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Category: Fee Request

Investors Seeks $200K in Mootness Attorney Fee Request

September 27, 2017

A recent Law 360 story by Matt Chiappardi, “Investors Seek Fees While Altor-NantCell Deal Suit Goes On,” reports that Altor Bioscience Corp. shareholders challenging the merger with billionaire physician Patrick Soon-Shiong's NantCell Inc., purportedly valued at nearly $300 million, pushed the Delaware Chancery Court for a mootness fee award as the case remains running, arguing they've so far garnered valuable supplemental disclosures from the company.

The suing shareholders, who include former EU ambassador and White House counsel C. Boyden Gray and Washington attorney and consultant Adam R. Waldman, argue that even though they did not succeed in halting the merger, they nudged Altor to make two additional packets of disclosures about the deal, bringing a benefit to all of the company's stockholders. For doing so, they should be awarded a nearly $200,000 mootness fee, the shareholders said.

"Plaintiffs caused Altor to issue two supplemental rounds of disclosures, which, although still incomplete, contained material information that Altor did not disclose in its original information statement," their Wednesday motion states. "The value of these supplemental disclosures — the restated information statement and the supplement — can and should be determined now."

The issue stems from a Chancery lawsuit Gray and Waldman lodges in June, a few weeks after the deal was announced. The shareholders argued the deal was an insider-led, lowball transaction to sell Altor to NantCell for a fraction of its value, and that company brass was withholding vital information about it.

A bid to halt the transaction, which closed at the end of July, failed when Vice Chancellor Joseph R. Slights III found there was no proof shareholders would be irreparably harmed if the deal closed.

Vice Chancellor Slights acknowledged the investors' concerns that the deal may have been rubber-stamped by a conflicted board at an unfair price, but said post-closing remedies were available if that were case.

The investors filed an amended complaint earlier this month that now also seeks appraisal and quasi-appraisal remedies.

But during the injunction bid process, the investors say they got Altor to eek out additional disclosures for shareholders that include descriptions of certain directors' potential conflicts of interests, previously unreleased clinical trial information about Altor and NantCell's compounds, Altor's strategic relationships, and information purporting that a financial adviser was not hired, a fairness opinion was not, both due to cost concerns, and a market check was not conducted.

"Because of plaintiffs, Altor's stockholders benefited from the disclosures when they were most valuable — prior to their determination as to whether to seek appraisal or tender their shares," the motion states. "By securing the supplemental disclosures during the injunction phase of this litigation, plaintiffs became entitled to a fee award; the court's finding that 'post-closing relief' is available to plaintiffs does not change plaintiffs' entitlement to a fee award."

Counsel for the Soon-Shiong parties declined to comment Thursday. Counsel for the other parties did not immediately respond to requests for comment.

Applications for mootness fees have become more popular in Delaware since Chancellor Andre G. Bouchard's decision in the In re: Trulia Inc. Stockholder Litigation case, widely seen as wiping out the practice of big-money settlement awards in cases where the resolution only involves disclosures.

In that 2016 opinion, Chancellor Bouchard suggested the proper outcome for gaining additional disclosures was a mootness fee, and litigants have been following suit. Many of the awards have been lower than is typical for the earlier settlement awards, which could sometimes stretch into the millions of dollars.

In the Altor case, the plaintiffs are seeking an interim mootness fee of $196,000 based on benefits to shareholders that "cannot seriously be disputed," with figures based on "actual time spent by plaintiffs' counsel, at normal hourly rates."

Litigation in the case is expected to continue whether or not the court approves the interim mootness fee, with the amended version of the complaint in play.

According to the lawsuit, terms of the deal equated to a $290 million company valuation — lower than Altor's most recent $309 million value peg and "multiple times" lower than industry comparables for a business with a dozen ongoing, in some cases advanced, clinical trials for cancer and HIV drugs.

The suing shareholders contend  all directors involved in the Altor sale decision are deeply conflicted and that the company failed to appoint a special committee or independent parties to evaluate the deal, and failed to provide even basic information about it to minority stockholders.

