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Category: Fee Allocation / Fee Apportionment

Class Counsel Earn $3.6M in Fees in CBS #MeToo Case

November 14, 2022

A recent Law 360 story by Katryna Perera, “CBS Investors Attys Get $3.6M in Moonves #MeToo Case” reports that counsel from Robbins Geller Rudman & Dowd LLP have been awarded $3.6 million for their work securing a $14.7 million settlement for a class of CBS Corp. investors who claimed the company's former CEO Les Moonves' alleged sexual misconduct tanked the broadcasting giant's shares.  U.S. District Judge Valerie Caproni issued an order granting the attorney fee request along with $354,000 in litigation expenses.  However, she declined to award fees or expenses to Johnson Fistel LLP, which she noted did not appear as counsel to any plaintiff in the instant case or in a related matter.

Judge Caproni also granted a $2,250 service award to lead plaintiff, the Construction Laborers Pension Trust for Southern California, but declined to grant a request for $20,000 in legal fees for the lead plaintiff's outside counsel, which the order does not identify.  In awarding Robbins Geller $3.6 million in fees, the judge said the attorneys devoted more than 5,000 hours to the case, with a lodestar value of $4.6 million.  She also noted that class members filed no objections to the fees or expenses.

The $14.7 million settlement between the class and CBS was reached in April.  Investors argued that the deal was a "very good" one given that it represents between 7% and 9% of their estimated reasonably recoverable damages.  The investors alleged in their August 2018 suit that a statement Moonves made at the Variety Innovate Summit industry event in late 2017 kept CBS' share price artificially inflated until explosive July 2018 news reports detailed his alleged history of workplace sexual harassment.

Groupon Settlement Merits $4.5M in Attorney Fees

November 1, 2022

A recent Law 360 story by Katryna Perera, “Attorneys in Groupon Settlement Secure $4.5M in Feesreports that lawyers representing a class of Groupon investors will receive $4.5 million in attorney fees from a $13.5 million settlement resolving allegations that Groupon misled investors about its financial health before ending its sale of physical goods and announcing the departure of two top executives.  U.S. District Judge Matthew F. Kennelly issued an order approving class counsel's fee requests along with $250,000 in litigation costs and a $5,000 service award to lead plaintiff Fadi Rahal.  The Illinois federal judge also granted final approval to the deal.

Judge Kennelly said class counsel from Glancy Prongay & Murray LLP and Kirby McInerney LLP devoted more than 4,000 hours to the case with a lodestar value of approximately $2.9 million.  Additionally, the judge said there were significant risks with continued litigation, and that the requested fee award is consistent with similar, complex class actions.

"The stakes in the action were extremely high given, among other things, the amount of money at issue, and the large size of the settlement class," the order states.   Plaintiff's counsel conducted the litigation and achieved the settlement with skill, perseverance and diligent advocacy, and they are highly experienced in the field of securities class action litigation."  Groupon and the investor class told the court in June they had reached the deal, which represents a recovery of 9.6% of the total maximum damages potentially available to shareholders. A best-case scenario would have resulted in a $140 million recovery, Rahal said at the time.

Delaware Court Wants More Info on Opioid Fee Award

October 26, 2022

A recent Law 360 story by Jeff Montgomery, “Del. Court Demands Info on $2.7M Atty Fee in Opioid Deal” reports that, citing unsatisfactory answers to questions about a flat, $2.7 million attorney fee payout request as part of Delaware's $100 million share of a nationwide opioid damage settlement, Delaware's chancellor cautioned she might sever the fee from the deal pending a fuller explanation.  In a letter to Cross & Simon LLC, Chancellor Kathaleen St. J. McCormick gave those seeking to wrap up the deal a choice between severing the fee award from the settlement for now or accepting a three-day deadline for briefs on the issue.

The chancellor said the request to direct the state's Prescription Opioid Distribution Commission to pay $2.7 million to unnamed outside attorneys "gave me pause for a few reasons."  Among the concerns, the chancellor said, is that "in analogous circumstances, this court exercises its own business judgment when approving attorneys' fees in representative litigation from a settlement fund."

