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Category: Fee Award Factors

NALFA: The Four Hourly Rate Factors

December 6, 2017

Hourly rates are the engine that drives attorney fees.  Hour rates are the most important single factor in determining attorney fee awards.  There are several factors that determine hourly rates.  NALFA has identified four hourly rate factors that have significant impact on prevailing market hourly rates.  At NALFA, these four factors are known as the primary variables and should be a part of any hourly rate survey.  We've ranked these hourly rates factors in order of importance:

Geography / Jurisdiction:  This is the most important of the factor in determining hourly rates.  Where an attorney practices matters the most.  Simply put, all things being equal, hourly rates in Manhattan are not the same as hourly rates in Oklahoma City.

Years in Practice / Position Title:  This is the second most important factor in determining hourly rates.  The more senior or experienced the attorney, the higher the hourly rate.  Simply put, all things being equal, hourly rates for partners are not the same as hourly rates for associates.

Practice Area / Complexity of Matter: 
Often overlooked and subtle, the nature of the underlying matters in determining hourly rates.  Hourly rates for more routine matters will not be the same as more complex areas of law.  Simply put, all things being equal, attorneys who practice in insurance defense or workers comp will charge different rates than attorneys who practice in antitrust litigation or white collar crimes.

Law Firm Size:  This is the least important of the factors, but still somewhat relevant.  Simply put, all things being equal, solo practitioners may have different rates than attorneys at very large law firms.

Ninth Circuit Backs Attorney Fees in ERISA Appellate Work

November 28, 2017

A recent Law 360 story by Adam Lidgett, “9th Circ. Backs Appellate Attys’ Fees for Benefit Plan,reports that a Ninth Circuit panel reversed a lower court’s denial of appellate attorneys' fees for an employee benefit plan in its dispute with Sun Life Assurance Co. of Canada Inc., saying the district court failed to take into account the whole course of litigation in analyzing the fee request. 

The panel reversed and remanded the denial of the fee request from the Group Disability Benefits Plan for California-based Gynecologic Oncology Associates Partners LLC.  The plan sought attorneys' fees and costs it incurred defending an earlier award of attorneys' fees in an Employee Retirement Income Security Act (ERISA) case filed against the plan and Sun Life.

The Ninth Circuit said the district court has to take into account the entire course of litigation and that it was clear the plan is entitled to the appellate attorneys' fees after weighing five factors outlined in the case Hummell v. S.E. Rykoff & Co. in light of Sun Life’s conduct.  Those factors included Sun Life's denial of a claim for disability benefits from a cancer surgeon with Gynecologic Oncology Associates Partners, the move that kicked off the initial lawsuit.

The appellate judges said the plan was forced into litigation after Sun Life wrongfully denied Dr. John Paul Micha’s claims and that Sun Life doesn’t dispute it can pay the fee award.  The panel remanded the issue to the district court to calculate reasonable fees.

“A party like Sun Life should not be able to appeal from a litigation fee award, even on an issue justifying appellate review, and thereby impose significant costs on the appellee in defending the fee award, while taking comfort in the knowledge that any potential appellate fee award against it will be judged solely on the basis of its appellate arguments on the fee issue,” the published decision said.

The case dates back to 2009 when Micha filed the suit after he was denied disability benefits by Sun Life.  The benefits of the plan were insured under a policy purchased from Sun Life, the plan has said.  After Sun Life settled Micha’s suit, the plan said it moved for attorneys' fees, and the district court agreed, awarding more than $38,000.  Sun Life appealed that award to the Ninth Circuit, but the appellate court affirmed the plan's win, prompting Sun Life to file a petition for a writ of certiorari in the U.S. Supreme Court, court papers show.

The Supreme Court denied the petition, however, and the plan sought an award for attorneys' fees and costs it incurred on appeal, according to court documents.  However, it first filed with the Ninth Circuit to transfer consideration of appellate attorneys' fees to the district court, the plan has said.  But when the issue went back to the lower court, the court denied the plan’s request for attorneys' fees incurred in defending the earlier award, the plan said.

The case is John Micha v. Sun Life Assurance of Canada et al., case number 16-55053, in the U.S. Court of Appeals for the Ninth Circuit.

Attorneys Get Fraction of Fee Request in FACTA Settlement

November 27, 2017

A recent Law 360 story by Melissa Daniels, “UCLA Shoppers’ Attys Get Fraction of Fees Ask in FACTA Deal,” reports that a California judge said he’d award plaintiffs’ attorneys only about 6 percent of their requested fees for representing consumers in the settlement of a Fair and Accurate Credit Transaction Act class action against UCLA, after noting in his tentative ruling that “when lawyers accomplish little, they deserve little.”
 
Los Angeles County Superior Court Judge John Shepard Wiley Jr. had already granted preliminary approval to a settlement over receipts printed at the University of California, Los Angeles with a projected total value of nearly $1.2 million.  But after an underwhelming number of claims yielded about $20,000 in payouts, the parties negotiated to have about $830,000 of unclaimed funds be designated as cy pres awards to support privacy- and finance-related programs at the university.

