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Ninth Circuit Bumps Up Hourly Rate in Labor Case

April 19, 2021

A recent Law 360 story by Lauren Berg, “9th Circ. Bumps Ore. Atty’s Hourly Fee Rate in Labor Case,” reports that a U.S. Department of Labor administrative law judge wrongly reduced an Oregon attorney's hourly rate by $100 while awarding attorney fees in a Longshore and Harbor Workers' Compensation Act case, the Ninth Circuit ruled, telling the Benefits Review Board to assign the case to another judge.

In a 35-page published opinion, the three-judge panel said the review board should not have upheld the administrative law judge's decision to knock down attorney Charles Robinowitz's fee rate from $450 per hour to $349.85 per hour, finding that the attorney had presented "substantial evidence" that his requested rate was in line with similar services by lawyers of comparable skill and experience.  Robinowitz provided supportive affidavits from other attorneys, the 2012 Oregon State Bar Survey reporting that Portland attorneys with more than 30 years of experience billed between $300 per hour and $400 per hour, and court decisions awarding him $425 per hour and $420 per hour for work performed in 2012, 2013 and 2014, according to the opinion.

The fee appeal comes after Ladonna E. Seachris in 2006 filed a claim for benefits under the LHWCA following the 2005 death of her husband, who was injured while working as a longshoreman in 1979, according to court filings.  An administrative law judge denied the claim in 2010 and Seachris appealed to the Benefits Review Board, which affirmed the judge's order.  Seachris appealed again to the Ninth Circuit, which remanded the case in 2013, and the administrative law judge ruled in her favor in 2016, according to court records.

Following that decision, Seachris' attorney Robinowitz filed for attorney fees for 109 hours at a rate of $450 per hour, as well as costs of $5,413.  The administrative law judge in 2017, however, allowed the attorney 98 hours at about $341 per hour, according to court filings.  The Benefits Review Board then affirmed the decision, but increased the hourly rate to $349.85 because of an inflation error.

Seachris and her attorney then appealed to the Ninth Circuit. Seachris' husband's former employer, Brady-Hamilton Stevedore Co., said Robinowitz should only get an hourly fee rate of $358, arguing that the administrative law judge correctly calculated the market rate using the 2012 Oregon State Bar Survey, according to court filings.

In its opinion, the appellate panel said the judge erred by rejecting Robinowitz's evidence of prevailing market rates as outdated, saying reliance on historical market conditions is appropriate when it is the most current information available.  The panel said the judge needs to treat the parties equally, finding that both parties, as well as the judge, relied on dated evidence.

Brady-Hamilton also relied on the 2012 OSB Survey, the panel said, and the judge herself relied on that same survey as the linchpin of her rate decision.  By the time her fee decision came out in January 2017, the 2011 rates in that 2012 survey were already six years old, according to the opinion.  "The ALJ nevertheless relied on the survey by adjusting the 2011 data for inflation — appropriately so," the panel said. "But the ALJ declined to make similar adjustments to Robinowitz's evidence."

"We see no reason why she should not have taken the same approach to Robinowitz's evidence, and it was [an] error not to do so," the panel added.  The administrative law judge also erred by rejecting Robinowitz's evidence from the 2012 OSB Survey and not taking into account the way the survey reported rates, the panel said.  The survey reported hourly rates charged by Portland attorneys based on their years of experience, irrespective of practice area, and based on their practice area, irrespective of experience, according to the opinion.

Robinowitz relied on the survey chart based on years of experience to calculate his hourly rate, but the judge rejected the evidence as being too "one-dimensional," according to the panel.  But then the judge relied on the other survey chart based on practice area to determine her rate, the panel said.

"Although the ALJ rejected Robinowitz's survey evidence as 'one dimensional,' she proceeded to base her rate determination on the equally one dimensional chart reporting rates by practice area," the panel said.  "Even assuming arguendo that rates based on practice area are more probative than rates based on years of experience, the latter rates are at least relevant."  The panel found that the judge and the review board committed legal error in determining Robinowitz's hourly rate and that the judge's rate decision isn't supported by substantial evidence, according to the opinion.

The panel remanded the case and told the review board to assign it to a different judge, finding that "the tone of the ALJ's decision and the manner in which the ALJ evaluated the evidence suggest that the ALJ may not be able to provide Robinowitz with a fair and impartial hearing on remand."

The panel also noted that the Oregon State Bar has published an updated survey, saying the 2017 survey reports that Portland attorneys with more than 30 years of experience charged a median rate of $425 per hour in 2016 and for attorneys in the 75th percentile, the average rate was $495 per hour.  "These updated rates, which the BRB should take into account on remand, provide further support for Robinowitz's requested rate," the panel said.

