Attorney’s Fee Award of $124 Million in Caremark Class Action Vacated
Stanley D. Lawler, Clete Walker, Georgia Urology, P.A., et al. v. Sam Johnson and City of Birmingham Retirement and Relief System
After class counsel negotiated a $310 million settlement with Caremark and its insurer resolving class members' fraud and suppression claims stemming from the previous settlement of the MedPartners class action, Georgia Urology, P.A. and several of its member physicians filed notice with the trial court that they objected to class counsel's request that 40% of the settlement, or $124 million, be paid to them as an attorney fee. The trial court thereafter overruled those objections and entered an order awarding class counsel the $124 million attorney fee they had requested. The objectors subsequently separately appealed that award to the Alabama Supreme Court, arguing that they had been given insufficient opportunity to object to class counsel's requested attorney fee inasmuch as their objections were due before class counsel's attorney-fee application was filed, and that the attorney fee ultimately awarded was excessive.
The Court agreed with Georgia Urology’s and the other objectors' argument that a schedule requiring class members to object to class counsel's attorney fee request before any such request is formally made violates class members' due-process rights. The Court also agreed that the objectors were entitled to more information from class counsel about the time expended on this case in order to allow them to properly articulate their objections. Thus, the Court vacated the trial court’s order and the attorney fee award of $124 million. The Court noted in its opinion that class counsel may file a new attorney-fee application on remand, which should include detailed information regarding class counsel’s time expended in the case and how that time was spent. Nothing in the Court’s opinion prohibited the objectors from renewing their objections to the attorney-fee application on remand.
