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Category: Fees & Common Fund

Judge Awards $37M in Attorney Fees in Forex Rigging Deals

May 26, 2023

A recent Law 360 by Sydney Price, “Attys Get $37M For Landing Forex Rigging Deals,” reports that a New York federal judge awarded $36.8 million in attorney fees to counsel for investors who accused a group of banks of rigging foreign exchange markets, about $10.4 million less than the lawyers wanted, for securing nearly $186 million in settlements for their clients.  U.S. District Judge Lewis A. Kaplan said in a letter that class counsel sought legal fees of $47.2 million, which represents 25.4% of the settlement fund, and litigation expenses of $845,471.57.  Judge Kaplan decided to apply a lodestar method to evaluate the payout, which removed some billable hours counsel included in its request.

Counsel submitted a proposed lodestar of $29.9 million for over 53,000 hours worked.  This calculation included over 3,000 hours by four non-lawyer analysts, including a derivatives expert.  Judge Kaplan said counsel did not provide enough data on the rates charged by these analysts to include them in his final calculation. The litigation expenses of $845,471.57 were granted without objections.

"After approximately six years of hard-fought litigation, counsel obtained eight class action settlements and twelve settling defendants, creating a common fund of $185,875,000," Judge Kaplan said.  "This was a good result for the class and counsel deserve to be compensated adequately."  The attorneys previously noted that no other firms attempted to represent the class in the case, contending that was "likely because of the ... high risks" the investors knew they would face in the matter.

The suit accused the banks of coordinating a "horizontal conspiracy to manipulate prices in favor of the defendants' derivatives trading positions" and cites investigations by Australia's securities regulator, which showed certain banks had worked together to fix derivative contract prices.

The parties reached a final settlement in the case last May. Credit Suisse had agreed to pay $8.88 million, and a group of five other banks, comprising BNP Paribas, Deutsche Bank, the Royal Bank of Canada, the Royal Bank of Scotland and UBS, had agreed to pay a total of $40 million to end the claims they face in the matter.

The settlement sum also includes $137 million in settlements reached earlier in the matter, including December 2021 agreements that Australia and New Zealand Banking and Commonwealth Bank of Australia would each pay $35 million, National Australia Bank would pay $27 million and Morgan Stanley would pay $7 million.  Westpac Banking Corp. agreed to pay $25 million in March 2021, and JPMorgan struck a $7 million settlement deal in November 2018.

Ninth Circuit to Decide on Common Benefit Fees

May 23, 2023

A recent Reuters article by Alison Frankel, “Appeals Court Will Decide If Lawyers Can Evade Common Fund Fees in Consolidated Cases,” reports on common fund fees in class actions and MDLs.  The story reads:

Can a plaintiffs lawyer who was a member of the steering committee in consolidated multidistrict litigation get out of paying common benefit fees for cases resolved outside of the MDL’s confines?  That’s the question that will be argued before the 9th U.S. Circuit Court of Appeals in a case arising from consolidated litigation over C.R. Bard Inc’s blood clot filter implants.  The 9th Circuit punted last year in a similar case addressing common fees in the Roundup MDL because the fee ruling on appeal was not a final order.

But assuming there are no jurisdictional problems in the Bard case – as both parties assured the appeals court in a joint supplemental brief filed earlier this month – the 9th Circuit will be just the third federal appeals court in the last decade to offer answers to vexing questions about the scope of MDL judges’ power to order fees in cases they do not oversee.

Common benefit fees, as you know, are intended to compensate MDL lead counsel who expend significant time and money to conduct discovery and litigate legal issues that affect all of the cases in the MDL.  The fees address what might otherwise be the problem of “free-riding” by lawyers trying to capitalize on the efforts of MDL leaders without paying for it.

There’s little doubt that MDL judges have the authority to order plaintiffs lawyers whose cases are part of the consolidated proceeding to turn over a share of their clients’ settlements to MDL leadership.  (In the Bard MDL, common benefit fees have been held back in an escrow account before ever reaching plaintiffs and their lawyers.)  But what about cases outside of the MDL, such as state-court lawsuits, claims that were settled before they were formally filed or cases filed after the closure of the MDL?  Can MDL judges require plaintiffs lawyers to pay common benefit fees in those cases?

