Arkansas Teacher Retirement System v. State Street Corporation et al

Filing 117

Judge Mark L. Wolf: ORDER entered. MEMORANDUM AND ORDER.(Bono, Christine)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
ARKANSAS TEACHER RETIREMENT SYSTEM,
on behalf of itself and all others
similarly situated,
Plaintiff
v.
STATE STREET BANK AND TRUST COMPANY,
Defendants.
ARNOLD HENRIQUEZ, MICHAEL T.
COHN,WILLIAM R. TAYLOR, RICHARD A.
SUTHERLAND, and those similarly
situated,
Plaintiff
v.
STATE STREET BANK AND TRUST COMPANY,
Defendants.
THE ANDOVER COMPANIES EMPLOYEE
SAVINGS AND PROFIT SHARING PLAN, on
behalf of itself, and JAMES
PEHOUSHEK-STANGELAND and all others
similarly situated,
Plaintiff
v.
STATE STREET BANK AND TRUST COMPANY,
Defendants.

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) C.A. No. 11-12049-MLW
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) C.A. No. 12-11698-MLW
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MEMORANDUM AND ORDER
February 6, 2017 

WOLF, D.J.
I.

SUMMARY

Questions

have

arisen

with

regard

to

the

accuracy

and

reliability of information submitted by plaintiffs' counsel on

which the court relied, among other things, in deciding that it
was reasonable to award them almost $75,000,000 in attorneys' fees
and more than $1,250,000 in expenses.

The court now proposes to

appoint former United States District Judge Gerald Rosen as a
special master to investigate those issues and prepare a Report
and Recommendation for the court concerning them.

After providing

plaintiffs' counsel an opportunity to object and be heard, the
court would decide whether the original award of attorneys' fees
remains

reasonable,

whether

it

should

be

reduced,

and,

if

misconduct has been demonstrated, whether sanctions should be
imposed.
The court is now, among other things, providing plaintiffs'
counsel the opportunity to consent or to object to: the appointment
of a special master generally; to the appointment of Judge Rosen
particularly; and to the proposed terms of any appointment.

A

hearing to address the possible appointment of a special master
will be held on March 7, 2017, at 10:00 a.m.
II.

BACKGROUND

After a hearing on November 2, 2016, the court approved a
$300,000,000 settlement in this class action in which it was
alleged that defendant State Street Bank and Trust overcharged its
customers

in

transactions.

connection

with

certain

foreign

It also employed the "common fund" method to

determine the amount of attorneys' fees to award.
2

exchange

See In re

Thirteen Appeals Arising Out of San Juan Dupont Plaza Hotel Fire
Litig., 56 F.3d 295, 305 (1st Cir. 1995).

The court found to be

reasonable an award to class counsel of $74,541,250 in attorneys'
fees and $1,257,697.94 in expenses.

That award represented about

25% of the common fund.
Like many judges, and consistent with this court's long
practice, the court tested the reasonableness of the requested
award, in part, by measuring it against what the nine law firms
representing

plaintiffs

$41,323,895.75.

stated

was

their

total

"lodestar"

of

See Nov. 2, 2016 Transcript ("Tr.") at 30-31, 34;

see also Manual for Complex Litigation (Fourth) § 14.122 (2004)
("the lodestar is . . . useful as a cross-check on the percentage
method" of determining reasonable attorneys' fees); Vizcaino v.
Microsoft Corp., 290 F.3d 1043, 1050 (9th Cir. 2002) ("[T]he
lodestar may provide a useful perspective on the reasonableness of
a given percentage award.").

Plaintiffs' counsel represented that

the total requested award involved a multiplier of $1.8%, which
they argued was reasonable in view of the risk they undertook in
taking this case on a contingent fee.

See Memorandum of Law in

Support of Lead Counsel's Motion for an Award of Attorneys' Fees
(Docket No. 103-1) at 24-25 ("Fees Award Memo").
A lodestar is properly calculated by multiplying the number
of hours reasonably expended on the litigation by a reasonable
hourly rate.

See Blum v. Stenson, 465 U.S. 886, 889 (1984).
3

The

Supreme Court has instructed that "[r]easonable fees . . . are to
be calculated according to the prevailing rates in the relevant
community." Id. at 895. "[T]he rate that private counsel actually
charges for her services, while not conclusive, is a reliable
indicum of market value."

United States v. One Star Class Sloop

Sailboat built in 1930 with hull no. 721, named "Flash II", 546
F.3d 26, 40 (1st Cir. 2008)(emphasis added).1
In their memorandum in support of the fee request, plaintiffs'
counsel represented that to calculate the lodestar they had used
"current rather than historical billing rates," for attorneys
working on this case.

Fees Award Memo. (Docket No. 103-1) at 24.

Similarly, in the related affidavits filed on behalf of each law
firm counsel stated that "the hourly rates for the attorneys and
professional support staff in my firm . . . are the same as my
firm's regular rates charged for their services . . . ."

See,

e.g., Declaration of Garett J. Bradley on behalf of Thornton Law
Firm LLP ("Thornton") (Docket No. 104-16) at ¶4; Declaration of
Lawrence A. Sucharow on behalf of Labaton Sucharow LLP ("Labaton")
(Docket No. 104-15) at ¶7.
jurisprudence

and

the

In view of the well-established

representations

of

counsel,

the

court

understood that in calculating the lodestar plaintiffs' law firms

1

The First Circuit cited a common fund case, In re Cont'l III
Sec. Litig., 962 F.2d 566, 568 (7th Cir. 1992), for this
proposition.
4

had used the rates they each customarily actually charged paying
clients for the services of each attorney and were representing
that those rates were comparable to those actually charged by other
attorneys to their clients for similar services in their community.
On November 10, 2016, David J. Goldsmith of Labaton, on behalf
of plaintiffs' counsel, filed the letter attached hereto as Exhibit
A (Docket No. 116).

