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Category: Fees as Sanctions

NFL Player Must Cover Attorney Fees in Poaching Suit

May 13, 2022

A recent Law 360 story by Max Jaeger, “Sanctioned NFL Player Must Cover Atty Fees in Poaching Suit” reports that New York Giants wide receiver Kenny Golladay must cover more than $15,000 in attorney fees for his former agency after flouting a subpoena in litigation over whether he was poached by a rival, a Michigan judge said.  In an order, U.S. Magistrate Judge Anthony P. Patti overruled Golladay and approved $14,929 in attorney fees to cover Honigman LLP's representation of the wideout's former agents at Clarity Sports International LLC.  The judge refused to award fees for work by Dowd Bennett LLP, finding them "excessive and redundant" of work by Honigman's lawyers.

Clarity said it cost them a little over $20,000 to get Golladay to comply with a third-party subpoena for his deposition and document production.  The agency says in a separate suit that sports memorabilia sellers helped non-party Creative Arts Agency steal Golladay from them.  The wide receiver is not a party to that suit, but he ignored a 2020 subpoena, so Clarity sued to compel.  The court hit him with sanctions for his "cavalier and reckless attitude" and ordered him to pay Clarity's legal bills for giving them the "run-around."

Golladay opposed most of the Honigman fees, arguing that partner Jeff Lamb's four hours at $580 per hour merely duplicated 19.75 hours of work that partner Andrew Clark did at $455 per hour.  But the court disagreed.  "Although much of attorney Lamb's relevant work appears to have involved review and conference with other attorneys, the court considers such collaboration between partners and associates typical and substantive, as opposed to duplicative and redundant," Judge Patti wrote.

That was "especially true" given Clark was out on leave for two months, the judge said.  He also approved 11 hours that associate Nicholas Burandt contributed at $350 an hour.  Some work was duplicative, however, and the judge denied $5,400 to Dowd Bennett for the roughly 7.5 hours each contributed by Dowd Bennett partner John D. Comerford and associate James B. Martin, who charged $420 an hour and $300 an hour respectively.

Golladay argued he shouldn't have to pay their fees because Clarity retained them on a contingency basis in the underlying tortious interference case against CAA that's separately playing out in Pennsylvania federal court.  Because it is ongoing, Clarity had not "incurred" any fees yet, he argued.  "The court, however, struggles to find the logic in this latter argument, as it would imply that parties (or non-parties) would be shielded from sanctions for poor behavior whenever the opposing side has a contingency-fee relationship," Judge Patti said in his order.

Instead, the judge said Dowd Bennett LLP's contribution amounted to sending emails to Honigman counsel and editing filings, and awarding fees would be excessive.  "Although Respondent's behavior throughout this matter has undoubtedly been unacceptable and necessitated additional work by Petitioners, that work was frustrating more so than complicated," Judge Patti said.

Judge Cuts ‘Excessive’ Attorney Fees for UBS Investor

May 11, 2022

A recent Law 360 story by Jon Hill, “NY Judge Cuts ‘Excessive’ Atty Fee Sanction For UBS Investor” reports that a New York state judge ordered a UBS investor to pay $30,000 in legal costs over a rejected effort to revive his derivative suit against the bank's top officials, saying his opponents' original request for him to pay more than double that to their counsel at Sullivan & Cromwell was "excessive."  In an order, Manhattan County Supreme Court Justice Jennifer Schecter declined to grant the full fee award submitted by the UBS Group AG defendants in the case, whose Sullivan & Cromwell LLP attorneys wanted a total of more than $61,000 from plaintiff Ezra Cattan.

Their request came after the judge sanctioned Cattan last month for making what she deemed an ill-conceived motion to re-argue his case, ruling that he would have to cover his opponents' legal bills for fighting his motion.  In response, UBS' Sullivan & Cromwell team requested $45,000 for its work opposing the motion and another roughly $16,000 for its time spent preparing the fee award application.  But Justice Schecter concluded that this $61,000 total was too much.

