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Category: Defense Fees / Costs

Judge Reduces Fees, Offers Primer on Legal Billing

September 13, 2017

A recent New York Law Journal story by Jason Grant, “Judge Slashes Fees, Offers Primer on Billing, in Cookbook Case,” reports that a New York federal judge has more than halved attorney fees due to an Ethiopian cookbook author who was wrongly sued for copyright infringement, finding that her defense counsel billed "excessive" hours for often straightforward work.

In July, U.S. District Judge Brian Cogan of the Eastern District of New York lambasted the plaintiff, author of a different Ethiopian cookbook, for bringing "unreasonable" claims in Schleifer v. Berns, 17-cv-1649. And he awarded an as-yet-undetermined amount of attorney fees to the defendant.

Cogan turned his sights to the defendant's counsel.  He criticized Berns' lawyers at Kushnirsky Gerber, calling their requested fees "excessive" and at times "redundant," and he chopped their itemized request for $29,365 in attorney fees down to $13,055 in attorney fees (plus $316.15 in costs).  He went through the categories and tasks billed, point by point, while explaining why the hours were often too high.  Underlying his reasoning was the notion—as explained in the July dismissal decision—that the plaintiff had brought a particularly flimsy action.

"The number of hours expended [by Kushnirsky Gerber]—83.9 hours—is too many in light of the weakness of plaintiff's case and counsel's experience with copyright cases," Cogan wrote before analyzing the amounts billed.  He also said, "the court continues to be guided by the overarching purposes of the Copyright Act, that is, compensation and deterrence," and noted that "the test is whether the plaintiff 'spen[t] the minimum necessary to litigate the case effectively,'" quoting Simmons v. N.Y. City Transit Auth., 575 F.3d 170, 174 (2d Cir. 2009).

Cogan wrote that, "First, it seems inherently excessive and redundant that defendant [counsel at Kushnirsky Gerber] expended 6.5 hours drafting the pre-motion conference letter in anticipation of the motion to dismiss, 33.7 hours on the motion to dismiss itself, and then 19 hours on the reply brief, for a total of 59.2 hours."

"The minimum necessary hours to have effectively litigated the motion to dismiss in this case cannot be nearly 60 hours when the case was so patently deficient," he continued, then added, "The research necessary to draft the pre-motion conference letter should certainly have transferred to the motion to dismiss and reply.  With much of the legwork already done ... the motion itself should not have taken more than 10 to 15 hours."

Continuing his breakdown, Cogan also wrote that "even though plaintiff filed an amended complaint after defendant filed her motion to dismiss, the changes to the amended complaint were so minimal that the court in fact saw no need to reinitiate motion practice.  Accordingly, the application for 19 collective hours on the reply is excessive."  In the end, Cogan ruled that "no more than 25 hours" total should be allotted to time spent on the pre-motion conference letter, motion to dismiss and reply.

He also wrote that "it is similarly unreasonable that counsel spent 3.5 hours conducting a 'Preliminary Case and Pleadings Review,'" when the complaint was only seven pages.  "Nor is it clear from the itemization which portions of time were preliminary 'case review' and which were 'pleadings review.'  Because the itemization fails to apprise the court properly … the court will not allow fees for this task," Cogan continued, adding, "Nor will the court permit fees for 1.2 hours of 'court correspondence,' as the only court correspondence on the docket (apart from the pre-motion conference letters) is a barely one-page letter asking the court to adjourn the initial status conference."

Cogan concluded by writing that Kushnirsky Gerber's final category of billing, 12 hours for preparing its fees application to him, was also too many.  "Half of the application is a general recitation of counsel's qualifications and a description of their firm and cases, and counsel's declarations … The remainder of the fee request includes the printouts of the itemizations and billing records, counsel's resumes, defendant's own declaration and her documented expenses, all of which would have (or certainly should have) been collated and put together by support staff," he wrote.

Defense Win $18.5M in Fees in Antitrust Case

August 28, 2017

A recent Law 360 story by Carolina Bolado, “Patheon Gets $18.5M Fees After Prevailing in Antitrust Row,” reports that a Florida federal judge granted pharmaceutical manufacturer Patheon Inc.’s request for $18.5 million in attorneys' fees and defense costs related to former joint venture partner Procaps SA's $255 million antitrust suit, which the court said was “especially unpleasant and nasty.”

U.S. Magistrate Judge Jonathan Goodman said now that the Eleventh Circuit has upheld the summary judgment order ending Procaps' suit, Patheon is entitled to a fee award under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) in the “full-throttle lawsuit” that he noted has generated 1,165 docket entries since it was first filed in December 2012.

