Parker Waichman, LLP v. Arnold Levin

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 20-12100
________________________
D.C. Docket No. 1:11-cv-22408-MGC
MR. EDUARDO AMORIN, et al.,
Plaintiffs,
PARKER WAICHMAN, LLP,
MILSTEIN JACKSON FAIRCHILD & WADE, LLP,
WHITFIELD BRYSON & MASON, LLP,
MRACHECK FITZGERALD ROSE KONOPKA
THOMAS & WEISS, PA,
ROBERTS AND DURKEE PA,
LEVIN PAPANTONIO THOMAS MITCHELL
RAFFERTY PROCTOR, PA,
Interested Parties - Appellants,
versus
TAISHAN GYPSUM CO., LTD.,
f.k.a. SHANDONG TAIHE
DONGXIN CO., LTD., et al.,
Defendants,
ARNOLD LEVIN,
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STEPHEN J. HERMAN,
RICHARD J. SERPE,
PATRICK SHANAN MONTOYA,
SANDRA S. DUGGAN,
Interested Parties - Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(June 9, 2021)
Before WILSON, ROSENBAUM, and HULL, Circuit Judges.
WILSON, Circuit Judge:
I.
This appeal concerns a discrete disagreement over attorneys’ fees following
a fractured multidistrict litigation (MDL) about defective Chinese drywall. A group
of attorneys appointed by the MDL court (Class Counsel) were awarded common
benefit costs and fees by the district court. The award comes out of fees received
by another group of attorneys (Individual Counsel) who negotiated private
settlements for 497 Florida plaintiffs. 1 The order awarded Class Counsel 45% of
1
Class Counsel is a generic term that encompasses numerous attorneys involved in the
overarching litigation. For purposes of this appeal, Class Counsel includes Arnold Levin,
Stephen J. Herman, Richard J. Serpe, Patrick S. Montoya, and Sandra S. Duggan. Individual
Counsel includes the firms Parker Waichman LLP; Milstein, Jackson, Fairchild & Wade LLP;
Whitfield, Bryson & Mason LLP; Roberts & Durkee, PA; Levin Papantonio Thomas Mitchell
Rafferty Proctor PA; and Mrachek, Fitzgerald, Rose, Konopka, Thomas & Weiss P.A.
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the total fees received by Individual Counsel for the Florida Individual Settlements
(FIS). Individual Counsel appealed. Because the district court did not abuse its
discretion in awarding these fees, we affirm.
II.
This MDL arose out of thousands of complaints filed against Chinese
drywall manufacturers and other companies that were involved in the production
and sale of the drywall. The plaintiffs, primarily from Florida and Louisiana,
alleged extensive property damage and some physical ailments caused by the
defective drywall. The case was transferred to the Eastern District of Louisiana
(the MDL court) for consolidated pretrial proceedings before Judge Fallon.
In 2018, 1,734 Florida cases from the MDL were remanded to Judge Cooke
in the Southern District of Florida (SDFL) for further proceedings. Individual
Counsel subsequently negotiated an agreement with a group of defendants that
offered nearly 500 of the Florida plaintiffs an individual settlement to resolve their
claims. Class Counsel and Individual Counsel entered an agreement to litigate any
claims for common benefit fees in the SDFL. The defendants made a total payout
of more than $40 million dollars to the 497 claimants who accepted the FIS. The
claimants paid attorneys’ fees to Individual Counsel pursuant to private
contingency fee agreements.
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In August 2019, Class Counsel moved for an award of common benefit costs
and/or fees from the proceeds of the FIS. Arguing that a substantial amount of their
foundational work was used to secure the FIS, Class Counsel claimed that they
were entitled to 20% of the total settlement. Individual Counsel opposed the
motion, arguing that Class Counsel was not entitled to any fees or costs from the
FIS.
Meanwhile, the MDL court approved a global settlement between the same
defendants and the remaining class members in January of 2020. The plaintiffs
involved in the FIS were not a part of this settlement. The MDL court awarded
Class Counsel 60% of the fees obtained in the global settlement.
