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Category: Fee Calculation Method

Federal Circuit Rejects Use of Laffey Matrix in Calculating Fee Award

May 21, 2019

A recent Law 360 story by Kevin Penton, “DC Circ. Vacates $7M Atty Fee Award in Civil Right Row,” reports that a split D.C. Circuit panel tossed a nearly $7 million fee award in a long-running civil rights class action in Washington, D.C., finding a lower court used a matrix for calculating fees that improperly included attorneys based outside of the district and specialized in irrelevant legal areas.  A majority of the three-judge appellate panel held that the federal court in the District of Columbia erred by relying on a new fee calculation matrix proposed by the district that included attorneys practicing in rural Virginia and West Virginia as well as those who worked in areas of law such as real estate and wills, rather than focusing on attorneys practicing complex federal litigation within the district.

The new matrix runs counter to statutory requirements that those who file and prevail in civil rights cases should be able to collect attorney fees based on "rates prevailing in the community" for the "kind and quality of services furnished," according to the majority opinion.  The plaintiffs in the case had sought $9.76 million in fees under a different matrix, according to court documents.  "It is obvious that the rates charged for, say, simple wills are lower than those for complex federal litigation," the panel majority wrote, which vacated the award and remanded it to the lower court for a recalculation.  "Worse still, nothing in the record reveals what percentage of respondents in the ... custom cross-section of ... data were litigators."

The plaintiffs — parents of children in Washington who fit within the class — sought the fees after prevailing in a class action they initiated in July 2005, claiming that the district violated the Individuals with Disabilities Education Act by failing to identify disabled children and to deliver adequate and timely education to a broader set of minors, according to the opinion.  The lower court in August 2017 awarded the plaintiffs $6.96 million in attorneys' fees, finding that the matrix proposed by Washington had a "statistically significant sample size" and "'more narrowly defined' experience categories," according to the opinion.

U.S. Circuit Judge David B. Sentelle dissented, holding that the appellate court could only toss the fee calculation matrix used by the lower court had it abused its discretion or clearly misapplied legal principles or demonstrated a "disregard" for the evidence entered in the case.  "The district court found another matrix to be more factually appropriate," Judge Sentelle wrote.  "The making of that factual determination, under the law in general and under the governing statute in particular, is the district court's province."

The case is DL et al. v. District of Columbia et al., case number 18-7004, in the U.S. Court of Appeals for the District of Columbia.

Florida High Court Asked to Clarify Attorney Fee Award Calculation

May 3, 2019

A recent Law 360 story by Nathan Hale, “Fla. High Court Asked to Clarify Atty Fee Award Calculation,” reports that a Florida appeals court suggested that a clash between case law and its own judgment means the state's high court needs to clarify whether to include certain prejudgment interest when determining if a judgment triggers a party's entitlement to attorney fees under a state statute.  In its opinion, the Fourth District reversed a trial court's awarding of attorney fees to CCM Condominium Association Inc. in its negligence and breach of contract case against Petri Positive Pest Control Inc., saying the lower court improperly included prejudgment interest accrued after the association made a settlement offer.

The panel said it based its decision on language in Florida Supreme Court opinions, including White v. Steak & Ale of Florida, which suggests post-offer prejudgment interest should be excluded, even though it would reach the opposite conclusion based on its own interpretation of the term "judgment entered" in the offer-of-judgment statute, found in Section 768.79 of the Florida Statutes.  "[W]e are troubled by how far the formula created in White strays from what we believe is the plain meaning of the statute," the judges said.

They certified a question of great public importance to the Supreme Court, asking it to clarify whether to exclude post-offer prejudgment interest and noting that the law is widely used and is an important tool for settling cases.  The Fourth District also certified that its decision conflicts with two other appeals court decisions.

"We're obviously disappointed to lose, but we are very pleased that the court recognized the conflict and recognized that it is an issue of great public importance, and we are optimistic that the Supreme Court will accept review so it can clear up an area of law that affects many litigants across the state," CCM counsel Maegen P. Luka of Brannock & Humphries told Law360.  The appeal arose from a 2013 lawsuit that CCM, which does business as Country Club Manor Condominium Association, filed against Petri for negligence and breach of contract.

According to the opinion, CCM offered to settle all of its claims for $500,000, but Petri rejected the proposal.  After a trial in 2016, a jury awarded CCM more $551,881 in damages, and the trial court entered a judgment of $636,327, including prejudgment interest.  CCM moved to recover attorney fees based on that figure, which exceeded its settlement offer by more than 25%, the statutory threshold to trigger its entitlement.

