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Article: Fee Rulings Show When to Litigate Wage Claims for Defense

March 9, 2020

A recent Law 360 article by Valerie K. Ferrier, “3 Rulings Show When Litigating Wage Claims Is Worth It,” reports on three recent fee rulings defense counsel should consider when deciding to litigate wage claims.  This article was posted with permission.  The article reads:

Wage and hour cases present a particular threat to small businesses. The hospitality industry is especially vulnerable to these claims.

Aside from incurring the legal costs of a defense, with one-way fee-shifting in favor of prevailing plaintiffs under the Fair Labor Standards Act and the New York Labor Law, it is often advisable for businesses to offer an early settlement before the other side incurs substantial attorney fees.

Yet, as some recent cases illustrate, there are situations when defendants may choose to fight it out at trial. Business owners may have multiple reasons they prefer to litigate: deterrence of future lawsuits, lack of concern because they are essentially judgment-proof, and of course moral outrage. Three recent decisions highlight instances in which businesses fought the good fight, and largely prevailed.

Offer of Judgment Under Federal Rule of Civil Procedure 68

A Rule 68 offer of judgment is a litigation tool meant to incentivize early settlement. Under the rule, at least 14 days before trial, a defendant may make an offer to settle on terms they specify.

If a plaintiff rejects the offer, and does not ultimately obtain a more favorable result at trial, the plaintiff must pay the defendant’s post-offer costs for things like transcript fees. In FLSA cases, the plaintiff's attorney may be incentivized to delay settlement discussions, knowing that if they prevail on any claim, in any amount, the FLSA’s fee-shifting provision will be triggered, and the defendant will have to pay the plaintiff's attorney fees, in addition to any judgment obtained by the plaintiff. A Rule 68 offer means that the plaintiff’s attorney, as well as the plaintiff, must think hard about whether to gamble on a more favorable outcome at trial.

A recent decision by a panel of the U.S. Court of Appeals for the Second Circuit in December 2019 made it easier for the parties to resolve cases early, without court approval. Prior to the ruling in Yu v. Hasaki Restaurant Inc., there was a split of authority about whether the parties to an FLSA action could privately settle the matter pursuant to a Rule 68 offer, or whether any FLSA settlement, including those under Rule 68, required court approval, as enunciated in Cheeks v. Freeport Pancake House Inc.

A two-judge majority of the panel held that "[a]ppeals to the broad remedial goals and uniquely protective qualities of the FLSA do not authorize us to write a judicial approval requirement into the FLSA, and thereby into Rule 68(a), when the text of both provisions is silent as to such a requirement." With this decision, parties are now free to more quickly resolve wage and hour cases, even prior to discovery.

Marcelino v. 374 Food

In Marcelino v. 374 Food Inc., following unsuccessful attempts at mediation and settlement, the U.S. District Court for the Southern District of New York held a bench trial, approximately a year and a half after the case was filed. The plaintiff, Domingo Castillo Marcelino, alleged he was underpaid over six months of employment.

His credibility was undermined on cross-examination when, among other things, he contradicted his starting date and was unable to identify one of the individual defendants in the courtroom, even though he testified that the man personally directed his work. The court dismissed the FLSA claims, holding that the plaintiff failed to establish either enterprise or individual coverage under the law.

Despite the defendant’s lack of time and pay records, the court assessed minimal damages under the New York Labor Law only, awarding the plaintiff $8,144, including statutory penalties and liquidated damages. However, noting that the plaintiff seemed to be "making up answers as he went along" during his testimony, the court concluded that the plaintiff perjured himself, and requested briefing from the parties as to whether, in light of that finding, the plaintiff was entitled to recover anything at all.

Thereafter, the plaintiff’s counsel, the subject of possible sanctions himself, withdrew from representation, and the plaintiff was unable to be located. He failed to appear at a hearing on the court’s order to show cause, and as a result, in addition to his "extensive perjury," on Jan. 24 the court forfeited the plaintiff’s award pursuant to its inherent power and closed the case.

