[00:00:00] Speaker 04:
Our next case for argument is 22-1018, Health Republic Insurance versus United States.

[00:00:08] Speaker 04:
Now, I'm going to try to say your name, counsel, and you'll tell me how to say it right after I mess it up.

[00:00:12] Speaker 04:
I'm going to try first.

[00:00:13] Speaker 04:
Mr. Keshavarzi?

[00:00:15] Speaker 01:
That's correct, ma'am.

[00:00:16] Speaker 04:
Are you just saying that to be nice?

[00:00:21] Speaker 04:
Please proceed.

[00:00:22] Speaker 03:
Good morning, and may it please the court, Mo Keshavarzi for the objecting class members.

[00:00:27] Speaker 03:
Your Honours, in a certified class action, class council is entitled to a reasonable fee.

[00:00:32] Speaker 03:
as multiple courts of appeals have held in determining the reasonableness of a fee award.

[00:00:38] Speaker 03:
The court should ensure that the award does not result in class counsel being paid an hourly rate that exceeds what any lawyer could reasonably charge.

[00:00:47] Speaker 04:
Counsel, it's my understanding that the lower tribunal has a lot of discretion in selecting attorney's fees.

[00:00:54] Speaker 04:
Is that correct?

[00:00:56] Speaker 03:
That's correct, Your Honor.

[00:00:57] Speaker 04:
OK.

[00:00:57] Speaker 04:
But discretion, for example, let's turn to the fee notice.

[00:01:00] Speaker 04:
It's on page 1389.

[00:01:01] Speaker 04:
Yes, Your Honor.

[00:01:09] Speaker 04:
about what attorneys would request.

[00:01:14] Speaker 04:
And it said they will request no more than 5% of any judgment or settlement.

[00:01:19] Speaker 04:
Now, while the lower tribunal has a lot of discretion on attorney's fees, do you agree that they would not have had the discretion to, for example, say, well, goodness, I don't think 5% is enough.

[00:01:30] Speaker 04:
I'm going to give them 10%.

[00:01:31] Speaker 03:
That's correct, Your Honor.

[00:01:32] Speaker 04:
So you think that whatever discretion they have has to begin from this, which is an agreement between the attorneys and the numbers of the class.

[00:01:40] Speaker 03:
That's correct, Your Honor.

[00:01:41] Speaker 03:
And I think in this case, the notice is important because this, and in the context for this supplemental notice, is important.

[00:01:48] Speaker 03:
So what happened is the record indicates, Your Honor.

[00:01:50] Speaker 01:
Yeah, we know the record.

[00:01:51] Speaker 01:
Let me finish.

[00:01:51] Speaker 01:
That's the following.

[00:01:53] Speaker 01:
I just want to, you said, or maybe the Chief said, the reason that a statement in a notice is binding is that, is it essentially contractual or what?

[00:02:03] Speaker 01:
What's the legal theory under which a very clear statement,

[00:02:07] Speaker 01:
The chief just read one of them.

[00:02:09] Speaker 01:
There are others in there, too.

[00:02:12] Speaker 01:
Should bind the trial court in the ultimate court.

[00:02:18] Speaker 01:
Is that under Rule 23?

[00:02:19] Speaker 01:
Is it contract?

[00:02:21] Speaker 01:
Yes.

[00:02:21] Speaker 03:
So I would cite for you the city of Detroit case, which is out of the Second Circuit.

[00:02:25] Speaker 03:
And in that case, and I'm going to answer your honor's question directly, because we're not taking the position necessarily.

[00:02:30] Speaker 03:
We did not say it's a contract.

[00:02:32] Speaker 01:
I'm not being skeptical.

[00:02:33] Speaker 01:
I'm looking at the theory.

[00:02:34] Speaker 01:
No, I understand.

[00:02:35] Speaker 03:
But it grows out of.

[00:02:36] Speaker 03:
the court's duty to act as a fiduciary for the class.

[00:02:39] Speaker 03:
And it's important in this case, because class members, putative class members, relied on this notice to opt into the class, and they had other options.

[00:02:50] Speaker 03:
So that context is important.

[00:02:51] Speaker 04:
But what happened in the one of the- Excuse me, stop.

[00:02:54] Speaker 04:
I had more questions.

[00:02:55] Speaker 04:
So if we all agree that whether it's contractual or an implied contract, that 5% bounded and that the lower tribunal may have had discretion for attorney's fees,

[00:03:08] Speaker 04:
she could not have gone above the 5%.

[00:03:10] Speaker 04:
And she didn't seem to suggest otherwise.

[00:03:14] Speaker 04:
And Judge Toronto alluded to where I wanted to go next, which is this notice has other things in it.

[00:03:18] Speaker 04:
One of the other things it says is the fee may be substantially less than 5%, depending on the level of class participation.

[00:03:25] Speaker 04:
Isn't it the case that they got pretty much all the participation in this?

[00:03:30] Speaker 03:
A significant portion, Your Honor.

[00:03:32] Speaker 03:
In fact, what Mr. Swedlow said in his declaration, that's page 1806, paragraph 22.

[00:03:39] Speaker 03:
Actually, I'm sorry, page 1804, paragraph 17.

[00:03:44] Speaker 03:
He said that because of this class notice and the promise that it made, the contingent of qualified health plan issuers who joined this class

[00:03:54] Speaker 03:
represents, by orders of magnitude, the greatest contingent of qualified health plan issuers.

[00:03:59] Speaker 03:
So it's exactly what the notice promised.

[00:04:01] Speaker 03:
OK.

[00:04:01] Speaker 04:
And so she didn't take it down at all for that, even though the fee.

[00:04:05] Speaker 04:
But it did say the fee may be, right?

[00:04:07] Speaker 04:
So that's not like a guarantee, right?

[00:04:09] Speaker 03:
That's correct, Your Honor.

[00:04:10] Speaker 03:
But I think that's where you're going next, is there's more text in the notice that's coming up.

