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Category: Class Fee Objector

Quinn Emanuel and Insurers Spar Over $185M in Attorney Fees

April 5, 2023

A recent Law 360 story by Jack Karp, “Quinn Emanuel, Insurers Spar in $185M Fee Fight,reports that Quinn Emanuel Urquhart & Sullivan LLP balked at what it called insurers' "incendiary" request for an accounting and discovery related to $185 million in attorney fees stemming from a $3.7 billion award secured in litigation over the Affordable Care Act.  The case law Kaiser Foundation Health Plan Inc. and UnitedHealthcare Insurance Co. cited to justify their requests for an accounting related to the $185 million and discovery regarding judgment preservation insurance taken out by the firm is irrelevant, Quinn Emanuel told the U.S. Court of Federal Claims in a join status report concerning the briefing schedule for its renewed fee application.

The insurers' request "once again relies on aspersions rather than any on-point precedent," the firm said.  "Throwing around the idea of ethical violations having nothing to do with class counsel's representation of the class against the government may be incendiary, but it is not a basis to delay resolution of the renewed fee application."  Quinn Emanuel asked the court to consider just its renewed fee application.  If the court allows the objectors to file any motions, the briefs on those motions should be filed simultaneously "in order to prevent undue delay in resolving this seven-year-old case," the firm said.

"Given the age of this case, class counsel respectfully submits there is no reason to drag this process out unnecessarily, and class counsel still does not understand the antagonism the United/Kaiser objectors are bringing to a process involving fees for claims that class counsel originated, pursued to a 100% result for United and Kaiser, and has continued to pursue doggedly for all remaining class members through the present," it said.  The two insurers were equally heated in their own portion of the joint status report.

Quinn Emanuel's proposal that the court order simultaneous briefing on the objectors' motion for discovery and accounting and Quinn Emanuel's motion for fees is inappropriate and would deprive the insurers of the information they need to file their opposition to the fees, they said in response.  "In effect, by insisting on simultaneous briefing, Quinn Emanuel seeks to moot the objectors' motion for discovery," they said.  The class has a right and the court has a duty to know if the accounting they request would demonstrate any ethical violations, the insurers added.

"Quinn Emanuel calls this argument 'incendiary' but does not deny that it is refusing to provide an accounting contrary to its obligations under Rules of Professional Conduct," they said.  In January, the Federal Circuit wiped out the $185 million in attorney fees awarded to Quinn Emanuel by the federal claims court following heated oral arguments in which an attorney for the firm was scolded for being "aggressive."

Quinn Emanuel and a group of health care plan insurers it represents had urged the Federal Circuit to affirm the fee award, insisting the firm had used a novel claim and achieved a 100% recovery for the class in litigation over so-called risk corridor payments under the ACA.  But Kaiser, UnitedHealthcare and others argued that class counsel was entitled to just $8.8 million after a lodestar cross-check.

Quinn Emanuel had originally promised in a supplemental class notice to limit its fee request based on the hours it worked on the litigation — the lodestar cross-check — and said its fee could be "substantially less than 5%" of the recovery, according to the Federal Circuit's January ruling.  But a Court of Federal Claims judge granted Quinn Emanuel's request for $185 million, or 5% of the total $3.7 billion settlement, finding that a lodestar cross-check was unnecessary.  That conclusion "was legal error," the Federal Circuit ruled.

"We are proud of our work in this case and of the unprecedented $3.7 billion award we obtained for qualified health plan providers, including Shepherd Mullin's clients," Quinn Emanuel partner Adam Wolfson told Law360 in a statement.  "When Quinn Emanuel won this case, we made certain the class administrator paid out 95% of the risk corridors claims to the plaintiffs as soon as possible.  We believe that the fee agreement the class members agreed to when we began our work on the case should stand," he said.  "Should the court come to a different conclusion, we will pay back any ordered amounts to the class administrator, who will then distribute those funds to the entire class."

