Torres v. SGE Management LLC
Filing
427
OPINION and ORDER on REMAND (Signed by Judge Charles Eskridge) Parties notified. (ClaudiaGutierrez, 4)
United States District Court
Southern District of Texas
ENTERED
July 16, 2021
Nathan Ochsner, Clerk
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
JUAN RAMON
TORRES, et al,
Plaintiffs,
vs.
SGE MANAGEMENT,
LLC, et al,
Defendants.
§ CIVIL ACTION NO.
§ 4:09-cv-02056
§
§
§
§ JUDGE CHARLES ESKRIDGE
§
§
§
§
§
OPINION AND ORDER
ON REMAND
Judge Kenneth Hoyt previously awarded attorney fees and
expenses to the various counsel for Plaintiffs and their respective
law firms upon their successful settlement in this case. Counsel
appealed that award, and the Fifth Circuit has remanded for
further elaboration. Judge Hoyt subsequently recused, with the
matter transferred to this Court.
All materials before Judge Hoyt when making his original
award have now been independently reviewed, and the attorneyfee award has itself been considered in light of the familiar and
controlling factors outlined in Johnson v Georgia Highway Express,
Inc, 488 F2d 714 (5th Cir 1974). Based on such review, the Court
awards $3,010,428.00 in fees and $187,557.00 in expenses to
Matthew John Prebeg of Prebeg Faucett Abbott PLLC;
$1,766,994.00 in fees to and $184,347.00 in expenses to Andrew Jack
Kochanowski of Sommers Schwartz PC; $1,963,327.00 in fees and
$975.00 in expenses to Jeffrey West Burnett of Jeffrey W. Burnett
PLLC; $1,570,661.00 in fees and $5,183.00 in expenses to Eric
Franklin Citron of Goldstein & Russell, PC; and $1,505,223.00 in
fees and $80,305.00 in expenses to Scott Monroe Clearman of The
Clearman Law Firm, PLLC.
1. Background
This is a fee dispute between the counsel who brought and
litigated this action. They ultimately obtained good results for
their clients through a settlement reached in October 2018.
Dkt 317. The dispute over fees has toiled on, being now on
remand from the Fifth Circuit for a closer review of factors as
directed in Torres v SGE Management, LLC, 945 F3d 347 (5th Cir
2019). The following facts are generally undisputed and drawn
from the unanimous panel opinion by Judge Patrick
Higginbotham as docketed at Dkt 387.
Plaintiffs initially retained Jeffrey Burnett and the
eponymous firm of Jeffery W. Burnett, PLLC to bring claims
against Defendants for creating a multi-level marketing program
that they alleged was a fraudulent pyramid scheme. Burnett in
turn hired Scott Clearman and his eponymous firm of The
Clearman Law Firm LLP to initiate a class action against
Defendants pursuant to the Racketeer Influenced and Corrupt
Organizations Act. They agreed to split any fees, with Burnett
receiving 25 percent and Clearman receiving 75 percent.
Clearman later formed Clearman Prebeg LLP with Matthew
Prebeg and thereafter assigned his former firm’s fee interest to
his new firm. Andrew Kochanowski of Sommers Schwartz, PC
also eventually joined the case as class counsel. All counsel then
entered into a new fee agreement under which Clearman Prebeg
would receive 60 percent of any fees (to be split among its four
partners) while Burnett and Sommers Schwartz would each
receive 20 percent. Dkt 387 at 3.
Clearman unfortunately began to experience issues
associated with substance abuse at some point in 2011. The
various counsel dispute the extent of his involvement in the case
thereafter. But it’s apparent that the relationship between
Clearman and fellow counsel (including his law partner, Prebeg)
fractured and remains in a state of disrepair. Ibid.
Three partners eventually left Clearman Prebeg to form
Prebeg, Faucett & Abbott, PLLC in January 2014. That same
month Judge Kenneth Hoyt certified the class and named
2
Clearman, Kochanowski, and Prebeg as co-class counsel. The
latter two engaged Goldstein & Russell to defend the class
certification on appeal. The various counsel (excluding Clearman)
then entered into a further amended fee arrangement in June
2014 under which Goldstein & Russell would receive between 16
percent and 18 percent of the total fee award (depending on the
size) and Burnett would receive another 17 percent of the total.
