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Hagens Berman Defends $31M Fee Award Before Fifth Circuit

February 16, 2022 | Posted in : Contingency Fees / POF, Ethics & Professional Responsibility, Fee Award, Fee Award Factors, Fee Dispute, Fee Issues on Appeal, Practice Area: Class Action / Mass Tort / MDL, Settlement Data / Terms

A recent Law 360 story by Emma Cueto, “Hagen Berman Defends $31M Fee Award at 9th Circ.” reports that Hagens Berman told the Ninth Circuit that its fee award from a $205 million settlement in a multidistrict class action over alleged optical disk drive price-fixing is valid, as the class member objecting to it chimed in too late and failed to prove the firm acted improperly.  In a brief, Hagens Berman Sobol Shapiro LLP said that objector Connor Erwin, who previously convinced the Ninth Circuit to throw out the first fee award in the case, was attempting to challenge the settlement itself under the guise of challenging the award, that he had not demonstrated the revised $31 million fee award was unreasonable, and that he had no basis for accusing the firm of misconduct for not immediately returning the vacated award.

Erwin's arguments, the firm said, were based on poor assumptions and misunderstandings of the law.  "Erwin's main theory is that class counsel should be paid nothing despite recovering $205 million in settlements on antitrust claims the district court held worthless on the merits," the brief said.  "For his Draconian remedy, however, Erwin's charged characterizations ... entirely assume what he fails to prove."

The dispute stems from a decade-old, multidistrict litigation claiming that Samsung Electronics Co. Ltd., Toshiba Corp. and other disk drive makers participated in an industry-wide conspiracy to fix optical disk drive prices. Hagens Berman was appointed lead class counsel in 2010 and later struck multimillion-dollar deals to resolve the disputes.  After U.S. District Judge Richard Seeborg took over the case, he awarded the law firm $47.8 million in attorney fees for securing the settlements. 

But in May 2020, a pair of Ninth Circuit panels vacated the fee awards after Erwin's attorney argued before the appellate court that Judge Seeborg erred by keeping Hagens Berman's initial proposal for lead class counsel under seal, among other objections.

In July, Judge Seeborg awarded Hagens Berman a revised $31 million in attorney fees, finding it was entitled to a 20% premium on top of the $25.9 million it would be allotted under a fee grid in its proposal.  Judge Seeborg also awarded Erwin's counsel $1.5 million in fees in September for their work helping to convince the Ninth Circuit to throw out the initial fee award.

Hagens Berman told the appellate court that Erwin's latest challenge, and his claims that the firm acted improperly when it did not immediately return its initial $47.8 million fee after the Ninth Circuit tossed the award, are baseless.  Because the fee award was vacated — not reversed or modified — Hagens Berman was not ethically required to return the amount until a new fee award had been calculated, which it promptly did, it said.