A recent Law 360 article by Hugh Marbury and Molly Shaffer, “A Defense Strategy For Addressing Copyright Fee-Shifting”, reports on case strategy in copyright fee-shifting litigation.  This article was posted with permission.  The article reads:

Unlike in Europe, litigants in the U.S. are generally responsible for paying their own attorney fees. Limited exceptions to the American rule exist.  For example, subject to the court's discretion, prevailing parties in Section 1983 patent and copyright litigation are eligible to recover attorney fees.

Although permissive fee-shifting is not isolated to copyright matters, copyright defendants face unique challenges because of the outsized impact Section 505 of the Copyright Act has on the economic incentive structure in all copyright litigation.  Federal Rules of Civil Procedure, Rule 68 could neutralize the omnipresent threat of Section 505 and serve as a mechanism for copyright defendants to recover post-offer attorney fees incurred.

In 2014, the American Law Institute launched a project for developing the first Restatement of the Law, Copyright.  More than 175 elected American Law Institute members — consisting of judges, law professors and experienced copyright practitioners — have spent several years drafting the restatement.  The restatement surveys copyright law as it is applied today, including the conflicting case law regarding fee-shifting and Rule 68.  In addition to the impending restatement, the U.S. Supreme Court has demonstrated some interest in copyright issues.

In Warner Chappell Music Inc. v. Sherman Nealy, the U.S. Supreme Court heard oral argument Feb. 21 to determine the relationship between the discovery accrual rule and the statute of limitations provision contained in Title 17 of the U.S. Code, Section 507(b).  The intersection between Rule 68 and Section 505 is another unclear area of copyright law where copyright lawyers could benefit from the Supreme Court's guidance.

The Intersection Between Rule 68 and Section 505

The U.S. Congress and courts have struggled with economic drivers in copyright cases, the subject matter of which can range anywhere from a single infringing photograph to massive copyright disputes regarding new and emerging software algorithms.  In December 2020, Congress addressed one end of the economic spectrum in the copyright ecosystem by establishing the Copyright Claims Board.

The CCB is a three-member tribunal, which serves as an alternative forum for smaller copyright disputes up to $30,000.  The CCB, while still in its infancy, does nothing to address the pressures associated with fee-shifting in all federal copyright cases, however.  Section 505 permits the "prevailing party" to recover its reasonable attorney fees as part of costs incurred. Unlike in patent cases, where fee-shifting is limited to exceptional cases, there is no such statutory limitation in Section 505.

Without any guidance as to when attorney fees may be awarded under Section 505, copyright plaintiffs threaten attorney fees early and often in settlement negotiations.  The threat of fee-shifting significantly affects the alleged infringer's bargaining power and resolve in defending the case.  Regardless of whether Congress intended Section 505 to provide significant leverage to plaintiffs and shift the focus from the merits of the litigation to the costs associated therewith, the reality is that Section 505 heavily affects settlement negotiations.

Rule 68 was designed to encourage settlement.  Enacted in 1946, Rule 68 permits a defendant to serve an offer of judgment on an opposing party at any point until 14 days before the trial date.  The offeree then has 14 days to accept the offer. If the offeree does not accept the offer within 14 days, the offer is considered withdrawn.  If the final judgment is not more favorable than the unaccepted offer, the offeree must pay the defendant's costs incurred after the offer was made.

Rule 68 is overlooked and underutilized because costs are often insubstantial in most litigation. However, where costs may be inclusive of attorney fees — in Section 505 — Rule 68 is a powerful tool that could minimize the threat of Section 505 in settlement negotiations by weakening the copyright holder's claim to its fees and allow defendants to collect attorney fees incurred after the offer.

In Marek v. Chesny in 1985, the Supreme Court interpreted Rule 68 in connection with a Section 1983 fee-shifting claim.  In Marek, the Supreme Court confirmed that all costs "properly awardable under the relevant substantive statute" fall within the scope of Rule 68.  Where the underlying statute includes attorney fees in its definition of costs, attorney fees are properly awardable under Rule 68.  Section 505 expressly provides that "the court may also award a reasonable attorney's fee to the prevailing party as part of the costs."

