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Category: Fees & Bad Faith

Article: Courts Are Right to Reject Insurer ERISA Attorney Fee Awards

May 9, 2022

A recent Law 360 article by Elizabeth Hopkins, “Courts Are Right To Reject Insurer ERISA Atty Fee Award” reports on ERISA attorney fee awards.  This article was posted with permission.  The article reads:

As the U.S. Supreme Court has often recognized, the Employee Retirement Income Security Act is remedial legislation that is primarily intended to protect plan participants and beneficiaries, promote their interests and ensure that they receive the benefits they are promised.  According to the U.S. Court of Appeals for the Ninth Circuit's 1984 ruling in Smith v. CMTA-IAM Pension Trust: "An important aspect of that protection is to afford [plan participants and beneficiaries] effective access to federal courts."

And one of the ways that this access is promoted is through ERISA's fee-shifting provision, which grants courts in actions brought by plan participants and beneficiaries the discretionary authority to allow a reasonable attorney fee and cost of action to either party.  Despite these protective statutory goals, individual ERISA claimants face uphill battles in attempting to reverse adverse benefit determinations.  They are not entitled to anything like a full trial in federal court, but are instead normally stuck with a trial on the record that was assembled by the decision-making fiduciary, who is in many instances entitled to great deference.

And the only recovery they can hope to achieve if they are successful is full payment of the benefits that they were always entitled to and perhaps some interest on this amount.  Given all these hurdles and limitations to recovery, it shouldn't come as a surprise that it is not always easy for ERISA plaintiffs to obtain counsel, especially when there is only a small amount of benefits at stake.

For this reason, as the Ninth Circuit explained in Smith, "without counsel fees the grant of federal jurisdiction is but a gesture for few [plaintiffs] could avail themselves of it."  Plan participants and beneficiaries who successfully challenge benefit denials or bring successful fiduciary breach suits against plan fiduciaries do invariably seek and almost always are awarded some attorney fees under this provision.

The Supreme Court made clear in 2010 in Hardt v. Reliance Standard Life Insurance Co., that participants need not even be prevailing parties in an ERISA action to qualify for fees, so long as they have had "some degree of success on the merits."  Once the success threshold has been met, to determine whether a discretionary award of fees is warranted, courts apply a five-factor test first developed in 1993 by the U.S. Court of Appeals for the Fourth Circuit in Quesinberry v. Life Insurance Co. of North America — factors that clearly and intentionally favor successful plaintiffs.

But a potent new threat to the ability of plan participants and beneficiaries to bring suit is looming.  Increasingly, insurance companies are seeking attorney fee awards against claimants who are partially or wholly unsuccessful in overcoming deference and other substantive and procedural advantages to the plan decision makers, and are thus unable to have a denial of benefits reversed.

For the most part, courts continue to reject attorney fee applications from insurance companies that successfully defeat lawsuits seeking plan benefits.  A November 2021 decision in Martin v. Guardian Life Insurance Co. of America from the U.S. District Court for the Eastern District of Kentucky is instructive of both the heavy-handed tactics of insurance companies seeking fees from claimants and one court's reaction.  In Martin, the insurance company that insured disability benefits sought nearly $138,000 against the claimant, the father of a minor child whose only income was roughly $756 a month in veterans benefits and who had only $1,500 in his bank account.

The court seemed especially put off by Guardian's argument that Martin declined to participate in an independent medical examination and that this indicated bad faith, finding, to the contrary, that his attested reasoning for hesitation about the examination was a concern with going to an unknown medical facility during the COVID-19 pandemic.  And the court noted that granting Guardian's motion for attorney fees "would tend to create a chilling effect on other plaintiffs seeking redress under ERISA."

Other courts have expressed similar concerns in denying fee applications asserted by insurance companies against disability plaintiffs.  For instance, in December 2021, the U.S. District Court for the Western District of Washington in Amoroso v. Sun Life Assurance Co. of Canada, declined to order the plaintiff to pay $66,000 in attorney fees to the insurance company simply because it "completely prevailed on the merits."

