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Category: Fees & Arbitration

Judge Denies Attorney Fees Over Lack of Billing Record

January 3, 2024

A recent Law 360 story by Matthew Santoni, “Pa. Judge Slices Investor’s Requested Attorney Fees”, reports that a Pennsylvania federal judge upheld an arbitrator's $258,000 judgment against an invention-marketing company, but declined to award the nearly $50,000 in additional attorney fees requested by the prevailing Texas-based inventor because his lawyers hadn't submitted billing records for the amount, which was nearly two-thirds of the fees they claimed in total.

U.S. District Judge Marilyn J. Horan reaffirmed an earlier order denying Davison Design & Development's bid to duck an arbitrator's award in favor of inventor Mario Scorza, but the day after a brief but contentious video hearing, the judge said Scorza's lawyers hadn't shown evidence supporting their request for fees and costs beyond the $17,837.83 they had billed through June.

"In the two months since this court scheduled this matter for hearing, Mr. Scorza's counsel provided no additional billing or time records beyond his conclusory reference to additional requested fees during his testimony at the January 2, 2024 hearing," Judge Horan wrote in her opinion.  "Such is not sufficient for Mr. Scorza to meet his burden for any additional fee award beyond $17,837.83."  Judge Horan entered a final judgment against Davison that included the original $258,000 award and arbitrator's fees, pre- and post-judgment interest, and the $17,837.83 she said was supported by the record.

Pittsburgh-based Davison had filed a lawsuit against Scorza in April, seeking to overturn the arbitration decision in his favor over the company's allegedly bungled refinement and patenting of his idea for a travel scale.  Davison said the arbitrator had improperly awarded Scorza attorney fees under the American Inventor's Protection Act and the Texas Regulation of Invention Development Services Act, even though Scorza had only sought those fees under the Pennsylvania Unfair Trade Practices and Consumer Protection Act.

But Scorza had countered that the Texas law had been acknowledged as applicable in his contracts with Davison, and in a November opinion denying Davison's request to toss out the attorney fees portion of the award, Judge Horan agreed.

"Davison's arguments, regarding vacatur of attorney fees, center on essentially a distinction without a difference.  Whether the arbitrator cited the UPTCPL or other statute, Davison had notice that Mr. Scorza was seeking attorneys' fees under his claims," she wrote in November. "Mr. Scorza's claims always contained an attorneys' fees component.  This was not a surprise to the litigants, and Davison has not argued that it would have disputed the attorneys' fees award differently through any defense under the AIPA and/or TIDSA.  Therefore, Davison has no basis to vacate or modify the award of attorneys' fees to Mr. Scorza."

Judge Horan held a video hearing to address Scorza's motion to confirm the arbitration award and to tack on additional attorney fees he had incurred while opposing Davison's bid to trim the award.  But the hearing started off on a contentious note, with Davison attorney Justin T. Barron noting that Scorza's attorneys had filed their exhibits for the hearing at 11 p.m. on New Year's Day, just 10 hours before the hearing.

Stacey Barnes of Kearney McWilliams & Davis, representing Scorza, noted that most of the exhibits had already been part of the record in the lawsuit and arbitration, and Judge Horan steered the discussion to an affidavit Barnes had signed regarding the alleged reasonableness of the fee request.

When arguing for his fee request — which he said had grown to an estimated $49,619.73 through the fight over fees in the underlying arbitration — Barnes was reined in repeatedly by the judge and by Barron's objections when he assailed Davison for allegedly delaying and litigating disputes in the hope that they would become too expensive for jilted inventors to fight.  "There is a playbook that has been run on Mr. Scorza," Barnes said. "They have concocted a procedural obstacle course for aspiring inventors."

Barron raised several objections to the relevance of such attacks, especially when Barnes claimed part of the reason for Davison's fighting the award was the hope that Scorza, who is in his 80s, might die before it was resolved. Judge Horan also admonished Barnes to focus on the reasoning for the post-arbitration fees.  "I'm inclined to grant fees, the question is, how much?" she said. "Let's get to the meat of it."

Barnes was sworn in to testify to his rates and his co-counsel's rates, and Barron questioned him on why his co-counsel had not filed their CVs as part of the record.  He also asked why Scorza's attorneys had not filed copies of their invoices with the court after June, even though they were asking for nearly $32,000 more since then.  That lack of additional information was what Judge Horan cited when she trimmed the requested fee award.

"The court will award only those fees which were necessary and reasonable and supported by the record evidence in this case," she wrote in her opinion.  Scorza's attorneys told Law360 they were disappointed by the reduced fee award and would discuss future steps with their client, but were pleased that the underlying arbitration award was upheld.

Twitter’s $90M Attorney Fee Dispute Heads to Arbitration

October 19, 2023

A recent Law 360 story by Jack Karp, “Wachtell Wins Bid to Arbitrate X’s $90M Fee Dispute”, reports that a California state judge granted Wachtell Lipton Rosen & Katz's request to send to arbitration a dispute with X Corp. over $90 million in legal fees tied to the fight over Elon Musk's purchase of Twitter.  The master retention agreement between Wachtell and X, formerly called Twitter, clearly delegates all disputes over arbitrability issues to an arbitrator, Superior Court Judge Richard B. Ulmer said in minutes issued after a brief remote hearing at which neither party appeared for Wachtell's motion to compel arbitration.

