For those of us practicing antitrust law in the Sixth Circuit, we are familiar with the case In re: Southeastern Milk Antitrust Litigation, 739 F.3d 262 (6th Cir. 2014). But there was also a northeastern component to the claimed antitrust violations asserted against Dairy Farmers of America (“DFA”). In that antitrust action, Allen v. Dairy Farmers of America, Inc., E.D. Vermont No. 5:09-cv-00230, after nine long years of litigation and contentious settlement negotiations, a settlement agreement was approved by the District Court in 2016, affirmed by the Second Circuit Court of Appeals in 2017, denied certiorari by the U.S. Supreme Court in January 2018, and was finally implemented in August, 2018, with thousands of dairy farmers receiving pro rata payments of a net $50 million settlement fund. However, while the class plaintiffs’ fight may be over with the DFA, another fight has arisen among some of the class plaintiffs’ counsel over how to allocate $7 million awarded in attorney’s fees.
Indeed, in early September, 2018, a flurry of briefing began among the plaintiffs’ subclass counsel and counsel for intervenors – whom the court allowed to join very late in the game, just three months before the parties were able to reach a final settlement, and after the defendants DFA/DMS had already agreed to pay the $50 million in any settlement but other disputes kept the parties’ settlement at an impasse. Plaintiffs’ subclass counsel filed their motion for approval of a proposed allocation of attorney’s fees in which they proposed that awarded fees be apportioned equally among all counsel based on lodestar, which would have provided all counsel with fees at a rate of about 22% of their lodestar. Counsel for the intervenors, however, rejected the proposal, which would have given them around $47,000, although according to the plaintiffs’ subclass counsel, intervenor counsel “provided none of the litigation work, and they advanced only a minuscule portion of the expenses. [They] bore no risk, compared to their co-counsel [and t]hey made no significant contributions for the benefit of the [class].” The plaintiffs’ subclass counsel argued that the intervenor counsel’s request for more fees than the proposed allocation was contrary to the factors set forth in Goldberger v. Integrated Resources, Inc., 209 F.3d 43, 50 (2d Cir. 2000), which guide the court in deciding whether to award counsel fees relatively larger than fees awarded to co-counsel. Among the factors to consider are (1) the time and labor expended by counsel; (2) the magnitude and complexity of the litigation; (3) the risk of the litigation and who bore it; (4) the quality of the representation; (5) the requested fee in relation to the settlement; and (6) public policy considerations. (It is worth noting that in the In re Southeastern Milk Antitrust Litigation, in two orders granting motions for award of attorney’s fees, the court there “authorize[d] lead counsel to allocate fees to specific firms” while “retain[ing] jurisdiction to resolve any fee disputes which may arise.” No disputes appear to have arisen before the court.)
In response to the plaintiffs’ class counsel’s motion, the intervenor counsel filed a memorandum in opposition, and they filed their own cross-motion for allocation of fees in which they requested an award of $249,016 be paid to them from the $7 million fee award. Intervenor counsel argued that they provided significant benefits to the class by “implement[ing] a new discussion and negotiation process intended to break the stalemate” in settlement discussions and helped achieve “more extensive” injunctive relief. According to intervenor counsel, with respect to the Goldberger factors, they “provided high quality representation and achieved an excellent result for the Class. They took the pivotal role in the successful renewed settlement negotiations.” Intervenor counsel argued they “assumed [a] very significant risk” that settlement would not be achieved , and their request for $249,016 in fees was reasonable and represents only a “modest portion of the $50 million settlement fund, one-half of one percent of the total.”
Briefing was completed on the motions for allocation of attorney’s fees in October, 2018, and on December 18, 2018, the court rendered its Order, granting in part and denying in part both the plaintiffs’ class counsel’s motion for allocation of fees and intervenor counsel’s cross-motion for allocation fees. In its Order, the Court ended up awarding the intervenor counsel $110,000 in attorneys’ fees and $2,093.93 in expenses. In rejecting the plaintiffs’ class counsel’s proposal to award intervenor counsel only $47,088 and the intervenor counsel’s request for almost $250,000, the court explained that “this class action was contentious well beyond the average class action antitrust suit, to the extent such a creature exists. Friction between Subclass Counsel and certain class representatives rendered settlement negotiations problematic and contributed to the court’s decision to reject the initial Settlement Agreement” and to eventually appoint additional class representatives and additional class counsel, including intervenor counsel. In assessing the fee allocation requests, the court noted that intervenor counsel “failed to provide billing records. Like [plaintiffs’ class c]ounsel, they too provide only summaries of their services and indicate the hours attributable to broad categories of services. The court thus has little means of determining whether the fees incurred are reasonable.”
With respect to intervenor counsel’s argument that “in light of the $7 million dollars in attorneys’ fees previously awarded by the court, [$249,016] represents a reasonable and fair appointment of the overall fee award,” the court found this to a be a “flawed starting point” since “[i]ntervenor [c]ounsel played no role in vast majority of the events of this case. . . . Intervenor [c]ounsel’s efforts to improve upon a settlement already achieved warrant fair compensation, but are dwarfed by the efforts [plaintiffs’ class counsel] expended on behalf of the class in litigating this case from start to finish.” Moreover, the court noted that there was no case law authority cited that would permit intervenor counsel to be compensated for services rendered before being appointed and they “cannot claim they single-handedly achieved results that [plaintiffs’ class counsel] were unable to achieve.” Nonetheless, the court recognized that intervenor counsel “brought a wealth of experience in the dairy industry to the settlement table, kept abreast of issues in the case, and offered valuable guidance in the settlement process. Their relationship with the class representatives was untainted by a history of acrimony and infighting” unlike plaintiffs’ class counsel. Still, the court explained that its “task in determining an attorneys’ fees award for Intervenor Counsel [was] complicated by their failure to submit time records with descriptions of work done in support of their hours spent on this matter.” In the end, “[c]onsidering the Goldberger factors, . . . [t]he court determine[d] that the amount of $110,000 (366 hours at $300 per hour) fairly compensate[d] [intervenor counsel] for their services to the class.”
Apparently dissatisfied with the fee award, on January 15, 2019, intervenor counsel filed a Notice of Appeal of the court’s order on fees. It will be interesting to see what happens on appeal and how this court’s order and the approach this court took in reaching its decision will impact and affect how other courts and counsel pursue allocation of attorney’s fees in other class litigation.