Mr. Goldsmith noted that the court had used

the lodestar calculated by counsel as a check concerning the
reasonableness of the percentage of the common fund requested for
attorneys' fees.

Id. at 3, n.4.

Counsel stated that as a result

of an "inquiry from the media" "inadvertent errors [had] just been
discovered in certain written submissions from Labaton Sucharow
LLP, Thornton Law Firm LLP, and Lieff Cabraser Heiman & Bernstein
LLP supporting Lead Counsel's motion for attorneys' fees . . . ."
Id. at 1.

Counsel reported that the hours of certain staff

attorneys, who were paid by the hour primarily to review documents,
had been included in the lodestar reports of more than one firm.
Id. at 1-2.
rates

had

He also stated that in some cases different billing
been

different firms.

attributed

to

particular

staff

attorneys

by

Id. at 3.

The double-counting resulted in inflating the number of hours
worked by more than 9,300 and inflating the total lodestar by more
than $4,000,000.

Id. at 2-3.

As a result, counsel stated a

multiplier of 2, rather than 1.8, should have been used to test
5

the reasonableness of the request for an award of $74,541,250 as
attorneys' fees.

Id. at 3.

Counsel asserted that the award

nevertheless remained reasonable and should not be reduced.

Id.

The letter did not indicate that the reported lodestar may not
have been based on what plaintiffs' counsel, or others in their
community, actually customarily charged paying clients for the
type of work done by the staff attorneys in this case.

Nor did

the letter raise any question concerning the reliability of the
representations

concerning

the

number

of

hours

each

attorney

reportedly worked on this case.
Such questions, among others, have now been raised by the
December 17, 2016 Boston Globe article headlined "Critics hit law
firms' bills after class action lawsuits" which is attached as
Exhibit B.

For example, the article reports that the staff

attorneys involved in this case were typically paid $25-$40 an
hour. In calculating the lodestar, it was represented to the court
that the regular hourly billing rates for the staff attorneys were
much higher -- for example, $425 for Thornton, see Docket No. 10415 at 7-8 of 14, and $325-440 for Labaton, see Docket No. 104-15
at 7-8 of 52.

A representative of Labaton reportedly confirmed

the accuracy of the article in this respect.

See Ex. B at 3.

The court now questions whether the hourly rates plaintiffs'
counsel attributed to the staff attorneys in calculating the
lodestar are, as represented, what these firms actually charged
6

for their services or what other lawyers in their community charge
paying clients for similar services.

This concern is enhanced by

the fact that different firms represented that they customarily
charged clients for the same lawyer at different rates.

In

general, the court wonders whether paying clients customarily
agreed

to

pay,

and

actually

paid,

an

hourly

rate

for

staff

attorneys that is about ten times more than the hourly cost, before
overhead, to the law firms representing plaintiffs.
In addition, the article raises questions concerning whether
the hours reportedly worked by plaintiffs' attorneys were actually
worked.

Most prominently, the article accurately states that

Michael Bradley, the brother of Thornton Managing Partner Garrett
Bradley, was represented to the court as a staff attorney who
worked 406.40 hours on this case.

See Docket No. 104-15 at 7 of

14. Garrett Bradley also represented that the regular rate charged
for his brother's services was $500 an hour.

Id.

However the

article states, without reported contradiction, that "Michael
Bradley . . . normally works alone, often making $53 an hour as a
court appointed defendant in [the] Quincy [Massachusetts] District
Court."

Ex. B at 1.

These apparent facts cause the court to be

concerned about whether Michael Bradley actually worked more than
400

hours

on

this

case

and

about

whether

Thornton

actually

regularly charged paying clients $500 an hour for his services.

7

The acknowledged double-counting of hours by staff attorneys
and the matters discussed in the article raise broader questions
about

the

accuracy

and

reliability

of

the

representations

plaintiffs' counsel made in their calculation of the lodestar
generally.

These

questions

--

which

at

this

time

are

only

questions -- also now cause the court to be concerned about whether
the award of almost $75,000,000 in attorneys' fees was reasonable.
III. THE PROPOSED SPECIAL MASTER
In view of the foregoing, the court proposes to appoint a
special master to investigate and report concerning the accuracy
and reliability of the representations that were made in connection
with the request for an award of attorneys' fees and expenses, the
reasonableness of the award of $74,541,250 in attorneys' fees and
$1,257,697.94 in expenses, and any related issues that may emerge
in the special master's investigation.

In the final judgment

entered on November 11, 2016, the court retained jurisdiction over,
among other things, the determination of attorneys' fees and other
matters related or ancillary to them.
No. 110) at 10.

See Final Judgment (Docket

Federal Rule of Civil Procedure 23(h)(4) states

that in class actions "the court may refer issues related to the
amount of the [attorneys' fee] award to a special master . . . as
provided in Rule 54(d)(2)(D)."

Federal Rule of Civil Procedure

54(d)(2)(D) states that "the court may refer issues concerning the
value of services to a special master under Rule 53 without regard
8

to the limitations of Rule 53(a)(1)."

As the 1993 Advisory

Committee's Note explains, "the rule [] explicitly permits . . .
the court to refer issues regarding the amount of a fee award in
a

particular

authorization

case

to

a

eliminates

master
any

under

Rule

controversy

references are permitted . . . ."

53.

as

to

.

.

.

This

whether

such

Fed. R. Civ. P. 54 Advisory

Committee's Note to 1993 Amendment.
The court proposes to exercise this authority to appoint
Gerald Rosen, a recently retired United States District Judge for
the Eastern District of Michigan, to serve as special master; Judge
Rosen's biography is attached as Exhibit C.

The court proposes to

authorize Judge Rosen to investigate all issues relating to the
award of attorneys' fees in this case.

