Court Opinion

ID: 4563964
Source: CourtListenerOpinion
Date Created: 2020-09-09 17:00:48.102426+00
Date Added: 2024-06-11T12:24:12.439070
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                _______________

                                 Nos. 19-1760 & 19-1771
                                   _______________

                IN RE: NATIONAL FOOTBALL LEAGUE PLAYERS’
                       CONCUSSION INJURY LITIGATION

                  Paul Raymond Turner, personal representative of the
                              Estate of Kevin Turner,
                                              Appellant in No. 19-1760

                                  Podhurst Orseck, P.A.,
                                                Appellant in No. 19-1771
                                    _______________

                     On Appeal from the United States District Court
                         for the Eastern District of Pennsylvania
                                (D.C. No. 2:12-md-02323)
                        District Judge: Honorable Anita B. Brody
                                    _______________

                      Submitted Under Third Circuit L.A.R. 34.1(a)
                                  on May 22, 2020

               Before: McKEE, BIBAS, and NYGAARD, Circuit Judges

                                (Filed: September 9, 2020)
                                    _______________

                                       OPINION*
                                    _______________

*
  This disposition is not an opinion of the full Court and, under I.O.P. 5.7, is not binding
precedent.
BIBAS, Circuit Judge.

   Plaintiffs agree with their lawyers on contingent fees, but district courts still review

their deals for reasonableness. Courts usually enforce the parties’ bargain, though they

rarely tweak the terms as circumstances change. When district courts do review and act,

we respect their careful judgment.

   Here, the District Court took the major step of slashing a contingent fee. Yet the plaintiff

asks us to cut it even more. But the court’s analysis was clear, convincing, and cogent. And

it reasonably applied the factors required by our precedent. So we will affirm.

                                     I. BACKGROUND

   A. Facts

   Kevin Turner was a professional football player for the New England Patriots and the

Philadelphia Eagles. About a decade after he retired, he was diagnosed with Amyotrophic

Lateral Sclerosis, also called ALS or Lou Gehrig’s disease. Attributing the disease to the

many concussions that peppered his pro football career, in 2012 he sued the NFL for dam-

ages. Podhurst Orseck represented him.

   Rather than pay by the billable hour, Turner chose a contingent fee. That meant

Podhurst would be entitled to 40 percent of any recovery (or 45 percent if it went up on

appeal), but the firm would cover all costs upfront. It also meant that the financial risk of

the case rested on Podhurst’s shoulders. If Turner lost before trial, at trial, or on appeal,

Podhurst would walk away with nothing.

   As we have recounted at length, all concussion-related lawsuits against the NFL were

eventually consolidated in the Eastern District of Pennsylvania. See generally In re Nat’l

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Football League Players Concussion Injury Litig., 821 F.3d 410 (3d Cir. 2016). The cases

settled for nearly $1 billion. Id. at 447. Turner’s own award was $5 million, the maximum

recoverable by any class member. Id. at 424. But his victory was marred by tragedy, as he

died mere weeks before the court finally approved the settlement.

   This dispute predated the settlement. Podhurst had played an active role in the multi-

district litigation, representing both individual clients like Turner and the class of players.

As settlement drew closer, it became clear that the NFL would pay for Podhurst’s work for

the class.

   Turner thought it only fair that this class fee, totaling around $6 million, cover his per-

sonal representation as well. Otherwise, he claimed, his counsel would get paid twice for

their work for him: once by the NFL and once out of his recovery. The firm disagreed.

Though it made clear that it would not seek the full 45 percent allowed by contract,

Podhurst did intend to enforce the agreement to an extent.

   The dispute simmered. Turner enlisted new counsel, Polsinelli, to help. But negotiations

stalled. After Turner passed away, his Estate fired Podhurst as counsel, ending their four-

year relationship.