Federal circuits have reached different conclusions.  In 2014, the 8th Circuit ruled in In re Genetically Modified Rice Litigation that the MDL judge did not have authority to order fees from plaintiffs’ lawyers in state-court GMO suits.  But in 2015’s In re Avandia, the 3rd Circuit ruled that MDL courts are entitled to enforce their own orders, so an MDL judge had authority to order a plaintiff’s firm that participated in the MDL to pay a common benefit fee on all of its settled cases.

Two highly-regarded MDL judges also recently diverged on the scope of their authority. U.S. District Judge Jesse Furman of Manhattan ruled in 2020’s In re: General Motors that his MDL orders required lawyers who had litigated before him to pay common benefit fees from settlements of unfiled cases.  But U.S. District Judge Vince Chhabria of San Francisco held in 2021’s In re: Roundup that his power to order fees was limited to cases within the MDL.

Like I said, this is a vexing issue.  The twist in the Bard case is that plaintiffs lawyer Ben Martin of Martin Baughman was appointed to the MDL’s steering committee at the very beginning of the case in 2015.  He and the lawyers at his firm settled about 200 cases in the MDL.  But they also settled an additional 300 or so cases that were never formally filed, were brought in state court, or were filed after U.S. District Judge David Campbell of Phoenix closed the Bard MDL.

Martin’s counsel, Howard Bashman of the indispensable How Appealing blog, told the 9th Circuit that Campbell erred when he ruled in 2022 that all of Martin’s cases – and not just those settled within the MDL -- were subject to a fee holdback.  Bashman argued that MDL judges simply do not have a right, under their inherent case management power or common fund doctrine, to order fees in cases that are not before them.

In a phone interview, Bashman acknowledged the free rider problem, but said that the 9th Circuit must distinguish between the legitimate goal of deterring abusive case-filing by plaintiffs lawyers who want to avoid common benefit fees and the limited power of MDL judges to accomplish that end.  “Those are two different questions,” Bashman said. (He emphasized that Martin and his firm were not trying to avoid common benefit fees by settling cases outside of the MDL.)

The other lawyers on the Bard MDL steering committee, who are represented by Shannon Clark of Gallagher & Kennedy, assert that MDL judges have inherent power to assess fees on cases outside of their court.  But the lawyers' primary argument is that Martin and his firm agreed to common benefit fee holdbacks for all of their cases when Martin accepted an MDL leadership role, based on a participation agreement attached to a Campbell case management order. (Martin has also received common benefit fees under those orders.)  Clark, who did not respond to my email query, argued that Martin waived his right to challenge the fees by failing to object to Campbell’s orders.

Bashman told the 9th Circuit that there is no evidence Martin signed the relevant participation agreement.  And even if he did, Bashman said, the MDL judge is not entitled to exceed his authority by imposing an impermissible condition on Martin’s ability to represent his clients.

In some ways, the stakes in the Bard appeal are small. Martin’s briefing does not say precisely how much money has been held back but says his clients’ 2% share amounts to less than $1 million.  The overall holdback is 10%, so this fight seems to involve between $5 and $10 million.  On the other hand, common benefit fees affect every MDL, and surely total hundreds of millions of dollars across all of the consolidated multidistrict cases being litigated in U.S. court.

Moreover, Bashman said, the 9th Circuit panel – 9th Circuit judges John Owens and Bridget Bade and Judge Miller Baker of the U.S. Court of International Trade – might not be the last word on the fee question, regardless of who wins.  “This does seem like the kind of issue the U.S. Supreme Court would be interested in,” he said.

Workers Support Counsel Seeking $10M in Fees in $31M Wage Action

May 19, 2023

A recent Law 360 by Irene Spezzamonte, “Workers for Virgin, Alaska Seek $10M Fees in $31M Wage Suit,reports that a group of flight attendants asked a California federal court to grant their attorneys $10 million in fees after they were able to reach a $31 million deal to solve their suit claiming Virgin America and Alaska Airlines cheated them out of pay.  The workers asked the court to sign off on the fees, as well as on more than $600,000 in expenses. 

The workers added that those amounts are reasonable after their attorneys put in about 7,300 hours of work during the eight-year litigation on claims that Virgin America Inc. and Alaska Airlines Inc. violated California labor laws.  "Plaintiffs and class counsel have litigated this matter for nearly eight years against unyielding defendants vigorously represented by skilled counsel," the workers said.  "Every single step of this litigation was hard-fought and fraught with risk."

