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In J&J Suit, Plaintiffs Prepare for $10M Fee Request

November 2, 2012 | Posted in : Fee Expert / Member, Fee Jurisprudence

A recent New Jersey Law Journal story, “J&J Shareholders’ Suit Settles; $10M in Fees, Costs Expected,” reports that Johnson & Johnson has agreed to ramp up oversight of subsidiaries and to pay up to $10.5 million in attorney fees and costs to settle a shareholders’ fraud and misconduct suit.  The evaluative factors “strongly suggest that the proposed settlement is fair, reasonable and adequate,” U.S. District Judge Freda Wolfson said in approving the deal, In Re Johnson & Johnson Derivative Litigation on Oct.26.

In the underlying case, shareholder plaintiffs claimed the board of directors ignored red flags such as criminal investigations, civil suits, subpoenas and Food and Drug Administrative warnings over product recalls and alleged off-label drug marketing, kickback schemes and flouted manufacturing standards.  The parties reached a settlement.  Among other changes, J&J will have to centralize its compliance oversight and assign ultimate authority to its chief quality officer, rather than leave those functions to the subsidiaries.

Wolfson noted that judges have approved fee awards close to and, sometimes exceeding, $10 million in corporate governance cases.  But she made no determination on the reasonableness of the fee request, instead appointing a special master to make a recommendation.  As for the settlement, Wolfson said the factors in Girsch v. Jepson (3d Cir. 1975) – the goals of cutting down on time-consuming and expensive litigation – favor approval.

Plaintiff lawyers from six firms claimed more than 10,000 hours, and requested a total of $6.61 million in fees and $452,017 in costs.  They are Carella, Byrne, Cecchi, Olstein, Brody & Agnello, with an $841,769 request; Robbins Geller Rudman & Dowd, $659,066; Kantrowitz Goldhamer & Graifman, $511,635; Bernstein Litowitz Berger & Grossmann, $1.15 million; Morris and Morris, $2.26 million; and Abraham Fruchter & Twersky, $1.65 million.  The lawyers also asked the court to apply a multiplier of 1.5 to the lodestar, bringing the total fee request to $10 million.