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Category: Prevailing Party Issues

Ninth Circuit Affirms $29M Fee Award in Infringement Action

August 16, 2019

A recent Law 360 story by Dave Simpson, “9th Circ. Keeps Oracle’s Rimini Injunction, $29M Atty Fee Win,” reports that the Ninth Circuit said that Rimini Street Inc. still must pay Oracle Corp. $28.5 million in attorney fees and largely affirmed an injunction that bars the software support service company from copying Oracle's software identified in the copyright infringement case.  In a unanimous, unpublished decision, the panel found that Nevada federal court did not abuse its discretion when it issued the injunction and that the injunction is not moot.

“The court pointed to the fact that Oracle and Rimini were direct competitors, explained that Rimini was able to gain increasing market share by offering lower prices for its service than Oracle offered, and that these lower prices were possible because Rimini’s infringing conduct saved the company time and money,” the panel said.  “This conclusion was supported by the record, including Rimini’s own internal e-mails.”  The injunction is not moot because Rimini has not shown that although it has stopped the infringing behavior, the challenged conduct won’t start back up again, the panel said.

The finding is the most recent in a hotly contested lawsuit that Oracle filed against Rimini in 2010, seeking to stop the competitor from copying Oracle's software, which Rimini argued it needed to serve clients.  Oracle initially asserted two dozen claims against Rimini and its CEO, alleging willful copyright infringement and violations of federal and state computer hacking laws, among others, according to court documents.

Though Rimini had changed its business practices, the case went to trial in September 2015, and a jury found that the company's former practices infringed Oracle's copyright.  But the jury concluded that the infringement was "innocent" because the company had no reason to believe its conduct constituted infringement.  The jury awarded Oracle about $50 million in compensatory damages and found Rimini liable for copyright claims and state hacking claims, but the Ninth Circuit later tossed the state claims and reduced the damages award to $35.6 million.

A Nevada federal judge in August 2018 ordered Rimini to pay Oracle $28.5 million in attorney fees, saying the award was still justified even though the Ninth Circuit reversed Oracle’s state-law claims.  The case made its way to the U.S. Supreme Court last year when the high court agreed to hear a dispute over an award of $12 million in "nontaxable costs" spent by Oracle in the litigation.

In a unanimous opinion written by Justice Brett Kavanaugh in March, the high court overturned a ruling that awarded Oracle more than $12 million in litigation costs.  Although the Copyright Act states that prevailing parties can recover their "full costs," the justices held that costs are limited to six narrower categories found in the general litigation cost statute.

The panel affirmed the fee award.  “The district court permissibly concluded that the claims ‘involve[d] a common core of facts [and were] based on related legal theories because the action was first and foremost a copyright infringement action,’” the panel said.  “Accordingly, it was within the district court’s discretion to determine that apportionment was not required beyond the twenty percent reduction.”

Philly City Worker Denied $360K in Fees in $1 Verdict

August 5, 2019

A recent Law 360 story by Matt Fair, “Philly City Worker Denied $360K Attorney Fees on $1 Award” reports that a federal judge ruled that a $1 verdict won by a Philadelphia municipal employee on claims she was retaliated against for complaining about alleged workplace discrimination did not entitle her to receive legal fees from the city.  U.S. District Judge Gerald Pappert said the damages won by Deanna Pierce, a social worker who said she was discriminated against when she was denied a promotion three years ago, represented just a nominal victory that did not support her claim that the city cover nearly $360,000 in legal fees incurred as she litigated her case.

"Pierce's nominal damages award is presumptively a technical victory that does not merit an award of attorneys' fees," the court ruled.  Pierce filed suit in December 2017 alleging that her Native American heritage had been used against her as she was denied three promotions over the course of three years.  She ultimately withdrew claims related to one of the promotions, and the court granted summary judgment in connection with a second.

Her case went to trial in January as Pierce looked to convince jurors that the city had looked to fill a position as a human services program administrator specifically with a Hispanic candidate.  She also accused the city of creating a hostile work environment — including by denying her overtime approval and lunch breaks — when she complained about the purportedly discriminatory hiring practices.

