Harden Manufacturing Corporation v. Pfizer, Inc. et al

Filing 4303

Chief Judge Patti B. Saris: ORDER entered. The Court ALLOWS the plaintiffs' motion for attorneys' fees, reimbursement of expenses, and compensation to class plaintiffs #4287 . Class Counsel are hereby awarded 28% of the settlement fund, inclusive of reimbursement of reasonable litigation expenses, plus interest accrued thereon, if any. In light of the factors and findings described above, the 28% fee award is within the applicable range of reasonable percentage fund awards. The Court finds this award to be fair and reasonable. The awarded fees and expenses shall be paid to Class Counselfrom the settlement fund in accordance with the terms of the Settlement Agreement. The Plaintiffs Steering Committee shall allocate the fees and expenses among Class Counsel in areasonable fashion. Class and Subclass Representatives are hereby compensated inthe following amounts for their reasonable time spent on tasksrelated to their representation of the Class and Subclass A,which shall be paid from the Settlement Fund: HardenManufacturing Corporation, $25,000; Louisiana Health ServiceIndemnity Company, d/b/a/ BlueCross/BlueShield of Louisiana,$25,000; ASEA/AFSCME Local 52 Health Benefits Trust, $25,000; andBlue Cross Blue Shield of Massachusetts, $25,000. These paymentsare in recognition of the work these plaintiffs undertook inrepresenting the Class and Subclass A, which amount is in 11 addition to whatever monies these plaintiffs will receive from the settlement fund pursuant to the plan of distribution. The Court finds these awards to be fair and reasonable. The Court retains exclusive jurisdiction over the Settlement Agreement, including over any issues relating to attorneys' fees and expenses. (Geraldino-Karasek, Clarilde)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

In re NEURONTIN MARKETING
AND SALES PRACTICES LITIGATION
THIS DOCUMENT RELATES TO:
HARDEN MANUFACTURING CORP.,
et al.,
Plaintiffs,
v.
PFIZER INC., et al.,
Defendants.

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Civil Action No. 04-10981-PBS

MEMORANDUM AND ORDER
November 10, 2014
Saris, U.S.D.J.
INTRODUCTION
This Court has separately issued a Final Order and Judgment
approving the class action settlement.
Class Counsel have moved pursuant to Fed. R. Civ. P. 23(h),
54(d), and 52(a) for an award of attorneys’ fees and
reimbursement of expenses. Having held a hearing on October 22,
2014 and considered all of the submissions and arguments, the
Court now ALLOWS the motion with a fee award percentage of 28% of
the common fund.
BACKGROUND
This petition for attorneys’ fees arises out of the
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settlement of a nationwide, decade-long multi-district litigation
against Pfizer, Inc. and Warner-Lambert Company (collectively
“Pfizer”) for a fraudulent scheme to promote and sell the drug
Neurontin for “off-label” conditions. Harden Manufacturing Corp.,
Louisiana Health Service Indemnity Company, and ASEA/AFSCME Local
52 Health Benefits Trust are the representatives of a nationwide
class of third-party payors (“TPPs”) who covered the cost of
Neurontin during the period since its first sale in the United
States. The beneficiaries range from very small Taft-Hartley
funds to large payors. There is also a subclass of indirect
purchasers (“Subclass A”), represented by Blue Cross Blue Shield
of Massachusetts, who alleged that Pfizer violated antitrust
laws.
The factual and procedural background of this case is set
forth in Harden v. Pfizer, 712 F.3d 60, 61-66 (1st Cir. 2013),
cert. denied, 132 S. Ct. 786 (2013); Kaiser v. Pfizer, 712 F.3d
21, 25-27 (1st Cir. 2013), cert. denied, 132 S. Ct. 786 (2013);
In re Neurontin Mktg. & Sales Practices Litig., 754 F. Supp. 2d
293, 296-308 (D. Mass. 2010); In re Neurontin Mktg. & Sales
Practices Litig., 677 F. Supp. 2d 479, 484-91 (D. Mass. 2010); In
re Neurontin Mktg. & Sales Practices Litig., 257 F.R.D. 315, 31718 (D. Mass. 2009); In re Neurontin Mktg. & Sales Practices
Litig., 244 F.R.D. 89, 92-103 (D. Mass. 2007); see also Kaiser v.
Pfizer, 748 F. Supp. 2d 34, 38-81 (D. Mass. 2010).
The settlement has resulted in a common fund of $325

