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Category: Settlement Data / Terms

Second $185M Attorney Fee Request Called ‘Indefensible’

March 6, 2024

A recent Law 360 story by Jack Karp, “Quinn Emanuel’s 2nd $185M Fee Bid Blasted as ‘Indefensible’”, reports that Quinn Emanuel Urquhart & Sullivan LLP's second attempt to win $185 million in attorney fees in $3.7 billion litigation over the Affordable Care Act still fails to justify the "indefensible" amount and barely pays "lip service" to a reevaluation ordered by the Federal Circuit, health insurers told the federal claims court.

The Federal Circuit already wiped out the $185 million attorney fee that the U.S. Court of Federal Claims awarded to Quinn Emanuel and directed the claims court to reexamine objecting class members' insistence that the firm hadn't justified its fee request, Kaiser Foundation Health Plan Inc. and UnitedHealthcare Insurance Co. said.

"Despite this clear direction, class counsel's second petition again fails to justify its lodestar and again seeks to avoid a lodestar cross-check.  It instead asks the court to rubberstamp the same $185 million award," the health insurers said in their opposition to the firm's latest motion for approval of its fee request.

That motion for approval fails to support the 10,000 hours Quinn Emanuel says it spent on the case, suggests that the firm double-counted hours by including time spent on a separate multibillion-dollar class, and tries to skew its rates higher by seeking 2023 rates, even though its first fee petition was filed in 2020, according to the insurers.

"Trying to reverse-engineer defenses for its indefensible fee demand, class counsel uses inflated and unproven hours, multiplies those alleged hours by unprecedented rates, and then proposes a multiplier that is miles outside accepted norms.  That is akin to applying no cross-check at all," the insurers said.

Quinn Emanuel and a group of healthcare plan insurers the firm represents have insisted the firm used a novel claim and achieved a 100% recovery for the class in litigation over so-called risk corridor payments under the ACA.  But objectors Kaiser Foundation, UnitedHealthcare and others have argued that class counsel was entitled to just $8.8 million after a lodestar cross-check.

A Court of Federal Claims judge granted Quinn Emanuel's request for $185 million, or 5% of the total $3.7 billion settlement, in 2021 finding that a lodestar cross-check was unnecessary.  But that conclusion "was legal error," according to the Federal Circuit, which vacated the award in 2023.

That $185 million amount was inconsistent with promises made in class opt-in notices, and the "extraordinarily high award" wasn't justified, the three-judge panel ruled, ordering the fees to be recalculated.  But Quinn Emanuel's renewed request for $185 million "does little more than pay lip service" to the Federal Circuit's order, according to the insurers.

While the insurers still think their original $8.8 million fee request is reasonable, they are willing to agree to a fee award between $11.77 million and $23.14 million in "the interest of finality," they told the claims court.  "[T]he objectors sincerely want class counsel to be handsomely rewarded.  $11.77 [million] to $23.14 million represents an incredibly large fee award that also fulfills class counsel's promise of a lodestar cross-check," the insurers said.

Roundup MDL Lead Counsel Defend Fee Allocations

February 19, 2024

A recent Law.com story by Amanda Bronstad, “Roundup MDL Lead Counsel Defend Fee Allocations: ‘Limited Funds Available’”, reports that lawyers doling out fees in Roundup litigation stood by their decisions on how to allocate the funds, despite objections raised by other firms.

The fee committee, which is comprised of the three lead plaintiffs firms in the Roundup multidistrict litigation, allocated 81% to themselves and the rest to four other firms, including those who helped win the only bellwether trial, which ended in an $80 million verdict in 2019.  Three of those firms objected to their share of the so-called common benefit fund, which totaled $20.23 million.

Lead counsel originally had sought an order that would have granted about $800 million in common benefit fees, enough for the firms to “each afford to buy their own island,” U.S. District Judge Vince Chhabria wrote in a 2021 order significantly trimming the scope of common benefit fees in the Roundup litigation.

Several firms had objected to the original request, which they called a “money grab,” but lead counsel insisted that Bayer, which owns Monsanto, would not have entered into settlements but for their work.  In 2020, Bayer announced it planned to settle about 125,000 Roundup claims for an estimated $10.9 billion, but thousands of cases remained unsettled.

The significant reduction in the common benefit fund appeared to influence the committee’s allocation amounts.  For instance, San Francisco’s Andrus Anderson, whose partner Lori Andrus served as co-liaison counsel in the Roundup multidistrict litigation, had wanted closer to $550,000, the amount the firm actually billed, rather than the allocated $200,000, or 1% of the common benefit fees.  The committee, in a response, acknowledged that Andrus Anderson’s request was reasonable.  “But, unfortunately, the limited funds available for distribution in this litigation do not allow this to happen,” the committee wrote.

The committee members are co-lead counsel Aimee Wagstaff, of Wagstaff Law Firm in Denver; Robin Greenwald, of New York’s Weitz & Luxenberg; and David Dickens, who took over following partner Michael Miller’s 2021 death, at the Miller Firm in Orange, Virginia.  Among the fee committee members, Wagstaff Law Firm is set to receive the most, with 30%.

