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Category: Fee Entitlement / Recoverability

CSX Responds to $14M Fee Request in Norfolk Southern Case

May 18, 2023

A recent Law 360 by Piper Hudspeth Blackburn, “CSX Hits Back at $14M Atty Fee Bid in Norfolk Southern Case,” reports that CSX Transportation Inc. has urged a Virginia federal judge not to award Norfolk Southern Railway Co. and a smaller railroad $14 million in attorney fees for beating back its antitrust claims, arguing that Virginia's state law does not allow it.  In a memorandum, CSX also said that no contractual provision between the parties allows an award for attorney fees as Virginia law requires, and the Sherman Act does not mandate that a defendant obtain a fee award for prevailing on a suit.

According to CSX, Virginia law mandates that successful claims be supported by "a statutory or contractual right" to attorney fees.  Therefore, if at all possible, the only claims Norfolk Southern and Norfolk & Portsmouth Belt Line Railroad Co. can seek are those related to their defense of CSX's injunctive-relief request under the Virginia's business conspiracy law, CSX added.

However, CSX also noted that the railway companies did not cite "a single decision" in the history of the Virginia statute "in which a court has awarded a prevailing defendant attorneys' fees."  The years-long litigation ended in April, when U.S. District Judge Mark S. Davis sided with Norfolk Southern and Belt Line and dismissed the suit, finding that CSX's claims were time-barred.

The companies filed separate motions on May 3 in an effort to get the court to order CSX to pay their court costs and attorney fees.  While Norfolk Southern estimates its costs and fees at around $11 million, the Belt Line put forth a much lower estimate of $3 million.  Belt Line argued that CSX must pay because Virginia law says prevailing defendants in a conspiracy case where plaintiffs requested injunctive relief are entitled to costs and attorney fees.

"Whether CSX sought money damages or injunctive relief, its core set of facts was identical for all claims, and therefore the Belt Line's entitlement to costs and attorneys' fees encompasses its efforts to overcome them all," the interchange railroad said.  However, CSX disagreed Wednesday, claiming that the statute does not mandate that losing plaintiffs pay attorney fees.  Instead, CSX said, the law requires only "a potential discretionary fee award for those fees specifically attributable to the state-conspiracy injunctive-relief remedy."

Federal Court Asked to Confirm Attorney Fees in Arbitration Award

May 12, 2023

A recent Law 360 by Elliot Weld, “Spanish IT Provider Asks Court to Confirm $14M Award,” reports that a spanish information technology provider Amadeus IT Group asked an Atlanta federal court to confirm an arbitration award it was granted by the International Chamber of Commerce against technology firm Ebix, saying the court should reject Ebix's arguments that the award improperly includes attorney fees.  Amadeus said that the inclusion of attorney fees in the award was the only argument Ebix had advanced to challenge it, and that both parties had agreed to be bound by the rules of the ICC.

"Ebix's sole basis for challenging the arbitration award is the arbitral tribunal's award of attorney fees," a memorandum by Amadeus reads.  "Contrary to Ebix's argument, the tribunal did not exceed its scope or authority."  According to Amadeus, the parties entered into a global agreement in October 2019 for Amadeus to provide Ebix's Indian subsidiary EbixCash with access to the Amadeus Travel Platform, a software interface it provides to its clients, in the Asia-Pacific region.  As part of that agreement, Amadeus paid EbixCash $15 million that was repayable if EbixCash failed to produce international airline bookings in certain volumes within time frames depicted in the agreement, according to Amadeus.

EbixCash failed to meet the required numbers and Amadeus terminated the agreement and sought repayment in April 2020, the company said.  The parties entered arbitration after they were "unable to reach an amicable resolution," according to the petition.  Ebix argued in a response April 18 that the tribunal's inclusion of costs and fees in the final award was beyond the scope of its power.  Amadeus responded that in the 2019 agreement between the two companies, ICC rules were included that permit a tribunal to award fees.  Ebix also waived its right to challenge the fees when it failed to raise the issue during arbitration, Amadeus said.

Eleventh Circuit precedent dictates that courts defer to the decisions of a tribunal when the scope of an arbitration is in dispute, Amadeus said.  "Ebix cannot point to a clause limiting Amadeus' ability to recover fees because no such clause exists," Amadeus argued.  At minimum, the remainder of the final $14 million award excluding the legal costs is not contested, and the court should confirm that even if it finds the tribunal exceeded its own authority, Amadeus said.

