Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Fee Issues on Appeal

Seventh Circuit Strip’s Jones Day’s $307K Fee Award in EEOC Case

June 8, 2018

A recent NLJ story by Erin Mulvaney, “7th Circuit Strips Jones Day’s $307K Legal-Fee Award in EEOC Case,” reports that a federal appeals court on Friday reversed a $307,0000 attorney fee award that was granted to CVS Pharmacy Inc.’s lawyers at Jones Day in a dispute the company won against the U.S. Equal Employment Opportunity Commission.

The U.S. Court of Appeals for the Seventh Circuit, ruling unanimously, said the trial court judge should not have awarded fees to CVS even though the company prevailed against the EEOC. The agency claimed in its lawsuit that CVS was using a severance agreement that interfered with employees’ workplace rights under federal law.

Jones Day, represented by partner Eric Dreiband, said attorney fees were justified for the EEOC’s “baseless” lawsuit and that regulators had unfairly targeted the company for alleged employment abuses. A trial court determined the agency ran afoul of internal regulations and was barred from bringing the “pattern or practice” enforcement action. The appeals court, at an earlier stage in the case, upheld the dismissal of the EEOC’s suit.

Chief Justice Diane Wood of the Seventh Circuit said Friday that the EEOC’s litigation position was not so far afield as to warrant an award of attorney fees to CVS’s attorneys.

“The EEOC’s theory was not that fruitless. Precedent may not have favored it, but the fee statute does not punish a civil rights litigant for pursuing a novel, even if ambitious, theory,” Wood wrote.

The EEOC sued CVS in 2014 over a severance agreement the agency said limited the rights of employees to file complaints. The EEOC called the severance agreement “overly broad” and argued it was part of a CVS “pattern or practice of resistance” to restrict the civil rights of the company’s employees. The agency lost its case in the U.S. District Court for the Northern District of Illinois.

Dreiband, formerly the head of Jones Day’s labor and employment group, in 2016 identified his hourly rate at $560. He is now awaiting confirmation as the Trump administration’s pick to lead the U.S. Department of Justice ‘s Civil Rights Division. Ninth-year associate Yaakov Roth, a former clerk to the late U.S. Supreme Court Justice Antonin Scalia, billed at $475 per hour in 2016, and Nikki McArthur at $275 per hour, according to court records. Dreiband was not immediately reached for comment Friday.

“EEOC violated both Title VII and its own regulations when it refused CVS’s pleas to try to resolve the matter in conciliation and spurned CVS’s offers to clarify its agreement’s terms,” Dreiband wrote in a court filing. “EEOC instead rushed to file a baseless lawsuit, and blasted CVS with an inflammatory press release falsely accusing the company of interfering with Title VII rights.”

CVS’s lawyers said the trial judge “acted well within his discretion when he ordered EEOC to reimburse a portion of the attorneys’ fees incurred by CVS in defending against a baseless but expensive suit that should never have been filed in the first place.”

Tenth Circuit: Billing Dispute Suit Not Covered by Insurance

May 23, 2018

A recent Law 360 story by Emma Cueto, “Atty Overbilling Suit Not Covered By Insurance: 10th Circ.,” reports that the Tenth Circuit declined to revive a dispute between a Colorado foreclosure attorney and his insurance company, ruling that the lower court was right to find the company did not have to defend the lawyer from a class action over alleged overbilling.

The appellate panel ruled that under Michael Medved's policy with Evanston Insurance Co., the insurer had no duty to defend Medved or his solo practice from a homeowner class action or during an investigation by the state attorney general — which eventually resulted in a $1 million settlement — because the policy only covered professional services, which did not include billing.

"The claims against Mr. Medved and his firm arose out of their billing practices, not their professional services," the decision said. "The policy therefore did not cover either the class action or the Colorado attorney general's investigation, and Evanston had no duty to defend in either of these matters."

Evanston filed suit against Medved in 2014, asking the court to clarify that it was not obligated to defend the attorney regarding his billing practices. Medved was one of several lawyers and law firms investigated by the Colorado attorney general connected to alleged foreclosure overbilling. Medved represented lenders and investors, and although he billed them directly, the cost of his services was typically passed on to property owners, according to the decision.

After the investigation became public, Medved was hit with a class action that eventually settled for $16,000, the decision said.

Evanston defended Medved for 10 months during the class action, but said it reserved the right to later assert it wasn't obligated to cover the suit, according to the decision. It declined to represent Medved during depositions in the state's investigation because no legal action had been filed, the decision said.

The insurer later argued it had no duty to defend Medved's billing and that Medved should reimburse it for its expenses, an argument backed by the district court, which granted Evanston a quick win.

