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Category: Fees & Common Fund

Saxena White Secures $40.5M in Fees in DaVita Investor Settlement

July 16, 2021

A recent Law 360 story by Katryna Perera, “DaVita Investor Attys Score $40.5M in Fees From Settlement”, reports that the law firms that represented investors in a case against health care company DaVita Inc. were awarded $40.5 million for their work on a $135 million class-action settlement of claims that shareholders were hurt when it was revealed that the company pressured patients to enroll in high-cost, private insurance plans.  U.S. District Judge William Martinez of the District of Colorado awarded attorney fees of 30% of the settlement fund as well as reimbursement of $547,409.27 in litigation expenses and $10,000 in representative rebates after the lead plaintiffs requested it.

Attorneys from Saxena White PA and Shuman Glenn & Stecker represented the plaintiffs, led by the Peace Officers' Annuity and Benefit Fund of Georgia and the Jacksonville Police and Fire Pension Fund.  Judge Martinez said the attorney fees would be calculated using a percentage rather than the lodestar approach because the case is a common fund case.

In his order, Judge Martinez mentioned the "extensive and extremely comprehensive investigation" the attorneys conducted and how time-consuming the settlement negotiations were.  Over four years of litigation, the lead counsel expended more than 31,000 hours, equivalent to $14.7 million in attorney and staff time, the judge said.  Additionally, the lead counsel will continue to work and incur out-of-pocket expenses in connection with the distribution of the settlement, now that it has received final approval, Judge Martinez noted.

A 30% award fee is typical even in "megafund" settlements, the judge said, and he noted the prominence of the $135 million resolution, calling it an "exceptional" monetary result.  "The $135 million recovery represents the second-largest all-cash securities class action recovery ever obtained in this district, is among the top five such settlements in Tenth Circuit history, and is more than 20 times larger than the $6.7 million median for securities class action settlements in the Tenth Circuit from 2010 to 2019," Judge Martinez said.

The judge also pointed out the risk that law firms take with class actions, as there is no guarantee of success.  "To date, lead counsel has received no compensation for its prosecution of this case, and since the extensive commitment of time and resources devoted here necessarily entailed the preclusion of other projects, the primary focus of this factor is to acknowledge this incongruence by permitting a higher recovery to compensate for the risk of recovering nothing," he said.

Judge Wary of Hourly Rates in Subaru Windshield Class Settlement

June 11, 2021

A recent Law 360 story by Jeannie O’Sullivan, “NJ Judge OKs Subaru Windshield Deal, Wary On Counsel Fee,” reports that a New Jersey federal judge gave final approval to a settlement that would give a class of Subaru drivers extended warranties and a reimbursement program to resolve claims over crack-prone windshields, but said class counsel still needs to justify its $515,000 fee request.  During a hearing held via Zoom, U.S. District Judge Renee Marie Bumb said that the settlement was fair, reasonable and adequate.  The deal will offer what the judge said was "very generous" relief to the current and former owners and lessees of about 231,000 Subaru Outback and Legacy vehicles from model years 2015 and 2016.  "It puts them in a very good position," Judge Bumb said of the settlement, agreeing to certify the class and approve the deal.

The resolution of the claims — in which Subaru denies liability — was the result of arm's length negotiations between counsel, Judge Bumb said, calling it "impressive" that the settlement notices reached 96% of the proposed class.  The deal drew only five objections, most of which she said were "the product of confusion."  Judge Bumb also directed class counsel Glancy Prongay & Murray LLP and Greenstone Law PC to provide supplemental briefing to bolster their request for attorney fees and expenses.  In their April motion, the firms specified hourly rates ranging between $800 and $850 and said they spent more than 1,200 hours on the case.

The firms' motion characterized their fee request as small relative to the deal's overall value, significantly less than the firms' actual lodestar and expenses. But Judge Bumb said that without more information, she was "somewhat handicapped in conducting an analysis" as to the reasonableness of the rate as well as the time spent on the case.  The judge pointed to a New Jersey federal court decision from August 2019, in which Chief U.S. District Judge Freda L. Wolfson, presiding over a case filed by drivers of Chrysler vehicles with allegedly defective automatic transmissions, noted that a $725-an-hour rate fell "on the outer end of reasonableness for this geographic area."

Judge Bumb also wondered about the amount of time class counsel actually spent on the Subaru case, given that the settlement deal was modeled on Subaru's prelitigation offer to extend the warranties.  Class attorney Mark S. Greenstone told the court that the total fee requested effectively reduces their hourly rate to about $600.  He pointed out that class counsel's tasks included filing an amended complaint, adding three new plaintiffs to the litigation, enlisting experts to analyze the windshields at issue, serving formal discovery and mediating the case over a year after it was filed.

In their motion for attorney fees, the firms described the negotiations as "intense, adversarial, and complex."  They noted that it wasn't a common fund settlement, so the fee wouldn't cut into the relief for the class.  The windshields at issue either cracked for no reason at all or under very slight impact, according to the complaint.  The replacement windows provided by Subaru were similarly defective, leading to multiple replacements in some cases, the complaint said.

