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Category: Fee Request

SCOTUS Questions Seem to Doubt USPTO’s Attorney Fee Claim

October 9, 2019

A recent Law 360 story by Jimmy Hoover and Bill Donahue, “Justices Question USPTO’s Bold Pursuit of Atty Fees,” reports that the U.S. Supreme Court appeared skeptical of the U.S. Patent and Trademark Office’s recent practice of seeking attorney fees from parties that take the agency to court, given that the USPTO paid for its own lawyers for more than a century.  At oral arguments in the case Peter v. NantKwest, the justices, minus an ailing Justice Clarence Thomas, peppered an attorney from the U.S. Solicitor General’s Office with questions about the USPTO’s new and aggressive pursuit of attorney fees, which extends even to cases that the agency loses.

The Federal Circuit ruled last year that the policy violates the so-called American Rule, a deep-rooted doctrine that litigants must pay their own attorneys unless Congress expressly says otherwise.  Several members of the Supreme Court seemed sympathetic to that view.  “What sense does it make to think that Congress wanted the winning party to turn around and pay the government's legal fees, given how unusual that is?” Justice Brett Kavanaugh asked. “Why would Congress have thought to do it that way?”

The case revolves around de novo appeals, which allow dissatisfied patent or trademark applicants to effectively relitigate their application in district court rather than merely appeal to the Federal Circuit.  Both the Patent Act and the Lanham Act say that for applicants who choose the de novo route, “[a]ll the expenses of the proceedings shall be paid by the applicant.”

USPTO long interpreted that to cover things like travel expenses and copying, but started arguing in 2013 that the “expenses” provision covers attorney fees too.  In the case at hand from NantKwest Inc., that included over $78,000 for the cost of the agency attorneys who defended the company’s lawsuit over a rejected cancer treatment patent.

At arguments, Justices Neil Gorsuch and Stephen Breyer homed in on the fact that the USPTO had long declined to pursue attorney fees from applicants under the current statute or its predecessors.  “How did the government just figure this out?” Justice Gorsuch asked.  While Deputy Solicitor General Malcolm Stewart admitted — to laughter in the courtroom — that the abrupt change was “an atmospherically unhelpful point for us,” he denied that this historical record doomed his case.  “For that 170-year period we were foregoing a source of income that we were entitled to get,” he said.

Defending the policy, Stewart said that collecting attorney fees is “consistent with the overall statutory scheme” whereby the USPTO is supposed to cover aggregate costs, including personnel costs.  He also pointed out that NantKwest’s lawsuit “caused us to incur 30 times the expenses that would ordinarily be the fees for the patent application and examination.”

“It seems fair and appropriate to make the applicant pay,” he said.  Morgan Chu of Irell & Manella LLP, representing the company, disagreed.  “The government is arguing for a radical departure from the American Rule,” Chu said.  “It is arguing that when a private party sues the government for its improper action, then that private party must pay for the government's attorneys, even if the government and its attorneys are flatly wrong.”

Article: Defense Perspective on Plaintiffs’ Attorney Fees in FLSA Litigation

October 8, 2019

A recent Wage & Hour article by Mark Tabakman, “Plaintiff Attorney Fees in FLSA Cases: The Frustrating, Driving Force in These Cases,” reports on plaintiffs’ attorney fee requests in Fair Labor Standards Act (FLSA) litigation from a defense counsel perspective.  This article was posted with permission.  The article reads:

I read a very interesting article in the Epstein Becker Wage & Hour Defense Blog, whose sentiments I wholeheartedly agree with.  It concerns the issue of attorney fees for plaintiff lawyers in FLSA/wage cases.  The blog post notes that often, these lawyers get big dollar fee awards, while the allegedly victimized people they represent get “pennies.”

The posting notes, and I agree, that there are many, many plaintiff wage hour class (or single) action lawyers who believe in their clients and feel that their clients were “wronged” by not receiving proper payment (e.g. overtime).  With that said, there are also many who are more dedicated to their fees and maximizing those fees than they are in vindicating their clients’ position.

