Opinion ID: 1349586
Heading Depth: 3
Heading Rank: 2

Heading: Final Fee Award

Text: On January 5, 2007, the Court sought suggestions regarding the procedures and timetable it should use in determining a final fee award. It invited any interested party to submit a memorandum on the subject, and it scheduled a hearing for March 1, 2007. [19] In response, the PMC filed a compendium of written agreements among the now ninety firms that claimed entitlement to common benefit fees and between those firms and a group of lawyers that came to be known as the Major Filers. The Major Filers consist of more than fifty law firms that together represented approximately 97% of the downstream opt-out plaintiffs, 26,000 claimants who were compensated under the Seventh Amendment, and half of all class members who received matrix payments through May 31, 2007. [20] Neither Riepen nor Valori was among the Major Filers. Those agreements (the Major Filer Agreements [21] ) reflected the shared understanding of Class Counsel and the Major Filers that the amount to be awarded in common benefit fees ... is to be determined by the Court in the exercise of its sound discretion.... (App. at 12976-77.) Subject to that understanding, however, Class Counsel and the Major Filers agreed that Class Counsel would request the entire $200 million originally deposited in the Fund A Legal Fees Escrow Account, plus interest; $178,111,111 from the Fund B Legal Fees Escrow Account; [22] and 7% of the benefits paid under the Seventh Amendment. Additionally, they agreed that it was appropriate for Class Counsel to levy a reduced assessment2% in federal cases and 1.33% in state caseson recoveries obtained by downstream opt-out claimants. The rationale behind the reduction, as stated in the Major Filer Agreements, was that recoveries in the downstream opt-out casesas opposed to the initial opt-out and PPH casesoccurred in part because of the Settlement Agreement, which had its own mechanisms for compensating attorneys. [23] In the PMC's words, the reduction served as a prophylactic against `double dipping' by Class Counsel. (Appellee's Br., No. 08-2387, at 25.) The Major Filers agreed that they would not object to the fees sought by Class Counsel, and the parties represented that there were no other agreements, promises, or undertakings among them. (App. at 13023.) After the March 1 hearing, the District Court entered an order, in accordance with the procedures it had established to adjudicate the interim fee award, requiring that the auditor submit a report of the compensable time and expenses claimed by counsel, that Class Counsel submit supplemental fee presentations to Plaintiffs' Liaison Counsel, and that Plaintiffs' Liaison Counsel file a compendium of the fee presentations with the Court. The auditor reported that, from the inception of litigation, Class Counsel had expended 553,020.53 hours in common benefit time, thereby producing a lodestar value of $156,849,257.24. On July 16, 2007, Plaintiffs' Liaison Counsel filed the compendium of fee presentations and, on behalf of Class Counsel, a joint fee petition that complied with the terms to which Class Counsel and the Major Filers had agreed. As it did in connection with the 2002 joint fee petition, the Court authorized those who objected to the petition to request limited discovery. Valori moved for discovery on August 7, 2007. The Special Master concluded that the motion was untimely and, because it did not adhere to the Court's instruction that any such motion set forth a concise statement of the need and legal basis for discovery, deficient. Nevertheless, the Court permitted Valori to depose the PMC's lead counsel regarding the terms and meaning of the compendium of agreements that lead counsel had submitted to the Court and whether any side agreements existed between Class Counsel and the Major Filers. Thereafter, Valori filed an objection to the joint fee petition. The two primary arguments in the objection were that the requested award was too high because there was a low risk of non-payment, given the existence of the legal fees escrow accounts, and that the requested award did not allocate the burden of payment proportionally between the initial opt-out and PPH claimants, on one hand, and the downstream opt-out claimants, on the other, according to the benefits that each group received. Riepen also objected to the joint fee petition, renewing the arguments that he had made in response to the 2002 fee petition. On April 8, 2008, the District Court ruled on the petition, in an order designated as PTO 7763(A). In re Diet Drugs Prods. Liab. Litig., 553 F.Supp.2d 442 (E.D.Pa.2008). It awarded Class Counsel a total amount of approximately $567 million, including the approximately $154 million that constituted the interim fee award, broken down in the following manner. First, the Court applied the percentage-of-recovery method [24] to determine the appropriate fee award to be allocated from the Settlement Accounts. Id. at 467-85. In light of the reasonableness factors that we articulated in In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283 (3d Cir.1998), and Gunter v. Ridgewood Energy Corp., 223 F.3d 190 (3d Cir.2000), it concluded that an award equaling 6.75% of the recoveries under the Settlement Agreementwhich the Court valued at $6.44 billionwas fair and appropriate. Diet Drugs, 553 F.Supp.2d at 485. The Court then performed a lodestar cross-check to gauge whether the ... award creat[ed] a windfall for the petitioners. Id. By the Court's calculation, the award represented a lodestar multiplier of 2.6. Id. at 486. While it recognized that its multiplier was artificially low, given that the auditor's report did not separate the time spent on the Settlement Agreement from time spent on the MDL, [25] it felt confident that the true multiplierwhatever it waswas not excessive for a supermega fund case such as this one. [26] Id. at 487. Second, the Court determined how to apportion the 6.75% award from among the Settlement Accounts. From the Fund A Legal Fees Escrow Account, it awarded Class Counsel $161,569,272, which, when added to its interim distribution of $38,430,728, equaled $200,000,000the amount that was originally deposited into that account. Id. at 487. From the Fund B Legal Fees Escrow Account, it awarded $124,633,410.60, which, when added to its interim distribution of $38,430,728, equaled $163,064,138.60, which represented 6.39% of Fund B's original $2.55 billion value. Id. at 488. Finding no reason why the fee award pertaining to recoveries under the Seventh Amendment should be materially different from that related to matrix benefits, [27] the Court also awarded Class Counsel 6.4% of the Supplemental Class Settlement Fund. Id. That distribution amounted to $71,447,638.10. Id. Third, the Court determined that the justifications that supported the 6% & 4% Assessment in 2002 still applied with equal force, and it approved Class Counsel's proposed reduction in the assessmentto 2% in federal cases and 1.33% in state cases for downstream opt-out claimants based on the logic that those claimants had incurred value from the Settlement Agreement that initial opt-out and PPH claimants did not incur, and Class Counsel was rewarded for creating that value from the Fund A Legal Fees Escrow Account. See id. at 491-96. It updated the award from the MDL Fee and Cost Account accordingly, adding $56,300,000 to the interim distribution of $76,861,455 for a total award of $133,161,455. [28] Id. at 496. The District Court then requested submissions regarding how to refund the money left over in the MDL Fee and Cost Account and the funds established pursuant to the Settlement Agreement, and it instructed Plaintiffs' Liaison Counsel to submit a plan regarding the allocation of the award among Class Counsel. On July 21, 2008, the Court completed adjudication of the fee award. PTO 7896 wrapped up the remaining refund and allocation issues, and PTO 7897 certified as final PTOs 2622, 7763(A), and 7896.