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Category: Fee Reduction

Fifth Circuit Cuts $4.3M Fee Award in Defective Toilet Case

January 12, 2022

A recent Law 360 story by Jonathan Capriel, “5th Circ. Cuts $4.3M Atty Fee in Defective-Toilet Settlement,” reports that the Fifth Circuit has ordered a lower court to slash a $4.3 million attorney fees award in a class action settlement between Porcelana Corona De Mexico and consumers over defective toilet tanks, saying class counsel who "achieved little" can't receive pay for claims that did not pan out.  In a published split decision, the appeals court said that the Texas federal judge on the case abused his discretion by declining to wade into whether hours attorneys at Carpenter & Schumacher PC spent on litigating unsuccessful consumer claims could be lopped off the lodestar.

The original January 2017 lawsuit sought punitive damages against the Porcelana for consumers who bought six different toilet models made over nine years.  Class counsel succeeded on "only a fraction" of the original claims with several toilet types and model years dropped from the final settlement, said Circuit Judge Edith H. Jones, who wrote the opinion for the majority.

"To allow recovery on these unsuccessful claims would incentivize fishing expeditions into every tangentially related product after the discovery of a singular defective item," Judge Jones said.  "Instead, Class Counsel must shoulder the burden of proving that the hours submitted are for claims sharing a common core of facts."

The attorney award had already been reduced from the $12 million that counsel initially requested when the trial judge determined that attorneys did not earn a 2.9 times multiplier.  But the lower court allowed the $4.3 million lodestar to remain almost undisturbed.  At the time the lower court said that was because class counsels' efforts "did not prove fruitless."  But a majority on the panel took exception to this. The lawsuit resulted in two "much narrower" settlements, Judge Jones said.

The first settlement only covered two toilet models made in 2011 and promised replacement and installation reimbursements up to $300 and property damage reimbursements up to $4,000, but only for those to whom Porcelana had not already paid out.  The other settlement, which covered two other toilet models for owners in Texas, promised $300 payouts to those who needed their entire toilet replaced.  Class members otherwise received $35.

Judge Jones said the lower court can't assume that all class counsels' work on failed toilet claims could be considered related to the successful claims.  The district court must engage in a "proper lodestar calculation" and not rely on speculation, he said.  Furthermore, the lodestar must be proportionate to what was actually achieved in the lawsuit, which Judge Jones said the district court seems not to have done.

However, it is "practically impossible" to figure out which attorney hours were used to push claims for specific toilet models, Circuit Judge James E. Graves Jr. wrote in his dissent.  Because all claims relied on the same legal theory, the district court was correct to assume unsuccessful and successful claims were related enough to be counted together.

Judge Reduces Hourly Rates Citing Lack of Evidence

December 21, 2021

A recent Law 360 story by Nathan Hale, Judge Backs $30K in Fees for Alan Parsons’ Contempt Effort,” reports that a Florida federal magistrate recommended trimming an attorney's fee request from Grammy Award–winning music veteran Alan Parsons to just under $30,000 to cover costs he incurred obtaining a civil contempt finding against his former promoter in a trademark infringement lawsuit.

In a report and recommendation, U.S. Magistrate Judge Leslie R. Hoffman approved of most of the request filed by lawyers from three firms that worked on Parsons' claim that defendants John Regna and World Entertainment Associates of America Inc. violated a preliminary injunction in the case, but she said two out-of-state attorneys failed to support the nearly four-figure hourly rates they submitted.  "[N]o further information about these attorneys' experience or expertise is discussed, and plaintiffs submit no further evidence suggesting that the hourly rates sought for these attorneys are reasonable," she said.

Despite a lack of objection from the defense, Judge Hoffman recommended the court calculate the fees award for Jeff Goldman and Rod S. Berman of California-based Jeffer Mangels Butler & Marmaro LLP at a rate of $375 an hour — equal to what another attorney requested and what courts in the Middle District of Florida have granted in similar cases — rather than the $945 per hour and $995 per hour that they had respectively requested. 

She recommended to U.S. District Judge Roy B. Dalton Jr. that he award the full amounts of $24,030.50 requested by attorneys from O'Connell & Crispin Ackal PLLC and $5,137.50 requested by attorney Brian P. Deeb, whose fee was specifically cited by Judge Hoffman.  And she recommended the court reimburse Goldman and Berman $825 for the 2.2 hours of work they said they contributed, instead of the $2,109 they requested.

NJ Law Firm Loses Challenge to Attorney Fee Reduction

December 13, 2021

A recent Law360 story by Nick Muscavage, “NJ Firm Loses Fee Cut Challenge in Walmart Injury Case,” reports that the Englewood Cliffs, New Jersey-based Law Offices of Andrew Park PC has lost its bid for a larger cut of the fees from a personal injury case against Walmart, after failing to submit a certificate of services detailing the work the firm put into the case.  A New Jersey Appellate Division panel found that the lower court correctly allocated to the Park firm one-third of the $41,666.66 contingency fee, or about $13,888, that was earned in the underlying slip-and-fall case against Walmart, which settled for $125,000 in 2017.

The other two-thirds of the award, which equaled about $27,777, was also correctly awarded to the plaintiff's former counsel, the Fort Lee, New Jersey-based Jae Lee Law PC, the appellate panel found.  The trial court, according to the appellate panel, rightly followed the principles in La Mantia v. Durst, a 1989 New Jersey Appellate Division opinion that laid out the principles that judges must follow when allocating fee awards.

