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Category: Historic / Landmark Case

Novel Ruling: Law Firm Awarded $10M in Fees After Withdrawing in NJ

April 17, 2021

A recent New Jersey Law Journal story by Charles Toutant, “Novel Holding in New Jersey: Law Firm Awarded $10M After Withdrawing From Case,” reports that a New Jersey judge has awarded $10 million to the law firm of Kirsch, Gelband & Stone in a fee dispute stemming from a $125 million personal injury settlement of a suit by a lawyer who was left paralyzed by a falling utility pole.  Although Kirsch Gelband was ultimately replaced by another firm, it had a key role in developing evidence that yielded such a large settlement, Essex County Superior Court Judge Thomas Vena said.

The ruling, giving a law firm that withdrew from representation a share of successor counsel’s legal fees, based on its contribution toward the recovery, is a novel holding in New Jersey, Vena said.  The ruling gives Kirsch Gelband a 40% cut of the $25 million awarded to its successor in the case, Mazie Slater Katz & Freeman.

Justifiable withdrawal

The case stems from a 2017 accident in which Maria Moser Meister was left paralyzed and brain damaged after a deteriorating utility pole fell on her on a street in Union City.  At the time of the accident, Meister was general counsel for finance firm Milberg Factors in New York, and previously had been an associate at Simpson Thacher & Bartlett.  David Mazie of Mazie Slater obtained the $125 million settlement in May 2020, calling it the largest settlement in New Jersey history.

Vena found that Kirsch Gelband’s Gregg Alan Stone had a stormy relationship with Meister’s husband, Peter, who would contact him at all hours. Finding that Stone had a justifiable cause to withdraw, the judge found that Kirsch Gelband was entitled to a calculation of how much of the fee the firm deserves.

Vena concluded that “the nature of and deterioration of the attorney/client relationship, exhibited throughout the hearing, justified Mr. Stone’s good-faith belief that the representation could not ethically be continued.” Vena said a “balancing of predecessor and successor contribution” was needed to decide Stone’s cut of the fees.  Bruce Nagel of Nagel Rice, who represents Kirsch Gelband, says that “in view of Mr. Mazie’s position that Kirsch Gelband was entitled to zero, we are extremely pleased with the $10 million award.”

But additional proceedings are underway between Mazie Slater and Kirsch Gelband.  Nagel and Mazie have a long history of acrimony.  The two are former law partners who frequently face each other as litigation adversaries.  Their rancor dates back to when Mazie split with Nagel to start his own firm in 2006. Mazie took cases with him that led to disputes over counsel fees.

Nagel said evidence in the case supported his claim, raised in a separate suit pending against Mazie Slater by Kirsch Gelband, that Mazie provided false information to Meister in order to get the case.  Mazie called that claim “nonsensical.”

Nagel also said he was filing an additional motion in the Verizon case to vacate a deal between Mazie and Philip Rosenbach, a lawyer who handled the case before Stone, in which Mazie purchased the other lawyer’s right to receive a referral fee from Kirsch Gelband.  Such a deal is “highly unethical and highly improper,” Nagel said.  But Mazie said Rosenbach “chose to resolve his claim for that one-third referral fee by settling with us rather than being embroiled in this frivolous litigation,” and added that there’s “nothing unethical about it.”

Class Counsel Spar Over $800M in Fees in Roundup MDL

March 8, 2021

A recent WSJ story by Sara Randazzo, “Roundup Plaintiffs’ Lawyers Spar Over $800 Million in Fees,” reports that plaintiffs’ firms that led the legal campaign against Bayer AG are fighting over $800 million in fees from the Roundup weedkiller litigation, arguing that they deserve a bigger slice of one of the largest-ever corporate settlements than firms that joined later.

The high-stakes dispute is coming to the fore eight months after Roundup’s maker, Bayer, announced that it would pay up to $9.6 billion to resolve 125,000 cancer claims brought by dozens of law firms.  The fee fight underscores increasing tension between law firms that do the in-court work necessary to win cases and those that advertise to sign up scores of clients.

The Roundup deal isn’t a single, all-encompassing pact that needs signoff from a court but instead a series of confidential settlements between Bayer and the many law firms with eligible clients.  Some of those firms spearheaded the litigation, but most signed up clients later in the process, building on work already started.

Six law firms appointed by a federal court as leaders in the litigation are asking a judge to set aside 8.25% of the Bayer settlements into a fund to be distributed among those firms and others that handled the brunt of the work.  Under their proposal, those firms would get a share of the fund and reap whatever fees they agreed upon with their clients.  Plaintiffs' lawyers often take a cut of more than 30% from such settlements.

The leadership firms, led by Andrus Wagstaff PC, Weitz & Luxenberg PC and the Miller Firm, argue that they invested at least $20 million and years of time to build a case linking Roundup to cancer.  They described the common-benefit fund as a sort of “tax” on law firms that waited until the litigation was successful before getting involved.

