A recent Las Vegas Review-Journal story by Taylor Avery, “Uber-Backed Proposal Would Cap Attorney Fees at 20%”, reports that rideshare company Uber is backing a proposal in Nevada to cap the percentage of fees an attorney can collect in civil cases.  The “Nevadans for Fair Recovery Act,” an initiative petition filed with the Secretary of State’s Office by a group of the same name, aims to ensure plaintiffs receive “their fair share” of awards or settlements in civil cases by capping attorneys’ fees at 20 percent.

Uber lobbyist Harry Hartfield said in a statement that the petition would bring “common sense reforms” to the state’s legal system.  “A system where billboard and television attorneys can afford to spend more than $100 million a year on advertisements and lobbying, while plaintiffs are left with barely half of their judgments, doesn’t benefit anyone except a small number of attorneys,” Hartfield said.  “Our hope is that this ballot measure can bring common sense reforms to the legal system, put victims first and potentially lower costs for all Nevadans.”The Retail Association of Nevada and Nevada Trucking Association are also supporting the measure. 

Major Las Vegas personal injury firms Dimopoulos Law, Adam S. Kutner Injury Attorneys and Naqvi Injury Law weren’t available for comment late Monday afternoon, but trial lawyer organization Nevada Justice Association President Jason Mills said Uber’s purpose for filing the petition is “embarrassingly transparent.”

“It’s more of Uber protecting itself,” Mills said. “This could make it harder for everyday folks in Nevada to get competent representation.”  “We protect Nevadans that can’t protect themselves from corporations like [Uber],” he said.

Under the proposal, attorneys would not be able to collect a contingency fee, or a percentage of the amount awarded in a civil case, greater than 20 percent of the award.  The cap would apply to all forms of awards, including settlements, arbitration, and judgements.  Currently, there’s no cap on how much attorneys can collect in contingency fees, except in certain circumstances.

The cap would apply to the awarded amount after legal fees have been deducted from the total amount, meaning attorneys will still be reimbursed for actual legal costs, including those incurred by hiring expert witnesses or conducting investigations.

Instead of being paid on an hourly basis, some lawyers are instead paid by contingency fees, meaning the amount they’re paid depends on how much they recover for the plaintiff.  Contingency fees aren’t allowed in criminal cases, but are common in personal injury cases.  Proponents of contingency fees say they improve access for plaintiffs who couldn’t otherwise afford an attorney and give attorneys an incentive to win cases for plaintiffs.

A recent Law.com story by Brad Kutner, “Attorney Push Back on Proposed Camp Lejeune Act Attorney Fee Cap,” reports that bipartisan efforts in both the House and Senate aim to add a cap to attorneys fees on lawsuits linked to exposure to toxic chemicals at a North Carolina marine base.  But attorneys who are already working with clients to get some of the $6.1 billion made available via legislation passed last summer say the suggested caps are unreasonably low and the market will better police the process. 

“Passing the Camp Lejeune Justice Act was an important step toward providing long denied justice for veterans, their families, and civilian workers,” said Rep. Jerry Nadler, D-New York, when he announced the Protect Access to Justice for Veterans Act earlier this year.  He said “bad actors” looking to take advantage of elderly vets were to blame for the bill. 

The Camp Lejeune Justice Act signed by President Joe Biden in August, nixed the statute of limitations on claims related to hazardous chemical and water exposure at the North Carolina marine base from the 1950s until the late 80s.  It defined the illnesses that can be covered and superseded the Feres doctrine, which would otherwise preclude suits from military personnel against the government.  But it also lacked any cap on attorneys fees, an issue that has stirred debate among lawyers as much as elected officials.  

Nadler’s effort would cap attorneys fees between 17 and 33%, depending on the services and timeline for completion of a claim.  Another effort sponsored by Republicans in the Senate, the Protect Camp Lejeune VETS Act, caps fees at 12 or 17%.  “In my eight years in the U.S. Senate, there are few issues I’ve been involved with that more desperately cry out for a just resolution,” said Sen. Dan Sullivan, R-Alaska, about his effort, which includes Minority Leader Mitch McConnell, R-Kentucky, among its co-sponsors.  

Efforts to limit fees were also submitted last fall after the act was signed, but they failed to gain traction before the end of the 117th Congress.  Now in the 118th congressional session, both bills have only been introduced, but that’s enough for lawyers working in the space to start speaking up.  “These are individual cases; every one is unique,” said Baird Mandalas Brockstedt Federico & Cardea partner Philip Federico in a phone interview, about the effort his firm has already put in for the clients he’s representing in Camp Lejeune claims.

