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Category: Fee / Rate Economics

Seventh Circuit Tosses $11M Attorney Fee Award

May 20, 2022

A recent Law 360 story by Hailey Konnath, “Seventh Circ. Throws Out $11M Fee Award For Bernstein Litowitz” reports that the Seventh Circuit vacated an $11 million fee award for Bernstein Litowitz Berger & Grossmann LLP's work on a $45 million settlement between waste disposal company Stericycle and its shareholders, finding that the district court "did not give sufficient weight" to points raised in a class member's objection.  The three-judge panel said the Illinois federal court overseeing the case should've more seriously considered evidence of related fee agreements, all the work that Bernstein Litowitz inherited from earlier litigation against Stericycle and the early stage at which the settlement was reached.

"The cumulative effect of these issues leads us to conclude that the district court's analysis did not sufficiently 'reflect the market-based approach for determining fee awards that is required by our precedent,'" the Seventh Circuit said.  The panel added, "We vacate the fee award and remand for a fresh determination more in line with what an ex ante agreement would have produced."

Objector Mark Petri appealed a 25% cut that Bernstein Litowitz got from representing investors claiming that Stericycle falsely inflated its financial results through fraudulent pricing.  In particular, Petri argued that the attorney fees were potentially inflated by a pay-to-play scheme and the case never proceeded past the motion-to-dismiss stage.

In the underlying case, lead plaintiffs Public Employees' Retirement System of Mississippi and the Arkansas Teacher Retirement System had pointed to briefing in a study conducted by Nera Economic Consulting.  According to that study, for securities class action cases that settled between 2014 and 2018 in amounts ranging from $25 million to $100 million, the median attorney fee award was 25%, like the share awarded to Bernstein Litowitz.

Bernstein Litowitz asked the court to approve its $11 million fee request in June 2019, and the court gave its blessing in May 2020.  But the Seventh Circuit said that the district court's analysis was incomplete.  Notably, the court didn't address a 2016 retention agreement between the firm and the Mississippi attorney general, under which Bernstein Litowitz was authorized to represent the Mississippi fund and seek a percentage of the recovery achieved for the class as compensation.  That percentage, however, was supposed to be limited to the percentage corresponding to the fund's estimated individual recovery, the panel said.

At oral argument, Bernstein Litowitz had said that the sliding scale structure outlined in that agreement only applies to the amount recovered by the fund itself, not to the total amount recovered by the class.  The Seventh Circuit said that interpretation is "improbable, arbitrary, unreasonable and not consistent with a class representative's fiduciary duty to class members."

Additionally, the district court's assessment of the risk of non-payment also didn't give sufficient weight to prior litigation involving Stericycle, litigation that substantially reduced the risk of non-payment, the panel said.  The court had found that the risk of non-payment was "substantial," but that earlier litigation demonstrating Stericycle's billing practices and other settlements signaled that class counsel was not actually taking on much risk, the Seventh Circuit said.

And on top of that, the court didn't properly consider just how early on in the litigation the case was settled, according to the decision.  At the very least, the district court should've considered whether the preliminary stage of the litigation warranted a reduction in the requested fee, it said.  The Seventh Circuit also remarked that it wasn't convinced the settlement was a good outcome for the class, but that neither Petri nor anyone else was challenging that.

Judge Calls Out Hourly Rate Gender Disparity in Fee Award

April 25, 2022

A recent Law 360 story by Matthew Santoni, “Judge Calls Out Atty Gender Pay Gap in $760K Fee Award reports that Console Mattiacci Law LLC will collect almost $765,000 in fees for winning a $2.3 million age-bias suit against AT&T Mobility Services, after a Pennsylvania federal judge slightly trimmed the firm's requested hours and rates but noted that a less-experienced female shareholder deserved the same hourly rate as her older male co-counsel.

U.S. Magistrate Judge Timothy R. Rice noted the legal industry's gender pay gap in his opinion awarding Laura Mattiacci and Susan Saint-Antoine the same $700-per-hour rate as firm founder Stephen Console for their work in securing a jury verdict for Alison Ray, saying they hadn't shown why the court should have awarded Console the requested $900 per hour and the others $730 per hour.