[00:04:14] Speaker 04:
So let's go to the next part that says, in any event, the exact percentage will be determined by the court subject to, among other things,

[00:04:24] Speaker 04:
the amount of issue in the case and what is called a load-start cross-check.

[00:04:28] Speaker 04:
Why isn't that a mandatory load-start cross-check?

[00:04:31] Speaker 03:
It is absolutely a mandatory load-start cross-check in this case, and that's our point, Your Honor.

[00:04:35] Speaker 04:
And just like she doesn't have the discretion to go above 5%, she doesn't have the discretion to refuse to do a load-start cross-check.

[00:04:41] Speaker 03:
That's absolutely correct, Your Honor.

[00:04:42] Speaker 03:
And the notice goes on to describe the low star cross check as a limitation on class fees based on the number of hours actually worked.

[00:04:53] Speaker 03:
And again, I know you know the record, but this point is really important because what happened, this is a supplemental notice.

[00:05:00] Speaker 03:
The original notice didn't say anything about fees.

[00:05:03] Speaker 03:
What Quinn and Emanuel learned was that some qualified health plan issuers were signing up with other law firms because they believed that Quinn was going to ask for 30% of the award.

[00:05:15] Speaker 03:
And so they wanted to correct that.

[00:05:16] Speaker 03:
And they didn't want these health plans to sign up with other lawyers.

[00:05:20] Speaker 03:
So they rushed to issue this notice and say, no, no, no.

[00:05:22] Speaker 03:
Don't sign up with them.

[00:05:23] Speaker 03:
We are going to only ask maximum 5%, which would be substantially reduced

[00:05:30] Speaker 03:
if the level of participation goes up.

[00:05:32] Speaker 03:
So they said, join us, because the more people that join us, the lower the fees are going to be.

[00:05:37] Speaker 04:
So now let's talk about if I agree with you that a mandatory load star cross-check had to be performed, and it wasn't in this case.

[00:05:45] Speaker 04:
The answer then, I assume, is that I bake in remand and tell her

[00:05:50] Speaker 04:
she needs to perform a mandatory low star cross check.

[00:05:52] Speaker 04:
Is that right?

[00:05:53] Speaker 03:
That's correct, Your Honor.

[00:05:54] Speaker 03:
And as some other courts have done, for example, the Ninth Circuit did it in the NRA and CAA case, the court could provide guidance in terms of what the court should do when conducting a low star cross check.

[00:06:04] Speaker 04:
Well, in fact, I mean, that's one of the things I imagine that opposing counsel may stand up and say is, well, she pretty much did a low star cross check when she analyzed the reasonableness of the fees that amount to something close to a low star cross check.

[00:06:19] Speaker 04:
Why is that not an answer to the concern I have?

[00:06:24] Speaker 01:
Together with the sentence at the top of Appendix 25, where the defense court said, even if the court applied the Lint Star Cross Check, a multiplier of 18 to 19 would at least not be outside the realm of reasonable.

[00:06:39] Speaker 03:
I have answers to all of those questions.

[00:06:43] Speaker 03:
So let me start by saying why it's not a lodestar cross check.

[00:06:47] Speaker 03:
Examples of lodestar cross checks include the Enrey Enron case from Texas, for example, or the Enrey Wright case out of the Second District, or Judge Kaplan's decision in King County, Utah, versus the United States.

[00:07:00] Speaker 03:
What courts do when they do a proper lodestar cross check

[00:07:04] Speaker 03:
It's not as if the court is awarding fees under a load stall.

[00:07:07] Speaker 03:
So admittedly, it's a lower requirement than a full-blown load stall analysis.

[00:07:14] Speaker 03:
But still, what those cases say is that what the court must do is assess, probe, ask questions about the reasonableness of the fee.

[00:07:22] Speaker 03:
The court didn't do that here, nor could it have done that.

[00:07:25] Speaker 03:
Why?

[00:07:25] Speaker 03:
Because the sum total of the evidence of the fees expended on this case is five sentences.

[00:07:30] Speaker 04:
I know, but you're not going to win on that.

[00:07:32] Speaker 04:
You're not going to win on there, we spent 10,000 hours argument.

[00:07:35] Speaker 04:
Because number one, 10,000.

[00:07:36] Speaker 04:
Wow, that's a very round number.

[00:07:38] Speaker 04:
It's kind of shocking that it came out to exactly that number.

[00:07:41] Speaker 04:
But nonetheless, in the low star cross-check area, the level of documentation required

[00:07:46] Speaker 04:
is much less substantial.

[00:07:48] Speaker 04:
It's not like a detailed day by day, hour by hour.

[00:07:52] Speaker 04:
And we don't want that.

[00:07:53] Speaker 04:
We want attorneys to take cases on contingencies and be willing to do something less.

[00:07:57] Speaker 04:
And the reason you're not going to win on it, I don't mean you won't necessarily win with us, but all she has to say on remand is, well, $10,000 in light of my experience with this case seems reasonable.

[00:08:06] Speaker 03:
So a couple of things right there.

[00:08:09] Speaker 03:
There's no law for this, and we look.

[00:08:11] Speaker 03:
But when you say my experience with this case, I think it's important to note that there is a new judge that took over this case after the fee motion was filed.

[00:08:19] Speaker 03:
The judge who had this case from the beginning was a different judge than the judge who ruled on the fee motion.

[00:08:25] Speaker 03:
I think that's an important fact.

[00:08:27] Speaker 01:
With respect to the 10 hours, the reason I thought this case was, in essence, litigated outside the claims court.

[00:08:37] Speaker 01:
Yes.

[00:08:37] Speaker 01:
But Judge, it's not like there was a lot to observe.

[00:08:40] Speaker 01:
There was a motion to dismiss.

[00:08:42] Speaker 01:
ruled on, and then basically all of the interesting legal work got done in this court and then the Supreme Court in other cases.

