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Category: Historic / Landmark Case

Fees Capped at 25 Percent in $2.67B BCBS MDL Settlement

November 17, 2020

A recent Law 360 story by Jeff Montgomery, “Ala. Judge Wary of Second-Guessing $2.67B BCBS Deal,” reports that a federal judge in Alabama cautioned an attorney for non-consenting class members about second-guessing "the tactical decisions of class counsel" in a proposed $2.67 billion multidistrict class settlement for alleged overpayments to Blue Cross-Blue Shield insurers.

U.S. District Judge R. David Proctor made the point during a video-conference preliminary approval hearing in the Northern District of Alabama for the settlement of a suit filed in January 2013, targeting allegations that the insurers divvied up the nation and conspired to restrain competition among themselves and from other insurers, causing damages estimated at between $19 billion and $38 billion.

The settlement, reached after more than eight years of battling, would provide proportional payouts to tens of millions of business and individual BCBS subscribers, while also establishing court-ordered reforms prohibiting anti-competitive conduct, including ending a Blues practice of requiring members to derive at least two-thirds of their revenues from "Blue branded" services.

Attorneys for the class hailed the deal as historic — potentially reshaping competition in the health insurance industry and increasing consumer choice.  But attorneys for three Blues customers told the judge their clients declined to support the deal based on a "lack of openness" in negotiations and requirement to release individual claims in order to participate in the settlement.

"I feel like I'm dealing with a college football team that has 70 players and the flag comes from the sideline and three of the players don't like the coach's call and want to see the playbook, which is all well and good," Judge Proctor said, "but I've got to make a decision here in the near future about whether to give preliminary approval."

Under the settlement, individual class members and their past costs for Blue Cross coverage, either through workplace or individual plans, will be developed from insurer records, with protection for sensitive information. Individuals will also have an opportunity to submit individual claims if they choose.

No more than 25% of the $2.67 billion will go toward attorney fees and expenses, with 93.5% of an estimated $1.9 billion in payouts expected to go to fully insured individuals or business premium-payers and the balance to self-insured individuals.

$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.

Second Circuit Rejects Fee Request After Landmark SCOTUS Ruling

September 30, 2020

A recent Connecticut Law Tribune story by Tom McParland, “2nd Circuit Blocks Attorney Fees for Troopers Who Recovered Union Dues After Landmark SCOTUS Ruling,” reports that a Manhattan-based federal appeals court rejected an appeal from a group of Connecticut state troopers who petitioned for attorney fees after securing a refund of collective bargaining dues in the wake of the U.S. Supreme Court’s landmark Janus decision, finding that it lacked jurisdiction to determine if they were “prevailing parties” to the litigation.

The ruling, from a three-judge panel of the U.S. Court of Appeals for the Second Circuit, left in place, for now, a district court’s ruling that the case was moot because the Connecticut State Police Union had refunded the current and former officers the full amount they had paid into collective bargaining, plus interest.  In a six-page summary order, the Second Circuit said the lower court’s ruling, which dismissed the case without prejudice, was not a final judgment that could be appealed, and noted that more litigation was likely in the U.S. District Court for the District of Connecticut.

“Having reviewed the record, we find that there has been no final, appealable judgment entered in the district court.  Therefore, we do not have jurisdiction over this appeal and must remand to the district court for further proceedings,” the panel wrote.

The plaintiffs, who declined to join the union, filed their lawsuit before the Supreme Court held in Janus that the First Amendment bars public employers from withholding agency fees from workers who opt out of a collective bargaining union.  Following the Janus decision, the union stopped collecting fees, and eventually provided a full refund after the officers moved for summary judgment.

U.S. District Judge Victor A. Bolden denied the motion as moot, and later found that the plaintiffs did not qualify as “prevailing parties” to the litigation.  Though the case was “administratively closed,” it did allow the plaintiffs to petition the court for post-judgment attorney fees and costs.

The Second Circuit panel said that its jurisdiction was limited, with few exceptions, to appeals from final judgments by a district court.  The administrative closure, however, did not meet that threshold, and the judges said Bolden would still need to rule on the plaintiffs’ motion for declaratory judgment on remand.  “In short, we see no indication that a final order has been entered in this case,” the court said.