Eduoard v. Nikodemo Operating

In Eduoard v. Nikodemo Operating Corp., the plaintiff, a former dishwasher and general helper sued his former employer, a restaurant, about a year after he had received approximately 150% of his total annual pay as a member of a class settlement against the restaurant. In his own lawsuit, he claimed that after the settlement the restaurant had improperly rounded his hours, and thus failed to appropriately pay him overtime.

He further alleged that an hour was improperly deducted from his time each day for a meal break that he claimed he never once took in all the years he worked there, and that he was fired in retaliation for complaining about it. He also brought spread-of-hours claims and claims for violation of the Wage Theft Prevention Act.

The defendants almost immediately made a Rule 68 offer, which was ignored and expired. Thereafter, without ever having conducted any class discovery, the plaintiff moved for class certification under Rule 23.

The court denied the motion, and the parties proceeded to a bench trial because the plaintiff failed to request a jury trial. Shortly before the trial was to commence, the plaintiff’s original counsel was substituted just before he was disbarred.

The plaintiff testified on his own behalf. One of the owners of the business testified on behalf of the defense. After the conclusion of the trial the court issued findings of fact and conclusions of law.

As in Marcelino, the U.S. District Court for the Eastern District of New York dismissed the FLSA claim because the plaintiff failed to prove either individual or enterprise coverage under the law. The court also found the defendant "much more credible than [the] plaintiff on several issues." Specifically incredible was the plaintiff's testimony that he never took a lunch break and never ate anything during his shifts, never got hungry, and never even once sat down while working during the relevant time period.

The court denied the plaintiff’s rounding, meal break deduction, retaliation and overtime claims, but granted the plaintiff’s claims as to spread-of-hours and the Wage Theft Prevention Act. As a result, after one year of litigation, the plaintiff was awarded a total of $3,419.32, including interest.

Because the defendants had previously made a Rule 68 offer before discovery commenced, the defendants moved for sanctions pursuant to the court’s inherent authority and under Title 28 of U.S. Code Section 1927 against the plaintiff’s former counsel. The motion was for unnecessarily multiplying the proceedings in bad faith by making a frivolous and factually unsupported motion for class certification, despite an explicit warning from the court regarding the consequences of doing so. A decision on this motion is pending.

Feuer v. Cornerstone Hotels

More recently, the Eastern District of New York issued a decision in Feuer v. Cornerstone Hotels Corp.[5] following a 2018 bench trial in the case of a married couple who worked and lived at a 12-room motel for six months in 2014. They alleged that they were either working or on-call 24/7, and were thus underpaid minimum wage and overtime. Shortly after the case commenced, the individual defendant chose to proceed pro se and left the corporate defendant unrepresented.

The court held that neither the husband nor wife, even combining their hours, ever worked more than 40 hours in a week. However, because they were underpaid during the first week of their employment the court awarded them $92 in unpaid wages, the same amount as liquidated damages, and statutory damages, for a total of $5,184, plus 2 cents interest per day until the judgment was paid.

Similar to Eduoard, the court credited the employer’s time and pay records, and found the plaintiffs’ testimony was not credible, especially when compared to that of the owner who testified and also lived on the premises.

Lessons for Counsel

As all three cases make clear, plaintiffs counsel must go beyond merely accepting their client’s word for how long they worked, or how much they were paid. Moreover, plaintiffs who take patently exaggerated positions do so at their peril.

Indeed juries are often instructed that if they determine that a witness has lied about anything, they are entitled to conclude that the witness has lied about everything. As the Latin saying goes, "falsus in uno, falsus in omnibus."

Even if a plaintiff is ultimately awarded a few thousand dollars after a year or more of litigation, other sanctions may be attached. In addition, plaintiffs counsel, who generally take wage and hour cases on contingency, may end up wasting an enormous amount of time, money, resources and good will, even if they are not sanctioned.