Back in the SDFL, Class Counsel amended their award motion to request
60% of the attorneys’ fees of the FIS—consistent with the MDL court’s award. In
May 2020, the district court partially granted Class Counsel’s amended motion for
a common benefit award. The district court found that the settling claimants
benefitted from Class Counsel’s work in the MDL court and in the global
settlement.2 Accordingly, the district court awarded Class Counsel 45% of all fees
obtained by Individual Counsel. Individual Counsel appealed.
2
The FIS included a Most Favored Nations (MFN) clause that would have increased each
plaintiff’s payout if a more valuable settlement were reached with any other Florida class
plaintiff. The MFN clause ultimately increased the FIS plaintiffs’ recovery by more than $12
million.
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III.
We have jurisdiction over this appeal pursuant to the collateral order
doctrine as the amount of the disputed fees is fixed, the district court’s allocation of
that amount is completely separate from the merits of the underlying action, and
the appeal is unaffected by further district court proceedings.3 See Cohen v.
Beneficial Indus. Loan Corp., 337 U.S. 541, 546–47 (1949); Firestone Tire &
Rubber Co. v. Risjord, 449 U.S. 368, 374 (1981). 4
A district court’s award of attorneys’ fees is reviewed for abuse of
discretion. Camden I Condo. Ass’n, Inc. v. Dunkle, 946 F.2d 768, 770 (11th Cir.
1991). An abuse of discretion occurs if the district court “applies an incorrect legal
standard, applies the law in an unreasonable or incorrect manner, follows improper
procedures in making a determination, or makes findings of fact that are clearly
erroneous.” Aycock v. R.J. Reynolds Tobacco Co., 769 F.3d 1063, 1068 (11th Cir.
2014) (citation and quotation marks omitted). “The district court has great latitude
in formulating attorney’s fees awards subject only to the necessity of explaining its
reasoning so” the decision can be reviewed. Waters v. Int’l Precious Metals Corp.,
3
One Florida plaintiff, M.E., did not accept the FIS settlement and was prevented from joining
the global settlement. Class Counsel argues that the merits of M.E.’s claims remain pending as
she actively litigates her claims individually, depriving us of appellate jurisdiction. However, the
district court docket indicates that M.E. is no longer represented by Individual Counsel, and the
resolution of her claims and attorney’s fees is completely separate from the common benefit fees
dispute at issue in this appeal.
4
Accordingly, the motion to dismiss for lack of appellate jurisdiction, which was carried with
the case, is denied.
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190 F.3d 1291, 1293 (11th Cir. 1999) (internal quotation mark omitted). “A district
court’s order on attorney’s fees must allow meaningful review—the district court
must articulate the decisions it made, give principled reasons for those decisions,
and show its calculation.” In re Home Depot Inc., 931 F.3d 1065, 1089 (11th Cir.
2019) (internal quotation marks omitted). “The level of specificity required . . . is
proportional to the specificity of the fee opponent’s objections.” Id.IV.
Individual Counsel argue that common benefit fees are only appropriate
when there is a “common fund” from which to award the fees. See William B.
Rubenstein, Newberg on Class Actions § 15:56 (5th ed. 2021) (describing
examples of what is and is not a common fund). They contend that the award is
inappropriate here because there is no common fund, nor is there judicial
supervision of the alleged fund. They argue that the court therefore erred by
treating the FIS as a common fund from which it can allocate the costs of litigation
among those who benefitted from the suit.
