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Category: Lawyering

Attorney Fees Capped at 15 Percent in $26B Opioid MDL

August 9, 2021

A recent Law 360 story by Mike Curley, “Atty Fees Capped at 15% in $26B Opioid MDL Settlement”, reports that an Ohio federal judge has capped contingent attorney fees in a $26 billion settlement in the sprawling opioid multidistrict litigation at 15%, saying the cap is necessary to ensure more money goes to the plaintiffs for addressing the harm opioids have done and to keep fees from being unreasonable.  U.S. District Judge Dan Aaron Polster capped the fees for individually retained plaintiff's attorneys, or IRPAs, in the suit, including both those whose cases are already in the MDL and those who opt-in to the settlement without having participated up to now.

According to the order, the $26 billion settlement reached in July already sets aside $2.3 billion, or about 8.8%, of its fund for attorney fees, and all the attorneys in the plaintiffs executive committee have agreed to waive their contingency contracts to take their fees from that fee fund.  In addition, the deal stipulates that in no event must less than 85% of the funds be spent on opioid remediation, the judge wrote, so the hard cap is already built into the settlement.  In order to collect from the attorney fee fund, IRPAs must submit an application and waive the right to enforce their own contingent fee contracts, the judge wrote.  And even if they forgo payment from the attorney fee fund, the amount they can collect on their contingent contracts is still capped at 15%, the judge wrote.

The deal with J&J, AmerisourceBergen Corp., Cardinal Health Inc. and McKesson Corp. ends the bulk of the suits levied over the opioid crisis. Up to $5 billion will come from J&J over the next nine years and $21 billion from the distributors over the next 18 years, with up to $23.5 billion of the total going toward easing the opioid epidemic, according to the deal.  Under the terms of the deal, J&J agreed to stop its opioid sales, according to a statement from the New York Attorney General's Office.  The drug distributors also agreed to share data about opioid shipments with an independent monitor.  New York was joined by the state attorneys general for California, Colorado, Connecticut, Delaware, Florida, Georgia, Louisiana, Massachusetts, North Carolina, Ohio, Pennsylvania, Tennessee and Texas in negotiating the deal.

The 15% cap represents a consensus following significant deliberation and negotiations among the parties, Judge Polster wrote Friday, and the fact that attorneys must waive their contingent contracts to collect from the fee fund will prevent the plaintiff entities from having to effectively pay their attorneys twice, and keep the amount each attorney receives fair and equitable.  Given the scale of the settlement, which Judge Polster said was among the largest in the nation's history, the lower percentage will keep the fees from growing beyond what is reasonable, adding that a disproportionately large fee could erode faith in the legal system.

Finally, the judge noted that some attorneys may well have performed extraordinary work on behalf of their clients far beyond the norm in the opioid MDL, and in those rare cases, the court will allow an IRPA who forgoes the fee fund to enforce a fee contract at higher than 15%, provided they present evidence of the exceptional work and extraordinary risk they went through in the case.  "We understand the court was faced with a difficult situation here and reached a Solomonic decision to ensure fairness for all the government clients," Hunter Shkolnik of Napoli Shkolnik PLLC, representing plaintiffs in the MDL, told Law360.

Paul Geller of Robbins Geller Rudman & Dowd LLP, also representing plaintiffs in the MDL, said those who worked the hardest on the case are the ones that are going to be alright with the cap.  "If there ever were a case where a lawyer should agree with a well-reasoned fee cap, it's this one," he said.  "There are literally hundreds of lawyers involved in opioid litigation ranging from altruistic to avaricious, and everything in between; one's reaction will largely depend on where you fall on that continuum."  Geller added that the litigation to him has always "had a higher purpose" of addressing the public health crisis

Judge Slams Attorney For Waste in Deepwater MDL

August 2, 2021

A recent Law 360 story by Mike Curley, “Judge Slams Atty For ‘Shameful’ Waste in Deepwater MDL”, reports that a Louisiana federal judge has sanctioned a plaintiff attorney involved in a sprawling multidistrict litigation over the 2010 Deepwater Horizon spill, calling his multiple lawsuits, duplicative motions and other actions "a colossal waste of time" intended to harass others and get around the court's previous orders.  U.S. District Judge Carl Barbier also required Brian J. Donovan of The Donovan Law Group PLLC to post the sanction on his website.

