Case 5:16-cv-10444-JEL-MKM ECF No. 1548, PageID.60212 Filed 03/29/21 Page 1 of 35
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
`
`
`
`In re Flint Water Cases
`
`
`No. 5:16-cv-10444-JEL-MKM
`
`Hon. Judith Levy
`
`Mag. Mona K. Majzoub
`
`
`
`
`
`
`
`
`
`OBJECTION TO PLAINTIFFS’ MOTION FOR AN AWARD OF
`ATTORNEYS’ FEES
`
`
`
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`
`

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`Case 5:16-cv-10444-JEL-MKM ECF No. 1548, PageID.60213 Filed 03/29/21 Page 2 of 35
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`TABLE OF CONTENTS
`
`Table of Contents ................................................................................................................... ii
`
`Table of Authorities .............................................................................................................. iv
`
`Introduction ............................................................................................................................ 1
`
`Argument ................................................................................................................................. 2
`
`I.
`
`Objectors are class members and intend to appear through pro bono
`counsel at the fairness hearing. .................................................................................. 4
`
`II.
`
`The Court owes a fiduciary duty to unnamed class members. .............................. 5
`
`III. The Court should invite defendants to comment on the fee request. ................. 5
`
`IV. The fee request does not comply with Rule 23(h) procedurally. .......................... 6
`
`A.
`
`B.
`
`C.
`
`Counsel does not and cannot say the amount of fees that will be
`awarded for common benefit work under the fee request. ........................ 7
`
`Class members who file their own claims should not be penalized
`with higher common benefit fees than private counsel might have
`reasonably charged. ......................................................................................... 8
`
`The fee request fails to disclose how common benefit fees will be
`allocated through fee-sharing agreements, which Co-Liaison
`counsel correctly observed hinders the court’s “obligation to
`conduct mass tort proceedings in a fair and efficient manner.” .............. 11
`
`V.
`
`Plaintiffs’ $202.76 million fee request violates Rule 23(h) substantively. .......... 12
`
`A.
`
`B.
`
`C.
`
`31.6% is not a reasonable percentage of $642 million. ............................. 13
`
`Plaintiffs ask the court to endorse a high ceiling on individual
`awards to pay tens of millions of dollars of without providing any
`detail whatsoever about the reasonableness of these fees. ....................... 17
`
`Class and Liaison Counsel propose to pay themselves based on
`gross awards, which dampens incentives to control administration
`costs, and which may run afoul of Mich. Ct. R. 8.121(C). ....................... 18
`
`
`
`ii
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`VI. A cross-check is necessary, and the poorly-documented claimed lodestar
`cannot be the basis of fees. ...................................................................................... 21
`
`A.
`
`Co-Liaison Counsel swore under oath that non-common benefit
`work was misclassified, and the record does not show otherwise. ......... 22
`
`B.
`
`The claimed lodestar includes wildly inflated rates from some firms. .... 23
`
`VII. Plaintiffs have also failed to demonstrate the reasonableness of
`their costs. .................................................................................................................. 25
`
`Conclusion ............................................................................................................................. 25
`
`Certificate of Service ............................................................................................................ 28
`
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`iii
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`Case 5:16-cv-10444-JEL-MKM ECF No. 1548, PageID.60215 Filed 03/29/21 Page 4 of 35
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`
`
`TABLE OF AUTHORITIES
`
`Cases
`In re “Agent Orange” Prod. Liab. Litig.,
`818 F.2d 216 (2d Cir. 1987) ..................................................................................... 11
`
`In re Anthem, Inc. Data Breach Litig.,
`2018 WL 11195115 (N.D. Cal. Feb. 2, 2018) ........................................................ 11
`
`In re Anthem Inc. Data Breach Litig., 2018 WL 3960068,
`2018 U.S. Dist. LEXIS 140137 (N.D. Cal. Aug. 17, 2018) ............................ 16, 23
`