In January, U.S. District Judge Jon S. Tigar entered a judgment order against the airlines, which are both a part of Alaska Air Group, directing them to shell out the settlement aimed at resolving claims they failed to pay overtime, meal and rest periods and did not provide workers with accurate wage statements.  The settlement also ended claims under California's Private Attorneys General Act.

In that order, Judge Tigar also asked the parties to separately file a motion for the attorney fees, service awards for the three named plaintiffs and to address the plan of allocation, triggering the filing.  The flight attendants said that the $10 million in attorney fees, which the airlines agreed to pay, are reasonable given the amount of time and work their counsel put into the litigation.  Of that amount, about $6 million will come directly from the airlines while the remaining $4 million will come from the $31 million common fund, the workers said.

The fees represent overall 33% of the settlement, but the $6 million the airlines will pitch in will be credited against the $31 million total, resulting in a 13% total of the deal, the workers added.  The $600,000 in expenses will also come from two sources: $40,000 from the airlines in the form of a reimbursement for the plaintiffs' taxable costs and the remainder from the common fund.

The workers also seek $25,000 to each of the three named plaintiffs, saying that "over the past eight years, plaintiffs have provided invaluable assistance and guidance to class counsel with respect to understanding the airline industry" and the airlines' practices and policies.  Additionally, each service award of $25,000 represents less than .001% of the final common fund judgment, the workers said.

Judge Says Trial Needed in $30M Attorney Fee Dispute

April 7, 2023

A recent Law 360 story by Jonathan Capriel, “Judge Says Trial Needed in $30M Attorney Fee Dispute,” reports that three Illinois law firms that made an oral agreement to share "fees" will have to go to trial to decide exactly what that means for the $30 million in attorney fees they were awarded for their work in the $1.5 billion Syngenta AG settlement, a Kansas federal judge ruled.  Exactly what the firms meant when they said "they would split 'fees' equally" is a question that can't be answered on summary judgment, said U.S. District Judge John W. Lungstrum, who shot down quick-win bids from both sides in his 18-page order.

As these firms fight over a pot worth tens of millions of dollars, other firms in Kansas and Minnesota that also worked on the original 2014 multidistrict litigation — which secured $1.5 billion in 2018 for a class of roughly 650,000 corn farmers who filed suit against Syngenta AG over genetically modified corn seed — tried to reverse the district court's method for splitting the larger $503 million in attorney fees.  But the Tenth Circuit refused to hold to an en banc hearing to review the lower court's decision.

Two of the Illinois firms at the center of the ongoing Kansas litigation, Crumley Roberts LLP and Burke Harvey LLC, argue that the spoken agreement they made with Heninger Garrison Davis LLC entitles them to two-thirds of the roughly $30 million award, and that Heninger Garrison has in fact breached a contract by not handing it over.  Heninger Garrison argues that in no way did it mean common benefit fees awarded to the class when it said "fees"; rather, it meant "contingent fees."  It further claims it performed the lion's share of the work and has offered to pay "more than the value of the compensable hours" that the two firms worked on the case.

But Judge Lungstrum said that the court can't make a determination at this stage of the litigation as to what "fees" means.  "The court concludes that any decision concerning ambiguity should be based on the totality of the circumstances surrounding the making of the oral agreement, including those relating to the parties' simultaneous agreement to work together to pursue litigation against Syngenta, and thus the court will await the presentation of evidence at trial," Judge Lungstrum wrote.

In 2019, the court divided the attorney fees into four pools, with each receiving a different amount of the fee. Kansas law firms received the bulk of counsel compensation with 49%. Minnesota firms got 23.5%, Illinois firms received 15.5% and about 12% went to private attorneys.  The Illinois pool consisted of the three present firms — Heninger Garrison, Crumley Roberts and Burke Harvey — and their sum ended up being about $29.1 million.

The three firms filed jointly as the "HGD Team" when seeking their compensation, and the court gave the entire amount to Heninger Garrison, which was then supposed to dole out the funds.  Once it became clear that Heninger Garrison didn't intend to give roughly $10 million to each party on the team, Crumley Roberts and Burke Harvey filed suit in state court. Their complaint was later removed to district court.  The two firms sought partial summary judgment on their breach-of-contract claim, arguing that "all fees" cannot be interpreted any other way.

