Anthem Lawyers Defending Their Fees Say Objector Has Conflict of Interest
The objector, Adam Schulman, is an attorney at the Competitive Enterprise Institute's Center for Class Action Fairness, where Ted Frank, a known class action critic, is the director.
May 23, 2018 at 05:52 PM
6 minute read
The original version of this story was published on The Recorder
Plaintiffs attorneys defending a $38 million fee request in the Anthem data breach settlement lashed out at an objector for having a conflict of interest because he works for his own lawyer, Ted Frank, a known class action critic.
The objector, Adam Schulman, is an attorney at the Competitive Enterprise Institute's Center for Class Action Fairness, where Frank is the director. In objecting to the fee request, Schulman successfully asked for a special master, whose report last month lopped off $9 million from the request due to potentially duplicative billing and inflated rates for 33 contract attorneys.
Both Schulman and the plaintiffs attorneys objected to the report. In a response filed Monday to Schulman's objection, plaintiffs attorneys defended their billing rates and insisted that case law backed up their fee request, which is 33 percent of the $115 million fund. But they also said Schulman's continued objections were based on his group's ideological agenda, not the interests of class members.
“In this case, the private interests of Schulman, his attorney (Frank), and the Competitive Enterprise Institute conflict with the interests of the class,” plaintiffs attorneys wrote. “An independent, adequate objector or objector's counsel is obligated to weigh the value to the class of providing immediate relief against the risks and delays to the class of further litigation. But this objector and his attorney are conflicted and cannot fairly and adequately speak for the class.”
In an email, Frank wrote: “It's a frivolous argument and a sign of desperation that half of their brief is taken up with ad hominems.”
U.S. District Judge Lucy Koh has set a hearing for June 14.
The filing is the latest to address special master James Kleinberg's report. Koh, in San Jose, California, appointed Kleinberg, a retired Santa Clara County Superior Court judge, as special master after stating she was “deeply disappointed” that lead plaintiffs attorneys had brought in an additional 49 plaintiffs law firms on the case. Eve Cervantez of Altshuler Berzon and Andrew Friedman of Cohen Milstein Sellers & Toll were co-lead counsel in the case, while Eric Gibbs of Girard Gibbs and Michael Sobol of Lieff Cabraser Heimann & Bernstein served as members of the plaintiffs steering committee.
In their response, plaintiffs attorneys insisted that, despite numerous academic reports to the contrary, some judges in settlements of more than $100 million have not lowered the percentage of the fund on which fee awards are based.
Brian Fitzpatrick, a professor at Vanderbilt University Law School, whose own academic research often gets cited in disputes over fees in class action settlements, said there are good reasons to depart from that precedent.
“I think it is a mistake to follow this practice—it is not supported by economic theory, but only, as far as I can tell, some sort of concern with public perception,” he wrote in an email.
Plaintiffs attorneys added that Schulman and Frank have financial and professional interests that pose conflicts of interest in their continued objection to the fees. Just as named plaintiffs cannot be employees of their attorneys in a class action, such protections should govern Schulman's relationship to his lawyer, they wrote. They noted that attorneys at Frank's group have filed at least 24 objections in which an employee or board member of the Competitive Enterprise Institute was their client.
“It is little wonder, then, that in lambasting the special master, Schulman and Frank continue to ask the court to penalize plaintiffs' counsel, even though the special master, while disagreeing with certain aspects of plaintiffs' fee request, found no misconduct,” they wrote.
In his email, Frank brushed off the conflict claims.
“As evidence of our 'ideological conflict' they cite over a dozen cases we won, with tens of millions of dollars of additional benefit to the class, plus one where the Supreme Court granted certiorari for the October 2018 term,” he wrote. “We face personal attacks in about 90% of our objections. Until courts start sanctioning such behavior, I imagine we'll keep seeing that sort of abuse.”
Plaintiffs lawyers in other cases have raised similar criticisms about Frank's organization or Frank, who has also objected on behalf of himself in some cases. In the $5.5 million class action settlement with Google over privacy issues relating to the use of cookies, for instance, plaintiffs attorneys said Frank and his group were “engaged in a public crusade against class actions” with financial contributions from numerous corporations.
And in a $10.8 million class action settlement with a retailer that does business as Wines 'Til Sold Out, plaintiffs attorney James Cecchi of Carella, Byrne, Cecchi, Olstein, Brody & Agnello in Roseland, New Jersey, insisted that conservative donors have allowed Frank and the Competitive Enterprise Institute “to make a career out of carpet-bombing class action settlements.” In an interview, Schulman said at the time: “It's a function that we're jeopardizing a multimillion dollar fee from plaintiffs counsel, so they're angry. They let that anger seep into their filings.”
In that case, the U.S. Department of Justice also filed a statement of interest opposing the deal but changed its mind following some revisions to the settlement. U.S. District Judge Renée Bumb in New Jersey ultimately rejected the settlement, citing too many unanswered questions.
In the Anthem case, Frank filed his own response on Monday on behalf of Schulman that continued to argue the $360 per hour charged for contract attorneys in the fee request, which the special master reduced to $156, was far beyond the market rates. He again cited a separate special master's report, a redacted version of which is due May 31, in class action settlements with State Street in which the rates of contract attorneys, including three who also were in the Anthem case, were at issue. The special master in that request reviewed a $75 million fee request by Lieff Cabraser and two other plaintiffs firms for potential overbilling.
He insisted that other judges would have reduced the fee award to between 10 percent and 20 percent of the settlement fund and attacked a declaration filed by plaintiffs' expert William Rubenstein, a Harvard Law School professor tasked last year with reviewing a $112.5 million fee request in the NFL concussion case.
“Rubenstein merely does what lawyers do every day in our common law legal system: compare this case with previous cases to argue that plaintiffs' request complies with the law,” he wrote.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllTravis Lenkner Returns to Burford Capital With an Eye on Future Growth Opportunities
Legal Speak's 'Sidebar With Saul' Part V: Strange Days of Trump Trial Culminate in Historic Verdict
1 minute readLegal Speak's 'Sidebar with Saul' Part IV: Deliberations Begin in First Trump Criminal Trial
1 minute readJosh Partington of Snell & Wilmer Is in Fact a Rock Star in the Office (and Out of It)
1 minute readTrending Stories
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250