In La Mantia, the court instructed trial judges to review the following circumstances when determining fee awards: the length of time each firm spent on the case relative to the total amount of time expended to conclude the case, the quality of the representation, the result of each of the firms' efforts, the reason why the client changed attorneys, the viability of the claim at counsel transfer and the amount of recovery resulting from the underlying lawsuit.  "Here, the trial court properly recognized that the allocation of the fee should be based on the principles enunciated in La Mantia as we directed," the appellate panel wrote in its Dec. 10 opinion.

As a result, the ruling by the trial court resulted from "appropriate findings of fact and conclusions of law" under La Mantia, the appellate panel added.  Additionally, the appellate panel noted that the Park firm did not submit a certification of services with supporting documents detailing the time the firm spent on the case, which was essential to the court's decision.  An affidavit or certification of services is required when a firm is seeking a fee allocation, according to the appellate panel.

Class Counsel Earn $9.4M in Attorney Fees in Securities Action

December 8, 2021

A recent Law360 story by Clark Mindock, “Quinn Emanuel, Others Get $9.4M Atty Fee in Securities Suit,” reports that a Delaware federal judge has awarded $9.4 million in attorney fees to Quinn Emanuel and others representing energy management software company C3 Inc. in a shareholder suit alleging fraud in a stock-swap deal, trimming an originally requested amount.  U.S. District Judge Colm Connolly awarded the attorney fees after receiving recommendations from a special master overseeing the case who found just two out of five arguments raised by the investors against the award had merit.

The judge agreed with the special master that it was appropriate to trim $1 million from the original $10.1 million requested since the award for attorney fees shouldn't include fees related to litigated holdback claims.  Judge Connolly also determined that a further reduction of 3% was appropriate after the special master suggested the court consider whether block billing and redactions in the request were indicative of potential bad faith.  "I agree that defendants' block billing could obscure bad-faith expenditures related to the holdback claim," Judge Connolly said, before adding he was exercising his discretion to reduce the fee beyond the $1 million by 3%.

The C3 firms sought the fees after fending off a suit brought by investors accusing the company of securities fraud and breach of contract.  Seeking reimbursement for the attorney work, C3 said its lead counsel Quinn Emanuel Urquhart & Sullivan LLP billed 11,197 hours over five years, accounting for $9.7 million in fees.  Four other firms — Cooley LLP, Morris Nichols Arsht & Tunnell LLP, Potter Anderson & Corroon LLP and Parkowski Guerke & Swayze PA — accounted for another $400,000, they said.

In March, Judge Connolly rejected an initial attorney fee bid for the $10.1 million, saying an outside observer may need to review the matter.  He then punted the case to the special master who made the recommendations that have now been accepted by the court.

Judge May Not Base Fee Award On Previous Awarded Rates

November 8, 2021

A recent story by Metropolitan News, “Judge May Not Base Fee Award on Previous Awards to Firm,” reports that a judge must make a fresh determination in each case of whether attorney fees that are sought are in line with prevailing rates in the community, rather than comparing the amounts claimed with those awarded to the same law firm in other cases of the same nature, the Ninth U.S. Circuit Court of Appeals held.  Circumstances unique to that case must also be weighed, according to the memorandum opinion.  A three-judge panel—comprised of Ninth Circuit Judges Daniel Aaron Bress and Lawrence VanDyke, joined by Tenth Circuit Judge David M. Ebel, sitting by designation—reversed a $11,349 award in favor a client of the Center for Disability Access (“CDA”).  The amount sought was $20,459.

CDA—which files torrents of actions throughout the state under the federal Americans with Disabilities Act and Callifornia’s Unruh Civil Rights Act—is a division of the San Diego firm of Potter Handy, LLP.  The plaintiff, Brian Whitaker, according to defendants SMB Group and Yoon Jeong Row, has filed more than 1,100 for in the Central District of California since 2014 claiming disability discrimination.  In the present case, the Ninth Circuit declared, District Court Judge Michael W. Fitzgerald of the Central District made some reasonable downward adjustments in the amount awarded, but erred in relying on past awards in actions brought by CDA “instead of considering other evidence of the prevailing community rates.”

The opinion says: “We cannot discern that, in its explanation of why it reduced the hourly rates sought by CDA, the district court analyzed the complexity of the case, the type of work involved, rates for non-CDA lawyers of comparable skill in the relevant community, whether the legal work was performed by lawyers at the appropriate levels of seniority, or other relevant factors….  “It may be that the district court here considered the above factors and thus the hourly rates the district court applied were appropriate.  But we cannot make that determination on the current record.  Accordingly, the district court’s fee award is vacated and the case is remanded for review consistent with this memorandum.”

The appellate judges said Carter did justify his reduction in hours spent—including subtracting hours supposedly spent at a hearing that did not take place and on an unnecessary motion—and paring block-billed hours.  At oral argument on Aug. 8, Dennis J. Price II of Potter Handy argued that the lodestar system of calculating attorney fees—multiplying hours spent times the hourly rate—“is not advisor—it’s a mandatory system” that judges must use.  He alleged that Fitzgerald “effectively ignored these rules.”

The hourly rates that were sought ranged from $450 to $595.  Those awarded went from $350 to $425.  Bress questioned whether the rates that were set by the judge would have been supportable had Fitzgerald “put in more than he did in his order.”  Price responded that the evidence would not support the lower rates.  However, asked the same question by VanDyke, he said that if Fitzgerald had “done the leg work,” he “wouldn’t have any argument that the rate was incorrect,” later reverting to his original position that “the evidence doesn’t support” the rates that were set.  Janice Ryan Mazur of the El Cajon firm of Mazur & Mazur argued for SMB Group and Row.  She said Fitzgerald did apply the lodestar method, but then adjusted it downward.