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Category: Defense Fees / Costs

Insurer Doesn’t Need to Cover Legal Fees in Dish Copyright Suits

December 22, 2021

A recent Reuters story by Barbara Grzincic, “Insurer Off the Hook for Legal Tab in Dish’s Copyright Battles,” reports that Dish Network Corp is stuck with the legal bills it ran up defending its Hopper and commercial-skipping “AutoHop” features in a four-year copyright battle with networks ABC, CBS, Fox and NBC, a federal appeals court held in a win for Ace American Insurance Co.  The 2nd U.S. Circuit Court of Appeals said Ace had no duty to defend Dish in the litigation because its policy clearly excluded coverage for copyright violations “committed by an insured whose business is ... broadcasting,” and under the “plain and ordinary meaning” of the term, broadcasting “is precisely the nature of Dish’s business.”

Dish’s legal team at Orrick, Herrington & Sutcliffe argued that regulatory and industry sources, including the Federal Communications Commission and the Federal Communications Act, do not consider it a “broadcaster” because users must buy a subscription and use special equipment to access its content.  However, “[i]f the parties had intended ‘broadcasting’ to take on a definition assigned by the FCC or the FCA, they could have easily pointed to those sources,” Circuit Judge Denny Chin wrote, joined by Circuit Judges John Walker Jr and Pierre Leval.

Adam Stein of Cozen O'Connor, who represented Ace along with Johnathan Hacker and others at O'Melveny & Myers, praised the court for its “straightforward” opinion.  The last of the suits settled in 2016.  Although none of the settlements required Dish to pay any money, the company then sued Ace in federal court in Manhattan to recover its legal fees.  The lower court ruled for Ace in 2019, adopting the reasoning of the 10th Circuit – the only other appeals court to have considered the question. Dish said the 10th Circuit had gotten it wrong.

Defense ‘Prevailing Party’ in DVPA Case Dropped by Plaintiff

October 9, 2021

A recent Metropolitan News story, “Defendant Was ‘Prevailing Party’ in Action Under DVPA Where Plaintiff Dropped Case,” reports that a judge erred in finding that a defendant was not the “prevailing party” in a civil action brought to impose a domestic violence restraining order on him, the Court of Appeal for this district has held, proclaiming that he did prevail even though the circumstances were that the plaintiff dismissed her petition after gaining such an order in a separate criminal proceeding.

But, Justice Anne H. Egerton of Div. Three said in an unpublished opinion, that does not mean that the order by Los Angeles Superior Court Judge Jonathan L. Rosenbloom denying an award of attorney fees to the defendant in the civil case need be reversed.  Such an award is discretionary, she noted, and, under Art, VI, §13 of the state Constitution, reversal is called for only where an error has resulted “in a miscarriage of justice” which, she declared, did not occur.

Burbank attorney David D. Diamond—a two-time unsuccessful candidate for the Los Angeles Superior Court who has announced his candidacy in the 2022 election—represented defendant Joshua Nathaniel Rivers in the trial court and on appeal. In seeking an award of $6,300 in attorney fees in favor of his client, sued by Marcia Bennett under the Domestic Violence Prevention Act (“DVPA”), Diamond said in an April 2, 2019 notice of motion that his client was “was compelled to respond to and defend a frivolous action,” and set forth in his memorandum of points and authorities: “Petitioners case was adjudicated in favor of Respondent. On November 20, 2018 the Petitioner asked for an additional hearing date to retain an attorney.  On December 10, 2018, the new hearing date, she failed to appear.”

He added in a declaration: “It is my belief that Petitioner should pay for the Respondent’s attorney’s fees because she [sic] is the prevailing party.”  In an opposing declaration dated May 29, 2019, Northridge attorney Bernal P. Ojeda (who also represented Bennett in the appeal) protested:

“The Respondent’s claim as a prevailing party is misleading.  Respondent at the present time has a four year criminal restraining order against him, not mentioned in the current motion….[T]his was the reason Petitioner did not appear for the hearing in the instant case. The criminal case is a related case and the criminal protective order should have been mentioned to this court but was not.  Given the fact that there is an existing restraining order against Respondent and protecting Petitioner, Respondent cannot claim he is a prevailing party nor can he have that status.”  (Los Angeles Superior Court Judge Peter Mirich granted the restraining order on Nov. 30, 2018, 10 days before the hearing at which Bennett did not appear.)

Ojeda said in his memorandum of points and authorities: “The criminal action now pending is a related case, involving the same parties, same incident and set of facts.”  The minute order of the June 4 hearing before Rosenbloom on the motion for attorney fees simply recites: “The Court finds Respondent is not the prevailing party.  “Motion Hearing re attorney fees is denied with prejudice.”

In her opinion upholding the outcome, Egerton said: “Rivers has not demonstrated the trial court’s erroneous prevailing party determination resulted in a miscarriage of justice….[B]ecause Rivers was the respondent on Bennett’s petition for a domestic violence restraining order, the trial court had discretion to deny his request for prevailing party attorney fees under [Family Code] section 6344, subdivision (a).”

