Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Fee Award Factors

Watts Guerra Seeks $150M in Fees in $1.5B Corn Settlement

August 7, 2018

A recent Texas Lawyer story by Amanda Bronstad, “Mikal Watts Wants One-Third of Expected $500M Fee Corn Settlement,” reports that Texas plaintiffs attorney Mikal Watts is asking for at least $150 million in legal fees from the $1.5 billion settlement with Syngenta AG, citing his firm’s “unique position in this litigation.”  The Watts Guerra attorney’s fee request, filed last month but updated on Aug. 3, sets up a potential clash over what could be an estimated $500 million in fees in the class action settlement, which resolves claims by more than 600,000 farmers who alleged Syngenta sold genetically modified corn seed that China refused to import, causing farmers to lose billions of dollars.  In a separate request for fees, lead counsel in the federal multidistrict litigation in Kansas are seeking that amount—about 33 percent of the total settlement fund.

“This fee request is based on Watts Guerra’s enormous investment in this litigation,” Watts wrote in his motion.  “It is on the high end of the range, perhaps, but not unprecedented.”  Watts claims to represent 57,000 farmers who could be entitled to between $345 million and $750 million under the settlement.  The requests come as at least four other lawyers have challenged the fees in the deal, particularly those going to Watts.  Oppositions to the fee requests are due Aug. 17.

The Syngenta litigation was coordinated in both federal multidistrict litigation in Kansas and in two proceedings in Minnesota and Illinois state courts.  In their fee request, the lead lawyers in Syngenta want 50 percent of the $500 million, plus about $6.7 million in costs and expenses, which would go to a total 44 law firms.  They want another 12.5 percent to go to the lead lawyers in the Minnesota state court, and 17.5 percent to attorneys in Illinois state court.  The remaining $100 million would be reserved for other lawyers.

The dispute mirrors fee fights that have erupted in mass torts between plaintiffs attorneys appointed to represent members of a class action and those who have brought individual suits on behalf of their clients.  The vast majority of the farmers Watts represents have retainer agreements with him and filed individual suits in Minnesota state court.  Last year, as part of the federal multidistrict litigation, a jury awarded $217.7 million to a class of Kansas farmers in the first bellwether trial.  It was one of eight subclasses of farmers planned for trials.  A second, on behalf of Minnesota farmers, was ongoing when both sides struck a deal.

Watts Guerra partner Francisco Guerra was co-lead plaintiffs counsel in Minnesota state court, but no one from the firm had a lead role in the federal multidistrict litigation.  The firm did work on the Minnesota trial, however, and Watts was one of four lawyers appointed to the plaintiffs’ negotiating committee.  “That trial forced Syngenta finally to accept that it faced not just hundreds of millions of dollars in compensatory damages but a likely multibillion-dollar judgment based on intentional misconduct—for the farmers in a single state,” Watts wrote.  “Then, in an instant, it was over.”

The initial settlement called for two agreements—one on behalf of the class, and one on behalf of the individual plaintiffs, according to court filings.  But the negotiated deal encompassed four subclasses—two on behalf of farmers, one for grain handling facilities and another for ethanol producers.  Final approval of the settlement is set for Nov. 15.

Earlier this year, two attorneys in Beaumont, Texas, claiming to represent 9,000 farmers filed a motion to delay approval of the settlement, insisting the lead lawyers who negotiated the deal kept their clients in the dark on “how the settlement would be divided and distributed between the class actions and the individual producer plaintiffs.”  In particular, they claimed Watts and another lawyer on the plaintiffs settlement negotiation committee, Clayton Clark of Clark, Love & Hutson in Houston, dropped a more favorable settlement for farmers with individual lawsuits in exchange for higher fees.

Another lawyer, D. Allen Hossley of Hossley & Embry in Tyler, Texas, who claimed to represent 650 farmers, joined the motion, filed by Mitchell Toups, of Weller, Green, Toups & Terrell and Richard Coffman of The Coffman Law Firm (Toups and Coffman are now seeking $34 million in fees, while Hossley wants nearly $2.7 million).