`Banas v. Volcano Corp.,
`47 F. Supp. 3d 957 (N.D. Cal. 2014) ...................................................................... 24
`
`Becerra-South v. Howroyd-Wright Empl. Agency, Inc., 2021 WL 606245,
`2021 U.S. Dist. LEXIS 14633 (C.D. Cal. Jan. 25, 2021) ...................................... 20
`
`Bowling v. Pfizer, Inc.,
`102 F.3d 777 (6th Cir. 1996) ........................................................................ 11, 14, 21
`
`In re Cardinal Health Inc. Secs. Litig.,
`528 F. Supp. 2d 752 (S.D. Ohio 2007) ................................................................... 20
`
`In re Cardizem CD Antitrust Litig.,
`218 F.R.D. 508 (E.D. Mich. 2003) .......................................................................... 15
`
`In re Chinese-Manufactured Drywall Prods. Liab. Litig.,
`424 F. Supp. 3d 456 (E.D. La. 2020) ...................................................................... 14
`
`In re Citigroup Inc. Secs. Litig.,
`965 F. Supp. 2d 369 (S.D.N.Y. 2013) ............................................................... 14, 23
`
`In re Citigroup Inc. Bond Litig.,
`988 F. Supp. 2d 371 (S.D.N.Y. 2013) ........................................................... 5, 13, 14
`
`Dial Corp. v. News Corp.,
`317 F.R.D. 426 (S.D.N.Y. 2016) ............................................................................. 24
`
`In re Diet Drugs Prods. Liab. Litig.,
`401 F.3d 143 (3d Cir. 2005) .................................................................................... 11
`
`
`
`iv
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`In re Dry Max Pampers Litig.,
`724 F.3d 713 (6th Cir. 2013) ................................................................................ 5, 16
`
`In re Facebook Biometric Info. Privacy Litig., No. 15-cv-03747-JD,
`2021 U.S. Dist. LEXIS 36801 (N.D. Cal. Feb. 26, 2021) .................................... 14
`
`Fraley v. Facebook, Inc.,
`2014 WL 806072 (N.D. Cal. Feb. 27, 2014) .......................................................... 20
`
`Geier v. Sundquist,
`372 F.3d 784 (6th Cir. 2004) .................................................................................... 10
`
`Goldberger v. Integrated Resources, Inc.,
`209 F.3d 43 (2d Cir. 2000) ......................................................................................... 5
`
`Hensley v. Eckerhart,
`437 U.S. 424 (1983) ................................................................................................... 21
`
`In re Indymac Mortgage-Backed Secs. Litig.,
`94 F. Supp. 3d 517 (S.D.N.Y. 2015) ....................................................................... 14
`
`Keener v. Department of Army,
`136 F.R.D. 140 (M.D. Tenn. 1991) ......................................................................... 21
`
`Kmiec v. Powerwave Tech.,
`2016 WL 5938709 (C.D. Cal. Jul. 11, 2016) .......................................................... 20
`
`McKenzie Constr., Inc. v. Maynard,
`758 F.2d 97 (3d Cir. 1985) ....................................................................................... 17
`
`McLaughlin v. IDT Energy,
`2018 WL 3642627 (E.D.N.Y. July 30, 2018) ......................................................... 16
`
`In re Mercury Interactive Corp. Secs. Litig.,
`618 F.3d 988 (9th Cir. 2010) ............................................................................ 5, 6, 11
`
`In re NASDAQ Market-Makers Antitrust Litig.,
`187 F.R.D. 465 (S.D.N.Y. 1998) ............................................................................. 13
`
`In re Nat’l Prescription Opiate Litig.,
`956 F.3d 838 (6th Cir. 2020) ...................................................................................... 8
`
`In re Nat’l Prescription Opiate Litig.,
`976 F.3d 664 (6th Cir. 2020) ...................................................................................... 9
`
`
`
`v
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`
`New York State Teachers’ Ret. Sys. v. GM Co.,
`315 F.R.D. 226 (E.D. Mich. 2016) .......................................................................... 14
`
`In re NFL Players, 2018 WL 1658808,
`2018 U.S. Dist. LEXIS 57792 (E.D. Pa. Apr. 5, 2018) ............................... 8, 15-16
`
`In re Oil Spill, 2012 WL 2236737,
`2012 U.S. Dist. LEXIS 83214 (E.D. La. Jun. 15, 2012) ............................. 8, 15, 17
`
`In re Packaged Ice Antitrust Litig.,
`2011 WL 6209188 (E.D. Mich. Dec. 13, 2011) ..................................................... 15
`
`Pearson v. NBTY, Inc.,
`772 F.3d 778 (7th Cir. 2014) .................................................................................... 19
`
`In re Polyurethane Foam Antitrust Litig.,