[00:08:53] Speaker 01:
That's correct.

[00:08:54] Speaker 03:
I was just responding to Judge Moore's comment about, in my experience with this case, 10,000 hours is enough.

[00:09:02] Speaker 03:
But let me tell you why on this point.

[00:09:04] Speaker 03:
And I'm going to go to the multiplier in a minute.

[00:09:07] Speaker 03:
But 10,000 hours, Your Honor, the reason I think there should have been more evidence here of the fees is this.

[00:09:16] Speaker 03:
The class certification was conceded in this case.

[00:09:19] Speaker 03:
The government didn't fight it.

[00:09:20] Speaker 03:
There was no discovery, and the case was stayed, as Your Honor noted, shortly after it was filed.

[00:09:25] Speaker 03:
There was amicus work that was done after the case was stayed.

[00:09:29] Speaker 03:
But according to Mr. Swedlow's declaration, and according to the brief they filed with the Supreme Court, which are all in the record,

[00:09:36] Speaker 03:
That that the expense for that was paid by somebody else not by the class.

[00:09:40] Speaker 03:
That's not part of the lodestar.

[00:09:42] Speaker 03:
So it is hard to understand how to spend 10,000 hours as five lawyers working full time for an entire year.

[00:09:49] Speaker 03:
It's hard to understand given the fact that the case was state shortly after it was filed.

[00:09:54] Speaker 03:
how 10,000 hours could have been racked up on this case.

[00:09:57] Speaker 01:
That's why I think in this case, one sentence that says... It might have had something to do with the fact that there were a bunch of other cases with other lawyers and conversations had to just go on endlessly between the lawyers.

[00:10:09] Speaker 03:
it's possible your honor but we don't know because all we have is Mr. Suelo's statement that on these cases we spent 10,000 hours and while it is true that in some cases where lesser fees at stake where the attorney is not asking to be paid $18,000 an hour it might be okay to take a sentence that says I spent 2,000 hours in a case like this

[00:10:28] Speaker 04:
I think that- Okay, we understand this point.

[00:10:30] Speaker 04:
Your better argument is the multipliers.

[00:10:32] Speaker 03:
We'll get to it.

[00:10:33] Speaker 04:
So she only cited three cases, two of which didn't appeal the high-multipliers.

[00:10:38] Speaker 04:
She cited three cases with high-multipliers.

[00:10:41] Speaker 04:
Am I right in understanding that your multiplier here is in excess of 18, even if we accept 10,000 hours?

[00:10:46] Speaker 03:
It's at least 18.

[00:10:48] Speaker 03:
Let me start by this.

[00:10:51] Speaker 03:
There's been a lot of research done on this case.

[00:10:53] Speaker 03:
We've done a lot of work.

[00:10:53] Speaker 03:
They've done a lot of work.

[00:10:55] Speaker 03:
The Supreme Court has been talking about fee applications since the 1880s.

[00:10:59] Speaker 03:
As far as we can tell, no case they cited, not a single Court of Appeals decision, not a single Court of Appeals in the history of the United States has ever awarded a multiple this high, ever.

[00:11:11] Speaker 03:
And the three cases the judge cited, one is an unpublished decision from- Well, two of them, they didn't raise an objection.

[00:11:17] Speaker 03:
Right.

[00:11:18] Speaker 03:
And the third didn't do a lodestar analysis.

[00:11:21] Speaker 03:
That's correct, Your Honor.

[00:11:22] Speaker 03:
And what the court said is, the court said, I found these cases.

[00:11:26] Speaker 03:
I mean, the task, as the Third Circuit said in Ray Prudential's case, the court's task in evaluating a multiplier is to look at cases, try to find similar cases, and explain why the multiplier is justified.

[00:11:40] Speaker 03:
The task should not be, as this court did, to say, well, some court somewhere has awarded a multiplier of 18.

[00:11:47] Speaker 04:
And so we shouldn't accept as

[00:11:51] Speaker 04:
an adequate or equivalent to a Lodestar multiplier, what she did, because the only thing that she cited when she said it's reasonable are three district court cases, two of which didn't appeal the multiplier, one of which didn't do a Lodestar analysis at all.

[00:12:05] Speaker 04:
And what do I make of this Newberg treatise, which seems to suggest that in contingency fee cases, the normal multiplier is in the range of 1 to 2 with a presumptive ceiling at 4?

[00:12:18] Speaker 03:
Your Honor, that's Newburgh.

[00:12:20] Speaker 03:
You could also go to their own expert, Mr. Fitzpatrick.

[00:12:24] Speaker 03:
If you look at the appendix at page 1978 in our footnote, we talked about, or in the text in the footnote, we talked about Mr. Fitzpatrick.

[00:12:31] Speaker 03:
Their own expert, whose declaration they submitted to the claims court, said that the average multiplier, most multipliers are in the low ones, and the average multiplier is below two.

[00:12:42] Speaker 04:
Well, when you say most multiples are the low ones, was he giving testimony, and help me because I don't recall the record, but specifically on a contingency case?

[00:12:51] Speaker 04:
That makes a difference, right?

[00:12:53] Speaker 04:
I mean, that's a big difference.

[00:12:55] Speaker 04:
And I don't know that he was limiting his analysis to contingency fee cases.

[00:13:01] Speaker 03:
I don't believe he was, Your Honor.

[00:13:02] Speaker 04:
Well, so that would make a really big difference.

[00:13:04] Speaker 03:
It would make a difference.

[00:13:04] Speaker 04:
The New York treatise was actually discussing contingency cases.

[00:13:07] Speaker 03:
Yes, Your Honor.

[00:13:08] Speaker 03:
And Your Honor, if you

[00:13:10] Speaker 03:
Even the multipliers the judge cited, one of them was in the fives.

[00:13:14] Speaker 03:
It was in, you know, 18.

[00:13:16] Speaker 03:
And most of the cases, the Third Circuit has discussed this issue.