The remainder of any fee award was to be divided amongst
Prebeg, Faucett & Abbott (51.99 percent), Sommers Schwartz
(30.67 percent), and Clearman (17.34 percent). Id at 4.
The class action eventually settled, with class members able
to choose between two options as consideration for releasing
their claims. Dkt 289-1 (settlement agreement). One was a
cash option, by which class members could receive 20 percent of
the difference between the amount they paid to Defendants and
the amount that Defendants paid them. The other was a
benefits option, by which class members could receive a number of
benefits relating to (among others) referral payments, conference
admissions, and reinstatement into Defendants’ sales program.
Id at 15–16.
Judge Hoyt also ultimately awarded $9,816,633.00 in fees to
counsel for Plaintiffs collectively, subject to allocation. Dkts 317,
336. Clearman sought to recover fully one-half of this award.
Dkt 321 at 4. Judge Hoyt instead allocated him $1,505,223.00 in
fees in a November 2018 order. Dkt 336. Clearman moved for
reconsideration several weeks later, which Judge Hoyt denied the
same day. Dkts 337, 339.
Clearman filed a notice of appeal in December 2018 as to the
fee allocation. Dkt 342. Plaintiffs, Kochanowski and Prebeg
(along with their respective firms), Burnett, and Thomas
Goldstein and Eric Citron (along with their firm) filed a crossappeal, urging that the allocation was appropriate and that the
appeal should be dismissed. They argued in the alternative that
Clearman shouldn’t be allocated any fees, but that if he received
any, he should receive “no more than $840,000 in fees and costs.”
Dkt 348 at 3.
The Fifth Circuit vacated the award and remanded “for
elaboration of the trial court’s reasoning under the Johnson
3
framework.” Dkt 387 at 2, citing Johnson 488 F2d at 717–19.
Clearman moved to recuse Judge Hoyt from the proceedings on
remand, who did so on March 6, 2020. Dkts 403, 413. The action
was then reassigned to this Court. Dkt 414.
Various counsel immediately filed voluminous post-remand
motions regarding the dispute over attorney fees. See Dkts 388,
398, 410, 412, 419, 420. But remand in no way required a new
record. Instead, each class member and associated class counsel
were ordered to file a brief addressing their positions under the
Johnson framework as to the material originally filed before Judge
Hoyt. Dkt 421. The pending motions were all denied as moot.
Clearman filed a brief arguing that he should receive between
35 and 50 percent of the fee. Dkt 422. Citron and Burnett filed a
brief arguing that the latter and his firm should receive 17 percent
of the fee (totaling $1,662,724.72 in fees and expenses) while the
former and his firm should receive 18 percent of the first $5
million, 17 percent of the next $3 million, and 16 percent of the
remainder (totaling $1,703,182.65 in fees and expenses). Dkt 423
at 7–8. And Kochanowski and Prebeg filed a brief arguing that
the former and his firm should be awarded $2,532,151.80 in fees
and $184,347.26 in expenses while the latter and his firm should
be awarded $3,164,170.00 in fees and $187,557.38 in expenses.
Dkt 424 at 12, citing Dkts 291, 297. Kochanowski and Prebeg
say that Citron and Burnett should be awarded the fees they
request while Clearman, if he is to receive any fees, “is at most”
entitled to $840,866.25 after all other counsel have been paid.
Dkt 424 at 13.
The following chart summarizes the final attorney-fee
allocation as originally determined by Judge Hoyt, as well as the
current positions stated by counsel on remand:
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Attorney Fee Summary
Counsel
Clearman/
The Clearman
Law Firm LLP
District
Court award
(Dkt 336)
Clearman’s
request
(Dkt 422)
$1,505,223.00
(fees),
$80,305.00
(expenses)
35% to 50% of
the total fees
($3,596,250.00–
$5,137,500.00)
Burnett/
$1,963,327.00
Jeffrey W.
