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Category: Fee Reduction / Fee Denial

Judge Trims Rates, Hours Billed in Hague Convention Fee Request

April 18, 2018

A recent Big Law Business story by Julianne Tobin Wojay, “Judge Trims Rates, Hours in Hague Convention Fee Request,” reports that an “unquestionably” experienced intellectual property attorney’s lack of experience in child abduction matters requires reducing the fees he billed, a New York federal trial court said.

Moreover his firm agreed to work for free, and thus “did not expect to be paid for its services or reimbursed for its expenses,” U.S. District Court Judge Jed S. Rakoff, of the U.S. District Court for the Southern District of New York, said.

Parents who obtain return of a child under the Hague Convention on the Civil Aspects of International Child Abduction are entitled to recoup their legal fees from the kidnapping parent.

This “prevailing party” fee award is calculated by multiplying the number of hours reasonably expended by the attorney by a reasonable rate, Rakoff explained.

To determine if the requested rate is reasonable, courts consider whether it’s “in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation,” he said.

While the fact that services were provided free, or pro bono, doesn’t make a fee award “clearly inappropriate,” it can warrant a reduction in the amount awarded, Rakoff said.

Frederick L. Whitmer, a partner at Kilpatrick Townsend & Stockton LLP, billed his $875 standard hourly rate for his successful efforts in returning a woman’s child to the Dominican Republic after the girl was unlawfully brought to the U.S. by her father, the case summary showed.

However, despite 40-plus years of litigation experience, he has appeared in a Hague case “only once before” and “apparently has no other experience with family law,” Rakoff found.

“His representation in this case, though able, often reflected this inexperience,” Rakoff said, deciding that “only a rate of $400 per hour is warranted.”

Likewise, the standard rate charged by his colleague, a Harvard Law graduate who is “of counsel” at Kilpatrick Townsend & Stockton, must be reduced, Rakoff said.

Trademark attorney Lisa Willis “has no prior experience with Hague Convention matters or domestic or international family law,” he said, dropping her hourly rate from $295 to $250.

Additionally, the 510 total hours they billed “are excessive-perhaps due to the relative inexperience in this area of law,” Rakoff said, trimming the hours by 30 percent.

The mother was represented by Kilpatrick Townsend & Stockton LLP, and the father by Law Offices of Nolan Klein, P.A.

The case is Duran-Peralta v. Luna, 2018 BL 123358, S.D.N.Y., No. 16 Civ. 7939 (JSR), 4/1/18.

Fee Request Cut in Chipotle FLSA Case

January 30, 2018

A recent Law 360 story by Bonnie Eslinger, “’Excessive’ Chipotle Class Fee Cut From $3.2M to $600K,” reports that a Minnesota federal judge slashed an attorneys' fee request of $3.2 million to $600,000 in a class action alleging Chipotle required employees to work off the clock, calling the ask “excessive” in light of the results: a $62,000 settlement for two restaurants' workers.


The decision Monday by U.S. District Judge Susan Richard Nelson to reduce the attorneys' fee request by more than 81 percent marked a withering end to Fair Labor Standards Act litigation that once sought to represent nationwide collectives and statewide classes. That result, Chipotle Mexican Grill Inc. told the court, potentially could have encompassed hundreds of thousands of plaintiffs and “untold millions” of dollars in damages. In the end, the number of class members receiving a share of the settlement was 28.

After more than four years of pursuing their case, counsel for the class urged the court to take their contingency-based fee arrangement into consideration when assessing the reasonableness of their fee request. The judge didn’t find that argument very persuasive.

“The court appreciates the risk undertaken by attorneys representing hourly-paid employees suing their corporate employer under the FLSA,” the judge wrote in her 44-page ruling. “However, even considering the contingency-based arrangement here, the total fee request of $3,236,368.50 is excessive.”

The fee request is particularly high, she said, in light of the amount of damages at stake, plaintiffs’ overall success and the $62,000 result.

