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Category: Historic / Landmark Case

Lodestar Multiplier Sought in Landmark $508M Title VII Win

May 10, 2022

A recent Law 360 story by Craig Clough, “Attys in Historic $508M Title VII Win Want Bigger Lodestar” reports that attorneys representing a class of 1,100 women in a long-running lawsuit against Voice of America asked a D.C federal judge to grant them a lodestar enhancement, arguing the extraordinary legal work that spanned four decades and resulted in a record $508 million settlement calls for such a boost.

U.S. District Judge Amit Mehta previously blocked the attorneys' bid for an additional $34 million in fees that would have brought their total award to $75 million.  Since that 2020 ruling, the parties have reached a deal on a $19 million lodestar fee award, but the class attorneys asked the court to grant an enhancement up to 4.5 times that amount.

The extraordinary if not unprecedented circumstances of the lawsuit and the record-breaking settlement amount for a case brought under Title VII of the Civil Rights Act supports the enhancement, class attorneys at Steptoe & Johnson LLP said in the motion.  Steptoe & Johnson is one of many firms that represent the class.

"If ever such a case for enhancement was presented, it is this one where, through superior lawyering and incredible determination, counsel was able to achieve — by far — the largest class-wide recovery and largest individual class member recoveries for employment discrimination in the history of the Civil Rights Act," the class attorneys said.

A group of journalists in 1977 sued Voice of America and its former parent agency, the U.S. Information Agency, in a case that eventually covered discrimination claims between 1974 and 1984 and more than 1,000 plaintiffs.  The government disputed the accusations for more than 20 years ahead of the 2000 settlement.

Bruce Fredrickson of Webster & Fredrickson PLLC led the representation of the class for more than four decades. The lodestar motion said he was assigned to the case as a young associate at Hudson Leftwich & Davenport fresh out of law school, and he has remained on the case ever since. He drafted the initial complaint for lead plaintiff Carolee Brady Hartman and first motion to certify the class before losing at trial in1979, according to the motion.  When Hudson Leftwich declined to take up the appeal, Fredrickson represented the women in his spare time until he formed his own firm in 1982.  He eventually reversed the trial outcome on appeal, according to the motion.

"Hartman went on to become the most successful employment discrimination case in history," the class attorneys said in the motion.  "While ultimately requiring additional lawyers engaged in decades of hard work and the resources of additional firms to achieve this result, it was Mr. Fredrickson, with his commitment to excellence, his brilliant strategic decisions, his tenacity in facing off against the best-financed defendant that obstinately refused to accept the judgment of liability, and his sheer perseverance that made this extraordinary success possible."

The class attorneys cited several U.S. Supreme Court cases on lodestar enhancement, including 2010's Perdue v. Kenny A. and 1984's Blum v. Stenson, which said rare and exceptional legal representation can support an enhancement.  "After decades of hard-fought litigation and unsurpassed results, it is clear that this is the rare and exceptional case which unambiguous Supreme Court precedent firmly establishes as appropriate to compensate plaintiffs' counsel for superior lawyering by awarding an enhancement above their lodestar fees," the class attorneys said.  The motion concluded with the class attorneys saying, "The greatest result in the history of Title VII deserves nothing less."

Federal Circuit to Hear $184M ACA Attorney Fee Award Dispute

April 1, 2022

A recent Law 360 story by Dorothy Atkins, “Quinn Emanuel ACA Clients Urge Fed. Circ. To OK $184M Fees” reports that a group of health care plan insurers represented by Quinn Emanuel Urquhart & Sullivan LLP have urged the Federal Circuit to affirm class counsel's $184 million attorney fee award for settlements totaling $3.7 billion that resolve litigation over so-called risk corridor payments under the Affordable Care Act.  In a 73-page response brief, the insurers argued that objections raised by Kaiser and United Healthcare health plan insurers largely ignore "key facts" that U.S. Court of Federal Claims Judge Kathryn C. Davis relied upon in determining that Quinn Emanuel's fee request was reasonable.

The insurers said Judge Davis awarded fees based on her finding that Quinn Emanuel "pioneered" a novel claim at great risk to itself and achieved a 100% recovery for the class.  She also found that the firm filed the first complaint by several months and drafted the first substantive brief on the issue, so she didn't abuse her discretion in awarding 5% in fees, the brief said.

The insurers added that the objectors' appeal focuses "myopically" on the lodestar multiplier, which is the number of times the firm's hourly rate would be multiplied to get the total fee award.  The objectors criticize the fee award for awarding the firm what comes out to an $18,000 hourly rate, but a percentage-of-the settlement fund is the appropriate method of determining fees, the brief said.  "Indeed, it would be nonsensical to treat hourly rates as the only legitimate means of determining reasonable compensation, especially when the competitive legal market for bringing these very claims proves otherwise," the brief said.