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million. Class Plaintiffs have requested that the Court award
Class Counsel fees and expenses amounting to 33 1/3% of the
settlement fund, $108.33 million dollars.1 There is no separate
request for reimbursement of litigation-related expenses, which
amount to $4.38 million.
DISCUSSION
A. Legal Framework
Under the “common fund doctrine,” attorneys whose efforts
lead to the creation of a fund for the benefit of the class are
“entitled to a reasonable attorney’s fee from the fund as a
whole.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980). In
common fund cases, a “district court, in the exercise of its
informed discretion, may calculate counsel fees either on a
percentage of the fund basis or by fashioning a lodestar.” In re
Thirteen Appeals Arising out of San Juan Dupont Plaza Hotel Fire
Litig., 56 F.3d 295, 307 (1st Cir. 1995). The fee must be based
on a percentage of the fund which the Court deems “reasonable.”
Id. at 305.
In weighing a common fund request, courts generally consider
the following so-called Goldberger factors: “(1) the size of the
fund and the number of persons benefitted; (2) the skill,
experience, and efficiency of the attorneys involved; (3) the

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At oral argument, Class Counsel and counsel for Subclass A
also suggested 30% would be fair. Hrg. Tr. 26:18-27:1; 33:2134:1.
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complexity and duration of the litigation; (4) the risks of the
litigation; (5) the amount of time devoted to the case by
counsel; (6) awards in similar cases; and (7) public policy
considerations.” In re Lupron Mktg. & Sales Practices Litig., No.
MDL 1430, 01-CV-10861-RGS, 2005 WL 2006833, at *3 (D. Mass. Aug.
17, 2005), citing Goldberger v. Integrated Res., Inc., 209 F.3d
43, 50 (2d Cir. 2000); Third Circuit Task Force, Court Awarded
Attorneys Fees, 108 F.R.D. 237, 255-56 (1985).
In so-called “megafund” cases, defined as those which yield
settlement funds of over $100 million, some courts have adopted a
practice of lowering the fee award percentage as the size of the
settlement increases to avoid giving attorneys a windfall at the
plaintiffs’ expense. See, e.g., In re Citigroup Inc. Bond.
Litig., 988 F. Supp. 2d 371, 374-75 (S.D.N.Y. 2013) (setting fee
award at 16% of $730 million common fund); Kifafi v. Hilton
Hotels Ret. Plan, 999 F. Supp. 2d 88, 100, 104 (D.D.C. 2013)
(setting fee award at 15% of $140 million common fund). The
Manual for Complex Litigation has noted this trend, pointing out
that “[o]ne court’s survey of fee awards in class actions with
recoveries exceeding $100 million found fee percentages ranging
from 4.1% to 17.92%.” Federal Judicial Center, Manual for Complex
Litigation - Fourth 188-89 (2004), citing In re Prudential Ins.
Co. of Am. Sales Practices Litig., 148 F.3d 283, 339-40 (3rd Cir.
1998). Additionally, Professor Brian T. Fitzpatrick submitted a

