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Category: Fee Jurisprudence

Attorneys Seek $11.5M in Fees in Veteran Home COVID Case

November 9, 2022

A recent Law 360 story by Chris Villani, “Attys Want $11M for $58M Vets’ Home COVID Outbreak Deal” reports that attorneys who led a class of veterans and their families to a nearly $58 million settlement with the state of Massachusetts following a deadly COVID-19 outbreak at a veterans' home asked a judge to approve their $11.5 million fee request.  Lawyers from the western Massachusetts firm of Lesser Newman Aleo & Nasser LLP told U.S. District Judge Mark G. Mastroianni that their fee request, which is unopposed by the commonwealth, is on the low end among similar settlements in the First Circuit.

The $11,512,500 request is just under 20% of the $57,912,500 legislative appropriation that covers veterans who became ill or died of COVID-19 at Holyoke Soldiers' Home between March 1, 2020, and June 23, 2020.  None of the 164 members of the settlement class have objected to the fee request, the lawyers said.  "Bringing a lawsuit of this nature is a daunting task," the memorandum states.  "It should be rewarded with a full attorney fee award, particularly in this case, where the requested fee is on the low end of the range of attorney fee awards recoveries in common fund class actions in the First Circuit and a full attorney fee award will not decrease the amounts to be received by the class members."

The settlement for the class members and the fee award were also negotiated separately in this case, the attorneys said, with just over $46 million set aside for the individual victims and their families.  Their awards, therefore, would not be reduced by the fee request, according to the memorandum.  The class lawyers also argued that awarding a lower fee could provide a disincentive for the commonwealth to settle future similar cases or take steps to prevent such tragedies from happening in the first place.  The fee award would also encourage lawyers to tackle tough cases when people are harmed by state action, the attorneys argued.

"In taking this case on, counsel was aware that the likelihood of prevailing at trial and actually recovering a judgment was, at best, difficult, [and] numerous other attorneys had declined to represent the veterans who had died of COVID-19 at the Holyoke Soldiers' Home," the document states.  "And, if the case went to trial, the firm would end up spending several million dollars' worth of billable hours, as well as incurring a minimum of $500,000 in expert fees."

Article: New Ruling Considers Hourly Rates in Chapter 11 Cases

November 8, 2022

A recent Law 360 article by Tyler Brown, Jason Harbour and Justin Paget of Hunton Andrews Kurth LLP, “How Ch. 11 Ruling Ends War Between National, Local Rates” reports on a recent ruling on hourly rates in Chapter 11 cases.  This article was posted with permission.  The article reads:

On Oct. 18, the U.S. Bankruptcy Court for the Eastern District of Virginia approved the professional fee applications in the Nordic Aviation Capital bankruptcy cases, including the rates of each of the professionals as appropriate market rates.  This settles any remaining uncertainty in how professionals' hourly rates will be considered for approval in bankruptcy courts in the district. In particular, the bankruptcy court noted that

[m]uch ink has since been spilled differentiating so-called "local" rates from "national" rates. The distinction is much ado about nothing.  The market for professional services cannot be predetermined by geography alone.

Instead of relying on geography alone, the bankruptcy court stated that

the plain language of the Bankruptcy Code directs the Court to consider the "customary compensation charged by comparably skilled practitioners in cases other than cases under [Title 11]."  The Court must, therefore, look at whether the rates charged are consistent with those set in the relevant market.

To determine the relevant market, the court noted that the market rate will be set for the most part by the amount clients are willing to pay for professional services.  The factors clients may consider in the selection process might include the reputation of the professional, the specialization of the professional, the need for the professional's experience and expertise, the stakes of the transaction and the time pressures of the engagement.

The court also stated that a good understanding of the relevant market in any given case could be gleaned from the rates of professionals other than those engaged by:

    The debtor;

    Debtor-in-possession financing budgets;

    Monthly operating reports of the debtor;

    Information required by the U.S. trustee program guidelines; and

    The checks and balances built into the fabric of the reorganization process to police the market.

The bankruptcy court also reiterated that the applicable factors for approving professional fee applications are those enumerated in Title 11 of the U.S. Code, Section 330(a)(3), and the Johnson factors.

Additionally, the bankruptcy court noted that in applying the Johnson factors, "it must heed the Fourth Circuit's admonition against per se rules beyond those legislatively mandated," noting that the court cannot "abdicate the equitable discretion granted to it by establishing rules of broad application which fail to take into account the facts of a particular case and the overall objectives of the bankruptcy system."[6]

After identifying the applicable legal standard, the bankruptcy court addressed the evidence that was relevant to the approval of the professional fee applications, including the rates of the professionals.  As the fee applications were uncontested, the court stated that it issued the memorandum opinion to provide guidance to practitioners on the facts they need to develop in support of fee applications filed in bankruptcy cases pending before that court.

In taking the unusual step of issuing a lengthy memorandum opinion for uncontested fee applications, the bankruptcy court put to rest what one commentator recently suggested was a war between national and local rates in the Eastern District of Virginia in mega Chapter 11 cases.  The issue arose in connection with the appeal of the plan confirmation order in the Mahwah Bergen Retail Group Inc. cases on unrelated grounds.

