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The Times-Picayune: Judge seals records on legal fees in suit: Payments in gasoline case secret

Friday, April 06, 2007
By Susan Finch

The judge in a 2004 federal class action lawsuit over fuel gauge damage caused by tainted gasoline made at Shell-Motiva refinery in Norco has sealed records on how he divided $6.8 million in legal fees among 79 lawyers in the case.

U.S. District Judge Ivan Lemelle has ordered each lawyer, on pain of being sanctioned, not to reveal how much they were paid.

Lemelle’s late January decision to keep the information under wraps has drawn criticism from some of the lawyers and has attracted the attention of Loyola Law School ethics professor Dane Ciolino.
 
Ciolino says the situation violates the right of the lawyers and the public to have access to court records. Additionally, he said, it flies in the face of a Louisiana attorney ethics rule that says a client is entitled to know how his lawyer shares fees with other lawyers.

Ciolino has asked Lemelle to lift the seal on details of the lawyers’ fees.

Lemelle, who is considering the request, did not return a call seeking comment.

The fee controversy caps a case brought on behalf of Louisiana, Mississippi, Alabama and Florida residents whose fuel gauges broke after they bought Shell Oil Co. gasoline containing too much sulfur over several weeks starting in May 2004.

Soon after the problem emerged, Shell volunteered to fix broken gauges in tens of thousands of vehicles at a cost of $200 to $1,000 each, depending on the car model. By September 2004, Shell had processed about 81,000 claims, meaning the firm by that time could have spent tens of millions on the repairs.

After spirited negotiations, attorneys for both sides reached a settlement that called for Shell to expand the repair program and provide $3.7 million to cover general damages, such as lost wages, for plaintiffs who filed repair claims. The settlement limited individual payments for general damages to $150 and $300 for lost wages.

The settlement also called for Shell to provide $6.875 million to cover attorneys’ fees, costs and expenses, $2,000 for each class representative and $400 for each named plaintiff.

In paperwork asking Lemelle to unseal the payment records, Ciolino complained that after a Jan. 22 status conference, the judge blessed the fee disbursement plan drawn up by a five-lawyer committee the judge formed last fall.

Lemelle took the panel’s advice to keep the list of individual lawyer fees out of public view, preventing “the public, including tens of thousands of class members and class counsel, from learning the distribution of fees among all class counsel,” Ciolino said.

New Orleans lawyer Stephen Murray, whose firm was among 32 involved in the case, complains that under the compensation formula Lemelle approved — $400 an hour times a multiplier of 2.3 — his firm should have been paid a lot more than $33,000 for its 125 hours on the case.
 
Murray contends Lemelle has deprived him of his due process right to challenge how the committee determined his firm’s fee.

Ciolino argues that the lack of transparency “suggests to the public at large that lawyers in high-profile, class action cases have something to hide. . . . Given that this is a class action case, the public interest in full disclosure is even more significant.”

Fee committee member Don Barrett, a Lexington, Miss., lawyer, told Lemelle during the Jan. 22 hearing that keeping the individual attorney fees confidential would forestall fee fights that might erupt if the lawyers could compare notes on their payments. If the payments to each lawyer remained secret “and nobody knows what they got, that is just between the court and them, they will be quite satisfied,” Barrett said.

Under Lemelle’s order, Barrett said, the judge can adjust an individual lawyer’s fee based on the person’s work, and not based on comparing the person’s fees to those of other attorneys.

According to committee members, the panel settled on fee amounts after reviewing information submitted by the attorneys on the services each provided and how much those services benefited the class as a whole.

In his Jan. 22 order, Lemelle said the five committee members played large roles in the case and were therefore well-positioned to understand its complexities and the contributions of individual lawyers.

Among the factors the committee considered in setting on fee amounts, Lemelle said, were the time and labor required, whether work on the case kept lawyers from taking other jobs and whether they had “direct and meaningful participation” in a wide range of tasks such as working with experts, preparing pleadings and developing litigation strategy.

Susan Finch can be reached at [email protected] or (504) 826-3340.

© 2007 The Times-Picayune. All rights reserved.

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