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Category: Legislation / Politics

Election Year Politics Fuel AGs Fee Opposition in Opioid MDL

October 20, 2020

A recent Law 360 story by Jeff Overley, “Opioid Settlements Stymied By Atty Fee Demands, AGs Say,” reports that massive fee demands from plaintiffs attorneys in multidistrict opioid litigation are the main reason settlements haven't been finalized with major drug companies in a broader wave of opioid cases, two state attorneys general said, a provocative claim that drew a fast and fiery backlash.

Pennsylvania Attorney General Josh Shapiro, a lead negotiator in efforts to resolve thousands of opioid-crisis lawsuits, was the first AG to deliver the bare-knuckle assertion.  He did so during a speech in Dauphin County — home to the Keystone State's capital city of Harrisburg — about an addiction-treatment initiative.

"If the private attorneys involved in these negotiations were a bit less worried about the amount of money going into their own pockets, and more worried about the unnecessary lives being lost in Pennsylvania and the other states across our country, I'd be able to stand here in Dauphin County today and talk about the resources that we were bringing back for treatment to Pennsylvania," Shapiro said.  "We'll get there soon," the Democratic attorney general added, "but sadly, too many of those private attorneys are standing in the way of progress right now."

Shapiro, who is up for reelection next month, largely echoed those comments at a subsequent speech in Northumberland County.  He has been working with the attorneys general of Tennessee, Texas and North Carolina to broker settlements with pharmaceutical companies facing thousands of lawsuits that accuse them of fueling a catastrophic epidemic of painkiller addiction.

In a statement provided to Law360, Tennessee Attorney General Herbert H. Slatery III, a Republican, said that he was "in total agreement with General Shapiro."  "There is nothing to indicate that the opioid crisis has abated in any way.  The AGs recognize the urgency.  We wish the plaintiff attorneys did too," Slatery said.  "Then we could finalize some things and get significant help on the ground to alleviate the crisis.  Instead, we are spending too much time arguing about attorney fees and costs."

Several top lawyers for local-government plaintiffs in the opioid MDL pushed back on Shapiro's remarks shortly after he delivered them.  "The aggressive and untiring efforts of plaintiffs attorneys against the opioid companies over the last six years are the main reason there even are settlement negotiations," Paul Hanly Jr. of Simmons Hanly Conroy LLC told Law360. "We seek justice and abatement funds for all communities across the nation.  As for ourselves, we seek only fair compensation for a job superbly done."

Paul Geller of Robbins Geller Rudman & Dowd LLP, another top lawyer for the MDL plaintiffs, suggested that Shapiro was claiming credit for settlement offers that only exist because of work done by MDL lawyers.  Geller likened Shapiro to Rosie Ruiz, who infamously snuck into the homestretch of the Boston Marathon in 1980 and claimed to have won the race.  "The AG's actions remind me of Rosie Ruiz," Geller said.  "She jumped in near the end … and hurried to 'win' a race that others actually ran for the long and grueling entire 26 miles."

These developments were the latest examples of infighting that first emerged when the attorneys general in October 2019 unveiled several deals with drug companies.  One of the proposed settlements was a $4 billion accord with Johnson & Johnson; the drugmaker last week upped its offer to $5 billion, and the MDL attorneys reacted favorably.

The other proposed settlements would cover drug distributors McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Drug Corp., which last year tentatively reached an $18 billion deal with the attorneys general.  Multiple sources said that the distributors are now offering more money, although they declined to provide a precise value.  "I will confirm that we wouldn't be talking to them if they weren't offering substantially more than they had offered under the original deal presented by the four AGs," Motley Rice LLC co-founder Joe Rice, a lead lawyer for the opioid MDL plaintiffs, told Law360.

Hunter Shkolnik of Napoli Shkolnik PLLC, another MDL plaintiffs attorney, told Law360 that Shapiro last year "said the plaintiffs were at fault for rejecting the $18 billion settlement they negotiated, [but] it's one year later and billions more have been offered because of our work and our rejection."  It's unclear how far apart the AGs and the plaintiffs lawyers are on attorney fees and costs.  Some AGs and drug companies have said plaintiffs attorneys could reap more than $3 billion in the MDL, which targets several other large companies beyond J&J and the distributors.

"There's a dispute about asking the distributors and Johnson & Johnson to pay the out-of-pocket litigation costs for the municipalities," Rice told Law360.  "The attorney generals got all of their out-of-pocket litigation costs paid.  But they refuse to add the same type [of] costs for the municipalities that have been litigating for years, and there's a dispute over that.  But it's in the tens of millions of dollars.  It's not huge."

The MDL contains roughly 3,000 cases filed mostly by cities and counties that want money for health care and law enforcement costs related to opioid abuse.  Some MDL attorneys also represent cities and counties with similar cases in state courts.  The attorneys general of virtually every state have also filed cases in state courts, sometimes with the assistance of lawyers in private practice.  A source close to the negotiations, speaking with Law360 on condition of anonymity, said that the attorney fees are "a real sticking point" because attorneys general fear they would siphon away badly needed funds for addiction treatment and prevention.