   B. Procedural history

   Before the split, Podhurst asked the Estate to re-sign the contract that Turner had agreed

to. The Estate refused. Podhurst lowered the fee it sought to 25 percent. Again, the Estate

declined. The simmer heated up to a boil.

   But the District Court was ready. Anticipating the storm of fee disputes at the end of

the litigation, it prepared a list of ground rules. Because class counsel did part of the work

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for all the plaintiffs, enforcing the full contingent fee would overcompensate many lawyers.

The court compared the work done for the class by class counsel (which the NFL had

agreed to pay for), with the work done by individual plaintiffs’ lawyers (to be paid by

contingent fees). It capped those contingent fees at 22 percent, finding that amount would

adequately compensate those lawyers for their share of the work and risk. It also adopted

rules for lawyers seeking variances, tapping a magistrate judge to handle those disputes.

   So this dispute went to a magistrate judge. After hearing oral argument, he recom-

mended slashing Podhurst’s fee by almost a third, down to 15.5 percent. The District Court

adopted his recommendation. The Estate now appeals. We review for abuse of discretion.

McKenzie Constr., Inc. v. Maynard, 758 F.2d 97, 100 (3d Cir. 1985) (McKenzie I); McKen-

zie Constr., Inc. v. Maynard, 823 F.2d 43, 44 (3d Cir. 1987) (McKenzie II).

              II. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION
                  BY NOT REDUCING PODHURST’S AWARD FURTHER

   Even after shrinking Podhurst’s fee by almost a third, the Estate seeks further cuts. But

as we explain, the District Court did not abuse its discretion by adopting the magistrate

judge’s reasonable recommendation.

   We assess challenges to contingent-fee arrangements using factors from a pair of cases,

McKenzie I and McKenzie II. Neither party disputes this. The dispute instead hinges on

how the magistrate judge applied the McKenzie factors. There are five, looking to:

   • the agreement at the time of contracting;

   • the circumstances by the time the court enforces the agreement;

   • the results obtained;

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   • the quality of the work performed; and

   • how much that work contributed to the result.

McKenzie I, 758 F.2d at 101; McKenzie II, 823 F.2d at 45.

   At root, the Estate claims that the 15.5 percent fee is unsupported by the magistrate

judge’s analysis. That argument fails.

   The magistrate judge started with an uncontested premise: given the work that class

counsel did here, a 22 percent fee ordinarily suffices to compensate individually retained

attorneys. From that starting point, he turned to McKenzie, spending fifteen pages laying

out the relevant factors. He then devoted nearly twenty-nine more pages applying those

factors to Podhurst and Turner. He did all that while keeping in mind the deference under-

lying McKenzie I and II: “[C]ourts should be reluctant to disturb contingent fee arrange-

ments freely entered into by knowledgeable and competent parties.” McKenzie I, 758 F.2d

at 101; McKenzie II, 823 F.2d at 45.

   A. The District Court reasonably assessed the agreement
      at the time of contracting

   The magistrate judge found the contract reasonable at its birth. He rested on two factors:

the potential length of the litigation and the hurdles it faced. Both were substantial. By that

time, consolidation into multi-district litigation was “almost certain” and would streamline

the work. App. 36. Even so, there was plenty of work left to do. There was also still plenty

of risk, especially on issues like causation, preemption, and the statute of limitations. Re-

covery was not guaranteed.

                                              5
   The magistrate judge weighed these factors and others, including the vast work

Podhurst did upfront and the clarity and early onset of Turner’s diagnosis. He found the

contract reasonable when Turner signed it, and the District Court reasonably adopted this

assessment.

   B. The District Court reasonably assessed the effect of changed circumstances

   The magistrate judge then turned to how circumstances changed and what light that cast

on the fee. Much had changed. Over the years, it grew clearer that Podhurst could seek

payment from the settlement fund for its upfront work. And as Podhurst’s stable of clients

increased, it benefitted from economies of scale. These changes favored reducing the fee.

