Arkin v. Pressman, Inc.
| Decision Date | 30 June 2022 |
| Docket Number | 21-11019, No. 21-11502 |
| Citation | 38 F.4th 1001 |
| Parties | Steven ARKIN, Anderson & Wanca, Plaintiffs-Appellants, William P. Sawyer, M.D., individually and as the representative of a class of similarly-situated persons, et al., Consolidated Plaintiffs, v. PRESSMAN, INC. Consolidated Plaintiff-Appellee, Smith Medical Partners, LLC, Delaware limited liability company, H.D. Smith, LLC, Delaware limited liability company, John Does 1-5, Defendants-Appellees. Dr. Steven Arkin, a Florida resident, individually and as the personal representative of a class of similarly-situated persons, Anderson & Wanca, Plaintiffs-Appellants, William P. Sawyer, M.D., individually and as the representative of a class of similarly-situated persons, et al., Consolidated Plaintiffs, v. Pressman, Inc., Consolidated Plaintiff-Appellee, Smith Medical Partners, LLC, Delaware limited liability company, H.D. Smith, LLC, Delaware limited liability company, John Does 1-5, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Glenn L. Hara, Ross M. Good, Ryan Michael Kelly, Anderson Wanca, Rolling Meadows, IL, Roy William Foxall, Roy W. Foxall, PA, Fort Myers, FL, for Plaintiffs-Appellants.
Phillip Andrew Bock, Bock Hatch & Oppenheim, LLC, Miami Beach, FL, Robert M. Hatch, Tod Allen Lewis, David Max Oppenheim, Jonathan B. Piper, Bock Hatch & Oppenheim, LLC, Chicago, IL, for Plaintiff-Appellee.
Martin W. Jaszczuk, Seth H. Corthell, Margaret Schuchardt, Jaszczuk, PC, Chicago, IL, Beth-Ann E. Krimsky, Lawren Adrian Zann, Greenspoon Marder, LLP, Fort Lauderdale, FL, for Defendants-Appellees.
Before Newsom, Tjoflat, and Ed Carnes, Circuit Judges.
Dr. Steven Arkin and his counsel, Anderson + Wanca ("Wanca"), appeal the District Court's denial of their motion for Wanca to receive a portion of the attorneys’ fees resulting from the settlement of a class action lawsuit brought under the Telephone Consumer Protection Act of 1991 ("TCPA"), 47 U.S.C. § 227. Wanca, while not appointed as class counsel in this case, began the chain of litigation that resulted in the settlement below and so contends that it provided a substantial and independent benefit to the class justifying a portion of the attorneys’ fees. While we do find that Wanca has shown it provided one substantial and independent benefit to the class, we affirm because Wanca's prioritization of its interests over the class's interests throughout the Arkin litigation forecloses the equitable relief Wanca seeks.
On September 15, 2017, Smith Medical Partners ("Smith") sent an unsolicited fax to Dr. Arkin, a Florida resident and medical doctor represented by Wanca at all times relevant to this appeal. On September 26, 2017, Dr. Arkin filed suit in the Middle District of Florida against Smith on behalf of a putative class of other persons or entities who allegedly received "unsolicited advertisements" by fax in violation of the TCPA ("Arkin I "). See 47 U.S.C. § 227(b)(1)(C) (). The parties then engaged in a discovery dispute which resulted in an order directing Smith to produce "1,324 fax campaigns and logs for [Dr. Arkin's] review" and directing Dr. Arkin to provide Smith with "his sampling of 20 fax campaigns." The District Court also ordered Dr. Arkin and Smith to participate in mediation. Following mediation negotiations, the parties reached a settlement agreement ("the Arkin Settlement").
The Arkin Settlement provided that Smith would create a $21 million common fund to pay verified claims against Smith; claimants would receive $493.32 for each fax number they had that received unsolicited advertisements from Smith.1 Wanca would receive one-third of the $21 million common fund—$7 million—as a fee award for its services, subject to court approval.2 As Eleventh Circuit precedent generally only allows district courts to award 25% of the common fund to class counsel as attorneys’ fees,3 Dr. Arkin and Smith agreed to voluntarily dismiss Arkin I and refile the class action in the Nineteenth Judicial Circuit Court of Illinois, the Illinois state trial court for Lake County, Illinois. See, e.g., Faught v. Am. Home Shield Corp. , 668 F.3d 1233, 1242 (11th Cir. 2011) (). Illinois precedent allows state trial courts to award one-third of the common fund as attorneys’ fees in class actions. Shaun Fauley, Sabon, Inc. v. Metro. Life Ins. Co. , 402 Ill.Dec. 506, 52 N.E. 3d 427, 436, 440–442 (Ill. App. Ct. 2016) (). While Wanca would receive $7 million from the common fund regardless of the actual number of claimants, any money remaining in the common fund after paying Wanca's attorneys’ fees and all claimants would revert to Smith.4 Additionally, the Arkin Settlement provided that any party could "terminate the settlement, for any reason or no reason at all, at any time prior to the Court's Final Approval Hearing." Should termination occur, the settlement agreement provided that the lawsuit would return to the Middle District of Florida as though the Arkin Settlement had never been made.
