Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Prevailing Party Issues

Delaware Governor Seeks Fee Reduction in State Court Party Balance Case

January 12, 2018

A recent Delaware Law Weekly story by Tom McParland, “Carney Asks for Fee Reduction in Case Striking State Court Party Balance Mandate” reports that attorneys for Governor John Carney are asking a federal judge in Wilmington to slash a request for attorney fees in the case of a New Castle County lawyer who successfully challenged a provision of the Delaware Constitution requiring political balance on the state’s courts.

Carney, who has appealed the decision said that a ruling on James R. Adams’ fee request should be tabled until the U.S. Court of Appeals for the Third Circuit can weigh in.  But the governor also argued that any award the court grants should be reduced by 40 percent because Adams had only achieved partial success.

Adams, who is represented by Finger & Slanina partner David L. Finger, last month requested $22,900 to cover the cost of litigating the case through summary judgment.  U.S. Chief Magistrate Judge Mary Pat Thynge of the District of Delaware on Dec. 6, 2017, ruled in favor of Adams, a graduate of Widener University Delaware Law School, who argued the 120-year-old requirement violated the First Amendment of the U.S. Constitution by restricting government employment based on party affiliation.

Carney, who is responsible for nominating judges, did not dispute that Adams had prevailed in the case.  However, Carney challenged Adams’ assertion that he had secured a “complete victory,” saying that Thynge’s ruling did not specifically address constitutional provisions preventing one political party from being represented by more than a “bare majority” of the judges on Delaware’s courts.

“Because plaintiff did not achieve success in challenging the constitutional provisions relating to the Family Court and the Court of Common Pleas, or in challenging the bare majority provisions for the Delaware Supreme Court, the Superior Court or the Court of Chancery, defendant requests a 40 percent reduction in any award the court may choose to grant, as such a reduction would reflect plaintiff’s partial success in challenging Delaware’s constitutional provisions governing the composition of its courts” Carney’s Young Conaway Stargatt & Taylor attorneys wrote in an 8-page brief.

Finger, meanwhile, said in an interview that reduction of attorney fees was not warranted in any case where a plaintiff has won “substantial” relief from the court.  “We won a very substantial issue,” he said. “Moreover, the issue [of party balance] will apply to Family Court and the Court of Common Pleas because the bare majority requirement still requires making political party a determining factor [in nominating judges],” Finger said.

Adams, a registered independent, said he’s been prevented in the past from applying for judgeships because of the constitutional mandate that judicial seats be split between Republicans and Democrats.

Proponents of the provision—codified in Article IV, Section 3 of the state constitution—have said it safeguards a fair, independent and impartial judiciary that attracts talent to serve in its ranks.  But Adams and others have argued the mandate improperly boxes out independents and creates the impression the state’s judiciary is tinged with political bias.

Fee Request Denied Because Neither Party Prevailed

January 9, 2018

A recent Delaware Business Court Insider by Tom McParland, “Seven-Figure Fee Request Crumble as Bouchard Calls Cookie Contract Case a Draw” reports that the Delaware Court of Chancery denied multimillion-dollar requests for attorney fees from Mrs. Fields Brand Inc. and Interbake Foods, ruling that neither party had prevailed in a dispute over a contract to sell Mrs. Fields cookies in grocery and convenience stores.

Chancellor Andre G. Bouchard said the baked-goods companies had fought to a draw on the two main issues of a 2016 trial, where Interbake argued that it could exit a five-year licensing agreement to sell Mrs. Fields’ products.

In June, Bouchard ruled in favor of Mrs. Fields, saying that Interbake could not rely on its “material adverse change” argument to escape the deal.  But he also rejected Mrs. Fields’ “astounding” claim for $28.7 million in damages in the case.

Both sides later moved for attorney fees under a provision of the contract that required the “prevailing” party to be reimbursed for costs and expenses of litigation stemming from the licensing agreement.  Interbake asked for $2.6 million, and Mrs. Fields requested $5.3 million for its efforts.

In an 11-page letter opinion, Bouchard said Interbake’s attempts to validate its exit from the agreement spawned a slew of related legal questions, which accounted for the bulk of his 108-page ruling in June.  But he also noted that Mrs. Fields made its losing push for money damages a “central focus” of its litigation strategy, despite a standstill agreement that ensured the licensing agreement would remain in place throughout the case.