In the suit, Procaps alleged that Patheon's acquisition of Banner Pharmacaps Europe BV made the previously agreed-upon Procaps-Patheon collaboration on the development of a softgel capsule for pharmaceutical products a restraint on trade.  But the Eleventh Circuit in January said Procaps couldn't prove any harm that would justify a Sherman Act suit, such as a reduction in output, increase in prices or decrease in quality.

In the order, Judge Goodman ruled that though the FDUTPA claims were essentially “tag-along” claims based on Procaps' claims under the federal Sherman Act — which does not authorize prevailing party fees — the claims were all clearly related and the time Patheon spent defending the federal claims was time spent defending the state law claims.  Judge Goodman pointed to Florida Supreme Court precedent authorizing fees to a prevailing party under FDUTPA unless the non-FDUTPA claims were clearly unrelated to or clearly beyond the scope of the FDUTPA proceeding.  That is not the case in this dispute, he said.

“There is no dispute about the reality of the FDUTPA claim: it was an alternative theory of recovery to the Sherman Act claim, based in large part on the same transaction and facts,” Judge Goodman said.  “The antitrust claim work cannot fairly be described as being 'totally unrelated' to the FDUTPA claim.”  He had choice words for the parties, saying that counsel regularly launched personal attacks and that filings in the court were “routinely riddled with insults, allegations of bad faith and unprofessionalism, and, in general, purple prose.”

Judge Goodman awarded Patheon the full $18,494,846 it had requested, noting that Procaps had not objected to the amount and that Patheon's attorneys had already self-discounted.

Patheon's attorney Michael Klisch said his client appreciated the significant time and effort the district court spent on the case that lasted almost five years.  He said Patheon had invested significant time and money into the case, which required a forensic analysis of Procaps' computer system and “a nearly complete do-over after Procaps changed its antitrust theory years into the case.”

“Given all the circumstances and applicable law, we believed an award of fees and costs was entirely appropriate, and are pleased the court agreed with us,” Klisch said.

The case is Procaps SA v. Patheon Inc., case number 1:12-cv-24356, in the U.S. District Court for the Southern District of Florida.

Defense Fees Awarded in CEPA Claim Deemed Baseless

August 3, 2017

A recent New Jersey Law Journal story by Charles Toutant, “Hospital Award Fees After Plaintiff’s CEPA Claim Deemed Baseless,” reports that a federal judge has awarded legal fees to a hospital as the prevailing party in an ex-employee's whistleblower claim after the plaintiff could not name any laws or regulations broken by the defendant.

Capital Health Systems is entitled to fees for defending lab technician Janice Marrin's claims under the Conscientious Employee Protection Act (CEPA) because her claims about lax procedures at the defendant's microbiology lab are without basis in law or fact, U.S. District Judge Freda Wolfson ruled.  Wolfson said the plaintiff had failed to advance any argument to support her CEPA claims.  Wolfson said lack of support distinguished Marrin's CEPA claim from a situation where claims were merely not viable.

Capital Health sought reimbursement for efforts to oppose Marrin's whistleblower claim for more than three years, from the first filing of the complaint in March 2014, but Wolfson granted the defendant fees from after the close of discovery in September 2016 until the plaintiff withdrew the CEPA claim in November 2016.

Marrin first worked in the defendant's hospital in Trenton and later was transferred to its hospital in Hopewell.  Her suit claimed she was terminated for complaining to supervisors about improper procedures in the lab.  She met with Capital Health's director of human resources in February 2013 to discuss her concerns about her co-workers' deficient procedures.  In April 2013 she was terminated for failure to cooperate with an internal investigation into how she obtained emails between her supervisors and the human resources department that discussed her but were not addressed to her.

Besides the CEPA claim, Marrin's suit brought claims under the state Law Against Discrimination and the Family and Medical Leave Act.  Wolfson dismissed the remainder of the claims this May.  Capital Health sought fees for the entire duration of the litigation because it claimed Marrin admitted during the August 2015 deposition that she lacked a basis for her CEPA claim when she filed the suit, but Wolfson called that assertion "highly speculative."

"Plaintiff was entitled at the pleading stage to maintain both her CEPA and NJLAD retaliation claims, and defendants chose to wait until after the close of discovery to move on all of plaintiff's claims, rather than moving on the CEPA claim as soon as Defendants contend it became apparent that the claim lacked merit.  This Court, considering the foregoing and looking to the parameters of CEPA's safe harbor provision … finds that an appropriate threshold for the imposition of fees and costs in this case was the close of discovery," Wolfson said.