"Ebix is opposing confirmation of the award solely for purposes of delay," the motion reads.  "The final award was issued well over a year ago, and Ebix is disputing only the fees and costs portion of the award.  Yet Ebix has yet to pay anything on the final award, including the undisputed principal amount."

Eleventh Circuit: Insurer Doesn’t Have to Pay Attorney Fees in Dismissed Action

May 9, 2023

A recent Law 360 by Ganesh Setty, “11th Circ. Says No Attorney Fees for Cos. In Tossed Insurance Suit,” reports that a home builder and contractor accused of faulty stucco work can't seek attorney fees from their insurance company after a Florida federal court found the insurer lacked standing to litigate whether it had a duty to defend the companies, the Eleventh Circuit ruled.  Under the circuit's 1984 decision in Certain British Underwriters at Lloyds of London v. Jet Charter Serv. Inc. , statutory attorney fees are an element of damages and are therefore part of the merits of a case itself, U.S. Circuit Judge Elizabeth L. Branch wrote in the court's unpublished opinion.

Thus, when U.S. District Judge Timothy J. Corrigan tossed Southern-Owners Insurance Co.'s suit because it failed to meet the federal $75,000 amount-in-controversy threshold, the court lacked the subject-matter jurisdiction to hear any ensuing dispute over attorney fees, Judge Branch found. U.S. Circuit Judge Gerald Bard Tjoflat penned a separate concurrence, while U.S. Circuit Judge Britt C. Grant issued a dissent.

According to the decision, the dispute began in August 2013, when the home builder, Maronda Homes Inc. of Florida, sold a house to a couple who later complained of various construction defects related to the home's stucco installation. Maronda had hired JROD Plastering LLC to perform the installation, which held a commercial general liability policy with Southern-Owners that listed Maronda as an additional insured.

The insurer subsequently sued Maronda and JROD in Florida federal court seeking a declaration it had no coverage obligations over the alleged construction defects.  But Judge Corrigan dismissed the suit for lack of subject-matter jurisdiction, finding that the insurer failed to meet the $75,000 amount-in-controversy threshold for federal litigation.

Maronda and JROD sought attorney fees under the now-repealed Florida statute § 627.428, which allowed a court to award attorney fees to insureds who prevailed in coverage litigation against their insurer.  The district court further dismissed those motions, citing in part the Jet Charter decision.  In that case, the Eleventh Circuit ruled that "attorney's fees recovera[bl]e by statute are to be regarded as 'costs' only when made so by statute," and are otherwise "treated as an element of damages," according to excerpts included in Friday's decision.

Though the Eleventh Circuit in Prime Insurance Syndicate Inc. v. Soil Tech Distributors Inc. ruled the opposite way in 2008, finding that attorney fees are "collateral issues" within the court's purview even if the underlying case isn't, that decision was not published, Judge Branch noted.  And even if it were, circuit precedent holds that in the case of conflicting published panel decisions, the oldest one controls, she said.

"All in all, while some Florida courts have reached a different result than we did in Jet Charter, these decisions are too varied to constitute a definitive change in law," Judge Branch added in a footnote.  "As such, we decline to exercise our discretionary power to rewrite our circuit's precedent which means that we are bound to follow Jet Charter."

Attorney Fees Awarded in $8M Wrongful Incarceration Judgment

April 28, 2023

A recent Law.com by Riley Brennan, “Nearly $700K in Attorney Fees and Costs Awarded Following $8M Judgment in Wrongful Incarceration Case,” reports that, following an $8 million civil rights judgment his favor, a former Massachusetts prisoner and his Chicago-based counsel were awarded an additional $743,395.87 in attorney fees and costs.  U.S. District Judge Timothy S. Hillman of the District of Massachusetts partially granted and partially denied a former prisoner’s motion for attorney fees and costs, awarding the plaintiff $675,194.88 in fees and $68,200.99 in costs in an April 7 opinion.

The case originated from plaintiff Natale Cosenza’s Section 1983 action, which alleged constitutional claims against various defendants, including the city of Worcester and multiple Worcester police officers, “stemming from his conviction and 16-year incarceration for armed burglary.”

