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Category: Fee Issues on Appeal

Ninth Circuit Affirms $29M Fee Award in Infringement Action

August 16, 2019

A recent Law 360 story by Dave Simpson, “9th Circ. Keeps Oracle’s Rimini Injunction, $29M Atty Fee Win,” reports that the Ninth Circuit said that Rimini Street Inc. still must pay Oracle Corp. $28.5 million in attorney fees and largely affirmed an injunction that bars the software support service company from copying Oracle's software identified in the copyright infringement case.  In a unanimous, unpublished decision, the panel found that Nevada federal court did not abuse its discretion when it issued the injunction and that the injunction is not moot.

“The court pointed to the fact that Oracle and Rimini were direct competitors, explained that Rimini was able to gain increasing market share by offering lower prices for its service than Oracle offered, and that these lower prices were possible because Rimini’s infringing conduct saved the company time and money,” the panel said.  “This conclusion was supported by the record, including Rimini’s own internal e-mails.”  The injunction is not moot because Rimini has not shown that although it has stopped the infringing behavior, the challenged conduct won’t start back up again, the panel said.

The finding is the most recent in a hotly contested lawsuit that Oracle filed against Rimini in 2010, seeking to stop the competitor from copying Oracle's software, which Rimini argued it needed to serve clients.  Oracle initially asserted two dozen claims against Rimini and its CEO, alleging willful copyright infringement and violations of federal and state computer hacking laws, among others, according to court documents.

Though Rimini had changed its business practices, the case went to trial in September 2015, and a jury found that the company's former practices infringed Oracle's copyright.  But the jury concluded that the infringement was "innocent" because the company had no reason to believe its conduct constituted infringement.  The jury awarded Oracle about $50 million in compensatory damages and found Rimini liable for copyright claims and state hacking claims, but the Ninth Circuit later tossed the state claims and reduced the damages award to $35.6 million.

A Nevada federal judge in August 2018 ordered Rimini to pay Oracle $28.5 million in attorney fees, saying the award was still justified even though the Ninth Circuit reversed Oracle’s state-law claims.  The case made its way to the U.S. Supreme Court last year when the high court agreed to hear a dispute over an award of $12 million in "nontaxable costs" spent by Oracle in the litigation.

In a unanimous opinion written by Justice Brett Kavanaugh in March, the high court overturned a ruling that awarded Oracle more than $12 million in litigation costs.  Although the Copyright Act states that prevailing parties can recover their "full costs," the justices held that costs are limited to six narrower categories found in the general litigation cost statute.

The panel affirmed the fee award.  “The district court permissibly concluded that the claims ‘involve[d] a common core of facts [and were] based on related legal theories because the action was first and foremost a copyright infringement action,’” the panel said.  “Accordingly, it was within the district court’s discretion to determine that apportionment was not required beyond the twenty percent reduction.”

Judge Rejects $200K Fee Request for $5K Settlement

August 15, 2019

A recent Law 360 story by Lauraann Wood, “$200K Fee After $5K Deal ‘Makes No Sense,’ Ill. Judge Says,” reports that an Illinois federal judge granted photo agency FameFlynet Inc. $10,500 of its request for $241,000 in attorney fees after settling a copyright suit for $5,000, saying awarding anything more after two-and-a-half years of avoidable litigation “makes no sense.”  FameFlynet and Jasmine Enterprises Inc. stipulated to the $5,000 in damages under the Copyright Act after U.S. District Judge Thomas Durkin ruled Jasmine was liable for publishing three photos of Nicky Hilton and James Rothschild’s wedding on a blog in 2015.

But the photo agency’s case only reached summary judgment issues because it canceled settlement talks and litigated discovery disputes after learning the parties were $1,000 apart during negotiations that happened three weeks after serving of its complaint on Jasmine, Judge Durkin said.  “For FFN to then incur hundreds of thousands of dollars in fees simply makes no sense, and it should not be rewarded for what should have been a straightforward case,” Judge Durkin said.  “This case exemplifies the familiar adage of cutting off your nose to spite your face,” he said.

The fee award represents a little more than the FFN incurred when it rejected Jasmine’s initial $15,000 settlement offer in November 2016 plus its filing fee and process server costs, since “the fault does not lie exclusively with FFN for failing to settle, and its early work advanced the goals of the Copyright Act,” Judge Durkin said.  But awarding FFN its entire fee request “would not advance considerations of compensation and deterrence,” since Jasmine removed the infringing photos the day it received notice of infringement and hasn’t posted to the blog since 2015, he ruled.