   Then again, the court had already imposed the fee cap to account for some of these

changes. But as the magistrate judge explained, this cap did not fully account for Turner’s

unique situation as representative of the subclass. Class counsel thus did some of the work

for him that ordinarily would have been done by his individual lawyers. Finally, because

the Estate ended the representation, Podhurst never had to handle the claim-submission

process. So further cuts were warranted. The District Court reasonably adopted this analy-

sis too.

   C. The District Court reasonably assessed the results
      that Podhurst secured for Turner

   The magistrate judge handled this factor quickly and reasonably. Turner recovered

$5 million from the NFL—the highest amount payable to any former player. That favored

Podhurst.

                                            6
   D. The District Court reasonably assessed the quality of the work that Podhurst
      did for Turner

   Tackling the fourth McKenzie factor, the magistrate judge found that “Podhurst pro-

vided quality work for Turner, performing many necessary tasks in this litigation.” App.

44. And this work was substantial. The magistrate judge detailed eight categories of work

that Podhurst did, noting where it did and did not favor reducing the fee below the fee cap.

Though Podhurst’s work was good, some of it was done in part for the class, and some was

done by replacement counsel Polsinelli. The District Court reasonably adopted the magis-

trate judge’s assessment of these points.

   E. The District Court reasonably assessed how much Podhurst’s work for
      Turner contributed to his result

   Finally, the magistrate judge gauged how much Podhurst’s work contributed to

Turner’s favorable recovery. He distinguished the work Polsinelli did from the work

Podhurst had done as class counsel and had already been paid for out of the settlement

fund. That analysis was reasonable. We will not fault the District Court for adopting it.

   Relatedly, the Estate objects that the fee awarded dwarfs the number of hours that

Podhurst worked for Turner. This argument assumes that lodestar analysis (the number of

hours worked times a reasonable hourly rate) bears on contingent-fee agreements. “Lode-

star analysis, however, does not apply to a contractual contingent fee agreement. We there-

fore reject any lodestar analysis as inapplicable.” McKenzie II, 823 F.2d at 47 n.3 (citation

omitted). The District Court did not abuse its discretion by heeding our words.s

                                             7
               III. THE DISTRICT COURT DID NOT VIOLATE THE RULES
                 GOVERNING FEE DISPUTES OR ABUSE ITS DISCRETION

   The Estate argues that the magistrate judge did not follow the District Court’s guide-

lines for attorney’s fees. As a result, it argues, the fee awarded improperly paid Podhurst

for tasks that were:

   • not included in its fee request;

   • not supported by evidence; and

   • not done for Turner’s benefit alone.

Not so. To start, fee guidelines do not trump our precedents. The fee analysis need only be

reasonable under the McKenzie factors. We require nothing more.

   In any event, the Estate’s argument fails. First, everything was included in Podhurst’s

fee request. It asked for the full 22 percent and pursued it vigorously. Second, there was

plenty of evidence to support Podhurst’s claim. As we have explained, the magistrate judge

spent many pages exploring all the factors and Podhurst’s work. Its recommended reduc-

tion of Podhurst’s fee reflects that. Finally, the magistrate judge carefully separated the

work Podhurst had done for Turner as its individual client from the work it had done for

the whole class. That motivated the large fee cut. Even apart from our deferential standard

of review, the District Court acted quite reasonably in adopting this analysis.

                                        * * * * *

   Kevin Turner sued the NFL and won. The thousands of NFL veterans who have or will

recover under this concussions settlement can thank his courage and dedication. But a con-

tract is a contract. No matter who the party, we cannot ignore its terms.

                                             8
   We rarely reduce agreed-upon contingent fees. Yet the District Court did just that, cut-

ting the fee from 22 to 15.5 percent. The magistrate judge scrutinized the contract’s terms

and applied the McKenzie factors to make sure the terms remained reasonable, and the

court reasonably agreed. It did not have to cut the fee any further. Because that analysis

was thorough and reasonable, we will affirm.

                                            9