In a scathing written opinion, Judge Barbier barred Donovan from filing any further suits against other plaintiff attorneys Stephen J. Herman of Herman Herman & Katz LLC and James P. Roy of Domengeaux Wright Roy & Edwards LLC, as well as Patrick A. Juneau of Juneau David APLC, claims administrator for the MDL's economic settlement.

"No party should have had to respond to any of these suits, and no court should have had to entertain them," Judge Barbier wrote. "Donovan has weaponized civil litigation to harass those with whom he disagrees.  His behavior has been a constant drain on judicial resources.  The waste Donovan creates is shameful and appalling."

Donovan had initially represented plaintiffs in a suit over the spill that was rolled into the MDL, but after some of his clients were denied claims, he sued other attorneys and Judge Barbier, saying Barbier should recuse himself over his past ownership of Halliburton Co. and Transocean Ltd. assets and that the other attorneys had colluded on the settlement to the detriment of class members and the benefit of BP PLC, which had operated the oil platform where an explosion started the spill.  Judge Barbier refused to recuse himself in November 2019 and scolded Donovan over his recusal motions but didn't levy sanctions at the time, instead referring his briefs, as well as Herman's opposition to the motion, to the clerk of the court to start a disciplinary proceeding against Donovan.

That suit, which named Herman as a defendant, was dismissed in March 2020, and Donovan filed two more, making the same allegations but adding the judge, Roy and Juneau as defendants, and both were voluntarily dismissed before Herman, Roy and Juneau moved for sanctions earlier this year, and at a hearing July 23, Judge Barbier granted the motions.

In the written order, Judge Barbier held little back, slamming Donovan's suits, as well as response briefs that came with more than 1,000 pages of exhibits, as repetitive and baseless, and attempts to harass those in the suit he disagreed with.  "Throughout the life of this MDL Donovan has inundated the court with wave after wave of motions that often do no more than repeat previous arguments," the judge wrote. "These practices have wasted the court's time and that of his opponents."

The judge further added that neither Donovan nor his clients have standing to assert many of the arguments he makes, as he's never argued that he or his clients are class members and his objections to the settlement are far too late.  "The fact that Donovan lacks standing to press his arguments makes every moment spent addressing them — whether by the parties, this court, or any other judicial body — a colossal waste of time," Judge Barbier wrote.

He added that it's "telling" that Donovan never sued BP, even though his filings point out that BP is liable for damages from the oil spill, and if he had he might have had a chance of recovering money for his clients, but instead he's only shown that his purpose in bringing the suits was to harass others.  Thus, Judge Barbier found it proper to block Donovan from filing yet another suit against Herman and the others over the same allegations, and further ordered Donovan to pay Herman's, Roy's and Juneau's attorney fees.

While Judge Barbier stopped short of fining Donovan for his behavior, he ordered Donovan to post a copy of the order on his website, as well as any other websites or blogs he owns, operates or maintains, and to provide the court with proof that he has given a copy of the order to his clients from his initial suit in the MDL.

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.

Ninth Circuit Strikes Down $7M Fee Award in ConAgra Class Settlement

June 2, 2021

A recent Law 360 story by Emily Field, “9th Circ. Strikes Down $7M Atty Fees in ConAgra Label Deal,” reports that the Ninth Circuit overturned a judge's approval of a class action settlement with ConAgra Food Inc. over its labeling on oil products, saying the parties crammed into the deal "a squadron of red flags" including attorney fees of nearly $7 million that are much larger than what consumers were awarded.  The panel in a published opinion said the agreement includes a number of questionable provisions and "reeks of collusion," particularly the attorney fee award of $6.85 million that is seven times higher than what class members received.

ConAgra and class counsel contended the deal could be worth more than $100 million, but ultimately, ConAgra paid out less than $8 million, with just $1 million going to the class.  Large counsel fees comparative to the payout for class members raises the possibility that counsel colluded with the defendant to lower class compensation in exchange for a larger fee, the panel said.  A defendant would go along with this kind of conspiracy because it only cares about how much it's paying in total, not how it's divided up, they added.

The panel said district courts must scrutinize attorney fee award arrangements when deciding whether a class action settlement is fair, following revisions to the Federal Rules for Civil Procedure that introduced the requirement in 2018.  Specifically, that requirement also applies to settlements that were reached after a class was certified, the panel held for the first time.  "[A] post-class certification settlement only ensures that the parties litigated aggressively to arrive at an adequate total fund size; it does not, however, address the inherent incentives that tempt class counsel to elevate his or her own interest over those of the class members," the panel said.

