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Florida Attorneys Lose Bid for High Court Look at Drywall Fees

Jan. 10, 2022, 3:04 PM

Attorneys who obtained legal fees for their work in individually settled Florida homeowners’ drywall cases will have to send 45% of the fees to class counsel in related consolidated litigation, after the U.S. Supreme Court denied review Monday.

The attorneys who negotiated the individual settlements totaling $40 million with Taishan Gypsum Co. opposed multidistrict litigation class counsel dipping into the contingency fees their clients paid them.

The lower court’s fee-sharing award was proper, the U.S. Court of Appeals for the Eleventh Circuit said in June. Class counsel in the multidistrict litigation laid the groundwork for the individual Florida settlements, the appeals court said.

The cases arose from a shortage of building supplies during reconstruction following Hurricanes Rita and Katrina, which also coincided with a housing boom. Builders turned to Chinese sources for drywall. But thousands of homeowners, especially in southern states, began to complain of foul smells, property damage, and health problems. Many homes have required significant rebuilding.

Homeowners affected by drywall made by a German-owned company entered into a global settlement in 2011 and another settlement over later claims in 2013. But the litigation against Taishan and related companies spanned numerous fights over jurisdiction, timeliness, and other issues.

About 1,700 Florida cases, grouped under the name of plaintiff Eduardo Amorin, were split off and sent to the Southern District of Florida in 2018, according to the appeals court.

Taishan and the homeowners still in the MDL reached a $248 million settlement. MDL class counsel received 60% of the fees awarded there.

When the Amorin plaintiffs reached their individual settlements, class counsel sought the same portion of fees. The district court agreed to a lower percentage, 45%.

Parker Waichman LLP and other firms involved in the Florida settlements appealed, saying class counsel weren’t entitled to fees at all. The Eleventh Circuit affirmed the district court’s allocation.

The individual settlement firms asked the Supreme Court to look at the lower court’s equitable power in this situation. They also sought review on the individual-class settlement distinction and the relationship between the originating court in Florida and the MDL court.

The MDL process has left “courts and scholars puzzled by an assortment of issues, including the high-stakes attorney fee compensation system at issue here,” they said.

Class counsel responded that the individually settling clients “were members of a certified class” even after they left the MDL court in Louisiana. And the district court had the authority to award the fees, they said.

In addition to Parker Waichman, the firms that negotiated the Florida settlements include Milstein, Jackson, Fairchild & Wade LLP; Whitfield Bryson LLP; Roberts, PA; Levin Papantonio Rafferty Proctor Buchanan O’Brien Barr Mougey PA; and Mrachek, Fitzgerald, Rose, Konopka, Thomas & Weiss PA.

Faircloth Melton Sobel & Bash LLC, Parker Waichman, and Milstein, Jackson, Fairchild & Wade submitted the group’s petition.

Class counsel is a term encompassing “numerous attorneys involved in the overarching litigation,” the appeals court said. For purposes of the appeal, class counsel includes Arnold Levin and Sandra Duggan of Levin Sedran & Berman LLP; Stephen J. Herman of Herman Herman & Katz LLC; Richard J. Serpe, who practices in Norfolk, Va.; and Patrick S. Montoya of Colson Hicks Eidson, it said. The firms represented themselves and their attorneys.

The case is Parker Waichman LLP v. Levin, U.S., No. 21-666, petition for certiorari denied 1/10/22.

To contact the reporter on this story: Martina Barash in Washington at mbarash@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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