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Federal Circuit Denies Request to Rehear Attorney Fee Ruling in IP Matter

January 10, 2019

A recent Law 360 story by Christopher Cole, “Fed. Circ. Denies Rembrandt Bid to Rehear Atty Fee Ruling,” reports that the Federal Circuit has denied Rembrandt Technologies LP's request for rehearing in its bid to escape paying a massive sum in attorneys’ fees for alleged misconduct while pursuing intellectual property claims in multidistrict litigation against several cable companies.  The circuit said that there would be no rehearing from either the full bench or the original three-judge panel, which had upheld a district court ruling ordering Rembrandt to pay the cable companies' legal fees but had struck a $51 million fee award. 

The ruling dashes an effort by Rembrandt to convince the appeals judges that the earlier decision drew conclusions the lower court never reached about alleged misconduct during the patent enforcement actions, including improper payment of witnesses and document spoliation.  “Upon consideration … the petition for panel rehearing is denied,” the court said in a non-precedential ruling in which the judges offered no further comment.  “The petition for rehearing en banc is denied.”

Rembrandt had sought to reverse the July decision by a circuit panel affirming a Delaware federal judge’s ruling that the firm litigated a long-running patent dispute with multiple cable providers in an “unreasonable manner,” partly by paying witnesses based on the contingency of winning the case.  The firm also either engaged in or failed to stop spoliation, the federal judge found.  The patent actions that led to the dispute over attorneys’ fees stretch back more than 10 years and roped in dozens of cable providers, equipment makers and broadcast networks that Rembrandt accused of infringing several patents, most of which covered cable modem technology.

In August 2015, U.S. District Judge Gregory M. Sleet fount that the long-running multidistrict litigation, involving allegations of infringement of broadcasting and cable transmission patents, was exceptional and ordered Rembrandt to pay attorneys’ fees and costs.

While the Federal Circuit panel agreed with the trial court’s characterization of Rembrandt’s conduct as “exceptional” in justifying a fee award, the appeals judges in the July ruling reversed a $51 million award — equal to almost all the cable companies’ fees — saying the district judge did not explain why that amount was warranted, sending the fee determination back to the judge.  But Rembrandt argued in court papers filed in September that the panel only upheld that the conduct was “exceptional” based on findings that it believed the judge “could have” made to justify such an award but did not actually make.

The case is In Re: Rembrandt Technologies LP Patent Litigation, case number 17-1784, in the U.S. Court of Appeals for the Federal Circuit.

$2.3M Fee Award in $6.9M Citigroup ERISA Class Action

January 7, 2019

A recent Law 360 story by Emily Brill, “Attys Get $2.3M Fee for $6.9M Citigroup ERISA Class Deal,” reports that a New York federal judge has awarded $2.3 million to the attorneys for a class of over 300,000 Citigroup Inc. 401(k) plan participants who negotiated a $6.9 million settlement in a long-running Employee Retirement Income Security Act suit in August.  U.S. District Judge Sidney Stein granted final approval to the settlement and fee award closing the book on claims that a Citigroup committee stuffed the company’s 401(k) plan with Citigroup-affiliated funds even though other funds charged lower fees.

The case has been pending since 2007, and its closure came as a relief to class attorney James A. Moore of McTigue Law LLP.   “The case was hard-fought for over a decade, and we think the result is an excellent one for plan participants,” Moore said.  “Citigroup stopped offering through its 401(k) plan the high cost proprietary funds that were the subject of the lawsuit.”  Moore added that he thinks the nearly $7 million recovery “sends a message to other employers that, under the law, they must manage retirement plans in the best interest of employees.”

The Citigroup 401(k) Plan Investment Committee and the class — a group of current and former Citigroup employees — told Judge Stein in August that they had reached a deal to end the case.  Soon, Citigroup workers, former workers and retirees who invested in certain funds in the 401(k) plan between Oct. 18, 2001, and Dec. 1, 2005, will be notified of the money headed their way.  Judge Stein signed off on the settlement notice.

He also signed an order awarding $2.3 million to the plaintiffs’ attorneys and $15,000 to each of the two class representatives.  The order also approved devoting $374,100 of the settlement to case-related expenses, leaving roughly $4.2 million left for the class after all the deductions — attorneys’ fees, class representative fees and expenses — are made.

The settlement notice tells Citigroup workers that the class’s three attorneys and two representatives “have devoted many hours to investigating the claims, bringing this case, and pursuing it for almost 11 years” and that the attorneys “have not been paid for their time and expenses while the case has been pending.”

