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Category: Fee Reduction / Fee Denial

$6.2M Fee Award in Virgin Airline Wage Class Action

January 21, 2020

A recent Law 360 story by Vin Gurrieri, “Attys Behind $77M Virgin Wage Win Sought $13M Get $6M,” reports that lawyers for Virgin America flight attendants who recently won $77 million over claims the airline stiffed workers on pay and rest breaks were awarded nearly $6 million in fees by a California federal judge, which was about half the amount they had requested.  U.S. District Judge Jon Tigar awarded $5.7 million to attorneys representing a class of flight attendants led by named plaintiff Julia Bernstein who alleged that Virgin America Inc. flouted California labor laws by not paying them for all hours worked, including pay for overtime, and denying them state-mandated meal and rest breaks.

After having largely granted the flight attendants' bid for summary judgment, Judge Tigar a year ago awarded the flight attendants $77 million in damages.  The airline has since challenged the award to the Ninth Circuit, an appeal that is still pending.  In the meantime, Judge Tigar issued an order finding that the class members' legal representatives were due almost $6 million in fees and an additional $251,000 in court-related expenses.  That number, however, fell short of the approximately $13 million in fees and expenses the lawyers had sought.

Judge Tigar agreed with Virgin that class counsel didn't provide enough detail about certain declared hours and sided with the company in its objection to certain categories, like one labeled "other," that were billed in blocks.  "Virgin takes issue with plaintiffs' use of an 'Other' category, which accounts for 148.1 hours of the fee request," the judge said on the latter issue.  "Given that plaintiffs neglected to identify even representative examples of the types of tasks included, the court cannot award fees for those hours.  The court therefore excludes all 148.1 hours from the fee request."

The judge also shaved the billing rates of several attorneys representing the class but rejected Virgin's arguments that the class members' failure to win on certain claims warranted a significant reduction in fees awarded, leading him to arrive at the $5.7 million figure.  "Ultimately, the court finds that the hours expended were reasonable in light of the overall success achieved, and agrees that success was exceptional," Judge Tigar said.

Fee Request Slashed in Sunoco Pipeline Challenge

January 7, 2020

A recent Law 360 story by Matt Fair, “Pa. Enviro Board Slashes Fee Award in Pipeline Challenge,” reports that a Pennsylvania environmental appeals board granted only a fraction of a quarter-million-dollar fee request from an attorney representing a pair of landowners involved in a fight over permits for a controversial Sunoco LP natural gas pipeline, citing the "limited success" of the challengers and their refusal to accept a settlement.

While Huntington County landowners Stephen and Ellen Gerhart managed to convince the state’s Environmental Hearing Board last year that Sunoco should be held to a higher standard in regard to how much the company is required to restore a wetland on their property after the pipeline's construction, the board said that their attorney, Rich Raiders of Raiders Law PC, could only recover just over $13,000 of the nearly $266,000 sought in the case.

In reaching its decision, the board noted that Raiders had only managed to score a victory on one of the several objections lodged to permits the state’s Department of Environmental Protection issued to Sunoco for construction of the pipeline.  “On a positive note, thanks to the Gerharts’ efforts, a 0.066-acre wetland will be restored,” the board said.  “That having been said, it must also be said that the Gerharts achieved a rather limited degree of success in the context of their appeal as a whole.”

The board also said that the Gerharts refusal to accept a settlement offer that Sunoco first put on the table in September 2017 — a deal that would have provided them with the same result they ultimately received by litigating the case all the way to the end — also weighed in favor of a reduced fee award.

“Although the appeal continued on at great expense for two more years, precisely the same result … could have been amicably attained by September 2017,” the board said, noting that it only learned about the settlement offer as it received briefs in the fee fight.  “Given the amount of attention devoted to this matter, this revelation is rather unsettling.”

The Gerharts claimed in February 2017 that permits issued by the state’s Department of Environmental Protection for the Sunoco pipeline — which is intended to ferry natural gas from the Marcellus Shale region of western Pennsylvania to a Philadelphia-area refinery — misclassified a wetland on their property.  The misclassification, the couple said, would have allowed Sunoco to get away with a less fulsome remediation of the property once construction of the gas pipeline was finished.

While the Gerharts argued that they should be allowed to recover fees from DEP for efforts to “correct a programmatic error in how wetlands are protected in Pennsylvania,” the board disagreed that the public should be put on the hook for the couple’s efforts.

