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Category: Prevailing Party Issues

SCOTUS Stays Out of Fee Dispute in Humana ERISA Suit

June 22, 2020

A recent Law 360 story by Adam Lidgett, “High Court Stays Out of Fee Fight in Humana ERISA Suit” reports that the U.S. Supreme Court said it won't review the Fifth Circuit's finding that health insurer Humana doesn't have to foot a patient's six-figure attorney fees tab incurred in a suit over eating disorder treatment coverage.  The high court denied a petition from a plan beneficiary only referred to as Ariana M. that had asked the justices to review an appellate ruling that she wasn't entitled to attorney fees after she ultimately lost her attempt to get full coverage for a stay at a Utah treatment center.

A Texas federal court initially ruled in favor of Humana in the Employee Retirement Income Security Act case, and a Fifth Circuit panel later affirmed that decision.  Then in March 2018, a majority of the full Fifth Circuit breathed new life into the case when it adopted a lower standard for reviewing decisions by benefits plan administrators to deny coverage to workers.

Specifically, eight of 14 judges said in that 2018 decision that courts should apply de novo review — analyze a denial of benefits anew — unless the plan's documents explicitly give its administrator sole discretion to consider claims.  They overturned the court's 1991 Pierre v. Connecticut General Life Insurance Co. ruling, which held that de novo review applies to appeals challenging an administrator's interpretation of plan language but only lets courts analyze an administrator's interpretations of facts for abuse of discretion.

But even after Ariana M.'s case was kicked back down, Humana won summary judgment when the district court again said the insurer's denial was correct.  After she lost her bid to get about $140,000 in attorney fees, she again appealed to the Fifth Circuit.  The appellate court affirmed the second summary judgment ruling in Humana's favor, and also affirmed the denial of Ariana M.'s attorney fees bid.

She asked the high court for review earlier this year, arguing she could collect attorney fees under ERISA.  Ariana M.'s petition said the Supreme Court has already found that "an applicant need not be a 'prevailing party'" to be able to collect attorney fees under the applicable provision of ERISA.  She said she "need only achieve 'some success on the merits'" to be eligible for such fees.

Feds Urge DC Circuit to Deny Novel Fee Request in IP Case

June 12, 2020

A recent Law 360 story by Britain Eakin, “Gov’t. Urges Fed. Circ. To Deny Novel Fee Bid in IP Appeal” reports that after failing to fend off a $4.4 million fee award on top of a $200,000 judgment for infringing a metal treatment technology patent, the government has told the Federal Circuit it has no authority to grant an inventor's untested bid seeking supplemental fees for defending the fee award.

In a response filed to a May 29 request from Hitkansut LLC and Acceledyne Technologies Ltd. LLC for appellate fees — a matter the Federal Circuit hasn't addressed before under Section 1498 of the Patent Act — the government argued that only the U.S. Court of Federal Claims can grant fee requests under that provision of the law.  "There is no indication in the statute or its legislative history that Congress intended to include post-judgment attorneys' fees within the ambit of those recoverable.  By including the fees in the underlying compensation award, the statute is open to only one interpretation: that the ability to award ... attorneys' fees ends with the final judgment of the Court of Federal Claims," the response said.

The companies, owned by late inventor Donna Walker, who passed away in 2018, asked the appeals court for supplemental attorney fees after a three-judge panel on May 1 affirmed the U.S. Court of Federal Claims' March 2019 grant of fees.  The lower court found in 2017 that government researchers at the Oak Ridge National Laboratory directly took Hitkansut's patent-pending technology, which can be used to relax stressed metal in large metal structures like airplanes, without giving Walker any credit, funding or contracts.

Hitkansut and Acceledyne were able to recoup fees at the claims court under a provision of the Patent Act that allows independent inventors, nonprofits and small businesses to recover fees when the government infringes, provided they can show the position of the United States was not "substantially justified."  The Federal Circuit said in its May 1 opinion that the government's litigation position was not substantially justified because its arguments were contrary to the evidence in the case and the testimony of government employees, and that its invalidity argument was "contradicted by its own expert witness."  The court, however, instructed the parties to bear their own costs.

But Hitkansut and Acceledyne contend that the court has the authority to order the government to pay additional fees under Section 1498, which they argued is not limited to the claims court action and so entitles them to recoup all of their costs, including those associated with defending their initial fee bid.  And although the appeals court hasn't addressed whether fees for defending an initial fee bid can be recouped under Section 1498 before, Hitkansut and Acceledyne argued that the court has done so in Wagner v. Shinseki under an analogous law — the Equal Access to Justice Act.

