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Category: Fees as Sanctions

Article: Eleventh Circuit’s New Standard for Attorney Fees in ADA Cases...at Gas Stations

September 3, 2021

A recent article by David Raizman and Paul J. De Boe, “Eleventh Circuit of Appeals Creates New Standard for Standing in Title III Cases Against Gas Stations,” reports on a recent ruling on ADA litigation in the Eleventh Circuit Court of Appeals.  This article was posted with permission.  The article reads:

For years, Scott Dinin was one of South Florida’s most prolific filers of Title III of the Americans with Disabilities Act (ADA) cases.  His run ended two years ago, when, after obtaining default judgments against two gas stations on behalf of his client, Alexander Johnson, Dinin submitted a request for attorneys’ fees whose billing entries caught the attention of Judge Paul Huck of the U.S. District Court for the Southern District of Florida.  Judge Huck’s investigation into the matter brought to light a systematic practice of filing frivolous claims, knowingly misrepresenting the time counted as billable, making misrepresentations to the court, and improperly sharing attorneys’ fees with clients.  In his August 2019 order awarding extensive sanctions, Judge Huck described Dinin’s and Johnson’s operation as “an illicit joint enterprise … to dishonestly line their pockets with attorney’s fees from hapless defendants under the sanctimonious guise of serving the interests of the disabled community.”

Judge Huck’s sanctions included:

dismissal with prejudice of Johnson’s ADA and Florida Civil Rights Act claims;

disgorgement of improperly obtained settlement funds from 26 “gas pump cases”;

additional penalties of $59,900 against Dinin and $6,000 against Johnson; and

an injunction preventing Johnson and Dinin “from filing any future ADA complaints without first obtaining the court’s written permission.”

Judge Huck’s order corroborated and confirmed the suspicions of many in South Florida’s business and legal communities about questionable practices of some plaintiffs and their lawyers in Title III access litigation.  Johnson and Dinin appealed, and on August 17, 2021, the Eleventh Circuit Court of Appeals dismissed Dinin’s appeal and affirmed the district court’s order imposing sanctions on Johnson.

The Eleventh Circuit Dilutes Standing Requirements

While the court’s affirmance of sanctions has drawn the most interest, practitioners may want to note the court’s holding regarding standing in Title III cases brought against gas stations and similar Title III defendants that are not “destination-type establishments like hotels, hospitals, or restaurants.”  The court held that standing could be established without showing a “definite intention to visit” the specific establishment “in the future,” as would be required if the defendant were a supermarket or a “destination-type establishment.”  The court reasoned that gas stations are “visited on an as-needed basis, often based on convenience, proximity, or price on a given day,” and “cars are mobile and must be serviced wherever they happen to be at the time gas is needed.”  Therefore, standing exists if “[Johnson] regularly travels in the vicinity of the particular gas station.”

As the concurring opinion pointed out, the majority opinion did not cite any support for “water[ing] down the constitutional minimum for standing.”  All the same, practitioners may want to take note of this important holding when defending cases brought against gas stations or non-destination-type establishments.

David Raizman is nationally known for his disability rights practice, specifically for his work under Title III of the Americans with Disabilities Act.  In 2012, he was recognized by the Los Angeles Daily Journal as one of the top labor and employment attorneys in California and has been recognized multiple times as a Southern California Super Lawyer.

Paul De Boe is an associate attorney in the Miami office of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.  His practice focuses in the area of employment litigation including claims of discrimination, harassment, retaliation, wage and hour, and family and medical leave law violations.  Mr. De Boe also counsels and defends clients in claims brought pursuant to Title III of the Americans with Disabilities Act involving brick and mortar locations as well as website accessibility, and state and federal consumer protection laws.

Judge Slams Attorney For Waste in Deepwater MDL

August 2, 2021

A recent Law 360 story by Mike Curley, “Judge Slams Atty For ‘Shameful’ Waste in Deepwater MDL”, reports that a Louisiana federal judge has sanctioned a plaintiff attorney involved in a sprawling multidistrict litigation over the 2010 Deepwater Horizon spill, calling his multiple lawsuits, duplicative motions and other actions "a colossal waste of time" intended to harass others and get around the court's previous orders.  U.S. District Judge Carl Barbier also required Brian J. Donovan of The Donovan Law Group PLLC to post the sanction on his website.

