Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Lawyering

Ninth Circuit Strikes Down $7M Fee Award in ConAgra Class Settlement

June 2, 2021

A recent Law 360 story by Emily Field, “9th Circ. Strikes Down $7M Atty Fees in ConAgra Label Deal,” reports that the Ninth Circuit overturned a judge's approval of a class action settlement with ConAgra Food Inc. over its labeling on oil products, saying the parties crammed into the deal "a squadron of red flags" including attorney fees of nearly $7 million that are much larger than what consumers were awarded.  The panel in a published opinion said the agreement includes a number of questionable provisions and "reeks of collusion," particularly the attorney fee award of $6.85 million that is seven times higher than what class members received.

ConAgra and class counsel contended the deal could be worth more than $100 million, but ultimately, ConAgra paid out less than $8 million, with just $1 million going to the class.  Large counsel fees comparative to the payout for class members raises the possibility that counsel colluded with the defendant to lower class compensation in exchange for a larger fee, the panel said.  A defendant would go along with this kind of conspiracy because it only cares about how much it's paying in total, not how it's divided up, they added.

The panel said district courts must scrutinize attorney fee award arrangements when deciding whether a class action settlement is fair, following revisions to the Federal Rules for Civil Procedure that introduced the requirement in 2018.  Specifically, that requirement also applies to settlements that were reached after a class was certified, the panel held for the first time.  "[A] post-class certification settlement only ensures that the parties litigated aggressively to arrive at an adequate total fund size; it does not, however, address the inherent incentives that tempt class counsel to elevate his or her own interest over those of the class members," the panel said.

The panel's decision reverses the 2019 approval of the deal and sends the case back to California federal court.  In the suit, the buyers alleged ConAgra mislabeled its Wesson oil products as "100% natural" even though they contain genetically modified ingredients.

The deal also included a stipulation that ConAgra not advertise the Wesson brand of essential oils as "100% natural" anymore, which was supposedly worth tens of millions of dollars but now appears worthless since ConAgra no longer owns the brand, the panel said.  "That is like George Lucas promising no more mediocre and schlocky Star Wars sequels shortly after selling the franchise to Disney.  Such a promise would be illusory," the panel wrote in their opinion.

Objector and University of Chicago law professor M. Todd Henderson brought the appeal last year, arguing the lower court did not take into account the deal's value to the class when it granted the fees.  The panel also found other red flags in the settlement, such as a "clear sailing arrangement" under which ConAgra agreed not to challenge the class counsel fees.  "A clear sailing provision signals the potential that a defendant agreed to pay class counsel excessive fees in exchange for counsel accepting a lower amount for the class members," the panel said.

Attorney Raises Concerns of Hourly Rates for K&L Gates

March 21, 2021

A recent Law 360 story by Rachel Scharf, “Atty in Failed WWE Case Blasts ‘Suspect’ K&L Gates Fee Bid,” reports that a lawyer who was previously sanctioned for his conduct in pursuing now-dismissed claims that World Wrestling Entertainment Inc. hid the risks of head injuries said that the company can't score more than half a million dollars in legal fees, calling K&L Gates LLP's billing rates "suspect."  Attorney Konstantine W. Kyros of Kyros Law Offices PC, who was sanctioned in 2018 for overly lengthy and frivolous filings, told a Connecticut federal judge that the nearly $574,000 fee requested by WWE and its CEO, Vince McMahon, is based on K&L Gates partner Jerry S. McDevitt's "patently unreasonable" $950 hourly rate, or nearly twice that of his co-counsel from Day Pitney LLP. Kyros also said McDevitt had overbilled for his time.

"WWE chose to provide this Court with suspect fees.  Mr. McDevitt spent far too much time performing basic work, numerous entries exist for nonrecoverable subjects, including research, drafting and conferencing over the crime-fraud exception, and over $20,000 for a PowerPoint presentation," Kyros said.  "These suspicious fees may require audit so the Court can properly discern any appropriate percentage reduction."

The fee fight stems from consolidated litigation dating back to 2014 alleging that WWE hid the risks of brain injuries from wrestlers, causing star wrestlers including Jimmy "Superfly" Snuka and Harry Masayoshi "Mr. Fuji" Fujiwara to develop chronic traumatic encephalopathy, or CTE.  The lawsuit was put to bed in September 2020 by a Second Circuit panel, after U.S. District Judge Vanessa Lynne Bryant tossed out a number of the actions in 2018 and ordered Kyros to pay WWE's attorney fees as a sanction for failing to heed the court's repeated warnings against frivolous filings.

Reached for comment, McDevitt denied Kyros' overbilling allegations and said the attorney is trying to duck paying for the time that WWE's counsel was forced to spend uncovering the "unethical tactics" that got him sanctioned.  "Mr. Kyros' deceptive and frivolous allegations are emblematic of his pattern throughout the case," McDevitt told Law360.  "He is now saying it should not have taken so much time and expense to expose his fraud on the court and serial misconduct, which he attempted to hide in mountains of deceptive and false pleadings and papers with the court."

