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Category: Fee Reduction

Block Billing Reduces Fee Award in Personal Injury Case

May 14, 2021

A recent Law 360 story by Mike Curley, “After ‘Block Billing’ and ‘Paper Dump,’, Attys Net Only $786K” reports that an Arizona federal judge has awarded $786,472 to attorneys representing a man who suffered additional injuries after a fall when his insurer delayed approving surgery, down from the requested $1.04 million as a result of "block billing," a "paper dump" and other failures in their request for fees.  U.S. District Judge Susan M. Brnovich also denied Greg Jarman's request for $74,000 in expenses from American Family Insurance Co. in its entirety, saying he failed to itemize the costs and the court will not "do the hard work for him" in separating out items like clothes for one attorney and a hotel room for another.

Jarman's request for fees comes after a jury in September awarded him $4.5 million over delays in care for injuries stemming from an on-the-job fall in 2015.  The court later reduced the verdict to $2.8 million.  Jarman, who had worked at electrical company Efficient Electric Inc. for more than 10 years before his injury, experienced a severe fall on July 25, 2015, according to court documents, and a couple of weeks later he went to the hospital and was diagnosed with a shoulder sprain and put on limited activity.  Jarman's neurologist on Oct. 6 of that year recommended cervical decompression surgery, after his orthopedic surgeon called his case "urgent."

American Family wanted its own doctor, Dr. John Beghin, to examine Jarman before approving the surgery, and he agreed on Nov. 5, 2015, that surgery was necessary.  The surgery was performed five days later, and Jarman said the delay caused cognitive injuries.  In the order, Judge Brnovich reduced the total fee for several reasons, starting with Jarman's failure to comply with court rules requiring his counsel to confer with American Family's on the fees before submitting his request.

While the judge did not accept American Family's argument that Jarman isn't entitled to fees at all, she did reduce them still further, saying that there is a particularly egregious case of block billing in this case, with one of the attorneys attributing hundreds of hours of work to single line items, leaving the court unable to determine how much time was spent on specific tasks.

The request also does not contain an affidavit as to the tasks that support staff at the firms took on during the case, so the court is unable to determine if the rates for their work are reasonable, the judge wrote, adding some entries from support staff are clerical in nature.  Jarman also failed to produce evidence that his attorneys' fee rates are reasonable, the judge wrote, further warranting a reduction to the fee.  The attorney fees request also includes entry for work done relating only to dismissed defendants, the judge added

3 Firms Give Up $1M in Fees in Purdue Bankruptcy

May 1, 2021

A recent Law 360 story by Justin Wise, “3 Firms Give Up $1M in Fees From Purdue Ch. 11,” reports that Skadden Arps Slate Meagher & Flom LLP, WilmerHale and Dechert LLP have agreed to a settlement with the U.S. Department of Justice to relinquish $1 million in fees earned in their representation of Purdue Pharma in its ongoing bankruptcy cases, after concerns were raised about the adequacy of the firms' disclosures.

The DOJ Trustee Program said that the firms failed to disclose a joint defense and common interest agreement between Purdue and the Sackler family, the company's owners, in their retention applications.  The agreement created obligations for the firms to the Sacklers in their defense of hundreds of lawsuits relating to Purdue's opioid sales, the DOJ said.  Purdue had invoked the agreement in an effort to avoid turning over documents to unsecured creditors reviewing debtors' conduct.  The settlement is subject to approval by the Bankruptcy Court for the Southern District of New York.

"These disclosure violations are particularly concerning because a central question in these cases has been the independence of Purdue from the Sackler families," Cliff White, director of the DOJ's Trustee Program, said in a statement.  "This agreement reflects the USTP's ongoing efforts to police law firms and other bankruptcy professionals who fail to disclose connections that may raise questions about their ability to perform their duties free of conflicts of interest."

Law firms are required under bankruptcy laws to disclose their connections to other parties who may have a stake in a case.  The three firms did not consider the common interest agreement to represent a "connection" requiring disclosure at the time of their applications, but agreed to the settlement to resolve a dispute with the U.S. Trustee, according to a court filing.  The U.S. Trustee first raised concerns about the firms' disclosures in early March.

