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Category: Fee Award

Ninth Circuit Asked to Rule on Fee Awards in MDLs

February 23, 2018

A recent Reuters story by Alison Frankel, “VW, Class Counsel Ask 9th Circuit to Refuse Fees for ‘Ghost Lawyers’,” reports that the 9th U.S. Circuit Court of Appeals has never had to decide whether and under what circumstances trial judges overseeing multidistrict litigation can award fees to lawyers who weren’t part of court-appointed steering committees. It’s now facing those questions in one of the most epic MDLs in recent memory, the $15 billion litigation over VW clean diesel cars outfitted with devices to deceive emissions tests.

Scores of plaintiffs’ firms stampeded to lead the consolidated case after state and federal regulators issued word in late 2015 of VW’s so-called defeat devices.  In January 2016, U.S. District Judge Charles Breyer of San Francisco appointed Elizabeth Cabraser of Lieff Cabraser Heimann & Bernstein as lead counsel and named 21 additional firms as members of a steering committee.

As members of the plaintiffs’ team drafted a consolidated complaint and prepared for litigation against VW, Cabraser participated in whirlwind, tripartite negotiations with VW and regulators. Within months, VW agreed to a $15 billion deal to resolve private and federal government claims.

Judge Breyer granted final approval of the settlement, which was structured as a class action, in October 2016. He awarded fees of $175 million to Lieff Cabraser, members of the steering committee and other plaintiffs’ firms that executed legal work authorized by Lieff Cabraser for the benefit of class members. In all, about 100 firms shared in the fees, which VW paid.

Not everyone was satisfied with the outcome, however. Judge Breyer denied fee requests by nearly 250 plaintiffs’ lawyers who represented individual VW owners but weren’t authorized to work on behalf of the class. Those lawyers wanted VW to pay their fees, arguing, in particular, that their pre-consolidation efforts helped push the company into a settlement and that they’d expended time apprising class members – their clients - about the terms of the deal. Judge Breyer ruled last April that none of that work actually benefited the class and that it was not covered by VW’s agreement to pay the fees of Cabraser and her team.

Led by Nagel Rice and Hyde & Swigart, 18 firms appealed Judge Breyer’s decision to deny them fees to the 9th Circuit. (I’m going to focus on their joint brief and not on separate appeals by a class member alleging its lawyers weren’t compensated for suggesting an important edit to the settlement agreement and a Virginia plaintiffs’ lawyer protesting a since-dissolved injunction on filing a lien against clients’ recoveries.) The Nagel Rice brief contended that the federal rules for class actions allow fee awards to lawyers not named as class counsel, as both the 3rd and 10th Circuits have acknowledged in, respectively, In re Cendant and Gottlieb v. Barry. In this case, the brief said, the real work took place before Lieff Cabraser was named to lead the case: developing initial legal theories, “creating a massive offensive across the country resulting in upwards of 451 possible related filings in some sixty districts,” screening clients, filing motions to force VW to preserve evidence and coordinating with other plaintiffs firms doing the same thing.

Judge Breyer’s alternative view of their contributions to the settlement, they said, is just wrong. “The court’s attempt to attribute the success of the class as a whole as springing only from the heads of Class Counsel beginning on the first day of their appointment, some four months into the filing of the case, is wholly arbitrary and without any basis in fact,” the appellate brief said. “By the time class counsel was appointed on Jan. 21, 2016, there had already been 451 potentially related cases filed across the nation in some 60 federal districts; at least four motions to preserve evidence; at least three motions for interim lead counsel positions; various preliminary discovery attempts; and at least eight conferences for attorneys across the country to analyze, discuss and refine approaches to bringing the cases.” Basically, the brief argued, Lieff Cabraser and its team received all of the credit – and fees – when all they did was meld and duplicate the work other plaintiffs’ lawyers had already done.

VW and the Lieff team filed their response briefs this week. VW’s lawyers at Sullivan & Cromwell submitted a sober explanation of why it believes it owes nothing to lawyers who didn’t bother to follow Judge Breyer’s pre-trial orders for requesting fees. Among the reasons: There’s no common fund in the class settlement, and VW never agreed to pay lawyers other than those Lieff Cabraser identified.

