PHILADELPHIA – A judge has approved an award of more than $5 million for fees and costs to lawyers in an antitrust litigation regarding domestic drywall in a Philadelphia federal court.
U.S. District Court for the Eastern District of Pennsylvania Judge Michael M. Baylson explained what led to the final calculation of costs, in an order published on March 19.
“Initially, to deal with the raw numbers, the total amount of the settlement for Indirect Purchasers was $16.95 million, of which $250,000 had been set aside for administration of the settlement. Counsel have documented the total number of hours as 24,552. Applying various hourly rates, counsel have calculated a proposed lodestar of $12,685,538, but request only one-third of that amount,” Baylson said.
“Counsel have documented unreimbursed costs of $1,481,478, which will be allowed in full, but the Court must note that it had previously approved reimbursement of expenses totaling $665,992 from settlement proceeds. Thus, the total costs in this case are approximately 15 percent of the settlement.”
A $200 million-plus settlement had been obtained on behalf of Direct Purchasers.
Baylson used factors such as the total number of hours spent in connection with the case and the hourly rate claimed to achieve the “lodestar," then considered whether that lodestar should be adjusted to a percentage ratio of attorneys fees to total settlement.
“The Court expressed its concern, in prior documents in this case, as to the fact that the lodestar of time value claimed by Indirect Purchaser Class counsel was over $12 million, which is unusually close to the overall settlement amount of $16.95 million,” Baylson said.
The Hon. Abraham J. Gafni - a former Common Pleas Court judge, state court administrator and current law professor/mediator/arbitrator - was appointed a Master to the case. Third Circuit precedent would not allow an award of attorneys’ fees of anything close to 75 percent of the total recovery, which is the ratio of the lodestar to settlement amount in this case.
Gafni recommended the Court “accept as accurate and deserving of compensation, the total amount of hours claimed by plaintiffs’ counsel in their fee petition.”
“The Court finds that $350.00 is a reasonable blended hourly rate for all timekeepers, attorneys and paralegals, given the nature of the case. Applying this rate to the number of hours results in a lodestar of $8,593,200. One-third of this amount is $2,864,400,” according to Baylson.
However, Baylson pointed out that a prior memorandum was largely devoted to counsels’ faults and flaws in preparing a settlement proposal.
“A major portion of this prior memorandum was devoted to showing shortcomings of counsel that required this Court to spend a great deal of time trying to sort through these inconsistencies,” Baylson commented.
“If counsel’s ill-prepared proposals were adopted without detailed analysis and clarification, administration of the class settlements may have resulted in chaos. The Court finds, as a positive factor, that some of Indirect Purchaser counsel’s efforts were helpful to the Direct Purchaser plaintiffs and that this should be considered.
"Indirect Class counsel recognize they cannot recover their total claimed lodestar. Based on Third Circuit precedents, the Court must recognize that every dollar awarded to counsel is a dollar less going to class members.”
Baylson then presented the rationale for the final calculation.
“In conclusion, the Court accepts the validity of the total number of hours that were recorded as being appropriate for consideration, but not the hourly rate. The Court believes that the class should recover approximately two-thirds of the total settlement. Therefore, the Court will award attorneys’ fees so that the total of fees plus costs do not exceed one-third of the total settlement. The Court will check the adjusted lodestar against a percentage of the overall recovery,” Baylson stated.
Baylson then approved the attorney’s fees of $2,864,400, plus all of the associated costs – for a final total of $5,279,000, which is close to one-third of the settlement amount of $16,700,000.
U.S. District Court for the Eastern District of Pennsylvania case 2:13-md-02437
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com