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Category: Historic / Landmark Case

Law Firms Earn $23.5M in Fees in $100M CD&R Merger

January 21, 2022

A recent Law 360 story by Rose Krebs, “Firms Get $23.5M for $100M Merger Suit Settlement in Del.,” reports that three firms are getting a $23.5 million fee per a vice chancellor's approval of a $100 million settlement of a Delaware Chancery Court suit that accused Clayton Dubilier & Rice LLC of steering a construction industry supplier it controlled into an allegedly "grossly unfair" $1.2 billion merger.

During a settlement hearing held virtually, Vice Chancellor J. Travis Laster approved the settlement, bringing an end to a suit filed by NCI Building Systems Inc. stockholder Gary D. Voigt.  He also approved the $23.5 million fee award to go to Voigt's counsel Andrews & Springer LLC, Friedman Oster & Tejtel PLLC and Kaskela Law LLC.

The vice chancellor initially said he thought there was "room to quibble with" the fee sought, but agreed to approve the settlement and fee as it was presented to the court.  He also approved a $5,000 incentive fee to go to Voigt and said the cash settlement negotiated in the case was a "good get" for the stockholder class.

During the hearing, David M. Sborz of Andrews & Springer told the vice chancellor the fee award sought was reasonable given the significant benefit achieved for NCI and the stockholder class.  In a court filing, Voigt's counsel claimed the deal was the fourth-largest derivative settlement and sixth-largest settlement, including direct or derivative claims, in the history of the court.

The suit claimed that the private equity firm used its control as a large NCI stockholder to make it pay $1.2 billion for the Clayton Dubilier-owned successor to privately held Ply Gem Holdings Inc. in July 2018, three months after Clayton Dubilier paid $683 million for the same business.  The transaction created a nearly $600 million windfall for the private equity firm, which owned 70% of Ply Gem, while creating a huge new debt burden for NCI, the suit asserted.  Under the settlement, the defendants will have insurers pay $100 million into an escrow fund that will be turned over to NCI.

Judge Mulls $113M in Fees in $454M Glumetza Antitrust Settlement

January 20, 2022

A recent Law 360 story by Hannah Albarazi, “Alsup Mulls $113M Atty Fees in Glumetza Antitrst Deal,” reports that U.S. District Judge William H. Alsup said he will grant final approval to $454 million in settlements resolving direct Glumetza buyers' class claims that drugmakers plotted to delay the generic version of the blockbuster diabetes drug, but said he's still weighing attorneys' $112.8 million fee bid.  During a hearing, class counsel urged the judge to sign off on their attorney fee bid for 25% of the $453.85 million settlement fund over objections raised by direct purchaser class members McKesson Corp., AmerisourceBergen Corp. and Cardinal Health Inc., who asked the court to slash the fee award to $22.5 million.

National wholesalers McKesson, AmerisourceBergen and Cardinal Health objected to the "unprecedented" attorney fee award of $112.8 million, telling Judge Alsup that class counsel is seeking to be paid five times their regular rates.  McKesson's attorney, Steven Winick of Buchalter PC, speaking on behalf of all three objectors, told Judge Alsup that "25% is not reasonable and would lead to a windfall for class counsel."

Winick said the "enormous damages" fund in this generic drug delay case stems from the "exorbitant" increase in the price of Glumetza by defendant Bausch and its co-conspirators, but that had the class gone to trial and won, it could have been awarded treble damages of up to $2.7 billion, a far cry from the $454 million settlement fund.  The objectors instead suggested a multiplier of two, which would result in a $22.5 million reward to class counsel.

The antitrust claims were filed by a group of direct and indirect buyers in fall 2019 after the price of the diabetes medication allegedly jumped by nearly 800% in 2015 from $5.72 per pill to more than $51 apiece.

Co-class counsel, Lauren G. Barnes of Hagens Berman Sobol Shapiro LLP, said the 25% fee award is the benchmark in Ninth Circuit and that the multiplier of five is not outside the range of reasonable multipliers awarded in this circuit.  Barnes also noted that the 25% take is less than the one-third bid that is often awarded in the district.  Judge Alsup said at the close of the hearing that he will allow the plaintiffs' $2.4 million in expense reimbursement and intends to grant final approval of the settlement, but said, "I don't have answer on the attorney fees

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."