But, as Federico and other attorneys pointed out, the individual nature of every claimant and the law’s language precluding class action claims will require a lot of work.  “We prepare as though we’re trying the cases,” said Beasley Allen principal Rhon Jones. His firm, along with vet disability firm Bergmann & Moore, are representing over 10,000 vets in claims under the act.  Many are still in the administrative process, and he’s still weighing his options for those who may now file suit. 

“There’s a lot of unknowns there.  We want to be prepared to represent our clients,” he said.  Notably the bill created an administrative process, managed by the U.S. Navy Judge Advocate General’s Corps, for vets to file claims with before going to court.  But as the six-month window for responses has come to an end for the earliest filers, the lawsuits have started steaming in.

According to a Court Listener search, at least 47 such suits have been filed in the U.S. District Court for the Eastern District of North Carolina, where all such complaints must be filed.  But the number of claims could skyrocket, with hundreds of thousands of people possibly impacted, as the administrative process has so far yielded only denials for the lawyers the National Law Journal spoke to. 

In a statement, Patricia Babb, public affairs officer for the Office of the Judge Advocate General of the Navy. said the office intaking claims was “closely monitoring the number of CLJA claims it receives each week, and also continually assessing its adjudication procedures.”  When asked whether any administrative claims had received payouts yet, she said no claims had “been fully adjudicated.”

As for concerns about resources to address the demand, a theory posited by Federico, Babb said the office was “taking appropriate actions to address staffing issues … when needed.”  Steven German, managing partner with Scout Law firm, has about 160 clients with Camp Lejeune claims. He’s among those who’ve yet to see an approved administrative claim.  But even before that administrative process starts, German said his firm is putting in work that requires reasonable compensation. 

“Lots of victims are dead, so you’re working with family members.  And it gets trickery when you get into the succession of the victim,” German said.  He also said finding medical records, some destroyed after 10 years, can be another challenge.  “It’s harder than people think, and these are the things that keep me up at night,” he said. 

German also argued that concerns about unreasonable attorneys fees are overblown.  Liens, hospital bills, Medicaid-owed funds and reimbursement claims such as workers’ compensation claims and veterans disability claims, can all get taken out from any settlement.  “The government gets all their money back,” he said.  “And the liens come off the top.” 

So what may start as a 40% fee on $60,000 win, $24,000, turns into $12,000 just as quickly.  “That’s a big haircut,” he said, also noting language in the bill can cause attorneys to forfeit up to one-third in fees.. 

Federico also expressed concern about reportedly high fees: “My father was an attorney and he always said ‘don’t tell me what you made, tell me what you ended up with,’” he said. To that end he’s promised to cap his firm’s handling of these cases at 25%, but he called the GOP-led effort to cap fees well below that “grossly unfair.”

One solution Federico offered was court intervention via a mediation process.  Once the court starts taking in complaints, a judge can make a matrix for awards and injuries and start sorting claims.  “We don’t need to take a decade to have this play out,” he said of the alternative.  Jones, meanwhile, is hoping once suits start rolling the system will work itself out. With his thousands of clients, he’s got plenty of work to do..  “We are in the process of preparing a lot of lawsuits,” he said.

A recent Metropolitan News story, “FTC’s ‘Holder Rule’ Doesn’t Bar Attorney Fee Award” reports that the Federal Trade Commission’s “Holder Rule”—under which an assignee of a consumer credit contract cannot be held liable for a breach by the seller for more than what the purchaser has paid—does not preclude the award of attorney fees in excess of that amount under California’s “lemon law,” the California Supreme Court held.

Justice Goodwin H. Liu authored the opinion which affirms a Jan. 29, 2021 decision by Div. Five of this district’s Court of Appeal. Div. Five, in an opinion by Presiding Justice Laurence D. Rubin, upheld a $169,602 award of attorney fees against TD Auto Finance, LLC, declaring that “the Holder Rule does not limit the attorney fees that a plaintiff may recover from a creditor-assignee.”  Yesterday’s opinion resolves a conflict among the courts of appeal.

Under a provision of the Code of Federal Regulations, a consumer credit contract must include this notice: “Any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained pursuant hereto or with the proceeds hereof. Recovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder.”