Several law firms have objected, saying the court doesn’t have the power to create the common fund—estimated at $800 million.  They say the leadership team is trying to double-dip, speculating that their confidential deals with Bayer are already more lucrative than those that other firms received.  “They’ve already been adequately compensated multiple times over,” Melissa Ephron, a Texas lawyer objecting to the extra fees, said at a virtual court hearing on the matter.

The confidential nature of Bayer’s settlements means the public is unlikely to know each law firm’s take and how much money the affected plaintiffs who blame their cancer on Roundup use will personally receive.  Bayer hasn’t conceded that its weedkiller can cause non-Hodgkin lymphoma and will continue to sell the product without a cancer-warning label.  U.S. District Judge Vince Chhabria in San Francisco, who oversees around 4,000 Roundup cases filed in federal court, raised doubts that he has the authority to require every law firm striking a deal to give up 8.25%.

“They all got their settlements because you achieved such a good result.  There’s no question about that,” he said during the hearing, but added that he wasn’t convinced it was appropriate for the leadership to get a windfall.  The fight highlights a dynamic playing out more in recent years in large cases alleging harms from drugs or everyday products.  A sophisticated ecosystem of advertisers and marketers sign up plaintiffs in bulk and pass them off to lawyers who file claims in court, often with little vetting on the strength of the cases. The rising number of plaintiffs can help pressure companies to settle.

The lead lawyers for Roundup plaintiffs pointed to this dynamic to bolster their argument for why they deserve more money than the more than 500 other law firms with Roundup clients.  After the lead firms had some key early success in the litigation, “a tsunami of advertising resulted in thousands of new lawsuits filed by law firms that had hedged their bets,” the leadership team wrote in a January filing.

$110M Fee Request Trimmed in $650M Facebook Biometric Settlement

February 26, 2021

A recent Law 360 story by Lauren Berg, “$650M Facebook Privacy Deal OK’d, $110M Atty Fees Trimmed,” reports that a California federal judge praised a $650 million settlement resolving claims that Facebook's facial recognition technology violated Illinois users' biometric privacy rights, calling it a "landmark result," but he trimmed the $110 million requested attorney fees to $97.5 million.  U.S. District Judge James Donato gave his final stamp of approval to the multimillion-dollar deal resolving claims under the "new and untested" Illinois Biometric Information Privacy Act, calling it a major win for consumers in the "hotly contested" area of digital privacy.

The settlement will put at least $345 each into the hands of 1.6 million class members who filed claims, according to the order, and Facebook has agreed to set its "face recognition" default setting to "off" for all global users and delete all existing and stored face templates for the class members.

But Judge Donato also cut back the $110 million in attorney fees that class counsel at Edelson PC, Robbins Geller Rudman & Dowd LLP and Labaton Sucharow LLP asked for, saying the $650 million size of the settlement fund is not a typical case that warrants the use of a 25% contingency fee as a benchmark.  The judge said in this case it would be more appropriate for him to adjust the benchmark percentage or employ the lodestar method instead to avoid "windfall profits" for class counsel.

"To be clear, the court recognizes the skill, dedication and hard work class counsel brought to this case and their clients," Judge Donato said.  "The fact that the court cannot in good conscience award fees on the presumption of a 25% contingency cut should not be read as detracting from that in any way."

"It is simply a matter of fairness and proportion," the judge said.  He said a 25% presumption is just too big to be applied to a settlement fund as large as this one.  The class counsel spent more than 30,103 hours on the case, according to the order — including 9,577 hours by Robbins Geller, 8,103 hours by Labaton Sucharow and 12,423 hours by Edelson.

The judge adjusted the percentage rate from 16.9% of the settlement fund to 15%, giving the class counsel $97.5 million in attorney fees, according to the order.  The judge said he also cross-checked that number with a lodestar calculation and found the award to be more reasonable than the one requested.  But the judge said 15% of the attorney fee award will be held back pending further order.  He granted the class counsel's request for $915,000 in expense reimbursement, finding sufficient documentation, according to the order.

The judge also reduced the incentive awards for the three class representatives — Nimesh Patel, Adam Pezen and Carlo Licata — from the requested $7,500 each to $5,000 each, saying that even though the requested amount would be a "minuscule proportion" of the settlement, it's still too high in comparison to the amount other class members will receive.

Judge Donato praised the parties' "proposed array of innovative ways to reach class members" and notify them of the settlement, including by direct email, Facebook's newsfeed notifications, publication in Illinois newspapers, a settlement website and an internet ad campaign.  "These were robust measures, and they paid off in spades," the judge said.

$1.2B Valeant Settlement Earns Robbins Geller $157M Fee Award

February 2, 2021

A recent Law 360 story by Dean Seal “Final OK on $1.2B Valeant Deal Earns Robbins Geller $157M”, reports that a New Jersey federal judge gave final approval to a $1.2 billion settlement of an investor action against Valeant Pharmaceuticals, landing lead counsel Robbins Geller Rudman & Dowd LLP a hefty payday.  U.S. District Judge Michael A. Shipp overruled objections from two investor plaintiffs when he granted a special master's recommendation to approve the deal reached in December 2019 between investors and the pharmaceutical company that became known as Bausch Health Cos. Inc. in 2018.