The forthcoming restatement of the law copyright has addressed this topic.  Although not yet published, the American Law Institute has approved various chapters of the restatement, including the chapter discussing remedies. Comment (h) to the restatement's chapter on remedies acknowledges that Rule 68 affects Section 505.  The restatement discusses the Supreme Court's decision in Marek and presents the competing case law regarding when a copyright defendant is eligible to collect its post-offer attorney fees under Rule 68.

Defensive Strategy: Reining in Overly Aggressive Copyright Plaintiffs

Rule 68 can prevent plaintiffs from recovering attorney fees under Section 505.  Neutralizing the threat of Section 505 shifts the economic structure of the litigation and refocuses the parties' attention on the merits of the action.

Courts are granted broad discretion to award attorney fees under Section 505 and should engage in a "particularized, case-by-case assessment."  Nonexclusive factors for consideration include frivolousness, motivation, objective unreasonableness, and the need in particular circumstances to advance considerations of compensation and deterrence.  Courts should give substantial weight to the objective reasonableness of the losing party's position, while still giving "due consideration to all other circumstances relevant to granting fees."

Unfortunately, the Supreme Court recently rejected the opportunity to clarify further the appropriate standard for awarding attorney fees under Section 505 in Hasbro Inc., et al. v. Markham Concepts Inc.  A reasonable but unaccepted Rule 68 offer does not operate a wholesale bar to a plaintiff's recovery of fees, but defendants should urge courts to consider an offer of judgment as a "circumstance relevant to granting fees."

An unaccepted offer of judgment may trigger several of the nonexclusive factors.  For example, failing to accept a reasonable Rule 68 offer could indicate that a plaintiff's motivation in the litigation is to obtain a windfall.

Relatedly, a plaintiff's failure to come down to a realistic settlement figure could show that the plaintiff presented an unreasonable litigation position.  Moreover, prolonged litigation — a result of an unaccepted Rule 68 offer — could reflect a plaintiff's intent to rack up attorney fees for both parties.  Each of these arguments could serve as a basis for the court to reject a plaintiff's Section 505 request.

Although the exact impact of Rule 68 is unclear in the copyright fee-shifting context, defendants could benefit from making creative arguments grounded in Rule 68 principles in attempt to equalize the bargaining power in copyright infringement negotiations.

Offensive Strategy: Maximize Recovery Opportunity

Circuits are split on the more difficult questions regarding when a defendant may recover attorney fees after an unaccepted offer of judgment.

The U.S. Court of Appeals for the Eleventh Circuit held in Jordan v. Time Inc. in 1997 that the copyright defendant was entitled to costs, including attorney fees, following an unaccepted offer of judgment that was more favorable than the damages awarded.  The court relied upon the mandatory language in Rule 68 and determined that the mandatory costs included attorney fees incurred after the Rule 68 offer.

Other circuits, however, have rejected Jordan, and require that the defendant also be the prevailing party to earn attorney fees incurred after the Rule 68 offer.  Applying Marek, those circuits have generally concluded that attorney fees must be properly awardable under the substantive statute to fall within Rule 68.

Under Section 505, attorney fees are only available to the prevailing party, and therefore, some courts have held that the defendant must be the prevailing party to recover post-offer attorney fees.  What exactly a prevailing party is remains elusive.  Because of the interplay between Rule 68 and Section 505, it seems possible that a defendant could recover post-offer attorney fees.  The Eleventh Circuit considered this argument in February in Affordable Aerial Photography Inc. v. Trends Realty USA Corp.

In that case, the defendant served an offer of judgment, which was not accepted, and the plaintiff later voluntarily dismissed the case without prejudice pursuant to Federal Rule of Civil Procedure 41(a)(2).  Although the court held that Rule 68 was inapplicable, it is conceivable that a copyright defendant could recover post-offer attorney fees under different facts.

What's Next?

Rule 68 and Section 505 certainly overlap, but exactly how they interact is less than clear.

Copyright practitioners would benefit from the Supreme Court's guidance on if and how Rule 68 affects permissive fee-shifting.  The Supreme Court has shown renewed interest in copyright cases generally, having reviewed fair use in Andy Warhol Foundation for the Visual Arts v. Goldsmith last May and the timing of damages in Warner Chappell Music Inc. v. Sherman Nealy in February.

Given the Supreme Court's recent interest in copyright issues and the many billions of dollars potentially at stake in attorney fees — particularly in the massive artificial intelligence copyright cases being filed in all circuits — the Supreme Court should give guidance on the relationship between Rule 68 and Section 505.  But all copyright defendants should seriously consider the role of Rule 68 in their litigation strategy.