Noting that application of the five factors that courts apply in determining whether fees are warranted very frequently suggests that attorney fees should not be charged against ERISA plaintiffs, the court concluded that was certainly true with respect to Sun Life's application for fees in that case.  With respect to the first factor, the Amoroso court concluded that there was nothing approaching bad faith in the record.  The court found the second factor weighed strongly against a fee award because Sun Life did not show that Amoroso had sufficient assets to pay an award, and the facts that his home was valued at over $1 million and that he had a medical practice was simply irrelevant with respect to his ability to pay.

Addressing Sun Life's most revealing argument — that the third factor weighed in its favor because awarding fees would deter other participants from brining unsuccessful benefit suits — the court disagreed, reasoning that deterring disabled plan participants from suing for plan benefits was flatly inconsistent with ERISA's policy and with ERISA's fee-shifting provision.

Likewise, the court rejected out of hand Sun Life's argument that awarding fees would benefit all other participants and beneficiaries of the plan by saving the insurance company money and perhaps leading to lower premiums.  The court found instead that such an award "would deter insureds from seeking such benefits at all, and it would only embolden insurers in denying claims at the administrative level."

Considering the relative merits of the parties' positions — the final factor — the court declined to "force a losing ERISA plaintiff to pay an insurer's attorneys' fees based solely on the fact that he lost," reasoning that to do so "would not be consistent with ERISA, the better-reasoned cases decided under it, equity, or common sense."

In the court's view, such a fee award in favor of an insurer would only be justified in unusual circumstances not presented by Amoroso's case.  Numerous other recent decisions have had no trouble denying insurers' requests for attorney fee awards against unsuccessful benefit claimants.

At this point, it appears that the recent and sharp uptick in fee applications from insurance companies seeking fees against plan participants and beneficiaries who are unsuccessful in reversing a denial of benefits is meeting with little or no success in the courts.

Application of the Quesinberry test, along with a healthy reluctance to punish disabled, sick or retired plan participants for seeking to obtain plan benefits, has quite correctly led courts in all but the most unusual circumstances to reject these fee applications.  Let's hope these kinds of decisions discourage insurance companies from engaging in this unfair tactic.

Elizabeth Hopkins is a partner at Kantor & Kantor LLP in Northridge, CA.

Article: Bad Faith Prosecution in Trade Secrets May Lead to Fee Award (Or Not)

November 5, 2021

A recent article by Keith Paul Bishop, “Bad Faith Prosecution of Trade Secrets Theft May Lead to Attorney Fee Award (Or Not),” reports on bad faith and the prosecution of trade secrets theft and attorney fee awards in California.  This article was posted with permission.  The article reads:

In 1984, the California legislature decided to curb "specious" actions for misappropriation of trade secrets by enacting Section 3426.4 of the California Civil Code.  Cal. Stats. 1984, ch. 1724.   That statute provides:

If a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or willful and malicious misappropriation exists, the court may award reasonable attorney’s fees and costs to the prevailing party.  Recoverable costs hereunder shall include a reasonable sum to cover the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the prevailing party.

In 2006, the legislature amended the statute to add "and costs" in the first sentence and to add the second sentence.  Cal. Stats. 2006, ch. 62.

Not all theft of trade secrets claims are made in made faith, however, and such was the case in Dr. V Productions, Inc. v. Rey, 2021 Cal. App. LEXIS 752.   The case involved an attempted appeal from an order denying a motion for attorney's fees after a voluntary dismissal of a misappropriation of trade secrets claim.   The Court of Appeal held that the order was not separately appealable.

Article: Who Pays For Attorney Fees in Litigation?