Eleventh Circuit Bans Class Action Incentive Awards

September 22, 2020

A recent Law 360 story by Allison Grande, “11th Circ. Says Class Reps Can’t Get Incentive Awards,” reports that the Eleventh Circuit said a Florida federal judge made several errors that "have become commonplace in everyday class-action practice" when approving a $1.4 million settlement and $6,000 incentive payment for the lead plaintiff in a robocall suit, finding that U.S. Supreme Court precedent prohibits such routine incentive awards.

Jenna Dickenson, who was the lone objector to the deal that resolved a proposed class action accusing medical debt collector NPAS Solutions LLC of violating the Telephone Consumer Protection Act, brought her challenge to the Eleventh Circuit after U.S. District Judge Robin L. Rosenberg granted final approval to the settlement in May 2018.  Dickenson argued that the settlement amount should have been higher, that class counsel should not be permitted to recover 30% of the settlement fund and that class representative Charles Johnson shouldn't get a $6,000 incentive award.

The Eleventh Circuit panel held that the federal court had erred in awarding Johnson for his role in the litigation, in setting a deadline for class members to file objections that fell more than two weeks before class counsel had filed their fee petition and in offering only "rote, boilerplate pronouncements" in its order granting final approval to the proposed settlement and class counsel's fee request.

"The class-action settlement that underlies this appeal is just like so many others that have come before it.  And in a way, that's exactly the problem," U.S. Circuit Judge Kevin C. Newsom wrote for the panel in a partially divided published opinion.  "We find that, in approving the settlement here, the district court repeated several errors that, while clear to us, have become commonplace in everyday class-action practice."

The panel stressed that it didn't necessarily fault the federal court for its missteps, given that "it handled the class-action settlement here in pretty much exactly the same way that hundreds of courts before it have handled similar settlements."  "But familiarity breeds inattention, and it falls to us to correct the errors in the case before us," the panel held.

Michael L. Greenwald of Greenwald Davidson Radbil PLLC, who represents lead plaintiff Johnson, told Law360 that his side intends to seek en banc review from the full Eleventh Circuit, saying his client disagrees with the majority's opinion decision to strike down the incentive award.  "Incentive awards — when reasonable — are widely accepted as a means to recognize the effort it takes for consumers to bring class actions, the scrutiny and discovery to which they are subjected, and the ultimate benefits they obtain for others," Greenwald said.  "While class representatives necessarily put others before themselves when they bring a class action, this ruling, should it stand, could chill consumers' desire to bring meritorious cases against well-heeled corporations — cases that can take years to prosecute."

Debevoise & Plimpton LLP partner Maura Monaghan, counsel for NPAS Solutions, commented that the ruling demonstrates that courts are scrutinizing incentives that can lead to a proliferation of class actions.  "By eliminating the named plaintiff's incentive fee and questioning the attorney's fees, the Eleventh Circuit has made it significantly more challenging for plaintiffs' counsel to recruit plaintiffs to bring these actions," Monaghan added.

The contested deal stems from claims lodged by Johnson in 2017, when he filed a putative class action challenging NPAS Solutions' alleged practice of using an autodialer to call numbers that had originally belonged to consenting debtors but had since been reassigned to new owners who hadn't given the company permission to contact them.  Less than eight months after the suit was launched, the parties reached their $1.4 million settlement, which covered 9,543 class members who subsequently submitted claims for recovery.  No class member opted out, and Dickenson provided the only objection.

In a portion of its ruling that only two judges joined, the Eleventh Circuit agreed with Dickenson that the district court's approval of Johnson's $6,000 incentive award should be thrown out.  The majority held that such awards were prohibited by a pair of Supreme Court rulings from the 1880s, Trustees v. Greenough and Central Railroad & Banking Co. v. Pettus.

"Although it's true that such awards are commonplace in modern class-action litigation, that doesn't make them lawful, and it doesn't free us to ignore Supreme Court precedent forbidding them," Judge Newsom wrote.  "If the Supreme Court wants to overrule Greenough and Pettus, that's its prerogative.  Likewise, if either the Rules Committee or Congress doesn't like the result we've reached, they are free to amend Rule 23 or to provide for incentive awards by statute.  But as matters stand now, we find ourselves constrained to reverse the district court's approval of Johnson's $6,000 award."