At issue is Delaware's share of a $4 billion fund for state and local governments, carved out of an overall $26 billion settlement that, for Delaware, resolves investigations and litigation over the role that Johnson & Johnson and distributors Cardinal, McKesson and AmerisourceBergen played in creating and accelerating the opioid crisis.  Delaware Attorney General Kathleen Jennings announced the state's portion of the settlement in July 2021.  A complaint and final consent judgment were filed together in the Court of Chancery on Aug. 24, 2022.

Funds from the settlement will finance addiction treatment and prevention as well as other services and programs.  The agreement also mandates producer, distributor and health care reforms to prevent a recurrence of the crisis, including Johnson & Johnson's exit from opioid production.  Attorneys for Delaware told the chancellor that "court approval is not required," but said in a letter earlier this month that they are prepared to submit documents for a traditional court fee analysis if required.

Michael L. Vild of Cross & Simon said in a letter Oct. 13 that "this matter involves a two-party contract between the state and its counsel, unrelated to the state's agreement with the defendants.  There are no unrepresented or absent third parties."  That explanation, the chancellor said, "gave me pause."  Included in the overall settlement, the chancellor said, are provisions for establishment of an outside counsel fund, and statements in some parts of the settlement agreement say that payment of fees from the settlement fund is "disfavored."

A related agreement, "Remediating Opioids Across Delaware through State-Municipal Abatement Partnership," also discourages attorney fee payments from the settlement fund, the chancellor observed, adding that a multistep review and approval process is called for under some provisions.  "The parties effectively ask that I shortcut the statutory process for authorizing distributions by ordering the commission to distribute the $2.7 million to the state's outside counsel, without any opportunity for public comment or investigation by the commission, without any role of the consortium, and without the requisite approvals," the chancellor wrote.  "Maybe that is warranted and appropriate, but the parties did not expressly address this aspect of the relief requested."

Acknowledging concerns about delaying the payment, the chancellor suggested a three-day window for supplemental briefs on the issue or severing the fee provisions from the order, allowing the rest of the funds to go forward, pending a resolution on fee terms.

Chancery Approves Attorney Fees in Biopharma Co. Settlement

October 14, 2022

A recent Law 360 story by Leslie Pappas, “Chancery Awards $900K Fee For Biopharma Co. Settlementreports that a shareholder who negotiated a settlement with Sage Therapeutics Inc. after suing in Delaware Chancery Court over alleged "grossly excessive" director pay was awarded $900,000 for his efforts, nearly three times what the company wanted but shy of the $1.25 million he sought.

In a bench ruling at the end of a virtual hearing, Delaware Chancellor Kathaleen St. J. McCormick approved the settlement that ended investor John Solak's derivative suit, but found that the benefits he achieved for the company were worth about $8.5 million, not the $9.5 million to $13.1 million his expert estimated.

Sage and the eight company directors who were named as defendants in Solak's suit identified enough problems with his expert's analysis to "merit some reduction" in the fee award, but arriving at a final number was "actually quite hard" because of the interplay of many different elements in the calculation, the Chancellor said.  "So I'm just going to administer some rough justice" and cut the fee award by 25%, she said.

The Massachusetts-based clinical-stage biopharmaceutical company, which develops treatments for brain disorders, had argued that the benefits to the company ranged from $2.4 million to $3.2 million and that Solak deserved an attorney fee award of no more than $350,000.

The plaintiff's analysis includes flaws that make the final number "wholly unreliable," such as using 2019 compensation figures instead of more recent ones, the company's attorney, Megan Barriger of WilmerHale, argued.  "You need to use the right set of data," she added.

Solak's attorney, Jeffrey M. Norton of Newman Ferrara LLP, told the court that the expert used standard forms of analysis and the plaintiff had spent nearly 600 hours prosecuting the case.  The settlement's unique solutions could be used as a template in future cases, he said.

Solak sued Sage in August 2020, alleging that the average pay for its non-employee directors far outpaced that of larger and more profitable companies. He accused the company's directors and others of unjust enrichment, fiduciary duty failures and corporate waste, and sought corporate governance reforms.