The panel's decision reverses the 2019 approval of the deal and sends the case back to California federal court.  In the suit, the buyers alleged ConAgra mislabeled its Wesson oil products as "100% natural" even though they contain genetically modified ingredients.

The deal also included a stipulation that ConAgra not advertise the Wesson brand of essential oils as "100% natural" anymore, which was supposedly worth tens of millions of dollars but now appears worthless since ConAgra no longer owns the brand, the panel said.  "That is like George Lucas promising no more mediocre and schlocky Star Wars sequels shortly after selling the franchise to Disney.  Such a promise would be illusory," the panel wrote in their opinion.

Objector and University of Chicago law professor M. Todd Henderson brought the appeal last year, arguing the lower court did not take into account the deal's value to the class when it granted the fees.  The panel also found other red flags in the settlement, such as a "clear sailing arrangement" under which ConAgra agreed not to challenge the class counsel fees.  "A clear sailing provision signals the potential that a defendant agreed to pay class counsel excessive fees in exchange for counsel accepting a lower amount for the class members," the panel said.

Attorney Raises Concerns of Hourly Rates for K&L Gates

March 21, 2021

A recent Law 360 story by Rachel Scharf, “Atty in Failed WWE Case Blasts ‘Suspect’ K&L Gates Fee Bid,” reports that a lawyer who was previously sanctioned for his conduct in pursuing now-dismissed claims that World Wrestling Entertainment Inc. hid the risks of head injuries said that the company can't score more than half a million dollars in legal fees, calling K&L Gates LLP's billing rates "suspect."  Attorney Konstantine W. Kyros of Kyros Law Offices PC, who was sanctioned in 2018 for overly lengthy and frivolous filings, told a Connecticut federal judge that the nearly $574,000 fee requested by WWE and its CEO, Vince McMahon, is based on K&L Gates partner Jerry S. McDevitt's "patently unreasonable" $950 hourly rate, or nearly twice that of his co-counsel from Day Pitney LLP. Kyros also said McDevitt had overbilled for his time.

"WWE chose to provide this Court with suspect fees.  Mr. McDevitt spent far too much time performing basic work, numerous entries exist for nonrecoverable subjects, including research, drafting and conferencing over the crime-fraud exception, and over $20,000 for a PowerPoint presentation," Kyros said.  "These suspicious fees may require audit so the Court can properly discern any appropriate percentage reduction."

The fee fight stems from consolidated litigation dating back to 2014 alleging that WWE hid the risks of brain injuries from wrestlers, causing star wrestlers including Jimmy "Superfly" Snuka and Harry Masayoshi "Mr. Fuji" Fujiwara to develop chronic traumatic encephalopathy, or CTE.  The lawsuit was put to bed in September 2020 by a Second Circuit panel, after U.S. District Judge Vanessa Lynne Bryant tossed out a number of the actions in 2018 and ordered Kyros to pay WWE's attorney fees as a sanction for failing to heed the court's repeated warnings against frivolous filings.

Reached for comment, McDevitt denied Kyros' overbilling allegations and said the attorney is trying to duck paying for the time that WWE's counsel was forced to spend uncovering the "unethical tactics" that got him sanctioned.  "Mr. Kyros' deceptive and frivolous allegations are emblematic of his pattern throughout the case," McDevitt told Law360.  "He is now saying it should not have taken so much time and expense to expose his fraud on the court and serial misconduct, which he attempted to hide in mountains of deceptive and false pleadings and papers with the court."

But Kyros argued that WWE's fee application wrongly stretches the so-called Rule 11 sanction from 2018 in an attempt to recoup expenses far outside the order's scope, including an additional $39,000 for costs tied to applications following the Second Circuit appeal.

"This is not a sweeping sanctions award. It does not provide for all bills tangentially related to the sanctions motions," Kyros said in Friday's brief.  "WWE's fight to justify their unconscionable fee applications is too attenuated from the sanctioned conduct to warrant granting."  In a comment to Law360, Kyros said he is continuing to pursue the litigation, including by lodging a petition asking the U.S. Supreme Court to review the Second Circuit's dismissal.  "Our team is proud to have stuck with the wrestlers in pursuit of their important claims, and despite WWE's liberal use of misguided Rule 11 filings we have stayed with the case to its conclusion," Kyros said.