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Category: Expenses / Costs

Class Counsel Awarded $2M in Fees in Frito-Lay Settlement

November 22, 2017

A recent Law 360 story by Joyce Hanson, “Frito-Lay to Pay $2M in Fees in ‘All Natural’ Suit Deal,” reports that a New York federal judge approved the settlement of a class suit accusing Frito-Lay of deceptively labeling food products as being “made with all natural ingredients” when they are actually made with ingredients containing genetically modified organisms, awarding about $2 million in attorneys’ fees and expenses to class counsel.

U.S. District Judge Roslynn R. Mauskopf finally signed off on the proposed settlement agreed to in November 2015 by lead plaintiff Julie Gengo and Frito-Lay North America Inc., which offers no award of damages to the class but does provide the primary relief sought in the litigation — namely, an assurance that products such as Tostitos and SunChips will not be labeled or advertised as “natural” unless those claims on any products containing GMOs are expressly authorized by the U.S. Food and Drug Administration or state or federal legislation.

“The complexity, expense and likely duration of the litigation favor settlement, which provides substantial benefits on a much shorter time frame than otherwise possible on behalf of the class,” Judge Mauskopf said.  “The support of class counsel, who are highly skilled in class action litigation such as this, and the plaintiffs, who have participated in this litigation and evaluated the settlement, also favor final approval.”

Under the terms of the final order and settlement agreement, Frito-Lay does not admit the validity of the claims or any wrongdoing or liability, the judge said.  Frito-Lay also continues to deny that its labeling of the challenged products is false, deceptive or misleading to consumers or violates any legal requirement.  However, Frito-Lay has already removed the “made with all natural ingredients” claim from its products, and the company has agreed not to label the products as “natural” as long as they continue to include GMO ingredients, according to a Nov. 10, 2015, class counsel memo.  The settlement was achieved with the assistance of retired U.S. District Judge Richard J. Holwell after mediation sessions over a period of 10 months, the memo said.

The judge approved class counsel’s motion for attorneys' fees in the amount of $1.9 million and for reimbursement of expenses of up to $200,000.  She also approved $5,000 awards to class representatives Gengo, Chris Shake and Valarie Zuro, and a $2,500 award to class representative Deborah Lawson.

“Class counsel achieved a favorable result for the class and created a benefit with a substantial value to the class by obtaining Frito-Lay's agreement to modify the labeling policies and practices challenged in this lawsuit,” Judge Mauskopf said in making the award of attorneys’ fees and expenses.

The case is Julie Gengo v. Frito Lay North America Inc., case number 1:12-cv-00854, in the U.S. District Court for the Eastern District of New York.  The multidistrict case is In re: Frito-Lay North America Inc. All Natural Litigation, case number 1:12-md-02413, in the U.S. District Court for the Eastern District of New York.

Greenberg Traurig Wins $2M Fee Award in U.S. Court of Claims

November 20, 2017

A recent Law.com story by C. Ryan Barber, “Greenberg Traurig Wins $2M Fee Award in Suit Against U.S. Government,” reports that a federal claims court judge ordered the government to pay $2 million in legal fees to Greenberg Traurig for its work representing a Florida real estate developer that prevailed in a long-running case over the denial of a permit to fill in wetlands.  After two rounds through U.S. Court of Federal Claims, each followed by an appeal to the U.S. Court of Appeals for the Federal Circuit, the company, Lost Tree Village Corp., prevailed in its challenge when the U.S. Supreme Court declined in June to hear the case.

The U.S. Department of Justice had asked the high court to review a 2015 decision that said the U.S. government’s denial of the fill permit amounted to an uncompensated “taking” of Lost Tree’s property.  Charles Lettow, a judge on the U.S. Court of Federal Claims, ordered the government to pay $4.2 million in damages, plus $3.5 million in interest.  Lost Tree Village Corp.’s lawyers at Greenberg Traurig, led by Washington partner Jerry Stouck, had argued the government owed more.

Stouck this summer went to the Federal Claims court seeking about $2 million in attorney fees from the government, along with $100,000 in other fees and expenses incurred by Lost Tree.  Stouck, chairman of the firm’s regulatory and administrative law practice, identified Lost Tree’s legal fees in remarkable detail, noting a period in which he and two other principal timekeepers at Greenberg Traurig had given discounts of between 5 and 15 percent of the standard hourly rates.  Stouck identified his standard billing rate, for 2017, at $810 an hour.  Greenberg Traurig’s court filings reveal standard billing rates for Stouck and other Greenberg lawyers from 2007 to now.

