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Category: Interest on Fees

Supreme Court: ‘Full Costs’ Doesn’t Mean All Imaginable Costs

March 6, 2019

A recent NLJ story by Scott Graham, “’Full Costs’ Doesn’t Mean All Imaginable Costs, Supreme Court Rules,” reports that a copyright statute that permits an award of “full costs” does not include litigation-related expenses such as expert witness fees, jury consulting fees and e-discovery.  A unanimous Supreme Court led by Justice Brett Kavanaugh held that the phrase “full costs” in Section 505 of the Copyright Act means all of the costs specifically enumerated in the general cost shifting statutes, 28 USC Sections 1821 and 1920, such as transcripts and fees for court-appointed experts and interpreters.

“A ‘full moon’ means the moon, not Mars,” Kavanaugh wrote in Rimini Street v. Oracle.  “A ‘full breakfast’ means breakfast, not lunch.  A ‘full season ticket plan’ means tickets, not hot dogs.  So too, the term ‘full costs’ means costs, not other expenses.”  The decisions resolves a circuit split against the Ninth Circuit in favor of the Eleventh and Eighth circuits, and will cost Oracle Corp. approximately $12.8 million that had been awarded in its copyright battle with Rimini Street.

Kirkland & Ellis partner Paul Clement had argued that the U.S. government as amicus curiae was talking out of both sides of its mouth: placing limits on “full” in Oracle’s case, but arguing for an expansive version of the phrase “all the expenses” in a case involving U.S. Patent and Trademark Office attorneys fees.  The high court granted cert in the PTO case, Iancu v. NantKwest.  Clement had also argued that Congress’ use of “full” had no meaning if it was limited to the enumerated costs.  But interpreting full more broadly, Kavanaugh wrote, would then make the next sentence—which says “the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs”—superfluous.  “In order to avoid some redundancy, Oracle’s interpretation would create other redundancy,” Kavanaugh wrote.

The award stems from a 2015 jury verdict that found Rimini infringed Oracle’s copyright and violated anti-hacking statutes while performing third-party maintenance for Oracle enterprise software.  Jurors awarded $35.6 million for infringement and $14.4 million for violations of California computer hacking statutes.  U.S. District Judge Larry Hicks of Nevada tacked on $28.5 million in attorney fees, and about $17 million in costs—including the $12.8 million in dispute—and $22 million in post-judgment interest.  The Ninth Circuit reversed the computer crimes verdict and threw out that portion of the award.  It also instructed Hicks to reconsider the fee award.

Defense Seeks $3.2M in Fees After $1M Jury Verdict in Whistleblower Suit

November 14, 2018

A recent Law 360 story by John Petrick, “Ex-UBS Analyst Seeks $3.2M in Atty Fees After $1M Jury Win,” reports that an ex-UBS analyst who won a nearly $1 million verdict in his whistleblower suit against his former employer asked a New York federal judge this week to award him $3.2 million in attorneys’ fees, saying that federal securities law requires the bank to fork over the funds.  Two law firms that represented former UBS analyst Trevor Murray, who emerged victorious from a nearly seven-year fight with the bank after he alleged he was fired in 2012 for complaining he was being pressured to falsely report better market conditions to boost UBS’ revenue numbers and impress investors, each asked for fees for their work on the case, according to filings.

Now that he’s won a jury verdict in the case, the Sarbanes-Oxley Act provides that the company cover his legal bills from Broach & Stulberg LLP and Herbst Law PLLC, he said in the petitions.  “For the entirety of Murray’s struggle, Broach & Stulberg has stood by his side, opposing every defense motion, persisting on his behalf and ultimately, winning and defending a favorable verdict,” Murray said in the petition on that firm’s fees.

Murray filed the lawsuit in February 2014, claiming UBS pressured him to skew his research to support the bank’s CMBS trading and loan origination activities and to report better conditions in the market because the commercial mortgage-backed securities line was a significant revenue generator.  In late 2011, Murray allegedly told the bank’s head CMBS trader he was concerned that certain CMBS bonds were overvalued, according to the suit.  But Murray was told not to publish anything negative about the bonds because they had been purchased by the UBS trading desk, he claims.

He was fired shortly thereafter, just a month after receiving what he said was an excellent performance review.  UBS had pushed back hard against Murray’s contentions in court, including arguing in March 2016 that the Sarbanes-Oxley claims should fail because Murray was terminated as part of a downsizing that resulted from the global financial downturn’s financial impact in 2011.  UBS also argued that Murray didn’t have a reasonable belief that the conduct he reported was a violation of applicable laws or regulations, and therefore the court should toss his claims.

But in March 2017, U.S. District Judge Katherine Polk Failla sided with Murray, finding he’d put forward sufficient evidence that he engaged in a protected activity and that the activity was a contributing factor to his termination, and sending the case to trial.  After a three-week trial, a jury in Manhattan awarded Murray nearly $1 million, finding he was fired for refusing to skew his research to impress investors, according to filings in the case.

