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Category: Interest on Fees

Judge Denies Fee Request, Refers Matter to Ethics Board

September 6, 2017

A recent Legal Intelligencer story by Max Mitchell, “Judge Tosses $1M Fee Request, Refers Matter to Ethics Board,” reports that a Scranton attorney who recovered $125,000 for his client in a bad-faith case wanted $1.12 million in fees, costs and interest, but the presiding judge has instead awarded his firm nothing and referred the case to the Disciplinary Board of the Supreme Court of Pennsylvania.

U.S. District Judge Malachy E. Mannion of the Middle District of Pennsylvania issued an order chiding attorneys Michael Pisanchyn and Marsha Lee Albright over their handling of the case Clemens v. New York Central Mutual Fire Insurance, and saying their request for fees and costs was "outrageous and abusively excessive."

Mannion's 100-page opinion went line-by-line through the request, slashing billed fees he deemed vague, duplicative and excessive.  Mannion also took issue with how the firm recreated its timesheets, saying that, while recreating timesheets is allowable if the attorneys did not make them contemporaneously, a number of the entries appeared to be based on guesswork.

Mannion ended his opinion by saying that, "given the conduct of the plaintiff's counsel and the exorbitant request for fees in this case, a copy of this memorandum will be referred to the Disciplinary Board of the Supreme Court of Pennsylvania for their independent determination of whether disciplinary action should be taken against attorney Pisanchyn and/or attorney Albright."

Pisanchyn, the name partner of Pisanchyn Law Firm, said that, while he tried the case, he had not been involved in preparing the attorney fees petition.  However, he said, both he and Albright conducted themselves according to the Rules of Professional Conduct.

"I believe that either no action will be taken, or if a complaint is opened, it will be dismissed," Pisanchyn said.  He added he did not think the fees were unreasonable, since the case had been litigated for nearly nine years.  "The defendants took the position of a scorched earth litigation, and we had to go toe-to-toe with them every step of the way," he said.  "I certainly tried the case to the jury. I didn't try the case to the judge.  The jury obviously liked my presentation and obviously thought it was effective."

According to Mannion, plaintiff Bernie Clemens' bad-faith claims came before a jury in November 2015, and ended with a $100,000 award.  The defendants had settled Clemens' uninsured motorist claim for $25,000.  When it came to the attorney fees, according to Mannion, the plaintiff's attorneys sought $48,050 for their work on the UIM claim, $827,515 for working on the bad-faith claim and $27,090 for preparing the fee petition, for a total of $902,655 in fees.  Except for awarding $4,986 in interest, Mannion denied the requests entirely.

"In addition to the unconscionable number of vague entries which had been billed for (or more accurately guessed about) by the plaintiff's counsel, there also appear to be a number of duplicative entries in the bad faith time logs for which no explanation is provided," Mannion said.  Mannion said one of the most "egregious" requests included billing 562 hours for trial preparation, with the plaintiff's attorneys entering between 20 and 22 hours per day on some days.

"If counsel did nothing else for eight hours a day, every day, this would mean that counsel spent approximately 70 days doing nothing but preparing for the trial in this matter—a trial in which the only issue was whether the defendant had committed bad faith in its handling of the UIM claim; a trial which consisted of a total of four days of substantive testimony; a trial which involved only five witnesses; a trial during which trial counsel had to be repeatedly admonished for not being prepared because he was obviously unfamiliar with the Federal Rules of Evidence, the Federal Rules of Civil Procedure and the rulings of this court," Mannion said.  "For this, the plaintiff's counsel are billing $196,700."

Attorneys Earn $18.5M in Fees in Dole Securities Action

July 21, 2017

A recent Law 360 story by Jeff Montgomery, “Dole Shareholders Garner $18.5M in Fees in Securities Cases, reports that attorneys for a Dole Food Co. stockholder class secured an $18.5 million fee award as part of a $74 million settlement in a Delaware federal securities suit targeting insider efforts that artificially depressed Dole’s stock price in 2013.

The fee, along with about $694,000 for expenses and costs, went to lead counsel Bernstein Litowitz Berger & Grossmann LLP and Entwistle & Cappucci LLP and liaison counsel Friedlander & Gorris LLP, in a case focused on damage to those who relinquished their shares before Dole sold the company into private ownership for $1.6 billion.

