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Category: Billing Practices

Judge Acted Arbitrarily in Setting ADA Attorney Fee Award

October 8, 2021

A recent Metropolitan News story, “Judge Acted Arbitrarily in Setting ADA Attorney Fee Award,” reports that a District Court judge, in setting an attorney fee award, acted arbitrarily in disregarding the services of three of five lawyers who represented the plaintff in securing a settlement of his action under the federal Americans With Disabilities Act and the state Unruh Act and by making a 10 percent deduction as a penalty for the law firm inflating its fees, the Ninth U.S. Circuit Court of Appeals held.

Its memorandum opinion comes in a case bought by the Center for Disability Access, a division of the San Diego law firm of Potter Handy LLP, on behalf of Antonio Fernandez, who is wheelchair-bound.  The center brings hundreds of ADA and Unruh actions each year, using a stable of plaintiffs, including Fernandez.  The appeal came in a case instituted in the U.S. District Court for the Central District of California against Roberta A. Torres, who owned real property in Whittier and against CBC Restaurant Corp., which operated the Corner Bakery Café on Torres’s property. The suit was brought over the height of the counter.

In making his award of attorney fees, Judge Fernando M. Olguin said in a July 14, 2020 order: “Despite many years of experience litigating the two claims in this case in virtually hundreds of cases, and a docket that reflects little, if any, litigation in this case, plaintiff seeks $15,762.50 for the work performed by five attorneys….Further, the cases filed by plaintiff include nearly identical complaints and subsequent filings.”  Olguin made note of three of the several ADA-based actions the center has recently brought in the Central District with Fernandez serving as the plaintiff.

The judge opined that the “assignment of so many experienced attorneys to such a simple case replete with boilerplate documents resulted in substantial task padding, duplication, over-conferencing, attorney stacking, and overall excessiveness,” declaring: “Given the simplicity of the case and ADA accessibility cases in general, the quick settlement and apparent lack of any contested litigation matters in this case, and the lack of any dispositive motions, no more than one partner and one associate was necessary to prosecute this case.  Thus, the court will reduce the fee award by cutting the fees for three of the five attorneys.”

He opted to take cognizance only the services of the lead attorrney, Christina “Chris” Carson, who was admitted to practice on Dec. 2, 2011, and Mark D. Potter, whose State Bar membership goes back to Dec. 1, 1993.

Potter sought recompense at an hourly rate of $595 and Carson wanted to be paid $450 an hour. Olguin said that taking into account the various factors customarily assessed in setting attorney fees, “$425 is reasonable for attorney Potter, and an hourly rate of $275 is reasonable for attorney Carson.”  Noting that there was a “quick settlement of this routine, non-complex case, where plaintiff did not file or oppose any dispositive motions,” Olguin declared that “the court will apply a ten percent reduction.”  After subtracting “10% of the time billed for general excessiveness,” he awarded $3,897 in attorney fees—slightly less than 25 percent of what was sought.  Olguin allowed the $642.50 in costs that were claimed.

Reversal came in an opinion signed by Circuit Judges Susan P. Graber and John B. Owens and by District Court Judge Charles R. Breyer of the Northern District of California, sitting by designation. The judges said: “While we agree with the district court that Fernandez’s lawyers overbilled, it was ‘arbitrary’ to ignore entirely the time billed by three of the five lawyers….These three appear to have performed at least some necessary work….To the extent that overstaffing resulted in inefficiencies, the district court should reduce the fee award in proportion to those inefficiencies, rather than Through a ‘shortcut.’ ”

The opinion continues: “The district court also abused its discretion in calculating the hours of the two attorneys whose work it considered.  The court provided cogent reasons for its specific cuts as to various tasks, but its final additional 10% reduction for ‘general excessiveness’ lacked any justification.”  Olguin did not abuse his discretion in setting the rates for Carson and Potter, the Ninth Circuit said, because they had nor provided evidence substantiating the higher value they ascribed to their services.

