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Category: Class Incentive Awards

Judge Says Attorney Fee Request ‘Way Too High’

January 18, 2024

A recent Law 360 story by Bonnie Eslinger, “Juniper Workers’ Atty Fee Bid ‘Way Too High,’” Says, reports that a California federal judge said he'll give final approval to Juniper Networks employees' $3 million deal over claims the marketing software company mismanaged their 401(k) plan, but called their attorneys' bid for $900,000 in fees "just way too high."  U.S. District Judge James Donato rejected the attorney fee ask during a hearing in San Francisco on the workers' motion for final approval on the $3 million deal, which the judge granted.

Based on the total fees racked up to date — $142,232 — the $900,000 request means the court is being asked to multiply the lodestar amount by 6.33, nothing he has ever awarded, the judge said.  Even in an "exemplary" $650 million settlement in his court, resolving a "groundbreaking class action" alleging Facebook's facial recognition technology violated users' biometric privacy rights, the attorney fees "didn't get anything close to a 6.33 multiplier," Judge Donato said.  The Juniper Networks Inc. case, by comparison, was small and fairly straightforward, he added.

A lawyer for the workers, Paul Secunda of Walcheske & Luzi LLC, told the court that there are cases where the fee award was up to five times higher than the lodestar.  Further, the 30% fee award is in line with others approved in complex Employee Retirement Income Security Act class actions, he said.

In addition, the $3 million settlement represents about 44% of the total estimated losses that the class members could have recovered if the case had been successfully litigated through trial on all counts, Secunda told the court.

Judge Donato said the litigation wasn't complicated.  "Occasionally, we'll get what I call sweat equity [when] plaintiffs worked relentlessly," the judge said. "That didn't happen."  Judge Donato said he might consider doubling the total projected amount that plaintiffs say they'll spend in fees, including $187,000.  But the $900,000 request is "just way too high," he added.

The judge also asked Secunda to file an additional written brief to the court explaining why the plaintiffs were also seeking $36,000 in expenses, on top of nearly $40,000 in settlement administration expenses and $15,000 for independent fiduciary fees.

Secunda said the $36,000 in expenses was used to pay outside consultants due to the complexity of the case, which required significant research and pouring over complex finance and employee benefit documents.  "You've got to tell me who they are and why they deserve it and why it was in the best interest of the class," the judge said, adding that he wasn't ready to approve that amount.

Judge Donato also called proposed awards of $5,000 each to the two named plaintiffs in the case out of line.  "They're not going to get five grand each, particularly as the average recovery is approximately $100, that's completely disproportionate," the judge said.

Two Law Firms Split $22M in Attorney Fees in Libor Case

October 25, 2023

A recent Law 360 story by Emillie Ruscoe, “Susman Godfrey, Hausfeld Split $22M Fee in Libor Case”, reports that Susman Godfrey LLP and Hausfeld LLP will receive a nearly $22 million fee for brokering a $90 million settlement deal with MUFG Bank Ltd., the Norinchukin Bank and Société Générale in sprawling multidistrict litigation against numerous financial services giants over their alleged manipulation of the London interbank offered rate.  In an order, U.S. District Judge Naomi Reice Buchwald granted the two-firm legal team's requested fee and said they could also have more than $2.5 million to reimburse litigation expenses and that their five lead plaintiffs could each have a $100,000 service award.

The order comes after the plaintiffs' counsel in September requested a fee that would be a quarter of the $90 million settlement deal they had recently negotiated, minus litigation costs.  The latest settlement brings the action's "tremendous" recovery total to $781 million, according to the proposed class of those who had purchased Libor-based instruments from the allegedly involved banks during the period of the alleged rate manipulation.

Over the course of the litigation, which now dates back nearly 12 years, Barclays has settled the proposed class' claims for $120 million, Citibank for $130 million, HSBC for $100 million and Deutsche Bank for $240 million.  And, after the latest deal was reached, the plaintiff class reached a separate $101 million settlement that ends claims against Lloyds, Rabobank, RBC and Portigon, the plaintiffs said in their September fee bid.

The plaintiffs also said their requested interim fee award was comparable to awards in other multi-defendant antitrust class actions, and the percentage is the same as attorneys representing a separate plaintiff class received in other settlements.  The plaintiffs' counsel also said the requested fee would "fairly compensate class counsel for the excellent result they have obtained" on behalf of the proposed class.  The order awarding attorney fees was entered alongside a final judgment against the three settling banks.

$267M Attorney Fee Award Appealed in $1B Dell Settlement

October 2, 2023

A recent Law 360 story by Jeff Montgomery, “Pentwater Appeals $267M Atty Fee Award in Dell Case in Del.”, reports that a private equity investor in Dell Technologies Inc. is appealing a Chancery Court's record $266.7 million fee award to class counsel that secured a $1 billion settlement for stockholders who sued over a $23.9 billion stock swap in 2018.  Pentwater Capital Management filed notice of appeal without a transcript late Friday with the Delaware Supreme Court, challenging both the attorney fee award and a $50,000 incentive award granted to Steamfitters Local 449 Pension Plan, the lead plaintiff for the suit filed in November 2018.