Individual Counsel further contend that there was no unjust enrichment or
free-rider problem here, as those doctrines are about plaintiffs as free riders, not
attorneys. See Rubenstein, § 15:61 (discussing unjust enrichment in common
benefit cases). And they argue that there is no equity issue because Class Counsel
have already been heavily compensated for their common benefit work by the
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MDL court. Alternatively, Individual Counsel argue that even if a common benefit
fee was appropriate here, the order does not allow for meaningful review and the
percentage standard for calculating an award was misapplied because the court did
not analyze each Johnson factor. See Johnson v. Ga. Highway Exp., Inc., 488 F.2d
714, 717–19 (5th Cir. 1974).5
Class Counsel argue that the FIS need not be a class settlement for a
common benefit-like award to be proper. See Sprague v. Ticonic Nat’l Bank, 307
U.S. 161, 167 (1939) (“[W]hen such a fund is for all practical purposes created for
the benefit of others, the formalities of the litigation . . . hardly touch the power of
equity in doing justice as between a party and the beneficiaries of his litigation.”);
see also In re Air Crash Disaster at Fla. Everglades on Dec. 29, 1972, 549 F.2d
1006, 1016 (5th Cir. 1977) (holding that “the district court had the power to direct
that the [court-appointed Plaintiffs’] Committee and its counsel be compensated
and that requiring the payment come from other attorneys was permissible.”).
They argue that common benefit fees—whether for class actions or MDLs—
are based on equity and quantum meruit. See Eldon E. Fallon, Common Benefit
Fees in Multidistrict Litigation, 74 La. L. Rev. 371, 375–76 (2014). Because it was
Class Counsel who established jurisdiction over the defendants, obtained default
5
Decisions of the Fifth Circuit predating September 30, 1981, are binding on us. Bonner v. City
of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc).
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judgments that were essential to establishing liability, and prepared and filed the
complaints, among other things, Class Counsel claim that the award was
appropriate here to ensure equity.
Finally, Class Counsel argue that the 45% award was reasonable, and the
district court carefully applied the Johnson factors, including “the time and labor
required” and the “novelty and difficulty of the questions involved.” See Johnson,
488 F.2d at 717–19.
We affirm the fee order. The district court did not abuse its discretion in
awarding Class Counsel 45% of the fees earned by Individual Counsel in the FIS.
“[A] litigant or a lawyer who recovers a common fund for the benefit of
persons other than himself or his client is entitled to a reasonable attorney’s fee
from the fund as a whole.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980).
“The doctrine rests on the perception that persons who obtain the benefit of a
lawsuit without contributing to its cost are unjustly enriched at the successful
litigant’s expense.” Id.Recognizing the purpose and importance of these awards, our precedent
maintains that common benefit fees—grounded in the courts’ equity power—need
not satisfy rigid eligibility requirements. See, e.g., Fla. Everglades, 549 F.2d at
1019 (“Because the payment was assessed against the attorneys this case does not
quite fit in the equitable fund cases. It need not precisely fit.”). In Florida
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Everglades, the former Fifth Circuit explained that the “[d]etermination of whether
a fund exists is a combination of traditional and pragmatic concepts centering
around the power of the court to control the alleged fund.” Id. at 1018.
Particularly in complex litigation, courts have broad managerial power that
includes significant discretion in awarding fees. See id. at 1012. The panel in
Florida Everglades explained the “much larger interests” that arise in MDL
cases—not only the sheer number of plaintiffs and claims involved but also the
importance of effectively and efficiently managing the crushing caseloads of
federal courts. Id. Thus, the “broad grant of authority” awarded to trial courts when
consolidating cases necessarily includes the ability to compensate appointed
counsel that carry “significant duties and responsibilities.” Id. at 1013–14, 1016.
Individual Counsel cite to cases from other circuits to argue that this case
does not have any common fund that would allow for this type of award because
the FIS consists of individual settlements subject to their own contingency fee
agreements. 6 But those cases involve factually different scenarios. In many of
those cases, the defendants—not the class members—were paying the fees, which
made them not “common fund” cases at all. See generally In re Home Depot, 931
F.3d at 1079 (“Thus, the key distinction between common-fund and fee-shifting
6
See, e.g., Weinberger v. Great N. Nekoosa Corp., 925 F.2d 518, 526 n.10 (1st Cir. 1991);
Christensen v. Kiewit-Murdock Inv. Corp., 815 F.2d 206, 208 (2d Cir. 1987).