‘Thousands of Hours of Common Benefit Work’

Common benefit fees are used in multidistrict litigation to compensate lead counsel for costs and fees associated with discovery, trials and settlements, while preventing “free riders,” or lawyers who collect fees on cases they generate but don’t necessarily litigate.  Lawyers with related state court cases, in past years, have challenged common benefit fees, which are funded through assessments against their settlements.

Chhabria, in the Northern District of California, called common benefit fees in multidistrict litigation “totally out of control,” sending shock waves through the mass tort bar.  In his Roundup order, he excluded a large amount of the legal work, including state court cases, from being reimbursed through common benefit fees.

Los Angeles-based Wisner Baum and its predecessor, Baum Hedlund Aristei & Goldman, focused heavily on Roundup cases in California state courts, where partner R. Brent Wisner won verdicts of $289 million, in 2018, and $2 billion, in 2019.  But the firm is set to receive 10% of the fees because “no other firm contributed more to the common benefit of the MDL,” according to the committee’s response, filed on Friday.

The allocation, the committee wrote, is based on Wisner Baum’s “good faith effort” to estimate its time.  But the firm didn’t have adequate billing records that divided up the hours tied to the multidistrict litigation versus state court cases.  The fee committee, as a result, was forced to reduce Wisner Baum’s requested amount.  “Applying such a reduction is consistent with how courts typically handle attorney fee determinations for firms that have failed to submit time records,” the committee wrote.

Jennifer Moore, of Moore Law Group, based in Louisville, Kentucky, was co-lead counsel with Wagstaff in the bellwether trial, which Monsanto appealed all the way to the U.S. Supreme Court.  Moore had argued that 6% was not enough given her work in that case or the $3.4 million her firm contributed to the common benefit fund, but the fee committee countered that the Miller Firm and Weitz & Luxenberg, both lead counsel firms, also anticipate receiving less than they paid.

“Moore Law contributed to the advancement of this MDL.  There is no question about that,” the committee wrote.  “But Moore Law also greatly benefitted from the thousands of hours of common benefit work that was done before it had any involvement in this MDL.”

Another objection came from David Diamond, of Diamond Law in Tucson, Arizona, who insisted he did not rely on lead counsel’s work in his Roundup cases.  He was joined by David Bricker, of Thornton Law Firm in Beverly Hills, California.  Diamond suggested returning the money to lawyers, like them, who took their own risks.

But the committee disputed his characterization.  “Diamond Law was able to resolve 300 MDL cases without having to draft and issue general discovery, brief and argue preemption and other general dispositive motions, depose a single Monsanto employee, or retain general experts in epidemiology, toxicology, pathology, and regulatory affairs,” the committee wrote.  “With this backdrop, it is difficult to comprehend how Diamond Law can boldly declare that it received no assistance from MDL leadership.”

Flint Water Crisis Law Firms Agree to End Fee Dispute

February 13, 2024

A recent Law 360 story by Aaron West, “Flint Water Crisis Firms Agree To End Settlement Fee Dispute”, reports that three law firms that negotiated a $626 million settlement related to the Flint, Michigan, water crisis reached a settlement of their own after McAlpine PC agreed to end claims that Cohen Milstein Sellers & Toll PC and Pitt McGehee Palmer Bonanni & Rivers PC unfairly cut it out of their original co-counsel agreement.

The Michigan-based firms agreed to dismiss the lawsuit without prejudice or costs, according to an order signed by U.S. District Judge Judith E. Levy.  The judge's order follows the defendant firms urging the court in October to dismiss McAlpine's lawsuit against them after it "sat on its hands for years" before bringing a claim over the settlement split, according to court documents.

The dispute, which McAlpine initially filed in state court, claimed that the Auburn Hills-based firm was only paid a paltry sum by its co-counsel for its contributions to the underlying litigation.  McAlpine argued its work was instrumental to the lawsuit, contributing about $16 million worth of labor, or about 24% of the total lodestar figure of $84.5 million.  But Cohen Milstein and Pitt McGehee offered to pay just $500,000, McAlpine said.

"Defendants breached the co-counsel agreement by failing to distribute an attorney fee award reflecting McAlpine's respective lodestar, in favor of distributing a greater share to themselves," the firm alleged in its complaint.  The defendants argued in a subsequent filing that McAlpine was too late in bringing its claims.  "McAlpine had a full and fair opportunity to litigate the amount of any attorneys fee award in the appropriate place to do so — the federal Flint class action," the defendants said.

The class action at the heart of the law firms' dispute was settled in 2021 when Judge Levy gave final approval to a $626 million settlement, a deal expected to provide payments to more than 100,000 people affected by lead-contaminated water.  Government officials were accused of switching the city's water supply to the Flint River despite information cautioning them against doing so, and working to cover up the ensuing public health crisis.

