstein & Russell in Washington, D.C.  “And there was no common benefit tax associated with those initial billions of dollars in cases that were settled,” Shkolnik said.  “They intentionally did not tax their own cases and put them into the fund.  You now have the next series of cases settling at much smaller amounts, and they’re seeking 8% common benefit.”

Lead counsel—Robin Greenwald, of Weitz & Luxenberg in New York; Michael Miller, of The Miller Firm in Orange, Virginia; and Aimee Wagstaff, of Andrus Wagstaff in Lakewood, Colorado —declined to comment about the objections.  They are due to respond Feb. 18.  In their request, lead counsel noted that the proposed holdback, of 8% in fees and 0.25% in expenses, includes an assessment on their own cases.

Meanwhile, U.S. District Judge Vince Chhabria of the Northern District of California, overseeing the Roundup multidistrict litigation, has his own questions—including whether a holdback is even necessary and, if so, how much it should be.  On Jan. 26, he asked lawyers to address four questions he had about the lead counsel’s request, including whether he could issue a holdback “without understanding how much of a premium co-lead counsel has already received on their settlements compared to the typical settlement.”  He also asked, “If a hold-back is truly warranted, why shouldn’t it be much lower than the 8% requested by co-lead counsel?”

The objections are the latest dispute among plaintiffs lawyers over common benefit fees, used to reimburse lead counsel in multidistrict litigation for costs and fees associated with discovery, trials and settlement.  Much of that work ends up benefiting lawyers not in leadership positions in the event they want to pursue trials or settlements of their own cases.

In their fee motion, however, lead counsel emphasized that six firms, including their own, did most of the work in the Roundup litigation, including in state courts.  Other firms, they noted, did not want to take the risks early on in the litigation.  “The world was watching this litigation; there can be no doubt that it was high risk for contingency fee lawyers, which explains why all the heavy lifting and lion’s share of litigation costs and risks were left to the MDL leadership,” they wrote.

A “tsunami of advertising” following their big wins, such as the Roundup verdicts in 2018 and 2019, led to thousands more cases filed by “law firms that hedged their bets and previously sat on the sidelines,” they wrote.  “That argument doesn’t at all describe us,” said Rhon Jones, of Beasley Allen in Montgomery, Alabama, who filed an objection to the holdback.  “We very much want to try our own cases and work our own cases, so I don’t see where any of that applies to Beasley Allen.”

Many of the objectors, like Beasley Allen, have cases in state courts that they say are not subject to multidistrict litigation—a response to one of Chhabria’s questions asking whether the holdback should apply to state court cases.  Jones estimated that as much as 90% of the cases over Roundup are in state courts. His own firm, he said, has only six cases in the multidistrict litigation, but 2,000 in state courts, mostly in Missouri.

Many firms argued that Chhabria, as a federal judge, did not have jurisdiction over state court cases, particularly where plaintiffs firms that did not sign any participation agreements with lead counsel.  “We’re not saying they didn’t do good work—there is going to be a common benefit order in the Roundup case,” said Shkolnik, who said he has 100 Roundup cases in the multidistrict litigation but several thousand lawsuits in state courts in Missouri.  “I just question whether or not the court has jurisdiction to apply to purely state court cases.”

Not only did some law firms claim they did not use discovery obtained in the multidistrict litigation, but they insisted that lead counsel purposely kept the experts to themselves and attempted to get other lawyers to refer cases to them.  Several firms submitted declarations, including Mikal Watts, of Watts Guerra in San Antonio, and W. Mark Lanier, of The Lanier Law Firm in Houston, stating they not request help from lead counsel in the multidistrict litigation.  Watts and Lanier both noted, however, that leadership also did not offer them “a trial packet, discovery documents, transcripts, or any other MDL work product,” according to their declarations.

In his objection, filed on behalf of her own firm and seven others, Arati Furness, of Dallas-based Fears Nachawati, wrote that lead counsel “refused to help any of the Roundup victims they do not represent,” and some even solicited referrals from other firms “to enhance their own settlements.”  “In some instances,” she wrote, lead counsel “attempted to push firms into settlements with threats that they were going to be left out in the cold with no experts, no depositions, and no trial package.”  Chhabria has scheduled a March 3 hearing on the fee dispute.