Soon-Shiong already owned or controlled 52 percent of Altor's outstanding stock and securities, and under the merger, some 24 million shares will be reserved for officers and directors to "buy their fealty," suing shareholders allege.

The case is Gray et al. v. Soon-Shiong et al., case number 2017-0466, in the Delaware Court of Chancery.

Banks Can Seek Attorney Fees in RICO Action

September 22, 2017

A recent Law 360 story by William Gorta, “Banks Can Seek Fees in Dana Transport RICO Suit: Judge,” reports that a New York federal judge on said a group of banks, including PNC Bank and Wells Fargo & Co. can pursue a claim for legal fees and expenses against Dana Transport Inc., which had sued the banks for RICO violations but voluntarily dismissed the case.

After hearing more than an hour of arguments, U.S. District Judge Ronnie Abrams denied Dana’s motion to dismiss the suit and also shot down the company’s request to stay the suit while awaiting the resolution of a suit Dana filed against the banks in New Jersey state court.  That suit is substantially similar to the suit Dana filed and dismissed in the Southern District of New York in 2015, alleging conversion, breach of contract and Racketeer Influenced and Corrupt Organizations Act violations.  The SDNY suit alleged lenders worked in tandem with consultants and other companies to force Dana Transport into default on a debt facility it was still making payments on, costing millions and putting the business in jeopardy.

Last year, the banks sued Dana for their legal expenses and attorneys' fees, citing an indemnity clause in the lending agreement that obligated Dana to cover them for lawsuits and other legal proceedings.  Dana argued that the indemnity clause did not include intra-party lawsuits and, should the New Jersey court find that the banks had acted with willful misconduct, the company would not be obliged to indemnify the banks.

Caroline F. Bartlett of Carella Byrne, arguing for Dana, told Judge Abrams that the case in New Jersey was essentially the same as the one it chose to dismiss in the Southern District of New York and there was no harm in letting it play out there since legal fees would continue to accrue, should the banks be eligible to receive them.

Wells Fargo’s attorney, Richard G. Haddad of Otterbourg PC, said the “expressly broad” indemnity clause —“any claim, any person whatsoever” — on its face included intra-party claims, such as foreclosures and liens.  Haddad said there can be no finding of willful misconduct in the dismissed federal RICO case, for which his client seeks to recover fees.

The case is PNC Bank, National Association et al. v. Dana Transport Inc., case number 1:16-cv-07797, in the U.S. District Court for the Southern District of New York.

Fee Allocation Dispute in NCAA Concussion Case

September 21, 2017

A recent American Lawyer story by Roy Strom, “High-Powered Plaintiff’s Lawyers Battle Over Fees in NCAA Concussion Case,” reports that a group of prominent plaintiff’s lawyers are battling for their cut of potentially $21 million in legal fees related to a pending concussion settlement with the National Collegiate Athletic Association, one of the many litigation battles that the governing body for collegiate sports now faces.  The dispute between Chicago-based Jay Edelson and Steve Berman, a co-founder of Seattle-based plaintiffs powerhouse Hagens Berman Sobol Shapiro, began as a strategy disagreement as late as 2014.

That’s when an Edelson client objected to a class action settlement led by Berman’s firm and others that would have the NCAA create a $70 million medical monitoring program for current and former college athletes, as well as put $5 million toward concussion research.  Edelson’s objection sought to preserve personal injury claims on behalf of former student athletes in a variety of sports, including football.

As part of the settlement, the lead counsel at Hagens Berman and Joseph Siprut, the founder and managing partner of Chicago’s Siprut PC requested $15 million in fees for themselves and about 10 other firms.  The fee request was made in January with the firms stating that they had worked 18,000 hours on the case and reached 4.2 million people to alert them to a preliminary approval of a settlement in July 2016.