On appeal, the Tenth Circuit agreed. Under Colorado precedent, billing does not fall under the heading of "professional services," the court said. It also rejected Medved's argument that his policy did include billing-related suits because it promised coverage for damages "by reason of" professional services.

"By reason of" was much more limited than the term "arising out of," the panel said, and was not expansive enough to fold billing matters into his policy, the decision said.

Counsel for both parties did not respond Tuesday to a request for comment.  Evanston is represented by M. Courtney Koger of Kutak Rock LLP.   Medved is represented by Damian Arguello of Colorado Insurance Law Center.  The case is Evanston Insurance Co. v. Law Office of Michael P. Medved et al., case number 16-1464, in the U.S. Court of Appeals for the Tenth Circuit.

U.S. Supreme Court to Clarify Attorney Fee Rules in Disability Benefits Cases

May 21, 2018

A recent Courthouse News story by Dan McCue, “Justices to Clarify Attorney’s Fee Rules in Disability Benefits Cases,” reports that the Supreme Court on Monday said it will resolve an appellate court split on the question of caps on attorney’s fees in Social Security benefits cases.

The 6th, 9th and 10th Circuits have held federal regulations mandate that a 25-percent cap on attorney’s fees only applies to Social Security benefits cases argued before a court.  But the 4th, 5th and 11th Circuits have held the cap on fees also applies in cases that never make it to court, but are heard only on the administrative level.

The case the justices will consider during their next term comes to the court from the 11th Circuit.  Petitioner Richard Culbertson successfully represented four clients who had been denied disability benefits by the Commissioner of Social Security.  After winning all four cases, Culbertson asked a federal judge to award him attorney’s fees.

Two federal statutes govern the awarding of attorney’s fees in Social Security cases. One, 42 USC § 406, allows the Commissioner of Social Security to set a fee for representing a client at the administrative level, and the district court to set a fee for representation of a claimant in court.  The other, 28 USC § 2412, allows a claimant to request fees under the Equal Access to Justice Act.

Culbertson asked for different fees for each of the four cases at issue, with dramatically different results. In one case, he sought fees of $4,488, but was only awarded $1,623. In another, he asked for $3,325, and was given it, but only so long as he agreed not to come back to the court and ask for more.

In two cases, Culbertson asked for $14,140 and $10,707 in attorney’s fees, respectively, as was had his requests rejected.  Culbertson appealed the fee awards, arguing the district court did not correctly calculate the fees he is entitled to under these statutes and 11th Circuit precedent.  But the 11th Circuit disagreed and upheld the lower court’s decision.  As is its custom, the justices did not explain their rationale for taking up the case.

Third Circuit Calls for More Attorney Fees in IDEA Case

May 14, 2018

A recent Legal Intelligencer story by PJ D’Annunzio, “3rd Circuit Calls for More Attorney Fees in Mother’s Case Against School District,” reports that, in tackling the issue of a parent’s eligibility for attorney fees in access-to-education litigation against a school district after a settlement offer has been made, a federal appeals court ruled that a mother was entitled to more than she was given.

The U.S. Court of Appeals for the Third Circuit reversed a district court’s decision to award attorney fees to plaintiff Rena Castrovillo up until the date a settlement offer was made by Colonial School District. The Third Circuit held that attorney fees continued to accrue after the rejected settlement offer was made.

Castrovillo’s case, involving her daughter’s access to appropriate education under the Individuals with Disabilities Education Act (IDEA), centered on the intersection of attorney fees and the act’s 10-day settlement window, which provides that a school district can offer to settle a case 10 days before it reaches a hearing.

According to the law, a parent who wins at a hearing can be eligible for attorney fees, but the 10-day offer clause allows a school district to limit its exposure to those fees by limiting a parent’s eligibility for fees accrued before the offer was made.

The offer made to Castrovillo did not include attorney fees and she therefore rejected it. A hearing officer awarded Castrovillo tuition for private schooling for her daughter. The district judge later awarded attorney fees, but held that Castrovillo was not justified in rejecting the offer and limited the award to work performed before the offer was made.

However, Third Circuit Judge D. Michael Fisher wrote in the court’s majority opinion that parents should not have to choose between settling a case and being able to pay for their lawyers.

“We do not read the IDEA to force parents to decide between the resolution of a placement dispute and paying for the attorney who assisted in achieving an appropriate placement for the student,” Fisher said. “A school district seeking to settle a dispute in which a lawyer has been involved should acknowledge that the parent has accrued attorney’s fees and should clearly state if its offer includes the payment of any fees. A parent is substantially justified in rejecting an offer that does not include the payment of reasonable attorney’s fees when the school district cannot reasonably believe that no attorney’s fees have accrued.”