Attorneys Seek $2.5M in Fees in Legal Malpractice Case

February 1, 2021

A recent Law 360 story by Nathan Hale, “Attys Seek $2.5M Fees For Jay Peak-Linked Malpractice Case”, reports that attorneys who helped investors land an $8 million settlement in a malpractice suit against their former counsel in litigation over the failed Jay Peak EB-5 immigrant investor project have asked a Florida federal court to approve distribution of $2.45 million in attorney fees.

In their motion, the law firms Cheffy Passidomo PA, Hanley Law and the Barr Law Group specified how they would divide the attorneys' fund established in the deal between the 25 investors and lawyers Edward J. Carroll and Mark H. Scribner and their firms, seeking to demonstrate the value of their work and convince U.S. District Judge Darrin P. Gayles to approve the payments.

Judge Gayles last month granted a request for preliminary approval of the settlement filed by Michael I. Goldberg, the court-appointed receiver for about two dozen entities related to the Jay Peak ski resort in Vermont.  In his motion, Goldberg noted that the immigrant investors' action had gone into "meaningful" discovery, and early last year the parties to the private malpractice litigation asked him to get involved to help settle it.  The resulting settlement agreement was reached after a few months of negotiations, he said.

In the motion, the three firms elaborated on their work for the investors.  They said they participated in depositions of all 25 plaintiffs as well as Carroll and Scribner.  They also retained three experts who were deposed by the defendants' counsel.  Additionally, they engaged in written discovery, substantial motion practice and two mediations, they said.

"Attorneys' fees for plaintiffs' counsels' hourly fees to date and the rate of the contingency fee arrangements between plaintiffs and plaintiffs' counsel in this case both exceed the total attorneys' fees fund provided for by the settlement agreement," the firms said.

Following Judge Gayles' preliminary approval of the settlement, the three firms submitted a letter to the receiver's counsel saying they had agreed that the Barr Law Group should be paid $1.47 million, and Cheffy Passidomo and Hanley Law should each be paid $490,000.

The group of investors filed their suit, Cason et al. v. Carroll et al., in Vermont federal court in February 2018, and a slightly different group filed an amended complaint in August 2019, according to the settlement approval motion.  The investors brought claims for legal malpractice, breach of fiduciary duty, breach of contract, and breach of good faith and fair dealing, alleging that Carroll and Scribner mislead them and withheld information and were conflicted because they had represented some of the investors and Jay Peak receivership entities at the same time.

"Defendants were aware, or should have been aware, of information suggesting that Jay Peak was being severely mismanaged, including that investor funds were being misappropriated to backfill shortfalls in the projects," the investors claimed, accusing the Jay Peak-linked attorneys of "designing and executing" the very fraud that injured the investors.

Among the damages the investors sought was disgorgement of the attorney fees they paid to Carroll and Scribner's firm, according to the motion.  After the parties failed to resolve the case in mediation in April 2019, they called upon the receiver to help negotiate a settlement.

In the motion for settlement approval, the receiver told Judge Gayles that the agreement "provides outstanding recoveries for the Cason plaintiffs," noting that after payments to the plaintiffs and attorney fees, the receivership entities would still recover $5.2 million to be distributed to other investors and would obtain a "bar order" barring all nongovernmental claims that could be filed between the receiver and Carroll and Scribner's former firms.

Judge to Award $1.5M in Fees in Walgreens Wage Settlement

November 26, 2020

A recent Law 360 story by Lauren Berg, “Calif. Walgreens Workers Bag $4.5M Wage Deal,” reports that Walgreens and a class of workers have received a California federal judge's approval for their $4.5 million settlement to resolve claims that the pharmacy chain broke Golden State labor law by not paying all wages to employees at its distribution centers.  U.S. District Judge William B. Shubb granted preliminary approval to the class action settlement that will see about 2,600 workers split $2.8 million, finding that the deal is fair and gives the workers a good recovery that might have been at risk had the case gone to trial.

