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Category: Fee Benchmark / Standard

Quinn Emanuel Gets $185M in Attorney Fees in $3.7B ACA Win

September 16, 2021

A recent Law 360 story by Dave Simpson, “Quinn Emanuel Gets $185M Fee From $3.7B Win in ACA Suits,” reports that a U.S. Court of Federal Claims judge granted Quinn Emanuel Urquhart & Sullivan LLP's request for $185 million in fees stemming from two class actions against the federal government over so-called risk corridor payments under the Affordable Care Act, which resulted in a nearly $3.7 billion total win.  Judge Kathryn C. Davis said that despite the "at times hyperbolic" motions for fees, the law firm did show "foresight" in focusing on a successful legal theory months before other parties jumped on that bandwagon.  She granted its request for 5% of the winnings.

"At the end of the day, what is more important is that class counsel's legal theory resulted in a huge award to the classes here," Judge Davis said.  Quinn Emanuel was the first firm in the country to file a lawsuit on behalf of a qualified health plan insurer accusing the federal government of unlawfully reneging on a commitment to shield ACA insurers from heavy financial losses.

Health Republic Insurance Co. sued the government in 2016 and in July 2020 won a judgment for $1.9 billion alongside a subclass of insurers.  Common Ground Healthcare Cooperative sued the government in 2017 over similar claims and won a $1.7 billion judgment.  Those cases set off a firestorm of parallel litigation across the country, alleging similar claims.  Two of those cases ended up at the U.S. Supreme Court.  In April 2020, the justices reversed Congress' denial of $12 billion in "risk corridor" funding, which the ACA dangled as an incentive for insurers during the law's first three years of operation.

While Quinn Emanuel didn't work on those cases directly, the firm argued in its request for fees in July 2020 that the Supreme Court "adopted the exact legal theory Quinn Emanuel set forth in the initial Health Republic complaint and which it advocated at every step."  But in August 2020, objectors like Kaiser Foundation Health Plan Inc., UnitedHealthcare Insurance Co. and others argued that class counsel was entitled to just $8.8 million after a lodestar cross-check.

They said that Quinn Emanuel had little to do with the litigation that ended up at the Supreme Court, and argued that the firm was trying to walk away with an award that would work out to an hourly rate of $18,000 per attorney.  Class members signed on to the suit with a guarantee that the proposed 5% fee award would be subject to a lodestar cross-check, the motion said, which the firm had eschewed.

Quinn Emanuel shot back in September 2020 that the $8.8 million award proposed would discourage attorneys in the future from taking on similarly ambitious cases.  The percentage model, which the insurers agreed to when choosing to join the class instead of pursuing individual claims, is favored by the courts for exactly this reason, the firm said.  According to the firm, despite the dozens of companies signing on to the fee objection, most of them Kaiser or United entities, almost 90% of the class members have not objected.

Judge Davis sided with the firm.  "These are not cases in which class counsel merely rode the coattails of other innovative litigators," she said.  The 5% fee is well below market value, and the objectors propose what would amount to a .22% fee, she said.  Further, the firm allocated 10,000 billable hours and might not have been paid for any of it had the outcome gone differently, the judge said.

Boies Cites ‘Trench Warfare’ in $627M BCBS Fee Request

June 21, 2021

A recent Bloomberg Law story by Roy Strom, “Boies Cites ‘Trench Warfare’ in $627 Million BCBS Legal Fee Bid,” reports that David Boies and Michael Hausfeld are requesting nearly $627 million in fees and another $40 million in expenses for the work a horde of lawyers did over eight years to secure a $2.7 billion antitrust settlement with Blue Cross Blue Shield.  The fee could provide a much-needed boost for Boies’ law firm, Boies Schiller Flexner, which has suffered an exodus of lawyers and saw its revenue in 2020 fall nearly 40% to $250 million, according to AmLaw data.

It’s unclear how the fee would be split between the myriad lawyers who worked on the case, but Boies and Hausfeld stand to gain most having served as co-lead counsel.  The fee application follows a preliminary approval in November of a settlement between the health insurer and plaintiff’s counsel. The judge in the case, R. David Procter of the Northern District of Alabama, said at the time the fees would be subject to his approval and would “receive intense scrutiny.”  He also said the proposed fee, which is roughly 25% of the settlement value, is “in line with benchmarks” for the Eleventh Circuit.

“This case has been the litigation equivalent of trench warfare, engaging scores of lawyers on both sides,” wrote Boies and Hausfeld, who are co-lead counsel.  The lawyers noted that from 2013 to August last year, a total of more than 434,000 hours had been spent litigating the case.

Filed in February 2012, the case alleged Blue Cross Blue Shield health plans divided up insurance markets across the country and agreed not to compete with one another across those markets.  The settlement agreement includes changes to the Blue Cross business model designed to enhance the market for health insurance, including eliminating a cap on revenue that BCBS affiliates could earn selling other health insurance plans.

