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Category: Ability to Pay

Security Firm Tells Federal Circuit It Can’t Pay Attorney Fees

October 16, 2020

A recent Law 360 story by Julia Arciga, “Security Firm Tells DC Circ. It Can’t Pay Union’s Atty Fees,” reports that a security guard service told the D.C. Circuit it's not able to cough up over $51,000 in attorney fees and costs it was ordered to pay a union for "stonewalling" arbitration over an employment dispute, claiming the district court was erroneous in finding the company had means to pay the sum.  In a hearing, an attorney for Preeminent Protective Services Inc., Eden Brown Gaines of Brown Gaines LLC, told a three-judge panel the lower court had "ignored" evidence of the company's inability to pay the attorney fees.

If the company is unable to pay the sum, Gaines said, "Preeminent's officials will be held in contempt, and they won't have the ability to purge it."  She also claimed the disconnect between what Preeminent could pay and the court's demands showed the court did not adequately tailor its remedy to the company's alleged misconduct.  On top of that, Gaines said, Preeminent's inability to pay the attorney fees would negatively affect contempt proceedings against the company — after the court found it was slow-walking arbitration proceedings with the union in an employment dispute.

Judge Gregory G. Katsas expressed doubt toward Gaines' claim, stating it was Preeminent's "burden to show that" it couldn't pay the fees.  "The court didn't ignore evidence," he said, adding that the lower court "didn't discharge your burden" because it felt the evidence wasn't enough.  The lawyer for the union said the court looked at the evidence, and completely debunked the notion that Preeminent couldn't pay.

"The district court had ample reason to conclude it had the ability to pay," Michael Anderson of Murphy Anderson PLLC told the appeals panel, pointing to Preeminent's public statements on its website boasting about its profits.  Anderson also said Preeminent asking the courts to ease up on a payment it had to make due to its financial situation was ignoring a path for financial relief through bankruptcy.  "It is a circumvention of the bankruptcy code for the court to give relief due to one party's inability to pay," he said.

Gaines, however, claimed the attorney fees Preeminent had to pay were "not a debt" and therefore "can't be discharged in bankruptcy."  "[Company] officials can be jailed if they can't pay. ... Financial statements were submitted under seal to the court, which is more accurate than an outdated website, and it showed Preeminent can't pay," she said, adding that the court was not giving the company a proper chance to purge itself from further contempt against the court.

The dispute between Preeminent and the union dates to 2017, when Preeminent took over a security subcontract from Business Resource and Security Services USA Inc., which had employed union members Crystal Middleton and Renay Campbell at a Washington, D.C., public site as security officers.  Six months after Preeminent's takeover, the union filed a complaint claiming a collective bargaining agreement required Preeminent to hire Middleton and Campbell, but Preeminent had refused to take them on.

The union won its bid to compel arbitration of the issue, but the district court later found the company was dragging its feet for more than a year.  In June 2019, the court found Preeminent in civil conditional contempt for disrupting the arbitration process.  The court then ordered the company in November 2019 to pay $51,097.20 in the union's attorney fees and expenses in connection with its "stonewalling" throughout arbitration.

The company appealed the decision to the D.C. Circuit, and asked the court to put off its attorney fees payment while its challenge proceeded — but the district court denied Preeminent's request in May.  During the hearing, Gaines and Anderson also argued over the validity of Preeminent's appeal and whether the D.C. Circuit could hear the case.  According to Anderson, Preeminent should have filed its complaint within a month after the court found it in contempt, rather than after the court finalized the attorney fees amount in November 2019.

PTAB: Inability to Pay Fees No Reason to Deny IPR

September 20, 2020

A recent Law 360 story by Britain Eakin, “PTAB Says Inability To Pay Legal Fees No Reason To Deny IPR,” reports that the Patent Trial and Appeal Board has agreed to review Dareltech LLC's "selfie stick" patent, rejecting the company's argument that since it can't afford to pay for counsel, Microsoft's inter partes review challenge should be denied.  The decision instituting IPR, the board said Dareltech's inability to pay to defend its patent doesn't qualify as a reason for the board to exercise its discretion to deny review, as the company had argued.

"Patent owner's current financial circumstances are not sufficient reason to preclude petitioner from pursuing its statutory rights to challenge the patentability of the claims," the decision said.  Dareltech had asserted that its lead counsel doesn't participate in post-grant matters, and that its backup counsel had been representing the company in other matters pro bono, but is unable to devote the time and resources to this IPR.

Additionally, Dareltech argued that it incurred expenses to prosecute the patent family, develop and commercialize the claimed invention without significant revenue and defend related IPRs, and so the board should deny review.  But the board was unmoved.  The PTAB also shot down Dareltech's argument that the board should deny the petition because it has no district court dispute with Microsoft, which it contends is acting as a proxy for Chinese technology company Xiaomi.