NCAA Ordered to Pay $33M in Fees and Costs in Antitrust Case

December 25, 2019

A recent Law 360 story by Dave Simpson, “NCAA Owes Student-Athletes’ Attys $33M in Fees and Costs,” reports that a California magistrate judge ordered the NCAA to pay $31.8 million to cover the attorneys who scored an injunction for student-athletes barring the NCAA from restricting their education-related compensation, but declined to provide the attorneys with the full $45 million they requested.  U.S. Magistrate Judge Nathanael Cousins applied minor reductions to the student-athletes’ baseline bid for fees and costs and declined to apply their ask for another $15 million based on a 1.5 multiplier, requested in light of "the exceptional nature of the outcome."

“Representation was of excellent quality on both sides of this litigation, and counsel for both sides expertly handled this exceedingly complex case,” Judge Cousins said.  “But the court finds that this quality and complexity are already reflected in plaintiffs’ counsels’ hourly rates and the number of hours billed.”

Further, he said, while the students’ victory was “historic,” they didn’t get everything they asked for.  “That both parties appealed the final judgment in the case indicates that neither wholly succeeded on their claims,” the magistrate judge said.  Finally, he said, the students’ attorneys have already recovered fees related to a damages portion of the case as a part of a settlement agreement.  In addition to the fees, the magistrate judge awarded the students’ attorneys nearly $1.4 million in costs.

Nearly $26 million of the fees will go to Winston & Strawn LLP, with about $3 million apiece heading to Hagens Berman Sobol Shapiro LLP and Pearson Simon & Warshaw LLP, while Pritzker Levine LLP will rake in $163,000.

The bid for fees and costs follows a landmark 10-day bench trial that kicked off in Oakland in September 2018 over allegations by Division I college football and basketball players that the NCAA's rules illegally restrict what they can receive to play.  The rules had limited athlete benefits to cost-of-attendance scholarships; Student Assistance Funds, which cover certain school-related expenses; some need-based grants, like Pell Grants; and bowl participation awards, which are typically capped around $450.

During the trial, sports economists, former athletes, university officials and NCAA administrators took turns testifying on the impacts of the NCAA's compensation rules.  Three former athletes, who didn't play professionally after college, recalled how they struggled as students to pay for meals, clothes and trips home, while they spent between 40 and 60 hours a week on their sports, which left little time for academics.

Hourly Rates and Billing Practices Questioned in Ditech Bankruptcy

December 13, 2019

A recent American Lawyer story by Samantha Stokes, “Weil Facing Sharp Fee Objections in Ditech Bankruptcy,” reports that a U.S. trustee is asking a New York bankruptcy judge to slash fees of Weil, Gotshal & Manges and other law firms, criticizing their billing tactics and invoices in the ongoing reorganization of a mortgage origination and servicing business.  The fee applications in the Chapter 11 case of Ditech Holding Corp. “reflect numerous instances of questionable billing judgment and overstaffing,” said the U.S. Trustee’s Office in New York in court documents.   In all, professionals in the Ditech bankruptcy in the Southern District of New York billed $49.46 million for several months of work in 2019—including nearly $26 million by six law firms.

William Harrington, the Region 2 U.S. trustee, had sharp objections to fees and expenses from Weil, debtor’s counsel, as well as Pachulski Stang Ziehl & Jones, counsel to the committee of unsecured creditors.  The trustee sought to cut $451,081 from Weil’s bill and $82,779 from Pachulski Stang’s.  For its part, Weil billed $17.85 million in fees and about $443,800 in expenses for work done from Feb. 11 to Sept. 30 of this year, according to the filing.  But the trustee found the firm’s partners charged Ditech an average of $116 an hour more than it charges non-bankruptcy clients and that associates also billed higher rates than they do in other cases.

Bankruptcy rates “must be held commensurate with those charged by other practice areas” and Weil “failed to meet” the burden to demonstrate these higher fees were reasonable, the trustee said.  “Absent a sufficient justification for the discrepancy … the requested fees should not be approved.”  In specific fee objections, the trustee sought to cut $65,082 reduction for block billing, in which the firm lumped together two or more tasks without specifying the total time spent on each task; $374,824 reduction for vague billing entries; and $11,175 for excessive conference staffing.

The trustee, finding instances where Weil professionals billed for meals and local travel on days when they billed for fewer than four hours, also requested a $25,000 reduction in expenses.  California-based restructuring boutique Pachulski Stang also overbilled, according to the trustee.  The trustee sought reductions of $53,653.25 for vague billing entries; $23,446.50 for transitory professionals, who bill small amounts in a case and might provide questionable benefit, as well as “grazing,” or billing nonproductive hours such as attending meetings or reviewing correspondence; and $5,697.50 for unexplained duplicate fee entries.  The trustee sought an expense reduction of $2,001.26 for local travel, airfare and meals exceeding limits.

