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Category: SCOTUS

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."

Article: Courts Are Right to Reject Insurer ERISA Attorney Fee Awards

May 9, 2022

A recent Law 360 article by Elizabeth Hopkins, “Courts Are Right To Reject Insurer ERISA Atty Fee Award” reports on ERISA attorney fee awards.  This article was posted with permission.  The article reads:

As the U.S. Supreme Court has often recognized, the Employee Retirement Income Security Act is remedial legislation that is primarily intended to protect plan participants and beneficiaries, promote their interests and ensure that they receive the benefits they are promised.  According to the U.S. Court of Appeals for the Ninth Circuit's 1984 ruling in Smith v. CMTA-IAM Pension Trust: "An important aspect of that protection is to afford [plan participants and beneficiaries] effective access to federal courts."

And one of the ways that this access is promoted is through ERISA's fee-shifting provision, which grants courts in actions brought by plan participants and beneficiaries the discretionary authority to allow a reasonable attorney fee and cost of action to either party.  Despite these protective statutory goals, individual ERISA claimants face uphill battles in attempting to reverse adverse benefit determinations.  They are not entitled to anything like a full trial in federal court, but are instead normally stuck with a trial on the record that was assembled by the decision-making fiduciary, who is in many instances entitled to great deference.

And the only recovery they can hope to achieve if they are successful is full payment of the benefits that they were always entitled to and perhaps some interest on this amount.  Given all these hurdles and limitations to recovery, it shouldn't come as a surprise that it is not always easy for ERISA plaintiffs to obtain counsel, especially when there is only a small amount of benefits at stake.

For this reason, as the Ninth Circuit explained in Smith, "without counsel fees the grant of federal jurisdiction is but a gesture for few [plaintiffs] could avail themselves of it."  Plan participants and beneficiaries who successfully challenge benefit denials or bring successful fiduciary breach suits against plan fiduciaries do invariably seek and almost always are awarded some attorney fees under this provision.

The Supreme Court made clear in 2010 in Hardt v. Reliance Standard Life Insurance Co., that participants need not even be prevailing parties in an ERISA action to qualify for fees, so long as they have had "some degree of success on the merits."  Once the success threshold has been met, to determine whether a discretionary award of fees is warranted, courts apply a five-factor test first developed in 1993 by the U.S. Court of Appeals for the Fourth Circuit in Quesinberry v. Life Insurance Co. of North America — factors that clearly and intentionally favor successful plaintiffs.

But a potent new threat to the ability of plan participants and beneficiaries to bring suit is looming.  Increasingly, insurance companies are seeking attorney fee awards against claimants who are partially or wholly unsuccessful in overcoming deference and other substantive and procedural advantages to the plan decision makers, and are thus unable to have a denial of benefits reversed.

For the most part, courts continue to reject attorney fee applications from insurance companies that successfully defeat lawsuits seeking plan benefits.  A November 2021 decision in Martin v. Guardian Life Insurance Co. of America from the U.S. District Court for the Eastern District of Kentucky is instructive of both the heavy-handed tactics of insurance companies seeking fees from claimants and one court's reaction.  In Martin, the insurance company that insured disability benefits sought nearly $138,000 against the claimant, the father of a minor child whose only income was roughly $756 a month in veterans benefits and who had only $1,500 in his bank account.

The court seemed especially put off by Guardian's argument that Martin declined to participate in an independent medical examination and that this indicated bad faith, finding, to the contrary, that his attested reasoning for hesitation about the examination was a concern with going to an unknown medical facility during the COVID-19 pandemic.  And the court noted that granting Guardian's motion for attorney fees "would tend to create a chilling effect on other plaintiffs seeking redress under ERISA."

Other courts have expressed similar concerns in denying fee applications asserted by insurance companies against disability plaintiffs.  For instance, in December 2021, the U.S. District Court for the Western District of Washington in Amoroso v. Sun Life Assurance Co. of Canada, declined to order the plaintiff to pay $66,000 in attorney fees to the insurance company simply because it "completely prevailed on the merits."