In a concurring opinion, Judge Joseph Greenaway Jr. agreed with the ruling, writing separately to discuss the difficulties 10-day offers can create. He noted that the majority offered no clarity in how specific parties should be when crafting settlement agreements that call for “tuition,” which the judge called an amorphous term.

“I therefore would caution parties not to needlessly proceed to federal court based on the belief that our opinion here dictates the outcome in some future case involving some other kind of educational service or instruction,” Greenaway said. “Instead, I would suggest that parties in the future be clear and specific when crafting and discussing 10-day offers. School districts should be precise about what they are offering. Parents should be forthcoming about the services they are seeking or anticipate receiving for their children. And both school districts and parents should communicate throughout this process.”

Castrovillo’s attorney, David J. Berney, did not respond to a request for comment. The school district’s attorney, Karl A. Romberger, said the district is reviewing its options.

California: Retainer Agreement Applicable to Particular Matter Can Be Orally Modified to Apply to All Cases

May 2, 2018

A recent Metropolitan News story, “Retainer Agreement Applicable to Particular Matter Can Be Orally Modified to Apply to All Cases- C.A.,” reports that an attorney-client agreement, applicable to a particular dispute, can be orally modified to pertain to all future representation, the Court of Appeal for this district held yesterday, affirming the granting of a motion to compel arbitration pursuant to a provision of the agreement.

Justice Anne H. Egerton of Div. Three wrote the opinion, affirming the decisions by Los Angeles Superior Court Judge Terry Green to send the case to arbitration and, following the arbitration, awarding attorney fees to the plaintiff.

The plaintiff in the case is Los Angeles attorney Ronald S. Caswell, a founding partner of Caswell & Cannon. He sued thoroughbred owner Jerry Jamgotchian for $76,346.54 in unpaid fees based on representation in 11 matters.

In moving to compel arbitration, Caswell relied upon a retainer agreement Jamgotchian signed on Dec. 14, 2005, providing:

“[S]hould any fee dispute arise between us, we mutually agree that such dispute will be subjected to binding arbitration in Los Angeles, California, pursuant to the JAMS/Endispute arbitration program, and that the arbitrator may award reasonable attorneys’ fees to the prevailing party in such proceedings. YOU ACKNOWLEDGE THAT YOU ARE AWARE OF THE FACT THAT BY AGREEING TO ARBITRATION, YOU WAIVE ANY RIGHT YOU HAVE TO A COURT OR JURY TRIAL.”

Green found that when a second matter came up, Jamgotchian “refused to sign...the second retainer agreement” and said: “Let’s make the first one be our retainer.” The judge concluded that “all parties then wanted the initial agreement to cover all future litigation that Mr. Jamgotchian brought, as the client, to Mr. Caswell.”

The arbitrator awarded Caswell $78,154.49 in damages, $28,154.15 in prejudgment interest, $126,406.25 in attorney fees he expended in retaining outside counsel, and $36,681.57 in arbitration costs, totaling $269,396.46.

Green confirmed the arbitrator’s award, adding $11,217.60 in prejudgment interest, bringing the total; to $280,614.60. He also awarded $133,362.50 in fees Caswell paid to attorney Kyle P. Kelley in the trial court, plus $3,417.28 in costs.

“On appeal, Jamgotchian does not dispute outright the trial court’s conclusion that he and Caswell orally agreed to modify the original retainer agreement so that its terms, including the arbitration clause, would apply to all subsequent representation by Caswell. Instead, he argues that written agreements to arbitrate may not be orally modified, and recharacterizes the court’s finding as concluding that the arbitration clause, rather than the retainer agreement, was orally modified.”

Rejecting the contention, she said:

“When Jamgotchian and Caswell orally modified the original retainer agreement so that it would apply to all subsequent representation by Caswell, they did not modify the arbitration clause. That clause remained identical in the second retainer agreement that Jamgotchian refused to sign in favor of applying the original retainer agreement to subsequent cases. Caswell and Jamgotchian orally agreed to modify not the arbitration clause, but ‘the overall contract in which that agreement to arbitrate is contained.’…That clause remained identical in the second retainer agreement that Jamgotchian refused to sign in favor of applying the original retainer agreement to subsequent cases. The unmodified written arbitration clause, as part of the retainer agreement, thus applied to ‘any fee dispute’ in subsequent cases.”

There was a remand to Green for a determination of attorney fees in connection with the appeal.  The case is Caswell v. Jamgotchian, B271389.