If appointed, he would be

empowered

subpoena

to,

among

other

things,

documents

from

plaintiffs' counsel and third parties, interview witnesses, and
take testimony under oath.

Judge Rosen would be authorized to

communicate with the court ex parte on procedural matters, but
encouraged to minimize ex parte communications, and to avoid them
if possible.

He would be expected to complete his duties within

six-months of his appointment, if possible.
At the conclusion of his investigation, Judge Rosen would
prepare for the court a Report and Recommendation concerning:
(1) the accuracy and reliability of the representations made by
plaintiffs' counsel in their request for an award of attorneys'
9

fees and expenses, including, but not limited to, whether counsel
employed the correct legal standards and had proper factual bases
for what they represented to be the lodestar for each firm and the
total lodestar; (2) the reasonableness of the amount of attorneys'
fees and expenses that were awarded, including whether they should
be reduced; and (3) whether any misconduct occurred; and, if so,
(4) whether it should be sanctioned, see, e.g.,  In re: Deepwater
Horizon, 824 F.3d 571, 576-77 (5th Cir. 2016).

The court would

provide plaintiffs' counsel an opportunity to object to the Report
and

Recommendation

and,

concerning any objections.

if

appropriate,

conduct

a

hearing

See Fed. R. Civ. Proc. 53(f)(1).

The

special master's report would be reviewed pursuant to Federal Rule
of Civil Procedure 53(f)(3), (4) & (5).
Judge Rosen would be compensated at his regular hourly rate
as a member of JAMS of $800 an hour or $11,000 a day.2

Judge Rosen

could be assisted by other attorneys and staff, who would be
compensated at a reasonable rate approved in advance by the court.
Judge Rosen and anyone assisting him would also be reimbursed for
their reasonable expenses.
The fees and expenses of the Special Master would be paid, by
the court, from the $74,541,250 awarded to plaintiffs' counsel.

2

The court notes that plaintiffs' counsel reported billing rates
of up to $1,000 an hour. See, e.g., Docket No. 104-17 at 8 of
135.
10

The court may order that up to $2,000,000 be returned to the Clerk
of the District Court for this purpose.
As required by Federal Rule of Civil Procedure 53(b)(3)(A),
Judge Rosen has submitted an affidavit disclosing whether there is
any ground for his disqualification under 28 U.S.C. §455, which is
attached as Exhibit D.

The only matter disclosed relates to

Elizabeth Cabraser, a partner in one of plaintiffs' law firms.
Ms. Cabraser reportedly worked 29.50 hours on this case.

Judge

Rosen reports that about four years ago he asked Ms. Cabraser to
become, with him and others, a co-author of the book Federal
Employment

Litigation.

Since

then

they

have

had

annually,

independently submitted updates to different chapters of the book.
They, and the other authors, share royalties from the book.

In

addition, Judge Rosen and Ms. Cabraser have participated together
on panels on class actions.

Although at least one lawyer from

plaintiffs' law firms has appeared before Judge Rosen, Judge Rosen
has had no other association with any of them.
Judge Rosen represents that he has no bias or prejudice
concerning

anyone

involved

in

this

matter,

or

any

knowledge of potentially disputed facts concerning it.

personal

Therefore,

it does not appear that his disqualification would be required by
28 U.S.C. §455(b)(1). It also appears to Judge Rosen and the court
that

his

relationship

with

Ms.

Cabraser

could

reasonable person to question his impartiality.
11

not

cause

a

Therefore, it

appears that his recusal would not be justified pursuant to
§455(a).

See United States v. Sampson, 12 F. Supp. 3d 203, 205-

08 (D. Mass. 2014) (Wolf, D.J.) (discussing standards for recusal
under §455(a)).3
However,

the

court

is

providing

plaintiffs'

counsel

the

opportunity to consent to the appointment of Judge Rosen as special
master on the terms discussed in this Memorandum, register any
objections, and/or comment on the proposal.

Among other things,

plaintiffs' counsel may propose alternative eligible candidates
for possible appointment.
IV.

See Fed. R. Civ. P. 53(b)(1).4

ORDER

In view of the foregoing it is hereby ORDERED that:
1.

Plaintiffs' counsel shall file by February 20, 2017, a

memorandum addressing, among other things deemed relevant: whether
they object to the appointment of a special

master; whether they

object to the selection of Judge Rosen if a special master is to

3

Ideally, the court would propose a special master who presents
no question of possible recusal. However, the court has found
in exploring potential candidates to serve as special master
that lawyers in larger law firms are unavailable because their
firms have adversarial relationships with plaintiffs' counsel in
other cases. Therefore, the court concluded that proposing a
recently retired judge would be most feasible and appropriate.
4

Any proposed alternative candidate must file an affidavit
demonstrating that he or she does not have any conflict of
interest and is not subject to disqualification pursuant to 28
U.S.C. §455.
12

be appointed; whether they believe Judge Rosen's disqualification
would be required under 28 U.S.C. § 455(a) or (b) and, in any
event, whether they waive any such ground for disqualification;
whether they object to any of the terms of the appointment and
powers of a special master discussed in this Memorandum; and
whether they propose the appointment of someone other than Judge
Rosen as special master.

Counsel shall provide an explanation,

with supporting authority, for any objection or comment.
2.

A hearing to address the proposed appointment of a

special master generally, and Judge Rosen particularly, shall be
held on March 7, 2017, at 10:00 a.m.

Each of plaintiffs' counsel

who submitted an affidavit in support of the request for an award
of attorney's fees, see Docket Nos. 104-15 - 104-24, shall attend.5
Michael Bradley shall also attend.

