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Category: Fee Award

Judge Approves $2.2M Fee Request in Life Insurance Case

June 23, 2020

A recent Law 360 story by Lauraann Wood, “Ill. Judge Oks $2.2M Fee Bid in Life Insurance Billing Case” reports that an Illinois federal judge gave final approval to a class action settlement and a $2.2 million attorney fee award for a group of Accordia Life and Annuity Co. customers who claimed their life insurance policies unlawfully lapsed during a system transition.  U.S. District Judge Colin Bruce said both the monetary and injunctive relief outlined in the deal between Accordia, its electronic payment collector and nearly 500,000 policyholders are fair and reasonable outcomes for the lawsuit that four policyholders launched in 2017.

The policyholders claimed their guarantees were cut on purpose when Accordia and its electronic payment collector, Alliance One Services Inc., allowed life insurance policies previously owned and guaranteed for life by Athene Annuity & Life Co. to either lapse or be canceled by not automatically debiting those customers' monthly premiums and applying them to their accounts.

Judge Bruce also said class counsel's request for $2.2 million in attorney fees shakes out to compensate the policyholders' attorneys for about 2,261 hours of work at $495 an hour, which "is a reasonable blended rate for counsel of this substantial experience engaged in complex civil litigation of a national scope in the Central District of Illinois."  The settlement, which Judge Bruce initially approved in June 2019, faced challenges from five class members who objected to either the nature of the settlement, its monetary relief or class counsel's fee request.

The judge approved the deal over the challenges, saying the settlement and its monetary relief aren't perfect, but "a settlement is a compromise, and, again, the court believes plaintiffs have attempted to achieve the best possible relief for the class when weighed against the risks of trial or summary judgment."

$88M Cut From $157M Fee Request in Namenda Class Settlement

June 15, 2020

A recent Law 360 story by Pete Brush, “$88M Cut From Requested $157.5M Atty Fee in Namenda Deal” reports that a Manhattan federal judge slashed nearly $88 million from a $157.5 million fee award requested by Garwin Gerstein & Fisher LLP and five other firms for guiding wholesalers of the Alzheimer's drug Namenda to a $750 million antitrust settlement with a unit of Allergan PLC.

After hinting she would reduce the payout, U.S. District Judge Colleen McMahon held Monday that six law firms that alleged Forest Laboratories Inc., a unit of Ireland-based Allergan, thwarted generic competition through unlawful "pay-for-delay" tactics are entitled to $69.538 million.  "It is still a handsome payday for counsel," Judge McMahon wrote, after cutting the request for about 21% of the settlement proceeds for plaintiffs' counsel down to about 9.3%.

The judge approved the lawyers' request for $5.8 million of expenses in the nearly five-year-old litigation, but slashed proposed $150,000 payouts for the two Namenda wholesalers that represented the class — Smith Drug Co. and Rochester Drug Co-Operative Inc. — by 50% to $75,000 each.  "Frankly, this was attorney-driven litigation.  All the class representatives really did was sit for a deposition," she wrote, calling the class reps' contributions "minimal."

Reasoning why she slashed the award, Judge McMahon said that the firms engaged in "duplicative work" — "or, in some cases triplicative or quadruplicative work" — and "inflated" their total number of hours worked.  "Class counsel's time sheets lack sufficient granularity to separate the productive hours from the wasted ones," she wrote.

The wholesalers had claimed Forest deployed a two-pronged strategy for keeping generic rivals to Namenda off the market, including unlawful "pay-for-delay" arrangements and "product-hopping" tactics that shielded its profits long after generic rivals should have developed robust sales.  A not-uncommon effort to settle ahead of trial led to the uncommonly large payout — one of the largest in the history of Hatch-Waxman Act generic-drug approval cases. Allergan admitted no wrongdoing in the deal.

"I fully understand why Forest settled this case for a large number.  Its downside was huge; this was a 'bet the company' case," Judge McMahon observed — awarding the plaintiffs' firms "twice the lodestar" but not "anything like the 4.5 times lodestar requested."

Judge McMahon also didn't like what she characterized as a suggestion that the six plaintiffs' firms should get an outsized payday to make up for the times they don't win.  "I am absolutely unmoved — indeed, I am offended — by the argument that class counsel deserves a humongous fee award in this case because 'the winning cases must help pay for the losing ones,'" she wrote.