After vacating confirmation in that case, the U.S. District Court for the Eastern District of Virginia ordered that the bankruptcy court issue proposed findings of fact and conclusions of law on any further fee applications in the case and questioned whether attorney rates should exceed the prevailing market rates in the Richmond division of the Eastern District of Virginia.

The district court's order created uncertainty as to how the bankruptcy court might subsequently analyze the rates of professionals from outside the Richmond division.  That uncertainty was short-lived.  Importantly, the memorandum opinion represented one of the bankruptcy court's first opportunities to address professional fee applications in a large Chapter 11 case since the entry of the district court order adopting the bankruptcy court's report and recommendation in the Mahwah Bergen bankruptcy cases.

In the memorandum opinion and the bankruptcy court's report and recommendation, two bankruptcy judges from the Eastern District of Virginia have extensively detailed the legal precedent in the U.S. Court of Appeals for the Fourth Circuit and the appropriate factual predicates for approving market rates.

In sum, the memorandum opinion provides comfort to all practitioners, including those from outside the Eastern District of Virginia, that the appropriateness of attorney rates in cases filed in the district will continue to be assessed through application of the factors identified in Section 330(a)(3) and the Johnson factors on a case-by-case basis, without any additional requirements or per se rules.

Fourth Circuit Affirms Fee Award for Abortion Protestors

November 2, 2022

A recent Law 360 story by Hayley Fowler, “Abortion Protesters Keep Atty Fees in 4th Circ. Picketing Row,reports that the Fourth Circuit affirmed an attorney fee award for abortion protesters in a suit challenging the constitutionality of a North Carolina city's picketing ordinance, finding the sidewalk ministry had notched some semblance of a win in the parties' consent agreement.  In a published opinion, a three-judge panel said the consent decree allows Cities4Life Inc. to hand out pamphlets at an abortion clinic where they were previously banned from doing so, meaning the legal relationship between them and the city of Charlotte altered in such a way that Cities4Life was a "prevailing party" under the agreement.

The Fourth Circuit's decision allows the ministry to keep its $39,811 in attorney fees awarded by the district court.  "Contrary to the city's assertion at oral argument, this was no 'technical victory' — plaintiffs' previous inability to distribute literature to vehicles at the center was central to their claim," U.S. Circuit Judge Albert Diaz wrote.  "Thus, we hold that the consent judgment here granted plaintiffs 'some relief on the merits' sufficient to establish this prerequisite for fee shifting."

Cities4Life had accused Charlotte police in 2019 of enforcing the city's picketing ordinance too liberally outside an abortion clinic that the Fourth Circuit said "performs the most abortions in the southeastern United States," where anti-abortion volunteers were allegedly inundated with citations.

One of the activities under scrutiny involved protesters stepping into the road to give literature to patients visiting the clinic. Police said it was a safety hazard that violated a city ordinance barring disrupting, blocking, obstructing or otherwise interfering with traffic.  But Cities4Life had argued police were infringing on their volunteers' First Amendment rights.  The parties reached a consent decree 17 days before the case was set to go to trial in 2020, the Fourth Circuit said.

Under the agreement, Cities4Life could approach cars with some caveats and would be issued an initial warning instead of an immediate citation if any of those conditions were violated.  The parties did not, however, settle the issue of attorney fees, which was decided at a later date by the district court.  Cities4Life had sought more than $150,000 in fees, which the judge ultimately slashed by 75% to land at the $39,000 figure.

On appeal, Charlotte argued the agreement had been a "practical resolution." Counsel for the city specifically said during oral arguments that the consent decree went "out of its way" to dismiss all the ministry's claims with prejudice, which he argued was a win for Charlotte — not the other way around.  But the Fourth Circuit said dismissing the claims with prejudice is typical of parties wanting to "ward off future litigation" and is a "poor indicator" of which one prevailed.

The panel found the decree "easily passes" its four-part test for determining fee awards, saying the parties had reached a consent decree that grants Cities4Life some relief, materially alters their legal relationship and is enforceable by the court.  In doing so, the Fourth Circuit dismantled the city's claim that an admission of liability is necessary to award attorney fees, which wasn't present in the consent decree, saying such an admission is not always necessary because judges have a "special degree" of oversight.

California Challenges Fee Entitlement in Tribes’ Gaming Appeal

October 28, 2022

A recent Law 360 story by Caleb Symons, “California Rebuffs Tribes’ Bid for $1.1M Atty Fee in Gaming Appeal reports that California and its governor, Gavin Newsom, say five Native American tribes that earlier this year won a Ninth Circuit decision over their gaming negotiations with the state are not entitled to more than $1.1 million in attorney fees, since federal Indian law offers no such relief.  That dispute comes several months after the Ninth Circuit gave the five tribes — the Chicken Ranch Rancheria of Me-Wuk Indians, the Chemehuevi Indian Tribe, the Hopland Band of Pomo Indians, the Robinson Rancheria of Pomo Indians and the Blue Lake Rancheria of the Wiyot, Yurok and Hupa Indians — major leverage in their gaming negotiations.