[00:13:20] Speaker 03:
The Third Circuit has convened a task force on this issue.

[00:13:23] Speaker 03:
They have noted that a multiplier of high single digits is reserved for extremely rare cases.

[00:13:30] Speaker 03:
And so most multipliers fall into one to two range.

[00:13:33] Speaker 03:
And to go to 18 is truly, truly unprecedented, Your Honors.

[00:13:37] Speaker 03:
I'd like to reserve some time for a model.

[00:13:41] Speaker 02:
I'm trying to understand how this lodestar cross check actually works if you do a lodestar cross check and say well, you know based on norms across a lot of different cases we see that a multiplier of more than four or five is really really rare and so therefore

[00:14:07] Speaker 02:
Even though we're adopting a percentage of the fund methodology, we're cutting it off at a lodestar multiplier of four.

[00:14:21] Speaker 02:
I'm just wondering, do you see that kind of analysis as essentially converting

[00:14:26] Speaker 02:
a percentage of the fund approach into a de facto lodestar methodology.

[00:14:33] Speaker 02:
Because any amount that you would reach and calculate through a percentage of the fund approach is ultimately going to be cut off, curtailed, amended by a lodestar approach that has a ceiling of a multiplier of four.

[00:14:52] Speaker 03:
Your Honor, I would say no.

[00:14:54] Speaker 03:
And the answer is that the Ninth Circuit, the Third Circuit, the Second Circuit have all adopted similar approaches in advising their district courts about the upper limits of what a reasonable multiplier is.

[00:15:05] Speaker 03:
And they've advised their district courts that while you have discretion, that there are upper limits and these are the ranges that you should look to and you should care to explain what analogizes a case, this case, where you think a multiplier is justified.

[00:15:17] Speaker 03:
So and those high multipliers are reserved for cases where counsel tries a case all the way to trial, takes five or six years, like the Enron case where the multiplier was less than seven, even though they had litigated for six years, trial, many years of document review.

[00:15:31] Speaker 03:
So let me get this straight.

[00:15:33] Speaker 02:
So if you work 10,000 hours, you should get a low multiplier.

[00:15:36] Speaker 02:
But if you work 100,000 hours, you should get a low multiplier.

[00:15:39] Speaker 02:
Bigger fatter multiplier?

[00:15:41] Speaker 03:
No, Your Honor.

[00:15:41] Speaker 03:
It's not that if you work more hours, you get a bigger multiplier.

[00:15:44] Speaker 03:
It goes to the complexity of the case and what it took.

[00:15:48] Speaker 03:
So there are a lot of factors that go into it.

[00:15:50] Speaker 03:
I don't believe that hours is just one factor.

[00:15:53] Speaker 04:
But with respect to your argument, can I understand your argument to be that in a contingency fee case, counsel is taking a much bigger risk if they're putting 100,000 hours in than they are if they're putting 10,000 hours in?

[00:16:03] Speaker 03:
That's absolutely correct, Your Honor.

[00:16:04] Speaker 04:
And that should be factored in?

[00:16:05] Speaker 03:
That's absolutely correct.

[00:16:07] Speaker 03:
And your honor's concern is not a court.

[00:16:09] Speaker 03:
We have not seen that with respect to district court decisions that have come out of Ninth Circuit, Third Circuit, or Second Circuit guidance.

[00:16:15] Speaker 02:
If the class noticed it just said a hard 5% period, would we be here still?

[00:16:21] Speaker 03:
It depends what else it said, Your Honor.

[00:16:23] Speaker 03:
It just said 5%.

[00:16:25] Speaker 03:
Without saying that it would be subject to a class check.

[00:16:28] Speaker 03:
I think the district court in that instance would still, it would be good practice for the district court to act as a fiduciary for the class, which is an obligation it has.

[00:16:38] Speaker 02:
Even though there was an anti-bargain agreement between...

[00:16:44] Speaker 03:
There are no circumstances, no agreement by counsel can lead to the district court advocating its responsibility, fiduciary responsibility to the class.

[00:16:54] Speaker 03:
So what the cases say is that in the Third Circuit and in Ray Prudential, for example, in the fee context, the attorney and the client

[00:17:03] Speaker 03:
are adverse almost.

[00:17:05] Speaker 03:
So the court has to step in to protect the client.

[00:17:07] Speaker 03:
And so I'm giving the answer to your question.

[00:17:10] Speaker 02:
Insurance companies can't protect themselves?

[00:17:12] Speaker 03:
Your Honor, the concern, your statement wasn't specific to insurance companies.

[00:17:17] Speaker 03:
And I think it's dangerous to give guidance to a court that says if there's an agreement, because most class actions are consumers.

[00:17:25] Speaker 03:
And I think the court needs to step in and act as a fiduciary.

[00:17:27] Speaker 01:
And I don't think the fact that- And it might be different depending on when

[00:17:34] Speaker 01:
The notice said we will ask for 5%.

[00:17:46] Speaker 01:
and, on the other hand, saying, we will ask for up to 5% full stop, but the court will determine the proper amount.

[00:17:54] Speaker 03:
I think that would make a difference.

[00:17:55] Speaker 03:
But there are cases, Judge Chen, where parties have agreed to a rate, and the court still comes in and says, I'm going to evaluate to see whether it's reasonable.

[00:18:04] Speaker 03:
The bankruptcy court case out of Maryland that the claims court actually cited involved an agreement for 30%, but the court came in to see whether it was unethical.

[00:18:14] Speaker 04:
OK.

[00:18:14] Speaker 03:
Yes, I'm sorry is that okay judge.

[00:18:17] Speaker 03:
Thank you on it.

[00:18:19] Speaker 04:
Is it mr.. Schaffer Schaffer

[00:18:28] Speaker 00:
Thank you, Chief Judge Moore, and may it please the Court.

[00:18:30] Speaker 00:
I'm going to start right with the notice, Your Honors.

