Diamonds are forever … and so are fee fights?
OK, maybe not.
But more than three years after a federal judge in Minneapolis approved a $42 million settlement of a class-action lawsuit brought by a group of retired professional football players over the use of their likenesses by the National Football League’s NFL Films, three of the law firms that represented the former gridiron greats are still battling over $6.2 million in attorneys’ fees.
It doesn’t look like it will be over any time soon, either.
In an order earlier this month, U.S. District Court Judge Paul A. Magnuson ruled that Eden Prairie sports attorney Bob Stein, a solo practitioner and the Washington, D.C., firm of Ward and Ward, P.L.L.C. can proceed with their lawsuit against their former co-lead counsel, Michael Hausfeld, and his eponymous D.C. firm, Hausfeld, L.L.P.
Stein — a former NFL linebacker and past president of the Minnesota Timberwolves — and Ward & Ward sued Hausfeld in Hennepin County District Court last August, asserting claims for breach of contract, civil theft, fraudulent misrepresentation, promissory estoppel, breach of fiduciary duty, conversion and unjust enrichment.
In their lawsuit, Stein and Ward & Ward say they are owed $199,500 under the terms of their fee-splitting agreement with Hausfeld, a prominent antitrust litigator who the National Law Journal once listed as one of the 100 most influential lawyers in the country.
Hausfeld, who is represented in the fee fight by Twin Cities attorney Thomas Atmore, promptly fired back and moved for a permanent injunction in U.S. District Court.
Atmore’s argument: Stein and Ward & Ward should be barred from suing Hausfeld because they are just trying to re-litigate the federal court’s already-settled allocation of attorneys’ fees.
But Magnuson — who was highly critical of both Stein and Ward & Ward in the course of the class action litigation — flatly rejected that argument.
“Stein and Ward are not demanding additional fees from Plaintiffs or the NFL, nor are they seeking to re-litigate the award of attorneys’ fees,” Magnuson wrote in his Nov. 7 order. “They are merely seeking to litigate a breach-of-contract claim against Hausfeld that the Court has never heard before.”
Bill Harper, who is representing Stein and Ward & Ward in the Hennepin County suit, said he was pleased by Magnuson’s ruling.
“I think it makes life much simpler,” said Harper, of Harper & Peterson in Woodbury. “It is a contract that was done pursuant to Minnesota state law and the federal courts have no continuing interest in it.”
He also expressed confidence that his clients would prevail, either at trial or via motion practice. “A deal is a deal and a contract is a contract. I have little doubt that it will be enforceable. I think [Hausfeld] is just buying time and prolonging the process,” Harper said. “I think this is going to be rancorous but easily resolved.”
Asked for his insights about the root cause of the acrimony between the firms, Harper attributed the conflict to differing views on the best interest of the class versus the best interest of individual players.
History of hard feelings
Without question, the acrimony among the firms predates the fight over attorney fees.
Not long after the class action complaint was filed on behalf of six former football stars (a cohort that included former Vikings great Jim Marshall), sharp differences on both litigation strategy and the viability of the class action claim began to emerge.
After a schism formed between the three originating firms — with Stein and Ward & Ward on one side, the Minneapolis firm of Zimmerman Reed on the other – Stein and Ward & Ward entered into a joint representation agreement with Hausfeld.
That collaboration didn’t last, either.
When Magnuson granted a preliminary approval of the settlement in 2013, he opined that the certification of the class action was “highly doubtful, at best.” In a withering memorandum and order, Magnuson lambasted Stein and Ward & Ward for opposing the settlement, which the judge later described as “one of a kind” and “a remarkable victory for the class as a whole.”
“The individuals who originally brought this lawsuit and who now oppose the settlement rode into Court on the banner of saving their downtrodden brethren, those who had played in the NFL yet today were penniless, and, often, suffering from injuries or illnesses directly related to their playing days,” Magnuson wrote. “It is the height of disingenuousness for these same Plaintiffs to now complain, like children denied desert, that this settlement does not benefit enough the individuals who brought the lawsuit.”
In that same order, Magnuson appointed Dan Gustafson, of the Minneapolis firm of Gustafson Gluek, as lead settlement counsel for the plaintiffs. Among Gustafson’s duties: figure out how to divvy up the $6.2 million in attorneys’ fees between seven law firms.
Because Stein and Ward didn’t sign on to the settlement, Gustafson recommended they be excluded.
‘Center’ of disputes
In a report to the court, Gustafson wrote that “Mr. Stein was always at center of the internal disputes between the Co-Lead Counsel (first with Zimmerman Reed and later with Zimmerman Reed and Hausfeld) that greatly delayed the resolution of the litigation.”
But Gustafson, who found similar fault with Ward & Ward, also provided an alternate recommendation that included fee awards for both firms.
Magistrate Judge Arthur Boylan agreed with Gustafson that the Stein and Ward & Ward could have been zeroed out but, in the end, concluded that fee awards to the two firms were justified, owing to their role in the origination of the suit and their work on the litigation.
In December 2013, Boylan formally adopted Gustafson’s alternate recommendations, awarding $445,000 to Stein, $525,000 to Ward & Ward, and $650,000 to Hausfeld.
Under the terms of the order, the four other plaintiffs firms – Zimmerman Reed, Gustafson Gluek, Larson King, and Zelle Hofmann Voelbel & Mason – received attorney fee awards of $2.2 million, $500,000, $425,000 and $375,000, respectively.
That did not put an end to the wrangling. Stein objected to his award (which Magnuson overruled) and, more recently, Zimmerman Reed put a lien on Stein’s fee award in connection with a $150,000 loan it extended at the outset of the litigation.
Players’ claims expire
Meanwhile, the NFL players who opted out of the class-action settlement saw their claims die last year when the Eighth Circuit upheld Magnuson’s settlement order. In February, the U.S. Supreme Court put the final nail in the coffin when it denied a petition for writ of certiorari.
Thomas Atmore, the attorney who is defending Hausfeld in the Hennepin County lawsuit, did not respond to a call seeking comment on the fee fight.
Gustafson, however, did pick up the phone. What does he make of the endless wrangling?
Gustafson allowed that he has not seen the state court lawsuit and doesn’t have a stake in its outcome. But he expressed puzzlement that the lawyers are still fighting.
“For all the work that’s gone into this case, and all of the difficulties, it’s hard for me to understand why people are continuing to fight over what I believe is a relatively small fee amount,” Gustafson said.