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Category: Settlement Amount / Data

Judge to Award $1.5M in Fees in Walgreens Wage Settlement

November 26, 2020

A recent Law 360 story by Lauren Berg, “Calif. Walgreens Workers Bag $4.5M Wage Deal,” reports that Walgreens and a class of workers have received a California federal judge's approval for their $4.5 million settlement to resolve claims that the pharmacy chain broke Golden State labor law by not paying all wages to employees at its distribution centers.  U.S. District Judge William B. Shubb granted preliminary approval to the class action settlement that will see about 2,600 workers split $2.8 million, finding that the deal is fair and gives the workers a good recovery that might have been at risk had the case gone to trial.

Lucas Mejia, who worked as an hourly stocker for about seven years at a Walgreens distribution center in California, launched the class action in November 2018 in the Superior Court for the County of Yolo, alleging that the company failed to pay employees for all of the compensable time they worked.  Mejia said Walgreens rounded down employees' hours on their timecards, required employees to pass through security checks before and after their shift without paying them for that time and didn't pay premium wages to workers who were denied meal breaks.

The suit also included a claim for civil penalties under the Private Attorneys General Act based on Walgreens' alleged violations of California labor law.  The case was eventually removed to federal court in Sacramento.  In December, the parties started talking with a mediator, which produced the current settlement.

In exchange for releasing all of the claims, Walgreens has agreed to pay up to $4.5 million to create a common fund, from which $2.8 million will be distributed to the estimated 2,648 class members, according to the order filed.  Each class member who does not opt out is estimated to receive about $1,200, the judge noted.

Also out of the pot, $1.5 million, or 33% of the fund, will be set aside for attorney fees, while $150,000 will go to pay PAGA penalties and $7,500 will be used as an incentive award for Mejia.  Another $50,000 will be used to pay litigation costs incurred by class counsel and settlement administration costs, according to the order.  Judge Shubb gave preliminary approval to the deal, finding that it is in the best interest of the class.

While Mejia's counsel said the labor claims could be worth up to $20.2 million and the PAGA claim up to $16 million, they said Walgreens had legitimate defenses that risked reducing the amount Mejia and the class could recover at trial, according to the order.  With that in mind, the settlement is a strong result for the class, the attorneys said, with the $4.5 million representing 22% of the potential damages.

The judge also noted that, while the deal sets aside 33% of the fund for attorney fees, Mejia's counsel said they will seek 25% of the fund in a separate motion for fees.  "The court will defer consideration of the reasonableness of counsel's fees until the fee motion is filed," the judge wrote.  "Class counsel is cautioned that the reasons for the attorney's fees should be explained further in that motion."

$45M Fee Award in $187M LIBOR MDL Settlement

November 25, 2020

A recent Law.com story by Nadia Dreid, “NY Judge ‘Surprised’ By Fee Application in Libor Rigging Case,” reports that a New York federal judge wasn't happy with the amount of hours or law firms on the attorney fee bill she received in the wake of a $187 million deal with JPMorgan and other major financial institutions over claims of interbank rate rigging, but she granted $45 million in fees anyway.  U.S. District Judge Naomi Reice Buchwald said in her opinion that she was "to say the least, surprised to learn from their fee application that [exchange-based plaintiff] class counsel involved twelve additional law firms" and that the work from those firms made up nearly a fifth of the submitted hours.

"The court cannot divine any reason why it was necessary, efficient or in the best interests of the class to have twelve additional law firms litigate this case," the opinion read.  "If anything, the hours were claimed for work that was duplicative, unnecessary and easily could have been performed by the two appointed firms."

Those firms were Kirby McInerney LLP and Lovell Stewart Halebian Jacobson LLP, who were appointed as class counsel to the exchange-based plaintiffs in the multidistrict litigation accusing JPMorgan, Deutsche Bank and a handful of other big banks of conspiring to rig the London Interbank Offered Rate, or Libor.  Judge Buchwald preliminarily approved the $187 million deal in March and gave it her final blessing in September, but she had yet to come to a final decision on attorney fees.  Ultimately, she decided that none of the 15,000 hours of additional work done by outside firms would be used in the lodestar calculations.