Edelson’s firm objected to that amount last week in a court filing that takes aim at various aspects of the lead counsels’ work and argues for no more than $8 million in fees to be awarded to Hagens Berman and Siprut.  The Edelson objection states that the requested fees, which represent 21 percent of the amount of the settlement, are too high.  It also argues the lead counsels’ request takes credit for $50 million in settlement value that Edelson claims his objector added when a judge agreed to knock out a “reversion” provision that would have returned to the NCAA unused money in the concussion monitoring program.

Berman’s firm, which is disputing Edelson’s request for $6 million in fees, argues the reversion provision would not have added anything close to $50 million in value to the settlement and that U.S. District Judge John Zee decided to knock it out of the deal for reasons that had little to do with Edelson’s objections.

Edelson’s firm had originally sparred with the lead counsels’ tactics in the case by saying they were not providing monetary benefits for potentially injured college athletes.  Unlike the National Football League’s $1 billion class action settlement with retired players, which continues to have its own unique issues ahead of resolution, the NCAA’s accord does not provide a fund to compensate injured athletes.

Fearing the settlement would bar athletes from pursuing personal injury claims, Edelson objected to create a “carve-out” for those claims.  His firm, working with Sol Weiss of Philadelphia’s Anapol Weiss, is now leading a series of nearly 50 class action suits on behalf of athletes who played the same sport at the same school.  For instance, the widow of a former University of Texas football player is the named plaintiff in a class action on behalf of all Longhorns football players who played between 1952 to 2010.

In a filing last week, Berman’s firm argues that Edelson’s firm should receive fees in the NCAA settlement case that represent a “pro rata portion” of his fees tied to the issue of arguing for a personal-injury carve out in the case.  That amount would be something less than $1.4 million.

Mark Mester, global chair of the consumer class action practice at Latham & Watkins in Chicago, is representing the NCAA in the litigation. The Indianapolis-based organization paid nearly $8.2 million to Latham—and another $5.8 million to Skadden, Arps, Slate, Meagher & Flom—during 2014-15, according to the NCAA’s most recent federal tax filing.

Judge Slams Fee Request in Civil Rights Case

September 15, 2017

A recent Legal Intelligencer story by P.J. D’Annunzio, “Judge Slams Lawyer, Equating Fee Request to ‘Attempted Bank Robbery’,” reports that a federal judge has taken Luzerne County attorney Cynthia L. Pollick to task for what the judge called "outlandish" fee requests and "inflammatory conduct" in a civil rights case.  In a lengthy 136-page rebuke, U.S. District Judge Matthew W. Brann of the Middle District of Pennsylvania chastised Pollick over her fee petition for nearly three-quarters of a million dollars in a decade-long case that settled for $25,000.

"Sad to say, after 10 years of protracted and unnecessarily contentious litigation, it appears that all plaintiff's counsel, Cynthia L. Pollick, esquire, has managed to accomplish is disrespecting this court as an institution and embarrassing herself in the eyes of many of its constituents," Brann wrote in his opinion.  But Brann wasn't finished there.  He went on to say Pollick's fee request "felt more like an attempted bank robbery than a genuine effort to recover a reasonable fee bill."

He continued: "Ms. Pollick's fee petition is 'mind boggling' and 'outrageously excessive.'  In fact, it is more than that.  The vast majority of Ms. Pollick's entries are larded with excreta unbecoming of any attorney in this district (and certainly unbillable to a client under any stretch of the imagination)."

Brann said in his opinion that Pollick "has not only failed to live up to her duty as an officer of this court—she has, as on numerous prior occasions, thumbed her nose at it.  Such defiance ceases today."  Specifically, Brann took issue, among other things, with the layout of Pollick's fee request.

"That Ms. Pollick submitted her fee bill without weeding out improper entries is grounds alone to deny it and impose sanctions," he said.  "That shortcoming here is not one that can be ameliorated by careful, line-by-line revisions.  I attempted to give Ms. Pollick the benefit of the doubt and pursue such an approach at first.  However, I soon discovered that this method was fool's errand: Ms. Pollick's entries are so inappropriate, vague, and duplicative that nearly every one of her thousands of entries needs to be eliminated or refined."

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.