Petri objected, pointing to the 2002 White decision, which it said defined the plaintiff's total recovery as including only attorney fees, costs and prejudgment interest accrued up to the date of its settlement offer.  That would push CCM's recovery below the 25% threshold.  Looking first at the statute itself, the Fourth District said the meaning of "judgment entered" is "easily understood."

"It is easy to calculate.  Included in that judgment are all of the elements of damages recovered in a case.  This includes prejudgment interest where applicable," the panel said, citing state court decisions that hold prejudgment interest is just another element of pecuniary damages.  But looking to the case law, the panel agreed with Petri that the Supreme Court appears to have gone beyond the text of the statute to create a different threshold.

In White, the high court found that the plaintiff's preoffer taxable costs should be included in calculating the "judgment obtained" for the purpose of entitlement to attorney fees, and said that "total net judgment" "includes plaintiff's taxable costs up to the date of the offer and, where applicable, the plaintiff's attorneys' fees up to the date of the offer."

"Thus, the court did not use the judgment actually entered or recovered in accordance with the statutory language, but it directed the calculation of a different amount based upon what might have been a final judgment at the time that the offer was made," the Fourth District said.  "However, the court did not include in this calculation any direction regarding prejudgment interest."

For an answer on prejudgment interest, the appeals panel pointed to the Supreme Court's 2012 decision in Shands Teaching Hospital and Clinics v. Mercury Insurance Co. of Florida, in which the justices approved a lower court's denial of fees based on "adding to the amount of damages recovered the attorney's fees, costs and pre-judgment interest accrued up to the date of the proposal for settlement."

$66M Fee Request in $800M Chrysler Emission Class Action Settlement

May 2, 2019

A recent The Recorder story by Amanda Bronstad, “Plaintiffs Lawyers in $800M Chrysler Emissions Settlement Want $66M,” reports that plaintiffs lawyers who helped craft an $800 million settlement with Fiat Chrysler this year over its “EcoDiesel” vehicles are asking for $66 million more in attorney fees and costs.  U.S. District Judge Edward Chen of the Northern District of California has scheduled oral arguments Friday about whether to grant final approval of the deal, which includes a $307 million class action settlement and $400 million to federal and state regulators to resolve claims that it installed software in 100,000 vehicles nationwide to cheat emissions tests.

In court papers, lead counsel Elizabeth Cabraser said the request for $59 million in attorney fees and $7 million in costs would be in addition to, and not deducted from, the settlement’s $800 million value.  She said the fees were reasonable in light of the complexities of the case.  “This significant result was not easily won,” wrote Cabraser, of San Francisco’s Lieff Cabraser Heimann & Bernstein, in an April 25 reply supporting the settlement.  “Plaintiffs’ claims were hotly contested and vigorously litigated for nearly two years.”

In the class action, Chen early on appointed Kenneth Feinberg, founder and managing partner of The Law Offices of Kenneth R. Feinberg in Washington, D.C., to serve as settlement master.  Last year, the judge allowed claims to go forward against Fiat Chrysler under the federal Racketeer Influenced and Corrupt Organizations Act.  Under the settlement’s terms, Fiat Chrysler Automobiles N.V. agreed to give individual cash payments of up to $3,075 and extended warranties to eligible consumers who brought their vehicles in for software fixes.  Fiat Chrysler agreed to provide $280 million, with software maker Robert Bosch GmbH contributing $27.5 million.

Class members have 18 months after the settlement’s final approval to make claims.  Unlike the $14.7 billion emission settlement in 2016 with Volkswagen, Chrysler agreed to provide a software fix for two years that would allow drivers to continue using their cars. Also unlike Volkswagen, Fiat Chrysler did not admit liability.  “We look forward to finalizing this agreement with the court, which will bring us another step closer to achieving the settlements’ goals: providing consumers the vehicles they were promised plus cash compensation, while also protecting our environment,” Cabraser said in a statement.

In the reply, Cabraser noted that only three out of 100,000 class members objected to the deal and, of the 3,461 who opted out, nearly 90 percent of them came from “vigorous marketing and solicitation campaigns by a handful of attorneys”—in particular, at Stern Law PLLC in Novi, Michigan, and Heygood, Orr & Pearson in Irving, Texas.  Ken Stern, of Stern Law, and Michael Heygood, of Heygood Orr, did not respond to questions about why they recommended their clients opt out.

