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Category: Settlement Data / Terms

Ninth Circuit: $6M Fee Award Does Not Create ‘Windfall’

April 12, 2021

A recent Metropolitan News story, “$6 Million Attorney Fee Award Would Not Create ‘Windfall’,” reports that the Ninth U.S. Circuit Court of Appeals, in a 2-1 decision, has reversed an order for a $4 million payment to the attorneys for the plaintiffs in a class action against Experian Information Solutions, Inc., a consumer credit reporting company, that resulted in the creation of a $24 million settlement fund, holding that the District Court judge failed to adequately explain why he was departing from the standard 25 percent cut for the lawyers.  Signing the majority opinion were Ninth Circuit Judge Andrew D. Hurwitz and Sixth Circuit Judge Eugene E. Siler, sitting by designation. Judge Daniel P. Collins dissented.

The settlement was reached in a case that was initially dismissed with prejudice by the judge then handling it, Andrew J. Guilford of the Central District of California, now retired.  After the Ninth Circuit on May 17, 2019, reversed the dismissal, Guilford certified a class of about 100,000 persons whose credit histories were damaged by reports of unpaid debts to a loan company, although the debts were disputed and the company, which was facing possible criminal prosecutions, had gone out of business.

The defendant, headquartered in Orange County’s City of Costa Mesa, agreed to a settlement of the action brought against it by Demeta Reyes, a resident of Georgia, under the federal Fair Credit Reporting Act (“FCRA”).  Replacing Guilford as the judge presiding in the case was Stephen V. Wilson.  An award of 25 percent of the recovery—which would be $6 million—would give the lawyers a windfall, noting that the lodestar value of their services was $2,085,843.50.

To award them $6 million, he noted, would mean use of a multiplier of 2.88, while an award of $4 million would entail “a more reasonable lodestar multiplier of 1.92.”  “By any measure, class counsel was successful,” Hurwitz and Siler wrote in a memorandum opinion.  They quoted an expert witness as saying that the settlement’s “structure...is the FCRA gold standard,” with class members each receiving a check for at least $270 without having to make a claim.

“To reach that result, class counsel assumed significant risk,” the majority opinion says, noting that contingency representation stretched over a four-year period, counsel advanced more than $100,000 in costs and expenses, and other work had to be declined.  “Experian deleted more than 56,000 delinquent loan accounts after this litigation began,” the opinion notes.  “Before deletion, those delinquent accounts depressed class members’ credit scores.”

 It goes on to say: “The 16.67% fee award falls below the market rate fee award in FCRA class action settlements. And no windfall is apparent.  Assuming a 25% award, the lodestar crosscheck returns a multiplier of 2.88. Similar lodestars are routinely approved by this court.”

It adds: “The district court’s reliance on megafund and wage and hour cases to find a windfall for class counsel was somewhat inappropriate here.  First, megafund cases are usually those with settlements exceeding $100 million….Here, the settlement is about a quarter of that.  Megafunds are more often a reflection of class size than class counsel’s efforts….Moreover, the complexity of this case is similar to a wage and hour dispute the district court cited where a 2.87 lodestar multiplier was approved, but not the ‘ordinary wage-and-hour dispute’ that the district court also cited.”  The memorandum opinion does not expressly direct an award of $6 million, instead remanding “for further proceedings not inconsistent with this opinion.”

Collins said in his dissent: “The majority nonetheless concludes that the district court abused its discretion because the settlement here was under $100 million and because multipliers of 2.88 or more have been allowed in other cases….But the fact that we have upheld higher multipliers in some cases does not mean that district courts lack discretion to conclude that a lower multiplier would be more reasonable in a given case.  By essentially ordering the district court to allow this high multiplier, the majority usurps the discretion that we have said belongs to the district court.

“Because the district court had discretion to conclude that a benchmark award that was nearly three tunes the lodestar amount would be unreasonable, and that a smaller (but still generous) multiplier was more appropriate, the district court did not abuse its discretion by ordering a $4,000,000 fee.”  Guilford set forth Reyes’s factual contentions in his order certifying the class.

Law Firm Accused of Not Sharing $30M in Fees in Syngenta MDL

March 22, 2021

A recent Law 360 story by Kevin Penton, “Law Firm Accused of Not Sharing $30M Fee in Syngenta MDL,” reports that Heninger Garrison Davis LLC is refusing to honor an oral agreement to share two-thirds of the $30 million it received in fees from multidistrict litigation involving Syngenta's genetically modified corn, two other law firms are alleging.  Crumley Roberts LLP and Burke Harvey LLC allege that they struck a deal with Heninger Garrison to split three ways any fees the firms received from the litigation, but that the defendant is not meeting its end of the agreement, according to a complaint filed last month in Illinois state court that Heninger Garrison removed to the Southern District of Illinois.

