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A federal judge on April 16 rejected a challenge by a group of class objectors to a $27 million attorneys’ fee award as part of a $96 million settlement agreement in an employment class action filed against computer giant Microsoft Corp. Donna Vizcaino, et al. v. Microsoft Corp., No. C93-178C, C98-1646C, (W.D. Wash. 2001). Judge John Coughenour of the U.S. District Court for the Western District of Washington said lead class counsel Bendich, Strong & Stobaugh of Seattle took extraordinary risks in its decision to accept the case and performed capably throughout the proceedings. ALLEGED FRAUD An estimated 12,000 former Microsoft employees sued the software company, alleging that they were hired as temporary or contract workers so the company could avoid paying them benefits. In December 2000, Microsoft and the class members struck a $96 million preliminary settlement agreement in which workers who qualified would receive payments ranging from several hundred to several thousand dollars. Under the terms of the settlement, Bendich Strong would receive 28 percent of the total settlement, or approximately $27 million. The firm had accepted the case on a contingency basis. OBJECTORS’ CHALLENGE In February 2001, a small group of plaintiffs challenged the firm’s fee award, saying it was too high. Judge Coughenour rejected the plaintiffs’ argument, saying that Bendich Strong had performed capably and that he saw no reason to reduce the fee award. The judge said the Washington Supreme Court has stated that the proper method for awarding fees in a common fund class action is the percentage-of-recovery approach. Bowles v. Department of Retirement Systems, 121 Wn. 2d 52, 70-74, 847 p.2d 440 (1993). “In common fund cases the size of the recovery constitutes a suitable measure of the attorneys’ performance,” the state supreme court said. RECOVERY ‘REASONABLE’ Judge Coughenour said the percentage of recovery request submitted by Bendich Strong was reasonable considering the “exceptional results” achieved for the class and the fact that 28 percent represents less than or equal to the prevailing market rate. “The common fund constitutes extraordinary relief in this case, because, as class counsel note, there were no controlling precedents when class counsel agreed to pursue the case. Class counsel had to overcome the potentially dispositive fact that class members had signed agreements stating they had no rights to benefits, and Microsoft fought this case vigorously for years,” Judge Coughenour wrote. The judge said the firm’s risk factor in choosing to accept the case was also high necessitating a higher award. The risk factor was increased by the repeated losses the class suffered in district court, which, had they stood, would have resulted in little or no recovery for the class, the judge said. “Class counsel’s risk was even greater, and their work made more difficult, because Microsoft is one of the nation’s largest and most formidable companies and it, and several law firms, defended the case vigorously for years,” Judge Coughenour wrote. The judge further stated the award was deserved because of the amount of time the firm had represented the class — 11 years, and because class counsel’s efforts resulted in significant nationwide public benefit. PUBLIC BENEFIT “As a result of this case and the large amount of publicity surrounding it, many employers have been advised to carefully ensure their workers are properly classified so they will not get into the same trouble as Microsoft. Workers, who otherwise would have been classified as contingent workers, are being properly classified as employees and receiving the benefits that are inherent in that classification,” Judge Coughenour wrote. The judge said considering all mitigating factors, a multiplier of four would be reasonable.Based on the lodestar amount of approximately $7.3 million, the percentage of recovery amounted to less than market rate. Dale Melvin Foreman of Foreman, Arch, Dodge, Delgado & Volyn in Moses Lake, Wash., and Lawrence Schonbrun of Berkeley, Calif., represent the class objectors. David F. Stobaugh and Brian J. Waid of Bendich, Strong & Stobaugh in Seattle serve as class counsel. Fredric C. Tausend and Carol S. Arnold of Preston, Gates & Ellis in Seattle, James D. Oswald, William H. Song and Michael Paul Monaco of Song, Oswald & Mondress in Seattle and Richard H. Sauer of Sullivan & Cromwell in Washington, D.C., represent Microsoft. � Copyright 2001 Mealey Publications, Inc.

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