The multimillion-dollar fight over fees and the trip to the Federal Circuit is the latest chapter in litigation that Quinn Emanuel-represented Health Republic Insurance Co. initially launched in 2016, accusing the federal government of unlawfully reneging on a commitment to shield ACA insurers from heavy financial losses.  The certified opt-in class of health care plans accused the federal government of failing to make required "risk corridor" payments under the ACA, and Quinn Emanuel's suit purportedly sparked a firestorm of parallel litigation across the country — two of which ended up before 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.  Although 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 objectors 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, and no more.

They told the trial court that Quinn Emanuel had little to do with the litigation that ended up at the Supreme Court, and the firm was trying to walk away with an award that would work out to an astronomical hourly rate of $18,000. Class members also signed on to the suit with a guarantee that the proposed 5% fee award would be subject to a lodestar cross-check, the objectors said, which the firm had eschewed.  But in September, Judge Davis granted the fee request, saying despite the "at times hyperbolic" motions for fees, Quinn Emanuel did show "foresight" in focusing on a successful legal theory months before other parties jumped on that bandwagon.

The objectors appealed the judge's ruling and told the Federal Circuit in their opening brief in January that Judge Davis abused her discretion by failing to cross-check the fee request.  The objectors argued that a reasonable hourly-rate multiplier for the firm's work should be in the lower single digits, and certainly not the 18 to 19 multiplier that would apply to reach the $184 million fee award.

"The effective multiplier of more than 18 the Claims Court awarded is astronomical and unjustified," the objectors said in their opening brief.  "In holding that a multiplier exceeding 18 would be reasonable (if it were to conduct a lodestar crosscheck, which it didn't do), the Claims Court cited three cases with high multipliers, though it did not provide any discussion as to why these cases were germane."  The insurers fired back, arguing the lower court appropriately rejected the lodestar method, particularly since adopting it would create "warped incentives, whereby attorneys are not rewarded for achieving outstanding results, and instead are rewarded for litigating inefficiently."

Ninth Circuit Affirms $98M Fee Award in Facebook Class Action

March 17, 2022

A recent Law 360 story by Dorothy Atkins, “9th Circ. Oks Facebook Class’s $98M Fee Win in Privacy Fight” reports that the Ninth Circuit affirmed class counsel's $97.5 million fee award for striking a $650 million deal that resolves claims Facebook's facial recognition technology violated Illinois users' biometric privacy rights, rejecting objectors' arguments that the award is "outrageous" and the trial judge abused his discretion in awarding it.  In a five-page unpublished opinion, a unanimous three-judge panel held that U.S. District Judge James Donato did not breach his fiduciary duty to the class by awarding class counsel 15% of the total $650 million settlement in fees.

Objectors' counsel had argued that the fees were too high and inappropriate because class counsel told Judge Donato they would not seek fees for an additional $100 million added to the settlement fund after the judge had rejected an initially proposed $550 million deal, which forced Facebook and class counsel back to the negotiating table.  Instead, Judge Donato should have awarded class counsel 10% of the initial $550 million proposed settlement, or $55 million, which would have been reasonable and in line with case law on other mega settlements, according to objectors' counsel, Kendrick Jan.

But the Ninth Circuit panel concluded that the 15% award is in line with 11 similarly sized settlements, which ranged between $400 million and $800 million and averaged around 16% in fees, and Judge Donato adequately explained why this was a reasonable fee based on the facts of this case.  Additionally, the panel said the trial judge appropriately cross-checked the fee award based on the 4.71 lodestar multiplier, which is the number of times the hourly rate would be multiplied to get the total fee award.  Although lodestar multipliers tend to average between 2.39 and 4.50, the Ninth Circuit said the multipliers tend to increase as the size of the class' recovery increases and the 4.71 multiplier in this case is reasonable based on the risks trial would have presented.

The Ninth Circuit also rejected the objectors' arguments that the fee lodestar was based on hours that included attorneys' lobbying activities, which cannot be included in contingency fees under both California and Illinois statutes.  The panel said the objectors waived their arguments on the matter because they didn't raise them before the trial judge.  But even if they had not done so, the fee award still would be affirmed, the panel added.

"To the extent that appellants did not waive the general argument that lobbying fees should not be included in the lodestar calculation, the district court did not abuse its discretion because its primary calculation tool was the percentage-of-recovery method," the opinion says.

The objectors' appeal challenged multiple aspects of Facebook's revised $650 million deal resolving claims the social media giant breached the Illinois Biometric Information Privacy Act by using facial recognition technology without users' consent to fuel its photo tag suggestion feature.  After years of hotly contested litigation, the case was headed to a jury trial, but the parties struck an initial $550 million settlement in 2020, which class counsel hailed as the largest amount ever doled out to resolve a privacy-related lawsuit.

