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Class Counsel Seek $94M in Fees in DuPont PFAS Settlement

October 17, 2023

A recent Law 360 story by Adrian Cruz, “Attorneys Seek $94 Million From DuPont PFAS Settlement”, reports that attorneys representing municipalities suing DuPont and other chemical companies over contaminated drinking water from PFAS chemicals have asked a South Carolina federal judge for $94 million in attorney fees.  In a memorandum, the group of attorneys from FeganScott LLC, Douglas & London PC, Napoli Shkolnik PLLC and Baron & Budd PC said their request of $94.8 million in fees is only 8% of the $1.19 billion settlement that was reached with Chemours, DuPont and Corteva in June.  The attorneys added that the 8% request is significantly below the 25% limit allowed by the Fourth Circuit.

Some of the reasons cited for the attorneys' fee request include a workload of nearly 415,000 combined billed hours, the novelty and complexity of the questions being asked throughout the litigation progress, the added challenges posed by the COVID-19 pandemic, and the end result, which settled one of the nation's largest multidistrict litigations, which they said benefits over 100 million Americans due to the drinking water improvements that will be made as a result.

"The DuPont settlement was the result of a years-long, multitrack effort by plaintiffs' counsel who expended hundreds of thousands of combined hours on multiple fronts, including settlement efforts, litigation efforts and MDL case administration, without any guarantee of a recovery," the memorandum said.  "This three-pronged approach was necessary given the highly complex nature of this MDL involving so many defendants, and in order to meet the challenges and obstacles presented by this MDL, including, of course, litigating in the midst of a global pandemic."

Along with the $94.8 million in fees, the attorneys also requested $2.1 million in costs, noting that the amount covers about 10% of the total out-of-pocket costs spent on the litigation.  The attorneys added that because of the case's size and the involvement of large corporations, it was a risky one for the firms involved as they ultimately spent over $21 million without any guarantee of recouping those costs.

"Considering the expense and time involved in prosecuting this case against well-resourced defense counsel on a purely contingent basis, with no guarantee of a positive result and ever-mounting litigation costs in excess of $21 million, risky cases such as this are not for the faint of heart," the memorandum said.  "Whereas many shied away from this litigation, the court-appointed counsel poured their heart and soul into this litigation and should be rewarded accordingly."  In June, the municipalities reached a $10.3 billion settlement with 3M, which was also sued for its role in manufacturing products using PFAS and the ensuing water contamination that allegedly happened as a result of the chemicals.

"Addressing the PFAS settlements with DuPont and 3M, this wasn't just a case for us at the PEC [plaintiffs' executive committee], but a long, uphill battle spanning half a decade," plaintiffs' attorney Paul Napoli told Law360.  "For five strenuous years, we worked relentlessly without immediate compensation, pouring significant financial resources into the case.  This endeavor saw us navigating vast expanses of documents, managing an overwhelming amount of data, and facing formidable defenses that often seemed insurmountable.  Our proposed 8% fee is not just competitive within the industry, but it reflects the hardships we faced, the risks we took, and the substantial investments we made."

Lead plaintiffs’ counsel spent nearly 415,000 hours on the litigation, according to their fee motion, with a lodestar of more than $300 million, far more than what they were asking for in the DuPont settlement.  The lodestar is the number of hours spent on a case multiplied by the average hourly rate of the lawyers.

In a declaration attached to the fee motion, Vanderbilt Law School Professor Brian Fitzpatrick said the fee request was below the norm, even for settlements worth $1 billion or more.  The average award in 36 class action settlements of that size, between 2006 and 2023, was 12.1%, he wrote.  “Arguably, an even greater percentage fee is warranted,” the motion says, “but class counsel recognizes that their efforts to resolve these claims against DuPont parallel the claims being resolved against 3M.  To request a different percentage of the fund simply because of the size of the fund was not deemed justified.”