Pursuant to the Arkin Settlement agreement, Dr. Arkin filed a stipulation of dismissal under Fed. R. Civ. P. 41(a)(1)(A)(ii) in Arkin I in the Middle District of Florida on August 23, 2018. On the same day, Dr. Arkin had Wanca file a new putative class action ("Arkin II ") in the Nineteenth Judicial Circuit. In so doing, the parties avoided by one day an order from the Middle District of Florida that would have required them to disclose the results of the mediation—and thus the terms of the Arkin Settlement—to the Middle District by August 24, 2018. See Absolute Activist Value Master Fund Ltd. v. Devine , 998 F.3d 1258, 1265 (11th Cir. 2021) ().
The Arkin II court, likely sensing that something was amiss, ordered supplemental briefing on whether it was proper and appropriate under Illinois law to award one-third of the common fund as attorneys’ fees. Wanca responded by citing over thirty Illinois state cases where the trial court awarded one-third of the common fund as attorneys’ fees. The Arkin II court then preliminary approved the terms of the Arkin Settlement on January 25, 2019. Accordingly, Dr. Arkin and Smith sent out a notice of settlement to the Arkin class members, of which 1,633 filed claims. As each claim was capped at $493.32, the Arkin Settlement class members would have received only $805,591.56 of the $21 million fund had the Arkin Settlement received final approval in Arkin II . Wanca, again, would have received $7 million, and the remaining $13 million or so would have remained with Smith.
However, one of the class members notified in Arkin II was Pressman, Inc., a pharmaceutical and medical supply company represented by the law firm Bock, Hatch, Lewis & Oppenheim, LLC ("Bock"). Bock, like Wanca, has extensive experience in TCPA class actions, and the two law firms have tangled before. See, e.g. , Med. & Chiropractic Clinic, Inc. v. Oppenheim , 981 F.3d 983 (11th Cir. 2020) ; Tech. Training Assocs., Inc. v. Buccaneers Ltd. P'ship , 874 F.3d 692 (11th Cir. 2017). On March 25, 2019, Pressman (through Bock) filed a wide-ranging objection to the Arkin Settlement challenging, inter alia , the $493.32 cap, the decision to dismiss Arkin I from the Middle District of Florida in (what Bock described as) an apparent attempt to secure more attorneys’ fees for Wanca, the provision allowing reversion of unclaimed funds to Smith, and the termination provision. As a result of this objection, Smith exercised its right to terminate the settlement "rather than engage in what promised to be a protracted and acrimonious objection process." Per the terms of the Arkin Settlement, Arkin II was dismissed from the Nineteenth Judicial Circuit in June 2019. Dr. Arkin then refiled the class action in the Middle District of Florida on July 16, 2019 ("Arkin III "). Pressman, meanwhile, filed a separate putative class action through Bock and against Smith in the Nineteenth Judicial Circuit, which Smith removed to the United States District Court for the Northern District of Illinois. The Northern District of Illinois transferred Pressman's suit to the Middle District of Florida on September 26, 2019, which then consolidated Pressman's suit with Arkin III on December 18, 2019.
When Arkin II fell apart in June 2019, Smith agreed to produce documents to Pressman and Bock for purposes of negotiation and settlement. Bock then spent months independently reviewing what the District Court described as "voluminous electronic files" while negotiating a settlement with Smith. The District Court later found that Bock "did not have access to the Wanca firm's work product" while negotiating with Smith. Following Bock's independent review of Smith's documents, Pressman and Smith filed a new proposed settlement agreement in Arkin III on February 18, 2020 ("the Pressman Settlement").
The Pressman Settlement was very different from the Arkin Settlement. For starters, it only provided for a $4.5 million common fund. However, this fund was non-reversionary, and each claimant was entitled to receive a pro rata share of the common fund. Additionally, class counsel could only receive up to 25% of the common fund as a fee award, or $1.125 million. The Pressman Settlement also provided that each claim form submitted in the Arkin Settlement would be valid under the Pressman Settlement unless the Arkin claimant later submitted an opt-out request. And, unlike the Arkin Settlement, the Pressman Settlement could only be terminated if it was not approved by the...
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...(U.S. Oct. 21, 2022) (No. 22-389). The petition was distributed to be considered by the Court during its April 14, 2023 conference.115. 38 F.4th 1001 (11th Cir. 2022). Senior Judge Gerald Tjoflat wrote the opinion of the court.116. Id. at 1009.117. Id. at 1005.118. Arkin, 38 F.4th at 1005. ......