In the wake of that decision, in which a panel of the appellate court prohibited California from adding to the tribes' new gaming compacts any regulatory topics not directly tied to gambling, tribal leaders have sought to recoup $1,130,679 they estimated spending on the litigation.  California fired back, saying the tribes are ineligible for that relief because the federal Indian Gaming Regulatory Act contains no provision for recovering such expenses.

Nor can the tribes turn to state civil procedure to recoup their attorney fees, Newsom and other state officials argued, since the case involved only questions of the federal Indian gaming law, not state law.  The Ninth Circuit has already determined — in the 2018 case Independent Living Center of Southern California Inc. v. Kent — that such claims are valid exclusively in litigation over state law, according to California.

"The tribes' attempt to expand Kent to permit state law attorneys' fees awards in federal court cases that do not adjudicate a state law claim remains wholly without support," the state said.  In their Sept. 26 motion, the five Native tribes said their request of $1.1 million in attorney fees was based on reduced rates and reflected a proper "lodestar" amount, defined as the product of the number of hours reasonably spent on the litigation and a reasonable hourly rate for the attorneys.

That calculation, on the high end, proposes $980 per hour for Lester J. Marston of Rapport and Marston, which represents all the tribes except the Blue Lake Rancheria.  At the low end, it proposes $300 per hour for Marston's son, a law clerk at the same firm.  But even if the tribes are, in fact, eligible to recoup such expenses, California and Newsom responded, the state is immune from furnishing those funds under the 11th Amendment of the U.S. Constitution.

California never waived its sovereign immunity in the litigation, the state added, calling the tribes "mistaken" for contending that it set aside its immunity under a statute that allows for lawsuits against the state that are related to the federal Indian gaming act.  That statute, known as Section 98005, allows for "good faith" litigation under the Indian gaming act but does not waive California's immunity to attorney fees, according to state officials.  "Because Section 98005 is silent on attorneys' fees, the statute does not 'unequivocally' waive the state's immunity to a claim for such fees," they said.

Delaware Court Wants More Info on Opioid Fee Award

October 26, 2022

A recent Law 360 story by Jeff Montgomery, “Del. Court Demands Info on $2.7M Atty Fee in Opioid Deal” reports that, citing unsatisfactory answers to questions about a flat, $2.7 million attorney fee payout request as part of Delaware's $100 million share of a nationwide opioid damage settlement, Delaware's chancellor cautioned she might sever the fee from the deal pending a fuller explanation.  In a letter to Cross & Simon LLC, Chancellor Kathaleen St. J. McCormick gave those seeking to wrap up the deal a choice between severing the fee award from the settlement for now or accepting a three-day deadline for briefs on the issue.

The chancellor said the request to direct the state's Prescription Opioid Distribution Commission to pay $2.7 million to unnamed outside attorneys "gave me pause for a few reasons."  Among the concerns, the chancellor said, is that "in analogous circumstances, this court exercises its own business judgment when approving attorneys' fees in representative litigation from a settlement fund."

At issue is Delaware's share of a $4 billion fund for state and local governments, carved out of an overall $26 billion settlement that, for Delaware, resolves investigations and litigation over the role that Johnson & Johnson and distributors Cardinal, McKesson and AmerisourceBergen played in creating and accelerating the opioid crisis.  Delaware Attorney General Kathleen Jennings announced the state's portion of the settlement in July 2021.  A complaint and final consent judgment were filed together in the Court of Chancery on Aug. 24, 2022.

Funds from the settlement will finance addiction treatment and prevention as well as other services and programs.  The agreement also mandates producer, distributor and health care reforms to prevent a recurrence of the crisis, including Johnson & Johnson's exit from opioid production.  Attorneys for Delaware told the chancellor that "court approval is not required," but said in a letter earlier this month that they are prepared to submit documents for a traditional court fee analysis if required.

Michael L. Vild of Cross & Simon said in a letter Oct. 13 that "this matter involves a two-party contract between the state and its counsel, unrelated to the state's agreement with the defendants.  There are no unrepresented or absent third parties."  That explanation, the chancellor said, "gave me pause."  Included in the overall settlement, the chancellor said, are provisions for establishment of an outside counsel fund, and statements in some parts of the settlement agreement say that payment of fees from the settlement fund is "disfavored."

A related agreement, "Remediating Opioids Across Delaware through State-Municipal Abatement Partnership," also discourages attorney fee payments from the settlement fund, the chancellor observed, adding that a multistep review and approval process is called for under some provisions.  "The parties effectively ask that I shortcut the statutory process for authorizing distributions by ordering the commission to distribute the $2.7 million to the state's outside counsel, without any opportunity for public comment or investigation by the commission, without any role of the consortium, and without the requisite approvals," the chancellor wrote.  "Maybe that is warranted and appropriate, but the parties did not expressly address this aspect of the relief requested."

Acknowledging concerns about delaying the payment, the chancellor suggested a three-day window for supplemental briefs on the issue or severing the fee provisions from the order, allowing the rest of the funds to go forward, pending a resolution on fee terms.