“This high level of engagement and remarkably low level of opposition is a strong endorsement of the settlement terms,” Cabraser wrote in the reply.  “Under any circumstances, this extremely low objection rate would strongly favor final approval, and it does so with particular force here given the well-publicized nature of this litigation and the significant sums at stake.”  So far, she wrote, nearly 34,000 class members had registered on the settlement’s website.

In separate declarations, Robert Klonoff, a professor at Lewis & Clark Law School, and Brian Fitzpatrick, a professor at Vanderbilt University Law School, said the fee request represented between 10 to 18 percent of the settlement amount, depending on how benefits are calculated.  Both are reasonable and fall below the 25 percent benchmark established by the U.S. Court of Appeals for the Ninth Circuit.

Cabraser, in her initial motion for final approval, calculated the fee request at 13 percent, when based on a minimum required 85 percent participation rate in the cash fund and cutting the $239.5 million value of the extended warranties in half to account for the government’s role, plus $67.5 million in attorney fees and legal and administrative costs.  When assessed against the total potential value of the settlement—the entire cash fund and value of the extended warranties—the request was 9.6 percent, she wrote.

She estimated that class counsel would have spent more than 100,000 hours on the case upon completion of the claims process in two years, billing at a blended rate of $453 per hour.  “This is more than justified given the intensity of the litigation, the quality of the work, and most importantly, the results achieved,” she wrote.  In addition to Cabraser’s firm, the fees would compensate the other nine law firms on the plaintiffs’ steering committee, plus 10 additional firms who did work on the case, according to a declaration Cabraser submitted in support of final approval.

Texas Justices Clarify Evidence Needed to Prove Attorney Fees

April 26, 2019

A recent Law 360 story by Michelle Casady, “Texas Justices Clarify Evidence Needed for Atty Fees,” reports that the Texas Supreme Court clarified what evidence lawyers must present to support their claims for attorney fees and costs, saying an $800,000 fee request in a dialysis center lease dispute was "too general."  A private dialysis center affiliated with the University of Texas Southwestern Medical School, UTSW DVA Healthcare LP, didn’t present specific-enough evidence to support its attorney fee request after the clinic won a lease dispute with landlord Rohrmoos Venture, the court said.

The court also remanded a second fee dispute case, Barnett v. Schiro, to a lower court for reconsideration under its Rohrmoos ruling.  In the decision, the court sought to dispel what it said was confusion on the part of lawyers and courts about two methods of calculating fees — the “Arthur Andersen method” and the lodestar method.  It said the lodestar method of calculating attorney fees was “never intended to be a separate test or method” from eight factors the court set forth in its 1997 ruling in Arthur Andersen & Co. v. Perry Equip. Corp.

Instead, lodestar was developed as a shorthand version of the Andersen factors, the court explained.  The starting point for calculating fees is determining the reasonable hours worked, multiplied by a reasonable hourly rate, and it's the burden of the party seeking those fees to prove up the request, the court said.  The lodestar method arrives at the fee amount by multiplying the number of hours spent working on the case by a reasonable hourly rate.  The Arthur Andersen method requires a court to consider eight factors in awarding fees, including time and labor, how difficult a case is, what a customary rate is, the results obtained and the skill of the attorney.

In the Rohrmoos case, UTSW attorney Wade Howard of Liskow & Lewis, sought about $800,000 in fees, plus conditional fees for any appeal.  Howard testified that his hourly rate is $430, and that the number of hours spent on this case was between 750 and 1,000.  While that would mean his fees were between $300,000 and $400,000, he said his fees were closer to or exceeded $800,000 in this case because the discovery and deposition process was so intensive.

The Texas Supreme Court wrote it understood Howard's argument that the actions of opposing counsel caused the cost of litigation to increase.  “However true this may be, Howard’s justification for why his fees should be $800,000 — searching through 'millions' of emails and reviewing 'hundreds of thousands' of papers in discovery, more than forty depositions taken, and a forty-page motion for summary judgment — is too general to establish that the requested fees were reasonable and necessary,” the high court wrote.  “Without detail about the work done, how much time was spent on the tasks, and how he arrived at the $800,000 sum, Howard’s testimony lacks the substance required to uphold a fee award.”

Howard told Law360 that during oral arguments before the court he tried to stress that putting hundreds of pages of detailed billing records before the jury would “do nothing” to help them determine what costs are reasonable and necessary.  But he said the ruling was “about as painless as possible” because he kept detailed, contemporaneous billing records and now will just have to present those — which were already produced in discovery to the other side — to the trial court.  “The reality is this is a conservative court and they don't like the award of attorneys fees with limited proof,” he said.  “We had a strong suspicion that the court was going to start requiring more than the Arthur Andersen factors ... but for anyone who keeps billing records, it's not an issue.”