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helpful affidavit in this case compiling several recent
unpublished cases with common funds similar in size to the one
here. Fitzpatrick Aff., Table 2, citing New England Carpenters
Health Benefits Fund v. First Databank, Inc., No. 05-11148-PBS,
2009 WL 2408560, at *2 (D. Mass. Aug. 3, 2009) (awarding 20% of
$350 million common fund); Pub. Emps.’ Ret. Sys. of Miss. v.
Merrill Lynch & Co., No. 1:08-cv-10841 (S.D.N.Y. May 8, 2012)
(awarding 17% of $315 million common fund); In re Bear Stearns
Co., Sec., Derivative and ERISA Litig., No. 08-MD-1963 (S.D.N.Y.
Nov. 9, 2012) (awarding 12% of $295 million common fund).
Some courts have rejected the practice of lowering fees in
megacases, reasoning that “[b]y not rewarding Class Counsel for
the additional work necessary to achieve a better outcome for the
class, the sliding scale approach creates the perverse incentive
for Class Counsel to settle too early for too little.” In re
Checking Account Overdraft Litig., 830 F. Supp. 2d 1330, 1367
(S.D. Fla. 2011) (setting fee award at 30% of $410 million common
fund), quoting Allapattah Servs., Inc. v. Exxon Corp., 454 F.
Supp. 2d 1185, 1213 (S.D. Fla. 2006); see also In re Synthroid
Mktg. Litig., 264 F.3d 712, 718 (7th Cir. 2001) (rejecting a 10%
cap on fee awards for common funds of $75 million and over,
noting that “[p]rivate parties would never contract for such an
arrangement, because it would eliminate counsel’s incentive to
press for more than $74 million from the defendants”). Professor

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Fitzpatrick’s affidavit also contained examples of this
perspective in other cases with similarly-sized funds.
Fitzpatrick Aff., Table 2, citing In re Tricor Direct Purchaser
Antitrust Litig., C.A. No. 05-340-SLR (D. Del. Apr. 23, 2009)
(awarding 33% of $250 million fund); In re Initial Pub. Offering
Sec. Litig., 671 F. Supp. 2d 467 (S.D.N.Y. 2009) (awarding 33.33%
of $510 million fund).
B. Application
Class Counsel seek an award of 33 1/3% of the settlement
fund. The Court must evaluate that request using the Goldberger
factors.
In fashioning the fee award, the Court gives due weight to
the fact that this case was lengthy and complex. Class Counsel
achieved excellent results for their clients. They brought a
great deal of experience to the case, and throughout the
litigation they performed with considerable skill. After more
than a decade of hard-fought litigation against a formidable
opponent, Pfizer, the settlement creates a $325,000,000 fund to
settle the claims of more than 40,000 class members. Only one
class member has opted out,2 and only one class member objected,
but not with respect to the amount of the fund, or the
reasonableness of the attorneys’ fees. Public policy militates in

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See Order & Judgment Granting Final Approval of the Class
Action Settlement Agreement and Release and Approving Proposed
Allocation of Settlement Funds, Ex. A.
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favor of a considerable fee award, as lawsuits which help curtail
fraudulent drug marketing provide a valuable service in helping
to safeguard the health and welfare of the general public.
Class Counsel emphasize that they have invested more than
ten years and millions of dollars in expenses. They argue that
they should receive more than the lodestar because of the risk
they took in undertaking this litigation, which involved novel
cutting-edge legal questions and complex scientific issues. The
riskiest portion of the litigation against Pfizer was the
bellwether trial for which Kaiser served as a plaintiff. The
outcome of that case - a jury found that Pfizer had violated the
Racketeer Influenced and Corrupt Organizations Act (RICO) substantially increased the certainty that Class Plaintiffs would
be able to recover their payments through civil litigation. See
In re Neurontin Mktg. & Sales Practices Litig., Civ. No. 04-cv10739-PBS, 2011 WL 3852254, at *1 (D. Mass. Aug. 31, 2011). The
Kaiser trial accounted for several years of the litigation.
Significantly, Class Counsel have already been compensated for
the Kaiser trial and the risks inherent within it. Counsel
declined to disclose the amount of the attorneys’ fees settlement
reached by the lead counsel who also served on this case. While
counsel subtracted the attorneys’ fees attributable to the Kaiser
case in calculating the lodestar in the present fee petition, a
high-end percentage of the fund here might over-compensate Class

