Opinion ID: 6342044
Heading Depth: 2
Heading Rank: 1

Heading: Billing Methods

Text: First, we agree with the district court that discovery regarding counsel’s billing methods was not required. In requesting that information, Petri relies heavily on allegations by a former attorney at lead counsel’s ﬁrm that surfaced in Bernstein v. Bernstein Litowitz Berger & Grossmann LLP, 814 F.3d 132 (2d Cir. 2016). Bruce Bernstein, who was of-counsel at the ﬁrm, ﬁled a complaint under seal against lead counsel and ﬁve individual partners in 2014. His allegations centered on another securities fraud class action in which lead counsel represented the Mississippi fund. Bernstein claimed that the 22 No. 20-2055 ﬁrm paid a local Mississippi attorney $112,500 in fees for a useless memo produced weeks after the case settled. He later learned that the attorney had little experience and was married to a lawyer in the Mississippi Attorney General’s Oﬃce. Id. at 136–38. According to Petri, scrutinizing lead counsel’s billing methods in this case would ensure that there is no such “pointless legal work undertaken for the excuse of generating a bill.” The relevance of the Bernstein allegations to this case is minimal. As a preliminary matter, the Second Circuit made clear that it was not assuming the truth of the allegations, noting that complaints frequently “contain allegations that range from exaggerated to wholly fabricated.” 814 F.3d at 143 (citation omitted). In fact, after interviewing witnesses and reviewing relevant documents, Bernstein himself said that he had “received information that seriously challenges my claims.” And Bernstein Litowitz has continued to serve as lead counsel—with the Mississippi fund as lead plaintiﬀ—in other cases after the complaint was unsealed. See, e.g., In re Signet Jewelers Ltd. Securities Litigation, No. 16 Civ. 6728, 2019 WL 3001084, at  (S.D.N.Y. July 10, 2019); cf. In re Merck & Co. Securities, Derivative & “ERISA” Litigation, MDL No. 1658, 2016 WL 8674608, at –2 (D.N.J. Dec. 23, 2016) (relying in part on Bernstein’s later statement to conclude that Bernstein allegations did not meet Rule 60(b)(2) standard for relief from ﬁ- nal judgment based on newly discovered evidence). More fundamental, there is little reason to think the ﬁrms were engaged in similar practices in this case. In Bernstein, lead counsel did not disclose—and was not required to disclose—the payment to the local Mississippi attorney when it submitted its fee petition to the court. 814 F.3d at 137 & n.2. No. 20-2055 23 Here, by contrast, lead counsel informed the district court that both Gadow Tyler PLLC and Klausner, Kaufman, Jensen & Levinson would be receiving attorney fees for their work on the case. Lead counsel added that no other ﬁrms would receive any fees. Attorneys from those two ﬁrms also submitted declarations describing their work. A partner from Gadow Tyler asserted that his ﬁrm’s participation included legal research in preparation of the third amended complaint, legal research prepared in opposition to Defendants’ motion to dismiss, meeting with Bernstein Litowitz attorneys to discuss case staﬃng and strategy, attending and participating in the mediation session held in Chicago, and participating in ongoing discus- sions about litigation strategy, settlement negotiations, and the settlement approval process. Furthermore, Gadow Tyler reviewed and ed- ited certain lead plaintiﬀ submissions, engaged in regular communications with the Oﬃce of the Mississippi Attorney General about case de- velopments, and prepared and submitted regu- lar reports to [the Mississippi fund]. A Klausner partner submitted a similar statement, aﬃrming that his ﬁrm’s 27.8 hours on the case involved assisting lead counsel with the initial complaint ﬁled on behalf of the two Florida pension funds. Both declarations also indicated that the ﬁrms had relevant experience: Gadow Tyler with securities class actions and Klausner with public employee retirement issues. And the overwhelming majority of their work 24 No. 20-2055 was completed before the case settled, further distinguishing this litigation from Bernstein. With all this information before it, and in granting a percentage-of-fund award, the district court did not abuse its discretion in denying Petri’s request for more detailed billing information.