The Herbst law firm in a petition asked for $638,950 to cover attorneys’ fees and another $1,160.55 plus interest in costs, court records show.  A day later, Broach & Stulberg filed a petition seeking about $2.6 million for their work on the case.

Peter Stack, a spokesman for UBS, told Law360 the company would challenge the fee bid, noting it was significantly higher than the verdict itself.  “The claim of Mr. Murray's attorneys that their efforts should be valued at more than triple the jury's award to Mr. Murray is wholly unwarranted,” Stack said.  “We look forward to addressing the matter in court.”

The case is Murray v. UBS Securities LLC et al., case number 1:14-cv-00927, in the U.S. District Court for the Southern District of New York.

Federal Circuit Upholds Fee Award in Native American Land Trust Class Action

October 18, 2018

A recent The Recorder story by Amanda Bronstad, “Yahoo Agrees to Pay $85M to Settle Consumer Data Breach Class Actions,” reports that ruling on a contentious fee dispute, a federal appeals court upheld an award of more than $3.5 million in fees and interest to a California-based lawyer for his work on a historic class action that led to a federal government payout of $3.4 billion to hundreds of thousands of Native Americans.

With its ruling, the U.S. Court of Appeals for the District of Columbia found that a lower court made the right call when it awarded Mark Brown $2.88 million in fees, plus a little less than $736,294 in prejudgment interest.  The D.C. Circuit’s opinion punctuates a fee dispute that pitted Brown against other plaintiffs lawyers in a long-running legal saga over the federal government’s management of Native American land trusts.

The appellate decision also resolves what’s likely one of the final pieces of an underlying class action accusing the U.S. Department of the Interior of mismanaging government trust funds for hundreds of thousands of Native Americans.  The case is often referred to by the shorthand, Cobell, after lead plaintiff Elouise Cobell, who died in 2011, some 15 years after she sued the U.S. Interior Department in 1996.

The class action eventually resulted in a historic $3.4 billion class action settlement, which was struck in 2009 and later secured final approval despite some opposition, according to court records. In connection with the settlement, lawyers who represented Cobell and other Native American class members, led by a team from Kilpatrick Townsend & Stockton and Washington-based solo practitioner Dennis Gingold, were awarded $99 million in legal fees.

Following that resolution, Brown—who had been on the plaintiffs’ legal team from March 2000 to January 2006—intervened in search of compensation for his time on the case.  In his appellate brief, Brown said he offered “loyal” service to the Native American plaintiffs but that, around 2005, his relationship with his co-counsel began to sour as a growing number of Kilpatrick Townsend lawyers came on board and Gingold allegedly began cutting Brown out of projects.

Brown initially urged a lower court judge to award him a little more than $5.5 million, representing more than 11,615 hours on the case at an hourly rate of $475 but later upped the request based on a rate of $568 per hour.  In response, the other plaintiffs lawyers argued that Brown deserved no fees at all because, they said, he effectively abandoned the case without telling his co-counsel or the plaintiffs and moved back to California after living in Washington for his time on the Cobell litigation.  Ultimately, U.S. Magistrate Judge G. Michael Harvey ruled on the fee dispute, awarding Brown fees based on a $350 hourly rate, which was the amount cited in his engagement letter when he joined the case in 2000.  The magistrate judge also awarded interest to Brown.

On appeal, the two sides made arguments similar to those they had presented to Harvey—Brown pushed for an award based on a higher hourly rate, while Kilpatrick Townsend argued that the lower court should have denied his request for fees.

A lawyer representing Brown on appeal, Stephen Larson of Los Angeles-based Larson O’Brien, said he had “nothing but positive things to say” about the D.C. Circuit’s conclusion.  He noted that, while Brown had sought a slightly higher fee on appeal, the court’s affirmance of the fee award and the prejudgment interest means his client got nearly all he was asking for.  Larson also praised the appeals court for upholding what, he said, was a well-reasoned lower court ruling.  “We’re pleased with the court’s decision,” said Larson.  “We believe, fundamentally, that Judge Harvey gave a very thorough and thoughtful ruling when he considered this issue in the trial court.”

Third Circuit: No Attorney Fees After ‘Outrageously Excessive’ Fee Request

September 12, 2018

A recent Legal Intelligencer story by PJ D’Annunzio, “3rd Circ.: Judge Was Right to Award Nothing After ‘Outrageously Excessive’ $1M Fee Request, reports that a federal appeals court has upheld the denial of a $1 million fee request by a Scranton attorney in an auto insurance case that produced a verdict almost a tenth of the requested legal compensation.  In its denial, the U.S. Court of Appeals for the Third Circuit, joining other circuit courts, also held that it is within a judge’s discretion to award no attorney fees at all, especially if the fee request is deemed “outrageously excessive.”

