In Re: NFL Players' Concussion v. ( 2020 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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Nos. 19-1760 & 19-1771
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IN RE: NATIONAL FOOTBALL LEAGUE PLAYERS’
CONCUSSION INJURY LITIGATION
Paul Raymond Turner, personal representative of the
Estate of Kevin Turner,
Appellant in No. 19-1760
Podhurst Orseck, P.A.,
Appellant in No. 19-1771
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On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2:12-md-02323)
District Judge: Honorable Anita B. Brody
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Submitted Under Third Circuit L.A.R. 34.1(a)
on May 22, 2020
Before: McKEE, BIBAS, and NYGAARD, Circuit Judges
(Filed: September 9, 2020)
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OPINION*
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*
This disposition is not an opinion of the full Court and, under I.O.P. 5.7, is not binding
precedent.
BIBAS, Circuit Judge.
Plaintiffs agree with their lawyers on contingent fees, but district courts still review
their deals for reasonableness. Courts usually enforce the parties’ bargain, though they
rarely tweak the terms as circumstances change. When district courts do review and act,
we respect their careful judgment.
Here, the District Court took the major step of slashing a contingent fee. Yet the plaintiff
asks us to cut it even more. But the court’s analysis was clear, convincing, and cogent. And
it reasonably applied the factors required by our precedent. So we will affirm.
I. BACKGROUND
A. Facts
Kevin Turner was a professional football player for the New England Patriots and the
Philadelphia Eagles. About a decade after he retired, he was diagnosed with Amyotrophic
Lateral Sclerosis, also called ALS or Lou Gehrig’s disease. Attributing the disease to the
many concussions that peppered his pro football career, in 2012 he sued the NFL for dam-
ages. Podhurst Orseck represented him.
Rather than pay by the billable hour, Turner chose a contingent fee. That meant
Podhurst would be entitled to 40 percent of any recovery (or 45 percent if it went up on
appeal), but the firm would cover all costs upfront. It also meant that the financial risk of
the case rested on Podhurst’s shoulders. If Turner lost before trial, at trial, or on appeal,
Podhurst would walk away with nothing.
As we have recounted at length, all concussion-related lawsuits against the NFL were
eventually consolidated in the Eastern District of Pennsylvania. See generally In re Nat’l
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Football League Players Concussion Injury Litig., 821 F.3d 410 (3d Cir. 2016). The cases
settled for nearly $1 billion. Id. at 447. Turner’s own award was $5 million, the maximum
recoverable by any class member. Id. at 424. But his victory was marred by tragedy, as he
died mere weeks before the court finally approved the settlement.
This dispute predated the settlement. Podhurst had played an active role in the multi-
district litigation, representing both individual clients like Turner and the class of players.
As settlement drew closer, it became clear that the NFL would pay for Podhurst’s work for
the class.
Turner thought it only fair that this class fee, totaling around $6 million, cover his per-
sonal representation as well. Otherwise, he claimed, his counsel would get paid twice for
their work for him: once by the NFL and once out of his recovery. The firm disagreed.
Though it made clear that it would not seek the full 45 percent allowed by contract,
Podhurst did intend to enforce the agreement to an extent.
The dispute simmered. Turner enlisted new counsel, Polsinelli, to help. But negotiations
stalled. After Turner passed away, his Estate fired Podhurst as counsel, ending their four-
year relationship.
B. Procedural history
Before the split, Podhurst asked the Estate to re-sign the contract that Turner had agreed
to. The Estate refused. Podhurst lowered the fee it sought to 25 percent. Again, the Estate
declined. The simmer heated up to a boil.
But the District Court was ready. Anticipating the storm of fee disputes at the end of
the litigation, it prepared a list of ground rules. Because class counsel did part of the work
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for all the plaintiffs, enforcing the full contingent fee would overcompensate many lawyers.
The court compared the work done for the class by class counsel (which the NFL had
agreed to pay for), with the work done by individual plaintiffs’ lawyers (to be paid by
contingent fees). It capped those contingent fees at 22 percent, finding that amount would
adequately compensate those lawyers for their share of the work and risk. It also adopted
rules for lawyers seeking variances, tapping a magistrate judge to handle those disputes.
So this dispute went to a magistrate judge. After hearing oral argument, he recom-
mended slashing Podhurst’s fee by almost a third, down to 15.5 percent. The District Court
adopted his recommendation. The Estate now appeals. We review for abuse of discretion.
McKenzie Constr., Inc. v. Maynard, 758 F.2d 97, 100 (3d Cir. 1985) (McKenzie I); McKen-
zie Constr., Inc. v. Maynard, 823 F.2d 43, 44 (3d Cir. 1987) (McKenzie II).
II. THE DISTRICT COURT DID NOT ABUSE ITS DISCRETION
BY NOT REDUCING PODHURST’S AWARD FURTHER
Even after shrinking Podhurst’s fee by almost a third, the Estate seeks further cuts. But
as we explain, the District Court did not abuse its discretion by adopting the magistrate
judge’s reasonable recommendation.
We assess challenges to contingent-fee arrangements using factors from a pair of cases,
McKenzie I and McKenzie II. Neither party disputes this. The dispute instead hinges on
how the magistrate judge applied the McKenzie factors. There are five, looking to:
• the agreement at the time of contracting;
• the circumstances by the time the court enforces the agreement;
• the results obtained;
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• the quality of the work performed; and
• how much that work contributed to the result.
McKenzie I, 758 F.2d at 101; McKenzie II, 823 F.2d at 45.
