After ‘unsubstantiated’ collusion claim, Entwistle law firm awarded fees in Valeant class action lawsuit

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A sign indicating the headquarters of Valeant Pharmaceuticals International Inc is seen in Laval, Quebec June 14, 2016. REUTERS/Christinne Muschi

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(Reuters) – There is a deep and unspoken irony in a decision last week, awarding $75,000 in legal fees to Entwistle & Cappucci, which represented an opponent of a $1.2 billion securities class action settlement between Valeant Pharmaceuticals International Inc and its shareholders.

Entwistle, as an attorney for investment firm Timber Hill LLC, had argued throughout the long-running case against Valeant (now known as Bausch Health Companies Inc) that the class action should stand account of investors’ losses in Valeant’s stock options.

The shareholders’ case, broadly, alleged that the company misled investors about the viability of its business model of raising acquirer companies that made life-saving drugs and then raising the prices of those products.

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When lawyers for Robbins Geller’s group Rudman & Dowd sought approval of a $1.2 billion settlement that set a 5% cap on the recovery of options traders from Valeant, Entwistle filed an objection. on behalf of Timber Hill. And in 2021, after U.S. District Judge Michael Shipp of Trenton, New Jersey, granted final approval to the settlement, including the award plan limiting the clawback for option investors, Entwistle appealed that decision to the 3rd U.S. Circuit Court of Appeals.

Last October, Entwistle agreed to drop the call, in a termination stipulation also signed by Robbins Geller and defense attorneys for several major companies. The stipulation noted that the administrator of the $1.2 billion settlement had determined that options traders’ claims would be well below the 5% threshold. Since Timber Hill’s appeal only challenged the cap on payments to option investors, according to the stipulation, the appeal was moot in light of the Claims Administrator’s report. The 3rd Circuit eventually accepted the stipulation and threw the call in December.

In the meantime, in the meantime, asked the trial judge to approve compensation of $75,000 for his work on behalf of options investors. That amount, the company said, was a small fraction of the company’s million-plus lodestar bills — and would barely cover the company’s $50,000 in expenses. Additionally, Entwistle told Shipp that the money would come from the $157 million he has already awarded in fees to class attorneys, so the class’s recovery would not be diminished at all.

If you’re pursuing a class action lawsuit, that’s where the alarm bells usually start ringing. An objector drops an appeal in exchange for a share of class attorneys’ fees? Isn’t this precisely the scenario that led to a 2018 amendment to federal procedural rules for class actions requiring trial courts to review “side agreements” in which class attorneys agree to pay objectors? for them to drop the calls?

Interlace and class counsel of Robbins Geller assured Shipp and Special Master Dennis Cavanaugh that there was nothing fishy about Timber Hill’s decision to deny his appeal. There was no quid pro quo between the plaintiffs’ businesses, both said. The dismissal was not contingent on the award of fees, they said, and merely reflected Timber Hill’s realization that it was no longer necessary to challenge the settlement’s allocation plan.

Those assurances rang hollow for another party in the Valeant case. And that’s where the irony comes into this story. A second opponent of the Valeant settlement said the 3rd circuit and the court of first instance that Entwistle and the class attorney appeared to have engaged in a “secret settlement” in which Robbins Geller agreed to pay Entwistle to drop his challenge to the settlement. The lawyer for the second objector? None other than Bandas Law Firm – a law firm that is often criticized as a serial objector and is known to have profited from exactly the kind of secret side deals he accused Entwistle of making.

Bandas’ attorney Robert Clore told the trial court that after raising questions about collusion between Entwistle and Robbins Geller, Entwistle disclosed to the 3rd Circuit that Robbins Geller had agreed not to oppose a request for a modest fee. It’s exactly the kind of deal, Clore argued, that demands skepticism after the 2018 amendment rule change, which was meant to discourage the practice known as “objectioner blackmail.”

“Timber Hill’s complicity with class attorneys in attempting to push the secret arrangement through the 3rd Circuit,” Clore wrote in a memoir to Shipp, “certainly bears upon the appropriateness of any charges.”

There is a strong “we know one” energy in Robbins Geller’s response to the Bandas company’s “baseless” claim of a collusive side deal. “The Bandas firm’s error lies in its assumption (based on its practice of fabricating objections with serial objectors connected to the firm in order to extract fees) that objectors will only dismiss appeals if their request for ‘fee is approved,’ the group’s attorney said. But that’s not what happened with the Timber Hill appeal, according to the filing: Entwistle’s decision that the appeal was moot was separate from any discussion of a royalty claim.

In the end, the special master, Cavanaugh, and the trial judge, Shipp, agreed with Entwistle and Robbins Geller. “The dismissal of Timber Hill’s appeal was based on mootness, not consideration paid or promised in the form of attorney’s fees,” Cavanaugh wrote in his December 6 report. Shipp’s June 30 ruling adopting the master’s special report said Clore’s assertion of a secret side deal to pay Entwistle to drop Timber Hill’s appeal was “unsubstantiated,” and that the Bandas company did not hadn’t explained how his “concern about collusion … turned into evidence.”

Clore did not respond to my email request for comment. Robbins Geller’s Jim Barz declined to comment beyond the group attorney’s brief.

Andrew Entwistle said he was pleased the court did not take Bandas’ “manifestly false” bait regarding collusion. “We’ve been completely transparent on the basis of the call being dropped,” he said. “It was never contingent on a fee.”

Read more:

Judge rejects class attorney’s payment to objector in lithium battery case

Valeant’s $1.2B Shareholder Class Action (and $157M Costs Award) Wins Final Approval

In ‘unconditional surrender,’ serial objector Bandas agrees not to practice in Illinois

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