August 23, 2021

A recent article by Julie Pendleton, “Who Pays For Attorney Fees in Litigation?,” reports on who covers attorney fees in litigation in Washington.  This article was posted with permission.  The article reads:

One of the first questions asked of me by clients when considering litigation is, “Can I make the other side pay for my attorney’s fees?”  In Washington State, the answer to that question is generally no.  This is referred to as the “American Rule.”

Courts have reiterated their support for the American Rule because (1) litigation is inherently a risky proposition, and a party should not be penalized for merely participating in a lawsuit; (2) those without means would be unduly discouraged from pursuing their legal rights if they feared that losing the case would also cost them their opponents’ legal fees; and (3) the cost of proving the amount of legal fees would pose an undue burden on judicial administration.  Blue Sky Advocates v. State, 107 Wn.2d 112, 123, 727 P.2d 644 (1986).

However, there are three exceptions to this rule and Courts can award attorney’s fees where: (1) there is a contractual provision for attorney’s fees, (2) a statute allows for the award of attorney’s fees, and (3) equity allows for attorney’s fees.

Contractual Attorney’s Fees

A litigant can recover attorney fees if the dispute involves a contract that includes a provision that the prevailing party is entitled to recover attorney fees.  It is quite common to see an attorney’s fee provision in adhesion contracts.  The good news is that in Washington, attorney’s fee provisions have to be applied bilaterally, or in other words, even if the contract only provides attorney’s fees provision if Party A wins, the Courts will apply it equally, so whichever party prevails will be entitled to have their attorney’s fees reimbursed by the other side.

While contractual attorney’s fees are enforced as a matter of course in Washington, they do require a “win” to apply.  In some cases where the case ends in a draw or a tie, where both sides lose a little and win a little, the Court may refuse to award fees.  In addition,  most courts will only award “reasonable” attorney’s fees, so an attorney’s fee provision in the Contract should not be treated as a blank check to direct your attorneys to overwork the case.  .

Statutory Attorney’s Fees

In Washington, a party can recover its attorney fees against another party if a law or statute that governs the case provides for the recovery of attorney fees.  There are many types of statutes that include these types of provisions. Examples include parties prevailing on: a Consumer Protection Act claim, an unpaid salary or wages claim, or a discrimination claim. However, each statute is different and should be read carefully.  Some statutes are mandatory while others allow the court to exercise discretion in deciding whether or not to award fees.  Further, some other statutes may only allow a winning plaintiff to recover fees, but not a winning defendant.  For example, if an employer is sued for minimum wage act violations and successfully prevails against the employee, while the employee probably requested the court to pay their fees under the minimum wage act, the employer would not be entitled to a reimbursement of fees at this stage.

Many clients are particularly interested in the frivolous lawsuit statute, which provides for fees and costs if a lawsuit is brought and continued for an improper purpose and is not grounded in fact.  RCW 4.84.0185.  This statute provides attorney’s fees if a litigant is subjected to a lawsuit that is either brought solely to harass or burden the defendant or otherwise is completely fanciful.  However, the standard is high to recover these sort of attorney’s fees as the litigant is required to prove  that the other side was either solely motivated by malice or another improper purpose or that the lawsuit had no chance of winning under any circumstances.  Receiving  attorney’s fees under the frivolous lawsuit statute is difficult, and should never be considered a guaranteed method of recovery.

Equitable Attorney’s Fees

In rare cases, a party can recover attorney’s fees from a party who engages in bad faith litigation conduct.  There are three types of bad faith litigation conduct: (1) pre-litigation misconduct, where a party engages in bad faith conduct that wastes private and judicial resources and forces a legal action to enforce a clearly valid claim or right; (2) procedural misconduct, where a party engages in bad faith conduct during the course of the lawsuit; (3) substantive bad faith, where a party intentionally brings a frivolous clam, counterclaim or defense for an improper motive such as harassment.  While most litigants believe that the other side has engaged in bad faith conduct in some form or another, recovering under this provision is extremely rare.

How does this Impact my Case?