Gibson Dunn Under Fire for Billing Practices

September 23, 2021

A recent Law 360 story by Rose Krebs, “Gibson Dunn Under Fire For Billing in Landmark Theatres Suit,” reports that Gibson Dunn & Crutcher LLP and Ross Aronstam & Moritz LLP have been accused of problematic billing in a Delaware Chancery Court suit over a price adjustment dispute that followed the 2018 sale of Landmark Theatres to billionaire real estate developer's Charles S. Cohen's theatrical production and distribution company.

In a brief, Cohen Exhibition Company LLC told Vice Chancellor Paul A. Fioravanti Jr. that a request by Gibson Dunn and Ross Aronstam to have the buyer reimburse roughly $840,000 of the sellers' legal costs and expenses should be reduced by no less than about $396,000.  A lesser-than-sought amount should be awarded, in part, due to the firms' "failure to support the hourly billing rates" included in the fee motion, the brief says.

The sellers, Roma Landmark Theaters LLC and MCC Entertainment LLC, which are represented by the two law firms, told the court in August that buyer Cohen Exhibition Company should have to pay costs and expenses they incurred litigating a battle over post-closing adjustments that ended up being largely decided in their favor.

But Cohen raised issues with the billing.  "Both the Ross Aronstam and Gibson Dunn invoices contain significant redactions of time entries," Cohen said in Tuesday's filing.  "The redactions are particularly problematic insofar as they not only completely obscure the services performed ... but also because they even obscure the timekeeper and amount of time spent."  Cohen argues that due to the redacted information it is "completely impossible" for the court to assess the reasonableness of certain invoices.

The company also pointed to "excessively high charges for Westlaw research, in one month totaling over $20,000 alone" in Gibson Dunn's bills.  The online legal research service "offers attorneys a plan with unlimited access to Delaware cases, statutes, and briefs at a flat monthly fee," according to Cohen. Granting those fees would effectively mean Cohen paying for "Gibson Dunn's overhead in maintaining a legal research account with Westlaw," the company said.

Cohen additionally took aim at what it described as the "high hourly rates billed by the attorneys at Gibson Dunn."  "Here, plaintiffs' attorneys have not provided any proof as to what their customary billing rates are for comparable matters," the brief said, highlighting one rate of up to $1,645 per hour.  "Nor have they provided any evidence as to each attorney's background and years of experience to support the respective claimed rates."  Cohen also protested what it said was the firms' request for reimbursement for "preparing and litigating" an unsuccessful motion to dismiss counterclaims lodged by the buyer in the litigation.

Roma and MCC said in court papers that an arbitration decision went in their favor, entitling them "to receive nearly all of the escrowed funds." Thus, they argued they are entitled to reimbursement for costs and expenses, especially since alleged legal posturing by the buyer led to a delay in escrow funds being turned over.  The Chancery Court confirmed the arbitration decision and the seller plaintiffs were awarded roughly $2.6 million plus additional interest and other costs, according to the motion, which added, "The fee award sought here is fair and reasonable in light of these positive results."

Article: Eleventh Circuit’s New Standard for Attorney Fees in ADA Cases...at Gas Stations

September 3, 2021

A recent article by David Raizman and Paul J. De Boe, “Eleventh Circuit of Appeals Creates New Standard for Standing in Title III Cases Against Gas Stations,” reports on a recent ruling on ADA litigation in the Eleventh Circuit Court of Appeals.  This article was posted with permission.  The article reads:

For years, Scott Dinin was one of South Florida’s most prolific filers of Title III of the Americans with Disabilities Act (ADA) cases.  His run ended two years ago, when, after obtaining default judgments against two gas stations on behalf of his client, Alexander Johnson, Dinin submitted a request for attorneys’ fees whose billing entries caught the attention of Judge Paul Huck of the U.S. District Court for the Southern District of Florida.  Judge Huck’s investigation into the matter brought to light a systematic practice of filing frivolous claims, knowingly misrepresenting the time counted as billable, making misrepresentations to the court, and improperly sharing attorneys’ fees with clients.  In his August 2019 order awarding extensive sanctions, Judge Huck described Dinin’s and Johnson’s operation as “an illicit joint enterprise … to dishonestly line their pockets with attorney’s fees from hapless defendants under the sanctimonious guise of serving the interests of the disabled community.”