 A jury ultimately found two of the defendants—Kerry Hazelhurst and John Doherty—liable for violations of plaintiff’s civil rights and awarded $8 million in compensatory damages and $30,000 in punitive damages.  Cosenza then moved for the awarding of attorney fees and costs, with defendants arguing against the proposed rates, billing, hours, and costs.  Hillman determined that most of the billing was appropriate, with the majority of the plaintiff’s attorneys’ rates being reasonably allocated.  However, there were three exceptions.

According to Hillman, “three partners spent a significant amount of time drafting motions, work that is typically done by associates and reviewed by partners.  Those three partners will be reimbursed at the mid-level associate rate of $300 for those hours.  Similarly, work on the ministerial portions of fee petitions is reimbursed at a reasonable paralegal rate of $100 an hour.”

Further, Hillman determined from the three attorneys’ descriptions that “only one described their work as legal,” and thus only that attorney’s hours should be “reimbursed at the associate rate, as there are substantive legal issues raised in the fee petition.  The other attorneys will be reimbursed at a paralegal rate for those hours.”

Plaintiff’s also requested for reimbursement of the services of an investigator, which defendants argued against, finding “that there should be no reimbursement for the services of an investigator where the case ultimately turned on the evidentiary record from the original criminal case.”  However, the court didn’t agree.

According to Hillman, the defendants failed to cite any case law for their argument.  Additionally, it did not strike the court as “unreasonable to hire an investigator in a case where the plaintiff’s allegations were that the police lied and destroyed evidence, even if the plaintiff is unable to point to a specific piece of evidence the investigator discovered that was introduced at trial.”  Thus the court, in factoring the investigator’s travel costs to serve defendants and conduct her investigation, determined $100 an hour was a reasonable rate.

In terms of the plaintiff’s counsel’s hours, defendants argued that the case was severely overstaffed, and that two attorneys would have been sufficient.  According to the court, this assertion was on the theory that the case as the case was defended by two attorneys, two attorneys was sufficient for plaintiffs.

“First, reasonable staffing for bringing and prosecuting a civil rights case is not identical to reasonable staffing for defending a civil rights case.  Apart from the normal burden of proof the plaintiffs must shoulder, they must overcome qualified immunity and evidentiary hurdles. But more importantly, the defendants’ objection to facing down 11 opposing attorneys is misleading,” said Hillman.

Hillman disagreed with the defendants’ assertion, highlighting that five of the total eleven attorneys requested minimal hours.  The remaining attorneys, that requested substantial hours, “were split into pre-trial and trial teams of three attorneys each.  Thus, at any given time in the litigation, plaintiff had three counsel and defendants had two—given the structural differences noted above, not an unreasonable staffing discrepancy.”

A similar structure was set up amongst the counsel’s paralegals, leading the court to conclude that a reduction for overstaffing was not warranted.  The court also rejected the defendants’ argument “that because their counsel worked 536 hours between May 4, 2022, and February 13, 2023, and the plaintiff’s counsel worked 770 hours during that time period, the time spent by defendants’ counsel is reasonable and a 30% reduction is in order.”

“Defendants cite no case law to support this position, which would allow an across-the-board reduction for a discrepancy in hours that is not even reflective of the total time spent on the case nor, in the court’s view, particularly egregious,” said Hillman.  “The relevance of that time period is also unclear to this court.  This court does not find a reduction for overbilling warranted on that ground.”

Defendants’ assertion that the time spent “getting attorneys up-to-speed on the case or discussing and strategizing about the case are not billable and request a 10% reduction,” was also rejected by Hillman, who didn’t find the “conferencing” hours for such a complex case unreasonable.  However, the plaintiff’s request for a 50% increase for their success was rejected.  “This was an unusual case, but this court does not find it justifies an increase.  And while this court recognizes the skill of plaintiffs’ counsel, that is reflected in the lodestar,” said Hillman .

The court also rejected the defendants’ counterargument, that due to the plaintiff’s “mixed success,” a 50% decrease was appropriate.  The court rejected the defendants’ theory that a downward variance was appropriate as the plaintiff achieved “nominal success,” finding that an $8 million judgment wasn’t merely considered a “nominal” success.

“Still, the plaintiff’s losses along the way must be accounted for,” determined the court.  “The plaintiff’s counsel did not delineate what they were working on in their fee petition.  That means a blanket reduction is necessary if the claims are not severable.”

