Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Holdback Fees

Juul Settlements Could Yield $150M in Attorney Fees

December 19, 2023

A recent Law.com story by Amanda Bronstad, Juul Settlements Could Generate $150M in Fees: ‘Everyone Undoubtedly Wishes the Pool Were Larger’”, reports that lawyers plan to ask a federal judge to approve as much as $150 million in fees tied to settlements with Juul Labs Inc. over the vaping epidemic.  The fee award, according to a partially redacted filing from a fee committee, is more than $50 million short of the compensation from nearly 368,000 billable hours incurred in the litigation, which began three years ago, and a rough estimate given that the total value of the Juul settlements remains unknown.

The motion attached an exhibit of allocations, expressed in percentages rather than dollar figures, to some of the 57 firms set to receive fees, including the four in the multidistrict litigation serving on the committee, who are among the top recipients.

At least one lawyer has objected to his own fee allocation.  Esfand Nafisi, who served on numerous committees in the Juul multidistrict litigation, said his firm, the Law Offices of Esfand Nafisi, based in San Anselmo, California, spent more than 10,000 hours on the cases.  “Though a smaller firm, Nafisi law was able to play a key role in this litigation by maintaining a singular focus,” he wrote in a Nov. 27 opposition to the fee motion.

In a Dec. 4 response, the committee said Nafisi’s opposition lacked specifics.  “Reality is that, while everyone undoubtedly wishes the pool were larger, all firms—save one—have abided by the order to which they all agreed three and a half years ago, and under which they all litigated this matter together,” the committee wrote.  “While Mr. Nafisi did provide some common benefit—which is why he was allocated common benefit fees—his contributions do not merit any greater allocation than what the fee committee recommended.”

The fee committee lawyers did not respond to a request for comment.  They are: Sarah London, of San Francisco’s Lieff Cabraser Heimann & Bernstein; Dean Kawamoto, of Keller Rohrback in Seattle; Ellen Relkin, of New York’s Weitz & Luxenberg; Dena Sharp, of San Francisco’s Girard Sharp; Paul Kiesel, of Kiesel Law in Beverly Hills, California; and Mark Robinson, of Robinson Calcagnie Inc. in Newport Beach, California.

Orrick is set to take up the $150 million fee motion at a hearing.  The dispute is the latest involving common benefit fees, awarded to lead plaintiffs’ attorneys appointed in multidistrict litigation for their legal efforts but funded through assessments made against settlements of cases involving other lawyers.

In 2021, U.S. District Judge Vince Chhabria of the Northern District of California raised red flags about the use of common benefit fees in the Roundup multidistrict litigation, but the U.S. Court of Appeals for the Ninth Circuit found it lacked jurisdiction to review the order.  On Aug. 25, the Ninth Circuit upheld common benefit assessments on cases outside the Bard IVC filter multidistrict litigation because the objecting lawyer had signed a participation agreement with lead counsel.

‘Not Totally Revealing’

Juul, facing its first bellwether trial over its electronic cigarettes, reached four separate settlements on Dec. 6, 2022.  The settlements resolved lawsuits brought by government entities, individuals with personal injuries, Native American tribes and consumers with economic claims.  Juul also settled the economic claims in a $255 million class action settlement.  Class counsel in that settlement asked for $76.5 million in fees, which must be approved under Federal Rule 23 of Civil Procedure. Hedley, one of eight objectors to the class settlement, called the billable hours “outrageously inflated on its face.”

On Sept. 19, Orrick granted final approval to the class action settlement but held off awarding fees until he received the fee committee’s report on the common benefit fund.  Plaintiffs’ lawyers initially sought to seal portions of their fee motion, citing “certain terms of confidential settlements,” but, after Hedley and Nafisi objected to the request, Orrick issued a Dec. 7 order to show cause why the information should remain under seal.  He granted part of the request and ordered plaintiffs’ lawyers to file their fee motion with fewer redactions.

“What they submitted un-redacted is a bit more revealing, but it’s not totally revealing in terms of what is the overall denominator that we’re talking about,” Hedley said.  “This additional information that’s come out from the fee committee is relevant to the arguments that we advanced in our initial objection.”

In their fee motion, plaintiffs’ lawyers referenced more than $24 million in common benefit costs paid in advance for the litigation by firms now set to receive fees.  The common benefit fund is paid for by a 7% holdback of fees paid to individual lawyers for their Juul settlements.  The motion excludes compensation tied to a $235 million settlement with Altria, which has a 35% stake in Juul. Altria settled earlier this year while in the midst of a trial against the San Francisco Unified School District.

