A recent Law 360 by George Woolston, “NJ Firm Keeps Victory In Retainer Fee Billing Challenge,” reports that the New Jersey state appeals court has backed Arbus Maybruch & Goode LLC's win in an ex-client's suit alleging it failed to disclose the incremental billing structure of its retainer fee, reasoning in a published decision that the firm's bimonthly invoices showed the terms were spelled out.  A three-judge panel affirmed a Monmouth County trial judge's decision to award summary judgment to the firm on breach of contract claims against Daniel Cohen and his company Cohen Capital Management over $142,000 in unpaid attorney fees and costs.

Cohen challenged the lower court's decision, claiming that the New Jersey firm's fee and retainer agreements were illegal and unethical under the state's rules of professional conduct for attorneys, according to the opinion. Cohen argued that attorneys are required to include language defining what unit of incremental billing the attorneys planned to use in retainer agreements, despite hourly rates and initial deposits being otherwise clearly defined.  The firm had been billing Cohen in increments of one-tenth of an hour, according to the opinion.

In its review of two retainer agreements between the firm and Cohen and the relevant rules and case law, the panel found "no rule as rigorous as the one defendants urge us to adopt" and reached the same conclusion as the trial court — the firm's legal fees were reasonably presented and agreed to by the parties.

"The fees awarded here were based upon a reasonable hourly rate, as determined by the trial judge, who made detailed findings regarding the type of matter involved, the rates charged by other New Jersey attorneys possessing similar experience in like matters, and regional considerations regarding the amount billed," Judge Maritza Berdote Byrne wrote for the panel.  The panel also found Cohen's argument that he was not aware of the firm's incremental billing was not supported by the record in the case.

"Further, based upon the parties' course of dealing, where defendants availed themselves of AMG's legal services for more than two years without objecting to any invoices or raising the incremental billing issue, defendants' claim suggests an improper motive," Judge Berdote Byrne wrote.

Arbus Maybruch & Goode represented Cohen and his company for more than two years, starting in 2018, in a negligent construction suit as well as in a separate lawsuit against Cohen by a law firm seeking unpaid attorney fees, according to the appellate opinion.  In July 2020, the firm ended its representation of Cohen and a month later filed its breach of contract suit over the unpaid attorney fees.  According to the opinion, the first time Cohen argued that the agreements did not permit billing on an "incremental" basis was in its answer to the lawsuit, filed in Oct. 2020.

A recent Law 360 by Piper Hudspeth Blackburn, “CSX Hits Back at $14M Atty Fee Bid in Norfolk Southern Case,” reports that CSX Transportation Inc. has urged a Virginia federal judge not to award Norfolk Southern Railway Co. and a smaller railroad $14 million in attorney fees for beating back its antitrust claims, arguing that Virginia's state law does not allow it.  In a memorandum, CSX also said that no contractual provision between the parties allows an award for attorney fees as Virginia law requires, and the Sherman Act does not mandate that a defendant obtain a fee award for prevailing on a suit.

According to CSX, Virginia law mandates that successful claims be supported by "a statutory or contractual right" to attorney fees.  Therefore, if at all possible, the only claims Norfolk Southern and Norfolk & Portsmouth Belt Line Railroad Co. can seek are those related to their defense of CSX's injunctive-relief request under the Virginia's business conspiracy law, CSX added.

However, CSX also noted that the railway companies did not cite "a single decision" in the history of the Virginia statute "in which a court has awarded a prevailing defendant attorneys' fees."  The years-long litigation ended in April, when U.S. District Judge Mark S. Davis sided with Norfolk Southern and Belt Line and dismissed the suit, finding that CSX's claims were time-barred.

The companies filed separate motions on May 3 in an effort to get the court to order CSX to pay their court costs and attorney fees.  While Norfolk Southern estimates its costs and fees at around $11 million, the Belt Line put forth a much lower estimate of $3 million.  Belt Line argued that CSX must pay because Virginia law says prevailing defendants in a conspiracy case where plaintiffs requested injunctive relief are entitled to costs and attorney fees.

"Whether CSX sought money damages or injunctive relief, its core set of facts was identical for all claims, and therefore the Belt Line's entitlement to costs and attorneys' fees encompasses its efforts to overcome them all," the interchange railroad said.  However, CSX disagreed Wednesday, claiming that the statute does not mandate that losing plaintiffs pay attorney fees.  Instead, CSX said, the law requires only "a potential discretionary fee award for those fees specifically attributable to the state-conspiracy injunctive-relief remedy."