"Saint-Antoine and Mattiacci are entitled to the same rate as fellow shareholder, Console, who served solely as a consultant on the case.  Historically, women in law earn less than their male counterparts, a discrepancy that may reflect hidden bias.  Saint-Antoine's experience and expertise on several of the pre-trial motions was critical in allowing the case to move to trial and Mattiacci's courtroom skills were pivotal to Ray's successful verdict," Judge Rice wrote.  "Attorneys of comparable skill and ability merit equal compensation without regard to gender or age."

The court's order trimmed Ray's request for $847,945 in fees to $764,825 by cutting the lead attorneys' hourly rates to the top level recommended by Community Legal Services, and also by cutting out hours spent on unsuccessful motions and work representing Ray in another plaintiff's age-discrimination case against AT&T.  The court awarded nearly $39,000 for costs, which AT&T did not contest.  Ray, a former sales director at AT&T Mobility Services, won $2.3 million in December 2021 after a jury found the company's "Workplace 2020" restructuring plan targeted older employees as "surplus," cut their positions and forced them to apply for different jobs if they wanted to keep working. Ray was 49 when she was laid off.

AT&T challenged many of the hours that Console Mattiacci said it had put into the case, but the judge generally supported charging for most of the work the attorneys had put in.  Factual distinctions between Ray's case and those of other AT&T employees that the firm represented in other cases meant that attorneys didn't get to reuse parts of the other employees' complaints, or recycle arguments and hours spent on their motion for summary judgment, Judge Rice said.  The attorneys' work on "mock trial" versions of the opening and closing arguments were also justified, Judge Rice said, even if the practice versions were done by another attorney on the case and had come before motions for summary judgment that could have precluded the need for trial.

"Mock trial preparation is an indispensable part of litigation.  Sharpening advocacy skills in advance of trial is as important as effective legal research and writing.  One cannot exist without the other in a courtroom. ... This is often overlooked or underestimated in fee litigation," Judge Rice wrote.  Although Ray's team took a risk in conducting the mock trial that early, he wrote, it worked in their favor because they ultimately prevailed over AT&T's motion for summary judgment, making the trial preparation necessary.

He did cut out an hour spent by a fifth attorney at the mock arguments, and cut down Console's time charged for the arguments down to an hour and a half to be consistent with the other attorneys on the case. He made other cuts for time spent on motions for protective orders or class treatment that were unsuccessful.  The attorneys' requested hourly rates were higher than what was recommended by CLS for typical Philadelphia-area lawyers with their experience, and the affidavits they submitted to support their higher request didn't convince Judge Rice, he said.

"Although Ray contends that the rates requested by Console, Mattiacci, and Saint-Antoine are the same or less than the regular rates charged for their services in non-contingent matters, she fails to present any evidence showing that any client has willingly agreed to pay such rates," the judge wrote.  And although both Console and Saint-Antoine would be worth up to $700 per hour on the CLS' recommended scale, Judge Rice praised Mattiacci's work on the case and said she'd earned more than what her experience alone would indicate.

"Although Mattiacci has been practicing law for fewer years than Console and Saint-Antoine and would warrant a rate of $530.00 based on her experience according to the CLS fee schedule, she is entitled to the same $700.00 rate as her fellow shareholder and partner given her expertise and skill as a trial lawyer," he wrote.  "Her exceptional advocacy skills helped to persuade the jury to award a significant verdict for Ray in a complex case. ... Even though the CLS fee schedule serves as a useful guide on setting hourly rates, its reference to experience should not serve as a cap that precludes exceptionally talented trial lawyers from receiving fair compensation simply because of age or gender."