(fees),
Burnett, PLLC $975.00
(expenses)
Citron/
$1,570,661.00
Goldstein &
(fees)
Russell
$5,183.00
(expenses)
Prebeg/Prebeg, $3,010,428.00
Faucett,
(fees),
& Abbot
$187,557.00
(expenses)
Kochanowski/
$1,766,994.00
Sommers
(fees),
Schwartz PC
$184,347.00
(expenses)
No position
$1,662,724.72
Burnett and
Citron’s
request
(Dkt 423)
Nothing, but at
most whatever
amount remains
after all other
allocations are
determined
$1,662,724.72
No position
$1,703,182.65
$1,703,182.65
No position
$3,164,170.00
(fees),
$187,557.38
(expenses)
$2,532,151.80
(fees),
$184,347.26
(expenses)
$3,164,170.00
(fees),
$187,557.38
(expenses)
$2,532,151.80
(fees),
$184,347.26
(expenses)
No position
Prebeg and
Kochanowski’s
request
(Dkt 424)
Nothing, but at
most
$840,866.25
The Court eventually heard oral argument, with all relevant
counsel appearing and articulating their respective positions on
the fee dispute. Dkt 426.
2. Legal standard
When assessing a class action settlement, district courts have
an independent duty under Rule 23 of the Federal Rules of Civil
Procedure to the class and the public to ensure that attorney fees
are reasonable and divided up fairly among counsel for plaintiffs.
Dkt 387 at 11 n 25, citing In re Vioxx Products Liability Litigation,
802 F Supp 2d 740, 772 (ED La 2011). Courts in the Fifth Circuit
typically use one of two methods for calculating attorney fees in
class actions. Under a percentage method, the court “awards fees as
a reasonable percentage of the common fund.” Union Asset
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Management Holding AG v Dell, Inc, 669 F3d 632, 642 (5th Cir
2012). Under a lodestar method the court computes fees by
multiplying the hours reasonably devoted to the litigation by a
reasonable hourly rate, followed by an upward or downward
multiplier applied at its discretion. Id at 643.
Judge Hoyt used the percentage method. This requires the
court to establish a reasonable attorney-fee award upon
consideration and weighing of twelve factors as set out by the
Fifth Circuit in Johnson v Georgia Highway Express, Inc, being:
o First, the time and labor involved;
o Second, the novelty and difficulty of the questions;
o Third, the skill requisite to perform the legal services
properly;
o Fourth, the preclusion of other employment due to
the case;
o Fifth, the customary fee;
o Sixth, whether the fee is fixed or contingent;
o Seventh, time limitations;
o Eighth, the amount involved and results obtained;
o Ninth, the experience, reputation, and ability of
counsel;
o Tenth, the undesirability of the case;
o Eleventh, the nature and length of the professional
relationship with the client, and;
o Twelfth, awards in similar cases.
488 F2d at 717–19.
Not all factors will have “specific factual significance” in
every case. Longden v Sunderman, 979 F2d 1095, 1100 (5th Cir
1992). This is particularly true when the sole question is the
allocation of an award among counsel. Still, a district court must
explain how each of the Johnson factors affects its award. In re High
Sulfur Content Gasoline Products Liability Litigation, 517 F3d 220, 228
(5th Cir 2008). But it isn’t an abuse of discretion to omit a lengthy
analysis of each factor. Forbush v JC Penney Co, 98 F3d 817, 823
(5th Cir 1996), quoting Louisiana Power & Light Co v Kellstrom,
50 F3d 319, 331 (5th Cir 1995), cert denied, 516 US 862 (1995).
6
So long as the district court “has articulated and clearly applied
the criteria,” the Fifth Circuit doesn’t require the findings “to be
so excruciatingly explicit in this area of minutiae that decisions of
fee awards consume more paper than did the cases from which
they arose.” Forbush, 98 F3d at 823, quoting Louisiana Power &
Light, 50 F3d at 331.
3. Analysis
The sole task on remand is to elaborate “the trial court’s
reasoning under the Johnson framework.” Dkt 387 at 1. Each
factor will be addressed in turn.
a. Time and labor involved
The Fifth Circuit instructs on consideration of the first
Johnson factor:
The trial judge should weigh the hours claimed
against his own knowledge, experience, and
expertise of the time required to complete
similar activities. If more than one attorney is
involved, the possibility of duplication of effort
along with the proper utilization of time should
be scrutinized. The time of two or three lawyers
in a courtroom or conference when one would
do, may obviously be discounted. It is
appropriate to distinguish between legal work,
in the strict sense, and investigation, clerical
work, compilation of facts and statistics and
other work which can often be accomplished by
non-lawyers but which a lawyer may do because
he has no other help available. Such non-legal
work may command a lesser rate. Its dollar
value is not enhanced just because a lawyer does
it.
