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Category: Fee Entitlement / Recoverability

First Circuit Deepens Circuit Split on SSA Fee Award Timing

November 3, 2022

A recent Law 360 story by Hayley Fowler, “Abortion Protesters Keep Atty Fees in 4th Circ. Picketing Row” reports that the First Circuit deepened a circuit divide on how long attorneys have to seek fees in district court after winning a Social Security Administration benefits dispute, adopting a "reasonable time" standard also used in the Tenth Circuit rather than a more rigid limit used in four other circuits.  The court affirmed a finding that the attorney in question waited too long under either approach to seek fees for successfully representing a client in a benefits dispute with the agency.

But in a matter of first impression for the circuit, the court said fee petitions brought under 42 USC § 406(b), for representation in court on disability benefits challenges must be brought within a reasonable time.  That puts the First and Tenth Circuits on one side of a divide opposite the Second, Third, Fifth and Eleventh circuits, which say such fee petitions must be brought within 14 days of judgment.

The problem with that 14-day time limit is that after a district court decides a benefits dispute, often the case is remanded to the agency for a benefits determination, making it impossible to know how much the client will recover and thus impossible to calculate a contingency fee, the court noted in an opinion written by Judge O. Rogeriee Thompson.  "In scanning the out-of-circuit precedent, we have observed that in practice, accomplishing justice in most § 406(b) cases seems to inevitably require some exercise of the district court's discretion and powers in equity," the court said.

Some of the circuits that follow the 14-day rule toll that deadline until the SSA makes a final benefits determination.  Others recognize the district court's power to grant discretionary relief from that strict deadline.  The First Circuit said it makes more sense to use the "reasonableness" standard applied to fee motions made under Federal Rule of Civil Procedure 60(b) – the rule for relief from a final judgment – rather than the 14-day time limit that comes from Federal Rule of Civil Procedure 54(d)(2), the rule for judgments that include attorney fees.

Attorney fees in disability benefits cases are not comparable to "loser pays" types of attorney fee awards typically addressed in motions for judgment under Rule 54(d)(2), the court said. Instead, the disability benefits statute allows for attorney fees of up to 25% of the awarded benefits, in what the First Circuit said "implies that the fees are awarded as a part of a district court's judgment for the claimant, rather than as a separate judgment allowing the party to recuperate costs underlying the action."  "Here it is clear to all parties that, in the event of success before the agency on remand, a subsequent amendment to the district court's judgment to award attorneys' fees is highly likely," the court said.

The dispute arose from Green & Greenberg's successful representation of a client in court and before the SSA who eventually was recognized to have a disability and awarded benefits.  The firm represented client Jose Pais on a contingency basis for 25% of his award.  After he won, the SSA set aside just over $29,000 for potential legal fees.  When the firm sought to collect its fees through the SSA, it claimed only about $7,000 for its work at the administrative level. During oral argument, the firm's David Spunzo told the court a paralegal mistakenly claimed 25% of the money available for fees, rather than 25% of the total award.

The SSA then several times notified the firm that it was continuing to retain about $22,000 from Pais's total award as the contingency fee.  By the time the firm sought the remaining amount of the available attorney fees for its work in court, 26 months after the SSA notified Pais of the benefits award, the district court determined it was too late.  The SSA did not take a position in the litigation on which approach to the timing of fee motions is correct, in-house counsel Timothy Bolen told the court during oral argument.  Bolen said the agency's role is to act as quasi-trustee for the claimant and reserve 25% of the award for potential payment of attorney fees, while the question of how much in fees to award is left to the district court.

Construction Firm Challenges Utah’s Attorney Fee Request

October 31, 2022

A recent Law 360 story by Caleb Symons, “Utah’s $100K Atty Fee Bid Excessive Construction Co. Says” reports that one of the federal contractors working on a Colorado gold mine when it ruptured in 2015 denies owing the state of Utah more than $100,000 in attorney fees for mishandling certain records, calling the request "unreasonable" because it avoided a harsher punishment for that infraction.  The sanctions dispute — part of multidistrict litigation over the Gold King Mine blowout, which released 3 million gallons of toxic waste — centers around Utah officials' claim that Harrison Western Construction Co. withheld documents detailing its construction plans at the mine.

U.S. District Judge William P. Johnson ruled earlier this year that Harrison Western must pay the state's attorney fees in those proceedings, but the company now seeks to substantially reduce an estimate of its obligation.  Noting that the judge declined to issue a more severe punishment, the Denver-based construction firm said last week that Utah should not be allowed to recoup its full legal bill after achieving only "relatively minimal success" on its March 7 sanctions request.

Rather than covering more than $100,000 in attorney fees — which includes Utah's estimate of future expenses in the ongoing spat — Harrison Western proposed paying the state less than $29,000 for those costs.  "Given Utah did not prevail on the two primary sanctions it sought, it should not be awarded fees on fees," the company said.  "At most, it should be awarded only one-third of the attorney fees and costs sought for preparation of its fee request, as it prevailed on only one of three sanctions sought."

