Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Challenging Fees

$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.

Greenberg Traurig Wins $2M Fee Award in U.S. Court of Claims

November 20, 2017

A recent Law.com story by C. Ryan Barber, “Greenberg Traurig Wins $2M Fee Award in Suit Against U.S. Government,” reports that a federal claims court judge ordered the government to pay $2 million in legal fees to Greenberg Traurig for its work representing a Florida real estate developer that prevailed in a long-running case over the denial of a permit to fill in wetlands.  After two rounds through U.S. Court of Federal Claims, each followed by an appeal to the U.S. Court of Appeals for the Federal Circuit, the company, Lost Tree Village Corp., prevailed in its challenge when the U.S. Supreme Court declined in June to hear the case.

The U.S. Department of Justice had asked the high court to review a 2015 decision that said the U.S. government’s denial of the fill permit amounted to an uncompensated “taking” of Lost Tree’s property.  Charles Lettow, a judge on the U.S. Court of Federal Claims, ordered the government to pay $4.2 million in damages, plus $3.5 million in interest.  Lost Tree Village Corp.’s lawyers at Greenberg Traurig, led by Washington partner Jerry Stouck, had argued the government owed more.

Stouck this summer went to the Federal Claims court seeking about $2 million in attorney fees from the government, along with $100,000 in other fees and expenses incurred by Lost Tree.  Stouck, chairman of the firm’s regulatory and administrative law practice, identified Lost Tree’s legal fees in remarkable detail, noting a period in which he and two other principal timekeepers at Greenberg Traurig had given discounts of between 5 and 15 percent of the standard hourly rates.  Stouck identified his standard billing rate, for 2017, at $810 an hour.  Greenberg Traurig’s court filings reveal standard billing rates for Stouck and other Greenberg lawyers from 2007 to now.

For the first appeal to the Federal Circuit, Stouck said, the firm and Lost Tree agreed on a fixed fee of $67,00, plus expenses, with an additional $300,000 payable only if Greenberg Traurig prevailed. (It did so.)

The $300,000 success fee, under the terms of the agreement, would be “recoverable from the government as part of the reasonable attorneys’ fees due to Lost Tree.”  Stouck told the court that Lost Tree “has achieved complete success.”  He added: “Perhaps more importantly, while this case was hard-fought and long-fought, Lost Tree has prevailed completely on what both parties and the court recognized from the outset was the principle issue to be decided—the ‘relevant parcel’ issue.”

The Justice Department, arguing that Greenberg Traurig’s billing “reflects excessive rates for attorney and paralegal work,” said Lost Tree should be awarded at most $1,078,121 in fees.  In a court filing, the Justice Department said Greenberg Traurig billed for “work done on matters unrelated to this case and irrelevant to the merits, work where the hours devoted to tasks were far beyond reasonable or duplicated by multiple attorneys, and work where very senior personnel were performing tasks typically done by more-junior personnel.”

From the government’s filing: “Most egregiously, plaintiff seeks reimbursement for a $300,000 bonus not-yet paid that is not based on work done for the case, but instead because they were victorious on appeal.  The United States has not waived its sovereign immunity to reimburse ‘success fees’ sought in addition to fees for the hours actually devoted to work on the case.

“I was actually surprised that the government had disputed our fees so aggressively because, as you can see from the opinion, my client has paid all of the fees,” Stouck said.  “And I think that is a very substantial proof of the reasonableness of it.”

In a court filing, Stouck defended the $300,000 success fee as not just reasonable but a “greatly reduced” fee for the appeal.  “This is not a situation where Greenberg is seeking an ‘enhancement’ to its hourly rates,” he wrote in a court filing.  “Lost Tree and Greenberg are simply asking the court to enforce their reasonable, arm’s length agreement.  In the context of this case, the alternative fee arrangement represents Greenberg’s commercially-available rate.”  The judge did not award the success fee but did award $91,000 in fees that were incurred beyond the fixed expense of $67,500.

Samsung Opposes Attorney Fees in “Duplicative Suit”

November 9, 2017

A recent Delaware Business Court Insider story by Tom McParland, “Samsung Opposes Fees in ‘Duplicative’ Suit, Citing Appeal” reports that Samsung Electronics Co. Ltd. told a federal judge in Delaware that any decision on Imperium IP Holdings’ motion for sanctions for having to defend a “duplicative” suit should be delayed pending an appeal to the U.S. Court of Appeals for the Third Circuit.

In a 23-page filing, Samsung said that a decision from the appeals court could moot Imperium’s request for $247,000 in the case, which followed a $20 million patent infringement ruling against Samsung in a Texas federal court.  Last month, U.S. District Judge Mark A. Kearney dismissed Samsung’s second-filed case in Delaware and criticized the electronics giant for “duplicating” the earlier litigation in order to attack the result in the U.S. District Court for the Eastern District of Texas.

Imperium filed its motion for attorney fees two weeks later, arguing that Samsung’s “bad-faith” tactics had qualified the case as exceptional under U.S. patent law.  The court, Imperium said, also had the authority to award fees based on Samsung’s decision to “unreasonably and vexatiously” multiply proceedings.

Samsung notified Kearney that it was appealing the Oct. 10 order and asked that consideration of motion for attorney fees be deferred until after the Third Circuit could weigh in.  Even then, Samsung said, the “exceptional” designation did not apply to a breach-of-contract suit, and Imperium had failed to prove bad faith conduct that would trigger the court’s discretion in granting sanctions.

