Fee disputes among plaintiffs lawyers may be a dime a dozen, but the number and ferocity of objections to the proposed allocation of fees from the $4.85 billion Vioxx product liability settlement suggest a battle of a much higher order.
As you’ll surely recall, in November 2007, after winning 11 of 16 trials involving allegations that its painkiller Vioxx contributes to heart disease and other illnesses, Merck agreed to a $4.85 billion settlement fund. In October 2010, New Orleans federal district court judge Eldon Fallon set aside 6.5 percent of the fund — $315.3 million — for attorney fees. He also appointed nine firms to allocate the fees among the 109 plaintiffs law firms involved in the New Orleans multidistrict Vioxx litigation.
On Jan. 20, the committee filed its fee allocation recommendations. The proposal grants the committee’s own members a huge proportion of the fees in the common benefit fund: $230 million, or about 70 percent of the total pool. The biggest winners are Seeger Weiss and Beasley Allen, which would each receive $40.9 million under the proposed allocation, and Herman Herman Katz & Cotlar, with a proposed share of $32.5 million.
Russ Herman of Herman Herman Katz told us back in October, when we named him Litigator of the Week for winning the $315.3 million fee award, that some firms might not like how the fees were ultimately divvied up. Boy, was he right! Since the fee committee submitted its recommendations a month ago, 17 firms have filed fierce objections. They accuse the committee of ignoring lodestar calculations and granting its own members fees equivalent to hourly rates as high as $2,205, while leaving only scraps for other lawyers who committed thousands of hours to the Vioxx litigation. [Hat tip: Bloomberg.]
“No one to my knowledge who has taken such a risk has ever been awarded such a ridiculously low rate considering the qualifications of the people who did this work,” wrote plaintiffs lawyer Daniel Becnel in a January filing. Becnel, who told us his firm committed more than 16,000 hours to the Vioxx litigation, including work that steered the MDL to Louisiana, was allocated $455,000 by the fee committee after complaining that his initial award of $97,000 amounted to only $6 an hour.
In Motley Rice’s objection to the proposed allocation, partner Joseph Rice alleges that the fee committee–which overlaps considerably with the MDL plaintiffs steering committee — stacked the deck in its own favor. The committee’s allocation system allowed members to double- and triple-dip in categories such as “key leadership” and “settlement negotiations,” without considering other substantive contributions, Rice argues. “Each of these duties is the same task wearing a different hat,” the Motley Rice brief asserts. “Certainly the court did not intend that triple-dipping for the same common benefit service be the manner by which this fee is awarded.”
Some objectors also accuse the fee committee of making side deals with certain firms at the expense of others. Plaintiffs lawyers Robert Arceneaux, Pascal Calogero (of Ajubita,Leftwich & Salzer), and Margaret Woodward — who are acting as lead counsel for the objectors group — argue that firms involved in Vioxx litigation in Texas received a larger cut of the settlement only because they agreed to drop an appeal of Judge Fallon’s decision to cap attorney fees earlier in the litigation.
The objectors have also raised questions about an agreement between Michael Stratton of Stratton Faxon and fee committee members Herman of Herman Herman Katz & Cotlar, Christopher Seeger of Seeger Weiss, and Andrew Birchfield of Beasley Allen. Stratton was appointed by Judge Fallon to represent plaintiffs attorneys with single clients in the Vioxx litigation, who didn’t want to pay a full 8 percent share of their clients’ settlements into the MDL common fund. At a private meeting last July, Stratton and fee committee members agreed to reduce the pay-in to 4 percent for single-client plaintiffs firms that had already squawked at the 8 percent assessment.
The fee allocation objectors claim the Stratton deal had the effect of decreasing the size of the common fund. “Of the $315,250,000 awarded by this court, only $311,885,030.00 has been recommended for allocation,” they argue.
Stratton told us there was nothing inappropriate about the deal he struck with the fee allocation committee. He said it didn’t benefit the plaintiffs steering committee or the fee committee and had no bearing on the allocation of money from the common benefit fund. “There’s nothing nefarious here,” he said. “I’m not one of the guys at the trough looking for cash.”
Fee committee members Herman, Seeger, and Birchfield didn’t return our calls. Lawyers representing the firms that objected to the fee committee’s recommendations — which must still be approved by Judge Fallon — couldn’t be reached or declined to comment.
Last week Judge Fallon appointed a special master to consider objections to the fee committee recommendations. Judging by the furious briefs already filed in the dispute, we’d guess it will be a while before plaintiffs firms can start cashing their checks.
Meanwhile, the $4.85 billion Vioxx settlement itself survived a lingering challenge Tuesday. The U.S. Supreme Court denied certiorari to a group of plaintiffs who challenged the settlement after their cases were dismissed. The plaintiffs had argued unsuccessfully in federal district court before Judge Fallon and before the U.S. Court of Appeals for the Fifth Circuit that an order requiring non-settling plaintiffs to produce medical reports on causation was premature and burdensome. Merck was represented by Skadden, Arps, Slate, Meagher & Flom.
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.
