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From Antitrust Law Daily, November 12, 2018

$300 million awarded to attorneys after mega-settlement of foreign exchange rate price fixing claims

By E. Darius Sturmer, J.D.

The federal district court in New York City has approved an attorney fees award of just over $300 million to counsel for a class of consumers who recently entered into settlements of foreign exchange rate price fixing claims against numerous major international banks and financial institutions totaling approximately $2.31 billion. The fees award is equivalent to 13% of the settlement fund, which represents the third largest antitrust class action settlement in history. Class counsel had sought an award of $381,353,830.27 plus interest—about 16.5% of the fund (In re Foreign Exchange Benchmark Rates Antitrust Litigation, November 8, 2018, Schofield, L.).

The class brought suit in 2013, alleging that the banks and financial institutions participated in an illegal conspiracy to fix prices in the foreign exchange or foreign currency markets by manipulating numerous benchmark rates and bid/ask spreads. While the majority of the original defendants settled the claims in December 2015, entities still defending the action until the 15 settlements approved in August included: The Bank of Tokyo-Mitsubishi UFJ, Ltd., Credit Suisse Group AG, Credit Suisse AG, Credit Suisse Securities (USA) LLC, Deutsche Bank AG, Morgan Stanley, Morgan Stanley & Co., Morgan Stanley & Co. International plc, RBC Capital Markets, LLC, Societe Generale, and Standard Chartered Bank.

In support of its original fees request, class counsel submitted a detailed breakdown of how they arrived at their proposed fee, citations to data pertaining to awards in other cases, declarations from law professors, and an expert report. The docket sheet, the court noted, reflected a "vast quantity of legal work produced to date," involving several hundred attorneys working on the matter over the course of five years before achieving the settlements.

The $381 million request was objected to by two class members who characterized it as "grossly excessive." The objectors asked the court to award a fee of no more than eight percent of net expenses.

The court elected to adopt the "percentage of the fund" method of calculating attorney fees rather than the lodestar method as it "directly align[ed] the interests of the class and its counsel and provide[d] a powerful incentive for the efficient prosecution and early resolution of litigation." Based on this analysis, the court found a reasonable baseline fee to be 13%, with no further adjustment.

Percentage of the fund. A determination by an expert appearing on behalf of the class that the average fee in reported class action settlements was between 27% (mean) and 31% (median) was "not entirely germane" to the case, as the antitrust cases within that data set had a median recovery of only $37.3 million, a far cry from the $2.3 billion settlement in the instant case. Given the "sliding scale" framework—the principle that a smaller fee percentage was appropriate as the size of the settlement increased—the figures "[did] not provide an adequate basis for comparison." Moreover, even limiting the data to all cases with recoveries above $67.5 million to arrive at a 22.3% average did not reflect a reasonable baseline fee for the case.

A study of "mega settlements" exceeding $1 billion that the expert cited revealed a mean fee average of 13.7% and a median of 9.5%, the court observed, and another expert noted that the five mega settlements in antitrust cases resulted in attorney fees awards averaging 14.43%. The latter settlements, along with a sixth that was, as here, comprised of several smaller settlements, provided a more relevant basis for comparison on account of their similarities with the present case in terms of size, complexity, and subject matter, the court explained.

Nothing in the record indicated that the case was exceptional in terms of risk, result, or policy considerations, the court added. While the $2.31 billion settlement class counsel achieved was "an exceptional result in the aggregate," it was unexceptional compared to other similar cases, the court said. Furthermore, as no particular public policy concern differentiated the case from those, there was no reason to deviate from the baseline fee, in the court’s view.

Lodestar cross-check. A lodestar cross-check confirmed the appropriateness of a 13% award, the court found. The award resulted in a lodestar multiplier of 1.72, which was within the typical range for megafund cases. That the lodestar multiplier was lower than those in similarly sized antitrust cases—which ranged from 1.99 to 6.2, with an average of 3.6—was "largely due to the exceptionally high number of hours billed. Some of these hours related to work in the ongoing litigation against Credit Suisse, which has not settled, the court observed. In light of the whole of the analysis, increasing the fee award percentage just so the multiplier could be larger was not merited.

This case is No. 1:13-cv-07789-LGS.

Attorneys: Christopher M. Burke (Scott+Scott Attorneys at Law LLP) for Haverhill Retirement System. Andrew J. Entwistle (Entwistle & Cappucci LLP) for Value Recovery Fund LLC and Augustus International Master Fund, L.P. Alan M. Wiseman (Covington & Burling, LLP) for Citigroup, N.A. Charles Matthew Miller (Kasowitz Benson Torres LLP) and David George Januszewski (Cahill Gordon & Reindel LLP) for Credit Suisse Group AG, Credit Suisse Securities [USA] LLC and Credit Suisse AG.

Companies: Haverhill Retirement System; Value Recovery Fund LLC; Augustus International Master Fund, L.P.; Citigroup, N.A.; Credit Suisse Group AG; Credit Suisse Securities [USA] LLC; Credit Suisse AG

MainStory: TopStory Antitrust NewYorkNews

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