The law firm of Schlichter, Bogard & Denton LLP is back in court – challenging a district court’s decision on awarding fees in an excessive fee case.
The firm is looking to collect $964,212 in fees to consultants and expert witnesses in the case of Tibble v. Edison – a case that over the course of more than a decade went all the way to the U.S. Supreme Court, netting a $13.2 million settlement for the plaintiffs in the case.
The issue here, according to an appeal filed in the 9th U.S. Circuit Court of Appeals, is that “ERISA does not allow plaintiffs to shift those expenses to the defendants who breached their fiduciary duties” – and, by refusing to authorize those expenses as part of the settlement, the plaintiffs’ law firm will have to pay those fees out of its own pocket.
Crucial or Indispensable
The appeal (Tibble v. Edison Int’l., 9th Cir., No. 18-55974, appellant’s opening brief 10/29/18) claims that the district court “abused its discretion by applying the incorrect legal standard,” specifically in allowing on expert witness fees that were deemed “crucial or indispensable to the successful claim.” A determination that the Schlichter firm says amounts to “…ignoring the undisputed facts that showed these experts were necessarily critical to pursuing this case involving complex financial and retirement industry issues and were actual expenses incurred by the class representatives and Class Counsel…”.
The district court made that determination, according to the appeal, because it reasoned that the plaintiffs had “succeeded minimally on only part of one of ten of their claims.” The appeal claims that the district court “found that because Plaintiffs had offered “no evidence regarding which, if any, expert’s work was ‘crucial or indispensable’ to the share class claim,” Plaintiffs had “not met their burden to show that any of their expert work was ‘crucial or indispensable’ to the share class claim and properly reimbursable out of the class’s recovery.”
Schlichter took issue with the district court’s assertion that it “did not rely on any particular expert’s conclusions” in reaching its decision in favor of plaintiffs at trial, noting that plaintiffs “provided 12 pages of explanation of the work that each expert provided to the prosecution of this case and the fact that two of those experts testified in the trials that led to the $13.2 million judgment and were relied on by the district court in its findings of fact and conclusions of law.”
That, and “…even though not a single member of this class of 20,000 Plan participants and beneficiaries objected to payment of the fees after notice.
“A contrary rule would require class attorneys to bear all of the risk that a claim may prove unsuccessful, thus discouraging counsel from agreeing to handle difficult cases in which recovery is uncertain,” Schlichter said.
In class action suits, plaintiffs’ attorneys generally receive a fee whose amount is contingent on the amount of the verdict or settlement – frequently about a third. While most of the excessive fee suits brought to date haven’t made it to trial, a number have settled, some just before going to trial.