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Category: Contingency Fees / POF

Judge Mulls $113M in Fees in $454M Glumetza Antitrust Settlement

January 20, 2022

A recent Law 360 story by Hannah Albarazi, “Alsup Mulls $113M Atty Fees in Glumetza Antitrst Deal,” reports that U.S. District Judge William H. Alsup said he will grant final approval to $454 million in settlements resolving direct Glumetza buyers' class claims that drugmakers plotted to delay the generic version of the blockbuster diabetes drug, but said he's still weighing attorneys' $112.8 million fee bid.  During a hearing, class counsel urged the judge to sign off on their attorney fee bid for 25% of the $453.85 million settlement fund over objections raised by direct purchaser class members McKesson Corp., AmerisourceBergen Corp. and Cardinal Health Inc., who asked the court to slash the fee award to $22.5 million.

National wholesalers McKesson, AmerisourceBergen and Cardinal Health objected to the "unprecedented" attorney fee award of $112.8 million, telling Judge Alsup that class counsel is seeking to be paid five times their regular rates.  McKesson's attorney, Steven Winick of Buchalter PC, speaking on behalf of all three objectors, told Judge Alsup that "25% is not reasonable and would lead to a windfall for class counsel."

Winick said the "enormous damages" fund in this generic drug delay case stems from the "exorbitant" increase in the price of Glumetza by defendant Bausch and its co-conspirators, but that had the class gone to trial and won, it could have been awarded treble damages of up to $2.7 billion, a far cry from the $454 million settlement fund.  The objectors instead suggested a multiplier of two, which would result in a $22.5 million reward to class counsel.

The antitrust claims were filed by a group of direct and indirect buyers in fall 2019 after the price of the diabetes medication allegedly jumped by nearly 800% in 2015 from $5.72 per pill to more than $51 apiece.

Co-class counsel, Lauren G. Barnes of Hagens Berman Sobol Shapiro LLP, said the 25% fee award is the benchmark in Ninth Circuit and that the multiplier of five is not outside the range of reasonable multipliers awarded in this circuit.  Barnes also noted that the 25% take is less than the one-third bid that is often awarded in the district.  Judge Alsup said at the close of the hearing that he will allow the plaintiffs' $2.4 million in expense reimbursement and intends to grant final approval of the settlement, but said, "I don't have answer on the attorney fees

Judge Calls Fee Disclosure in Voya Class Settlement 'Inadequate'

January 14, 2022

A recent Reuters story by Allison Frankel, “N.Y. Judge Calls Out Susman Godfrey for “Inadequate Fee Disclosure,” reports that Manhattan federal judge Kevin Castel refused this week to grant preliminary approval of a proposed $92.5 million class action settlement to resolve allegations that Voya Retirement Insurance and Annuity Company breached its contract with more than 46,000 life insurance policyholders who were subjected to a “cost of insurance” rate increase when Voya’s predecessor sold the policies to Lincoln Life and Annuity Company of New York.

The judge’s beef was not with the terms of the proposed settlement itself, which class counsel from Susman Godfrey described in a brief backing preliminary approval as “extraordinary.”  Susman Godfrey’s brief certainly establishes the firm’s tenacity in more than five years of litigation, all the way through class certification and summary judgment rulings.  The cash portion of the proposed agreement, Susman said, will provide at least as robust a recovery for policyholders as settlements that have previously been approved in other cost of insurance class actions.  And here, the firm said, the money will go straight to policyholders, who don’t even have to assert a claim to receive their share of the settlement fund.

Susman Godfrey said it intended to request a fee award of less than one-third of the settlement.  More specifically, the proposed notice to class members, attached as an exhibit to a declaration from the claims administrator, said Susman “will file a motion seeking an award for attorneys’ fees not to exceed one-third of the gross benefits provided to the settlement class.”

That mention of "gross benefits" caught Castel’s attention.  In the memo requesting preliminary approval, Susman touted the value of the non-monetary benefits it had obtained in the proposed settlement, including Voya’s pledge not to raise cost of insurance rates for class members for five years.  In an analogous class action mentioned in Susman’s motion, similar benefits were valued at more than $90 million.

Castel said it wasn’t clear from the language of the proposed class notice whether Susman Godfrey would ask for less than 33% of the cash value of the settlement – a number that would be simple for class members to calculate – or 33% of some as-yet unknown total settlement value.

“No hint is given as to the methodology that class counsel plans to employ,” Castel said, pointing out that if Susman Godfrey evaluated the non-monetary settlement provisions as generously as they were viewed in the class action cited in class counsel’s brief, one-third of the “gross benefits” could be as much as $62 million – which would give Susman Godfrey two-thirds of the cash in the settlement.  “If this is what counsel has in mind – or anything close to it – class members and the court should know it now,” Castel said.