In addition the representative

of each lead plaintiff who supervised this litigation (not a
lawyer) shall attend.6

5

Such counsel are: Lawrence A. Sucharow of Labaton; Garrett J.
Bradley of Thornton; Daniel P. Chiplock of Lieff, Cabraser,
Heimann & Bernstein, LLP; Lynn Sarko of Keller Rohrback LLP; J.
Brian McTigue of McTigue Law; Carl S. Kravtiz of Zuckerman
Spaeder LLP; Catherine M. Campbell of Feinberg, Campbell & Zack,
PC; Jonathan G. Axelrod of Beins, Axelrod, PC; and Kimberly
Keevers Palmer of Richardson, Patrick, Westbrook & Brickman,
LLC.
6

Such individuals are: George Hopkins on behalf of Arkansas
Teacher Retirement System; Arnold Henriquez; Michael T. Cohn;
William R. Taylor; Richard A. Sutherland; James Pehoushek13

Judge Rosen shall also be present and may be questioned.
Regardless of whether Judge Rosen is appointed special master, the
court will order that he receive reasonable compensation for his
time and expenses from the fee award previously made to plaintiffs'
counsel.

/s/ Mark L. Wolf

UNITED STATES DISTRICT JUDGE

Stangeland; and Janet A. Wallace on behalf of The Andover
Companies Employee Savings and Profit Sharing Plan.
14

EXHIBIT A

Labaton
Sucharow

David J. Goldsmith
Partner
2129070879 direct
212 883 7079 fax
[e-mail]

November 10, 2016

ByECF
Hon. Mark L. Wolf
United States District Judge
United States District Court
District of Massachusetts
John Joseph Moakley
United States Coutthouse
1 Coutthouse Way
Boston, Massachusetts 02210
Re:

Arkansas Teacher Retirement System v. State Street Bank & Trust Co.,
No. l1-CV-I0230 MLW

Dear Judge Wolf:
We are writing respectfully to advise the Coutt of inadvertent errors just discovered in certain
written submissions from Labaton Sucharow LLP, Thornton Law Firm LLP, and Lieff Cabraser
Heimann & Bernstein LLP supporting Lead Counsel's motion for attorneys' fees, which the Coutt
granted following the fairness hearing held on November 2, 2016. See Order Awarding Attorneys'
Fees, Payment of Litigation Expenses, and Payment of Service Awards to Plaintiffs ("Fee Order,"
ECF No. 111).
These mistakes came to our attention during internal reviews that were conducted in response to an
inquiry from the media received after the hearing. The purpose of this letter is to disclose the error
and provide a corrected lodestar and multiplier. We respectfully submit that the error should have
no impact on the Court's ruling on attorneys' fees.
As the Court is aware, the submissions supporting Lead Counsel's fee application included
individual declarations submitted on behalf of Labaton Sucharow, Thornton, and Lieff Cabraser,
reporting each firm's lodestar and number ofhouts billed. See ECF Nos. 104-15, at 7-9; 104-16, at
7-8; 104-17, at 8-9; see also ECF No. 104-24 (Master Chart).
The professionals and paraprofessionals listed in these firms' respective lodestar reports include
persons denoted as Staff Attorneys, or "SAs." SAs are bar-admitted, experienced attorneys hired on
a temporary, though generally long-term, basis, and are paid by the hour. The SAs in this action

Labaton Sucharow

LLP

140 Broadway, New York, NY 10005

2129070700 main

2128180477 fax

www.labaton.com

" ~"" 1!1

Labaton
Sucharow
Hon. Mark L. Wolf
United States District Judge
November 10, 2016
Page 2

were tasked principally with reviewing and analyzing the millions of pages of documents produced
by State Street.
Seventeen (17) of the SAs listed on the Thornton lodestar report are also listed as SAs on the
Labaton Sucharow lodestar report. 1 Six (6) of tht: SAs listed on the Thornton lodestar report are
also listed as SAs on the Lieff Cabraser lodestar report. 2 Both sets of overlap reflect the fact that as
the litigation proceeded, efforts were made to share costs among counsel, such that fmancial
responsibility for certain SAs located at Labaton Sucharow's and Lieff Cabraser's offices was borne
by Thornton.
We have now determined that:
•
•
•

•

The hours of the Alper SAs reported in the Thornton lodestar report mistakenly
were also reported in the Labaton Sucharow lodestar report.
Certain hours reported by one of the Alper SAs (S. Dolben) in the Thornton lodestar
report mistakenly duplicated certain hours of another Alper SA (D. Fouchong).
A portion of the hours of two of the Jordan SAs reported in the Thornton lodestar
report (c. Jordan and J. Zaul) mistakenly were also reported in the Lieff Cabraser
lodestar report.
The hours of two other Jordan SAs (A. Ten Eyck and R. Wintterle) mistakenly were
included in the Lieff Cabraser lodestar report. 3

Because of these inadvertent errors, Plaintiffs' Counsel's reported combined lodestar of
$41,323,895.75, and reported combined time of 86,113.7 hours, were overstated. See ECF No. 10424 (Master Chart).

These SAs, listed alphabetically, are D. Alper, E. Bishop, N. Cameron, M. Daniels, S. Dolben,
D. Fouchong, J. Grant, I. Herrick, D. Hong, C. Orji, D. Packman, A. Powell, A. Rosenbaum, J.
Saad, B. Schulman, A. Vaidya, and R. Yamada (collectively, the "Alper SAs"). Compare ECF No.
104-16, at 7-8 (Thornton lodestar report) with ECF No. 104-15, at 7-8 (Labaton Sucharow lodestar
report).
2 These SAs, listed alphabetically, are C. Jordan, A. McClelland, A. Ten Eyck, V. Weiss, R.
Wintterle, and J. Zaul (collectively, the "Jordan SAs"). Compare ECF No. 104-16, at 7 (Thornton
lodestar report) with ECF No. 104-17, at 8 (Lieff Cabraser lodestar report).
3 The lodestar reports in the individual firm declarations submitted by ERISA counsel (ECF
Nos. 104-18 to 104-23) are unaffected.
1

