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Sunday, September 22, 2019

In $71 million Viptera fee fight, former judges Herndon, Stack, Baricevic take sides

Lawsuits

By Record News | May 14, 2019


Stack and Baricevic

EAST ST. LOUIS – Retired judges David Herndon and Daniel Stack improperly took sides in a $71 million fee dispute involving farmers suing over Syngenta’s genetically modified corn seeds, Alabama lawyer Lewis Garrison alleged on May 9.  

“These two persons are not supposed to have any dog in this fight, so it is incredible that they would come forth in the manner they did,” Garrison wrote in a brief opposing recommended fee distribution. 

The former judges signed declarations on April 30, defending Stack’s recommendation to cut Garrison’s fee application from $46.4 million to $9.6 million.

Stack further recommended $61.6 million for a team that Clayton Clark of Houston and Martin Phipps of San Antonio led. 

The fees flow from a settlement between seed maker Syngenta and farmers who claimed the company contaminated corn with Viptera. They argued economic losses because China doesn’t allow import of corn that grows from Viptera seeds, which are modified with bug killer. 

Herndon, who retired from the Southern District of Illinois in January, had presided over Syngenta in coordination with judges in other states. He appointed Stack, a former Madison County circuit judge who had once presided over class action claims against Syngenta over its herbicide atrazine, as special master in 2016.

Stack retired as judge in 2010.

Garrison wrote that diligent search for a judge or special master submitting public commentary in the form of sworn testimony returned nothing.

“Although Judge Herndon’s declaration could, at first glance, appear particularly influential due to his position, the declaration is shown to be inaccurate, so it should not be afforded special weight if considered at all,” he wrote. 

Litigation started in 2014, after China turned away American corn shipments and prices fell. 

Syngenta and plaintiffs settled last year for $1.51 billion. 

When Garrison applied for fees last July, he wrote that one camp of lawyers wanted to pursue a class action and one camp wanted to represent individual farmers. 

He wrote that they rarely agreed on anything, but there was broad consensus that the U.S. Judicial Panel on Multi District Litigation should assign Herndon.

“This court was the number one choice for virtually every firm, whether as a class or an individual case, and this court’s track record preceding the Syngenta litigation speaks for itself as to why it was everyone’s choice,” he wrote. 

Although many lawyers petitioned for Herndon, the panel assigned District Judge John Lungstrum of Kansas City, Kan.. 

Garrison wrote that his firm desperately wanted to participate. He joined forces with attorney Jim Onder of St. Louis, and other firms soon joined their team.

Garrison says he reached out to leaders in Lungstrum’s court to gauge whether his team might receive common benefit work if it filed cases there. 

Individuals would not give a commitment, he wrote, and he believed the battle needed a third front.

His team decided to employ a rarely successful mass action approach within the Class Action Fairness Act. 

He wrote that mass action could accomplish what all the JPML petitions could not, by injecting Herndon into the litigation, believing Herndon would ultimately drive any settlement.

Five years ago, Syngenta removed the original case from Madison County. Herndon certified a mass action, which opened a door for Garrison’s firm as an immediate player and a force Syngenta had to deal with. 

Garrison wrote that Herndon granted a motion to bar transfer to any other court, “securing the Southern District of Illinois as a battleground.”

He says he questioned witnesses in depositions for Lungstrum’s court, and that plaintiffs used his questions with powerful effect at the only trial in that court with farmers prevailing. 

After the litigation settled, Clark and Phipps also applied for a fee. 

Stack couldn’t act on the applications until Lungstrum allocated a $503 million fee from the global settlement. 

In December, Lungstrum allocated about $274 million to lawyers in his court, $118 million to those in Minnesota, $78 million to those in Illinois, and $60 million to those who represented individuals. 

In March, Stack found Clark and Phipps deserved 79 percent of the Illinois award, finding they pioneered litigation tactics that achieved a successful outcome, and that Syngenta required their participation in the settlement.

“Garrison’s argument that Clark and Phipps played a significantly lesser role is misplaced and factually inaccurate,” Stack wrote. 