Hugh Marbury is a partner and co-chair of the copyright practice at Cozen O'Connor.  Molly Shaffer is an associate at the firm.

A recent Law 360 story by Carolina Bolado, “11^th Circ. Says Broker Can’t Collect Fees in Copyright Case”, reports that the Eleventh Circuit has ruled that a Florida real estate broker cannot collect attorney fees incurred for defending himself from a copyright infringement suit by an aerial photography company because the broker was not a prevailing party once the photography company voluntarily dismissed the case.

In an opinion issued Feb. 28, the appeals court affirmed a district court decision denying a request by real estate broker John Abdelsayed and his company Trends Realty USA Corp. for an award of their attorney fees and costs from Affordable Aerial Photography Inc.  That company had sued over the use of a copyrighted photograph on Trends Realty's website.

Abdelsayed and Trends Realty argued that they are entitled to fees under Federal Rule of Civil Procedure 68, which mandates a fee award if an offer to settle is not accepted and ends up being more favorable than the judgment obtained, and under the Copyright Act's cost-shifting provision.

But the Eleventh Circuit said they are not entitled to fees under Rule 68 because it only applies when a plaintiff has obtained a judgment for an amount less favorable than the defendant's settlement offer.  It does not apply in cases where the defendant wins a judgment, the appeals court said.  And because Abdelsayed and Trends Realty did not obtain a judgment, they are not prevailing parties in the suit and are therefore not eligible for a fee award under the Copyright Act, according to the Eleventh Circuit.

"The order of dismissal does not prevent AAP from refiling its claims," the appeals court said.  "And even assuming future action by AAP may be unlikely or now barred by the statute of limitations, those facts are irrelevant because the court did not rebuff or reject AAP's claims on any grounds."

Abdelsayed, who operates in the Palm Beach County market, was sued in August 2021 in the Southern District of Florida by Affordable Aerial Photography for using a copyrighted photograph on Trends Realty's site.  AAP moved to voluntarily dismiss the suit without prejudice a year later.

After briefing and a hearing, the district court granted the motion and dismissed the case without prejudice. The court ruled that if AAP were to refile its case, it would have to pay the defendants' reasonable attorney fees incurred in defending this case.  Two months later, Abdelsayed and Trends Realty asked the court to reconsider that order, claiming they were entitled to immediate recovery of their fees under Rule 68 and the Copyright Act. But the court denied the request.

On appeal, the defendants argued to the Eleventh Circuit that allowing this would create an incentive for a plaintiff to drop a case just before an expected adverse ruling, but the appeals court pointed out that the plaintiff can't do this unilaterally and that a dismissal must be approved by the court.  In this case, the district court held a hearing and found that the defendants would not suffer legal prejudice because their counsel was pro bono or on a contingency agreement, according to the appeals court.

A recent Law.com article by Adam J. Levitt, “Arguing Class Actions: Objections to Class Action Settlements” reports on the role of class action objectors in the settlement process.  This article was posted with permission.  The article reads:

After years of litigating and negotiating, the parties and their counsel seek approval from the court of a class action settlement.  All parties are eager for final approval but objections start flowing in.  But final approval and ultimate disbursement of much-needed relief to class members is delayed for months, if not years, as the objectors appeal.  This scene has played out time and time again, particularly in the case of large, well-publicized class action settlements.

Federal Rule of Civil Procedure 23(e) guarantees each class member who does not opt out the right to object to a class action settlement. Fed. R. Civ. P. 23(e)(4), (5).  Objectors can sometimes play a role in helping the court or the parties evaluate a settlement.  Indeed, one court noted that objectors can add value to the class action settlement process by: “(1) transforming the fairness hearing into a truly adversarial proceeding; (2) supplying the Court with both precedent and argument to gauge the reasonableness of the settlement and lead counsel’s fee request; and (3) preventing collusion between lead plaintiff and defendants.” In re Cardinal Health, Inc. Sec. Litig., 550 F. Supp. 3d 751, 753 (S.D. Ohio 2008).  Objections may also address uniquely-situated class members with independent, unusual circumstances that may affect the adequacy of their recovery under the proposed settlement.