On the other hand, defendants who are confident that they have complied with the law, or have only minimal liability, may elect to pursue litigation to its conclusion in order to prove a point. Defendants are often loath to pay both their own attorney fees and at the same time accept the risk that they may be ordered to pay plaintiff fees, even if the award is small.

However, as Feuer demonstrated, in some instances, pro se individual defendants can save attorney fees and successfully defend themselves. In addition, strategic deployment of a Rule 68 offer of judgment at an early stage of the litigation may drastically curtail even a prevailing plaintiff’s entitlement to attorney fees.

Valerie K. Ferrier is a partner and head of the labor and employment practice group at Martin Clearwater & Bell LLP in New York, NY.

Article: Five Lessons for Recovering Attorney Fees in Texas

February 24, 2020

A recent BizLitNews article by Amanda Taylor, “Recovering Attorney’s Fees in Texas: Five Lessons,” reports on attorney fee recovery in Texas.  This article was posted with permission.  The article reads:

Obtaining an award of attorneys’ fees might be the final step in a long-waged litigation battle but to do so successfully requires careful planning and diligence from the outset of a case.  The Texas Supreme Court recently clarified the evidence required to obtain and affirm such an award.  Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469 (Tex. 2019).  The Texas Supreme Court also recently confirmed that these evidentiary standards apply equally when fees are sought to be recovered as a sanction.  Nath v. Texas Children’s Hosp., 576 S.W.3d 707, 710 (Tex. 2019).  To best serve a client’s interests of recovering attorneys’ fees in Texas, whether as a prevailing party or as a sanction, lawyers should adhere to five lessons from Rohrmoos.

Lesson One:  Confirm a legal entitlement to recover fees.  “In Texas, as in the federal courts, each party must pay its own way in attorney’s fees … unless a statute or contract provides otherwise.”  Rohrmoos Venture, 578 S.W.3d at 484.  Certain claims, such as a breach of contract claim brought under Chapter 38 of the Texas Civil Practices and Remedies Code, entitle a prevailing party to recover attorneys’ fees.  Other claims, such as a common law fraud claim, do not afford such a remedy.  In establishing your initial case strategy, it is important to consider which claims will and will not allow for recovery of fees, and advise your client about the pros and cons of pursuing each claim accordingly.  Also, be aware of fee-shifting procedural tools (such a motion to dismiss under the Texas Citizens Participation Act) and various Texas statutes and rules that allow for recovery of fees as a sanction (such as Civil Practice and Remedies Code Chapters 9-10, and Texas Rule of Civil Procedure 215).

Lesson Two: Keep accurate, contemporaneous billing records.  Although billing records are not absolutely required to prove the amount of reasonable and necessary fees, it is “strongly encouraged” to submit such proof in support of attorneys’ fees.  Rohrmoos Venture, 578 S.W.3d at 502.  It is much easier to review, summarize, and testify about the work performed (often years later) if you have been diligent in your billing practices throughout.  Time should be kept in a manner that demonstrates the “(1) particular services performed, (2) who performed those services, (3) approximately when those services were performed, (4) the reasonable amount of time required to perform the services, and (5) the reasonable hourly rate for each person performing the services.”  Id.  It is also advisable to keep time in a manner that is specific enough to cover the topic but without legalese and without so much detail that heavy redactions become necessary.  Fact finders prefer to read invoices in plain English without the interruption of hidden text.

Lesson Three:  Your fee agreement does not control the amount awarded.  “[A] client’s agreement to a certain fee arrangement or obligation to pay a particular amount does not necessarily establish that fee as reasonable or necessary.”  Id. at 488.  Translation: even if you have agreed to handle the matter for a flat fee or contingency fee, you still must demonstrate that the amount of fees sought for recovery are reasonable and necessary based on the work performed and the time incurred.  Regardless of the fee arrangement with your client, keeping accurate and contemporaneous billing records is important.

