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Posted: January 17, 2014

Reasonable Attorneys’ Fees Awarded Under Fee Shifting Statute May Be At Southern District Market Rates But Must Account For Fees Already Recovered From Other Defendants

In Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. Ltd., 05 CV 0453 (E.D.N.Y. Dec. 30, 2013), Judge Brian Cogan granted in part plaintiffs’ request for attorneys’ fees under the Clayton Act, to the extent of awarding $4,093,163.35 in fees, and no costs, out of the $13,724,641.75 in fees and $1,363,307.68 in costs requested.  The case was a seven-year, multi-district anti-trust class action against Chinese vitamin C manufacturers, in which a group of direct purchasers alleged that the defendants participated in a cartel to fix prices and limit the output of vitamin C exported to the United States.  Plaintiffs settled with two of the four main defendants and ultimately recovered a judgment, after a jury trial and trebling of the damages, of $153,300,000 against defendants Hebei Welcome Pharmaceutical Co. and North China Pharmaceutical Group Corp.  Plaintiffs were represented by Boies, Schiller & Flexner LLP and Susman Godfrey LLP.

Judge Cogan accepted plaintiffs’ counsel’s hourly rates of $375-$980, even though they were higher than the rates customarily charged by lawyers with offices in the District, due to the complex and demanding nature of the case. The Court said the case involved factual and legal issues that “have never been considered in this district and very possibly would be unique anywhere,” and required that “extraordinary” resources “be brought to bear to prosecute the case.” Slip op., 3.  In the Court’s view there was “no plaintiffs’ class action firm with the capacity to deal with a case of this magnitude resident within this district.”  Slip op., 4.  The Court said that because it was not a “close question” whether to apply the forum rate or counsel’s national rates, there was no need for plaintiffs to offer independent evidence that their counsel’s national rates were reasonable.  Rather, the Court relied on its own knowledge of market rates in the relevant community, which includes the Southern District, and said that plaintiffs had bolstered their reasonableness showing by demonstrating that counsel’s proposed rates were the same as the rates charged to clients paying on an hourly basis, and that similar or higher rates had been approved by courts in other complex class action litigation.

Virtually the entire reduction in the fees and the complete denial of the costs was in order to avoid what Judge Cogan viewed as double counting, in light of plaintiffs’ prior receipt of a substantial amount in fees and costs from the settling defendants.  Plaintiffs sought the “full amount of their fees in this case even though a substantial portion of those fees have been paid” as a result of the settlements, on the theory that “they are entitled to an enhancement of their lodestar calculation and that in lieu of that, I should not apply a credit in favor of defendants to their fee recovery.”  Slip op., 11.  Judge Cogan rejected plaintiffs’ argument that relied on a “linkage between an enhancement and an offset” for fees already recovered, because plaintiffs’ proposal would result in an enhancement of “over 100%.”  He concluded that not offsetting the fees plaintiffs had already received would result in a windfall to them at odds with the Clayton Act’s allowance of a “reasonable” fee award.

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