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Microsoft Corp. is opposing Townsend and Townsend and Crew’s hefty request for attorney fees, saying the firm piggybacked on the U.S. government’s antitrust case and other private litigation in settling its California consumer class action. Townsend, lead counsel in the suit, is requesting at least $97 million in fees and costs for itself and another $197 million for 34 other firms that worked on the case. In a 48-page response filed with San Francisco Superior Court on Tuesday, Microsoft objected to the value Townsend is placing on the work that led to an all-voucher settlement worth $1.1 billion. “This would be the largest fee ever awarded to counsel in an antitrust class action in California, or anywhere else,” wrote Microsoft attorney Robert Rosenfeld, a partner at Heller Ehrman White & McAuliffe. “More surprising even than the sheer enormity of the compensation class counsel seek is that they seek it in a case where they rode the coattails of United States v. Microsoft and other government investigations and earlier private litigation against Microsoft. “This case — which, by definition, was neither novel nor pioneering — warrants a much lower fee than might be appropriate in a class action developed and litigated from scratch. High multipliers are simply improper in piggybacking cases,” he continued. Specifically, Microsoft objects to the lodestar multiplier that Townsend is requesting. Attorney fees in class actions are determined either as a percentage of the plaintiffs’ award or by a lodestar method. The lodestar is the number of hours expended multiplied by the counsel’s hourly rate, which the court may enhance by a multiplier. Townsend is seeking a 5.75 multiplier on its lodestar of $16 million, which would mean $92 million for the firm. Microsoft said class counsel are seeking to apply high multipliers to every one of the 209,000 hours they recorded on the case, which would create “an extraordinary windfall.” For example, Microsoft said that with his multiplier, Townsend partner Eugene Crew would receive $3,019 for each of the 6,198 hours he recorded on the case. At the most, Microsoft said, class counsel should receive their lodestar enhanced by a multiplier of 1.5 applied to only a portion of those hours. The company said the 17,000 hours spent on the case after it settled, as well as the work done by contract attorneys and paralegals, should not be enhanced by any multiplier. “This would give class counsel a premium of between $20 million and $25 million over their lodestar,” Rosenfeld wrote. Rosenfeld listed examples of what he described as “outrageous fees” the class counsel has requested for certain work. They include more than 500 hours the firms spent shopping for a document repository system and $36,500 that William Conyngham Jr., a partner at Kellogg, Huber, Hansen, Todd & Evans, billed for one day’s work preparing materials and traveling to and from a hearing. The California action, a consolidation of 27 consumer suits, the first of which was filed by Townsend, alleged that Microsoft’s illegal conduct denied consumers competitive prices and free choices among software products. Microsoft settled the suit — Lingo v. Microsoft, 301357 — in January 2003. The 14 million plaintiffs in California who indirectly purchased Microsoft software over the previous seven years can use the vouchers to purchase computer products. Two-thirds of unclaimed settlement funds will go to public schools in the form of software and vouchers for computer equipment, while the remaining third will revert to Microsoft. Microsoft argues that Townsend and the other plaintiff’s counsel did little original work in pursuing the California action, instead relying on information and legal theories developed by the government and private lawyers in earlier proceedings. “Indeed, class counsel spent less than one percent of their time on factual investigation, and 1.7 percent on legal research in preparing this case for trial,” Microsoft said. The company said more than 50 of the 80 or so substantive paragraphs in plaintiffs’ March 18, 1999 amended complaint “repeat verbatim, in part or in whole, paragraphs from the government’s May 19, 1998 complaint against Microsoft.” Similarly, Microsoft said that in response to its interrogatories, class counsel cut-and-pasted approximately 80 pages from Judge Thomas Penfield Jackson’s findings of fact in United States v. Microsoft and a summary judgment pleading filed by the plaintiff in Caldera v. Microsoft. Microsoft dismissed Townsend’s claims that it faced financial risk in taking on the corporate giant before other firms did so. “Counsel were hedging their bets, and used the Lingo complaint largely as a placeholder until Judge Jackson issued his findings of fact on Nov. 5, 1999,” the company said. Microsoft also noted in its filing that the court has received more than 170 objections from class members. Crew, the Townsend partner who led the class action, said his firm would file a response to Microsoft’s opposition. He said he had not gotten a chance to study the filing since he is preparing opening statements in a similar class action against Microsoft set to begin trial March 1 in Minneapolis. San Francisco Superior Court Judge Paul Alvarado is being asked to approve the settlement and consider Townsend’s petition for attorney fees at a March 29 hearing.

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