`2016 U.S. Dist. LEXIS 156339 (N.D. Ohio. Oct. 24, 2016) ............................... 25
`
`In re Polyurethane Foam Antitrust Litig.,
`168 F. Supp. 3d 985 (N.D. Ohio. 2016) ................................................................. 23
`
`Rawlings v. Prudential-Bache Properties, Inc.,
`9 F.3d 513 (6th Cir. 1993) .......................................................................................... 5
`
`In re Royal Ahold NV Secs. & ERISA Litig.,
`461 F. Supp. 2d 383 (D. Md. 2006) ........................................................................ 13
`
`Seijas v. Republic of Arg.,
`2017 WL 1511352 (S.D.N.Y. Apr. 27, 2017)......................................................... 20
`
`Shane Grp., Inc. v. Blue Cross Blue Shield,
`825 F.3d 299 (6th Cir. 2016) .................................................................................... 24
`
`Stetson v. Grissom,
`821 F.3d 1157 (9th Cir. 2016) .................................................................................. 17
`
`Teachers’ Ret. Sys. v. A.C.L.N., Ltd.,
`2004 U.S. Dist. LEXIS 8608 (S.D.N.Y. May 14, 2004) .................................. 19-20
`
`In re Telik, Inc. Sec. Litig.,
`576 F. Supp. 2d 570 (S.D.N.Y. 2008) ..................................................................... 24
`
`United Slate, Local 307 v. G & M Roofing & Sheet Metal Co.,
`732 F.2d 495 (6th Cir. 1984) .................................................................................... 21
`
`
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`United States ex rel. Palmer v. C&D Techs., Inc.,
`2017 WL 1477123 (E.D. Pa. Apr. 25, 2017) .......................................................... 24
`
`Virginia House of Delegates v. Bethune-Hill,
`139 S. Ct. 1945 (2019) .............................................................................................. 17
`
`In re Volkswagen & Audi Warranty Extension Litig.,
`89 F. Supp. 3d 155 (D. Mass. 2015) ....................................................................... 20
`
`Wells Fargo Sec. Litig.,
`157 F.R.D. 467 (N.D. Cal. 1994) ............................................................................ 20
`
`
`Rules and Statutes
`
`Fed. R. Civ. P. 23(e)(5)(A) ..................................................................................................... 4
`
`Fed. R. Civ. P. 23(h) .............................................................................. 3, 6, 9, 11, 12, 15, 17
`
`Fed. R. Civ. P. 23(h)(1) .................................................................................................... 9, 11
`
`Fed. R. Civ. P. 23(h)(2) ........................................................................................................ 17
`
`Mich. Ct. R. 8.121(B) ............................................................................................................. 3
`
`Mich. Ct. R. 8.121(C) ........................................................................................... 3, 13, 18, 19
`
`Other Authorities
`
`Theodore Eisenberg & Geoffrey P. Miller,
`Attorney Fees and Expenses in Class Action Settlements: 1993–2008,
`7 J. EMPIRICAL LEGAL STUD. 248, 263 (2010) .................................................. 13-14
`
`Federal Judicial Center,
`MANUAL FOR COMPLEX LITIGATION—FOURTH 188–89 (2004) ........................ 14
`
`Brian T. Fitzpatrick, An Empirical Study of Class Action Settlements and Their Fee
`Awards, 7 J. EMPIRICAL LEGAL STUD. 811 (2010) ................................................. 14
`
`
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`Case 5:16-cv-10444-JEL-MKM ECF No. 1548, PageID.60219 Filed 03/29/21 Page 8 of 35
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`INTRODUCTION
`Plaintiffs’ fee motion (“Motion,” ECF No. 1458) seeks up to $202.76 million, an
`extraordinary 31.6% of the common benefit fund. PageID.57192. The Motion includes
`scant detail about the claimed common benefit work, does not even estimate what the
`common benefit fees might amount to, and provides absolutely no evidence that ceding
`27% of claimants’ recovery to private attorneys for work sight unseen could possibly
`be fair to Flint residents who need this money to help them grapple with oft-debilitating,
`ruinous, and violent consequences of lead exposure for their entire lives. In megafund
`settlements of this size involving classes with wealthier shareholders or businesses,
`typical fee awards are in the 10 to 12% range, under half of what attorneys seek here.
`The scant detail and undisclosed fee sharing behind the Motion were harshly
`condemned by none other than Co-Liaison Counsel (collectively “Liaison Counsel”)
`and Co-Lead Class Counsel (collectively “Class Counsel”) in this very litigation.
