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Category: Fee Entitlement

NJ Justices Consider Fee Request Following High-Low Settlement

April 9, 2018

A recent New Jersey Law Journal story by Michael Booth, “Justices Consider Fee Petition That Followed High-Low Settlement,” reports that the New Jersey Supreme Court is considering whether a medical malpractice plaintiff who took the rare step of seeking counsel fees under the offer-of-judgment rule, even after entering a high-low agreement that was silent on the issue, may recover such fees.  Lawyers argued over whether the plaintiff could be awarded fees over and above the $1 million “high,” a question that the Appellate Division answered in the negative.

“It’s not the plaintiffs’ burden to prove” that there was a provision in the agreement for counsel fees, said Bruce Nagel, the attorney for the plaintiff on appeal.  There was no waiver of counsel fees in the settlement, said Nagel, of Nagel Rice in Roseland.  The defendant’s attorney, James Sharp, asked the court to affirm the lower court’s ruling.  “This case is settled,” said Sharp, of Schenck, Price, Smith & King in Florham Park.

In its February 2017 ruling, the Appellate Division said: “Without evidence that the parties agreed to allow plaintiff to seek amounts in excess of the high, [the plaintiff] was not entitled to any other payments.”

“Parties are always free to preserve any claim they might have pursuant to a court rule or otherwise when settling a case … but they must clearly state that intention at the time of the settlement,” Judge Garry Rothstadt wrote, joined by Judges Ellen Koblitz and Susan Reisner.

In the suit, plaintiff Ben Serico of West Caldwell claimed he was administered a colonoscopy by physician Robert Rothberg in December 2007, but two years later he was diagnosed with colon cancer that had spread to his liver.  Serico died two years after his diagnosis, in December 2011, at age 62, after which his wife, Lucia Serico, continued to pursue claims that Rothberg negligently failed to treat the cancer.  The appeals court said Lucia Serico made an offer of judgment of $750,000 before trial, to which Rothberg never responded.

According to the court, settlement negotiations began in earnest during the trial, and the parties entered a high-low agreement providing for a minimum recovery of $300,000 and a maximum of $1 million.  During the negotiations, neither side raised a possible fee award, or a reservation or waiver of rights, or the offer of judgement, the court said.

A jury found for the plaintiff after a two-week trial before Essex County Superior Court Judge James Rothschild Jr., and awarded $6 million, thus triggering the $1 million “high.”  (The jury attributed 20 percent of damages to the decedent’s pre-existing cancer, which, absent the high-low, would have reduced the award to $4.8 million.)

Because the $1 million judgment was more than 120 percent of the previous $750,000 offer, Serico, citing Rule 4:58, moved for an award of fees and costs.  Each side acknowledged that the issue hadn’t been raised at the negotiations during trial, the appeals court said.

Rothschild denied the motion.  He found there was no evidence of intent to determine that Serico’s rights to a fee sanction under the rule had been preserved.  He also referred to his 42 years’ experience as a civil lawyer and judge, as well as the experience of colleagues he consulted, and said high-low settlements were rarely if ever followed by fee applications under Rule 4:58, according to the court.

“By entering into the high-low agreement, plaintiff could not recover any amount beyond the ‘high’ to which she agreed because the agreement limits the total amount of defendant’s obligation to that amount,” Rothstadt wrote, adding that such agreements are “subject to traditional rules of contract interpretation.”

Texas Court Reduces Fees10 Percent for Block Billing in ERISA Case

March 13, 2018

A recent Law.com and FC&S Legal story by Steven Meyerowitz, “After Deducting 10 Percent for Block Billing, Texas Court Awards Plaintiff in ERISA Case $243,000 in Attorney’s Fees” reports that a federal district court in Texas has awarded over $243,000 in attorney’s fees to a plaintiff in a case under the Employee Retirement Income Security Act of 1974 (“ERISA”) who had achieved “some success on the merits” – but it deducted 10 percent of the requested amount because the plaintiff’s attorney had used block billing.

Joel Thomason sued Metropolitan Life Insurance Company and Verizon Employee Committee (together, “MetLife”) over whether Mr. Thomason had elected to receive pension benefits when he used direct rollover to move his benefits to his IRA. The U.S. District Court for the Northern District of Texas granted summary judgment on Mr. Thomason’s claims under 29 U.S.C. §§ 1132(a)(1)(B) and (a)(3), finding that the plan administrator had incorrectly interpreted the meaning of “elected to receive” pension benefits.  The district court, however, denied summary judgment on Mr. Thomason’s § 1132(c) claim, finding insufficient evidence that he had been prejudiced by a delay in receiving the pension-plan document and trust agreement from MetLife.

