Class lawyers win reduced fee of $152 million in Sutter case

REUTERS/Chip East
  • San Francisco judge rejected higher fee bid for $172 million
  • Cited 'unreasonably high' hours claimed by plaintiffs' lawyers
  • Five firms on antitrust plaintiffs' team vs Sutter Health
  • Final approval given for $575 million settlement

(Reuters) - A California judge has slashed a requested legal fee award in an antitrust settlement with Sutter Health, approving $152.3 million in compensation for class counsel, after concluding the plaintiffs' lawyers had claimed "unreasonably high" hours for their work.

Judge Anne-Christine Massullo of San Francisco Superior Court gave final approval to the $575 million settlement as she awarded fees to five law firms that represented plaintiff labor unions and employers, in an order released on Friday.

Sutter Health in 2019 first agreed to the settlement resolving claims that anticompetitive practices led to higher healthcare costs in northern California. The awarded legal fee marked about 26% of the settlement, in line with compensation in other class actions, Massullo wrote.

Massullo said her award accounted for the "risk presented by this litigation" and also "the novelty and complexity of the issues." The plaintiffs' lawyers had asked for $172.5 million in fees.

A lead lawyer for the class, Richard Grossman of California's Pillsbury & Coleman, did not immediately return a message seeking comment on Monday. The firms Farella Braun + Martel; Cohen Milstein Sellers & Toll; Kellogg, Hansen, Todd, Figel & Frederick; and McCracken, Stemerman & Holsberry also represented the plaintiffs.

Jones Day partner David Kiernan, a lawyer for Sutter, also did not immediately return a message seeking comment on Monday.

Massullo's order awarded $11.5 million in fees to the California attorney general's office, which sued Sutter in 2018. The state's complaint was consolidated with the private litigation, which began in 2014. Massullo said the state attorneys and class lawyers "demonstrated a high level of skill in providing high quality of representation in this case."

Still, the judge raised concerns about the number of hours -- 194,642 -- that class lawyers claimed in their request for fees. Massullo said the claimed hours compared to "93.6 years of work, or more than 7 years of work for 13 attorneys."

Declarations from plaintiffs' attorneys involved in the case "do not, except at a high level and very generally, permit assessment of the extent to which the five firms that constitute class counsel unreasonably duplicated efforts," Massullo said.

Still, she said she was "satisfied that this litigation was a monumental undertaking" that required a "vast number of hours."

Class named plaintiffs United Food and Commercial Workers International Union and Employers Benefit Trust objected to the requested legal fees as excessive.

A lawyer for the union, Stephen Siegel, partner at Chicago's Novack and Macey, argued the assistance provided by the California attorney general's office should have reduced the fees paid to private lawyers. Siegel did not immediately return a message on Monday seeking comment.

The case is UFCW & Employers Benefit Trust v. Sutter Health, San Francisco Superior Court, No. CGC-14-538451.

For the plaintiffs: Richard Grossman of Pillsbury & Coleman

For objector UFCW & Employers Benefit Trust: Stephen Siegel of Novack and Macey

For California: Emilio Varanini of the state attorney general's office

For Sutter: David Kiernan of Jones Day

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