The U.S. Trustee said it discovered no "evidence that the failure to disclose in this case was intentional or that there was an effort by any of the firms to mislead."  Under the settlement, Skadden, WilmerHale and Dechert will collectively reduce their pending or future fees by $1 million and file supplemental retention applications to reflect any agreements entered on behalf of debtors and other parties.

Ninth Circuit Bumps Up Hourly Rate in Labor Case

April 19, 2021

A recent Law 360 story by Lauren Berg, “9th Circ. Bumps Ore. Atty’s Hourly Fee Rate in Labor Case,” reports that a U.S. Department of Labor administrative law judge wrongly reduced an Oregon attorney's hourly rate by $100 while awarding attorney fees in a Longshore and Harbor Workers' Compensation Act case, the Ninth Circuit ruled, telling the Benefits Review Board to assign the case to another judge.

In a 35-page published opinion (pdf), the three-judge panel said the review board should not have upheld the administrative law judge's decision to knock down attorney Charles Robinowitz's fee rate from $450 per hour to $349.85 per hour, finding that the attorney had presented "substantial evidence" that his requested rate was in line with similar services by lawyers of comparable skill and experience.  Robinowitz provided supportive affidavits from other attorneys, the 2012 Oregon State Bar Survey reporting that Portland attorneys with more than 30 years of experience billed between $300 per hour and $400 per hour, and court decisions awarding him $425 per hour and $420 per hour for work performed in 2012, 2013 and 2014, according to the opinion.

The fee appeal comes after Ladonna E. Seachris in 2006 filed a claim for benefits under the LHWCA following the 2005 death of her husband, who was injured while working as a longshoreman in 1979, according to court filings.  An administrative law judge denied the claim in 2010 and Seachris appealed to the Benefits Review Board, which affirmed the judge's order.  Seachris appealed again to the Ninth Circuit, which remanded the case in 2013, and the administrative law judge ruled in her favor in 2016, according to court records.

Following that decision, Seachris' attorney Robinowitz filed for attorney fees for 109 hours at a rate of $450 per hour, as well as costs of $5,413.  The administrative law judge in 2017, however, allowed the attorney 98 hours at about $341 per hour, according to court filings.  The Benefits Review Board then affirmed the decision, but increased the hourly rate to $349.85 because of an inflation error.

Seachris and her attorney then appealed to the Ninth Circuit. Seachris' husband's former employer, Brady-Hamilton Stevedore Co., said Robinowitz should only get an hourly fee rate of $358, arguing that the administrative law judge correctly calculated the market rate using the 2012 Oregon State Bar Survey, according to court filings.

In its opinion, the appellate panel said the judge erred by rejecting Robinowitz's evidence of prevailing market rates as outdated, saying reliance on historical market conditions is appropriate when it is the most current information available.  The panel said the judge needs to treat the parties equally, finding that both parties, as well as the judge, relied on dated evidence.

Brady-Hamilton also relied on the 2012 OSB Survey, the panel said, and the judge herself relied on that same survey as the linchpin of her rate decision.  By the time her fee decision came out in January 2017, the 2011 rates in that 2012 survey were already six years old, according to the opinion.  "The ALJ nevertheless relied on the survey by adjusting the 2011 data for inflation — appropriately so," the panel said. "But the ALJ declined to make similar adjustments to Robinowitz's evidence."

"We see no reason why she should not have taken the same approach to Robinowitz's evidence, and it was [an] error not to do so," the panel added.  The administrative law judge also erred by rejecting Robinowitz's evidence from the 2012 OSB Survey and not taking into account the way the survey reported rates, the panel said.  The survey reported hourly rates charged by Portland attorneys based on their years of experience, irrespective of practice area, and based on their practice area, irrespective of experience, according to the opinion.

Robinowitz relied on the survey chart based on years of experience to calculate his hourly rate, but the judge rejected the evidence as being too "one-dimensional," according to the panel.  But then the judge relied on the other survey chart based on practice area to determine her rate, the panel said.

