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Category: Fee Benchmark / Standard

Judge Mulls $24M in Fees in $98M Mattel Investor Settlement

May 2, 2022

A recent Law 360 story by Gina Kim, “Mattel Judge Mulls $24.5M Atty Fee Bid in $98M Investor Deal” reports that U.S. District Judge Mark C. Scarsi said he will grant final approval of $98 million in settlements resolving investors' claims that Mattel and PwC misled them by understating an income tax expense, but said he's still considering the class counsel's $24.5 million attorney fee bid.  During a hearing, John Rizio-Hamilton, who represents the class and lead investor plaintiffs DeKalb County Employees Retirement System and New Orleans Employees Retirement System, urged Judge Scarsi to approve the fee bid, which he said is 25% of the $98 million deal and consistent with the Ninth Circuit's benchmark for percentage fee awards in common fund cases.

The investors' counsel also sought $1,139,330 in expenses, plus plaintiff awards to DeKalb County and New Orleans for $8,615. Defense counsel for PwC and Mattel did not object to the fee request.  Rizio-Hamilton maintained that the reasonableness of the fee request is backed by a lodestar cross-check, which he said yields a multiplier of 2.7.  "I know it's 25% of the settlement, but it represents a 2.7 times multiplier of a lodestar calculation," Judge Scarsi began. "Why is this significant upward deviation from the lodestar reasonable in this case?"  Rizio-Hamilton said the fee bid comports with the benchmark and "if anything, it's a touch less, because we're requesting 25% of the settlement net of litigation expenses."

The lodestar crosscheck of 2.7 multiplier is actually in the middle range, and is a common figure awarded to comparable class action securities litigations, Rizio-Hamilton said.  He cited several cases, such as Vizcaino v. Microsoft Corp., where the Ninth Circuit affirmed an award of 28% of a $97 million settlement, and In re: Brocade Securities Litigation, where class counsel received 25% of a $160 million deal.

Furthermore, the recovery achieved for the class is above average considering the serious risks facing the class, justifying the fee request, Rizio-Hamilton argued.  Class counsel dedicated almost 19,000 hours into the case, and incurred more than $1.1 million in expenses to face off against well-funded, high-caliber law firms representing Mattel and PwC, he said.

The class's reaction to the requested fee has also been favorable, and no institutional investor objected to it, Rizio-Hamilton added.  Only one individual investor, James J. Hayes of Virginia, objected to the fee request, but those objections are without merit and Hayes doesn't explain why the fee request is purportedly excessive, Rizio-Hamilton said.

Judge Scarsi aired additional concerns he had with the billing rates provided in class counsel's papers, noting that there were hourly rates ranging from $300 to $425 for nonlawyer litigation staff.  "Why aren't those high?" Judge Scarsi asked Rizio-Hamilton.

Rizio-Hamilton defended the billing rates charged by nonlawyer staff, arguing that they have been repeatedly accepted by courts in connection with fee applications in similar cases across the nation and in the district.  He also cited Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation" In re: Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation in the Northern District of California, where the court found hourly rates in that case — up to $490 per hour for nonlawyer paralegals — to be reasonable.

Rizio-Hamilton further contended that the billing rates are consistent with those charged by other firms litigating national securities litigations, including the very defense counsel in the instant Mattel litigation.  "We know that because we look at the bankruptcy fee applications they submit," Rizio-Hamilton said.  "Suffice it to say, the rates that they submitted to bankruptcy courts are meaningfully higher than the rates we submit here," he said.  "On the question of nonlawyer paralegals, for instance, Munger Tolles — and I don't mean to single them out — have submitted rates between $405 to $490 in 2020 for paralegals in the PG&E bankruptcy case in the Northern District of California."

Ultimately, class counsel achieved a recovery that is meaningfully greater than what is typically achieved in comparable cases, considering the time and quality of work poured into the case for more than two years without any payment, he added.  Class counsel are only asking for a benchmark, "and not a penny more," Rizio-Hamilton said.

"I do appreciate all the arguments, as you understand, you know, I'm just trying to do the best thing for the class, which is why I'm focusing on the attorney award, and I'll give that a little more thought based on the arguments today," Judge Scarsi said.  "So the court will approve the settlement, will issue an order, and you know, the attorneys' fees may not be the 2.7 multiple, so we'll see."

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.

