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Attorneys Stuck With Slashed Attorney Fees After USAA Trial Win

July 20, 2020 | Posted in : Fee Award, Fee Reduction, Fee Request

A recent Law 360 story by Daniel Siegal, “Atty Stuck With Slashed Fees After USAA Bad Faith Trial Win” reports that an Oregon federal judge refused to reconsider his ruling awarding only $179,000 of the $715,000 in fees requested by lawyers who helped a woman convince the court that USAA had acted in bad faith when it refused to cover her crash with an uninsured driver.

In a two-page order, U.S. District Judge Michael H. Simon did not go into the details of the arguments made by plaintiff Peggy Foraker's attorneys, but simply stated the legal standard for a motion for reconsideration and said having reviewed the motion and associated briefing, he found "no basis for reconsideration."

Foraker attorney Stephen Hendricks of Hendricks Law Firm told Law360 via email on Monday that his client intends to appeal the attorney fee ruling in addition to other matters going to the merits of the suit.

Foraker, who was hurt when a suspect fleeing from police crashed into her, won two bench trials in her suit against her insurer, which had refused to pay out an uninsured motorist policy. In the first phase, Foraker obtained a ruling that USAA Casualty Insurance Co. owed her the full $1 million limit of that policy, and in the second phase, Judge Simon found USAA acted in bad faith and awarded Foraker $323,000.

Last month, however, Judge Simon ruled that Foraker's lawyers deserved much less in legal fees than the $715,000 lodestar they requested, because their wins in the second phase were limited — unlike the first phase, where they got $1.31 million in fees.

Judge Simon wrote that roughly three-quarters of the attorneys' time went to unsuccessful arguments and that this was "consistent with the results," and thus it made sense to award them one-quarter of their lodestar figure.

Judge Simon also called the attorneys' 340-page sheaf of submitted bills "massive but poorly organized."

In their motion for reconsideration and supporting briefing, Foraker's attorneys said they understood the case had been "exhausting" and that the court is "weary of this case," but pressed their case that the reduced attorney fee award would have a chilling effect on future bad faith insurance cases under Oregon law.

"As the first publicly watched case on the subject, the court's fee award sends a clear message that all such cases should be abandoned, as even the very successful trial outcome of such a case will be compensated at the rate of 25% of hours incurred," Foraker's attorneys wrote. "This ignores the mandates of Oregon law and strongly disincentivizes similar plaintiffs from pursuing other meritorious claims."

The attorneys also argued that the supposedly poorly organized time records were organized the same way as the ones submitted for the phase one trial, which were accepted by the court.

Finally, in their reply brief filed on July 13, Foraker's lawyers drew a comparison between their bid for attorney fees and the recent protests for racial justice in Portland.

"Plaintiff is also keenly aware that the court and the courthouse have faced other unrest and cries of injustice — literally marring the courthouse walls — in recent weeks," the attorneys wrote.

"Perhaps when faced with so much injustice, there is a natural temptation to weigh plaintiff's request as less important than those making daily news headlines. Yet justice is not a zero-sum game or a limited pie to be disbursed based on the degree of relative merit in injustice or suffering," they wrote.

"Plaintiff therefore respectfully and humbly asks the court to apply its blindfold of justice and weigh the facts and the law in correcting this error in her case," the attorneys wrote.