The ruling stems from plaintiff Bernie Clemens’ bad-faith case against New York Central Mutual Fire Insurance over its handling of his auto accident case.  The claims went before a jury and ended with a $100,000 punitive damages award.  The defendants had settled Clemens’ uninsured motorist claim for $25,000.

The case was handled by Mike Pisanchyn of the Pisanchyn Law Firm in Scranton.  After the case was resolved, Pisanchyn asked the court to award the seven-figure fee amount.  However, U.S. District Judge Malachy Mannion of the Middle District of Pennsylvania was taken aback by the sheer size of the number—so much so that he awarded Pisanchyn and his firm nothing and referred Pisanchyn for disciplinary review.

Reached for comment, Pisanchyn disagreed that his firm’s fee request was excessive.  “In essence, despite us obtaining a $100,000 award on a zero written offer case while we represented the plaintiff over eight to nine years of litigation, the court has determined the plaintiff’s attorney should be awarded nothing,” he said in an email.  “However, we do take comfort in the fact that our clients have been compensated and are extremely happy with our representation of them through this almost decade of litigation.”

James Haggerty of Haggerty, Goldberg, Schleifer & Kupersmith in Philadelphia represented Clemens on appeal.  “The decision is important in that it addresses an issue regarding the award of counsel fees which had not heretofore been considered by the Third Circuit,” Haggerty said, “The court issued a well-reasoned and well written opinion, finding that the district court did not abuse its discretion in refusing to award counsel fees to trial counsel following his successful recovery of bad faith damages from the defendant insurer.”

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.

The Third Circuit agreed with Mannion’s handling of the request, which found that Pisanchyn and his firm were entitled to recover only 13 percent of the fees they asked for.  “In light of that substantial reduction, the district court deemed Clemens’s request ‘outrageously excessive’ and exercised its discretion to award no fee whatsoever,” Third Circuit Judge Joseph Greenaway wrote for the panel, which also included Judges Luis Felipe Restrepo and Stephanos Bibas.

“Although it was unusual, we cannot say that this decision was an abuse of discretion,” Greenaway added.  ”Review of the record and the district court’s comprehensive opinion makes clear that denial of a fee award was entirely appropriate under the circumstances of this case.  Counsel’s success at trial notwithstanding, the fee petition was severely deficient in numerous ways.”  Mannion had said one of the most “egregious” requests included billing 562 hours for trial preparation, with the plaintiffs attorneys entering between 20 and 22 hours per day on some days.  The Third Circuit examined that figure in detail.

“All the more troubling is the fact that counsel’s (supposedly) hard work did not appear to pay off at trial.  As the district court explained, 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 th[e] court,” Greenaway said.  “Given counsel’s subpar performance and the vagueness and excessiveness of the time entries, the district court did not abuse its discretion in disallowing all 562 hours.”

Greenaway continued, “Aside from the problems with the hours billed for individual tasks, counsel also neglected their burden of showing that their requested hourly rates were reasonable in light of the prevailing rates ‘in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation.’”

Davis Wright Tremaine Files Action Against Former Client for Unpaid Legal Fees

August 8, 2018

A recent The Recorder story by Ross Todd, “Cheesy Dispute: Davis Wright Tremaine Sues Mac & Cheese Restaurant Claiming $37K in Back Fees,” reports that Davis Wright Tremaine has sued the company behind popular Oakland macaroni and cheese restaurant Homeroom, claiming that the eatery owes more than $40,000 in unpaid legal fees and interest.  The lawsuit, filed late last month in San Francisco Superior Court, claims that Little Mac LLC, which does business as Homeroom, hired the firm in September 2016, but has refused to pay its bills for work done from May through June 2017.

“Excluding interest, Little Mac still owes DWT $37,690.23 for services rendered,” wrote firm partner Sanjay Nangia in the July 26 complaint.  This balance is now more that six (6) months past due.”  The firm claims that interest has accrued at the rate of $12.44 per day and is asking for $41,421.58 in fees and interest.

Just why the fee dispute is playing out in public wasn’t immediately clear.  The engagement agreement between the firm and the restaurant, which was included as an attachment to the complaint, includes a provision that each side has the right to request arbitration under the California Business & Professions Code in the case of a “fee dispute.”

In response to an email sent to Nangia and Davis Wright’s Don Buder, the partner who signed off on the engagement letter with the restaurant, a firm spokesman declined to comment beyond the court papers.

According to the September 2016 engagement letter, Buder charged Homeroom $675 per hour for work on “pending business and real estate matters.”  Buder’s firm bio says that he serves as “a strategic legal advisor and corporate counsel to food and beverage, food tech, and ag tech innovators, entrepreneurs, and investors.”  The engagement letter also said that then-associate Vipul Kumar charged $435 per hour and associate Drew Patterson charged $420 per hour, although the firm reserved the right to change rates and assign other lawyers to work for Homeroom.