State authorities asked Judge Johnson in early October to approve their $105,578 sanctions bill, claiming that Harrison Western "refused to participate in a good-faith effort to resolve this motion for an award of attorneys' fees without requiring judicial intervention."  The company responded that Utah is entitled to only a fraction of that sum because the judge had approved only the "least severe" of its sanction requests.

Moreover, the state's compensation formula — based on an hourly fee of $795 for partners and $550 for associates — is well above the typical rate in both New Mexico, where the MDL is located, and the Rocky Mountain region, according to Harrison Western.  Nor has Utah shared enough information about the hours worked by its King & Spalding LLP lawyers to prove an accurate accounting, the company added.

California Challenges Fee Entitlement in Tribes’ Gaming Appeal

October 28, 2022

A recent Law 360 story by Caleb Symons, “California Rebuffs Tribes’ Bid for $1.1M Atty Fee in Gaming Appeal reports that California and its governor, Gavin Newsom, say five Native American tribes that earlier this year won a Ninth Circuit decision over their gaming negotiations with the state are not entitled to more than $1.1 million in attorney fees, since federal Indian law offers no such relief.  That dispute comes several months after the Ninth Circuit gave the five tribes — the Chicken Ranch Rancheria of Me-Wuk Indians, the Chemehuevi Indian Tribe, the Hopland Band of Pomo Indians, the Robinson Rancheria of Pomo Indians and the Blue Lake Rancheria of the Wiyot, Yurok and Hupa Indians — major leverage in their gaming negotiations.

In the wake of that decision, in which a panel of the appellate court prohibited California from adding to the tribes' new gaming compacts any regulatory topics not directly tied to gambling, tribal leaders have sought to recoup $1,130,679 they estimated spending on the litigation.  California fired back, saying the tribes are ineligible for that relief because the federal Indian Gaming Regulatory Act contains no provision for recovering such expenses.

Nor can the tribes turn to state civil procedure to recoup their attorney fees, Newsom and other state officials argued, since the case involved only questions of the federal Indian gaming law, not state law.  The Ninth Circuit has already determined — in the 2018 case Independent Living Center of Southern California Inc. v. Kent — that such claims are valid exclusively in litigation over state law, according to California.

"The tribes' attempt to expand Kent to permit state law attorneys' fees awards in federal court cases that do not adjudicate a state law claim remains wholly without support," the state said.  In their Sept. 26 motion, the five Native tribes said their request of $1.1 million in attorney fees was based on reduced rates and reflected a proper "lodestar" amount, defined as the product of the number of hours reasonably spent on the litigation and a reasonable hourly rate for the attorneys.

That calculation, on the high end, proposes $980 per hour for Lester J. Marston of Rapport and Marston, which represents all the tribes except the Blue Lake Rancheria.  At the low end, it proposes $300 per hour for Marston's son, a law clerk at the same firm.  But even if the tribes are, in fact, eligible to recoup such expenses, California and Newsom responded, the state is immune from furnishing those funds under the 11th Amendment of the U.S. Constitution.

California never waived its sovereign immunity in the litigation, the state added, calling the tribes "mistaken" for contending that it set aside its immunity under a statute that allows for lawsuits against the state that are related to the federal Indian gaming act.  That statute, known as Section 98005, allows for "good faith" litigation under the Indian gaming act but does not waive California's immunity to attorney fees, according to state officials.  "Because Section 98005 is silent on attorneys' fees, the statute does not 'unequivocally' waive the state's immunity to a claim for such fees," they said.

Ford Challenges $550M Fee Request in $1.7B Verdict

October 27, 2022

A recent Law 360 story by Emily Johnson, “Ford Asks Judge to Punt $550M Fee Bid in $1.7B Crash Case” reports that, as the company challenges a record-shattering $1.7 billion punitive damage verdict in a lawsuit over a fatal truck crash, Ford Motor Co. has urged a Georgia state judge to deny as premature a request for at least $549 million in attorney fees being sought in the case.  Ford asked a Gwinnett County State Court judge to delay weighing the request for attorney fees until its post-trial motions in the case are considered.

Ford has requested a new trial on both liability and damages after a Georgia jury awarded $24 million in compensatory damages and $1.7 billion in punitive damages in August to the children of Voncile and Melvin Hill, who were crushed by the roof of their 2002 Ford Super Duty F-250 when it rolled over in a 2014 accident on a rural Georgia road.

The jury in the design defect case found Ford 70% to blame for the deaths, and assigned 30% of the blame to Pep Boys Manny Moe & Jack Inc. and three employees, who settled with the Hills' children in 2018. Kim and Adam Hill claimed the Pep Boys defendants placed the wrong tire on their parents' truck, causing it to lose control.