“In sum, because each side both won and lost on one of the two equally core issues in this case, I hold that neither Mrs. Fields nor Interbake predominated in the litigation and thus neither is entitled to an award of attorneys’ fees or expenses as the ‘prevailing party’ under [the licensing agreement],” the chancellor wrote.

Governor Cuomo Signs Attorney Fee FOIL Bill

December 13, 2017

A recent Times Union story by Brendan J. Lyons, “Cuomo Signs Bill Strengthening FOIL Law,” reports that Gov. Andrew Cuomo signed a bill that will require judges to award attorneys' fees to litigants who "substantially prevail" in Freedom of Information Law (FOIL) cases.

The governor acknowledged the legislation is important but said it falls far short of comprehensively reforming the state's antiquated Freedom of Information Law, including not requiring greater transparency from the Legislature that sent the bill to his desk.

"The bill before me continues to perpetuate a fractured and inequitable system of transparency by only applying to the executive (branch), and intentionally excluding other branches of government," Cuomo said in a memo filed in support of the measure.  "Notably, current law already provides courts with discretion to award attorney's fees in such situations, but they are not required to do so."

Still, advocates for more transparency in government have hailed the legislation as necessary to prevent agencies at all levels of New York government from deliberately withholding public records or delaying responses unnecessarily.

Cuomo vetoed similar legislation two years ago that stated courts must award attorney's fees when an agency denies access to FOIL requests in "material violation" of the law.  The governor said the earlier bill did not define the term "material violation," which could have created confusion for judges who could reach different conclusions on what the term means.

The bill requires that courts "shall" assess reasonable legal costs in FOIL cases in which a person "substantially prevailed" and the court finds there was no reasonable basis for denying access to a record.  Courts have sparsely awarded attorney's fees in FOIL cases.  But not always.

Jones Day Seeks Fees from EEOC After “Baseless Suit”

November 13, 2017

A recent NLJ story by Erin Mulvaney, “Jones Day Seeks $446K in Fees From EEOC After ‘Baseless Suit’ Goes Nowhere” reports that Jones Day lawyers are seeking hundreds of thousands in legal fees from the U.S. Equal Employment Opportunity Commission, saying federal regulators unfairly targeted CVS Pharmacy Inc. for alleged employment abuses that no judge sustained.  Eric Dreiband, the lead partner for CVS in the litigation, is the Trump administration's pick to lead the U.S. Justice Department's Civil Rights Division.

The EEOC sued CVS in 2014 over a severance agreement the agency said limited the rights of employees to file complaints.  The EEOC called the severance agreement “overly broad” and argued it was part of a CVS “pattern or practice of resistance” to restrict the civil rights of the company’s employees.  The agency lost its case, EEOC v. CVS Pharmacy, in the U.S. District Court for the Northern District of Illinois and in its appeal in the U.S. Court of Appeals for the Seventh Circuit.  The appeals court concluded the agency too broadly interpreted its enforcement powers.

The dispute is back in the Seventh Circuit as Jones Day--led by partner Eric Dreiband—seeks attorney fees for the work the firm did for CVS.  The district court said CVS was entitled to legal fees.  Dreiband and the Jones Day team want $446,339 for 250 hours of work.

The dispute provides a glimpse at the billing practices at Jones Day.  In court filings, Dreiband requested legal fees for himself and Jones Day associates.  Dreiband identified his hourly rate at $560.  Ninth-year associate Jacob Roth, a former clerk to the late Justice Antonin Scalia, billed at $475 per hour; Nikki McArthur at $275 per hour; and staff attorney Adria Villar at $175 per hour.

“These rates are significantly less than what Jones Day actually billed, and was paid, for the firm’s work on this matter,” Dreiband said in a declaration.  “These rates are also lower than what Jones Day typically bills for these timekeepers on other similar matters.”

Dreiband argued in the request for legal fees that the EEOC “concocted what it admits to be a novel interpretation of Title VII that would give the agency vast power” to challenge employment practices that it doesn’t like.  He argued the EEOC exceeded its authority in filing the suit—refusing any conciliation with CVS—and issuing a press release announcing the case.

“The EEOC instead rushed to file a baseless lawsuit, and blasted CVS with an inflammatory press release falsely accusing the company of interfering with Title VII rights,” Dreiband told the appeals court.  EEOC lawyers, responding to the claims, said the agency had reason to believe it would prevail and that the fees awarded were an abuse of direction.

