Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Fee Reduction / Fee Denial

Judge Rejects $200K Fee Request for $5K Settlement

August 15, 2019

A recent Law 360 story by Lauraann Wood, “$200K Fee After $5K Deal ‘Makes No Sense,’ Ill. Judge Says,” reports that an Illinois federal judge granted photo agency FameFlynet Inc. $10,500 of its request for $241,000 in attorney fees after settling a copyright suit for $5,000, saying awarding anything more after two-and-a-half years of avoidable litigation “makes no sense.”  FameFlynet and Jasmine Enterprises Inc. stipulated to the $5,000 in damages under the Copyright Act after U.S. District Judge Thomas Durkin ruled Jasmine was liable for publishing three photos of Nicky Hilton and James Rothschild’s wedding on a blog in 2015.

But the photo agency’s case only reached summary judgment issues because it canceled settlement talks and litigated discovery disputes after learning the parties were $1,000 apart during negotiations that happened three weeks after serving of its complaint on Jasmine, Judge Durkin said.  “For FFN to then incur hundreds of thousands of dollars in fees simply makes no sense, and it should not be rewarded for what should have been a straightforward case,” Judge Durkin said.  “This case exemplifies the familiar adage of cutting off your nose to spite your face,” he said.

The fee award represents a little more than the FFN incurred when it rejected Jasmine’s initial $15,000 settlement offer in November 2016 plus its filing fee and process server costs, since “the fault does not lie exclusively with FFN for failing to settle, and its early work advanced the goals of the Copyright Act,” Judge Durkin said.  But awarding FFN its entire fee request “would not advance considerations of compensation and deterrence,” since Jasmine removed the infringing photos the day it received notice of infringement and hasn’t posted to the blog since 2015, he ruled.

The agency argued that declining to award it fees would deter future plaintiffs from pursuing claims, but Judge Durkin said his concerns over awarding FFN's request was different.  “Far from advancing the Copyright Act’s goals, awarding FFN its requested fees would incentivize parties to reject reasonable settlement offers in hope of cashing in on enormous attorneys’ fees down the line,” he said.

Craig Sanders of Sanders Law PLLC, who represents FFN, told Law360 in an email that the judge’s decision to award fees was proper.  But he “appears to have committed reversible error” by failing to comply with Seventh Circuit and Supreme Court precedent by using the so-called lodestar method to calculate a reasonable fee in the photo agency’s case, Sanders said.

Jasmine claimed its photo publication was fair use before Judge Durkin sided with FFN on liability and said Jasmine likely would not win on that defense.  FFN argued that Jasmine’s defense was objectively unreasonable given “existing case law,” so fighting it warranted a fee award.  But Judge Durkin disagreed, saying the agency inaccurately “conflates whether a defense was successful with whether it was reasonable.”

“Losing on the merits does not establish that a party’s position was objectively unreasonable.  Otherwise, a losing defendant would ‘virtually always be found to have done something culpable,’” Judge Durkin ruled, quoting the U.S. Supreme Court’s ruling in Kirtsaeng v. John Wiley & Sons Inc.

FFN had demanded $16,000 to settle its copyright suit, and ended negotiations after Jasmine offered $15,000, according to Judge Durkin’s order.  Jasmine offered $15,000 to settle the case at several other times during litigation, including after the agency filed its bulky fee bid.  But assuming that constitutes poor litigation conduct would mean Jasmine’s offer was unreasonable in the first place, Judge Durkin said.

Major Fee Reduction Because of Whistleblower’s Conduct

August 13, 2019

A recent Law 360 story by Bill Wichert, “Novartis Attys Get Reduced Fees Over Whistleblower’s Antics,” reports that a New Jersey state judge awarded fees and costs to Nukk-Freeman & Cerra PC and McCusker Anselmi Rosen & Carvelli PC as counsel to Novartis Pharmaceuticals Corp. based on a onetime executive's misconduct during a trial in her successful whistleblower suit. But the award was much less than the firms requested.  Superior Court Judge Louis S. Sceusi awarded a total of $8,466 to the two firms — less than a third of what they had been seeking — as a result of Min Amy Guo's "contemptuous, disruptive conduct" on three occasions, including when she purportedly told a defense witness in a restroom, "[s]ave your soul and tell the truth," court records show.

"Because plaintiff's actions disrupted the trial, they required defendant's attorneys to allocate trial and research time to respond and address these matters," Judge Sceusi said in his statement of reasons.  The two firms had sought about $32,000 in fees and costs with respect to Guo's misconduct, according to the judge's opinion.

That request was based on 4.6 hours each of trial attendance for lead attorneys John B. McCusker of McCusker Anselmi and Patricia Prezioso of Nukk-Freeman & Cerra, at $395 and $390 per hour, respectively; three hours for Novartis' trial technician and equipment rentals; and 110.57 hours for "research, production of written memorandum, and strategy," the opinion said.  The judge found that the hours and rates attributed to the trial attendance of McCusker and Prezioso were reasonable, citing the attorneys' "experience, reputation, and the complexity of the case."