But Kyros argued that WWE's fee application wrongly stretches the so-called Rule 11 sanction from 2018 in an attempt to recoup expenses far outside the order's scope, including an additional $39,000 for costs tied to applications following the Second Circuit appeal.

"This is not a sweeping sanctions award. It does not provide for all bills tangentially related to the sanctions motions," Kyros said in Friday's brief.  "WWE's fight to justify their unconscionable fee applications is too attenuated from the sanctioned conduct to warrant granting."  In a comment to Law360, Kyros said he is continuing to pursue the litigation, including by lodging a petition asking the U.S. Supreme Court to review the Second Circuit's dismissal.  "Our team is proud to have stuck with the wrestlers in pursuit of their important claims, and despite WWE's liberal use of misguided Rule 11 filings we have stayed with the case to its conclusion," Kyros said.

GA Appeals Court Vacates $12M Fee Award in Wrongful Death Suit

March 17, 2021

A recent Law 360 story by Rosie Manins, “Split Ga. Court Nixes $12M Atty Fees in Wrongful Death Suit,” reports that a divided Georgia appellate court vacated a $12.7 million attorney fees award in a wrongful death case that netted a Georgia widow $32.8 million in damages, ruling 8-6 that the trial court's calculations were incorrect.  The whole court decided two appeals in a case over the 2007 death of Georgia man Keith Mayfield in a state highway crash for which Georgia woman Vickie Kennison was found predominantly responsible.  The majority of appellate judges affirmed the trial court's handling of evidence, despite allegations by Kennison of motion in limine violations, but they vacated and remanded the attorney fees order.

Presiding Judge Sara L. Doyle wrote in the majority opinion that the trial court awarded attorney fees under a Georgia law that authorizes them after rejection of a good faith settlement offer and that it based its calculation on a 40% contingency fee agreement that Mayfield's wife, Tanisha Mayfield, and the administrator of his estate made with their lawyers in the case.  The court applied 40% to the difference between the plaintiffs' $1 million settlement offer in 2015 and the $32.8 million judgment in their favor in 2019.

But Doyle said that under Georgia law, the mere existence of a contingency fee agreement does not warrant reasonable attorney fees without additional evidence showing the true value of the work performed.  That the lead plaintiffs' attorney in the case testified his usual hourly rate in such a case is $1,900 was not enough, she said.  "There is a distinction between the risk/reward bargain made between the client and his or her attorney and the actual value of the professional services rendered by the attorney," Judge Doyle wrote in the majority opinion.  "It is recovery of the reasonable value of those services, not the contingency fee agreement itself, that is authorized by [Georgia law]."

Judge Doyle also found fault with the trial court's justification of the award on the basis that the plaintiffs' lawyers had worked for 11 years on the case, because she said seven of those years were before the settlement offer.  Her findings on attorney fees, while supported by seven other judges of the court, were rejected by six judges, including Chief Judge Christopher J. McFadden, who wrote in a partially dissenting opinion that the attorney fees award should be affirmed.

Judge McFadden said the trial court carefully followed the applicable law, exercised its broad discretion within the law's boundaries and heard extensive evidence about the value of the attorneys' work.  He said the lower court "took care to ensure that the plaintiffs were awarded only fees incurred after the rejection of their settlement offer."  Judge McFadden said plaintiffs' lead counsel testified that he and his firm had spent a minimum of about 8,000 hours on the case, of which around 6,400 hours were after the settlement offer was rejected.  He disagreed with the majority's contention that any effect a lawyer's efforts might have on the amount of a settlement or judgment is irrelevant to the value of the actual work done.

"If that were so, there would be no reason for anyone to hire a lawyer," Judge McFadden said. "Law is not art.  Legal services are not purchased for their intrinsic value."  He said settlement offers are not driven by injuries "and other facts as such," but by parties' expectations of what a judge or jury might do, and that "lawyering can change those expectations and those eventual outcomes."  Judge McFadden said it was a troubling case, because the jury verdict was "strikingly large" and the circumstances of the fatal crash could have elicited a defense verdict in Kennison's favor.  But he said that wasn't for the appeals court to decide.

Attorney Who ‘Overlitigated’ Case Sees Fees Reduced

March 16, 2021

A recent Law 360 story by Kevin Penton, “Atty Who ‘Overlitigated’ Contractor Dispute See Fee Reduced,” reports that a California state appeals court has upheld a trial court awarding nearly $200,000 less in fees than what a lawyer sought for working on a dispute over an unlicensed contractor, finding that the lawyer representing himself in the matter "overlitigated" and got "embroil[ed]" in the case.  A three-justice panel of the Second Appellate District upheld the trial court's "sound discretion" in rejecting David S. Karton's bid to collect $286,110 in attorney fees and awarding him $90,000 instead, according to the opinion.  The court noted that when the dispute originated, the lawyer and Ari Design and Construction Inc. were $22,096 apart on how much the contractor owed him and his wife for a home construction job.

