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In a decision brimming with praise, a federal judge has awarded more than $60.7 million in attorney fees to the team of lawyers who brought a class action antitrust suit against the leading manufacturers of corrugated paper products and secured more than $202 million in settlements. “The lawyering in the case at every stage was superb,” Senior U.S. District Judge Jan E. DuBois wrote in his 37-page decision in In re: Linerboard Antitrust Litigation. DuBois concluded that the plaintiffs’ lawyers were entitled to 30 percent of the fund — the full amount they requested — because they handled the case skillfully and efficiently at every stage, and because they took on great risks and secured large cash settlements that represented about 55 percent of the claimed damages. “The settlements are remarkable given the fact that there was no prior government action to establish liability and the case covered a relatively short conspiracy period of 26 months,” DuBois wrote. “The number of persons benefited is large, and includes all entities that purchased corrugated containers and sheets during the class period. … The size of that population is best estimated by the number of entities that were sent the notice describing the final partial settlements — approximately 80,000 companies,” DuBois wrote. But DuBois, of the Eastern District of Pennsylvania, won’t be deciding exactly how much to award to each of the more than 200 lawyers who together logged more than 51,000 hours over six years of litigation. Instead, DuBois noted that the plaintiffs’ lawyers had all agreed to have the allocation of the fees decided by their lead lawyer, Howard I. Langer of Langer & Grogan. Langer, he said, “has led the case from its inception and is the attorney better able to describe the weight and merit of each counsel’s contribution. … Likewise, from the standpoint of judicial economy, leaving allocation to such counsel makes sense because it relieves the court of the difficult task of assessing counsel’s relative contributions,” DuBois wrote. Langer led a team that included attorneys from four Philadelphia firms — Robert LaRocca of Kohn Swift & Graf; Eugene A. Spector of Spector Roseman & Kodroff; Roberta D. Liebenberg and Donald L. Perelman of Fine Kaplan & Black; and Martin I. Twersky of Berger & Montague; along with Michael Freed of Much Shelist Freed Denenberg Ament & Rubenstein in Chicago; Joseph Goldberg of Freedman Boyd Daniels Hollander Goldberg & Cline in Albuquerque, N.M.; and W. Joseph Bruckner of Lockridge Grindal Nauen in Minneapolis. DuBois found that while more than 200 lawyers’ names appeared on bills over the years, a core group of 61 lawyers handled most of the work. Langer, who served as liaison counsel, and LaRocca, who managed many of the discovery issues, each logged more than 2,500 hours. Six other lawyers logged between 1,000 and 2,000 hours; another 17 lawyers showed between 500 and 1,000 hours; and 36 lawyers had logged more than 100 but less than 500 hours, DuBois noted. Most of DuBois’ opinion is devoted to analyzing the fee request under a test established by the 3rd U.S. Circuit Court of Appeals in its 2000 decision in Gunter v. Ridgewood Energy Corp. The Gunter decision instructed trial judges to consider seven factors when deciding the size of the fee to be awarded in a class action settlement: � The size of the fund created and the number of persons benefited. � The presence or absence of substantial objections by members of the class to the settlement terms and/or the fees requested by counsel. � The skill and efficiency of the attorneys involved. � The complexity and duration of the litigation. � The risk of nonpayment. � The amount of time devoted to the case by plaintiffs’ counsel. � Awards in similar cases. DuBois concluded that each of the Gunter factors weighed in favor of approving the request in full. “The fact that numerous courts have approved settlements where the percent of damages was substantially lower than in this case provides objective evidence that the settlements are highly favorable,” DuBois wrote. With settlements totaling $202.5 million, DuBois noted that the Linerboard litigation is the sixth largest reported antitrust settlement according to a recent survey of all class actions between 1972 and 2003. DuBois also found it especially remarkable that none of the class members filed objections to the fee request. “While in some cases a lack of objections may reflect the absence of counsel or unfamiliarity with the legal system, in this case class members are represented by counsel. Further, the classes in this cases include many of the largest corporations in America — entities that are hardly unfamiliar with civil litigation,” DuBois wrote. In a lengthy section of the opinion, DuBois focused on the Gunter factor relating to “skill and efficiency of the attorneys involved,” and concluded that the case was exceedingly well managed and that the settlement negotiations were handled with true finesse. “Throughout every phase of the litigation petitioners managed a major discovery effort, managed on a day-to-day basis by Martin Twersky and Robert LaRocca. In terms of document discovery alone, defendants produced more than 430 boxes of documents containing more than one million pages of records,” DuBois wrote. The plaintiffs began by striking an initial “icebreaker” settlement of $8 million with two defendants, Temple-Inland Inc. and Gaylord Container Corp. By securing the cooperation of those two defendants, DuBois said, the plaintiffs were able to secure much larger sums from the remaining defendants After a $68 million settlement was struck with three defendants — Weyerhaeuser Co., International Paper Co. and Georgia-Pacific Corp. — the plaintiffs ended the case by striking deals with the final three. Smurfit-Stone Container Corp. paid $92.5 million and Packaging Corp. of America and Tenneco Inc. paid $34 million. DuBois also found that the plaintiffs faced significant obstacles to success, including a lengthy battle over the threshold question of class certification. After DuBois certified the class, the defendants appealed and hired attorney Kenneth Starr, a former U.S. solicitor general and a former judge of the U.S. Court of Appeals for the D.C. Circuit, to argue that the decision violated the U.S. Supreme Court’s 1977 decision in Illinois Brick v. Illinois. In Illinois Brick, the Supreme Court ruled that only a “direct purchaser,” and not others in the chain of manufacturing or distribution, is a party “injured in his business or property” within meaning of the Clayton Act. But the 3rd Circuit held that DuBois was correct in finding that the Linerboard case qualified for the exception to Illinois Brick announced by the 3rd Circuit in its 1978 decision in In re Sugar Industry Antitrust Litigation. In the Sugar case, the 3rd Circuit held that if plaintiffs purchased items that incorporated a price-fixed item obtained directly from the producer, suit was not barred by Illinois Brick. But DuBois noted that the Sugar decision “addressed only the issue of individual standing, and not class standing, under Illinois Brick.” On appeal, the defendants argued that the Sugar exception should not apply because the tracing of damages from one level to another complicated proof of impact and damages such that class proceedings were impracticable. Both DuBois and the 3rd Circuit disagreed. In one of his final sections, DuBois refused to follow a growing trend to reduce attorney fees in so-called “mega-cases” where massive settlements lead to huge fee requests. Instead, DuBois opted to follow the counter-trend in which some judges have held that the fee percentage should remain the same no matter how large the fund because a reduced percentage merely serves to punish success and efficiency. “One might argue that a fee award of 30 percent of settlements in excess of $200 million is excessive given the absolute figure, approximately $60 million, that such an award produces. The court rejects that thinking in this case because the highly favorable settlement was attributable to the petitioners’ skill and it is inappropriate to penalize them for their success,” DuBois wrote.

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