Class Counsel Seek $3.4M in Fees for ESOP Settlement

Counsel for healthcare workers in a class action lawsuit who alleged overcharges to their employee benefit stock plans in violation of the Employee Retirement Income Security Act (ERISA) has filed a motion requesting almost $3.4 million in attorney’s fees and expenses. The case is Gamino v. KPC Healthcare Holdings Inc. et al., Case Number 5:20-cv-01126, U.S. District Court for the Central District of California.

The motion for attorney fees, which seeks 30% of the total settlement fund, plus $663,000 in litigation expenses, follows two settlements in the case. The first settlement, which occurred in July 2022, is between current or former employees and the employer, KPC Healthcare Holdings Inc., for $5 million. The most recent settlement in October 2022, was between the employees and Alerus Financial NA for $4 million. The October settlement provides for attorney fees of no more than a third of the total settlement fund and a service award of no more than $10,000, which would go to the lead plaintiff for the class. 

The attorney fee request is a slight upward departure from the Ninth Circuit’s 25% typical attorney fee award, based on the “specialized skills” of the class counsel in ERISA and class action litigation. The motion outlines the work of the three law firms on the case, with attorneys charging hourly rates between $280 and $1,050 for over 5,200 hours. The attorneys obtained 240,000 pages of documents, responded to at least ten discovery disputes, and conducted sixteen depositions across the country. 

The attorney fees motion is the latest filing in a class action lawsuit that class representative Danielle Gamino originally filed in June 2020 against KPC and Alerus. She alleged that the two companies violated ERISA when the workers’ employee stock ownership plan (ESOP) fund purchased KPC’s stock for $227 million when its value was only about $27.6 million. 

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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