Although Sullivan & Cromwell's opposition to Cattan's motion had been "understandably thorough" given the circumstances and "notwithstanding the quality of defense counsel's work and the reasonable though expensive hourly rates they charge, spending more than 60 hours on the opposition papers and this fee application was excessive," Justice Schecter wrote.  Cattan, for his part, had objected to the UBS defendants' $61,000 fee award request as unreasonable and urged that it be slashed to about $25,000, if not less.

Instead, Justice Schecter said that a total award of $30,000 "would be reasonable ... for having to oppose plaintiff's frivolous motion for re-argument and renewal."  Cattan's motion sought to reopen his derivative suit against top officials at UBS.  Filed in 2020, the case pinned blame on the bank's leaders — including then-CEO Sergio Ermotti — for what Cattan, a shareholder, claimed has been an "endless train" of damaging scandals, investigations and lawsuits for the bank going back more than a decade.

Justice Schecter threw out the case in December, ruling that Cattan's claims were covered by a forum selection clause in the bank's corporate charter that designated Switzerland as the proper venue.  But Cattan subsequently moved to keep the case alive by filing both a notice of appeal and a motion for re-argument.  In that February motion, he contended that the judge lacked the power to dismiss his suit on "forum non conveniens" grounds and should grant a do-over.

That challenged was slapped down last month by Justice Schecter, who said that it misconstrued her dismissal reasoning and "should never have been made."  At the same time, the judge granted a request by the UBS defendants to impose sanctions on Cattan for what they called his "frivolous" motion.  "Plaintiff shall therefore reimburse defendants for the reasonable costs and attorneys' fees incurred in opposing this motion," Justice Schecter ordered last month.

Honeywell Wants Workers to Cover Attorney Fees in ERISA Suit

May 4, 2022

A recent Law 360 story by Abby Wargo, “Honeywell Wants Workers To Cover Atty Fees in ERISA Suit” reports that Honeywell International Inc. told a Michigan federal judge to grant it attorney fees after it won a retirement benefits suit against its former workers, saying the workers' unnecessary prolonging of the suit caused the company to expend additional resources that should be reimbursed.  The corporation asked U.S. District Judge Denise P. Hood to approve its request for a "carefully limited" sum of $263,485 after winning a decade-long suit against the United Autoworkers of America and Honeywell retirees.

Honeywell asked the court to approve only the payment of fees incurred during a period of several months in 2018 and early 2019, rather than the full 11 years of the lawsuit, which it told the judge is a reasonable request compared to the millions of dollars spent throughout the suit.  "Having defeated all of plaintiff's claims, Honeywell should be awarded a narrow portion of its attorneys' fees.  Specifically, the court should award Honeywell's fees most related to plaintiff's second summary judgment filing, as well as the unsupportable vesting claims that plaintiff pursued on appeal," according to the motion for attorney fees.

Honeywell said that it is proposing "voluntary concessions" to its requested award, such as excluding fees paying for the time of noncore legal team members and reducing the rates of the award to less than what Honeywell was actually paying for its lawyers.  If the award is granted, it would be only a small fraction of the millions of dollars Honeywell spent fighting the lawsuit, it said.

But Honeywell said that the plaintiffs were "unpersuaded" by the rulings and moved for summary judgment again, though they still lost. Regardless, the company's attorneys had to spend hundreds more hours on the case than was necessary, it said in the fee motion.

First Circuit Affirms Sanctions in Long-Running Fee Dispute

February 10, 2022

A recent Law 360 story by Hailey Konnath, “1st Circ. Backs Sanctions Against Lieff Cabraser in Fee Tiff,” reports that the First Circuit left intact a Massachusetts federal judge's sanctions against Lieff Cabraser Heimann & Bernstein LLP in a fees spat, finding that the lower court didn't abuse its discretion in punishing the firm for misrepresenting a study regarding fee awards in similar cases.  A three-judge panel affirmed a decision from U.S. District Judge Mark L. Wolf, who sanctioned the firm for misrepresentations it made to the court while justifying a $75 million fee award for Lieff Cabraser and co-counsel at Labaton Sucharow LLP and Thornton Law LLP. 

