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Category: Lodestar / Multiplier

Class Attorneys Earn $3M in $9.85M in US Airways Settlement

April 11, 2019

A recent Law 360 story by Dean Seal, “Class Attys Get $3M Cut of $9.85M US Airways Deal,” reports that three law firms in coastal California will get about 30% of the $9.85 million settlement they negotiated with US Airways Inc. to resolve nearly decade-old breach of contract claims over baggage delays.  U.S. Magistrate Judge Virginia K DeMarchi said that the $3 million in attorney fees and expenses requested by Karczag and Associates PC, Foley Bezek Behle & Curtis LLP and the Law Office of William M. Aron is fair given the 1,850 hours and $45,000 they’ve spent on settling the somewhat recently revived class action.

“The attorneys’ fees requested in the amount of $2,955,000 represents a multiplier of 3.11, which is reasonable and justified based on: the difficult and novel legal challenges faced by class counsel in this case; the risks and financial burdens that class counsel undertook in litigating this case on a fully contingent basis; and the significant benefits that are being made available to the class members under the settlement,” Judge DeMarchi said.

The judge’s final approval of settlement will net about $14 per person for a class of more than 400,000 flyers who traveled on US Airways between November 2005 and April 2010, reported checked baggage that was lost or delayed and were not refunded their $15 baggage fee.  The airline merged with American Airlines Inc. in 2013. 

The order also allots a $10,000 award for plaintiff and class representative Hayley Hickcox-Huffman.  Hickcox-Huffman said in her 2010 complaint that after she paid a $15 checked baggage fee, she received her luggage a day late following a 2009 US Airways flight from Colorado Springs, Colorado, to San Luis Obispo, California.  Hickcox-Huffman’s case was dismissed in 2011 on grounds that it was preempted by the federal Airline Deregulation Act, but the Ninth Circuit ruled in May 2017 that Hickcox-Huffman properly pled an express breach of contract that US Airways voluntarily entered into, defeating the preemption argument.

The appellate panel, in reviving the suit, cited the 1995 U.S. Supreme Court case American Airlines Inc. v. Wolens, which held that state law breach of contract claims are not preempted.

At a hearing in October 2017, counsel for Hickcox-Huffman argued that she should not have to decide between her implied and express contract claims until after discovery, when the court is expected to learn more about the agreement between the airline and its passengers paying for checked baggage.

A judge ruled soon after that both types of breach could be alleged, but tossed Hickcox-Huffman’s breach of federal common law and “breach of self-imposed undertaking” claims, finding them redundant and not actionable.  The case proceeded into discovery but was ultimately resolved after a two-day mediation session, according to court records.

Class Counsel Seek $45M in Fees in Latest NCAA Antitrust Case

March 27, 2019

A recent The Recorder story by Ross Todd, “Plaintiffs in Latest NCAA Antitrust Case Seek Nearly $45M in Fees,” reports that lawyers who recently won an injunction barring the National Collegiate Athletic Association from capping education-related benefits for certain college athletes are seeking nearly $45 million in attorney fees as a result of what they call “a historic and substantial judgment.”  Co-lead plaintiffs counsel at Winston & Strawn, Hagens Berman Sobol Shapiro, and Pearson, Simon & Warshaw submitted court papers claiming plaintiff lawyers spent more than 51,000 hours on the case, which culminated in a 10-day bench trial last year.

The firms claim they put in the equivalent of about $29,944,894 in hourly billings, but they’re asking U.S. District Senior Judge Claudia Wilken of the Northern District of California to apply a multiplier of 1.5 to that amount, based on the novelty of the case, the risks involved and the quality of the defense counsel representing the NCAA and its member conferences.

“Plaintiffs’ fees are reasonable in light of the substantial defense resources (involving more than a dozen of the top law firms in the world) that they had to overcome, the difficulty and novelty of the many issues presented by this case, the enormous amount of factual discovery and expert work that was required to prosecute the claims, and the substantial economic value of the injunctive relief delivered to the Plaintiff Classes,” plaintiffs counsel wrote.

Wilken earlier this month found the NCAA in violation of federal antitrust law and issued an injunction barring the organization and its member schools and conferences from capping education-related benefits such as computers, science equipment, postgraduate scholarships and aid to study abroad for NCAA Division I women’s and men’s basketball players and football players at schools in the NCAA’s Football Bowl Subdivision.  Plaintiffs submitted estimates from their economic expert which claim the injunction could be worth as much as $100,000 for individual class members over a four-year period—as much as $235 million annually in total.