The nearly five-year-old lawsuit claimed Valeant used a clandestine network of pharmacies to push high-priced drug prescriptions, sending the stock plummeting once price-gouging allegations surfaced.  Investor plaintiff Cathy Lochridge had lodged an objection to the 13% attorney award for Robbins Geller and local lead counsel Seeger Weiss LLP, arguing that the $157.3 million request was too high considering that the settlement "captures just 3% of class damages," but Judge Shipp said it was also the ninth-largest securities class action recovery ever.

"As Lochridge correctly notes, 'what is important is that the district court evaluate what class counsel actually did and how it benefited the class,'" the judge said.  "Here, lead counsel obtained a $1.21 billion all-cash recovery for the benefit of over 400,000 members."

The stock-drop litigation represents consolidated claims by investors who saw Valeant's stock price slide from more than $250 a share in 2015 to below $10 two years later.  The company has been fined by regulators and sued by investors who said it defrauded the market.  Investors claimed that Valeant had employees work under aliases for a company called Philidor Rx Services LLC that used deceptive practices to block generic alternatives from competing with Valeant's branded drugs.  Valeant allegedly duped insurers by changing prescription codes to ensure they were filled with Valeant-branded drugs and making claims for unrequested refills, investors said, and covered up the scheme by lying about the pharmacies' ownership and issuing a series of false statements to investors.

In December 2019, Bausch announced that it had agreed to resolve the case with a $1.21 billion settlement while admitting no liability and denying all wrongdoing.  Last June, a special master issued a report recommending final approval of the settlement, plan of allocation and attorney fees and expense reward, leading to objections from two plaintiffs.

The first, from brokerage firm Timber Hill LLC, objected to the settlement itself as well as the plan of allocation, arguing against the plan's imposition of an "arbitrary" 5% recovery cap on options investors while permitting common stock and debt investors to take the remaining 95%.  The cap demonstrated that options investors were not adequately represented in the settlement, Timber Hill said, asking that the cap be increased to around 9.5%.

Judge Shipp overruled the objection, saying that Timber Hill's expert had originally supported an options cap in the 5% range and that he found the plan to be "fair, reasonable and adequate."  The second objector, Lochridge, had asked that the attorney fee award be reduced to 6% of the settlement fund, or around $72.6 million, arguing that "this is the lowest ever return on class damages for a billion-dollar securities settlement."

Judge Shipp disagreed, saying Lochridge's low recovery argument was based on "new and inconsistent" analysis from Timber Hill's expert and speculation that Valeant could have agreed to a higher settlement amount despite its uncertain financial position.  The judge also found that the hefty settlement fund and low number of objectors and opt-outs weighed in favor of approving the award, as did the complexity and duration of the litigation and lead counsel's devotion of more than 75,000 hours to the case.

$11M Fee Request in Home Health Care FCA Case

January 19, 2021

A recent Law 360 story by Sarah Jarvis, “Attys Want $11M After Record Home Health Care FCA Deal,” reports that a whistleblower is seeking more than $11 million in attorney fees and costs for a $57 million deal in his suit alleging the Visiting Nurse Service of New York defrauded the government, saying the figure is reasonable for the scope and outcome of the case.

Former VNSNY executive Edward Lacey asked a New York federal court for an order requiring the agency to pay him more than $11,147,000 in fees, costs and expenses incurred in Constantine Cannon LLP's successful litigation of the case, which resulted in a record deal last June to resolve Lacey's False Claims Act suit.  Lacey had claimed that VNSNY, the largest not-for-profit home health care agency in the U.S., billed for services it never provided and disregarded patients' formal treatment plans.

"Relator is seeking payment for a total attorneys' fee lodestar of $10,110,337.50," Lacey said.  "This amount is reasonable by any objective measure based on [Constantine]'s hourly rates and the hours the firm worked to secure this historic result."  Lacey said the firm spent 17,374 hours in attorney and legal support time on the case and used the smallest team possible to avoid duplicating resources, noting that only two lawyers worked on the case for its first 18 months.  After that, another lawyer joined in October 2015 and another in January 2016, but that principal team didn't expand again for almost two years to handle an accelerated schedule, according to Lacey's memorandum.

In support of his request, Lacey also noted the quality of the result, saying the $57 million settlement is one of the largest home health care fraud settlements ever and the only one to successfully challenge the failure to comply with patient plans of care.  Lacey said the settlement "hopefully remedies — or at least turns a regulatory spotlight on — a practice that adversely affects millions of sick and elderly patients across the country."

June's settlement ended Lacey's claims that VNSNY billed Medicare and Medicaid for therapy and services that doctors never provided and maintained an "accept all referrals" policy regardless of capacity constraints. VNSNY did not admit liability as part of the deal and maintains that it didn't bill for visits doctors never provided.  As part of the settlement, the federal government was stipulated to receive $50.1 million of the settlement, with New York state getting about $6.8 million.  Lacey was then awarded a 29% share of the total $57 million award, his counsel said, and Lacey noted in his memo that this amount was the outer limit of what the government was allowed to award.