TX Justices Toss Class Action Fee Award in Insurance Cases

April 18, 2021

A recent Texas Lawyer story by Greg Land, “Texas Justices Toss Class Action Ruling Against Insurer and $3.5M Fee Award,” reports that the Texas Supreme Court has ruled an insurer that stopped issuing “all risk” homeowners policies because it was paying out too much in mold claims did not violate the contracts of some 400,000 policyholders, and does not have to pay more than $3 million in attorney fees and nearly $487,000 in costs a jury awarded to the plaintiffs lawyers. 

Ruling in a class action that’s been percolating through the courts for nearly 20 years, the justices sent the fee award back to a Jefferson County judge with instructions to consider what is “equitable and just” to Farmers Insurance, given that the named plaintiff and class “have not prevailed in any regard and have obtained no favorable results.”  The April 9 ruling written by Justice Jimmy Blacklock overturns a 2019 ruling by the Thirteenth Court of Appeals that upheld the fee award and also said the plaintiffs in separate, though related litigation should have been allowed to intervene in order to seek their own fees. 

Farmers is represented by a team of Norton Rose Fulbright lawyers including Houston-based partners Layne Kruse, Carlos Rainer, Katherine Mackillop and Scott Incerto.  Lawyers for plaintiff Sandra Geter and the class are John Werner of Reud Morgan & Quinn and DeWayne Layfield of the Law Office of L. DeWayne Layfield, both in Beaumont.

As detailed in the order and other filings, the case began in 2000 when Farmers and other insurers sought permission from the Texas Department of Insurance to stop writing the all-risk policies and instead offer a less comprehensive “named peril” policy.  A Farmers executive told the TDI the move was necessary because of “dramatic increases that we have experienced for water, mold and foundation claims, and the resultant underwriting losses.”    

The decision was approved, and in 2002 Farmers sent all holders of the policies a notice that they would not be renewed but that the named peril policy would still be offered.  In 2002, policyholder Geter filed a class action seeking declaratory judgment that Farmers’ non-renewal violated the clause of her policy stating: “We may not refuse to renew this policy because of claims for losses resulting from natural causes.”

She also argued that the non-renewal notice was void because it “was based on a prohibited reason for non-renewal.”  The trial court granted Geter summary judgment, ruling that Farmers breached the contract by not renewing the policies.  Also in 2002, another class action was filed in Travis County claiming that Farmers “wrongfully raised premiums despite offering less coverage when it replaced the HO-B policy” with the slimmed-down coverage.  Claims mirroring Geter’s were later added to that suit as well.  In 2016 the Travis County suit settled with Farmers agreeing to compensate policyholders in “a package valued at over $100 million.”  But the non-renewal claims were carved out of that litigation, and the Geter case continued with both sides filing for summary judgment.  

The trial court granted summary judgment to the plaintiffs, ruling that Farmers breached its agreement by not renewing the policies and that each member should be allowed to renew their HO-B policy at a premium set by the trial court.  While that decision was on appeal, in 2016 the trial judge held a jury trial on attorney fees that ended with a jury awarding the plaintiffs lawyers $3,046,247 in fees and $486,790 in expenses.  The plaintiffs in the Travis County action filed to intervene for their attorney fees, arguing that their case benefitted the Geter class members.

The trial judge denied the motion, and both they and Farmers appealed.  The court of appeals affirmed the trial court’s holding that Farmers had breached its policyholders’ contracts and the fee award, but reversed the rulings denying the Travis County plaintiff’s motions to intervene and ordering Farmers to issue HO-B policies at a determined premium. 

Blacklock’s opinion said the key to the case was the interpretation of the policies’ bar to renewal “for losses resulting from natural causes.”  “The dispute comes down to what paragraph 6(a) of the policy means by ‘claims for losses,’” Blacklock wrote.  “If the language refers to ‘claims’ and ‘losses’ of the individual policyholder, then Farmers is correct that the policy does not preclude an insurer from terminating the policy’s use statewide because of systemic losses that make continued use of the policy financially untenable,” he said.  “If ‘claims’ and ‘losses’ also refers to statewide or systemic ‘claims’ and ‘losses,’ then Geter is correct that the policy prohibited Farmers from deciding to non-renew.”

The justices find it “highly implausible” that Farmers or the TDI would agree to language that would “undermine TDI’s regulatory authority to react to changing circumstances in the insurance industry and would bind Farmers to suffer statewide underwriting losses in perpetuity.”

“Because the individual plaintiff and class members were not entitled to a renewal of their HO-B policies, all the plaintiffs’ claims fail, and summary judgment for Farmers was proper,” the opinion said.  It follows, Blacklock wrote, that neither Geter nor the would-be intervenors are entitled to any award of fees. 

