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4 Reasons to Get Help on a Fee Motion

November 24, 2017

A recent CEBblog article by Julie Brook, “4 Reasons to Get Help on a Fee Motion,” reports on attorney fee requests.  This article was posted with permission.  The article reads:

Just because you successfully handled the merits of a case doesn’t mean that you should take on a large or complex fee motion that arises from it. It may be time to bring in someone with fee motion expertise.

Here are four reasons to bring in outside counsel for a fee motion:

  1. The expertise required for fee motions may make it more efficient or effective to hire an experienced fee litigator.
  2. Trial counsel’s credibility or skill is often a major issue, and an outside attorney adds objectivity to the presentation.
  3. Fee applications can become very time-consuming, and trial counsel’s efforts might be better spent on matters more within his or her areas of expertise.
  4. The cost to trial counsel (“fees on fees”) can be claimed from the opponent  (see Serrano v Unruh (Serrano IV) (1982) 32 C3d 621 (prevailing party is entitled to fees for time spent preparing and litigating fee application)).

On the other hand, there might be reasons for handling fee motions “in-house” in some cases, particularly if the law firm or program seeking the fees has an attorney with sufficient expertise. Keep in mind that, just because outside counsel potentially can recover his or her fees (“fees on fees”) from the opponent doesn’t mean it will happen—there’s a risk that the court will deny the motion for fees or refuse to award all of the fees sought, leaving your firm on the hook.

Regardless of whether you decide to use outside counsel, make sure that your law firm designates one of its attorneys to be primarily responsible for maximizing attorney fee recoveries. Otherwise, the firm is likely to miss deadlines or make mistakes early in the case that even the best outside counsel will be unable to remedy. This is particularly critical if you represent low-income clients in certain civil rights, employment, or public interest cases and statutory attorney fees are your only source of payment if you win.

Class Counsel Awarded $2M in Fees in Frito-Lay Settlement

November 22, 2017

A recent Law 360 story by Joyce Hanson, “Frito-Lay to Pay $2M in Fees in ‘All Natural’ Suit Deal,” reports that a New York federal judge approved the settlement of a class suit accusing Frito-Lay of deceptively labeling food products as being “made with all natural ingredients” when they are actually made with ingredients containing genetically modified organisms, awarding about $2 million in attorneys’ fees and expenses to class counsel.

U.S. District Judge Roslynn R. Mauskopf finally signed off on the proposed settlement agreed to in November 2015 by lead plaintiff Julie Gengo and Frito-Lay North America Inc., which offers no award of damages to the class but does provide the primary relief sought in the litigation — namely, an assurance that products such as Tostitos and SunChips will not be labeled or advertised as “natural” unless those claims on any products containing GMOs are expressly authorized by the U.S. Food and Drug Administration or state or federal legislation.

“The complexity, expense and likely duration of the litigation favor settlement, which provides substantial benefits on a much shorter time frame than otherwise possible on behalf of the class,” Judge Mauskopf said. “The support of class counsel, who are highly skilled in class action litigation such as this, and the plaintiffs, who have participated in this litigation and evaluated the settlement, also favor final approval.”

Under the terms of the final order and settlement agreement, Frito-Lay does not admit the validity of the claims or any wrongdoing or liability, the judge said. Frito-Lay also continues to deny that its labeling of the challenged products is false, deceptive or misleading to consumers or violates any legal requirement.

However, Frito-Lay has already removed the “made with all natural ingredients” claim from its products, and the company has agreed not to label the products as “natural” as long as they continue to include GMO ingredients, according to a Nov. 10, 2015, class counsel memo. The settlement was achieved with the assistance of retired U.S. District Judge Richard J. Holwell after mediation sessions over a period of 10 months, the memo said.

In addition, the memo said, Frito-Lay has agreed not to label its products as “natural” under any circumstances for the next five years, unless the ingredients are approved for use in products identified as "natural" by a federal agency or controlling regulatory body.

The judge approved class counsel’s motion for attorneys' fees in the amount of $1.9 million and for reimbursement of expenses of up to $200,000. She also approved $5,000 awards to class representatives Gengo, Chris Shake and Valarie Zuro, and a $2,500 award to class representative Deborah Lawson.

“Class counsel achieved a favorable result for the class and created a benefit with a substantial value to the class by obtaining Frito-Lay's agreement to modify the labeling policies and practices challenged in this lawsuit,” Judge Mauskopf said in making the award of attorneys’ fees and expenses.

