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Monday, October 21, 2019

Rosenstengel rips special master Stack's $61 million fee recommendation for Texas firms in Syngenta Viptera litigation

Federal Court

By Record News | Aug 20, 2019


Rosenstengel, Herndon and Stack

EAST ST. LOUIS – Former judge Daniel Stack made a $24 million mistake allocating fees from a mass action, according to Chief U.S. District Judge Nancy Rosenstengel. 

On Aug. 19, she ripped apart his recommendations for firms that litigated against Syngenta in Illinois from 2014 to last year. 

Rosenstengel awarded three and a half times as much as Stack would have awarded to a group that Lewis Garrison of Birmingham, Ala., led. 

She found Stack mistakenly attributed 12,913 hours to a group that Clayton Clark of Houston and Martin Phipps of San Antonio led. 

She also ripped apart a declaration that former district judge David Herndon filed in support of Stack and a statement Stack filed against Garrison. 

Before his retirement in January, Herndon presided over Syngenta litigation and had appointed Stack for fee allocation

Rosenstengel wrote that Herndon’s declaration added little substance and mitigated Garrison’s contributions. 

“Regardless of the intent, the court finds the response from special master Stack unnecessary and the response from Judge Herndon highly inappropriate, given their purportedly neutral roles in these proceedings,” she wrote. 

Farmers and agricultural businesses sued Syngenta on a claim that it contaminated corn shipments with bug killer Viptera. 

They sought damages for a drop in prices. 

The U.S. Judicial Panel on Multi District Litigation consolidated cases from district courts and assigned them to Kansas District Judge John Lungstrum. 

Masses of cases also proceeded before Herndon and at circuit courts of Williamson County in Marion and Hennepin County in Minneapolis. 

Syngenta and plaintiffs settled for $1.51 billion last year. 

Lungstrum allocated a third to attorneys and created pools for those whose efforts produced a common benefit to all plaintiffs. 

He placed about $247 million in a Kansas pool, about $118 million in a Minnesota pool, and about $78 million in an Illinois pool. 

Lungstrum set aside about $60 million for individually retained attorneys. 

He ordered the judge over each pool to allocate fees. 

Herndon hired Stack for that purpose last December, and retired on Jan. 7. 

In March, Stack recommended allocating 79 percent of the Illinois pool to the group that Texas lawyers Clark and Phipps led. 

That worked out to $61,633,166.67. 

Stack wrote that they established novel theories for ethanol plants and biorefineries that resulted in formation of an ethanol subclass for settlement and that they vigorously prosecuted claims for grain handling facilities, resulting in another subclass for settlement. 

His analysis set their share above 79 percent, but he reduced it upon finding some of their activities less than helpful and at times potentially detrimental. 

He recommended $9,674,066.67 for Garrison’s group, 12.4 percent of the pool. 

He recommended $3,120,666.67 for Craig Eiland of Galveston, Texas, four percent. 

He recommended $2,028,433.33 for Onder Law of Webster Groves, Mo., 2.6 percent. 

He recommended $1,560,333.33 for O’Hanlon, Demerath and Castillo of Austin, Texas, two percent. 

Garrison, who had applied for more than $46 million, objected. 

He filed a declaration of former 20th Judicial Circuit chief judge John Baricevic, who wrote that he went to high school and college with Stack.

He found Stack’s analysis so far from proper that it was unworthy of consideration. 

Garrison wrote that Lungstrum’s allocation order stated that client acquisition costs should not be part of the analysis. 

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

“I was a judge, and I know fabricated time when I see it,” Garrison wrote. 

He wrote that Stack changed the analysis from hours and results to one where attorneys who spent the most money to acquire clients get the most money. 

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. 

He wrote that without Clark and Phipps, no farmers would receive payments and no fees would be available for division. He wrote that criticism of his reliance on time summaries rather than individual entries ignored established law and the circumstances of the case. 

He wrote that attorneys submitted spreadsheets subject to strict rules, and that he believed it reasonable and efficient to rely on spreadsheets and on affidavits and declarations submitted under penalties of perjury. 

Herndon responded too, declaring that Stack neither violated nor ignored his orders or Lungstrum’s guidance. 

He wrote that Garrison’s objection and Baricevic’s declaration misrepresented Stack’s actions and his decision making process. 

“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,” Herndon wrote. 

“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.” 

On May 9, Garrison wrote that Herndon and Stack improperly took sides. 

“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. 

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

Rosenstengel shared his view in her order rejecting Stack’s recommendations. 

She wrote that she couldn’t adopt them due to structural and procedural flaws, and that the analysis considered client acquisition costs, which Lungstrum specifically instructed the courts not to consider. 

She wrote that the analysis put undue weight on claimant numbers and expenses, did not accurately display the common benefit value. 

“The methodology also carries the risk of blindly and disproportionately rewarding attorneys for marketing efforts, rather than work performed advocating for the benefit of the plaintiffs,” Rosenstengel wrote. 

She wrote that anonymous employees of the Clark Phipps group logged a large portion of time on summaries without contemporaneous records, and that Stack didn’t scrutinize the time at all. 

She also wrote that he didn’t differentiate between the types of work underlying the common benefit hours or who performed the work. 

She wrote that although Clark and Phipps submitted two thirds of all hours in the Illinois pool, they attributed more than two thirds of the hours to non attorneys. 

She noted “a staggering 22,499.8 hours of assisting clients in perfecting claims in settlement and 48,221.1 hours of pre settlement communication with clients.” 

That failure to evaluate the work behind the hours diluted the contributions of some firms while inflating the value of others, she wrote. 

Rosenstengel held that the work of Clark and Phipps in developing cases against grain handlers created obstacles to coordination of litigation in Illinois and Kansas. 

She awarded them $38.2 million, or 49 percent of the pool, which is $23.4 million less than Stack recommended. 

She awarded Garrison’s group $33.9 million, or 43.4 percent of the pool, which is $24.2 million more than Stack recommended. 

“Garrison’s success benefited all Illinois plaintiffs, state and federal, as well as plaintiffs in other state courts across the country,” she wrote. 

She wrote that Garrison’s group provided detailed time sheets, secured important rulings, presented 44 farmers for deposition, and produced about 350,000 pages of farmer documents. 

She also revised awards for smaller groups. 

She increased Onder Law’s share from 2.6 percent to 3.6, raising its award to $2.8 million. 

She reduced Eiland’s share from four percent to three, dropping its award to $2.3 million. 

She reduced the share for O’Hanlon, Demerath and Castillo from two percent to one, dropping its award to $780,166.67.

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