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Category: SCOTUS

Class Counsel Earn $4.8M in Fees in $17M ERISA Settlement

December 2, 2020

A recent Law 360 story by Michael Angell, “Neuberger Workers’ Attys Get $4.8M in Fees in ERISA Deal,” reports that attorneys for a class of Neuberger Berman employees got the green light from a New York federal judge to collect $4.76 million in attorney fees for their work securing a $17 million settlement resolving claims that the investment giant put workers' retirement money into an underperforming fund.

U.S. District Judge Laura Taylor Swain approved the fee request from attorneys for Arthur Bekker, who sued Neuberger Berman for breach of fiduciary duty for offering him and others a laggard, in-house mutual fund in their 401(k) plans.  Judge Swain said the fees, which were lower than those earlier requested, were merited in a long-running, difficult case.

"Class counsel has pursued this matter since 2016 — over four years of research, investigation, briefing and settlement efforts. ... Class counsel were efficient and effective in securing this result for their client and the class," Judge Swain said in her order.  Bekker's attorneys secured $17 million for the class in June from the Employee Retirement Income Security Act suit.

Judge Swain said Bekker's representatives were able to get the award in the face of significant risks in bringing ERISA 401(k) actions, especially the risk of taking on a lengthy, complex case with the potential of zero recovery for their clients and themselves.

Judge Swain noted that Bekker's fiduciary breach claim was initially dismissed, prior to her reviving it in May 2019.  She also said the U.S. Supreme Court's February decision in Intel Corp. Investment Policy Committee et al. v. Christopher M. Sulyma, which established deadlines on when workers can file ERISA actions, could have time-barred Bekker's suit.

"Class counsel were able to leverage their expertise and experience with similar matters to achieve a positive, lasting and meaningful benefit to the class in this complex case," Judge Swain said in her order.  The fees request, which works out to 28% of the total award, is a discount relative to other awards in ERISA 401(K) cases across the country, which are typically one-third of the total award, Judge Swain said in her order.

The percentage-of-award calculation for fees is preferred in the Second Circuit over using an hourly rate multiplied by the number of hours worked on a case, according to her order.  But even based on an hourly rate method, the fees request seems reasonable, Judge Swain's order said.  Bekker's attorneys put in 1,386.5 hours of work on the case, which works out to $813,410 in "lodestar" fees earned for their time, Judge Bekker's order said. The fees request amounts to a lodestar multiplier of 5.85, which is on par with other fees requests, she added.

Bekker's attorneys requested they be given 28% of the award in October, saying that the percentage requested reflects the median amount given in 137 other ERISA cases from 1997 through 2013.  That request amounted to roughly $1 million less than they originally asked for.  However, Judge Bekker noted that the fee was not so low that it would disincentivize other attorneys from bringing forward similar complaints.  In addition to the fees, Bekker's attorneys will be reimbursed for $41,083 in expenses, and he will receive $20,000 for serving as lead plaintiff.

Class Counsel Seek $18.5M in Fees in LIBOR MDL

November 3, 2020

A recent Law 360 story by Dean Seal, “Class Atty Seek $18.5M in Fees for Libor Deal with 7 Banks,” reports that counsel for a class of bondholders asked a New York federal judge for an $18.5 million fee award for having negotiated settlements with seven financial giants accused of rigging the London Interbank Offered Rate (LIBOR).  Attorneys from Morris and Morris LLC Counselors At Law and Weinstein Kitchenoff & Asher LLC put the request before the court while seeking final approval for $68.6 million worth of settlements with JPMorgan Chase, Bank of America, RBS, Barclays, HSBC, UBS and Citibank.

According to the filings, class counsel has spent 34,743 hours representing the bondholders in their class action, which is part of sprawling multidistrict litigation launched over alleged rate-rigging coordinated by the world's largest financial institutions.  "Class counsel made this investment in vigorously litigating the bondholder action over more than eight years, with no assurance either of payment for their services or recoupment of their out-of-pocket litigation expenses," the bondholder attorneys said.