Heninger Garrison sought summary judgment on a number of grounds, including arguing that William Bross of Heninger Garrison did not mean attorney fees when he orally agreed to split fees with Brian L. Kinsley of Crumley Roberts and Todd Harvey of Burke Harvey.  But even if the two did believe the agreement included counsel compensation, the amount they would receive "is so disproportionate to the work they performed that it would be an unreasonable fee and thus, unenforceable," Heninger Garrison said.

"Enforcing the agreement would thus pay plaintiffs nearly $20 million for a few hundred hours of common benefit work," Heninger Garrison said in its summary judgment motion.  The firms "never expected to receive that money.  Mr. Harvey conceded [Burke Harvey] was not entitled to 1/3 of the common benefit fee, 'far from it.'  And Mr. Kinsley conceded that most of [Crumley Roberts'] work was not compensable and did not benefit the class."

But the judge said he couldn't get past the broad use of the word "fees" in the agreement.  "Not only does the use of the word 'fees' in the agreement without limiting language weigh against Heninger Garrison's interpretation, the fact that the parties submitted a joint application … could suggest that the parties had agreed to divide any resulting award on some basis other than the relative common benefit hours included in the application, as the parties could simply have submitted separate applications if they were to be compensated only according to those hours," the judge said

Delaware Court Wants More Info on Opioid Fee Award

October 26, 2022

A recent Law 360 story by Jeff Montgomery, “Del. Court Demands Info on $2.7M Atty Fee in Opioid Deal” reports that, citing unsatisfactory answers to questions about a flat, $2.7 million attorney fee payout request as part of Delaware's $100 million share of a nationwide opioid damage settlement, Delaware's chancellor cautioned she might sever the fee from the deal pending a fuller explanation.  In a letter to Cross & Simon LLC, Chancellor Kathaleen St. J. McCormick gave those seeking to wrap up the deal a choice between severing the fee award from the settlement for now or accepting a three-day deadline for briefs on the issue.

The chancellor said the request to direct the state's Prescription Opioid Distribution Commission to pay $2.7 million to unnamed outside attorneys "gave me pause for a few reasons."  Among the concerns, the chancellor said, is that "in analogous circumstances, this court exercises its own business judgment when approving attorneys' fees in representative litigation from a settlement fund."

At issue is Delaware's share of a $4 billion fund for state and local governments, carved out of an overall $26 billion settlement that, for Delaware, resolves investigations and litigation over the role that Johnson & Johnson and distributors Cardinal, McKesson and AmerisourceBergen played in creating and accelerating the opioid crisis.  Delaware Attorney General Kathleen Jennings announced the state's portion of the settlement in July 2021.  A complaint and final consent judgment were filed together in the Court of Chancery on Aug. 24, 2022.

Funds from the settlement will finance addiction treatment and prevention as well as other services and programs.  The agreement also mandates producer, distributor and health care reforms to prevent a recurrence of the crisis, including Johnson & Johnson's exit from opioid production.  Attorneys for Delaware told the chancellor that "court approval is not required," but said in a letter earlier this month that they are prepared to submit documents for a traditional court fee analysis if required.

Michael L. Vild of Cross & Simon said in a letter Oct. 13 that "this matter involves a two-party contract between the state and its counsel, unrelated to the state's agreement with the defendants.  There are no unrepresented or absent third parties."  That explanation, the chancellor said, "gave me pause."  Included in the overall settlement, the chancellor said, are provisions for establishment of an outside counsel fund, and statements in some parts of the settlement agreement say that payment of fees from the settlement fund is "disfavored."

A related agreement, "Remediating Opioids Across Delaware through State-Municipal Abatement Partnership," also discourages attorney fee payments from the settlement fund, the chancellor observed, adding that a multistep review and approval process is called for under some provisions.  "The parties effectively ask that I shortcut the statutory process for authorizing distributions by ordering the commission to distribute the $2.7 million to the state's outside counsel, without any opportunity for public comment or investigation by the commission, without any role of the consortium, and without the requisite approvals," the chancellor wrote.  "Maybe that is warranted and appropriate, but the parties did not expressly address this aspect of the relief requested."

Acknowledging concerns about delaying the payment, the chancellor suggested a three-day window for supplemental briefs on the issue or severing the fee provisions from the order, allowing the rest of the funds to go forward, pending a resolution on fee terms.