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Category: Lodestar / Multiplier

Class Counsel Defend $38M Fee Request in Anthem Data Breach Case

January 23, 2018

A recent The Recorder by Amanda Bronstad, “Plaintiffs Lawyers in Anthem Data Breach Settlement Defend $38M in Fees” reports that laintiffs lawyers are fighting accusations by an objector that their $38 million fee request in the Anthem data breach settlement was “outrageous on its face” and required a special master to investigate potential over-billing.

“In effect, objector contends that counsel should have litigated this case on the cheap, rather than devoting the resources (and taking the risks) necessary to litigate it well and protect the class,” wrote co-lead plaintiffs attorneys Eve Cervantez and Andrew Friedman in a response filed Jan. 18. “To put it simply, the lodestar in this case reflects first-rate lawyering that yielded a first-rate result, something this court is well equipped to rule upon.”

As for a special master, there was no need for such “satellite litigation,” which would only delay the case and incur costs, they wrote. “Rhetoric aside,” they wrote of the objector, represented by class action critic Ted Frank, “he identifies no billing improprieties that would raise serious questions about counsel’s fee request and which might make the services of a special master useful to the court.”

U.S. District Judge Lucy Koh of the Northern District of California has scheduled a Feb. 1 hearing for final approval of the $115 million settlement, though a hearing on the special master request is expected to be on April 5.

The settlement provides two years of credit monitoring and identity protection services to more than 78 million people whose personal information was compromised in 2015. It also provides a $15 million fund to compensate for costs such as credit monitoring services and falsified tax returns.

Frank, of the Competitive Enterprise Institute’s Center for Class Action Fairness, filed an objection last month on behalf of Adam Schulman, who is an attorney at his Washington, D.C., organization. He wrote that the fee request, which is 33 percent of the settlement, should be closer to $13.8 million when subtracting $23 million in notice and administration costs.

He also questioned why 49 other firms not appointed by the court stood to earn a total of $13.6 million in fees and “whether there were side agreements to back scratch or trade favors in other MDLs to get work in this MDL.”

But he was especially critical of the average $360 hourly rate for contract attorneys submitted by the four firms, one of which is San Francisco’s Lieff Cabraser Heimann & Bernstein, which was on the plaintiffs steering committee along with Girard Gibbs in San Francisco. A special master in Boston is investigating Lieff Cabraser, along with two other law firms, for potential over-billing for staff attorneys in a $74.5 million fee request in securities class action settlements with State Street. The special master’s report is due in March.

Cervantez, of San Francisco’s Altshuler Berzon, and Friedman, of Washington, D.C.-based Cohen Milstein Sellers & Toll, wrote in their response that there are no similarities between the two cases.

“There is absolutely no indication that counsel’s fee application here suffers from the perceived irregularities that have prompted some trial courts to enlist the assistance of a special master,” they wrote. In State Street, a special master was appointed after class counsel admitted their lodestar was initially overstated due to a mistake in double counting time for contract attorneys. “Here, to the contrary, there is no suggestion that counsel duplicated any amount of the lodestar, inadvertently or otherwise,” they wrote.

But in a declaration, Cervantez said she had discovered “three clerical errors”: One associate at Scott + Scott was incorrectly identified as a contract attorney, as were staff attorneys at Lieff Cabraser, and the rate for an associate at Goldman, Scarlato Penny in Conshohocken, Pennsylvania, should have been $495, not $595, per hour.

In declarations filed with the court, Friedman, Cervantez, Lieff Cabraser’s Michael Sobol and Eric Gibbs of Girard Gibbs insisted they had not “made any agreements to exchange work or fees in this case for work or support for leadership positions in another MDL or in any other case.” Friedman and Cervantez added that they made all work assignments to other firms “on the basis of efficiency and relevant experience and expertise.”

Friedman, Cervantez, Sobol and Gibbs did not respond to a request for comment.

Frank said: “There are the same problems here that the State Street special master is investigating. The declarations were fascinating: the claim is that dozens of law firms allegedly ​did as much as $1.5 M of lodestar work on spec without any promise or tacit understanding of how they would be paid. I can’t even hire a local counsel for a couple of thousand dollars without signing a lengthy retainer agreement.”

Koh has been especially critical of fees, trimming the number of plaintiffs firms leading the Anthem case and slashing compensation in other cases involving Lieff Cabraser and Cohen Milstein.