OPM Plans to Limit Attorney Fees for Federal Workers

October 9, 2020

A recent Law 360 story by Jon Steingart, “OPM Plans to Limit Back Pay, Attorney Fees for Federal Workers,” reports that the U.S. Office of Personnel Management unveiled a proposal that would narrow the circumstances when federal employees can recover back pay and attorney fees after management makes a mistake that causes them to be underpaid.

The notice of proposed rulemaking from the U.S. government's central human resources agency would retool Back Pay Act regulations that allow federal employees to be made whole if they are underpaid because their employer didn't comply with a legal requirement or a collective bargaining agreement.  The OPM said current regulations exceed Congress' intent for the law to have a narrow scope that covers only alleged underpayment connected to an action such as a suspension, termination or a demotion.  "By extending the Back Pay Act's coverage beyond personnel actions they encourage and subsidize expensive litigation over any matter that affects employee pay," the OPM wrote in the notice.

As an example of a scenario that is not covered by the Back Pay Act, the OPM identified a situation where the U.S. Department of Defense clawed back too much when it recouped a housing allowance that it overpaid to a teacher working on an overseas military base.  The employee couldn't get a refund under the Back Pay Act because a miscalculated recoupment isn't a personnel action, the OPM noted.

In another example of a situation that Congress didn't intend the Back Pay Act to cover, the OPM identified a case where an arbitrator found that a Veterans Affairs hospital didn't give a performance award to an employee who earned it.  The arbitrator ordered the hospital to pay the employee $1,000 for the award and $30,387 in attorney fees under the act, the notice said. 

"Requiring agencies to pay tens of thousands of dollars in attorney fees in litigation over much smaller performance awards wastes agency resources," the OPM said.  "It also encourages agencies to broadly distribute performance awards, to avoid litigation.  This undermines the purpose of performance awards, which is to recognize, reward, and incentivize high performance."

The proposed rule would also specify that a union cannot collect attorney fees under a Back Pay Act regulation that permits them for an "employee or an employee's personal representative."  The OPM explained that courts have interpreted this regulation to include labor organizations, but that wasn't what the OPM meant when it wrote the rule in 1981.

Federal Circuit Backs Attorney Fee Cap in IDEA Cases

August 14, 2020

A recent Law 360 story by Andrew Karpan, “DC Circ. Backs Atty Fee Cap in Civil Right Row” reports that the D.C. Circuit rejected the efforts of attorneys representing hundreds of parents in a civil rights case to collect over $5 million in fees from Washington, D.C., and ruled that a congressional cap that strictly limited the amount they could collect in those cases was perfectly valid.

The opinion, authored by U.S. Circuit Judge Gregory Katsas, found that an appropriations rider Congress passed in 2009 did not violate the Takings Clause of the Fifth Amendment nor was it an illegal intervention into the court's power to award fees.  The rider expressly forbade Washington from paying more than $4,000 in attorney fees in any single civil rights case filed under the Individuals with Disabilities Education Act, which mandates special education services for kids.

Crucially, Judge Katsas wrote, Congress started limiting the city's ability to pay out legal fees in IDEA cases in 1999, which was before the parents in these cases filed suit.  "The fee cap does not interfere with any reasonable expectations, for each of the awards at issue was entered at a time when Congress had already limited the District's ability to pay IDEA fee awards," the judge said.  The ruling covered eleven separate IDEA cases, all of which preceded 2009 and all of which successfully alleged that Washington didn't provide a special needs education to students who qualified for one.

Back in 2015, a magistrate judge calculated the city's tab in those cases at about $3.7 million, along with another $1.3 million in interest, according to the ruling.  Two years later, a D.C. federal judge used the cap to trim the fee award to $220,000 but left the interest, which had notched up to $1.4 million by then.  Both the parents and the city challenged that ruling.  Congress, which provides funding to public schools in Washington through the District of Columbia Appropriations Act, had every reason to be concerned about using that budget to pay lawyers in IDEA cases, Judge Katsas observed.

The city's "long struggle" to comply with IDEA was costing it $10 million a year by the time Congress began limiting how much of that funding could be spent on fee payments in those cases, the ruling noted.  An appropriations rider passed in 2009 had instituted the permanent $4,000 cap on the awards.

The parents argued, in part, that the rider violated their rights to fees that a court had awarded them but the panel said shaving a fee award isn't "a per se taking."  Deciding to trim an award that had already been issued didn't misappropriate the powers of Congress either, the panel added.  Lawyers for the parents should also have known they wouldn't be able to collect more than $4,000 a case because the initial rider dated to 1999, Judge Katsas added.

But in addition to ruling that the cap was perfectly legal, the D.C. Circuit also scratched the $1.4 million in interest the parents had won.

