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Category: Fees for Fees

Eleventh Circuit: No Added Attorney Fees for Defending Fees

April 12, 2019

A recent Law 360 story by Nathan Hale, “No Added Atty Fees in Nationstar Case, 11th Circ. Says,” reports that a Florida woman who won a judgment against Nationstar Mortgage LLC for charging improper fees is not entitled under state law to collect appellate attorney fees for her counsel's work defending an initial attorney fees award in the case, the Eleventh Circuit ruled.  The federal appeals court backed a lower court's decision to deny Sara Alhassid's request for attorney fees covering Nationstar's appeal based on a finding that the benefit would be purely for her attorneys and that she has no obligation to pay them for this work.

The appeals panel said it agreed with the district court that the controlling case on the issue is the Second District of Florida's ruling in B & L Motors Inc. v. Bignotti.  In that case, the state appeals court found that if a plaintiff has no interest in a fee award because it would not affect her payment obligation to her attorneys, then the plaintiff may not receive a fee award under the Florida Deceptive and Unfair Trade Practices Act, according to the opinion.

“B & L Motors is exceedingly clear that a prevailing plaintiff may receive fees under FDUTPA only if a 'fee award is found to be in the interests of the client and if the fee arrangement is found to have contemplated payment for that work,'” the Eleventh Circuit said.  “Because we do not lightly disregard binding, on-point decisions of intermediate state appellate courts, we hold that B & L Motors compels the denial of appellate attorneys’ fees in this case.”

Alhassid's counsel, Reuven T. Herssein of Herssein Law Group PA, said that his side intends to seek an en banc rehearing of the decision, which he said promotes meritless appeals by mortgage companies and other large institutions and has a chilling effect on plaintiffs who bring and litigate these cases.  "In light of this decision, plaintiffs attorneys will shy away from taking on these kind of cases since we won on the merits of the appeal and the appellate court’s decision means we are not paid for the successful result we obtained for our client in the appellate court," he said.

According to the opinion, Alhassid's attorneys had said that they “took this case on a contingency basis,” and the district court found that meant that any fees resulting from the appeal of the fee award would “inure solely to the benefit of plaintiff's attorneys and not to plaintiff herself.”

The dispute stems from Bank of America's decision to place Alhassid’s reverse mortgage in default for failure to pay flood insurance on her property.  After acquiring Alhassid’s mortgage and note in April 2013, Nationstar called her loan due and payable and started a foreclosure action on the property in January 2014, according to case records.  Alhassid filed the suit as a proposed class action against Bank of America NA and Nationstar in February 2014 and was joined by Sarah Drennen in August 2014.  The two women filed their third amended complaint in December 2014, bringing three breach-of-contract claims, a claim for breach of the covenant of good faith and fair dealing, the FDUTPA claim and a claim of violation of the Fair Debt Collection Practices Act.

They alleged the two companies charged improper fees, placed loans in default when borrowers did not pay those fees and then charged more unlawful fees after the defaults, according to the opinion.  The district court in Miami denied class certification in August 2015, finding that the nine class definitions didn’t show commonality and only individualized evidence could prove wrongdoing.  The claims against Bank of America were ultimately dismissed voluntarily, but Alhassid won summary judgment against Nationstar on all but the good-faith and fair-dealing claim, which the court found to be duplicative, the opinion said.

Alhassid was awarded $5,000 in actual damages and $1,000 in statutory damages under the FDCPA, according the opinion.  The district court also found that she was entitled to attorney fees as the prevailing party under the FDUTPA and awarded her $435,704 in fees.  The Eleventh Circuit affirmed the award on appeal.  The case is Alhassid v. Nationstar Mortgage LLC, case number 18-11985, in the U.S. Court of Appeals for the Eleventh Circuit.

Contractor Challenges Fee Request in False Claims Act Case

April 3, 2019

A recent Law 360 story by Michael Phillis, “Contractor Fights ‘Cash Grab’ Fee Request in FCA Suit,” reports that a joint venture that included Bechtel Group blasted a whistleblower's bid for nearly $2 million in attorney fees and expenses as a "cash grab" after the contractor agreed to pay $3.2 million to resolve claims it lied about its subcontractors at a nuclear waste cleanup.  Washington Closure Hanford LLC told a Washington federal court that whistleblower Salina Savage and Savage Logistics LLC’s request for nearly $2 million in attorney fees, expenses and “fees on fees” was based on an elevated hourly rate of $800 and was generally unreasonable.  According to the memorandum filed, an appropriate fee award would be roughly $300,000 after applying a $150 to $400 per-hour rate.

