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Category: Fee Request

Judge Approves $2.2M Fee Request in Life Insurance Case

June 23, 2020

A recent Law 360 story by Lauraann Wood, “Ill. Judge Oks $2.2M Fee Bid in Life Insurance Billing Case” reports that an Illinois federal judge gave final approval to a class action settlement and a $2.2 million attorney fee award for a group of Accordia Life and Annuity Co. customers who claimed their life insurance policies unlawfully lapsed during a system transition.  U.S. District Judge Colin Bruce said both the monetary and injunctive relief outlined in the deal between Accordia, its electronic payment collector and nearly 500,000 policyholders are fair and reasonable outcomes for the lawsuit that four policyholders launched in 2017.

The policyholders claimed their guarantees were cut on purpose when Accordia and its electronic payment collector, Alliance One Services Inc., allowed life insurance policies previously owned and guaranteed for life by Athene Annuity & Life Co. to either lapse or be canceled by not automatically debiting those customers' monthly premiums and applying them to their accounts.

Judge Bruce also said class counsel's request for $2.2 million in attorney fees shakes out to compensate the policyholders' attorneys for about 2,261 hours of work at $495 an hour, which "is a reasonable blended rate for counsel of this substantial experience engaged in complex civil litigation of a national scope in the Central District of Illinois."  The settlement, which Judge Bruce initially approved in June 2019, faced challenges from five class members who objected to either the nature of the settlement, its monetary relief or class counsel's fee request.

The judge approved the deal over the challenges, saying the settlement and its monetary relief aren't perfect, but "a settlement is a compromise, and, again, the court believes plaintiffs have attempted to achieve the best possible relief for the class when weighed against the risks of trial or summary judgment."

SCOTUS Stays Out of Fee Dispute in Humana ERISA Suit

June 22, 2020

A recent Law 360 story by Adam Lidgett, “High Court Stays Out of Fee Fight in Humana ERISA Suit” reports that the U.S. Supreme Court said it won't review the Fifth Circuit's finding that health insurer Humana doesn't have to foot a patient's six-figure attorney fees tab incurred in a suit over eating disorder treatment coverage.  The high court denied a petition from a plan beneficiary only referred to as Ariana M. that had asked the justices to review an appellate ruling that she wasn't entitled to attorney fees after she ultimately lost her attempt to get full coverage for a stay at a Utah treatment center.

A Texas federal court initially ruled in favor of Humana in the Employee Retirement Income Security Act case, and a Fifth Circuit panel later affirmed that decision.  Then in March 2018, a majority of the full Fifth Circuit breathed new life into the case when it adopted a lower standard for reviewing decisions by benefits plan administrators to deny coverage to workers.

Specifically, eight of 14 judges said in that 2018 decision that courts should apply de novo review — analyze a denial of benefits anew — unless the plan's documents explicitly give its administrator sole discretion to consider claims.  They overturned the court's 1991 Pierre v. Connecticut General Life Insurance Co. ruling, which held that de novo review applies to appeals challenging an administrator's interpretation of plan language but only lets courts analyze an administrator's interpretations of facts for abuse of discretion.

But even after Ariana M.'s case was kicked back down, Humana won summary judgment when the district court again said the insurer's denial was correct.  After she lost her bid to get about $140,000 in attorney fees, she again appealed to the Fifth Circuit.  The appellate court affirmed the second summary judgment ruling in Humana's favor, and also affirmed the denial of Ariana M.'s attorney fees bid.

She asked the high court for review earlier this year, arguing she could collect attorney fees under ERISA.  Ariana M.'s petition said the Supreme Court has already found that "an applicant need not be a 'prevailing party'" to be able to collect attorney fees under the applicable provision of ERISA.  She said she "need only achieve 'some success on the merits'" to be eligible for such fees.