Labaton
Sucharow
Hon. Mark L. Wolf
United States District Judge
November 10, 2016
Page 3

We have corrected these errors by removing the duplicative time. When a given SA had different
hourly billing rates, we removed the time billed at the higher rate. Deducting the duplicative time
from the $41.32 million reported combined lodestar results in a reduced combined lodestar of
$37,265,241.25, and a reduced combined time of 76,790.8 hours.
Cross-checking the $37.27 million reduced combined lodestar against the $74,541,250 percentagebased fee awarded by the Court yields a lodestar multiplier of 2.00. 4 This is higher than the 1.8
multiplier we proffered in our submissions and during the hearing.
Plaintiffs' counsel respectfully submits that a 2.00 multiplier remains reasonable and well-within the
range of multipliers found reasonable for cross-check purposes in common fund cases within the
First Circuit, and that such an enhancement of the reduced lodestar represented by the 24.85% fee
awarded by the Court remains well-supported by the $300 million Setdement obtained and fees
awarded in comparable cases. See Fee Brief, ECF No. 103-1, at 24-25.
Accordingly, Plaintiffs' counsel respectfully submits that the Court should adhere to its ruling on
attorneys' fees. See Fee Order ~~ 4, 6 (ECF No. 111)5; Nov. 2,2016 Hrg. Tr. at 36:1-2 (finding 1.8
multiplier "reasonable").
We sincerely apologize to the Court for the inadvertent errors in our written submissions and
presentation during the hearing. We are available to respond to any questions or concerns the Court
may have.

The Court found it "appropriate in this case to use the percentage of the common fund
approach in determining the amount of attorneys' fees that should be awarded." Nov. 2,2016 Hrg.
Tr. at 22:25-23:2; see also id. at 35:12-13 ("I have used the percentage of common fund method. I've
used the reasonable lodestar to check on that.").
5The Fee Order, at Paragraph 6(d), references the approximately 86,000 combined hours and
$41.32 million combined lodestar reported in our written submissions.
4

Labaton
Sucharow
Hon. Mark L. Wolf
United States District Judge
November 10, 2016
Page 4

DJG/idi
cc:

All Counsel of Record
(by ECF)

Certificate of Service
I certify that on November 10, 2016, I caused the foregoing Letter to be filed through the
ECF system in the above-captioned action, and accordingly to be served electronically upon all
registered participants identified on the Notices of Electronic Filing.
/s/ David J. Goldsmith
David J. Goldsmith

EXHIBIT B

Comments
The Boston Globe Travel Show
SPOTLIGHT FOLLOW­UP

Critics hit law firms’ bills after class­
action lawsuits
By Andrea Estes   GLOB E   S TAFF    DE C E MB E R   1 7 ,  201 6

Attorneys at the Thornton Law Firm had just helped win a $300 million settlement
from State Street Bank and Trust in a complicated lawsuit involving eight other law
firms. Now, it was time to submit their legal fees to the judge so that they could get
paid.
That’s when the younger brother of Thornton managing partner Garrett Bradley
emerged as a $500­an­hour “staff attorney” at the Boston firm.
Michael Bradley is a lawyer, but he normally works alone, often making $53 an
hour as a court­appointed defender in Quincy District Court, records show. Yet,
according to his older brother’s sworn statement on Sept. 14, 2016, Michael
Bradley’s services were worth nearly 10 times that rate in the State Street case.
The elder Bradley said Michael worked 406.4 hours on the lawsuit, which centered
on international currency trades, at a cost of $203,200.
Michael Bradley wasn’t the only lawyerfor whose work Thornton claimed
stratospheric — and questionable — legal costs in the filing to US District Court
Judge Mark L. Wolf. Garrett Bradley listed 23 other staff attorneys, each with
hourly rates of $425, who collectively accounted for $4 million in costs.

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Comments

 View Story

Law firm ‘bonuses’ tied to
political donations
A small Boston law firm became a top funder of
the national Democratic Party by paying lawyers
“bonuses” for their political donations.

 Candidates returning donations
from Thornton Law Firm attorneys
 Hassan to return law firm’s
donations

But one of the lawyers told the Globe he was actually paid just $30 an hour for his
services — and not by Thornton. Like all the other staff attorneys on Garrett
Bradley’s list, except his brother, he worked for another firm in the case, which also
counted his hours on its list of costs.
The sworn statement by Garrett Bradley —
until recently an assistant House majority
leader on Beacon Hill — raises troubling
questions about the way Thornton and the
other firms that brought the State Street
lawsuit tallied legal costs to justify their
enormous $75.8 million payday.

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BRADLEY FOR SELECTMAN

Michael Bradley, Quincy attorney.