Lieff Cabraser’s brief, which was also signed by the other firms on the VW plaintiffs steering committee and New York University professor Samuel Issacharoff, is a more entertaining read than VW’s, leading off with a memorable account of the long ago “ghost riders” of New Jersey buses and trains, who would appear out of nowhere to claim injuries whenever one of the vehicles was involved in an accident. A similar phenomenon occurs in mass tort litigation, the brief said: “Successful lawsuits spawned claims of parental rights by lawyers whose participation in the case came as a surprise to all. These ‘ghost lawyers’ would appear at the end of the litigation claiming that the work they performed on behalf of an individual client was indispensable to the success of the common enterprise.”

The plaintiffs’ firms asking the 9th Circuit to award them fees in the VW case are ghost lawyers, according to the Lieff brief, “emerging from the shadows only after the case has been resolved (to) claim credit for the result.” In fact, Lieff and its team argued, the lawyers offered “no work product evidence of having engaged in the actual prosecution or resolution of the consolidated case.”

MDL courts, like New Jersey transit systems, have adopted systems and protocols to dissuade claims by freeloaders, the brief said. Judge Breyer followed best practices when he picked a leadership team, ordered documentation of its work and awarded fees based on that documentation. To hold otherwise, the Lieff team said, the 9th Circuit would have to be convinced the judge abused his discretion.

“There is simply no basis for any such argument. Not only was the district court not clearly erroneous in its fact finding and case management, but the handling of this extraordinary litigation serves as a model for complex case oversight,” the brief said. “Appellants run headlong into well-documented findings by the district court below on how this litigation was handled and by whom.”

CA Appeals Court Rules on Discretionary Attorney Fee Awards

February 22, 2018

A recent Metropolitan News story, “Parties May Render Award of Attorney Fees Discretionary,” reports that a contract that provides that the court “may” award attorney fees to the prevailing party is outside the ambit of Civil Code §1717 and such an award is discretionary, the Fifth District Court of Appeal has held in a 2-1 decision.

Acting Presiding Justice Bert Levy wrote the majority opinion, along which Justice Jennifer R.S. Detjen.

Notwithstanding that the opinions came, as noted by dissenting Justice Kathleen Meehan, in a “a case of first impression,” they were not certified for publication.

The majority, in its opinion filed Tuesday, affirmed the decision of retired Tulare Superior Court Judge Lloyd L. Hicks, sitting on assignment, who denied attorney fees to Universal Biopharma Research Institute, Inc., the prevailing party in a dispute over a lease. Biopharma asserted that §1717 renders an award mandatory.

The lease in question provided:

“In the event of any proceedings brought by either party against the other under this lease, the prevailing party may be entitled to recover the fees of their attorneys in such action or proceedings for such amounts as may be adjudged reasonable attorney’s fees.”

Hicks reasoned that use of the word “may” rendered an award discretionary.

Agreeing, Levy said:

“The court noted that standard attorney fees contracts make an award of fees to the prevailing party mandatory by simply using the word ‘shall.’ Here, however, the contract states the prevailing party ‘may’ be entitled to fees.

“The trial court’s interpretation of the attorney fees provision is reasonable.”

Section 1717, relied upon by Biopharma—which sought fees of about $197,000—provides, in part:

“In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.”

That section, Biopharma argued, prevails over the lease provision and renders the award of attorney fees mandatory.

Levy responded:

“[T]he text of section 1717 limits its reach to contracts with mandatory attorney fees provisions, i.e., where the contract specifically provides that attorney’s fees and costs shall be awarded. Thus, by its terms, section 1717 does not apply to the lease agreement at issue here.”

Cases relied upon by Biopharma proclaiming an award of fees to be mandatory did not involve contractual clauses specifying that an award would be discretionary, Levy noted.

He said the wording of §1717 “does not indicate that courts must construe discretionary contractual attorney fee provisions as mandatory” but “simply reflects the statute’s purpose of establishing mutuality of remedy and thereby preventing inequitable mandatory attorney fees awards.”

The jurist pointed to Code of Civil Procedure §1021 which provides: “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties….”

Levy continued:

“Section 1717 assumes parties have the right to enter into agreements for the award of attorney fees, a right derived from Code of Civil Procedure section 1021….However, section 1717 has a limited application. By its terms, it covers contract actions only where the contract sued upon includes a mandatory attorney fee provision.”