"After each incident, the court recessed the jury, called counsel to sidebar or into chambers to discuss what happened and to air opinions of counsel on the remediation," Judge Sceusi said.  "This court agrees that both counsels' assessment of the time misdirected on these matters is reasonable and quite conservative."  The judge awarded $1,817 and $1,794, respectively, for McCusker's and Prezioso's trial attendance.  He also awarded the requested $855 to Nukk-Freeman & Cerra for the technician's time and the equipment rentals.

But Judge Sceusi concluded that the 110.57 hours for research and writing "exceeds the bounds of necessity and fairness."  Instead, the judge awarded each firm eight hours at $250 per hour for that work.  "The court does not believe it was necessary for both defense law films to expend so much manpower or hours on these specific issues," the judge said.  "The 110.57 hours of combined research, in this court's view, 'exceed those that competent counsel reasonably would have expended to achieve a comparable result' and must be excluded as redundant and unnecessary."

Law Firm Wins Dispute Over $1.3M Fee Reduction

August 12, 2019

A recent Law 360 story by Kevin Penton, “Law Firm Wins Nix of $1.3M Fee Reduction in Client Dispute,” reports that a New Jersey trial judge jumped the gun when he decided a fee dispute between an Illinois-based law firm and its client by reducing the firm's bill from approximately $1.7 million to $359,000 before either a formal complaint or a petition for fees had been filed, a state appellate court has ruled.

Superior Court Judge Craig L. Wellerson lacked jurisdiction to decide the fee dispute between Susan Lucas and Freeborn & Peters LLP as the disagreement was not part of the underlying legal malpractice case Lucas had filed against another law firm, and neither Freeborn & Peters nor Lucas had formally petitioned the court over the matter, according to the opinion by a three-judge Appellate Division panel.

While Lucas gave her blessing during a December 2016 hearing for the judge to decide the matter, that was insufficient grounds for Judge Wellerson to intercede, according to the Appellate Division opinion, which nullified the fee reduction and instructed Freeborn & Peters to file a separate cause of action in pursuit of the fees it seeks to recover from Lucas.  "The court intruded in this dispute over Freeborn's repeated objections and Lucas' acquiescence, which in no way endowed the court with the subject matter jurisdiction to adjudicate this fee dispute," the opinion reads.

Lucas hired Freeborn & Peters to serve as her counsel in a case in which she asserted, among other things, that Arnold Schancupp & Associates had committed legal malpractice when it represented her in the purchase of a home along the Jersey Shore and failed to disclose that the property was subject to a storm water easement, according to the opinion.  A jury awarded Lucas $980,000 in compensatory damages, with an additional $99,506 in consequential damages awarded by the court, according to Friday's opinion.

While Lucas and Freeborn & Peters had issues at the end of the underlying case over how much she owed the firm, she told the judge during a telephone conference that she intended to separately dispute the reasonableness of the fees, while the law firm stipulated that their retainer agreement designated a court in Illinois as the venue where any disputes between the parties would be resolved, according to the opinion.

Judge Wellerson still proceeded with a hearing to consider the reasonableness of the fees, during which Lucas agreed for the judge to rule on the matter and Freeborn & Peters continued to lodge objections, according to court documents.  "Because the trial court did not have the legal authority to unilaterally assert jurisdiction over this fee dispute, the court's decision to sua sponte adjudicate this dispute was an ultra vires act; any relief awarded by the court in this context is a legal nullity," the opinion reads.

"My clients are relieved that the matter is resolved and that they can proceed to the next stages of recouping their fees," John Hanamirian, an attorney representing the law firm, told Law360.  "They did win this case for their client in a six-week trial, but that victory and their relationship with their client was made adversarial by this process.  That is beyond unfortunate."

Philly City Worker Denied $360K in Fees in $1 Verdict

August 5, 2019

A recent Law 360 story by Matt Fair, “Philly City Worker Denied $360K Attorney Fees on $1 Award” reports that a federal judge ruled that a $1 verdict won by a Philadelphia municipal employee on claims she was retaliated against for complaining about alleged workplace discrimination did not entitle her to receive legal fees from the city.  U.S. District Judge Gerald Pappert said the damages won by Deanna Pierce, a social worker who said she was discriminated against when she was denied a promotion three years ago, represented just a nominal victory that did not support her claim that the city cover nearly $360,000 in legal fees incurred as she litigated her case.

"Pierce's nominal damages award is presumptively a technical victory that does not merit an award of attorneys' fees," the court ruled.  Pierce filed suit in December 2017 alleging that her Native American heritage had been used against her as she was denied three promotions over the course of three years.  She ultimately withdrew claims related to one of the promotions, and the court granted summary judgment in connection with a second.