Novel Ruling: Law Firm Awarded $10M in Fees After Withdrawing in NJ

April 17, 2021

A recent New Jersey Law Journal story by Charles Toutant, “Novel Holding in New Jersey: Law Firm Awarded $10M After Withdrawing From Case,” reports that a New Jersey judge has awarded $10 million to the law firm of Kirsch, Gelband & Stone in a fee dispute stemming from a $125 million personal injury settlement of a suit by a lawyer who was left paralyzed by a falling utility pole.  Although Kirsch Gelband was ultimately replaced by another firm, it had a key role in developing evidence that yielded such a large settlement, Essex County Superior Court Judge Thomas Vena said.

The ruling, giving a law firm that withdrew from representation a share of successor counsel’s legal fees, based on its contribution toward the recovery, is a novel holding in New Jersey, Vena said.  The ruling gives Kirsch Gelband a 40% cut of the $25 million awarded to its successor in the case, Mazie Slater Katz & Freeman.

Justifiable withdrawal

The case stems from a 2017 accident in which Maria Moser Meister was left paralyzed and brain damaged after a deteriorating utility pole fell on her on a street in Union City.  At the time of the accident, Meister was general counsel for finance firm Milberg Factors in New York, and previously had been an associate at Simpson Thacher & Bartlett.  David Mazie of Mazie Slater obtained the $125 million settlement in May 2020, calling it the largest settlement in New Jersey history.

Vena found that Kirsch Gelband’s Gregg Alan Stone had a stormy relationship with Meister’s husband, Peter, who would contact him at all hours. Finding that Stone had a justifiable cause to withdraw, the judge found that Kirsch Gelband was entitled to a calculation of how much of the fee the firm deserves.

Vena concluded that “the nature of and deterioration of the attorney/client relationship, exhibited throughout the hearing, justified Mr. Stone’s good-faith belief that the representation could not ethically be continued.” Vena said a “balancing of predecessor and successor contribution” was needed to decide Stone’s cut of the fees.  Bruce Nagel of Nagel Rice, who represents Kirsch Gelband, says that “in view of Mr. Mazie’s position that Kirsch Gelband was entitled to zero, we are extremely pleased with the $10 million award.”

But additional proceedings are underway between Mazie Slater and Kirsch Gelband.  Nagel and Mazie have a long history of acrimony.  The two are former law partners who frequently face each other as litigation adversaries.  Their rancor dates back to when Mazie split with Nagel to start his own firm in 2006. Mazie took cases with him that led to disputes over counsel fees.

Nagel said evidence in the case supported his claim, raised in a separate suit pending against Mazie Slater by Kirsch Gelband, that Mazie provided false information to Meister in order to get the case.  Mazie called that claim “nonsensical.”

Nagel also said he was filing an additional motion in the Verizon case to vacate a deal between Mazie and Philip Rosenbach, a lawyer who handled the case before Stone, in which Mazie purchased the other lawyer’s right to receive a referral fee from Kirsch Gelband.  Such a deal is “highly unethical and highly improper,” Nagel said.  But Mazie said Rosenbach “chose to resolve his claim for that one-third referral fee by settling with us rather than being embroiled in this frivolous litigation,” and added that there’s “nothing unethical about it.”

Former AG’s Hourly Rate: $2,295

April 16, 2021

A recent Law.com story by Mike Scarcella, “Covington’s Eric Holder Bills at $2.295 Hourly, New Legal Services Contract Shows,” reports that Covington & Burling partner Eric Holder Jr., the Obama administration’s first U.S. attorney general and a veteran Washington lawyer, is billing at $2,295 hourly, according to a contract the law firm signed with a public university to conduct an internal investigation about workplace culture.  Holder is Covington’s lead partner on the legal services engagement with Oregon Health & Science University.  The school announced its retention of Covington in late March to lead a “comprehensive, independent investigation of institutional harassment, discrimination, retaliation and racism.”

Covington and other firms have long been hired to conduct internal investigations at companies and other institutions, but in many instances the engagement letters, revealing rates and the scope of legal services, are not matters of public record.  ALM obtained Covington’s contract through a public records request.  Holder’s $2,295 billing rate puts him at the high end of hourly figures.  Billing at other elite firms such as Weil, Gotshal Manges and Kirkland & Ellis have recently approached $2,000.

“Mr. Holder and Covington have conducted examinations of workplace culture and issues related to equity, diversity and inclusion for corporations including Uber, Starbucks and Airbnb,” the university said in announcing the retention of the Washington-based law firm.  The announcement noted that “Holder and the Covington team are also currently assessing race, equity, inclusion and diversity policies and practices at Seattle Children’s Hospital.”

Holder is working with Covington partner Nancy Kestenbaum, co-chair of the firm’s white-collar defense and investigations practice group and a former member of the firm’s management committee. Kestenbaum is billing at $1,445 an hour, the law firm’s engagement letter said.  Covington said it agreed to discount its rates by 10%.