On April 24, Minneapolis attorney Doug Nill sued Watts.  He claimed Watts, firm partner Guerra and Jon Givens, of counsel, who lives in Alaska, and 13 other small law firms or solo practitioners conspired to convince 60,000 farmers not to participate in the class action, and now could end up with $200 million in fees.  The suit asked to void the retainer agreements, which included a contingency fee rate of 40 percent.  In his fee request, Watts said he would drop his contingency fee to 33.3 percent.  When accounting for what he had agreed to pay lead lawyers in the federal multidistrict litigation—referred to as a common benefit assessment—his contingency fee would drop to less than 24.2 percent, he wrote.

But, anticipating that “some of the other common benefit counsel” may demand one-third of the settlement for themselves, he insisted that his fees come out of the $500 million and that he get reimbursed for the $12.8 million in common benefit expenses he paid in the Minnesota state court litigation.  He cited a 2015 joint prosecution agreement that was designed to resolve future fee disputes among lawyers in both the Minnesota state court cases and federal multidistrict litigation.

Watts backed up his fee request, which also includes 332 law firms that worked on his cases, with expert reports from six prominent legal scholars, including Brian Fitzpatrick of Vanderbilt Law School and Geoffrey Miller of New York University School of Law.

Federal Judge: Midwest Lawyers, Stuck with Midwest Rates

August 6, 2018

A recent American Lawyer story by Scott Flaherty, “Midwest Lawyers, Stuck with Midwest Rates, Federal Judge Tells Arent Fox,” reports that a lateral move to a firm with roots in a more expensive city doesn’t mean a judge is going to award that lawyer a bump in attorney fees in litigation, even if some of the work then gets done in that pricier hub, a recent court ruling shows.

Ruling on a fee request by Arent Fox after a $130,000 settlement with the U.S. government on behalf of a group of Florida landowners, U.S. Court of Federal Claims Judge Patricia Campbell-Smith held that the firm deserves attorney fees based on the St. Louis market rates the lead attorney initially charged while working out of St. Louis-based Lathrop Gage’s headquarters.  She rejected the argument that he should earn the higher rates charged by Washington, D.C.-based Arent Fox after the lawyer switched to that firm’s St. Louis office.  Arent Fox had sought more than $1.1 million in fees plus more than $14,000 in costs.  As the judge explained in her opinion, the fee issue arose in a “rails to trails” lawsuit that dates back to 2009.

A team from Lathrop Gage, led by Mark “Thor” Hearne II, served as plaintiffs lawyers in the suit, representing a group of Florida landholders whose property included railway tracks formerly used by CSX Transportation Inc.  CSX stopped using the railroad lines in 2004, and soon after, a federal agency proposed to set aside a strip of land near the tracks for recreational trails.  The landowners alleged that amounted to an unlawful seizure of their land and sought compensation, according to court documents.

Shortly after the suit was filed, Hearne and his team moved to the Arent Fox, still working primarily from that firm’s St. Louis outpost.  The litigation started as a putative class action, but was winnowed down to a smaller case with some 14 landholder plaintiffs.  Following a summary judgment ruling in the government’s favor, the case was narrowed further to claims from three plaintiffs.  In 2013, the two sides struck the $130,000 settlement.

Since then, they’ve been litigating Arent Fox’s potential fees in light of a settlement in favor of its clients.  The firm has argued for an award based on current market rates in Washington, D.C., while the government has urged lower St. Louis rates, adjusted to take account of the years in which the work was actually performed.  Campbell-Smith awarded $14,362 in costs to Arent Fox.  But her ruling, made public on Aug. 1, faults the firm’s fee request for $1.1 million in part because it relied on the legal market rates in Washington, D.C.—where the firm is based and the federal claims litigation took place.

Instead, the judge ruled, most of the lawyers’ work happened in St. Louis, and since there’s a significant difference between billing rates in Washington and St. Louis, the St. Louis rates should win out.  To illustrate the differences in billing rates between the two cities, Campbell-Smith pointed to the proposed hourly rate for the lead partner in the case, Hearne.  Arent Fox sought an hourly rate of $826 for Hearne, while the likely St. Louis market rate would be more like $504 per hour for a partner with Hearne’s amount of experience, the judge wrote.

Campbell-Smith detailed several reductions she would impose when figuring out what to award Arent Fox in the case, according to her decision.  Still, she didn’t set a final fee award, concluding that the firm and the government needed to provide more information about the average St. Louis market rates for lawyers at different seniority levels, as laid out in billing rate surveys conducted by the publication “Missouri Lawyers Weekly.”

