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$567 Million Fee Award Upheld in Fen-Phen Litigation
The Legal Intelligencer
October 09, 2009
A federal appeals court on Thursday rejected challenges to the $567 million attorney fee award in the fen-phen diet-drug litigation, declaring that Chief U.S. District Judge Harvey Bartle III of the Eastern District of Pennsylvania had handled the massive case properly at every step.
"The amount of the award, though extraordinarily large, is not excessive in this extraordinary case," 3rd Circuit Judge Kent A. Jordan wrote.
Jordan found that Bartle "employed transparent procedures and undertook a thorough and proper analysis -- based on the appropriate information -- in determining the award."
The 64-page opinion by Jordan was fully joined by 3rd Circuit Judge Dolores K. Sloviter and partially joined by Judge Thomas L. Ambro.
Ambro wrote a partial dissent, saying he believed lawyers whose clients opted out of the settlement may have been treated unfairly in how much they were ordered to contribute to the fees of the class lawyers.
The ruling is a victory for attorney Michael D. Fishbein of Levin Fishbein Sedran & Berman, who argued in defense of the fee award to the 72 firms that had logged more than 350,000 hours on the case.
It was a setback for two lawyers who led the challenge -- Brian S. Riepen of Dallas and Raymond Valori of Weston, Fla.
Riepen argued that the process Bartle used in calculating the fee award lacked the transparency courts require in common fund cases.
Jordan disagreed, saying: "[T]he fee proceedings were amply transparent under our precedent. Indeed, it is difficult to discern what the District Court reasonably could have done to increase the level of transparency."
Riepen argued that Bartle should have considered and made public the class counsel's individual billing records, but Jordan said, "[W]e have held that courts need not always engage in that time-consuming process."
In a separate appeal, Valori had argued that he was unfairly forced to contribute to the fee award from the fees he had earned through clients who opted out of the fen-phen settlement -- despite the fact that he never took advantage of the joint discovery conducted by the class action lawyers.
Valori also argued that Bartle failed to make the proper findings to support his ultimate conclusion that the $567 million in fees was reasonable.
Jordan disagreed, saying Bartle had made a series of findings that amply supported the fee award, including the finding that the work of class counsel yielded a $6.44 billion settlement fund that benefited more than 800,000 class members.
As for the contributions demanded from the opt-out lawyers, Jordan said it was "beyond reasonable denial" that the work of the class action lawyers had benefited all of the opt-out plaintiffs.
Ambro, in his partial dissent, said, "[T]he problem I am focusing on represents, at most, a minor blemish in the District Court's otherwise excellent, and persuasive, treatment of an extraordinarily difficult case."
But Ambro said that while he joined most of Jordan's opinion, he would have ordered Bartle to revisit the issue of how much contributory fees should have been paid by the so-called "downstream opt-out" plaintiffs.
"I believe the District Court abused its discretion in assessing the 'downstream opt-out' plaintiffs at a lower rate for the case-wide services provided by the plaintiffs' management committee than it assessed the 'initial opt-out'" plaintiffs, Ambro wrote.
