Monday, February 27, 2012

Follow Up on "Pending Lists" Class Action Settlement - Approval of Counsel Fees and Disbursements

The news about the certification of the class action by lawyers against Westlaw led by my classmate Lorne Waldman reminds me that I have been remiss in updating about the “pending list” class action, on which I blogged extensively before. This involved allegedly unpaid musical “mechanical” copyright royalties on about 300,000 titles and, hence, potential statutory minimumdamages ranging between about $150 million to $6 billion based on the normal $500 - $20,000 range set out in the statute, although the latter figure was never really a serious possibility.

This action settled for what still appears to be a lot of money, namely about $47 million. This is about a third of what an ostensibly “minimum” statutory damages award might have yielded based upon 300,000 songs at the presumptive minimum of $500 each (the court can lower this based on factors including the “good faith” the defendant.)  It is also less than the amount of $50 million that was allegedly unpaid according to the allegations in the Statement of Claim. Class counsel is seeking approval of fees in the amount of approximately 15% of the value of the settlement fund, which works out to $6,950,000 plus disbursements for a total of $7,647,583.85.

The action was originally filed in the name of the Estate of Chet Baker, although the lead plaintiff was changed amidst some apparent mystery and controversy midway. Some of the documents concerning this litigation are available here. 

From a procedural standpoint, this litigation did not get very far and the settlement took place at an early stage. There is no indication that a statement of defence was ever filed. There was presumably no formal discovery.  Certification was not contested. Given the highly technical settlement documentation that clearly reflects detailed knowledge of the music business in Canada, it would seem that defendants’ counsel were very cooperative and may have had a major role to play in drafting the settlement documents. Indeed, as I pointed out last year, CMRRA/SODRAC will receive 10% of all payments made out of the Settlement Trust as “commission” for acting as “settlement administrator”. Presumably, this will be in addition to the regular remuneration that CMRRA/SODRAC receives from copyright owners. They will not have to pay anything to the copyright owners. See here
and here. 

From informationprovided to the Court, 16 named class lawyers and an unknown number of unnamed students and associates at two law firms and a legal clinic at the University of Ottawa have docketed about $2.2 million in time on this case. That amount will more than treble if the 15% contingency fee they seek is approved.

The Motion Record for Approval of Class Counsel Fees etc. contains the following information concerning the docketed time of some of the lawyers:
  • The lead lawyer at Harrison, Pensa, Jon Foreman, docketed $747,348 of time.
  • Three other members of his firm docketed between $146,422.50 and $180, 127.50 of time.
  • The lead lawyer at Bates Barristers, Paul Bates, docketed $565,427.50 of time.
  • CIPPIC, the public interest legal clinic at the University of Ottawa, was also involved. Those associated with CIPPIC whose time is accounted for are:
    • David Fewer, currently Director of the legal clinic CIPPIC at the University of Ottawa, Faculty of Law: $106,766.67,
    • Pippa Lawson, former Director of CIPPIC: $20,249.25
    • Tanya Woods: $40,000
    • Students: $33,709.50
Presumably, these amounts will more than treble if the 15% contingency fee is approved.

There will be further billings at normal hourly rates for the administration of the settlement, if the Court approves.

The lead plaintiffs, Ms. Carol Baker and her replacement, Mr. Craig Northey, have indicated that although they have no “expectation” of an “honorarium”, they would be “grateful” for whatever the Court may approve.

Disbursements amounted to an additional $87,788.66 including tax. These ranged from a low of $20 for taxis/Parking to $27,928.28 to Jeremy Debeer, a law professor at the University of Ottawa and a member of Centre for Law, Technology and Society, which provides guidance, as an internal advisory board, to CIPPIC. The payment to Prof. Debeer was for preparation of an affidavit and for attendance for cross-examination, including travel expenses.
The motion to approve these fees was apparently to be put to the Court on November 27, 2011. There is no indication on the class website whether any other submissions were received or whether the Court has yet ruled.

The settlement mechanism considers any unpaid amount over $2,500 to be a “high value item”.  If counsel fees are approved as asked on the basis of 15% of the value of the settlement, and CMRRA/SODRAC (CSI) gets paid a 10% commission, the payment for the 300,000 works will come from a pool of approximately $36 million. This suggests that the average payment for each work will be more or less about $120. 

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