If there is a method to recover attorney’s fees in a case (either by contract or statute), this is vital to discuss early on in the case with an attorney.  Not only can attorney’s fees provisions be used to drive early settlement, but they should also be considered when determining whether or not to bring a lawsuit or counterclaims.

Julie Pendleton is an attorney at Lasher Holzapfel Sperry & Ebberson PLLC in Seattle and a member of the firm’s Business Litigation and Trusts and Estates Litigation practice groups representing individuals and small companies throughout various stages of litigation and dispute resolution.

Article: When is ‘No Fee’ a Reasonable Fee?

March 6, 2021

A recent article by Karen M. Morinelli and Samantha E. Dunton-Gallagher, “When Is ‘No Fee’ a Reasonable Fee? 11th Circuit’s Guidance on Reasonableness in FLSA Attorneys’ Fees Cases,” reports on a recent FLSA fee ruling in the Eleventh Circuit Court of Appeals.  This article was posted with permission.  The article reads:

On February 1, 2021, in an unpublished opinion resolving a Fair Labor Standards Act (FLSA) attorney’s fees dispute, the Eleventh Circuit Court of Appeals, in Batista v. South Florida Womans Health Associates, Inc., struck another blow against unreasonable plaintiffs’ counsel seeking “reasonable” fees.  Mitzy Batista appealed the district court’s finding that it would be unreasonable to award her counsel, Elliot Kozolchyk, any attorney’s fees given his conduct during litigation filed under the FLSA.  Ultimately, the Eleventh Circuit remanded the case to the district court to make necessary findings of fact and to issue its ruling regarding whether the employer had mailed a replacement check.  However, in doing so, the Eleventh Circuit provided additional analysis as to when reasonable attorneys’ fees in an FLSA case may be no fee at all.

Background

Mitzy Batista was employed for slightly over two weeks in January 2018 by South Florida Woman’s Health Associates, Inc., when she was discharged for missing work.  Batista claimed that she never received her last paycheck and was owed $275.50 for the 38 hours she worked.  South Florida Woman’s Health Associates claimed that Batista’s last paycheck was mailed to her last known address and that because the check was not returned, and because Batista did not contact the company, South Florida Woman’s Health Associates assumed that all was well.  Batista, however, claimed that she called her former employer’s office the day after she was fired and asked for her final paycheck.  She alleged that at first she was told she would be paid by direct deposit, only to be told a few days later by the receptionist that the owner of the clinic, Edward D. Eckert, was not going to pay her at all.

Batista met with her counsel, Kozolchyk, three weeks after her employment was terminated.  But in the three months that followed, neither Batista nor Kozolchyk contacted her former employer to ask about the missing check.  In May 2018, Batista sued her former employer, raising claims under the FLSA including violations of the minimum-wage provision, liquidated damages, and attorneys’ fees and costs.  After receiving notice of the lawsuit, Eckert offered to send Batista a check for her unpaid wages but not her attorney’s fees.  Kozolchyk ignored Eckert’s initial offer.  When the counsel for South Florida Woman’s Health Associates and Eckert himself reached out again, they offered to clear up the matter and offered to pay the unpaid wages and court costs.

Kozolchyk initially ignored their communications and about a month later rejected the settlement offer.  Kozolchyk insisted on receiving attorney’s fees in an amount greater than what Eckert believed to be reasonable, stating, “my client cannot agree to shoulder the fees in this case … [for] those are recoverable against the defendants above and beyond the value of the claim.”  Kozolchyk then demanded his fees in the amount of $3,200, and Eckert counteroffered $1,100 in attorney’s fees.  Ultimately, the parties settled and agreed that Batista was to be paid $551 in unpaid wages, liquidated damages, and costs in the amount of $523, and that “the task of deciding the question of reasonable attorney’s fees” would be left to the district court.  The settlement was approved and Batista filed her motion for attorneys’ fees, seeking $10,675 in fees for the 30.5 hours Kozolchyk claimed to have expended litigating the case.  The district court referred the motion to a magistrate judge for a report and recommendation.