Philip Morris Tells Florida High Court Hourly Rates Too High in Case

March 3, 2022

A recent Law 360 story by Carolina Bolado, “Philip Morris Asks Fla. High Court To Take Up Fee Award Case” reports that Philip Morris is urging the Florida Supreme Court to take up its appeal of a $3.2 million fee award to an Engle progeny plaintiff, arguing that the court improperly used rates from more expensive markets to calculate the fee award rather than the prevailing market rate in Jacksonville, where the case was filed.  In a brief, Philip Morris USA Inc. said a First District Court of Appeal decision affirming the fee award for plaintiff Elaine Jordan conflicts with the Florida Supreme Court's 1985 ruling in Florida Patient's Compensation Fund v. Rowe, which says fee awards must be based on the prevailing market rate for attorneys in that community.

The First District reasoned that because Engle progeny cases are unique, the relevant legal community is the community of lawyers who try these cases in Jacksonville, no matter where their offices are located.  The Engle progeny cases stem from the landmark Engle class action against several tobacco companies that led to a $145 billion verdict.  The Florida Supreme Court decertified the class in 2006 and overturned the verdict but allowed class members to file individual suits relying on the jury's findings that include conclusions that smoking causes certain diseases and that tobacco companies hid smoking's dangers.

But Philip Morris said the uniqueness of Engle litigation does not justify a departure from established fee-setting principles.  The tobacco giant cited a dissent from First District Judge Bradford Thomas noting that Engle cases are easier to prove because of the preclusive effect of the original Engle jury's findings.

"If accepted, that logic would allow use of out-of-town rates in every case involving an out-of-town lawyer, given that the case is necessarily pending in the local jurisdiction," Philip Morris said.  "That would effectively eliminate the entire principle from Rowe that bars non-local rates, as the trial of a case always occurs in the location where the case is pending."

Attorney Defends Well-Earned Fee Request in Consumer Law Win

March 1, 2022

A recent Law 360 story by Matthew Santoni, “Atty Says Win’s Effect on Pa. Consumer Law Earned High Fee” reports that winning an appeal to the Supreme Court of Pennsylvania that expanded consumers' power to sue over deceptive business practices should have been worth the high end of a scale for attorney fees, a consumer protection lawyer told an appellate court in Pittsburgh.  Attorney Kenneth Behrend, whose February 2021 win for Gary and Mary Gregg established that a consumer didn't have to show fraud or negligence in order to prove an Unfair Trade Practices and Consumer Protection Law claim, told a Superior Court panel he'd shown his work was worth up to $700 per hour, given the time spent on the case, his experience and the impact of the ruling, but a judge had erroneously followed the defense's expert and awarded him $550 per hour.

"The trial court did decide that for an attorney as experienced as I am on consumer law cases ... the rate can be between $500 and $700 an hour," Behrend told the panel.  "If you're dealing with a decision that has changed the legal landscape, should that not be at the high end of the scale?"

Behrend was appealing an Allegheny County judge's award of attorney fees for his appellate work on Gregg v. Ameriprise Financial, which had been filed more than 20 years earlier over an Ameriprise agent who allegedly sold the Greggs insurance products that he made a commission on, but cost them significantly more.

While the Greggs could not prove fraud or negligence, the trial judge had said they had a valid unfair trade practices claim.  That set up appeals over whether deceptive business practices had to include an element of fraud, with a split Supreme Court eventually finding that the law's catchall provision meant that consumers didn't have to show an intent to deceive in order to sustain their claims.  The trial court had already awarded the Greggs more than $52,000 for their losses plus interest, and it had ordered Ameriprise to pay the Greggs' legal fees to Behrend and his co-counsel.

But when considering Behrend's petition for additional fees to account for the time spent on the Supreme Court appeal, the county judge said Behrend "did not adequately explain or justify the significant increase in the fees requested over a relatively short period of time since the last fee petition presented to this court in 2015," according to the trial court's April 2021 opinion.  Behrend had previously been awarded $400 per hour in fees, so the court's $550 per hour award increased that and went above what Ameriprise's expert recommended, but did not top out the $500-$700 scale that Behrend and his experts had presented.

Behrend argued to the Superior Court panel that winning his case before the state Supreme Court and setting a precedent expanding consumers' rights should have been worth more, noting that he'd been awarded $600 an hour for a different case against Ameriprise, and had taken both cases on contingency.  "If you end up being paid less than the highest rate ... what case does it take to get to the highest rate?" he asked the panel.  "It discourages experienced, skilled attorneys from taking fee-shifting cases."