He went on to dispel the implication that a party, by inserting a provision rendering the award of attorney fees discretionary, could specify that such an award could be made only in favor of that party, declaring:

“Here, the parties agreed to a bilateral discretionary attorney fee provision, not a one-sided mandatory fee provision. Thus, this attorney fees clause does not contravene either the terms or purpose of section 1717. Section 1717 does not abolish the general rule that parties have the right to enter into contracts with either no attorney fee provision or a discretionary fee provision.”

Meehan said in her dissent:

“[T]he majority has created a class of contractual attorney fees provisions that will fall outside the statute enacted to govern them. Contracting parties may circumvent Civil Code section 1717 (section 1717), and undermine the public policies upon which it is based, by making the statute’s otherwise mandatory application discretionary in strategically drafted private agreements. Section 1717 governs a narrowly tailored category of attorney fees awards where a party prevails on causes of action to enforce the contract in which a fees provision is contained. Given the statute’s narrow focus, and its comprehensive definitions and requirements, it is unlikely the Legislature intended that it would be limited, much less optional, in its application.”

The case is City of Dinuba v. Universal Biopharma Research Institute, F072497.

$10M Fee Award in Subway Co-Founder Case

January 10, 2018

A recent Delaware Business Court Insider by Celia Ampel, “Holland & Knight Nabs $10M Fee Award in Subway Co-Founder Case” reports that Holland & Knight attorneys were awarded more than $10 million in fees and costs on a nearly $13 million verdict they won for the estate of a Subway co-founder.

The fee award stemmed from the jury’s finding of civil theft against developer Anthony Pugliese, his business manager Joseph Reamer and the Pugliese Co.  The defendants stole $2.9 million from Subway co-founder Fred DeLuca that was meant to be invested in a real estate project south of Orlando, the jury found in February 2017.

Civil theft findings allow judges to award attorney fees before an appeal is complete.  The defendants are challenging the DeLuca verdict before the Fourth District Court of Appeal.

Palm Beach Circuit Judge Donald Hafele awarded Holland & Knight about $8.6 million in attorney fees, $1.3 million in costs and $19,000 in expert witness fees for eight years of litigation.  He also added $317,000 in prejudgment interest for a total of $10.3 million.

The firm tallied about 25,000 hours of work on the civil theft claims from 10 attorneys and two paralegals.  “The amount of attorney’s fees and costs awarded by the court was reasonable, given the fact that the Pugliese parties contested nearly every issue, regardless of how small or insignificant it was,” said Holland & Knight partner Rick Hutchison in West Palm Beach, who put in more than 5,000 hours on the claims.

The defense challenged the fee award, arguing Holland & Knight deserved no more than about $1.5 million in fees, particularly given that the civil theft award was $2.9 million.

The judgment came to $12.8 million after the theft amount was tripled and the jury awarded $4 million for breach of contract.  The judge added interest but deducted $1.2 million in restitution Pugliese paid as the result of a criminal case in which he was sentenced to six months in jail and 10 years of probation.

“The DeLuca parties’ counsel were only able to convince a jury to award an additional $1.7 million in damages after 20 days of trial,” wrote Pugliese attorney John Mariani of Kammerer Mariani in West Palm Beach in a court filing.  “Consequently, compared to the $43 million they demanded but did not receive, the DeLuca parties cannot state to this court that the attorney’s fees Fexpended are justified by the result.”  The door is still open for the DeLuca parties to ask for more attorney fees under the Florida Deceptive and Unfair Trade Practices Act after the appeal is done.

Law Firms Question Expert’s Analysis of Attorney Fees

January 4, 2018

A recent Legal Intelligencer story by Max Mitchell, “NFL Concussion Lawyers Questions Expert’s Analysis of Attorney Fees” reports that several leading law firms in the NFL concussion settlement litigation are taking issue with an expert report that suggested slashing attorney fee recoveries.

More than 10 law firms have filed responses to a December expert report that recommended capping attorney fees.  Attorneys questioning the report’s conclusions included both Chris Seeger of Seeger Weiss and Sol Weiss of Anapol Weiss, who are co-lead class counsel in the litigation that came to a $1 billion settlement with the National Football Association in early 2015.  Most responses from the attorneys questioned the assumptions underpinning the report Harvard professor William Rubenstein issued last month, and some said that capping attorney fees could damage some of the former players’ ability to recover under the settlement.