Making a case for the deal during the hearing, Greenstone said unlimited mileage isn't a common term for car warranties, noting that the windshield replacements on average cost more than $500.  "So, in terms of the substantive relief, it is really hard to imagine a better and more appropriate remedy even if this case had gone to trial," Greenstone told the court.  The deal also includes a class representative award of $5,000 for each of the four named plaintiffs. Judge Bumb said during the hearing that she was not questioning the class representative awards.

Eleventh Circuit Upholds Fee Award in Chinese Drywall MDL

June 10, 2021

A recent Law 360 story by Carolina Bolado, “11th Circ. Upholds Fee Award in Chinese Drywall MDL,” reports that the Eleventh Circuit ruled that court-appointed class counsel in the defective Chinese drywall multidistrict litigation could receive 45% of the total fees paid to attorneys who negotiated settlements for 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.

The class counsel includes firms Colson Hicks Eidson, Lieff Cabraser Heimann & Bernstein LLP, Morgan & Morgan, Herman Herman & Katz LLC and Seeger Weiss LLP.  The Eleventh Circuit said that although the attorneys for the 497 plaintiffs had worked hard to get the deal, their work "did not exist in a vacuum."

"They benefited from the decade of foundational work that class counsel exerted in this groundbreaking MDL, which involved evasive defendants in China, complex jurisdictional challenges requiring two trips to the Fifth Circuit, decertification attempts and liability determinations," the appeals court said.  "That class counsel has otherwise been compensated for this work does not prevent them from continuing to reap the rewards of their efforts."  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 for further proceedings.

Following the settlement with the 497 plaintiffs, class counsel said that much of their foundational work was used to secure the deals, entitling them to 20% of the total settlement.  After a global settlement was approved in January 2020 between Taishan and the remaining class members, the class counsel amended their award request to 60% of the attorney fees paid out to the individual plaintiffs, according to the opinion.  In May 2020, Judge Cooke awarded them a 45% cut.

The counsel for the individual plaintiffs appealed the decision, arguing that common benefit fees are only appropriate when there is a common fund from which to award them.  In this case, there is no common fund or judicial supervision of a fund, they said.  They also argued that class counsel have already been highly compensated for their common benefit work by the MDL court.

But the Eleventh Circuit said that particularly in complex litigation, courts have broad managerial power and discretion to award fees.  "The district court had control over the funds pursuant to the agreement of the parties to litigate common benefit fees in the SDFL and the actions taken by the court after the settlement agreement was first filed," the appeals court said.  "Awarding a portion of these fees to class counsel was therefore within the district court's power."  The appeals court added that preventing appointed counsel from recovering fees when their work leads to settlements down the road would make it more difficult for courts to find competent lawyers to take on that work.

Jimmy Faircloth, who represents the attorneys who worked on the individual settlements, told Law360 the ruling conflicts with Eleventh Circuit precedent by allowing contractual attorney fees to be used as a fund for purposes of the common benefit doctrine.  "[The ruling] allows MDL authority to reach even deeper into the jurisdiction of a transferor court following a remand," Faircloth said.  "This creates a slippery slope with negative consequences for the class action device."

Patrick Montoya, who represents the class counsel, said he was pleased the Eleventh Circuit affirmed Judge Cooke's "well-founded opinion recognizing class counsel's efforts in this decade-long, hard-fought case."  "The settlement obtained by class counsel was an unprecedented result against Chinese companies and the first of its kind in the United States," Montoya said.  "Judge Cooke and the Eleventh Circuit prevented a group of splinter lawyers from doing an end-around and unfairly benefitting from the class counsel's monumental efforts and the excellent results obtained for class members by class counsel."

Class Counsel Argue for Attorney Fees in Flint Water Crisis Settlement

May 31, 2021

A recent Law 360 story by Michael Phills, “Flint Plaintiffs' Attys Argue For Final OK of $641M Settlement,” reports that plaintiffs' attorneys want to seal the deal on a $641 million settlement over the Flint, Michigan, water crisis that objectors have said carves out too much for legal fees, arguing that the fee request is fair for the hard-fought work to secure compensation for an environmental catastrophe.  In a trio of filings, the plaintiffs' attorneys pushed back against several types of objections around the settlement, including the argument that a nearly 32% award of attorney fees is unreasonable.  The attorneys argue that their work produced something significant that the judge should sign off on.  They say that despite the objections the court has received, more than 50,000 have supported the deal, showing its widespread backing from the Flint community.

On the question of fees, plaintiffs' counsel defended their request as reasonable, reflective of the many years and hours of work spent on the case.  And they said the top line fee request is more complicated than objectors make it out to be.  "Some objectors have claimed that plaintiffs' counsel seek an award of more than $200 million in attorneys' fees.  That is not true — a substantial portion of the attorneys' fees in this matter will be paid by claimants to their individually retained counsel," the plaintiffs' attorneys wrote.

According to court filings, individual attorneys that were privately hired had often already locked in their fees and "much of the aggregate fee request will go to these individual attorneys."  In May, 26 individuals objected to the deal and raised a range of concerns, including that the settlement generally lacks clarity on what it entails and that it won't provide enough money to help residents as they try to move past a crisis that has left them with medical concerns and exorbitant water bills.

