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Category: Practice Area: Class Action / Mass Tort / MDL

Seventh Circuit Tosses $11M Attorney Fee Award

May 20, 2022

A recent Law 360 story by Hailey Konnath, “Seventh Circ. Throws Out $11M Fee Award For Bernstein Litowitz” reports that the Seventh Circuit vacated an $11 million fee award for Bernstein Litowitz Berger & Grossmann LLP's work on a $45 million settlement between waste disposal company Stericycle and its shareholders, finding that the district court "did not give sufficient weight" to points raised in a class member's objection.  The three-judge panel said the Illinois federal court overseeing the case should've more seriously considered evidence of related fee agreements, all the work that Bernstein Litowitz inherited from earlier litigation against Stericycle and the early stage at which the settlement was reached.

"The cumulative effect of these issues leads us to conclude that the district court's analysis did not sufficiently 'reflect the market-based approach for determining fee awards that is required by our precedent,'" the Seventh Circuit said.  The panel added, "We vacate the fee award and remand for a fresh determination more in line with what an ex ante agreement would have produced."

Objector Mark Petri appealed a 25% cut that Bernstein Litowitz got from representing investors claiming that Stericycle falsely inflated its financial results through fraudulent pricing.  In particular, Petri argued that the attorney fees were potentially inflated by a pay-to-play scheme and the case never proceeded past the motion-to-dismiss stage.

In the underlying case, lead plaintiffs Public Employees' Retirement System of Mississippi and the Arkansas Teacher Retirement System had pointed to briefing in a study conducted by Nera Economic Consulting.  According to that study, for securities class action cases that settled between 2014 and 2018 in amounts ranging from $25 million to $100 million, the median attorney fee award was 25%, like the share awarded to Bernstein Litowitz.

Bernstein Litowitz asked the court to approve its $11 million fee request in June 2019, and the court gave its blessing in May 2020.  But the Seventh Circuit said that the district court's analysis was incomplete.  Notably, the court didn't address a 2016 retention agreement between the firm and the Mississippi attorney general, under which Bernstein Litowitz was authorized to represent the Mississippi fund and seek a percentage of the recovery achieved for the class as compensation.  That percentage, however, was supposed to be limited to the percentage corresponding to the fund's estimated individual recovery, the panel said.

At oral argument, Bernstein Litowitz had said that the sliding scale structure outlined in that agreement only applies to the amount recovered by the fund itself, not to the total amount recovered by the class.  The Seventh Circuit said that interpretation is "improbable, arbitrary, unreasonable and not consistent with a class representative's fiduciary duty to class members."

Additionally, the district court's assessment of the risk of non-payment also didn't give sufficient weight to prior litigation involving Stericycle, litigation that substantially reduced the risk of non-payment, the panel said.  The court had found that the risk of non-payment was "substantial," but that earlier litigation demonstrating Stericycle's billing practices and other settlements signaled that class counsel was not actually taking on much risk, the Seventh Circuit said.

And on top of that, the court didn't properly consider just how early on in the litigation the case was settled, according to the decision.  At the very least, the district court should've considered whether the preliminary stage of the litigation warranted a reduction in the requested fee, it said.  The Seventh Circuit also remarked that it wasn't convinced the settlement was a good outcome for the class, but that neither Petri nor anyone else was challenging that.

Lodestar Multiplier Sought in Landmark $508M Title VII Win

May 10, 2022

A recent Law 360 story by Craig Clough, “Attys in Historic $508M Title VII Win Want Bigger Lodestar” reports that attorneys representing a class of 1,100 women in a long-running lawsuit against Voice of America asked a D.C federal judge to grant them a lodestar enhancement, arguing the extraordinary legal work that spanned four decades and resulted in a record $508 million settlement calls for such a boost.

U.S. District Judge Amit Mehta previously blocked the attorneys' bid for an additional $34 million in fees that would have brought their total award to $75 million.  Since that 2020 ruling, the parties have reached a deal on a $19 million lodestar fee award, but the class attorneys asked the court to grant an enhancement up to 4.5 times that amount.

The extraordinary if not unprecedented circumstances of the lawsuit and the record-breaking settlement amount for a case brought under Title VII of the Civil Rights Act supports the enhancement, class attorneys at Steptoe & Johnson LLP said in the motion.  Steptoe & Johnson is one of many firms that represent the class.