488 F2d at 717.
After Judge Hoyt granted the motion for preliminary
approval of the settlement, Kochanowski, Burnett, Citron,
Clearman, and Prebeg each submitted separate motions for
attorney fees. Dkts 291, 292, 295, 296, 297. It appears that one
reason for the disjointed effort was because Clearman didn’t
7
maintain billing records. Indeed, Clearman later acknowledged,
“I never cared to record my hours as I would rather focus on
getting results and being rewarded accordingly.” Dkt 387 at 5
(internal quotations omitted). This made a unified fee petition
impracticable from the outset.
Both Burnett and Citron and Kochanowski and Prebeg filed
detailed time records along with their fee petitions. Dkts 291-1,
292-6, 295-6, 297-9. Burnett asserts that he billed “at least 1,200
hours of work” over nine years, and Citron asserts that he billed
936.25 hours handling appellate matters for the class. Dkt 423
at 9–10. Kochanowski claims that he “led a team of seven
Sommers lawyers who billed 2,488 hours at a blended rate of
$458 (historical) or $574 (actual) in the litigation.” Dkt 424 at 5.
Prebeg claims that he and his firm “recorded 4,153 hours of time
on the litigation” and “billed at an average rate of $424.26,” while
excluding any time Clearman claimed to work while partnered
with Prebeg. Id at 5–6.
For his part, Clearman filed his initial fee petition in
September 2018, seeking $5,000,000.00 (being approximately
50 percent of the fees remaining after expenses) upon assertion
that he devoted “at least 3000 productive hours” to the case.
Dkt 298 at 32. A number of motions to strike that fee petition
followed because Clearman didn’t offer contemporaneous time
sheets. Dkts 303, 305, 307. Judge Hoyt struck the petition and
ordered Clearman to file a revised petition that “set forth time
expended and his usual and customary rates as well as incurred
expenses.” Dkt 316. Clearman submitted a new fee petition with
reconstructed time records several weeks later, again seeking half
of the fees after expenses—but this time claiming he billed 4,150
hours. Dkts 321, 321-1 (time records). This again drew objection
from the class representatives. Dkt 335.
Clearman continues to maintain that he and his associates
worked on this case for over nine years and billed 4,310 hours
after subtracting the hours he billed from 2014–2016, which he
has withdrawn. Dkt 422 at 8. Clearman also claims that he
“owns” any time worked by Clearman Prebeg LLP lawyers while
the firm existed from 2011 to 2013, which would add an
8
additional 2,410 hours to Clearman’s time (for a total of 6,720
hours). Id at 9–10.
Burnett and Citron contend that the time records supposedly
“reconstructed” by Clearman are neither accurate nor credible,
thus providing reason to reject his fee application outright.
Dkt 423 at 14. Prebeg and Kochanowski likewise argue that
Clearman’s time records are “pure fabrication.” Dkt 424 at 7.
They note that Clearman wasn’t involved in the litigation after
2013. And, for example:
Briefing Counsel painstakingly went through
Clearman’s submission to discover that: he
claims to have worked over 9 hours a day, 424
hours total, to just write the complaint; billed
over 100 hours drafting a 5 page sur-reply brief;
billed 170 hours going over the “record” of a
single-issue dismissal; then spent 550 more
hours briefing the single issue; 370 hours
watching the same video clips over several
years; 669 hours of 10 to 14 block hours, and so
forth.
Id at 10.
A lack of contemporaneous billing statements doesn’t per se
preclude an award of fees. But the Fifth Circuit requires that the
evidence be adequate to determine reasonable hours. Gagnon v
United Technisource Inc, 607 F3d 1036, 1044 (5th Cir 2010).
Clearman here responded to Prebeg’s initial fee petition by
stating that “if this Court wants Clearman to fabricate time
records retroactively like Prebeg has, Clearman will do so.”
Dkt 131 at 13. That attitude is consistent with his evolving
estimate of the number of hours he devoted to this case.
Clearman no doubt devoted many hours to this case over a
number of years. But nothing corroborates the veracity of his
retroactive estimates.
