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Category: Defense Fees / Costs

Michigan Has Paid $35M in Defense Fees in Flint Water Crisis

September 4, 2018

A recent Crain’s Detroit Business story by Chad Livengood, “Flint Water Legal Bills Could Top $34.5 Million,” reports that three years after lead was discovered in Flint's water, there's no end in sight for the legal bills the state is paying private law firms to represent state officials in civil litigation and criminal prosecutions.  Private attorneys representing state health director Nick Lyon have billed taxpayers more than $1.6 million to defend a high-ranking member of Gov. Rick Snyder's cabinet facing involuntary manslaughter charges stemming from Flint's water crisis — and his trial date hasn't even been set yet.

That number is only a small part of amount the state has spent on Flint water crisis-related legal bills.  Through mid-August, the state had spent $26.5 million, while three state departments have current capacity in contracts to make that total top $34.5 million, according to public records compiled by Crain's.  Three days after a Genesee County judge ordered Lyon to stand trial last month for the suspected water-related deaths of two elderly Flint-area men, the state's Administrative Board increased the contract for Lyon's primary defense attorneys at the Grand Rapids firm Willey & Chamberlain by $1 million to $2.75 million.

The state Department of Health and Human Services, which Lyon remains in charge of while facing prosecution, has additional contracts of $400,000 each with two other law firms working to keep him out of prison — Bursch Law PLLC in Caledonia and Chartier & Nyamfukudza PLC in Lansing.

The $3.55 million budgeted for Lyon's criminal defense in a high-stakes and politically tinged criminal case brought by Attorney General Bill Schuette is seen by longtime Lansing observers as an unprecedented expense of taxpayer money.  Lyon's legal bills alone over three fiscal years exceed what Genesee County spends annually for defense attorneys who represent indigent residents.

"It's unheard of. It's beyond exorbitant," said William Whitbeck, a retired Court of Appeals judge who was paid nearly $300,000 by Schuette to evaluate charges leveled by a special prosecutor.  "If you or I were to commit a crime or even be charged with committing a crime, we'd pay our own way.  There's no reason in God's green earth why a similarly situated citizen who happens to be a state employee should be treated differently."

Schuette, the Republican nominee for governor, has run up some big bills himself in pursuit of criminal convictions of state officials he says are culpable for Flint's tainted water.  To date, Schuette's investigation, run by the Royal Oak law firm of attorney Todd Flood, has spent $6.9 million.  The Legislature has approved an additional $3.1 million for the prosecutions over the next 13 months.

Three years have passed since elevated levels of toxic lead were discovered in the city's drinking water, and, despite deep distrust from residents, public health officials have since declared the Vehicle City's tap water safe to drink again.  But there's no end in sight for the legal recriminations from the crisis that are keeping some private attorneys in Michigan busy.

Not a single trial from Schuette's litany of charges against 15 current and former local and state officials has begun, with Lyon just getting bound over for trial two weeks ago in Genesee County Circuit Court after a laborious 11-month preliminary examination in district court.

Gov. Rick Snyder's administration has spent at least $13.75 million to date on private attorneys hired to produce some 2 million pages of records for Schuette and Flood's investigation and represent the governor and at least 30 state employees in the criminal probe and subsequent court proceedings, state records show.

Richard McLellan, a Lansing attorney and ally of Lyon, said the outgoing Republican governor is "doing the right thing" using taxpayer money to defend "his people" in court.  "Yeah, it costs money.  But what is the cost of maybe going to prison for 15 years for something you didn't do?" McLellan said, referencing the prison sentence Lyon faces for involuntary manslaughter. "... What's Snyder supposed to do? Say, 'Oh, it's too much. You're just going to have to be on your own.'"

NJ Justices Hears $2M Fee Dispute in Employment Case

January 3, 2018

A recent New Jersey Law Journal story by Michael Booth, “Justices Hear Dispute Over $2 Million Fee Award in Employment Case” reports that a Princeton financial services company asked the New Jersey Supreme Court to reinstate a more than $2 million attorney fee award for defeating an ex-employee's lawsuit.

Noren was employed by Heartland from April 1998 to June 2005 as a “relationship manager,” a role in which he sold payment processing services.  The contract he signed provided that he and Heartland both “irrevocably waive any right to trial by jury in any suit, action or proceeding under, in connection with or to enforce this agreement,” according to court documents.  Another contract provision awarded fees and costs “[i]n any suit, action or proceeding arising out of or related to this agreement.”

Noren was fired in 2005.  His suit was eventually whittled down to the two claims: breach of contract and the CEPA violation.  His jury trial demand was denied based on the waiver provision and, after 22 days of bench trial, Bergen County Superior Court Judge Susan Steele dismissed both claims.  She awarded Heartland $2.06 million in fees and costs for the defense of both claims, finding them so intertwined that the fees could not be apportioned, the decision stated.

In his appeal, Noren did not dispute the jury waiver’s applicability to the contract claim, or the notion that fees may be awarded based on Heartland’s success in defeating that claim.  But he did dispute the waiver’s applicability to the CEPA claim, and the corresponding fee award based on the statute.