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Counsel for risks of litigation that have already been accounted
for elsewhere.
The sizes of fee awards in similar mega-cases suggest that
33 1/3% of the settlement fund is too high a percentage. An
empirical study of federal class action fee awards in 2006 and
2007 found that nearly two-thirds of class action fee awards
based on the percentage method were between 25% and 35% of the
common fund. See Brian T. Fitzpatrick, An Empirical Study of
Class Action Settlements and Their Fee Awards, 7 J. Empirical L.
Stud. 811, 833-34 (2010). In the First Circuit, the mean was 27%
and the median was 25%. Id. at 836. Importantly, however, the
study also broke down fee award data according to the size of the
settlement fund, and found that for settlements between $250
million and $500 million, the mean percentage was just 17.8%. Id.
at 839.
Class Counsel argue that the multiplier on the lodestar of
3.97 is appropriate in light of the complexity of the case, and
that if they don’t receive the requested high percentage (33
1/3%) of the fund the resulting multiplier would be too low.
However, Class Counsel have given the Court only a bottom line
lodestar figure - $27.4 million excluding time spent on the
Kaiser trial - and have not provided detailed information
regarding hours worked, hourly rates charged, or expenses
charged, rendering it impossible for the court to perform a

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proper lodestar cross-check on the reasonableness of the 33 1/3%
award amount. Indeed, based on the high hourly rates requested by
those of Class Counsel who were involved in the Kaiser fee award
petition, some over $900 per hour, it is quite likely that the
court would have reached a lower lodestar figure by imposing
hourly rate caps to better reflect the Boston market, and the
legal market generally post-2008.3 See Mem. in Supp. of Mot. for
Atty Fees, Dkt. 4166. In any event, 28% would yield a multiplier
of 3.32, which is well within the range. See In re Fed. Nat’l
Mortg. Ass’n Sec., Derivative, and “ERISA” Litig., 4 F. Supp. 3d
94, 113 n.20 (D.D.C. 2013), quoting 4 Newberg on Class Actions §
14:7 (4th ed. 2002) (“Generally, multipliers from 1-3 are the
norm.”).
In light of the above, the Court reduces the proposed
percentage and awards Class Counsel 28% of the common fund for
attorneys fees’ and expenses. Setting attorneys’ fees at the end
of a decade-long multidistrict litigation is a sour task. The
court’s decision not to award the requested fees of 33 1/3% does
not diminish its view of the excellent lawyering here.
ORDER

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See, e.g., Commonwealth Care Alliance v. AstraZeneca
Pharm., LP, No. CIV. A. 05-0269, 2013 WL 6268236, at *1-*2 (Mass.
Super. Aug. 5, 2013) (concluding that hourly rates of $590 for a
senior partner are reasonable and in line with rates charged at
medium to large law firms in Boston and applying a lodestar
multiplier of 2).
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The Court ALLOWS the plaintiffs’ motion for attorneys’ fees,
reimbursement of expenses, and compensation to class plaintiffs
(Docket No. 4287). Class Counsel are hereby awarded 28% of the
settlement fund, inclusive of reimbursement of reasonable
litigation expenses, plus interest accrued thereon, if any. In
light of the factors and findings described above, the 28% fee
award is within the applicable range of reasonable percentage
fund awards. The Court finds this award to be fair and
reasonable.
The awarded fees and expenses shall be paid to Class Counsel
from the settlement fund in accordance with the terms of the
Settlement Agreement. The Plaintiffs Steering Committee shall
allocate the fees and expenses among Class Counsel in a
reasonable fashion.
Class and Subclass Representatives are hereby compensated in
the following amounts for their reasonable time spent on tasks
related to their representation of the Class and Subclass A,
which shall be paid from the Settlement Fund: Harden
Manufacturing Corporation, $25,000; Louisiana Health Service
Indemnity Company, d/b/a/ BlueCross/BlueShield of Louisiana,
$25,000; ASEA/AFSCME Local 52 Health Benefits Trust, $25,000; and
Blue Cross Blue Shield of Massachusetts, $25,000. These payments
are in recognition of the work these plaintiffs undertook in
representing the Class and Subclass A, which amount is in

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addition to whatever monies these plaintiffs will receive from
the settlement fund pursuant to the plan of distribution. The
Court finds these awards to be fair and reasonable.
The Court retains exclusive jurisdiction over the Settlement
Agreement, including over any issues relating to attorneys’ fees
and expenses.

/s/ PATTI B. SARIS
PATTI B. SARIS
United States District Judge

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