`Allowing firms to dole out common benefit work on the basis of undisclosed fee
`sharing agreements is indeed “detrimental to both the class and individual litigants.”
`ECF No. 444-2 (Shkolnik Decl.), PageID.14140. Similarly, ceding money to attorneys
`based upon mass client sign-ups only advantages “the attorney who will garner a
`percentage of the award based on the retainer agreement.” ECF No. 404 (Class
`Counsel’s Motion for Replacement of Co-Liaison Counsel), PageID.13292. Class and
`Liaison Counsel were both right! But it appears they set aside their demands for rigor
`and scrutiny because they have jointly agreed to take more from claimants. The Court
`must act as a fiduciary to protect the interests of absent class members and Minors who,
`although not class members, realistically have no better chance to recover against the
`settling defendants than this partial settlement.
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`1
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`ARGUMENT
`Preliminarily, the Court should solicit defendants’ response to the Motion, which
`is permitted if and only if the Court asks. See Settlement, PageID.54160.
`Plaintiffs’ Motion weds three distinct components of the fee request that total
`up to $202.8 million or 31.6% as Plaintiffs admit (ECF No. 1458, PageID.57192):
`
`1. A Common Benefit Assessment (“CBA”) on the whole fund at 6.33% for
`common benefit work performed at the directed of Class or Liaison
`Counsel for common benefit. Id., PageID.57159.
`2. A cap on contingency fees to individually-retained counsel (“IRC”): 27%
`for counsel retrained prior to July 16, 2020, and 10% if after this date. Id.,
`PageID.57160.
`3. For unrepresented class members, an additional 27% assessment paid to
`Class and Liaison Counsel, and for claimants represented after July 16, an
`extra 17% assessment. Id.
`The Hall Objectors only disagree with the rates proposed by the first two
`provisions, not their structure. Courts can appropriately assess common benefit fees to
`be paid evenly by all claimants, and the Court should cap IRC fees to avoid private
`windfalls on the backs of class members who are entitled to straightforward
`compensation under the Settlement. Objectors simply contend the cap should be lower.
`But Objectors strenuously object to the very existence of the third category of
`assessments, which the Motion muddles with normal (“global”) CBA assessments. For
`the sake of clarity, this objection will call the “common benefit” fees taxed only on
`unrepresented or late-represented class member awards “Special Assessments.”
`These Special Assessments are based on the retention status and individual awards of
`thousands of claimants. Plaintiffs effectively seek an extra common benefit fee of
`unknown size. The Court cannot assure the fairness of an indeterminant fee award.
`Moreover, the Special Assessments unfairly treat claimants in the settlement.
`None of the settlements cited by Plaintiffs include such a feature, and it strikes Hall
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`Objectors as unjustified and punitive to charge vastly higher “common benefit”
`assessments to claimants who navigate the claims process without counsel, or who do
`so with late-retained counsel like the Objectors. Effectively, the Special Assessments
`treat these claimants as if they had chosen to retain individual counsel, when in reality
`they obtained no such individual services.
`The Hall Objectors further object to the Motion’s request for the Court to
`delegate its Rule 23(h) duty by allowing these firms to apportion fees among themselves,
`in secret and without judicial involvement. Co-Liaison Counsel appropriately objected
`to this practice, but apparently now given comparable authority, they hold their tongue.
`Independently, the fee request is simply excessive no matter how it gets allocated.
`In a class action settlement, a typical fee award for a $641.25 million fund would be
`about 10-12%. While this settlement is not strictly a class action settlement, Plaintiffs
`are incorrect that MDLs regularly approve fees this high. In other cases with IRC fee
`caps, many claimants never pay such fees because they need not retain an attorney, but
`here Plaintiffs propose to make unrepresented class members pay Special Assessments
`as if they had hired the most expensive attorneys available. Plaintiffs provide no data to
`suggest that a 27% would not provide a windfall to IRC. Finally, given the expenses yet
`to be paid in this case, Plaintiffs’ 31.6% total fee request may not even comply with
`Mich. Ct. R. 8.121(B) & (C), which limits the ethical capture of attorneys’ fees to one
`third next expenses, whereas Plaintiff’s Motion seeks fees on gross amounts.