“The legal theories and facts in this litigation are neither wholly severable nor so overlapping that they are incapable of independent analysis,” Hillman continued.  “The failure to intervene and malicious prosecution legal theories, for instance, largely overlap factually and overlap to some extent legally with the conspiracy claims insofar as they are all somewhat parasitic on a due process violation.  The doctrine of qualified immunity permeated this litigation, and while this court analyzed it claim-by-claim, it would be difficult for plaintiff’s counsel to separate research done on the doctrine in that way.  That said, although the underlying alleged facts were all of a similar type—they all supported allegations that plaintiff’s conviction was the result of the bad actions of law enforcement—they were all distinct from each other.”

The court issued a 20% reduction for pretrial work and a 5% reduction for post-trial work, to account for the “minor losses” plaintiff suffered after summary judgment.  Thus, the plaintiff’s fees, after the 25% reduction, and after applying the local Worcester rates and reductions for mixed success and overbilling, is reduced from $1,766,002.50 to $675,194.88.

In regards to the plaintiff’s cost requests of $86,605.41 under 28 U.S.C. § 1920 and 42 U.S.C. § 1988, defendants objected “to costs on several broad grounds, requesting an 80% reduction” without citing any case law.

The court rejected “defendants’ across-the-board reduction,” examining their objections in turn.  The defendants pointed to what they described as plaintiffs counsel’s “remarkable” travel costs, including repeated flights “back and forth from Chicago, railway travel, hotel, car rental and other costs for client meetings, ‘investigation,’ and deposition preparation.”

According to the court, a Chicago law firm incurring travel costs to litigate in Worcester isn’t remarkable, but the “out-of-state law firms must justify out-of-state costs by showing that no similar in-state services exist.”

“Plaintiff’s counsel argues Loevy & Loevy is a specialized firm that specializes in wrongful incarceration cases, but this court finds that plaintiff could have found comparable representation in Boston,” Hillman said.  “Therefore, only travel costs from Boston to Worcester are justified.”  Therefore, Hillman said, a reduction of $15,858.06 in travel costs was appropriate.

The court also deducted $1,001.36 for the plaintiff’s counsel using a rental car for the week of the trial to go from their hotel to the courthouse, after concluding that “a taxi or ride-share service would cost an average of $40 a day, and so over a six-day trial transportation should have cost them $240.”

Costs were further reduced by $1,145, after defendants alleged that the deposition costs were duplicative, as plaintiffs had requested costs the recordings of depositions and the transcripts.  The court determined that for at least one of the witnesses the video deposition was shown at trial, and the costs of the other video recordings were deducted.  $400 in costs were deducted as not all of the plaintiff’s attorneys granted pro hac vice filed motions or argued in the court, in response to defendants objection to all ten of the attorneys receiving reimbursement for pro hac vice admission.

Thus, after “reducing out-of-state costs ($15,858.06), the car rental ($1,001.36), recordings of depositions ($1,145), and excessive pro hac vice applications ($400), this Court finds $68,200.99 in costs proper,” the plaintiff was awarded a total of $743,395.87 in fees and costs.

Insureds Can’t Recover Attorney Fees for Work on Their Own Behalf

April 27, 2023

A recent Business Insurance by Judy Greenwald, “Insureds Can’t Recover Attorney Fees for Work on Their Own Behalf,” reports that, under California law, insureds may not recover attorneys fees for work they performed on their own behalf, a federal appeals court ruled in affirming a lower court decision in Travelers Cos. Inc. units’ favor.

Kathleen March and Patrick Bright, a married couple who are both attorneys and owners of Walking U Ranch LLC  in New Cuyama, California, were involved in an underlying property dispute with a neighbor for which Travelers Cos. units had a duty to defend under the insureds’ primary and excess agribusiness policies, according to court papers in The Travelers Indemnity Co. of Connecticut; Travelers Casualty Insurance Co. of America v. Walking U Ranch LLC, Katheen P. March; Patrick Bright.

The U.S. District Court in Pasadena ruled in Travelers’ favor on the couple’s bad faith breach claim and request for attorneys fees.  A three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco affirmed the lower court ruling, saying, “Under California law … attorneys may not recover for work performed on behalf of themselves and another party with identical interests.”

Because Ms. March and Mr. Bright are married and Walking U Ranch’s sole owners, they “therefore all shared the same interest in the outcome of the underlying action.  “There is also no indication that March or Bright spent any extra time in the underlying action representing Walking U Ranch LLC rather than themselves,” the panel said in affirming the lower court’s summary judgment rejecting the bad faith claim.