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Category: Fee Issues on Appeal

Class Counsel Win $15.2M Fee Award in Home Depot Breach

January 24, 2020

A recent Law 360 story by Mike LaSusa, “Home Depot Breach Class Attys Score $15.2M After Fee Fight,” reports that attorneys representing banks and other financial institutions that sued over Home Depot's 2014 data breach won a $15.2 million fee award after the Eleventh Circuit nixed an earlier award and asked the Georgia federal court that handled the case to take another look.  U.S. District Judge Thomas W. Thrash Jr. awarded the attorneys $14.5 million in fees and just over $730,000 in expenses, rejecting Home Depot’s contention that the Eleventh Circuit’s ruling limited the Georgia federal court’s latitude in deciding the fee issue.

The appeals court ruled in July that the lower court had erred in applying a multiplier of 1.3 to an $11.773 million lodestar, leading to a $15.3 million award.  Home Depot said that decision triggered a clause in its settlement with the financial institutions under which Home Depot would only be responsible for the lower amount if the attorney fees were reduced on appeal.  But Judge Thrash pointed out that the Eleventh Circuit left it up to him to determine the best way to decide the attorney fees.

“If the Eleventh Circuit had intended that this court simply enter an order awarding class counsel $11.773 million plus interest, as Home Depot contends, this court believes the appellate court would have said so explicitly,” the judge said.  “The Eleventh Circuit did not reduce the amount of the award; rather, the appellate court reversed the award and remanded for reconsideration.”

Rather than use the lodestar method that had yielded the earlier fee award, Judge Thrash instead calculated the new award based on a percentage of the benefit to the class.  Calculating the benefit to the class to be $42.5 million, the judge ruled that one-third of that amount would be appropriate, and added on interest as specified in the settlement agreement.

The attorneys asked for $18 million in late August, contending that their work had resulted in not only the $27.25 million settlement, but also pushed the retailer to offer some of the country's biggest banks $14.5 million to release their claims.

$100M Attorney Fee Award in $1B Vereit Settlement

January 23, 2020

A recent Law 360 story by Reenat Sinay, “Robbins Geller Bags $100M in Fees for $1B Vereit Settlement,” reports that Robbins Geller Rudman & Dowd LLP attorneys will receive a $100 million payday for securing a $1.025 billion settlement for Vereit Inc. investors in a suit that accused the real estate investment trust of lying about its books, a New York federal judge ruled.  U.S. District Judge Alvin K. Hellerstein approved the massive settlement but decided to take more time to rule on attorney fees due to the size of the deal.

Robbins Geller, which represented lead class plaintiff TIAA-CREF, had asked for attorney fees worth 12.4% of the settlement fund, which comes out to $127.1 million, plus expenses of just over $5.1 million.  The lawyers said in their December fee bid that the 12.4% amount "falls far below" the usual range for cases of this size and complexity, and noted a 13% fee award in a $2.3 billion class-action settlement was recently affirmed by the Second Circuit.

Without explaining his reasons for approving a lower amount than requested, Judge Hellerstein awarded $100 million in fees and $5,154,721 in expenses.  "The court finds that the amount of fees awarded is fair, reasonable, and appropriate under both the lodestar and 'percentage-of-recovery' methods," he said.  "Lead counsel has pursued the litigation and achieved the settlement with skill, perseverance and diligent advocacy."

The settlement ended five years of "hard-fought" litigation and represents a recovery of 50% of the maximum recoverable damages — the highest percentage recovery ever in a major private securities class action ahead of trial, according to Robbins Geller.

Fee Allocation Dispute in Antitrust Case in Seventh Circuit

January 15, 2020

A recent Law 360 story by Celeste Bott, “Attys Spar Over Fees From Antitrust Row at 7th Circ.,” reports that a Seventh Circuit panel took issue with an attorney’s arguments that the allocation of attorney fees from an underlying case should have been settled in arbitration and that Cozen O'Connor wasn’t entitled to its share of a $4 million deal for representing that attorney in the fee dispute.  Judges Amy J. St. Eve, Diane P. Wood and Ilana Rovner said attorney Michael Needle appeared to waive arbitration, noting that he didn’t move to compel it and had previously stated that the district court was the proper forum to resolve all claims in a dispute over a $4.2 million settlement fund.

“How can you come in and argue now there’s no jurisdiction because it should have gone to arbitration, when you argued the opposite in the district court?” Judge St. Eve asked.  The panel heard argument in two related cases, both stemming from a Racketeer Influenced and Corrupt Organizations Act case alleging that International Profit Associates Inc. and its affiliates bilked small businesses into buying expensive but useless consulting.

Needle and Merle L. Royce were co-counsel on a contingent fee basis representing 16 plaintiffs in the RICO case, and in 2013 obtained a $4.2 million settlement, then disagreed over the fees for their work, according to court documents.  Cozen O'Connor represented Needle in the fee dispute and later sought a lien to get paid.

After the settlement, Royce said the fees should be limited to one-third of the settlement proceeds, while Needle sought a much larger sum of $2.5 million, according to briefs in the case.  In 2015, Royce filed an interpleader complaint to determine how the fees should be allocated, and a lower court ruled that the pair were entitled to one-third of the settlement, with 60% to Needle and 40% to Royce.  Needle argued on appeal that the fee dispute should have been decided in arbitration under a binding mediation provision in the fee agreement.  That provision means there’s no jurisdiction to proceed, said Frank C. Fusco, arguing for Needle.