“Although the EEOC did not prevail, this theory—which was consistent with the statutory language and this court’s precedents—was entirely plausible, and the EEOC had no reason to believe with any certainty that it would not succeed,” EEOC lawyers told the Seventh Circuit.

John Darrah, the federal trial judge who said Jones Day was entitled to fees, concluded the EEOC had violated its own internal regulations in the case against CVS.  “The EEOC’s own regulations require the agency to use informal methods of eliminating an unlawful employment practice where it has reasonable cause to believe that such a practice has occurred or is occurring,” Darrah wrote in his ruling.

Florida Supreme Court Rules on Fee Issue in Insurance Coverage Litigation

October 24, 2017

A recent FC&S Legal article by Steven Meyerowitz, “The Florida Supreme Court Just Made It Easier for Insureds’ Attorneys to get Big Fee Awards,” reports on a recent decision by the Florida Supreme Court in Joyce v. Federated National Ins. Co.  The article reads:

The Florida Supreme Court, in an insurance coverage dispute, has rejected appellate court rulings that trial courts may apply a contingency fee multiplier to an award of legal fees to a prevailing party only in “rare” and “exceptional” circumstances.

The Case

William and Judith Joyce, an elderly retired couple, filed a claim for insurance benefits with their homeowners’ insurance carrier, Federated National Insurance Company, following water damage to their home. Federated National denied coverage on the basis of alleged material misrepresentations made by the Joyces in the application process – namely, that the Joyces had failed to disclose certain losses they had with their previous carrier.

The Joyces hired an attorney on a contingency fee basis and sued Federated National, alleging that the insurer had wrongfully denied their claim. After months of litigation, Federated National finally agreed to settle.  The parties stipulated that the Joyces were entitled to recover reasonable legal fees under Florida Statutes Section 627.428.

At the fee hearing, the trial court heard testimony from the Joyces’ attorney and fee expert and Federated National’s fee expert.  The trial court also examined certain evidence exhibits, including time records for the Joyces’ attorney and a copy of the contingency fee agreement.

After the hearing, the trial court awarded the Joyces $76,300 in attorneys’ fees, using a two-step process.  First, the court calculated the “lodestar” amount – the number of hours reasonably incurred by the Joyces’ attorney, multiplied by a reasonable hourly rate – as being $38,150, or 109 hours reasonably expended at a reasonable hourly rate of $350.  Second, the trial court applied a contingency fee multiplier of 2.0 to the lodestar amount.

Federated National appealed both the trial court’s calculation of the lodestar amount and its use of the contingency fee multiplier.  The appellate court affirmed the lodestar amount but reversed the trial court’s use of a contingency fee multiplier, concluding that the lodestar approach included a “strong presumption” that the lodestar represented the “reasonable fee.”

Florida Law

Section 627.428, Florida Statutes provides:

(1) Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had.

The Florida Supreme Court’s Decision

The court quashed the appellate court’s decision.  First, the court reviewed its precedent regarding contingency fee multipliers and declared that it was “clear” that it had “never limited the use of contingency fee multipliers to only ‘rare’ and ‘exceptional’ circumstances.”

In fact, the court said, it had recognized “the importance of contingency fee multipliers to those in need of legal counsel” and it had made clear that trial courts “could consider contingency fee multipliers any time the requirements for a multiplier were met.”

In the court’s opinion, the contingency fee multiplier provided trial courts with the “flexibility” to ensure that lawyers who took a difficult case on a contingency fee basis were “adequately compensated.”The court rejected the argument that a contingency fee multiplier encouraged “nonmeritorious claims” and said, instead, that solely because a case was “difficult” or “complicated” did not mean that the case was nonmeritorious.  “Indeed, without the option of a contingency fee multiplier, those with difficult and complicated cases will likely be unable or find it difficult to obtain counsel willing to represent them,” the court said.

The court then disagreed that the possibility of receiving a contingency fee multiplier amounted to a “windfall.”  The court concluded that there was not a “rare” and “exceptional” circumstances requirement before a contingency fee multiplier could be applied.  It decided that the trial court’s findings, “which properly considered the complexity of these types of cases and this case in particular,” were not in error, and it ordered the appellate court to reinstate the reinstate the attorneys’ fees award.