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Category: Fee Award Factors

Class Counsel Seek $6.9M in Fees for ‘Trailblazing’ Litigation

June 18, 2021

A recent Law 360 story by Rose Krebs, “Attys Seek $6.9M For ‘Trailblazing’ Work on Fresh Market Suit,” reports that Friedlander & Gorris and Robbins Geller are seeking roughly $6.9 million for what they say was "trailblazing" work as part of a proposed $27.5 million settlement to a Delaware Chancery Court suit over the $1.4 billion take-private sale of specialty grocery chain Fresh Market.  In a brief, Friedlander & Gorris PA and Robbins Geller Rudman & Dowd LLP assert they should be awarded $6.875 million for attorney fees and expenses for brokering the $27.5 million payout for a proposed class of former Fresh Market stockholders. 

The fee award sought is 25 percent of the settlement fund, an amount the firms argued has been granted under other similar investor suit deals.  "Plaintiff and plaintiff's counsel were well-positioned to conclude that the settlement is fair and reasonable," the brief said. "Plaintiff's counsel fought for and reviewed 1.5 million pages of documents."  The firms said "the benefits of the $27.5 million settlement are substantial in comparison to the strength of the claims and the risks of further litigation."

Also, Friedlander & Gorris and Robbins Geller said the proposed settlement "resulted from a trailblazing litigation strategy" since the transaction at issue came in the wake of Corwin v. KKR Financial Holdings LLC .  That key 2015 Delaware Supreme Court ruling laid out when deference should be given to the business judgment of the board rather than enhanced court scrutiny being applied under the First State's cornerstone "Revlon" standard.

The state Supreme Court's landmark 1986 Revlon v. MacAndrews & Forbes Holdings decision established an intermediate deal-review standard between deference to director business judgment and the more plaintiff-friendly "entire fairness" assessment, which requires a close look at the fairness of the process and transaction price.  In their brief, the firms said they "conceived a novel litigation plan" by obtaining company records under Section 220 of Delaware's General Corporation Law "to plead around Corwin" and defeat a defense under Corwin that deference be given to the board's business judgment.

Eleventh Circuit Upholds Fee Award in Chinese Drywall MDL

June 10, 2021

A recent Law 360 story by Carolina Bolado, “11th Circ. Upholds Fee Award in Chinese Drywall MDL,” reports that the Eleventh Circuit ruled that court-appointed class counsel in the defective Chinese drywall multidistrict litigation could receive 45% of the total fees paid to attorneys who negotiated settlements for 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.

The class counsel includes firms Colson Hicks Eidson, Lieff Cabraser Heimann & Bernstein LLP, Morgan & Morgan, Herman Herman & Katz LLC and Seeger Weiss LLP.  The Eleventh Circuit said that although the attorneys for the 497 plaintiffs had worked hard to get the deal, their work "did not exist in a vacuum."

"They benefited from the decade of foundational work that class counsel exerted in this groundbreaking MDL, which involved evasive defendants in China, complex jurisdictional challenges requiring two trips to the Fifth Circuit, decertification attempts and liability determinations," the appeals court said.  "That class counsel has otherwise been compensated for this work does not prevent them from continuing to reap the rewards of their efforts."  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 for further proceedings.

Following the settlement with the 497 plaintiffs, class counsel said that much of their foundational work was used to secure the deals, entitling them to 20% of the total settlement.  After a global settlement was approved in January 2020 between Taishan and the remaining class members, the class counsel amended their award request to 60% of the attorney fees paid out to the individual plaintiffs, according to the opinion.  In May 2020, Judge Cooke awarded them a 45% cut.

The counsel for the individual plaintiffs appealed the decision, arguing that common benefit fees are only appropriate when there is a common fund from which to award them.  In this case, there is no common fund or judicial supervision of a fund, they said.  They also argued that class counsel have already been highly compensated for their common benefit work by the MDL court.

But the Eleventh Circuit said that particularly in complex litigation, courts have broad managerial power and discretion to award fees.  "The district court had control over the funds pursuant to the agreement of the parties to litigate common benefit fees in the SDFL and the actions taken by the court after the settlement agreement was first filed," the appeals court said.  "Awarding a portion of these fees to class counsel was therefore within the district court's power."  The appeals court added that preventing appointed counsel from recovering fees when their work leads to settlements down the road would make it more difficult for courts to find competent lawyers to take on that work.