More than 60 percent of the costs that Thornton and two other law firms submitted
Comments
to Judge Wolf came from the work of staff attorneys — all of them assigned hourly
rates at least 10 times higher than the $25 to $40 an hour typical for these low­
level positions — which involves document review.
A spokesman for the lead law firm in the case acknowledged that hourly rates the
firms listed for staff attorneys were above the lawyers’ actual wages, but argued
that, essentially, everyone does it. Diana Pisciotta, spokeswoman for the Labaton
Sucharow law firm in New York City, called it “commonly accepted practice
throughout the legal community.”
Critics of the way lawyers are paid in class­action lawsuits acknowledge that firms
often dramatically mark up the rates of their lower­paid attorneys when seeking
legal fees in court, but they say Thornton has pushed the practice to an extreme.
“This happens all the time,” said Ted Frank, a lawyer at the Competitive Enterprise
Institute in Washington and a leading national critic of legal fees in class­action
lawsuits. “Lawyers pad their bills with overstated hourly work to make their fee
request seem less of a windfall.”
Lawyers in class­action lawsuits commonly receive a major share of any settlement
because they are taking the risk that, if they lose, they will be paid nothing.
In fact, plaintiffs in the State Street case, many of them public pension funds,
agreed in advance to set aside a quarter of any settlement for attorneys in their
lawsuit alleging that the Boston­based bank routinely overcharged clients for their
foreign currency exchanges, costing them more than $1 billion.
But, to actually collect the money, lawyers document their costs by filing affidavits
under penalty of perjury.
The accounting must be based on actual time records, listing the names and hourly
rates of the lawyers who worked on the case, and the total amount billed. The
hourly rate is supposed to be what the lawyer would charge a paying client for
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similar work, including the lawyer’s salary and a markup for office costs and other
Comments
expenses.
That’s where, critics of contingency fee lawsuits say, lawyers have a built­in
opportunity to inflate their bills. And, for a variety of reasons, their bills often get
little scrutiny.
“Imagine you’re a lawyer and you’re allowed to write your own check for your fee,”
explained Lester Brickman, a Yeshiva University law professor and author of
“Lawyer Barons: What Their Contingency Fees Really Cost America.”
“I could write $3,000, but I could add a zero and write $30,000 or add two zeroes
and charge $300,000,” Brickman said. “That’s the honor system.”
Thornton officials insist that they did nothing wrong and that the 23 staff attorneys
who actually work for Labaton or a firm in San Francisco belonged on Thornton’s
list.
Under a cost­sharing agreement between the firms, Thornton paid part of their
wages while they were reviewing millions of pages of documents in the State Street
case. These lawyers just receive their usual salary and don’t share in the proceeds
from the settlement.
Garrett Bradley’s brother, by contrast, will receive the $203,200 listed for him on
the filing to Judge Wolf, according to Thornton spokesman Peter Mancusi, who
noted that Michael Bradley, unlike the other staff attorneys, was not paid
previously for his work.
Neither Michael Bradley nor a spokesman for Thornton would say what he did on
the case, but the spokesman described him as an experienced prosecutor and fraud
investigator.
Globe questions about the legal bills prompted the lead law firm in the State Street
case to submit an extraordinary letter to Judge Wolf admitting that Thornton and
the other firms double­counted more than 9,000 hours, overstating their fees by
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$4 million. The author, David Goldsmith of Labaton Sucharow, blamed the inflated
Comments
bills on “inadvertent errors.”
According to Goldsmith’s Nov. 10 letter, Labaton and another firm, Lieff Cabraser
Heimann & Bernstein, claimed the same staff attorneys that Thornton had listed on
its legal expenses, double­counting the lawyers’ cost. Goldsmith said the double­
counted lawyers were employees of either Labaton or Lieff Cabraser, but their
hours and costs should have been counted only once — by Thornton Law.
To resolve the issue, he said, the other firms dropped the lawyers and Thornton
lowered the hourly rate it charged for numerous staff attorneys because it had
assigned a higher rate than the other firms.
Despite the resulting drop in combined legal fees, Goldsmith urged Wolf not to
reduce the lawyers’ payment from the settlement. In class­action cases, lawyers
commonly receive a payment that not only covers costs, but a financial reward for
bringing a risky case that could have failed and paid nothing.
Goldsmith suggested that Wolf simply boost the reward to offset the reduced legal
fees so that the firms still split the same $74 million, including $14 million for
Thornton.
“We respectfully submit that the error should have no impact on the court’s ruling
on attorneys’ fees,” wrote Goldsmith, whose firm often joins forces with Thornton.
That may not be enough to satisfy Wolf, who has a reputation for closely
questioning claims made in his court.
He called the legal fees “reasonable” at a Nov. 2 hearing and praised the plaintiffs’
lawyers for taking on a “novel, risky case.” But he approved the fees in part based
on sworn statements that the lawyers now admit were in error. Wolf could reduce
their payments, which were issued earlier this month, or hold a hearing to
determine whether the lawyers knowingly submitted false information, a serious
breach of professional ethics.
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“The double­counting was likely the result of sloppiness, assuming that there
Comments
would be no objectors’ or court scrutiny of the fee request,” said Frank, who has
successfully challenged several settlements and fee requests in other cases,
recouping more than $100 million for class members.
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Frank said the problems with the legal fees go beyond the double­counting of
attorneys. Other law firms contacted by the Globe said it’s common to list an hourly
rate for an attorney several times higher than the attorney’s own pay, because the
law firm has many other expenses aside from the lawyer him or herself. However,
Thornton listed attorneys’ rates at up to 14 times the lawyer’s wages.
Frank said his analysis suggests that the $75.8 million award to the nine law firms
was excessive — by at least $20 million and as much as $48.3 million — in part
because the lawyers asked too much in the first place. He said that the lawyers’ own
documents show that, in similarly sized settlements, the legal fees average only 17.8
percent.
Thornton Law Firm, a personal injury firm that specializes in asbestos­related
cases, is already the target of three investigations for its controversial campaign
contribution program in which the law firm paid millions of dollars in “bonuses” to
partners that offset their political contributions.
Federal prosecutors as well as two other agencies are investigating whether the
bonuses were an illegal “straw donor” scheme to allow the firm to vastly exceed
limits on campaign contributions. Thornton officials have insisted they did nothing
wrong, because the bonuses were paid out of the lawyers’ own equity in the firm.
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Thornton’s legal fees in the State Street case feed into a larger debate about how
Comments
lawyers get paid in class­action lawsuits. Defenders of paying lawyers on
contingency say the prospect of a high payoff encourages lawyers to take on
exceptionally difficult cases, such as suing a wealthy bank like State Street.
However, Frank said there’s little oversight of lawyers’ fee claims. Defendants
usually don’t care what the plaintiffs’ lawyers receive, because their costs don’t
change regardless of how much the plaintiffs’ lawyers receive.
And individual plaintiffs typically get too little money to have a strong incentive to
challenge legal fees. In the State Street case, the 1,300 plaintiffs would see
increases in their individual payments of only about $20,000 apiece if the lawyers’
fees were reduced by $20 million, Frank calculated. A plaintiff might have to spend
that much or more to hire another lawyer to investigate.
None of the plaintiffs in the State Street case objected to their lawyers’ request for
legal fees. But neither the lawyers nor their clients apparently noticed that the exact
same hours for nearly two dozen staff attorneys were claimed by more than one law
firm.
“The mistakes came to our attention during internal reviews that were conducted
in response to an inquiry from the media,” explained Labaton partner Goldsmith,
in his letter to Wolf.
Nor did they notice that Thornton consistently assigned a higher rate than the
other firms for the same attorneys — often a difference of $90 an hour.
Labaton officials, in a prepared statement, said the affidavits supporting the fee
request weren’t as important as the percentage of the settlement fund the lawyers
sought — just over 25 percent, once expenses are added.
“This fee award is reviewed by the Court for fairness . . . we believe the fees
awarded are still fair,” wrote Diana Pisciotta, a spokeswoman for Labaton.