Judge Huck’s sanctions included:

dismissal with prejudice of Johnson’s ADA and Florida Civil Rights Act claims;

disgorgement of improperly obtained settlement funds from 26 “gas pump cases”;

additional penalties of $59,900 against Dinin and $6,000 against Johnson; and

an injunction preventing Johnson and Dinin “from filing any future ADA complaints without first obtaining the court’s written permission.”

Judge Huck’s order corroborated and confirmed the suspicions of many in South Florida’s business and legal communities about questionable practices of some plaintiffs and their lawyers in Title III access litigation.  Johnson and Dinin appealed, and on August 17, 2021, the Eleventh Circuit Court of Appeals dismissed Dinin’s appeal and affirmed the district court’s order imposing sanctions on Johnson.

The Eleventh Circuit Dilutes Standing Requirements

While the court’s affirmance of sanctions has drawn the most interest, practitioners may want to note the court’s holding regarding standing in Title III cases brought against gas stations and similar Title III defendants that are not “destination-type establishments like hotels, hospitals, or restaurants.”  The court held that standing could be established without showing a “definite intention to visit” the specific establishment “in the future,” as would be required if the defendant were a supermarket or a “destination-type establishment.”  The court reasoned that gas stations are “visited on an as-needed basis, often based on convenience, proximity, or price on a given day,” and “cars are mobile and must be serviced wherever they happen to be at the time gas is needed.”  Therefore, standing exists if “[Johnson] regularly travels in the vicinity of the particular gas station.”

As the concurring opinion pointed out, the majority opinion did not cite any support for “water[ing] down the constitutional minimum for standing.”  All the same, practitioners may want to take note of this important holding when defending cases brought against gas stations or non-destination-type establishments.

David Raizman is nationally known for his disability rights practice, specifically for his work under Title III of the Americans with Disabilities Act.  In 2012, he was recognized by the Los Angeles Daily Journal as one of the top labor and employment attorneys in California and has been recognized multiple times as a Southern California Super Lawyer.

Paul De Boe is an associate attorney in the Miami office of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.  His practice focuses in the area of employment litigation including claims of discrimination, harassment, retaliation, wage and hour, and family and medical leave law violations.  Mr. De Boe also counsels and defends clients in claims brought pursuant to Title III of the Americans with Disabilities Act involving brick and mortar locations as well as website accessibility, and state and federal consumer protection laws.

Insurer Overpaid Policyholder’s Attorney Fees, Judge Finds

August 25, 2021

A recent Law 360 story by Daphne Zhang, “Insurer Overpaid For Policyholder’s Legal Bills, Judge Finds,” reports that a New York federal judge said that an insurer's decision to stop paying a GoPro accessory maker's attorney fees was reasonable, finding the policyholder's defense counsel billed administrative work at partner rates and logged excessive working hours.  U.S. District Judge Mae D'Agostino denied 360Heros Inc.'s motion for summary judgment against Main Street America Assurance Co., saying the carrier's payment of more than $2 million in attorney fees fully satisfied its defense obligations.

The judge sided with Main Street in finding that 360Hero's defense counsel, Gauntlett & Associates, repeatedly charged "unreasonable and excessive" legal fees in an underlying patent infringement suit with GoPro.  The camera company sued 360Heros alleging the harness maker used its copyrighted pictures and infringed two of its trademarks.  The suit was settled in May 2018. 360Heros sued Main Street in 2017 after the insurer stopped paying for its defense costs.

"Based on Gauntlett's repeated practice of billing excessive, redundant or otherwise unnecessary hours the court finds that a 15% reduction in Gauntlett's fees is warranted," the judge said.  According to the order, a Main Street attorney found in 2017 that the insurer overpaid for defense costs after retroactively reviewing the payment history.  Main Street subsequently stopped paying the policyholder's legal bills, which 360Hero claimed violated its insurance policy.  "The amount of unpaid fees is significantly less than the amount that the court finds were reasonably expended," Judge D'Agostino found, saying that Main Street was fully entitled not to pay because the defense counsel overcharged on legal bills.