Seeger’s response, specifically took issue with Rubenstein’s determination that, since the litigation settled relatively quickly, it was reasonable to recommend that the court reject a proposed 5 percent set-aside that would go toward a common benefit fund for class counsel attorneys.  “Any suggestion that class counsel did not invest sufficient time in this litigation to warrant the requested $106.8 million in common benefit fees is simply wrong,” Seeger said.  “Although this may not have been a typical MDL involving extensive discovery bellwether trials, and the like, all kinds of labor, resources, and ingenuity went into resolving this litigation.”

Last year, class counsel asked U.S. District Judge Anita Brody of the Eastern District of Pennsylvania, who is overseeing the litigation, to approve $112.5 million for attorney fees and costs stemming from the settlement, which is intended to compensate about 20,000 former players suffering from concussion-related injuries.  The NFL has agreed to pay the money in addition to the money for the class members.

The fee request included a 15.6 percent rate for attorneys representing claimants directly, along with the 5 percent set-aside that would be paid to the common benefit fund either from attorney fees, if the claimant had individual representation, or from the claimants’ recovery if they were unrepresented.  Rubenstein, who Brody asked to review the fee request, issued a 47-page expert report in mid-December recommending a presumptive 15 percent cap on contingency fees and that the court not adopt the 5 percent set-aside.

Responses largely took issue with the class participation rate Rubenstein used, and said the report did not take into account how vigorously the NFL would contest some of the claimant’s petitions.  A filing by X1Law said attorneys also said that cutting the fees could have a chilling effect on attorneys wanting to represent claimants who have difficult cases.

“Capping attorney’s fees at 15 percent would cut the legs out from under independently retained plaintiff’s attorneys (IRPAs) due to the time and risk involved in this complex and contentious claims process, essentially gutting their ability to represent class members by making the representation financially dangerous,” X1Law attorney Patrick Tighe said in the filing.  “Professor Rubenstein’s proposed cap would severely chill access to IRPAs, limiting IRPA advocacy and oversight, resulting in a lack of oversight in any otherwise dangerous claims process for class members.”

When reached for comment, Tighe said a 15 percent cap on fees would specifically impact players whose symptoms do not presently show up on tests, but may manifest in a few years.  “It’s going to eliminate a vast majority of class members from being able to present a claim,” he said.

NJ Justices Hears $2M Fee Dispute in Employment Case

January 3, 2018

A recent New Jersey Law Journal story by Michael Booth, “Justices Hear Dispute Over $2 Million Fee Award in Employment Case” reports that a Princeton financial services company asked the New Jersey Supreme Court to reinstate a more than $2 million attorney fee award for defeating an ex-employee's lawsuit.

Noren was employed by Heartland from April 1998 to June 2005 as a “relationship manager,” a role in which he sold payment processing services.  The contract he signed provided that he and Heartland both “irrevocably waive any right to trial by jury in any suit, action or proceeding under, in connection with or to enforce this agreement,” according to court documents.  Another contract provision awarded fees and costs “[i]n any suit, action or proceeding arising out of or related to this agreement.”

Noren was fired in 2005.  His suit was eventually whittled down to the two claims: breach of contract and the CEPA violation.  His jury trial demand was denied based on the waiver provision and, after 22 days of bench trial, Bergen County Superior Court Judge Susan Steele dismissed both claims.  She awarded Heartland $2.06 million in fees and costs for the defense of both claims, finding them so intertwined that the fees could not be apportioned, the decision stated.

In his appeal, Noren did not dispute the jury waiver’s applicability to the contract claim, or the notion that fees may be awarded based on Heartland’s success in defeating that claim.  But he did dispute the waiver’s applicability to the CEPA claim, and the corresponding fee award based on the statute.

Attorneys Want to Depose NFL Fee Expert

December 22, 2017

A recent Legal Intelligencer story, by Max Mitchell, “Lawyers Want to Depose NFL Fee Expert Over Slashed Attorney Fees,” reports that attorneys from five law firms have asked the court presiding...

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NALFA: The Four Hourly Rate Factors

December 6, 2017

Hourly rates are the engine that drives attorney fees.  Hour rates are the most important single factor in determining attorney fee awards.  There are several factors that determine hourly rates. ...

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