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Category: Lodestar / Multiplier

Attorneys Earn $25M in Attorney Fees in JPMorgan 401K Settlement

September 24, 2019

A recent Law 360 story by Danielle Nichole Smith, “Workers’ Attys Get $25M in Fees From JPMorgan 401K Deal,” reports that a New York federal judge has given the final green light to a $75 million settlement resolving an Employee Retirement Income Security Act (ERISA) class action over JPMorgan Chase & Co.’s management of investments from participants in third-party 401(k) plans, signing off on the participants' bid for $25 million in attorney fees.

In his two orders, U.S. District Judge Vernon S. Broderick granted his final approval to the deal struck between JPMorgan and the class of third-party 401(k) plan participants and awarded the class counsel $25 million in attorney fees and nearly $1.5 million in costs.  The settlement was “fair, reasonable and adequate,” the judge found, dismissing with prejudice objections from three individuals.

Judge Broderick was also unpersuaded by two objections lodged against the attorney fees in the settlement.  The judge found one objection taking issue with certain costs being imposed on the class to be unavailing because courts weren’t allowed to “pick and choose the terms of the settlement they may desire to have modified.”

And another objection regarding the size of the award failed to take into account the 26,952 hours the firms spent working on the case, the judge said.  While the objector looked at the class counsel’s out-of-pocket costs to conclude that the $25 million represented a 1429% profit, the firms’ $17.6 million lodestar showed they only sought a “modest multiplier” of 1.4, the judge held.

The dispute stems from a proposed class action filed against JPMorgan and affiliates in April 2012 that received certification in March 2017.  In their case, the participants alleged that JPMorgan wrongly had its stable value funds invest heavily in funds that themselves were invested in “excessively risky, highly-leveraged assets.”

Class Counsel Seek $15M in Fees in $74M SunEdison Settlement

September 23, 2019

A recent Law 360 story by Mike Curley, “Attys Seek $15M in Fees From $74M SunEdison Settlement,” reports that the lead counsel in a class action claiming SunEdison Inc. misled shareholders about its financial health before filing for bankruptcy is asking a New York federal court to approve more than $15 million in attorney fees for its work in reaching a $74 million settlement with the company. 

In a memorandum filed, attorneys with Bernstein Litowitz Berger & Grossmann LLP, representing plaintiffs the Municipal Employees’ Retirement System of Michigan and Arkansas Teacher Retirement System, said the fee, which amounts to 21% of the $74 million pot, is reasonable and under the amount suggested by lodestar guidelines.

The request also includes $1.5 million in expenses, and 21% of any additional recovery, according to the memorandum.  The attorneys are also requesting an award of $13,598 to the Municipal Employees’ Retirement System of Michigan and $1,819 to Arkansas Teacher Retirement System for their costs and expenses.

The fees reflect that the settlement was achieved through the “skill, tenacity and effective advocacy” of the lead attorneys, according to the memorandum, including an extensive investigation into SunEdison’s alleged fraud, drafting the complaints, defeating motions for dismissal and summary judgment and nationwide and international discovery efforts.  In addition, the fee is based on a written agreement that lead counsel signed with the Municipal Employees’ Retirement System of Michigan at the start of the case and should therefore be presumed to be reasonable, the attorneys argued.

Circuit courts have approved attorney fees in settlements of this type of more than 30% of the total fund, according to the memorandum, which added that the lodestar payment, based on the amount of hours the attorneys put in, would be $18 million, making the $15 million request only 86% of the lead counsel’s time.

The 2015 class action alleges false and misleading statements and omissions in violation of the Exchange Act and liability and negligence claims under the Securities Act.  The suit is one of a multitude that SunEdison is facing in multidistrict litigation following business decisions that ultimately led to its filing for bankruptcy in April 2016.

In their bid for initial settlement approval filed in July, shareholders in the company also asked the court to allow their counsel to request attorney fees of up to 22% of the settlement fund and another $2 million in litigation expenses incurred over the three and a half years since the suit was filed.  Under the settlement, a $74 million fund will be divided between the two subclasses, with $19.5 million and any of the supplemental insurance money going to the Exchange Act subclass, and $54.5 million going to the Securities Act subclass, the investors said.

Fee Allocation Dispute in BNY Mellon Settlement Can Be Litigated

September 20, 2019

A recent Law 360 story by Chris Villani, “Atty Can Sue for Fees in BNY Mellon Settlement, Judge Rules,” reports that a dispute between Bailey & Glasser LLP, the Howard Law Firm and McTigue Law LLP over a $3 million fee following a $10 million settlement with Bank of New York Mellon Corp. sounds like a breach of contract case to a Massachusetts judge, who invited McTigue on Thursday to sue if it wanted.  Chief U.S. District Judge Patti B. Saris said that, in approving the $3.33 million fee award for the lawyers representing a class of trustees who sued BNY Mellon over alleged excessive charges, she would not resolve a long-running dispute between the lead class attorneys and a lawyer for the named plaintiff in the case.