Lucas Mejia, who worked as an hourly stocker for about seven years at a Walgreens distribution center in California, launched the class action in November 2018 in the Superior Court for the County of Yolo, alleging that the company failed to pay employees for all of the compensable time they worked.  Mejia said Walgreens rounded down employees' hours on their timecards, required employees to pass through security checks before and after their shift without paying them for that time and didn't pay premium wages to workers who were denied meal breaks.

The suit also included a claim for civil penalties under the Private Attorneys General Act based on Walgreens' alleged violations of California labor law.  The case was eventually removed to federal court in Sacramento.  In December, the parties started talking with a mediator, which produced the current settlement.

In exchange for releasing all of the claims, Walgreens has agreed to pay up to $4.5 million to create a common fund, from which $2.8 million will be distributed to the estimated 2,648 class members, according to the order filed.  Each class member who does not opt out is estimated to receive about $1,200, the judge noted.

Also out of the pot, $1.5 million, or 33% of the fund, will be set aside for attorney fees, while $150,000 will go to pay PAGA penalties and $7,500 will be used as an incentive award for Mejia.  Another $50,000 will be used to pay litigation costs incurred by class counsel and settlement administration costs, according to the order.  Judge Shubb gave preliminary approval to the deal, finding that it is in the best interest of the class.

While Mejia's counsel said the labor claims could be worth up to $20.2 million and the PAGA claim up to $16 million, they said Walgreens had legitimate defenses that risked reducing the amount Mejia and the class could recover at trial, according to the order.  With that in mind, the settlement is a strong result for the class, the attorneys said, with the $4.5 million representing 22% of the potential damages.

The judge also noted that, while the deal sets aside 33% of the fund for attorney fees, Mejia's counsel said they will seek 25% of the fund in a separate motion for fees.  "The court will defer consideration of the reasonableness of counsel's fees until the fee motion is filed," the judge wrote.  "Class counsel is cautioned that the reasons for the attorney's fees should be explained further in that motion."

$2B in Attorney Fees Offered in $26B Opioid MDL Settlement

November 5, 2020

A recent Law 360 story by Emily Field, “$26B Opioid Deal Offer to Include $2B in Atty Fees,” reports that the $26 billion settlement proposal from Johnson & Johnson and McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Corp. will include a separate $2 billion fund to pay attorney fees and costs for the local governments that have sued over the opioid epidemic in multidistrict litigation, a source confirmed.

A source with knowledge of the settlement negotiations confirmed that the fund will be $2 billion and will be used to pay the plaintiffs' attorney fees, including the private counsel hired by the state attorneys general who have claimed that the companies fueled the opioid crisis.  The fund will be administered by an arbitration panel, the details of which have yet to be worked out with U.S. District Judge Dan Polster, who is overseeing the multidistrict litigation over the crisis in Ohio federal court, the source said.

The source also noted that the $2 billion was less than the $3 billion that had initially been reported.  In February, drug companies told Judge Polster that a proposal for 7% fee against a global settlement could be more than $3.3 billion, potentially jeopardizing negotiations.  The plaintiffs' executive committee in the MDL said in a statement that they supported the deal, which includes $4 billion more than an initial offer of $22 billion in cash in the fall of 2019.

"While no dollar figure can restore the lives and families already devastated by the crisis, these settlement dollars are desperately needed in areas that have been hardest hit by this man-made epidemic, particularly as they now grapple with COVID-19," said Paul T. Farrell Jr. of Farrell Law, Paul J. Hanly Jr. of Simmons Hanly Conroy and Joe Rice of Motley Rice LLC in a joint statement.  "Addiction prevention, education and treatment is critical to the recovery of our families and communities. We need to get these resources out to them as fast as we can — this settlement does that."  The committee also noted that the attorney fees fund is intended to replace the collection of contingency fees so that money can reach communities faster.

In a filing with the U.S. Securities and Exchange Commission McKesson said it would pay up to $8 billion over 18 years, and Cardinal and AmerisourceBergen would pay the rest over that time.  In October, J&J disclosed that it's offering up to $5 billion to end the litigation, a 25% increase from an earlier settlement proposal.