Judge Mauskopf in August 2013 scrapped much of a related multidistrict case accusing Frito-Lay of placing deceptive "all natural" labels on chips and dip made with genetically modified organisms, but rejected the company's standing and preemption arguments.

The judge trimmed a 13-count complaint alleging the PepsiCo Inc. unit deceptively labeled and marketed products such as Tostitos, SunChips and Fritos Bean Dip as made with only natural ingredients, but said the suit itself was not barred by federal preemption, lack of standing or the reasonable consumer's belief that a product labeled "all natural" is GMO-free.

The judge also exacerbated a growing split within the federal district courts by refusing to halt the suit pending a determination from the FDA on whether such labeling can lawfully apply to bioengineered foods. Judge Mauskopf said the dispute fell within "the traditional realm of judicial competence" and wasn't barred by the primary jurisdiction doctrine, which instructs judges not to take on issues that are delegated to a specific regulatory body.

The case is Julie Gengo v. Frito Lay North America Inc., case number 1:12-cv-00854, in the U.S. District Court for the Eastern District of New York.  The multidistrict case is In re: Frito-Lay North America Inc. All Natural Litigation, case number 1:12-md-02413, in the U.S. District Court for the Eastern District of New York.

Judge: Reed Smith Can’t Sue for Share of Attorney Fees in Class Action

November 21, 2017

A recent New York Law Journal story by Christine Simmons, “Judge Says Reed Smith Can’t Sue for $7M Slice of SAC Capital Fees,reports that a Manhattan federal judge ruled that Reed Smith can't sue former co-counsel Wohl & Fruchter in state court for a chunk of class action attorney fees.

A federal judge has shot down Reed Smith’s attempt to sue its former co-counsel law firm Wohl & Fruchter, in state court for its share of fees from a class action against SAC Capital Advisors, finding Reed Smith was “seeking a mulligan.”

U.S. District Judge Naomi Reice Buchwald of the Southern District of New York ruled Nov. 16 that she had misgivings about Wohl’s conduct—including its settling a case amid the expulsion of Reed Smith from the plaintiffs’ counsel group—but said Reed Smith, which had served as class co-counsel for a brief period in September 2016, missed an opportunity to seek its fees in the right venue.

“The sequence of events surrounding Reed Smith’s retention and subsequent termination certainly raises questions regarding Wohl and [Wohl & Fruchter's] motivations. But Reed Smith was given an opportunity to fully raise those questions, and it failed to do so,” Buchwald said, enjoining Reed Smith’s lawsuit in New York state court against the Wohl firm.

In the underlying class action case against hedge fund SAC Capital and other defendants alleging insider trading of securities, plaintiffs attorneys in May were awarded $27 million in attorney fees after obtaining a $135 million settlement.

About a month after the fee award, Reed Smith, which submitted no fee application in federal court, sued attorney Ethan Wohl and his four-attorney law firm in New York state court arguing it was entitled to fees for its work under tortious interference and unjust enrichment claims. The firm was seeking at least $6.75 million.

Reed Smith claimed that Wohl & Fruchter, when looking for co-counsel, realized that it was a small firm “overmatched by the resources available to the SAC defendants,” represented by Paul, Weiss, Rifkind, Wharton & Garrison, Willkie Farr & Gallagher, Goodwin Procter and Bracewell.

After Reed Smith was retained, the firm said, it immediately committed significant resources to the SAC action. And soon after Reed Smith filed notices of appearance in the case, the SAC defendants reached out to Wohl for settlement discussions, Reed Smith said. “Reed Smith’s appearance was the obvious catalyst for the settlement discussions, which proved to be successful,” the firm claims.

But Reed Smith asserts that when counsel for the SAC defendants at Paul Weiss mused about a possible conflict involving Reed Smith before Southern District Judge John Koeltl, the Wohl firm saw an opportunity to eliminate Reed Smith and “intentionally exploited Paul Weiss’ statements.” Reed Smith formally withdrew from the SAC case in December 2016.

Reed Smith was originally represented in the fee dispute by Marc Kasowitz at Kasowitz Benson Torres. In July, Dechert partners Gary Mennitt and Andrew Levander replaced Kasowitz as Reed Smith’s counsel.

Wohl & Fruchter then moved in federal court to block Reed Smith’s state court lawsuit.