The U.S. Department of Justice in June announced it settled the False Claims Act case for $3.2 million, ending accusations that WCH — a joint venture of AECOM, Bechtel and CH2M Hill Cos. Ltd. — made misrepresentations about its subcontractors while doing nuclear waste cleanup work at the Hanford Site in Washington state.  Savage and her company Savage Logistics, which received a $643,000 cut of the settlement, originally filed the suit against WCH in 2010 after having unsuccessfully bid on subcontract work.  Any attorney fees awarded would be on top of that amount.

“If the court grants Savage’s exorbitant request, Savage would recover nearly $2.6 million from WCH for a case litigated primarily between WCH and the [U.S. Department of Justice] that settled for $3.2 million,” the memorandum said.  “Savage’s motion is nothing more than a cash grab by a relator whose efforts did little to bring the case to resolution.”  WCH responded to what it said was an overblown request by Savage in March for a too-large share of fees.

According to WCH, Savage’s fee request was based on an inflated hourly rate that was inappropriate for the local area in which the litigation occurred.  It asked for too many hours and Savage was only involved in part of the litigation, which mainly was pursued by the federal government, which intervened in the suit.  “WCH spent its time and resources after intervention defending against the DOJ, not against Savage,” the memorandum said.  “The small number of hours worked by Savage’s counsel reflects only her limited role after intervention.”

In its request for fees, Savage said her efforts and those of her attorneys took years and resulted in an important settlement.  That work should be properly considered and compensated, according to court filings.  “Work performed by the attorneys securing the government’s participation and presenting Savage’s case to the court has created invaluable precedent over the viability of — and measure of damages in — False Claims Act cases predicated on false small-business certifications,” Savage’s March filing said.

Marisa Bavand, an attorney with Groff Murphy PLLC who represents WCH, said the fee request was "inflated."  "[The memorandum] also highlights the highly improper costs Savage is seeking to recover including costs associated with her personal office, undisclosed “interns,” copy paper and various other costs that are not recoverable," Bavand told Law360 in an email.

The case is United States of America et al. v. Washington Closure Hanford LLC et al., case number 2:10-cv-05051, in the U.S. District Court for the Eastern District of Washington.

Article: Fresh Takes on Seeking Costs and Fees Under Rule 45

February 22, 2019

A recent Pepper Hamilton blog post article by Donna Fisher, Matthew Hamilton, and Sandra Hamilton, “Fresh Takes on Seeking Costs and Fees Under Rule 45,” reports on fee-shifting incurred in responding to a Federal Rules of Civil Procedure 45 subpoena.  This article was posted with permission.  The article reads:

Recent case law reveals that courts vary widely in their approaches to shifting the costs and fees incurred in responding to a Federal Rule of Civil Procedure 45 subpoena.  Some courts view shifting costs and fees as mandatory in situations where a nonparty is forced to bear “significant” costs.  Others may shift costs and fees only to the extent those costs are “unreasonable,” which is measured by (1) the nonparty’s size and economics, despite its lack of connection to the dispute, (2) defining “reasonable costs” so narrowly that the nonparty bears substantial costs or (3) eliminating attorneys’ fees from the cost-shifting calculation.  The relief a nonparty may be awarded may depend on factors that are not specifically identified in Rule 45 but that are nonetheless included in the court’s concept of fairness.  As the cases discussed below demonstrate, nonparties responding to Rule 45 discovery requests should consider the following best practices:

Know and understand the applicable jurisdiction’s rules pertaining to Rule 45’s protections. 

Be able to demonstrate that the non-party has attempted to respond to Rule 45 discovery in the most efficient manner available.

If possible, demonstrate that review for compliance with regulations or attorney-client privilege is consistent with any applicable protective order or local rule and, therefore, not just for the non-party’s benefit. 

In order to increase the likelihood of recovering costs of any motion practice, attempt to cooperate with the requesting party and demonstrate a willingness to resolve or mitigate the costs and the dispute.

The cases discussed below evaluate motions for costs and fees in two broad categories: (1) those incurred when litigating the scope of the subpoena itself and (2) those incurred in compliance.