In her bench ruling, Chancellor McCormick concluded that Solak, represented by Cooch and Taylor PA, Newman Ferrara LLP and Kranenburg, deserved 10% of the $8.5 million estimated benefit he achieved for the company.  She bumped the total award to $900,000 to account for the fact that the settlement also secured the possibility of a stockholder vote on the new pay scheme.

Fourth Circuit Mostly Upholds Fee Award in Fee Dispute

August 10, 2022

A recent Law 360 story by Rachel Rippetoe, “4th Circ. Mostly Backs Firm’s $1.5M Win in Napoli Fees Fight reports that the Fourth Circuit has mostly upheld a $1.5 million outcome for Maryland law firm Keyes Law Firm LLC against a dozen defunct law firms connected to New York plaintiffs attorney Paul Napoli, rejecting all but one challenge on appeal — a question concerning the appropriate interest rate on sanctions stemming from the parties' discovery fights.  The appeals court said in an opinion that it affirmed all of a Maryland district court's rulings in a fee-agreement battle between firms over the referral of asbestos clients, "with one small exception" — the verdict's application of Maryland's 10% post-judgement interest rate attached to the discovery sanctions inflicted on the defendants.

Among many other objections in their appeal of a December 2020 ruling that said Napoli and his many firms owed Keyes $1.5 million, the defendants argued that the district court gave no reason why the state interest rate should be applied instead of the federal rate.  On that point, the Fourth Circuit agreed.  The panel, including U.S. Circuit Judges Robert B. King, Allison J. Rushing and Eastern District of Virginia U.S. District Judge David J. Novak, who was sitting by designation, said that federal law trumps state law and no party had disputed this.

On all other matters though, despite both parties raising 24 issues "claiming almost limitless error" in the district court's handling of the case, the Fourth Circuit affirmed the lower court.  "Judge Craven of our court once remarked that '[s]o many points of error suggest that none are valid.'" the opinion read.  "His observation applies with equal force here.  The defendants offer twenty-one grounds for reversal and [Keyes Law Firm] another three.  After carefully considering each one, we conclude that, with one minor exception, they all lack merit."

The underlying suit alleges that Napoli's initial law firm Napoli Bern Ripka Shkolnik LLP never made good on many of its 2,174 referral agreements with Keyes Law Firm, particularly after the firm divided in a drama-filled break up of partners Napoli and Marc Bern.  Before the breakup, Mary Keyes, founder of Keyes Law Firm, said she signed fee-sharing agreements with Napoli Bern and referred asbestos clients to the firm between 2012 and 2014.

Keyes Law Firm, which specializes in representing clients in asbestos cases, was working with bankruptcy firm David Law Firm, which is now Cooper Hart Leggiero & Whitehead PLLC.  The bankruptcy firm would send its asbestos clients that were not facing bankruptcy to Keyes for a small referral fee.  But soon Keyes was flush with clients and entered a partnership with Napoli Bern, referring some of its asbestos clients to the national plaintiffs firm, which had more trial resources.

Keyes eventually served as a "sort of middle man" between the bankruptcy firm and Napoli Bern, the opinion said, with Keyes Law Firm receiving 6% of the settlements, the bankruptcy firm receiving 10% and Napoli Bern receiving 24%.  All was going smoothly until the Napoli Bern breakup, Keyes said. Napoli and Bern together made tens of millions of dollars representing New York City workers injured during the cleanup after the Sept. 11, 2001, terror attacks.  But in 2014, the pair were embroiled in a battle over who would control the firm, following Napoli's battle with lymphoma.

The falling-out resulted in litigation on both sides, an even split of the firm's clients granted to both Napoli and Bern, and Napoli Bern being placed in a receivership, where it remains today.  But it had another side effect, according to Keyes — her payments from Napoli from the ongoing settlements in the asbestos cases dwindled, and eventually discontinued.  In 2017, Keyes sued 17 defendants, representing several offspring of Napoli Bern, who she claims were simply alter egos for the original firm and Napoli himself, claiming breach of the association agreements.