During a hearing earlier this month in her Boston courtroom, Judge Saris heard arguments from McTigue Law that it was entitled to a 20% cut of the fee under the terms of a co-counsel agreement between McTigue, Bailey & Glasser and Howard Law.  The latter two firms said McTigue violated that pact and should not get the 20% share, and Judge Saris invited McTigue to sort the issue out through a new suit.

“McTigue Law’s motion essentially raises a breach of contract claim against lead plaintiff’s counsel,” Judge Saris wrote in a brief order.  “The court did not resolve that claim in its ruling on lead plaintiff’s motion for attorneys fees and expenses.”  Judge Saris said she would deny McTigue’s motion for a 20% cut without prejudice to a separate breach of contract suit.

The order clarified Judge Saris’ more lengthy Wednesday order giving her blessing for the fee, after which a McTigue representative told Law360 it did not believe the judge’s fee award prevented the firm from going after Bailey & Glasser and Howard Law for the cut it believes it rightfully deserves.  The class of trustees reached a settlement with BNY Mellon in March on the eve of trial, but the accord with the bank did little to stem the disagreements between two class counsel firms and Brian McTigue, the personal lawyer for class representative Ashby Henderson.

Bailey & Glasser and Howard Law told the judge in their fee request that McTigue's firm "did not benefit the class, but rather caused disruption, delay and confusion."  McTigue countered by saying he performed "significant and material work" on the case and argued his cut was agreed to in 2016, when the firms signed a contract stating he “will be apportioned 20% of the lodestar work, awarded 20% of the fees and pay 20% of the expenses in this litigation, all on an ongoing basis, as measured from the beginning of the litigation.”

More Law Firms Enter NFL Concussion Fee Allocation Dispute

September 18, 2019

A recent Law 360 story by Ryan Boysen, “More Firms Pile Onto Seeger Weiss in Concussion Fee Fight,” reports that Zimmerman Reed LLP and Kreindler & Kreindler LLP have added their voices to the growing chorus of attorneys claiming Seeger Weiss LLP shortchanged them for their work on the landmark NFL concussion settlement, in a contentious fee fight in the Third Circuit.  In separate briefs, Kreindler’s Anthony Tarricone and a handful of Zimmerman Reed lawyers said their early contributions to the litigation that led to the massive concussion settlement were overlooked and undervalued by Chris Seeger and U.S. District Judge Anita B. Brody when she determined how to divvy up most of the $112 million common benefit fund in 2017.

“Despite recognizing that 'every attorney involved in the litigation has taken on the risk that work will be performed but no payment will be received,’ the court’s awarded multipliers have almost no correlation to the actual” hours of work performed or the risk of nonpayment inherent in those hours, Zimmerman Reed said in its brief.  “That result is completely inconsistent with the court’s” decision to award Seeger Weiss a comparatively massive risk multiplier for its own hours, Zimmerman Reed added.

Tarricone received a risk multiplier of 1.25 for his hours and Zimmerman Reed received a multiplier of just 1, while Seeger Weiss received a 3.5 multiplier, according to court documents.  That huge 3.5 multiplier, coupled with the hundreds of hours billed by Seeger Weiss for its own work, have allowed it to take home nearly $65 million worth of the roughly $100 million that’s been paid out from the common benefit fund thus far.

Seeger is widely acknowledged as the primary architect of the settlement itself, but most of the 20 or so firms involved in the concussion litigation’s early stages have repeatedly bristled at his perceived heavy-handedness and concentration of power during that process.  While those firms are still able to collect contingency fees when their individual clients’ awards are approved under the settlement, practically all of them were left seething after Judge Brody’s lopsided allocation of the CBF money.

They’ve also taken issue with how that money was divvied up in the first place.  According to an opening brief filed last month that Tarricone, Zimmerman Reed and many other firms have all joined, Seeger was allowed to pour over each firm’s time records and decide what would count and what wouldn’t, and determine their risk multipliers.  That process was then essentially rubber-stamped by Judge Brody with hardly any independent analysis on her part, the opening brief claims.  Meanwhile, all of the other firms involved still have yet to lay eyes on Seeger’s own time records.

The first concussion lawsuit was filed against the NFL in 2011 and the settlement was finally approved in 2015, putting to rest claims that the NFL knew for decades about the long-term dangers of repeated concussions but did nothing to warn its players.  The uncapped deal has a 65-year lifespan and covers about 20,500 retired NFL players, all of whom are potentially eligible for payments ranging from a few thousand dollars to $5 million depending on their age and the severity of their football-related brain injuries.  Thus far it’s on track to pay out roughly $675 million to players, although many attorneys have complained that the process is far more difficult than they bargained for.

While the joint opening brief primarily takes aim at the broader issues that allegedly infected the CBF allocation process, Tarricone and Zimmerman Reed’s briefs focus on their own grievances.  Tarricone says he co-chaired the public relations effort undertaken by the lead lawyers in the concussion litigation and was instrumental in getting retired football players on television and favorable op-eds written, as well as steering reporters to write about concussions in football.

