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Category: Fee Award Factors

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.

$145M Opana Antitrust Settlement Merits $50M in Fees

November 11, 2022

A recent Law 360 story by Nadia Dreid, “Opana Buyers’ $145M Deal With $50M in Atty Fees Gets Final OK” reports that the attorneys who secured a $145 million settlement for direct purchasers of Endo Pharmaceuticals's Opana ER who said they overpaid generic-drug maker Impax Labs for the prescription painkiller because of a pay-for-delay deal will walk away from the litigation with more than $50 million for their trouble.  U.S. District Judge Harry D. Leinenweber gave the settlement his final approval, solidifying the agreement that will give class counsel Garwin Gerstein & Fisher LLP and Berger Montague PC more than a third of the settlement fund for their work over the last eight years.

The $50,528,470.66 in attorney fees amounts to 36% of the settlement fund, after the class awards and the $4.3 million in costs that the firms will also receive are subtracted, according to the opinion.  Direct purchases Value Drug Co. and Meijer Inc. will each receive $150,000 for their trouble.

The deal was reached just as trial was set to start back in June in the multidistrict litigation over a 2010 deal Endo and Impax reached to settle patent infringement claims Endo laid against the generics maker.  One group of direct purchasers — CVS Pharmacy Inc. and Walgreen Co. among them — opted out of the class, but ended up reaching their own settlement mid-trial, though the details were never made public.

Impax ended up getting around $112 million from Endo for delaying its generic version of Opana ER by about three years, with Endo promising not to launch an authorized generic version of the drug once Impax's version went to market, according to the current suit.  According to the Federal Trade Commission and the Opana ER buyers that make up the various proposed classes, the settlement constituted an illegal reverse payment.

The claims have been working their way through Illinois federal court since late 2014 when they were folded into the court by the U.S. Judicial Panel on Multidistrict Litigation.  The buyers said they lost money by paying more for the brand name when a cheaper, generic version could have been available to them.

Judge Needs More Data in $2.8M Attorney Fee Request

November 10, 2022

A recent Law 360 story by Leslie Pappas, “Chancery Oks Aerospace Co.’s Pay Suit Deal, Defers Fees” reports that a Delaware Chancery Court judge approved a settlement between aerospace parts manufacturer TransDigm Group Inc. and a stockholder who sued over excessive director pay, but postponed a decision on a requested $2.8 million attorney fee award, saying she lacked data to evaluate it.

At a bench ruling at the end of a virtual hearing, Vice Chancellor Lori W. Will told attorneys for plaintiff Matthew Sciabacucchi, represented by Farnan LLP and Levi & Korsinsky LLP, that she intended to award a fee but couldn't do it without more information.  "I don't have the full picture," she said. "I'm going to give counsel a better shot of submitting the information I'm asking for."  The attorneys had sought $2.8 million in fees and a $4,000 incentive award for the deal, which they estimated would save TransDigm $23.8 million in cash over the next four years.

Sciabacucchi sued in November 2021, claiming the company's top officers and directors were awarding themselves compensation that was 176% higher than their peers.  TransDigm's executive chairman W. Nicholas Howley and its president and CEO Kevin Stein, for example, received a "staggering" $68.1 million and $22 million respectively for the company's fiscal year ending September 2020, according to the complaint.

Vice Chancellor Will said she didn't know the net present value of the estimated $23.8 million savings, nor did she have enough information to assess the effects of reducing the strike price of the options.  "I do intend to award a fee," she said.  "This is a good settlement, and counsel should be commended for it."

Attorneys Seek $11.5M in Fees in Veteran Home COVID Case

November 9, 2022

A recent Law 360 story by Chris Villani, “Attys Want $11M for $58M Vets’ Home COVID Outbreak Deal” reports that attorneys who led a class of veterans and their families to a nearly $58 million settlement with the state of Massachusetts following a deadly COVID-19 outbreak at a veterans' home asked a judge to approve their $11.5 million fee request.  Lawyers from the western Massachusetts firm of Lesser Newman Aleo & Nasser LLP told U.S. District Judge Mark G. Mastroianni that their fee request, which is unopposed by the commonwealth, is on the low end among similar settlements in the First Circuit.

The $11,512,500 request is just under 20% of the $57,912,500 legislative appropriation that covers veterans who became ill or died of COVID-19 at Holyoke Soldiers' Home between March 1, 2020, and June 23, 2020.  None of the 164 members of the settlement class have objected to the fee request, the lawyers said.  "Bringing a lawsuit of this nature is a daunting task," the memorandum states.  "It should be rewarded with a full attorney fee award, particularly in this case, where the requested fee is on the low end of the range of attorney fee awards recoveries in common fund class actions in the First Circuit and a full attorney fee award will not decrease the amounts to be received by the class members."