Citing the Rohrmoos ruling, the court also decided another case.  In that dispute, attorney Richard Schiro represented Daniel Barnett in a lawsuit brought by Kirtland Realty Group in 2011 that ended in a settlement agreement.  Schiro then sued to recover from Barnett $183,673 in unpaid legal fees, which the jury awarded him.  Schiro also sought “reasonable attorneys' fees and costs” in the suit, and the jury awarded him $131,786.

Barnett appealed, arguing there was insufficient evidence to support that award of fees and costs, and the lower appellate court affirmed the ruling.  But the Texas Supreme Court reversed that ruling and sent the case back to the trial court to redetermine what fees should be awarded in light of its holding in Rohrmoos.  Charles W. McGarry of Law Office of Charles McGarry, who represents Barnett, told Law360 he'll likely ask the Texas Supreme Court for rehearing because part of his argument was that the court should have rendered judgment in his favor rather than send it back to the trial court.

According to court documents, in the lease dispute between Rohrmoos and UTSW a jury found both parties breached the lease, but that Rohrmoos had breached first.  As the prevailing party, a jury awarded UTSW $800,000 in fees, and a conditional $150,000 for representation in the court of appeals, and $75,000 for representation in the Texas Supreme Court, totaling a little more than $1 million.  On appeal, Rohrmoos argued the evidence wasn't enough to support that total, but the lower appellate court disagreed and upheld the award.  On appeal to the Texas Supreme Court Rohrmoos again challenged the sufficiency of the evidence and argued that UTSW wasn't actually a prevailing party since the jury found both parties breached the lease, and therefore wasn't entitled to fees.

In its opinion, the Texas Supreme Court held that UTSW was a prevailing party in the lawsuit because it successfully defended against a counterclaim from Rohrmoos seeking $250,000 in unpaid rent.  The cases are Rohrmoos Venture et al. v. UTSW DVA Healthcare LLP, case number 16-0006, and Daniel S. Barnett et al. v. Richard B. Schiro, case number 18-0278, in the Supreme Court of Texas.

Ninth Circuit Affirms $42M Fee Award in NCAA Class Action

April 18, 2019

A recent Law 360 story by Matthew Perlman, “9th Circ. Affirms $42M Fee Award in NCAA Damages Deal,” reports that the Ninth Circuit cleared the way for a nearly $209 million settlement between athletes and the NCAA over claims it unlawfully capped compensation, affirming a $42 million fee award despite objections from a former Division I football player.  In a seven-page unpublished memorandum, the appellate panel affirmed the award over the contention of former Western Michigan University wide receiver Darrin Duncan that 20% of the settlement fund is excessive.  The panel said the district court was right to reject Duncan’s objections because the percentage is lower than those in similar cases and because the counsel’s efforts led to the “exceptional, mega-fund results.”

“The district court did not abuse its discretion in finding that the large size of the settlement fund did not warrant a reduction of the 20 percent fee award,” the memorandum said.  The panel noted that the settlement covers some 53,000 class members, and that those who played sports for four years will receive an average of $6,000 each.  An attorney for the settling athletes, Steve Berman of Hagens Berman Sobol Shapiro LLP, told Law360 the appellate ruling was the last thing holding up payments for the class.  “We are pleased with the outcome as the appeal has tied up the $208 million we have been waiting to distribute to the class,” Berman said.  “We have been getting constant inquiries about distribution and now there is no roadblock to getting these student athletes paid.”

Duncan objected to the $41.7 million in fees awarded in district court and then filed an appeal with the Ninth Circuit in January 2018, according to court records.  In addition to rejecting Duncan’s arguments about the percentage, the panel also brushed aside his contention that the $3.2 million in expenses should have been included in the calculation of the fee percentage.  The panel said district courts are allowed to “calculate the percentage of attorney fees based on either the gross or net fund.”  Duncan had also argued that the district court failed to properly crosscheck the fee award against the hours reported by the athletes’ counsel.  But the panel found that wasn’t the case and that attorneys provided detailed records of the time spent on different aspects of the litigation.

“In addition, because the settlement only resolved plaintiffs’ claims for damages, the district court ordered counsel who had not already done so to specify whether their activities billed related only to such claims,” the memorandum said.  After the settlement covering damages, claims from the players seeking to change the rules pressed ahead and went to trial last year.