Jimmy Faircloth, who represents the attorneys who worked on the individual settlements, told Law360 the ruling conflicts with Eleventh Circuit precedent by allowing contractual attorney fees to be used as a fund for purposes of the common benefit doctrine.  "[The ruling] allows MDL authority to reach even deeper into the jurisdiction of a transferor court following a remand," Faircloth said.  "This creates a slippery slope with negative consequences for the class action device."

Patrick Montoya, who represents the class counsel, said he was pleased the Eleventh Circuit affirmed Judge Cooke's "well-founded opinion recognizing class counsel's efforts in this decade-long, hard-fought case."  "The settlement obtained by class counsel was an unprecedented result against Chinese companies and the first of its kind in the United States," Montoya said.  "Judge Cooke and the Eleventh Circuit prevented a group of splinter lawyers from doing an end-around and unfairly benefitting from the class counsel's monumental efforts and the excellent results obtained for class members by class counsel."

Ninth Circuit Strikes Down $7M Fee Award in ConAgra Class Settlement

June 2, 2021

A recent Law 360 story by Emily Field, “9th Circ. Strikes Down $7M Atty Fees in ConAgra Label Deal,” reports that the Ninth Circuit overturned a judge's approval of a class action settlement with ConAgra Food Inc. over its labeling on oil products, saying the parties crammed into the deal "a squadron of red flags" including attorney fees of nearly $7 million that are much larger than what consumers were awarded.  The panel in a published opinion said the agreement includes a number of questionable provisions and "reeks of collusion," particularly the attorney fee award of $6.85 million that is seven times higher than what class members received.

ConAgra and class counsel contended the deal could be worth more than $100 million, but ultimately, ConAgra paid out less than $8 million, with just $1 million going to the class.  Large counsel fees comparative to the payout for class members raises the possibility that counsel colluded with the defendant to lower class compensation in exchange for a larger fee, the panel said.  A defendant would go along with this kind of conspiracy because it only cares about how much it's paying in total, not how it's divided up, they added.

The panel said district courts must scrutinize attorney fee award arrangements when deciding whether a class action settlement is fair, following revisions to the Federal Rules for Civil Procedure that introduced the requirement in 2018.  Specifically, that requirement also applies to settlements that were reached after a class was certified, the panel held for the first time.  "[A] post-class certification settlement only ensures that the parties litigated aggressively to arrive at an adequate total fund size; it does not, however, address the inherent incentives that tempt class counsel to elevate his or her own interest over those of the class members," the panel said.

The panel's decision reverses the 2019 approval of the deal and sends the case back to California federal court.  In the suit, the buyers alleged ConAgra mislabeled its Wesson oil products as "100% natural" even though they contain genetically modified ingredients.

The deal also included a stipulation that ConAgra not advertise the Wesson brand of essential oils as "100% natural" anymore, which was supposedly worth tens of millions of dollars but now appears worthless since ConAgra no longer owns the brand, the panel said.  "That is like George Lucas promising no more mediocre and schlocky Star Wars sequels shortly after selling the franchise to Disney.  Such a promise would be illusory," the panel wrote in their opinion.

Objector and University of Chicago law professor M. Todd Henderson brought the appeal last year, arguing the lower court did not take into account the deal's value to the class when it granted the fees.  The panel also found other red flags in the settlement, such as a "clear sailing arrangement" under which ConAgra agreed not to challenge the class counsel fees.  "A clear sailing provision signals the potential that a defendant agreed to pay class counsel excessive fees in exchange for counsel accepting a lower amount for the class members," the panel said.

$9.3M Fee Award in $30.2M Lens Price-Fixing MDL Settlement

June 1, 2021

A recent Law 360 story by Dave Simpson, “$30.2M Deal, $9.3M Fee Award Greenlit in Lens Price-Fix MDL,” reports that a Florida federal judge signed off on a $30.2 million settlement to resolve claims against ABB Optical Group in sprawling price-fixing litigation and also granted $9.3 million in attorney fees plus $1 million for future anticipated claims costs.  U.S. District Judge Harvey E. Schlesinger greenlit the fee bid, which equals one-third of the settlement fund after payment of $500,000 for court-approved notice costs, $1 million in anticipated claims administration costs and about $750,000 in expenses.

"The court has considered the applicable case law and finds that awarding the requested attorneys' fees is fair and reasonable and just compensation for the work done and risks taken in this litigation and is well within the range of reasonableness under the factors established by the Eleventh Circuit," the judge said.