Lesson Four: Remember to timely designate fee experts.   “Historically, claimants have proven reasonableness and necessity of attorney’s fees through an expert’s testimony—often the very attorney seeking the award.”  Id. at 490.  “[C]onclusory testimony devoid of any real substance will not support a fee award.”  Id. at 501.  Because expert testimony will be required, the attorney must remember to designate herself and any other attorney who will offer an opinion about the reasonableness and necessity of the fee amount(s) as an expert witness in compliance with the scheduling order or discovery control plan governing the case.

Lesson Five: Understand the “Texas two-step” calculation method.  At step one, calculate the “base” or “lodestar” amount by multiplying the “reasonable hours worked” by a “reasonable hourly rate.”  Id. at 498.  This is an “objective calculation” that yields a “presumptively reasonable” amount.  Id. at 497-98, 502.  The determination of what is a reasonable market rate and what is a reasonable amount of time will typically include consideration of the following factors: (1) the time and labor required, (2) the novelty and difficulty of the questions involved, (3) the skill required to perform the legal service properly, (4) the fee customarily charged in the locality for similar legal services, (5) the amount involved, (6) the experience, reputation, and ability of the lawyer or lawyers performing the services, (7) whether the fee is fixed or contingent and the uncertainty of collection, and (8) the results obtained.  Id. at 500.  At step two, “adjust[] the base calculation up or down based on relevant considerations … [that were not] subsumed in the first step.”  Id.  “If a fee claimant seeks an enhancement, it must produce specific evidence showing that a higher amount is necessary to achieve a reasonable fee award.”  Id. at 501.  Remember that only “rare circumstances” justify such an adjustment.  Id. at 502.

Following these five lessons from the outset of a case will be beneficial to the expert testifying about the amount of fees at the end of a case.  More importantly, it will benefit your client’s best interest in obtaining a monetary award and being able to have that award affirmed on appeal.

Amanda G. Taylor is a Board-Certified Civil Appellate attorney who practices from the Austin, TX office of Butler Snow LLP.  Her practice is focused on shaping successful case strategy for litigation clients from the outset of litigation through the end of an appeal.  She also frequently represents clients in matters regarding the Texas Citizens Participation Act (Texas’ anti-SLAPP statute).

Fifth Circuit Asked to Clarify ‘Prevailing Party’ in Maritime Law

February 12, 2020

A recent Law 360 story by Michelle Casady, “5th Circ. Asked to Clarify Prevailing Party in Maritime Law,” reports that the Fifth Circuit was urged during oral arguments to provide lawyers clarity on what it means to be the prevailing party entitled to attorney fees and costs in a maritime contract dispute.  Presenting it as an "undecided issue in federal law," Marty McLeod of Phelps Dunbar LLP, who represents Genesis Marine in a dispute against Hornbeck Offshore Services, asked the court to consider establishing a "bright-line rule" based on who prevails on the "main issue" in a case.

"I'm not asking the court to do anything other than apply what it's already done in other cases … to federal maritime law," he said.  In the underlying dispute, Genesis is seeking $102,789 in attorney fees and costs, arguing it was the prevailing party in the lawsuit it filed in the Eastern District of Louisiana in July 2017 against Hornbeck, which it had chartered its vessels to.

As Genesis sees it, because it prevailed on the main issue in the case — which asked whether it provided appropriate notice to terminate ship management agreements after about $722,000 in invoices went unpaid — it's entitled to recover the fees and costs. Hornbeck unsuccessfully argued the termination was not proper and therefore it was entitled to $2.95 million in unpaid ship management fees.

But Hornbeck contends that while Genesis prevailed on the main issue of the case, Hornbeck similarly prevailed on the "main issue" of its counterclaim, which was its entitlement to about $117,000 for fuel, lube and shoreside services under the master charter agreement that allows for the recovery of fees and costs.  According to court records, Genesis stipulated to that amount it owed Hornbeck at the end of trial and the judge reduced Genesis' award by that amount, which Hornbeck said means it, too, is a prevailing party.