Costs and Fees Incurred Litigating the Scope of the Subpoena Itself

The district court in In re Aggrenox Antitrust Litigation considered the motion of a nonparty, Gyma Laboratories of America, to recover $72,778.20 in costs and fees incurred in response to a Rule 45 subpoena from the direct purchaser plaintiffs.  Gyma objected to the requests as overbroad and asserted that production would be unduly burdensome.  At the hearing on cross-motions to compel and to shift costs and fees, the court expressed concern that Gyma had not made a record establishing the alleged difficulties in production, but directed that Gyma would be eligible for reimbursement of reasonable costs incurred.

In reviewing Gyma’s subsequent motion for costs and fees, the court reasoned that Rule 45 makes cost-shifting “mandatory in all instances in which a non-party incurs significant expense from compliance with a subpoena,” but that it did not require the requesting party to bear the entire cost of compliance.  Further, the court held that only “reasonable” costs are compensable under Rule 45 and that the moving party bears the burden of proof.  The court found that Gyma had not established that a reasonable client would use its “expensive” New York counsel to handle the subpoena, and further that costs and fees incurred prior to the date it provided an estimate of costs to the plaintiffs and the court were not fairly chargeable.

Moreover, the court found that many of the costs and fees were incurred in connection with Gyma’s efforts to resist compliance with the subpoena, which the court found was a unilateral “decision to litigate the subpoena zealously.”  Finding that Gyma was “notably intransigent and dilatory in its response,” and considering the admonition of the U.S. Court of Appeals for the Second Circuit, that courts should “not endorse scorched earth tactics” or “hardball litigation strategy,” the district court denied Gyma’s motion for fees in bringing the motion, and awarded only $20,000 in reasonable costs and fees for compliance with the subpoena.

The court in Valcor Engineering Corp. v. Parker Hannifin Corp. considered the motion of non-party MEDAL, to shift the entire cost of production pursuant to a subpoena, $476,000, to the requesting party.  The court found that the costs and fees were objectively unreasonable, and that much of the cost resulted from MEDAL’s tactical decision to aggressively challenge every aspect of the subpoena, which led to two separate motions to compel.  Moreover, the court found that MEDAL demonstrated little interest in minimizing expenses or preventing further motion practice.  For example, after the court granted the first motion to compel, MEDAL withheld nearly 90 percent of the documents identified by search terms as non-responsive, without providing any explanation.  The court also found that MEDAL’s aggressive tactics tended to demonstrate that it was not a truly disinterested non-party, and that it had been intimately involved in the acts giving rise to the litigation.  Finding that MEDAL’s motion came “close to wielding the shield of Rule 45 as a sword,” the court denied its motion for cost-shifting.

By contrast, the court in Linglong Americas Inc. v. Horizon Tire Inc. granted, in full, a similar request by non-party GCR Tire & Service for costs and fees associated with a Rule 45 subpoena served by Horizon.  GCR objected to the scope of the subpoena, and its counsel spent several months negotiating with Horizon’s counsel to narrow the request.  GCR moved to recover its costs and fees, and Horizon objected to allocation of fees incurred in narrowing the scope of the subpoena.  Reviewing Rule 45 case law, including Aggrenox, the court reasoned that it was required to protect the non-party from significant, reasonable expenses incurred in compliance.  The court found that narrowing the subpoena took several months of work by GCR’s attorneys and that the charges were reasonable, particularly since GCR had already paid them.  The court further found that expenses incurred in litigating the fee dispute were reasonable and incurred in compliance with the subpoena.  Accordingly, the court awarded the full $24,567 sought for responding to the subpoena and another $15,338 in fees for filing the fee dispute.

Costs and Fees Incurred in Collection, Processing and Review

In Sands Harbor Marina Corp. v. Wells Fargo Insurance Services of Oregon, the plaintiffs alleged that EVMC Real Estate Consultants, Inc. and others conspiring with EVMC fraudulently induced the plaintiffs to pay advance loan commitment fees when, in fact, no financing was available.  Wells Fargo, the employer of one of the defendants, served a subpoena on Dogali Law Group, a nonparty law firm that had represented EVMC in connection with the loan transactions at issue.  Dogali withheld multiple documents on the basis of attorney-client privilege.  Several years later, the court ruled that a defendant law firm could not withhold documents on the basis of attorney-client privilege because no surviving entity had standing to invoke the privilege on EVMC’s behalf.  Wells Fargo then renewed and expanded its earlier subpoena to Dogali, seeking the withheld documents.  When Dogali argued that an electronic production would be time-consuming, Wells Fargo proposed to use its own vendors to reduce time and costs.  After unsuccessful negotiations about the payment of costs and fees for the production, the court ordered production of the previously withheld privileged documents, as well as all documents responsive to the expanded subpoena.  Dogali later filed a motion for costs and fees in the amount of $39,709.