`Plaintiff’s submitted billing information is deficient for the purposed of lodestar
`check because does not allow class members to review claimed hours to ensure they
`were directed toward common benefit. That said, in its limited review CCAF
`determined that Napoli Shkolnik has claimed a large amount of billing—up to $11.4
`million of its $16 million application—based on billing ~$40/hour contract attorneys
`as $500/hour “associates.”
`The repercussions of the fee award will echo for decades. While attorneys
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`deserve to be paid for their work, the Court’s fiduciary duty to class members and Minor
`claimants requires a close look at the fee award, including hourly billing and fee sharing
`agreements that Liaison and Class Counsel does not disclose.
`Fortunately, scrutiny of the fees need not hold up Settlement administration.
`Should the Court approve the underlying Settlement,1 the Court may hold over the
`Motion to resolve a clearer picture of what the fee request actually entails. The
`administrator does not anticipate sending checks until early 2022. Formulating a just fee
`award need not delay justice to Flint residents.
`I.
`
`Objectors are class members and intend to appear through pro bono
`counsel at the fairness hearing.
`As discussed in their attached declarations, Objectors Hall, Hempel, and
`Jankowiak (the “Hall Objectors”) are members of the settlement class with standing to
`object. The Hall Objectors bring this objection through CCAF in good faith to protect
`the interests of the entire class under Rule 23(e)(5)(A). The Hall Objectors also object
`for the common benefit of non-class member claimants like their children. See
`Settlement, PageID.54184 (“Claimants” may object). Each Hall Objector adopts any
`other objections not inconsistent with this one.
`Hamilton Lincoln Law Institute’s Center for Class Action Fairness (“CCAF”)
`represents the Hall Objectors pro bono and will not seek attorneys’ fees for its work here.
`Declaration of Theodore H. Frank ¶ 34. Objections brought through CCAF’s assistance
`have recovered over $200 million dollars for class members by persuading courts to
`reduce excessive fee requests or by driving settling parties to reach improved
`settlements. Id. ¶ 7. CCAF’s M. Frank Bednarz intends to appear at the fairness hearing.
`
`
`1 The Hall Objectors take no position on approval of the underlying settlement.
`No evidence suggests that Class and Liaison Counsel did not have every incentive to
`maximize total recovery. They should be paid for their work—just not overpaid. See
`Declaration of M. Frank Bednarz (“Bednarz Decl.”), ¶ 11.
`
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`II. The Court owes a fiduciary duty to unnamed class members.
`A district court must act as a “fiduciary for the class,” “with a jealous regard” for
`the rights and interests of such absent class members. In re Mercury Interactive Corp. Secs.
`Litig., 618 F.3d 988, 994-95 (9th Cir. 2010) (cleaned up). The fiduciary role is necessary
`because “[i]n class-action settlements, the adversarial process—or … ‘hard fought’
`negotiations—extends only to the amount the defendant will pay, not the manner in
`which that amount is allocated between the class representatives, class counsel, and
`unnamed class members.” In re Dry Max Pampers Litig., 724 F.3d 713, 718 (6th Cir. 2013).
`“The interest of class counsel in obtaining fees is adverse to the interest of the class in
`obtaining recovery because the fees come out of the common fund set up for the
`benefit of the class.” Rawlings v. Prudential-Bache Properties, Inc., 9 F.3d 513, 516 (6th Cir.
`1993). Encompassed within this fiduciary duty is “the Court’s responsibility to avoid
`awarding plaintiffs’ counsel a ‘windfall’ at the expense of the class—a special concern
`where ‘the recovered fund runs into the multi-millions.’” In re Citigroup Inc. Bond Litig.,
`988 F. Supp. 2d 371, 374 (S.D.N.Y. 2013) (quoting Goldberger v. Integrated Resources, Inc.,
`209 F.3d 43, 52 (2d Cir. 2000)).
`III. The Court should invite defendants to comment on the fee request.
`Under the Settlement, “Defendants will take no position with respect to any
`application … for an award of attorneys’ fees, and reimbursement of costs”—“Unless
`requested to do so by the Federal Court.” PageID.54160 (emphasis added). The
`Court should make this request. While defendants sometimes do not have any incentive
`to scrutinize common fund fee requests, at least the Attorney General has indicated an
`interest in taking a formal position on the Motion. See Paul Egan, Concerns mount over
`attorneys fees in Flint Water settlement. Here’s why, DETROIT FREE PRESS (Mar. 23, 2021)
`(quoting Dana Nessel: “For a case of this nature, and a settlement of that nature, is that
`a very high number? I would suggest it seems like it”), attached as Bednarz Ex. 1.