[00:18:32] Speaker 00:
I know that those were the first questions posed.

[00:18:34] Speaker 00:
But let me answer your question, Judge Toronto.

[00:18:36] Speaker 00:
It's at the back of the opening brief that the notice is raised.

[00:18:40] Speaker 00:
There's no legal authority that decided for a contractual theory or a constitutional theory or even a Rule 23 theory for why there was some violation here.

[00:18:48] Speaker 00:
The best sense that I can make of it, because I don't think any of us thinks a notice is a contract, is that there could be a due process violation if the class was informed of one thing.

[00:18:58] Speaker 01:
Maybe one way of saying is that if after the notice is given and

[00:19:07] Speaker 01:
People rely on it by opting in.

[00:19:10] Speaker 01:
Maybe even we can say it can be presumed irrebuttably that they relied on everything in it, that the notice, if not honored later, would not turn out in retrospect to have been a fair notice.

[00:19:23] Speaker 00:
Two points, Judge Toronto.

[00:19:25] Speaker 00:
Number one, I think you'd be limited to the express terms of the notice and what would be reasonably understood from those plain terms.

[00:19:31] Speaker 00:
And number two, to the extent you go beyond that, here the testimony is unrefuted in declarations that the only discussions around the five percent was council would be asking for five percent.

[00:19:42] Speaker 00:
That's in the Swedlow declarations.

[00:19:43] Speaker 00:
It's uncontradicted.

[00:19:44] Speaker 01:
Isn't the phrase up to 5%?

[00:19:46] Speaker 00:
Well, no, I'm sorry.

[00:19:47] Speaker 00:
It's the parole evidence, if you will, Judge Tronto.

[00:19:50] Speaker 00:
The discussions around that with these highly sophisticated insurers will be seeking 5%.

[00:19:55] Speaker 00:
But if a settlement materializes.

[00:19:57] Speaker 01:
And you have discussions with all members of the class.

[00:20:00] Speaker 00:
It's certainly United and Kaiser, who are the primary constituency of the objectors.

[00:20:06] Speaker 00:
But they don't deny it.

[00:20:07] Speaker 00:
Judge Tronto, no one is here saying

[00:20:09] Speaker 00:
They were told, in the circumstances that materialized, where there was no settlement, it was fully and finally decided all the way up to the US Supreme Court.

[00:20:18] Speaker 00:
And the participation, Chief Judge Moore, was one third.

[00:20:21] Speaker 00:
One third.

[00:20:21] Speaker 00:
When the United States had been discussing this with Mr. Swedlow, and this is in his declaration at appendix 2215.

[00:20:27] Speaker 00:
You can also find it in 1801 and 02 in the record.

[00:20:31] Speaker 00:
The discussions were the United States wanted full participation, everyone in the class,

[00:20:36] Speaker 00:
And if that happened and they had settled, then in that circumstance, the fee would have been, I think, reasonably below 5%.

[00:20:44] Speaker 00:
Nothing like that happened.

[00:20:46] Speaker 04:
OK, but what about the fact that the notice said there would be a load star cross check?

[00:20:52] Speaker 00:
I want to get to that right now, Chief Judge Moore, but one last point about the notice, if I may, which is that it is conceded

[00:21:01] Speaker 00:
by the objectors in the reply brief at 29, that 5% could have followed if there had been lower class participation.

[00:21:08] Speaker 00:
Their characterization is that it was somehow a high rate of class participation.

[00:21:12] Speaker 00:
That's just their characterization.

[00:21:14] Speaker 00:
One third.

[00:21:14] Speaker 04:
Can you get to my question?

[00:21:15] Speaker 00:
Yes, sorry.

[00:21:16] Speaker 00:
There was a load start cross check.

[00:21:19] Speaker 00:
You can find it at appendix 2425.

[00:21:20] Speaker 00:
If the Court of Federal Claims.

[00:21:23] Speaker 04:
Are you talking about where she said it would have been reasonable?

[00:21:25] Speaker 00:
Where she addressed the argument in the alternative.

[00:21:28] Speaker 04:
And she did that after analyzing.

[00:21:32] Speaker 00:
It's the even if you're ours.

[00:21:34] Speaker 00:
I don't think.

[00:21:35] Speaker 01:
Let me just get something that I guess has been on my mind since I read that.

[00:21:41] Speaker 01:
This says even if I did a lodestar cross-check.

[00:21:45] Speaker 01:
And let's even assume that it was

[00:21:50] Speaker 01:
an adequate one.

[00:21:52] Speaker 01:
What the Clint's Court says is that would not be outside the realm of reasonableness.

[00:21:59] Speaker 01:
And I guess the thought that occurred to me was this, that that's just the wrong question.

[00:22:04] Speaker 01:
In attorney's fees cases, when an adjudicator is to set the fee, the adjudicator doesn't say,

[00:22:13] Speaker 01:
Here is the range of what would be reasonable.

[00:22:15] Speaker 01:
Of course, there's arbitrariness and imprecision.

[00:22:18] Speaker 01:
So there's going to be a range.

[00:22:21] Speaker 01:
I can and should award or even start with the top end or any request below the top end.

[00:22:31] Speaker 01:
I grant that.

[00:22:33] Speaker 01:
And that's what outside the range of reasonableness sounds like.

[00:22:37] Speaker 01:
It seems to me that's confusing the appellate review of the discretion of an adjudicator, which says you've got a range of reasonableness.

[00:22:48] Speaker 01:
But the adjudicator's job is to decide what the award should be, taking account of all of the relevant policies of attorney's fees.

[00:22:58] Speaker 01:
So this seems to me not to be asking the right question.

[00:23:02] Speaker 00:
Judge Toronto, forgive me for disagreeing, but I invoke Judge Chen's question.

[00:23:06] Speaker 00:
It is settled law of the circuit that you can use the percentage of the fund approach, where you essentially disregard the lodestar.