After reviewing this outcome, Judge Wiley issued a tentative ruling on that took issue with the fact that the funds were staying within the realm of the university instead of benefiting any class members.  “This isn’t even a revisionary settlement, the money doesn’t revert,” he said. “It just stays.”

As a result of the perceived puffed-up value, Judge Wiley calculated the attorneys’ fees off of a $40,000 settlement value, awarding $13,333 instead of the $227,000 that was requested.  Judge Wiley’s tentative ruling, which he said he would adopt after making a few grammatical tweaks, also cut named plaintiff Cindy Fernandez’ class representative award from $5,000 to $500.  A final report will be due next year.

The suit, filed in March, said UCLA accepted credit and debit cards from at least 1,000 putative class members who made purchases at its establishments in Los Angeles, but that the machines at its points of sale gave receipts that showed an unlawful amount of card number digits — including some receipts that showed the first six and last four numbers of shoppers’ cards and others that showed the first and last four digits.

UCLA said the misprints stemmed from software vendors that the university reasonably relied upon to comply with applicable law — and it also cited its possible immunity as a public institution. Yet the school agreed to settlement without admitting liability to avoid the burdens of litigation, according to settlement documents.

The motion for final approval said the parties determined four programs to benefit from the nearly $830,000 in unclaimed funds: programs for privacy awareness and financial wellness, counselors for students in economic crises, funding for academic courses on privacy and funding and a security audit for the ASUCLA, the student-controlled, nonprofit organization that provides retail and student union services.

Daniel Gaines of Gaines & Gaines APLC, who represents the plaintiffs, defended the “important, worthy goals” of the cy pres programs and said that while he understood Judge Wiley’s point, he still sees the value of the deal at approximately $1.2 million.  “When you’re talking about the university, it’s a little different than when you’re talking about a private corporation,” Gaines said. “This money that’s being spent on projects, it’s projects that otherwise wouldn’t have been expended on.”

The case is Cindy Fernandez v. The Regents of the University of California et al., case number BC656256, in the Superior Court of the State of California for the County of Los Angeles.

Class Counsel Awarded $2M in Fees in Frito-Lay Settlement

November 22, 2017

A recent Law 360 story by Joyce Hanson, “Frito-Lay to Pay $2M in Fees in ‘All Natural’ Suit Deal,” reports that a New York federal judge approved the settlement of a class suit accusing Frito-Lay of deceptively labeling food products as being “made with all natural ingredients” when they are actually made with ingredients containing genetically modified organisms, awarding about $2 million in attorneys’ fees and expenses to class counsel.

U.S. District Judge Roslynn R. Mauskopf finally signed off on the proposed settlement agreed to in November 2015 by lead plaintiff Julie Gengo and Frito-Lay North America Inc., which offers no award of damages to the class but does provide the primary relief sought in the litigation — namely, an assurance that products such as Tostitos and SunChips will not be labeled or advertised as “natural” unless those claims on any products containing GMOs are expressly authorized by the U.S. Food and Drug Administration or state or federal legislation.

“The complexity, expense and likely duration of the litigation favor settlement, which provides substantial benefits on a much shorter time frame than otherwise possible on behalf of the class,” Judge Mauskopf said.  “The support of class counsel, who are highly skilled in class action litigation such as this, and the plaintiffs, who have participated in this litigation and evaluated the settlement, also favor final approval.”

Under the terms of the final order and settlement agreement, Frito-Lay does not admit the validity of the claims or any wrongdoing or liability, the judge said.  Frito-Lay also continues to deny that its labeling of the challenged products is false, deceptive or misleading to consumers or violates any legal requirement.  However, Frito-Lay has already removed the “made with all natural ingredients” claim from its products, and the company has agreed not to label the products as “natural” as long as they continue to include GMO ingredients, according to a Nov. 10, 2015, class counsel memo.  The settlement was achieved with the assistance of retired U.S. District Judge Richard J. Holwell after mediation sessions over a period of 10 months, the memo said.

The judge approved class counsel’s motion for attorneys' fees in the amount of $1.9 million and for reimbursement of expenses of up to $200,000.  She also approved $5,000 awards to class representatives Gengo, Chris Shake and Valarie Zuro, and a $2,500 award to class representative Deborah Lawson.

“Class counsel achieved a favorable result for the class and created a benefit with a substantial value to the class by obtaining Frito-Lay's agreement to modify the labeling policies and practices challenged in this lawsuit,” Judge Mauskopf said in making the award of attorneys’ fees and expenses.

The case is Julie Gengo v. Frito Lay North America Inc., case number 1:12-cv-00854, in the U.S. District Court for the Eastern District of New York.  The multidistrict case is In re: Frito-Lay North America Inc. All Natural Litigation, case number 1:12-md-02413, in the U.S. District Court for the Eastern District of New York.