`
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`5
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`Case 5:16-cv-10444-JEL-MKM ECF No. 1548, PageID.60224 Filed 03/29/21 Page 13 of 35
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`IV. The fee request does not comply with Rule 23(h) procedurally.
`Plaintiffs’ Motion violates Rule 23(h) because neither it nor the Settlement
`identifies how the attorney fee award will be allocated among the plaintiffs’ firms.
`Rule 23(h) authorizes the Court to award “reasonable” attorneys’ fees only when notice
`of the fee request is “directed to class members in a reasonable manner.” Fed. R. Civ.
`P. 23(h), (h)(1). It is not sufficient that class members are able to make “generalized
`arguments about the size of the total fee”; the notice must enable them to determine
`which attorneys seek what fees for what work. Mercury Interactive., 618 F.3d at 994. The fee
`request fails to provide this basic information and thus undermines Rule 23(h)’s policy
`of “ensur[ing] that the district court, acting as a fiduciary for the class, is presented with
`adequate, and adequately-tested, information to evaluate the reasonableness of a
`proposed fee.” Id.
`There are several stark deficiencies in the fee request. First, because of the
`variable nature of Special Assessments, Plaintiffs cannot even provide an estimate of
`the amount of “common benefit” attorneys’ fees their Motion would pay. The Court
`has been asked to agree to a “common benefit” fee award that could not be known for
`many months or even years because Special Assessments depend on both the
`representation status of claimants and their ultimate gross recoveries. Without knowing
`the actual common benefit fee being requested, the Court could not possibly know it
`to be reasonable.
`Second, Special Assessments like Plaintiffs propose are a novel attempt to
`peculiarly disadvantage unrepresented claimants by robbing them of the advantages of
`a class action settlement. Through economies of scale, Class and Liaison Counsel have
`developed a settlement program that allows represented and unrepresented claimants
`to file claims with relative ease, and all claimants should pay equally for the substantial
`common benefit of this program. But unrepresented claimants ought not pay extra
`merely because they chose to forego the services and costs of an additional attorney;
`
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`6
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`they never contracted to pay such rates and ought to enjoy their common benefit at the
`same fee as represented claimants.
`Third, the Motion fails to disclose fee sharing agreements among the firms,
`which Liaison counsel appropriately flagged as a cause for concern.
`A.
`Counsel does not and cannot say the amount of fees that will be
`awarded for common benefit work under the fee request.
`The Motion seeks a global CBA of $40,591,125.00 (6.33% of the gross fund),
`but Special Assessments make the actual common benefit request impossible to
`ascertain and therefore evaluate.
`First, Plaintiffs propose to also seek 27% common benefit from the 20.5% of
`the Qualified Settlement fund allocated to adults, property owners, businesses, and
`programmatic relief. PageID.57178. According to plaintiffs, this would work out to at
`most an additional $35.493,187.50 if none of the adult subclasses had retained counsel.
`PageID.57178.2 But the amount will be significantly smaller because it appears many
`adult claimants are represented, judging by registrations reported by Liaison Counsel
`alone. ECF No. 1500. The exact amount cannot be determined because it depends on
`whether class members are entirely unrepresented or merely represented after July 16.
`The proposed common benefit award becomes completely impossible to
`estimate when it comes to minor claimants who are registered without counsel or by
`counsel retained after July 16. Awards to Minors are intentionally the largest component
`of the Settlement, and the number of unrepresented and late-retained Minor claimants
`may result in dramatically larger common benefit awards thanks to the Special
`Assessments. For example, if 20% of the awards to Minors are unrepresented and 30%
`are registered by late-retained counsel, this would result in Special Assessments of over
`
`
`2 Plaintiffs’ calculation appears to be an error or represent a difference in how
`Special Assessments are calculated compared to IRC fees. Bednarz Decl. ¶ 6.
`
`
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`7
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`Case 5:16-cv-10444-JEL-MKM ECF No. 1548, PageID.60226 Filed 03/29/21 Page 15 of 35
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`$50 million—dwarfing the global CBA.3
`No one could say what the “common benefit” fees in this case might be, because
`it depends on the representation status of claimants (undisclosed) and the amount these
`claimants ultimately receive, which will not be known for many months—and years in
`the case of the Future Minor Sub-Qualified Settlement Fund. The Hall Objectors
`respectfully submit that the Court cannot ensure the reasonableness of a fee award
`under Rule 23(h) when the size of the award is unknown and currently unknowable.
