Mike Bowers, left, said the mediation he led on the Cobb EMC lawsuit didn’t go nearly as smoothly as Tuesday’s settlement hearing. “It was a mean, mean mediation,” he said. (John Disney/Daily Report)
A Cobb County Superior Court judge said Tuesday that an attorney fee request for nearly $20 million made him gasp initially, but he approved it as part of a $100 million settlement over a profit-sharing lawsuit brought by members of the Cobb Electric Membership Corp.
Judge J. Stephen Schuster praised the mediator, former Georgia Attorney General Mike Bowers, for trimming the payment to plaintiffs’ lawyers from $30 million to $19.8 million. The judge also lauded both sides’ lawyers, saying the EMC’s shift from a combative large law firm to its current counsel helped seal the deal.
Schuster said Cobb EMC’s general counsel, J. Kevin Moore of Moore Ingram Johnson & Steele, represented a “change in attitude” in the negotiations when he took over the case in recent years. “The original law firm’s attitude was fight, fight, fight and bill, bill, bill,” Schuster said.
Moore noted the prior counsel charged $800 per hour and employed a strategy of fighting its own members who had filed lawsuits. The judge also suggested Moore’s rate was considerably less, but no amount was mentioned since it wasn’t part of the settlement. The EMC’s prior lead counsel was King & Spalding partner Dwight Davis. Reached at King & Spalding after the hearing Tuesday, Davis said, “I wasn’t present and it wouldn’t be appropriate for me to comment.”
Schuster signed the final settlement order at 10:04 a.m., following an hourlong hearing before a courtroom packed with lawyers, EMC directors and customers. The deal ends nearly seven years of legal battling with current and former EMC members, who will now be paid their overdue patronage capital, a type of profit sharing based on their electrical usage. The company agreed to pay up to $98 million to current and past EMC members and their lawyers, plus notice and administrative costs estimated at $2 million. Actual payouts to the customers will depend on how many file claims and whether they opt for a reduced present value immediate payment or a higher amount over the next 24 years. So far, $59 million in claims have been reported.
“This resolution brings them back their money,” Schuster said of the EMC members. “This class action is why we have class actions.”
Schuster admitted he “gasped” when he saw the $19.8 million legal tab for the deal. “I know the fee amount sounds large,” said Schuster. “It is large.” But the judge justified the fees in several ways.
First, Schuster complimented the lawyers for reaching the settlement instead of continuing the legal wrangling that has gone on since the two class action lawsuits were filed in 2007 and 2010. “It is always better to own your outcome. These parties owned their outcome. If this case had gone to trial, lawyer fees would have been greater than any settlement.”
In addition, the fee amount was reduced. Plaintiffs’ lawyers requested a total of $29.4 million for fees in December, supporting the number with 200 pages of briefs citing case law that dictates awards of up to 35 percent of recovery. Michael Terry of Bondurant Mixson & Elmore, who served as fee counsel to the current members’ class attorneys, told the court the fee award represents a $10 million savings over what the lawyers would be entitled to collect.
Attorneys for the class of current EMC members include David Cohen of Complex Law Group in Marietta and Hylton Dupree Jr. of Dupree & Kimbrough in Marietta. Attorneys for the former members’ group include: W. Paul Lawrence II and Charles Siegel of Waters, Kraus & Paul in Washington; Samuel Pierce Jr. and Charles Gabriel of Pierce Gabriel Partners of Roswell; and Larry Lahman of Mitchell & Declerck in Enid, Okla.
The plaintiffs’ lawyers and the judge credited the $10 million fee reduction to Bowers, the court-appointed special master who mediated the settlement. The Balch & Bingham partner told them flatly that the standard 30 percent to 35 percent class action fee would never be approved by the court. (Bowers himself said he charged $650 an hour but had “no idea” how many hours he worked on the matter.)
The plaintiffs’ lawyers said they were all “taken to the woodshed” by Bowers, known for his direct and salty language.
“I have never been spoken to like that by a mediator,” Moore said of Bowers. “He would not let us walk out, although we each tried.”
When it was his turn to speak, Bowers said the conclusion of the case bears no reflection on the process of getting there. “Despite the harmonious atmosphere here, the actual mediation was nothing like this,” Bowers said. “It was a mean, mean mediation.”
Bowers said he tried to think of another case as contentious as this from the 400 he has mediated since he left politics in 1998, but could not. He said the closest one was a family estate dispute that came down to a battle between a mother and her son over a Rolex watch that belonged to the late husband and father. It was so bitter that the mother said of her son, “If I’d have known it would come to this, I’d have drowned him when he was born.”
The case is In re Cobb EMC class action, No. 10-100353-48.