In a scathing written opinion, Judge Barbier barred Donovan from filing any further suits against other plaintiff attorneys Stephen J. Herman of Herman Herman & Katz LLC and James P. Roy of Domengeaux Wright Roy & Edwards LLC, as well as Patrick A. Juneau of Juneau David APLC, claims administrator for the MDL's economic settlement.

"No party should have had to respond to any of these suits, and no court should have had to entertain them," Judge Barbier wrote. "Donovan has weaponized civil litigation to harass those with whom he disagrees.  His behavior has been a constant drain on judicial resources.  The waste Donovan creates is shameful and appalling."

Donovan had initially represented plaintiffs in a suit over the spill that was rolled into the MDL, but after some of his clients were denied claims, he sued other attorneys and Judge Barbier, saying Barbier should recuse himself over his past ownership of Halliburton Co. and Transocean Ltd. assets and that the other attorneys had colluded on the settlement to the detriment of class members and the benefit of BP PLC, which had operated the oil platform where an explosion started the spill.  Judge Barbier refused to recuse himself in November 2019 and scolded Donovan over his recusal motions but didn't levy sanctions at the time, instead referring his briefs, as well as Herman's opposition to the motion, to the clerk of the court to start a disciplinary proceeding against Donovan.

That suit, which named Herman as a defendant, was dismissed in March 2020, and Donovan filed two more, making the same allegations but adding the judge, Roy and Juneau as defendants, and both were voluntarily dismissed before Herman, Roy and Juneau moved for sanctions earlier this year, and at a hearing July 23, Judge Barbier granted the motions.

In the written order, Judge Barbier held little back, slamming Donovan's suits, as well as response briefs that came with more than 1,000 pages of exhibits, as repetitive and baseless, and attempts to harass those in the suit he disagreed with.  "Throughout the life of this MDL Donovan has inundated the court with wave after wave of motions that often do no more than repeat previous arguments," the judge wrote. "These practices have wasted the court's time and that of his opponents."

The judge further added that neither Donovan nor his clients have standing to assert many of the arguments he makes, as he's never argued that he or his clients are class members and his objections to the settlement are far too late.  "The fact that Donovan lacks standing to press his arguments makes every moment spent addressing them — whether by the parties, this court, or any other judicial body — a colossal waste of time," Judge Barbier wrote.

He added that it's "telling" that Donovan never sued BP, even though his filings point out that BP is liable for damages from the oil spill, and if he had he might have had a chance of recovering money for his clients, but instead he's only shown that his purpose in bringing the suits was to harass others.  Thus, Judge Barbier found it proper to block Donovan from filing yet another suit against Herman and the others over the same allegations, and further ordered Donovan to pay Herman's, Roy's and Juneau's attorney fees.

While Judge Barbier stopped short of fining Donovan for his behavior, he ordered Donovan to post a copy of the order on his website, as well as any other websites or blogs he owns, operates or maintains, and to provide the court with proof that he has given a copy of the order to his clients from his initial suit in the MDL.

Judge Alsup Accepts Fee Recommendation from Former Alsup Clerk

July 27, 2021

A recent Law 360 story by Dave Simpson, “Alsup OKs $5.9M From Finjan, Slams Kramer Levin Attys,” reports that Finjan Inc. must foot a $5.9 million portion of Juniper Networks' legal bill but doesn't deserve sanctions, U.S. District Judge William Alsup ruled, while noting that "in no way" does his order vindicate three Kramer Levin Naftalis & Frankel LLP partners who represented Finjan in the patent infringement suit.  Judge Alsup adopted in its entirety the May recommendation from special master Matthew Borden of Braunhagey & Borden LLP, rejecting Finjan's bid to nix the fees and Juniper's bid to score sanctions against the patent-licensing company.  Borden had recommended that Finjan pay the networking infrastructure provider nearly $6 million in reasonable fees for work done that culminated in winning two summary judgment motions, defeating a summary judgment motion and prevailing in a five-day jury trial.