The court also had issues with the amount of hours billed by class counsel themselves.  Although she agreed to accept all of the more than 65,000 hours of work from the two firms, the court noted that their bill listed 10,000 hours more than their sister counsel claimed "in support of their fee application for a case of similar magnitude."  It would take a four-person law firm working on the case full-time for roughly nine years — minus a month annually for vacation — to reach the 65,000 mark, according to the court.

"While the sheer quantum of hours suggests some amount of over-litigation, the court will credit [class counsel] the full amount of time they claim," Judge Buchwald said.  The fees that the firms will walk away with comes out to 25% of the $187 million settlement, after the deduction of around $5.6 million in expenses, according to the opinion.

Insurers Refuse to Pay $18M in Defense Fees in Experian Class Actions

November 19, 2020

A recent Law 360 story by Joanne Faulkner, “Insurers Deny Liability in Experian’s $18M Legal Fees Suit,” reports that two insurers have told a London judge they are entitled to refuse to pay Experian's $18 million claim for coverage of its U.S. legal fees in a pair of class actions over errant credit reporting because the litigation stems from deliberate data erasure by staff at the company.  Zurich Insurance PLC and a subsidiary of SCOR said Experian's policy excludes "deliberate acts" such as those that allegedly form the basis of two major class action suits in the U.S., a newly public Nov. 13 defense said, after the company sued to claw back litigation fees.

The claims made against Experian — which said it has racked up millions of dollars in liabilities and legal costs defending the suits — were for statutory damages according to the U.S. Fair Credit Reporting Act.  If Experian is liable, it is the result of a "wilful (or reckless) failure on the part of an employee or employees … to comply with the FCRA," the defense said. 

Experian says in its October High Court suit that it paid a class of more than 100,000 payday loan customers $24 million to settle a lawsuit in January brought by lead plaintiff Demeta Reyes.  A $5 million deal was reached with consumers in the so-called Smith action.  The customers said they were harmed by inaccurate reporting of their credit history.  The insurers said that Experian's alleged liability in the Reyes action arises out of the deleting of loan records —  particularly those held by an entity called Delbert Services Corp.  In the Smith action, it is connected to the re-reporting of records relating to loans held by CashCall Inc.  Experian directors were involved in the decision-making in both incidents, the insurers said.

From April 2015 through April 2016, Experian held a complex multitiered insurance "tower" consisting of a primary policy from XL Specialty Insurance Co. and several layers of excess coverage, Experian says.  Zurich and SCOR unit General Security Indemnity Co. of Arizona are each liable for half of a $20 million excess policy, which kicked in once the underlying coverage was depleted, Experian says.  So far the insurers have only paid out a slice of the $20 million excess that Experian says it is entitled to, the company alleges.

Experian is also seeking a declaration from the court that the insurers will cover financial penalties that Experian may have to pay as a result of investigations into a 2015 cyberattack.  The two insurers said that coverage is provided for regulatory fines and penalties, but Experian must prove that any sanction is "lawfully insurable."

Experian says it has run up costs of more than $32 million defending two major related class suits.  Thousands of consumers successfully argued that Experian's failure to delete certain negative information in their consumer credit reports caused them harm.

Experian says it should be able to recover $18 million in legal costs from the insurers under its third-party liability and first-party insurance policies.  The suit also name-checks an action brought by Carolyn Clark alleging the company violated the FCRA, which ended up costing Experian more than $21 million. The company says it could be entitled to an indemnity of $14.3 million from the insurers to cover the costs from that case.

Fees Capped at 25 Percent in $2.67B BCBS MDL Settlement

November 17, 2020

A recent Law 360 story by Jeff Montgomery, “Ala. Judge Wary of Second-Guessing $2.67B BCBS Deal,” reports that a federal judge in Alabama cautioned an attorney for non-consenting class members about second-guessing "the tactical decisions of class counsel" in a proposed $2.67 billion multidistrict class settlement for alleged overpayments to Blue Cross-Blue Shield insurers.

U.S. District Judge R. David Proctor made the point during a video-conference preliminary approval hearing in the Northern District of Alabama for the settlement of a suit filed in January 2013, targeting allegations that the insurers divvied up the nation and conspired to restrain competition among themselves and from other insurers, causing damages estimated at between $19 billion and $38 billion.

The settlement, reached after more than eight years of battling, would provide proportional payouts to tens of millions of business and individual BCBS subscribers, while also establishing court-ordered reforms prohibiting anti-competitive conduct, including ending a Blues practice of requiring members to derive at least two-thirds of their revenues from "Blue branded" services.