At root, the Estate claims that the 15.5 percent fee is unsupported by the magistrate
judge’s analysis. That argument fails.
The magistrate judge started with an uncontested premise: given the work that class
counsel did here, a 22 percent fee ordinarily suffices to compensate individually retained
attorneys. From that starting point, he turned to McKenzie, spending fifteen pages laying
out the relevant factors. He then devoted nearly twenty-nine more pages applying those
factors to Podhurst and Turner. He did all that while keeping in mind the deference under-
lying McKenzie I and II: “[C]ourts should be reluctant to disturb contingent fee arrange-
ments freely entered into by knowledgeable and competent parties.” McKenzie I, 758 F.2d
at 101; McKenzie II, 823 F.2d at 45.
A. The District Court reasonably assessed the agreement
at the time of contracting
The magistrate judge found the contract reasonable at its birth. He rested on two factors:
the potential length of the litigation and the hurdles it faced. Both were substantial. By that
time, consolidation into multi-district litigation was “almost certain” and would streamline
the work. App. 36. Even so, there was plenty of work left to do. There was also still plenty
of risk, especially on issues like causation, preemption, and the statute of limitations. Re-
covery was not guaranteed.
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The magistrate judge weighed these factors and others, including the vast work
Podhurst did upfront and the clarity and early onset of Turner’s diagnosis. He found the
contract reasonable when Turner signed it, and the District Court reasonably adopted this
assessment.
B. The District Court reasonably assessed the effect of changed circumstances
The magistrate judge then turned to how circumstances changed and what light that cast
on the fee. Much had changed. Over the years, it grew clearer that Podhurst could seek
payment from the settlement fund for its upfront work. And as Podhurst’s stable of clients
increased, it benefitted from economies of scale. These changes favored reducing the fee.
Then again, the court had already imposed the fee cap to account for some of these
changes. But as the magistrate judge explained, this cap did not fully account for Turner’s
unique situation as representative of the subclass. Class counsel thus did some of the work
for him that ordinarily would have been done by his individual lawyers. Finally, because
the Estate ended the representation, Podhurst never had to handle the claim-submission
process. So further cuts were warranted. The District Court reasonably adopted this analy-
sis too.
C. The District Court reasonably assessed the results
that Podhurst secured for Turner
The magistrate judge handled this factor quickly and reasonably. Turner recovered
$5 million from the NFL—the highest amount payable to any former player. That favored
Podhurst.
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D. The District Court reasonably assessed the quality of the work that Podhurst
did for Turner
Tackling the fourth McKenzie factor, the magistrate judge found that “Podhurst pro-
vided quality work for Turner, performing many necessary tasks in this litigation.” App.
44. And this work was substantial. The magistrate judge detailed eight categories of work
that Podhurst did, noting where it did and did not favor reducing the fee below the fee cap.
Though Podhurst’s work was good, some of it was done in part for the class, and some was
done by replacement counsel Polsinelli. The District Court reasonably adopted the magis-
trate judge’s assessment of these points.
E. The District Court reasonably assessed how much Podhurst’s work for
Turner contributed to his result
Finally, the magistrate judge gauged how much Podhurst’s work contributed to
Turner’s favorable recovery. He distinguished the work Polsinelli did from the work
Podhurst had done as class counsel and had already been paid for out of the settlement
fund. That analysis was reasonable. We will not fault the District Court for adopting it.
Relatedly, the Estate objects that the fee awarded dwarfs the number of hours that
Podhurst worked for Turner. This argument assumes that lodestar analysis (the number of
hours worked times a reasonable hourly rate) bears on contingent-fee agreements. “Lode-
star analysis, however, does not apply to a contractual contingent fee agreement. We there-
fore reject any lodestar analysis as inapplicable.” McKenzie II, 823 F.2d at 47 n.3 (citation
omitted). The District Court did not abuse its discretion by heeding our words.s
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III. THE DISTRICT COURT DID NOT VIOLATE THE RULES
GOVERNING FEE DISPUTES OR ABUSE ITS DISCRETION
The Estate argues that the magistrate judge did not follow the District Court’s guide-
lines for attorney’s fees. As a result, it argues, the fee awarded improperly paid Podhurst
for tasks that were:
• not included in its fee request;
• not supported by evidence; and
• not done for Turner’s benefit alone.
Not so. To start, fee guidelines do not trump our precedents. The fee analysis need only be
reasonable under the McKenzie factors. We require nothing more.
In any event, the Estate’s argument fails. First, everything was included in Podhurst’s
fee request. It asked for the full 22 percent and pursued it vigorously. Second, there was
plenty of evidence to support Podhurst’s claim. As we have explained, the magistrate judge
spent many pages exploring all the factors and Podhurst’s work. Its recommended reduc-
tion of Podhurst’s fee reflects that. Finally, the magistrate judge carefully separated the
work Podhurst had done for Turner as its individual client from the work it had done for
the whole class. That motivated the large fee cut. Even apart from our deferential standard
of review, the District Court acted quite reasonably in adopting this analysis.
* * * * *
Kevin Turner sued the NFL and won. The thousands of NFL veterans who have or will
recover under this concussions settlement can thank his courage and dedication. But a con-
tract is a contract. No matter who the party, we cannot ignore its terms.
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We rarely reduce agreed-upon contingent fees. Yet the District Court did just that, cut-
ting the fee from 22 to 15.5 percent. The magistrate judge scrutinized the contract’s terms
and applied the McKenzie factors to make sure the terms remained reasonable, and the
court reasonably agreed. It did not have to cut the fee any further. Because that analysis
was thorough and reasonable, we will affirm.
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