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cases is whether the attorney’s fees are paid by the client (as in common-fund
cases) or by the party (as in fee-shifting cases).”).
Here, the “common fund” was the fees generated by Individual Counsel in
the FIS. The district court had control over the funds pursuant to the agreement of
the parties to litigate common benefit fees in the SDFL and the actions taken by the
court after the settlement agreement was first filed. Awarding a portion of these
fees to Class Counsel was therefore within the district court’s power.
The district court rightly acknowledged that Individual Counsel worked hard
to bring about the FIS. But their work did not exist in a vacuum. They benefitted
from the decade of foundational work that Class Counsel exerted in this
groundbreaking MDL, which involved evasive defendants in China, complex
jurisdictional challenges requiring two trips to the Fifth Circuit, decertification
attempts, and liability determinations. That Class Counsel has otherwise been
compensated for this work does not prevent them from continuing to reap the
rewards of their efforts. Moreover, preventing appointed counsel from recovering
awards when their work leads to massive recoveries down the road would make it
harder for courts to find capable and competent lawyers to take on that work in the
future. See Fla. Everglades, 549 F.2d at 1016.
After considering the efforts and outcomes of each group of attorneys at
each stage of the litigation, the district court awarded a reasonable percentage of
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the fees as common benefit fees. See Camden I Condo. Ass’n, 946 F.2d at 774(“There is no hard and fast rule mandating a certain percentage of a common fund
which may reasonably be awarded as a fee because the amount of any fee must be
determined upon the facts of each case.”).
It is appropriate for courts to consider the Johnson factors when determining
the proper percentage. Id. at 775. 7 The district court did that here. In particular, the
order contemplates the “time, effort, and skill” that Individual Counsel exerted in
the FIS negotiations. It considers the specific contributions of Class Counsel
including “discovery, travel (both domestic and foreign), motion practice,
conferences, appeals, court appearances, and settlement negotiations.” The order
also reflects Judge Cooke’s appreciation for the novelty and difficulty of the case,
as well as the amount of money involved. Though the court found the MDL court’s
reasoning to be “persuasive and instructive,” Judge Cooke still exercised
independent judgment—considering the facts of the cases before her and awarding
a lower percentage of fees because of the significant efforts of Individual Counsel.
This was not an abuse of discretion.
7
The Johnson factors include: (1) the time and labor required; (2) the novelty and difficulty of
the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of
other employment by the attorney due to acceptance of the case; (5) the customary fee; (6)
whether the fee is fixed or contingent; (7) time limitations; (8) the amount involved and the
results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the
“undesirability” of the case; (11) the nature and length of the professional relationship with the
client; and (12) awards in similar cases. See Johnson, 488 F.2d at 717–19.
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V.
Lastly, Individual Counsel argue that they were denied due process because
the district court denied discovery, refused to hold a hearing, and adopted findings
from the MDL court’s proceedings where Individual Counsel were not permitted to
participate. We are not persuaded by this argument.
“Due process, in its most basic form, still requires notice and an opportunity
to be heard.” S.E.C. v. Torchia, 922 F.3d 1307, 1316 (11th Cir. 2019). Both were
afforded to Individual Counsel here. Individual Counsel were aware of Class
Counsel’s request for an award. The court permitted numerous briefs and
documentary evidence to be filed, providing a fair opportunity to be heard. A
hearing was not required. See Miles v. Sampson, 675 F.2d 5, 9–10 (1st Cir. 1982)
(noting that while a hearing on attorneys’ fees may be helpful, “no case holds that
a hearing is mandatory”). Moreover, while the district court relied on the MDL
court’s findings, it still considered the facts and realities of the case at hand—
adjusting the award to account for the effort and type of work completed by
Individual Counsel. This was not a due process violation, nor an abuse of
discretion. So we affirm.
AFFIRMED.
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