NALFA: Serial Class Action Objectors Not Qualified in Attorney Fee Analysis

January 5, 2018

A recent The Recorder story by Amanda Bronstad, “$38M Fee Request in Anthem Data Breach Settlement Under Scrutiny” reports that an objection says the fee request, which is 33 percent of the $115 million settlement, was “outrageous on its face” and should be closer to $13.8 million.

A prospective class member has objected to the Anthem data breach settlement, specifically criticizing a fee request of nearly $38 million, and planning to ask that a special master investigate the case for potential over-billing.

Class action critic Ted Frank, of the Competitive Enterprise Institute’s Center for Class Action Fairness, filed the objection on Dec. 29 on behalf of Adam Schulman, who is an attorney at his Washington D.C. organization.  The objection said the fee request, which is 33 percent of the $115 million settlement  was “outrageous on its face” and should be closer to $13.8 million.  He particularly targeted the average $360 per hour rate for contract attorneys submitted by four lead plaintiffs firms, one of which is San Francisco’s Lieff Cabraser Heimann & Bernstein.  A special master in Boston is investigating Lieff Cabraser, along with two other law firms, for potential over-billing for staff attorneys in a $74.5 million fee request over securities class action settlements with State Street.  The special master’s report is due in March.  Frank said he planned to file a motion on Thursday asking that a special master be appointed in the Anthem case.

He wants a special master to look into “the same thing they’re investigating in State Street, which is why this billing happened and whether it’s appropriate and whether there was an attempt to mislead the court.”  He also questioned why 49 other firms not appointed by the court stood to earn a total of $13.6 million in fees and “whether there were side agreements to back scratch or trade favors in other MDLs to get work in this MDL.”

U.S. District Judge Lucy Koh, who trimmed the number of plaintiffs firms appointed to lead the Anthem case, has scheduled a Feb. 1 hearing for final approval of the settlement in San Jose, California.  Two other objections were filed on Dec. 29 that also challenged the fee request, among other things.  Class counsel is expected to respond to the objections by Jan. 25.

Eve Cervantez, of San Francisco’s Altshuler Berzon, who is co-lead counsel in the case along with Andrew Friedman of Cohen Milstein Sellers & Toll in Washington D.C., wrote in an email: “The three professional objectors made the same typical, boilerplate objections we often see in consumer class actions, and neglected the true value of the settlement to the class—protection of their personal data both by mandated improvements to Anthem’s cybersecurity to prevent future hacks, and by credit monitoring to prevent misuse of their personal data by the hackers that stole it.”

In the Anthem case, Koh preliminarily approved the settlement in August.  The deal provides two years of credit monitoring and identity protection services to more than 78 million people whose personal information was compromised in 2015.  It also provides a $15 million fund to pay costs that class members were forced to pay due to the breach, such as credit monitoring services and falsified tax returns.

In motions filed last month, the four lead plaintiffs firms defended their fee request as adequate compensation for obtaining the largest data breach settlement in history.  The case involved “massive discovery” and “complicated factual and legal research,” they wrote.  It also was “extraordinarily risky,” given that many data breach cases have been dismissed.  The fees also were reasonable given the total lodestar—or the amount billed multiplied by the hourly rate—was $37.8 million.  The hourly billing rates of partners were between $400 to $970—rates that Koh has approved in prior cases.

“There is no true comparator to this groundbreaking settlement,” Cervantez wrote.  “Other data breach cases have not resulted in common funds that come close to $115 million, nor have they included the comprehensive cybersecurity improvements mandated by this settlement, coupled with a major, quantifiable investment in cybersecurity.”

The other two objections, one filed by solo practitioners John Pentz in Massachusetts and Benjamin Nutley in California, and the other by a trio of law firms from Missouri and Colorado, raise additional concerns over the cash value of the settlement, a proposed $597,500 in incentive payments to 29 lead plaintiffs and a request on both sides to seal portions of the deal—in particular, the amount of money Anthem has agreed to spend on cybersecurity in the future.

Koh has slashed fee requests in past cases, some involving the same plaintiffs firms.  Last year, she cut fees in a $150 million settlement involving the poaching of animators at DreamWorks and The Walt Disney Co. to $13.8 million after finding the original $31.5 million request to be “unreasonably high.”  In that case, Koh relied on the billing records, concluding that the U.S. Court of Appeals for the Ninth Circuit’s 25 percent benchmark in class action settlements would result in a windfall to the three plaintiffs firms, which included Cohen Milstein.