A jury ultimately sided with the city on the discrimination claim, but awarded damages of $1 on Pierce's retaliation claim.  Based on the verdict, Pierce went on to file a motion asking that the city be required to pay some $360,000 in fees and another nearly $30,000 in costs under a federal statute allowing the prevailing party in a civil rights case to recoup their expenses.

In deciding whether to grant the request, Judge Pappert pointed to U.S. Supreme Court precedent stating that a nominal damage verdict doesn't necessarily bar a fee award to a prevailing party, but that it bears upon the propriety of such an award.

Under the high court's precedent, Pappert said, the "degree of success obtained" by the prevailing party was the most critical factor in determining the propriety of a fee award.  But given that the award came after all of Pierce's other claims had been dismissed, and that she had sought as much as $2.75 million to settle the case in advance of trial, Judge Pappert said that granting her motion for fees was inappropriate.  "The court must give primacy to the disparity between damages sought and awarded, and this weighs heavily against awarding attorneys' fees in her case," he said.

No Fee Award for Winning ADA Award After Judge Tosses It?

July 19, 2019

A recent Law 360 story by Matthew Santoni, “Don’t Give Attys Fees for Losing ADA Award ‘Win’. Co. Says,reports that a Pittsburgh claims administration and management company said that attorneys for a woman denied extra breaks for her post-traumatic stress disorder shouldn't get to claim a "win" and seek fees after a federal judge vacated a jury's $285,000 damage award in May.

Premier Comp Solutions said that under a contingency fee structure, Stember Cohn & Davidson-Welling LLC shouldn't be able to ask for the company to pay almost $312,000 in fees and $24,000 in costs, since their client, former billing assistant Beth Schirnhofer, hadn't actually won the case after the judge tossed the award.

"Having lost the case, they want to be rewarded while their client receives nothing," said Premier's brief in opposition to the fees.  "If a contingent fee lawyer does not win money for the client, he or she does not get paid a fee.  For some reason, plaintiff's counsel believe they should get paid a fee even though they lost."

U.S. District Judge Billy Roy Wilson had erased the jury's award of $35,000 in back pay and $250,000 in noneconomic damages following a trial in April, citing its affirmative answer to the question of whether the company would have fired Schirnhofer regardless of her alleged disability.

Under the Americans with Disabilities Act, Judge Wilson said, the court could grant declaratory relief, injunctive relief and attorney fees in verdicts, but not any compensatory or punitive damages when the jury believed there could have been some other reason for firing Schirnhofer, also known as a "mixed motive."

Premier argued Monday that fees were inappropriate if there were no awards for Schirnhofer.  "Plaintiff's counsel took the risk that they would not win.  They should not be allowed to avoid the consequences of losing," Premier's brief said.  "By requesting a mixed-motive instruction on plaintiff's disability discrimination claims, plaintiff's counsel caused plaintiff to lose out on the $285,000 jury verdict and potential punitive damages."

Schirnhofer sued Premier in 2016, saying her doctor had provided the company with paperwork detailing her need for extra breaks due to PTSD, but Premier refused to provide them.  Premier allegedly decided Schirnhofer's PTSD was a disability, but it just didn't warrant accommodation, her suit said.  Her later firing, the company said, was because she violated its social media policy with Facebook comments about committing suicide, complaints about her coworkers, and a picture of a woman with a gun — not out of retaliation for her complaints.

Stember Cohn had claimed that the ADA and case law had shown the firm could still seek compensation for fighting the contentious case, since the jury had rejected Premier's claims it did no wrong.

"In mixed motive cases the award of attorney's fees is a matter left to the discretion of the district court," the firm wrote in its June 11 brief. "A court may award fees absent monetary or other tangible relief."

