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Category: Fee Allocation / Fee Apportionment

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.

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.

Three Law Firms Seek $4M in Fees in $20M Fidelity Settlement

April 5, 2022

A recent Law 360 story by Rose Krebs, “3 Firms to Seek Up to $4.4M for $20M Fidelity National Suit Settlement” reports that three firms are set to seek $4.4 million for a proposed $20 million settlement of an investor suit in Delaware Chancery Court that accused Fidelity National Financial Inc. directors and others of forcing through a $1.8 billion acquisition of annuity and life insurance provider F&G.  In a stipulated settlement filed to Chancellor Kathaleen St. J. McCormick, plaintiff City of Miami General Employees' and Sanitation Employees' Retirement Trust is set to drop its suit in exchange for the defendants paying or having their insurers pay $20 million to Fidelity.  The settlement still needs to be approved by the court at a future hearing.

Bernstein Litowitz Berger & Grossmann LLP, Andrews & Springer LLC and Klausner Kaufman Jensen & Levinson are set to seek a fee award of up to $4.4 million in connection with the deal, according to the stipulation.  The fee award would be paid out of the $20 million settlement.

The lawsuit alleged Foley used the F&G deal as an opportunity to earn fees for his affiliated companies, including MVB Management LLC and Trasimene Capital Management LLC.  Foley and business partner Chinh Chu, the latter of whom is not named as a defendant, allegedly already took in millions of dollars per year from F&G through a sub-advisory investment management agreement with a Blackstone unit, the suit asserted.

The pension fund claimed that through the acquisition of F&G, Blackstone and MVB renegotiated the agreement giving MVB more advisory fees but for the same amount of work.  Also, the suit similarly alleged Fidelity paid Trasimene an "exorbitant" amount of money for a five-year services agreement, which that entity earned by giving two presentations to the special committee and didn't provide a fairness opinion.

The deal was approved largely because of Foley's "patronage machine" — the special committee that reviewed the transaction — which included individuals loyal to Foley, the lawsuit asserted.  The suit argued the transaction was not a strategically sound decision and made little sense to Fidelity shareholders as the company and F&G operate in separate spheres of the insurance world, title insurance and annuities.

Although the pension fund continues to assert the suit's claims have legal merit, it believes the proposed settlement is "fair, reasonable, and adequate, and in the best interests of the company and its stockholders," the stipulation said.  Defendants deny "all allegations of wrongdoing or liability" and have agreed to settle to "avoid the costs, disruption and distraction of further litigation," the stipulation said.

Attorney Denied Bulk of $5.3M Fee Award in VA Suit

March 29, 2022

A recent Law 360 story by Jonathan Capriel, “Atty Denied ‘Lion Share’ of $5M Fee in Paralyzed Vet Suit” reports that the personal injury lawyer behind a $21 million win for a man paralyzed due to a botched surgery in a Veterans Affairs hospital won't keep the "lion's share" of a $5.3 million attorney fee award, a New York federal judge ruled, saying it was "inappropriate" to short his former law firm.

U.S. District Judge Frederick J. Scullin Jr. called attorney Robert B. Nichols' work "instrumental" in securing a multimillion-dollar award for veteran Charles Malmberg, who sued Syracuse VA Medical Center claiming a 2004 spinal operation left him significantly immobile.  But Nichols' assertion that his previous employer, the Office of Paul William Beltz based in Buffalo, is entitled to only a tenth of the award was far too small, the judge said.

"The Court finds that Mr. Nichols's work in bringing this matter to its conclusion weighs in favor of his receiving a larger than 50% share of the counsel fees," Judge Scullin said in his order.  "However, because so much of the work that Mr. Nichols conducted in this case was done on behalf of the Beltz Firm, the Court further finds that his request for 'the lion's share,' i.e., 90%, of the counsel fees is inappropriate."

The judge ordered that the Beltz firm should receive 40%, or $2.1 million. Nichols and his co-counsel Alan J. Pierce, an attorney at Hancock Estabrook LLP, are entitled to the remaining 60%, or nearly $3.2 million, of the counsel compensation.  While this money has been sitting in an escrow account since at least March 2021 as the two sides debated who deserved how much, the attorneys in this lawsuit, which was filed in 2006, have been waiting much longer to get paid.