For the first appeal to the Federal Circuit, Stouck said, the firm and Lost Tree agreed on a fixed fee of $67,00, plus expenses, with an additional $300,000 payable only if Greenberg Traurig prevailed. (It did so.)

The $300,000 success fee, under the terms of the agreement, would be “recoverable from the government as part of the reasonable attorneys’ fees due to Lost Tree.”  Stouck told the court that Lost Tree “has achieved complete success.”  He added: “Perhaps more importantly, while this case was hard-fought and long-fought, Lost Tree has prevailed completely on what both parties and the court recognized from the outset was the principle issue to be decided—the ‘relevant parcel’ issue.”

The Justice Department, arguing that Greenberg Traurig’s billing “reflects excessive rates for attorney and paralegal work,” said Lost Tree should be awarded at most $1,078,121 in fees.  In a court filing, the Justice Department said Greenberg Traurig billed for “work done on matters unrelated to this case and irrelevant to the merits, work where the hours devoted to tasks were far beyond reasonable or duplicated by multiple attorneys, and work where very senior personnel were performing tasks typically done by more-junior personnel.”

From the government’s filing: “Most egregiously, plaintiff seeks reimbursement for a $300,000 bonus not-yet paid that is not based on work done for the case, but instead because they were victorious on appeal.  The United States has not waived its sovereign immunity to reimburse ‘success fees’ sought in addition to fees for the hours actually devoted to work on the case.

“I was actually surprised that the government had disputed our fees so aggressively because, as you can see from the opinion, my client has paid all of the fees,” Stouck said.  “And I think that is a very substantial proof of the reasonableness of it.”

In a court filing, Stouck defended the $300,000 success fee as not just reasonable but a “greatly reduced” fee for the appeal.  “This is not a situation where Greenberg is seeking an ‘enhancement’ to its hourly rates,” he wrote in a court filing.  “Lost Tree and Greenberg are simply asking the court to enforce their reasonable, arm’s length agreement.  In the context of this case, the alternative fee arrangement represents Greenberg’s commercially-available rate.”  The judge did not award the success fee but did award $91,000 in fees that were incurred beyond the fixed expense of $67,500.

$11M in Attorney Fees Sought in IP Action

November 17, 2017

A recent Law 360 story by Dorothy Atkins, “VMware Seeks $11M Atty Fees for Beating Phoenix IP Suit,” reports that VMware Inc. urged a California federal judge to award it $11.2 million in attorneys’ fees and litigation costs after a jury cleared it of Phoenix Technologies Ltd.’s claims it infringed Phoenix’s software copyright and breached their licensing agreement, arguing that the case was “ill founded from the outset.”

Michael Jacobs of Morrison & Foerster LLP argued that staff at Phoenix knew that its suit was premised on an "implausible legal contention," because they waited 15 years to sue over their licensing contract, and that's highlighted by the fact that they shifted their legal theory dramatically after the close of fact discovery.  “This case was ill-founded from the outset,” Jacobs said.  “To go back and read the complaint is to remind ourselves how odd it was to receive it on its face.”

Phoenix’s bid for attorneys' fees and costs comes after a jury cleared VMware of all allegations in June.  Phoenix had sought $110 million in damages and alleged in its March 2015 complaint that VMware broke its contract with Phoenix and infringed copyrights by limiting its use of software that controls basic input and output operations, known as BIOS.

Jacobs argued that Phoenix had evidence of weakness of their case since the beginning, but failed to do its due diligence to ensure its claims were viable.  The company unfairly forced VMware to spend millions to defend itself against the suit, he said.  “This case cries out for an award of attorneys’ fees lest there be a lot more cases like it,” he said.

But Phoenix’s attorney, Michael Attanasio of Cooley LLP, argued that nothing about this case would make it objectively unreasonable to pursue.  Also, Attanasio said, VMware can't cite a single case in which claims were deemed objectively unreasonable, despite having survived summary judgment and going to trial.  Even the Supreme Court has observed that sometimes cases go to trial, and the plaintiffs lose, but that doesn’t turn it into fee shifting award, Attanasio said.

U.S. District Judge Haywood S. Gilliam Jr. said he would take the arguments under submission, along with Phoenix's motion for judgment as a matter of law and request for new trial.  In that motion, Phoenix claimed that the jury was prejudiced by VMware’s defense argument, which the court shouldn’t have allowed VMware to present.  But during the hearing, Judge Gilliam suggested that the appeals court might be a better place for that particular challenge to be resolved.

The case is Phoenix Technologies Ltd. v. VMware Inc., case number 4:15-cv-01414, in the U.S. District Court for the Northern District of California.

