Lawyers’ fees reallocated in the context of a class action lawsuit against a pyramid scheme
Five law firms for a class of salespeople who settled with
A lawyer who was initially hired to pursue the civil racketeering suit with an expected 75% fee take, but who was not fully engaged throughout the prosecution due to substance abuse issues, will receive approximately $ 1 , $ 5 million, Judge Charles R Eskridge III said July 16 for the US District Court for the Southern District of Texas.
Attorney Scott Clearman requested about half of the total amount in fees after the case was referred by the United States Court of Appeals to the Fifth Circuit. The appellate court said Judge Kenneth Hoyt should have done a full analysis of the relevant legal factors in determining the allocation of costs. While in pre-trial detention, Hoyt recused himself and Eskridge conducted the analysis.
Appropriate allocation owes “more to experience, rather than any precise measure of logic or statistics,” Eskridge said. “And from that point of view, the award of the fees by Judge Hoyt – who dealt with the lawyers and this litigation from inception to its conclusion after the settlement – was correct.”
Clearman’s offer for half the price “borders on tatting,” he said.
The cost award is part of a settlement valued at over $ 46 million that resolved allegations that Stream Energy’s Ignite marketing program was an illegal pyramid scheme under the Influenced and Corrupted Organizations Act. by racketeers.
The Fifth Circuit Board upheld the prosecution’s certification in 2016 in a groundbreaking decision that eased the burden on plaintiffs in fraud-based claims under RICO.
After Clearman appealed Hoyt’s allowance and other attorneys cross-appealed, saying Clearman should get less, a Fifth Circuit panel disagreed with the judge’s conclusion that he did not have to take a close look at the award and award of the fees because no one disputed the size of the award. .
Bayko, Prebeg, Faucett & Abbott PLLC; CP Sommers Schwartz; Jeffrey W. Burnett SARL; Goldstein & Russell CP; and The Clearman Law Firm PLLC represented the plaintiffs and the class.
Gibson, Dunn & Crutcher LLP and Reese Marketos LLP represented the defendants.
The case is Torres v. SGE Mgmt., LLC, 2021 BL 268481, SD Tex., N ° 4: 09-cv-02056, 07/16/21.