Premier countered that there had been no relief at all for Schirnhofer, since all she had sought was money damages. Five of her 11 claims were tossed before trial, three were determined in Premier's favor, and the three disability discrimination claims were not an "outright win" for her because of the mixed-motive verdict, the company said. After the judge had thrown out the award, nothing had changed for Schirnhofer; no precedents had been set and no declaratory judgments were made, Premier argued.

"Plaintiff and her counsel's principal purpose in bringing this lawsuit was to recover money from defendant ... Plaintiff did not make any specific claim for declaratory, injunctive, or any other kind of equitable relief," Premier's brief said.  "Plaintiff received none of the relief she sought in her complaint.  Such a result could not, with a straight face, be called a 'success.' ... Accordingly, plaintiff's counsel should not be rewarded with fees or costs."

Premier also said Stember Cohn's strategy had harmed its client's case because they had asked for the mixed-motive jury question rather than trying to present the social-media policy issue as a pretext for Schirnhofer's firing.  The firm could not then claim fees for work that had cost its client an award in her favor, the company said.

Article: Rohrmoos Highlights Steps to Securing Attorney Fees in Texas

July 8, 2019

A recent Law 360 article by Amy Anderson, Tiffany Raush and Joshua Norris, “Rohrmoos Highlights Steps to Securing Atty Fees in Texas,” reports on the recent Texas Supreme Court case, Rohrmoos Venture v. UTSW DVA Healthcare.  This article was post with permission.  The article reads:

In Rohrmoos Venture v. UTSW DVA Healthcare LLP, the Supreme Court of Texas has finally thrown down the gauntlet for attorney fees claims: Submit your billing records or else!

While the court’s opinion issued April 26, 2019, stopped short of actually mandating submission of billing records in support of an attorney fees request, “billing records are strongly encouraged.”  In reality, nothing short of contemporaneous billing records would likely satisfy the stringent evidentiary requirements articulated in Rohrmoos.

In Rohrmoos, the lessee prevailed in a lease dispute against its landlord; however, it supported its attorney fees claim only with the testimony of its attorney.  The attorney testified as to the mountain of documents, emails and depositions he reviewed, prepared for and completed in addition to time spent in trial.  He also testified regarding his rate, why that rate was reasonable and why the fees in this case (about $800,000) were so high compared to the total amount in dispute (about $300,000).

He did not introduce his billing records, which would have certainly been voluminous, and instead asserted before the court that the billing records would give the jury no additional basis on which to award his client attorney fees.  The jury awarded the lessee $800,000 for fees incurred in addition to conditional amounts for appeal.  The landlord challenged the fee award and, in particular, the failure to produce billing records in support.  The court of appeals affirmed the award concluding that billing records were not required to prove attorney fees in this case.

The Supreme Court of Texas disagreed.  The court issued a lengthy, 20-plus page opinion to address the issue of the attorney fees claim, apparently flummoxed that practitioners, parties and lower courts did not understand that Texas exclusively subscribed to the lodestar method following City of Laredo v. Montano.

The lodestar method requires the calculation of reasonable hours multiplied by a reasonable rate, producing the “lodestar.”  From there, adjustment up or down is possible depending on particular circumstances not already accounted for in the lodestar calculation.  If it was unclear before, it is clear now — the lodestar method applies to every claim for attorney fees in Texas.  And, as the Rohrmoos court sees it, there is little to no reason for an award to ever deviate from the lodestar.

Attorney fees claims are valuable to parties because they constitute an entirely separate claim for damages.  An award of fees is meant to compensate the winning party and make that party whole.  The award is not intended to punish the losing party, nor is it intended to benefit the attorney.  The contours of the court’s Rohrmoors opinion provide important clarifications, reminders and cautions on the issue of attorney fees, several of which are highlighted in the following practice pointers.

Get Your Ducks in a Row Ahead of Time — Chapter 38 (Probably) Won’t Save You

Texas follows the “American Rule” regarding attorney fees recovery — each party pays its own way.  To “shift” the payment of attorney fees, parties must point to either a contract provision or a statute.  In Texas, we have long revered Chapter 38 as the attorney fees saving grace for oral contracts or the occasional contract without an attorney fee provision.  But Chapter 38 has fallen from grace over the past decade following several state and federal court opinions holding that it does not apply to limited liability companies or limited partnerships.