The class sued Citigroup and its 401(k) plan committee in October 2007, accusing them of putting the bank’s interests ahead of workers’ when stocking the employee retirement plan.  The company and plan committee allegedly failed to remove or replace subpar, expensive Citigroup funds from the 401(k) plan’s lineup, allowing Citigroup to reap “substantial revenues” at plan participants’ expense while violating the Employee Retirement Income Security Act, which requires fiduciaries to make decisions in participants’ best interests, according to the complaint.

Citigroup was dropped as a defendant in 2010, leaving the 401(k) investment committee, another committee called the Benefit Plans Investment Committee of Citigroup Inc. and various individual committee members and officers to defend the suit.  The class won certification in November 2017.  Moore said Monday that the class has more than 300,000 members.

The case is Leber et al. v. The Citigroup 401(k) Plan Investment Committee et al., case number 1:07-cv-09329, in the U.S. District Court for the Southern District of New York.

Class Counsel Seek $13M in Attorney Fees in Dairy Settlement

January 2, 2019

A recent Law 360 story by Christopher Cole, “Class Attys Look to Milk $13M From Dairy Settlement,” reports that lawyers who secured a $40 million deal ending a suit by a proposed class of farmers alleging DairyAmerica Inc. and an affiliate lowballed milk prices paid to the class members are asking a California federal judge for a $13.3 million slice of the settlement and $824,000 in costs.  The attorneys said their decade-long work on the litigation — stemming from allegations that the milk giant and California Dairies Inc. lowballed nonfat dry milk rates to run up their profits — warranted a share totaling about a third of the settlement.

The $40 million deal was reached after a lengthy legal fight that included reviving the litigation in the Ninth Circuit after all the claims had been dismissed at the trial court level, the lawyers said in court papers filed Dec. 28.  “To achieve this exceptional result, class counsel have worked on an entirely contingent basis for approximately 10 years without compensation of any kind,” they said.  “The settlement was obtained as a direct result of class counsel’s relentless and creative advocacy, substantial investment, and continual risk-taking throughout the last decade.”  Separately, attorneys for the milk farmers want litigation expenses amounting to almost $824,000 and service awards to each named plaintiff of $90,000 and to each former plaintiff of $10,000.

The litigation dates to 2009, when a series of class actions were consolidated in California federal court.  The farmers accused the dairy buyers of providing lowball rates for nonfat dry milk in a survey by the National Agricultural Statistics Service, leading to federal milk marketing orders that allegedly disadvantaged farmers and beefed up the buyers’ profits.  The case almost died the following year when U.S. District Judge Anthony W. Ishii dismissed the claims, citing the filed rate doctrine, which holds generally that state law claims can’t be brought against federally set rates.  However, the Ninth Circuit disagreed, saying the doctrine wasn’t applicable to the legal issues in the suit, and revived the case in August 2012.

The farmers and dairy companies reached a settlement with the proposed class and asked the judge for approval in August. Judge Ishii gave the deal a green light on Sept. 14.  Attorneys for the milk farmers said that even though the Ninth Circuit has observed that 25 percent may serve as a fee award benchmark in such cases, that can be adjusted based on circumstances, and the settlement amount is “unusually high” relative to the alleged damages to the farmers.  They said the requested fees are “especially warranted considering the quality and depth” of their work, including defeating multiple motions to dismiss and amending the complaint twice to materially expand the claims.

“Yet, in addition to aggressively pursuing these traditional litigation avenues, class counsel also took multiple creative, unusual and ultimately successful steps at critical junctures of this litigation that were crucial to securing the $40 million settlement,” they said.

The case is Gerald Carlin et al. v. DairyAmerica Inc. et al., case number 1:09-cv-00430, in the U.S. District Court for the Eastern District of California

Federal Judge to Hear Attorney Fee Expert in Acacia Fee Dispute

December 27, 2018

A recent Law 360 story by Aaron Leibowitz, “Mass. Judge to Hear Expert in $1.75M Acacia Atty Fee Fight,” reports that a Boston federal judge said he wants to hear from an expert before deciding a dispute over a $1.75 million attorneys’ fee proposition from Acacia Communications Inc. shareholders, but approved a settlement between the shareholders and the fiber optics company in their insider trading case.  In putting forward that figure, the shareholders' attorneys said the internal reforms proposed in the settlement deal would increase stockholder value.  They filed a declaration by Harvard Law School scholar Matthew D. Cain, who estimated the changes would net between $68 million and $82 million for Acacia shareholders.

U.S. District Judge William G. Young said that he would like to hear from Cain directly as he tried to put a dollar value on work in a settlement that is not monetary, but rather involves changes to the oversight of insider trading at Acacia.  "I will be more comfortable having heard this expert," Judge Young said, noting that Acacia's attorneys would be allowed to cross-examine the expert.  He was skeptical of a request by Acacia to depose the scholar before he appears in court, but said he would consider it.