Texas Energy Companies Can’t Block Rival’s Attorney Fee Win

October 6, 2017

A recent Law 360 story by Jess Krochtengel, “Texas Energy Cos. Can’t Block Rival’s Atty Fee Win,” reports that a Texas appeals court affirmed a $280,000 attorneys’ fee award to Crawford Hughes Operating Co., rejecting arguments from a group of energy companies that formerly worked with Crawford that a trial court wrongly granted a new trial on the fee issue.

A panel of the Fourteenth Court of Appeals held Crawford’s pleadings support a recovery of defensive attorneys’ fees.  The court also determined it lacked jurisdiction to consider arguments from Anglo-Dutch Energy LLC, Explorer Investments LLC and Saxton River Corp. that a trial court had wrongly allowed Crawford a new trial on attorneys’ fees.

The trial court had initially ruled Crawford could not recover any fees despite winning a jury trial in a dispute between the energy companies over bills for operating expenses incurred under multiple joint operating agreements.  But it granted Crawford a partial new trial limited to the fee issue and ultimately awarded the company a total of about $280,000 in fees.

The Anglo-Dutch group had argued the new trial was improperly granted because there was no good cause to allow Crawford an opportunity to fix a “strategic mistake” in how it had initially requested attorneys’ fees.  But the appellate panel said its authority to review new trial orders is limited, and that the circumstances in the Crawford trial don’t merit appellate review.

“The working interest appellants’ arguments on appeal do not invoke any of the scenarios in which appellate review is permitted,” the court said.  “Because this challenge does not fall within one of the narrow exceptions identified by the Supreme Court of Texas, we lack appellate jurisdiction to entertain the working interest appellants’ challenge to the new trial orders.”

The dispute over operating expenses was tried in Harris County District Court in November and December 2014 and a jury awarded the Crawford entities about $44,000 in damages and $233,000 in legal fees.  The trial judge initially struck Crawford’s fee award, finding the group did not properly attribute the fees to reflect the different entities, claims and counterclaims involved in the case.  But Crawford asked the court to modify the judgment and requested a partial new trial limited to the amount of fees it could recover.  The trial court agreed, prompting an earlier appeal from the Anglo-Dutch parties.

In December 2015, the Anglo-Dutch group asked the Texas Supreme Court to block Crawford from getting a new trial on the attorneys’ fee issue.  They argued Crawford was trying to get a “mulligan” after making a strategic mistake in how it marshalled and presented its evidence.

When the case returned to the trial court, the parties stipulated the amount of fees Crawford Hughes Operating had incurred.  A modified final judgment issued in May 2016 awarded Crawford Hughes Operating about $42,000 in damages against Anglo-Dutch and $2,600 in damages against Explorer Investments and Saxton River.

The modified judgment awards Crawford Hughes Operating about $240,000 against Anglo-Dutch and $7,400 against Explorer and Saxton River for attorneys’ fees incurred in defending the case and another $31,000 in fees against Anglo-Dutch and $2,000 in fees against Explorer and Saxton River for what it incurred litigating its counterclaim.

The case is Anglo-Dutch Energy LLC et al. v. Crawford Hughes Operating Co. et al., case number 14-16-00635-CV, in the Texas Court of Appeals for the Fourteenth District.

Tiffany Asks for $5.6 M in Attorney Fees in Trademark Case

October 4, 2017

A recent Law 360 story, “Tiffany, Costco Trade Blows After $21M TM Award” reports that Tiffany and Costco are trading post-trial blows following a ruling that the retailer must pay the jeweler more than $21 million for using “Tiffany” on diamond engagement rings, with Tiffany demanding millions more in attorneys' fees and Costco pushing to overturn the loss.

The new wrangling comes after more than four years of litigation over the Tiffany trademark. Costco argued it had merely used it as shorthand for “Tiffany setting” — a generic term for a style of ring — but U.S. District Judge Laura Taylor Swain ruled in favor if the jeweler in 2015.

With Costco already on the hook for $21 million, Tiffany asked earlier this month for $5.6 million in attorneys' fees, saying Costco’s aggressive defense made the big fee-shifting reasonable.  “Throughout the case Costco revisited and relitigated issues previously decided against it, and generally engaged in a scorched earth strategy that forced Tiffany — and the court — to undertake all manner of extra work,” the company wrote.

Costco, meanwhile, asked Judge Swain last week to change her ruling, particularly her findings that the company was liable for counterfeiting, a more serious infraction that is usually reserved for situations where “entire products have been copied stitch-for-stitch.”  “Counterfeiting is the ‘hard core’ or ‘first degree’ of trademark infringement,” the retailer wrote.  “The evidence here shows no such ‘stitch-for-stitch’ mimicry.”

The rings at issue in the case, Costco told Judge Swain, were sold in unbranded packaging that didn’t look anything like Tiffany boxes and were not identified as Tiffany rings on the store receipt.  They were also stamped with a manufacturer’s mark, not Tiffany’s.  The retailer also asked the judge to toss out a finding that it infringed the trademarks willfully, saying that finding, too, was “clearly unsupported.”

This month’s filings were merely a prelude to an appeal to the Second Circuit, a move Costco has already repeatedly promised.  The retailer tried to get an immediate appeal following the 2015 ruling, but was refused at the time.  The two companies instead held a damages trial, leading to an award of $19 million; interest and other fees later increased the award to $21 million.

The case is Tiffany & Co. v. Costco Wholesale Corp., case number 1:13-cv-01041, in the U.S. District Court for the Southern District of New York.

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.