Feds Urge DC Circuit to Deny Novel Fee Request in IP Case

June 12, 2020

A recent Law 360 story by Britain Eakin, “Gov’t. Urges Fed. Circ. To Deny Novel Fee Bid in IP Appeal” reports that after failing to fend off a $4.4 million fee award on top of a $200,000 judgment for infringing a metal treatment technology patent, the government has told the Federal Circuit it has no authority to grant an inventor's untested bid seeking supplemental fees for defending the fee award.

In a response filed to a May 29 request from Hitkansut LLC and Acceledyne Technologies Ltd. LLC for appellate fees — a matter the Federal Circuit hasn't addressed before under Section 1498 of the Patent Act — the government argued that only the U.S. Court of Federal Claims can grant fee requests under that provision of the law.  "There is no indication in the statute or its legislative history that Congress intended to include post-judgment attorneys' fees within the ambit of those recoverable.  By including the fees in the underlying compensation award, the statute is open to only one interpretation: that the ability to award ... attorneys' fees ends with the final judgment of the Court of Federal Claims," the response said.

The companies, owned by late inventor Donna Walker, who passed away in 2018, asked the appeals court for supplemental attorney fees after a three-judge panel on May 1 affirmed the U.S. Court of Federal Claims' March 2019 grant of fees.  The lower court found in 2017 that government researchers at the Oak Ridge National Laboratory directly took Hitkansut's patent-pending technology, which can be used to relax stressed metal in large metal structures like airplanes, without giving Walker any credit, funding or contracts.

Hitkansut and Acceledyne were able to recoup fees at the claims court under a provision of the Patent Act that allows independent inventors, nonprofits and small businesses to recover fees when the government infringes, provided they can show the position of the United States was not "substantially justified."  The Federal Circuit said in its May 1 opinion that the government's litigation position was not substantially justified because its arguments were contrary to the evidence in the case and the testimony of government employees, and that its invalidity argument was "contradicted by its own expert witness."  The court, however, instructed the parties to bear their own costs.

But Hitkansut and Acceledyne contend that the court has the authority to order the government to pay additional fees under Section 1498, which they argued is not limited to the claims court action and so entitles them to recoup all of their costs, including those associated with defending their initial fee bid.  And although the appeals court hasn't addressed whether fees for defending an initial fee bid can be recouped under Section 1498 before, Hitkansut and Acceledyne argued that the court has done so in Wagner v. Shinseki under an analogous law — the Equal Access to Justice Act.

The court in Wagner said that because he partially prevailed in defending against the government's challenge to his initial bid for fees, "he was entitled to supplemental fees."  The Wagner court reasoned that a prevailing party can recoup fees not just for underlying litigation but also for defending an initial EAJA fee request.  Hitkansut and Acceledyne urged the court to apply the same reasoning it did in Wagner to this case, but the government contends its reliance on Wagner is "misplaced" because it says the EAJA is "fundamentally different" from Section 1498, which it said doesn't give the Federal Circuit jurisdiction over supplemental fee requests.

Congress enacted the Section 1498 fee provision because it believed the EAJA was unavailable for such claims, the government said.  "Had it wanted to do so, Congress had a clear model in EAJA to insure recovery of appellate fees and costs.  But Congress selected a different path," the government said.

Federal Circuit Reverses Fee Award in Sippy Cup IP Case

June 10, 2020

A recent Law 360 story by Tiffany Hu, “Fed. Circ. Reverses Atty Fee Award in Sippy Cup IP Case” reports that the Federal Circuit ruled that a failed patent lawsuit over spill-proof sippy cups is not exceptional enough to merit attorney fees, finding in a precedential opinion that a lower court "abused its discretion" in awarding the fees without adjudicating the issues.  In a 16-page opinion, a three-judge panel overturned a California federal judge's decision that granted Luv N' Care Ltd.'s bid for $1 million in a patent dispute against Munchkin Inc.  The lower court had deemed the case exceptional because Munchkin concealed relevant prior art during litigation, and its amended trademark claims were so weak they were abandoned.