Circuit Judge Gregg J. Costa said the record seems to support the trial judge's contention that both sides prevailed and the requests for fees offset each other. McLeod said that can't be.  "There cannot be more than one prevailing party under the contract," he said, explaining the contract allows for fees to be recouped by "the prevailing party," which is singular, rather than "a prevailing party," which could mean multiple parties.

A bench trial in the case began in June 2018.  In August 2018, U.S. District Judge Ivan L.R. Lemelle issued a ruling that Hornbeck pay Genesis about $722,000, minus $117,000 for fuel, lube and shoreside services.  He also dismissed with prejudice Hornbeck's counterclaims.

In March 2019, Judge Lemelle issued an order denying the motion for attorney fees, explaining in a seven-page order that the parties had agreed the main issue in the case was whether Genesis had improperly terminated the ship management agreements, which would have allowed Hornbeck to offset its invoices for unpaid ship management fees. The court ruled for Genesis on the issue but decided that because the dispute didn't fall under the master time charter agreement — the only agreement that allowed for fee recovery — it couldn't award Genesis attorney fees.

"Simply put, the agreed-upon main issue of this case was found to not fall under the master time charter — the only relevant contract that provides recovery of attorneys' fees and costs," Judge Lemelle wrote.  "The master time charter provides recovery of reasonable attorneys'  fees and costs from the other party for not just any dispute, but only disputes falling under the master time charter."

When Must the Federal Government Pay Attorney Fees?

February 11, 2020

A recent NLJ article by Marcia Coyle, “When Must the U.S. Pay Legal Fees? A Vietnam Vet Turns to the Supreme Court,” reports on attorney fee recovery from the federal government in an EAJA case.  The article reads:

Alfred Procopio Jr.’s decades-long fight with the U.S. Department of Veterans Affairs changed the law, forcing the agency to provide potentially billions of dollars in benefits for thousands of Vietnam War veterans.  But his dispute with the government hasn’t ended, as his lawyer presses an appeal in the U.S. Supreme Court to collect $35,000 in legal fees.

The petition tests a key element of the Equal Access to Justice Act, or EAJA, a federal law that allows private parties who prevail against federal agencies in certain circumstances to recoup the cost of litigation.  An award of fees under the EAJA is mandatory when a court concludes that the government’s position was not “substantially justified.”  Procopio’s case challenges how courts determine whether the government’s arguments were “substantially justified.”

The septuagenarian Procopio, represented by retired Navy Cmdr. John Wells of Slidell, Louisiana, is asking the justices to review a decision by the U.S. Court of Appeals for the Federal Circuit that said he is not entitled to any compensation. The en banc court in September sided with the U.S. Justice Department in ruling against Procopio’s fee request.  “The Supreme Court takes about one veteran’s case a year,” Wells said in an interview.  “When I filed [the petition], I said, ‘OK, it’s worth a try,’ but given the success rate [in granting review], I didn’t hold out much hope. It’s a very good, legitimate issue.”

In 2010, a dozen federal agencies paid out more than $50 million in court and administrative cases via the EAJA, according to one government report.  The Department of Veterans Affairs tab of $15.5 million was among the highest.  The U.S. Court of Appeals for Veterans Claims in 2017 reported receiving nearly 3,000 applications under the EAJA.

The original statute capped fees at $125 hourly, an amount that is now $200 adjusted for inflation.  Awards are limited to individuals with a net worth of $2 million or less, or the owner of a business or other organization worth $7 million or less and with no more than 500 employees.  Lawyers at major U.S. law firms that have served pro bono sometimes ask courts to award EAJA fees.

‘The Government’s Position Here Was Plainly Wrong.’

Wells argues that the Federal Circuit took an “inelastic and rigid approach” in its conclusion that the government’s position was substantially justified in the case.  The government resisted Procopio’s arguments that so-called Blue Water veterans, who served in the waters of Vietnam, but not on land, were entitled to certain benefits after being exposed to the chemical Agent Orange.

Procopio’s petition relies in part on a concurring opinion from Federal Circuit Judge Kathleen O’Malley, who sympathized with Procopio but ultimately said the court’s hands were tied because of Supreme Court and circuit court precedents.  O’Malley said, “this is the very type of case for which Congress enacted the EAJA.  The government’s position here was plainly wrong.”