The first Johnson factor doesn’t weigh in favor of Clearman
for the simple reason that no reliable records credibly establish
his time and labor invested in the case. In descending order of
credible time records presented, this factor weighs most heavily
in favor of Prebeg and his firm, followed by Kochanowski and
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his firm, Burnett and his firm, Citron and his firm, and only then
by Clearman and his firm.
b. Novelty and difficulty of the questions
The Fifth Circuit observes as to the second Johnson factor,
“Cases of first impression generally require more time and effort
on the attorney’s part.” 488 F2d at 718. And further, counsel
shouldn’t “be penalized for undertaking a case which may make
new law,” but should instead “be appropriately compensated for
accepting the challenge.” Ibid.
The briefs by Burnett and Citron and Prebeg and
Kochanowski don’t address this factor at all. That’s likely because
it doesn’t appear applicable to fee-allocation disputes between
counsel—as opposed to establishing the requisite amount of the
overall fee to be awarded. This is so because questions and issues
presented by a case are generally common to all counsel, whether
difficult or routine.
Even so, Clearman asserts that this factor weighs in his favor
because his “contributions involved novel and difficult issues that
required highly developed skills to perform.” Dkt 422 at 8. He
specifically congratulates himself for avoiding arbitration. Ibid.
By this, he attempts to compartmentalize his work as to one
aspect of the case. To the contrary, this factor considers the
novelty or difficulty of the case holistically. But even if this factor
was accorded with Clearman’s understanding, nothing explains
how the tasks performed by other counsel were any less novel or
difficult than those he claims to have performed.
The second factor appears to be inapplicable. As such, it
doesn’t weigh in favor of shifting the fee allocation in favor of
any counsel or firm.
c. The skill required to properly perform the legal
services
The Fifth Circuit instructs as to the third Johnson factor, “The
trial judge should closely observe the attorney’s work product, his
preparation, and general ability before the court.” 488 F2d at 718.
And further, “The trial judge’s expertise gained from past
experience as a lawyer and his observation from the bench of
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lawyers at work become highly important in this consideration.”
Ibid.
Clearman argues that the third Johnson factor weighs in his
favor for the same reasons that the second factor also supposedly
weighs in his favor. Dkt 422 at 8. Prebeg and Kochanowski argue
to the contrary that “Clearman had virtually no role in the
certification of this class” and “played virtually no role in the
litigation itself during and post certification.” Dkt 424 at 12.
Burnett and Citron address the third factor by acknowledging
that Clearman “appears to have been a skilled attorney,” but they
argue that his “absence meant he was unable to apply that skill to
perform work on behalf of the class much of the time.” Dkt 423
at 10. Burnett and Citron further argue that they (along with
Kochanowski and Prebeg) are “experienced, reputable, and able
attorneys” whose expertise led to the settlement, while
specifically highlighting Citron “whose specialized appellate skills
were vital to successfully upholding class certification and,
ultimately, obtaining relief for the class.” Ibid.
It was Clearman who moved to recuse Judge Hoyt. Dkt 403.
And so it is he who has imposed a disadvantage in the weighing
of this factor for the very reason that Judge Hoyt isn’t now
available to consider—in light of his own considerable expertise
obtained from his decades of distinguished service on the
bench—the work product, preparation, and performance of
various counsel that he observed in real time. It instead devolves
to this Court as a post hoc determination based on a cold record.
Aside from referencing Citron’s specific skills regarding the
appeal of the class certification, none of the briefs articulate any
identifiable skill that isn’t common and in ready supply amongst
any group of competent class counsel that have already been
appointed as lead counsel. True, a RICO class action isn’t a
garden-variety tort or contract claim. But then again, this action
was ultimately resolved by a settlement following motion
practice, discovery, and class certification. There was neither a
trial nor an appeal on the merits. All counsel without question
appear to have devoted their talents to resolving the matter. But
which counsel did what (and how well they did it) isn’t apparent
on this attorney-fee record.
11
The third Johnson factor doesn’t shift the fee allocation in
favor of or away from any counsel or firm.
d. The preclusion of other employment due to
this case
The Fifth Circuit explains as to the fourth Johnson factor that
the trial court should consider “otherwise available business
which is foreclosed because of conflicts of interest which occur
from the representation, and the fact that once the employment
is undertaken the attorney is not free to use the time spent on the
client’s behalf for other purposes.” 488 F2d 714, 718.
Clearman argues that his “commitment of time and
resources precluded him from taking on other significant
matters—generally more so than other litigation counsel on the
case, who worked in larger firms with diversified practices.”