The motion states that the fees would be considered common benefit fees and deducted from retainer fees that firms already received through their own contingency contracts.  Lead plaintiffs’ lawyers also asked for $2.1 million in costs relating to the DuPont settlement, about 10% of their total expenses when including the 3M deal.

Prevailing Party Wins $3.1M in Fees in “Exceptional” IP Case

October 16, 2023

A recent Law 360 story by Rose Krebs, “Emerson Radio Gets $3.1M Atty Fees, Enhanced TM Damages”, reports that Emerson Radio Corp. has been awarded about $3.1 million in attorney fees following its $6.5 million default win in a trademark infringement suit, with a Delaware federal judge saying fees were awarded due to "unreasonable" litigation conduct by the companies it sued.  In a memorandum opinion and accompanying order, U.S. District Judge Gregory B. Williams also awarded $700,000 in enhanced damages to Emerson Radio in litigation against Emerson Quiet Kool Co. Ltd. and Home Easy Ltd.

"The Lanham Act provides that the court may award reasonable attorneys' fees in exceptional cases," and this was an instance where awarding fees to the plaintiff was merited, given the circumstances of the case, Judge Williams ruled.  "A case is exceptional if "(a) there is an unusual discrepancy in the merits of the positions taken by the parties or (b) the losing party has litigated the case in an 'unreasonable manner,'" Judge Williams noted, citing the Third Circuit's 2014 ruling in Fair Wind Sailing Inc. v. Dempster.

As the prevailing party, Emerson Radio asserted "that it is entitled to reasonable attorneys' fees because this case is exceptional based on both (1) the merits of the case, and (2) the unreasonable manner in which defendants litigated it," the opinion said.  "The court agrees that the case is exceptional," Judge Williams wrote.

Among the litigation conduct that was flagged were actions mentioned in a prior court decision that granted a motion to withdraw by the defendants' former counsel, including that the defendants' repeatedly refused to follow counsel's advice, were unwilling to engage in trial preparations, and had a "sudden and unexplained change of tack" during proceedings.

Another prior court order also took issue with Emerson Quiet Kool and Home Easy for being unable to obtain substitute counsel for a time, calling it "part of a pattern of delay and lack of representation that has plagued this litigation."

"Given these previous findings, the court need not further expand on defendants' litigation conduct," Judge Williams wrote. "In light of the totality of the circumstances, the court finds the present case is exceptional based both on the merits and on the unreasonable manner in which defendants litigated the case."

Emerson Radio submitted declarations breaking down the $3,159,000 in attorneys' fees incurred by Stevens & Lee, Cooley LLP, and an Orrick Herrington & Sutcliffe LLP attorney who worked the case before he moved over to Cooley, according to the opinion.  "Upon review, the court finds that the number of hours spent litigating this action in representation of plaintiff is reasonable," the opinion said. "Similarly, the court finds that the hourly rates are reasonable."

Article: Do We Really Need An Attorney Fee Expert?

April 18, 2022

A recent article by William F. Cobb, “Do We Really Need An Attorney Fee Expert?” discusses the need to hire an attorney fee expert.  This article was posted with permission.  The article reads:

In 2002, the Fourth District Court of Appeal issued a decision in Island Hoppers Ltd. v. Keith 820 So. 2d 967 (Fla. 4th DCA 2002) discussing whether or not expert testimony should be required to support an award of attorney’s fees to a prevailing party.  The decision questioned the necessity and wisdom of the longstanding judicially-created requirement.

Justice Polen, who authored the opinion in Island Hoppers, recognized that an award of attorneys’ fees must be supported by competent substantial evidence and Florida courts have required testimony by the attorney performing the services, together with testimony by an expert fees witness as to the time and value of those services.  The expert in that case spent a scant three hours in preparation of his opinion in this wrongful death case and is accused of lacking a sufficient factual predicate to form an opinion.  Although Justice Polen and the court allowed the testimony, claiming the testimony went to the weight of the evidence and not its admissibility, the opinion questions whether the longstanding rule requiring the corroborative testimony of an expert fees witness is always the best or most judicious practice. 