In an April 2010 bench trial, Judge Scullin determined that the VA hospital had deviated from the accepted standard of care and committed medical malpractice, which caused Malmberg's injuries. Nichols, who was working at the Beltz firm throughout the litigation, left to start his own practice in January 2011 and took Malmberg as a client.  The judge awarded the veteran nearly $4.5 million in damages in 2012. Malmberg, whose medical condition had become worse, asked the court to increase the award amount to $15 million and later to $25 million, but the district court said no.

He appealed to the Second Circuit with co-counsel Pierce brought on board.  Ultimately, the panel agreed with Malmberg, saying Judge Scullin should have taken into account expert testimony that said the deteriorating nature of the veteran's condition wasn't obvious at the time of filing.  "Following two appeals to the Second Circuit, two remands, and various settlement negotiations, the parties ultimately stipulated to $21.5 million in damages for plaintiff," Judge Scullin said, summing up the case history.

About 25% of the award was set aside for attorney fees.  But there was a dispute between Nichols and his old firm.  During two months of mediation in 2021, Nichols and Pierce offered the Beltz firm only $540,000, or just over 10% of the fee, but Beltz claimed it was entitled to 60%.  Nichols and Pierce claimed that of the 1,880 hours spent on this case, the Beltz firm contributed only 185, or 10.1%.  On top of that, Nichols was the lead attorney the entire time when he was at Beltz.

Beltz rejected this, arguing, in part, that the nearly 1,700 hours they put into Malmberg's case should largely be ignored when calculating the two attorneys' share. The firm said that those hours were spent in appeal trying to fix a mess Nichols made at the start of the case.  He erroneously requested an "inadequate" amount in damages of just $6 million, Beltz said.  While both sides couldn't agree to their share, they did acknowledge that this situation was somewhat novel.

"The parties agree that there are no known cases in this Circuit in which an outgoing attorney left after the liability phase of trial and the incoming attorney managed the damages phase and appeals," the judge said.  Ultimately, the judge agreed that Nichols had messed up when requesting such a small amount of money at the onset of the case. Still, he didn't want to discount the work he did overall.  "Mr. Nichols was also instrumental in obtaining the highest possible damages judgment for plaintiff, despite his error in requesting only $6 million when he filed the complaint as part of The Beltz Firm in 2006," the judge said.

Plaintiffs Firms Seek $20M in Fees in ATM Antitrust Case

February 28, 2022

A recent Reuters story by Mike Scarcella, “Plaintiffs Law Firms Seek $20 mln in Legal Fees From ATM Antitrust Case” reports that three plaintiffs' law firms have asked a federal judge to award more than $20 million in legal fees as part of a $66 million antitrust settlement with banks accused of participating in a scheme to fix ATM charges.  The class attorneys representing ATM operators and consumers said in a petition for fees on Feb. 25 they had invested more than 30,500 hours in the case since 2011, when it was filed in U.S. District Court for the District of Columbia.

A judge last year approved a settlement with Bank of America NA, Wells Fargo & Co and JPMorgan Chase & Co. Two other co-defendants, Visa Inc and Mastercard Inc, are pressing a legal challenge in the U.S. Court of Appeals for the D.C. Circuit.  The class damages exceed $1 billion, according to the three plaintiffs' firms seeking fees: Hagens Berman Sobol Shapiro, Quinn Emanuel Urquhart & Sullivan and Mehri & Skalet.

The bank defendants agreed to resolve consumer claims that they overpaid certain charges levied on transactions at bank-operated ATMs.  "This is not a case where plaintiffs settled quickly after filing their pleadings or relied on parallel guilty pleas," the plaintiffs' lawyers said in their fee petition.

The firms said their requested fee marked a 30% cut of the overall settlement fund and was "reasonable when compared to awards in antitrust class actions in this district."  The lawyers also argued the "litigation required an atypically high amount of expert work."  They pointed to a 2021 academic report showing the median antitrust fee award was 30% for settlements between $50 million and $99 million from 2009 to 2020.