BAR/BRI Plaintiffs Firms Take Fee Request Back to the 9th Circuit
The National Law Journal
March 24, 2010
Plaintiffs lawyers who obtained a $49 million settlement in an antitrust class action against the parent company of BAR/BRI are gearing up for another fight before the 9th U.S. Circuit Court of Appeals -- this time, involving their attorney fees.
Class counsel McGuireWoods, which settled the litigation in 2007, filed a notice of appeal on March 8 after U.S. District Judge Manuel Real of the Central District of California eliminated all the firm's attorney fees over an apparent conflict of interest. Two other firms serving as class counsel, New York's Zwerling, Schachter & Zwerling and Washington's Finkelstein Thompson, whose fees the judge reduced, filed a separate appeal on March 15.
Another lawyer filed an appeal on March 9 on behalf of the estate of Eliot Disner, the plaintiffs attorney who brought the original case.
The settlement involved 300,000 class members who claimed to have paid, on average, about $1,000 in overcharges for BAR/BRI's bar examination review course on the ground that its parent company, West Publishing Corp., conspired to monopolize the market in a secret deal with Kaplan Inc., which sells preparatory courses for the Law School Aptitude Test.
The appeals challenge Real's Feb. 3 finding that McGuireWoods violated the California Rules of Professional Conduct by failing to inform class members about an agreement that gave incentive awards to five class representatives based on the value of the settlement. "Under California law, in the absence of informed written consent, the simultaneous representation of clients with conflicting interest constitutes an automatic ethics violation that results in the forfeiture of attorneys' fees," Real wrote.
Real found no conflicts or ethical lapses by Finkelstein Thompson or Zwerling Schachter, but reduced their fees by 37 percent, to about $1.6 million and $1.5 million, respectively, citing "excessive fees and noncompensable work."
Real did grant expenses to the three firms: about $1.2 million to Richmond, Va.-based McGuireWoods, $118,000 to Finkelstein Thompson and $35,000 to Zwerling Schachter.
The appeals represent a potential second go-around before the 9th Circuit in the case. Last year, the 9th Circuit upheld the settlement but told Real to reconsider the award of attorney fees to plaintiffs counsel. The appeals court concluded that counsel on both sides of the case had created a "disturbing appearance of impropriety" because of the incentive awards that "tied the promised request to the ultimate recovery and in so doing, put class counsel and the contracting class representatives into a conflict position from day one."
The panel directed Real to consider the influence those payments had on McGuireWoods, due $12 million in fees under the settlement.
Sidney Kanazawa, a partner in the Los Angeles office of McGuireWoods who represents his firm in its appeal, did not respond to calls for comment on Monday. In a motion for reconsideration in February, he disputed Real's interpretation of the 9th Circuit's ruling and called the apparent conflict "harmless."
"The Ninth Circuit did not limit the remand for the sole purpose of denying attorneys' fees to McGuireWoods, but rather explicitly instructed this Court to review its previous fee award in light of the Ninth Circuit opinion and California law," the motion said.
Rosemary Rivas, a partner in the San Francisco office of Finkelstein Thompson who represents her firm and Zwerling Schachter in their appeal, did not return a call for comment. In her motion for reconsideration, she asked Real to reinstate the fees originally awarded to both firms because they played an instrumental role in the ultimate approval of the settlement.
Real later took both motions off calendar.
Zareh A. Jaltorossian, a partner in the Los Angeles office of Reed Smith who represents Sandra Disner, executor of the estate of Eliot Disner and successor-in-interest to Disner and his former firm, Disner Law Group, did not return a call for comment.
Disner brought the original suit in 2006. McGuireWoods inherited the case after acquiring the firm Disner was working for at that time, Van Etten Suzumoto & Becket, that same year. Disner, whom McGuireWoods fired in 2007 after he objected to the BAR/BRI settlement, died last year.