Pomerantz set to forgo attorney fees after delaying settlement with biotech execs

A man walks through the street carrying a briefcase in Manhattan, New York City, U.S., August 19, 2020. REUTERS/Andrew Kelly
  • Firm represents shareholders suing TerraVia Holdings
  • Judge threatened sanctions over settlement delays
  • Pomerantz said it will give up $625k in fees

(Reuters) - Pomerantz has said that it will not seek payment for its work on a shareholder settlement with biotech company executives after a San Francisco federal judge threatened to sanction the plaintiffs' law firm for letting the case languish for nearly a year and a half.

Pomerantz had proposed to take $625,000 in attorneys fees from the $2.5 million deal but said in court filings Thursday that it would recoup only expenses.

The firm represents investors who sued TerraVia Holdings Inc and three of its executives for allegedly failing to disclose that its algae-based protein had prompted a product recall.

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Attorneys for Pomerantz and the executives did not immediately reply to requests for comment.

The company filed for bankruptcy in 2017 and was acquired by Dutch food ingredients company Corbion.

TerraVia executives agreed to settle the claims in September 2020, according to court documents, but the shareholders' attorneys did not ask the judge to approve the deal until March 2022.

Last month, U.S. District Judge James Donato ordered Pomerantz to explain why it had not better supported the lead attorney on the case, who said at a hearing that family issues had caused the delays.

"The Pomerantz firm should have functioned as a team to carry out its fiduciary duties as class counsel," the judge wrote.

Pomerantz is one of the most frequent filers of securities class actions, according to litigation consulting firm Cornerstone Research.

The firm's managing partner Jeremy Lieberman said in a filing on Thursday that the attorney had not asked for assistance and that the delays were "an isolated lapse by an attorney under difficult personal circumstances."

Shareholders sued TerraVia and the executives in 2016, alleging it concealed that its protein powder caused a recall of Honey Stinger brand protein chews tied to a spate of gastrointestinal illness.

Donato administratively closed the case in December 2021 after there had been no filings for more than a year but reopened it in February to allow Pomerantz to file for approval of the settlement. The TerraVia executives did not admit wrongdoing.

After a hearing on the deal, the judge said delays in the case raised "serious questions" and threatened sanctions such as dismissing the case or disqualifying Pomerantz from practicing in the Northern District of California, a major venue for shareholders suing companies.

The firm said in court filings that the delay was due in part to the lead attorney not promptly replying to emails and that none of his other cases had been delayed. A former attorney for the TerraVia executives also went on leave and did not reply to emails for a time, Pomerantz said.

The case is In re TerraVia Holdings Inc, U.S. District Court, Northern District of California, No. 3:16-cv-06633.

For shareholders: Patrick Dahlstrom and Louis Ludwig of Pomerantz

For TerraVia: Jordan Eth and Mark Foster of Morrison Foerster

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Jody Godoy reports on banking and securities law. Reach her at jody.godoy@thomsonreuters.com