U.S. District Court Judge Leonard P. Stark said the uncontested settlement terms were both fair and reasonable, and reflected the significant risk taken by attorneys in pursuing damages to former investors unable to receive shares of a separate, $101 million Chancery Court award in a related Dole stockholder case.

“The claims on behalf of persons who sold stock before the closing were going to be released, but they were not going to receive any consideration,” class attorney Vincent R. Cappucci of Entwistle & Cappucci said.  He added later that suit required “tremendous work by experts in analytics.”

In August 2015, Vice Chancellor J. Travis Laster found that Dole CEO David Murdock and General Counsel C. Michael Carter breached their fiduciary duties to shareholders in connection with the take-private deal.  Both were said by Vice Chancellor Laster to have acted in “intentional bad faith,” with Carter alleged to have engaged in fraud and the two found jointly and severally liable for $148.19 million in damages.  The award covered both holders of stock in the run-up to the go-private closing and parties who launched a separate suit challenging Dole’s appraised value.

In the August opinion, Vice Chancellor Laster concluded that Murdock and Carter’s effort to drive down Dole’s share price and their alleged misrepresentations during negotiations reduced the company deal price by 16.9 percent, or $2.74 per share.

Judge Stark said the subsequent $74 million federal court settlement was large “not only in the abstract, but more importantly it represents a substantial percentage of what the plaintiffs believe is the maximum possible recovery — right around a third of the best scenario in the plaintiffs' estimate.”

Class attorney Katherine M. Sinderson of Bernstein Litowitz said interest also will be applied to both the fee award and the class payment, which will be distributed proportionally to investors.  The $639,000 in legal expenses approved by the court, Sinderson said, were well below the $1.3 million possible for the case.

Judge Stark said the case involved many complex issues, some novel or unprecedented, as well as statute of limitation concerns.  The complications in the contingent fee case created a significant risk that the stockholders and attorneys “may have had nothing had the case proceeded all the way through trial and an inevitable appeal,” the judge said.

The case is San Antonio Fire and Police Pension Fund et al. v. Dole Food Co. Inc. et al., case number 1:15-cv-01140, in the U.S. District Court for the District of Delaware.

Former Enron Unit Failed to Justify Fee Request

June 29, 2017

A recent Law 360 story by Natalie Olivo, “Nigeria Knocks Ex-Enron Unit’s Fee Bid in $21M Award Row,” reports that a former Enron subsidiary has failed to justify its request for hundreds of thousands of dollars in legal fees for the solo practitioner who netted the company confirmation of a contract breach arbitral win against the Nigerian government now topping $21 million, the country told a D.C. federal court.

In pushing for the fees this month, Enron Nigeria Power Holding Ltd. — sold off by Enron in the wake of its 2001 scandal and collapse — said the $276,752.64 in attorneys’ fees and $4,025.69 in costs was well-earned by Texas attorney Kenneth R. Barrett, who overcame stiff opposition from experienced opposing counsel who put up a complex legal defense.  Legal fees are appropriate, ENPH said, in part because Nigeria refused to abide by the underlying award and because the underlying agreement requires compensation by “the party resisting enforcement.”

But the Nigerian government pushed back, arguing that instead of using the Washington, D.C., rate to calculate his fees, Barrett should have used the lower rate of Houston, Texas, because that was mainly where he worked.  In addition, the government said, while Barrett has nearly three decades of legal experience, he has not provided any evidence to show that he has experience regarding international arbitration award disputes with foreign governments.

“The fact that plaintiffs’ counsel has been licensed as an attorney for almost 30 years, does not necessarily translate to 30 years [of] experience in every area of law,” Nigeria said.  “Plaintiffs’ counsel has not shown that he has the requisite experience and reputation in international arbitration enforcement to justify the billing rate and hours spent on this matter.”

ENPH’s total award was up to more than $21.2 million after a D.C. federal judge added on exchange rate fluctuations and interest in April.  The International Chamber of Commerce arbitration award of $11 million plus fees had already been confirmed, and in December the D.C. Circuit also rejected Nigeria’s appeal of that ruling.

Nigeria had argued that it could cancel its deal with ENPH because of then-parent company Enron Corp.’s accounting scandal, and said enforcing the award would endorse fraudulent conduct and conflict with U.S. public policy, despite ENPH rebuttals that Nigeria failed to provide any evidence of wrongdoing on the subsidiary's part.