Having found MetLife liable, the district court entered final judgment in favor of Mr. Thomason; the U.S. Court of Appeals for the Fifth Circuit affirmed.  Following the appeal, Mr. Thomason filed a renewed motion for attorney’s fees, contending that he had incurred $270,320.93 in reasonable attorney’s fees, which included $3,613.43 in charges for online legal research.

According to Mr. Thomason, his attorney reasonably had expended a total of 699.9 hours on his behalf: 530.1 hours from the time he began preparing the original complaint on January 10, 2014 to June 30, 2016, and 149.8 hours from July 1, 2016 to August 1, 2017, when he filed his motion for attorney’s fees.  Mr. Thomason added that his attorney likely would spend an additional 20 hours to review and draft a reply to MetLife’s response to the renewed motion for attorney’s fees.  Moreover, he pointed out that, on July 1, 2016, Mr. Thomason’s attorney’s billable rate increased from $375 to $400 an hour.

Mr. Thomason also argued that his attorney was entitled to a delay enhancement of $9,204.63 due to the year delay from MetLife’s appeal and was entitled to conditional attorney’s fees if MetLife sought review from the Supreme Court.  MetLife contended that Mr. Thomason was not entitled to a delay enhancement for the brief period of the appeal.  MetLife also contended that Mr. Thomason’s attorney’s fees should be reduced for block billing, time spent on “unnecessary” motions to compel, and time spent on the renewed request for attorney’s fees.

The district court first found that Mr.Thomason was entitled to attorney’s fees because he had achieved “some success on the merits” in his suit against MetLife.  It then rejected MetLife’s contention that Mr. Thomason should not receive attorney’s fees for two motions to compel because he later was granted summary judgment without the benefit of using the requested discovery and his success without the use of that discovery showed the motions to compel were unnecessary.  The district court noted that Mr. Thomason had filed the two motions to compel over three months before filing his motion for summary judgment. 

According to the district court, he could not have known at the time of filing the motions to compel that the district court would grant his motion for summary judgment or that the case would not go to trial.  Under the circumstances, it ruled, Mr. Thomason’s attorney “reasonably expended time drafting the motions to compel, believing they could produce documents that would help him if the case went to trial.”  Therefore, the district court ruled that it would not deduct the time spent on the motions to compel.

The district court also was not persuaded by MetLife’s argument that Mr. Thomason should not receive attorney’s fees for the renewed motion for attorney’s fees because portions of the renewed motion were identical to his original motion for attorney’s fees.  The district court found that Mr. Thomason’s renewed motion included “additional arguments not in the original motion” for attorney’s fees and included an appendix with more hours billed due to the appeal.  The district court found that the additional hours spent on the renewed motion for attorney’s fees were “reasonable” and ruled that it would not reduce these hours.

Having concluded that Mr. Thomason was entitled to attorney’s fees, the district court then applied the lodestar method to determine the reasonableness of the attorney’s fees requested.  The district court pointed out that Mr. Thomason’s attorney used block billing, listing multiple tasks performed in one specified time period.  For example, it said, Mr. Thomason’s attorney stated that he spent seven hours one day reviewing a motion to approve supercedeas bond and stay execution, preparing a response to MetLife’s motion to extend time to appeal, researching, editing a draft of Mr. Thomason’s declaration, and corresponding with his client.  From this block entry, the district court said, it could not determine how much time was spent reading and drafting emails to Mr. Thomason versus researching the motions to extend time or whether such amount of time was reasonable.

Because it was impossible to determine how much time was spent on each task due to the block billing time-keeping method, the district court ruled that a 10 percent deduction was appropriate.  Thus, it reduced the 530.1 hours expended from January 10, 2014 to June 30, 2016 to 477.09 hours, the 149.8 hours expended from July 1, 2016 to August 1, 2017 to 134.82 hours, and the additional 20 hours likely spent on reviewing and replying to MetLife’s response to 18 hours.

(The district court declined Mr. Thomason’s request for conditional attorney’s fees if MetLife seeks review by the Supreme Court. It also found a delay enhancer inappropriate given what it characterized as the “relatively short period of time” – 14 months – the appeal delayed the attorney’s fee award.)

The district court decided that the $375 and $400 per hour rates were reasonable within the Dallas legal market during the relevant time periods.  Accordingly, the district court calculated the lodestar as follows:

  • January 10, 2014 to June 30, 2016: 477.09 hours x $375 = $178,908.75
  • July 1, 2016 to August 1, 2017: 134.82 hours x $400 = $53,928.00
  • Hours replying to MetLife’s response: 18 hours x $400 = $7,200.00
  • Online legal research charges: $3,613.43 (which the district court concluded were reasonable)

Total: $243,650.18.