But all too often, objectors only object to class action settlements for personal gain, an individual (often undefined) animus toward the class action mechanism, or for purportedly policy-based or “principled” reasons that are generally ham-fisted attacks on the plaintiffs’ bar in general.  These bad-faith objectors are often referred to as “professional objectors.”  Professional objectors file meritless objections, seeking, in a small number of cases, to extract a payoff in exchange for withdrawing the objection.  Other “professional objectors” have a well-known agenda and animus against class action attorneys, filing “gotcha” appeals which do nothing to materially improve settlements, but instead prolong when settlement payments are made.  Either flavor of professional objector is bad.  The first kind puts pressure on class counsel to engage in blackmail to finalize settlements so that class members can get paid.  The second kind only helps defense counsel, who are paid hourly, while advancing the personal view of one person and holding up payments to potentially millions of others who are happy with the settlement.

Courts across the United States have noted the havoc that professional objectors can wreak on the settlement approval process.  One court held that “settlement funds of $147 million, the product of four years of hard-fought litigation, have hung in limbo for more than eight months because a person who knows he has no right to object to the settlement nonetheless refuses to withdraw his meritless Objection.” In re Polyurethane Foam Antitrust Litig., 165 F. Supp. 3d 664, 670–71 (N.D. Ohio 2015).  Another referenced professional objectors as “a pariah to the functionality of class action lawsuits.” Snell v. Allianz Life Ins. Co. of N. Am., No. 97-cv-2786, 2000 WL 133640, at *9 (D. Minn. Sep. 8, 2000).  In a particularly egregious case, an objector sent class counsel a letter stating “[s]ettle with me for $10,000 and not a penny more or a penny less to remove me and only me from the equation of the case. . . You have one week to decide.”  The judge ordered the objector to show cause “why his communications with class counsel should not be referred to the United States Attorneys Office” for possible wire or mail fraud. Junge v. Geron Corp., No. C 20-00547, 2023 WL 2940048, at *1 (N.D. Cal. Apr. 13, 2023)).  Any objector still has the ability to appeal approval of a class settlement, regardless of a district court’s findings about their motivations.  For example, a settlement that would resolve antitrust claims against Blue Cross Blue Shield of Michigan was held up for over a year before the United States Court of Appeals for the Sixth Circuit was able to address an objector’s “raft of objections, many of them undeveloped, all of them meritless.” Shane Grp., Inc. v. Blue Cross Blue Shield of Michigan, 833 F. App’x 430, 431 (6th Cir. 2021).  Even after an appellate court ruling, objectors can still file a petition for a writ of certiorari with the United States Supreme Court, and the class has to wait until the petition is rejected before any settlement relief becomes available—a process which, itself, could take yet another year.  By way of example, members of my firm helped to resolve the class action against Equifax related to its 2017 data breach in April 2019.  The settlement was upheld, but an endless litany of objectors’ spurious appeals resulted in payments being delayed until January 2022. See, e.g., In re Equifax Inc. Customer Data Sec. Breach Litig., 999 F.3d 1247 (11th Cir. 2021), cert. denied sub nom. Huang v. Spector, 142 S. Ct. 431 (2021), and cert. denied sub nom. Watkins v. Spector, 142 S. Ct. 765 (2022).

Both the plaintiff and defense class action bar agree on the need to reform the objection process.  The April 2016 Minutes from the Meeting of the Civil Rules Advisory Committee note that “there was virtually unanimous agreement that something should be done to address the problem of ‘bad’ objectors.” Civ. Rules Advisory Comm., Draft Minutes, at 13 (Apr. 14, 2016). On December 1, 2018, new language was added to the Federal Rules of Civil Procedure to address professional objectors.  Rule 23(e)(5) now requires objectors to: (1) state “with specificity the grounds for the objection;” and (2) requires court approval for “forgoing or withdrawing an objection” or “forgoing, dismissing, or abandoning an appeal from a judgement approving the proposal.” Fed. R. Civ. P. 23(e)(5).

While it appears these changes have resulted in some reduction in the number of frivolous objections, courts have continued to approve side payments to professional objectors. See Brian Fitzpatrick, Objector Blackmail Update: What Have the 2018 Amendments Done?, 89 Fordham L. Rev. 437, 437-38 (2020). More can still be done.