Attorneys for the class hailed the deal as historic — potentially reshaping competition in the health insurance industry and increasing consumer choice.  But attorneys for three Blues customers told the judge their clients declined to support the deal based on a "lack of openness" in negotiations and requirement to release individual claims in order to participate in the settlement.

"I feel like I'm dealing with a college football team that has 70 players and the flag comes from the sideline and three of the players don't like the coach's call and want to see the playbook, which is all well and good," Judge Proctor said, "but I've got to make a decision here in the near future about whether to give preliminary approval."

Under the settlement, individual class members and their past costs for Blue Cross coverage, either through workplace or individual plans, will be developed from insurer records, with protection for sensitive information. Individuals will also have an opportunity to submit individual claims if they choose.

No more than 25% of the $2.67 billion will go toward attorney fees and expenses, with 93.5% of an estimated $1.9 billion in payouts expected to go to fully insured individuals or business premium-payers and the balance to self-insured individuals.

Judge Cites New Ninth Circuit Ruling When Considering Fee Calculation

November 12, 2020

A recent Law 360 story by Dorothy Atkins, “Koh Rips Kellogg Attys ‘Kitchen Sink’ Litigation Tactics,” reports that U.S. District Judge Lucy Koh rejected a revised $20 million deal to resolve claims Kellogg falsely labeled its sugar-loaded cereals and slammed class counsel for their "kitchen sink" approach to litigation, saying "the way you've litigated this case throughout has been overly burdensome on the court."  At the start of a hearing held via Zoom, Judge Koh took issue with a lengthy, now-mooted motion to enforce the settlement that class counsel filed after Kellogg purportedly threatened not to cooperate with a renewed bid for preliminary approval.

If approved, the proposed deal would resolve lead plaintiff Stephen Hadley's August 2016 lawsuit that alleges Kellogg Sales Co. falsely advertises its sugar-loaded Raisin Bran, Frosted Mini-Wheats and Smart Start cereals and Nutri-Grain breakfast bars as healthy.  Judge Koh told class counsel, Jack Fitzgerald, that she spent considerable time deciding the motion to enforce the settlement, which had 64 exhibits attached and included confidential information from the settlement negotiations, which Judge Koh repeatedly said isn't allowed.

But Kellogg ultimately did not oppose the class's renewed motion for preliminary settlement approval, so now the motion to enforce is moot, Judge Koh said, and the work and time she spent deciding it was a waste.  She added that she would have denied the motion.  Judge Koh noted that the motions to dismiss in the case were over 65 pages long "each time" and the lengthy motions practice is "a constant problem."  She also warned repeatedly that she'll remember how the attorneys overburdened the court if she decides to award attorney fees.

The discussion came during an hours-long hearing on the second attempt by the parties to get the deal preliminarily approved in hotly contested litigation over Kellogg's labels. For example, the Frosted Mini-Wheats and Smart Start labels say "lightly sweetened" and the Nutri-Grain bars say "wholesome goodness," which Hadley said implies those products are low in sugar, even though they contain 18% to 40% added sugars.

In February, Judge Koh rejected an initial $31.5 million class action settlement, finding the deal contained several troubling provisions and outright legal errors.  The parties went back to the negotiating table, but in July, class counsel filed a renewed motion for preliminary approval along with a motion to enforce the settlement, which Kellogg opposed.  But during the lengthy hearing on the motions, Judge Koh pointed out that the motion to enforce attached privileged mediation communication between defense counsel, class counsel and the mediator.

Judge Koh also took issue with the "mechanics" of how the proposed deal calculates attorney fees. The judge pointed out that as it is proposed, fees would need to be approved before a cash settlement is distributed, but the fees depend on how many class members choose to redeem coupons compared to those who choose cash payments, and class members need to know how much they would receive in a cash payment in order to decide whether to opt for a coupon or cash.

"It seems a bit circular," she said.  Judge Koh added that in light of the Ninth Circuit's ruling earlier this week in Chambers et al. v. Whirlpool Corp. et al., she is "more confident" that this deal qualifies as a coupon settlement for the purposes of determining attorney fees.  But Fitzgerald argued that even under Chambers, the court has the discretion to award fees and he proposed to base the fee award on using a lodestar that's calculated after they determine how many class members will redeem a coupon versus cash payment.