The agency argued that declining to award it fees would deter future plaintiffs from pursuing claims, but Judge Durkin said his concerns over awarding FFN's request was different.  “Far from advancing the Copyright Act’s goals, awarding FFN its requested fees would incentivize parties to reject reasonable settlement offers in hope of cashing in on enormous attorneys’ fees down the line,” he said.

Craig Sanders of Sanders Law PLLC, who represents FFN, told Law360 in an email that the judge’s decision to award fees was proper.  But he “appears to have committed reversible error” by failing to comply with Seventh Circuit and Supreme Court precedent by using the so-called lodestar method to calculate a reasonable fee in the photo agency’s case, Sanders said.

Jasmine claimed its photo publication was fair use before Judge Durkin sided with FFN on liability and said Jasmine likely would not win on that defense.  FFN argued that Jasmine’s defense was objectively unreasonable given “existing case law,” so fighting it warranted a fee award.  But Judge Durkin disagreed, saying the agency inaccurately “conflates whether a defense was successful with whether it was reasonable.”

“Losing on the merits does not establish that a party’s position was objectively unreasonable.  Otherwise, a losing defendant would ‘virtually always be found to have done something culpable,’” Judge Durkin ruled, quoting the U.S. Supreme Court’s ruling in Kirtsaeng v. John Wiley & Sons Inc.

FFN had demanded $16,000 to settle its copyright suit, and ended negotiations after Jasmine offered $15,000, according to Judge Durkin’s order.  Jasmine offered $15,000 to settle the case at several other times during litigation, including after the agency filed its bulky fee bid.  But assuming that constitutes poor litigation conduct would mean Jasmine’s offer was unreasonable in the first place, Judge Durkin said.

Seeger Weiss Targeted in NFL Concussion Fee Appeal

August 14, 2019

A recent Law 360 story by Ryan Boysen, “First Shots Fired in Seeger Weiss Concussion Fee Appeal,” reports that Seeger Weiss LLP has “hoarded” nearly $65 million for its work on the landmark NFL concussion settlement while punishing rival firms by docking their pay over perceived slights, all through an “improper process” that “lacked transparency and basic mechanisms of fairness,” according to the opening briefs in a contentious Third Circuit appeal.

The appeal was filed over a year ago, challenging an order by U.S. District Judge Anita B. Brody that created a $112.5 million common benefit fund to pay the 24 firms involved in bringing to fruition the uncapped concussion settlement, which has paid out nearly $660 million in claims since it was approved in 2015.  In opening briefs filed, two groups of law firms and retired football players led by Locks Law Firm and Lubel Voyles LLP took aim at Seeger Weiss’ role in divvying up that money.

The firms argued that Judge Brody essentially gave Chris Seeger carte blanche to award himself and other firms whatever he pleased, then rubber-stamped his decisions with hardly any oversight, violating constitutional due process obligations and binding precedent in the process.  Adding insult to injury, Locks Law said, all of the firms involved in the settlement were required to submit time records to Seeger while he determined their final awards, but to this day no other firm “has seen Mr. Seeger’s records” and “neither will this court: those records were never made part of the record below.”

“The court empowered Mr. Seeger … to reward himself and penalize rivals without any on-the-record scrutiny of his own time records,” Locks Law said.  “The court accepted Mr. Seeger’s [determinations] with only minor adjustments.”  “There is no justification for this manifestly inadequate process,” Locks Law added.

While ostensibly separate, the allegations in the briefs mirror complaints about the settlement as a whole, which many attorneys claim has been marred by a lack of transparency and a seeming willingness on Judge Brody’s behalf to improvise when deciding issues of considerable importance to the class of 20,000 retired players suffering from concussion-related brain damage the deal is meant to compensate.

The briefs also underscore the bad blood that’s been building up for years between Seeger and many of the other lawyers involved in the case.  To take just one example, Locks Law was terminated as class counsel alongside five other firms in May, a move many viewed as retaliation for its request that Judge Brody reconsider new medical guidelines that Locks Law had argued would make it harder for players to get paid.  Prior to that, Locks Law butted heads with Seeger directly when it sought to take over the implementation of the deal, arguing that Seeger was letting the NFL steamroll the players with “scorched earth” legal tactics.  Both of those motions were denied.

In a nod to those broader tensions, Lubel Voyles acknowledged in its brief that while “fee fights in class action litigation are, sadly, not rare,” it is rare “for the optics of a common benefit fee award to be so poor that even class counsel are divided on every aspect of the award, not just allocation of the money.”  Locks Law said that before Judge Brody made a decision on how to apportion the $112.5 million CBF, some firms recommended a special master be appointed for that purpose while Locks Law itself urged the creation of a committee.