The bondholders' suit is one of many filed in connection with Barclays Bank PLC's 2012 admittance that it had been one of a number of banks lying about the interest rates it actually expected to pay in order to artificially influence Libor.  Investors contend the major financial institutions deliberately low-balled their submissions in the Libor rate-setting process to manipulate the benchmark.  As a result, the banks raked in hundreds of millions, and perhaps even billions, of dollars in ill-gotten gains, according to case filings.

Ellen Gelboim and Linda Zacher led the class of bondholders who owned U.S. dollar Libor-based debt securities between Aug. 1, 2007, and May 31, 2010.  Their highly complex antitrust action had already seen more than one dismissal, multiple appeals and even a trip to the U.S. Supreme Court by the time they announced settlements with Barclays, UBS AG and HSBC Bank PLC in 2017.

Under those deals, which received preliminary approval in July 2017, Barclays agreed to pay $7.1 million, UBS would contribute $17.9 million and HSBC would hand over $11.1 million.  Another deal that received preliminary approval in December 2018 stipulates that Citi will pay over $7 million to resolve bondholder claims.

Then last April, the bondholders announced three more settlements with JPMorgan Chase, Bank of America and Royal Bank of Scotland Group PLC that would recover a combined $25.5 million for the bondholder class.  The filings show that JPMorgan and BofA would each pay $6.25 million while RBS would turn over $13 million.  "Continuing to litigate against the settling defendants would likely last many years with the potential of no recovery for the bondholder class, and require the expenditure of significant resources of the court and the investment of hundreds if not thousands of hours of time and large sums of money," the bondholder class said.

Class counsel are asking for a 28% cut of the overall settlement fund net of roughly $2.5 million in expenses, resulting in a fee request of just over $18.5 million, along with another $817,237 in unreimbursed fees.  They noted that the settlements had been reached despite the fact that the bondholders' claims are currently dismissed and would rely on "an unpredictable appeal" to get reinstatement.

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.

Federal Circuit Grants Attorney Fees in ‘Demeaning’ Goat IP Case

September 10, 2020

A recent Law 360 story by Tiffany Hu, “Fed. Circ. Grants Atty Fees in ‘Demeaning’ Goat IP Case, reports that the Federal Circuit ordered a New York attorney to pay legal fees after the U.S. Supreme Court refused to take up his challenge to a restaurant's registered trade dress that he personally found "demeaning" to goats.  In a nonprecedential order, a three-judge panel found that Queens-based attorney Todd M. Bank owes $28,523 in attorney fees to Al Johnson's Swedish Restaurant & Butik in his attempt to invalidate the restaurant's trade dress for goats on a grass-covered roof.

The fee order comes after the high court in June denied a certiorari petition filed by Bank, in which he argued that the Federal Circuit incorrectly found that his personal concern that the mark was "demeaning" to goats did not give him standing to challenge the trade dress.  "What can I say when the same judges who wrongly sanctioned me proceed to ignore all of the arguments that I made in response to the defense counsel's fee application, and instead abuse their power by ruling by fiat?"  Bank, who represented himself, told Law360 in an email.

Katrina G. Hull of Markery Law LLC, an attorney for the restaurant, said in an email that she and her client were "pleased with the court's order."  Al Johnson's Swedish Restaurant, which is based in Sister Bay, Wisconsin, was issued a registration in 1996 for a trade dress that "consists of goats on grass roofs," according to filings.

In 2011 and 2012, Bank petitioned to cancel the registration on behalf of a previous client, a photographer named Robert Doyle.  The Trademark Trial and Appeal Board found both times that Doyle failed to establish standing, saying in 2012 that the photographer's alleged interest in "dining and shopping in such other restaurants and gift shops with goats on their roofs" was insufficient.

Bank filed the third and latest petition "as attorney and client" last October, the restaurant said.  In asking to cancel the mark, Bank argued that the mark was offensive for being "demeaning" to goats and that the registration harms the "respect, dignity and worth of animals."

But siding with the TTAB, a Federal Circuit panel in December ruled that Bank's concern for the animals did not give him standing because he had no other interest in the trade dress.  Bank was ordered to pay the restaurant's legal fees for filing a "frivolous" appeal, with the panel noting that the TTAB has thrice dismissed his petitions to cancel the trade dress for the same reason.