Lawler v. Johnson

253 So. 3d 939
CourtSupreme Court of Alabama
DecidedOctober 20, 2017
Docket1151347; 1160049; 1160158
StatusPublished

This text of 253 So. 3d 939 (Lawler v. Johnson) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lawler v. Johnson, 253 So. 3d 939 (Ala. 2017).

Opinion

STUART, Chief Justice.

Stanley D. Lawler; Clete Walker; Georgia Urology, P.A., and several of its member physicians (those physicians are hereinafter referred to collectively with *941Georgia Urology, P.A., as "the Georgia Urology claimants"; Lawler, Walker, and the Georgia Urology claimants are hereinafter referred to collectively as "the objectors"), filed objections in the Jefferson Circuit Court challenging a $124 million attorney fee awarded by the Jefferson Circuit Court to class counsel as part of the settlement of Johnson v. Caremark Rx, LLC ("the Caremark class action).1 After the trial court overruled their objections and its judgment approving the settlement became final, the objectors appealed the attorney fee to this Court. We vacate the trial court's order awarding attorney fees and remand the case.

I.

This Court has previously had before it appellate proceedings arising from the Caremark class action on multiple occasions. See, e.g., Ex parte Caremark Rx, LLC, 229 So.3d 751 (Ala. 2017) ; CVS Caremark Corp. v. Lauriello, 175 So.3d 596 (Ala. 2014) ; and Ex parte Caremark RX, Inc., 956 So.2d 1117 (Ala. 2006). Although we have described the basic facts of the case on each of those occasions, we briefly do so again here to provide context to the instant appeals.

Beginning in approximately 1998, MedPartners, Inc., was the subject of dozens of securities-fraud lawsuits alleging that it had made false statements regarding its financial condition and anticipated future performance. Many of those lawsuits were eventually consolidated into a class action in the Jefferson Circuit Court ("the MedPartners class action"), and in 1999 the MedPartners class action was settled for $56 million based on MedPartners' assertions that the negotiated settlement exhausted its available insurance coverage and that it possessed limited other assets it could use to pay a larger award or settlement. Post-settlement, however, it was revealed in unrelated litigation that MedPartners actually held an excess-insurance policy providing unlimited coverage during the period in which the alleged fraud had been committed. In 2003, the Caremark class action was initiated against MedPartners' corporate successor, an entity now known as Caremark Rx, LLC ("Caremark"), and its previous insurer asserting fraud and suppression claims based on the $56 million settlement agreed to in the MedPartners class action.

Little progress was made toward resolution of the Caremark class action over the next several years because disputes concerning class certification, class representatives, and which attorneys would act as class counsel resulted in time-consuming delays and multiple appeals to this Court. Ultimately, however, Caremark and its insurer agreed in May 2016 to settle the claims asserted against them in the Caremark class action for $310 million. The trial court subsequently approved the settlement and awarded class counsel 40% of the settlement fund, or $124 million, as an attorney fee. The primary issue in these appeals is the size of the awarded attorney fee; the objectors argue that it is excessive and amounts to a windfall for class counsel and that they were given insufficient time and information to properly object to the size of the attorney-fee award.

In its June 1, 2016, order giving preliminary approval to the $310 million settlement, the trial court set forth the terms of the proposed settlement and outlined the procedures by which class members could file with Gilardi & Co, LLC, the appointed claims administrator, both proof of claims *942and any objections to the proposed settlement. The trial court also set forth the following relevant deadlines:

June 17, 2016-notice of the proposed settlement, in the forms approved by the trial court, must be published in the Wall Street Journal and on the official settlement Web site and mailed to all identifiable class members. Class counsel's attorney-fee application must also be posted on the settlement Web site.
July 22, 2016-written objections to any aspect of the proposed settlement, including class counsel's attorney-fee application, must be delivered to Gilardi; any objectors desiring to present oral argument regarding their objections must also deliver notice of that desire to the trial court and counsel for all the parties.
July 29, 2016-class counsel must file and serve its attorney-fee application along with all supporting materials.
August 8, 2016-trial court to conduct a fairness hearing to consider fairness, reasonableness, and adequacy of the proposed settlement.
September 30, 2016-class members must deliver proof of claims to Gilardi.

The trial court also approved the notice form that would be mailed to class members ("the short-form notice") and the more detailed notice that would be posted on the settlement Web site ("the long-form notice").

In accordance with this time line, on or around June 17, 2016, the short-form notice was mailed to identified class members. Under a header stating "Your right to additional information and/or to object," the short-form notice provided:

"A longer and more detailed notice of the settlement, which describes additional terms of the settlement and the procedures applicable to the settlement, is available at www.aig-caremarkclassaction.com. The settlement hearing will be held on August 8, 2016 at 1:30 p.m. [at the Jefferson County Courthouse]. ... Any class member may object to the proposed settlement, the plan of allocation, or the fee and expense application and/or incentive awards. A class member may do so by filing a written objection and/or by appearing at the settlement hearing and showing cause why the court should not approve the proposed settlement, the plan of allocation, or the fee and expense application and/or incentive awards. Additional information regarding objecting to the settlement, including the requirements for submitting valid objections, is available at www.aig-caremarkclassaction.com."

(Emphasis added.) Thus, although the trial court's June 1, 2016, order indicated that a class member objecting to the proposed settlement was required to file a written objection with Gilardi by July 22, 2016, the short-form notice mailed to class members informed them that they could object to the proposed settlement "by filing a written objection and/or by appearing at the settlement hearing." In this respect, the language of the short-form notice actually mailed to the class members differed from the language of the short-form notice approved by the trial court in conjunction with its June 1, 2016, order; the approved short-form notice provided that "[a] class member may [object] by filing a written objection and

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Bluebook (online)
253 So. 3d 939, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lawler-v-johnson-ala-2017.