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Ninth Circuit Judge Skeptical of $42M Fee Award in Price Fixing Settlements

October 23, 2019 | Posted in : Contingency Fees / POF, Fee Award, Fee Award Factors, Fee Cap / Fee Limits, Fee Issues on Appeal, Fee Request, Practice Area: Class Action / Mass Tort / MDL

A recent Law 360 story by Dorothy Atkins, “9th Circ. Judge ‘Concerned’ Over Hagens Berman’s $42M Fees,” reports that a Ninth Circuit judge appeared skeptical of keeping intact Hagens Berman Sobol Shapiro LLP's $42 million fee award in multiple price-fixing settlements, saying she's "concerned" the district judge didn't know the extent the fee requests varied from the amount the firm submitted in its lead class counsel bid.

During a hearing in Portland, Oregon, U.S. Circuit Court Judge Morgan Christen said she's not sure that U.S. District Judge Richard Seeborg, who took over the case from another judge, had access to or could find the law firm's initial proposal to serve as lead class counsel. Judge Christen said it took the circuit court "three runs" to get a copy of the proposal from the clerk's office, and she questioned whether the district judge faced similar accessibility challenges.  "You may well have expected that the district court had access to it ... But I can't see that he did have it," she said.

The judge's comments came during a hearing on appeals filed by two objectors — Conner Erwin and Christopher Andrews — who are challenging the $42 million in attorney fees awarded in multiple settlements totaling $124.5 million.  The deals resolve decade-old litigation alleging that Samsung Electronics Co. Ltd., Toshiba Corp. and other disk drive makers participated in an industry-wide conspiracy to fix optical disk drive prices.  During the hearing before a three-judge panel, Erwin's counsel, Robert Clore of Bandas Law Firm PC, argued that Judge Seeborg erred by keeping the lead class counsel proposal that Hagens Berman submitted to the court under seal.

He said the judge also erred by allowing the firm to collect $42 million, or 25% of the total settlements, instead of keeping fees capped at 12% of the settlement, or $22 million, which it had originally promised it would seek.  "If reasonableness is the bottom line for attorneys' fees, how is it ever reasonable to award a firm twice what it bid to become class counsel?" Clore said.

But Kevin Kamuf Green of Hagens Berman, an attorney for the class, defended the fees, arguing that the judge appropriately exercised his "broad discretion" in awarding them and noting the law firm isn't bound by the fee estimates submitted in its bid for lead counsel.  Green also quoted from Judge Seeborg's order approving one of the last settlements, which acknowledged that the fee award is higher than what the firm initially proposed, but lower than what it could be.  The judge also had "talked about the bid" in another order, so he must have been aware of it.

Green also pointed out that Hagens Berman fronted $30 million over 10 years to obtain significant recovery for the class, and not many other firms would agree to take such litigation on contingency.  Green added that there were risks associated with taking on the case; for example, the U.S. Department of Justice had launched related investigations into possible antitrust violations, but the government didn't issue broader indictments.

But Judge Morgan said she "frankly" found the firm's argument "mystifying." The judge also noted that this is a "mega settlement" and therefore fees are typically lower than typical benchmark percentages.  "I think it is less cut and dry than you are presenting," she told Green.

U.S. Circuit Court Judge Carlos Bea also appeared skeptical of Green's argument, pointing out that the objectors are essentially arguing that Hagens Berman "did a bait and switch," by submitting a proposal for $22 million in fees and then later doubling its request, and the lower court should have taken it into consideration.  But U.S. Circuit Court Judge Joseph Jerome Farris seemed unconvinced by the objectors, saying there was no way to know at the outset of litigation how much work would go into the case.

Aside from the attorney fee issue, the other objector, Christopher Andrews, appeared pro se.  He argued that the lower court made material errors approving the deals, which he claimed gave "usurious" incentive payments to lead plaintiffs.  Among his many concerns with the settlements, Andrews complained that the class notice had an ambiguous start and end date, and he said a copy of the two-page settlement release was not attached to the claims form, so class members couldn't know what they were agreeing to by submitting a claim.