Instead, Locks Law said, Judge Brody let Seeger make “the sole determinations of what work performed by other [leading firms] qualified for common benefit compensation in his petition.”  “The district court’s decision to delegate responsibility for that allocation to the largest recipient of those fees, co-lead counsel Christopher Seeger,” was an “improper process,” Locks Law said.

Locks Law said all of the firms applying for those fees had to submit their time sheets to Seeger for him to review, but Seeger’s own records were only ever reviewed in camera by Judge Brody.  After approving more hours for his firm than any other, and awarding a higher lodestar multiple — a common calculation used by law firms to determine fees in many instances — for those hours than to any other firm, Seeger ultimately received about $52 million of the initial $85 million payout from the fund.  His firm has since received $8 million more, and is waiting on Judge Brody to approve more than $4 million on top of that, for a total of nearly $65 million.

Meanwhile, Locks Law has received less than $5 million in common benefit fees thus far, despite representing more than 1,000 players in the litigation compared to Seeger’s 20-or-so clients, a common point of contention raised by many other lawyers involved in the case.  Locks Law says Seeger seized on an interview Gene Locks gave to Bloomberg Businessweek for a 2013 article that “infuriated the NFL” as a reason to justify the low lodestar multiple given to Locks Law, but in its brief the firm said that explanation was “not credible.”

Lance Lubel of Lubel Voyles claims he was cut out of the CBF fees entirely because he objected to the settlement, something he's done frequently, even though his earlier complaints about the deal’s language led to significant safeguards being put in place to protect retired players.  Lubel echoed many of Locks Laws’ concerns with Seeger’s role in the CBF distribution, but went one step further by also challenging a 5% holdback that’s currently applied to each successful monetary award and a 22% fee cap Judge Brody imposed on attorneys representing retired players.

The 5% holdback is being set aside, and Judge Brody has said she’ll rule at a later date on whether or not to tap those funds to continue paying CBF fees for the implementation of the 65-year-long program, money that would presumably only be available to Seeger after Judge Brody axed the other class counsel firms in May.  Lubel said the $112.5 million should be enough money to compensate the lead firms over the entire course of the settlement’s lifespan.

As to the 22% cap on attorney fees, which works out to 17% after the holdback is applied, Lubel said Judge Brody “has, in the spirit of helping class members, gutted their chances of qualifying for an award through the claims process.”  That’s because many retired players require expensive medical tests before they can qualify for an award, and the price of those exams can easily reach $10,000 or more.  For various reasons, a player’s attorney is often the only party willing and able to front those funds, Lubel said.  But artificially capping their fees at a relatively low 17% rate makes them less willing to spend that money to get the ball rolling on a client’s claim, he continued.

The case is In re: National Football Players' Concussion Injury Litigation, case number 18-2012, in the U.S. Court of Appeals for the Third Circuit.

Law Firm Wins Dispute Over $1.3M Fee Reduction

August 12, 2019

A recent Law 360 story by Kevin Penton, “Law Firm Wins Nix of $1.3M Fee Reduction in Client Dispute,” reports that a New Jersey trial judge jumped the gun when he decided a fee dispute between an Illinois-based law firm and its client by reducing the firm's bill from approximately $1.7 million to $359,000 before either a formal complaint or a petition for fees had been filed, a state appellate court has ruled.

Superior Court Judge Craig L. Wellerson lacked jurisdiction to decide the fee dispute between Susan Lucas and Freeborn & Peters LLP as the disagreement was not part of the underlying legal malpractice case Lucas had filed against another law firm, and neither Freeborn & Peters nor Lucas had formally petitioned the court over the matter, according to the opinion by a three-judge Appellate Division panel.

While Lucas gave her blessing during a December 2016 hearing for the judge to decide the matter, that was insufficient grounds for Judge Wellerson to intercede, according to the Appellate Division opinion, which nullified the fee reduction and instructed Freeborn & Peters to file a separate cause of action in pursuit of the fees it seeks to recover from Lucas.  "The court intruded in this dispute over Freeborn's repeated objections and Lucas' acquiescence, which in no way endowed the court with the subject matter jurisdiction to adjudicate this fee dispute," the opinion reads.

Lucas hired Freeborn & Peters to serve as her counsel in a case in which she asserted, among other things, that Arnold Schancupp & Associates had committed legal malpractice when it represented her in the purchase of a home along the Jersey Shore and failed to disclose that the property was subject to a storm water easement, according to the opinion.  A jury awarded Lucas $980,000 in compensatory damages, with an additional $99,506 in consequential damages awarded by the court, according to Friday's opinion.