According to a declaration filed alongside the fee motion, lawyers, paralegals and support staff at Winston & Strawn put in 41,152.05 hours on the case over about five years during the litigation, worth about $24,304,240 at the historical billing rates at the time of the work.  Jeffrey Kessler, co-executive chairman of the firm and co-chair of its antitrust/competition and sports law practices, saw his hourly rate go from $1,180 per hour when the case was initially filed in 2014, to $1,515 per hour for work done this year on the case, according to billing records submitted with the declaration.

Hagens Berman, according to a separate declaration filed, dedicated 5,575.20 hours of lawyer, paralegals and legal staff time to the matter, or $2,742,185 in firm time at historical rates.  Name partner Steve Berman put in 514.4 hours on the case at rates ranging from $950 to $1,025 per hour during the case, for a little more than $500,000 worth of total billings.  Attorneys with Pearson, Simon & Warshaw claim they spent 4,754.20 hours working on the applicable portion of the case, or about $2,754,725 worth of firm time.  The most recent rates for name partners Clifford Pearson, Bruce Simon, and Daniel Warshaw all recently hit $1,150 an hour, according to the firm’s declaration in support of the fee motion.

Elizabeth C. Pritzker of Oakland’s Pritzker Levine, whose firm represented two named plaintiffs who played women’s basketball for the University of California at Berkeley and served as additional plaintiffs counsel, filed a declaration claiming the firm logged 198 attorney hours in the injunctive relief portion of the case, or $143,745 in hourly billings.

In the fee motion, the plaintiffs team noted that, in a prior antitrust class action against the NCAA involving the names, likenesses and images of players, Wilken awarded injunctive relief class counsel about $40,794,246 in lodestar fees—roughly a third more than what’s being sought, timewise, in the current case.  The plaintiffs contend, however, that the more recent case has done more “to bridge the ‘great disparity’ between class members and defendants.”

Judge Trims Attorney Fees in Vertex Junk Fax Settlement

March 22, 2019

A recent Law 360 story by Chris Villani, “Attys’ Fees Trimmed to $1.3M in Vertex Junk Fax Settlement,” reports that two firms serving as class counsel in a junk fax settlement with Vertex Pharmaceuticals should receive less than they requested in fees because they overstated the $4.75 million deal's benefit to the class, a Massachusetts federal judge ruled.  Counsel Anderson & Wanca and Swartz & Swartz PC had asked for a 33 percent cut, or just over $1.58 million, when the proposed class action settled in February 2018.  However, U.S. Magistrate Judge Jennifer C. Boal said that request was a bit too high, dropping the amount to 28 percent, or $1.33 million.

“This court is satisfied with the quality of class counsel; and counsel spent over 1,500 hours in this matter with a lodestar value of $807,148.16,” Judge Boal wrote.  “On the other hand, class counsel overstate the extent of the benefit obtained as it relates to the class as a whole.”  The attorneys who led the suit said it was the largest recovery under the Telephone Consumer Protection Act that the District of Massachusetts had ever seen.  But Judge Boal noted that only 8 percent of the class members made a timely claim, so the amount paid to them will total around $351,000.

“Thus, class counsel stands to receive more than four times the amount of money that will be received by clients in whose name the suit was brought,” the judge wrote.  “In balancing these considerations, this court finds that an attorney’s fee award in the amount of 28 percent of the settlement fund is reasonable in this case.”  Additionally, Judge Boal awarded only $41,000 of $90,000 in requested expense reimbursements, saying the balance lacked sufficient documentation.  She also approved a $15,000 incentive award for the class representative, Cincinnati health care provider Physicians Healthsource Inc.

$20M in Fees to Class Counsel in Madoff Ponzi Suit

March 15, 2019

A recent Law 360 story by Rick Archer, “Lead Class Attys in Madoff Ponzi Suit Awarded $20M,” reports that a New York federal judge awarded nearly $20 million in fees to the counsel for a class that received a $1 billion settlement for money lost through Bernard Madoff's Ponzi scheme, saying objectors to the award were rehashing rejected arguments.  Saying the objectors' claims that class counsel is being compensated for work unconnected to the case "go well beyond the mandate" set forth in a 2017 Second Circuit ruling on the fee award, U.S. District Judge Colleen McMahon accepted a magistrate judge's findings and approved the new attorneys fee award on the Tremont Fund settlement.

Tremont, part of Massachusetts Mutual Life Insurance Co., was the second-largest Madoff feeder fund.  The $1 billion settlement reached in 2011 stemmed from allegations by trustee Irving Picard that the company continued to pour money into Bernard L. Madoff Investment Securities LLC despite obvious red flags.  In August 2105, U.S. District Judge Thomas Griesa issued an oral order approving a complex plan of allocation to the plaintiffs that included a 3 percent fee award for the plaintiffs' counsel, capped at 2.5 times the lodestar.  Based on the size of the settlement fund at the time, the award would have been $18.7 million and capped at about $40 million.