The judge added that while the plaintiffs’ law firms initially sought to certify a nationwide class, they were ultimately unsuccessful in that effort.

“In consideration of these factors, on balance, the court is persuaded that due to the relatively straightforward nature of the legal issues here, significantly lower awards in similar cases, the results obtained, and the disproportionate relationship between the amount of damages obtained and the fee request,” an overall reduction is reasonable the judge said.

The 81.5 percent reduction of the $3.2 million fee request also incorporated cuts by the judge for hourly billing rates the judge found were above the prevailing rate for comparable work done by other attorneys in the Twin Cities.

Each of the plaintiffs’ law firms billed at hourly rates of $600 for partners, $450 for senior associates with five or more years of experience, $350 for junior associates with less than five years of experience, and $250 for paralegals, the court noted.

Reasonable rates should account for varying levels of experience, the judge said, noting that a partner with 14 years of legal experience billed at the same rate as a partner and lead attorney with three decades under his belt, Kevin Giebel of Giebel and Associates LLC. The court made reductions to most hourly billing rates, including dropping Giebel to $575 per hour and the less-experienced partner to $475.

The judge also shaved the fee request to account for work done by counsel for the plaintiffs involving abandoned claims and unsuccessful efforts to amend the pleadings, for tasks considered administrative or clerical in nature, and for work deemed duplicative or excessive.

The parties reached their settlement during the summer, weeks after Judge Nelson denied a bid by the burrito restaurant chain to decertify the class of employees accusing the company of wage-and-hour violations — and just as the case was set to go to trial.

In rejecting the motion to decertify the class, judge rebuffed Chipotle’s argument that the alleged FLSA violations were attributable to “varied” reasons, including managerial requests to clock out early and continue working, additional cleaning assignments as punishment, “voluntary cleaning parties,” and off-the-clock work to demonstrate loyalty. In her June ruling, she also denied the argument that plaintiffs working as hourly kitchen managers or service managers had a conflict of interest because they were among the employees who directed other plaintiffs to perform off-the-clock work.

The workers were granted conditional collective action certification under the FLSA in September 2014. The suit was first filed in July 2013 against Chipotle by several employees at the restaurant in Crystal, Minnesota. Judge Nelson, however, turned down the employees' request for a nationwide class that would have covered some 100,000 workers, instead certifying a narrower class composed only of workers at the Chipotle in Crystal.

The settlement also resolves the individual claims filed in October 2014 by a former Chipotle employee at its restaurant in Golden Valley, Minnesota.

The cases are Harris et al. v. Chipotle Mexican Grill Inc., case number 0:13-cv-01719, and Woodards v. Chipotle Mexican Grill Inc., case number 0:14-cv-4181, in the U.S. District Court for the District of Minnesota.

Delaware Governor Seeks Fee Reduction in State Court Party Balance Case

January 12, 2018

A recent Delaware Law Weekly story by Tom McParland, “Carney Asks for Fee Reduction in Case Striking State Court Party Balance Mandate” reports that attorneys for Governor John Carney are asking a federal judge in Wilmington to slash a request for attorney fees in the case of a New Castle County lawyer who successfully challenged a provision of the Delaware Constitution requiring political balance on the state’s courts.

Carney, who has appealed the decision said that a ruling on James R. Adams’ fee request should be tabled until the U.S. Court of Appeals for the Third Circuit can weigh in.  But the governor also argued that any award the court grants should be reduced by 40 percent because Adams had only achieved partial success.

Adams, who is represented by Finger & Slanina partner David L. Finger, last month requested $22,900 to cover the cost of litigating the case through summary judgment.  U.S. Chief Magistrate Judge Mary Pat Thynge of the District of Delaware on Dec. 6, 2017, ruled in favor of Adams, a graduate of Widener University Delaware Law School, who argued the 120-year-old requirement violated the First Amendment of the U.S. Constitution by restricting government employment based on party affiliation.