The settlement for the class members and the fee award were also negotiated separately in this case, the attorneys said, with just over $46 million set aside for the individual victims and their families.  Their awards, therefore, would not be reduced by the fee request, according to the memorandum.  The class lawyers also argued that awarding a lower fee could provide a disincentive for the commonwealth to settle future similar cases or take steps to prevent such tragedies from happening in the first place.  The fee award would also encourage lawyers to tackle tough cases when people are harmed by state action, the attorneys argued.

"In taking this case on, counsel was aware that the likelihood of prevailing at trial and actually recovering a judgment was, at best, difficult, [and] numerous other attorneys had declined to represent the veterans who had died of COVID-19 at the Holyoke Soldiers' Home," the document states.  "And, if the case went to trial, the firm would end up spending several million dollars' worth of billable hours, as well as incurring a minimum of $500,000 in expert fees."

Article: New Ruling Considers Hourly Rates in Chapter 11 Cases

November 8, 2022

A recent Law 360 article by Tyler Brown, Jason Harbour and Justin Paget of Hunton Andrews Kurth LLP, “How Ch. 11 Ruling Ends War Between National, Local Rates” reports on a recent ruling on hourly rates in Chapter 11 cases.  This article was posted with permission.  The article reads:

On Oct. 18, the U.S. Bankruptcy Court for the Eastern District of Virginia approved the professional fee applications in the Nordic Aviation Capital bankruptcy cases, including the rates of each of the professionals as appropriate market rates.  This settles any remaining uncertainty in how professionals' hourly rates will be considered for approval in bankruptcy courts in the district. In particular, the bankruptcy court noted that

[m]uch ink has since been spilled differentiating so-called "local" rates from "national" rates. The distinction is much ado about nothing.  The market for professional services cannot be predetermined by geography alone.

Instead of relying on geography alone, the bankruptcy court stated that

the plain language of the Bankruptcy Code directs the Court to consider the "customary compensation charged by comparably skilled practitioners in cases other than cases under [Title 11]."  The Court must, therefore, look at whether the rates charged are consistent with those set in the relevant market.

To determine the relevant market, the court noted that the market rate will be set for the most part by the amount clients are willing to pay for professional services.  The factors clients may consider in the selection process might include the reputation of the professional, the specialization of the professional, the need for the professional's experience and expertise, the stakes of the transaction and the time pressures of the engagement.

The court also stated that a good understanding of the relevant market in any given case could be gleaned from the rates of professionals other than those engaged by:

    The debtor;

    Debtor-in-possession financing budgets;

    Monthly operating reports of the debtor;

    Information required by the U.S. trustee program guidelines; and

    The checks and balances built into the fabric of the reorganization process to police the market.

The bankruptcy court also reiterated that the applicable factors for approving professional fee applications are those enumerated in Title 11 of the U.S. Code, Section 330(a)(3), and the Johnson factors.

Additionally, the bankruptcy court noted that in applying the Johnson factors, "it must heed the Fourth Circuit's admonition against per se rules beyond those legislatively mandated," noting that the court cannot "abdicate the equitable discretion granted to it by establishing rules of broad application which fail to take into account the facts of a particular case and the overall objectives of the bankruptcy system."[6]

After identifying the applicable legal standard, the bankruptcy court addressed the evidence that was relevant to the approval of the professional fee applications, including the rates of the professionals.  As the fee applications were uncontested, the court stated that it issued the memorandum opinion to provide guidance to practitioners on the facts they need to develop in support of fee applications filed in bankruptcy cases pending before that court.

In taking the unusual step of issuing a lengthy memorandum opinion for uncontested fee applications, the bankruptcy court put to rest what one commentator recently suggested was a war between national and local rates in the Eastern District of Virginia in mega Chapter 11 cases.  The issue arose in connection with the appeal of the plan confirmation order in the Mahwah Bergen Retail Group Inc. cases on unrelated grounds.

After vacating confirmation in that case, the U.S. District Court for the Eastern District of Virginia ordered that the bankruptcy court issue proposed findings of fact and conclusions of law on any further fee applications in the case and questioned whether attorney rates should exceed the prevailing market rates in the Richmond division of the Eastern District of Virginia.

The district court's order created uncertainty as to how the bankruptcy court might subsequently analyze the rates of professionals from outside the Richmond division.  That uncertainty was short-lived.  Importantly, the memorandum opinion represented one of the bankruptcy court's first opportunities to address professional fee applications in a large Chapter 11 case since the entry of the district court order adopting the bankruptcy court's report and recommendation in the Mahwah Bergen bankruptcy cases.

In the memorandum opinion and the bankruptcy court's report and recommendation, two bankruptcy judges from the Eastern District of Virginia have extensively detailed the legal precedent in the U.S. Court of Appeals for the Fourth Circuit and the appropriate factual predicates for approving market rates.

In sum, the memorandum opinion provides comfort to all practitioners, including those from outside the Eastern District of Virginia, that the appropriateness of attorney rates in cases filed in the district will continue to be assessed through application of the factors identified in Section 330(a)(3) and the Johnson factors on a case-by-case basis, without any additional requirements or per se rules.