$24M in Attorney Fees in VW Clean Diesel MDL Settlement

October 21, 2022

A recent Law 360 story by Dorothy Atkins, “VW’s $80M Porsche Emissions Deal OK’d With $24M Atty Fees” reports that a California federal judge said he will approve Volkswagen and Porsche's $80 million deal and class counsel's $24 million fee award to end consumers' claims they manipulated emissions and fuel-economy tests for nearly 500,000 gas-powered Porsche vehicles, despite objections the deal includes vehicles that weren't damaged.

At the end of a hearing held via Zoom, U.S. District Judge Charles Breyer said he plans to issue an order signing off on the $80 million deal, which awards class counsel $24 million in fees — or 30% of the settlement fund — and roughly $710,000 in costs, and overruling objections by two pro se class members and a third, Wesley V. Lochridge, who is represented by Robert Clore of Bandas Law Firm PC.

During the hearing, which the pro se class members did not attend, only Lochridge's counsel objected to the settlement, which resolves claims for consumers who purchased or leased certain gasoline-powered Porsche vehicles the plaintiffs claim were made to seem more environmentally friendly than they actually were.

Clore argued the settlement includes a group of thousands of vehicles — referred to as "other class vehicles," which includes 84 model Porsches for a variety of model years — that class counsel had tested and concluded released emissions that didn't deviate from fuel economy standards. As a result, he said, those car owners don't have standing to sue, but are getting compensated for undamaged vehicles.

But class counsel Elizabeth J. Cabraser of Lieff Cabraser Heimann & Bernstein LLP argued the reality is that the damages alleged on an individual level are difficult to measure, and class counsel decided not to spend extra resources, which would have cost the class, in testing those particular vehicles thoroughly even though they likely had emissions irregularities.  She said the objector had focused on a particular comment in the record about the vehicles, but took it out of context, and consumers don't have to prove the vehicles were definitively damaged for the purpose of the settlement.

Cabraser defended the claims process, noting that the bulk of claimants haven't had a problem submitting claims, and she agreed to send out a reminder to class members that they can submit a claim with alternative documents as proof if they don't have the original contract and to make that clear on the settlement's website.  She also argued the deal warrants approval and payments have already been sent out to more than 120,000 claimants, which she said is a significant claims rate. She added that 99% of claimants raised no objections to the deal, and the objectors' concerns aren't enough to defeat its approval.

The claims were part of multidistrict litigation initially launched in 2015, accusing Volkswagen AG, its luxury line Porsche AG and Porsche Cars North America Inc. of improperly skewing test results, leaving consumers with Porsche vehicles that didn't meet emissions and fuel-economy performance standards.

The settlement agrees to reimburse U.S. consumers who bought or leased certain vehicles from model years 2005 to 2020 and divides the class members into three groups: fuel economy, Sport+ and other class vehicles.  Under the deal, consumers in the fuel economy group will receive $250 to $1,109 per vehicle, depending on their vehicle's revised fuel economy ratings and how long they have had the vehicle. Consumers who purchased vehicles with a high-performance Sport+ mode — which are the subject of an ongoing recall — receive an automatic cash payment of $250.

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.

Hagens Berman $31M Fee Objection Heads to Ninth Circuit

April 19, 2022

A recent Law 360 story by Dorothy Atkins, “Hagens Berman Must Forfeit $31M Fee Win, 9th Circuit Told” reports that an objector's counsel urged the Ninth Circuit to force Hagens Berman Sobol Shapiro LLP to forfeit or reduce a revised $31 million fee award for securing deals worth $205 million in multidistrict litigation over optical disk drive price-fixing, arguing that the law firm violated multiple professional rules of ethics.  During a hearing before a three-judge panel, objector Connor Erwin's counsel, Robert Clore of Bandas Law Firm PC, argued that Hagens Berman violated multiple California Rules of Professional Conduct in securing its eight-figure fee award before a trial court, including by never placing the disputed funds into a client trust account, despite class members' objections and appeals pending.

