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Category: Settlement Data / Terms

Law Firms Earn $23.5M in Fees in $100M CD&R Merger

January 21, 2022

A recent Law 360 story by Rose Krebs, “Firms Get $23.5M for $100M Merger Suit Settlement in Del.,” reports that three firms are getting a $23.5 million fee per a vice chancellor's approval of a $100 million settlement of a Delaware Chancery Court suit that accused Clayton Dubilier & Rice LLC of steering a construction industry supplier it controlled into an allegedly "grossly unfair" $1.2 billion merger.

During a settlement hearing held virtually, Vice Chancellor J. Travis Laster approved the settlement, bringing an end to a suit filed by NCI Building Systems Inc. stockholder Gary D. Voigt.  He also approved the $23.5 million fee award to go to Voigt's counsel Andrews & Springer LLC, Friedman Oster & Tejtel PLLC and Kaskela Law LLC.

The vice chancellor initially said he thought there was "room to quibble with" the fee sought, but agreed to approve the settlement and fee as it was presented to the court.  He also approved a $5,000 incentive fee to go to Voigt and said the cash settlement negotiated in the case was a "good get" for the stockholder class.

During the hearing, David M. Sborz of Andrews & Springer told the vice chancellor the fee award sought was reasonable given the significant benefit achieved for NCI and the stockholder class.  In a court filing, Voigt's counsel claimed the deal was the fourth-largest derivative settlement and sixth-largest settlement, including direct or derivative claims, in the history of the court.

The suit claimed that the private equity firm used its control as a large NCI stockholder to make it pay $1.2 billion for the Clayton Dubilier-owned successor to privately held Ply Gem Holdings Inc. in July 2018, three months after Clayton Dubilier paid $683 million for the same business.  The transaction created a nearly $600 million windfall for the private equity firm, which owned 70% of Ply Gem, while creating a huge new debt burden for NCI, the suit asserted.  Under the settlement, the defendants will have insurers pay $100 million into an escrow fund that will be turned over to NCI.

Judge Mulls $113M in Fees in $454M Glumetza Antitrust Settlement

January 20, 2022

A recent Law 360 story by Hannah Albarazi, “Alsup Mulls $113M Atty Fees in Glumetza Antitrst Deal,” reports that U.S. District Judge William H. Alsup said he will grant final approval to $454 million in settlements resolving direct Glumetza buyers' class claims that drugmakers plotted to delay the generic version of the blockbuster diabetes drug, but said he's still weighing attorneys' $112.8 million fee bid.  During a hearing, class counsel urged the judge to sign off on their attorney fee bid for 25% of the $453.85 million settlement fund over objections raised by direct purchaser class members McKesson Corp., AmerisourceBergen Corp. and Cardinal Health Inc., who asked the court to slash the fee award to $22.5 million.

National wholesalers McKesson, AmerisourceBergen and Cardinal Health objected to the "unprecedented" attorney fee award of $112.8 million, telling Judge Alsup that class counsel is seeking to be paid five times their regular rates.  McKesson's attorney, Steven Winick of Buchalter PC, speaking on behalf of all three objectors, told Judge Alsup that "25% is not reasonable and would lead to a windfall for class counsel."

Winick said the "enormous damages" fund in this generic drug delay case stems from the "exorbitant" increase in the price of Glumetza by defendant Bausch and its co-conspirators, but that had the class gone to trial and won, it could have been awarded treble damages of up to $2.7 billion, a far cry from the $454 million settlement fund.  The objectors instead suggested a multiplier of two, which would result in a $22.5 million reward to class counsel.

The antitrust claims were filed by a group of direct and indirect buyers in fall 2019 after the price of the diabetes medication allegedly jumped by nearly 800% in 2015 from $5.72 per pill to more than $51 apiece.

