Judge's failure to conduct 'lodestar cross-check' dooms Quinn Emanuel's $185M fee award
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A trial judge should not have awarded $185 million in fees to Quinn Emanuel Urquhart & Sullivan without conducting a “lodestar cross-check” that considers hours worked and billing rates, the U.S. Court of Appeals for the Federal Circuit ruled Tuesday.
Quinn Emanuel received the fee award in its representation of two classes of health plan insurers in litigation under the Affordable Care Act. The insurers said the federal government did not abide by its promise to pay them for losses incurred for the first three years of participation in the law’s insurance marketplace. The litigation settled for $3.7 billion, and the $185 million represented 5% of the award.
Law.com, Bloomberg Law, Reuters and Law360 have coverage.
Quinn Emanuel lawyers had worked nearly 10,000 hours on the case with a blended hourly rate of $1,033. Support staff had worked more than 400 hours at an average hourly rate of $325. If only attorney time was considered, the fee awarded comes to about $18,500 per hour, according to prior coverage of the case.
“Quinn Emanuel’s numbers for hours and rates, even if accepted, would produce a lodestar of approximately $10 million, and Quinn Emanuel’s $185 million proposal is huge compared to that figure,” the Federal Circuit said in a Jan. 31 opinion by Judge Richard G. Taranto.
The Federal Circuit noted that Quinn Emanuel had sent a notice to potential class members that promised a lodestar cross-check.
“Assurances about the future course of the litigation, when stated in a court-approved class notice like the ones here, must generally be respected,” Taranto wrote.
The notice also said the law firm would seek no more than 5% of an award or settlement.
The trial judge had concluded that, even if a lodestar cross-check was performed, a multiplier of 18 to 19 would “not be outside the realm of reasonableness.” But that contradicts the approach taken by a number of courts that have found multipliers of one to four to be reasonable, the Federal Circuit said.
“A multiplier of 18 or 19 is far outside the evident relevant norm and so would require exceptional justification,” the Federal Circuit said. The trial judge cited three cases involving multipliers of similar magnitude, but they offer “particularly weak support” for the multiplier used in Quinn Emanuel’s case, according to Taranto.
“We must vacate the award of fees and remand for reconsideration,” Taranto wrote. “That reconsideration must include a lodestar cross-check in accordance with this opinion, including an assessment of whether there is sufficient justification for an award with an implicit multiplier outside the mainstream of relevant multipliers.”
Quinn Emanuel commented in a statement to publications that covered the decision.
“We are proud of our work in this case and the unprecedented $3.7 billion award we obtained for our clients,” the statement said. “We are reviewing all options for next steps in response to the Federal Circuit decision and look forward to defending our entitlement to attorneys’ fees through further proceedings.”
Law360 reported that December oral arguments in the case were “heated,” with one judge accusing a Quinn Emanuel lawyer of being “aggressive” and not “respectful.”
“I was trying to sit here and figure out to myself why you’re being so aggressive, pointing your finger at us and sort of yelling at the court, and then I realized: It’s your money,” Chief U.S. Circuit Judge Kimberly A. Moore said while laughing.
The cases are Health Republic Insurance Co. v. United States and Common Ground Healthcare Cooperative v. United States.