`B.
`Class members who file their own claims should not be penalized
`with higher common benefit fees than private counsel might have
`reasonably charged.
`Independently, the Hall Objectors object to the Special Assessments imposed on
`claimants and class members, who are effectively penalized for not retaining an attorney
`(or for retaining an attorney too late). Contrary to Plaintiffs, Special Assessments are
`not “consistent with the law and equitable principles,” because all claimants do not
`“contribute an equal pro rata share to Plaintiffs’ Counsel’s fees.” PageID.57160.
`Objectors are unaware of any class action settlement with this kind of penalty.
`The closest antecedents to this Settlement—cases that at once resolved class and
`individual personal injury claims—are perhaps the BP oil spill and NFL concussion
`settlements. Individual attorneys’ fees were capped in both cases, but in neither did the
`courts impose an extra assessment on unrepresented claimants. See In re Oil Spill, 2012
`WL 2236737, 2012 U.S. Dist. LEXIS 83214 (E.D. La. Jun. 15, 2012); In re NFL Players,
`2018 WL 1658808, 2018 U.S. Dist. LEXIS 57792 (E.D. Pa. Apr. 5, 2018). “MDLs are
`not some kind of judicial border country, where the rules are few and the law rarely
`makes an appearance.” In re Nat’l Prescription Opiate Litig., 956 F.3d 838, 844 (6th Cir.
`2020). Rule 23 too, “limits judicial inventiveness” and the inequitable Special
`
`3 $641.25 million x 0.9367 (after global assessment) x 0.795 (fund for minors) x
`((0.27 x 0.2) + (0.17 x 0.3)) = $50.14 million.
`
`
`
`8
`
`

`

`Case 5:16-cv-10444-JEL-MKM ECF No. 1548, PageID.60227 Filed 03/29/21 Page 16 of 35
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`Assessments proposed exceed the bounds of Rule 23(h). In re Nat’l Prescription Opiate
`Litig., 976 F.3d 664, 672 (6th Cir. 2020) (internal quotation omitted).
`The Special Assessments remove choice from class members and claimants,
`eliminating the key benefit of a large settlement program. Through economies of scale
`and uniformity of claim proofs, class settlements enable claimants to obtain fair
`compensation without requiring individual counsel. Three years ago, Theodore Leopold
`described the advantage of uniform resolution this way:
`
`Flint residents may in some cases be able to participate without the
`aid of an attorney. If a settlement is announced and a resident
`would like to retain an attorney there will be ample time for an
`individual to select counsel of their choice and with a fee
`arrangement which can be designed to meet the individual’s needs.
`ECF No. 479-4 (email from Leopold to Shkolnik), PageID.15163.
`The fee request largely vitiates claimants’ choice. Whether claimants made any
`choice at all, their award will be charged a 27% common benefit assessment—the same
`rate as if they had retained an attorney on a 33% contingency—and presumably also
`obtained the benefit of that attorney’s services.
`Plaintiffs offer two related excuses for the Special Assessments, but neither
`withstand scrutiny. First, Plaintiffs claim that they “fairly allocate[] [CBA fees] according
`to the extent of a particular Claimant’s reliance on common benefit work.”
`PageID.57174. Not so: every claimant relies on the common benefit the settlement
`embodies, which represented and unrepresented claimants alike rely on. Because of the
`common benefit, for example, Liaison Counsel can process thousands of registrations
`within a single day. ECF No. 1500, PageID.58203. The Special Assessment simply
`penalizes claimants who file claims themselves, and it does so at an even higher rate
`than some private attorneys would charge. While Napoli Shkolnik may have uniformly
`retained its clients at 33% fees (and even higher until Class Counsel flagged the
`problem), the record shows that at least some plaintiffs retained counsel at only 25%
`
`
`
`9
`
`

`

`Case 5:16-cv-10444-JEL-MKM ECF No. 1548, PageID.60228 Filed 03/29/21 Page 17 of 35
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`of net (not gross) recovery in 2016. See ECF No. 444-6, PageID.14232 (Flint Class
`Action Legal Team retention