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Category: Expenses / Costs

Judge Slams Hourly Rates in Wage Action

July 15, 2021

A recent Bloomberg Law story by Maya Earls, “Judge Slams Hourly Rates, Awards $1 Attorneys’ Fee in Wage Suit,” reports that a federal judge in Arkansas rejected a request for more than $30,000 in attorneys’ fees in an overtime pay dispute and awarded Sanford Law Firm $1 instead, saying the higher amount isn’t fair, proper, or just under the circumstances.  Sanford Law Firm represented a plaintiff in a Fair Labor Standards Act collective action filed against Eden Isle Corp.  The plaintiff accepted a $4,000 outstanding offer of judgment and later sought about $30,681 in lawyers’ fees and $1,225 in costs.

Sanford’s hourly rates “appear to be entirely arbitrary and unreliable,” according to the U.S. District Court for the Eastern District of Arkansas.  The firm requested between $240 and $383 an hour for attorneys, but other cases litigated by the firm during the same time period had lower hourly rates, the court said.  The more reasonable hourly rates are between $125 and $250 an hour, according to the ruling.

This case involved 13 timekeepers, ten of whom were lawyers.  Eden Isle noted that a large amount of time attributed to the lead lawyer was spent on in-house conferences and communication.  This is too much oversight for a lawyer who has been practicing for 11 years and focused her practice on employment law, the court said.  “As has been pointed out time and again, the random involvement of all of the lawyers and the constant oversight by the senior attorney are inefficient, unnecessary, and unreasonable,” wrote Judge Billy Roy Wilson.

Sanford sought more than $3,600 for work on a motion for summary judgment, but the motion was granted for Eden Isle before the plaintiff accepted the outstanding offer of judgment.  Wilson criticized the “frivolous request,” writing that this isn’t the first time the firm sought reimbursement for unsuccessful issues.

“Although plaintiff was, technically, the prevailing party, his ‘success’ was paltry, at best,” wrote Wilson.  The court cited other billing issues, such as duplicative billing and excessive time, that resulted in a petition that was “excessive and unreliable.”  Wilson reduced the costs from $1,241 to $416 because the $825 cost for a private process server isn’t recoverable.  The plaintiff will challenge the judge’s findings in the U.S. Court of Appeals for the Eighth Circuit, according to a notice filed.

Class Counsel Earn $10M in Fees in $31M Keurig Antitrust Settlement

June 23, 2021

A recent Law 360 story by Bryan Koenig, “Class Counsel Awarded $10M in Fees From $31M Keurig Deal, reports that a New York federal judge signed off on a $10.3 million attorney fees award, plus $2.3 million in litigation costs, for plaintiff firms that negotiated a $31 million antitrust settlement with Keurig Green Mountain Inc. resolving claims the coffee giant monopolized the market for single-serve coffee packs.  U.S. District Judge Vernon S. Broderick also granted final approval to the deal itself covering indirect buyers who purchased Keurig K-Cup Portion Packs through middlemen between September 2010 and August 2020.  Taking the lead on negotiating that settlement were attorneys from Kaplan Fox & Kilsheimer LLP, Wolf Haldenstein Adler Freeman & Herz LLP and Pearson Simon & Warshaw LLP.

The firms, backed by others, had sought approval for their one-third cut last month on arguments that the request was fair and reasonable in light of the length, complexity and risks involved in pursuing the litigation.  Judge Broderick agreed, signing off on legal costs that also include up to $911,286.43 in administrative and notice costs for JND Legal Administration, along with a $3,000 award for each of 11 class representatives who submitted to depositions and another $1,500 for the remaining 20 named plaintiffs.

The settlement, which does not affect ongoing claims from Keurig competitors like TreeHouse Foods Inc., came out of suits brought against Keurig that were consolidated into multidistrict litigation in 2014 over allegations of anti-competitive practices in the marketing of the company's single-serve packs of roasted and ground coffee for use in its coffee machines.

Buyers and coffee companies, including TreeHouse, alleged Keurig's anti-competitive actions included forcing distributors to enter exclusive agreements, filing baseless patent infringement lawsuits against competitors and attempting to dissuade retailers from selling competitors' products.  They also alleged Keurig misled consumers into believing that rival pods wouldn't work with "Keurig 2.0" coffee machines and modified the machines purely to make them incompatible with competitor pods.

In April, the court allowed the attorneys general of Illinois and Florida to object to the method of distributing the $31 million settlement to residents of their states.  Neither Keurig nor the indirect buyers who reached the deal opposed the intervention bid, though the judge said the settlement class has "made clear" it will not willingly change the allocation plan and sought to reserve the right to argue that the objections should have come sooner.