The posting notes that some plaintiff lawyers will announce that they “need” to get a certain sum as their fees for the case.  Then, the defendant’s lawyer (and a mediator, if it goes that far) know that they have to work back from that demanded fee award to get to a point where the case settles and the plaintiff(s) get something, whatever that “something” is.  That is, as the post correctly notes, the “tail wagging the dog.”

The posting notes, and again I agree, that the issue defaults to whether judges will try to do something about this disturbing trend, to stem this tide.  One example makes the point.  A Judge was presiding over a matter where the parties settled a wage-hour case, with small recoveries by the plaintiffs and where the plaintiff lawyers sought fees far greater than the recoveries that their clients would themselves receive.

The Judge could have easily approved the settlement, just to get it off the docket, but this Judge refused to take the easy way out.  She observed that these cases often are not about the employees or “justice” but rather the plaintiff lawyer’s fees.  She would not approve the settlement and hoped that other Judges would also not put up with these tactics.

 The Takeaway

I am so glad to hear a Judge express this sense of frustration.  I encounter it all the time and feel it all the time.  She is right.  Often times, I find myself settling so-called small cases because the portent of a large attorney fee demand makes the risk of defending too great, even if I know the client did nothing wrong.  That is wrong and very frustrating to me.

I hope the next Judge I get in a wage hour case is just like this one…

Mark E. Tabakman is a partner in the Labor & Employment Department of Fox Rothschild LLP who focuses his practice on advising and defending employers across the country in wage-hour matters. Based in the firm’s Princeton, NJ office.

Hospital System Can Challenge Attorney Fees in FCA Case

October 3, 2019

A recent Law 360 story by Adam Lidgett, “Hospital Chain Can Fight FCA Atty Fees, Judge Rules,” reports that hospital giant Community Health Systems (CHS) Inc. can challenge the pursuit of attorney fees by whistleblowers in False Claims Act (FCA) lawsuits alleging improper inpatient admissions, a Tennessee federal judge has ruled, citing murky settlement language.

U.S. District Judge Marvin E. Aspen held that a settlement agreement reached by CHS — in which it agreed to pay $97.3 million plus interest to end claims in various FCA cases — doesn't bar the company from contesting whether the whistleblowers were eligible to collect attorney fees.  The judge said that the whistleblowers, or relators, were aware "or had reason to know" that CHS intended to retain its ability to fight whether the relators could collect those fees.

"Even if we found that relators did not share CHS' interpretation of their rights under the settlement agreement, the evidence ... establishes that they knew of CHS' position," the judge wrote.  "Multiple communications also show that relators had reason to know of CHS' position."

The judge was careful, however, to note that his ruling did not decide whether the whistleblowers can actually collect those fees.  The decision stood in contrast to a recommendation from U.S. Magistrate Judge Barbara D. Holmes that interpreted the agreement in favor of the whistleblowers.  One group of relators had sought $2.65 million in fees, according to that recommendation.

The ruling came on remand from the Sixth Circuit, which in November 2016 scrapped a lower court's decision that CHS waived its right to challenge the fee award.  The company's appeal at the Sixth Circuit centered on whether a sentence in the settlement agreement meant CHS could only challenge fees under a specific FCA provision dealing with the reasonableness of fees, or instead could reserve its right to such challenges on any basis.  While a Tennessee federal judge in 2015 found the former, the Sixth Circuit held that the language was ambiguous and therefore warranted a remand for further proceedings.

PG&E Bankruptcy Attorneys Blast Fee Examiner’s Caps on Fees

October 2, 2019

A recent Law 360 story by Rick Archer, “PG&E Case Attorneys Blast Fee Application Protocol,” reports that counsel for Pacific Gas and Electric Co. (PG&E), the utility’s board of directors and the unsecured creditors in its bankruptcy case have jointly claimed the court-appointed fee examiner is seeking to impose excessively strict caps and unnecessary barriers to their fee applications.