In her Nov. 16 ruling, Buchwald rejected Reed Smith’s jurisdictional arguments. “We have jurisdiction over the fee dispute between Reed Smith on the one hand and Wohl and [Wohl & Fruchter] on the other, and our jurisdiction is exclusive,” Buchwald said, adding that Reed Smith’s presentation of a tort-based theory of recovery “does not change the reality that some quantum of attorneys’ fees is the ultimate recovery sought.”

Buchwald also considered collateral estoppel issues. “The amount of fees to which [Wohl & Fruchter] was entitled was an issue that was litigated, and Judge Koeltl determined that a $27 million award was ‘fair and reasonable,’” she said.

Analyzing the case broadly, Buchwald said she found “little about either side’s conduct that is sympathetic.”

“The rapid succession of events—Reed Smith’s entry into the case, the settlement, and Reed Smith’s dismissal—naturally raises questions as to Wohl and [Wohl & Fruchter's] actions and motivations, and these questions are amplified when the weakness of [Wohl & Fruchter's] conflicts arguments are considered,” she said. “The record is hardly inconsistent with Reed Smith’s theory that it was terminated by [Wohl & Fruchter's] so that [Wohl & Fruchter] could obtain a larger share of attorneys’ fees.”

However, Reed Smith missed an opportunity to submit an application for fees, she noted. “We find little equity in allowing Reed Smith to take a mulligan, through duplicative litigation, on an issue that had been squarely teed up,” Buchwald said.

Reed Smith’s explanation for why it failed to do so—that it did not want to interfere with approval of the settlement—“holds little water,” Buchwald said, noting that Reed Smith’s declaration supporting its withdrawal from the federal case detailed its grievances with Wohl and raised questions about the propriety of the settlement.

While the judge said she was enjoining Reed Smith from prosecuting the state court lawsuit “and the implicit application for fees contained therein,” she denied Wohl’s request to reject Reed Smith’s application for attorney fees in federal court. “Reed Smith has never made a direct application for attorneys’ fees in this court, and there accordingly exists no such application for us to deny,” Buchwald said.

Greenberg Traurig Wins $2M Fee Award in US Court of Claims

November 20, 2017

A recent Law.com story by C. Ryan Barber, “Greenberg Traurig Wins $2M Fee Award in Suit Against U.S. Government,” reports that a federal claims court judge on Tuesday ordered the government to pay $2 million in legal fees to Greenberg Traurig for its work representing a Florida real estate developer that prevailed in a long-running case over the denial of a permit to fill in wetlands.

A federal claims court judge on Tuesday ordered the government to pay $2 million in legal fees to Greenberg Traurig for its work representing a Florida real estate developer that prevailed in a long-running case over the denial of a permit to fill in wetlands.

After two rounds through U.S. Court of Federal Claims, each followed by an appeal to the U.S. Court of Appeals for the Federal Circuit, the company, Lost Tree Village Corp., prevailed in its challenge when the U.S. Supreme Court declined in June to hear the case.

The U.S. Department of Justice had asked the high court to review a 2015 decision that said the U.S. government’s denial of the fill permit amounted to an uncompensated “taking” of Lost Tree’s property.

Charles Lettow, a judge on the U.S. Court of Federal Claims, ordered the government to pay $4.2 million in damages, plus $3.5 million in interest. Lost Tree Village Corp.’s lawyers at Greenberg Traurig, led by Washington partner Jerry Stouck, had argued the government owed more.

Stouck this summer went to the Federal Claims court seeking about $2million in attorney fees from the government, along with $100,000 in other fees and expenses incurred by Lost Tree.

Stouck, chairman of the firm’s regulatory and administrative law practice, identified Lost Tree’s legal fees in remarkable detail, noting a period in which he and two other principal timekeepers at Greenberg Traurig had given discounts of between 5 and 15 percent of the standard hourly rates. Stouck identified his standard billing rate, for 2017, at $810 an hour.

Greenberg Traurig’s court filings reveal standard billing rates for Stouck and other Greenberg lawyers from 2007 to now.

For the first appeal to the Federal Circuit, Stouck said, the firm and Lost Tree agreed on a fixed fee of $67,00, plus expenses, with an additional $300,000 payable only if Greenberg Traurig prevailed. (It did so.)