The Federal Claims judge also sided with the government on another key issue related to Arent Fox’s fee request—whether the award should be based on current or historical market rates for legal services.  “The attorney billing rates shall be calculated based on the average hourly rates as reflected in the ‘Missouri Lawyers Weekly’ surveys, and shall be awarded historically,” Campbell-Smith wrote.

$100K in Attorney Fees Awarded Under Catalyst Theory in California

August 2, 2018

A recent Metropolitan News story, “$100,000 Sufficient Attorney Fees for Catalysts of Impound Rule Change,” reports that plaintiffs whose lawsuit prompted the City of Los Angeles to change its policy of impounding cars driven by holders of drivers’ licenses issued by foreign countries have lost a bid in this district’s Court of Appeal to increase their award of attorney fees from $100,000 to $1.7 million.  Los Angeles Superior Court Judge John S. Wiley Jr., sitting on assignment to Div. Seven, wrote the unpublished opinion.  It affirms a judgment by Judge Elihu Berle in three appeals from the same case.

In two of the challenges, the plaintiffs contend the award was unjustifiably meager.  The City of Los Angeles cross-appealed, arguing that no fees should have been awarded at all.  The opinion also rejects the protest by three other plaintiffs to the dismissal of their causes of action against the cities of Escondido and Long Beach on the ground that disputes with those defendants were resolved in prior actions.

The underlying case concerns the cities’ policies in interpreting Vehicle Code §14602.6(a)(1), which allows police to impound a car when it is driven by a person who has never “been issued a driver’s license.”  All plaintiffs in the case had cars impounded despite having driver licenses issued in foreign countries.  In 2007, a federal class action was brought against various California government entities in the case of Salazar v. Schwarzeneggar.  The Salazar litigation involved many plaintiffs and defendants at different times, most of whom were not parties to the present appeal.

That case was unsuccessful for the plaintiffs.  The court dismissed with prejudice their claim under Art. I, §13 of the California Constitution—the right to be secure from unreasonable seizures—ruling that the section “does not provide a private cause of action for damages.”  The court also declined to take supplemental jurisdiction over the remaining state claims, and several of the plaintiffs and others sued various cities in state court in 2011.  Two of the plaintiffs in the state case, Laurencio Marin and Vincent Soltero, settled with Los Angeles for $4,000 each.  Berle awarded the two men $100,000 in attorney fees under Code of Civil Procedure §1021.5, the private attorney general statute.

Wiley explained that the award of fees was proper under a catalyst theory, which allows for attorney fees when a plaintiff prompts the defendant to change its behavior, even if there was no judicial resolution of the dispute.  In 2012, before the city settled with Marin and Soltero, then-Los Angeles Police Chief Charlie Beck, since retired, issued “Special Order No. 7,” which changed the LAPD’s impound policy.  The order—which drew considerable controversy—removed from officers discretion as to whether a vehicle driven by an unlicensed vehicle should be impounded, directing that it not be under specified circumstances.  The order provided that a driver’s license issued “by any jurisdiction (foreign or domestic)” would be recognized.

(The Court of Appeal for this district held in 2014 “that Special Order 7 is within the wide discretion of the police chief.”)  Wiley said:  “The catalyst theory required Marin and Soltero to establish (1) that their lawsuit was a catalyst motivating the City of Los Angeles to provide the primary relief sought; (2) that the lawsuit had merit and achieved its catalytic effect by threat of victory, not by dint of nuisance and threat of expense; and (3) that Marin and Soltero reasonably attempted to settle the litigation before filing their suit…

“The trial court found Marin and Soltero satisfied these three requirements and thus were entitled to a fee award.  The court expressly identified each factor and made appropriate findings.”  Although Berle found that Marin and Soltero had been successful, he noted that it was a limited success.  The settlement amount they had each received was minute, and they had suffered many failures throughout the litigation, including a failure to obtain class certification.  Wiley said:

“The court acknowledged the plaintiffs contributed in some degree to the advent of Special Order No. 7, but noted even that success was mixed.  Special Order No. 7 was a move in the right direction, as far as plaintiffs were concerned, but plaintiffs continued to challenge Los Angeles Police Department’s impound policies even as embodied in Special Order No. 7.  The trial court dryly remarked ‘[i]t is unusual to argue that plaintiffs have been successful in remedying a state of affairs which they continued to attack.’ ”

For this reason, Wiley explained that Berle had appropriately denied the plaintiffs their requested lodestar and multiplier.  As to the third appeal in the case, Wiley noted that Escondido and Long Beach had shown the three elements of claim preclusion applied to the three plaintiffs challenging the award of summary judgment to those cities.