"If ever such a case for enhancement was presented, it is this one where, through superior lawyering and incredible determination, counsel was able to achieve — by far — the largest class-wide recovery and largest individual class member recoveries for employment discrimination in the history of the Civil Rights Act," the class attorneys said.

A group of journalists in 1977 sued Voice of America and its former parent agency, the U.S. Information Agency, in a case that eventually covered discrimination claims between 1974 and 1984 and more than 1,000 plaintiffs.  The government disputed the accusations for more than 20 years ahead of the 2000 settlement.

Bruce Fredrickson of Webster & Fredrickson PLLC led the representation of the class for more than four decades. The lodestar motion said he was assigned to the case as a young associate at Hudson Leftwich & Davenport fresh out of law school, and he has remained on the case ever since. He drafted the initial complaint for lead plaintiff Carolee Brady Hartman and first motion to certify the class before losing at trial in1979, according to the motion.  When Hudson Leftwich declined to take up the appeal, Fredrickson represented the women in his spare time until he formed his own firm in 1982.  He eventually reversed the trial outcome on appeal, according to the motion.

"Hartman went on to become the most successful employment discrimination case in history," the class attorneys said in the motion.  "While ultimately requiring additional lawyers engaged in decades of hard work and the resources of additional firms to achieve this result, it was Mr. Fredrickson, with his commitment to excellence, his brilliant strategic decisions, his tenacity in facing off against the best-financed defendant that obstinately refused to accept the judgment of liability, and his sheer perseverance that made this extraordinary success possible."

The class attorneys cited several U.S. Supreme Court cases on lodestar enhancement, including 2010's Perdue v. Kenny A. and 1984's Blum v. Stenson, which said rare and exceptional legal representation can support an enhancement.  "After decades of hard-fought litigation and unsurpassed results, it is clear that this is the rare and exceptional case which unambiguous Supreme Court precedent firmly establishes as appropriate to compensate plaintiffs' counsel for superior lawyering by awarding an enhancement above their lodestar fees," the class attorneys said.  The motion concluded with the class attorneys saying, "The greatest result in the history of Title VII deserves nothing less."

Judge Clears Law Firm in Overcharge Fee Suit

May 6, 2022

A recent Law 360 story by Ryan Harroff, “Judge Axes Benicar Fee Suit. Says Firm Didn’t Overcharge” reports that Mazie Slater Katz & Freeman LLC beat a suit that claimed it overcharged its clients in multidistrict litigation over gastrointestinal injuries related to blood pressure drug Benicar and its generic Olmesartan after the New Jersey court found a state attorney fee rule did not apply to the MDL.  A New Jersey federal judge granted Mazie Slater's motion to dismiss the proposed class action, writing that the nearly $9 million award for the firm was "well within the reasonable and equitable percentages of Third Circuit examples."  The court agreed with the firm's argument from its dismissal bid that a state rule on attorney fees that served as the backbone of the action does not apply to mass tort MDL cases.

According to the court's opinion, named plaintiff Anthony Martino misapplied New Jersey Court Rule 1:21-7(i), which requires firms to aggregate class action fees based on individual client recoveries and seek court approval for fees over $3 million, by claiming that he and his proposed class members all had "substantially identical liability issues," a requirement for the rule, since they were all litigants in a New-Jersey resident-only multicounty consolidated litigation running parallel to the broader Benicar MDL.

According to the opinion, "there can be no rational, medical, logical, or legal justification why the claims of a subset of Olmesartan registrants could be interpreted as having substantially identical liability based merely on the fact they arose in the MCL."

The product liability MDL and MCL in question sought to hold Daiichi Sankyo Inc. and Forest Laboratories Inc. accountable for injuries suffered by Benicar and Olmesartan users.  The MDL settled initially for $300 million in August 2017 and the deal later grew to $380 million after triple the expected class members registered, according to the opinion.

Mazie Slater got $8.9 million of the total attorney fee allotment from the deal, and Martino accused the firm of running afoul of the New Jersey court rule in his November complaint, which claimed legal malpractice, unjust enrichment and conversion after firm partner Adam Slater allegedly failed to tell his clients that the firm would get "substantial fees and costs for the same, or substantially same, work that he had performed for each client and for which he received a full fee under the individual retainer agreements."

The rule does not apply to MCL or MDL consolidations, the court wrote, citing a lack of case law to support its application and the "very different and the very specific factual details" of each consolidated injury, which, according to the opinion, undercut Martino's argument the MCL litigants issues are substantially identical.