The lawyer for Capital Health, Kelly Bunting of Greenberg Traurig in Philadelphia, said she and her client were both "thrilled" with the decision, given the difficulty of winning motions for fees.  Bunting said she had yet to calculate how much she will seek on the CEPA issue, adding that her motions for legal fees under the LAD and for a bill of costs are still pending. Bunting said she had no disagreement with the court's limits on the scope of her CEPA fee award, which was based on a finding that some time spent on that motion could also apply to the plaintiff's LAD claim.

Former Enron Unit Failed to Justify Fee Request

June 29, 2017

A recent Law 360 story by Natalie Olivo, “Nigeria Knocks Ex-Enron Unit’s Fee Bid in $21M Award Row,” reports that a former Enron subsidiary has failed to justify its request for hundreds of thousands of dollars in legal fees for the solo practitioner who netted the company confirmation of a contract breach arbitral win against the Nigerian government now topping $21 million, the country told a D.C. federal court.

In pushing for the fees this month, Enron Nigeria Power Holding Ltd. — sold off by Enron in the wake of its 2001 scandal and collapse — said the $276,752.64 in attorneys’ fees and $4,025.69 in costs was well-earned by Texas attorney Kenneth R. Barrett, who overcame stiff opposition from experienced opposing counsel who put up a complex legal defense.  Legal fees are appropriate, ENPH said, in part because Nigeria refused to abide by the underlying award and because the underlying agreement requires compensation by “the party resisting enforcement.”

But the Nigerian government pushed back, arguing that instead of using the Washington, D.C., rate to calculate his fees, Barrett should have used the lower rate of Houston, Texas, because that was mainly where he worked.  In addition, the government said, while Barrett has nearly three decades of legal experience, he has not provided any evidence to show that he has experience regarding international arbitration award disputes with foreign governments.

“The fact that plaintiffs’ counsel has been licensed as an attorney for almost 30 years, does not necessarily translate to 30 years [of] experience in every area of law,” Nigeria said.  “Plaintiffs’ counsel has not shown that he has the requisite experience and reputation in international arbitration enforcement to justify the billing rate and hours spent on this matter.”

ENPH’s total award was up to more than $21.2 million after a D.C. federal judge added on exchange rate fluctuations and interest in April.  The International Chamber of Commerce arbitration award of $11 million plus fees had already been confirmed, and in December the D.C. Circuit also rejected Nigeria’s appeal of that ruling.

Nigeria had argued that it could cancel its deal with ENPH because of then-parent company Enron Corp.’s accounting scandal, and said enforcing the award would endorse fraudulent conduct and conflict with U.S. public policy, despite ENPH rebuttals that Nigeria failed to provide any evidence of wrongdoing on the subsidiary's part.

But the D.C. Circuit noted the courts’ tendency to defer to arbitration.  It also found that while the public policy issue of award enforcement was a question for the courts, interpreting the agreement between Nigeria and ENPH was a question for the ICC.  The panel also remarked that Nigeria began trying to back out of the deal in 1999 out of apparent economic convenience — before the Enron scandal broke.  As of the April judgment Nigeria still had not paid any of the award to ENPH.

ENPH in March asked the court for the $18.7 million in award and award interest as well as for exchange rate consideration and post-award/prejudgment interest on legal fees and arbitration costs.  The final judgment confirmed the $18.7 million and added $1.1 million based on ENPH arbitration legal fees and costs — converted from pounds at the November 2012 rate — along with $870,000 for ICC fees and $529,000 in prejudgment interest.

ENPH followed up with the court this month, noting that due to an “oversight,” prejudgment interest should actually be about $33,000 more.  The company first sought compensation for its legal costs late last month, asking for more than $630,000 total when combining its U.S. and United Kingdom court enforcement efforts.

In a June 3 brief, ENPH argued the rates charged by Barrett are reasonable, with the attorney having performed work both as lawyer and legal assistant.  For the attorney work, Barrett charged between $770 and $820 an hour, while he charged between $175 and $185 an hour for legal assistant efforts, for a total of 413.57 hours in all.

Hitting back against ENPH’s fee request, the Nigerian government said Barrett should actually be using the average Houston rate for comparable attorneys of about $300 an hour for attorney work and about $127 per hour for legal assistance efforts.  During the four years of the dispute, ENPH’s counsel made only two trips to Washington, D.C., the government said, one for mediation and the other for oral arguments before the circuit court.

The government also argued Barrett’s fee request should be reduced due to its documentation.  “The plaintiffs’ counsel in the matter has presented invoices rife with serial or blocked bill entries that impermissibly intermix time spent on multiple activities,” Nigeria said.  “It renders the task of determining how much time plaintiffs’ counsel reasonably spent on particular activities difficult.”