"In this appeal the Kartons have come out swinging, apparently believing the best defense is a good offense," the opinion reads.  "This approach demonstrates the trial court was within its discretion to conclude the Kartons conducted litigation that was less than civil."  Because California laws allow consumers to collect the entire amount they have paid a contractor who is unlicensed, Karton and his wife collected the entire $92,651 they had paid Ari by the time the lawyer learned in November 2015 that the contractor was not properly licensed or insured, according to the opinion.  With other penalties, the judgment added up to $133,792, not including post-judgment interest and attorney fees, according to the opinion.

Karton then sought to collect on over 600 hours of work, which the trial court cut down to 200.  The appellate court noted that Karton "overlitigated" and engaged in "incivility" in his briefing, through actions such as calling comments by his opposing counsel "frivolous" and alleging that they made false statements, according to the opinion.  "The trial court fairly attributed some of the overlitigation to Karton's personal embroilment in the matter," read the opinion, which upheld the lower court's conclusion that it would "seem unreasonable" for an attorney fee award to total approximately three times the damages in the matter.

"A $23,000 argument must be resolved, but it does not justify launching a disproportionate litigation offensive," the opinion read.  "The Kartons' strategy netted them windfall gains: the harshness of contractor licensing laws allowed them to recoup all their construction monies, plus $10,000, and to retain the benefit of months of free construction work."

Karton took issue with the appellate court describing as a "windfall" what he was statutorily entitled to, asserting that it is meant as a deterrent against workers who are injured on the job not having their medical bills paid.  He told Law360 that during a settlement conference, he and his wife offered to settle the case for $125,000 — including attorney fees — but that Ari rebuffed them.

Judge Orders Attorney Fee Dispute to Arbitration

March 9, 2021

A recent Law 360 story by Emma Whitford, “Atty Must Arbitrate Fee Dispute With Racehorse Trader,” reports that a California judge ordered an attorney to arbitrate her dispute with a U.K. racehorse auctioneer company, her former client, over fees allegedly due when she represented the company accusing a financier of failing to pay for a racehorse.  Attorney Diana Courteau of California claimed in her April complaint that Tattersalls Ltd., the racehorse company, failed to pay her $73,255.34 for the months of February and March 2020, after firing her that March.  The six-claim complaint also accused Tattersalls and Bracher Rawlins LLP, the company's English counsel, of fraud and intentional misrepresentation.

But Tattersalls and Bracher Rawlins pushed back with a motion to dismiss, pointing to an arbitration provision in their contract with Courteau and claiming that she failed to give them proper notice under the California Mandatory Fee Arbitration Act, which lays out rules for the handling of attorney-client fee disputes.  "Here, it is undisputed that [the] plaintiff did not provide the mandatory notice form to defendants," U.S. District Judge Dolly M. Gee ruled, adding that the case will be stayed while arbitration goes forward.

"Moreover," Judge Gee added, "the agreement between plaintiff and Tattersalls contains a broad arbitration provision governing the very dispute at issue."  Specifically, a "dispute over legal bills that alleges breach of contract and related claims."  Courteau had argued that Bracher Rawlins could not compel her to arbitrate because the firm is not a signatory to her agreement with Tattersalls.  But Judge Gee disagreed, saying that Bracher Rawlins will be part of the arbitration as an "agent" of Tattersalls.

It is "well settled that a nonsignatory may compel a signatory to arbitrate based on agency principles," Judge Gee wrote, adding that Bracher Rawlins "was only in a position to direct or authorize plaintiff to perform legal work for Tattersalls in its capacity as Tattersalls' agent."  The order is just the latest development in the litigious fallout of Tattersalls' working relationship with Courteau, who represented the company in various matters from 2011 until March of last year.

Last June, in the case Courteau worked for Tattersalls until they fired her, U.S. District Judge Karen S. Crawford ordered Courteau to pay $31,772.62 in sanctions to defendants Gerald Wiener and his entity Finance California Inc., court records show.  The sanctions covered attorney fees for a two-day deposition last January in which the court found that Courteau coached the witness, as well as the cost of preparing the sanctions motion, court records show.

Wiener and Finance California had also sought termination sanctions, a serious sanction that would have ended the case, for Courteau's alleged "abusive" and "hardball" tactics.  But Judge Crawford denied that motion, saying the "worst of this conduct has been addressed" and "monetary sanctions have been imposed which should be enough to deter future misconduct."  Courteau has yet to pay the sanctions, court records show.  Attorneys for Wiener filed a notice of lien in the instant suit on Jan. 15.

In a Feb. 4 declaration to the court, Courteau urged Judge Gee to proceed with a trial for her fee dispute or, in the alternative, send the case to "global mediation" along with the Wiener case, which is currently on appeal to the Ninth Circuit.  "Plaintiff is willing to stipulate (notwithstanding meritorious grounds for appeal) that ... the $31,772,62 (sanctions) can be paid from fees owed by defendants," Courteau wrote.