The case is Thomason v. Metropolitan Life Ins. Co., No. 3:14-CV-86-K (N.D. Tex. March 5, 2018). Attorneys involved include: For Joel Thomason, Plaintiff: James L Johnson, LEAD ATTORNEY, The Johnson Law Firm, Dallas, TX. For Metropolitan Life Insurance Company, Verizon Employee Benefits Committee, Defendants: Linda G Moore, LEAD ATTORNEY, Terah Jean Moxley, Estes Thorne & Carr PLLC, Dallas, TX; Lauren Marie Leider, Estes Okon Thorne & Carr PLLC, Dallas, TX.

NCAA Appeals $40M Fee Award to Ninth Circuit

February 16, 2018

A recent Courthouse News story by Nathan Solis, “NCAA Asks 9th Circuit to Strip $40M Fee Award From Student-Athletes” reports that the National Collegiate Athletic Association fought a $40 million attorney fee award at the Ninth Circuit in an antitrust class action by former student-athletes who said the organization forced students to sign their rights away while reaping the benefits of licensing and merchandise agreements.  The federal case played out in court for six years as the student-athletes challenged the makers of sports video games, a college licensing company and the NCAA.

Former UCLA basketball star Edward O’Bannon claimed in the 2009 federal class action that students were forced to sign away the rights to their own images if they wanted to play NCAA sports.  Like many other former athletes, O’Bannon’s collegiate career is archived in video footage, photographs and that content is sold through merchandising deals.

In their class action, the former athletes said NCAA’s backlog of archived footage is estimated to be valued in the billions of dollars.  Additional defendants included video game publisher Electronic Arts and Collegiate Licensing Company.

In 2015, a Ninth Circuit upheld U.S. District Judge Claudia Wilken’s finding that the NCAA violated antitrust laws with rules that were more restrictive than necessary.  But the Ninth Circuit did not agree with Wilken’s order awarding college athletes $5,000 for each year they played in college.  The appeals court instead said NCAA schools could cover the cost of tuition, but the student-athletes were not entitled to additional cash.

In 2016, Wilken ordered the NCAA to pay about $42.3 million in attorneys’ fees and other costs – later lowered to just over $40 million – and the NCAA made a failed bid to bring the case the Supreme Court.  Fighting the fee award at the Ninth Circuit, NCAA attorney Gregory Curtner from Riley Safer Holmes & Cancila said plaintiffs adopted a winner-take-all approach in their antitrust class action before the three-judge panel.

“A Game of Thrones approach.  There was no middle ground,” said Curtner, who noted the student-athletes sought to revolutionize intercollegiate sports, failed, and aren’t entitled to a fee award.  “They’re entitled to nothing,” Curtner said bluntly.

The student-athletes’ attorney Jonathan Massey from Massey & Gail said the case was a hard-fought class action that didn’t just end with “a narrow injunction.”  When analyzing the degree of success in the for a fee award, Massey said the Ninth Circuit panel should keep in mind that not all claims need to be successful.  “We think this court has established that it’s OK to lose sometimes,” said Massey. “You don’t have to win every single claim in order to be entitled fees for all of the claims.”

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.

Governor Cuomo Signs Attorney Fee FOIL Bill

December 13, 2017

A recent Times Union story by Brendan J. Lyons, “Cuomo Signs Bill Strengthening FOIL Law,” reports that Gov. Andrew Cuomo signed a bill that will require judges to award attorneys' fees to litigants who "substantially prevail" in Freedom of Information Law (FOIL) cases.

The governor acknowledged the legislation is important but said it falls far short of comprehensively reforming the state's antiquated Freedom of Information Law, including not requiring greater transparency from the Legislature that sent the bill to his desk.

"The bill before me continues to perpetuate a fractured and inequitable system of transparency by only applying to the executive (branch), and intentionally excluding other branches of government," Cuomo said in a memo filed in support of the measure.  "Notably, current law already provides courts with discretion to award attorney's fees in such situations, but they are not required to do so."

Still, advocates for more transparency in government have hailed the legislation as necessary to prevent agencies at all levels of New York government from deliberately withholding public records or delaying responses unnecessarily.

Cuomo vetoed similar legislation two years ago that stated courts must award attorney's fees when an agency denies access to FOIL requests in "material violation" of the law.  The governor said the earlier bill did not define the term "material violation," which could have created confusion for judges who could reach different conclusions on what the term means.

The bill requires that courts "shall" assess reasonable legal costs in FOIL cases in which a person "substantially prevailed" and the court finds there was no reasonable basis for denying access to a record.  Courts have sparsely awarded attorney's fees in FOIL cases.  But not always.