"The master retention agreement only carves out actions 'enforcing claims for injunctive or equitable relief.'  It did not carve out any other issue or circumscribe the scope of the parties' broad delegation clause," the judge said in adopting the tentative order.  X sued the firm in July, accusing Wachtell of exploiting "lame duck fiduciaries" as it "ran up the tab" and earned a $90 million fee helping the company defeat Musk's effort to back out of a $44 billion deal to acquire the company.

The firm ultimately helped Twitter obtain an expedited trial that put pressure on Musk before he finally agreed to close the deal on its original terms.  Wachtell moved to compel arbitration of X's claims in September.  The arbitration clause in question delegates jurisdiction over what kinds of claims can be arbitrated to the arbitrator in two places, and uses language derived from a Ninth Circuit decision on the topic, undercutting X's claims that the issue was left unclear by the contract, Wachtell argued.

X pushed back in early October, arguing that it is seeking only equitable relief since it wants the court to void its closing-day letter agreement and any associated excess fee payment in addition to restitution or disgorgement of the fees charged by Wachtell.  X also sought attorney fees and pre- and post-judgment interest.

"Once this court has set aside the closing day letter agreement, X Corp. will recover its payment to Wachtell, less Wachtell's 'reasonable fee.'  What is 'reasonable' under the circumstances will necessarily encompass various considerations and equitable principles," it said.  That means the "sole method" for X to win relief in the case requires the "application of equitable principles" to determine Wachtell's reasonable compensation, it said.

But Wachtell countered that the rescission X is seeking is "an action in equity" only when the recovery sought by the plaintiff through rescission involves something other than the money paid by the plaintiff.  "Here, every dollar of the final fee that X Corp. seeks to recover from Wachtell Lipton is a dollar that Twitter paid. That is restitutionary disgorgement — which is legal relief," the firm said in its Oct. 10 motion to compel arbitration.

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."

NALFA Releases 2021 Litigation Hourly Rate Survey & Report

July 19, 2022

Every year, NALFA conducts an hourly rate survey of civil litigation in the U.S.   Today, NALFA released the results from its 2021 hourly rate survey.  The survey results, published in The 2021 Litigation Hourly Rate Survey & Report, shows billing rate data on the very factors that correlate directly to hourly rates in litigation:

City / Geography
Years of Litigation Experience / Seniority
Position / Title
Practice Area / Complexity of Case
Law Firm / Law Office Size

This empirical survey and report provides micro and macro data of current hourly rate ranges for both defense and plaintiffs’ litigators, at various experience levels, from large law firms to solo shops, in regular and complex litigation, and in the nation’s largest markets.  This data-intensive survey contains hundreds of data sets and thousands of data points covering all relevant billing rate categories and variables.  This is the nation’s largest and most comprehensive survey or study on hourly billing rates in litigation.

This is the second year NALFA has conducted this survey on billing rates.  The 2021 Litigation Hourly Rate Survey & Report contains new cities, additional categories, and more accurate variables.  These updated features allow us to capture new and more precise billing rate data.  Through our propriety email database, NALFA surveyed thousands of litigators from across the U.S.  Over 8,400 qualified litigators fully participated in this hourly rate survey.  This data-rich survey was designed to aid litigators in proving their lodestar rates in court and comparing their rates to their litigation peers.

The 2021 Litigation Hourly Rate Survey & Report is now available for purchase.  For more on this survey, email NALFA Executive Director Terry Jesse at terry@thenalfa.org or call us at (312) 907-7275.

IMF Says It’s Immune From Attorney Fee Dispute

December 10, 2021

A recent Reuters story by Mike Scarcella, “IMF Says It’s Immune From Legal Fee Fight -- Again,” reports that a lawyer for the International Monetary Fund told a federal appeals court that the organization is shielded from a case that seeks to have a judge hear a dispute over millions of dollars in legal fees.  Seyfarth Shaw's James Newland Jr, arguing for the IMF before a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit, asserted that the IMF has judicial immunity from the litigation and that the organization never "expressly waived" such immunity in a legal-services contract with one of its outside lawyers.  A lower court judge in March dismissed the lawsuit.

The plaintiff, Leonard A. Sacks & Associates, in 2017 filed an arbitration action against the IMF that questioned how much the organization had paid him to resolve a construction-related dispute with contractors who'd been hired for work on the IMF's office in Washington, D.C. Leonard Sacks said in court filings his work saved the IMF about $45 million.  Sacks contested in court an arbitrator's decision to award him about $39,000 in fees beyond the $2.36 million he had received in 2016.

Newland did not immediately return a message seeking comment.  A lawyer for Sacks, Donald Spence Jr of Spence & Becker, and Sacks did not immediately return messages seeking comment.  Sacks had a 20-year professional services relationship with the IMF.  He said in court filings that the IMF, without his input, had determined his fee for the legal services on the construction project would be $4.15 million.  Sacks said he asked for an accounting on the fees but did not receive one.  The IMF ended its contract with him in 2017, court filings show.

Spence, arguing for Sacks at the D.C. Circuit, said the courts should have a role in reviewing the arbitrator's fee award.  The contract at issue, Spence argued, referenced D.C. law and the American Arbitration Association rules, which permit lawsuits seeking to modify or vacate an award.  Sacks had a contractual right to a court's review, Spence told D.C. Circuit Judges Cornelia Pillard, Laurence Silberman and Karen Henderson.  "Without a remedy, the contract is essentially illusory," Spence wrote in a brief.