Joshua Snyder of Babst Calland, representing Ameriprise, said Behrend had already gotten paid $192,000 in the 2015 fee award and could claim another $337,000 if he accepted the court's ruling.  But an attorney disagreeing with the rate the court set did not mean the judge had abused his discretion, which should be the standard the Superior Court should apply, Snyder said.

"The court considered all the arguments Mr. Behrend is making today," Snyder told the panel.  "There's no error of law.  The court applied the correct test; it just reached a conclusion Mr. Behrend is unhappy with ... As long as there's factual, record support, the abuse-of-discretion standard requires the decision to be affirmed."

Is Law School Relevant in Establishing Hourly Rates?

December 9, 2021

A recent Metropolitan News story, “Law School Attorney Attended Is Relevant to Fee Award,” reports that a judge was not off base in commenting at a hearing on the setting of attorney fees that a lawyer who graduated from Glendale College of Law did not rate the same hourly fee as one who earned a J.D. at Harvard or Yale, the Court of Appeal for this district held.  Santa Clara Superior Court Judge Audra Ibarra, sitting on assignment to Div. Seven, authored the opinion which was not certified for publication. 

It upholds Los Angeles Superior Court Judge William F. Fahey’s award of $320,000 in attorney fees to the plaintiff in an action under the Fair Employment and Housing Act, but reverses a $28,472 cost award because the judge mistakenly thought that recompense was available only for services of experts who were court appointed.  Of the $320,000, $200,000 was to compensate the plaintiff, James Herron, for services performed by Encino attorney Darryl M. Lucien. Herron recovered $200,000 in an action against the County of Los Angeles.

Lucien has set his hourly rate at $600; Fahey awarded fees at $500 an hour.  At the hearing on the motion, Fahey commented that attorneys “who went to Harvard or Yale typically are paid at a much higher level” than those who attended less prestigious institutions, saying that this “reflects, perhaps, an intelligence level beyond this court’s intelligence level and a dedication and a drive and a capability” that he does not “otherwise see with some other lawyers.”  (Fahey graduated from the law school at UCLA.)

Ibarra wrote: “But Herron takes the court’s comment out of context.  The court was comparing Lucien’s background and experience with other attorneys in the legal market as it was allowed to do.  The court explained, ‘Background, experience, number of years, approval by judges of those hourly rates, et cetera.  All of those are factors that this court has in mind.”  Fahey said in the order for fees: “In calculating the reasonable value of plaintiffs counsel’s services, the Court notes that it has resolved more than 100 fee motions in over 15 years….

“In this case, Lucien is a sole practitioner and is requesting $600 per hour.  However, he admits that no judge has ever approved this rate.  He graduated from Glendale University College of Law in 2002, but provides no information about his achievements there.  He conducted one misdemeanor trial while a clerk with the District Attorney’s office and 15 civil trials thereafter. He has spoken at three CLE seminars.  “This Court has seen and approved hourly rates of $400-550 for attorneys with Lucien’s background and trial experience.  Given Lucien’s pre-trial and trial skills, the Court concludes that a rate of $500/hour is reasonable.”

The judge made note that “plaintiff prevailed on only two claims and received only about 10% of the amount he sought from the jury” and his lawyers “grossly over-litigated this case prior to trial.”  Herron had sought $2,148,440 in fees based on $600 per hour for Lucien, $400 for Maximilian Lee, with a multiplier of two.  Fahey pared the number of hours as well as lowering the rate for Lucien.  The judge commented in a footnote: “Plaintiff Herron no doubt would be shocked and outraged if he was asked to pay over $2 million to his attorneys who managed to obtain a judgment of only $200,000.”

Ibarra found no abuse of discretion by Fahey, saying: “Although the trial court awarded Herron attorney fees for fewer hours than requested, we do not find the court abused its discretion based on the record before us.  Having presided over the entire case, including discovery disputes, the experienced court was well-positioned to determine if Herron’s attorneys overlitigated or padded their hours.”