 

 

Boston Calls $2.3M Fee Request ‘Beyond The Pale’

August 17, 2020

A recent Law 360 story by Brian Dowling, “Boston Calls Officers’ $2.3M Fee Request ‘Beyond The Pale’” reports that calling the request "beyond the pale," the city of Boston asked a federal judge to pare down a $2.3 million fee bid by Black police officers who won a $484,000 back pay ruling in a long-running discrimination case, citing a litany of issues including "egregiously high" hourly rates.  After being hit with the back pay ruling due to a promotion exam's disparate impact on Black officers, the city attacked the fee request by lawyers from Lichten & Liss-Riordan PC and Fair Work PC.

"The well-settled case law and the facts and circumstances presented by this case lead to the inexorable conclusion that the court should — indeed, must — reduce their requested fees and costs in fundamentally significant ways," the city wrote to U.S. District Judge William G. Young.

A primary contention in the city's opposition is that the officers' inclusion of nearly $1 million in legal fees and costs from an earlier related lawsuit, Lopez v. City of Lawrence.  The police officers have argued that the Lopez case laid the foundation for the success in the present case, Smith et al. v. City of Boston.  The Smith lawsuit focused on promotions from sergeant to lieutenant, whereas the Lopez case related to promotions from patrolman — the entry-level position — to sergeant.  The two tests were similar, but two different judges came to two different conclusions about them.

Saying there's no "legitimate basis" to include billing from the Lopez case, Boston explained that it dealt with "different exams, brought by different plaintiffs against different defendant cities … tried to a different judge, and which the plaintiffs indisputably lost at trial and on appeal."

The city said the entire amount billed from the Lopez case, $977,951.07, should be cut from the fee request.  Boston said further reductions were warranted because the officers failed to gain certification as a class action and the lawsuit fell short in pressing a claim that one of the two tests was discriminatory.

The city also argued the hours billed by the officers' attorneys are "extraordinarily high" and reflect the type of "excessive, redundant billing and overstaffing" that the First Circuit has taken issue with in the past.  Attorneys for the officers accounted for their hours "almost exclusively" using block billing, the practice of lumping together daily time spent on a case rather than itemizing specific tasks done for a client, the city said.

In an unrelated case in April, U.S. District Court Judge Nathaniel M. Gorton slashed nearly $2 million off a $2.7 million attorney fee request due to "pervasive shortcomings" including block billing.   Boston's analysis of Lichten & Liss-Riordan PC founder Harold Lichten's billing records showed many days with a single block of time for multiple tasks or generic tasks "so vague as to be all but meaningless," the city said.

The city also said Lichten failed to keep time records since mid-2015 and proposed cutting his undocumented hours since then from 274 to 137.  In addition to the volume of hours, Boston said the "egregiously high" hourly rates claimed by the attorneys need to be reduced.  The fees pegged the fair market rate for the lawyers who represented the officers at $700 per hour for Lichten and $450 and $350 per hour for the firm's attorneys Benjamin Weber and Zachary Rubin. 

"These rates are simply far above the market rate for lawyers of comparable experience and skill — both for work performed then and now," the city said.  In addition to the specific billing arguments detailed in the city's 23-page opposition, Boston said the court weighing the fee reward "must be mindful that it is limited taxpayer funds, necessary to provide public services, that are at stake."

Federal Circuit Backs Attorney Fee Cap in IDEA Cases

August 14, 2020

A recent Law 360 story by Andrew Karpan, “DC Circ. Backs Atty Fee Cap in Civil Right Row” reports that the D.C. Circuit rejected the efforts of attorneys representing hundreds of parents in a civil rights case to collect over $5 million in fees from Washington, D.C., and ruled that a congressional cap that strictly limited the amount they could collect in those cases was perfectly valid.

The opinion, authored by U.S. Circuit Judge Gregory Katsas, found that an appropriations rider Congress passed in 2009 did not violate the Takings Clause of the Fifth Amendment nor was it an illegal intervention into the court's power to award fees.  The rider expressly forbade Washington from paying more than $4,000 in attorney fees in any single civil rights case filed under the Individuals with Disabilities Education Act, which mandates special education services for kids.

Crucially, Judge Katsas wrote, Congress started limiting the city's ability to pay out legal fees in IDEA cases in 1999, which was before the parents in these cases filed suit.  "The fee cap does not interfere with any reasonable expectations, for each of the awards at issue was entered at a time when Congress had already limited the District's ability to pay IDEA fee awards," the judge said.  The ruling covered eleven separate IDEA cases, all of which preceded 2009 and all of which successfully alleged that Washington didn't provide a special needs education to students who qualified for one.