Court Ordered Attorney and Client to Pay Opposing Counsel

November 6, 2017

A recent Daily Business Review story by Samantha Joseph, “Attorney and Client Ordered to Pay Opposing Counsel Over Frivolous Lawsuit,” reports that the litigation in Palm Beach County alone has cost about $4,000, with a mounting legal bill of about $20,000 for the Broward case.  A state appellate court sanctioned Palm Beach attorney Guillermo J. Farinas, holding him personally responsible for half of an attorney fee award against his client.

Florida’s Fourth District Court of Appeal held Farinas and client Joseph Manzaro equally liable for “frivolous and completely meritless” filings in a child custody case that jumped from Broward to Palm Beach County.  It remanded the case to the lower court with instructions to divide the opposing side’s attorneys fees between Farinas and Manzaro, then took the additional step of making an allowance for future litigation expenses.

“If a motion for rehearing is filed in this court, then services rendered in connection with the filing of the motion, including, but not limited to, preparation of a responsive pleading, shall be taken into account in computing the amount of the fee,” the court ordered.  It was an unusual sanction, but ethics lawyer Andrew Berman has seen it employed with growing frequency as judges order attorneys to explain why courts shouldn’t sanction them along with their clients.

“Appellate courts have become frustrated with frivolous appeals and motions,” said Berman, senior partner at Young Berman Karpf & Gonzalez in Miami and Fort Lauderdale, who was not involved in the litigation.  “It’s done as a method to dissuade people from taking frivolous positions.”

Court records show Farinas turned to the Palm Beach Circuit in 2016 to file a complaint for relief from a 2012 agreed final order from Broward County, claiming extrinsic fraud and lack of personal jurisdiction.  Litigants typically have a one-year window to seek to set aside an order, with exceptions for fraud, mistakes and other causes under Florida Rule of Civil Procedure 1.540(b).

Farinas’ filings suggest he anticipated two hurdles: a potential deadline impediment and the leap from one county—which still maintained jurisdiction—to another.  To mitigate these, he brought the fraud claim and pitched his Palm Beach filing as an independent action.  But the appellate court rejected both strategies, citing precedent requiring litigants to raise fraud claims in the original court.

“The appellant has had multiple opportunities to raise the issues presented in his complaint to the Broward Circuit Court and, in fact, has done so,” Judge Jeffrey T. Kuntz wrote in a unanimous decision with Judges Carole Taylor and Dorian Damoorgian.  “His attempt at filing a new lawsuit in a different circuit, after those prior attempts were rejected and while other new attempts still remain pending in the Broward Circuit Court, is completely devoid of merit.”

Ninth Circuit Remands BAR/BRI Fee Award for Second Time

November 1, 2017

A recent MetNews story, “Ninth Circuit Vetoes Attorney Fee Award for Second Time” reports that the Ninth U.S. Court of Appeals has, for a second time, remanded a case to the District Court for the Central District of California for a determination as to how much of a $9.5 million settlement fund in a class action against West Publishing Corporation will go to the plaintiffs’ attorneys.

The lawsuit alleged that BAR/BRI, a bar exam preparatory course then owned by West, conspired with Kaplan, Inc. to limit competition in the field. U.S. District Court Judge R. Gary Klausner awarded class counsel attorney fees in the amount of $883,475.50 and $20,734.89 in costs.

Six class members had protested the $1.9 million in fees and $49,934.89 in cost being sought.  Klausner granted the objectors attorney fees in the amount of $7,354.90 based on their success in getting the award pared, and provided for incentive awards of $500 to each of the objectors.  Class members were those who purchased the BAR/BRI course at any time from Aug. 1, 2006 to March 21, 2011.

A three-judge panel, composed of Judges Stephen Reinhardt, Richard Paez and Milan Smith, found in their memorandum opinion that Judge R. Gary Klausner correctly used the lodestar method of calculating the award—multiplying the number of hours reasonably expended by the prevailing rate for attorney fees—as Judge Manuel L. Real had last year when he presided over the case.  An alternative method would have been a percentage of the settlement.

However, the judges said that Klausner, to whom the case was assigned following a reversal of Real’s award, failed “to update the lodestar calculation to compensate for the delayed payment.”  He used the 2016 calculations, without either taking into account the increase between then and now in the prevailing rates or applying a “prime-rate enhancement,” the opinion says.  The judges also faulted him for not using a multiplier based on the risk factor in undertaking a case without certainty of an award.

However, the judges said Klausner was correct in finding the case was not a rare one in which the fee needed to be adjusted up or down to meet the test of reasonableness, and that he was justified in excluding expert fees that were not properly documented.