Even before that spate of decisions, however, Chapter 38 had its limitations.  As discussed in Rohrmoors, to prevail on an attorney fees claim under Chapter 38, parties have to show (1) they prevailed on a claim entitling them to attorney fees, and (2) they recovered damages for that claim.  Thus, while a party who successfully pursued a breach of contract claim for damages can recover attorney fees under Chapter 38, a party who successfully defended a breach of contract claim cannot.

It is imperative that attorney fees are properly addressed in a contract. Among other things, the Rohrmoors decision demonstrates that contractual fee-shifting provisions should specify when a party is a “prevailing party.”  If the contract is silent, the trial court will likely apply Chapter 38 prevailing party law — meaning that your successful defense of a breach of contract claim will not yield an attorney fee award.

Parties should also consider whether fee recovery should be limited to fees “incurred.”  In Rohrmoors, the court explained that use of the word “incurred” limits the amounts of fees to only those fees for which the requesting party is liable.  Without using “incurred,” a party may recover attorneys’ fees that are reasonable and necessary to the representation without a showing that they were “incurred.”  While broader is better if you are seeking the fees, and limited is better if you are defending against fees, what is best is to predictably know how the fee provision will be interpreted and applied by the court.  Therefore, clarity is king.

Litigation Is Nigh — Now What?

When the parties to a contract find themselves staring down inevitable litigation, the focus is naturally on the claims giving rise to the litigation: breach of contract, breach of warranty, fraudulent conduct, etc.  Early on, attorney fees may not be foremost in mind, but they should be.  Informed consideration of likely avenues for recovery of attorney fees will help the parties evaluate their potential damages and their potential risks in litigating.

In addition, Chapter 38 has “presentment” requirements and other fee-shifting statutes, such as the Deceptive Trade Practices Act, may have similar preconditions.  Developing your attorney fees claim, or defending against the opposing party’s fee claim, is often overlooked until trial approaches when the costs have already been incurred and discovery is coming to a close.  Understanding the fee claim and developing or defending it alongside the core claims will pay dividends in the long run.

Proving It Up for the Win

Rohrmoors clears up any lingering mystery: Plan to submit your attorneys’ billing records to support your fee claim.  “Sufficient evidence [to support a fee claim] includes, at a minimum, evidence of (1) particular services performed, (2) who performed those services, (3) approximately when the services were performed, (4) the reasonable amount of time require to perform the service, and (5) the reasonable hourly rate for each person performing such services.”

From that, the factfinder determines the reasonable hours times the reasonable hourly rate resulting in the lodestar.  Only in extremely limited and unusual circumstances may the factfinder apply a multiplier upward or downward to account for factors not otherwise baked-in-the-cake of the lodestar.

Thus, when proving up your attorney fees, it is critical to provide accurate and complete billing records in support of your claim.  The Supreme Court of Texas stated this was “strongly encouraged” in Rohrmoos, but the clear implication of that opinion as a whole is that it is indispensable to recovery of fees.

That means the attorneys’ time entries should be detailed enough to provide sufficient information for review and payment, but not so detailed that extensive redacting is going to be required to protect work product or attorney-client privileged information.  Such extensive redaction may fall short of the Rohrmoors’ requirement that the evidence show the particular services performed and may also fail to satisfy segregation requirements.

Also consider whether a fee claim will require a separate, retained expert.  The attorney in Rohrmoors opted to testify as his own expert, which is fairly common.  There are multiple schools of thought on this.  The attorney who generated the fees is going to have a better grasp on the facts and nuances of the case, especially in complex litigation where the total hours and requested award might be especially large.  Most judges know that a retained expert is no less self-interested than the lawyer in the case.  On the other hand, to a jury, a retained expert may appear at least somewhat less self-serving.  If the attorney’s rate is particularly high, it may be helpful to have another attorney explain why that rate is reasonable.  Finally, if there is a great degree of tension between opposing lawyers related to the litigation, cross examination of the lawyer in the case on the issue of fees could get heated.  In that case, it may be better to have one degree of separation with a retained expert.