Following a 40-minute hearing in February, where attorneys for both companies told the Federal Circuit that the lower court didn't make factual determinations on either issue, the panel agreed the exceptionality finding was underdeveloped.  "None of these issues was fully adjudicated before the court on the merits, and given the limited arguments [Luv N' Care and another defendant] made in support of [their] fee motion, we hold that the district court abused its discretion in granting the motion and we reverse the exceptional-case determination," U.S. Circuit Judge Raymond T. Chen wrote for the panel.

The panel said the district court failed to explain why Munchkin's arguments concerning the validity of its patent were unreasonable, and was also "led astray" by Luv N' Care's claim that Munchkin improperly maintained the lawsuit after the Patent Trial and Appeal Board launched an inter partes review of the patent and found the patent invalid.  "That Munchkin's patent was ultimately held unpatentable does not alone translate to finding its defense of the patent unreasonable," Judge Chen wrote.

Munchkin sued Luv N' Care and Admar International Inc. for trademark infringement and unfair competition in 2013.  Munchkin moved to amend the trademark claim the following year, deciding to assert a different trademark in the case, and then added a patent infringement claim to the suit in 2015.  Luv N' Care later challenged the validity of Munchkin's patent at the PTAB, which invalidated all of the challenged claims.  After the board invalidated the patent, the district court ruled in favor of Luv N' Care and deemed it the prevailing party.  The district court tacked on the cost of the PTAB proceedings to the fee award, as well as Munchkin's appeal of the PTAB decision that was affirmed by the Federal Circuit in 2017.

Federal Circuit: No Attorney Fee Awards for PTAB Cases

June 4, 2020

A recent Law 360 story by Ryan Davis, “Fed. Circ. Says It Can’t Award Atty Fees Tied to PTAB Cases” reports that the Federal Circuit said that it cannot award attorney fees for allegedly unreasonable conduct during a Patent Trial and Appeal Board case, saying such awards are only available for judicial proceedings and rejecting drugmaker Almirall's bid for fees from rival Amneal.  Almirall SA argued that Amneal Pharmaceuticals Inc.'s failed inter partes review challenge to its acne drug was so "exceptional" that it should have to pay attorney fees, which the Federal Circuit said appeared to be the first time it has been asked to consider how the fee-shifting statute applies to IPR appeals.

While Almirall said the law authorizes the Federal Circuit to award fees incurred during PTAB proceedings before an appeal is filed, the court disagreed.  It said it can award fees related to district court infringement actions, but "appeals from the board are a different matter."  The statute says "the court" may award fees, and that "speaks only to awarding fees that were incurred during, in close relation to, or as a direct result of, judicial proceedings," the Federal Circuit said.  "This language is simply inconsistent with Almirall's position that we can award fees incurred for work in patent office proceedings before this court has ever asserted its jurisdiction," it said.

Amneal had moved to voluntarily dismiss its appeal of the PTAB's decision that it hadn't shown Almirall's patent is invalid.  Almirall said it would agree on the condition that it was awarded fees, but the Federal Circuit granted the dismissal motion and denied the fee request.  As it prepared to market a generic version of Almirall's acne medication Aczone, Amneal challenged two of the patents on the drug in inter partes reviews. Almirall then filed an infringement suit in district court.

According to the Federal Circuit, Almirall offered Amneal a covenant not to sue over one of the patents during settlement talks, but the parties could not finalize a deal.  The IPR on that patent proceeded and the PTAB upheld the patent.  Amneal appealed, but then moved to dismiss the appeal.  That led Almirall to argue that Amneal should have to pay its fees associated with the IPR and the appeal, saying that because Amneal knew it wouldn't be sued over that patent, its decision to continue the IPR was "exceptional."

"It is beyond reasonable that trial was justified once Almirall offered to assure Amneal it would not sue for infringement," it said.  Amneal told the Federal Circuit that Almirall's position was "extraordinary," and that just because Almirall offered not to sue doesn't mean Amneal was bound to drop its IPR.

The Federal Circuit did not get into the merits of whether fees were warranted, and instead concluded its authority to award fees extends only to district court and appellate litigation, not PTAB cases.  "Almirall is impermissibly seeking fees that were incurred for work at the patent office before this case was commenced," it said.  It noted that the PTAB has its own means for regulating misconduct, including awards of attorney fees.