ABB Optical Group LLC, a contact lens distributor, was one of several large companies in the optical industry roped into the multidistrict litigation, which was consolidated in Central Florida.  The plaintiffs and the company signaled to the court Aug. 31 that they had reached a deal, although details were not disclosed at the time.  The court gave preliminary approval on Nov. 13, and the plaintiffs and their counsel filed initial motions for final approval of the deal and for the attorneys fee award in late February, according to court records.

The MDL — originally composed of over 100 cases — has been percolating for the last half-decade in the federal court in Jacksonville, where cases from Kansas and California were consolidated with those from the Sunshine State in 2015.  Suits began cropping up after optometrists and ophthalmologists raised concerns about discount lenses, accusing the four companies — vision care manufacturers Bausch & Lomb, Johnson & Johnson and Alcon and distributor ABB — of engaging in a conspiracy to coordinate their pricing.

In a December 2018 order, U.S. District Judge Schlesinger created a "In a December 2018 order, U.S. District Judge Schlesinger created a horizontal class of U.S. residents who made certain retail purchases of disposable lenses made by Alcon, Johnson & Johnson or Bausch & Lomb from June 1, 2013, to Dec. 4, 2018, for their own use and not resale.

The judge also created vertical manufacturer-based subclasses for consumers who bought, from June 1, 2013, to the date of class certification, lenses that one of those three companies made, applying the same conditions regarding prices.  The buyers had said in April that the lack of objections to their fee bid "evidences the reasonableness of lead counsel's fee request."

Class Counsel Argue for Attorney Fees in Flint Water Crisis Settlement

May 31, 2021

A recent Law 360 story by Michael Phills, “Flint Plaintiffs' Attys Argue For Final OK of $641M Settlement,” reports that plaintiffs' attorneys want to seal the deal on a $641 million settlement over the Flint, Michigan, water crisis that objectors have said carves out too much for legal fees, arguing that the fee request is fair for the hard-fought work to secure compensation for an environmental catastrophe.  In a trio of filings, the plaintiffs' attorneys pushed back against several types of objections around the settlement, including the argument that a nearly 32% award of attorney fees is unreasonable.  The attorneys argue that their work produced something significant that the judge should sign off on.  They say that despite the objections the court has received, more than 50,000 have supported the deal, showing its widespread backing from the Flint community.

On the question of fees, plaintiffs' counsel defended their request as reasonable, reflective of the many years and hours of work spent on the case.  And they said the top line fee request is more complicated than objectors make it out to be.  "Some objectors have claimed that plaintiffs' counsel seek an award of more than $200 million in attorneys' fees.  That is not true — a substantial portion of the attorneys' fees in this matter will be paid by claimants to their individually retained counsel," the plaintiffs' attorneys wrote.

According to court filings, individual attorneys that were privately hired had often already locked in their fees and "much of the aggregate fee request will go to these individual attorneys."  In May, 26 individuals objected to the deal and raised a range of concerns, including that the settlement generally lacks clarity on what it entails and that it won't provide enough money to help residents as they try to move past a crisis that has left them with medical concerns and exorbitant water bills.

In March, other objectors opposed the fee request, saying a motion for the fee award included "scant detail" about the claimed common benefit work and didn't estimate what the common benefit fees might amount to.  "[The request] provides absolutely no evidence that ceding 27% of claimants' recovery to private attorneys for work sight unseen could possibly be fair to Flint residents who need this money to help them grapple with oft-debilitating, ruinous, and violent consequences of lead exposure for their entire lives," the objectors said.

They said that in "megafund" settlements of this size, typical fee awards are in the 10% to 12% range.  In March, the plaintiffs' attorneys made their fee request for their five years and more than 180,000 hours of attorney work to reach the "remarkable" settlement result.  "Contrary to every single 'megafund' case cited by the [objectors], this case involved complicated questions of sovereign immunity which necessarily rendered the case riskier and required a heightened level of skill," the plaintiffs' attorneys wrote.  They argued that they should not have to provide detailed billing records to certain objectors.

U.S. District Judge Judith Levy gave preliminary approval to the deal in January, saying that it is a partial settlement that doesn't end the litigation over the lead-tainted water.  The settlement with Michigan and others provides a mechanism for minors, injured adults, property owners and renters, those who paid Flint water bills and impacted business owners to receive monetary awards, the judge said. It also offers a "class action" solution for adults who have not hired their own attorneys, the judge said.