She continued: “On the record before us, it is not reasonably probable that the court would have awarded Rivers the attorney fees he requested, even if the court had properly deemed him the prevailing party on the petition. And, based on this record, we cannot say the court’s denial of prevailing party attorney fees would have been an abuse of discretion.”  The judge went on to say: “And, given that Bennett dismissed her petition only after already obtaining the protection she sought under the DVPA, we cannot say the trial court’s denial of attorney fees on this ground would have been an abuse of discretion.”

Harvard Sues Insurer Over Attorney Fees

September 20, 2021

A recent Law 360 story by Eli Flesch, “Harvard Sues Insurer For Legal Fees in Affirmative Action Suit,” reports that Harvard University sued Zurich American Insurance Co. for excess coverage of costs it incurred fighting a lawsuit challenging its affirmative action policies, saying the insurer wrongly denied coverage on the basis that it didn't get a timely notice of the suit.  The Ivy League school told a Massachusetts federal court that Zurich was ducking its obligation under a $15 million excess insurance policy to pay for legal fees connected to allegations that it has engaged in illegal racial balancing to the detriment of Asian American applicants.  Harvard defeated the underlying suit in two lower courts but still faces a government investigation and a potential U.S. Supreme Court fight.

In an 11-page complaint, one of Harvard's governing boards told the court that it had already maxed out its $25 million coverage limit under its policy with AIG unit National Union Fire Insurance Co. of Pittsburgh.  The university said it would continue to accrue legal fees because of a pending U.S. Department of Justice inquiry and the writ of certiorari that could bring the Title VI allegations of discrimination to the Supreme Court.

Harvard said it provided notice to Zurich of its claim in May 2017, far before its coverage under the AIG policy had been exhausted.  Despite that, the university said, Zurich denied its claim in October 2017 on the basis of "purported" late notice.  The insurer told Harvard in several letters that it would have been entitled to coverage under the policy had timely notice been given, according to the complaint.

But Harvard argued that the Zurich policy, which carried much the same terms as the AIG policy, required the university to tender notice of the claim "as soon as practicable," which it did.  Moreover, Zurich personnel were well aware of the discrimination suit, the university said, pointing out the considerable media attention drawn by the allegations.  The university is seeking a declaration of coverage and a finding of breach of contract.

The underlying suit, brought by Students for Fair Admissions, claimed that Harvard violated Title VI of the Civil Rights Act.  The group lost its case in 2018 after a closely watched three-week bench trial, a finding that the First Circuit upheld in November.  In June, the U.S. Supreme Court signaled it might take up the landmark challenge to Harvard's affirmative action admissions policy when it invited President Joe Biden's administration to weigh in on whether the school's race-conscious system is legal.

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.

Small Law Firm Accused of Overbilling in Bribery Case

June 19, 2021

A recent Law 360 story by Kevin Penton, “Cognizant Says Firm Overbilled It In Ex-CLO’s Bribery Case,” reports that a small New York law firm is facing allegations that it overbilled Cognizant Technology Solutions Corp. for representing the technology consulting company's former chief legal officer in several underlying cases related to an alleged foreign bribery scheme.  Jeremy Bohrer and his namesake firm charged Cognizant $23.3 million for representing Steven Schwartz from January 2019 to last April, outpacing co-counsel Paul Weiss Rifkind Wharton & Garrison LLP's nearly $20 million bill for the same period, despite the smaller firm lacking expertise in white collar defense and having a total of four lawyers, according to the complaint by the company in the Southern District of New York.

The complaint says that Bohrer and his firm, Bohrer PLLC, charged Cognizant a 600% markup for document reviews conducted by contract attorneys, that the attorney hired vendors in which he has an ownership stake to work on the Schwartz cases without disclosing the conflict, and that Cognizant was charged millions of dollars for work that was either not performed as invoiced or that was performed at a fraction of the cost of what was billed, according to the complaint.

Cognizant told the court that it was contractually obligated to pay Bohrer and his firm after Schwartz retained them in July 2018 to work together with Paul Weiss — and later Gibbons PC — on several related matters connected to the alleged scheme.  But Cognizant has balked at the fees charged by Bohrer and his firm, noting that they are nearly double the $13 million that Jones Day and a smaller firm charged Cognizant for representing Gordon Coburn, the company's former president and Schwartz's co-defendant in the criminal proceeding.

"Defendants' conduct is unethical, unconscionable, criminal, and has caused Cognizant significant harm," the complaint read.  "Even though Cognizant was contractually required to advance fees and costs for Schwartz's defense, Bohrer and Bohrer PLLC took advantage of that obligation in the extreme."

Federal prosecutors in February 2019 accused Schwartz and Coburn of conspiracy and multiple Foreign Corrupt Practices Act violations for allegedly approving a $2 million bribe to secure a construction permit for the IT company's campus in Chennai, India, in 2014.

Cognizant wants the Southern District of New York to order Bohrer and his firm to repay all the money they have charged the company, according to Wednesday's complaint. The company is also seeking punitive damages, pre- and post-judgment interest, and its attorney fees and costs, according to the complaint.

In a statement, Bohrer blasted the legal action.  "This is a malicious lawsuit filled with outrageous and false allegations and represents another attempt to interfere with Mr. Schwartz's defense against a prosecution that should never have been brought," Bohrer said in a statement.  "Bohrer PLLC is honored to represent Steven Schwartz and will remain focused on his defense."