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Category: Fees & Common Fund

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."

Three Law Firms Seek $4M in Fees in $20M Fidelity Settlement

April 5, 2022

A recent Law 360 story by Rose Krebs, “3 Firms to Seek Up to $4.4M for $20M Fidelity National Suit Settlement” reports that three firms are set to seek $4.4 million for a proposed $20 million settlement of an investor suit in Delaware Chancery Court that accused Fidelity National Financial Inc. directors and others of forcing through a $1.8 billion acquisition of annuity and life insurance provider F&G.  In a stipulated settlement filed to Chancellor Kathaleen St. J. McCormick, plaintiff City of Miami General Employees' and Sanitation Employees' Retirement Trust is set to drop its suit in exchange for the defendants paying or having their insurers pay $20 million to Fidelity.  The settlement still needs to be approved by the court at a future hearing.

Bernstein Litowitz Berger & Grossmann LLP, Andrews & Springer LLC and Klausner Kaufman Jensen & Levinson are set to seek a fee award of up to $4.4 million in connection with the deal, according to the stipulation.  The fee award would be paid out of the $20 million settlement.

The lawsuit alleged Foley used the F&G deal as an opportunity to earn fees for his affiliated companies, including MVB Management LLC and Trasimene Capital Management LLC.  Foley and business partner Chinh Chu, the latter of whom is not named as a defendant, allegedly already took in millions of dollars per year from F&G through a sub-advisory investment management agreement with a Blackstone unit, the suit asserted.

The pension fund claimed that through the acquisition of F&G, Blackstone and MVB renegotiated the agreement giving MVB more advisory fees but for the same amount of work.  Also, the suit similarly alleged Fidelity paid Trasimene an "exorbitant" amount of money for a five-year services agreement, which that entity earned by giving two presentations to the special committee and didn't provide a fairness opinion.

The deal was approved largely because of Foley's "patronage machine" — the special committee that reviewed the transaction — which included individuals loyal to Foley, the lawsuit asserted.  The suit argued the transaction was not a strategically sound decision and made little sense to Fidelity shareholders as the company and F&G operate in separate spheres of the insurance world, title insurance and annuities.

Although the pension fund continues to assert the suit's claims have legal merit, it believes the proposed settlement is "fair, reasonable, and adequate, and in the best interests of the company and its stockholders," the stipulation said.  Defendants deny "all allegations of wrongdoing or liability" and have agreed to settle to "avoid the costs, disruption and distraction of further litigation," the stipulation said.

High Court Won’t Review Chinese Drywall Attorney Fee Award

January 11, 2022

A recent Law 360 story by Emily Field, “High Court Won’t Review Chinese Drywall Atty Fee Award,” reports that the U.S. Supreme Court declined to review an Eleventh Circuit decision that upheld a fee award of $5.8 million to class counsel in the defective Chinese drywall multidistrict litigation from MDL attorney fees from past work on the case.

As is custom, the high court did not explain why it chose not to hear the November petition from lawyers who represented 497 individual plaintiffs in suits stemming from the MDL.  In their petition, the attorneys had argued that the MDL compensation system is out of control, and the award conflicts with the so-called American Rule, under which litigants generally pay their own attorney fees.  "Multidistrict litigation has revolutionized civil procedure, leaving courts and scholars puzzled by an assortment of issues, including the high-stakes attorney fee compensation system at issue here," the lawyers said.

The Eleventh Circuit said in June that the court-appointed class counsel could receive 45% of the total fees paid to attorneys who negotiated settlements for the 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.  In affirming the decision, the appellate panel said the attorneys' work for the 497 plaintiffs "did not exist in a vacuum."  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.

"The Eleventh Circuit's decision was well-reasoned.  I'm not surprised that the Supreme Court denied review.  The Supreme Court's decision not to accept review is further vindication for the team of lawyers that obtained this historic result after over 10 years of hard fought litigation," Patrick Montoya, who represents the class counsel, told Law360.  "This case was unique for so many reasons, but chief among them was receiving compensation from Chinese companies for the U.S. victims of Chinese drywall."

Rutgers Blasts $1.6M Attorney Fee Request in COVID Case

January 6, 2022

A recent Law 360 story by Jeannie O’Sullivan, “Rutgers Blasts $1.6M Fee Bid in COVID-19 Fee Refund Suit,” reports that Rutgers University has blasted the $1.6 million counsel fee sought by three firms for representing a class of students seeking refunds after the COVID-19 pandemic torpedoed in-class instruction, arguing the amount cuts too deeply into the compensation fund.  In a brief filed in Middlesex County Superior Court, the New Jersey university said the students would benefit from a lesser fee of $500,000, representing 10% of the $5 million settlement struck by the parties.  The $1.6 million fee — sought by Carella Byrne Cecchi Olstein Brody & Agnello PC, Hagens Berman Sobol Shapiro LLP and Bursor & Fisher PA — amounts to a third of the fund.