Carney, who is responsible for nominating judges, did not dispute that Adams had prevailed in the case.  However, Carney challenged Adams’ assertion that he had secured a “complete victory,” saying that Thynge’s ruling did not specifically address constitutional provisions preventing one political party from being represented by more than a “bare majority” of the judges on Delaware’s courts.

“Because plaintiff did not achieve success in challenging the constitutional provisions relating to the Family Court and the Court of Common Pleas, or in challenging the bare majority provisions for the Delaware Supreme Court, the Superior Court or the Court of Chancery, defendant requests a 40 percent reduction in any award the court may choose to grant, as such a reduction would reflect plaintiff’s partial success in challenging Delaware’s constitutional provisions governing the composition of its courts” Carney’s Young Conaway Stargatt & Taylor attorneys wrote in an 8-page brief.

Finger, meanwhile, said in an interview that reduction of attorney fees was not warranted in any case where a plaintiff has won “substantial” relief from the court.  “We won a very substantial issue,” he said. “Moreover, the issue [of party balance] will apply to Family Court and the Court of Common Pleas because the bare majority requirement still requires making political party a determining factor [in nominating judges],” Finger said.

Adams, a registered independent, said he’s been prevented in the past from applying for judgeships because of the constitutional mandate that judicial seats be split between Republicans and Democrats.

Proponents of the provision—codified in Article IV, Section 3 of the state constitution—have said it safeguards a fair, independent and impartial judiciary that attracts talent to serve in its ranks.  But Adams and others have argued the mandate improperly boxes out independents and creates the impression the state’s judiciary is tinged with political bias.

Fee Request Denied Because Neither Party Prevailed

January 9, 2018

A recent Delaware Business Court Insider by Tom McParland, “Seven-Figure Fee Request Crumble as Bouchard Calls Cookie Contract Case a Draw” reports that the Delaware Court of Chancery denied multimillion-dollar requests for attorney fees from Mrs. Fields Brand Inc. and Interbake Foods, ruling that neither party had prevailed in a dispute over a contract to sell Mrs. Fields cookies in grocery and convenience stores.

Chancellor Andre G. Bouchard said the baked-goods companies had fought to a draw on the two main issues of a 2016 trial, where Interbake argued that it could exit a five-year licensing agreement to sell Mrs. Fields’ products.

In June, Bouchard ruled in favor of Mrs. Fields, saying that Interbake could not rely on its “material adverse change” argument to escape the deal.  But he also rejected Mrs. Fields’ “astounding” claim for $28.7 million in damages in the case.

Both sides later moved for attorney fees under a provision of the contract that required the “prevailing” party to be reimbursed for costs and expenses of litigation stemming from the licensing agreement.  Interbake asked for $2.6 million, and Mrs. Fields requested $5.3 million for its efforts.

In an 11-page letter opinion, Bouchard said Interbake’s attempts to validate its exit from the agreement spawned a slew of related legal questions, which accounted for the bulk of his 108-page ruling in June.  But he also noted that Mrs. Fields made its losing push for money damages a “central focus” of its litigation strategy, despite a standstill agreement that ensured the licensing agreement would remain in place throughout the case.

“In sum, because each side both won and lost on one of the two equally core issues in this case, I hold that neither Mrs. Fields nor Interbake predominated in the litigation and thus neither is entitled to an award of attorneys’ fees or expenses as the ‘prevailing party’ under [the licensing agreement],” the chancellor wrote.

NALFA: Serial Class Action Objectors Not Qualified in Attorney Fee Analysis

January 5, 2018

A recent The Recorder story by Amanda Bronstad, “$38M Fee Request in Anthem Data Breach Settlement Under Scrutiny” reports that an objection says the fee request, which is 33 percent of the $115 million settlement, was “outrageous on its face” and should be closer to $13.8 million.

A prospective class member has objected to the Anthem data breach settlement, specifically criticizing a fee request of nearly $38 million, and planning to ask that a special master investigate the case for potential over-billing.