Co-class counsel, Lauren G. Barnes of Hagens Berman Sobol Shapiro LLP, said the 25% fee award is the benchmark in Ninth Circuit and that the multiplier of five is not outside the range of reasonable multipliers awarded in this circuit.  Barnes also noted that the 25% take is less than the one-third bid that is often awarded in the district.  Judge Alsup said at the close of the hearing that he will allow the plaintiffs' $2.4 million in expense reimbursement and intends to grant final approval of the settlement, but said, "I don't have answer on the attorney fees

Judge Calls Fee Disclosure in Voya Class Settlement 'Inadequate'

January 14, 2022

A recent Reuters story by Allison Frankel, “N.Y. Judge Calls Out Susman Godfrey for “Inadequate Fee Disclosure,” reports that Manhattan federal judge Kevin Castel refused this week to grant preliminary approval of a proposed $92.5 million class action settlement to resolve allegations that Voya Retirement Insurance and Annuity Company breached its contract with more than 46,000 life insurance policyholders who were subjected to a “cost of insurance” rate increase when Voya’s predecessor sold the policies to Lincoln Life and Annuity Company of New York.

The judge’s beef was not with the terms of the proposed settlement itself, which class counsel from Susman Godfrey described in a brief backing preliminary approval as “extraordinary.”  Susman Godfrey’s brief certainly establishes the firm’s tenacity in more than five years of litigation, all the way through class certification and summary judgment rulings.  The cash portion of the proposed agreement, Susman said, will provide at least as robust a recovery for policyholders as settlements that have previously been approved in other cost of insurance class actions.  And here, the firm said, the money will go straight to policyholders, who don’t even have to assert a claim to receive their share of the settlement fund.

Susman Godfrey said it intended to request a fee award of less than one-third of the settlement.  More specifically, the proposed notice to class members, attached as an exhibit to a declaration from the claims administrator, said Susman “will file a motion seeking an award for attorneys’ fees not to exceed one-third of the gross benefits provided to the settlement class.”

That mention of "gross benefits" caught Castel’s attention.  In the memo requesting preliminary approval, Susman touted the value of the non-monetary benefits it had obtained in the proposed settlement, including Voya’s pledge not to raise cost of insurance rates for class members for five years.  In an analogous class action mentioned in Susman’s motion, similar benefits were valued at more than $90 million.

Castel said it wasn’t clear from the language of the proposed class notice whether Susman Godfrey would ask for less than 33% of the cash value of the settlement – a number that would be simple for class members to calculate – or 33% of some as-yet unknown total settlement value.

“No hint is given as to the methodology that class counsel plans to employ,” Castel said, pointing out that if Susman Godfrey evaluated the non-monetary settlement provisions as generously as they were viewed in the class action cited in class counsel’s brief, one-third of the “gross benefits” could be as much as $62 million – which would give Susman Godfrey two-thirds of the cash in the settlement.  “If this is what counsel has in mind – or anything close to it – class members and the court should know it now,” Castel said.

Castel had to connect some dots to understand the potential gap between fees based on just the $92.5 million cash recovery for the class and an award that included the value of the non-cash benefits.  Susman’s memo requesting preliminary approval of the settlement does not put a dollar figure on those benefits.  Castel must have obtained the valuation figure he cited in this week’s opinion from a declaration filed by Susman’s Seth Ard.

Castel also took issue with class counsel’s proposed explanation to class members of the consequences of opting out of the settlement.  The proposed notice advised class members that they could tell the judge what they didn’t like about the settlement but would still be bound by the deal.  “This statement is fundamentally misleading,” Castel said.  “The purpose of an objection is to persuade the court not to approve the proposed settlement.  A successful objection means that the objector and other members of the class are not bound.”

Susman’s Steven Sklaver told me by email that the firm has taken Castel’s feedback to heart.  Susman intends to file a revised motion for preliminary approval clarifying that its fee request will be based only on the cash payout to class members, not on any additional value from the non-cash benefits.  “We are thankful for the court’s consideration of the matter and guidance,” Sklaver said.

Fifth Circuit Cuts $4.3M Fee Award in Defective Toilet Case

January 12, 2022

A recent Law 360 story by Jonathan Capriel, “5th Circ. Cuts $4.3M Atty Fee in Defective-Toilet Settlement,” reports that the Fifth Circuit has ordered a lower court to slash a $4.3 million attorney fees award in a class action settlement between Porcelana Corona De Mexico and consumers over defective toilet tanks, saying class counsel who "achieved little" can't receive pay for claims that did not pan out.  In a published split decision, the appeals court said that the Texas federal judge on the case abused his discretion by declining to wade into whether hours attorneys at Carpenter & Schumacher PC spent on litigating unsuccessful consumer claims could be lopped off the lodestar.