A recent Law 360 by Jeff Montgomery, “Chancery Oks $1B Dell Class Suit Deal; $285M Fee Pending,” reports that a record $1 billion settlement of a stockholder class suit that challenged a $23.9 billion Dell Technologies Inc. stock swap in 2018 won Delaware Court of Chancery approval, while a proposed $285 million class attorney fee got sidelined for further consideration.  Vice Chancellor J. Travis Laster described the deal — announced in November and the largest on record for the court — as the result of "a huge effort" on the part of class attorneys who battled through nearly 4½ years of litigation and racked up more than 53,000 attorney hours to reach the hearing.

Waiting at the hearing, however, were arguments by a large shareholder and a friend-of-the-court brief filed by law professors urging the court under some proposals to slash the fee by $100 million or more.  Pentwater Capital Management LP, which holds 1.6% of the shares at issue, argued that the 28.5% fee award would be excessive and urged the court to adopt a sliding, or diminishing, rate for mega-settlements.  A group of law professors also backed a declining scale, saying a $150 million fee would be defensible while keeping $135 million for stockholders.  "I do think the objectors have raised important points that I'm going to think about," the vice chancellor said after a 2½-hour hearing.

The class suit accused Dell and controlling investors Silver Lake Group and its affiliates of shortchanging regular shareholders by some $10.7 billion in a deal that converted Class V stock — created to finance much of Dell's $67 billion acquisition of EMC Technologies in 2016 — to common shares.

When the challenged conversion closed on December 28, 2018, VMware stock closed at $158.38 per share, and DVMT, or Class V, stockholders received just $104.27 per share because Dell's Class C stock had been overvalued.  "The simple fact is, defendants would not settle for a billion dollars unless there was a real, credible risk of much higher damages at trial," said David Cooper of Quinn Emanuel Urquhart & Sullivan LLP, counsel to the class, while explaining the decision to settle rather than pursue a much larger share of the stockholders' short-changing.

"There were an enormous number of obstacles, and this was very far from a typical case," Cooper said.  "In determining whether $1 billion is fair value for the class, whether it reflects positively on the performance of counsel, it simply did not make sense to look at $10.7 billion while ignoring risk" that there would be nothing recovered, as happens in many deal challenges.

Stephen B. Brauerman of Bayard PA, counsel to Pentwater, said it would be "credibility killing" to call the settlement unimpressive, but told the court there are concerns that the deal did not fully compensate the stockholder class for the potential $10.7 billion in damages.  "All were requesting the court to consider in its exercise of discretion" the potential for "adversely impacting the class, impacting substantially their recovery," Brauerman said.

Ned Weinberger of Labaton Sucharow LLP, also counsel to the class, told the vice chancellor that stockholder attorneys logged more than 53,000 hours on the case, with nearly $4.3 million in expenses, with the fee and expense award reflecting an implied hourly rate of about $5,268 per hour.  If the court is entertaining a size adjustment, Weinberger said, "we have already done it for you.  All of the precedents support a fee award on the eve of trial of 30% or more.  We sought only 28.5%," or a 5% reduction.

Anthony A. Rickey of Margrave Law LLC, counsel to the law professor group, advocated in part bringing Chancery Court litigation fees more in line with relatively lower payouts for large cases in U.S. District Court securities actions.  Rickey said a 15% fee would be more appropriate, providing a still large $150 million fee while earmarking another $135 million for shareholders.  "There is a considerable amount of decreased risk after motions to dismiss," Rickey said, "even in Chancery practice."

Vice Chancellor Laster said federal securities cases seldom go to trial and often settle after motions to dismiss.  "Why isn't that a fair distinction?" the vide chancellor said.  "It makes sense" in federal court, when there is similar work in each case "and people are benefiting from the size of the issuer rather than actual value added" in litigation.  In contrast, the vice chancellor said, the Dell counsel "had to litigate against the army of the excellent until they got to the verge of trial, where they had to settle."

A recent Law 360 by Elliot Weld, “Spanish IT Provider Asks Court to Confirm $14M Award,” reports that a spanish information technology provider Amadeus IT Group asked an Atlanta federal court to confirm an arbitration award it was granted by the International Chamber of Commerce against technology firm Ebix, saying the court should reject Ebix's arguments that the award improperly includes attorney fees.  Amadeus said that the inclusion of attorney fees in the award was the only argument Ebix had advanced to challenge it, and that both parties had agreed to be bound by the rules of the ICC.