From Feb. 26 to Sept. 30 of this year, Pachulski Stang has billed about $2.1 million in fees and $41,074 in expenses.  Two law firms—Bradley Arant Boult Cummings, as special counsel to debtors, and Rich Michaelson Magaliff, as special industry counsel to committee of unsecured creditors—agreed to reduce fees and expenses after the trustee raised concerns, according to court papers.  Bradley Arant, which billed just over $2 million in fees and $13,329.14 in expenses from Feb. 11 to Sept. 30, reduced expenses so no meal was billed at more than $20, the maximum allowed by the Southern District of New York.

Rich Michaelson had significant time billed under “case administration,” according to the trustee, and after a discussion, it agreed to a $10,000 fee reduction for this work. In all, the firm billed $365,880 in fees and $7,803.15 in expenses from Feb. 26 to Sept. 30.  Other law firms involved in the case include Orrick, Herrington & Sutcliffe, serving as special securitization counsel for debtors and billing nearly $1 million in fees and $3,476.45 in expenses from April 1 to Sept. 30; and Quinn Emanuel Urquhart & Sullivan, which is counsel to the official committee of consumer creditors and which billed about $2.49 million and $87,092 in expenses from May 6 to Sept. 30.  The trustee did not request any reductions from either firms’ applications.

DOJ Asks Federal Circuit to Toss $7M Fee Award

December 5, 2019

A recent Law 360 story by Tiffany Hu, “DOJ Asks Fed. Circ. To Scrap Dentons’ $7M Fee Award,” reports that the U.S. Department of Justice is asking the Federal Circuit to wipe out $7.4 million in attorney fees secured by Dentons in a lawsuit accusing the Navy of infringing a company’s patents in a combat ship, saying the lower court went “too far” in its analysis.  In an opening brief, the DOJ said that the U.S. Court of Federal Claims in July incorrectly awarded attorney fees to Dentons for its work on behalf of FastShip LLC, which claimed that some of the Navy’s combat ships infringed two of its patents.

Among other things, Judge Charles F. Lettow had found that the federal government’s opposition to FastShip’s lawsuit was not “substantially justified” under a federal provision governing the amount that can be recovered in a lawsuit against the government.  That provision says a patent owner can get reasonable compensation in a suit against the government unless the government's position was substantially justified.

The DOJ argued that Judge Lettow erred in considering the government’s conduct before litigation, as the provision in question restricts the patent owners’ compensation to costs incurred “in pursuing the action,” the department said in its brief.  But even if pre-litigation conduct could be considered, the DOJ said, the judge went “too far” when he relied on certain allegations that either had nothing to do with the present lawsuit or the claimed use of the invention.

“This construct is unduly broad even if some pre-litigation conduct could be considered,” the DOJ wrote.  “The CFC’s definition goes well beyond the ‘claim’ — i.e., the facts necessary to establish infringement — and into some ill-defined totality of facts that include the procurement actions of contractors in which the government was not involved.”  The department urged the Federal Circuit to toss the lower court’s award of fees and costs and to send the case back to the court to reconsider whether the government’s position in the present action was “substantially justified.”

Judge Lettow ruled partly in favor of FastShip in 2017, finding that one ship, LCS-1, had infringed, but that a second, LCS-3, and any that followed in the class had not because they were still being manufactured when the patents expired.  The Federal Circuit in June 2018 upheld Judge Lettow’s ruling and raised the damages award slightly to $7.1 million. FastShip ultimately recovered $12.36 million for the infringement, including delay damages, Judge Lettow wrote in his July order.

Judge Lettow’s July ruling said that the “conduct of the government, both before and throughout this litigation, belies its argument that it was ‘substantially justified.’”  The judge said that among his reasons for awarding the fees and costs was that FastShip met with Lockheed during the procurement process and shared its patent technology, but that FastShip was ultimately not included as a part of the team.

“Lockheed Martin would go on to manufacture the Freedom class of ships for the government, with a completion and infringement date for LCS-1, of September 26, 2006,” Judge Lettow wrote.  The judge also questioned if the government had done a proper investigation after FastShip filed an administrative claim with the Navy in 2008.  The Navy said it did a “thorough analysis” and found no infringement after the claim was filed, although it did not share the analysis with FastShip when it wrote the company a letter after it “sat” on the claim for two years, he wrote.

“At best, this was a perfunctory response to the concerns of FastShip that ultimately proved legitimate.  At worst, it may have delayed FastShip’s filing of its claim in this court by two years,” Judge Lettow wrote.  The judge made partial adjustments to the $8.72 million of fees and costs requested by FastShip, ultimately awarding more than $7.4 million, including over $6.17 million in attorney fees and related expenses, and over $1.2 million in costs.