The case is Enron Nigeria Power Holding Ltd. v. Federal Republic of Nigeria, case number 1:13-cv-01106, in the U.S. District Court for the District of Columbia.

AIG Unit Must Pay Defense Fees in Monopoly Case

May 5, 2017

A recent Law 360 story by Ryan Boysen, “AIG Units Owe Sabre Monopoly Defense, NY Panel Says,” reports that Sabre Inc.’s roughly $300 million coverage dispute with two AIG units is headed to trial in October, after a New York appeals court affirmed a lower court ruling that the units could be responsible for most of the costs of American Airlines’ antitrust litigation against Sabre.
 
In a one-page ruling, a five-judge panel said efforts by the Insurance Co. of the State of Pennsylvania and Chartis Specialty Insurance Co. to dodge coverage outright were unconvincing, but sided with the lower court in ruling that a jury would need to make the final call as to how much the insurers owe. The trial has been set to begin Oct. 2.

“The pleadings in the underlying actions allege facts within the scope of coverage under the subject insurance policies, giving rise ... to the duty to defend,” the panel said.

Travel technology company Sabre is seeking roughly $70 million in defense costs and indemnification for a $200 million settlement with American, as well as damages for slow-payment and bad-faith-denial claims.  Under Texas law, which would govern because that is where the American litigation played out, bad faith insurance claims can lead to treble damages.

New York Supreme Court Justice Peter O. Sherwood had ruled in December that ICSOP and Chartis did have a duty to defend Sabre, a ruling that will likely put them on the hook for the $70 million in defense costs the company racked up during the American litigation.  But Justice Sherwood said the slow-payment and bad-faith claims, as well as the question of indemnification for the settlement, would fall to a jury to decide.

Sabre operates the world’s largest global distribution system, essentially an airline booking service that serves as the travel industry's “electronic plumbing,” connecting travel agents and bookers with airlines, according to court documents.

Sabre had brought the current suit in June 2012, just as it appeared that American’s antitrust litigation was headed for a two-month trial in a dispute where the airline claimed it was owed nearly $1 billion for Sabre’s anti-competitive attempts to shut down an American-offered competing service called AA Direct Connect.

A week into that trial, Sabre settled with American to the tune of $200 million, having spent more than $70 million in attorneys’ fees and costs in the course of its defense, according to court documents.  American had brought one suit in Texas state court and another in Texas federal court, and the settlement ended both.

US Airways subsequently pursued a similar suit against Sabre that recently ended in a $15 million jury award for the airline, but that suit is not related to the current coverage dispute.

Sabre held a commercial general liability policy with ICSOP and a specialty risk protector policy with Chartis when American brought that suit in 2011.  Neither paid Sabre’s claims asking the insurers to foot the bill on Sabre's defense costs for the American suit, the complaint said.

ICSOP said the claims were excluded under its policy because American alleged Sabre had made false accusations and disparaging remarks against American.  ICSOP’s policy excludes the “knowing violation of rights of another.”

Justice Sherwood said ICSOP’s argument was flawed, however.  Even if Sabre’s accusations against American were false, he said, there was nothing in American’s complaint to suggest Sabre knew they were false.  “Someone can, unknowingly, make a false statement,” Justice Sherwood wrote.

Chartis had initially agreed to pay for Sabre’s defense, but on the strict condition that it would pick the lawyers and control the legal strategy.  Sabre refused, saying Chartis would be tempted to guide its defense in a such way that the suit would ultimately fall into a coverage exclusion in one or both of the policies — Chartis had reserved the right to bar coverage for a loss stemming from “any intentional or knowing violation of law,” for example.

Justice Sherwood said, again, that Sabre had a point.  “If the jury found Sabre acted with malice [for example] there would be no coverage due to a policy exception,” he wrote.  “Thus, the same facts to be decided by the jury were at the heart of the coverage issue, creating a disqualifying conflict of interest.”

Chartis had also sought to duck coverage outright on a separate exclusion, but Justice Sherwood shot down that defense as well.  He said the evidence was equally weighted on whether Sabre was entitled to slow-payment and bad-faith claims, however, and left those questions to a jury.  The issue of indemnification is also up in the air, he said, since Chartis and ICSOP say they never agreed to the terms of the settlement.

The case is Sabre Inc. et al. v. The Insurance Co. of the State of Pennsylvania et al., case number 3778 652241/2012, in the Supreme Court of the State of New York, Appellate Division, First Judicial Department.