The full panel also took issue with the timing of the deadline to file objections in the lower court, even though they concluded that the error was ultimately "harmless," as well as the district court's failure to include "findings or conclusions that might facilitate appellate review" in its final approval order.  As a result, the circuit judges remanded the case "so that the district court can adequately explain its fee award to class counsel, its denial of Dickenson's objections and its approval of the settlement."

In her partial dissent, U.S. Circuit Judge Beverly B. Martin wrote that she disagreed with her colleague's decision to take the incentive award away from Johnson.  "In reversing this incentive award, the majority takes a step that no other court has taken to do away with the incentive for people to bring class actions," Judge Martin wrote, arguing that the majority's decision "goes too far in deciding this issue" and goes against the circuit's binding precedent "that recognizes a monetary award to a named plaintiff is not categorically improper."

She noted that, in addition to spending time and money, class representatives must endure "all the slings and arrows that accompany present day litigation" in order for the class action system to operate.  The judge expressed concern that by prohibiting named plaintiffs from receiving "routine" incentive awards, "the majority opinion will have the practical effect of requiring named plaintiffs to incur costs well beyond any benefits they receive from their role in leading the class."  "As a result, I expect potential plaintiffs will be less willing to take on the role of class representative in the future," Judge Martin wrote.

The Nation’s Top Attorney Fee Experts of 2020

June 24, 2020

NALFA, a non-profit group, is building a worldwide network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on the reasonableness of attorney fees.  We help organize and recognize qualified attorney fee experts from across the U.S. and around the globe.  Our attorney fee experts also include court adjuncts such as bankruptcy fee examiners, special fee masters, and fee dispute neutrals.

Every year, we announce the nation's top attorney fee experts.  Attorney fee experts are retained by fee-seeking or fee-challenging parties in litigation to independently prove reasonable attorney fees and expenses in court or arbitration.  The following NALFA profile quotes are based on bio, CV, case summaries and case materials submitted to and verified by us.  Here are the nation's top attorney fee experts of 2020:

"The Nation's Top Attorney Fee Expert"
John D. O'Connor
O'Connor & Associates
San Francisco, CA
 
"Over 30 Years of Legal Fee Audit Expertise"
Andre E. Jardini
KPC Legal Audit Services, Inc.
Glendale, CA

"The Nation's Top Bankruptcy Fee Examiner"
Robert M. Fishman
Cozen O'Connor
Chicago, IL

"Widely Respected as an Attorney Fee Expert"
Elise S. Frejka
Frejka PLLC
New York, NY
 
"Experienced on Analyzing Fees, Billing Entries for Fee Awards"
Robert L. Kaufman
Woodruff Spradlin & Smart
Costa Mesa, CA

"Highly Skilled on a Range of Fee and Billing Issues"
Daniel M. White
White Amundson APC
San Diego, CA
 
"Extensive Expertise on Attorney Fee Matters in Common Fund Litigation"
Craig W. Smith
Robbins Arroyo LLP
San Diego, CA
 
"Highly Experienced in Dealing with Fee Issues Arising in Complex Litigation"
Marc M. Seltzer
Susman Godfrey LLP
Los Angeles, CA

"Total Mastery in Resolving Complex Attorney Fee Disputes"
Peter K. Rosen
JAMS
Los Angeles, CA
 
"Understands Fees, Funding, and Billing Issues in Cross Border Matters"
Glenn Newberry
Eversheds Sutherland
London, UK
 
"Solid Expertise with Fee and Billing Matters in Complex Litigation"
Bruce C. Fox
Obermayer Rebmann LLP
Pittsburgh, PA
 
"Excellent on Attorney Fee Issues in Florida"
Debra L. Feit
Stratford Law Group LLC
Fort Lauderdale, FL
 
"Nation's Top Scholar on Attorney Fees in Class Actions"
Brian T. Fitzpatrick
Vanderbilt Law School
Nashville, TN
 
"Great Leader in Analyzing Legal Bills for Insurers"
Richard Zujac
Liberty Mutual Insurance
Philadelphia, PA