In March, other objectors opposed the fee request, saying a motion for the fee award included "scant detail" about the claimed common benefit work and didn't estimate what the common benefit fees might amount to.  "[The request] provides absolutely no evidence that ceding 27% of claimants' recovery to private attorneys for work sight unseen could possibly be fair to Flint residents who need this money to help them grapple with oft-debilitating, ruinous, and violent consequences of lead exposure for their entire lives," the objectors said.

They said that in "megafund" settlements of this size, typical fee awards are in the 10% to 12% range.  In March, the plaintiffs' attorneys made their fee request for their five years and more than 180,000 hours of attorney work to reach the "remarkable" settlement result.  "Contrary to every single 'megafund' case cited by the [objectors], this case involved complicated questions of sovereign immunity which necessarily rendered the case riskier and required a heightened level of skill," the plaintiffs' attorneys wrote.  They argued that they should not have to provide detailed billing records to certain objectors.

U.S. District Judge Judith Levy gave preliminary approval to the deal in January, saying that it is a partial settlement that doesn't end the litigation over the lead-tainted water.  The settlement with Michigan and others provides a mechanism for minors, injured adults, property owners and renters, those who paid Flint water bills and impacted business owners to receive monetary awards, the judge said. It also offers a "class action" solution for adults who have not hired their own attorneys, the judge said.

$203M Attorney Fee Request in Flint Water Settlement

March 10, 2021

A recent Law.com story by Amanda Bronstad, “Plaintiffs Counsel in Flint Water Settlement Seek $200M in Attorney Fees,” reports that plaintiffs lawyers who obtained a settlement in the Flint, Michigan, water crisis litigation are asking for more than $200 million in attorney fees.  The request, outlined in the filing in the U.S. District Court for the Eastern District of Michigan, is part of a $641.25 million settlement with the state of Michigan, former Michigan Gov. Rick Snyder, the city of Flint and several individual government defendants.

The fee request would include an estimated $40.6 million in common benefit fees to lead counsel and others who spent five years litigating both a class action and individual cases.  The fees also would provide a fee award to class counsel and cap contingency rates of individually retained counsel at 27%.  In all, the fees could total nearly $203 million, according to the motion.

“Plaintiffs’ counsel have worked on a contingency basis for more than five years now, without compensation of any kind, to achieve this remarkable result,” the fee motion says.  “The fee proposal is designed to provide reasonable and fair compensation to plaintiffs’ counsel and to ensure equitable treatment for all who make claims under the settlement.”  U.S. District Judge Judith Levy has scheduled a fairness hearing, including potential approval of the fees, for July 12.

In April 2014, state officials decided to shift Flint’s water supply from Lake Huron to the Flint River despite studies warning the corrosive nature of the river water could send lead into the drinking water.  Early on in the litigation, co-lead counsel Ted Leopold, a partner at Cohen Milstein Sellers & Toll in Palm Beach Gardens, Florida, and Michael Pitt, of Pitt, McGehee, Palmer, Bonanni & Rivers in Royal Oak, Michigan, had a protracted fight with co-liaison counsel Hunter Shkolnik, of New York-based Napoli Shkolnik, over potential fees.  Meanwhile, the Flint water cases dragged through several procedural hurdles, with the U.S. Court of Appeals for the Sixth Circuit reversing some key rulings.

The partial settlement, filed in court Nov. 17, excludes two engineering firm defendants and the U.S. Environmental Protection Agency.  On Jan. 21, Levy preliminarily approved the settlement, 79.5% of which provides a compensation fund for minors.  The settlement also includes subclasses of adult residents, businesses and property owners.  Signing the fee motion were lawyers at 20 law firms, including Leopold, Pitt, Shkolnik and co-liaison counsel Corey Stern, of New York’s Levy Konigsberg.

The motion requests a 6.33% common benefit assessment, divided equally between co-lead counsel and co-liaison counsel, with higher percentages imposed on lawyers retained after July 16, 2020.  Lead counsel said they provided $7 million upfront expenses and invested 182,571 hours of work—about $84 million in an estimated lodestar, which is the billing amount multiplied by the hourly rate.  The requested fees, which are more than double the lodestar, are justified given the length and risks of the case, the number of defendants, the complexity of the issues and litigation that involved more than a dozen appeals, Leopold said.  “The work speaks for itself,” he said.

The fee motion says lawyers with individual cases would have a 27% cap on their contingency fees.  Michigan law caps contingency fees at one-third of a recovery amount.  “For the vast majority of the cases and the lawyers who did not work on the common benefit, we didn’t think it would be fair to the clients to take 33%,” Leopold said.

The fee request also takes into account the fact that the work isn’t over.  Levy has scheduled the first bellwether trials to occur in October.  Many of the settlement’s beneficiaries also are minors who do not have lawyers and will need help from lead counsel during the claims process, Shkolnik said.  “There’s going to be a whole new round of work that’s going to be done for individual cases to process them as if we represent them,” he said.