The MDL contains 3,000 cases filed mostly by cities and counties that want money for health care and law enforcement costs related to opioid abuse.  Some MDL attorneys also represent cities and counties with similar cases in state courts.  The attorneys general of virtually every state have also filed cases in state courts.

Law Firms Tussle Over Share of $8.3M in Attorney Fees

October 12, 2020

A recent Law 360 story by Emillie Ruscoe, “Fee Bid is ‘Unseemly Mudslinging.’ ICO Suit Co-Counsel Says,” reports that part of a co-lead counsel team accused their counterparts of "unseemly mudslinging" in a dispute over distribution of the $8.3 million counsel fee they earned in a settlement of allegations that Swiss blockchain company Tezos Stiftung's 2017 initial coin offering violated federal securities laws.

Lawyers from Block & Leviton LLP and Hagens Berman Sobol Shapiro LLP told U.S. Magistrate Judge Joseph C. Spero to deny a September motion for counsel fees filed by attorneys from Hung G. Ta Esq. PLLC, LTL Attorneys LLP, the Restis Law Firm PC and Lite DePalma Greenberg LLC, telling the magistrate judge that the fee request "is devoted to unseemly mudslinging, inaccurate accusations of deceit, and unfounded claims of violations of the rules of professional conduct."

The Hung G. Ta Esq. PLLC-helmed attorney group filed their counsel fee request in September, asking U.S. District Judge Richard Seeborg to order Block & Leviton to put funds back into the escrow account holding $8.3 million that the plaintiffs' counsel team was awarded for its work on the case.  In a memo accompanying the counsel fee motion, the HGT Law group told Judge Seeborg that "Block & Leviton has proceeded, without HGT Law's authority, to distribute attorneys' fees to itself and several other firms with which it is aligned," asking the judge not to permit "such brazen misconduct."

HGT Law said the Block group had "proceeded to unilaterally distribute fees" so that Block & Leviton and Hagens Berman received 25% of the total fee, and 50% of the fee went to Robbins Geller, which is not docketed in the matter but was also involved in the case, according to the co-lead counsel team.  "This proposal is irrational and unreasonable," the HGT group contended, suggesting that Block & Leviton was trying to "maintain good relations with Robbins Geller and ensure favorable treatment from Robbins Geller in other cases."

Two days after the counsel fee motion was filed, court records show, Judge Seeborg referred the case to Judge Spero for resolution of the attorney fees dispute.  "This development is unwelcome, and its disposition ought not involve the intervention of this court," Judge Seeborg said in the same order vacating the Oct. 29 hearing on the motion that HGT had requested.

The Block group apologized to the court "that counsel were unable to work things out among themselves" and promised to work with the magistrate judge to resolve the issue in good faith.  "The court should not have to deal with this dispute.  It is always unseemly for lawyers to be squabbling over a multimillion-dollar award of attorneys' fees," the Block group said.

The Block group contended that HGT Law knew since December 2019 that it could expect to receive a quarter of the counsel fee.  "The [HGT Law group] never proposed a different fee allocation until after fees were awarded and sat on its hands until B&L sought to distribute the money consistent with [co-lead plaintiff] Trigon's allocation," the Block group claimed.

The Block group also said that "The Ta Group's wild accusation that 'Block & Leviton (and the other firms in the Block group) have attempted to deceive HGT Law, and have violated numerous ethical duties and guidelines of this district' is absolutely false."  The Block group also said that it "reiterates its willingness — if the Ta Group would like to withdraw its motion without prejudice — to resolve this dispute either through further informal discussions or through more formal [alternative dispute resolution] mechanisms."

Records show the parties to the case reached a $25 million cash settlement agreement in March, ending claims that the Tezos defendants held an unregistered securities offering in July 2017.  The $8.3 million counsel fee comprised a third of the settlement fund, and the attorneys who worked on the case on behalf of the proposed investor class would also get $300,000 to cover their litigation costs, according to the settlement terms.