A recent Law 360 by Sydney Price, “Attys Get $37M For Landing Forex Rigging Deals,” reports that a New York federal judge awarded $36.8 million in attorney fees to counsel for investors who accused a group of banks of rigging foreign exchange markets, about $10.4 million less than the lawyers wanted, for securing nearly $186 million in settlements for their clients.  U.S. District Judge Lewis A. Kaplan said in a letter that class counsel sought legal fees of $47.2 million, which represents 25.4% of the settlement fund, and litigation expenses of $845,471.57.  Judge Kaplan decided to apply a lodestar method to evaluate the payout, which removed some billable hours counsel included in its request.

Counsel submitted a proposed lodestar of $29.9 million for over 53,000 hours worked.  This calculation included over 3,000 hours by four non-lawyer analysts, including a derivatives expert.  Judge Kaplan said counsel did not provide enough data on the rates charged by these analysts to include them in his final calculation. The litigation expenses of $845,471.57 were granted without objections.

"After approximately six years of hard-fought litigation, counsel obtained eight class action settlements and twelve settling defendants, creating a common fund of $185,875,000," Judge Kaplan said.  "This was a good result for the class and counsel deserve to be compensated adequately."  The attorneys previously noted that no other firms attempted to represent the class in the case, contending that was "likely because of the ... high risks" the investors knew they would face in the matter.

The suit accused the banks of coordinating a "horizontal conspiracy to manipulate prices in favor of the defendants' derivatives trading positions" and cites investigations by Australia's securities regulator, which showed certain banks had worked together to fix derivative contract prices.

The parties reached a final settlement in the case last May. Credit Suisse had agreed to pay $8.88 million, and a group of five other banks, comprising BNP Paribas, Deutsche Bank, the Royal Bank of Canada, the Royal Bank of Scotland and UBS, had agreed to pay a total of $40 million to end the claims they face in the matter.

The settlement sum also includes $137 million in settlements reached earlier in the matter, including December 2021 agreements that Australia and New Zealand Banking and Commonwealth Bank of Australia would each pay $35 million, National Australia Bank would pay $27 million and Morgan Stanley would pay $7 million.  Westpac Banking Corp. agreed to pay $25 million in March 2021, and JPMorgan struck a $7 million settlement deal in November 2018.

A recent Reuters article by Alison Frankel, “Appeals Court Will Decide If Lawyers Can Evade Common Fund Fees in Consolidated Cases,” reports on common fund fees in class actions and MDLs.  The story reads:

Can a plaintiffs lawyer who was a member of the steering committee in consolidated multidistrict litigation get out of paying common benefit fees for cases resolved outside of the MDL’s confines?  That’s the question that will be argued before the 9th U.S. Circuit Court of Appeals in a case arising from consolidated litigation over C.R. Bard Inc’s blood clot filter implants.  The 9th Circuit punted last year in a similar case addressing common fees in the Roundup MDL because the fee ruling on appeal was not a final order.

But assuming there are no jurisdictional problems in the Bard case – as both parties assured the appeals court in a joint supplemental brief filed earlier this month – the 9th Circuit will be just the third federal appeals court in the last decade to offer answers to vexing questions about the scope of MDL judges’ power to order fees in cases they do not oversee.

Common benefit fees, as you know, are intended to compensate MDL lead counsel who expend significant time and money to conduct discovery and litigate legal issues that affect all of the cases in the MDL.  The fees address what might otherwise be the problem of “free-riding” by lawyers trying to capitalize on the efforts of MDL leaders without paying for it.

There’s little doubt that MDL judges have the authority to order plaintiffs lawyers whose cases are part of the consolidated proceeding to turn over a share of their clients’ settlements to MDL leadership.  (In the Bard MDL, common benefit fees have been held back in an escrow account before ever reaching plaintiffs and their lawyers.)  But what about cases outside of the MDL, such as state-court lawsuits, claims that were settled before they were formally filed or cases filed after the closure of the MDL?  Can MDL judges require plaintiffs lawyers to pay common benefit fees in those cases?