“Samsung and Imperium have been engaged in hard-fought litigation for over three years, and Samsung’s filing and prosecution of this action in good-faith reliance on the forum selection clause is nothing more than vigorous advocacy,” attorneys for the company wrote.  ”Awarding attorneys’ fees under these circumstances will only serve to promote what courts strive to avoid: a chilling effect on an attorney’s legitimate ethical obligation to represent clients zealously.”

The case is Samsung Electronics v. Imperium IP Holdings.

Ninth Circuit Remands BAR/BRI Fee Award for Second Time

November 1, 2017

A recent MetNews story, “Ninth Circuit Vetoes Attorney Fee Award for Second Time” reports that the Ninth U.S. Court of Appeals has, for a second time, remanded a case to the District Court for the Central District of California for a determination as to how much of a $9.5 million settlement fund in a class action against West Publishing Corporation will go to the plaintiffs’ attorneys.

The lawsuit alleged that BAR/BRI, a bar exam preparatory course then owned by West, conspired with Kaplan, Inc. to limit competition in the field. U.S. District Court Judge R. Gary Klausner awarded class counsel attorney fees in the amount of $883,475.50 and $20,734.89 in costs.

Six class members had protested the $1.9 million in fees and $49,934.89 in cost being sought.  Klausner granted the objectors attorney fees in the amount of $7,354.90 based on their success in getting the award pared, and provided for incentive awards of $500 to each of the objectors.  Class members were those who purchased the BAR/BRI course at any time from Aug. 1, 2006 to March 21, 2011.

A three-judge panel, composed of Judges Stephen Reinhardt, Richard Paez and Milan Smith, found in their memorandum opinion that Judge R. Gary Klausner correctly used the lodestar method of calculating the award—multiplying the number of hours reasonably expended by the prevailing rate for attorney fees—as Judge Manuel L. Real had last year when he presided over the case.  An alternative method would have been a percentage of the settlement.

However, the judges said that Klausner, to whom the case was assigned following a reversal of Real’s award, failed “to update the lodestar calculation to compensate for the delayed payment.”  He used the 2016 calculations, without either taking into account the increase between then and now in the prevailing rates or applying a “prime-rate enhancement,” the opinion says.  The judges also faulted him for not using a multiplier based on the risk factor in undertaking a case without certainty of an award.

However, the judges said Klausner was correct in finding the case was not a rare one in which the fee needed to be adjusted up or down to meet the test of reasonableness, and that he was justified in excluding expert fees that were not properly documented.

Fee Allocation Dispute in NCAA Concussion Case

September 21, 2017

A recent American Lawyer story by Roy Strom, “High-Powered Plaintiff’s Lawyers Battle Over Fees in NCAA Concussion Case,” reports that a group of prominent plaintiff’s lawyers are battling for their cut of potentially $21 million in legal fees related to a pending concussion settlement with the National Collegiate Athletic Association, one of the many litigation battles that the governing body for collegiate sports now faces.  The dispute between Chicago-based Jay Edelson and Steve Berman, a co-founder of Seattle-based plaintiffs powerhouse Hagens Berman Sobol Shapiro, began as a strategy disagreement as late as 2014.

That’s when an Edelson client objected to a class action settlement led by Berman’s firm and others that would have the NCAA create a $70 million medical monitoring program for current and former college athletes, as well as put $5 million toward concussion research.  Edelson’s objection sought to preserve personal injury claims on behalf of former student athletes in a variety of sports, including football.

As part of the settlement, the lead counsel at Hagens Berman and Joseph Siprut, the founder and managing partner of Chicago’s Siprut PC requested $15 million in fees for themselves and about 10 other firms.  The fee request was made in January with the firms stating that they had worked 18,000 hours on the case and reached 4.2 million people to alert them to a preliminary approval of a settlement in July 2016.

Edelson’s firm objected to that amount last week in a court filing that takes aim at various aspects of the lead counsels’ work and argues for no more than $8 million in fees to be awarded to Hagens Berman and Siprut.  The Edelson objection states that the requested fees, which represent 21 percent of the amount of the settlement, are too high.  It also argues the lead counsels’ request takes credit for $50 million in settlement value that Edelson claims his objector added when a judge agreed to knock out a “reversion” provision that would have returned to the NCAA unused money in the concussion monitoring program.

Berman’s firm, which is disputing Edelson’s request for $6 million in fees, argues the reversion provision would not have added anything close to $50 million in value to the settlement and that U.S. District Judge John Zee decided to knock it out of the deal for reasons that had little to do with Edelson’s objections.

Edelson’s firm had originally sparred with the lead counsels’ tactics in the case by saying they were not providing monetary benefits for potentially injured college athletes.  Unlike the National Football League’s $1 billion class action settlement with retired players, which continues to have its own unique issues ahead of resolution, the NCAA’s accord does not provide a fund to compensate injured athletes.

Fearing the settlement would bar athletes from pursuing personal injury claims, Edelson objected to create a “carve-out” for those claims.  His firm, working with Sol Weiss of Philadelphia’s Anapol Weiss, is now leading a series of nearly 50 class action suits on behalf of athletes who played the same sport at the same school.  For instance, the widow of a former University of Texas football player is the named plaintiff in a class action on behalf of all Longhorns football players who played between 1952 to 2010.

In a filing last week, Berman’s firm argues that Edelson’s firm should receive fees in the NCAA settlement case that represent a “pro rata portion” of his fees tied to the issue of arguing for a personal-injury carve out in the case.  That amount would be something less than $1.4 million.

Mark Mester, global chair of the consumer class action practice at Latham & Watkins in Chicago, is representing the NCAA in the litigation. The Indianapolis-based organization paid nearly $8.2 million to Latham—and another $5.8 million to Skadden, Arps, Slate, Meagher & Flom—during 2014-15, according to the NCAA’s most recent federal tax filing.