The opinion recognizes that expert witnesses are presented to assist with guidance to the trier of fact and fails to see what “guidance” if any a fees expert provides to judges who see various levels of skill and experience in the courtroom on a regular basis.  The opinion does recognize the expert may provide some assistance to the court in terms of a multiplier determination in the market, but distinguished the more fundamental issues of determining appropriate hours expended and rates charged and states the trial judge has greater insight and understanding regarding what is reasonable.   The Island Hoppers decision prompted a Florida Bar Journal article, authored by Robert J. Hauser, Raymond E. Kramer III and Patricia A. Leonard, of Beasley & Hauser, P.A., in January 2003 regarding the same topic, (Vol. 77, No. 1, page 38) essentially agreeing the requirement should be revisited and perhaps eliminated.  In virtually every case decided by the Florida Supreme Court, both before and subsequent to the Island Hoppers decision, the Court has found, or at least commented upon, the requirement for an expert to testify regarding the reasonableness of the time and amount of attorney’s fees being sought, together with a multiplier determination in the relevant market area, especially where there was a fee-shifting provision involved. 

In Roshkind v. Machiela, decided in 2010, the Fourth District Court of appeal again addressed the long-standing requirement of independent expert witness testimony to support a claim for attorney’s fees.  The Court recognized generally “where a party seeks to have the opposing party in a lawsuit pay for attorney’s fees incurred . . . independent expert testimony is required” and “case law throughout this state has adhered to the requirement of an independent expert witness to establish the reasonableness of fees, regardless of whether a first or third party is responsible for payment.”  Although the opinion recognizes Island Hoppers and the previously questioned judicially-created requirement of independent expert testimony to establish the reasonableness of attorney’s fees, it ruled the judicially-created requirement “remains etched in our case law.”  The Fourth District certified a question to the Florida Supreme Court regarding whether or not an expert witness is required to testify to establish attorney’s fees, seeking a final determination of the issue.  The Florida Supreme Court initially accepted jurisdiction but later issued an opinion “upon further consideration, we have determined to deny review and discharge jurisdiction” thereby denying a review and ruling on the issue.

In 2007, In re Amendments to Florida Rules of Civil Procedure, The Florida Bar Civil Procedure Rules Committee recommended adding Rule 1.526 to The Florida Rules of Civil Procedure.  The proposed rule was entitled “Expert Opinion Testimony on Costs and Attorneys’ Fees” and included “[e]xpert opinion is not required to support or oppose a claim or an award of costs, attorneys’ fees, or both, unless by prior order of the court.”  Essentially, the proposed rule would leave it to the trial judge to determine whether or not he or she would require “guidance” in the form of an expert’s opinion regarding the determination of attorneys’ fees.  In rejecting the proposed rule, the Florida Supreme Court opined “that the issue of whether expert opinion testimony is required in this context is not one that is appropriately addressed in a rule of procedure” and declined to adopt the proposed rule.

From a review of the foregoing, although at least one District Court of Appeal has questioned the judicially-created requirement for and independent attorneys’ fee expert to testify in a fee determination hearing, it is clear the Florida Supreme Court consistently has supported and recognized the longstanding requirement and has further refused to adopt a rule of procedure that would allow the trial court to determine the need for expert testimony.  In order to support an award of attorney’s fees, the attorney for the party seeking the fees, whether first or third party obligation for payment is present, is required to retain the services of an expert to offer testimony regarding the reasonableness of the hours expended and amount being sought in recovery in order to prevail.

William F. Cobb is a Partner at Cobb Gonzalez in Jacksonville, FL.

Low Claim Rate and Fee Ask Doom Data Breach Settlement

February 18, 2022

A recent Law 360 story by Allison Grande, “Low Claim Rate and High Atty Fees Scuttle Data Breach Deal” reports that a Wisconsin federal judge has refused to sign off on a deal to resolve a putative class action over a payment card data breach at water filtration retailer Filters Fast, finding that significant questions remained about class members' awareness of the settlement and the "reasonableness" of class counsel's request for more than $300,000 in fees.