Bruce Nagel of Nagel Rice LLP, counsel for Martino and the proposed class, told Law360 that it is "nonsense" for the court to say the MCL plaintiffs do not all arise from the same liability issues since they all come from the same drug.  Nagel also said the MCL plaintiffs all had retainer agreements with Mazie Slater that included the New Jersey court rule and that he believed the Third Circuit would find that rule enforceable under those retainers.

Adam Slater of Mazie Slater Katz & Freeman LLC, who is both a named defendant and counsel for himself and the firm, told Law360 that the court's decision was "absolutely correct," and that there are many variances of liability issues in the consolidated cases, such as whether a plaintiff took the drug before or after a warning about potential side effects was added in 2013.  Slater said variances like that are why the New Jersey court rule does not apply for mass torts.

"What we did here is consistent with what every New Jersey lawyer litigating mass torts in the state and federal courts of New Jersey has been doing for over 40 years, calculating fees, and it's very clear that that rule does not apply in a mass tort setting like the Benicar case or the other mass tort cases that are routinely litigated in New Jersey," Slater said.

Judge Mulls $24M in Fees in $98M Mattel Investor Settlement

May 2, 2022

A recent Law 360 story by Gina Kim, “Mattel Judge Mulls $24.5M Atty Fee Bid in $98M Investor Deal” reports that U.S. District Judge Mark C. Scarsi said he will grant final approval of $98 million in settlements resolving investors' claims that Mattel and PwC misled them by understating an income tax expense, but said he's still considering the class counsel's $24.5 million attorney fee bid.  During a hearing, John Rizio-Hamilton, who represents the class and lead investor plaintiffs DeKalb County Employees Retirement System and New Orleans Employees Retirement System, urged Judge Scarsi to approve the fee bid, which he said is 25% of the $98 million deal and consistent with the Ninth Circuit's benchmark for percentage fee awards in common fund cases.

The investors' counsel also sought $1,139,330 in expenses, plus plaintiff awards to DeKalb County and New Orleans for $8,615. Defense counsel for PwC and Mattel did not object to the fee request.  Rizio-Hamilton maintained that the reasonableness of the fee request is backed by a lodestar cross-check, which he said yields a multiplier of 2.7.  "I know it's 25% of the settlement, but it represents a 2.7 times multiplier of a lodestar calculation," Judge Scarsi began. "Why is this significant upward deviation from the lodestar reasonable in this case?"  Rizio-Hamilton said the fee bid comports with the benchmark and "if anything, it's a touch less, because we're requesting 25% of the settlement net of litigation expenses."

The lodestar crosscheck of 2.7 multiplier is actually in the middle range, and is a common figure awarded to comparable class action securities litigations, Rizio-Hamilton said.  He cited several cases, such as Vizcaino v. Microsoft Corp., where the Ninth Circuit affirmed an award of 28% of a $97 million settlement, and In re: Brocade Securities Litigation, where class counsel received 25% of a $160 million deal.

Furthermore, the recovery achieved for the class is above average considering the serious risks facing the class, justifying the fee request, Rizio-Hamilton argued.  Class counsel dedicated almost 19,000 hours into the case, and incurred more than $1.1 million in expenses to face off against well-funded, high-caliber law firms representing Mattel and PwC, he said.

The class's reaction to the requested fee has also been favorable, and no institutional investor objected to it, Rizio-Hamilton added.  Only one individual investor, James J. Hayes of Virginia, objected to the fee request, but those objections are without merit and Hayes doesn't explain why the fee request is purportedly excessive, Rizio-Hamilton said.

Judge Scarsi aired additional concerns he had with the billing rates provided in class counsel's papers, noting that there were hourly rates ranging from $300 to $425 for nonlawyer litigation staff.  "Why aren't those high?" Judge Scarsi asked Rizio-Hamilton.

Rizio-Hamilton defended the billing rates charged by nonlawyer staff, arguing that they have been repeatedly accepted by courts in connection with fee applications in similar cases across the nation and in the district.  He also cited Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation" In re: Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation in the Northern District of California, where the court found hourly rates in that case — up to $490 per hour for nonlawyer paralegals — to be reasonable.

