Arkansas Teacher Retirement System v. State Street


In November 2016, a Boston Globe’s Spotlight team reporter contacted Theodore H. Frank, director of CEI’s Center for Class Action Fairness (CCAF) concerning double-billing the Globe had spotted in a recent class action settlement by politically active Thornton Law Firm of Massachusetts. Thornton, along with two large plaintiffs firms, Labaton Sucharow LLP and Lieff Cabraser Heimann & Bernstein, LLP had received nearly $75 million in fees for their work on the case, and on November 10, 2017 the lead firm Labaton wrote to the court to advise it had double-counted hours from 17 different “staff attorneys” hired on a temporary basis, with charges worth over $4 million. The class attorneys asserted in the letter and still assert that the attorneys’ fee award in this matter was reasonable and should not be reduced.

Frank wrote a memo for the reporter agreeing that the double billing was likely an inadvertent error (as the firms insist), but that the bill showed other common signs of inflation such as crediting work by temporary contract attorneys paid $25-55/hour as being worth over $350/hour. Frank was subsequently quoted in the Globe’s December 17 article on the case, which detailed the double-billing and also questioned the billing rates of attorneys listed on the fee requests filed for Labaton, Thornton, and Lieff Cabraser. In particular, at least one of the temporary staff attorneys billed at hundreds of dollars an hour told the Globe he was actually just paid $30 an hour, and another frequently works as a court-appointed defender making $53 an hour. More than 60 percent of the fees claimed by Labaton, Thornton, and Lieff Cabraser were claimed to derive from work performed by staff attorneys.

On February 6, 2017, the court issued an order proposing the appointment of a special master to investigate the fees, attaching a copy of the Boston Globe article. On February 17, the CCAF moved to file as an amicus and be appointed guardian ad litem to provide adversarial presentation before the special master. Alternatively, CCAF requested that supplemental notice be sent to class members. Class counsel opposed all these suggestions and insisted that the special master would provide adequate protection for the class.

On March 8, 2017, the court allowed CCAF’s amicus filing and took the motion for appointment as guardian ad litem under advisement. The court appointed a special master, retired District Judge Gerald Rosen to investigate class counsel’s fee request and related matters. The special master will be paid from $2 million that class counsel agreed to surrender back to the clerk of court.

On March 31, 2017, the court issued an order requiring notice to be sent to the class, as CCAF had suggested. The court specifically found that CCAF’s submissions had been “helpful.” CCAF will continue to monitor the case, and is encouraged that Judge Rosen has appointed an attorney and accounting investigator to provide an adversarial presentation so that class counsel’s representations are not unchallenged.

Judge Rosen’s Report and Recommendation was filed on May 14, 2018, under seal. The judge is allowing the parties to propose redactions before the report is released publicly.  Class members will have an opportunity to object after the report is released.