Judge Questions $30M Fee Request in Yahoo Data Breach MDL

June 18, 2020

A recent Law 360 story by Dorothy Atkins, “Judge Koh Questions $30M Atty Fee Bid in Yahoo Breach MDL” reports that California federal judge Lucy Koh declined to approve class counsel's $30 million fee bid for securing a $117.5 million deal resolving sprawling Yahoo data breach multidistrict litigation, demanding more billing information from dozens of plaintiffs' firms — including the "markup" on work by first-year law students.  During a hearing held via Zoom, Judge Koh heard objections to the fee request and said she wants more detailed billing information on the 31 law firms and 204 attorneys and paralegals who worked on the MDL and related litigation consolidated in state court, as well as total costs for hiring experts.

Judge Koh gave class counsel a week to submit a chart on how much time each partner and associate worked on the case, what work they did and how much they billed for the work.  She also said she wanted to know how much staff and hourly workers were paid compared with how much the firms billed, pointing out that they had billed $200 per hour for at least one first-year law school student.  "I need to know how much you are paying to know how much the markup is," she said.

Judge Koh also questioned the legitimacy of hundreds of hours of work that nine law firms charged after class counsel had filed the motion for final settlement approval in February, and she pointed out that multiple line items appeared to violate her orders, which prohibited class attorneys from billing at various points in litigation without first receiving court approval.  Class counsel apologized for any billings that went beyond her restrictions and said they would withdraw the charges from their fee request.  They also agreed to submit the additional information within the week.

The judge's comments came during a nearly four-hour hearing on a motion to finalize the approval of Yahoo's $117.5 million deal, which class counsel argued in court documents "provides the second largest common fund recovery ever obtained in a data breach case."  The motion compared the settlement with the health insurer Anthem's $115 million deal, which Judge Koh approved in 2018 to resolve similar data breach claims.

If the Yahoo deal is approved, the settlement would end multidistrict litigation in federal court and parallel state court proceedings over Yahoo's alleged multiple data security failings between 2012 and 2016.  During those four years, the company had annual attacks that potentially impacted millions of U.S. and Israeli account holders, exposing some of their logins, passwords, emails, dates of birth, and answers to security questions to hackers, according to the users.  Judge Koh preliminarily signed off on the proposed deal in July, after rejecting a previous version of the settlement for being too vague and inadequately describing the breaches at issue.

Under the proposed deal, Yahoo agreed to provide class members with either two years of comprehensive credit monitoring or alternative compensation for those that already have credit monitoring.  They also agreed to cover out-of-pocket costs such as fraud losses if class members submit proof and said they would make certain changes to its business to prevent future data breaches.

During the hearing, which was watched by more than 100 observers, Judge Koh said she doesn't think the class should have to pay for the initial proposed settlement, because it was "obviously not in compliance with federal rules of civil procedure."  Judge Koh also took issue with apparent discrepancies between the class size estimates and the number of Yahoo users since the case began, which she said seems to have changed throughout litigation.

The judge noted that Yahoo's CEO touted its 1 billion active users in corporate press releases in 2016, but there's been a "pattern in this case" that every time the parties come back to court the number is smaller.  Now that class counsel wants the settlement approved, they're likely going to argue that there are only 10 class members, the judge quipped.  At the end of the hearing, Judge Koh said she would at some point approve attorney fees, but she reiterated that she takes her responsibility very seriously and wants to review the attorneys' billing.

Attorneys Get Fraction of Fees Sought in USAA Bad Faith Trail

June 16, 2020

A recent Law 360 story by Cara Salvatore, “Attys Score Fraction of Fees Sought in USAA Bad Faith Trial” reports that an Oregon federal judge has ruled that lawyers who helped a driver win claims in a two-phase trial against her insurer will be paid only $179,000 for the second phase, or a quarter of the $715,000 they'd requested.  The suit concerned USAA Casualty Insurance Co.'s alleged refusal to pay out an uninsured motorist policy to plaintiff Peggy Foraker, who was hurt when a suspect fleeing from police crashed into her.  After a two-day, two-phase bench trial, U.S. District Judge Michael Simon found in April that USAA acted in bad faith and awarded Foraker $323,000.