The contract that Tania Pulliam signed when she purchased a used Nissan from HNL Automotive Inc. in Beverly Hills contained that language.  Dissatisfied with the vehicle she purchased, Pulliam sued HNL and the assignee of the contract, TD Auto Finance, under the Song-Beverly Consumer Warranty Act (the “lemon law”) and was awarded $21,957.25 in damages.  TD insisted that the award against it of attorney fees, under the act’s fee-shifting provision, was improper because Pulliam was entitled to nothing in excess of what she had paid under the credit contract.

Disagreeing, Liu wrote: “We conclude that the Holder Rule does not limit the award of attorney’s fees where, as here, a buyer seeks fees from a holder under a state prevailing party statute.  The Holder Rule’s limitation extends only to ‘recovery hereunder.’  This caps fees only where a debtor asserts a claim for fees against a seller and the claim is extended to lie against a holder by virtue of the Holder Rule.  Where state law provides for recovery of fees from a holder, the Rule’s history and purpose as well as the Federal Trade Commission’s repeated commentary make clear that nothing in the Rule limits the application of that law.”

Before the FTC enacted its rule in 1975, Liu recited, a consumer was liable to the holder in due course of a note even for goods that were not delivered.  The rule places the holder in the shoes of the seller, subjecting it to all claims against, and defenses available to, the seller, limiting damages against the seller, and consequently against the assignee, he explained.  In formulating the rule, Liu said, “the FTC had damages in mind when limiting recovery under the Rule, and there is no indication that attorney’s fees were intended to be included within its scope.”

Attorney fees, in California, where awardable, are costs, not an element of damages, he noted.  The FTC, itself, has issued an advisory opinion declaring, “the Holder Rule does not limit recovery of attorneys’ fees and costs when state law authorizes awards against a holder,” Liu said.  The justice pointed out: “Were attorney’s fees part of the Holder Rule’s limit on recovery, the effective result for many, if not most, consumers would be the same as their options were under the holder in due course rule that the FTC sought to supplant.”

A recent Law 360 story by Mike Curley, “Feds Push Back On Bid For $1.9M Fees in GMO Salmon Suit” reports that the federal government has opposed a motion from environmental groups seeking $1.9 million in attorney fees and costs in a suit alleging the U.S. Food and Drug Administration wrongly approved the first genetically modified salmon for human consumption, saying the "excessive" fees request follows a "narrow" suit victory.  In an opposition brief, the government said the groups, led by the Institute for Fisheries Resources, saw limited success and repeated losses in the suit, prevailing narrowly on only three of the 14 claims, including losing all claims under the Food, Drug and Cosmetic Act.

That limited success should in turn limit the amount that the court awards in fees, according to the brief, and the government said if the court decides to award fees at all, they should be capped at $246,333.37, while expenses should max out at $1,135.91.  In particular, the government said, the groups should not be able to recover fees for their unsuccessful claims, such as the claims under the FDCA and the bulk of their claims under the National Environmental Policy Act.

The plaintiffs sued the FDA in March 2016, claiming the agency's groundbreaking 2015 approval of a genetically engineered salmon for human consumption poses unknown dangers to food, health and the environment.  AquaBounty used genetic material from a Pacific Chinook salmon and from another fish, the ocean pout, to create a line of fish that grow to full size in about half the standard time, according to court documents.  U.S. District Judge Vince Chhabria in November 2020 found the FDA should have looked deeper into regulating genetically modified salmon, saying the agency didn't meaningfully analyze what might happen to normal salmon if the genetically engineered salmon were able to establish a population in the wild.

The environmental groups asked for the $1.9 million in attorney fees in March, after a previous bid — seeking $2.9 million — was rejected in February.  In March's motion, the groups said they had cut down their billable hours to 3,190.6.  In the brief, the government further argued that the plaintiffs had used "unreasonable" hourly rates that go beyond the market standards in the attorneys' home markets by using the benchmark of San Francisco rates despite three out of four core counsel working out of Portland, Oregon and Seattle.

And the hours claimed are excessive, the government wrote, with the plaintiffs presenting vague time entries and block billing that make it impossible for the government defendants to figure out what hours apply to which claims.  In addition, the time sheets include hours that are not compensable, the government wrote, such as hours spent in separate regulatory proceedings, client solicitation, media activities and challenges to the FDA's deliberative processes.

In other cases, the attorneys' time sheets included duplicative time entries for overlapping efforts among multiple attorneys, resulting in excessive hours for which they should not be billed.  The government also challenged particular time entries linked to tasks that they say were well in excess of the actual time spent on those actions, such as 240 hours marked as being spent on a procedural motion that "did not necessitate so many hours."