Castel had to connect some dots to understand the potential gap between fees based on just the $92.5 million cash recovery for the class and an award that included the value of the non-cash benefits.  Susman’s memo requesting preliminary approval of the settlement does not put a dollar figure on those benefits.  Castel must have obtained the valuation figure he cited in this week’s opinion from a declaration filed by Susman’s Seth Ard.

Castel also took issue with class counsel’s proposed explanation to class members of the consequences of opting out of the settlement.  The proposed notice advised class members that they could tell the judge what they didn’t like about the settlement but would still be bound by the deal.  “This statement is fundamentally misleading,” Castel said.  “The purpose of an objection is to persuade the court not to approve the proposed settlement.  A successful objection means that the objector and other members of the class are not bound.”

Susman’s Steven Sklaver told me by email that the firm has taken Castel’s feedback to heart.  Susman intends to file a revised motion for preliminary approval clarifying that its fee request will be based only on the cash payout to class members, not on any additional value from the non-cash benefits.  “We are thankful for the court’s consideration of the matter and guidance,” Sklaver said.

Southern Copper Opposes $7.5M Attorney Fee Request

January 13, 2022

A recent Law 360 story by Rose Krebs, “Southern Copper Opposes 2 Firms’ $7.5M Fee Bid in Chancery,” reports that Southern Copper Corp. is arguing that Delaware Chancery Court should give Andrews & Springer LLC and Friedman Oster & Tejtel PLLC roughly half of the $7.5 million in fees they requested after reaching a proposed $24.5 million settlement of a stockholder suit asserting the company was exploited by controlling investors.  In a brief filed Wednesday in "limited objection" to a bid by stockholder plaintiff Carla Lacey, who is represented by the two firms, Southern Copper argues that $3.675 million would be a more reasonable award than the $7.5 million sought for attorney fees and expenses.

"Plaintiff requests a fee representing 30.6% of the $24.5 million monetary settlement that was reached at an early stage of this case, which is a spin-off from a related case involving the same plaintiff and counsel," the brief said.  "To support this excessive request, plaintiff touts supposed non-monetary corporate benefits that largely occurred before this case was filed and which counsel contends were sparked by their work in the prior case — for which they were already richly compensated in that prior case."

Southern Copper's counsel was referring to a settlement approved by Vice Chancellor Sam Glasscock in 2019 to end another suit filed by Lacey over the purchase of two Southern Copper power plants by Mexican mining giant Grupo Mexico SAB.  Class claims in that case, which asserted the $300 million acquisition was unfairly structured, were settled for $50 million, with $13.5 million awarded in attorney fees for class counsel and a $5,000 incentive award for lead plaintiff Lacey.

Southern Copper said that it filed "this limited objection because the 30.6% fee request is excessive and would unreasonably deprive Southern Copper and its stockholders of a portion of the settlement."  Other defendants in the case joined Southern Copper's objection, court records show.

In a brief made public earlier this month, Andrews & Springer and Friedman Oster told the court they are seeking the $7.5 million for work on the proposed settlement, which would end a more than two-year battle over stockholder allegations Southern Copper has been exploited by its controlling investors.  The two law firms argued the fee bid is reasonable given the "benefits secured through the $24.5 million cash settlement payment" along with corporate governance reforms made while the suit was being litigated.  Lacey is also seeking a $5,000 incentive award for "her efforts in asserting and prosecuting this action," the firms said.

Under the stipulated settlement filed with the court in September, AMC is set to pay Southern Copper $24.5 million to end the suit.  Defendants make no admission of any wrongdoing under the proposed settlement.  In the brief made public last week, Lacey's counsel contended that she also secured other benefits for Southern Copper, including enhanced "procedures for reporting, documenting and reviewing related party transactions" and that her "litigation efforts also caused SCC's appointment of two new independent directors."

Those benefits, in addition to the cash settlement, should lead the court to approve the incentive award and $7.5 million fee and expenses award, the brief said.  But Southern Copper argued in the filing that "the company instituted a number of corporate actions during" the first Lacey suit, accusing the plaintiff of trying to "double-dip" by asking for $7.5 million now.

"Notwithstanding that plaintiff's counsel were well-compensated for their work in Lacey I, which made this follow-on case relatively straightforward, plaintiff's counsel asks that the court divert 30.6% of the $24.5 million monetary settlement to them despite the early stage of litigation," Southern Copper argued.