Federal circuits have reached different conclusions.  In 2014, the 8th Circuit ruled in In re Genetically Modified Rice Litigation that the MDL judge did not have authority to order fees from plaintiffs’ lawyers in state-court GMO suits.  But in 2015’s In re Avandia, the 3rd Circuit ruled that MDL courts are entitled to enforce their own orders, so an MDL judge had authority to order a plaintiff’s firm that participated in the MDL to pay a common benefit fee on all of its settled cases.

Two highly-regarded MDL judges also recently diverged on the scope of their authority. U.S. District Judge Jesse Furman of Manhattan ruled in 2020’s In re: General Motors that his MDL orders required lawyers who had litigated before him to pay common benefit fees from settlements of unfiled cases.  But U.S. District Judge Vince Chhabria of San Francisco held in 2021’s In re: Roundup that his power to order fees was limited to cases within the MDL.

Like I said, this is a vexing issue.  The twist in the Bard case is that plaintiffs lawyer Ben Martin of Martin Baughman was appointed to the MDL’s steering committee at the very beginning of the case in 2015.  He and the lawyers at his firm settled about 200 cases in the MDL.  But they also settled an additional 300 or so cases that were never formally filed, were brought in state court, or were filed after U.S. District Judge David Campbell of Phoenix closed the Bard MDL.

Martin’s counsel, Howard Bashman of the indispensable How Appealing blog, told the 9^th Circuit that Campbell erred when he ruled in 2022 that all of Martin’s cases – and not just those settled within the MDL -- were subject to a fee holdback.  Bashman argued that MDL judges simply do not have a right, under their inherent case management power or common fund doctrine, to order fees in cases that are not before them.

In a phone interview, Bashman acknowledged the free rider problem, but said that the 9th Circuit must distinguish between the legitimate goal of deterring abusive case-filing by plaintiffs lawyers who want to avoid common benefit fees and the limited power of MDL judges to accomplish that end.  “Those are two different questions,” Bashman said. (He emphasized that Martin and his firm were not trying to avoid common benefit fees by settling cases outside of the MDL.)

The other lawyers on the Bard MDL steering committee, who are represented by Shannon Clark of Gallagher & Kennedy, assert that MDL judges have inherent power to assess fees on cases outside of their court.  But the lawyers' primary argument is that Martin and his firm agreed to common benefit fee holdbacks for all of their cases when Martin accepted an MDL leadership role, based on a participation agreement attached to a Campbell case management order. (Martin has also received common benefit fees under those orders.)  Clark, who did not respond to my email query, argued that Martin waived his right to challenge the fees by failing to object to Campbell’s orders.

Bashman told the 9th Circuit that there is no evidence Martin signed the relevant participation agreement.  And even if he did, Bashman said, the MDL judge is not entitled to exceed his authority by imposing an impermissible condition on Martin’s ability to represent his clients.

In some ways, the stakes in the Bard appeal are small. Martin’s briefing does not say precisely how much money has been held back but says his clients’ 2% share amounts to less than $1 million.  The overall holdback is 10%, so this fight seems to involve between $5 and $10 million.  On the other hand, common benefit fees affect every MDL, and surely total hundreds of millions of dollars across all of the consolidated multidistrict cases being litigated in U.S. court.

Moreover, Bashman said, the 9th Circuit panel – 9th Circuit judges John Owens and Bridget Bade and Judge Miller Baker of the U.S. Court of International Trade – might not be the last word on the fee question, regardless of who wins.  “This does seem like the kind of issue the U.S. Supreme Court would be interested in,” he said.

A recent Law 360 by Piper Hudspeth Blackburn, “CSX Hits Back at $14M Atty Fee Bid in Norfolk Southern Case,” reports that CSX Transportation Inc. has urged a Virginia federal judge not to award Norfolk Southern Railway Co. and a smaller railroad $14 million in attorney fees for beating back its antitrust claims, arguing that Virginia's state law does not allow it.  In a memorandum, CSX also said that no contractual provision between the parties allows an award for attorney fees as Virginia law requires, and the Sherman Act does not mandate that a defendant obtain a fee award for prevailing on a suit.

According to CSX, Virginia law mandates that successful claims be supported by "a statutory or contractual right" to attorney fees.  Therefore, if at all possible, the only claims Norfolk Southern and Norfolk & Portsmouth Belt Line Railroad Co. can seek are those related to their defense of CSX's injunctive-relief request under the Virginia's business conspiracy law, CSX added.