No Fee Enhancement in Prolonged Med Mal Case

November 10, 2017

A recent New York Law Journal story by Jason Grant, “Morelli Denied Enhanced Fee in Seven-Year Long Med Mal Case” reports that the Manhattan-based firm, led by famed civil litigator Benedict Morelli, was sufficiently compensated when it was paid $376,198.50 for 970 hours of legal services, in accordance with Judiciary Law § 474-a(2), which sets out a schedule for contingency fees earned by lawyers in medical, dental or podiatric malpractice actions.

The Morelli Law Firm is not due an increased contingency fee award based on alleged “extraordinary circumstances” in representing a client in a medical malpractice lawsuit for 7½ years, a state appeals court has ruled.  A unanimous Appellate Division, Second Department, panel ruled that, while the statute provides for higher fees based on extraordinary circumstances, Morelli had not made a “threshold showing” that the money collected by his firm was inadequate.

“The law firm expended approximately 970 hours, that included 9 days of trial, over the course of the 7½ years it represented the plaintiffs in this medical malpractice action,” wrote Justices John Leventhal, Betsy Barros, Valerie Brathwaite Nelson and Linda Christopher.  “The record is devoid of any evidence that the amount of time spent on the representation of the plaintiffs resulted in an exceptionally low hourly rate of compensation, or that it caused the law firm any financial detriment.”

“Inasmuch as the law firm failed to make the threshold showing that compensation in this case was inadequate, it is not necessary to reach the issue of whether extraordinary circumstances existed,” the panel added in a terse opinion issued Nov. 1, in Siu Kiu Lam v. Nelly Loo, et al.; Morelli Law Firm, PLLC, nonparty-appellant, 20028/09.  The panel’s opinion affirmed the June 2016 decision of Kings County Supreme Court Justice Bert Bunyan, who had denied the Morelli firm’s motion under Judiciary Law § 474-a for an increased contingency fee award.

CA Court: No Fee Multiplier for “Fees for Fees” in Private Attorney General Action

November 8, 2017

A recent Met News story, “Enhancement Based on ‘Risk’ Inapplicable in Seeking ‘Fees on Fees’ Award—C.A.” reports that an attorney fee award in connection with work done in securing fees in a private attorney general action would logically not be enhanced based on “risk,” the Court of Appeal for this district held.  The decision came in a case in which trial court ordered the state to pay $836,211.25 in attorney fees to lawyers for work they did in defending previous attorney fee awards in the case, a case which stretches back to the filing of a complaint on June 20, 1978, and includes a decision by the California Supreme Court.  It was alleged in the class action that the state unconstitutionally collected higher vehicle license fees and use taxes on vehicles purchased out of state.

The state appealed the latest fee awards, divided among three firms and one sole practitioner, now located in Houston; the sole practitioner and plaintiff, Patrick G. Woosley, cross appealed.  Broken down, the awards were: $14,332.50 to Jones, Bell, Abbott, Fleming & Fitzgerald L.L.P, $80,010 to the Gansinger Firm, $15,600 to the Law Offices of John F. Busetti, and $70,000 to Woosley.

Writing for Div. Five, Justice Lamar Baker said Los Angeles Superior Court Judge Stephanie M. Bowick did not abuse her discretion in making the awards.  With respect to the enhancements Woolsey sought in connection with the risk a lawyer in a private attorney general action takes that no fees will be ordered, should there be a lack of success, and based on a delay in payment, Baker wrote:

“[W]e conclude the trial court’s decision not to enhance Woosley’s fee award for risk and delay was not error.  By the time Plaintiffs’ Counsel applied for the attorney fees at issue here, their entitlement to an award of some amount was all but inevitable (notwithstanding the State’s arguments to the contrary) based on their success in the underlying litigation and their earlier fee award…. Thus, the trial court did not abuse its discretion in failing to enhance Woosley’s award for risk.”

He went on to say that while a small enhancement based on delay in payment is permissible, being akin to interest, the award is discretionary.  Woosley contested deductions Bowick made from the amount he requested, but Baker declared:  “The court’s method and results were both sound.”