High Court Won’t Review Chinese Drywall Attorney Fee Award

January 11, 2022

A recent Law 360 story by Emily Field, “High Court Won’t Review Chinese Drywall Atty Fee Award,” reports that the U.S. Supreme Court declined to review an Eleventh Circuit decision that upheld a fee award of $5.8 million to class counsel in the defective Chinese drywall multidistrict litigation from MDL attorney fees from past work on the case.

As is custom, the high court did not explain why it chose not to hear the November petition from lawyers who represented 497 individual plaintiffs in suits stemming from the MDL.  In their petition, the attorneys had argued that the MDL compensation system is out of control, and the award conflicts with the so-called American Rule, under which litigants generally pay their own attorney fees.  "Multidistrict litigation has revolutionized civil procedure, leaving courts and scholars puzzled by an assortment of issues, including the high-stakes attorney fee compensation system at issue here," the lawyers said.

The Eleventh Circuit said in June that the court-appointed class counsel could receive 45% of the total fees paid to attorneys who negotiated settlements for the 497 Florida plaintiffs, because their work on the common case helped lead to the individual recoveries.  The appeals court said U.S. District Judge Marcia G. Cooke did not abuse her discretion when she awarded class counsel $5.8 million of the more than $40 million paid by Taishan Gypsum Co. Ltd. to end claims over shoddy drywall imported from China.  In affirming the decision, the appellate panel said the attorneys' work for the 497 plaintiffs "did not exist in a vacuum."  The 497 plaintiffs were part of 1,734 Florida cases remanded in 2018 from the MDL in Louisiana to Judge Cooke in the Southern District of Florida.

"The Eleventh Circuit's decision was well-reasoned.  I'm not surprised that the Supreme Court denied review.  The Supreme Court's decision not to accept review is further vindication for the team of lawyers that obtained this historic result after over 10 years of hard fought litigation," Patrick Montoya, who represents the class counsel, told Law360.  "This case was unique for so many reasons, but chief among them was receiving compensation from Chinese companies for the U.S. victims of Chinese drywall."

Rutgers Blasts $1.6M Attorney Fee Request in COVID Case

January 6, 2022

A recent Law 360 story by Jeannie O’Sullivan, “Rutgers Blasts $1.6M Fee Bid in COVID-19 Fee Refund Suit,” reports that Rutgers University has blasted the $1.6 million counsel fee sought by three firms for representing a class of students seeking refunds after the COVID-19 pandemic torpedoed in-class instruction, arguing the amount cuts too deeply into the compensation fund.  In a brief filed in Middlesex County Superior Court, the New Jersey university said the students would benefit from a lesser fee of $500,000, representing 10% of the $5 million settlement struck by the parties.  The $1.6 million fee — sought by Carella Byrne Cecchi Olstein Brody & Agnello PC, Hagens Berman Sobol Shapiro LLP and Bursor & Fisher PA — amounts to a third of the fund.

"Rutgers does not dispute that the court should award Plaintiffs' counsel a reasonable attorneys' fee, but submits that under the circumstances of this case, the amount Plaintiffs' attorneys have requested would overcompensate them and take too much money out of the hands of the Rutgers students intended to benefit from the settlement," the brief said.  The firms would still be made whole by a $500,000 counsel fee award, Rutgers argued.

"Granting them their full request, by contrast, would cause a significant and unjustified reduction in the amount each current and former student will receive in the settlement," the brief said.  The university said it didn't dispute the class counsel's argument that common fund case fee awards can range from 19% to 45% of the settlements, as evidenced in a product liability suit against General Motors and antitrust litigation against Comcast Corp.

"But we are dealing here with claims by students against a public university," Rutgers argued.  The university pointed to the Second Circuit's 2000 decision in Goldberger v. Integrated Resources Inc., which held that a "'fee award should be assessed based on scrutiny of the unique circumstances of each case.'"

In their fee bid filed Dec. 20, the firms called the settlement an "unprecedented legal accomplishment" achieved on behalf of a 65,000-member class.  The attorneys said they'd expended 943.40 hours as of the filing and noted that the lodestar amount doesn't include additional hours they put in administering and overseeing the settlement.  The filing detailed the trajectory of the litigation, which was filed in May 2020 and "fiercely litigated and opposed" by Rutgers.  The litigation entailed vigorous motion practice, amended complaints and a trip to appeals court, after which a settlement was reached following multiple mediation conferences, the brief said.

The fee ask is justified after consideration of the seven factors courts must consider, ranging from the fund size and number of beneficiaries to awards in similar cases, and comports with professional conduct rules for attorneys, the firms said.  The firms also said the two class representatives are entitled to incentive awards of $2,500 each, given their "initiative, time and effort."