The court in Wagner said that because he partially prevailed in defending against the government's challenge to his initial bid for fees, "he was entitled to supplemental fees."  The Wagner court reasoned that a prevailing party can recoup fees not just for underlying litigation but also for defending an initial EAJA fee request.  Hitkansut and Acceledyne urged the court to apply the same reasoning it did in Wagner to this case, but the government contends its reliance on Wagner is "misplaced" because it says the EAJA is "fundamentally different" from Section 1498, which it said doesn't give the Federal Circuit jurisdiction over supplemental fee requests.

Congress enacted the Section 1498 fee provision because it believed the EAJA was unavailable for such claims, the government said.  "Had it wanted to do so, Congress had a clear model in EAJA to insure recovery of appellate fees and costs.  But Congress selected a different path," the government said.

Federal Circuit Reverses Fee Award in Sippy Cup IP Case

June 10, 2020

A recent Law 360 story by Tiffany Hu, “Fed. Circ. Reverses Atty Fee Award in Sippy Cup IP Case” reports that the Federal Circuit ruled that a failed patent lawsuit over spill-proof sippy cups is not exceptional enough to merit attorney fees, finding in a precedential opinion that a lower court "abused its discretion" in awarding the fees without adjudicating the issues.  In a 16-page opinion, a three-judge panel overturned a California federal judge's decision that granted Luv N' Care Ltd.'s bid for $1 million in a patent dispute against Munchkin Inc.  The lower court had deemed the case exceptional because Munchkin concealed relevant prior art during litigation, and its amended trademark claims were so weak they were abandoned.

Following a 40-minute hearing in February, where attorneys for both companies told the Federal Circuit that the lower court didn't make factual determinations on either issue, the panel agreed the exceptionality finding was underdeveloped.  "None of these issues was fully adjudicated before the court on the merits, and given the limited arguments [Luv N' Care and another defendant] made in support of [their] fee motion, we hold that the district court abused its discretion in granting the motion and we reverse the exceptional-case determination," U.S. Circuit Judge Raymond T. Chen wrote for the panel.

The panel said the district court failed to explain why Munchkin's arguments concerning the validity of its patent were unreasonable, and was also "led astray" by Luv N' Care's claim that Munchkin improperly maintained the lawsuit after the Patent Trial and Appeal Board launched an inter partes review of the patent and found the patent invalid.  "That Munchkin's patent was ultimately held unpatentable does not alone translate to finding its defense of the patent unreasonable," Judge Chen wrote.

Munchkin sued Luv N' Care and Admar International Inc. for trademark infringement and unfair competition in 2013.  Munchkin moved to amend the trademark claim the following year, deciding to assert a different trademark in the case, and then added a patent infringement claim to the suit in 2015.  Luv N' Care later challenged the validity of Munchkin's patent at the PTAB, which invalidated all of the challenged claims.  After the board invalidated the patent, the district court ruled in favor of Luv N' Care and deemed it the prevailing party.  The district court tacked on the cost of the PTAB proceedings to the fee award, as well as Munchkin's appeal of the PTAB decision that was affirmed by the Federal Circuit in 2017.

Jenner & Block Win Attorney Fees in Pro Bono Case

May 14, 2020

A recent Law 360 story by Lauraann Wood, “Jenner & Block Gets Fees For Prevailing in Pro Bono Suit” reports that Jenner & Block LLP should receive attorney fees under the Illinois Civil Rights Act after the firm prevailed in a pro bono lawsuit launched on behalf of individuals who'd been denied birth certificates with changed sex designations, an Illinois state appeals court said.

A three-judge panel said a lower court incorrectly hinged its fee rejection on the fact that Jenner & Block's attorneys agreed to represent the individuals pro bono and direct any fee award to the American Civil Liberties Union's Roger Baldwin Foundation.  When statutes like ICRA say prevailing parties "shall" be awarded fees, "courts interpret it to mean that an award of fees is mandatory" unless some further qualification is statutorily required, it held.

"Nothing in the language or context of the statute indicates that the legislature intended anything other than that a circuit court is required to award reasonable attorney fees to a plaintiff who qualifies as a prevailing party under the Illinois Civil Rights Act," the panel said.  "Any other interpretation would disregard the plain and unambiguous meaning of the statutory language."

