Eli Lilly has withdrawn its motion for attorney fees and costs—a move that says a lot about the cost of litigation in both time and money.
You may recall that the defendants in this case are the fiduciaries of the $8.2 billion Eli Lilly plan (as well as the company itself, and the employee benefit committee and fund advisory committee), who won their case last month. More specifically, U.S. District Judge Jane Magnus-Stinson granted Eli Lilly’s motion to dismiss the suit with prejudice[i]—at least participant-plaintiff Jennifer Probst's claims against the company, its board of directors, its benefit committee and its fund advisory committee.
And then, two weeks later, the company sued for a partial recovery of its costs[ii] in defending a suit that Judge Magnus-Stinson had ruled was based on allegations that were “wholly conclusory and do nothing to identify what specific types of services comparator plans received relative to the Plan,” and that the plaintiff’s (Jennifer Probst) allegations that any difference in services provided does not affect the price of the services was “not plausible.” All in all, Judge Magnus-Stinson determined that “Ms. Probst's allegations are conclusory and do not state a plausible claim for breach of the duty of prudence.”
However, Eli Lilly had only sought a recovery of $86,000, despite commenting that a recovery of ALL their fees and costs total more than $430,000—the former apparently limited to the costs incurred as a result of the assertion of just one of the counts in the litigation.
But now they have notified the court that they are withdrawing that motion—and while it’s done without an explanation, that notification was filed on the same day that plaintiff Probst filed “notice with the Court that she waives any right to appeal or seek reconsideration of the order and judgment dismissing the Action.”
What This Means
The timing suggests that the parties felt it was better to end the matter altogether than to pursue the expense reimbursement or to pursue an appeal of the district court’s judgement. And as such, regardless of the outcome, one can’t help but be cognizant of the $430,000 that Eli Lilly estimates it spent to win the case to provide a fresh appreciation for why some have been inclined to settle, rather than contest allegations in these cases.
Are participants well-served by these pursuits? We’ll let you decide.
[i] Walcheske & Luzi LLC and Macey Swanson LLP represent Probst; Sidley Austin LLP and Barnes & Thornburg LLP represent Eli Lilly.
[ii] While this type of action seems rare in these types of cases (at least to this point), it is not without precedent. Last summer, a federal judge has affirmed a $1.5 million judgement against Schlichter Bogard & Denton LLP and Schneider Wallace Cottrell Konecky LLP for their role in bringing a “reckless” excessive fee suit.