The $300,000 success fee, under the terms of the agreement, would be “recoverable from the government as part of the reasonable attorneys’ fees due to Lost Tree.” Stouck told the court that Lost Tree “has achieved complete success.” He added: “Perhaps more importantly, while this case was hard-fought and long-fought, Lost Tree has prevailed completely on what both parties and the court recognized from the outset was the principle issue to be decided—the ‘relevant parcel’ issue.”

The Justice Department, arguing that Greenberg Traurig’s billing “reflects excessive rates for attorney and paralegal work,” said Lost Tree should be awarded at most $1,078,121 in fees. In a court filing, the Justice Department said Greenberg Traurig billed for “work done on matters unrelated to this case and irrelevant to the merits, work where the hours devoted to tasks were far beyond reasonable or duplicated by multiple attorneys, and work where very senior personnel were performing tasks typically done by more-junior personnel.”

From the government’s filing: “Most egregiously, plaintiff seeks reimbursement for a $300,000 bonus not-yet paid that is not based on work done for the case, but instead because they were victorious on appeal. The United States has not waived its sovereign immunity to reimburse ‘success fees’ sought in addition to fees for the hours actually devoted to work on the case.”

The Justice Department declined to comment Wednesday on the fee award. Stouck said he was surprised not by the judge’s ruling on legal fees but by the tenacity with which the government challenged his request.

“I was actually surprised that the government had disputed our fees so aggressively because, as you can see from the opinion, my client has paid all of the fees,” Stouck said. “And I think that is a very substantial proof of the reasonableness of it.”

In a court filing, Stouck defended the $300,000 success fee as not just reasonable but a “greatly reduced” fee for the appeal. “This is not a situation where Greenberg is seeking an ‘enhancement’ to its hourly rates,” he wrote in a court filing. “Lost Tree and Greenberg are simply asking the court to enforce their reasonable, arm’s length agreement. In the context of this case, the alternative fee arrangement represents Greenberg’s commercially-available rate.”

The judge did not award the success fee but did award $91,000 in fees that were incurred beyond the fixed expense of $67,500.

$11M in Attorney Fees Sought in IP Action

November 17, 2017

A recent Law 360 story by Dorothy Atkins, “VMware Seeks $11M Atty Fees for Beating Phoenix IP Suit,” reports that VMware Inc. urged a California federal judge Thursday to award it $11.2 million in attorneys’ fees and litigation costs after a jury cleared it of Phoenix Technologies Ltd.’s claims it infringed Phoenix’s software copyright and breached their licensing agreement, arguing that the case was “ill founded from the outset.”

Michael Jacobs of Morrison & Foerster LLP argued that staff at Phoenix knew that its suit was premised on an "implausible legal contention," because they waited 15 years to sue over their licensing contract, and that's highlighted by the fact that they shifted their legal theory dramatically after the close of fact discovery.

“This case was ill-founded from the outset,” Jacobs said. “To go back and read the complaint is to remind ourselves how odd it was to receive it on its face.”

Phoenix’s bid for attorneys' fees and costs comes after a jury cleared VMware of all allegations in June.  Phoenix had sought $110 million in damages and alleged in its March 2015 complaint that VMware broke its contract with Phoenix and infringed copyrights by limiting its use of software that controls basic input and output operations, known as BIOS.

On Thursday, Jacobs argued that Phoenix had evidence of weakness of their case since the beginning, but failed to do its due diligence to ensure its claims were viable. The company unfairly forced VMware to spend millions to defend itself against the suit, he said.

“This case cries out for an award of attorneys’ fees lest there be a lot more cases like it,” he said.

But Phoenix’s attorney, Michael Attanasio of Cooley LLP, argued that nothing about this case would make it objectively unreasonable to pursue. Also, Attanasio said, VMware can't cite a single case in which claims were deemed objectively unreasonable, despite having survived summary judgment and going to trial.

Even the Supreme Court has observed that sometimes cases go to trial, and the plaintiffs lose, but that doesn’t turn it into fee shifting award, Attanasio said.

U.S. District Judge Haywood S. Gilliam Jr. said he would take the arguments under submission, along with Phoenix's motion for judgment as a matter of law and request for new trial. In that motion, Phoenix claimed that the jury was prejudiced by VMware’s defense argument, which the court shouldn’t have allowed VMware to present. But during the hearing, Judge Gilliam suggested that the appeals court might be a better place for that particular challenge to be resolved.

The case is Phoenix Technologies Ltd. v. VMware Inc., case number 4:15-cv-01414, in the U.S. District Court for the Northern District of California.