“Claim preclusion applies when a second suit involves (1) the same cause of action (2) between the same parties (3) after a final judgment on the merits in the first suit,” he wrote.  The three plaintiffs and both cities had all been parties to the Salazar litigation, which had included a cause of action for the California Constitution claim which was the only claim in their state case.  The federal court had dismissed that claim with prejudice, which is a final judgment on the merits.

The case is Sancandi v. City of Los Angeles, B268839.  Counsel for the plaintiffs were Barrett S. Litt of Pasadena; Cynthia Anderson-Barker of Los Angeles; and Robert Mann and Donald W. Cook of Los Angeles.  The cities were represented, respectively, by Assistant City Attorney Gabriel S. Dermer for Los Angeles, Deputy City Attorney Adam C. Phillips for Escondido, and Deputy City Attorney Howard D. Russell for Long Beach.

Third Circuit Cuts Attorney Fees in Faulty Nuclear Missile Parts Case

July 17, 2018

A recent Legal Intelligencer story by PJ D’Annunzio, “In Suit Over Faculty Nuclear Missile Parts, Court Shoots Down $3M Attorney Fee Request,” reports that, in a settled lawsuit over defective batteries sold to the U.S. government for use in intercontinental ballistic missile launch systems, a federal appeals court upheld a decision denying the government’s lawyers’ demand for millions of dollars in fees.  The case involved a contentious dispute over how much the firm representing the government should be paid for the time put into the case.  While the case settled for $1.7 million, lawyers for the government requested $3.11 million in fees.

Attorneys hurled insults and innuendo at one another during the case, prompting U.S. District Judge Gene E.K. Pratter of the Eastern District of Pennsylvania, the trial judge handling the matter, to proclaim, “it is a hellish judicial duty to review and resolve disputed attorneys’ fee petitions, particularly in cases, like this one, where the adversaries fan the flames at virtually every opportunity,” according to an opinion from the U.S. Court of Appeals for the Third Circuit, which reviewed the case.

Pratter slashed the attorney fee amount to roughly $1.8 million, leading the plaintiff to file an appeal to get the full amount requested.  The government and its relator in the False Claims Act case, Donald Palmer, said it was unfair for the court to award an amount even less than the one suggested by the defendant, C&D Technologies.  “Relator does not cite any decision that requires a district court to award at a minimum the amount of attorneys’ fees that the opposing party contends is reasonable, and we decline to make such a ruling today,” Senior Judge Morton Greenberg of the U.S. Court of Appeals for the Third Circuit wrote in the court’s July 17 opinion.

“Rather, our case law provides district courts with substantial discretion to determine what constitutes reasonable attorneys’ fees because they are ‘better informed than an appellate court about the underlying litigation and an award of attorney fees is fact specific.’”  However, the court did remand the case for Pratter to review whether the government and Palmer were entitled to “fees on fees,” that is, fees to compensate lawyers for the time spent arguing over how much they should be paid.

“The district court should proceed in two steps: (1) as with all fee petitions, it must first determine whether the fees on fees are reasonable; and (2) once the reasonability analysis is complete, the court must consider the success of the original fee petition and determine whether the fees on fees should be reduced based on the results obtained,” Greenberg said.

NY Judge Vents on “Astronomical” Attorney Fee Requests

July 13, 2018

A recent New York Law Journal story by Christine Simmons, “Blasting Greenberg Traurig Request, Judge Says Fees ‘Zooming Out of Control’, reports that a Manhattan judge has slashed Greenberg Traurig’s $464,164 fee request by 62 percent in a co-op-tenant lawsuit, writing he was “troubled, almost haunted, by the idea of awarding almost half a million dollars to attorneys who simply prevailed upon a court to dismiss an untimely proceeding.”  In a decision punctuated with feisty commentary, such as writing the fee request could be viewed as “highway robbery without the six-gun,” Manhattan Supreme Court Justice Arthur Engoron called on the legal profession and fellow judges to cut down on astronomical fee awards.