But U.S. Circuit Court Judges Morgan Christen and Carlos T. Bea asked how class members have been harmed by the firm's failure to hold the funds in a client trust account.  "What harm, what foul?" Judge Bea asked.  Clore replied that as a result, the class has been denied up to $600,000 in interest that would have been collected on the disputed money.  At least a portion of that interest should have gone back to the class when a Ninth Circuit panel vacated Hagens Berman's previous $52.8 million fee and expense award, the attorney said.

"Why should they be entitled to interest on fees that don't belong to them?" Clore asked the panel.  The trip to the Ninth Circuit is the latest chapter in a decade-old multidistrict litigation claiming that Samsung Electronics Co. Ltd., Toshiba Corp. and other disk drive makers participated in an industry-wide conspiracy to fix optical disk drive prices.

Hagens Berman beat out other firms for lead class counsel in 2010, and the firm later struck multimillion-dollar deals to resolve the disputes.  After U.S. District Judge Richard Seeborg took over the case from U.S. District Court Judge Vaughn Walker, Judge Seeborg awarded the law firm $47.8 million in attorney fees for securing the settlements.  But in May 2020, a pair of Ninth Circuit panels vacated the fee awards after Clore argued before the appellate court that Judge Seeborg erred by keeping Hagens Berman's initial proposal for lead class counsel under seal and not properly taking it into account in awarding fees, among other objections.

On remand, in July, Judge Seeborg awarded Hagens Berman a revised $31 million fee, finding that the firm was entitled to a 20% premium on top of the $25.9 million it would be allotted under the firm's interpretation of the fee grid in its initial class counsel proposal.  Judge Seeborg also awarded Erwin's counsel $1.5 million in fees in September for their work helping to convince the Ninth Circuit to throw out the initial fee award.

But Erwin again challenged the fee award, with Clore arguing before the appellate court that Hagens Berman took too long to return the fees after the previous panel vacated the award, and did not place the funds in a client trust account, as required by professional rules of conduct.  Clore added that the trial court also erred in miscalculating the "starting point" for setting reasonable attorney fees on remand by using a flat rate instead of the sliding scale specified in the firm's initial proposal, resulting in an adjusted $25.9 million for the firm.  That amount should be $22.2 million, he said.

In light of the alleged violations, Clore asked the Ninth Circuit to send a message that class counsel are not immune to the California state bar's professional rules, and require the law firm to either forfeit its fees, or at the very least reduce the fees to keep in line with the firm's initial $22.2 million fee proposal.  As support, Clore cited the Ninth Circuit's 2012 decision in Rodriguez v. Disner, which held that a court has "broad equitable powers to … require an attorney to disgorge fees already received" for a serious ethical violation.

But class counsel Shana E. Scarlett, of Hagens Berman Sobol Shapiro LLP, argued that $31 million in fees is justified given the length of litigation and how fiercely the litigation was fought.  She also argued that the judge properly awarded additional fees on top of the initial $25.9 million proposal based on his discretion and understanding of the case.

But Judge Bea asked why the trial judge used a flat rate instead of the sliding scale methodology specified in the firm's initial bid proposal.  "Why isn't Judge Seeborg wrong in using a flat basis rather than a sliding scale basis based on the schedule we have before us?" the judge asked the attorney.  Scarlett replied that the firm's initial bid proposal was just one part of what informed the trial judge's decision. But Judge Bea appeared skeptical.

"You're talking about extrinsic evidence that was used by Judge Seeborg to interpret the writing, which we have before us?" Judge Bea asked.  "What factual evidence was there?  Are you saying that the written document is ambiguous and requires factual findings interpreted?"  Scarlett replied that the initial proposal was clear that the fees should use a flat rate, and not a sliding scale, but Judge Seeborg "went further and made the finding that we intended to be flat rate structure."

