Case Discusses It in Class Action and MDL Complex Litigation Contexts, Also Indicating Perdue Decision Did Not Apply to Using Lodestar as Check on Percentage of Recovery Fee Award.
For those practitioners dealing with cases where a common fund is created (from which fee awards are frequently sought), we came across a case that is must reading. It is In re Vioxx Products Liability Litig., __ F.Supp.2d __, 2010 WL 5576193 (E.D.La. Oct. 19, 2010), authored by U.S. District Judge Eldon E. Fallon.
Aside from having a very scholarly discussion of the reasons behind the common fund doctrine, Vioxx was interesting in that it involved the settlement of astronomical litigation where over $4.3 billion was funded and distributed to numerous claimants within 31 months. District Judge Fallon found that the common fund doctrine had been creatively used to assess common benefit fees in favor of attorneys who render legal services beneficial to all MDL plaintiffs, even though they only represented a small segment of the plaintiffs directly.
Eventually, the district court adopted a “blended” percentage method to determine a reasonable fee award, determining first the valuation of the benefit received by claimants, then selecting a benchmark percentage, and finally adjusting upwards/downwards through a multiplier process. District Judge Fallon determined that 6% of the settlement amount was a reasonable benchmark for a common benefit fee award, but coming out of the contingent fee recoveries of all Vioxx primary plaintiffs’ attorneys. However, the district court then adjusted this percentage upward by .5% to a total of 6.5%.
Lastly, the district court used a lodestar “check” on the reasonableness of the common fund award. The common benefit fee award came to $315,250,000, not bad at all. In a footnote, District Judge Fallon dismissed that Perdue v. Kenny A., 130 S.Ct. 1662 (2010) impacted using the lodestar as a cross-check of a common benefit awarded as a percentage of a common fund, finding that “[t]he Supreme Court’s holding was informed by the Supreme Court’s lodestar jurisprudence and the statutory purpose of [42 U.S.C.] § 1988.” Id. at *17 n. 25.
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