But Judge Simon said that Foraker's lawyers deserved much less in legal fees than the $715,000 lodestar they requested, because their wins in the second phase were limited — unlike the first phase, where they got more than $1 million in fees.  "Based on plaintiff's pretrial filings and the time spent at trial, it appears to the court that approximately 75 percent of plaintiff's efforts were directed toward plaintiff's unsuccessful claims and arguments.  This is also consistent with the results obtained.  Thus, the court will award plaintiff an attorney fee award at Phase II equal to 25 percent of plaintiff's Phase II lodestar figure," the judge said.

In the first phase, a different judge awarded Foraker the full $1 million USAA uninsured motorist policy limit, but rejected her claim that the insurer breached its contract because USAA hadn't denied her claim in full before she sued.  "Much of the legal and factual work spent by plaintiff at Phase II related to plaintiff's claim for non-economic damages, plaintiff's claim for economic damages based on the lost gains that she would have earned in her investment portfolio, and other legal issues on which plaintiff did not prevail," the judge said.  Judge Simon also called the attorneys' 340-page sheaf of submitted bills "massive but poorly organized."  In the first phase, Foraker was awarded legal fees of $1.31 million.

$88M Cut From $157M Fee Request in Namenda Class Settlement

June 15, 2020

A recent Law 360 story by Pete Brush, “$88M Cut From Requested $157.5M Atty Fee in Namenda Deal” reports that a Manhattan federal judge slashed nearly $88 million from a $157.5 million fee award requested by Garwin Gerstein & Fisher LLP and five other firms for guiding wholesalers of the Alzheimer's drug Namenda to a $750 million antitrust settlement with a unit of Allergan PLC.

After hinting she would reduce the payout, U.S. District Judge Colleen McMahon held Monday that six law firms that alleged Forest Laboratories Inc., a unit of Ireland-based Allergan, thwarted generic competition through unlawful "pay-for-delay" tactics are entitled to $69.538 million.  "It is still a handsome payday for counsel," Judge McMahon wrote, after cutting the request for about 21% of the settlement proceeds for plaintiffs' counsel down to about 9.3%.

The judge approved the lawyers' request for $5.8 million of expenses in the nearly five-year-old litigation, but slashed proposed $150,000 payouts for the two Namenda wholesalers that represented the class — Smith Drug Co. and Rochester Drug Co-Operative Inc. — by 50% to $75,000 each.  "Frankly, this was attorney-driven litigation.  All the class representatives really did was sit for a deposition," she wrote, calling the class reps' contributions "minimal."

Reasoning why she slashed the award, Judge McMahon said that the firms engaged in "duplicative work" — "or, in some cases triplicative or quadruplicative work" — and "inflated" their total number of hours worked.  "Class counsel's time sheets lack sufficient granularity to separate the productive hours from the wasted ones," she wrote.

The wholesalers had claimed Forest deployed a two-pronged strategy for keeping generic rivals to Namenda off the market, including unlawful "pay-for-delay" arrangements and "product-hopping" tactics that shielded its profits long after generic rivals should have developed robust sales.  A not-uncommon effort to settle ahead of trial led to the uncommonly large payout — one of the largest in the history of Hatch-Waxman Act generic-drug approval cases. Allergan admitted no wrongdoing in the deal.

"I fully understand why Forest settled this case for a large number.  Its downside was huge; this was a 'bet the company' case," Judge McMahon observed — awarding the plaintiffs' firms "twice the lodestar" but not "anything like the 4.5 times lodestar requested."

Judge McMahon also didn't like what she characterized as a suggestion that the six plaintiffs' firms should get an outsized payday to make up for the times they don't win.  "I am absolutely unmoved — indeed, I am offended — by the argument that class counsel deserves a humongous fee award in this case because 'the winning cases must help pay for the losing ones,'" she wrote.