The indirect buyer class cut a deal with the Illinois and Florida enforcers last week that recognized the ability of residents of those states to recover antitrust damages as indirect buyers.  The revised plan treats Florida and Illinois as "repealer states," putting them among those that have acted at the state level to counter the U.S. Supreme Court's Illinois Brick doctrine, which generally blocks indirect buyers from securing monetary damages under the Sherman Act.  The indirect plaintiffs filed the revision, which does not change the Keurig settlement itself, the same day as a special master's report that recommended adopting the changes.

Law Firms Set for Fee Allocation Dispute in CytoDyn Action

June 22, 2021

A recent Law 360 story by Rose Krebs, “Fight on Tap Over Firms’ $4M Fee Bid in CytoDyn Suit Deal,” reports that as a Delaware vice chancellor is set to consider a proposed stockholder suit settlement that will require five directors of life sciences venture CytoDyn Inc. to forfeit certain awards, three firms have come under fire for seeking $4.1 million in fees for their work on the case.  In a letter to Vice Chancellor Paul A. Fioravanti Jr., attorney Mark Richardson of Labaton Sucharow LLP argued that a special litigation committee set up by CytoDyn's board is being unreasonable in proposing that the firms representing shareholders only receive $1 million in attorney fees and expenses.

In the letter, Richardson told the vice chancellor that the committee's proposal is "well outside the range of reasonableness, lacks support under Delaware law, and is not the product of a 'logical deductive process' that is helpful to the court."  In a March court filing, Labaton Sucharow, Faegre Drinker Biddle & Reath LLP and Purcell Julie & Lefkowitz LLP asserted they are entitled to the $4.1 million award for successfully challenging "fiduciary malfeasance that was blatant and egregious in equal measure, and, thus, entirely unfair to CytoDyn."

Earlier this year, the CytoDyn special litigation committee asked the Chancery Court to approve the settlement, which would require five directors to forfeit some or all of the 7.2 million shares they were granted in 2019.  The committee said it could find no "meaningful" justification for the compensation.  The recommendation followed Vice Chancellor Fioravanti's decision in 2020 granting the SLC's request to stay the litigation so it could investigate the December 2019 and January 2020 stock awards that were flagged by the suing stockholders in their 2020 derivative suit.

The three firms asserted that the rescission of December 2019 awards and additional stock options from CytoDyn's CEO, Nader Z. Pourhassan, "represents an economic benefit for the company valued at approximately $15,647,828."  The firms also argued the plaintiffs "deserve at least partial credit" for the forfeiture of January 2020 awards that were valued at roughly $41 million.  The firms argued that the six suing stockholders obtained a roughly $13.6 million benefit for the company through their challenge of the 2020 stock awards.

The firms said the suit also led to important corporate governance reforms by CytoDyn, including considering the addition of a new independent director within the next year, a reconstituted compensation committee that will have at least three independent directors and strengthened compensation policies.

The fee award the firms are seeking amounts to roughly 10% of the nearly $27.2 million "economic benefit achieved for CytoDyn as a result of this lawsuit" and is "appropriate and reasonable," they said in a court filing.  But the committee is unhappy with the fee award being sought with its attorney Andrew D. Cordo of Wilson Sonsini Goodrich & Rosati telling the vice chancellor in a recent letter that "a $1 million fee award to plaintiffs' counsel would be reasonable."

The committee takes issue with the way the firms calculated the monetary value for the benefit achieved as a result of the lawsuit and asserts that "there is no factual basis for plaintiffs (or anyone) to take credit for the expiration of the January awards."

Those awards "lapsed on their own due to the failure of a vesting condition unrelated to this litigation," the committee said.  "Removing the value incorrectly attributed to the January awards and otherwise applying plaintiffs' methodology yields a fee of $1.875 million," the committee asserted.  However, the committee also argued the amount still needed to be reduced to take into account that the plaintiffs' firms only played a "relative role in bringing about the settlement."  "The SLC conducted the investigation and negotiated the settlement," Cordo's letter contended.  The committee also argued that a $4.1 million award "would be damaging to the company's financial condition."

Boies Cites ‘Trench Warfare’ in $627M BCBS Fee Request

June 21, 2021

A recent Bloomberg Law story by Roy Strom, “Boies Cites ‘Trench Warfare’ in $627 Million BCBS Legal Fee Bid,” reports that David Boies and Michael Hausfeld are requesting nearly $627 million in fees and another $40 million in expenses for the work a horde of lawyers did over eight years to secure a $2.7 billion antitrust settlement with Blue Cross Blue Shield.  The fee could provide a much-needed boost for Boies’ law firm, Boies Schiller Flexner, which has suffered an exodus of lawyers and saw its revenue in 2020 fall nearly 40% to $250 million, according to AmLaw data.