The fees stemmed from their work securing a $300 million settlement with State Street Corp., and they were later slashed to $60 million following a lengthy investigation into allegations of overbilling and other improprieties.  The First Circuit said that Judge Wolf had provided notice to the firm that it was facing possible violations of Rule 11 in several instances, rejecting the firm's argument to the contrary.

"The court repeatedly explained to Lieff, over the course of two years, that it would consider whether any misconduct in the original fee application warranted sanctions — specifically flagging 'the accuracy and reliability of the representations' made by class counsel in its filings," the panel said.  It added that Lieff Cabraser "certainly responded as if it well understood what was at stake."  Thus, Judge Wolf met the important requirement of giving the firm both notice of the basis for a possible sanction and a fair opportunity to show why there shouldn't be any sanction, the First Circuit panel said.

The panel had hinted that the firm's appeal may be futile at oral arguments in November, saying that Judge Wolf may just double down if the appeals court held that he unfairly punished the firm.  Lieff Cabraser received far less flak from Judge Wolf than the other two firms but fought a $1.1 million reduction in its fees, arguing that reversing the rule violation finding is even more important than the money.

In the decision, the First Circuit noted that the district court had found that Lieff Cabraser and its co-counsel used a template for their fee declaration that misleadingly indicated that they regularly charged paying clients the rates supporting its lodestar.  The court also held that the firms failed to exercise reasonable care in contributing to a suspect $4.1 million payment to a lawyer in Texas and for misrepresenting a study regarding typical fees awarded in similar cases, according to the opinion.  Lieff Cabraser was formally sanctioned for misrepresenting the study, but not for the other criticisms, the panel said.

No other firm joined Lieff Cabraser in the appeal and no parties to the underlying litigation wanted to participate either, the First Circuit said.  That led Judge Wolf himself to try to lawyer up to defend his ruling.  However, the appellate court refused to let Judge Wolf participate and instead permitted amicus Hamilton Lincoln Law Institute to file a brief in the dispute.  While Lieff Cabraser didn't challenge the fee award in its appeal, it argued that if the appellate court set aside all of the district court's criticisms, it may be entitled to some money out of the funds awarded to the class if any funds are unclaimed, according to the decision.

But the First Circuit said it found no basis for deviating from the circuit's general rule that a district court's criticism of counsel unconnected to any challenge to a judgment or order on appeal is not itself reviewable on appeal.  The panel also rejected Lieff Cabraser's argument that it didn't sign the memorandum in support of the fee award underlying the dispute and thus cannot be held liable for any misrepresentations contained in it.  That contention "goes nowhere," the First Circuit said.  The firm's name and the names of three of its attorneys were placed on the signature page of the challenged papers and the firm advocated for the fee at a hearing, the panel said.

Judge Largely Rejects Fee Request in Failed Whistleblower Case

January 25, 2022

A recent Reuters story by Nate Raymond, “J&J’s $2.4M Fee Request Largely Rejected in Failed Whistleblower Case,” reports that a federal judge largely rejected Johnson & Johnson's bid to have two surgeons who served as expert witnesses in lawsuits over J&J's hip implants pay it $2.4 million for misusing confidential records from that mass tort litigation while pursuing their own whistleblower case against the company. 

U.S. Magistrate Judge M. Page Kelley in Boston awarded J&J some of its expenses but said forcing Antoni Nargol and David Langton to pay its attorneys' fees too would be an "excessive" punishment after she last month tossed their case as a sanction for the misuse of records.  The judge instead only awarded J&J some of its expenses other than attorneys' fees, such as for certain printing and docketing costs.  The exact amount will be determined based on later briefing.

Nargol and Langton sued J&J's DePuy Orthopaedics Inc unit in 2012 under the False Claims Act, which allows whistleblowers to sue companies on the government's behalf to recover taxpayer funds paid out based on fraudulent claims.  They alleged DePuy marketed defective metal-on-metal Pinnacle-branded hip implant devices to unsuspecting doctors who then sought government reimbursement for the products.  DePuy stopped selling the devices in 2013.