In December, McAlpine said that the court should deny the firms' request to toss the fees case because it wasn't suing for recovery from the common benefit award, as Cohen Milstein and Pitt McGehee argued. Rather, McAlpine's claims were centered on "breaches of obligations" between the firms that were independent of the Court's order, the firm said.  The defendants' reply said what McAlpine was requesting went against their original agreement.

"McAlpine's argument is not supported anywhere," the defendants wrote.  "To the contrary, McAlpine agreed to work under the supervision of Co-Lead Counsel and the Executive Committee, and never challenged Co-Lead Counsel's authority to apportion fees among class counsel based on their respective roles in the litigation and contributions to the settlement until after the common benefit fee was distributed."

Attorneys Seek Fees in $6M AMDI Med Tech Settlement

February 6, 2024

A recent Law 360 story by Jeff Montgomery, “Attys Seek $750K Fee in Del. For $6M Med Tech Co. Deal”, reports that, proposed class attorneys who secured a $6 million settlement from medical device company AMDI Inc. after a purportedly under-priced and conflicted stock sale to an interest of Oracle founder Larry Ellison have asked Delaware's Chancery Court to approve $750,000 in attorney fees for their work.

The proposal by Grant & Eisenhofer PA — made public after the lawyers filed a sealed version of the stipulation Jan. 29 in Chancery Court — would end a derivative suit filed by a minority stockholder of AMDI, a company formed to develop automated medical lab systems designed to hunt for pathogens, including the COVID-19 virus.

Ellison gained control of AMDI through a series of large investments dating to 2016 by Tako Ventures LLC, a venture capital firm he controls through a different LLC.  The investments gave Ellison the ability to oversee the appointment of three of the company's seven directors, in addition to other benefits he received as a controlling stockholder.

According to the complaint filed in October 2021, Ellison's stake in AMDI grew as the company worked to develop its "Autolab" system, which has faced rising costs and has yet to generate any revenue. When its lone big investor, Tako, stepped in with what became a $2 per-share $20 million additional stake, members of a board special committee began pressing for better terms and a larger investment.

If approved by the court, lawyers for the minority stockholders and special committee would receive $750,000, 12.5% of the $6 million settlement total, or about 56% of the amount called for under the lodestar multiplier ordinarily used in attorney fee calculations.  The multiplier calculates payments based on hours of work performed at an attorney's professional fee rates.  Attorneys for the minority stockholders "invested considerable time and effort in both developing and litigating this action," the proposal said. Given the stage of the litigation, the fee request "is well within, and often below, precedent awards."

Judge Says Attorney Fee Request ‘Way Too High’

January 18, 2024

A recent Law 360 story by Bonnie Eslinger, “Juniper Workers’ Atty Fee Bid ‘Way Too High,’” Says, reports that a California federal judge said he'll give final approval to Juniper Networks employees' $3 million deal over claims the marketing software company mismanaged their 401(k) plan, but called their attorneys' bid for $900,000 in fees "just way too high."  U.S. District Judge James Donato rejected the attorney fee ask during a hearing in San Francisco on the workers' motion for final approval on the $3 million deal, which the judge granted.

Based on the total fees racked up to date — $142,232 — the $900,000 request means the court is being asked to multiply the lodestar amount by 6.33, nothing he has ever awarded, the judge said.  Even in an "exemplary" $650 million settlement in his court, resolving a "groundbreaking class action" alleging Facebook's facial recognition technology violated users' biometric privacy rights, the attorney fees "didn't get anything close to a 6.33 multiplier," Judge Donato said.  The Juniper Networks Inc. case, by comparison, was small and fairly straightforward, he added.

A lawyer for the workers, Paul Secunda of Walcheske & Luzi LLC, told the court that there are cases where the fee award was up to five times higher than the lodestar.  Further, the 30% fee award is in line with others approved in complex Employee Retirement Income Security Act class actions, he said.

In addition, the $3 million settlement represents about 44% of the total estimated losses that the class members could have recovered if the case had been successfully litigated through trial on all counts, Secunda told the court.

Judge Donato said the litigation wasn't complicated.  "Occasionally, we'll get what I call sweat equity [when] plaintiffs worked relentlessly," the judge said. "That didn't happen."  Judge Donato said he might consider doubling the total projected amount that plaintiffs say they'll spend in fees, including $187,000.  But the $900,000 request is "just way too high," he added.

The judge also asked Secunda to file an additional written brief to the court explaining why the plaintiffs were also seeking $36,000 in expenses, on top of nearly $40,000 in settlement administration expenses and $15,000 for independent fiduciary fees.

Secunda said the $36,000 in expenses was used to pay outside consultants due to the complexity of the case, which required significant research and pouring over complex finance and employee benefit documents.  "You've got to tell me who they are and why they deserve it and why it was in the best interest of the class," the judge said, adding that he wasn't ready to approve that amount.

Judge Donato also called proposed awards of $5,000 each to the two named plaintiffs in the case out of line.  "They're not going to get five grand each, particularly as the average recovery is approximately $100, that's completely disproportionate," the judge said.