Dkt 422 at 7. Citron argues on behalf of himself and his firm that
“every hour spent on this case took time away from other cases
(and other cases the firm could have taken).” Dkt 423 at 11
(internal quotations and citations omitted). Burnett and Prebeg
and Kochanowski don’t address this factor in their respective
briefs.
What Citron says is true, but it applies equally to all. Every
lawyer who devoted any time to this matter undoubtedly had to
decline some amount of work as a result at some point. That’s
the nature of the litigation business. Surprisingly, no one
addresses the fact that Clearman’s substance abuse was itself a
leading cause of his taking on less work as to this case—and in
his practice as a whole. If anything, this factor cuts at least slightly
against him.
The fourth Johnson factor doesn’t shift the fee allocation in
tremendous favor of any counsel or firm, but it does slightly
disfavor Clearman.
e. The customary fee
The Fifth Circuit directs as to the fifth Johnson factor that the
trial court should consider the “customary fee charged” for the
relevant services that counsel performed “in the relevant
community.” 488 F2d at 718.
12
The various counsel don’t address this factor in their
respective briefs. And so for this factor, at least, it appears that
they agree that it applies to them all equally. As such, it doesn’t
weigh in favor of shifting the fee allocation in favor of any
counsel or firm.
f. Whether the fee is fixed or contingent
The Fifth Circuit observes as to the sixth Johnson factor, “The
fee quoted to the client or the percentage of the recovery agreed
to is helpful in demonstrating the attorney’s fee expectations
when he accepted the case.” 488 F2d at 718.
It’s clear that all counsel represented Plaintiffs on a
contingent basis. But this factor addresses the size of the overall
award—and not, for instance, the various allocation agreements
reached between counsel at different phases of this litigation, as
noted above. Indeed, the various counsel don’t address this factor
in their respective briefs, appearing to agree that it applies to them
all equally. As such, this factor doesn’t weigh in favor of shifting
the fee allocation in favor of any counsel or firm.
g. Time limitations imposed by the client or the
circumstances
The Fifth Circuit holds as to the seventh Johnson factor,
“Priority work that delays the lawyer’s other legal work is entitled
to some premium.” 488 F2d at 718. And it also observes that this
factor “is particularly important when a new counsel is called in
to prosecute the appeal or handle other matters at a late stage in
the proceedings.” Ibid.
Neither Clearman nor Prebeg and Kochanowski specifically
address this factor in their respective briefing. Burnett argues that
his time “is limited” as a solo practitioner and that this case
“demanded a lot of work, often on short notice and against
capable attorneys.” Dkt 423 at 10. Citron argues that he and his
firm “faced a complete demand on their time and every hour
spent on this case took time away from other cases.” Id at 11
(internal quotations and citations omitted).
This factor doesn’t weigh in favor of either Clearman or
Prebeg and Kochanowski. It does weigh in favor of Citron
because he was brought on to prosecute the appeal of class
13
certification at a later stage in the proceedings. It also weighs
slightly in favor of Burnett for the reasons that he states. The fact
that he has been a solo practitioner throughout this action lends
credibility to his argument.
h. The amount involved and the results obtained
The Fifth Circuit observes as to the eighth Johnson factor that
the court “should consider the amount of damages . . . awarded,”
but that such consideration should not obviate its “scrutiny of
the decision’s effect on the law.” 488 F2d at 718. Here, the exact
settlement amount isn’t clear from the agreement itself. See
Dkt 289-1 at 16. But there’s no question that the result was
favorable for Plaintiffs, with the litigation resulting in precedent
helpful to plaintiffs in future RICO class actions.
Clearman argues that the eighth Johnson factor “has been
consistently recognized as ‘the most important.’” Dkt 422 at 7,
quoting Bear Ranch, LLC v Heartbrand Beef, Inc, 885 F3d 794, 803
(5th Cir 2018). He also offers brief and conclusory argument that
his requested relative-contribution percentage of 50 percent
“accords with Factor 8 of the Johnson factors.” Dkt 422 at 7. But
he offers no further support or argument as to why this is so.
Burnett and Citron argue that they, along with Kochanowski
and Prebeg, obtained “an excellent result” for the class “in large
part by obtaining class certification and upholding it on appeal.”