Several Tremont investors objected to the plan and the fee request, in particular, on the grounds that there was little risk involved in reaching the settlement and because class counsel had already received substantial fees from a previous settlement in the litigation.  Judge Griesa rejected those objections, and in June 2017, the Second Circuit upheld his ruling on the settlement distribution but remanded the fee award, saying the lodestar multiplier was not justified by the "limited risk" plaintiffs' counsel had run.

After Judge Griesa's death in December 2017, the case was remanded to Judge McMahon, who asked U.S. Magistrate Judge Gabriel Gorenstein to issue a report.  Judge Gorenstein's report was issued in February, saying that while plaintiffs' counsel was now requesting a lodestar of 1.67, which would produce a $33.2 million fee cap, he had found that the risk factors did not justify any modifier and set the cap at approximately $19.9 million.

A group of Tremont investors filed a new objection to the fees, arguing new evidence provided last year showed that 75 percent of the fees Judge Griesa used to calculate the lodestar were for work unconnected with the fund distribution, but class counsel argued that the Second Circuit had rejected those claims and had remanded solely to recalculate the lodestar multiplier cap.  In her ruling, Judge McMahon said the only reason the case had been remanded was to revise the lodestar cap down.  "In his excellent report, Judge Gorenstein anticipated and answered every objection raised by the Tremont Fund objectors. I find no flaw in his reasoning," she said.

The case is In re: Tremont Securities Law litigation, case number 1:08-cv-11117, in the U.S. District Court for the Southern District of New York.

$2.4M Fee Award in CPI Credit Card IPO Action

March 14, 2019

A recent Law 360 story by Matthew Guarnaccia, “Credit Card Co. Investors Score $2.4M in IPO Suit Atty Fees,” reports that the New York federal judge overseeing a class action lawsuit related to CPI Card Group Inc.’s initial public offering awarded lead counsel Labaton Sucharow LLP $2.37 million in attorneys’ fees and costs, stopping short of the total amount requested by investors for work in reaching an $11 million settlement with the credit card company.  In addition to granting final approval of the settlement, U.S. District Judge Lewis A. Kaplan awarded 20.6 percent of the total amount of the deal as attorneys' fees to Labaton.

The award came in below the 25 percent, or $2.75 million, requested by Labaton, with Judge Kaplan saying he had a few reservations about the lodestar claimed by the firm.  The judge did note, however that his concerns were not about the validity or accuracy of the timekeeping figures provided by lead counsel.  In particular, Judge Kaplan said Labaton reported contributions from 19 attorneys and 14 other timekeepers during the case, and that it is likely this work included “some nontrivial amount of duplication or unnecessary effort.”  The overall number of timekeepers also seemed excessive given the amount of work that was actually done on this case, which included drafting the complaint, litigating class certification and dismissal motions, the defense of a deposition, and settlement negotiations, the judge said.

In addition, Judge Kaplan said the requested lodestar was based on current hourly rates of the timekeepers involved, even though the rates for some increased over the course of the litigation.  “Accordingly, the court has adjusted the lodestar to reflect historical hourly rates to the extent that some differ from current rates and considered the use of current hourly rates in considering the multiplier,” Judge Kaplan wrote.

Judge Kaplan’s final consideration in lowering the lodestar was Labaton’s assertion that more than 2,900 hours was dedicated to the case, which he called “relatively straightforward and not heavily litigated.”  As a result, the judge lowered the total hours sought by 10 percent, leaving a lodestar of approximately $1.5 million, and allowing for a 1.5 percent multiplier, as opposed to the 1.64 multiplier requested by Labaton.

The resulting attorneys’ fee figure is around $2.27 million. Judge Kaplan also tacked on around $106,000 in expenses, but said the lead plaintiff in the case was not entitled to a requested $10,000 award for “time and trouble.”  The fee award by Judge Kaplan comes a little more than a month after the judge gave final approval to a deal that ended the shareholder lawsuit led by investor Alex Stewart.

In his lawsuit, Stewart claimed CPI shipped more than 100 million extra cards to its biggest customers before its October 2015 IPO without telling investors.  Orders allegedly plummeted after the offering because of the "bloated" inventory at financial institutions, as did the initial $10-per-share stock price, which stood at $4.70 a share when the suit was filed in June 2016.  CPI produces 35 percent of all payment cards in the U.S. and serves the majority of the top 20 U.S. debit and credit card issuers, including JPMorgan Chase & Co., American Express Co., Bank of America Corp. and Wells Fargo & Co., according to its U.S. Securities and Exchange Commission registration statement.

The case is In Re: CPI Card Group Inc. Securities Litigation, case number 1:16-cv-04531, in the U.S. District Court for the Southern District of New York.