The difficulty in reforming the objection process is balancing the approach so that good-faith objectors are not deterred while professional objectors are sufficiently deterred.  For example, barring side payments to objectors, as proposed by Professor Brian Fitzpatrick, id., would potentially eliminate the professional objector problem, but others have voiced the concern that it would also discourage good-faith objectors from raising objections that might improve the settlement agreement.  See Robert Klonoff, Class Action Objectors: The Good, The Bad, and The Ugly, 89 Fordham L. Rev. 475, 492-93 n.99 (2020).

One oft-proposed reform is requiring objectors to post an appeals bond under Federal Rule of Appellate Procedure 7.  Requiring hefty appeals bonds for frivolous appeals could deter professional objectors but again there is a concern that this could deter good-faith objectors (i.e., those without any agenda or personal bent against class actions, but who legitimately want to make the settlement materially better, rather than engage in seriatim “gotcha” appeals) who may be pro se and have limited funds. Id. at 497.  Courts, however, can use their discretion to assess whether the objection is in good faith and determine whether an appeals bond is appropriate.

Class counsel can also request that courts conduct an expedited review of objections and appeals.  For example, if an objector files an appeal, class counsel and the defendant can file a motion for summary affirmance where “no substantial question is presented” in the objection. See id. at 501 n.160.  This would allow the appellate court to quickly dismiss a frivolous appeal without full briefing.  Both the Seventh and Ninth Circuits have recently granted summary affirmance in cases involving professional objectors. Id. at 502.  Another option is simply for the parties to move for expedited review with an accelerated briefing and oral argument schedule.

Courts can take a more active role in sanctioning and barring professional objectors from practicing in their jurisdiction.  Reform along these lines has been somewhat limited, as a judge in one federal district court cannot bar a professional objector from practicing before another court.  This practice could be aided if courts coordinated at the national level to maintain a list of problematic professional objectors, along with information about the number of times each has objected and whether the objector has been barred from practicing in any court. See id. at 499.  This list could then be easily cited by class counsel in an objection response or sanctions motion.  Such a database could also assist courts in determining whether to require an appeals bond and if expedited review is appropriate.  If managed well, it may be the most promising mechanism for deterring serial professional objectors without deterring good faith objections.

Finally, another reform that can serve as an effective check on settlement objectors is adopting provisions in settlement agreements that allow for the payment of fees and expenses before objector appeals are resolved.  While settlement objectors and other class action opponents characterize these as “quick pay” provisions, they are actually anything but—as settlements usually only come after a significant amount of time and resources are spent litigating a case without any guarantee of recovery.  Provisions for fee payments before objector appeals are resolved serve to deter professional objectors, because enabling plaintiffs’ counsel to be paid for their work in achieving a settlement removes the ransom payment tool from the objector’s extortionate toolbox.  A survey from the Western Alliance Bank Class Action Law Forum in April 2021 found that nearly two-thirds of the survey’s respondents had participated in class action settlements permitting timely payments to settling plaintiffs’ counsel.

Complex issues such as navigating objections to class action settlements require complex, balanced, and intersectional solutions.  We encourage judges and class action practitioners to use their creativity and judgment to address the continuing problem of professional objectors—as well as the problem of purported “principled objectors,” whose sole “principle” is to undermine the class action process for their own political ends—and to point out and criticize this bad behavior in the hopes of deterrence.  And, in the future, we would also encourage the Rules Committee to consider additional measures—such as requiring objectors to successfully intervene before they may file an objection, which prevents the class from being paid after an already long wait.

Adam J. Levitt is a founding partner of DiCello Levitt, where he heads the firm’s class action and public client practice groups.

A recent Law.com story by Amanda Bronstad, “Juul Settlements Could Generate $150M in Fees: ‘Everyone Undoubtedly Wishes the Pool Were Larger’”, reports that lawyers plan to ask a federal judge to approve as much as $150 million in fees tied to settlements with Juul Labs Inc. over the vaping epidemic.  The fee award, according to a partially redacted filing from a fee committee, is more than $50 million short of the compensation from nearly 368,000 billable hours incurred in the litigation, which began three years ago, and a rough estimate given that the total value of the Juul settlements remains unknown.

The motion attached an exhibit of allocations, expressed in percentages rather than dollar figures, to some of the 57 firms set to receive fees, including the four in the multidistrict litigation serving on the committee, who are among the top recipients.