O’Malley continued: “Mr. Procopio is the very type of prevailing party, moreover, for whom Congress enacted the EAJA.  Mr. Procopio changed the law for all Vietnam War veterans who served in the Republic of Vietnam’s territorial waters.  And his financial burden in doing so was only increased by the government’s failure to codify its tenuous position into a type of rule whose validity we may review on its face rather than as applied to any individual case.”

O’Malley wrote separately, she said, “to express my belief that the governing interpretation of ‘substantially justified’ sets the bar far too low for the government in a way that is contrary to the plain text of the EAJA and its underlying purpose.”  She implored the judiciary to adopt a standard that she said “breathes life back into the text and purpose of the EAJA.”  The word “substantially,” O’Malley said, “must do some work in defining precisely how justified the government’s position must be.”

In the 1988 case Pierce v. Underwood, the Supreme Court said “substantially justified” means that the government’s position, in both its underlying conduct and its litigating posture, must have a “reasonable basis” in law and fact.  But O’Malley said there is no reasonableness standard in EAJA’s text.  The statutory text, she said in Procopio’s case, “requires that the government’s position be justified by a considerable amount or, at least, that it have a solid foundation in substance.”  And that was not the case with the government’s position in Procopio, she concluded.

Procopio’s fee request stemmed from his victory in January 2019 in Procopio v. Wilkie.  The Federal Circuit, ruling 9-2, said for the first time that the Agent Orange Act of 1991 and its presumption of exposure to the chemical herbicide applies to Navy veterans who served on ships within the 12-mile territorial sea of Vietnam.  The Veterans Affairs department and the Justice Department had argued for years that the 1991 act covered only those veterans who served on the ground or inland waterways of Vietnam.  Six months after the appellate decision, the Justice Department told the Supreme Court that it would not appeal the ruling.  The benefits potentially owed to roughly 90,000 vets have been estimated to cost the government more than $1 billion over 10 years.

In reaching its 2019 decision, the majority, led by Federal Circuit Judge Kimberly Moore, said Congress was clear from its use of the term “in the Republic of Vietnam” that “all available international law unambiguously confirms that it includes its territorial sea.”  The majority overruled the 2008 decision in Haas v. Peake.  The Haas court, Moore wrote, “went astray” when it found ambiguity in the law.  Mel Bostwick, a partner in Orrick, Herrington & Sutcliffe, argued pro bono on behalf of Procopio.

Justice Department’s Opposition

In opposing Procopio’s subsequent fee application in the Federal Circuit, the Justice Department’s civil division, led by Assistant Attorney General Jody Hunt, argued that a 1988 decision benefited the government’s argument that its litigation position was substantially justified.  The Federal Circuit’s ruling in Owen v. United States said that the government’s position can be deemed substantially justified when the government relies on a binding, precedential court of appeals decision that is later overturned.

“Our position relied on this court’s 2008 precedential decision in Haas v. Peake to defend [the] VA’s denial of Mr. Procopio’s presumptive disability compensation claim and the Veterans Court’s decision on appeal,” the Justice Department lawyers told the Federal Circuit.  In the Supreme Court petition, Wells said the justices’ “reasonable person” test for substantial justification “flies in the face of the plain meaning of the statute.”  He contends the Federal Circuit in a 2015 decision had placed the government on notice that its “boots-on-the-ground” position was wrong but it persisted in defending it.

NJ Justices Toss ‘Unsound’ Attorney Fee Ethics Rules

January 29, 2020

A recent Law 360 story by Bill Wichert, “NJ Justices Throw Out ‘Unsound’ Ethics Rules for Atty Fees,” reports that the New Jersey Supreme Court upended new ethics rules from an appellate panel with respect to attorney fees in discrimination and related cases, saying they could have “far-reaching and negative effects” on lawyers and their clients.  The justices reined in those “ethical pronouncements” from the panel's 2018 published decision affirming a trial court’s orders declaring Brian M. Cige’s agreement with Lisa Balducci unenforceable.  The Supreme Court said a new ad hoc committee of judges and attorneys will be created to address such issues and make recommendations to the court.