While Lucas and Freeborn & Peters had issues at the end of the underlying case over how much she owed the firm, she told the judge during a telephone conference that she intended to separately dispute the reasonableness of the fees, while the law firm stipulated that their retainer agreement designated a court in Illinois as the venue where any disputes between the parties would be resolved, according to the opinion.

Judge Wellerson still proceeded with a hearing to consider the reasonableness of the fees, during which Lucas agreed for the judge to rule on the matter and Freeborn & Peters continued to lodge objections, according to court documents.  "Because the trial court did not have the legal authority to unilaterally assert jurisdiction over this fee dispute, the court's decision to sua sponte adjudicate this dispute was an ultra vires act; any relief awarded by the court in this context is a legal nullity," the opinion reads.

"My clients are relieved that the matter is resolved and that they can proceed to the next stages of recouping their fees," John Hanamirian, an attorney representing the law firm, told Law360.  "They did win this case for their client in a six-week trial, but that victory and their relationship with their client was made adversarial by this process.  That is beyond unfortunate."

Ambiguous Settlement Proposals Doom Insurer’s Request for Attorney Fees

August 9, 2019

A recent Daily Business Review story by Steven Meyerowitz, “Ambiguous Settlement Proposals Doom Insurer’s Bid for Attorney Fees,” reports that the Third District Court of Appeal affirmed an order denying an insurer’s motion for attorney fees and costs, concluding the indemnity provision in settlement proposals was ambiguous and would cause additional litigation rather than fair settlement of the dispute.  On July 31, 2015, Shanika Brown and Juanita Reid filed a claim with their insurer, Safepoint Insurance Company, for water damage. Brown and Reid subsequently sued Safepoint to recover damages for the alleged loss.

On May 11, 2017, Safepoint served separate proposals for settlement on both Brown and Reid, offering $2,500 each.  If either accepted the proposal, she would agree to indemnify Safepoint for attorney fees and costs, including any incurred from continuing litigation should the other party not settle.

Safepoint’s proposal to Reid stated: “Upon acceptance of this Proposal, Plaintiff shall defend and indemnify Safepoint Insurance Company, against any and all claims in any way related to the subject matter of this litigation, including, but not limited to, any remaining claims by Shanika Brown, any other named or omnibus insured(s), any mortgagees, any public adjusters, and any and all attorney’s fees, costs, and expenses incurred by Safepoint Insurance Company in defending the same, as well as any attorney’s fees and costs incurred in defense of such claims.”  Brown received an identical proposal, except it required indemnification against Reid.

On Sept. 27, 2017, the trial court granted summary judgment in favor of Safepoint. The company then moved to recover attorney fees and costs.  After a hearing, Miami-Dade Circuit Judge Bronwyn Miller denied Safepoint’s motion, concluding its proposals were, “at a minimum ambiguous, and violate[d] the differentiation requirement under Florida Rule of Civil Procedure 1.442(c)(3).”

Safepoint appealed, and the appellate court affirmed.  In its decision, the appellate court explained Rule 1.442(c)(3) requires that a joint proposal for settlement “state the amount and terms attributable to each party.”  It added that Florida Statutes Section 768.79(6)(b) requires courts to weigh “the amount of the offer” against “the judgment obtained.”

The appellate court then pointed out that, in Attorneys’ Title Insurance Fund v. Gorka, 36 So. 3d 646 (Fla. 2010), the Florida Supreme Court held that a proposal by an insurance company to multiple offerees was invalid because the proposal did not allow each individual offeree “to settle the suit knowing the extent of his or her financial responsibility.”  The Florida Supreme Court reasoned that if a proposal required mutual agreement and only one party agreed, he or she was forced to participate in further litigation out of his or her control, which went against the goal of ending litigation through settlements.

The Third DCA found Safepoint’s proposals “would only cause further litigation.” If Brown accepted Safepoint’s proposal and Reid continued litigation, Brown would be obligated to pay Safepoint “an indeterminable amount of money,” which went against the particularity requirement of Rule 1.442.  The appellate court ruled the trial court could not weigh the proposed amount versus the judgment as required by Section 768.79 because the future legal fees were an unknowable variable to be subtracted from the offered $2,500.

The appellate court observed the proposals prevented Brown and Reid from independently evaluating the offer.  “Absent joint acceptance, a settling plaintiff would be unable to evaluate her true financial exposure,” Judge Ivan Fernandez wrote for a unanimous panel.  The proposals divested Brown and Reid “of independent control of the decision to settle,” were tacitly contingent upon joint acceptance, failed to identify financial exposure and were “patently ambiguous,” he wrote.