Amy K. Anderson and Tiffany C. Raush are associates and Joshua A. Norris is a partner at Jones Walker LLP in Houston.

Novartis Attacks $3M Fee Request in Whistleblower Case

July 5, 2019

A recent Law 360 story by Bill Wichert, “Novartis Attacks $3M Atty Fees Bid in Whistleblower Case,” reports that counsel for Novartis told a New Jersey state court that an attorney fees award to a former company executive who prevailed on a whistleblower claim at trial should be cut in half because the pharmaceutical giant succeeded on its unjust enrichment counterclaim against her.  More than three months after jurors handed a roughly $1.8 million whistleblower award to Min Amy Guo, Novartis Pharmaceuticals Corp.'s attorneys said her lawyers' more than $3 million in proposed fees should be reduced for various reasons, including because the jury also awarded nearly $350,000 to Novartis on the counterclaim after concluding she violated company policy.

"There is nothing in New Jersey jurisprudence, there is nothing in American jurisprudence that supports a fee-shifting provision being applied to compensate plaintiff's counsel on a count that she was not successful in," Novartis attorney Patricia Prezioso told Superior Court Judge Louis S. Sceusi during oral arguments on the fees application.  Beyond the 50% "limited success" reduction, Novartis is seeking additional cuts in the proposed fees.

The judge acknowledged he "can't pay the plaintiff for losing the unjust enrichment claim," but questioned the company's proposed 50% reduction for Guo's limited success at trial.  "How do you come up with 50%?  How is that more justified than 20%, 30%?” Judge Sceusi asked Prezioso.

Prezioso pointed to the substantial amount of trial testimony that focused on Guo's policy violations, saying "unjust enrichment and the policy violations ... was far more than 50% of the case."  "It was more like 80% of the case," said Prezioso, adding that "asking for 50%, in light of the fact that we prevailed on that and there's no support for fee-shifting ... when they lost on a claim, is fair."

But Guo attorney James K. Webber countered that she is entitled to reasonable attorney fees as the prevailing party on her state Conscientious Employee Protection Act claim, and the award should not be cut because she lost on the unjust enrichment counterclaim.  Webber argued that the issues underlying both claims were the same, since Guo's purported policy violations constituted the company's defense to her whistleblower claim.  "There's certainly no support for defendant's position," Webber told the judge.

The former executive director of the health economics and outcomes research group at Novartis, Guo said she was fired in retaliation for objecting to a proposed study by pharmaceutical distribution company McKesson Corp. of Afinitor's use as a breast cancer drug. Novartis ultimately did not move forward with the study.  Among her claimed objections to the proposed McKesson study was that it appeared to be a kickback to the company to help sell Afinitor.

Guo said she believed the study would violate a corporate integrity agreement that Novartis entered into in 2010 as part of a settlement with the U.S. Department of Justice.  That agreement required Novartis to comply with federal health care program requirements, including a federal anti-kickback statute, court documents state.  Novartis claimed Guo was terminated for violating company policies.

At the end of the more than seven-week trial, the jury in a 7-1 vote on Feb. 26 awarded about $1.8 million to Guo on her CEPA claim.  The jurors then unanimously awarded nearly $350,000 to Novartis on its counterclaim for unjust enrichment.  On Feb. 27, the jury denied Guo's bid for punitive damages.

On March 26, Judge Sceusi rejected the company's bid to set aside the CEPA verdict and, about a month later, Guo's attorneys submitted their fees application.  During a hearing, however, the judge pushed back against the fees request.  For example, Judge Sceusi pointed to Novartis' criticism of Guo attorney Richard J. Murray's request of fees for more than 1,200 hours spent on the case over less than a year, whereas Webber is requesting fees for nearly 1,400 hours spent over five years on the suit.  In that regard, the company has called Murray's fees request "simply glutinous."