Judge: Reed Smith Can’t Sue for Share of Attorney Fees in Class Action

November 21, 2017

A recent New York Law Journal story by Christine Simmons, “Judge Says Reed Smith Can’t Sue for $7M Slice of SAC Capital Fees,reports that a Manhattan federal judge ruled that Reed Smith can't sue former co-counsel Wohl & Fruchter in state court for a chunk of class action attorney fees.  A federal judge has shot down Reed Smith’s attempt to sue its former co-counsel law firm Wohl & Fruchter, in state court for its share of fees from a class action against SAC Capital Advisors, finding Reed Smith was “seeking a mulligan.”

U.S. District Judge Naomi Reice Buchwald of the Southern District of New York ruled that she had misgivings about Wohl’s conduct—including its settling a case amid the expulsion of Reed Smith from the plaintiffs’ counsel group—but said Reed Smith, which had served as class co-counsel for a brief period in September 2016, missed an opportunity to seek its fees in the right venue.

“The sequence of events surrounding Reed Smith’s retention and subsequent termination certainly raises questions regarding Wohl and [Wohl & Fruchter's] motivations.  But Reed Smith was given an opportunity to fully raise those questions, and it failed to do so,” Buchwald said, enjoining Reed Smith’s lawsuit in New York state court against the Wohl firm.

In the underlying class action case against hedge fund SAC Capital and other defendants alleging insider trading of securities, plaintiffs attorneys in May were awarded $27 million in attorney fees after obtaining a $135 million settlement.  About a month after the fee award, Reed Smith, which submitted no fee application in federal court, sued attorney Ethan Wohl and his four-attorney law firm in New York state court arguing it was entitled to fees for its work under tortious interference and unjust enrichment claims.  The firm was seeking at least $6.75 million.

Reed Smith claimed that Wohl & Fruchter, when looking for co-counsel, realized that it was a small firm “overmatched by the resources available to the SAC defendants,” represented by Paul, Weiss, Rifkind, Wharton & Garrison, Willkie Farr & Gallagher, Goodwin Procter and Bracewell.  After Reed Smith was retained, the firm said, it immediately committed significant resources to the SAC action.  And soon after Reed Smith filed notices of appearance in the case, the SAC defendants reached out to Wohl for settlement discussions, Reed Smith said.  “Reed Smith’s appearance was the obvious catalyst for the settlement discussions, which proved to be successful,” the firm claims.

But Reed Smith asserts that when counsel for the SAC defendants at Paul Weiss mused about a possible conflict involving Reed Smith before Southern District Judge John Koeltl, the Wohl firm saw an opportunity to eliminate Reed Smith and “intentionally exploited Paul Weiss’ statements.” Reed Smith formally withdrew from the SAC case in December 2016.

In her Nov. 16 ruling, Buchwald rejected Reed Smith’s jurisdictional arguments.  “We have jurisdiction over the fee dispute between Reed Smith on the one hand and Wohl and [Wohl & Fruchter] on the other, and our jurisdiction is exclusive,” Buchwald said, adding that Reed Smith’s presentation of a tort-based theory of recovery “does not change the reality that some quantum of attorneys’ fees is the ultimate recovery sought.”

Buchwald also considered collateral estoppel issues. “The amount of fees to which [Wohl & Fruchter] was entitled was an issue that was litigated, and Judge Koeltl determined that a $27 million award was ‘fair and reasonable,’” she said.  Analyzing the case broadly, Buchwald said she found “little about either side’s conduct that is sympathetic.”

“The rapid succession of events—Reed Smith’s entry into the case, the settlement, and Reed Smith’s dismissal—naturally raises questions as to Wohl and [Wohl & Fruchter's] actions and motivations, and these questions are amplified when the weakness of [Wohl & Fruchter's] conflicts arguments are considered,” she said.  “The record is hardly inconsistent with Reed Smith’s theory that it was terminated by [Wohl & Fruchter's] so that [Wohl & Fruchter] could obtain a larger share of attorneys’ fees.”

However, Reed Smith missed an opportunity to submit an application for fees, she noted.  “We find little equity in allowing Reed Smith to take a mulligan, through duplicative litigation, on an issue that had been squarely teed up,” Buchwald said.

Reed Smith’s explanation for why it failed to do so—that it did not want to interfere with approval of the settlement—“holds little water,” Buchwald said, noting that Reed Smith’s declaration supporting its withdrawal from the federal case detailed its grievances with Wohl and raised questions about the propriety of the settlement.

While the judge said she was enjoining Reed Smith from prosecuting the state court lawsuit “and the implicit application for fees contained therein,” she denied Wohl’s request to reject Reed Smith’s application for attorney fees in federal court.  “Reed Smith has never made a direct application for attorneys’ fees in this court, and there accordingly exists no such application for us to deny,” Buchwald said.