The original January 2017 lawsuit sought punitive damages against the Porcelana for consumers who bought six different toilet models made over nine years.  Class counsel succeeded on "only a fraction" of the original claims with several toilet types and model years dropped from the final settlement, said Circuit Judge Edith H. Jones, who wrote the opinion for the majority.

"To allow recovery on these unsuccessful claims would incentivize fishing expeditions into every tangentially related product after the discovery of a singular defective item," Judge Jones said.  "Instead, Class Counsel must shoulder the burden of proving that the hours submitted are for claims sharing a common core of facts."

The attorney award had already been reduced from the $12 million that counsel initially requested when the trial judge determined that attorneys did not earn a 2.9 times multiplier.  But the lower court allowed the $4.3 million lodestar to remain almost undisturbed.  At the time the lower court said that was because class counsels' efforts "did not prove fruitless."  But a majority on the panel took exception to this. The lawsuit resulted in two "much narrower" settlements, Judge Jones said.

The first settlement only covered two toilet models made in 2011 and promised replacement and installation reimbursements up to $300 and property damage reimbursements up to $4,000, but only for those to whom Porcelana had not already paid out.  The other settlement, which covered two other toilet models for owners in Texas, promised $300 payouts to those who needed their entire toilet replaced.  Class members otherwise received $35.

Judge Jones said the lower court can't assume that all class counsels' work on failed toilet claims could be considered related to the successful claims.  The district court must engage in a "proper lodestar calculation" and not rely on speculation, he said.  Furthermore, the lodestar must be proportionate to what was actually achieved in the lawsuit, which Judge Jones said the district court seems not to have done.

However, it is "practically impossible" to figure out which attorney hours were used to push claims for specific toilet models, Circuit Judge James E. Graves Jr. wrote in his dissent.  Because all claims relied on the same legal theory, the district court was correct to assume unsuccessful and successful claims were related enough to be counted together.

High Court Won’t Review Chinese Drywall Attorney Fee Award

January 11, 2022

A recent Law 360 story by Emily Field, “High Court Won’t Review Chinese Drywall Atty Fee Award,” reports that the U.S. Supreme Court declined to review an Eleventh Circuit decision that upheld a fee award of $5.8 million to class counsel in the defective Chinese drywall multidistrict litigation from MDL attorney fees from past work on the case.

As is custom, the high court did not explain why it chose not to hear the November petition from lawyers who represented 497 individual plaintiffs in suits stemming from the MDL.  In their petition, the attorneys had argued that the MDL compensation system is out of control, and the award conflicts with the so-called American Rule, under which litigants generally pay their own attorney fees.  "Multidistrict litigation has revolutionized civil procedure, leaving courts and scholars puzzled by an assortment of issues, including the high-stakes attorney fee compensation system at issue here," the lawyers said.

The Eleventh Circuit said in June that the court-appointed class counsel could receive 45% of the total fees paid to attorneys who negotiated settlements for the 497 Florida plaintiffs, because their work on the common case helped lead to the individual recoveries.  The appeals court said U.S. District Judge Marcia G. Cooke did not abuse her discretion when she awarded class counsel $5.8 million of the more than $40 million paid by Taishan Gypsum Co. Ltd. to end claims over shoddy drywall imported from China.  In affirming the decision, the appellate panel said the attorneys' work for the 497 plaintiffs "did not exist in a vacuum."  The 497 plaintiffs were part of 1,734 Florida cases remanded in 2018 from the MDL in Louisiana to Judge Cooke in the Southern District of Florida.

"The Eleventh Circuit's decision was well-reasoned.  I'm not surprised that the Supreme Court denied review.  The Supreme Court's decision not to accept review is further vindication for the team of lawyers that obtained this historic result after over 10 years of hard fought litigation," Patrick Montoya, who represents the class counsel, told Law360.  "This case was unique for so many reasons, but chief among them was receiving compensation from Chinese companies for the U.S. victims of Chinese drywall."