The motion for legal fees compared the scope of the litigation to some of the most well-known antitrust cases, including those brought against Standard Oil, American Tobacco Co., and AT&T. Those cases were investigated and brought by the U.S. government.  Boies and Hausfeld noted there was no government investigation in the Blue Cross case.  “This was a purely private effort to enforce the antitrust laws,” the lawyers wrote.  The parties briefed over 150 discovery motions that led to 91 discovery orders, Judge Procter noted in an earlier filing.  He wrote that lawyers conducted over 120 depositions and defended over 20 depositions of class representatives and experts.

The lawyers wrote in their fee application that the defendants produced more than 75 million pages that were reviewed by a team of 178 attorneys for the plaintiffs.  The settlement negotiations began in 2015 and included 158 in-person and virtual meetings with mediators and 282 telephone conferences, they wrote.  The lawyers also noted they went up against “a who’s who of the nation’s most experienced antitrust litigators” at a number of major law firms, including Kirkland & Ellis, Hogan Lovells, Crowell & Moring, Foley & Lardner, Shearman & Sterling, and Cravath, Swaine & Moore.

$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."

Ninth Circuit: $6M Fee Award Does Not Create ‘Windfall’

April 12, 2021

A recent Metropolitan News story, “$6 Million Attorney Fee Award Would Not Create ‘Windfall’,” reports that the Ninth U.S. Circuit Court of Appeals, in a 2-1 decision, has reversed an order for a $4 million payment to the attorneys for the plaintiffs in a class action against Experian Information Solutions, Inc., a consumer credit reporting company, that resulted in the creation of a $24 million settlement fund, holding that the District Court judge failed to adequately explain why he was departing from the standard 25 percent cut for the lawyers.  Signing the majority opinion were Ninth Circuit Judge Andrew D. Hurwitz and Sixth Circuit Judge Eugene E. Siler, sitting by designation. Judge Daniel P. Collins dissented.

The settlement was reached in a case that was initially dismissed with prejudice by the judge then handling it, Andrew J. Guilford of the Central District of California, now retired.  After the Ninth Circuit on May 17, 2019, reversed the dismissal, Guilford certified a class of about 100,000 persons whose credit histories were damaged by reports of unpaid debts to a loan company, although the debts were disputed and the company, which was facing possible criminal prosecutions, had gone out of business.

The defendant, headquartered in Orange County’s City of Costa Mesa, agreed to a settlement of the action brought against it by Demeta Reyes, a resident of Georgia, under the federal Fair Credit Reporting Act (“FCRA”).  Replacing Guilford as the judge presiding in the case was Stephen V. Wilson.  An award of 25 percent of the recovery—which would be $6 million—would give the lawyers a windfall, noting that the lodestar value of their services was $2,085,843.50.

To award them $6 million, he noted, would mean use of a multiplier of 2.88, while an award of $4 million would entail “a more reasonable lodestar multiplier of 1.92.”  “By any measure, class counsel was successful,” Hurwitz and Siler wrote in a memorandum opinion.  They quoted an expert witness as saying that the settlement’s “structure...is the FCRA gold standard,” with class members each receiving a check for at least $270 without having to make a claim.

“To reach that result, class counsel assumed significant risk,” the majority opinion says, noting that contingency representation stretched over a four-year period, counsel advanced more than $100,000 in costs and expenses, and other work had to be declined.  “Experian deleted more than 56,000 delinquent loan accounts after this litigation began,” the opinion notes.  “Before deletion, those delinquent accounts depressed class members’ credit scores.”

 It goes on to say: “The 16.67% fee award falls below the market rate fee award in FCRA class action settlements. And no windfall is apparent.  Assuming a 25% award, the lodestar crosscheck returns a multiplier of 2.88. Similar lodestars are routinely approved by this court.”

It adds: “The district court’s reliance on megafund and wage and hour cases to find a windfall for class counsel was somewhat inappropriate here.  First, megafund cases are usually those with settlements exceeding $100 million….Here, the settlement is about a quarter of that.  Megafunds are more often a reflection of class size than class counsel’s efforts….Moreover, the complexity of this case is similar to a wage and hour dispute the district court cited where a 2.87 lodestar multiplier was approved, but not the ‘ordinary wage-and-hour dispute’ that the district court also cited.”  The memorandum opinion does not expressly direct an award of $6 million, instead remanding “for further proceedings not inconsistent with this opinion.”

Collins said in his dissent: “The majority nonetheless concludes that the district court abused its discretion because the settlement here was under $100 million and because multipliers of 2.88 or more have been allowed in other cases….But the fact that we have upheld higher multipliers in some cases does not mean that district courts lack discretion to conclude that a lower multiplier would be more reasonable in a given case.  By essentially ordering the district court to allow this high multiplier, the majority usurps the discretion that we have said belongs to the district court.

“Because the district court had discretion to conclude that a benchmark award that was nearly three tunes the lodestar amount would be unreasonable, and that a smaller (but still generous) multiplier was more appropriate, the district court did not abuse its discretion by ordering a $4,000,000 fee.”  Guilford set forth Reyes’s factual contentions in his order certifying the class.