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In addition to its fees from the State Street case, Thornton Law will receive a
Comments
portion of the $20 million the Securities and Exchange Commission awarded a
whistle­blower who alerted regulators to State Street’s international currency
practices.

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How low­paid lawyers can rack up big legal bills
Comments

Law firms commonly hire junior­level “staff attorneys” to review documents for $‫܀‬� to $‫ ܀܀‬an hour.
Thornton Law Firm took advantage of these low­paid lawyers to make millions in its lawsuit against State
Street Bank.
1

Thornton says it employed 24 staff attorneys in the State Street case.

2

In court documents, Thornton listed the hourly rates for the staff attorneys at $425 to
$500, more than ten times their actual pay.

One attorney's actual pay
Rate listed by Thornton

3

$�‫܀‬
$‫܀܀‬�

Thornton said the staff attorneys worked more than 10,000 hours on the case at a total
cost of $4.5 million, accounting for 60 percent of the total costs of the case.

4

A federal judge approved Thornton's bills, and gave them a bonus for taking on such a
risky lawsuit.

5

But there was a problem: 23 of Thornton’s 24 staff attorneys were also listed as lawyers
for other law firms working on the same case. Thornton and the other law firms double-

counted the work of the staff attorneys, inflating their combined bills by $4 million.
6

The lawyers admitted the “inadvertent errors” to the judge and asked him not to reduce
their legal fees.

SOURCE: Court records

G LOBE STAFF

Related
Walsh, Clinton join growing number of politicians returning donations from Thornton Law Firm
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Calls for probe of Thornton Law Firm mount; Sen. Warren to return donations

EXHIBIT C

Hon. Gerald E. Rosen (Ret.)

Hon. Gerald E. Rosen (Ret.) joins JAMS following 26 years of distinguished service on the
federal bench as a United States District Judge for the Eastern District of Michigan,
including seven years as that Court’s Chief Judge.
T: 313-872-1100
F: 313-872-1101
Case Manager
Donna Vinson
JAMS
400 Renaissance
Center
26th Floor
Detroit, MI 48243
313-872-1100 Phone
313-872-1101 Fax
Email:
dvinson@jamsadr.c om

"Mediation works, and
can produce great
b enefits much more
efficiently than other
approaches. There
are four keys to
success: candor,
cooperation, creativity
and courage. If the
Detroit b ankruptcy is
any guide, early and
committed use of
mediated negotiation
is likely to produce
b enefits that otherwise
might never b e
achievab le."
-Hon. Gerald E.
Rosen (Ret.)
"Judge Rosen was
indispensab le and
critical to the
successful conclusion
of the case. He and
his fellow mediators
were heroic in their
commitment of time

While on the bench, Judge Rosen had wide experience in facilitating settlements between
parties in a great many cases, including highly complex Multi-District Litigation (MDL)
matters and class actions. Most recently, the Judge served as the Chief Judicial Mediator
for the Detroit Bankruptcy case—the largest, most complex municipal bankruptcy in our
nation’s history—which resulted in an agreed upon, consensual plan of adjustment in just
17 months.
Prior to taking the bench, the Judge was a Senior Partner at the law firm of Miller, Canfield,
Paddock and Stone where he was a trial lawyer specializing in commercial, employment
and constitutional litigation.
Read counsel comments ab out Judge Rosen's skills and style as a neutral.
ADR Experience and Qualifications
Judge Rosen has extensive experience in the resolution of complex disputes in the
following areas:
Antitrust
Bankruptcy (Municipal)
Business/Commercial
Class Action/Mass Tort
Employment/FMLA
Civil Rights/§1983
Intellectual Property
Real Property
Securities
Special Master/Discovery Referee
Representative Matters
Antitrust
Cason-Merenda v. Detroit Medical Center, No. 06-15601 (Nurse wage case)
In re Northwest Airlines Corp., et al., Antitrust Litigation, No. 96-74711 (Hidden-city
ticketing case)
Arbitration
Quixtar Inc. v. Brady, No. 08-14346, and Amway Glob al v. Woodward, No. 0912946 (Addressing arbitrability of disputes and confirmation of arbitrator's award)
Bankruptcy
In re: City of Detroit (Chapter 9 municipal bankruptcy)
United States v. City of Detroit (Detroit water and sewer case) (Mediated
settlements)
Class Action/Mass Tort
Tankersley v. Ameritech Pub lishing, Inc. (FLSA collective action and Rule 23 class
action)
Marquis v. Tecumseh Products Co., No. 99-75971 (Class action alleging sexual
harassment at manufacturing plant)
In re Rio Hair Naturalizer Products, MDL 1055 (Multi-district product liability action)