Feds Push Back on $1.9M Fee Request in GMO Salmon Action

April 28, 2022

A recent Law 360 story by Mike Curley, “Feds Push Back On Bid For $1.9M Fees in GMO Salmon Suit” reports that the federal government has opposed a motion from environmental groups seeking $1.9 million in attorney fees and costs in a suit alleging the U.S. Food and Drug Administration wrongly approved the first genetically modified salmon for human consumption, saying the "excessive" fees request follows a "narrow" suit victory.  In an opposition brief, the government said the groups, led by the Institute for Fisheries Resources, saw limited success and repeated losses in the suit, prevailing narrowly on only three of the 14 claims, including losing all claims under the Food, Drug and Cosmetic Act.

That limited success should in turn limit the amount that the court awards in fees, according to the brief, and the government said if the court decides to award fees at all, they should be capped at $246,333.37, while expenses should max out at $1,135.91.  In particular, the government said, the groups should not be able to recover fees for their unsuccessful claims, such as the claims under the FDCA and the bulk of their claims under the National Environmental Policy Act.

The plaintiffs sued the FDA in March 2016, claiming the agency's groundbreaking 2015 approval of a genetically engineered salmon for human consumption poses unknown dangers to food, health and the environment.  AquaBounty used genetic material from a Pacific Chinook salmon and from another fish, the ocean pout, to create a line of fish that grow to full size in about half the standard time, according to court documents.  U.S. District Judge Vince Chhabria in November 2020 found the FDA should have looked deeper into regulating genetically modified salmon, saying the agency didn't meaningfully analyze what might happen to normal salmon if the genetically engineered salmon were able to establish a population in the wild.

The environmental groups asked for the $1.9 million in attorney fees in March, after a previous bid — seeking $2.9 million — was rejected in February.  In March's motion, the groups said they had cut down their billable hours to 3,190.6.  In the brief, the government further argued that the plaintiffs had used "unreasonable" hourly rates that go beyond the market standards in the attorneys' home markets by using the benchmark of San Francisco rates despite three out of four core counsel working out of Portland, Oregon and Seattle.

And the hours claimed are excessive, the government wrote, with the plaintiffs presenting vague time entries and block billing that make it impossible for the government defendants to figure out what hours apply to which claims.  In addition, the time sheets include hours that are not compensable, the government wrote, such as hours spent in separate regulatory proceedings, client solicitation, media activities and challenges to the FDA's deliberative processes.

In other cases, the attorneys' time sheets included duplicative time entries for overlapping efforts among multiple attorneys, resulting in excessive hours for which they should not be billed.  The government also challenged particular time entries linked to tasks that they say were well in excess of the actual time spent on those actions, such as 240 hours marked as being spent on a procedural motion that "did not necessitate so many hours."

Finally, the government argued that the plaintiffs should not be granted any fees under the Equal Access to Justice Act, which allows fees to be granted to the prevailing party unless the government shows its actions were substantially justified.  Both the FDA's approval decision and its conduct in the litigation were substantially justified, the government argued, saying the FDA had diligently examined AquaBounty's application and the U.S. Fish and Wildlife Service concurred with its determination.  That the government prevailed on the bulk of the claims in the suit is further evidence that its position was reasonable, according to the brief, and therefore no fees should be awarded under the EAJA.

Class Counsel Seek $5M in Fees in $50M Pinterest Derivative Action

April 22, 2022

A recent Law 360 story by Dorothy Atkins, “Pinterest Investors Seek $5M in Fees for $50M Derivative Deal” reports that Pinterest investors asked U.S. District Judge William Alsup to approve a $5.37 million attorney fee award — which the judge has said should be paid in installments — for cutting a $50 million deal to end derivative claims alleging the social media company fostered a culture of race and sex discrimination.  In a 33-page motion, investors argued class counsel should receive 10.75% of the settlement fund, or $5.37 million in fees, and roughly $47,000 in litigation costs for securing "substantial corporate governance and workplace reforms" and a $50 million fund to implement the reforms.

The investors noted that even if they were to proceed to trial on their claims, at best, they would likely only win half of the $50 million agreed to under the settlement, and there would be no guarantee the reforms would occur.  "Faced with this trade-off, plaintiffs felt strongly that swifter progress for employees, backed by a meaningful financial obligation, warranted settling rather than continuing to litigate through judgment," the motion says.

If approved, the deal would end a derivative shareholder lawsuit filed in November 2020, alleging the San Francisco-based, image-sharing company has had a "systematic culture, policy and practice of illegal discrimination on the basis of race and sex" since at least February 2018.  The investors claimed the company's executives and board facilitated or "knowingly ignored the discrimination and retaliation against those who spoke up and challenged the company's white, male leadership clique," harming the company financially and its reputation among its largely female user base.