The magistrate judge, although “acknowledging the general requirement that prevailing plaintiffs in FLSA actions receive some award of attorney’s fees,” recommended that the court deny Batista’s motion and not award her attorney’s fees.  “Specifically, the magistrate judge found that (i) Defendants timely issued and mailed Plaintiff her final paycheck to the address she provided, (ii) Kozolchyk made no effort to contact Defendants to inform them that Plaintiff had not received her check before suing, and (iii) had he done so, he would have discovered that Defendants had sent Plaintiff’s paycheck to her address and were willing to issue another.”  Accordingly, the magistrate judge deemed Batista’s fee demands to be “excessive relative to the minimal work [i.e., a brief phone call] necessary to resolve the matter and make his client whole.”  The district court adopted the factual determinations and legal conclusions contained in the report and recommendation and rejected Batista’s objections, which included an affidavit in which she averred that she had telephoned someone in South Florida Woman’s Health Associates’ payroll department to request her last paycheck.  South Florida Woman’s Health Associates did not provide an affidavit to support its own allegations.

The Court’s Analysis

In determining whether the district court abused its discretion when it determined that a reasonable attorney’s fee in the case was no fee, the Eleventh Circuit reviewed guidance provided by analogous case law in the Southern District of Florida—including cases where plaintiffs were also represented by Kozolchyk.

Initially, the court discussed the “seminal district court case” of Goss v. Killian Oaks House of Learning, which was decided in 2003.  There, the plaintiff was a former employee who alleged she was owed two days of pay.  The former employer had issued a check and told her to pick it up, but instead of doing so, she hired a lawyer who sued the former employer for failure to pay wages.  The plaintiff’s lawyer asked for over $16,000 in attorneys’ fees where the matter settled for slightly over $300 for unpaid wages.  The Goss court stated that regardless of “the FLSA’s provision for a mandatory award of attorney’s fees for a prevailing plaintiff, ‘an entitlement to attorney’s fees cannot be a carte blanche license for Plaintiffs to outrageously and in bad faith run up attorney fees without any threat of sanction.’”  The Goss court “concluded that there are ‘special circumstances’ that can render the award of attorney’s fees unjust and that ‘so-called nuisance settlements represent such a circumstance.’”

The Eleventh Circuit also discussed Nelson v. Kobi Karp Architecture & Interior Design, Inc., a 2018 case in which “the [district] court denied in its entirety a fee request by counsel in [the] case, Mr. Kozolchyk.”  The plaintiff in Nelson had sued for two days of unpaid wages equaling $116, and after settlement, Kozolchyk had sought more than $9,000 in attorney’s fees.  In Nelson, the employer had immediately tried to resolve the matter after suit was filed by paying the unpaid wages at issue, plus $1,500 in attorney’s fees and costs, which Kozolchyk declined.  The employer, through counsel, then physically tendered the money in question and offered $2,000 in fees and costs, but Kozolchyk still declined.  The Nelson court ultimately determined that ‘Kozolchyk’s “sole intent [at that point] was to run up his bill.’”  Therefore, the Nelson court concluded, awarding any attorney’s fees would be “unreasonable, unjust, and inequitable.”

Similarly, in the 2019 case of Olguin v. Florida’s Ultimate Heavy Hauling, after Kozolchyk had filed suit, “the employer unconditionally tendered to Kozolchyk all the wages requested by the plaintiff, but Kozolchyk refused to accept the tendered paycheck” and lengthy litigation ensued on a separate claim, which he ultimately abandoned.  Kozolchyk ultimately sought attorney’s fees of over $36,000.  The Olguin court denied the request for attorney’s fees, finding that Kozolchyk’s “conduct was part of a strategy to churn the file and create unnecessary attorney’s fees.”

