Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Firm Loses Bid for Attorney Fees in Rice Farmers MDL

September 1, 2014 | Posted in : Contingency Fees / POF, Expenses / Costs, Fee Award, Fee Dispute, Fee Entitlement / Recoverability, Fee Issues on Appeal, Fee Jurisprudence

A recent NLJ story, “Firm Loses Fee Fight in Rice Farmers’ Class Action,” reports that a law firm has lost its effort to collection $13.3 million out of the fees gathered to pay for the legal work on behalf of American rice farmers, millers and dealers who sued Bayer CropScience LP for tainting the American rice supply with its genetically modified rice.  The federal MDL was consolidated in Missouri federal court.

Law firm The Phipps Group also lost its effort to overturn U.S. District Judge Catherine D. Perry’s order requiring that all setting plaintiffs pay eight percent of their recoveries toward attorney fees and three percent for litigation costs and expenses undertaken for the common benefit of all plaintiffs.

Judge Steven M. Colloton, writing for the U.S. Court of Appeals for the Eighth Circuit, said that Phipps waived the challenge to the creation of a fund to pay for legal work benefiting all the plaintiffs by agreeing to settle cases under those terms.  Phipps argued that success in two of his firm’s cases “enhanced lead counsel’s leverage in settlement negotiations.”

However, Colloton said Phipps was not entitled to attorney fees out of the common benefit fund when he did not have a lead role in the discovery and litigation against Bayer.  “While it is possible that lawyers may create bargaining leverage over the defendant by refusing to join an MDL and litigating in multiple flora, the district court was not automatically required to accept that Phipps did so here,” the court said.  “To accept Phipps’s position would reduce incentives to collaborate with leadership counsel and could frustrate the purposes of the MDL statute to promote efficiency and coordination.”

Bayer agreed to pay $750 million to rice farmers, and lead plaintiffs Don Downing, Adam Levitt and other attorneys got approval to receive $51.6 million in fees and $5.5 million in expenses.  The court also authorized the law firms to receive up to a total of $72 million in fees from any remaining amount in the common benefit fund.

The disbursement of up to $72 million in fees and expenses was approximately 8.4 percent of the plaintiffs’ total recovery from the settlement with Bayer and was “within the range of awards made in similar cases,” Colloton said.  Colloton agreed that the district court lacked jurisdiction to order holdbacks from state court settlements and verdicts in which plaintiffs’ counsel refused to pay into the MDL common benefit fund.