Some of Gauntlett's invoices were billed without any tasks designated to a paralegal, the judge pointed out, and the firm repeatedly charged administrative work at partner rates. Gauntlett also charged full rates for travel, which should have been billed at half of their hourly rates, Judge D'Agostino said.  "For travel to a one-day out-of-town settlement conference, [one Gauntlett attorney] billed for $418.48 in meals," she said.

Eighth Circuit Tosses $1 FLSA Attorney Fee Award

August 19, 2021

A recent Law 360 story by Max Kutner, “8th Circ. Axes $1 Atty Fee Award in FLSA Case”, reports that counsel for workers who settled overtime claims against a pipe manufacturer are set to get more attorney fees after the Eighth Circuit ruled that an Arkansas federal court's award of a single dollar was wrong, finding the judge hadn't made the required calculations.  In its opinion, a split three-judge panel vacated the fees award and remanded the Fair Labor Standards Act case against Welspun Pipes Inc. and related entities, saying that regardless of any concerns about attorney conduct, the lower court hadn't done necessary calculations when slashing the requested $96,000 to $1.

The lower court hadn't calculated the lodestar, which is the number of hours counsel worked times the prevailing hourly rate, the majority said.  The lower court had properly determined the prevailing rate at the attorneys' firm, but it hadn't multiplied the rate by the reasonable number of hours worked, the judges said.  "Without any reference to the lodestar amount, the district court said it awarded $1 because it could not award any less," the majority said.  "Without a supporting rationale based on the lodestar calculation and reduction, this was [an] error."

Under circuit precedent, a district court must calculate the lodestar in an FLSA settlement, the majority said.  When the lodestar is determined, "it is unlikely that a $1 attorneys' fee is reasonable," given that the counsel obtained a nearly $270,000 payout for the workers, the judges said.  Even the $25,000 fee award the lower court said it would approve if the $1 amount was shot down on appeal was not based on a lodestar calculation, the majority said.  The opinion added that any reduction to the award because of a party's conduct should come after the court determines the lodestar.

But the majority pushed back against the workers' argument that the district judge had also wrongly denied an earlier settlement motion on the grounds that the parties had not negotiated the wage claim settlement and attorney fees separately.  The lower court had said circuit precedent required the separate negotiations.  "There is sufficient evidence in the record for the district court to have determined that the wage claim and the attorneys' fees were not separately negotiated," the majority said.  The opinion cited emails showing the parties at certain points discussed the amounts as a single lump sum, among other factors.

The panel also denied the workers' request to reassign the district judge, saying they hadn't shown the judge was incapable of determining appropriate attorney fees due to a clear bias against them.  In a dissenting opinion, U.S. Circuit Judge Steven M. Colloton said the lower court had been right to issue the $1 award due to attorney conduct when negotiating the wage claim amount and the fee amount.  The focus on the lodestar issue is "misplaced," Judge Colloton said. "The whole point of the district courts' order is that the lodestar amount of fees was immaterial on this record, because counsel's egregious conduct warranted an award of a de minimis fee, if any at all."

The dispute stems from a proposed class and collective action that workers Anthony Vines and Dominique Lewis filed in August 2018.  They alleged that Welspun shorted manufacturing plant workers on overtime pay by not factoring bonuses and other incentives into the rate calculations, in violation of the FLSA and Arkansas law.  The two sides reached a settlement in which Welspun agreed to pay $211,666 to an initial class and an additional amount to a subsequent class.  The company also agreed to pay Sanford Law Firm $89,000 in fees and costs for the first class and an additional fee for the second class.

But in September 2019, the district judge partly denied the request, saying the court couldn't determine whether the deal was reasonable because information was missing.  In March 2020, the parties filed a new agreement, under which the first class would still get $211,666, the second class would get $57,673 and counsel would get $96,000 in fees and costs.  But the judge again denied the request, saying that the parties had failed to negotiate the wage claim and attorney fees separately.  Then that May, the two sides asked for final approval for only the wage claim, and the judge granted it.

The parties then asked for the $96,000 in attorney fees.  But in June 2020, the judge awarded just $1, citing the firm's "incorrigible" billing practices, such as "random increases" in hourly rates and rates that seemed "arbitrary and … unreliable."