However, CSX also noted that the railway companies did not cite "a single decision" in the history of the Virginia statute "in which a court has awarded a prevailing defendant attorneys' fees."  The years-long litigation ended in April, when U.S. District Judge Mark S. Davis sided with Norfolk Southern and Belt Line and dismissed the suit, finding that CSX's claims were time-barred.

The companies filed separate motions on May 3 in an effort to get the court to order CSX to pay their court costs and attorney fees.  While Norfolk Southern estimates its costs and fees at around $11 million, the Belt Line put forth a much lower estimate of $3 million.  Belt Line argued that CSX must pay because Virginia law says prevailing defendants in a conspiracy case where plaintiffs requested injunctive relief are entitled to costs and attorney fees.

"Whether CSX sought money damages or injunctive relief, its core set of facts was identical for all claims, and therefore the Belt Line's entitlement to costs and attorneys' fees encompasses its efforts to overcome them all," the interchange railroad said.  However, CSX disagreed Wednesday, claiming that the statute does not mandate that losing plaintiffs pay attorney fees.  Instead, CSX said, the law requires only "a potential discretionary fee award for those fees specifically attributable to the state-conspiracy injunctive-relief remedy."

A recent Law 360 by Hayley Fowler, “Milberg Nets $85K in Fees on NC Data Breach Deal with CPAs,” reports that a North Carolina judge awarded about $85,000 in attorney fees — a reduced amount — to Milberg Coleman Bryson Phillips Grossman PLLC after the firm secured a class action settlement with an accounting office over a data breach that affected nearly 16,000 clients.  Chief Judge Louis A. Bledsoe III of the North Carolina Business Court said in an order that the hourly rates sought by three Milberg partners who worked on the case were slightly higher than average for the state.  But he said their ability to secure a speedy settlement against the accounting office of Gerald O. Dry PA had "required high legal skill" meriting an award of attorney fees.

"This case revolves around rapidly evolving legal questions of digital security, data breaches and digital privacy, which are at the cutting edge of the interplay between new technology and the law," Judge Bledsoe wrote.  "Pursuing these actions is therefore complicated, difficult and fraught with risk, for both clients and attorneys, and such was the case here."  Taking into account comparable hourly rates in similar complex business disputes, the judge awarded the firm roughly $85,000 in fees and costs — down from the $110,000 Milberg had sought.

The fee award comes on the heels of Judge Bledsoe's decision to grant final approval of a class action settlement Milberg secured on behalf of roughly 15,855 clients of Gerald O. Dry PA whose personal information was allegedly compromised in a data breach announced last year.  Gerald O. Dry PA reached an agreement to settle the proposed class action almost immediately, court documents show, and the parties received early approval in November.

Under the terms of the agreement, Gerald O. Dry PA will reimburse out-of-pocket expenses related to the data breach of up to $400 per class member, lost time of up to five hours at $20 per hour, and monetary losses of up to $5,000.  Those benefits are capped at $200,000 total.  The accounting firm also agreed to give class members two years of identity theft protection services with a potential retail value of more than $3.4 million, as well as implement a host of new cybersecurity protections, including a new firewall, antivirus software and third-party verification, among others.

Milberg had based its $110,000 fee request, which it said represented about 26% of the total deal, on a total settlement value of $419,189.  The firm highlighted "substantial hurdles" and the complex nature of cybersecurity law it faced in pursuing the case, saying that it was never guaranteed the class would be certified and that the requested rates were in line with similar data breach class action settlements in other states.

But Judge Bledsoe said Friday he would not consider rates charged in other jurisdictions when the "relevant locality is North Carolina."  "The North Carolina state courts have generally not approved hourly rates as high as those sought" by the three Milberg partners, the judge said, though he conceded that "hourly rates have risen since many of the North Carolina state cases that speak to reasonable rates were decided."

Taking all of that into account, Judge Bledsoe reduced the hourly rate of lead counsel David Lietz to $700, down from his requested rates of $919 per hour for work performed in 2022 and $979 per hour for work performed this year.  Milberg partners Scott Harris and Gary Klinger were, by comparison, awarded $575 an hour. Harris had initially sought $764 per hour for last year's work and $829 per hour for this year's work. Klinger had requested an hourly rate of $850.