It’s unclear how the fee would be split between the myriad lawyers who worked on the case, but Boies and Hausfeld stand to gain most having served as co-lead counsel.  The fee application follows a preliminary approval in November of a settlement between the health insurer and plaintiff’s counsel. The judge in the case, R. David Procter of the Northern District of Alabama, said at the time the fees would be subject to his approval and would “receive intense scrutiny.”  He also said the proposed fee, which is roughly 25% of the settlement value, is “in line with benchmarks” for the Eleventh Circuit.

“This case has been the litigation equivalent of trench warfare, engaging scores of lawyers on both sides,” wrote Boies and Hausfeld, who are co-lead counsel.  The lawyers noted that from 2013 to August last year, a total of more than 434,000 hours had been spent litigating the case.

Filed in February 2012, the case alleged Blue Cross Blue Shield health plans divided up insurance markets across the country and agreed not to compete with one another across those markets.  The settlement agreement includes changes to the Blue Cross business model designed to enhance the market for health insurance, including eliminating a cap on revenue that BCBS affiliates could earn selling other health insurance plans.

The motion for legal fees compared the scope of the litigation to some of the most well-known antitrust cases, including those brought against Standard Oil, American Tobacco Co., and AT&T. Those cases were investigated and brought by the U.S. government.  Boies and Hausfeld noted there was no government investigation in the Blue Cross case.  “This was a purely private effort to enforce the antitrust laws,” the lawyers wrote.  The parties briefed over 150 discovery motions that led to 91 discovery orders, Judge Procter noted in an earlier filing.  He wrote that lawyers conducted over 120 depositions and defended over 20 depositions of class representatives and experts.

The lawyers wrote in their fee application that the defendants produced more than 75 million pages that were reviewed by a team of 178 attorneys for the plaintiffs.  The settlement negotiations began in 2015 and included 158 in-person and virtual meetings with mediators and 282 telephone conferences, they wrote.  The lawyers also noted they went up against “a who’s who of the nation’s most experienced antitrust litigators” at a number of major law firms, including Kirkland & Ellis, Hogan Lovells, Crowell & Moring, Foley & Lardner, Shearman & Sterling, and Cravath, Swaine & Moore.

Class Counsel Seek $6.9M in Fees for ‘Trailblazing’ Litigation

June 18, 2021

A recent Law 360 story by Rose Krebs, “Attys Seek $6.9M For ‘Trailblazing’ Work on Fresh Market Suit,” reports that Friedlander & Gorris and Robbins Geller are seeking roughly $6.9 million for what they say was "trailblazing" work as part of a proposed $27.5 million settlement to a Delaware Chancery Court suit over the $1.4 billion take-private sale of specialty grocery chain Fresh Market.  In a brief, Friedlander & Gorris PA and Robbins Geller Rudman & Dowd LLP assert they should be awarded $6.875 million for attorney fees and expenses for brokering the $27.5 million payout for a proposed class of former Fresh Market stockholders. 

The fee award sought is 25 percent of the settlement fund, an amount the firms argued has been granted under other similar investor suit deals.  "Plaintiff and plaintiff's counsel were well-positioned to conclude that the settlement is fair and reasonable," the brief said. "Plaintiff's counsel fought for and reviewed 1.5 million pages of documents."  The firms said "the benefits of the $27.5 million settlement are substantial in comparison to the strength of the claims and the risks of further litigation."

Also, Friedlander & Gorris and Robbins Geller said the proposed settlement "resulted from a trailblazing litigation strategy" since the transaction at issue came in the wake of Corwin v. KKR Financial Holdings LLC .  That key 2015 Delaware Supreme Court ruling laid out when deference should be given to the business judgment of the board rather than enhanced court scrutiny being applied under the First State's cornerstone "Revlon" standard.

The state Supreme Court's landmark 1986 Revlon v. MacAndrews & Forbes Holdings decision established an intermediate deal-review standard between deference to director business judgment and the more plaintiff-friendly "entire fairness" assessment, which requires a close look at the fairness of the process and transaction price.  In their brief, the firms said they "conceived a novel litigation plan" by obtaining company records under Section 220 of Delaware's General Corporation Law "to plead around Corwin" and defeat a defense under Corwin that deference be given to the board's business judgment.