[00:23:13] Speaker 00:
What we're talking about is a complement to that.

[00:23:15] Speaker 00:
It is the lodestar cross-check, not the touchstone, not the determinant of the fee.

[00:23:21] Speaker 00:
It's just a double check to make sure it's within the realm of reasonableness.

[00:23:24] Speaker 00:
And don't take my word for that.

[00:23:26] Speaker 00:
If you read the reply brief pages 14 and 15, you will see the objectors acknowledging.

[00:23:30] Speaker 00:
And I think my friend did just now at the podium.

[00:23:33] Speaker 00:
But the load star cross check is not how you're arriving at the fee.

[00:23:36] Speaker 00:
It's just a double check to make sure that you haven't gone outside the bounds of reason.

[00:23:41] Speaker 00:
And that is, once you understand it to be a lodestar cross-check, it is a complement.

[00:23:47] Speaker 00:
It's not a substitute for the District Court's exercise, the Court of Claims exercise the discretion in this respect.

[00:23:52] Speaker 04:
There's factors that are typically employed in a lodestar cross-check, and I don't see her having analyzed those factors here.

[00:24:01] Speaker 04:
For example, what are typical multipliers in other similarly situated cases?

[00:24:07] Speaker 04:
The fact that she was able to identify three district court cases, two of which did not involve a challenge to include a multiplier, and the third, which didn't actually do a lodestar cross-check, doesn't seem to me that she accurately or adequately addressed what are typical multipliers in other cases.

[00:24:27] Speaker 00:
Forgive me for disagreeing again.

[00:24:28] Speaker 00:
Can I take the three cases, Chief Judge Moore?

[00:24:30] Speaker 00:
The first one that I would direct your honors to is America's mining, decided by the Delaware Supreme Court.

[00:24:36] Speaker 00:
And I acknowledge the court there did not use the word lodestar cross-check.

[00:24:42] Speaker 00:
But what the court did do is specifically say this is at 51 F3, 1257 and 58, after saying that essentially it was a 66 times multiple.

[00:24:53] Speaker 04:
So there are three cases.

[00:24:54] Speaker 04:
Two of them didn't object.

[00:24:56] Speaker 04:
One of them, she acknowledges, didn't do a lodestar cross check.

[00:25:01] Speaker 04:
You're going to try and tell me now it did, but it's kind of irrelevant, because she says, in her opinion, no cross check was conducted.

[00:25:07] Speaker 04:
So I don't see how you could possibly prevail on this point.

[00:25:11] Speaker 04:
The treatises, all of the evidence of record suggests that the typical multiplier is in the 1 to 2 range with a presumptive cap at 4.

[00:25:19] Speaker 04:
And that's for contingency cases, which is what this is.

[00:25:23] Speaker 04:
I don't see that she acknowledged that, analyzed that.

[00:25:25] Speaker 04:
I certainly see that they argued it.

[00:25:27] Speaker 04:
But I don't see her having performed that analysis and acknowledging it.

[00:25:32] Speaker 04:
And this seems to be one of the most critical factors, the load start cross check.

[00:25:36] Speaker 04:
ought to look at, which is the range of usual normal multipliers in cases like this.

[00:25:43] Speaker 00:
Yeah.

[00:25:44] Speaker 00:
Chief Judge Moore, when I've seen that formulation that you look at comparable cases, it's as to the fee, the fee percentage.

[00:25:50] Speaker 00:
And it is undisputed here that the fee percentage, 5%, is on the low side.

[00:25:54] Speaker 04:
I respect the treatise says otherwise.

[00:25:57] Speaker 00:
The Newberg treatise that you're referring to, Your Honor, is I read it to be descriptive and acknowledging that there is discretion that is exercised in this respect.

[00:26:04] Speaker 00:
You asked about the Fitzpatrick Declaration.

[00:26:07] Speaker 00:
If you read the supplemental declaration, it specifically points out that because a lot of courts don't report the Lodestar crosscheck, it doesn't come through the record.

[00:26:15] Speaker 04:
It's talking about Lodestar multipliers.

[00:26:18] Speaker 04:
That's part of the Lodestar crosscheck, correct?

[00:26:20] Speaker 00:
Yes, absolutely.

[00:26:21] Speaker 04:
That's the finding.

[00:26:23] Speaker 04:
In contingency fee cases, empirical evidence of multipliers across many cases demonstrates most multipliers are in the relatively modest 1 to 2 range.

[00:26:33] Speaker 04:
This fact counsels in favor of a presumptive ceiling of 4 or slightly above twice the mean.

[00:26:41] Speaker 04:
What is your response to that?

[00:26:42] Speaker 04:
That is, in the analysis of the Lodestar cross-check multiplier, that seems like pretty strong evidence.

[00:26:48] Speaker 00:
My friend points to the Enron case.

[00:26:50] Speaker 00:
And if you read the Enron case, where the multiple was, I think, at 5-something, that was a case where the recovery for the class was 20% of what is claimed.

[00:26:57] Speaker 00:
In the court there notes that usually in class actions, we're talking about recovering 3% to 6%.

[00:27:03] Speaker 00:
Or Professor Fitzpatrick says sometimes it could be as high as 20%.

[00:27:06] Speaker 00:
Here we're looking at a class action that recovered 100%.

[00:27:09] Speaker 00:
against the United States government.

[00:27:12] Speaker 00:
In a case where Chief Judge Moore, the risks were greater than in the usual class action.

[00:27:15] Speaker 04:
Because even though in the Enron case and many other class actions... Yes, but the level of risk is a separate factor than multipliers.

[00:27:23] Speaker 04:
What I'm saying, I'm not saying you lose.

[00:27:26] Speaker 04:
I'm saying we need to make it a remand because she didn't do what she was required to do.

[00:27:32] Speaker 04:
What you all put the world on notice would happen before any

[00:27:37] Speaker 04:
attorney fee judgment was determined.