Class action critic Ted Frank, of the Competitive Enterprise Institute’s Center for Class Action Fairness, filed the objection on Dec. 29 on behalf of Adam Schulman, who is an attorney at his Washington D.C. organization.  The objection said the fee request, which is 33 percent of the $115 million settlement  was “outrageous on its face” and should be closer to $13.8 million.  He particularly targeted the average $360 per hour rate for contract attorneys submitted by four lead plaintiffs firms, one of which is San Francisco’s Lieff Cabraser Heimann & Bernstein.  A special master in Boston is investigating Lieff Cabraser, along with two other law firms, for potential over-billing for staff attorneys in a $74.5 million fee request over securities class action settlements with State Street.  The special master’s report is due in March.  Frank said he planned to file a motion on Thursday asking that a special master be appointed in the Anthem case.

He wants a special master to look into “the same thing they’re investigating in State Street, which is why this billing happened and whether it’s appropriate and whether there was an attempt to mislead the court.”  He also questioned why 49 other firms not appointed by the court stood to earn a total of $13.6 million in fees and “whether there were side agreements to back scratch or trade favors in other MDLs to get work in this MDL.”

U.S. District Judge Lucy Koh, who trimmed the number of plaintiffs firms appointed to lead the Anthem case, has scheduled a Feb. 1 hearing for final approval of the settlement in San Jose, California.  Two other objections were filed on Dec. 29 that also challenged the fee request, among other things.  Class counsel is expected to respond to the objections by Jan. 25.

Eve Cervantez, of San Francisco’s Altshuler Berzon, who is co-lead counsel in the case along with Andrew Friedman of Cohen Milstein Sellers & Toll in Washington D.C., wrote in an email: “The three professional objectors made the same typical, boilerplate objections we often see in consumer class actions, and neglected the true value of the settlement to the class—protection of their personal data both by mandated improvements to Anthem’s cybersecurity to prevent future hacks, and by credit monitoring to prevent misuse of their personal data by the hackers that stole it.”

In the Anthem case, Koh preliminarily approved the settlement in August.  The deal provides two years of credit monitoring and identity protection services to more than 78 million people whose personal information was compromised in 2015.  It also provides a $15 million fund to pay costs that class members were forced to pay due to the breach, such as credit monitoring services and falsified tax returns.

In motions filed last month, the four lead plaintiffs firms defended their fee request as adequate compensation for obtaining the largest data breach settlement in history.  The case involved “massive discovery” and “complicated factual and legal research,” they wrote.  It also was “extraordinarily risky,” given that many data breach cases have been dismissed.  The fees also were reasonable given the total lodestar—or the amount billed multiplied by the hourly rate—was $37.8 million.  The hourly billing rates of partners were between $400 to $970—rates that Koh has approved in prior cases.

“There is no true comparator to this groundbreaking settlement,” Cervantez wrote.  “Other data breach cases have not resulted in common funds that come close to $115 million, nor have they included the comprehensive cybersecurity improvements mandated by this settlement, coupled with a major, quantifiable investment in cybersecurity.”

The other two objections, one filed by solo practitioners John Pentz in Massachusetts and Benjamin Nutley in California, and the other by a trio of law firms from Missouri and Colorado, raise additional concerns over the cash value of the settlement, a proposed $597,500 in incentive payments to 29 lead plaintiffs and a request on both sides to seal portions of the deal—in particular, the amount of money Anthem has agreed to spend on cybersecurity in the future.

Koh has slashed fee requests in past cases, some involving the same plaintiffs firms.  Last year, she cut fees in a $150 million settlement involving the poaching of animators at DreamWorks and The Walt Disney Co. to $13.8 million after finding the original $31.5 million request to be “unreasonably high.”  In that case, Koh relied on the billing records, concluding that the U.S. Court of Appeals for the Ninth Circuit’s 25 percent benchmark in class action settlements would result in a windfall to the three plaintiffs firms, which included Cohen Milstein.