"Although the ALJ rejected Robinowitz's survey evidence as 'one dimensional,' she proceeded to base her rate determination on the equally one dimensional chart reporting rates by practice area," the panel said.  "Even assuming arguendo that rates based on practice area are more probative than rates based on years of experience, the latter rates are at least relevant."  The panel found that the judge and the review board committed legal error in determining Robinowitz's hourly rate and that the judge's rate decision isn't supported by substantial evidence, according to the opinion.

The panel remanded the case and told the review board to assign it to a different judge, finding that "the tone of the ALJ's decision and the manner in which the ALJ evaluated the evidence suggest that the ALJ may not be able to provide Robinowitz with a fair and impartial hearing on remand."

The panel also noted that the Oregon State Bar has published an updated survey, saying the 2017 survey reports that Portland attorneys with more than 30 years of experience charged a median rate of $425 per hour in 2016 and for attorneys in the 75th percentile, the average rate was $495 per hour.  "These updated rates, which the BRB should take into account on remand, provide further support for Robinowitz's requested rate," the panel said.

Ninth Circuit: $6M Fee Award Does Not Create ‘Windfall’

April 12, 2021

A recent Metropolitan News story, “$6 Million Attorney Fee Award Would Not Create ‘Windfall’,” reports that the Ninth U.S. Circuit Court of Appeals, in a 2-1 decision, has reversed an order for a $4 million payment to the attorneys for the plaintiffs in a class action against Experian Information Solutions, Inc., a consumer credit reporting company, that resulted in the creation of a $24 million settlement fund, holding that the District Court judge failed to adequately explain why he was departing from the standard 25 percent cut for the lawyers.  Signing the majority opinion were Ninth Circuit Judge Andrew D. Hurwitz and Sixth Circuit Judge Eugene E. Siler, sitting by designation. Judge Daniel P. Collins dissented.

The settlement was reached in a case that was initially dismissed with prejudice by the judge then handling it, Andrew J. Guilford of the Central District of California, now retired.  After the Ninth Circuit on May 17, 2019, reversed the dismissal, Guilford certified a class of about 100,000 persons whose credit histories were damaged by reports of unpaid debts to a loan company, although the debts were disputed and the company, which was facing possible criminal prosecutions, had gone out of business.

The defendant, headquartered in Orange County’s City of Costa Mesa, agreed to a settlement of the action brought against it by Demeta Reyes, a resident of Georgia, under the federal Fair Credit Reporting Act (“FCRA”).  Replacing Guilford as the judge presiding in the case was Stephen V. Wilson.  An award of 25 percent of the recovery—which would be $6 million—would give the lawyers a windfall, noting that the lodestar value of their services was $2,085,843.50.

To award them $6 million, he noted, would mean use of a multiplier of 2.88, while an award of $4 million would entail “a more reasonable lodestar multiplier of 1.92.”  “By any measure, class counsel was successful,” Hurwitz and Siler wrote in a memorandum opinion.  They quoted an expert witness as saying that the settlement’s “structure...is the FCRA gold standard,” with class members each receiving a check for at least $270 without having to make a claim.

“To reach that result, class counsel assumed significant risk,” the majority opinion says, noting that contingency representation stretched over a four-year period, counsel advanced more than $100,000 in costs and expenses, and other work had to be declined.  “Experian deleted more than 56,000 delinquent loan accounts after this litigation began,” the opinion notes.  “Before deletion, those delinquent accounts depressed class members’ credit scores.”

 It goes on to say: “The 16.67% fee award falls below the market rate fee award in FCRA class action settlements. And no windfall is apparent.  Assuming a 25% award, the lodestar crosscheck returns a multiplier of 2.88. Similar lodestars are routinely approved by this court.”

It adds: “The district court’s reliance on megafund and wage and hour cases to find a windfall for class counsel was somewhat inappropriate here.  First, megafund cases are usually those with settlements exceeding $100 million….Here, the settlement is about a quarter of that.  Megafunds are more often a reflection of class size than class counsel’s efforts….Moreover, the complexity of this case is similar to a wage and hour dispute the district court cited where a 2.87 lodestar multiplier was approved, but not the ‘ordinary wage-and-hour dispute’ that the district court also cited.”  The memorandum opinion does not expressly direct an award of $6 million, instead remanding “for further proceedings not inconsistent with this opinion.”