Following the verdict, the Hills' children went on to file a motion last month seeking anywhere from $549 million to $686 million in attorney fees, offering the court three options for calculating the amount, plus more than $500,000 in litigation costs.  But Ford argued that the possibility of the verdict being either reduced or overturned meant it was too soon to decide how much it should pay in fees.

"These motions could moot or materially impact resolution of the fee motion, and Ford will appeal the verdicts if its motions are denied," Ford said in its response to the fee motion.  "The court should therefore refrain from ruling on the fee motion until, at a minimum, it has resolved Ford's post-trial motions."

Whether or not the court opts to wait to consider the fee request, Ford said the Hills' attorneys weren't eligible for an award under Georgia law.  Ford argued that the Hills didn't recover a final judgment that was more than 125% of the $50 million settlement offer that Ford rejected to resolve the siblings' wrongful death claims prior to trial.  Ford said that the compensatory damage verdict on the pair's wrongful death claims, which included a $6 million award for Melvin Hill and $10 million for Voncile Hill, did not meet the threshold.

"Plaintiffs had to recover more than $62.5 million on their wrongful death claims (or $31.25 million for each decedent) to satisfy the statutory requirements," Ford said. "They did not."  Ford also said that the Hills' attorneys don't qualify for attorney fees because they have not given specifics on hours spent working on the case from the time Ford rejected the Hills' settlement offer to the time of final judgment.  "Plaintiffs improperly have relied solely on the contingency fee agreement rather than providing evidence of hours, rates or other objective indications of value," Ford said.

Ninth Circuit: Minimal Fee Award Upheld in ‘Abusive’ ADA Suits

October 25, 2022

A recent Law 360 story by Hanna Albarazi, “9th Circ. Slams ‘Abusive’ ADA Suits in Upholding Atty Fee Cut” reports that a Ninth Circuit panel on upheld a decision to slash attorney fees in an Americans with Disabilities Act lawsuit over a lack of accessible parking, suggesting in a scathing published opinion that the suit amounted to "abusive ADA litigation" by a serial litigant.  The circuit panel held that a California federal judge had not abused his discretion in reducing the attorney fees in an open-and-shut case over a lack of accessible parking spaces at a Los Angeles County shopping center, but the panel also used its opinion as an opportunity to rail against a perceived blight caused by serial ADA plaintiffs.

"The ADA satisfied the need for meaningful legislation for the protection of individuals with disabilities; however, one of the unforeseen consequences of this statute was the widespread abuse taking form due to the actions of serial ADA plaintiffs," wrote U.S. Circuit Judge Milan D. Smith Jr., who penned the unanimous opinion.  Smith wrote that the ability to recover attorney fees in ADA cases "has given rise to a wave of 'get-money quick' lawsuits brought by a small number of professional, serial plaintiffs."

However, enforcement of the ADA falls on persons with disabilities.  As a result, disabilities rights advocates frequently contend that bringing suit against violators increases accessibility.  Plaintiff James Shayler, who has physical disabilities that make walking and standing difficult, sued property owner 1310 PCH LLC in California federal court in November 2020, claiming its property in Hermosa Beach was in violation of the ADA and California's Unruh Civil Rights Act.

Shayler's suit went largely uncontested, resulting in summary judgment in his favor on the ADA claim and an award of injunctive relief. The court, however, declined to exercise supplemental jurisdiction over the Unruh Act.  Shayler then moved for over $34,000 in attorney fees and costs.

But U.S. District Judge George H. Wu concluded that the hourly rates and the time spent by his attorneys on the case were unreasonable given that the nature of the legal work was routine and because there had been a lack of meaningful opposition by the defendant.  Judge Wu adopted a $300 per hour blended billing rate for the work performed by Shayler's four attorneys and reduced the overall fee total by 65%.  In September 2021, Judge Wu ultimately awarded just under $10,000 in attorney fees and costs to Shayler.

Shayler quickly appealed the award, arguing that the downward reduction was unjustified.  The appellate panel affirmed the lower court's ruling.  "Given the repetitive nature of high-frequency ADA litigation, there was nothing irrational about the district court's conclusions that, in effect, much of the work here could have been performed by junior associates or even paralegals, or that much of the motion practice in the case was superfluous," Judge Smith wrote.

Judge Smith said the district court's choice of a $300 per hour blended billing rate was largely based on its finding that this was "a run-of-the-mill repeat-player ADA case lacking in legal, factual, or procedural complexity."  The district court cited decisions determining that serial ADA litigation, such as Shayler's, does not involve particularly complex work justifying partner-level billing rates, the panel said.  "A hallmark of abusive ADA litigation is the use of form complaints containing a multitude of boilerplate allegations of varying merit," the panel wrote.