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Category: Trial / Jury / Verdict

AIG Unit Tells Ninth Circuit Yahoo’s Fee Award is Excessive

February 3, 2021

A recent Law 360 story by Daphne Zhang, “AIG Unit Tells 9th Circ. Yahoo’s Atty Fee Award is Excessive,” reports that an AIG subsidiary has asked the Ninth Circuit to reverse Yahoo Inc.'s award of over $600,000 in attorney fees or grant a new trial altogether, arguing that the tech giant did not present the correct recoverable amount and that the district court failed to guide a jury on how to allocate and award attorney fees.

In a brief filed, National Union Fire Insurance Co. of Pittsburgh, Pa., said the tech giant was not able to show which portions of its legal fees were spent on bad faith claims.  The insurer asked the court to vacate a jury verdict that found it had acted in bad faith by failing to cover Yahoo's costs to defend a consolidated class action.  National Union said that California law has clearly stated that a policyholder seeking to recover attorney fees as bad faith damages may recover only fees spent on insurance coverage issues, not those incurred to litigate the bad faith claim itself.

The carrier said that Yahoo, however, lumped all legal fees together, including those relating to bad faith claims, which are not recoverable.  The company could not present the exact amount of its legal bills spent on coverage issues, which is the only portion of recoverable attorney fees that should have been awarded, it added.  Yahoo showed "large swaths of invoices with minimal, unexplained redactions,"  National Union said. The court should reverse the attorney fee award because the unrecoverable fees must be excluded from the damages calculation, it added.

The coverage dispute goes back to January 2017, when Yahoo filed suit alleging National Union had breached its policy by refusing to cover the company in several class actions accusing it of scanning customers' emails.  In October 2018, U.S. District Judge Edward J. Davila found that National Union largely failed to defend and indemnify Yahoo for $4 million in attorney fees that resulted from the class actions.  The judge said it was up to a jury, though, to decide whether the insurer acted in bad faith in denying coverage.

Following a five-day trial in May 2019, a jury returned a verdict finding that National Union had acted in bad faith and should foot the bill for Yahoo's attorney fees.  "The jury clearly did not perform the allocation that Yahoo neglected to perform," National Union said on Monday, adding that Yahoo's own counsel could not point out how much of the legal fees were incurred on coverage issues and what portion was spent on bad faith claims.

"The district court failed to properly instruct the jury on how to allocate, leading the jury to award 100% of the claimed fees — a plainly excessive amount," the insurer claimed.  Yahoo previously argued that it had correctly allocated the legal fees by only submitting the invoices incurred before the district court's summary judgment order that granted its coverage benefits.  National Union said that since the bad faith claims were also litigated on summary judgment, Yahoo did not conduct a proper fee allocation.  "Yahoo is not entitled to a second bite at the apple to present allocation evidence it opted not to present at trial," the carrier said.

The case is Yahoo! Inc. v. National Union Fire Insurance Co. of Pittsburgh, Pa., case number 19-16475, in the U.S. Court of Appeals for the Ninth Circuit.

Legal Fees To Top £5M in Credit Suisse Espionage Suit

January 29, 2021

A recent Law 360 story by Christopher Crosby, “Legal Fees To Top £5M in Credit Suisse Espionage Suit,” reports that legal fees are expected to top more than £5 million ($6.9 million) as a former Credit Suisse employee heads to trial seeking £60.3 million from the lender after he was imprisoned in Romania on charges of espionage over his work.  Judge Roger ter Haar QC signed off the costs in a short judgment at the High Court, approving hourly rates of £780 for top-tier barristers and £515 for their lieutenants.

Credit Suisse had budgeted some £3.8 million in time and costs for defending itself against allegations by Vadim Benyatov that the bank is liable to cover his lost earnings and costs arising from his conviction in 2013 by Romanian authorities. He was sentenced to 10 years in prison on charges of espionage and establishing an organized criminal group.

Benyatov, meanwhile, has estimated spending in excess of £2.3 million for the lawsuit. But despite the complexity and "considerable skill" involved in the case the judge trimmed the bank's budget for costs nearer to £3.1 million and Benyatov's to £2.1 million.  There are "big issues" with the disparity between the two estimates, the judge told the court.

Most of the trimming — more than £300,000 — came from the Swiss bank's preparation and budget for trial, which is expected to begin in late April.  Benyatov, who ran the lender's emerging markets desk in Europe, inflated the size of the dispute to £60.3 million from £39 million in November, when Judge ter Haar said he could add 10 years onto his projected retirement age.