Finally, the government argued that the plaintiffs should not be granted any fees under the Equal Access to Justice Act, which allows fees to be granted to the prevailing party unless the government shows its actions were substantially justified.  Both the FDA's approval decision and its conduct in the litigation were substantially justified, the government argued, saying the FDA had diligently examined AquaBounty's application and the U.S. Fish and Wildlife Service concurred with its determination.  That the government prevailed on the bulk of the claims in the suit is further evidence that its position was reasonable, according to the brief, and therefore no fees should be awarded under the EAJA.

A recent Metropolitan News story, “$260,000 Fee Award Proper Though Damages Were $2,500” reports that the Ninth U.S. Circuit Court of Appeals has affirmed an attorney fee award of nearly $260,000 in a case in which a prison inmate was awarded $2,500 based on ill-effects from a chemical grenade having accidentally been discharged, with fumes seeping into the area of the cells.  District Court Judge Haywood S. Gilliam Jr. of the Northern District of California made the award under California’s private attorney general statute, Code of Civil Procedure §1021.5, ruling that the statutory criteria were met, including a benefit to the public that overshadows the personal benefit to the prisoner, Daniel Manriquez.

The incident underlying Manriquez’s suit occurred on June 4, 2015.  According to allegations of the operative complaint, two employees at Pelican Bay State Prison, defendants Justin Vangilder and Juan Vasquez, while inside a control booth, were “horse playing” with a “military-grade” grenade which is “designed to quickly release oleoresin capsicum (‘OC’) into the air.”  One of them dropped the grenade, it went off, and the employees “opened the windows to the control booth, allowing a fog of OC to quickly fill the surrounding space.”

The inmate prevailed at trial and his lawyers sought an award of a fee in the amount of $467,425, arguing that the California Department of Corrections and Rehabilitation had “insisted on using this case as a ‘test case’ for prisoners who have been indirectly exposed to oleoresin capsicum,” had rejected reasonable settlement offers, and “forced Plaintiff to heavily litigate this case for going on three years now.”  Gilliam awarded $259,237.50.

 A three-judge panel—composed of Judge M. Margaret McKeown and Senior Judges A. Wallace Tashima and Sidney Thomas—upheld the award, saying that there was, as Gilliam found, a “significant benefit” conferred on the general public. Their memorandum opinion declares: “To be sure, the primary effect of Manriquez’s $2,500 judgment is arguably an enforcement of his personal interests against two correctional officers for an isolated incident, as there was no injunction or statewide policy changes.  But we hold that the district court did not clearly err* in its determination that Manriquez’s verdict has “larger implications” beyond his individual case. The district court explicitly took into consideration the fact that indirect exposure to chemical agents is not uncommon among inmates and that Defendants’ own witnesses testified at trial about the frequency with which chemical agents are used in prison facilities.  Moreover, the district court highlighted that there are approximately 95.000 men and women incarcerated in California, including approximately 1.900 inmates in Pelican Bay, where Manriquez was in custody.”

The Ninth Circuit judges also agreed with Gilliam that the public benefit transcends Manriquez’s personal interests, saying: “In the end, Manriquez was awarded a total of $2,500 while his counsel requested a total of $467,425 in attorneys’ fees for over 1,100 hours of work.  Had counsel not agreed to represent Manriquez on contingency, the value of the recovery for Manriquez’s pain and panic would not have justified the costs in litigating this case.  For the same reason—comparing the modest sum of the total damages to the attorneys’ fee requested—we agree with the district court that the interests of justice require the fees to not be paid out of Plaintiffs’ recovery.”

The defendants argued that even though Gilliam awarded less in fees than was sought, the amount is 84 times that allowed by the Prison Litigation Reform Act (“PLRA”).  The PLRA caps attorney fees 150 percent of any monetary which would mean a maximum award of $3,750.

The panel responded: “[T]he PLRA cannot be used as a basis to limit the attorneys’ fees granted under California Code of Civil Procedure § 1021.5.  In this case. Manriquez prevailed on both his state law negligence claim as well as his Eighth Amendment claim against Defendants.  The state law claim thus served as an independent basis for awarding attorneys’ fees, the amount of which is not governed or limited by the PLRA….Moreover, the district court is not required to apportion the work between Manriquez’s Eighth Amendment claim and his negligence claim because his claims are intertwined and based on the same common core of facts.”

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