Dkt 423 at 10 (citations omitted). By contrast, they point to
Clearman’s admission that “his participation in the class
certification briefing and the hearing was much diminished,”
given that he had “checked himself in for alcoholism treatment”
at the time the class was certified. Ibid, quoting Dkt 392 at 12
(internal quotations omitted). Kochanowski and Prebeg also
assert that Clearman didn’t meaningfully contribute in
certification or after the class was certified. Dkt 424 at 12.
Clearman hasn’t sufficiently connected his early efforts to the
settlement in a way that distinguishes his performance from that
of his co-counsel. It’s evident that he played a substantial role
during the early part of this action, putting a great deal of work
into its development. That work has and should be valued. But
he simply wasn’t involved in certifying the class or thereafter.
14
And that latter work is what most directly enabled successful
settlement.
Given the actual reason for the results obtained, this factor
weighs in favor of all counsel except for Clearman.
i. The experience, reputation, and ability of the
attorneys
The Fifth Circuit observes as to the ninth Johnson factor,
“Most fee scales reflect an experience differential with the more
experienced attorneys receiving larger compensation.” 488 F2d
at 718–19. “Longevity per se, however, should not dictate the
higher fee.” Id at 719.
Meaningful difference in the experience, reputation, and
ability of various counsel isn’t apparent. But of course, the factor
by its nature invites each to brag on himself (and, at times, to
demean others) in a self-interested way. And so, Clearman argues
that the ninth Johnson factor weighs in his favor because his
“experience, reputation and ability for class and RICO litigation
(Factor 9) can hardly be rivaled.” Dkt 422 at 8. Kochanowski
argues that his firm “has been involved in many class actions, and
its partners have litigated class cases for decades, and didn’t need
Clearman’s purported skills.” Dkt 424 at 12. Prebeg argues that
he “also had prior class action experience, and extensive
experience in complex litigation.” Ibid. Burnett claims that he’s a
“reputable attorney with a skillset involving complex, numbersoriented legal issues.” Dkt 423 at 11. And Citron notes that he’s
a “highly regarded appellate lawyer at one of the Nation’s finest
appellate firms.” Ibid. Burnett and Citron also acknowledge that
Clearman “was a skilled attorney,” but they argue that “he was
unable or unwilling to represent the class and do the necessary
work after 2013.” Ibid.
Let’s leave it at this. Such arguments between former cocounsel—who have together successfully created and resolved a
significant litigation matter—are somewhat unseemly and
unbecoming of dignified practice. All counsel are well established
and leveraged their respective skills to institute a class action,
achieve its certification, and confect a settlement. They did so as
a group, at different stages and at different times. Human
15
circumstances and personal strife led to a rupture in overall
harmony after years of toil. But that is a story often told.
This factor doesn’t weigh in favor of shifting the fee
allocation towards or away from any counsel or firm in particular.
Their individual experience, reputation, and ability are adequately
assessed under other factors devoted to work performed and
results obtained.
j. The political “undesirability” of the case
The Fifth Circuit contemplated cases involving civil rights
when establishing the tenth Johnson factor, specifically noting that
the “decision to help eradicate discrimination is not pleasantly
received by the community.” 488 F2d at 719. While this factor
could certainly be conceived to fit an array of at-the-timeunpopular litigation stances, nothing suggests that this class
action under the RICO laws is one of them. Even if it did, the
relative political undesirability of a case would affect all counsel
equally.
Only Clearman attempts to argue that this factor weighs in
his favor because “the case was very risky and therefore
undesirable” when he “committed to bring and fund it.” Dkt 422
at 8. Without elaboration, he also says that “only he was the
subject of ridicule for prosecuting the case” because other
counsel “joined the case after the risk had diminished.” Ibid.
This confuses political undesirability with overall perception
of litigation risk and economics—which is accounted for by at
least the second Johnson factor. This factor doesn’t weigh in favor
of shifting the fee allocation in favor of any counsel or firm.
k. The nature and length of the professional
relationship with the client
The Fifth Circuit recognizes as to the eleventh Johnson factor,
“A lawyer in private practice may vary his fee for similar work in
the light of the professional relationship of the client with his
office.” 488 F2d at 719. It also observes that the trial court “may
appropriately consider this factor in determining the amount that
would be reasonable.” Ibid. Basically, this factor appears directed
towards what is known internally within law firms as client
attribution or client origination.