But the D.C. Circuit noted the courts’ tendency to defer to arbitration.  It also found that while the public policy issue of award enforcement was a question for the courts, interpreting the agreement between Nigeria and ENPH was a question for the ICC.  The panel also remarked that Nigeria began trying to back out of the deal in 1999 out of apparent economic convenience — before the Enron scandal broke.  As of the April judgment Nigeria still had not paid any of the award to ENPH.

ENPH in March asked the court for the $18.7 million in award and award interest as well as for exchange rate consideration and post-award/prejudgment interest on legal fees and arbitration costs.  The final judgment confirmed the $18.7 million and added $1.1 million based on ENPH arbitration legal fees and costs — converted from pounds at the November 2012 rate — along with $870,000 for ICC fees and $529,000 in prejudgment interest.

ENPH followed up with the court this month, noting that due to an “oversight,” prejudgment interest should actually be about $33,000 more.  The company first sought compensation for its legal costs late last month, asking for more than $630,000 total when combining its U.S. and United Kingdom court enforcement efforts.

In a June 3 brief, ENPH argued the rates charged by Barrett are reasonable, with the attorney having performed work both as lawyer and legal assistant.  For the attorney work, Barrett charged between $770 and $820 an hour, while he charged between $175 and $185 an hour for legal assistant efforts, for a total of 413.57 hours in all.

Hitting back against ENPH’s fee request, the Nigerian government said Barrett should actually be using the average Houston rate for comparable attorneys of about $300 an hour for attorney work and about $127 per hour for legal assistance efforts.  During the four years of the dispute, ENPH’s counsel made only two trips to Washington, D.C., the government said, one for mediation and the other for oral arguments before the circuit court.

The government also argued Barrett’s fee request should be reduced due to its documentation.  “The plaintiffs’ counsel in the matter has presented invoices rife with serial or blocked bill entries that impermissibly intermix time spent on multiple activities,” Nigeria said.  “It renders the task of determining how much time plaintiffs’ counsel reasonably spent on particular activities difficult.”

The case is Enron Nigeria Power Holding Ltd. v. Federal Republic of Nigeria, case number 1:13-cv-01106, in the U.S. District Court for the District of Columbia.

Four Season’s $11M Fee Dispute in Arbitration

June 5, 2017

A recent the Law 360 story by Natalie Olivo, “Four Seasons Hotel’s $11M Fee Spat Sent to Arbitration,” reports that the owners of a Four Seasons-branded hotel in Los Angeles will have to arbitrate their request for the hotel chain to return an award of nearly $11 million in legal fees stemming from a contract dispute over split loyalties, after a California judge cited the companies’ arbitration agreement.

In sending Burton Way Hotels LLC’s fee request to arbitration, U.S. District Judge Philip S. Gutierrez noted that Ontario-based Four Seasons Hotels Ltd. has contended that the parties’ arbitration agreement covers the fee request, which should be decided by a new arbitration panel.  In addition, Judge Gutierrez said, Burton Way has indicated that it was also willing to have the fee request decided in arbitration.

“In light of the clear language in the parties’ arbitration agreement providing for the arbitrators’ power to adjudicate the questions presented in Burton Way’s fees motion, and the parties’ mutual agreement to bring the fees motion before the new arbitration panel, the court concludes that the fees motion is to be decided by the new arbitrators pursuant to the parties’ arbitration agreement,” Judge Gutierrez said.

The award at issue was handed down in underlying arbitration that dismissed Burton Way’s claims accusing Four Seasons Hotels of breaching their deal for the exclusive use of the brand and ordering Burton Way to pay Four Seasons $10.2 million in fees and costs.  However, after the Ninth Circuit vacated the award in October, Burton Way sought to have the payment returned, saying it is now owed more than $10.9 million with interest.

Neal Marder, an Akin Gump Strauss Hauer & Feld LLP attorney representing Burton Way, told Law360 that "we advised the court that Burton Way was comfortable with the panel deciding this issue so the decision was welcomed and not unexpected."

The dispute over Four Seasons' decision to manage and operate the nearby Regent Beverly Wilshire Hotel, which Burton Way says is a direct competitor, has been barreling back toward arbitration at least since Judge Gutierrez refused Burton Way's bid last month to void an agreement to arbitrate the dispute over a licensing deal under which Four Seasons has managed the Burton Way-owned Four Seasons Hotel Los Angeles since the late 1980s.