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.

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.

Lead Counsel Defends $800M Fee Request in Roundup MDL

February 19, 2021

A recent Law.com story by Amanda Bronstad, “Lead Counsel in Roundup MDL Defend $800M Fee Request,” reports that lawyers defending as much as $800 million in proposed common benefit fees from settlements with Monsanto insisted that the law firms objecting to their request had painted “an incomplete and inaccurate picture” of the Roundup litigation.  More than a dozen law firms had objected to the fee request, with one of them calling the request a “money grab” by lead counsel in the multidistrict litigation.  In a response, lead counsel insisted that the award was justified.

They said Bayer, which owns Monsanto, would not have entered into settlements last year but for their work, which included obtaining three Roundup verdicts.  “The pleadings and affidavits submitted by the objectors present an incomplete and inaccurate picture of the Roundup litigation,” they wrote.  “The simple fact remains that all Roundup attorneys and plaintiffs have benefitted from MDL leadership’s efforts—irrespective of whether or where their cases are filed or unfiled and whether their individually retained attorneys have cases pending in the MDL, have formally availed themselves of MDL work product, or have entered into a formal participation agreement.”  Lead counsel are Robin Greenwald, of Weitz & Luxenberg in New York; Michael Miller, of The Miller Firm in Orange, Virginia; and Aimee Wagstaff, of Andrus Wagstaff in Lakewood, Colorado.

Bayer announced in June that it planned to settle about 125,000 Roundup claims for an estimated $10.9 billion, which included a class action settlement that lawyers later withdrew.  The settlements were not part of a global agreement, however.  Lawyers, including lead counsel, conducted their own negotiations, which have been confidential, and many cases remain unsettled.

In a Jan. 11 motion, lead counsel sought an 8.25% assessment on Roundup settlements to pay for fees and expenses spent on the “common benefit” of all lawyers.  U.S. District Judge Vince Chhabria of the Northern District of California, overseeing the Roundup multidistrict litigation, filed a Jan. 26 order asking lawyers to address four questions about the holdback request, including whether it is even necessary and, if so, how much, and whether it should be lower than the proposed 8% in fees and 0.25% in expenses.  He also asked whether he could issue a holdback “without understanding how much of a premium co-lead counsel has already received on their settlements compared to the typical settlement.”

Several firms criticized the request, particularly on top of an estimated $2 billion in attorney fees they claimed that lead counsel made from contingency fee contracts associated with their own cases, which settled last year for greater amounts than Monsanto is now offering.

In their response, lead counsel noted that the proposed holdback includes an assessment on their own cases, and would compensate about 20 firms not in leadership.  They also said that the assessment pertained only to about 400 law firms that had done one of the following: had at least one case pending in the multidistrict litigation, signed a participation agreement, used “work product” in the multidistrict litigation, or sought help from Kenneth Feinberg, the special master, in settlement negotiations.

“The circumstances of this litigation warrant an expansion of the current scope of the holdback to encompass the entire universe of settlements, because all Roundup plaintiffs have undoubtedly benefited from the efforts and expenditures of common benefit attorneys,” they wrote.  “Indeed, the extensive work that this court has conducted in issuing opinions and managing the litigation have had a direct effect on each and every Roundup case or claim, irrespective of whether or where an attorney might have filed his or her cases.”  Many of the objecting firms had insisted they did not use discovery in the multidistrict litigation and that lead counsel purposely kept the experts to themselves.  Lead counsel countered that they had made work product available on a firm website and provided a “trial package” and experts.

Addressing the objections of specific firms, lead counsel said that Beasley Allen had a pending case in federal court that is part of the trial pool and had coordinated with Weitz & Luxenberg, one of the lead counsel firms, to obtain experts in its state court cases.  Beasley Allen also had asked for an 8% holdback in the multidistrict litigation against Johnson & Johnson over talcum powder, they wrote.  They also attacked the objections of The Lanier Law Firm as “untrue and baffling” given that the firm reached out to lead counsel to retain their experts for upcoming Roundup trials in Missouri state courts.  The Lanier Law Firm also had sought a 10% holdback in multidistrict litigation over DePuy Orthopaedics’ Pinnacle hip implants.

In an email, W. Mark Lanier called the comparison “apples and oranges,” given the amount of work done in the hip implant cases, and disputed claims that he used experts from the multidistrict litigation.  “I find the pleading and allegations a bit baffling as well,” he wrote. “I personally had been told most every expert was being pulled by MDL leadership, and non-MDL cases would have to find their own experts.”  Chhabria has scheduled a March 3 hearing on the fee dispute.