Nevertheless, in the brief, he claims Seeger ordered him to delete 80 hours that should have been payable from the CBF and discounted his efforts when coming up with what he considers the paltry risk multiplier of 1.25 for his other hours.  Tarricone and his firm ultimately received about $1.5 million from the CBF, but Tarricone claims it would have been higher if his actual work and risk were properly accounted for.

Similarly, Zimmerman Reed said the late Charles “Bucky” Zimmerman was instrumental in getting the concussion litigation off the ground in the first place, and then spent many hours from 2013 to 2017 monitoring some lawyers and lenders who were allegedly misleading retired players in an attempt to squeeze money out of them.

“During that time, Seeger Weiss largely ignored the [Ethics Committee’s] efforts,” Zimmerman Reed said.  “Once the issue gained public traction” through an article in the New York Times however, “Seeger Weiss, as was its practice in this case, unilaterally took over the effort initiated by the committee” and then “barely acknowledged the work Zimmerman Reed performed.”

“The district court’s failure to scrutinize Seeger Weiss’s recommendation that it be credited for certain work but that Zimmerman Reed not be credited for similar work on the Ethics Committee is clearly erroneous,” the firm said.  Neither Tarricone nor Zimmerman Reed gave precise dollar amounts or other figures in their briefs, but both were adamant that their final payouts from the CBF should have been higher.

For its part, Seeger has not yet submitted a reply brief in the fee fight.  But his response to the initial objections that were overruled by Judge Brody in her 2017 order on the CBF allocation can likely provide some foreshadowing of the arguments he’ll make before the Third Circuit.  “Certain firms disagree with the court’s decision to ask me to submit a proposed allocation, likening me to a ‘fox’ divvying up the chickens, and claiming that I cannot be objective, or worse,” Seeger wrote in that earlier response.

$1.2M Attorney Fee Award in Fiat Chrysler Class Action

September 12, 2019

A recent Law 360 story by Jeannie O’Sullivan, “$1.2M Atty Fee Awarded in Fiat Chrysler Class Suit,” reports that Capstone Law APC and attorney Howard A. Gutman won a $1.2 million fee award for what a New Jersey federal judge called their "skill and experience" in representing a class of Fiat Chrysler customers who lodged now-settled claims that the car manufacturer produced vehicles with defective transmissions.

In her ruling approving the award, U.S. District Judge Freda L. Wolfson said Los Angeles-based Capstone and Gutman, a New Jersey attorney who served as co-class counsel, are “well-versed” in consumer class action litigation involving automobile defects.  The judge also granted their request for a $28,786 reimbursement for costs and expenses and a $5,000 incentive award for class representatives Dolores and Albert Granillo.  The parties struck a settlement deal in February in which eligible drivers can receive as much as $2,000 in cash or $4,000 in a trade-in voucher to be used toward the purchase of a new Fiat Chrysler vehicle, and would provide an extended warranty on affected cars.

“The settlement obtained for the class members would not have been achieved without the skill and experience of class counsel,” Judge Wolfson said.  Capstone has settled 13 automobile defect class actions in the past five years and Gutman’s track record includes 500 automobile warranty or consumer fraud claim settlements, the judge noted.  The firms reached the settlement in the instant matter in “the face of formidable legal opposition” of defense counsel McElroy Deutsch Mulvaney & Carpenter LLP, the decision said.

Counsel skill is one of the factors for evaluating counsel fees per the standard established in the Third Circuit’s decision in Gunter v. Ridgewood Energy Corp. in 2000, according to Judge Wolfson.  Turning to other Gunter factors, Judge Wolfson said there was a “substantial benefit” to the settling class members in the form of direct payments or vouchers.  Only .02% of the class lodged objections to the settlement, and only one objection mentioned fees, the ruling said.

The complexity of the case also justified the fee, the ruling said, as counsel dedicated over 2,000 hours to motion practice, discovery and multiple mediation sessions while facing a high risk of nonpayment.  Judge Wolfson went on to say the fee was comparable to those of other consumer class actions in the District of New Jersey, and that the “expenses were properly documented and reasonably and appropriately incurred in litigating this matter.”

The class counsel used the lodestar method of calculating its fees, in which the number of hours worked is multiplied by hourly rates, according to the ruling.  Judge Wolfson said the lodestar system was the appropriate method because the percentage-of-recovery system depends on a set pool of settlement funds, which wasn’t the way this settlement was structured.  The class counsel rates — $245 to $725 — “fall on the outer end of reasonableness for this geographic area,” the judge said.

The defendants objected to the class counsel’s request to be compensated for time supplementing its fee application, which prompted the judge to shave nearly $20,000 from the base lodestar, reducing it from $1,100,912.50 to $1,081,099.28.  “Although as a general matter counsel is typically entitled to recover the time spent in preparing and defending a fee application, here, the additional briefing was only necessary because counsel’s initial application was deficient,” Judge Wolfson wrote.