He recommended 12.4 percent for Garrison; four percent, or $3.1 million for Craig Eiland of Galveston, Texas; 2.6 percent, or $2 million Garrison’s friend Onder; two percent, or $1.5 million for O’Hanlon, Demerath, and Castillo of Austin, Texas.  

Garrison filed an objection on April 16, and he attached a declaration from former 20th Judicial Circuit chief judge John Baricevic. 

Baricevic wrote that he went to high school and college with Stack, yet found his reasoning should be disregarded. 

“In my opinion, Dan Stack’s analysis should be disregarded by the court because it is so far from a proper analysis that it is unworthy of consideration,” Baricevic wrote. 

He wrote that Stack completely disregarded Lungstrum’s allocation order.

“This decision stated that client acquisition costs should not be a part of the analysis, so I am at a loss to why Dan Stack chose to make it a part of the analysis in his report and recommendations,” Baricevic wrote. 

He wrote that he reviewed time submissions of Clark and Phipps and found no backup data, detail, or time sheets to support incredibly large blocks of time. 

“It is surprising to me that Dan Stack did not request time sheets for about 138,000 hours of work that this group claimed to have performed,” he wrote. “I was a judge, and I know fabricated time when I see it.” 

He wrote that Stack injected extraneous criteria and changed the analysis from hours and results to “one where attorneys with the most clients who have spent the most money acquiring those clients get the most money.” 

Onder joined the objection on April 18, writing that Stack rewarded the mere act of signing up clients. 

Stack responded on May 2, writing that most recipients of his recommendations are quite rational and professional.

“But there are often a few who demonstrate a complete lack of understanding of the process and a profound arrogance as to their own value,” Stack wrote. 

Without Clark and Phipps, no farmers would receive payments and no fees would be available for division, according to Stack.

He wrote that Garrison’s group based their position on hours only, and basing awards solely on hours would create extreme injustice and one of the most incredible windfalls ever.

Further, he wrote that reliance on time summaries rather than individual entries ignored established law and the circumstances of the case. 

He wrote that Lungstrum required spreadsheets for basic fee and expense information in a format that would facilitate review. And, attorneys submitting spreadsheets did so subject to strict rules.

Herndon’s declaration stated that Stack neither violated nor ignored his orders or Lungstrum’s guidance.

“The objections of counsel, and the disingenuous declaration of retired judge John Baricevic, to special master Stack’s gathering of information about how much energy lawyers put into client acquisition demonstrate a misrepresentation of the actions and decision making process of the special master,” Herndon wrote.

“I do not recall Mr. Garrison ever telling me of the extraordinary value he viewed his efforts to be to the common benefit of the entire litigation.

“Based on my first hand knowledge and observation, the only Illinois litigation group lawyer who played a role in getting the overall litigation resolved was Clayton Clark.” 

He wrote that he appeared unannounced at a mediation session in Washington, and took plaintiffs’ lawyers and Syngenta lawyers to task for their lack of progress.

“I spoke with them all in a blunt and clear fashion in order to express to them the dissatisfaction of all three judges, as I was authorized to do,” he wrote. 

He wrote that judges appointed four lawyers to a plaintiffs’ negotiating committee, with Clark as Illinois representative.

“I can state with clarity that the settlement with Syngenta would not have occurred without Clayton Clark’s work on that negotiating team,” Herndon wrote.

It took five months to finalize the agreement from the time a term sheet was signed settling the case in principle, with the greatest part of the delay having been caused by disagreements over fees. 

In reply on May 9, Garrison wrote that Baricevic’s opinion was well founded. 

He wrote that Stack had to assess the value of Clark Phipps cases, in which he participated, against a team of whose activities he had no first hand knowledge.

“Judge Baricevic, by comparison, stands an equal distance from all the litigation, which is a more neutral position,” he wrote. 

The dispute awaits resolution by District Judge Nancy Rosenstengel, who took the case upon Herndon’s retirement.   

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Organizations in this Story

Illinois Twentieth Judicial Circuit Court Madison County Syngenta U.S. District Court for the Southern District of Illinois

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