“Hourly rates for other lawyers range from $595 for junior associates to $2,295 for senior partners; and for legal assistants from $290 to $545,” the firm said in its engagement letter.  The firm said it reviews and adjusts rates yearly as of Jan. 1, “although there are circumstances in which we may adjust rates at other times.”  Part of the contract contained information that the university would not release.  The information pertained to clients Covington is advising on clinical trials being conducted at the university.

“As you recognize, we are a large law firm with multiple practices in multiple offices throughout the world, and we represent many different clients in many different industries, including clients who are competitors of each other and sometimes adversaries in legal matters,” Holder wrote.  “In taking on this representation, we commit that we will not represent any other client in any matter adverse to you that is substantially related to this matter.”

A private law firm charging a public client is not rare.  Public records show major U.S. law firms have charged local or state government clients to take a case to the U.S. Supreme Court.  Not every engagement, however, is charged. Some work is done pro bono.

Ninth Circuit: $6M Fee Award Does Not Create ‘Windfall’

April 12, 2021

A recent Metropolitan News story, “$6 Million Attorney Fee Award Would Not Create ‘Windfall’,” reports that the Ninth U.S. Circuit Court of Appeals, in a 2-1 decision, has reversed an order for a $4 million payment to the attorneys for the plaintiffs in a class action against Experian Information Solutions, Inc., a consumer credit reporting company, that resulted in the creation of a $24 million settlement fund, holding that the District Court judge failed to adequately explain why he was departing from the standard 25 percent cut for the lawyers.  Signing the majority opinion were Ninth Circuit Judge Andrew D. Hurwitz and Sixth Circuit Judge Eugene E. Siler, sitting by designation. Judge Daniel P. Collins dissented.

The settlement was reached in a case that was initially dismissed with prejudice by the judge then handling it, Andrew J. Guilford of the Central District of California, now retired.  After the Ninth Circuit on May 17, 2019, reversed the dismissal, Guilford certified a class of about 100,000 persons whose credit histories were damaged by reports of unpaid debts to a loan company, although the debts were disputed and the company, which was facing possible criminal prosecutions, had gone out of business.

The defendant, headquartered in Orange County’s City of Costa Mesa, agreed to a settlement of the action brought against it by Demeta Reyes, a resident of Georgia, under the federal Fair Credit Reporting Act (“FCRA”).  Replacing Guilford as the judge presiding in the case was Stephen V. Wilson.  An award of 25 percent of the recovery—which would be $6 million—would give the lawyers a windfall, noting that the lodestar value of their services was $2,085,843.50.

To award them $6 million, he noted, would mean use of a multiplier of 2.88, while an award of $4 million would entail “a more reasonable lodestar multiplier of 1.92.”  “By any measure, class counsel was successful,” Hurwitz and Siler wrote in a memorandum opinion.  They quoted an expert witness as saying that the settlement’s “structure...is the FCRA gold standard,” with class members each receiving a check for at least $270 without having to make a claim.

“To reach that result, class counsel assumed significant risk,” the majority opinion says, noting that contingency representation stretched over a four-year period, counsel advanced more than $100,000 in costs and expenses, and other work had to be declined.  “Experian deleted more than 56,000 delinquent loan accounts after this litigation began,” the opinion notes.  “Before deletion, those delinquent accounts depressed class members’ credit scores.”

 It goes on to say: “The 16.67% fee award falls below the market rate fee award in FCRA class action settlements. And no windfall is apparent.  Assuming a 25% award, the lodestar crosscheck returns a multiplier of 2.88. Similar lodestars are routinely approved by this court.”

It adds: “The district court’s reliance on megafund and wage and hour cases to find a windfall for class counsel was somewhat inappropriate here.  First, megafund cases are usually those with settlements exceeding $100 million….Here, the settlement is about a quarter of that.  Megafunds are more often a reflection of class size than class counsel’s efforts….Moreover, the complexity of this case is similar to a wage and hour dispute the district court cited where a 2.87 lodestar multiplier was approved, but not the ‘ordinary wage-and-hour dispute’ that the district court also cited.”  The memorandum opinion does not expressly direct an award of $6 million, instead remanding “for further proceedings not inconsistent with this opinion.”

Collins said in his dissent: “The majority nonetheless concludes that the district court abused its discretion because the settlement here was under $100 million and because multipliers of 2.88 or more have been allowed in other cases….But the fact that we have upheld higher multipliers in some cases does not mean that district courts lack discretion to conclude that a lower multiplier would be more reasonable in a given case.  By essentially ordering the district court to allow this high multiplier, the majority usurps the discretion that we have said belongs to the district court.

“Because the district court had discretion to conclude that a benchmark award that was nearly three tunes the lodestar amount would be unreasonable, and that a smaller (but still generous) multiplier was more appropriate, the district court did not abuse its discretion by ordering a $4,000,000 fee.”  Guilford set forth Reyes’s factual contentions in his order certifying the class.