Judge approves pre-trial order governing attorneys' fees in drywall antitrust MDL; Quarterly fee reports will not be publicly docketed

By Jon Campisi | May 13, 2013

The federal judge overseeing the newly created Domestic Drywall Antitrust Multi-district

The federal judge overseeing the newly created Domestic Drywall Antitrust Multi-district

Litigation at the Eastern District of Pennsylvania issued a recent memorandum outlining the procedures for plaintiffs’ counsel fees in the case.

U.S. District Judge Michael Baylson, in his May 7 memorandum, wrote that the court has approved a proposed pretrial order governing the subject of attorneys’ fees, what the judge wrote is a “touchy but important” subject in complex cases, particularly those involving class certification.

In this case, a host of plaintiffs assert that the manufacturers of drywall, also known as sheetrock, a material used in home construction, conspired to fix and raise the price of the commodity during a particularly difficult economic time throughout the past couple years.

The approved order, known as Pretrial Order No. 3, contains the requirements for all plaintiffs’ counsel recording “accurately and contemporarily time and expenses by all counsel working for plaintiffs in this case, and submitting those reports to lead counsel.”

Baylson praised lead plaintiffs’ counsel for their “leadership at arriving at agreement with all of their colleagues and clients.”

In his memorandum, Baylson directed lead counsel to submit, on a quarterly basis, a summary of their fee reports to the court for periodic review.

The reports, however, will not be publicly docketed, the judge wrote, but rather will be maintained in chambers.

Baylson also commended lead plaintiffs’ counsel on the proposed management of assignments as the MDL moves forward, writing that the attorneys representing the plaintiffs in the products liability case are “well versed in the heavy burdens that plaintiffs bear in an antitrust price fixing conspiracy claim, particularly where, as appears to be the situation here, there is no preceding criminal indictment or government civil proceeding from which the plaintiffs can take advantage of the government’s superior investigative abilities.”

“Borrowing from Wagner’s Ring, all counsel in a complex case must have the wisdom of Wotan, the bravery of Brunnhilde and the strength of Siegfried,” the judge wrote. “However, plaintiffs’ counsel must avoid unnecessary work, or duplicative tasks, and be thrifty in their expenditure of money on litigation expenses.”

Baylson went on to touch on the often misunderstood economic reality of plaintiffs’ counsel taking on complex class action antitrust cases, noting that most lawyers representing clients in these matters typically accept the work without an advance retainer or hourly fee agreement.

Instead, the litigators generally rely on an award of attorneys’ fees by the court if their case is successful.

“Of course, this presupposes a successful result,” the judge wrote. “If the case is unsuccessful, the attorneys will have done all the work for no compensation.”

Baylson noted that appellate court precedence has required trial courts to exercise supervision over the fee process in class action cases so as to “enforce the fiduciary relationship between the proposed class and the lawyer, and also to ensure that attorneys treat the class fairly when there is a large award to be divided between them.”

“With plaintiffs’ counsel undertaking major risks, there may be tension reflected in their desire to do enough work to win the case, but not to waste time and overload expenses,” Baylson wrote. “The management of these issues by lead counsel is a difficult task, but appellate precedents require the trial judge to review, if the plaintiffs are successful, their fee petitions with at least a small dose of hindsight as to what was reasonable when the ‘going was tough’ – even if the result is very good.”

Baylson said in this case, the entry of Pretrial Order No. 3 is a decent plan that will enable a fair process if the court eventually has to rule on attorneys’ fees.

As for the issue of out-of-pocket expenses, Baylson wrote that the court has no interest in micro-managing “experienced counsel,” and therefore the court would like to see whether plaintiffs’ and defense counsel can agree on hiring the same vendor for data collection and storage.

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