Bowick rebuffed the state’s contention that the attorneys were entitled to no further fees.  She cited the California Supreme Court’s 1982 decision in Serrano v. Unruh (Serrano IV) for the proposition if a party has received attorney fees in a private attorney general action, pursuant to Code of Civil Procedure §1021.5, entitlement to fees in connection with gaining fees follows.

In that decision, the high court said: “We conclude that, absent circumstances rendering an award unjust, the fee should ordinarily include compensation for all hours reasonably spent, including those relating solely to the fee.”

Woosley initially scored a victory in the trial court.  Then-Los Angeles Superior Court Judge Lester M. Olson awarded $13.7 million to class counsel and $1 million in fees to Woosley “for services rendered as class representative.”  The state appealed from a judgment in favor of the two classes Olson certified, and Woosley appealed from the denial of fees for his legal services.  The Court of Appeal affirmed the judgment for the classes and reversed the denial of fees for Woosley’s legal work.

The California Supreme Court in 1992 affirmed and reversed the Court of Appeal.  Then-Chief Justice Ronald George (now retired) wrote: “[W]e hold the state violated the commerce clause of the United States Constitution by imposing vehicle license fees and use taxes on vehicles originally sold outside California that were higher than the fees and taxes charged on similar vehicles first sold within the state….

“[W]e hold the class claim filed in this case was not authorized by statute. That claim is valid only as to Woosley in his individual capacity.  Although our ruling does not automatically preclude continuation of this suit as a class action, the class may include only persons who timely filed valid claims for refunds.”  George noted that under the judgment as it stood, refunds, according to the state’s reckoning, would amount to more than $1 billion.  He also noted that the state had ceased its discriminatory practice on 1976.

The chief justice added: “Because our opinion will result in a substantial reduction in the amount of the judgment, the trial court shall reconsider the amount of its award of attorney fees to counsel for the class and the amount of its award to Woosley ‘as fees for services rendered as class representative.’”

On remand, there came a $23 million attorney fee award, with costs, which the Court of Appeal in 2010 reversed because consideration had not given “any consideration to the lack of success.” In 2014, the trial court pared the award to $2.8 million, and the lawyers appealed.

The case is Woosley v. State of California, B275402.

Ninth Circuit Remands BAR/BRI Fee Award for Second Time

November 1, 2017

A recent MetNews story, “Ninth Circuit Vetoes Attorney Fee Award for Second Time” reports that the Ninth U.S. Court of Appeals has, for a second time, remanded a case to the District Court for the Central District of California for a determination as to how much of a $9.5 million settlement fund in a class action against West Publishing Corporation will go to the plaintiffs’ attorneys.

The lawsuit alleged that BAR/BRI, a bar exam preparatory course then owned by West, conspired with Kaplan, Inc. to limit competition in the field. U.S. District Court Judge R. Gary Klausner awarded class counsel attorney fees in the amount of $883,475.50 and $20,734.89 in costs.

Six class members had protested the $1.9 million in fees and $49,934.89 in cost being sought.  Klausner granted the objectors attorney fees in the amount of $7,354.90 based on their success in getting the award pared, and provided for incentive awards of $500 to each of the objectors.  Class members were those who purchased the BAR/BRI course at any time from Aug. 1, 2006 to March 21, 2011.

A three-judge panel, composed of Judges Stephen Reinhardt, Richard Paez and Milan Smith, found in their memorandum opinion that Judge R. Gary Klausner correctly used the lodestar method of calculating the award—multiplying the number of hours reasonably expended by the prevailing rate for attorney fees—as Judge Manuel L. Real had last year when he presided over the case.  An alternative method would have been a percentage of the settlement.

However, the judges said that Klausner, to whom the case was assigned following a reversal of Real’s award, failed “to update the lodestar calculation to compensate for the delayed payment.”  He used the 2016 calculations, without either taking into account the increase between then and now in the prevailing rates or applying a “prime-rate enhancement,” the opinion says.  The judges also faulted him for not using a multiplier based on the risk factor in undertaking a case without certainty of an award.

However, the judges said Klausner was correct in finding the case was not a rare one in which the fee needed to be adjusted up or down to meet the test of reasonableness, and that he was justified in excluding expert fees that were not properly documented.

National Law Journal Cites NALFA Program

September 11, 2017

A recent NLJ article by Amanda Bronstad, “Judges Look to Profs in Awarding Lower Percentage Fees in Biggest Class Actions,” quotes NALFA’s CLE program, “View From the Bench: Awarding Attorney...

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