At the time, the former banker had also sought to amend his 2018 lawsuit against Credit Suisse Securities (Europe) Ltd.  He was prevented from adding claims that the bank breached its duty to undertake a risk assessment on work in Romania.

However the judge allowed him to claim loss over the Financial Conduct Authority's decision to revoke his authorization in 2013.  Judge ter Haar rejected the Swiss bank's attempt to strike out the allegations, saying in December that it had applied the wrong legal test.

The former director worked for the bank from around 2005 on the proposed privatization of a Romanian state-owned energy producer by an Italian company.  He alleges that Romanian officials were concerned about potential Russian influence in its energy sector and scrutinized him because of his Russian family name and birth place inside the former Soviet Union.

Benyatov also claims that the bank should have tipped off Romania's intelligence services about its business plans.  He said after he was arrested in 2006 that Credit Suisse paid for his legal expenses but failed to cover his "enormous losses."  The bank disputes Benyatov's claim for repayment, and has said there is no obligation for it to indemnify him simply because his work for the lender led to his arrest.

The case is Vadim Don Benyatov v. Credit Suisse Securities (Europe) Ltd., case number QB-2018-001043, in the Queen's Bench Division, the High Court of Justice of England and Wales.

UBS Whistleblower Awarded $1.8M in Fees in $1M Jury Verdict

December 16, 2020

A recent Law 360 story by Jack Queen, “UBS Whistleblower Naps $1.8M in Atty Fees on $1M Jury Win,” reports that a Manhattan federal court awarded a former UBS Securities analyst who won a $1 million retaliatory firing verdict $1.77 million in attorney fees and costs, granting half the sum requested by his lawyers at Stulberg & Walsh LLP and Herbst Law PLLC.  U.S. District Judge Katherine Polk Failla said the case was one of the "closest [her] court has ever observed" in her 74-page order, which parsed seven years of tenacious litigation between Trevor Murray and UBS in two separate cases that yielded five published opinions and a $3.2 million request for fees that the investment bank pilloried as "jaw-dropping" and "excessive."

Judge Failla slashed Murray's fee request for both of his firms, finding that while he notched a victory in a developing area of the law against a well-armed opponent, there were "enormous disparities" between what Murray sought, what he got and what his attorneys ultimately asked for.  "Putting to the side the policy goals ostensibly vindicated by the jury's verdict, the fact remains that plaintiff obtained significantly less relief, quantitatively and qualitatively, than he sought," Judge Failla said.

Murray sought $14 million in damages under the Sarbanes-Oxley Act in a case Judge Failla described as "far from a slam dunk."  Jurors awarded the former mortgage-backed securities analyst about $1 million in 2017, finding he was fired for refusing to skew his research to impress investors but concluding he wasn't entitled to damages for future wages.  Murray argued that substantial fees were warranted because he secured an extremely rare trial win on a Sarbanes-Oxley retaliation claim after weathering a years-long onslaught from UBS' legal team.  Healthy compensation for his attorneys would encourage other lawyers to represent whistleblowers, he said.

UBS countered that Murray's lawyers "wasted countless hours in pursuing losing positions" and won only a "'success' worse than defeat" after years of fighting.  Murray won $653,300 in back pay and $250,000 in noneconomic damages plus interest while striking out on future pay and reinstatement, UBS noted.  Judge Failla found merit in both positions but still trimmed Murray's hours significantly, pointing to the gulf between his demand and award, the "top-heavy" billing practices of his lawyers and their litigation and staffing strategies, which she said led to wasted effort.

Murray waited until the eve of trial to hire Herbst Law because Stulberg & Walsh had inadequate trial experience to argue the case, which Judge Failla said led to duplicative billing.  Murray also mothballed his initial claim under the Dodd-Frank Act when it went to arbitration only to see it gutted by the U.S. Supreme Court's decision in Digital Realty Trust Inc. v. Somers , which found plaintiffs can only qualify as whistleblowers under Dodd-Frank if they go directly to the U.S. Securities and Exchange Commission.

"The court does not fault plaintiff or his counsel for not being prescient," Judge Failla wrote.  "That said, plaintiff and his counsel made strategic litigation decisions that had dramatic impact on his legal bills."  In a statement to Law360, Murray's attorney Robert L. Herbst said the "huge reduction disincentivizes civil rights lawyers and their clients to take on these difficult and protracted legal struggles against major law firms whose billings and hourly rates are double ours."  Robert Stulberg concurred, adding that "if courts do not believe that vindication of a whistleblower's rights, and a million-dollar judgment, are a 'success,' then the reason for fee-shifting in civil rights statutes has not been served."