Weighing the mandate of Rule 45, the court held that Dogali was entitled to an award of fees.  While the court generally agreed that the legal services rates charged were reasonable, it found that the legal time spent responding to the second subpoena and renewed subpoena included time for tasks that were unreasonable, such as time spent researching whether Dogali had standing to assert the attorney-client privilege, reviewing the documents for privilege, creating privilege logs for documents reviewed previously, and researching privilege and waiver issues.  In addition, the court held that time spent communicating with former partners, preparing file memoranda, and conferring with Wells Fargo’s counsel about costs and production was not reasonable.

Finally, the court looked at the attorney time spent researching and preparing the motion for costs as well as the paralegal time spent reviewing documents for production.  The court denied Dogali’s request for the costs of drafting and reviewing the application as unnecessary and excessive.  As to time billed for the paralegal and cost of production, the court noted Wells Fargo’s offer to allow Dogali to utilize its vendor and determined that “rather than explore a more efficient and economical approach for the production, [Dogali] opted to have [its] paralegal print each email individually and convert it into a pdf…[Wells Fargo] should not be required to bear the cost of [Dogali’s] unilateral decision to utilize a more time-consuming approach.”  After carving out costs and fees determined to be unreasonable, the court awarded Dogali fees and costs in the amount of $10,537.33.

In Nitsch v. Dreamworks Animation SKG Inc., the court determined that attorneys’ fees and costs associated with protecting the confidentiality of affected non-parties were reasonable and therefore compensable.  Non-party Croner Company, a consulting company that conducted annual compensation benchmarking, moved for reimbursement of costs incurred in responding to the plaintiffs’ subpoena, which sought survey data that Croner obtained from companies in the animation and visual effects industry over several years.  Before Croner responded to the subpoena, its counsel conferred with plaintiffs’ counsel, advised that it would seek reimbursement of costs, and provided an initial estimate of those costs.

Because all surveys Croner conducted were subject to confidentiality provisions, Croner notified affected clients about the subpoena and devised a form of production to produce the information for the plaintiffs but preserve the anonymity of the survey participants.  The process was more time-consuming than expected, and Croner sought costs, including outside attorneys’ fees, in the amount of $67,787.55.  The plaintiffs objected on the basis that the request was unreasonable, arguing that Croner had produced only 16 documents and that the requested sum was grossly over-inflated and unreasonable.

Citing Rule 45(d)(2)(B)(ii)’s requirement that a court must protect a person who is neither a party nor a party’s officer from “significant expense resulting from compliance,” the court stated that the “shifting of significant expenses is mandatory, but the analysis is not mechanical; neither the Federal Rules nor the Ninth Circuit has defined ‘significant expenses.’”  The court then discussed whether costs tied to Croner’s confidentiality concerns were compensable, as “resulting from compliance” with a subpoena.

The court noted that reimbursable fees include those incurred in connection with legal hurdles or impediments to production, such as ensuring that production does not violate federal law or foreign legal impediments, but reimbursable fees do not include fees incurred for services for the non-party’s sole benefit and peace of mind.  The plaintiffs argued that Croner’s efforts to protect client confidentiality were purely business interests that inured solely to Croner’s benefit and that the protective order was sufficient to address Croner’s confidentiality issues.  The court disagreed, finding that the efforts to address confidentiality issues were reasonable and compensable.

Significantly, the court held that Croner’s efforts were consistent with the protective order entered into by the parties, stating that: Croner’s efforts to protect client confidentiality were not made to be obstreperous, but were the result of compliance with the subpoena.  Indeed, if any of the parties in this case were asked to produce a non-party’s confidential information, the stipulated protective order requires them to do what Croner did.

In Steward Health Care System LLC v. Blue Cross & Blue Shield of Rhode Island, however, the court reached the opposite conclusion when the non-party, Nemzoff & Company LLC, requested reimbursement for costs and fees associated with complying with a subpoena from Blue Cross, which included a review for relevancy and privilege.  Nemzoff initially refused to comply due to the costs involved, resulting in a court order compelling compliance and a warning that Nemzoff should minimize expense as it may bear the cost.  The court explained that only “reasonable expenses” incurred — and not all expenses — may be shifted.