Noting that application of the five factors that courts apply in determining whether fees are warranted very frequently suggests that attorney fees should not be charged against ERISA plaintiffs, the court concluded that was certainly true with respect to Sun Life's application for fees in that case.  With respect to the first factor, the Amoroso court concluded that there was nothing approaching bad faith in the record.  The court found the second factor weighed strongly against a fee award because Sun Life did not show that Amoroso had sufficient assets to pay an award, and the facts that his home was valued at over $1 million and that he had a medical practice was simply irrelevant with respect to his ability to pay.

Addressing Sun Life's most revealing argument — that the third factor weighed in its favor because awarding fees would deter other participants from brining unsuccessful benefit suits — the court disagreed, reasoning that deterring disabled plan participants from suing for plan benefits was flatly inconsistent with ERISA's policy and with ERISA's fee-shifting provision.

Likewise, the court rejected out of hand Sun Life's argument that awarding fees would benefit all other participants and beneficiaries of the plan by saving the insurance company money and perhaps leading to lower premiums.  The court found instead that such an award "would deter insureds from seeking such benefits at all, and it would only embolden insurers in denying claims at the administrative level."

Considering the relative merits of the parties' positions — the final factor — the court declined to "force a losing ERISA plaintiff to pay an insurer's attorneys' fees based solely on the fact that he lost," reasoning that to do so "would not be consistent with ERISA, the better-reasoned cases decided under it, equity, or common sense."

In the court's view, such a fee award in favor of an insurer would only be justified in unusual circumstances not presented by Amoroso's case.  Numerous other recent decisions have had no trouble denying insurers' requests for attorney fee awards against unsuccessful benefit claimants.

At this point, it appears that the recent and sharp uptick in fee applications from insurance companies seeking fees against plan participants and beneficiaries who are unsuccessful in reversing a denial of benefits is meeting with little or no success in the courts.

Application of the Quesinberry test, along with a healthy reluctance to punish disabled, sick or retired plan participants for seeking to obtain plan benefits, has quite correctly led courts in all but the most unusual circumstances to reject these fee applications.  Let's hope these kinds of decisions discourage insurance companies from engaging in this unfair tactic.

Elizabeth Hopkins is a partner at Kantor & Kantor LLP in Northridge, CA.

Attorneys Seek $5M in Fees in Buccaneers Junk Fax Settlement

April 29, 2022

A recent Law 360 story by Max Jaeger, “Attys Seek $5M Cut of Buccaneers Junk Fax Settlement” reports that the legal team that got the Tampa Bay Buccaneers to settle a decade-old Telephone Consumer Protection Act class action for $19.75 million in March says it rolled the dice on the risky litigation and should be awarded fees and costs totaling more than $5 million.  The firms Siprut PC, Addison & Howard PA and Anderson + Wanca want to divvy up 25% of the settlement — which works out to $4,937,000 — plus $250,000 for costs for the 6,188.15 hours of combined attorney and professional time put into the case, according to the motion.

They say the 25% figure is apt because it conforms to the Eleventh Circuit's benchmark.  But even if the court applied so-called Johnson Factors for awards above 25%, the time they invested, the novelty of the case, the risk they incurred and the outcome they achieved would satisfy those and support the award, according to the motion.  "Few lawyers will take on a lawsuit that consumes significant attorney time, involves uncertain questions and requires the lawyers to advance large out-of-pocket costs, with no guarantee of payment," the filing says.  "Although class counsel were able to achieve an excellent result for the class, achieving this outcome was anything but certain when they agreed to take the case."

The TCPA does not provide for attorney fees to a prevailing plaintiff, so lawyers must rely on a large recovery to pay their own bills.  Class counsel advanced more than $250,000 to prosecute the Bucs case while they "risked receiving nothing in return," the filing says.  Their costs actually exceeded a quarter-million dollars, but the settlement agreement capped their request, they said. Driving up the costs were $20,000 for an expert witness and more than $110,000 for class counsel in other jurisdictions, mostly Canada, that the plaintiffs needed to obtain discovery, according to the filing.  They paid Teplitsky Colson LLP $88,593.42 and Koskie Minsky LLP $23,000 for the local representation, they said.

