Lawler v. Johnson
| Citation | 253 So.3d 939 |
| Decision Date | 20 October 2017 |
| Docket Number | 1160158,1151347,1160049 |
| Parties | Stanley D. LAWLER v. Sam JOHNSON and City of Birmingham Retirement and Relief System Clete Walker v. Sam Johnson and City of Birmingham Retirement and Relief System Georgia Urology, P.A., et al. v. Sam Johnson and City of Birmingham Retirement and Relief System |
| Court | Supreme Court of Alabama |
William Brower and W. Scott Brower of Brower Law Office, Birmingham, for appellant Stanley D. Lawler.
Randall D. Quarles and Frances P. Quarles of Quarles Law Firm, LLC, Mountain Brook; and Matthew J. Evans and Michael J. King of Paine Bickers, LLP, Knoxville, Tennessee, for appellants Clete Walker and Georgia Urology, P.A., et al.
Bruce J. McKee, Scott A. Powell, John W. Haley, Ralph D. Cook, Brian M. Vines, and Tempe D. Smith of Hare, Wynn, Newell & Newton, LLP, Birmingham; J. Timothy Francis of Francis Law, LLC, Birmingham; and John Q. Somerville of Somerville, LLC, Birmingham, for appellees.
Stanley D. Lawler; Clete Walker; Georgia Urology, P.A., and several of its member physicians (those physicians are hereinafter referred to collectively with Georgia Urology, P.A., as "the Georgia Urology claimants"; Lawler, Walker, and the Georgia Urology claimants are hereinafter referred to collectively as "the objectors"), filed objections in the Jefferson Circuit Court challenging a $124 million attorney fee awarded by the Jefferson Circuit Court to class counsel as part of the settlement of Johnson v. Caremark Rx, LLC ("the Caremark class action).1 After the trial court overruled their objections and its judgment approving the settlement became final, the objectors appealed the attorney fee to this Court. We vacate the trial court's order awarding attorney fees and remand the case.
This Court has previously had before it appellate proceedings arising from the Caremark class action on multiple occasions. See, e.g., Ex parte Caremark Rx, LLC, 229 So.3d 751 (Ala. 2017) ; CVS Caremark Corp. v. Lauriello, 175 So.3d 596 (Ala. 2014) ; and Ex parte Caremark RX, Inc., 956 So.2d 1117 (Ala. 2006). Although we have described the basic facts of the case on each of those occasions, we briefly do so again here to provide context to the instant appeals.
Beginning in approximately 1998, MedPartners, Inc., was the subject of dozens of securities-fraud lawsuits alleging that it had made false statements regarding its financial condition and anticipated future performance. Many of those lawsuits were eventually consolidated into a class action in the Jefferson Circuit Court ("the MedPartners class action"), and in 1999 the MedPartners class action was settled for $56 million based on MedPartners' assertions that the negotiated settlement exhausted its available insurance coverage and that it possessed limited other assets it could use to pay a larger award or settlement. Post-settlement, however, it was revealed in unrelated litigation that MedPartners actually held an excess-insurance policy providing unlimited coverage during the period in which the alleged fraud had been committed. In 2003, the Caremark class action was initiated against MedPartners' corporate successor, an entity now known as Caremark Rx, LLC ("Caremark"), and its previous insurer asserting fraud and suppression claims based on the $56 million settlement agreed to in the MedPartners class action.
Little progress was made toward resolution of the Caremark class action over the next several years because disputes concerning class certification, class representatives, and which attorneys would act as class counsel resulted in time-consuming delays and multiple appeals to this Court. Ultimately, however, Caremark and its insurer agreed in May 2016 to settle the claims asserted against them in the Caremark class action for $310 million. The trial court subsequently approved the settlement and awarded class counsel 40% of the settlement fund, or $124 million, as an attorney fee. The primary issue in these appeals is the size of the awarded attorney fee; the objectors argue that it is excessive and amounts to a windfall for class counsel and that they were given insufficient time and information to properly object to the size of the attorney-fee award.
In its June 1, 2016, order giving preliminary approval to the $310 million settlement, the trial court set forth the terms of the proposed settlement and outlined the procedures by which class members could file with Gilardi & Co, LLC, the appointed claims administrator, both proof of claims and any objections to the proposed settlement. The trial court also set forth the following relevant deadlines:
The trial court also approved the notice form that would be mailed to class members ("the short-form notice") and the more detailed notice that would be posted on the settlement Web site ("the long-form notice").
In accordance with this time line, on or around June 17, 2016, the short-form notice was mailed to identified class members. Under a header stating "Your right to additional information and/or to object," the short-form notice provided:
(Emphasis added.) Thus, although the trial court's June 1, 2016, order indicated that a class member objecting to the proposed settlement was required to file a written objection with Gilardi by July 22, 2016, the short-form notice mailed to class members informed them that they could object to the proposed settlement "by filing a written objection and/or by appearing at the settlement hearing." In this respect, the language of the short-form notice actually mailed to the class members differed from the language of the short-form notice approved by the trial court in conjunction with its June 1, 2016, order; the approved short-form notice provided that "[a] class member may [object] by filing a written objection and by appearing at the settlement hearing ...." (Emphasis added.) Class counsel asserts in one of its briefs filed with this Court that the language was changed before the short-form notice was mailed in an attempt to clarify that an objector was not required to attend the August 8 fairness hearing in order to assert an objection.
At approximately this same time, the long-form notice was posted on the settlement Web site. The long-form notice provided that, "[a]t the settlement hearing, class counsel will request the court to award attorneys' fees not to exceed 40% of the settlement amount, plus expenses not to exceed $3,000,000." On July 22, 2016, Walker and the Georgia Urology claimants filed their objections to the proposed settlement; Walker also submitted notice that he intended to appear at the August 8 fairness hearing. Their objections to the proposed settlement raised the same general issues—that they were given insufficient time and information to properly consider the settlement and to prepare any objections; that they were given insufficient time to gather the approximately 20–year-old records needed to establish their claims; and that a potential award of attorney fees up to $124 million was excessive. On July 29, 2016, class counsel filed their attorney-fee application formally requesting $124 million in attorney fees, an additional $2,585,933 for expenses, and $50,000 service awards for each of three current or former named plaintiffs; class counsel also filed responses to the objections made by Walker and the Georgia Urology claimants. This attorney-fee application had not been previously posted on the settlement Web site or made available for class members to review.
On August 5, 2016, Lawler filed an objection to the proposed settlement; his objection focused solely on class counsel's requested $124 million attorney fee. Lawler also filed notice with the trial court that he planned to be represented at the August 8 fairness hearing. The fairness hearing was subsequently held as scheduled, and, although class counsel argued that Lawler's objection was untimely, the trial court nevertheless allowed Lawler to present his argument. Walker also presented argument on his objections at the hearing, and class counsel argued in response that Walker, as well as the Georgia Urology claimants, had failed to establish that the...
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