But Judge Donato tore into the initial proposal, which he noted gave users just 1.25%, or $300 at most, of what they could be entitled to under BIPA, even though the state statute comes with a $1,000-per-violation fine and a $5,000 enhancement for intentional or reckless violations.  At the time, Judge Donato told the parties that the enhancement appeared to be a potentially viable claim in light of the $5 billion fine Facebook agreed to pay the Federal Trade Commission in 2019 for violations of a 2012 consent decree over its privacy practices.

Roughly a month later, the parties filed a motion asking the judge to preliminarily approve a revised $650 million deal, which attempted to address Judge Donato's concerns by narrowing the release provision and increasing class members' potential recoveries to up to $400.  At the time, class counsel said it would seek up to $110 million in fees plus expenses based on the initial settlement amount.

In February 2021, Judge Donato signed off on the revised deal, calling it a "landmark result," but trimmed the $110 million requested attorney fees to $97.5 million, which reflected a 15% portion of the settlement.  He also slashed the requested incentive awards to three class representatives from $7,500 each to $5,000 each.

Ninth Circuit Considers Class Counsel’s $98M Attorney Fee Win

February 17, 2022

A recent Law 360 story by Dorothy Atkins, “Facebook Class’s $98M Fee Win ‘Outrageous,’ 9th Circ. Told” reports that objectors' counsel urged the Ninth Circuit to throw out class counsel's $97.5 million fee award for striking a $650 million deal that resolves claims Facebook's facial recognition technology violated Illinois users' biometric privacy rights, arguing that the judge abused his discretion in awarding the "outrageous" fee award.  During a virtual hearing, the objectors' counsel, Kendrick Jan, told a three-judge panel that the case has a "cornucopia of issues" that should be reversed on appeal.

For one, Jan said, U.S. District Judge James Donato breached his fiduciary duty to the class by awarding class counsel 15% of the total $650 million settlement in fees, even though class counsel told him they wouldn't seek fees for an additional $100 million added to the settlement fund after Judge Donato rejected an initially proposed $550 million deal, which forced Facebook and class counsel back to the negotiating table.  Instead, Judge Donato should have awarded class counsel 10% of the initial $550 million proposed settlement, or $55 million, which would've been reasonable and in line with case law on other mega-settlements, Jan said.

Jan's co-counsel John Jacob Pentz III also noted that class counsel's initial fee request reflected a 5.3 lodestar multiplier, which is the number of times the hourly rate would be multiplied to get the total fee award.  Judge Donato ended up awarding fees that came out to a 4.7 multiplier, "which is still outrageous," Pentz said, because 4.7 is well above the 1-4 multiplier ranges approved by the Ninth Circuit, and it translates to $3,750 per hour.

"That's beyond the pale in our opinion," Pentz said.  The objectors' comments came during a hearing on an appeal of multiple aspects of Facebook's revised $650 million deal resolving claims the social media giant breached the Illinois Biometric Information Privacy Act by using facial recognition technology without users' consent to fuel its photo tag suggestion feature.  After years of hotly contested litigation, the case was headed to a jury trial, but the parties struck an initial $550 million settlement in 2020, which class counsel hailed as the largest amount ever doled out to resolve a privacy-related lawsuit.

But Judge Donato tore into the initial proposal, which he noted gave users just 1.25%, or $300 at most, of what they could be entitled to under BIPA, even though the state statute comes with a $1,000-per-violation fine and a $5,000 enhancement for intentional or reckless violations.  At the time, Judge Donato told the parties that the enhancement appeared to be a potentially viable claim in light of the $5 billion fine Facebook agreed to pay the Federal Trade Commission in 2019 for violations of a 2012 consent decree over its privacy practices.

Roughly a month later, the parties filed a motion asking the judge to preliminarily approve a revised $650 million deal, which attempted to address Judge Donato's concerns by narrowing the release provision and increasing class members' potential recoveries to up to $400.  At the time, class counsel said it would seek up to $110 million in fees plus expenses based on the initial settlement amount.

In February 2021, Judge Donato signed off on the revised deal, calling it a "landmark result," but he trimmed the $110 million requested attorney fees to $97.5 million which reflected a 15% portion of the settlement.  He also slashed the requested incentive awards to three class representatives from $7,500 each to $5,000 each.