The court held that attorneys’ fees have traditionally been awarded as sanctions in the most egregious circumstances or when the requested fees were for work that benefited only the requesting party.  Since it was not presented with any argument for sanctions, the court found that Nemzoff’s use of its own attorneys to review the documents for relevancy, confidentiality and privilege matters was only for Nemzoff’s benefit, and conferred an unwanted benefit upon Blue Cross.  Nemzoff’s attorneys were protecting its own interests.  As such, the court denied Nemzoff’s request.

While cost-shifting remains within the discretion of the court, courts have consistently been more likely to award costs and fees when a non-party has worked in good faith to narrow the scope of a subpoena and responded in an efficient fashion.  To the contrary, when a non-party attempts to obstruct the discovery process, courts have refused to shift costs and fees.  As demonstrated by the case law, the potential for cost-shifting must necessarily turn on the particular facts and circumstances of each case.

Donna Fisher is a member of the health sciences department at Pepper Hamilton LLP.  Matthew Hamilton is a member of the health sciences department at and partner at the firm.  Sandra Adams is a discovery attorney at the firm.  For a full list of end notes, visit https://www.pepperlaw.com/publications/fresh-takes-on-seeking-costs-and-fees-under-rule-45-2019-02-13/

California Agency Seeks Attorney Fees in LSAT Matter

July 18, 2018

A recent The Recorder story by Karen Sloan, “LSAT Maker Owes $529K in Fees, Calif. Agency Asserts,” reports that the California Department of Fair Employment and Housing has requested more than a half million dollars in attorney fees from the Law School Admission Council for its work related to the LSAT developer’s violations of a consent decree.

A federal judge in March held the council in civil contempt for violating the court-ordered rules governing accommodations for disabled test takers—a development the California department set in motion last fall when it filed court papers detailing what it alleged were the council’s efforts to circumvent the 2014 consent decree. U.S. District Judge Joseph Spero of the Northern District of California extended the consent decree, which was set to expire in May, for two more years as a result.  Spero also ordered the council to pay for the department’s fees and costs.  (The council denied any intentional violations, saying it tried to operate within the complicated and costly set of best practices established under the consent decree.  The council also said it quickly corrected compliance problems identified by the California department.)

On July 13, the California department filed a request for $529,341 in attorney fees and an additional $4,077 in expenses for its work on the motion for contempt of court.  According to the fee motion, the department’s team of attorneys spent months investigating the council’s compliance with the consent decree and conferring with the council before the parties reached an impasse and it asked the court to find the council in civil contempt.  It said it plans to request additional fees incurred during the fee motion process.

“The significant work required for the contempt motion is undisputed,” reads the department’s fee motion.  “LSAC itself has repeatedly acknowledged it.  When requesting additional time to file the opposition to the motion, even though LSAC did not bear the burden of proof, LSAC noted it would take ‘a significant amount of time to respond to a pleading of this nature.’”

In a statement issued Tuesday, the council called the California department’s fee request “unreasonable,” and said such an amount would reduce the resources available to support Law School Admission Test takers.  “We would certainly prefer to settle this matter on fair and reasonable terms without the need for additional litigation, but as a nonprofit organization we cannot agree to an unreasonable fee that is far beyond what is allowed under the terms of the consent decree,” the council said.

The fee request covers 934 billable hours by three department attorneys and one legal fellow who is a 2017 law school graduate.  The department eliminated an additional 830 billable hours and did not include work provided by five other attorneys, according to the fee request.  The department argued that its billing rates should be based on the prevailing rate among attorneys in San Francisco.  Accordingly, the department requested an $850 hourly rate for senior attorney Mari Mayeda, a $425 rate for two midlevel attorneys, and a rate of $290 for the legal fellow.

The litigation surrounding LSAT disability accommodations dates back to 2012, when the department first sued the council alleging that its accommodation procedures were too burdensome for test takers and violated the Americans with Disabilities Act.  The U.S. Department of Justice intervened in that litigation and in 2014 the parties announced a consent decree under which the council would stop alerting law schools when LSAT takers were given extra time on the exam.  The council also agreed to pay $8.7 million to 6,300 people who applied for accommodations between January 2009 and May 2014 and change how it handles test accommodations.

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.

4 Reasons to Get Help on a Fee Requests

November 24, 2017

A recent CEBblog article by Julie Brook, “4 Reasons to Get Help on a Fee Motion,” reports on attorney fee requests.  This article was posted with permission.  The article reads: Just because...

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