Back in 2015, a magistrate judge calculated the city's tab in those cases at about $3.7 million, along with another $1.3 million in interest, according to the ruling.  Two years later, a D.C. federal judge used the cap to trim the fee award to $220,000 but left the interest, which had notched up to $1.4 million by then.  Both the parents and the city challenged that ruling.  Congress, which provides funding to public schools in Washington through the District of Columbia Appropriations Act, had every reason to be concerned about using that budget to pay lawyers in IDEA cases, Judge Katsas observed.

The city's "long struggle" to comply with IDEA was costing it $10 million a year by the time Congress began limiting how much of that funding could be spent on fee payments in those cases, the ruling noted.  An appropriations rider passed in 2009 had instituted the permanent $4,000 cap on the awards.

The parents argued, in part, that the rider violated their rights to fees that a court had awarded them but the panel said shaving a fee award isn't "a per se taking."  Deciding to trim an award that had already been issued didn't misappropriate the powers of Congress either, the panel added.  Lawyers for the parents should also have known they wouldn't be able to collect more than $4,000 a case because the initial rider dated to 1999, Judge Katsas added.

But in addition to ruling that the cap was perfectly legal, the D.C. Circuit also scratched the $1.4 million in interest the parents had won.

"This principle is as old as the Republic," Judge Katsas mused on this point, citing a ruling the Supreme Court made in 1789, in Hoare v. Allen, and in which the court similarly scratched the interest on debts owed to a British creditor during the Revolutionary War, as the Constitutional Congress had expressly banned paying debts to British subjects.

Similarly, Judge Katsas wrote, Congress had banned Washington from paying lawyers in IDEA cases fees above a certain amount: interest couldn't be collected on fees above that amount either.  The panel sent the award back to a lower court to recalculate using the capped award instead. 

The D.C. Circuit ruled on an IDEA fee bid in a different case just last year, when a panel initially rejected a nearly $7 million fee award in a class action suit leveled under that law, ruling in that case that a lower court had used an invalid matrix for calculating fees.

The Nation’s Top Attorney Fee Experts of 2020

June 24, 2020

NALFA, a non-profit group, is building a worldwide network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on the reasonableness of attorney fees.  We help organize and recognize qualified attorney fee experts from across the U.S. and around the globe.  Our attorney fee experts also include court adjuncts such as bankruptcy fee examiners, special fee masters, and fee dispute neutrals.

Every year, we announce the nation's top attorney fee experts.  Attorney fee experts are retained by fee-seeking or fee-challenging parties in litigation to independently prove reasonable attorney fees and expenses in court or arbitration.  The following NALFA profile quotes are based on bio, CV, case summaries and case materials submitted to and verified by us.  Here are the nation's top attorney fee experts of 2020:

"The Nation's Top Attorney Fee Expert"
John D. O'Connor
O'Connor & Associates
San Francisco, CA
 
"Over 30 Years of Legal Fee Audit Expertise"
Andre E. Jardini
KPC Legal Audit Services, Inc.
Glendale, CA

"The Nation's Top Bankruptcy Fee Examiner"
Robert M. Fishman
Cozen O'Connor
Chicago, IL

"Widely Respected as an Attorney Fee Expert"
Elise S. Frejka
Frejka PLLC
New York, NY
 
"Experienced on Analyzing Fees, Billing Entries for Fee Awards"
Robert L. Kaufman
Woodruff Spradlin & Smart
Costa Mesa, CA

"Highly Skilled on a Range of Fee and Billing Issues"
Daniel M. White
White Amundson APC
San Diego, CA
 
"Extensive Expertise on Attorney Fee Matters in Common Fund Litigation"
Craig W. Smith
Robbins LLP
San Diego, CA
 
"Highly Experienced in Dealing with Fee Issues Arising in Complex Litigation"
Marc M. Seltzer
Susman Godfrey LLP
Los Angeles, CA

"Total Mastery in Resolving Complex Attorney Fee Disputes"
Peter K. Rosen
JAMS
Los Angeles, CA
 
"Understands Fees, Funding, and Billing Issues in Cross Border Matters"
Glenn Newberry
Eversheds Sutherland
London, UK
 
"Solid Expertise with Fee and Billing Matters in Complex Litigation"
Bruce C. Fox
Obermayer Rebmann LLP
Pittsburgh, PA
 
"Excellent on Attorney Fee Issues in Florida"
Debra L. Feit
Stratford Law Group LLC
Fort Lauderdale, FL
 
"Nation's Top Scholar on Attorney Fees in Class Actions"
Brian T. Fitzpatrick
Vanderbilt Law School
Nashville, TN
 
"Great Leader in Analyzing Legal Bills for Insurers"
Richard Zujac
Liberty Mutual Insurance
Philadelphia, PA