"Rutgers does not dispute that the court should award Plaintiffs' counsel a reasonable attorneys' fee, but submits that under the circumstances of this case, the amount Plaintiffs' attorneys have requested would overcompensate them and take too much money out of the hands of the Rutgers students intended to benefit from the settlement," the brief said.  The firms would still be made whole by a $500,000 counsel fee award, Rutgers argued.

"Granting them their full request, by contrast, would cause a significant and unjustified reduction in the amount each current and former student will receive in the settlement," the brief said.  The university said it didn't dispute the class counsel's argument that common fund case fee awards can range from 19% to 45% of the settlements, as evidenced in a product liability suit against General Motors and antitrust litigation against Comcast Corp.

"But we are dealing here with claims by students against a public university," Rutgers argued.  The university pointed to the Second Circuit's 2000 decision in Goldberger v. Integrated Resources Inc., which held that a "'fee award should be assessed based on scrutiny of the unique circumstances of each case.'"

In their fee bid filed Dec. 20, the firms called the settlement an "unprecedented legal accomplishment" achieved on behalf of a 65,000-member class.  The attorneys said they'd expended 943.40 hours as of the filing and noted that the lodestar amount doesn't include additional hours they put in administering and overseeing the settlement.  The filing detailed the trajectory of the litigation, which was filed in May 2020 and "fiercely litigated and opposed" by Rutgers.  The litigation entailed vigorous motion practice, amended complaints and a trip to appeals court, after which a settlement was reached following multiple mediation conferences, the brief said.

The fee ask is justified after consideration of the seven factors courts must consider, ranging from the fund size and number of beneficiaries to awards in similar cases, and comports with professional conduct rules for attorneys, the firms said.  The firms also said the two class representatives are entitled to incentive awards of $2,500 each, given their "initiative, time and effort."

Robbins Geller Seeks $4.5M in Fees in Investment Fraud Matter

December 17, 2021

A recent Law360 story by James Mills, “Robbins Geller Seeks $4.5M Fee in Investor Deal Intervention,” reports that saying it prevented what would have been a "grave injustice," Robbins Geller Rudman & Dowd LLP has asked a California federal judge for a $4.5 million share of fees in an investment fraud class action after it intervened in settlement negotiations to ensure class counsel wasn't shortchanging the firm's client.  In a motion, the firm said its extra work to ensure its clients received a higher payout entitled it to an almost 30% cut of the $15.5 million in attorney fees included in the settlement, which resolved claims from investors who alleged Granite Construction Inc. used deceptive accounting techniques to hide $338 million in cost overruns.

Robbins Geller represented investor Arash Nasseri in a similar class action in state court whose claims under the Securities Act of 1933 were ultimately subsumed as part of a separate federal lawsuit against Granite.  The federal suit, filed by Bleichmar Fonti & Auld LLP on behalf of a group of investors led by the Police Retirement System of St. Louis, leveled claims under the Exchange Act of 1934.  After Bleichmar Fonti struck a deal with Granite to end the class action, Robbins Geller said it stepped in to secure a more favorable award for investors pursuing claims under the Securities Act that were not included as part of the Bleichmar Fonti-backed suit.

"Put bluntly, class counsel and the class representative attempted to enrich themselves and other Exchange Act of 1934 claimants by at least $22.5 million, at the expense of Securities Act claimants," Robbins Geller said.  "The only thing that stopped them was the Securities Act plaintiff and Robbins Geller."  The firm argued an award of 29% of the total attorneys fees would not only compensate Robbins Geller for the extra effort it put into the case but also prevent class counsel from being rewarded for attempting to shortchange the claimants.

The Police Retirement System filed the suit in August 2019 alleging that Granite Construction had artificially inflated the value of the company's stock.  That suit contended the Wastonville, California-based company experienced significant cost overruns on four bridge or highway construction projects.  Since the projects were performed under fixed-price contracts, however, the complaint said that Granite could not ask for more money and that the company and its executives ultimately hid the overruns in its financial reports.

In spring 2021 when the Police Retirement System and Granite were working towards a settlement agreement, investor Nasseri fought the plan, saying the pension fund was improperly trying to resolve claims that were not part of its lawsuit.  That's when Robbins Geller moved to intervene in the settlement negotiations, court records say.

Through mediation sessions, Granite agreed to pay $129 million to investors.  But Robbins Geller contended that the company would not have agreed to that amount without the firm's "concerted effort to obtain the maximum recovery" for claimants included under the firm's lawsuit.  It contended that class counsel attempted to shortchange those claimants by $22.5 million.  Robins Geller said that a subsequent investigation by a special master into the firm's involvement in the settlement talks had confirmed that it had prevented a "grave injustice" being done to the Securities Act claimants.  Robbins Geller, which specializes in securities litigation and shareholder rights cases, reported it spent 2,127 hours of attorney and paraprofessional time dealing with this case.