Vice Chancellor J. Travis Laster set the fee at $266.7 million on July 31, trimming a request of $285 million.  He said in his July 31 decision and order that eight funds that had invested in Dell but were not part of the class suit, recommended a lower fee, citing concerns about "windfall" profits in the case of large awards.

Pentwater — holder of 1.6% of the Dell Class V tracking stock at issue in the Chancery Court suit — branded the fee award as massive and a potentially "dangerous" precedent. In a Chancery Court brief opposing the fee, Pentwater argued that "the requested fee in absolute and percentage terms is disproportionate to the value conferred on class members."

Settlement of the overall case prevented a trial on claims targeting Dell's effort to exchange Class V stock — created to finance much of Dell's $67 billion acquisition of EMC Technologies in 2016 — for shares of Dell common stock.  The Class V shares generally traded at only 60% or 65% of the price of VMware, a business in which EMC owned an 81.9% equity stake when Dell acquired EMC.  Public shareholders, the class had argued, were shortchanged by $10.7 billion when, in December 2018, Dell Technologies paid $14 billion in cash and issued 149,387,617 shares of its Class C common stock for the Class V shares.

When the challenged conversion closed on Dec. 28, 2018, VMware stock closed at $158.38 per share, and Class V stockholders received just $104.27 per share, fueling objections that the Dell Class C stock to be received for Class V shares had been overvalued.

In his fee opinion, the vice chancellor noted that class attorneys provided hundreds of examples of contingent fee agreements to support their original request for $285 million.  However, he noted, none of the objectors provided examples, except for Pentwater, and that example was "not for a Delaware case."  Vice Chancellor Laster also observed in his July 31 decision that investment funds that had recommended a lower amount, including Pentwater and seven others, had "a strong economic motivation for seeking a lower fee award."

The vice chancellor's decision elaborated on the idea that the investment funds that didn't go to the trouble of suing had a financial motivation now to object.  Following a 10% fee trend in federal securities actions, he noted, would have given them an extra $49 million for the equity holders, rather than sharing it with the class.  Five law professors suggested in a friend-of-the-court brief that a 15% fee would be appropriate, which still would have added $35.78 million to the objectors' recovery, the vice chancellor's decision noted.

"Having sat back and done nothing, the objectors now claim that a fee award without a sizable reduction would 'not yield equitable results,'" the vice chancellor wrote in an August filing confirming the $266.7 million fee award.  "That assertion masks self-interest with an appeal to equity.  Wanting more money for yourself is understandable, but it is not grounds for a fee objection."

Class Counsel Seek 33 Percent in CVS Lidocaine Label Case

September 26, 2023

A recent Law 360 story by Mike Curley, “Class Seeks $1.1M Atty Fees in CVS Lidocaine Label Suit”, reports that plaintiffs in a class action against CVS Pharmacy Inc. over its labeling of lidocaine products are asking a New York federal court to award $1.1 million in attorney fees out of a $3.8 million settlement, saying attorneys' work and the scope of the settlement warrant the payout.  In a memorandum, named plaintiffs Monique Bell, Tree Anderson and Melissa Conklin said the fee request amounts to just over a quarter of the settlement's total value when the $3.8 million for the class is added to an estimated $500,000 for notice and administration costs, putting it well within the typical 33% benchmark.

The plaintiffs added that the requested amount represents about 800 hours of work so far. With a blended hourly rate of $620 an hour, it comes to a lodestar multiplier of about 2.29 — a multiplier that will go down, as the plaintiffs' attorneys estimate they have about 50 more hours of work ahead in administering the deal.  In addition, the plaintiffs argued that the result for the class was very good, considering the risks that the case could have been dismissed or that they could have lost at trial.  They added that the injunctive relief requiring CVS to change its labeling further warrants a significant payment.

The suit was filed in December 2021, alleging that CVS tricked consumers into thinking that the labeling of "maximum strength" on its lidocaine patches referred to the maximum strength often prescribed by doctors and made false claims regarding how long the patches stay on the body.  The suit alleged violations of state consumer protection statutes, state warranty acts, the federal Magnuson-Moss Warranty Act and New York's General Business Law, as well as a claim of unjust enrichment. The class sought preliminary approval for the $3.8 million settlement in April.

CVS sold more than 9.5 million units of lidocaine products from December 2017 through January 2023, and the class is defined as all persons who purchased products during that time.  Under the agreement, CVS will provide consumers recovery of up to $4.50 per purchased unit and change product labels to clarify that "maximum strength" refers to lidocaine available over the counter.  The settlement also requires CVS to remove any language referring to the length of time that the patches stick to the body.

In the memorandum, Bell also asked the court for a $3,000 service award for the three named plaintiffs, arguing that they have spent significant time helping the class by investigating the claims, providing information and keeping in contact to discuss the progress and strategy of the case.