In a filing with a California bankruptcy court, the parties said the fee examiners' proposal would unreasonably put a flat cap on compensation for time spent preparing fee applications, bar compensation for travel time and place other “unwarranted” barriers to fee applications.  “The protocol and motion together contain a litany of requirements that have no basis in the Bankruptcy Code, rules or guidelines,” they said.

The filing is a response to a September filing by Bruce Markell, the fee examiner appointed by the court in the case, proposing guidelines and procedures to evaluate applications to approve legal fees.  According to the filing, 23 firms had submitted appearances in the bankruptcy case as of Sept. 16, although only eight had filed fee applications.

Markell argued he should be allowed to bar redacted time entries and applications for nonworking travel time, which he said made up about $1 million of the then-current fee applications.  He also sought a cap on payable hours for time preparing employment and fee applications.  “The fee examiner has been impressed by the amount charged for obtaining court approval of employment. In one interim application, these fees approached $200,000,” he said.

In the filing, counsel for PG&E and the unsecured creditors argued the proposed guidelines are too strict, saying the general local guidelines call for fee application preparation to be capped at 5% of total fees, and that standard guidelines call for attorneys be compensated for up to two hours of non-working travel time.  They noted a number of attorneys in the case who are based in New York and others are required to travel around California in connection with wildfire litigation.  They also argued the procedures would unnecessarily penalize late applications and impose other “unwarranted barriers.”

“The protocol and motion should not impose requirements beyond what Congress has commanded,” they argued.  PG&E filed for Chapter 11 bankruptcy in January after racking up over $30 billion in liabilities related to its alleged role in sparking wildfires that charred vast swaths of California and killed 130 people.

Class Counsel to Judge: Trust Us, Our $89M Fee Request is Reasonable

September 27, 2019

A recent Law 360 story by Jack Queen, “Consumer Seek $89M in Atty Fees for Robocall Class Action, reports that attorneys who won a class action against a robocalling debt collector asked a California federal court to grant them $89 million in fees, citing the size of the trial judgment and lengthy appeal fight ahead.  Bursor & Fisher PA told the court that one-third of the $267 million judgment was an appropriate fee given the risks of the first-of-its-kind case and intransigence of defendant Rash Curtis & Associates, whose "sandbagging, discovery abuse, and false testimony" bogged down the case.  A jury found earlier this year that the debt collector made more than 500,000 illicit robocalls to consumers.

"Defendant repeatedly withheld information and provided false testimony regarding important issues to be decided at trial," Bursor & Fisher said.  "To overcome these abuses, class counsel had to file, and win, seven motions to compel discovery, just to obtain the evidence needed to present the claims at trial."  Bursor & Fisher said it should get more than the standard 25% benchmark fee for class actions set by the Ninth Circuit because of the novelty and risk of the case, which the firm said was the largest per-class-member judgment ever awarded under the Telephone Consumer Protection Act, a federal law limiting the use of automatic dialers.

Bursor & Fisher said the litigation is still far from over, and the firm expects to rack up expenses as it seeks to collect from Rash Curtis' insurer and fend off appeals from the California debt collector, which vowed to "tie the case up in righteous appeals for years."  The firm also said that it expects Rash Curtis to file for bankruptcy, further complicating efforts to recover the $500 awarded for each call.

The class action was originally filed in June 2016 and alleged that Rash Curtis used "repeated robocalls, prerecorded voice messages and autodialed calls to threaten and harass consumers in an attempt to collect" debts.  The firm collected numbers using "skip tracing," a method of analyzing personal information on public and private databases that often dredges up numbers unconnected to any debt, according to the class complaint.

Discovery in the case was fraught, riven with late additions to the evidence and last-second turnabouts by the defense, Bursor & Fisher said.  In a September 2017 ruling granting class certification, U.S. District Judge Yvonne Gonzalez Rogers chided Rash Curtis for its "blatant delaying and sandbagging tactics" and warned that she would impose sanctions if the debt collector kept it up.