The objectors' counsel argued that the incentive awards are too high, and the fee award is outrageous, particularly given that the settlement only reflects 5% of the total damages at stake.  Jan noted that in In re: Wash. Pub. Power Supply Sys. Secs. Litig., a 1994 case that involved a megasettlement, the Ninth Circuit awarded fees based on a 1.2 multiplier, which represented less than 5% of the total settlement fund.  In that case, the court also rejected a 3.1 multiplier class counsel requested, even though their settlement reflected 47% of the total damages at stake, which is significantly higher than the 5% recovery at issue in the instant suit, Jan said.

U.S. Circuit Court Judge Michael Daly Hawkins pressed the attorneys and asked the objectors' counsel how much they charge hourly. Pentz replied that he's charging $800 per hour for work on the case, which he noted is based on the Laffey Matrix, an hourly rate schedule set by the U.S. Attorney's Office based on a lawyer's years in practice.

Jan also argued that class counsel's hourly rate and lodestar calculation included hours the firm spent lobbying legislatures, even though both California and Illinois statutes preclude lobby efforts from being included in contingency fees. Without those hours, the lodestar multiplier jumps from 4.7 to 5.38, Jan said.

But counsel for the class, John Aaron Lawson of Edelson PC, defended the attorney fee award, arguing that the fact that Judge Donato rejected the initial settlement proves that he was honoring the class.  "The record is pretty clear that he was constantly aware of duty to the class," Lawson said.  Still, Judge Forrest remained skeptical and noted that it seemed, from the record, that if the court awarded fees based on the initial $550 million settlement, and not the revised $650 million settlement, nobody probably would have objected.

The attorney replied that it's the judge's discretion to award fees and 15% is the range of reasonableness, particularly since this case presented major risks and was tackling a novel legal issue with huge damages at stake.  He added that the objectors' complaints about the lodestar multiplier aren't relevant because Judge Donato only considered the lodestar to cross-check the reasonableness of the award, and the final basis for his decision was on a percentage of the settlement.  Additionally, the objectors waived their arguments about lobbying fees by failing to raise the issue before the lower court, Lawson said.

Attorneys Earn $50M in Attorney Fees in Glumetza Antitrust

February 4, 2022

A recent Law 360 story by J. Edward Moreno, “Final Approval in Glumetza Antitrust Deals Gives Attys $50M,” reports that a California federal judge granted final approval of three settlements resolving direct buyers' class claims that drugmakers plotted to delay the generic version of the blockbuster diabetes drug Glumetza, awarding $50 million in attorney fees to class counsel, less than half of the $112.8 million they had sought.

Judge William Alsup of the U.S. District Court for the Northern District of California ruled that in the case of so-called megafunds, settlements above $100 million, it's more effective when determining attorney fees to use the lodestar method — in which a court determines a prevailing market billing rate and then multiplies that by a reasonable number of hours expended on the case — rather than rely on a percentage.  The lodestar in this case — determined as a reasonable amount of hours at a reasonable rate — is $22.5 million, so the $50 million attorney fee award reflects a 2.2 lodestar multiplier instead of 25% of the $453.85 million settlement fund that class counsel had proposed.

The $112.8 million award that class counsel suggested amounts to a 4.99 lodestar multiplier, which is significantly higher than the 1 to 2 multiplier that's been applied in similar cases, Judge Alsup said.  "This award constitutes the second-highest amount of attorney's fees granted in a generic delay antitrust action filed post-Actavis," Judge Alsup said, referring to a 2013 landmark U.S. Supreme Court ruling that certain large payments to settle patent disputes amount to so-called reverse payments that likely trigger Sherman Act violations.

The Actavis ruling clarified the legal landscape of generic delay antitrust actions and "charted a more favorable path for future plaintiffs," Judge Alsup said, meaning that the attorneys in this case took on significantly less risk than attorneys litigating similar claims before the Actavis ruling.  Judge Alsup also noted that the risk was divided among seven firms: Hagens Berman Sobol Shapiro LLP, Sperling & Slater PC, Hilliard & Shadowen LLP, Taus Cebulash & Landau LLP, the Roberts Law Firm, Tadler Law LLP and Frank LLP.

"Despite the fact that counsel undertook this litigation on a purely contingent basis, the risk of non-payment was spread out over seven different law firms, ensuring that no one firm would take too big a hit upon an adverse ruling," Judge Alsup said. "And, as previously discussed, unlike other reverse-payment antitrust actions with larger multipliers, counsel initiated this action nearly six years after the Actavis decision."

Class counsel was awarded what it had sought to cover expenses: $2.4 million for administrative costs and consulting fees.  Judge Alsup also finalized the three settlements — Bausch's $300 million deal, Lupin's $150 million deal and Assertio's $3.85 million deal — totaling $454 million.  Those direct purchasers objected to the $112.8 million proposed attorney fees and asked the court to slash the award to $22.5 million.