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Federal Judge: ‘Complete Reanalysis’ Needed for MDL Fee Proposal

May 21, 2020 | Posted in : Class Action / MDL, Fee Agreement / Fee Proposal, Fee Award, Fee Issues on Appeal, Fee Request

A recent Law 360 story by Dorothy Atkins, “$34M MDL Fee Bid Needs ‘Complete Reanalysis’ Judge Says” reports that a California federal judge told class counsel she's going to do a "complete reanalysis" of their renewed bid for $34 million in fees for resolving battery price-fixing claims against Sony and others after the Ninth Circuit vacated her prior approval.  During a hearing held via the Zoom videoconferencing tool, U.S. District Judge Yvonne Gonzalez Rogers ordered co-lead class counsel Hagens Berman Sobol Shapiro LLP to resubmit its initial proposal to serve as sole lead counsel so that she can consider it in deciding whether the $34 million attorney fee award is appropriate.  The Ninth Circuit remanded the issue in September.

Judge Gonzalez Rogers noted that she rejected the firm's 2013 bid to serve as sole lead class counsel in the MDL, which involves claims by direct and indirect buyers of lithium-ion batteries and major electronics makers.  Instead, she opted to appoint Hagens Berman and two other firms to co-lead the class.  However, the judge said the Ninth Circuit's ruling earlier this month in a separate antitrust MDL involving optical disk drives indicates that district courts are required to consider initial class counsel bids like the one Hagens Berman submitted when awarding fees.

"It is my view that ... it's incumbent on this court to do a complete reanalysis of this motion for fees," the judge said.  The judge's comments came at the end of a hearing on class counsel's renewed motion for $34 million in attorney fees for cutting settlements totaling $113 million for indirect buyers and a motion to grant final approval of a $44.95 million deal with Hitachi Maxell Ltd., LG Chem America and NEC Corp. resolving some indirect buyers' claims.

The MDL accuses battery sellers — including Hitachi, Sony Corp., LG Chem, Toshiba Corp. and NEC — of working together to hike prices for lithium-ion batteries, which are used primarily in computers and other electronics, from 2000 to 2011.  Since the litigation landed on Judge Gonzalez Rogers' docket in 2013, the judge has approved multiple rounds of multimillion-dollar settlements resolving claims by direct and indirect buyers.

But in September the Ninth Circuit vacated her order approving the $44.95 million nationwide settlement and the $34 million fee award and remanded "to allow the district court to properly exercise its discretion' consistent with Rule 23's rigorous procedural requirements."

On remand, class counsel renewed their bid for fees and the settlement, while altering how the settlement pot is allotted to mirror a subsequent settlement round that has been approved.  Under the altered deal, 90% of the settlement funds would go to battery purchasers located in states that repealed Illinois Brick v. Illinois, which allows for federal antitrust claims to be brought only by direct purchasers impacted by anti-competitive activity.  The remaining 10% of the pot would go to battery buyers in the so-called nonrepealer states.

But during the hearing, multiple objectors argued that the court shouldn't approve the settlement, because it pays out claims to individuals in nonrepealer states who don't have a claim under the state law.  The objectors also argued that the court should consider Hagens Berman's initial proposal to serve as lead counsel in its decision to award fees and that class counsel's 25% attorney fee benchmark shouldn't be considered in such a megafund settlement.  Additionally, Deborah E. Arbabi of Crowell & Moring LLP argued on behalf of 228 class members that the court should allow those who missed claim deadlines to submit a claim, since the litigation won't be resolved anytime soon and it won't harm the class.

However, class counsel, Adam J. Zapala of Cotchett Pitre & McCarthy LLP defended the deal and fee bid, noting that there are always conflicts between state laws.  He said although "hindsight is 2020," it would have been strange for class counsel to abandon nonrepealer class members when they struck the settlement and that the deal was reached before the Ninth Circuit clarified Illinois Brick precedent.

Zapala also argued that the late claimants haven't given any reason for why they missed the deadline, stressing that "a deadline is a deadline, that's how courts work."  The class members had notice of the deadlines, he said, and there's no obvious justification that would distinguish between these late claimants and other late claimants in the future.

But Judge Gonzalez Rogers said she would allow class members who missed the deadline to file claims to submit them, and agreed that at some point there should be a hard cut-off date, but that class counsel should propose one.  Judge Gonzalez Rogers ordered Hagens Berman to produce its lead counsel proposal by Friday and gave the objectors until June 5 to respond to it and any supplemental briefing on the fee bid.