Rizio-Hamilton further contended that the billing rates are consistent with those charged by other firms litigating national securities litigations, including the very defense counsel in the instant Mattel litigation.  "We know that because we look at the bankruptcy fee applications they submit," Rizio-Hamilton said.  "Suffice it to say, the rates that they submitted to bankruptcy courts are meaningfully higher than the rates we submit here," he said.  "On the question of nonlawyer paralegals, for instance, Munger Tolles — and I don't mean to single them out — have submitted rates between $405 to $490 in 2020 for paralegals in the PG&E bankruptcy case in the Northern District of California."

Ultimately, class counsel achieved a recovery that is meaningfully greater than what is typically achieved in comparable cases, considering the time and quality of work poured into the case for more than two years without any payment, he added.  Class counsel are only asking for a benchmark, "and not a penny more," Rizio-Hamilton said.

"I do appreciate all the arguments, as you understand, you know, I'm just trying to do the best thing for the class, which is why I'm focusing on the attorney award, and I'll give that a little more thought based on the arguments today," Judge Scarsi said.  "So the court will approve the settlement, will issue an order, and you know, the attorneys' fees may not be the 2.7 multiple, so we'll see."

Attorneys Seek $5M in Fees in Buccaneers Junk Fax Settlement

April 29, 2022

A recent Law 360 story by Max Jaeger, “Attys Seek $5M Cut of Buccaneers Junk Fax Settlement” reports that the legal team that got the Tampa Bay Buccaneers to settle a decade-old Telephone Consumer Protection Act class action for $19.75 million in March says it rolled the dice on the risky litigation and should be awarded fees and costs totaling more than $5 million.  The firms Siprut PC, Addison & Howard PA and Anderson + Wanca want to divvy up 25% of the settlement — which works out to $4,937,000 — plus $250,000 for costs for the 6,188.15 hours of combined attorney and professional time put into the case, according to the motion.

They say the 25% figure is apt because it conforms to the Eleventh Circuit's benchmark.  But even if the court applied so-called Johnson Factors for awards above 25%, the time they invested, the novelty of the case, the risk they incurred and the outcome they achieved would satisfy those and support the award, according to the motion.  "Few lawyers will take on a lawsuit that consumes significant attorney time, involves uncertain questions and requires the lawyers to advance large out-of-pocket costs, with no guarantee of payment," the filing says.  "Although class counsel were able to achieve an excellent result for the class, achieving this outcome was anything but certain when they agreed to take the case."

The TCPA does not provide for attorney fees to a prevailing plaintiff, so lawyers must rely on a large recovery to pay their own bills.  Class counsel advanced more than $250,000 to prosecute the Bucs case while they "risked receiving nothing in return," the filing says.  Their costs actually exceeded a quarter-million dollars, but the settlement agreement capped their request, they said. Driving up the costs were $20,000 for an expert witness and more than $110,000 for class counsel in other jurisdictions, mostly Canada, that the plaintiffs needed to obtain discovery, according to the filing.  They paid Teplitsky Colson LLP $88,593.42 and Koskie Minsky LLP $23,000 for the local representation, they said.

Class representatives Cin-Q Automobiles Inc. and Medical & Chiropractic Clinic Inc. sued the Buccaneers after the organization hired a Canadian "fax broadcaster" called FaxQom to send 343,011 faxes from July 2009 through June 2010 advertising tickets to team games, allegedly in violation of the TCPA.  The legal battle began in state court in 2009, but Cin-Q filed the instant federal action in 2013 after the U.S. Supreme Court ruled state and federal courts share jurisdiction over TCPA actions.

The motion also seeks to set aside $10,000 each for Cin-Q and M&W as incentive awards for acting as class representatives.  But that would only be payable if a 2020 Eleventh Circuit decision barring such incentives is vacated or otherwise reversed before the Bucs settlement is finally approved, the motion notes.  U.S. Magistrate Judge Anthony E. Porcelli gave his preliminary blessing to the agreement's top-line numbers on March 29, but the motion reveals how the lawyers agreed back in 2015 to divvy the spoils should they prevail.

Tampa Firm Addison & Howard PA, which initiated Cin-Q's lawsuit in 2009, would claim 28%; Chicago litigation firm Siprut PC would receive 16%; and Illinois class action litigators Anderson + Wanca, which joined forces with Addison for the case in 2013, would take the remaining 56%.  James M. Thomas of Tampa was to split the 16% chunk with Siprut PC, but he is no longer licensed to practice law in Florida, the motion says.  According to public records, the Supreme Court of the State of Florida suspended him from practicing there for one year in a December 2020 decision.