GA Appeals Court Affirms Jury’s $1.2M Attorney Fee Award

October 31, 2020

A recent Daily Report story by Greg Land, “Appeals Court Affirms Jury’s $1.2M Fee Award Blocks Fee Request Under Settlement Offer Law,” reports that affirming a trial judge, the Georgia Court of Appeals said an auto accident plaintiff who gleaned a $5 million judgment from a jury that included more than $1.2 million in attorney fees was not entitled to another fee award based on Georgia’s offer of judgment statute.  Lawyers for plaintiff Joao Junior had argued that the law—which allows a plaintiff to recover his fees and expenses if a defendant rejects a settlement demand then loses in court by a sum 125% or more than the spurned offer—was “clear and unambiguous” that the fees must be added.

A Fulton County judge ruled that such a double recovery was prohibited, and the appellate opinion authored by Presiding Judge Sara Doyle with the concurrence of Chief Judge Christopher McFadden and Judge Ken Hodges agreed.  The jury had awarded Junior’s fees under another statute, allowing for such an assessment for fees incurred in cases where a defendant “has acted in bad faith, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense.”

While Georgia law and prior appellate court precedent do not necessarily bar a double fee recovery under both statutes, wrote Doyle, Junior filed his motion for fees under the offer of judgment statute after having already been awarded fees by the jury.  “In some instances,” said Doyle, a party “may have incurred fees after a jury verdict but prior to entry of the final judgment by the trial court, in which case a subsequent award under [the offer of judgment statute] by a judge for such fees would be appropriate.  “Junior, however, does not contend that he incurred such fees,” she said, and they were therefore rightly denied. 

Defendant Sharon Graham and her insurer, USAA, were represented at trial by Cruser Mitchell Novitz Sanchec Gaston & Zimet partner R. Russell Grant, who was joined in the appeal by firm partner J. Robb Cruser along with Laurie Webb Daniel and Matthew Friedlander of Holland & Knight.  “We, of course, believe the Court reached the correct result, and did so with a thoughtful and thorough analysis,” said Daniel in an email.  Plaintiffs attorney Ben Brodhead III said the opinion misinterpreted both the law and Georgia Supreme Court precedent.

“Although I have only had the decision from the Court of Appeals for a few minutes, it appears that the issue of whether fees were ‘incurred’ might be an issue that needs clarification,” said Brodhead, who represents Junior with Brodhead Law colleagues Ashley Fournet, Holli Clark and John Nichols.

“It appears,” said Brodhead via email, “the Court of Appeals is under the impression that the attorneys’ fees under 13-6-11 [the stubbornly litigious statute] go to the attorney to pay the plaintiff’s attorneys’ fees.  While that might seem reasonable on the surface, it is not how contingency fee contracts are structured.”

Regardless of the fees a jury awards, the amount a lawyer makes is governed by contract, he said: 40% of the recovery in this case.  “Accordingly, whether the money recovered is for medical bills, pain and suffering, attorneys’ fees, or lost wages, it is treated the same,” he said.  Brodhead said he would be filing a motion for reconsideration or a petition for certiorari with the Georgia Supreme Court. 

As detailed in the opinion and other filings, the convoluted case began more than a decade ago when the vehicle driven by Junior, now 61, was between two other cars at a stop sign on Old Milton Parkway when Graham hit the last vehicle in line.  Junior’s Nissan Sentra was totaled, and he ultimately underwent surgery for herniated disk.  In 2010, Brodhead sent USAA a demand for Graham’s $100,000 policy limit; the insurer replied with an offer of $14,500, which Junior declined.  In 2011, Junior sued Graham in Fulton County State Court, and in 2013 Brodhead offered to settle for $600,000, which USAA also declined.  Some years later, the insurer offered it’s $100,000 limit, which Junior refused. 

Following a trial last year before Fulton County Judge John Mather, the jury found for Junior in a final judgment totaling $4,979,066, including $1,251,554 in fees and expenses under the bad faith/stubbornly litigious statute.  Junior’s lawyers then moved to have the court award attorney fees and expenses from the time the $600,000 offer was rejected under O.C.G.A. 9-11-68, the offer of judgment statute.

In rejecting the motion, Mather wrote that “the statutory language does not explicitly preclude a determination of bad faith in either scenario.”  But, Mather wrote, “[w]hile an award under the two statutes may be based upon different conduct, the fees were expended as to one defendant under one cause of action.”

“While an award under the two statutes may be based upon different conduct, the fees were expended as to one defendant under one cause of action,” he said, and “allowing Plaintiff a further award of attorney’s fees would permit a double recovery.”  In appealing the order, Junior’s lawyers wrote that the offer of judgment statute’s mandate that a prevailing party “shall be entitled to recover reasonable attorney’s fees and expenses of litigation” did not involve any other sanction issued by a court or jury. 