Record $267M Attorney Fee Award in $1B Dell Settlement

August 2, 2023

A recent Law 360 story by Jeff Montgomery, “Five Firms Win Record $266.7M Fee From $1B Dell Settlement”, reports that the Delaware Chancery Court gave the nod to a record $266.7 million fee award for stockholder class attorneys among five firms who secured a $1 billion settlement, one of the largest ever in any state-level court, for a suit that challenged Dell Technologies Inc.'s $23.9 billion stock swap in 2018.  Vice Chancellor J. Travis Laster's 92-page opinion awarded the fees to Labaton Sucharow LLP, Quinn Emanuel Urquhart & Sullivan LLP, Andrews & Springer LLC, Robbins Geller Rudman & Dowd LLP, and Friedman Oster & Tejtel PLLC.

The vice chancellor approved the overall settlement on April 19, saying class attorneys had undertaken a "huge effort," but reserved judgment on the 28.5% fee while considering objections that it took a disproportionate bite out of the per-share payment to stockholders.  Vice Chancellor Laster pruned the request from $285 million to $266.7 million, noting that eight investment funds had recommended a lower fee, citing concerns about "windfall" profits in the case of large awards.

"The funds have a strong economic motivation for seeking a lower fee award.  They collectively own shares comprising 26.1% of the class.  Although they did not propose an alternative amount, if the court were to follow the federal trend and award a 10% fee, the objectors would receive another $49 million," the vice chancellor wrote.  Five law professors separately suggested in a friend of the court brief that a 15% fee would be appropriate, which would have added $35.78 million to the objectors' recovery.

"In this case, plaintiff's counsel brought a real case, invested over $4 million of real money, and obtained a real and unprecedented result. Rather than requesting an unprecedented fee award, plaintiff's counsel asked for 28.5% of the common fund," consistent with past court practices and precedent, Vice Chancellor Laster wrote in the opinion.  Included in the fee award is a proposed $50,000 incentive fee for the plaintiff.  The award in Dell was eclipsed only by the $285 million fee approved for attorneys in the derivative Americas Mining case in 2012, set by then Chancellor Leo G. Strine Jr.

The deal heads off a trial on claims targeting Dell's effort to exchange Class V stock — created to finance much of Dell's $67 billion acquisition of EMC Technologies in 2016 — for shares of Dell common stock.  The Class V shares generally traded at only 60% or 65% of the price of VMWare, a business in which EMC owned an 81.9% equity stake when Dell acquired EMC.  Public shareholders, the class has argued, were short-changed by $10.7 billion when, in December 2018, Dell Technologies paid $14 billion in cash and issued 149,387,617 shares of its Class C common stock for the Class V shares.

During a settlement hearing last week, attorneys for the class told the vice chancellor that they 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.  The requested fee, they said, had already been adjusted downward by 5% from a typical eve-of-trial award of 30% or more.  In addition to towering over any state award, the $1 billion payout would rank as the 17th largest class settlement of all time, according to Institutional Shareholder Services Inc.

Among the objectors was Pentwater Capital Management LP, which held 1.8% of the Dell Class V stock at the center of the stockholder action.  Pentwater described the fee as "far in excess of what is appropriate in these circumstances" and "fundamentally unfair" to the class represented.

The objectors, the vice chancellor observed "argue that the $1 billion common fund is not so impressive because plaintiff's counsel had a high likelihood of prevailing at trial," and asserted that the combination of the court's "entire fairness test and flaws in the deal meant that liability, while contested was never in doubt.  "No one who is actually familiar with litigation in this court could think that," the vice chancellor wrote.

Defendants regularly win under the entire fairness test, the vice chancellor noted, and "plaintiff's counsel did not have a laydown hand on liability.  They had a strong case that the fiduciary defendants did not follow a fair process, but fair price was debatable, and damages were a Wildcard."  Had Dell shown that the price was sufficiently fair, the class would lose, the decision found.

"Plaintiff's counsel deserves to be well compensated for identifying real cases, investing real money in those cases, and obtaining real results.  But the law should not reward plaintiff's counsel for filing weak cases and obtaining insubstantial results," the vice chancellor wrote.  Litigation continued until 19 days before trial, with the class pre-trial brief weighing in at 134 pages.

"Plaintiff's counsel thus went beyond a mid-stage adjudication that should yield a fee of 15–25%" after multiple depositions and some level of motion practice, the vice chancellor wrote, referring to the court's practice of taking the stage of litigation and effort heavily into account when awarding fees.

Fee decisions generally take into account the complexity of a case, the experience and ability of the lawyers, time and effort invested, stage of litigation and contingency terms that subject counsel to a risk of no payment at all, according to the court.  Not requested were attorney expenses, which amounted to more than $4 million.  In part, class attorneys had to make a decision regarding the appearance of a request for deduction of expenses, the vice chancellor wrote, in a case where "the common fund is so large that the out-of-pocket costs become a rounding error."