Crumley Roberts and Burke Harvey allege that as part of the arrangement that originated in early 2015, they brought clients to the litigation and personally handled them, while Heninger Garrison dealt directly with the courts and defendants in the underlying dispute, according to the complaint.  After deducting any referral fees to other firms, the three firms were to then split the remaining money three ways, Crumley Roberts and Burke Harvey contend.

"Plaintiffs are entitled to distribution of their one-third each of the partnership's assets, which consist of the amount of the total fee award," the complaint reads.  "Notwithstanding repeated requests, [Heninger  Garrison] has failed and refused to pay this amount to plaintiffs."

The dispute arises from years of litigation over allegations that Syngenta should have delayed launching the corn seeds that were genetically modified to be pest-resistant until Chinese authorities — controlling a major corn market for U.S. growers — approved importing the GMO corn.  When China discovered a strain of corn with a mix of varieties in November 2013, it rejected American corn cargo and shut down the Chinese market for U.S. corn, costing the domestic U.S. industry more than $1 billion, some of the farmers in the litigation contended.

Syngenta agreed in March 2018 to a $1.51 billion settlement in the nationwide class action, with a plethora of law firms in the litigation receiving approximately a third of the amount, according to court documents.  Heninger Garrison on Friday urged the Southern District of Illinois to pause the proceedings in the attorney fees case to give the Judicial Panel on Multidistrict Litigation time to weigh the firm's request for a shift to the multidistrict litigation in the District of Kansas handling fee disputes.

"The plaintiffs' claims directly implicate the fee award to [Heninger Garrison] and seek the large majority of that award, which subjects the claims to the jurisdiction of the MDL in accordance with certain provisions in the class settlement agreement," reads Heninger Garrison's motion to stay.

Class Counsel Earn $80.6M in Fees in Apple iPhone Slowdown Settlement

March 20, 2021

A recent Law 360 story by Mike Curley, “Attys Get $80.6M in Apple IPhone Slowdown Settlement,” reports that a California federal judge greenlighted a settlement of up to $500 million for iPhone users who accused Apple of deliberately slowing down their devices with an update and granted class counsel $80.6 million in fees after objections from some class members, Apple and government entities that the initial request was too high.  In a pair of orders, U.S. District Judge Edward J. Davila first granted final approval to the settlement, which will see Apple pay out between $310 million and $500 million — which the judge called one of the largest class action settlements in the circuit — then turned to the divisive request for fees.

Those fees are to be awarded to Cotchett Pitre & McCarthy LLP; Kaplan Fox & Kilsheimer LLP; the Law Offices of Andrew J. Brown; and the Brandi Law Firm.  Class counsel in the case had requested $87 million in fees, which prompted Apple to ask the court to cut it down by at least $7 million.  While Judge Davila praised the attorneys for their work on the case, including their assumption of the risks of taking it on contingency, the risks of continued litigation, and the substantial payout that class members are likely to receive, he said that other factors don't support increasing the total fees beyond the court's normal 25% benchmark.

In particular, the judge noted how a large settlement fund could support granting attorneys a higher percentage, but in this case, the high settlement fund is mostly the result of the large amount of class members — not the amount of work performed by the class counsel.  "Class counsel's work in litigating this case up to the point of reaching settlement would have been the same whether there were 10,000, 100,000, 1,000,000 or more devices at issue," the judge wrote.

For the purposes of the fee calculation, the judge decided it was most appropriate to go by the percentage-of-the-fund model, based on the $310 million minimum Apple will have to pay, rather than a lodestar model that would be used for a settlement based on the number of claims made, and the judge found that 26% of the $310 million — or $80.6 million — was appropriate.  He also granted $995,245 in expenses, finding that none of the objections to either the fees or the expenses warranted knocking the total down any further than that.

The settlement resolves dozens of consumer protection lawsuits that were filed in 2018 after Apple admitted to issuing software updates that slowed certain iPhones.  The suits allege that Apple designed its software updates to slow down some phone models, nudging consumers to buy newer iPhones.  Under the deal, Apple agreed to pay up to $500 million in total, depending on the amount of iPhone users to participate in the deal, according to court filings, with a minimum settlement fund of $310 million.  Class members would receive $25 each for their phones.  If the payouts, attorney fees and expenses don't add up to at least $310 million, class members will receive up to $500 apiece until that minimum settlement amount is reached.