At least one lawyer has objected to his own fee allocation.  Esfand Nafisi, who served on numerous committees in the Juul multidistrict litigation, said his firm, the Law Offices of Esfand Nafisi, based in San Anselmo, California, spent more than 10,000 hours on the cases.  “Though a smaller firm, Nafisi law was able to play a key role in this litigation by maintaining a singular focus,” he wrote in a Nov. 27 opposition to the fee motion.

In a Dec. 4 response, the committee said Nafisi’s opposition lacked specifics.  “Reality is that, while everyone undoubtedly wishes the pool were larger, all firms—save one—have abided by the order to which they all agreed three and a half years ago, and under which they all litigated this matter together,” the committee wrote.  “While Mr. Nafisi did provide some common benefit—which is why he was allocated common benefit fees—his contributions do not merit any greater allocation than what the fee committee recommended.”

The fee committee lawyers did not respond to a request for comment.  They are: Sarah London, of San Francisco’s Lieff Cabraser Heimann & Bernstein; Dean Kawamoto, of Keller Rohrback in Seattle; Ellen Relkin, of New York’s Weitz & Luxenberg; Dena Sharp, of San Francisco’s Girard Sharp; Paul Kiesel, of Kiesel Law in Beverly Hills, California; and Mark Robinson, of Robinson Calcagnie Inc. in Newport Beach, California.

Orrick is set to take up the $150 million fee motion at a hearing.  The dispute is the latest involving common benefit fees, awarded to lead plaintiffs’ attorneys appointed in multidistrict litigation for their legal efforts but funded through assessments made against settlements of cases involving other lawyers.

In 2021, U.S. District Judge Vince Chhabria of the Northern District of California raised red flags about the use of common benefit fees in the Roundup multidistrict litigation, but the U.S. Court of Appeals for the Ninth Circuit found it lacked jurisdiction to review the order.  On Aug. 25, the Ninth Circuit upheld common benefit assessments on cases outside the Bard IVC filter multidistrict litigation because the objecting lawyer had signed a participation agreement with lead counsel.

‘Not Totally Revealing’

Juul, facing its first bellwether trial over its electronic cigarettes, reached four separate settlements on Dec. 6, 2022.  The settlements resolved lawsuits brought by government entities, individuals with personal injuries, Native American tribes and consumers with economic claims.  Juul also settled the economic claims in a $255 million class action settlement.  Class counsel in that settlement asked for $76.5 million in fees, which must be approved under Federal Rule 23 of Civil Procedure. Hedley, one of eight objectors to the class settlement, called the billable hours “outrageously inflated on its face.”

On Sept. 19, Orrick granted final approval to the class action settlement but held off awarding fees until he received the fee committee’s report on the common benefit fund.  Plaintiffs’ lawyers initially sought to seal portions of their fee motion, citing “certain terms of confidential settlements,” but, after Hedley and Nafisi objected to the request, Orrick issued a Dec. 7 order to show cause why the information should remain under seal.  He granted part of the request and ordered plaintiffs’ lawyers to file their fee motion with fewer redactions.

“What they submitted un-redacted is a bit more revealing, but it’s not totally revealing in terms of what is the overall denominator that we’re talking about,” Hedley said.  “This additional information that’s come out from the fee committee is relevant to the arguments that we advanced in our initial objection.”

In their fee motion, plaintiffs’ lawyers referenced more than $24 million in common benefit costs paid in advance for the litigation by firms now set to receive fees.  The common benefit fund is paid for by a 7% holdback of fees paid to individual lawyers for their Juul settlements.  The motion excludes compensation tied to a $235 million settlement with Altria, which has a 35% stake in Juul. Altria settled earlier this year while in the midst of a trial against the San Francisco Unified School District.

A recent Law 360 story by Ryan Boysen, “Gibson Dunn Fees Halved in NY Eviction Law Dispute”, reports that attorneys from Gibson Dunn & Crutcher LLP can recover $385,000 in fees for successfully blocking a pandemic-era anti-eviction law on behalf of New York landlords, after a federal judge rejected arguments that they should not be paid at all, but found their initial request of $735,000 "unreasonably excessive."

In a 26-page ruling, U.S. District Judge Gary R. Brown said the Gibson Dunn team in question deserves credit for four months of frenzied work that finally led the U.S. Supreme Court to enjoin New York's COVID-19 Emergency Eviction and Foreclosure Prevention Act, or CEEFPA, in August 2021 — even though a new, nearly identical law was then passed shortly thereafter.