[00:27:39] Speaker 04:
You put the world on notice.

[00:27:41] Speaker 04:
There would be a lodestar cross check.

[00:27:42] Speaker 04:
She didn't do it.

[00:27:43] Speaker 00:
Respectfully, I'm trying to convince Your Honors that that's not the correct disposition.

[00:27:47] Speaker 00:
And if you were to do that, to not be as prescriptive as the other side suggests, the case that was cited in that notice was Geneva Rock.

[00:27:54] Speaker 00:
In the Geneva Rock case, the Court of Federal Claims relied solely upon an attorney's attestation.

[00:27:58] Speaker 00:
There was not even specification as to what the hourly rate was.

[00:28:02] Speaker 00:
It was just statutory fees.

[00:28:03] Speaker 00:
It used that for the load star cross check, arrived at a ratio that was above 5.

[00:28:08] Speaker 00:
And there, Chief Judge Moore, the percentage, the fee percentage, was 35%.

[00:28:12] Speaker 00:
That's what the last council was recovering, 35%.

[00:28:15] Speaker 00:
If we had sought 35%, then the load star cross check number would have gone above 100.

[00:28:22] Speaker 00:
above where it had been in the America's mining case that the Delaware Supreme Court decided, after the trial court there, the Court of Chancery had brought the requested fee down from 22.5% to 15%.

[00:28:32] Speaker 00:
That's what got the fee to the level where the load star cross check there would have been 66%.

[00:28:39] Speaker 00:
And the Delaware Supreme Court explained why that was commendable.

[00:28:42] Speaker 00:
The court had looked at what the hourly rate would be based upon this analysis, had clipped the fee to bring it down to 15%, resulting in 66 to 1.

[00:28:53] Speaker 00:
That was another case where it was not 100% recovery.

[00:28:57] Speaker 00:
This is on the outer high end of class action recoveries.

[00:29:00] Speaker 00:
It is against the United States government in a case where the class and council would have been completely zeroed out, zeroed out, absent the intervention of the US Supreme Court.

[00:29:10] Speaker 00:
So there's every reason I respectfully submit why this multiple would be on the high end.

[00:29:15] Speaker 00:
You have the Delaware Supreme Court to consider judgment on this.

[00:29:17] Speaker 04:
I'm trying to sit here and figure out to myself why you're being so aggressive, pointing your finger at us and sort of yelling at the court.

[00:29:23] Speaker 04:
And I realize it's your money.

[00:29:24] Speaker 00:
So please continue.

[00:29:25] Speaker 00:
I don't mean to point my finger or to be aggressive.

[00:29:28] Speaker 00:
I just mean, Chief Judge, more respectfully to push back on the suggested disposition.

[00:29:32] Speaker 04:
It hasn't been respectful so far, just so you know.

[00:29:34] Speaker 04:
Your approach has not been respectful.

[00:29:36] Speaker 00:
Please accept my apologies, Your Honor.

[00:29:38] Speaker 04:
I realize it's your money.

[00:29:39] Speaker 04:
If I had $187 million on the line, I'd probably lose my cool little tooth.

[00:29:43] Speaker 04:
So go for it.

[00:29:44] Speaker 00:
Chief Judge Moore, it's not about that.

[00:29:46] Speaker 00:
And I want to point out that I personally did not participate in the action in question.

[00:29:50] Speaker 00:
So it's not my good word.

[00:29:51] Speaker 04:
But there's so much- When you say you didn't participate in the action in question, are you a partner at Quinn Emmanuel?

[00:29:55] Speaker 00:
I am.

[00:29:56] Speaker 04:
In that sense- Wait, wait.

[00:29:57] Speaker 04:
Does your profit and your paycheck reflect whether or not Quinn Emmanuel gets this $187 million?

[00:30:03] Speaker 04:
Your honor, I'd have to ask the powers that be what the... Does your share of the partnership guarantee you a percentage of profit?

[00:30:11] Speaker 00:
Now we're getting to things that I put on the public record.

[00:30:13] Speaker 00:
It's really subject to what the powers that be decide about my entitlement in particular.

[00:30:17] Speaker 04:
It's not your money.

[00:30:19] Speaker 00:
It is your money.

[00:30:20] Speaker 00:
If I may simply say this, Chief Judge Moore, as someone who has, even before I was at Quinn Emmanuel, spent much of my career litigating against the United States government, as Professor Pitt Fitzpatrick attests in his Your Honors Know, this is not a defendant who is likely to settle.

[00:30:35] Speaker 00:
This is not a defendant who fears

[00:30:37] Speaker 00:
being subjected to a $12 billion recovery.

[00:30:39] Speaker 00:
This is a defendant that will litigate all the way up to the US Supreme Court.

[00:30:43] Speaker 00:
So the risks in this class action, different from many where class counsel may invest a lot of time and money, there's going to be some recovery.

[00:30:51] Speaker 00:
It's just a question of what's the settlement.

[00:30:52] Speaker 02:
Do you agree that, as a general matter, the lodestar multiplier tends to be between the range of one to four?

[00:30:58] Speaker 00:
I think that that is true in terms of the reporting decisions, Judge Chen, with the high side being what we've seen in America's mining decision, the only decision you have from a higher court, the stop and shop decision, which specifically was lowering the fee to get down.

[00:31:13] Speaker 02:
These are the cases the claims court cited.

[00:31:15] Speaker 00:
Correct, those three.

[00:31:16] Speaker 02:
So we can pick those and decide for ourselves what the value is of those.

[00:31:20] Speaker 00:
Yes, but Judge Chen, I think that it is under-reported, the amount of lodestar cross-checks that are on the high side, simply because courts don't tend to report those numbers if they look to be high.

[00:31:30] Speaker 00:
Neither does class counsel do that.

[00:31:31] Speaker 02:
You're talking about in-race send-in, the Third Circuit opinion.

[00:31:34] Speaker 00:
Yes.