“Specifically,” it said, “although the amount of damages under O.C.G.A. § 13-6-11 and the amount of sanctions under O.C.G.A. § 9-11-68 are both calculated with reference to attorneys’ fees, they are different statutes with different language that apply to different conduct that occurs at different times,” Junior’s appellate brief said. 

In upholding Mather, Doyle cited the Georgia Supreme Court’s 2014 decision in Ga. Dept. of Corrections v. Couch, 295 Ga. 469, which expressly stated that fees awarded by a jury for bad faith “must be based on conduct arising from the transaction underlying the cause of action being litigated, not conduct during the course of the litigation itself.  “By contrast, attorney fees awarded under OCGA § 9-11-68 (b) are not identified as damages; they relate entirely to conduct during the course of the litigation; and they are determined post-judgment by the court rather than during trial by the jury,” that ruling said. 

Couch, however, did not address whether a claimant could recover a full amount of attorney fees under OCGA § 13-6-11 and another full amount under OCGA § 9-11-68 (b), and such a finding is not implied in this case,” Doyle wrote.  “This is because, by the time that Junior filed his motion … he had no longer ‘incurred’ the $1,251,554 in attorney fees for which he was awarded additional damages by the jury—those costs had been compensated,” Doyle wrote.

Judge: Can Counsel Tack 40% Fee Request on Top of $33M Verdict?

October 23, 2020

A recent Law.com story by Katheryn Tucker, “Judge’s Question on $12M Legal Bill: ‘I Want to Hear Why This Is Something Legitimate’, reports that a big fee was the sticking point during Zoom oral arguments before the Georgia Court of Appeals.  The panel of three—Presiding Judge Sara Doyle, Chief Judge Chris McFadden and Judge Ken Hodges—is being asked to decide whether plaintiffs lawyers can tack on their 40% contingency fee award on top of a $33 million wrongful death verdict.

“I want to hear why this is something legitimate,” Doyle said to Mike Terry of Bondurant Mixson & Elmore, arguing for the plaintiff’s side to defend the verdict and attorney fee claim.  Doyle said she understands that plaintiffs lawyers take on the risk of a case with no guarantee of being paid, and that’s “why they get more.”  But why wouldn’t the fee come out of the $33 million judgment, she asked.

Terry said plaintiffs counsel is entitled to the added fee under Georgia law after making a $1 million offer of settlement, then far exceeding that sum at trial.  So the plaintiffs counsel’s math subtracts that $1 million from the $33 million verdict, which makes $32 million, multiplies that by 40%, which is about $12 million, then adds the two together, making $45 million.

On the other side was Laurie Webb Daniel of Holland & Knight, representing the driver who turned left in front of a reportedly speeding motorcycle.  Daniel was hired by the insurance company, State Farm, which now has $45 million on the line between the verdict and the added-on fee award.  Daniel told the panel that the plaintiffs counsel had shown no documentation to justify the fee demand.  Plus she said Terry’s argument had been “based on an erroneous order,” and that “improper material had been presented to the jury.”  She said the judge allowed plaintiffs counsel to question the defendant about her prior driving record and past speeding, which had nothing to do with the case.  “The law does not allow collateral impeachment,” Daniel said.

The case was tried in February 2019 before Spalding County State Court Judge Josh Thacker. The plaintiff is the wife of a man killed 15 years ago when a car turned left in front of his motorcycle.  The jury awarded: $63,000 for medical and funeral expenses, $3.25 million for general estate damages, $4.1 million for wrongful death-loss of wages and $26 million for wrongful death-noneconomic value of the life of Daniel K. Mayfield Jr.

“This was a tragic case of a driver who turned left directly in front of a motorcyclist that she failed to see approaching,” Mayfield family attorney Ben Brodhead of Brodhead Law said after the verdict.  “The case was complicated by three independent witnesses who claimed that the motorcyclist was traveling at approximately 80 mph to 100 mph as he approached the intersection.”  But Brodhead said he was able to establish that “no one observed the motorcycle’s speed in the 10 seconds before the crash.” 

The jury apportioned 3% of the fault to Mayfield and 97% to defendant Vickie Lynn Fain Kennison, the driver who turned left into the path of Mayfield’s motorcycle.  Broadhead said he made requests for the $100,000 State Farm policy limit over the course of a decade of litigation.  He said immediately after the trial that he would be asking for the added 40% fee award in addition to 97% of the verdict, plus interest and litigation expenses.