Faced with a potential liability of nearly $37.2 million in attorney’s fees in the Retirement Fund class action settlement case (Betty Johnson v. Inos), the Inos administration has reached settlements with the class counsel for a fifth of their total fee request, according to a statement yesterday from the Office of the Governor.
Negotiations between the parties have been ongoing since October 2013 and were mediated by the Judge Robert J. Faris. In January, the administration reached settlements of $185,000 and $800,000 with Stephen C. Woodruff and Bruce Jorgensen, respectively. Most recently, on July 17, 2014, the administration finalized a settlement agreement providing for payment of $6.5 million (to be paid over three years) with the Bronster Hoshibata firm.
“The three-year payment term is a huge benefit for the Commonwealth as it gives us time to incorporate the payments into our budget and generate more revenue,” said Gov. Eloy S. Inos.
Deputy Attorney General Gilbert Birnbrich explained, “If the district court issued an order to pay attorney’s fees, the lump sum amount would have been due at the time ordered and the amount could have been two, three, or even five times the amount negotiated in the fee settlements. We presented strong arguments to the district court for a fee award at the lower end, but there was a high possibility that the court would have awarded fees that exceeded settlement amounts. In one of its prior class action settlement cases, the court awarded class counsel fees with a multiplier of 8.”
The Jorgensen and Bronster settlements are still subject to approval by the district court and will not be final until such approval.
“The administration would have, of course, much preferred to see these fee monies go to projects and programs in our community, but the Commonwealth had an obligation to pay attorney’s fees under the settlement agreement,” said a part of the statement.
“It is likely that the court would have awarded fees that exceeded the amounts we reached in settlement,” said Inos. “The fee settlements have saved the Commonwealth from exposure to millions of dollars and these savings can be used for matters that directly benefit our community, including the restoration of the 25 percent pension reduction.”
The administration was also involved in settlement negotiations with Timothy R. Lord, an attorney who was not included as class counsel under the terms of the settlement agreement, but who represented the plaintiff earlier in the case. Lord insists that he is entitled to almost $6 million in fees; the government does not believe that he earned this fee and has not reached a settlement with him. (Office of the Governor)