"This principle is as old as the Republic," Judge Katsas mused on this point, citing a ruling the Supreme Court made in 1789, in Hoare v. Allen, and in which the court similarly scratched the interest on debts owed to a British creditor during the Revolutionary War, as the Constitutional Congress had expressly banned paying debts to British subjects.

Similarly, Judge Katsas wrote, Congress had banned Washington from paying lawyers in IDEA cases fees above a certain amount: interest couldn't be collected on fees above that amount either.  The panel sent the award back to a lower court to recalculate using the capped award instead. 

The D.C. Circuit ruled on an IDEA fee bid in a different case just last year, when a panel initially rejected a nearly $7 million fee award in a class action suit leveled under that law, ruling in that case that a lower court had used an invalid matrix for calculating fees.

The Nation’s Top Attorney Fee Experts of 2020

June 24, 2020

NALFA, a non-profit group, is building a worldwide network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on the reasonableness of attorney fees.  We help organize and recognize qualified attorney fee experts from across the U.S. and around the globe.  Our attorney fee experts also include court adjuncts such as bankruptcy fee examiners, special fee masters, and fee dispute neutrals.

Every year, we announce the nation's top attorney fee experts.  Attorney fee experts are retained by fee-seeking or fee-challenging parties in litigation to independently prove reasonable attorney fees and expenses in court or arbitration.  The following NALFA profile quotes are based on bio, CV, case summaries and case materials submitted to and verified by us.  Here are the nation's top attorney fee experts of 2020:

"The Nation's Top Attorney Fee Expert"
John D. O'Connor
O'Connor & Associates
San Francisco, CA
"Over 30 Years of Legal Fee Audit Expertise"
Andre E. Jardini
KPC Legal Audit Services, Inc.
Glendale, CA

"The Nation's Top Bankruptcy Fee Examiner"
Robert M. Fishman
Cozen O'Connor
Chicago, IL

"Widely Respected as an Attorney Fee Expert"
Elise S. Frejka
Frejka PLLC
New York, NY
"Experienced on Analyzing Fees, Billing Entries for Fee Awards"
Robert L. Kaufman
Woodruff Spradlin & Smart
Costa Mesa, CA

"Highly Skilled on a Range of Fee and Billing Issues"
Daniel M. White
White Amundson APC
San Diego, CA
"Extensive Expertise on Attorney Fee Matters in Common Fund Litigation"
Craig W. Smith
Robbins LLP
San Diego, CA
"Highly Experienced in Dealing with Fee Issues Arising in Complex Litigation"
Marc M. Seltzer
Susman Godfrey LLP
Los Angeles, CA

"Total Mastery in Resolving Complex Attorney Fee Disputes"
Peter K. Rosen
Los Angeles, CA
"Understands Fees, Funding, and Billing Issues in Cross Border Matters"
Glenn Newberry
Eversheds Sutherland
London, UK
"Solid Expertise with Fee and Billing Matters in Complex Litigation"
Bruce C. Fox
Obermayer Rebmann LLP
Pittsburgh, PA
"Excellent on Attorney Fee Issues in Florida"
Debra L. Feit
Stratford Law Group LLC
Fort Lauderdale, FL
"Nation's Top Scholar on Attorney Fees in Class Actions"
Brian T. Fitzpatrick
Vanderbilt Law School
Nashville, TN
"Great Leader in Analyzing Legal Bills for Insurers"
Richard Zujac
Liberty Mutual Insurance
Philadelphia, PA

Victoria Becomes First Australian State to Approve Contingency Fees

June 19, 2020

A recent Law.com story by Christopher Niesche, “Victoria Becomes First Australian State to OK Contingency Fees” reports that Victoria has become the first state in Australia to allow contingency fees—a change the government says will make bringing class actions easier.  New legislation passed by the Victorian Parliament this week allows the Victorian Supreme Court to order that plaintiffs lawyers in class actions receive a contingency fee—a fee that is calculated as a percentage of the settlement or damages.

“We are removing barriers to class actions to allow people with genuine claims—who may not be in a position to take on the financial risks of a case—to bring their class actions to the court,” Attorney General Jill Hennessy said in a statement.  “We’re improving access to justice for ordinary Victorians by making it easier to bring class actions for silicosis, wage theft, consumer harm and other forms of corporate wrongdoing.”

The reforms came after recommendations from the Victorian Law Reform Commission (VLRC), which found the state’s class action regime is underutilized, with an average of five or fewer class actions filed per year.  The VLRC found the risks associated with class actions could be reduced by allowing lawyers to receive a percentage of any amount recovered in the proceedings for their legal costs, in return for indemnifying the other side’s costs.

The new law comes soon after the national Government introduced licensing requirements for litigation funders and began an inquiry into class actions and litigation funders in a bid to reduce the number of class actions.  Some plaintiff firms have been preparing to make use of the new regime and there is some expectation that more class actions will be filed in Victoria as a result of the legislation.