Quinn Emanuel Gets $185M in Attorney Fees in $3.7B ACA Win

September 16, 2021

A recent Law 360 story by Dave Simpson, “Quinn Emanuel Gets $185M Fee From $3.7B Win in ACA Suits,” reports that a U.S. Court of Federal Claims judge granted Quinn Emanuel Urquhart & Sullivan LLP's request for $185 million in fees stemming from two class actions against the federal government over so-called risk corridor payments under the Affordable Care Act, which resulted in a nearly $3.7 billion total win.  Judge Kathryn C. Davis said that despite the "at times hyperbolic" motions for fees, the law firm did show "foresight" in focusing on a successful legal theory months before other parties jumped on that bandwagon.  She granted its request for 5% of the winnings.

"At the end of the day, what is more important is that class counsel's legal theory resulted in a huge award to the classes here," Judge Davis said.  Quinn Emanuel was the first firm in the country to file a lawsuit on behalf of a qualified health plan insurer accusing the federal government of unlawfully reneging on a commitment to shield ACA insurers from heavy financial losses.

Health Republic Insurance Co. sued the government in 2016 and in July 2020 won a judgment for $1.9 billion alongside a subclass of insurers.  Common Ground Healthcare Cooperative sued the government in 2017 over similar claims and won a $1.7 billion judgment.  Those cases set off a firestorm of parallel litigation across the country, alleging similar claims.  Two of those cases ended up at the U.S. Supreme Court.  In April 2020, the justices reversed Congress' denial of $12 billion in "risk corridor" funding, which the ACA dangled as an incentive for insurers during the law's first three years of operation.

While Quinn Emanuel didn't work on those cases directly, the firm argued in its request for fees in July 2020 that the Supreme Court "adopted the exact legal theory Quinn Emanuel set forth in the initial Health Republic complaint and which it advocated at every step."  But in August 2020, objectors like Kaiser Foundation Health Plan Inc., UnitedHealthcare Insurance Co. and others argued that class counsel was entitled to just $8.8 million after a lodestar cross-check.

They said that Quinn Emanuel had little to do with the litigation that ended up at the Supreme Court, and argued that the firm was trying to walk away with an award that would work out to an hourly rate of $18,000 per attorney.  Class members signed on to the suit with a guarantee that the proposed 5% fee award would be subject to a lodestar cross-check, the motion said, which the firm had eschewed.

Quinn Emanuel shot back in September 2020 that the $8.8 million award proposed would discourage attorneys in the future from taking on similarly ambitious cases.  The percentage model, which the insurers agreed to when choosing to join the class instead of pursuing individual claims, is favored by the courts for exactly this reason, the firm said.  According to the firm, despite the dozens of companies signing on to the fee objection, most of them Kaiser or United entities, almost 90% of the class members have not objected.

Judge Davis sided with the firm.  "These are not cases in which class counsel merely rode the coattails of other innovative litigators," she said.  The 5% fee is well below market value, and the objectors propose what would amount to a .22% fee, she said.  Further, the firm allocated 10,000 billable hours and might not have been paid for any of it had the outcome gone differently, the judge said.

Class Counsel Win Reduced Attorney Fees of $152M in Antitrust Case

August 30, 2021

A recent Reuters story by Mike Scarcella, “Class Lawyers Win Reduced Fee of $152M in Sutter Case,” reports that a California judge has slashed a requested legal fee award in an antitrust settlement with Sutter Health, approving $152.3 million in compensation for class counsel, after concluding the plaintiffs' lawyers had claimed "unreasonably high" hours for their work.  Judge Anne-Christine Massullo of San Francisco Superior Court gave final approval to the $575 million settlement as she awarded fees to five law firms that represented plaintiff labor unions and employers, in an order released.

Sutter Health in 2019 first agreed to the settlement resolving claims that anticompetitive practices led to higher healthcare costs in northern California.  The awarded legal fee marked about 26% of the settlement, in line with compensation in other class actions, Massullo wrote.  Massullo said her award accounted for the "risk presented by this litigation" and also "the novelty and complexity of the issues."  The plaintiffs' lawyers had asked for $172.5 million in fees.

Massullo's order awarded $11.5 million in fees to the California attorney general's office, which sued Sutter in 2018.  The state's complaint was consolidated with the private litigation, which began in 2014.  Massullo said the state attorneys and class lawyers "demonstrated a high level of skill in providing high quality of representation in this case."  Still, the judge raised concerns about the number of hours -- 194,642 -- that class lawyers claimed in their request for fees.  Massullo said the claimed hours compared to "93.6 years of work, or more than 7 years of work for 13 attorneys."

Declarations from plaintiffs' attorneys involved in the case "do not, except at a high level and very generally, permit assessment of the extent to which the five firms that constitute class counsel unreasonably duplicated efforts," Massullo said.  Still, she said she was "satisfied that this litigation was a monumental undertaking" that required a "vast number of hours."