“Some of those pronouncements appear too broad and some unsound, and others are worthy of the deliberative process by which new ethical rules are promulgated by this Court,” Justice Barry T. Albin wrote in the unanimous opinion.  The ethical obligations set forth by the panel covered attorneys handling New Jersey Law Against Discrimination and other fee-shifting cases when a retainer agreement includes hourly fees.  In fee-shifting actions, a defendant is responsible for a prevailing plaintiff’s reasonable attorney fees.

Among those rules, the Supreme Court rejected the panel’s finding that such attorneys must provide clients with “‘examples of how much hourly fees have totaled in similar cases.’”  That requirement “imposes a difficult, if not impossible, task,” the justices said.  “The attorney would have to know whether the ‘similar case’ settled or was tried, the nature and length of the discovery process, the number of depositions conducted and expert witnesses retained, the overall complexity of the litigation, and many other factors,” Justice Albin wrote.

The justices challenged the panel’s directive that attorneys inform clients that “‘other competent counsel represent clients in similar cases solely on a contingent fee basis, without an hourly component,’” noting that clients may benefit more from an hourly-fee deal than a contingent-fee arrangement.  The Supreme Court also expressed doubts about the panel’s pronouncement that attorneys “‘disclose other competent counsel who represent clients in similar cases advance litigation costs.’”

“Must an attorney refer a potential client to a competitor who may be less experienced or skilled merely because that attorney advances litigation costs?” the justices said.  “The answer to that question suggests that the Appellate Division’s disclosure requirement must be considered critically.”  The panel further asserted that “‘if the attorney has no such experience with similar cases ... consideration should be given to referring the case to a certified civil trial attorney,’” but the Supreme Court questioned whether that was correct as well.

The justices noted that “an attorney who has represented a client in one particular species of LAD cases may be no less capable of handling another species of such cases.”  “In addition, without in any way diminishing the value or importance of the designation of certified civil trial attorney — a special designation that signals that an attorney has recognized competence and experience as a litigator — certification is a voluntary, lawyer-initiated process, and some of the finest attorneys in their respective fields have decided not to seek certification,” the Supreme Court said.

The Supreme Court, however, upheld the panel’s finding that Cige’s retainer agreement was invalid.  Balducci retained Cige in 2012 to represent her son in an LAD lawsuit against a school district over bullying he had faced, court documents state.  The retainer agreement stated that Cige was entitled to the greater of three fee calculation methods: his hourly rate, a contingent fee or an award of statutory attorney fees, court documents state.

Balducci has claimed that Cige told her she would not have to pay his hourly fees, although the retainer agreement indicated otherwise, court documents state.  She has said Cige assured her the attorney fees would be covered by the school board, court documents state. Cige has denied making any statements that conflicted with the written agreement, according to the court documents.

The agreement also did not specify what Cige would charge Balducci for expenses, including $1 for every email sent or received, court documents state.  After Balducci terminated his services in 2015, Cige billed her for about $286,000 in fees and expenses, court documents state.  Balducci then filed the instant action seeking to have the agreement declared unenforceable, court documents state.

A trial court heard testimony from Balducci, her son and Cige, and sided with Balducci in invalidating the agreement, court documents state. The appellate panel upheld that decision.  In affirming the invalidation ruling, the Supreme Court concluded there was “sufficient credible evidence in the record” to back up the trial court’s findings.

“The court accepted Balducci’s assertion that she would not have retained Cige had he informed her that she would be responsible for his hourly fees if the lawsuit failed.  The court, moreover, determined that ‘a reasonable client’ would have viewed the retainer agreement as a typical contingent-fee arrangement, obligating the client to pay a percentage of a monetary recovery only if the lawsuit succeeded,” the justices said.