The deal "makes hundreds of millions of dollars available" to the approximately 323,000 settlement class members, who would be able to claim up to $750 in expense reimbursements, up to $60 in compensation for lost time or a standardized $25 payment, according the plaintiffs.  The settlement also provides for up to 24 months of credit monitoring services for each settlement class member and requires the online retailer to make certain "information security enhancements" to ensure that personal information "is better protected in the future," the plaintiffs have said.

U.S. District Judge James D. Peterson preliminarily approved the deal in November.  But in an order, the judge declined to grant plaintiffs' request to finalize the settlement and class counsel's motion for fees and costs, finding that both requests suffered from several severe deficiencies.  "Before the court can grant either motions, plaintiffs and plaintiffs' counsel will have to address the concerns of the court related to the adequacy of the notice, the fairness of the settlement and the reasonableness of class counsel's request for fees and costs," Judge Peterson ruled.

When it came to notifying class members of the deal, the judge took issue with the effectiveness of the chosen process, which involved the claims administrator sending an initial email to all class members on Dec. 8, transmitting a second email on Jan. 6 to those who didn't respond to the first correspondence, and mailing letters to any class members who couldn't be reached by email.  The claims administrator attested that these methods have resulted in approximately 89 percent of the class receiving notice.

But while this process appears "adequate on its face," Judge Peterson voiced serious concerns with the low response rate. Even though class members can submit a claim for $25 without showing any individualized injury, the claims administrator has said it's received only 69 claims through the mail and 3,476 claims submitted electronically, which represents a little more than 1 percent of the 323,000 eligible class members, according to the judge's ruling.  "Plaintiffs offer no explanation for what appears to be a low response rate in a context where there was little downside to submitting a claim," Judge Peterson said.

"The administrator's explanation of its notice procedures is rather vague," Judge Peterson found.  "It doesn't explain how it determined that 89 percent of the class received notice. And though it provided a copy of the legal notice accompanying the emails it sent the class, it doesn't provide a sample of the actual email it sent, making it impossible for the court to determine whether the email adequately communicated to class members that they were receiving notice of a class settlement."

"In evaluating the fairness of the settlement, the court must consider the 'relief provided' to the class, not the 'relief requested,'" Judge Peterson ruled.  The judge's order also threw into doubt class counsel's petition for approximately $305,000 in fees and $15,000 in costs.

Judge Peterson said he had "multiple concerns" with this request, including that it didn't comply with the court's procedures that require fee petitions to be accompanied by billing logs as well as the "larger issue" that it "represents nearly three times the potential cash settlement to be paid to the class."  "As counsel themselves point out, the general rule in this circuit is that 'fees awarded to class counsel should not exceed a third or at most a half of the total amount of money going to class members and their counsel,'" the judge noted.

Class counsel have claimed that their requested fees and costs are "only approximately 22% of the value actually claimed by the class," a figure that the attorneys arrived at by factoring in not only the monetary payments required by the deal but also the value of the credit monitoring services that Filters Fast will provide and the business practice changes that the company has implemented to prevent future data breaches, including greater security and monitoring, according to the judge's ruling.

But Judge Peterson identified "multiple problems" with counsel's reliance on nonmonetary benefits to justify their fee petition, including that Seventh Circuit precedent dictates that fee requests should be compared to "the total amount of money going to class members and their counsel."  "Counsel cite no authority for the view that they may use nonmonetary benefits to justify a larger fee award; they simply assume that they can," Judge Peterson noted.

"All this is to say that the court is dubious that a fee request of more than $300,000 can be justified in this case based on a percentage-of-recovery analysis," Judge Peterson ruled. "Even if the court were to exclude only the proposed value of the business practice changes and consider the estimated value of credit monitoring services, plaintiffs' counsel's fee request would represent well over 50 percent of the total amount, which is outside the acceptable range."