The Eleventh Circuit, analyzing the prior case law, clarified that the absence of any inquiry by counsel notifying an employer prior to filing an FLSA action was not in and of itself sufficient to deny attorney’s fees.  Specifically, the court noted that although it had denied fees in Sahyers v. Prugh, Holliday & Karatinos, P.L., a 2009 case in which the plaintiff’s counsel had filed a lawsuit without contacting the prospective defendants to resolve the matter extrajudicially, the holding was limited to the facts of that case—“an FLSA suit filed against fellow attorneys as defendants.”  Indeed, the court emphasized that an attorney is required under the Federal Rules of Civil Procedure “to make reasonable inquiry into the facts underlying a claim.”  That is, “litigation in which the defendant-employer has done what it should reasonably do to get payment to a former employee, but in which the employee or her attorney has made no pre-suit effort to inform the employer that the payment was never received creates a scenario fitting into the … ‘nuisance litigation’ category.”

Ultimately, the Eleventh Circuit remanded the case because the primary reason for the district court’s holding that attorney’s fees should not be awarded rested on “the finding that Defendants had actually mailed a final check to Plaintiff prior to her lawsuit.”  However, the record lacked evidence to support this finding because “Defendants had never supported their factual position with an affidavit, [so] their assertions were likewise insufficient to create an adequate evidentiary basis for findings that Plaintiff ultimately contested.”

Key Takeaways

The decision provides helpful guidance to employers.  In instances in which an employee is seeking unpaid wages where the amount of wages sought is partly or fully contested, the employer may want to consider tendering payment in full pre-suit where such sum is nominal.  Providing full tender of the payment may assist in preventing an overinflated award of attorneys’ fees and costs where the employee’s counsel’s primary intent is to “churn the file” and gain fees in bad faith.  When considering their options, employers may want to take heed that FLSA cases are fact-specific.

Karen Morinelli is the Office Managing Shareholder of Ogletree Deakins’ Tampa office.  As a former General Counsel and Vice President of Human Resources, she brings a strong business perspective to both client relations and in her approach to manage client issues.  She counsels employers in all aspects of labor and employment law including employer/employee relations, litigation, and alternative dispute resolution.

Samantha Dunton-Gallagher is Of Counsel in Ogletree Deakins’ Miami office and represents employers in cases that involve, among other things, alleged wrongful termination, harassment, discrimination, wage and hour violations and unfair business practices.  She regularly interacts with state and federal agencies, such as the U.S. Department of Labor and the Equal Employment Opportunity Commission (EEOC).

This article was drafted by the attorneys of Ogletree Deakins, a labor and employment law firm representing management, and is reprinted with permission.  This information should not be relied upon as legal advice.  

Nelson Mullins Discloses Hourly Rates in Patent Fee Request

March 1, 2021

A recent Law.com story by Mike Scarcella, “Denied a Seal, Nelson Mullins Reveals Rates in Fee Petition in Patent Suit,” reports that, for at least the second time in the span of a year a federal trial judge refused to let a major U.S. law firm keep hourly rates and other billing-related information secret as part of an effort in court to squeeze legal fees from an opponent.

Denied its bid for secrecy, one of the firms, Nelson Mullins Riley & Scarborough, last week resubmitted its attorney fee petition fully unredacted in the U.S. District Court for the Western District of North Carolina.  The other firm, King & Spalding, abandoned an effort last year in Washington’s federal trial court after a judge said he would unseal supporting records showing hourly rates if the firm wanted to press its fee request.

Nelson Mullins sought $292,340 from a private plaintiff who filed patent claims against the motorsports company Simpson Performance Products and an engineer there.  The law firm won a key ruling in early February, but the court, just one day after the fee petition was filed, denied the request.  King & Spalding had sought $665,000 from the U.S. Department of Health and Human Services after successfully obtaining records in a federal Freedom of Information Act lawsuit.