Class representatives Cin-Q Automobiles Inc. and Medical & Chiropractic Clinic Inc. sued the Buccaneers after the organization hired a Canadian "fax broadcaster" called FaxQom to send 343,011 faxes from July 2009 through June 2010 advertising tickets to team games, allegedly in violation of the TCPA.  The legal battle began in state court in 2009, but Cin-Q filed the instant federal action in 2013 after the U.S. Supreme Court ruled state and federal courts share jurisdiction over TCPA actions.

The motion also seeks to set aside $10,000 each for Cin-Q and M&W as incentive awards for acting as class representatives.  But that would only be payable if a 2020 Eleventh Circuit decision barring such incentives is vacated or otherwise reversed before the Bucs settlement is finally approved, the motion notes.  U.S. Magistrate Judge Anthony E. Porcelli gave his preliminary blessing to the agreement's top-line numbers on March 29, but the motion reveals how the lawyers agreed back in 2015 to divvy the spoils should they prevail.

Tampa Firm Addison & Howard PA, which initiated Cin-Q's lawsuit in 2009, would claim 28%; Chicago litigation firm Siprut PC would receive 16%; and Illinois class action litigators Anderson + Wanca, which joined forces with Addison for the case in 2013, would take the remaining 56%.  James M. Thomas of Tampa was to split the 16% chunk with Siprut PC, but he is no longer licensed to practice law in Florida, the motion says.  According to public records, the Supreme Court of the State of Florida suspended him from practicing there for one year in a December 2020 decision.

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.

SCOTUS Asked to Review $5M Patent Attorney Fee Award

January 18, 2022

A recent Law 360 story by Tiffany Hu, “High Court Asked to Review $5M Atty Fees in Fracking IP Suit,” reports that the U.S. Supreme Court has been asked to look into whether the Federal Circuit created "uncertainty and confusion" when it affirmed that a patent dispute over fracking technology was exceptional and warranted granting $5 million in attorney fees.  In a Jan. 12 certiorari petition, Heat On-The-Fly LLC said that the Federal Circuit erred in affirming a North Dakota federal judge's decision that its lawsuit against Energy Heating LLC and other companies was the kind of "exceptional" case that merited attorney fees.

Heat On-The-Fly had argued that the district court failed to take into account the "manner" in which the company litigated the case — including that it did not engage in litigation misconduct — but the Federal Circuit said in October that the lower court "properly considered the totality of the circumstances."  In doing so, Heat On-The-Fly said that the appeals court "ignore[d] the distinction between 'the substantive strength of a party's litigating position' and 'the unreasonable manner in which the case was litigated," citing the high court's 2014 Octane Fitness ruling.

The "decision in this case creates uncertainty and confusion regarding the factors that district courts must address and consider in order to properly exercise their discretion and consider the 'totality of the circumstances' when determining exceptionality," the petition states.

After a bench trial in 2016, U.S. District Judge Ralph R. Erickson found that Heat On-The-Fly's patent was unenforceable because the company and inventor Ransom Mark Hefley knowingly did not tell the U.S. Patent and Trademark Office when they filed a patent application for the concept in September 2009 that the invention had been in use as early as October 2006.  The district judge later rejected Energy Heating's motion for attorney fees, but the Federal Circuit in 2018 said the judge erred in refusing the request because he did not explain his decision, though it affirmed that the patent was unenforceable due to inequitable conduct.

Harvard Sues Insurer Over Attorney Fees

September 20, 2021

A recent Law 360 story by Eli Flesch, “Harvard Sues Insurer For Legal Fees in Affirmative Action Suit,” reports that Harvard University sued Zurich American Insurance Co. for excess coverage of...

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