[00:31:34] Speaker 02:
Are you familiar with that?

[00:31:35] Speaker 02:
I am, Your Honor.

[00:31:36] Speaker 02:
OK.

[00:31:37] Speaker 02:
What's wrong with the approach the Third Circuit took on in-race send-in, which seems to work against you here?

[00:31:43] Speaker 00:
Well, in rescindent, I don't think that the district court there had analyzed the prescribed factors.

[00:31:49] Speaker 00:
And it had not gone through the analysis that this court did over the course of 28 pages to say, what were the comparable rates?

[00:31:55] Speaker 00:
What was the market rate for this sort of representation?

[00:31:58] Speaker 00:
So in the absence of that, the court was simply looking at the load-start cross-check and saying that it had not been performed.

[00:32:04] Speaker 02:
And essentially- Well, it concluded that a multiplier of 7 or 10 is just extremely high compared to the norms.

[00:32:13] Speaker 02:
and then said, therefore, there's an abuse of discretion that happened here, and then remanded it back, but then gave a very strong signal that it thought a multiplier of three would be appropriate.

[00:32:24] Speaker 02:
Am I recalling the case correctly?

[00:32:26] Speaker 00:
You are, Judge Jen.

[00:32:27] Speaker 00:
And I'm just saying that that was an instruction for remand to a court that had not gone through the prescribed analysis, had not explained why you would go.

[00:32:36] Speaker 00:
above the traditional load start, what might be the average of that.

[00:32:41] Speaker 00:
Here you have a case where the average rate is below that of the usual class action.

[00:32:46] Speaker 00:
It's the lowest market rate that was available to any of the plaintiffs that recovered in this case by a considerable amount.

[00:32:53] Speaker 00:
The other contingency fees were 25% that had been agreed to by each of the lead plaintiffs had been 15% was the lowest reported number for anyone else.

[00:33:02] Speaker 00:
Here, the class members are getting one third of that 15% number.

[00:33:06] Speaker 00:
5% is the amount they pay to counsel for an off-the-charts, unprecedented recovery, dollar for dollar, against the United States.

[00:33:14] Speaker 00:
That is a case where you would expect the load star cross check to be on the high side, and you do respectfully have precedents that have signed off on load star cross checks that were at or above this number.

[00:33:26] Speaker 00:
I just don't think that there's a problem in terms of the notice

[00:33:28] Speaker 00:
And in terms of the application of the factors, it is thoroughly explained.

[00:33:33] Speaker 00:
It is well-substantiated.

[00:33:35] Speaker 00:
And my friends for the other side really don't dispute the key factual premises of what the Court of Federal Claims decided.

[00:33:41] Speaker 00:
You can find it in appendix 18 that this was the best rate that was available on the market.

[00:33:46] Speaker 00:
And really, that should be very telling to your office, because we're talking about highly sophisticated.

[00:33:53] Speaker 04:
I appreciate that your time is up.

[00:33:54] Speaker 04:
Thank you for your argument.

[00:33:55] Speaker 00:
Thank you, Chief Dixmore, and I apologize if my tone or my gesticulation was in any way offensive to the court.

[00:34:02] Speaker 04:
OK, counsel, you have some rebuttal time.

[00:34:04] Speaker 03:
Thank you, Your Honors.

[00:34:04] Speaker 03:
Just briefly, I want to start first with the last thing counsel said, that this was the best rate that was available in the market.

[00:34:11] Speaker 03:
Paragraph 14 of Mr. Swedlow's declaration makes it clear that putative class members had two options.

[00:34:17] Speaker 03:
They could have signed

[00:34:18] Speaker 03:
with counsel on a contingency basis, or they were signing hourly agreements.

[00:34:24] Speaker 03:
So it's not true that this was the best rate available in the market.

[00:34:27] Speaker 03:
And the statement about the best rate available in the market is what I said earlier, that some putative class members were signing with other firms at 15% because they believed Quinn was going to ask for 30%.

[00:34:38] Speaker 03:
So they thought their choice was 15 and 30.

[00:34:40] Speaker 03:
They did not know that Quinn was going to say up to five.

[00:34:43] Speaker 03:
So that's one issue with respect to that was the best deal that was available on the market.

[00:34:48] Speaker 03:
Council talks about Mr. Swedlow's side conversations with class members saying, even though this is what we said in the notice, you should expect something else.

[00:34:56] Speaker 03:
We addressed this issue in pages 1,985 and 1,986 of the appendix in our briefs.

[00:35:02] Speaker 03:
And there's cases we've cited for the proposition that the court cannot and should not rely on statements that council makes that contradict the class notice.

[00:35:12] Speaker 03:
That's just bad law in our view and based on the cases that we've cited.

[00:35:16] Speaker 03:
And the final point I want to make, Judge Carranza, I was about to give you this citation, and we got whisked away on a discussion earlier, and that was you had talked to me about the notice and what it means and the import of it.

[00:35:28] Speaker 03:
The case I was citing to you on, there was a City of Detroit case out of the Second Circuit.

[00:35:31] Speaker 03:
And one point of the City of Detroit case, there's a lot of...

[00:35:34] Speaker 03:
language in there, but there's one particular point that I think is- I think it's Grinnell.

[00:35:37] Speaker 01:
Yes, Grinnell Corporation.

[00:35:39] Speaker 01:
Partly overruled later by the Second Circuit.

[00:35:41] Speaker 03:
Yes, yes.

[00:35:42] Speaker 03:
One reason the Second Circuit sent the case back to the district court with respect to the fee issue was that the class notice had promised an evidentiary hearing at which the fees would be determined.

[00:35:55] Speaker 03:
The district court had decided on its own that it was not going to hold an evidentiary hearing, and the Second Circuit said the failure to do that which you promised to the class

[00:36:02] Speaker 03:
is improper abuse of discretion and send it back.

[00:36:05] Speaker 03:
Your honor, unless you have any questions for me, I thank you for your time.