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Feds Urge Caution on $87M Fee Request in Apple Device MDL

December 3, 2020 | Posted in : Contingency Fees / POF, Fee Calculation Method, Fee Dispute, Fee Request, Hourly Rates, Lodestar, Lodestar Multiplier, Practice Area: Class Action / Mass Tort / MDL, Settlement Data / Terms

A recent Law 360 story by Christopher Cole, “Feds Urge Caution on $87M Atty Fee Bid in Slow-IPhone MDL,” reports that the U.S. government has criticized a request by plaintiffs' lawyers for an $87 million cut of the half-billion-dollar deal reached with Apple over claims the company slowed down certain iPhones, telling a California federal court that such a large award would unfairly cut into consumers' share.

Apple's lawyers have already pushed back against the class counsel's request, arguing that it vastly overestimates how much time and effort the plaintiff's legal team put into the case.  The multidistrict litigation centers on classwide allegations that Apple designed its software updates to slow down some phone models, nudging consumers to buy newer iPhones.  Apple reached a deal in May to settle the case for up to $500 million, but has protested the $87 million fee bid.  The government made clear in a filing that it does not object to the proposed settlement itself, but views the fee request as over the top.

"While the United States does not share the participants' close knowledge of this litigation, class counsel's request for more than $87 million in fees is difficult to square with prior precedent and the Ninth Circuit's typical benchmark in megafund cases," the U.S. Department of Justice's Civil Division said.

"Because a windfall for the attorneys in this matter would work to the direct detriment of class members, the United States asks the court, on behalf of unnamed consumer plaintiffs, to take a close, second look at the lodestar analysis and the factors relating to a reasonable percentage-of-the-fund cross check," the agency said.  The government made its stance known through a statement of interest under the Class Action Fairness Act of 2005.

Class counsel has asked for $87.7 million in fees plus more than $1 million in costs, a total that Apple urged the court in October to slash by at least $7 million. The tech giant said then that the request would knock down the actual settlement amount by at least $23 per device, and possibly more, "taking money out of the pockets of the very group that plaintiffs' counsel represent."

The government said that the fee request alone amounts to 28.3% of the minimum $310 million that Apple has agreed to pay out under the settlement, and that "dozens of settlement class members and the defendant filed objections denouncing the requested fees as excessive."

The DOJ didn't suggest an alternative share for the attorneys but urged the court to "examine closely, in the context of its own extensive experience with the case, the attorneys' fees request and underlying documentation provided by class counsel.  Even where a settlement provides real value to the class, courts must also ensure that the attorneys' fee award is reasonable."

"A second look to evaluate attorney hours, rates, and the claimed lodestar multiplier is especially appropriate here, where small changes to the calculation necessarily would lead to large amounts of money being shifted between the attorneys and consumer plaintiffs," the government said.