Judge Approves $2.1M in Fees in Illumina Shareholder Suit

March 19, 2021

A recent Law 360 story by Emille Ruscoe, “Levi & Korsinsky Earns $2.1M for Illumina Shareholder Suit,reports that the Levi & Korsinsky LLP legal team representing investors in biotechnology company Illumina Inc. in their proposed shareholder class action will receive $2.1 million in attorney fees, a federal judge in San Diego.  In the fee order, U.S. District Judge M. James Lorenz granted the firm's request for $2.1 million for their work on the case, which accused the company of artificially inflating its stock prices by hiding declining sales from the public.

Judge Lorenz also approved reimbursement of litigation expenses totaling $167,727, agreeing to all of the requested expenses except for the $2,000 the firm asked for to pay its attorneys' travel expenses for the final approval hearing in the matter.  The judge also agreed to a proposed $25,000 incentive award for plaintiff Anton Agoshkov and to $1,000 incentive awards apiece for two other plaintiffs, Braden Van Der Wall and Steven Romanoff.

"The requested fees and expenses are within the range approved by this court in its preliminary approval of class settlement, and are therefore presumptively reasonable," Judge Lorenz said.  The judge noted that the fee reflected hourly fees of $850 to $1,025 for Levi Korsinsky partners and $350 to $650 for associates, and that the firm spent an estimated 3,937 hours working on the case.  The parties to the suit told Judge Lorenz they'd reached a settlement deal in June 2019 in a motion for preliminary approval that called the $13.85 million deal, which represents a 4.6% recovery of an estimated $300 million in damages, a "fair, reasonable, and adequate" outcome for the proposed class.

Judge Slams $32M Wells Fargo Fee Request as Unreasonable

March 18, 2021

A recent Law 360 story by Dorothy Atkins, “Wells Fargo Judge Slams $32M Atty Fee Bid As Unreasonable,” reports that a California federal judge said she'll preliminarily approve Wells Fargo's $95.7 million deal to resolve certified class claims that the bank stiffed thousands of mortgage consultants' wages, but told class counsel "nothing" about their $31.9 million attorney fees request "looks reasonable to me."  During a hearing held via Zoom, U.S. District Judge Beth Freeman asked the parties to make minor revisions to the settlement notice and said the proposed deal, which gives out roughly $11,500 per class member, is "very solid" for the class.

She took issue, however, with class counsel's proposed fee award, which asks for a third of the settlement, or $31.9 million, reflecting an hourly lodestar calculated with an 8.9 multiplier.  "Nothing about this looks reasonable to me," she said.  "And it appears to me it doesn't seem reasonable to you, because you reserve your right to appeal [the settlement's approval]. I have never seen that."  Judge Freeman said by reserving their right to appeal, the attorneys seem to expect to lose their fee bid and appear to plan to appeal unless she gives them everything they want.

Class counsel Joshua H. Haffner of Haffner Law PC noted that they haven't fully briefed their reasoning for their requested fee award yet, but he argued that the litigation has been hard fought for years, making it through motions for summary judgment and a trip to the Ninth Circuit.  He added that the lodestar is still in the range of what is acceptable, albeit the higher end.  She told the attorneys to be sure to cite cases in which class attorneys were awarded fees that reflected a lodestar with a multiplier greater than eight in their motion for attorney fees.  "I just about jumped out of my chair when I saw the 8.9 multiplier," she said, adding "I think you invite objectors."

The judge's comments came during a hearing on a motion to preliminarily approve a global $95.7 million settlement that would resolve meal and rest claims, as well as derivative wage and hour claims on behalf of a class of roughly 5,377 California home mortgage consultants employed by the bank between 2013 and 2019.  If approved, the deal would include $25 million that the San Francisco-based bank already paid in a consolidated case called Ibarra, plus another $70 million for follow on cases alleging the bank claws back hourly wages and vacation time from the consultants' earned sales commissions.  Wells Fargo has since discontinued the pay practices underlying the plaintiffs' claims in the cases, according to court documents.

Judge Freeman acknowledged that her concern about the requested fee award doesn't "hold us up" with the final approval process and class notice, and the settlement agreement itself doesn't need to go back to the bargaining table.  She did, however, question how class counsel plans to pay for their appeal if she approves the settlement with a lesser fee award.