Under the proposed settlement, Pinterest agreed to undergo third-party race, gender and equity assessments to ensure workers are being paid, promoted and leveled appropriately, and that there is no adverse impact on women and people of color.  The deal also creates a requirement for a report to shareholders on progress made toward diversity, equity and inclusion goals, including hiring.

During a hearing in January, Judge Alsup repeatedly said he was concerned the deal was merely a "cosmetic settlement" and that the attorneys would "all go off into the sunset" with attorney fees, with nothing meaningful coming of the settlement.  Despite his misgivings, the judge agreed to preliminarily sign off on the deal in February, but told the lawyers they could expect payout of their fee in installments, as counsel provide reports on "progress accomplishing the goals of the settlement agreement."

At the time, Judge Alsup also called class counsel's suggested $5.37 million fee request "disproportionate."  He pointed out the investors' lawyers had claimed their efforts had "contributed" to corporate governance changes the company implemented following recommendations by a special committee of Pinterest's board — even though the special committee made its recommendations months before the latest version of the investors' allegations was even filed.

Even so, the investors argued in their motion the expense and fee request is reasonable and fair, given that $5.37 million represents 10.75% of the funding commitment — well below the Ninth Circuit's 25% benchmark and which amounts to a 2.0 lodestar multiplier.  The investors also argued they should be credited for specifically obtaining significant governance reforms designed to improve board oversight and reduce the risk of future compliance failures through regular pay equity audits and other audits, while promoting confidence in Pinterest's workforce and customer base.

Apple Wants Judge to Mull $27M Fee Request in App Case

March 2, 2022

A recent Law 360 story by Gina Kim, “Apple Wants Judge to Mull $27M Atty Fee Bid in App Case” reports that Apple has told a California federal judge that although it won't oppose $27 million in attorney fees requested by software app makers who secured a $100 million settlement in a proposed antitrust class action, it wants the judge to use her discretion when deeming the appropriate amount.  Apple said in its response brief that the requested fee amount from attorneys representing app developer plaintiffs from the $100 million non-reversionary cash settlement is rather high and more than 200% of their lodestar investment.

"While Apple takes no issue with the expenses or service awards sought by plaintiffs, the fee request is high by the standards applied in this circuit and district," Apple wrote in its response.  The Ninth Circuit has advised that class counsel should typically receive about 25% of the ascertainable value of the settlement in attorney fees, Apple said.

Attorneys who represented 6,700 software app developers in the United States asked U.S. District Judge Yvonne Gonzalez Rogers last month to award them $27 million in fees after securing a $100 million settlement — which includes nonmonetary relief — to resolve claims that Apple held a monopoly over its App Store.

The developers' counsel from Hagens Berman Sobol Shapiro LLP and other plaintiffs' firms wrote in their motion for attorney fees last month that the requested fee award is justified, as they spent millions of dollars upfront to work on the case, and tens of thousands of hours facing off against one of the biggest tech names in the world on a contingency basis.

The developers' counsel argued there was added risk to settlement talks, given that the same federal judge overseeing the developer case concluded Apple wasn't a monopoly at the end of another closely watched antitrust case, the Epic Games v. Apple bench trial.  The developers signed their settlement deal with Apple just before Judge Gonzalez Rogers issued her decision in the Epic Games v. Apple case.

But Apple argued that the developers' counsel are entitled to 25% of the $100 million settlement, or $25 million, instead of the requested $27 million, which is nearly two-and-a-half times the lodestar amount of $11 million.  The requested amount is high both in terms of the percentage of the settlement fund and lodestar multiple, the company said.  Furthermore, the Epic v. Apple outcome would have jeopardized any chance for developers to recover anything, the company said in its response brief.  "Counsel did not risk it all here.  A $25 million award, all in, would still be 175% of their investment — a healthy return in any environment, particularly generous in light of Epic," Apple wrote.

"These are real benefits, and they are the product of extensive settlement negotiations between the parties in order to resolve contentious litigation and preserve judicial resources," Apple wrote in its response.  "Class counsel are entitled to be paid for their efforts in litigating this action. The question is how much."

Apple further said that the Ninth Circuit's guidance, that class counsel should typically receive about 25% of the ascertainable value of the settlement in attorney fees, "protects absent class members by ensuring that the majority of the cash achieved in settlement — 75% or more — is available to the class members rather than the lawyers."

"These values would be jeopardized if courts were routinely to examine uncertain non-monetary terms to increase the fee award," Apple wrote.  Ultimately, Apple said it is not opposing an entry of a fee award requested by the developers. Instead, the company is reminding the judge that she can use her discretion to award a different fee amount to the developers' counsel, Apple wrote in its response.