In addition to agreeing with Borden's recommendation, Judge Alsup singled out for criticism three Kramer Levin partners who'd previously represented Finjan in the case.  "In no way does this order vindicate attorneys James R. Hannah, Lisa Kobialka, and Paul J. Andre," the judge wrote.  "Their conduct was improper and frustrated the fairness of the proceedings.  Judges in the future should take this into account when dealing with them in future cases."

Juniper had argued that Finjan deserved sanctions for, among other things, flip-flopping on its patent infringement theory in an attempt to artificially boost damages, presenting its facts-only damages theory to the jury after its damages expert was excluded, and misrepresenting a previous court decision to the court.  "Finjan's misrepresentation of a district court decision was 'reckless' but, even if a finding of recklessness alone satisfies the ... standard, this order finds that act, by itself, would not warrant sanctions," Judge Alsup said.

Special fee master Borden's May report came after Judge Alsup in January ordered Finjan to pay a portion of Juniper's legal fees.  He said Finjan "flip-flopped" on the eve of trial when it sought to put forth a new infringement theory for one of its malware-detection patents after realizing its original one only covered a small part of Juniper's revenue.  "Finjan tried to sneak this theory in with its expert-damages report, but we caught it, and the Daubert order excluded that trick," Judge Alsup said in January.

Finjan, which sued Juniper in 2017 alleging it infringed nine patents covering technologies for storing and downloading security data, tried to claim $142 million in damages after Juniper provided evidence in discovery that, at most, it would owe less than $1.8 million if a jury found its products infringed the remaining patent in the case.  After the Federal Circuit affirmed Juniper's jury win on the only patent claim that had survived to trial, the company asked Judge Alsup to grant it attorney fees for fighting the nine patent claims.

At a hearing on Juniper's bid for attorney fees in January, Finjan pointed to its expert testimony, but Judge Alsup lamented the "standard patent BS by bought-and-paid-for experts." Finjan pushed back, saying it had a good-faith belief it wasn't altering its damages theory.  Judge Alsup appointed Borden, his former law clerk, to sort out the fee dispute and instructed Juniper to resubmit billing records distinguishing between time spent by its attorneys on the patents and time spent on other facets of the litigation.

Zurich to Pay Attorney Fees as Sanctions in Coverage Action

April 20, 2021

A recent Law 360 story by Mike Curley, “Zurich to Pay $1.5M For Sanctions in Fluor Coverage Suit,” reports that a Missouri federal judge ordered Zurich American Insurance Co. to pay $1.5 million in sanctions for disobeying court orders to turn over documents in a coverage dispute stemming from lead poisoning and pollution suits against Fluor Corp.  The sum is meant to cover the amount Fluor spent in its efforts to get certain documents relating to a period in 2010 while Fluor was fighting the pollution suits, which it said would have enabled it to settle the suits at a lower cost than the $300 million deal it initially struck.

Though Fluor had requested either $7.1 million or $15.4 million for the sanctions using two different methods of calculations, U.S. District Judge E. Richard Webber found that Fluor had both overstated the amount of work the sanctions should cover and its fees.  The order stems from a finding in December, in which Judge Webber sanctioned the insurer over its failures to find and turn over documents illuminating a period in 2010 when Fluor might have been able to settle the numerous suits.

At the time, the judge did not state the amount of the sanctions, but in a February filing ordered Zurich to pay Fluor's attorney fees and costs to obtain the discovery at issue, and Fluor filed a statement of fees, asking for between $7.1 million and $15.4 million.  According to the order, Zurich disputed the amounts, saying Fluor improperly included in its calculation fees for work performed unrelated to the discovery dispute, such as expert fees and briefing of unrelated motions.

Judge Webber rejected the $15.4 million sum, as it included all attorney fees Fluor incurred between February 2019, when the court issued its first sanction order, and the December 2020 hearing, and thus went against his order, which directed Fluor to calculate the fees related to the discovery dispute specifically.

While Fluor argued that the entirety of those 21 months of litigation would not have been necessary if Zurich had complied, the judge rejected the argument, saying it would be "excessively punitive," as it includes fees that would've been incurred regardless of Zurich's sanctioned conduct.

For the $7.1 million sum, which comes from a more itemized list of fees, the judge first slashed it by 60% to about $3 million, saying Fluor's proposed attorney fee rates of $840 and $930 per hour are far above the reasonable rates for the St. Louis market, while $350 per hour is more reasonable.  The $7.1 million request also includes work unrelated to the discovery dispute, Judge Webber said, and he cut it in half again, resulting in the $1.5 million sanction.

