United States District Court, S.D. New York
October 2, 2005.
In re: EPHEDRA PRODUCTS LIABILITY LITIGATION. EIKO WINTERS, et al., Plaintiffs,
GENERAL NUTRITION CORPORATION, et al., Defendants. AARON GANIR, et al., Plaintiffs, v. FM, INC., et al., Defendants.
The opinion of the court was delivered by: JED RAKOFF, District Judge
OPINION AND ORDER
On June 2, 2005, counsel for the parties in the above-captioned
individual cases appeared before the Court to seek approval of a
proposed settlement of these cases, including attorneys fees.
After hearing from counsel and approving the general terms of the
settlement, the Court excused defense counsel and held a sealed
proceeding regarding the request of plaintiffs' counsel,
Christopher E. Grell, Esq., for attorneys fees equal to 40
percent of the gross recovery. (For the reasons that follow, the
Clerk of the Court is hereby directed to unseal the transcript of
Pursuant to California law, Mr. Grell and his firm had entered
into retainer agreements with the plaintiffs in these cases that provided that counsel would be entitled to fees of one-third
of the gross recovery, except that "in the event the matter goes
to Trial-Setting Conference or beyond, said attorneys shall be
entitled to a fee of 40 percent of the gross recovery." In answer
to the Court's inquiry as to whether this condition had been
satisfied, Mr. Grell stated: "In California they have a
trial-setting conference where we have a trial date. In both of
these cases, we did have trial dates, whether or not they were
given trial dates as part of a trial-setting conference."
(Transcript, 6/2/05, at 5-6). The Court then noted that its own
practice was to set a trial date early in a case (suggesting that
the Court doubted that a reasonable client would equate
"Trial-Setting Conference" with such an early act), but Mr. Grell
assured the Court that in California "[w]e don't have that."
Id. at 10.
The following colloquy then occurred:
MR. GRELL: I think if you went to the San Francisco
Local Rules or Almeda rules you would find a specific
[hearing] that is called a trial-setting conference.
THE COURT: Was that hearing held in this case
MR. GRELL: Yes. And a trial date was assigned and
then this case got removed to the federal
THE COURT: What about in the other case?
MR. GRELL: The same similar circumstance, your
Id. at 11-12 (emphasis supplied).
Notwithstanding these unequivocal representations by Mr. Grell,
the Court inquired further, asking whether there was an available transcript of the California "Trial-Setting
Conferences" in these two cases, to which Mr. Grell responded
that "[t]here is usually not a transcript," but that the
trial-setting conference was a real event nonetheless, coming
only after the case was actually ready to go to trial. Id. at
14-15. In reliance on these representations, the Court then ruled
that if Mr. Grell submitted a sworn affidavit stating that "there
occurred a trial-setting conference on such and such a date for
each of [these cases]," then, "[a]ssuming the adequacy of the
affidavit, I will then approve the 40 percent." Id. at 15.
On June 29, 2005, Mr. Grell submitted his affidavit. In it, he
now admitted that his representations to the Court that
trial-setting conferences had been held in California on these
cases was inaccurate. He nonetheless contended that, because this
Court had itself set a tentative trial date when it early set a
schedule for discovery and motion practice in these cases, that
should be deemed the "Trial-Setting Conference" sufficient to
trigger the 40 percent recovery.
This is balderdash. First, counsel flatly misrepresented to the
Court that trial-setting conferences in these cases had occurred
in California when in fact they had not occurred. This alone
would warrant rejecting his application, or worse. Second, the
Court had specifically indicated to counsel at the time of the
hearing that its practice of setting a tentative trial date early
in the process of arriving at a case management plan was a good
example of what would not reasonably qualify as a "Trial-Setting Conference," and
counsel had effectively agreed. It is far too late in the day for
counsel to backtrack.
Accordingly, while the overall settlement agreements are
approved, plaintiffs' counsel is entitled to recover only
one-third of the gross proceeds in attorneys fees and must
therefore remit the remainder (minus any actual and reasonable
expenses) to the clients. Given the aforementioned circumstances,
plaintiffs' counsel is hereby also ordered to deliver a copy of
this Opinion and Order to each of the clients in these cases.
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