A federal judge in Kansas has largely signed off on a special master’s recommendation on how to dole out $503 million in legal fees as part of a $1.5 billion settlement with Syngenta over genetically modified corn.
In a Dec. 31 order, U.S. District Judge John Lungstrum rejected arguments from Texas plaintiffs lawyer Mikal Watts, who has sought up to $150 million in fees. Watts was among more than a dozen lawyers who raised concerns at a hearing last month about the special master’s report, which divvied up fees to about 400 law firms.
In an interview, Watts said he planned to appeal. A recent trend in ”hybrid” multidistrict litigation proceedings — those that include both individual cases with contingency fee contracts and class actions – raise issues that the appellate courts will have to address, he said.
“This may well be the last hybrid case that corporate America can ever settle,” he said. “People hired by private individual clients are not going to put their client into hybrid settlement deals where 88 percent of their fee is absconded by lawyers who the clients don’t know.”
Lungstrum agreed with the special master that the bulk of the fee award should go to common benefit fees, with nearly half the award going to lead plaintiffs lawyers in the multidistrict litigation, in Kansas, who “easily contributed the most to the class settlement.” Smaller percentages of the fee award, he wrote, should go to lawyers in Minnesota state court and Illinois federal court who did work that benefited the class.
“The successful resolution of this litigation was most driven by the successes achieved in the Kansas MDL (including a favorable trial verdict and the specter of additional class trials to come) and the massive consolidated action in Minnesota; Illinois provided an additional front, but that front clearly ranked third in the pecking order,” he wrote.
The settlement, approved in an order last month, resolved lawsuits alleging that Syngenta sold genetically modified corn seed that China refused to import, causing about 600,000 farmers and other producers to lose billions of dollars.
In her Nov. 21 report, the special master, Ellen Reisman of Reisman Karron Greene in Washington, D.C., recommended that 50 percent of the fees should go to 95 law firms in the multidistrict litigation in Kansas. Another 24 percent should go to lawyers with Minnesota cases, 16 percent to those in Illinois, and 10 percent to attorneys with individual clients.
The special master also had recommended capping contingency fees at 10 percent for a fourth group: lawyers with individual clients. Lungstrum supported that move but, in order to impose such a cap, concluded that he would have to raise the percentage of fees for that group from 10 percent to 12 percent, resulting in a corresponding reduction in common benefit fees. To accommodate the increase, Lungstrum reduced the common benefit pools: Kansas to 49 percent, Minnesota to 23.5 percent and Illinois to 15.5 percent.
At a Dec. 17 hearing, lawyers with individual clients raised concerns that the report failed to acknowledge the work they did.
A key voice in that camp was Watts, of Watts Guerra in San Antonio, who, along with 330 other firms, represented 57,000 farmers with individual contingency fee contracts. Reisman, in her report, shot down his initial request for $150 million in fees. Watts objected to her report, but lead plaintiffs attorneys in Kansas estimated that Watts Guerra stood to earn $52 million, plus $12.8 million in expenses, under the report’s allocation.
This week, Lungstrum rejected various arguments from Watts, who called his order “unprecedented.”
He said Lungstrum should not have relied on a 2018 fee sharing agreement that excluded him and other lawyers with individual clients. And he challenged the 10 percent cap on contingency fees. But his primary concern was the judge’s authority to regulate attorney fees governed by contingency fee contracts.
“There is no way in future torts that any lawyer is going to subject himself and his clients to a hybrid deal if this is the law of the land,” he said.
Lungstrum, however, noted that attorneys with individual clients could submit requests by Jan. 18 for expenses or common benefit work, in addition to their contingency fees.
Lungstrum also approved $48.8 million in expenses and nearly $2.8 million in service awards to class representatives. U.S. District Judge David Herndon of the Southern District of Illinois and Minnesota Fourth Judicial District Judge Laurie Miller signed off on Lungstrum’s order.