In addition to the partner-level fees, Judge Bledsoe signed off on the requested hourly rates for an associate and four paralegals, finding them to be more in line with recent state business court fee decisions in comparable suits.  The resulting fee award of $85,252 takes into account those adjusted rates as well as roughly $1,000 in expenses and costs.

A recent Law 360 by Jeff Montgomery, “Chancery Oks $1B Dell Class Suit Deal; $285M Fee Pending,” reports that a record $1 billion settlement of a stockholder class suit that challenged a $23.9 billion Dell Technologies Inc. stock swap in 2018 won Delaware Court of Chancery approval, while a proposed $285 million class attorney fee got sidelined for further consideration.  Vice Chancellor J. Travis Laster described the deal — announced in November and the largest on record for the court — as the result of "a huge effort" on the part of class attorneys who battled through nearly 4½ years of litigation and racked up more than 53,000 attorney hours to reach the hearing.

Waiting at the hearing, however, were arguments by a large shareholder and a friend-of-the-court brief filed by law professors urging the court under some proposals to slash the fee by $100 million or more.  Pentwater Capital Management LP, which holds 1.6% of the shares at issue, argued that the 28.5% fee award would be excessive and urged the court to adopt a sliding, or diminishing, rate for mega-settlements.  A group of law professors also backed a declining scale, saying a $150 million fee would be defensible while keeping $135 million for stockholders.  "I do think the objectors have raised important points that I'm going to think about," the vice chancellor said after a 2½-hour hearing.

The class suit accused Dell and controlling investors Silver Lake Group and its affiliates of shortchanging regular shareholders by some $10.7 billion in a deal that converted Class V stock — created to finance much of Dell's $67 billion acquisition of EMC Technologies in 2016 — to common shares.

When the challenged conversion closed on December 28, 2018, VMware stock closed at $158.38 per share, and DVMT, or Class V, stockholders received just $104.27 per share because Dell's Class C stock had been overvalued.  "The simple fact is, defendants would not settle for a billion dollars unless there was a real, credible risk of much higher damages at trial," said David Cooper of Quinn Emanuel Urquhart & Sullivan LLP, counsel to the class, while explaining the decision to settle rather than pursue a much larger share of the stockholders' short-changing.

"There were an enormous number of obstacles, and this was very far from a typical case," Cooper said.  "In determining whether $1 billion is fair value for the class, whether it reflects positively on the performance of counsel, it simply did not make sense to look at $10.7 billion while ignoring risk" that there would be nothing recovered, as happens in many deal challenges.

Stephen B. Brauerman of Bayard PA, counsel to Pentwater, said it would be "credibility killing" to call the settlement unimpressive, but told the court there are concerns that the deal did not fully compensate the stockholder class for the potential $10.7 billion in damages.  "All were requesting the court to consider in its exercise of discretion" the potential for "adversely impacting the class, impacting substantially their recovery," Brauerman said.

Ned Weinberger of Labaton Sucharow LLP, also counsel to the class, told the vice chancellor that stockholder attorneys logged more than 53,000 hours on the case, with nearly $4.3 million in expenses, with the fee and expense award reflecting an implied hourly rate of about $5,268 per hour.  If the court is entertaining a size adjustment, Weinberger said, "we have already done it for you.  All of the precedents support a fee award on the eve of trial of 30% or more.  We sought only 28.5%," or a 5% reduction.

Anthony A. Rickey of Margrave Law LLC, counsel to the law professor group, advocated in part bringing Chancery Court litigation fees more in line with relatively lower payouts for large cases in U.S. District Court securities actions.  Rickey said a 15% fee would be more appropriate, providing a still large $150 million fee while earmarking another $135 million for shareholders.  "There is a considerable amount of decreased risk after motions to dismiss," Rickey said, "even in Chancery practice."

Vice Chancellor Laster said federal securities cases seldom go to trial and often settle after motions to dismiss.  "Why isn't that a fair distinction?" the vide chancellor said.  "It makes sense" in federal court, when there is similar work in each case "and people are benefiting from the size of the issuer rather than actual value added" in litigation.  In contrast, the vice chancellor said, the Dell counsel "had to litigate against the army of the excellent until they got to the verge of trial, where they had to settle."

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