The Phipps Group v. Don Downing & Adam Levitt, etc
764 F.3d 864
| 8th Cir. | 2014Background
- Multidistrict litigation (MDL) consolidated hundreds of federal rice-contamination suits against Bayer; the district court appointed a plaintiffs’ leadership group (including Downing and Levitt) to coordinate pretrial work.
- Lead Counsel performed discovery, depositions, expert work, and shared results with federal and related state-court plaintiffs; Phipps represented many state-court plaintiffs but was not in the leadership group.
- In 2010 the district court ordered creation of a Common Benefit Fund (CBF) to collect holdbacks (8% fees, 3% costs) from MDL settlement proceeds; the court said it lacked jurisdiction to compel state-court plaintiffs to contribute.
- The parties settled; Enrolling Counsel (including Phipps) submitted claims under a Settlement Agreement that provided payments would be made “as if” the 2010 CBF order applied.
- A Special Master reviewed Lead Counsel’s request (~$51.6M fees, ~$5.47M expenses, plus multipliers for six firms) and recommended approval; he denied Phipps’s request (~$13.27M) for common-benefit fees.
- The district court adopted the Special Master’s report, denied Phipps additional discovery and a share of the Fund, awarded the common-benefit disbursements (up to $72M allocation scheme), and Hare Wynn received a modest refund per agreement.
Issues
| Issue | Plaintiff's Argument (Phipps) | Defendant/Lead Counsel Argument | Held |
|---|---|---|---|
| Whether Phipps may challenge the 2010 Common Benefit Fund order after enrolling in the Settlement Agreement | Phipps argued it preserved its objections and may still attack the 2010 Order | Lead Counsel argued Phipps waived challenge by agreeing to be bound and accepting settlement benefits | Waiver/estoppel: Phipps agreed to be bound by settlement allocation; waived challenge to Fund creation and its required contributions |
| Whether district court abused process by denying discovery and relying on summaries/affidavits for fee review | Phipps sought discovery and in-depth review of time records before disbursements | Lead Counsel and Special Master relied on summaries, affidavits, and procedures reviewing duplicative entries; discovery unnecessary | No abuse: court’s procedures (Special Master, review of affidavits/summaries, objections considered) were within discretion |
| Whether Phipps did work entitling it to common-benefit compensation from the Fund | Phipps claimed its state-court victories and work benefitted all plaintiffs and pressured Bayer to settle | Lead Counsel argued Phipps worked independently, did not coordinate, and its work primarily benefited its clients | No abuse: court found Phipps worked separate from leadership and denied common-benefit award |
| Whether district court could order holdbacks from state-court recoveries | Lead Counsel argued court could require state recoveries contribute (or have Bayer/attorneys withhold) because state plaintiffs benefited | Phipps and the district court argued the federal court lacked jurisdiction over non-federal state-court actions | Held: district court lacks jurisdiction to compel holdbacks from state-court recoveries despite equitable arguments |
Key Cases Cited
- Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) (factors for evaluating attorney-fee awards)
- Hardman v. Board of Education of Dollarway, Arkansas School District, 714 F.2d 823 (8th Cir. 1983) (adoption of Johnson factors and standards for explaining fee awards)
- Skelton v. Gen. Motors Corp., 860 F.2d 250 (7th Cir. 1988) (acceptance of settlement benefits can preclude later challenges)
- In re High Sulfur Content Gasoline Prods. Liab. Litig., 517 F.3d 220 (5th Cir. 2008) (procedures for fee allocation that constitute an abuse of discretion)
- In re Diet Drugs Prod. Liab. Litig., 582 F.3d 524 (3d Cir. 2009) (use of summaries vs. full billing records in large MDLs)
- Hensley v. Eckerhart, 461 U.S. 424 (1983) (lodestar method and limits on protracted fee litigation)
- Wescott Agri-Products, Inc. v. Sterling State Bank, Inc., 682 F.3d 1091 (8th Cir. 2012) (district court’s discretion in awarding attorneys’ fees)
- In re Showa Denko K.K. L-Tryptophan Prods. Liab. Litig.-II, 953 F.2d 162 (4th Cir. 1992) (MDL consolidation is procedural and does not expand jurisdiction over state cases)