Specific hourly billing rates and other internal records about fees generally are not things that law firms and lawyers are eager to discuss out in the open.  Indeed, both Nelson Mullins and King & Spalding had argued hourly rates and other billing documents were sensitive business records that should be kept confidential.  Still, information about billing often becomes public as a matter of routine in any number of settings, including in bankruptcy filings, certain types of litigation and in some law firm contracts with government clients.

A bankruptcy case in the U.S. District Court for the Northern District of Texas recently showed hourly rates for Kirkland & Ellis partners to be between $1,085 and $1,895, and associates’ hourly rates between $625 and $1,195.  In California, a federal judge last month ordered legal fees to be paid to a team from Gibson, Dunn & Crutcher that successfully represented Rachel Maddow as a defendant in a defamation case.  Gibson Dunn partner Theodore Boutrous Jr., prominent for his First Amendment advocacy, was shown as billing $1,525 hourly last year.

Nelson Mullins “asks the court to seal the amount of attorneys’ fees being requested—the very substance of the relief that it is seeking from the court—along with how it calculated the fees (counsel’s hourly rates and the time expended during their representation),” U.S. District Judge Kenneth Bell wrote in a Feb. 24 order.  “Thus, the effect of a request to seal this information is tantamount to a request to issue a secret order, as the court could not even grant much less fully discuss the merits of [the legal fee] request without disclosing the amount of fees requested along with counsel’s hourly fees, etc.”

In the King & Spalding matter, U.S. District Judge Amit Mehta said “the records that plaintiff asks to keep under seal go to the very heart of what is before the court: questions concerning the reasonableness of plaintiff’s counsel’s hourly rates and the reasonableness of the time they expended on this matter.”

Both judges declined the invitation to seal the law firms’ hourly rates and other records.  In the case involving King & Spalding, the firm dropped its move to get fees after Mehta said he would unseal rate information if the firm moved forward.  Those details remained sealed.  “Once a matter is brought before a court for resolution, it is no longer solely the parties’ case, but also the public’s case,” wrote Bell, a former McGuireWoods partner who’d spent more than 10 years in the firm’s Charlotte office before joining the bench in 2019.

Bell said that “except in very limited circumstances, the court’s business must be conducted openly, with public access guaranteed to instill confidence in the fairness of the proceedings and inform the public about the law.” He added: “[B]y choosing to seek attorneys’ fees in an open court, Simpson must necessarily disclose the amount of the award it seeks and the underlying basis for its fees.”  To “avoid any surprise,” Bell said he would allow Nelson Mullins to withdraw its motion for legal fees or refile it in an unredacted form.  That firm submitted 85 pages of arguments, declarations and billing records to back its request for fees.

“The rates charged by defendants’ counsel were well within, if not below, the range typically charged for complex litigation in North Carolina,” wrote Charlotte-based Nelson Mullins partner Craig Killen, who said he billed at $425 hourly for the case.  Another partner, Robert McWilliams, billed at $405 on the case.  Three associates billed at hourly rates between $320 and $345, according to the law firm’s motion for fees.

In arguing for fees, the Nelson Mullins team trumpeted the “unusual questions” raised during the patent litigation.  “This case was pending over two years and proceeded through the extended period of discovery,” Killen wrote in a court filing.  Nelson Mullins said its request for fees “is made with some reluctance because Simpson has no interest in ‘punishing’ an individual plaintiff.”  But, the law firm said in its court filing, “much of the expense incurred by the defense could have been avoided if plaintiff had not pressed unreasonable and objectively baseless positions.”

On the day after refusing to allow Nelson Mullins to file its billing records under seal, Bell, the trial judge, rejected the firm’s request.  “In the exercise of its discretion, the court does not find this case to be exceptional,” Bell wrote in an order last week.  “While the court determined that defendants were fully entitled to summary judgment (and to be clear does not intend by this decision to indicate that it has any uncertainty over that conclusion), defendants have not shown that plaintiff pursued her claims frivolously, for an improper purpose or in bad faith.”