Her case went to trial in January as Pierce looked to convince jurors that the city had looked to fill a position as a human services program administrator specifically with a Hispanic candidate.  She also accused the city of creating a hostile work environment — including by denying her overtime approval and lunch breaks — when she complained about the purportedly discriminatory hiring practices.

A jury ultimately sided with the city on the discrimination claim, but awarded damages of $1 on Pierce's retaliation claim.  Based on the verdict, Pierce went on to file a motion asking that the city be required to pay some $360,000 in fees and another nearly $30,000 in costs under a federal statute allowing the prevailing party in a civil rights case to recoup their expenses.

In deciding whether to grant the request, Judge Pappert pointed to U.S. Supreme Court precedent stating that a nominal damage verdict doesn't necessarily bar a fee award to a prevailing party, but that it bears upon the propriety of such an award.

Under the high court's precedent, Pappert said, the "degree of success obtained" by the prevailing party was the most critical factor in determining the propriety of a fee award.  But given that the award came after all of Pierce's other claims had been dismissed, and that she had sought as much as $2.75 million to settle the case in advance of trial, Judge Pappert said that granting her motion for fees was inappropriate.  "The court must give primacy to the disparity between damages sought and awarded, and this weighs heavily against awarding attorneys' fees in her case," he said.

Attorney Fees Trimmed in Tesla Salespeople Settlement

July 12, 2019

A recent Law 360 story by Linda Chiem, “Atty Fees Trimmed in $1M Telsa Salespeople Settlement” reports that a California federal judge trimmed the fees and costs awarded to attorneys representing a class of former Tesla sales advisers accusing the electric carmaker of overtime and meal and rest break violations, chastising the attorneys for "unreasonable" requests before ultimately approving an overall $1 million settlement.  U.S. Magistrate Judge Jacqueline Scott Corley awarded plaintiffs' attorneys at Amartin Law PC and Brennan & David Law Group $160,895 in attorney fees and $13,146.49 in litigation costs, which falls short of the $256,689 in fees and $15,208.91 in costs they had requested in January.

Judge Corley also cut by half the incentive awards for named plaintiffs Brian Wilson, Carrie Hughes and Katia Segal from the requested $10,000 to $5,000 apiece for serving as class representatives in the wage-and-hour action.  The judge also signed off on the overall settlement, but not before calling out the class counsel for discrepancies in their filings.

Judge Corley said the class counsel failed to reasonably explain their lodestar calculations and submitted billing records with "numerous excessive and block billing entries" that didn't adequately break down the time spent working on this specific case or included excessive costs for travel or other expenses, according to the order.  Attorney fees awarded using the lodestar method count "the number of hours reasonably expended multiplied by [a] reasonable hourly rate" determined by the court.

"The discrepancy with respect to plaintiffs' lodestar and billing records is just the latest example of plaintiffs' counsel's carelessness in the presentation of the settlement to the court," Judge Corley said.  "Given the court's concerns, the court finds that the lodestar method, rather than the percentage of the fee method, is the most appropriate method of calculating attorneys' fees in this particular case."

She also ripped the attorneys for trying to collect fees on work the court ordered them to redo after their first motion for preliminary approval was rejected in June 2018 because it didn't explain the logic behind the deal and why it was a good result for both sides.  Judge Corley tentatively approved the deal last September after the attorneys reworked their motion in response to her concerns.

"Counsel's request for fees in excess of $36,000 for the work spent redoing the motion for preliminary approval, traveling to the second preliminary approval hearing, responding to the court's request for a status update, and traveling to and from San Francisco for the status conference is thus unreasonable," Judge Corley said.

Additionally, the plaintiffs' request for $10,000 apiece in incentive awards for the named plaintiffs was too much, the judge said, considering that each of the plaintiffs attested to spending between 75 and 90 hours on this action — the equivalent of two 40-hour weeks of work — but none of them were ever deposed or attended the mediation.  "Under these circumstances, the court finds that plaintiffs' generic statements regarding how they assisted the attorneys in the litigation fail to justify the requested $10,000 incentive award," Judge Corley said.

"The court is mindful that participation in wage-and-hour actions involves reputational risk, but finds that the risk here is not so great as to justify deviating from the standard $5,000 incentive award," she said.  The $1 million deal covers 282 class members, most of whom live in California, who accused Tesla of misclassifying showroom owner advisers and sales advisers as exempt from overtime under California's "commission salesperson exception."

That exemption only applies if sales advisers make at least 1.5 times the minimum wage and if over half of their compensation comes from commissions.  The plaintiffs maintained that their commissions failed to make up over half of their income so they should not have been denied overtime or proper meal and rest breaks, according to court documents.