The consolidated cases set to be resolved allege that Acacia executives and private equity backers obtained early releases from insider trading agreements, allowing them to sell off their shares two weeks before announcements from the company's two largest customers led to a significant drop in Acacia's stock price.

"You say you are the catalyst that caused [these reforms] to be put in place," Judge Young said to the shareholders' attorneys.  "How are you gonna value it?"

Geoffrey Johnson of Scott & Scott Attorneys at Law LLP, representing the shareholders, said it's more of an art than a science, but he said the Harvard expert used "very conservative assumptions" on how the reforms would boost Acacia's worth.  In a court filing last month, the shareholders' attorneys said they expended nearly 1,690 hours on the case and used a multiplier of 1.72 to calculate the award.  They asked to be reimbursed for about $34,000 in expenses.

But Acacia has said the $1.75 million calculation is unreasonable, pointing to a settlement in a recent case involving internal reforms at Aveo Pharmaceuticals in which the plaintiffs requested over $800,000 in attorneys' fees, but were instead awarded about $200,000 by U.S. District Judge Denise J. Casper, also in Boston.  "The requested fee here is just way too high," Daniel Halston of WilmerHale, representing Acacia, told the judge. "It's just out of bounds."

Judge Young said he had no issue with the settlement itself.  He rescheduled an afternoon hearing to the morning so he could hear arguments on the fees first, but held the afternoon session in case anyone showed up to object to the deal.  When no one objected — the only people in the gallery were a lawyer and a reporter — the judge gave his formal approval.

The case is Tharp et al. v. Acacia Communications et al., case number 1:17-cv-11504, in the U.S. District Court for the District of Massachusetts.

18 Law Firms Ask Ninth Circuit for Share of $175M Fee Award in VW MDL

December 21, 2018

A recent Law 360 story by Dorothy Akins, “18 Firms Ask 9th Circ. For Cut of $175M Fees in VW MDL,” reports that an attorney representing 18 law firms told the Ninth Circuit they're owed part of $175 million in fees and costs awarded in multidistrict litigation over Volkswagen’s emissions cheating and were wrongfully cut from the award shared among approximately 100 firms simply because they weren't the "chosen ones."

During a hearing in San Francisco, Bruce Nagel of Nagel Rice LLP told a three-judge panel that U.S. District Judge Charles R. Breyer improperly concluded that work done by his law firm and 17 others before Lieff Cabraser was appointed as lead counsel was worthless.  As a result, paralegals at the "chosen" law firms are earning over $1,300 per hour for their work on the litigation and senior attorneys are earning $4,200 per hour, while the 18 law firms appealing the order have received nothing for what amounts to identical work, Nagel argued.  "The district court found … the identical work to be worthless," he said.

Although Nagel was arguing on behalf of all 18 law firms, he noted that his law firm was the second or third to file a complaint against the automaker and led a "press blitz" following Volkswagen's 2015 announcement that the company deliberately installed software designed to cheat federal and state emissions tests in nearly 600,000 2009-2015 vehicles.  In March 2017, Judge Breyer issued a nine-page order granting class counsel’s request for $167 million in attorneys' fees and $8 million in costs, which represented roughly 1.7 percent of the $10 billion class settlement fund that was set up to resolve the 2.0-liter class action claims.

But Nagel argued that Judge Breyer's order never compared the work done by the different law firms and his ruling was based on "bald assertions" and on a "finding of fact not supported by anything."  Nagel said if the ruling is allowed to stand, the order would require some class representatives to have to pay their own lawyers, while other class representatives don't have to, because their attorneys happen to be lead counsel and are effectively the "chosen ones." That sets up a bad precedent and bad public policy, Nagel argued.

But Samuel Issacharoff, who represents the plaintiffs' steering committee and class counsel, pushed back, arguing that the 18 law firms appealing the order didn't follow the process required to submit their hours in order to receive a cut of the $175 million.  Ultimately, Issacharoff said there were 99 non-lead counsel firms that cooperated with lead counsel and went through auditing.  Those 99 firms received a portion of the award, Issacharoff said.

On rebuttal, Nagel argued that his firm submitted multiple letters to lead counsel regarding their work on the litigation but never received a response.  Another appellant, attorney James B. Feinman who represented himself, also argued that he would file a lien against the automaker in Virginia state court to recover the outstanding attorneys' fees.  But counsel for VW, Sharon Nelles of Sullivan & Cromwell LLP, argued that any outstanding attorneys' fees must come out of the $175 million award.  Nelles said the automaker isn't responsible for any additional fees based on the terms of the $10 billion class action settlement, and the company would fight any liens against it filed in state court.