Hon. Gerald E. Rosen (Ret.) | JAMS Mediator and Arbitrator | General Biography
400 Renaissanc e Center • 26th Floor • Detroit, Mic higan 48243 • Tel [phone] • Fax [phone] • www.jamsadr.c om
Page 1 of 3

and effort in the entire
process."
-Detroit Bankruptcy
Counsel
"[Y]ou demonstrate[d]
a keen sense of how
to get parties moving
together and closing
deals."
-Financial Creditor
Party, Detroit
Bankruptcy

Employment/FMLA
Redd v. Brotherhood of Maintenance of Way Employees Division of International
Brotherhood of Teamsters, No. 08-11457 (ERISA)
Civil Rights/§1983
Cheolas v. City of Harper Woods, No. 06-11885 (Police raid of party with underage
drinking)
Flagg v. City of Detroit, No. 05-74253 (Tamara Greene case)
Intellectual Property
I.E.E. International Electronics & Engineering, S.A. v. TK Holdings Inc., No. 1013487 (Vehicle occupant sensors patent)
Lear Automotive Dearb orn, Inc. v. Johnson Controls, Inc., No. 04-73461 (Remotecontrol garage door opener patent)
Real Property
United States v. Certain Land Situated in the City of Detroit (Detroit International
Bridge land condemnation case)
Securities
In re General Motors Corp. Securities and Derivative Litigation, MDL No. 06-1749
In re Collins & Aikman Corp. Securities Litigation, No. 03-71173
In re: Delphi Corporation Securities, Derivative & “ERISA” Litigation, MDL 1725
(Multi-district securities fraud/ERISA action)
Honors, Memberships, and Professional Activities
Widely published on a wide range of topics including, civil procedure, evidence, due
process, criminal law, labor law and legal advertising, including:
Co-Author, Federal Civil Trials and Evidence, The Rutter Group Practice Guide,
1999-Present
Co-Author, Federal Employment Litigation, The Rutter Group Practice Guide,
2006-2016
Co-Author, Michigan Civil Trials and Evidence, The Rutter Group Michigan Practice
Guide, 2008-2016
Contributing Editor, Federal Civil Procedure Before Trial, The Rutter Group
Practice Guide, 2008-2016
Co-Chair, Judicial Evaluation Committee for the U.S. District Court for the Eastern
District of Michigan, 1983-1988
Adjunct Professor, Evidence:
University of Michigan Law School, 2008
Wayne State University Law School, 1992-Present
University of Detroit-Mercy Law School, 1994-1996
Thomas M. Cooley Law School, 2004-2013
U.S. Representative, United States Department of State’s Rule of Law Program in
Moscow, Russia; Tbilisi, Georgia; Beijing, China; Cairo, Egypt, Hebrew University
(Jerusalem); and Malta
Judicial Consultant, United States Departments of State and Justice missions to
Thailand and the Ukraine
Member, Sixth Circuit Judicial Council, 2009-2015
Member, Board of Directors, Federal Judges Association, 1996-2002
Member on the Board of Directors of several charitable organizations, including:
Focus: HOPE; the Detroit Symphony Orchestra; the Community Foundation of
Southeastern Michigan and the Michigan Chapter of the Federalist Society
Member, Board of Advisors, George Washington University Law School, 2005-Present
Member, U.S. Judicial Conference, Committee on Criminal Law, 1995-2001
Founding Member, Michigan Intellectual Property Inn of Court
Selected Articles About the Detroit Bankruptcy
Howes: Detroit Bankruptcy Kudos Widely Shared, Detroit News, February 26, 2015.
Detroit Bankruptcy Shows Mediation Can Get the Job Done, Detroit Free Press,
January 18, 2015.
Detroit Bankruptcy Pros Write Off Millions in Fees, Detroit Free Press, December 11,
2014.
How Detroit Was Reb orn, Detroit Free Press, Special Section, November 9, 2014.
Judge, A Mediator in Bankruptcy, Sees Hope for Detroit, Detroit Free Press, November
9, 2014.

Hon. Gerald E. Rosen (Ret.) | JAMS Mediator and Arbitrator | General Biography
400 Renaissanc e Center • 26th Floor • Detroit, Mic higan 48243 • Tel [phone] • Fax [phone] • www.jamsadr.c om
Page 2 of 3

Finding $816 Million, and Fast, to Save Detroit, The New York Times, November 7,
2014.
Judge Rosen’s Tough Tack on Creditors Helped Speed Detroit Bankruptcy Case,
Crain’s Detroit Business, November 6, 2014.
Mediator in Detroit Bankruptcy Walks Fine Line Between City, Creditors, The Wall
Street Journal, February 14, 2014.
How Mediation Has Put Detroit Bankruptcy on the Road to Resolution, Detroit Free
Press, February, 2, 2014.
Detroit Emerges From Nation’s Largest Municipal Bankruptcy, Los Angeles Times,
November 10, 2014.
Background and Education
United States District Judge, Eastern District of Michigan (Detroit), 1990-2017
Chief Judge, 2009-2015
Judge by Designation, United States Court of Appeals for the Sixth Circuit,
Repeated Appointments
Senior Partner, Miller, Canfield, Paddock and Stone, specializing in commercial,
employment, real property, and constitutional litigation, 1979-1990
J.D., George Washington University Law School, 1979
Legislative Assistant, United States Senate, Sen. Robert P. Griffin (R-MI), 1974-1979
B.A., Senior Fellow, Political Science Kalamazoo College, 1973
Disclaimer
This page is for general information purposes. JAMS makes no representations or
warranties regarding its accuracy or completeness. Interested persons should conduct
their own research regarding information on this website before deciding to use JAMS,
including investigation and research of JAMS neutrals. See More

Hon. Gerald E. Rosen (Ret.) | JAMS Mediator and Arbitrator | General Biography
400 Renaissanc e Center • 26th Floor • Detroit, Mic higan 48243 • Tel [phone] • Fax [phone] • www.jamsadr.c om
Page 3 of 3

EXHIBIT D