Zurich sued Fluor in March 2016, claiming it doesn't have to indemnify the engineering company after it reached a roughly $300 million settlement in 2014 over lead poisoning and pollution suits encompassing 63 cases — known as "Bronson/Smoger" cases — from residents in Herculaneum, Missouri, which is home to a lead smelter.

Fluor, in turn, countersued, saying Zurich's failure to strike a deal caused the construction and engineering conglomerate to go to trial on the residents' claims, resulting in the hefty verdict, when the insurer could have ended the case with a settlement of under $7 million.

Zurich had previously been sanctioned in February 2019 when Judge Webber found Zurich willfully didn't comply with his orders to turn over documents and eventually awarded $244,000. Later the same year, Fluor requested sanctions again, in response to which the judge ordered Zurich in August 2019 to turn over an extensive list of documents to Fluor.

Attorney Raises Concerns of Hourly Rates for K&L Gates

March 21, 2021

A recent Law 360 story by Rachel Scharf, “Atty in Failed WWE Case Blasts ‘Suspect’ K&L Gates Fee Bid,” reports that a lawyer who was previously sanctioned for his conduct in pursuing now-dismissed claims that World Wrestling Entertainment Inc. hid the risks of head injuries said that the company can't score more than half a million dollars in legal fees, calling K&L Gates LLP's billing rates "suspect."  Attorney Konstantine W. Kyros of Kyros Law Offices PC, who was sanctioned in 2018 for overly lengthy and frivolous filings, told a Connecticut federal judge that the nearly $574,000 fee requested by WWE and its CEO, Vince McMahon, is based on K&L Gates partner Jerry S. McDevitt's "patently unreasonable" $950 hourly rate, or nearly twice that of his co-counsel from Day Pitney LLP. Kyros also said McDevitt had overbilled for his time.

"WWE chose to provide this Court with suspect fees.  Mr. McDevitt spent far too much time performing basic work, numerous entries exist for nonrecoverable subjects, including research, drafting and conferencing over the crime-fraud exception, and over $20,000 for a PowerPoint presentation," Kyros said.  "These suspicious fees may require audit so the Court can properly discern any appropriate percentage reduction."

The fee fight stems from consolidated litigation dating back to 2014 alleging that WWE hid the risks of brain injuries from wrestlers, causing star wrestlers including Jimmy "Superfly" Snuka and Harry Masayoshi "Mr. Fuji" Fujiwara to develop chronic traumatic encephalopathy, or CTE.  The lawsuit was put to bed in September 2020 by a Second Circuit panel, after U.S. District Judge Vanessa Lynne Bryant tossed out a number of the actions in 2018 and ordered Kyros to pay WWE's attorney fees as a sanction for failing to heed the court's repeated warnings against frivolous filings.

Reached for comment, McDevitt denied Kyros' overbilling allegations and said the attorney is trying to duck paying for the time that WWE's counsel was forced to spend uncovering the "unethical tactics" that got him sanctioned.  "Mr. Kyros' deceptive and frivolous allegations are emblematic of his pattern throughout the case," McDevitt told Law360.  "He is now saying it should not have taken so much time and expense to expose his fraud on the court and serial misconduct, which he attempted to hide in mountains of deceptive and false pleadings and papers with the court."

But Kyros argued that WWE's fee application wrongly stretches the so-called Rule 11 sanction from 2018 in an attempt to recoup expenses far outside the order's scope, including an additional $39,000 for costs tied to applications following the Second Circuit appeal.

"This is not a sweeping sanctions award. It does not provide for all bills tangentially related to the sanctions motions," Kyros said in Friday's brief.  "WWE's fight to justify their unconscionable fee applications is too attenuated from the sanctioned conduct to warrant granting."  In a comment to Law360, Kyros said he is continuing to pursue the litigation, including by lodging a petition asking the U.S. Supreme Court to review the Second Circuit's dismissal.  "Our team is proud to have stuck with the wrestlers in pursuit of their important claims, and despite WWE's liberal use of misguided Rule 11 filings we have stayed with the case to its conclusion," Kyros said.