“Fees are zooming out of control, and courts should not be complacent; rather, we should be on the front line, not the sideline, leading the charge to keep them reasonable (keeping in mind the considerable costs of running a law practice),” the judge said, in the decision.  “To focus solely on [Greenberg Traurig’s] rates and hours would be to miss the forest for the trees.”  The judge’s comments arose in a suit brought by five residents of a housing complex on the Lower East Side, Seward Park Housing Corp., who were upset over a decision by the co-op’s board to switch to a valet parking system.  The residents filed an Article 78 Petition, seeking to annul the board’s decision.

After dueling motions, Engoron in July 2017 dismissed the case for untimeliness, while addressing other arguments raised by Greenberg Traurig, representing the co-op.  Afterward, a special referee, Louis Crespo, recommended that the co-op parties be awarded $161,000 in legal fees, reflecting deductions for alleged double billing, lack of complexity, and failure to use more associates rather than partners.  In deciding to award just slightly more than Crespo’s recommendation, Engoron first contemplated the dueling ”perspectives” inspired by the firm’s request.

On one hand, it “is shocking and disturbing,” he wrote, “that a law firm is asking for the staggering sum of $464,164 to have prevailed upon a court to dismiss as untimely a relatively straightforward” petition filed by middle-class tenants.  He added, “Such an outrageous figure sounds like a typographical error or an April Fool’s joke; if it is not, it merits ‘fee shaming,’ public humiliation, and possible sanctions.  For such egregious overreaching, a court could, and maybe should, award nothing.”

After all, he said, these days, $464,164—more than twice the salary of a New York State Supreme Court justice—could buy a one-bedroom co-op apartment on the Upper East Side with a doorman and onsite parking garage; a one-bedroom co-op in Bay Ridge with a live-in super and high ceilings; or “your very own private house in suburban Elmont, Nassau County, just over the Queens border.”  “The point being that we are not talking mere Monopoly money here!” Engoron wrote.

From another perspective, Engoron wrote that Greenberg’s papers are “beautiful: well-organized, well-written, and well-reasoned.”  And Greenberg “argued just what you would expect, just what it had to, and just how it had to,” he said.  “Fish gotta swim, birds gotta fly, and lawyers gotta litigate.  Arguments made in moving papers could also be found in reply papers, ad nauseum, etc., but that is how lawyers usually argue, and sometimes win, cases,” Engoron said.  “In short, [Greenberg] did what lawyers do, submitted excellent papers, and prevailed.”

Risking the ’Golden Egg’?

In his analysis in Cruz v. Seward Park Housing, the judge confirmed the referee’s findings that Greenberg’s hourly rates, some of which topped $1,000 per hour, were reasonable and that its attorneys performed the work they claimed.  He rejected the findings that Greenberg should have used more associate time. “Experienced partners charge more but work quicker,” he wrote.

But Engoron took issue with Greenberg’s time on its dismissal motion, outside of the time spent on the statute of limitations argument.  The co-op would have achieved the same result—dismissal with prejudice—had the timeliness defense been its only argument, the judge said.  “There was no need to make a double-barreled motion,” he said.  He added that the nearly half-million-dollar fee request was not in the context of “industrial or technological behemoths battling each other for market supremacy, but in the context of a handful of middle-class cooperators upset with a board of directors’ decision.”

Engoron pointed to larger issues from outsized fee requests and aggressive litigation tactics.  “By requesting astronomical fees, attorneys are in danger of killing the goose that laid the golden egg,” the judge said, noting a recent New York City Bar Association report that asked attorneys to eschew litigation tactics like asserting defenses that could burden the parties.  “Cultural change may be in the offing.”

This case should have been litigated, and would have been dismissed, solely on statute of limitations grounds, the judge said.  “Gold-plated lawyering was not needed. [Greenberg] probably needed two partners to do everything it did as well as it did.  But another approach could have achieved the same result: The partner in charge could have walked out into the hallway, grabbed the first mid-level litigation associate that walked by, and said, ‘Our client is being sued; it’s untimely; get it dismissed,’” the judge wrote.  Such an approach, the judge found, would have resulted in fees, including disbursements, of no more than $175,000—the figure Engoron ultimately awarded to the co-op.

That amount, the judge said, “may not seem like an awful lot of money, but could buy you a 55-foot yacht, equipped with multiple staterooms; a salon/galley/dining area; a washer-dryer; and stall showers.” He added, “To this court, that’s reasonable.”