The judges pushed back on that argument and against Needle’s assertion that he was wrongfully sanctioned for asking for an extension that was ultimately granted.  They said he waited “until the last minute” and that the district court had the right to grant him extra time yet still find his actions sanctionable.

Alan R. Borlack of Bailey Borlack Nadelhoffer & Carroll, arguing for Royce, said the sanctions were warranted, noting that even the lower-court judge had said he had “never encountered” anyone so “unrelentingly obstructionist” as Needle in more than six decades of practicing law.  Needle had asked for the added time allegedly because he had failed to file time sheets and was seeking a transcript from a status hearing, Borlack said.

“These were disingenuous reasons for an extension,” Borlack said.  “This case goes to whether a district court can have control of a courtroom so it can administer justice.”  And in the Cozen O'Connor appeal, Fusco told the panel the firm was wrongfully granted a lien because the fee agreement didn’t provide for compensation if the firm withdraws, and that the firm’s work didn’t help Needle recover funds.

Federal Circuit: Attorneys Lack Standing to Recover Attorney Fees for Veteran

January 13, 2020

A recent Law 360 story by Kevin Penton, “Fed Circ. Won’t Let Attys Get Fees From Feds on Vet’s Behalf, reports that attorneys lack standing under federal law to sue the federal government on their own to recover fees for work they performed on behalf of a veteran, the Federal Circuit held in a precedential opinion.  The appellate panel rejected arguments by attorneys Meghan Gentile and Harold H. Hoffman III of the nonprofit Veterans Legal Advocacy Group that they could collect over $4,000 in fees after their former client, Matthew Shealey, prevailed in his case, even though he had fired them and had opposed their attempt to collect the money.

The Federal Circuit noted that in a 2010 case known as Astrue v. Ratliff, the U.S. Supreme Court held that under the Equal Access to Justice Act, the “prevailing party” is the actual party in a case, not the individual’s attorneys.  “The fact that the statute awards to the prevailing party fees in which [its] attorney may have a beneficial interest or a contractual right does not establish that the statute ‘awards’ the fees directly to the attorney,” the Federal Circuit said, quoting the Supreme Court.

The Federal Circuit also rejected an alternative argument by Gentile and Hoffman that they had a right to the money under the fee agreement that they had inked with Shealey, as “the fee agreement on its face does not purport to assign Mr. Shealey’s [Equal Access to Justice Act] claim to intervenors, and the intervenors expressly disclaimed such a theory at oral argument.”  The appellate panel also rejected the argument that the attorneys had so-called third party standing to sue for fees on their former client’s behalf, as Shealey revoked his authorization for them to apply for the fees and costs, according to the opinion.

“The interests of a client such as Mr. Shealey — including the ability to resolve their fee claim by settlement with the government and the ability to decline pursuing an [Equal Access to Justice Act] claim at all — would be impaired if their attorneys were afforded standing to file a claim on their behalf when that authority has been revoked,” the Federal Circuit wrote.

Federal Circuit Faults Judge in Patent Fee Award

December 26, 2019

A recent Law 360 story by Ryan Davis, “Fed. Circ. Faults Judge’s $444K Fee Award in IV Patent Case,” reports that the Federal Circuit vacated a Delaware judge’s decision ordering patent licensing company Intellectual Ventures to pay Trend Micro Inc. $444,000 in attorney fees after a failed patent suit, saying the judge may not have used the right legal standard.  The appeals court said it seemed that after Chief Judge Leonard P. Stark of the District of Delaware invalidated Intellectual Ventures’ patents, he only considered one aspect of the case to have “stood out from others,” the U.S. Supreme Court’s standard for when attorney fees are warranted, rather than the case as a whole.

The Patent Act states that attorney fees may be awarded "in exceptional cases.”  When he awarded fees to Trend Micro in 2017, Judge Stark said an unusual situation in the case, when Intellectual Ventures’ expert witness changed his testimony, was exceptional, but the case as a whole was not.  He ordered the company to pay Trend Micro’s fees related to that witness, but the Federal Circuit said it was concerned by the judge’s statement that the overall case was not exceptional.

“Instead of determining whether the case was exceptional, it appears that the district court may have focused on whether one discrete portion of the case stood out from other cases," the Federal Circuit said.  "This is not the appropriate analysis."  The court noted that it has held that an award of attorney fees can be related to particular conduct and circumstances that stood out and made the case exceptional, "but in all such cases we have required a finding of an exceptional case — not a finding of an exceptional portion of a case — to support an award of partial fees."  The court therefore remanded the case so that Judge Stark can consider whether the specific circumstances render the case exceptional and deserving of attorney fees.

During pretrial proceedings in that case, Intellectual Ventures' expert offered an opinion about the meaning of a phrase in one of the patents.  During trial, however, the expert offered a different interpretation, saying he changed his opinion after working with Intellectual Ventures' lawyers.  Judge Stark later invalidated all three patents, finding that they claim only abstract ideas.  Trend Micro then moved for attorney fees and Judge Stark granted the motion, ruling that Intellectual Ventures' conduct was exceptional, "solely with respect to this collection of circumstances" regarding the changed expert testimony.

The Federal Circuit ruled that because Judge Stark only found that those specific circumstances were exceptional, "it is not clear that the district court applied the proper legal standard when it considered whether the case was exceptional."  However, the appeals court rejected Intellectual Ventures' argument that attorney fees can only be awarded for a pattern of "bad faith, sharp tactics, and unreasonable litigation positions," and not for a single act.