Judge Brown slashed the initial $735,000 fee request nearly in half after finding the 10-attorney team was too big, too "top-heavy" and billed too many hours, some of them at too-high hourly rates.  That decision came even though the Gibson Dunn attorneys had argued the $735,000 figure already reflected "significantly discounted" rates and some pro bono hours for which they did not bill at all.  "Upon review of the billing records, the court … finds that the number of hours expended by Gibson Dunn on this litigation to be unreasonably excessive for several reasons," Judge Brown said.

In civil rights cases the "prevailing party" is able to seek legal fees from their opponent, on the grounds that when a plaintiff "succeeds in remedying a civil rights violation," the benefits of doing so inure to the rest of society as well, according to the ruling.  Judge Marks, the defendant in the landlords' initial lawsuit, had argued that the Gibson Dunn team should not receive any fees because its efforts only resulted in enjoining a law that had been set to lapse just days later.

"The stark truth is that plaintiffs failed to recover a judgment against [Marks] at all, rendering this fee application null," Judge Marks said in a brief opposing Gibson Dunn's fee request.  Judge Brown said that analysis was not quite on the money, however.  Even if a party receives only a stay or preliminary injunction, and never obtains a final judgment in its favor, it can still be considered a "prevailing party" if the court ruled in its favor on the merits, the ruling said.

"Moreover, 'a party prevails under [Section 1988 of the Federal Rules of Civil Procedure] where it obtains a preliminary injunction against enforcement of a law that is later amended or repealed,'" Judge Brown said, quoting the 2021 ruling in HomeAway.com Inc. v. City of New York.  Nonetheless, Judge Brown declined to award the Gibson Dunn team the entirety of the fees it asked for.

His reductions began with the hourly rates sought by the Gibson Dunn team.  Randy M. Mastro and Akiva Shapiro billed $550 each per hour; senior associates Jessica C, Benvenisty and William J. Moccia billed $375; midlevel associates Erich A. Bruhn, Lauren K. Myers and Seton Hartnett O'Brien $287.50; and junior associates Lavi M. Ben Dor, Bina Nayee and Maxwell A. Peck $200.  These are the rates Gibson Dunn said had already been "significantly discounted" from the firm's "customary rates," the ruling said.

Judge Brown gave Mastro his $550 an hour rate given his widely acknowledged status as a towering figure of the New York Bar and his extensive experience with civil rights litigation, but reduced Shapiro's rate to $450 an hour.  Judge Brown also reduced the senior associates' rates to $325 an hour, the midlevel associates' rates to $250 an hour, and the junior associates' rates to $150 an hour.  Most of the reduction in the overall dollar amount received by the Gibson Dunn team came in the form of hours, however.

The attorneys claimed they spent nearly 2,000 hours on the CEEFPA case, but Judge Brown said that after he reviewed their billing records it seemed to him that Mastro, Shapiro and the senior associates spent too much time doing work that could have been done by lower-level associates, too much time in meetings, and too much time on "vague and block-billed" entries.

The entries with which he took issue included items such as "conference with team," "various correspondence with team members," "participate in team strategy call," "work on various issues going forward," "emails regarding status," and "work on various issues."  "In sum … the court finds that an across-the-board reduction of 50% of the hours billed by plaintiffs' counsel is appropriate," Judge Brown wrote.

A recent Law 360 article by Theodore Boutrous, Lee Crain, and Randi Kira Brown of Gibson Dunn LLP, “How NY SLAPP Defendants Can Recover Fees in Fed. Court”, reports on attorney fee recovery in...

Read Full Post

A recent Law.com story by Avalon Zoppo, “Attorney Fees Cannot Exceed Value to Class, 9th Circuit Makes Clear in Copyright Case,” reports that the U.S. Court of Appeals for the Ninth Circuit made...

Read Full Post

A recent Law 360 story by Hayley Fowler, “Abortion Protesters Keep Atty Fees in 4th Circ. Picketing Row” reports that the First Circuit deepened a circuit divide on how long attorneys have to...

Read Full Post

A recent Law 360 story by Matthew Santoni, “Ex-Client Fights Buchanan Ingersoll’s $1.9M Fee Lien” reports that a former client of Buchanan Ingersoll & Rooney PC has said the firm isn't...

Read Full Post