"Ebix's sole basis for challenging the arbitration award is the arbitral tribunal's award of attorney fees," a memorandum by Amadeus reads.  "Contrary to Ebix's argument, the tribunal did not exceed its scope or authority."  According to Amadeus, the parties entered into a global agreement in October 2019 for Amadeus to provide Ebix's Indian subsidiary EbixCash with access to the Amadeus Travel Platform, a software interface it provides to its clients, in the Asia-Pacific region.  As part of that agreement, Amadeus paid EbixCash $15 million that was repayable if EbixCash failed to produce international airline bookings in certain volumes within time frames depicted in the agreement, according to Amadeus.

EbixCash failed to meet the required numbers and Amadeus terminated the agreement and sought repayment in April 2020, the company said.  The parties entered arbitration after they were "unable to reach an amicable resolution," according to the petition.  Ebix argued in a response April 18 that the tribunal's inclusion of costs and fees in the final award was beyond the scope of its power.  Amadeus responded that in the 2019 agreement between the two companies, ICC rules were included that permit a tribunal to award fees.  Ebix also waived its right to challenge the fees when it failed to raise the issue during arbitration, Amadeus said.

Eleventh Circuit precedent dictates that courts defer to the decisions of a tribunal when the scope of an arbitration is in dispute, Amadeus said.  "Ebix cannot point to a clause limiting Amadeus' ability to recover fees because no such clause exists," Amadeus argued.  At minimum, the remainder of the final $14 million award excluding the legal costs is not contested, and the court should confirm that even if it finds the tribunal exceeded its own authority, Amadeus said.

"Ebix is opposing confirmation of the award solely for purposes of delay," the motion reads.  "The final award was issued well over a year ago, and Ebix is disputing only the fees and costs portion of the award.  Yet Ebix has yet to pay anything on the final award, including the undisputed principal amount."

A recent Law 360 by Emily Sawicki, “Co. Held in Contempt For Failing To Pay $1M Atty Fee,” reports that a New Jersey federal judge has issued a contempt order against an India-based supplement company for failing to pay discovery misconduct fees and blocked its legal counsel from withdrawing, a year after the company was ordered to pay more than $1 million to opposing counsel following patent infringement claims dating back to 2015.  U.S. District Judge Robert B. Kugler found Prakruti Products Pvt. Ltd. in civil contempt, citing the $994,803.29 in discovery misconduct fees Prakruti still owed to Sabinsa Corp.

Judge Kugler issued an order on April 12 giving Prakruti until April 18 to issue payment.  As of oral argument on May 1, Prakruti had paid just $8,671 of what had been more than $1 million in outstanding fees toward Sabinsa, in order for the plaintiff to pay back $878,548.56 in ArentFox Schiff LLP law firm fees, $15,120 in "Indian-law counsel fees," $96,750.50 in Saiber LLC law firm fees and $13,035.23 in costs.

Judge Kugler ordered the clerk of the District of New Jersey's Camden Vicinage to enter default against Prakruti on Sabinsa's claim that Prakruti violated a 2015 settlement agreement between the two entities, and converted a summary judgment briefing, set to take place in May, into a briefing on Prakruti's default judgment.

In his order, Judge Kugler specified that, although Prakruti's attorneys, Gregory A. Krauss and James T. Wilson of Davidson Berquist Jackson & Gowdey LLP and Jason B. Lattimore of the Law Office of Jason B. Lattimore, would not be permitted to withdraw, "Prakruti's attorneys are not held jointly or severally liable with Prakruti for the remainder of the discovery misconduct fees."

The three had filed a motion to withdraw from their representation on April 14 and Lattimore provided reasoning in a letter dated April 25, saying, "a conflict of interest has arisen between Prakruti, on the one hand, and its current counsel, on the other," citing a pro se, ex parte letter entered into the docket by a Prakruti company director.  "It appears that Prakruti intends to shift blame for its current predicament from itself to its counsel for their supposed failure to provide 'proper representation,'" Lattimore wrote of the company's letter.

The fee amount itself was a point of contention, after then-U.S. Magistrate Judge Karen M. Williams calculated an initial award of about $879,724 to the ArentFox Schiff lawyers in November 2021, recalculated to $878,548 by U.S. Magistrate Judge Sharon A. King, in April 2022.  The award stems from an underlying patent infringement case brought by New Jersey-based Sabinsa, which claimed Prakruti was violating its patent by selling a turmeric supplement.

During a "contentious" discovery process, Judge Williams found that "Prakruti had withheld certain information from Sabinsa and also spoliated pertinent evidence," according to court documents.  The judge sanctioned Prakruti with an adverse inference, finding that Sabinsa's legal efforts to prove Prakruti's misconduct warranted an award of attorney fees against Prakruti.

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