Collins said in his dissent: “The majority nonetheless concludes that the district court abused its discretion because the settlement here was under $100 million and because multipliers of 2.88 or more have been allowed in other cases….But the fact that we have upheld higher multipliers in some cases does not mean that district courts lack discretion to conclude that a lower multiplier would be more reasonable in a given case.  By essentially ordering the district court to allow this high multiplier, the majority usurps the discretion that we have said belongs to the district court.

“Because the district court had discretion to conclude that a benchmark award that was nearly three tunes the lodestar amount would be unreasonable, and that a smaller (but still generous) multiplier was more appropriate, the district court did not abuse its discretion by ordering a $4,000,000 fee.”  Guilford set forth Reyes’s factual contentions in his order certifying the class.

Ninth Circuit Doubles Fee Award in California Medicare Litigation

April 8, 2021

A recent Metropolitan News story, “Ninth Circuit Ups Attorney Fee Award Against California From $4 Million to $8.2 Million,” reports that the Ninth U.S. Circuit Court of Appeals has decided that a District Court judge, at the tail end of years-long litigation to bar slashes in California’s Medicare program, short-changed a law firm in her award of attorney fees by reducing its hours and declining to employ a multiplier, with the appeals panel declaring that the firm is entitled to nearly $8.2 million.

The action was brought in Los Angeles Superior Court on April 22, 2008, and the state removed it to the U.S. District Court for the Central District of California on May 19, 2008.  Plaintiffs are the Independent Living Center of Southern California, two branches of the Gray Panthers, and several pharmacies and pharmacists, along with individual Medicaid recipients.  “Litigation in this case spanned twelve years and included argument at every level of the federal courts,” the Ninth Circuit’s latest opinion in the case notes.

The case, which spawned a U.S. Supreme Court opinion in 2012, was settled in 2014.  District Court Judge Christina A. Snyder of the Central District of California ruled on July 6, 2015 that California Code of Civil Procedure §1021.5, the private attorney general statute, “cannot support an award of attorneys’ fees in this case”; the Ninth Circuit vacated her order and remanded on Nov. 21, 2018; on Jan. 24, 2020, Snyder awarded the Los Angeles law firm of Stanley L. Friedman $2,731,800, saying:

“This amount reflects the product of the $628/hour rate that the Court found to be a reasonable lodestar rate for the Friedman firm, and the 4.350 hours that the Court found to be a reasonable lodestar for the total number of hours spent by the Friedman firm litigating this case.”  The intervenors’ counsel did most of the work, she remarked, concluding: “The Friedman firm’s supporting role during the merits stage of this case simply does not support a fee enhancement.”

The Ninth U.S. Circuit Court disagreed.  “Here, the district court inadequately justified awarding Friedman only fifty percent of his requested hours, while awarding Intervenors’ counsel one hundred percent of theirs,” the opinion says.  It adds that in light of the usual factors militating in favor of a multiplier, “the need to ensure that, in the future, lawyers are not dissuaded from taking up claims that will benefit the public interest,” Snyder “erred by failing to apply a multiplier.”

The court, itself, set the amount the firm is to receive, saying: “Because of the district court’s thorough fact-finding, we are able to modify the attorney’s fees award on appeal, conserving judicial resources by avoiding the need to remand for further proceedings.  Pursuant to the foregoing, we hold that the Friedman Firm is entitled to payment for seventy-five percent of its billed hours, at the rates set forth by the district court.  We further hold that the Friedman Firm is entitled to a multiplier of 2.  The Friedman Firm billed 8.699 hours.  Seventy-five percent of this amount, multiplied by the hourly rate of $628 yields an award of $4,097.229.00.  With a multiplier of 2, the Friedman Firm is entitled to $8,194,458.00 pursuant to California Code of Civil Procedure § 1021.5.”