$12M Fee Award in $42M in Takata Air Bag MDL

April 6, 2022

A recent Law 360 story by Nathan Hale, “Court Oks $42M VW Deal, $12.6M Fee in Takata Air Bag MDL” reports that a Florida federal judge granted final approval to a $42 million settlement automakers Volkswagen and Audi reached to resolve multidistrict litigation over their alleged use of defective Takata Corp. air bags, as well as a $12.6 million attorney fee award from that total.  The proposed settlement with Volkswagen Group of America Inc., Audi of America LLC and their affiliates covers 1.35 million vehicles and is modeled on settlements previously approved with seven other automakers, according to the plaintiffs' motion for approval filed in September 2021.  The court granted preliminary approval in November 2021 and held a final fairness hearing March 7.

"We are pleased with Judge Moreno's order granting final approval of the VW settlement, and overruling the few objections that were raised, because the order is faithful to Eleventh Circuit precedent," the plaintiffs' chair lead counsel, Peter Prieto of Podhurst Orseck PA, told Law360.  "We will continue to litigate against the remaining automakers until there is a resolution or trial."  Miami-based U.S. District Judge Federico A. Moreno deemed the settlement agreement fair in all respects over objections from seven class members.

The objections focused primarily on three arguments: an outreach program to encourage drivers to get the parts replaced is ineffective, there is no value for many class members who have already sold their vehicles or gotten them repaired, and class counsel's request for 30% of the settlement fund to cover fees and expenses runs afoul of legal precedents.

Judge Moreno also certified a class for settlement purposes, noting the class consists of more than 1 million members across the U.S, the case involves common questions regarding Volkswagen's alleged activities, and the class representatives have no conflict with the other class members and are represented by experienced class counsel.

The judge appointed Prieto as lead settlement class counsel and also named the following attorneys as settlement class counsel: David Boies of Boies Schiller Flexner LLP, Todd A. Smith of Smith LaCien LLP, Roland Tellis of Baron & Budd PC, James E. Cecchi of Carella Byrne Cecchi Olstein Brody & Agnello PC and Elizabeth J. Cabraser of Lieff Cabraser Heimann & Bernstein LLP.  Nine potential class members opted out from the settlement, according to an exhibit attached to the order.

The settlement grants the defendants full release from liability for all economic loss claims asserted against them.  The releases also apply to German parent companies Volkswagen AG and Audi AG, which the court dismissed in 2019 for lack of personal jurisdiction, the order noted.  Judge Moreno said he disagreed with the objection that the outreach program is redundant or ineffective.

The record, including unchallenged statements the claims administrator made at the fairness hearing, shows similar programs in the first seven settlements have been successful, resulting in more than 9.1 million recalled air bag replacements being completed, the judge said.  He also noted the program provides assurances beyond what is required by the National Highway Traffic Safety Administration's recall mandates.

"Far from leaving outreach to the discretion of Volkswagen, the settlement's outreach program mandates that Volkswagen provide massive funding — more than $13 million — for outreach efforts and empowers the settlement special administrator to oversee and administer a dynamic, state-of-the art program," he said.  Judge Moreno also refuted claims of intra-class conflicts, saying differences in benefits various class members may receive are common and do not amount to fundamental conflicts that could trip up a deal.

Addressing the fee request, he rejected several objectors' suggestion that the court should apply Florida state law, which applies a lodestar-multiplier method to fee awards.  The judge said the class counsel's $12.6 million request, which comes out to as low as 22% of the settlement value — when the value of a customer support program is also taken into account — falls well within Eleventh Circuit precedent.

Some objectors had also argued that because this is the seventh settlement in the multidistrict litigation, the deal should be considered a "mega-fund" along with the previous deals and a lower percentage of fees awarded.  But Judge Moreno pointed out the Eleventh Circuit has said it does not reduce fees based on size because that would be "antithetical" to its percentage of the recovery method.