16
Neither Clearman nor Prebeg and Kochanowski specifically
address this factor. Burnett notes that he “originated the named
plaintiffs and class representatives, and he was the primary point
of contact with those clients throughout the case.” Dkt 423 at 11.
He also explains that both appointed class representatives were
his clients “long before this case.” Ibid. Citron argues that he
“provided exactly the work he was asked to provide (and more)
and seeks only the fee that the class representatives previously
agreed to.” Id at 11–12. Citron and Burnett also persuasively note
that Clearman had no prior relationship with the clients and that
“the class representatives dismissed Clearman because of his
unprofessional behavior and objected to his fee petition as
disproportionate to the services he rendered.” Ibid.
The eleventh Johnson factor certainly weighs in favor of
Burnett, given his long relationship with the class representatives.
And it is neutral as to Prebeg, Kochanowski, Citron, and their
respective firms. But it weighs against Clearman. Granted, he
joined the case at an early stage, but the class representatives raise
serious allegations about his performance and working
relationship with class members. See Dkt 303 at 16.
l. Awards in similar cases
The Fifth Circuit counsels as to the twelfth Johnson factor,
“The reasonableness of a fee may also be considered in the light
of awards made in similar litigation within and without the court’s
circuit.” 488 F2d at 719.
This factor of its nature relates to the size of an overall fee
award, not to disputes between counsel related to portions of that
fee award. And the various counsel don’t directly address it,
appearing to agree that the factor applies to them all equally. As
such, this factor doesn’t weigh in favor of shifting the fee
allocation in favor of any counsel or firm.
4. Conclusion
In summary, the Court FINDS as to the Johnson factors that:
o Factor one weighs most heavily in favor of Prebeg and
his firm, followed by Kochanowski and his firm,
Burnett and his firm, Citron and his firm, and finally
Clearman and his firm;
17
Factor four doesn’t weigh in favor of any counsel or
firm, but it does slightly disfavor Clearman;
o Factor seven weighs in favor of Citron and slightly in
favor of Burnett, but not in favor of any other
counsel;
o Factor eight weighs in favor of all counsel except for
Clearman
o Factor eleven weighs in favor of Burnett and against
Clearman, and is neutral as to Prebeg,
Kochanowski, Citron, and their respective firms;
and
o Factors two, three, five, six, nine, ten, and twelve don’t
weigh in favor of any counsel as compared to any
other.
To be clear, none of the Johnson factors independently and
affirmatively establish that Clearman is entitled to a fee award
most heavily weighted in his favor. And nothing comes close to
supporting an allocation to him of 50 percent of the overall fee.
The very contention borders on frivolous.
What does this mean as to the appropriate allocation? That’s
a matter devoted more to experience, rather than any precise
metric of logic or statistics. And in that view, the fee award by
Judge Hoyt—who dealt with counsel and this litigation from
inception to its conclusion after settlement—was correct. A
lesser award to Clearman certainly wouldn’t have been surprising,
given his failure to maintain and present any reasonable account
of his time, along with his inability to continue on with the
litigation during and after class certification. But then again, the
award by Judge Hoyt in fact reflected a steep discount as against
the amount requested by Clearman and his hours presented.
Having now reviewed all materials before Judge Hoyt when
making his original fee award, and also having considered each of
the factors outlined in Johnson v Georgia Highway Express, Inc,
488 F2d 714 (5th Cir 1974), attorney fees are AWARDED as
follows:
o
18
$3,010,428.00 in fees and $187,557.00 in expenses to
Matthew John Prebeg of Prebeg Faucett Abbott
PLLC;
o $1,766,994.00 in fees and $184,347.00 in expenses to
Andrew Jack Kochanowski of Sommers Schwartz
PC;
o $1,963,327.00 in fees and $975.00 in expenses to Jeffrey
West Burnett of Jeffrey W. Burnett PLLC;
o $1,570,661.00 in fees and $5,183.00 in expenses to Eric
Franklin Citron of Goldstein & Russell, PC; and
o $1,505,223.00 in fees and $80,305.00 in expenses to
Scott Monroe Clearman of The Clearman Law
Firm, PLLC.
SO ORDERED.
o
Signed on July 16, 2021, at Houston, Texas.
Hon. Charles Eskridge
United States District Judge
19
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