The judge's order also directed class counsel to address in any renewed motion it may file "potential concerns about duplication of effort, failure to delegate and excessive hourly rates," with Judge Peterson sharply questioning why plaintiffs' declarations showed that "no fewer than eight attorneys and five paralegals from multiple law firms were assigned to this case and that five of the attorneys billed at rates of $700 an hour or more" in a case that was still in its very early stages when it settled.  The judge gave the parties until Feb. 22 to submit renewed motions for final approval of the settlement and class counsel's request for fees and costs.

First Circuit Affirms Sanctions in Long-Running Fee Dispute

February 10, 2022

A recent Law 360 story by Hailey Konnath, “1st Circ. Backs Sanctions Against Lieff Cabraser in Fee Tiff,” reports that the First Circuit left intact a Massachusetts federal judge's sanctions against Lieff Cabraser Heimann & Bernstein LLP in a fees spat, finding that the lower court didn't abuse its discretion in punishing the firm for misrepresenting a study regarding fee awards in similar cases.  A three-judge panel affirmed a decision from U.S. District Judge Mark L. Wolf, who sanctioned the firm for misrepresentations it made to the court while justifying a $75 million fee award for Lieff Cabraser and co-counsel at Labaton Sucharow LLP and Thornton Law LLP. 

The fees stemmed from their work securing a $300 million settlement with State Street Corp., and they were later slashed to $60 million following a lengthy investigation into allegations of overbilling and other improprieties.  The First Circuit said that Judge Wolf had provided notice to the firm that it was facing possible violations of Rule 11 in several instances, rejecting the firm's argument to the contrary.

"The court repeatedly explained to Lieff, over the course of two years, that it would consider whether any misconduct in the original fee application warranted sanctions — specifically flagging 'the accuracy and reliability of the representations' made by class counsel in its filings," the panel said.  It added that Lieff Cabraser "certainly responded as if it well understood what was at stake."  Thus, Judge Wolf met the important requirement of giving the firm both notice of the basis for a possible sanction and a fair opportunity to show why there shouldn't be any sanction, the First Circuit panel said.

The panel had hinted that the firm's appeal may be futile at oral arguments in November, saying that Judge Wolf may just double down if the appeals court held that he unfairly punished the firm.  Lieff Cabraser received far less flak from Judge Wolf than the other two firms but fought a $1.1 million reduction in its fees, arguing that reversing the rule violation finding is even more important than the money.

In the decision, the First Circuit noted that the district court had found that Lieff Cabraser and its co-counsel used a template for their fee declaration that misleadingly indicated that they regularly charged paying clients the rates supporting its lodestar.  The court also held that the firms failed to exercise reasonable care in contributing to a suspect $4.1 million payment to a lawyer in Texas and for misrepresenting a study regarding typical fees awarded in similar cases, according to the opinion.  Lieff Cabraser was formally sanctioned for misrepresenting the study, but not for the other criticisms, the panel said.

No other firm joined Lieff Cabraser in the appeal and no parties to the underlying litigation wanted to participate either, the First Circuit said.  That led Judge Wolf himself to try to lawyer up to defend his ruling.  However, the appellate court refused to let Judge Wolf participate and instead permitted amicus Hamilton Lincoln Law Institute to file a brief in the dispute.  While Lieff Cabraser didn't challenge the fee award in its appeal, it argued that if the appellate court set aside all of the district court's criticisms, it may be entitled to some money out of the funds awarded to the class if any funds are unclaimed, according to the decision.

But the First Circuit said it found no basis for deviating from the circuit's general rule that a district court's criticism of counsel unconnected to any challenge to a judgment or order on appeal is not itself reviewable on appeal.  The panel also rejected Lieff Cabraser's argument that it didn't sign the memorandum in support of the fee award underlying the dispute and thus cannot be held liable for any misrepresentations contained in it.  That contention "goes nowhere," the First Circuit said.  The firm's name and the names of three of its attorneys were placed on the signature page of the challenged papers and the firm advocated for the fee at a hearing, the panel said.