Burton Way had claimed the arbitration agreement was void because the hotel owner agreed to it only if a certain judge — who recused himself in January under a request from Burton Way alleging improper ex parte communications — was involved in the arbitration.  But Judge Gutierrez instead ruled that the provisions did not reference the judge in a way that would render the agreement void now that he has recused himself.

Following Judge Gutierrez’s order declining to void the agreement, the parties have squared off over remaining issues in the dispute.  Four Seasons in April told the court that Burton Way could not relitigate the entire contract case, arguing that the Ninth Circuit issued a very limited mandate for still-live issues to be contested when the case returns to arbitration.

According to Judge Gutierrez’s order, Four Seasons had noted that Burton Way’s fee request depends on a determination of which party is the “prevailing party, which is a question reserved for the arbitrators.

While Burton Way had also agreed to arbitrate its fee request, the company claimed that Four Seasons was trying to keep the district court from ruling on the fees motion on the grounds that it has no jurisdiction under the parties’ arbitration agreement, while at the same time asking the court to rule on the scope of the Ninth Circuit’s order, rather than allowing both issues to be arbitrated.

The case is Burton Way Hotels Ltd. et al. v. Four Seasons Hotels Ltd., case number 2:11-cv-00303, in the U.S. District Court for the Central District of California.

London Arbitration Firm Recovers Costs from UAE Fee Dispute

March 13, 2017

A recent Law 360 story by Jimmy Hoover, “London Arbitration Firm Recovers Costs From UAE Fee Spat,” reports that a London-based international arbitration firm won back nearly all of the costs it spent pursuing around $2 million in legal fees from its representation of a wealthy United Arab Emirates (UAE) family in a commercial contract dispute, when a U.K. court found the family was drawing out the appeal process to delay payment of the fees.

The England and Wales High Court ruled that Shackleton and Associates Ltd., a firm founded by sole shareholder and solicitor advocate Stewart Shackleton, is entitled to 80 percent of the costs incurred from a proceeding to enforce the fee award against the Bin Kamils, a wealthy business family in Sharjah, United Arab Emirates.  The fee award, handed down by a London tribunal of the International Court of Arbitration in 2013, stems from Shackleton’s representation of the family in an earlier ICC proceeding over a cement plant joint venture gone bad in the Arab nation.

The evidence in the case suggests that “the defendants lacked any realistic defence to the enforcement of the [fee award] and that the steps they took in the proceedings were taken not in pursuit of a genuine defence but solely for the purpose of delaying payment to the claimant of the fees to which it had been held to be entitled,” Justice Nigel John Martin Teare said in a judgment.  “That takes the case out of the norm and is a very significant level of unreasonable conduct which undoubtedly justifies an order for indemnity costs.”

The underlying ICC arbitration involved a joint venture between the Bin Kamils and Cypriot company Terna Bahrain Holding Co. WLL involving a cement plant with a capacity of up to 1.8 million tons.  Terna, which purchased a 40 percent stake in an entity holding a 25-year lease of the property in Hamriyah Free Zone in Sharjah where the plant was being built, alleged that the Bin Kamils failed to procure permits to allow the construction of a cement import-export terminal.

A previous decision from the High Court maintained that Shackleton “had been most heavily involved in conducting the case on behalf of the Bin Kamils in the arbitration” but was “was not available to assist” with the Terna arbitration award after a falling-out with the firm Galadari & Associates in 2011.  On Monday, Shackleton disputed the court's characterization of a falling out with Galadri & Associates, insisting in an email to Law360 that the non-payment of fees was "the only reason" that his firm ceased acting in the summer of 2011.

Shackleton won an award for £1.4 million ($1.76 million) in fees plus interest from the ICC tribunal in 2013 after the Bin Kamils refused to participate in the proceeding other than to say that the tribunal lacked jurisdiction over the claims.  Challenging a Paris appeals court’s order granting “permission” to enforce the award, the family unsuccessfully applied to set aside the award, but the Cour de Cassation dismissed the application in March 2016.

“The impression one gains from this history is that the defendants were intent on delaying payment into court as long as was possible,” Justice Teare said.  The court did not assess Shackleton’s costs but noted that his normal hourly rate of £800, or roughly $1,000, was “more than double” of what appears to be the “guideline rate.”  Though the court can exceed the guideline rate for sufficiently complex cases, “proceedings to enforce an arbitration award do not fall into that category,” the judge said.