Illinois residents Victoria Kirk, Karissa Rothkopf and Riley Johnson sued Damon Arnold, the former state registrar for vital records, in 2009 after he'd cited certain interpretations of the state's Vital Records Act to deny their applications for new birth certificates.  Arnold issued the certificates after the residents sued and told them the department had stopped the practices that resulted in their application denials, which resulted in their suit getting dismissed as moot, according to the order.

The plaintiffs argued in their fee request that their case's resolution made them the prevailing party under ICRA's fee shifting statute, since their lawsuit was the catalyst for the registrar's changed position.  Arnold didn't dispute that position, according to the order.  The lower court awarded Jenner & Block $6,168 in costs but said Jenner & Block's pro bono counsel status meant it couldn't collect fees it hadn't actually incurred, according to the order.  However, that reasoning incorrectly reads extra qualifications into the ICRA's fee-shifting statute, the panel said.

Section 5(c) of the ICRA requires courts to award "reasonable" attorney fees to prevailing parties, but the statute "contains no additional qualifying language indicating that the fees must be 'incurred' by a prevailing party to be recoverable," the panel said.

The lower court also incorrectly found that courts tend not to allow statutory attorney fees where no fees were actually incurred, the panel said.  Fee availability is controlled by the language of the statute at issue in a case, and state courts follow the basic rule that "whether the attorney charges a fee or has an agreement that the organization that employs him will receive any awarded attorneys' fees are not bases on which to deny or limit attorneys' fees or expenses," the panel said, quoting case law on the issue.  The panel remanded the case for further proceedings because the lower court didn't outline any specific number of hours or fee amount that it would have provisionally allowed if it would have granted fees at all.

Ohio Supreme Court Cuts $4M in Fees; Redefines Lodestar

March 26, 2020

A recent Bloomberg Law story by Alex Ebert, “$4M Attorney Fee Award Cut in Half by Ohio High Court,” reports that a nearly $4 million payday for a prevailing group of attorneys was lopped in half by the Ohio Supreme Court, which ruled an “enhancement” that doubled the winning lawyers’ fees went too far.  Ohio’s lodestar calculation, the method for determining a reasonable attorneys fee, already factors in the complexity and time of litigation, and the expertise of the attorneys involved, the court said in its opinion issued.

A state trial and appellate court were wrong to look to these factors and double the more than $1.99 million in attorneys fees awarded to Phoenix Lighting Group LLC’s lawyers, the high court said.  The legal team won the lighting business a $5,518,335 judgment following years of litigation over claims that its value was reduced by unlawful actions by a competitor, Genlyte Thomas Group LLC, dating back to incidents that occurred in 2009.

“Today’s decision communicates the Ohio Supreme Court’s desire to limit an attorney’s ability to receive an enhancement in attorney fees in cases where his or her performance was exceptional or where the attorney, for the best interest of the client, took on a case with exceptional risk,” Phoenix Lighting Group’s attorney Jeffrey Witschey, a partner with Akron-based Witschey Witschey & and Firestine Co., LPA, said in an email.

“The danger with the decision is the potential chilling effect on attorneys taking cases for clients that are unable to financially support long legal battles with wealthier opponents,” he said.  The court made the “right decision and established appropriate limitations that will make enhancements rare in Ohio and require the rare enhancement to be based on objective evidence that is reviewable on appeal,” Genlyte Thomas Group’s attorney Benjamin Sasse, a partner in Tucker Ellis LLP’s Cleveland office, said in an email.

The court shouldn’t increase the fees just because the payoff took a long time, the justices said.  “Enhancements to the lodestar should be granted rarely and are appropriate when an attorney produces objective and specific evidence that an enhancement of the lodestar is necessary to account for a factor not already subsumed in the lodestar calculation,” Justice Melody Stewart wrote in the majority opinion signed by seven justices.

Justice Sharon Kennedy issued a concurring opinion that agreed with Stewart but said trial courts must weigh each reasonable-fee factor individually, and not believe all factors are bound-up perfectly in the lodestar analysis.  Justice Patrick Fischer also a separate concurring opinion saying that courts must also be mindful of the “time value of money” in cases that take years to resolve.  The underlying issues in this matter began in 2004.  “Prevailing plaintiffs who have paid their attorneys over the course of the lawsuit and attorneys working on a contingent-fee basis have been deprived of the use of their money throughout the lawsuit,” Fischer said in his concurrence.