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Category: Fees for Fees / Fees on Fees

Epic Games Calls Apple’s $73M Attorney Fee Request An Overreach

February 27, 2024

A recent Law 360 story by Bryan Koenig, “Epic Calls Apple’s $73M Fee Bid An Overreach”, reports that Epic Games blasted Apple for seeking $73.4 million in legal fees following the pair's California federal court antitrust battle over App Store payment fees, arguing that antitrust claims like Epic's are immune from legal fees and that Apple cannot wrap its demands in successful contract breach counterclaims.

Apple's fee bid, according to Epic, "overreaches at every turn" after the U.S. Supreme Court refused to consider a Ninth Circuit decision upholding a district court ruling largely siding with the iPhone maker, except on Epic's California state law claims targeting Apple rules barring app developers from steering users to alternative payment options.

"Apple seeks recovery of unrecoverable fees and costs incurred in defending against Epic's antitrust claims; it seeks recovery of fees and costs it incurred in defending against other plaintiffs' antitrust claims; and it seeks recovery of categories of expenditures that go beyond what the Ninth Circuit's ruling in this case permitted," Epic said in its opposition brief. "Apple even seeks its fees and costs incurred in seeking its fees and costs, even though the vast majority of those fees and costs it seeks are not recoverable and Apple made no effort to meet and confer with Epic to determine the scope of any dispute before filing the motion."

According to Epic, Apple's mid-January bid for legal costs is grounded in the latter's win on claims that Epic breached its developer program licensing agreement when offering users an in-app workaround for the up to 30% commission that Apple charges on in-app purchases, such as through Epic's Fortnite game juggernaut. Epic is only the most prominent of multiple plaintiffs to target those commissions.

The problem with a fees bid based on the contract breach claims, Epic said, is that a California state appeals court held in Carver v. Chevron USA Inc. that defendants, even ones who successfully defeat antitrust claims, cannot claim any fees incurred in that defense.  According to the brief, it doesn't matter that the developer program licensing agreement otherwise calls for plaintiffs to reimburse Apple.

"Moreover, any fees and costs that are 'inextricably intertwined' with those incurred in defending against antitrust claims also cannot be recovered, even if they were incurred also in connection with a breach of contract claim," Epic said.  "Apple may thus recover only those fees and costs it incurred specifically to litigate separable, non-antitrust claims — i.e., fees and costs attributable to work performed for Apple's contract claims that did not overlap with its defense against Epic's (or other plaintiffs') antitrust claims."

But Apple hasn't tried to separate or identify those costs, according to the brief. "To the contrary, Apple completely ignores this binding precedent and seeks primarily and specifically the unrecoverable fees and costs it incurred in defending against Epic's antitrust claims," it said.

Epic also assailed Apple for seeking to recover costs incurred in defending against other plaintiffs who'd also targeted the Apple rules leaving the App Store as the only way to get apps on iPhones.  It attacked Apple for going beyond the Ninth Circuit mandate to pursue only attorney fees; according to Epic, around 40% of the fees Apple has claimed cover costs for things like expert witness and consulting fees, travel and logistical support.  And it assailed Apple for seeking costs incurred from putting together the motion for costs.

"Moreover, Apple did not meet and confer with Epic prior to filing its motion as required by Civil Local Rule 54-5, and, as a result, incurred attorneys' fees and costs that it could well have avoided," Epic said.  "Specifically, Apple unilaterally engaged two experts and a team of nine analysts from an expert consulting shop to review its invoices, without so much as checking whether Epic intended to dispute any of its calculations or the reasonableness of the fees and costs it incurred."

Epic said it hasn't tried to assess the accuracy of Apple's fees bid, preferring to leave that issue until after the court determines the appropriate scope of any fees bid.  It further called a detailed review "wasteful when Apple has sought to sweep in much to which it is not legally entitled" and it assailed Apple for providing "only an incomplete set of materials just days before this opposition was due."

Insurer Ordered to Pay Casino’s 'Fees for Fees'

January 30, 2024

A recent Law 360 story by Alexa Scherzinger, “Insurer Ordered To Pay Casino $55K in Attorney Fees”, reports that an insurer must pay a Las Vegas casino and resort more than $55,000 in attorney fees after a Nevada federal judge sanctioned the carrier in September, ruling that the insurer failed to produce relevant portions of its claims manual during a COVID-19 coverage dispute.  In an order, U.S. Magistrate Judge Elayna J. Youchah ordered Affiliated FM Insurance Co. to pay Treasure Island LLC the fees within a month, exercising her discretion and awarding the resort "fees on fees" in addition to traditional fees for hours billed by counsel.

Neither Affiliated nor Judge Youchah objected to the rates charged by Treasure Island's counsel, according to the order, so the court was tasked with deciding whether the hours billed were reasonable and whether the casino was entitled to recover additional attorney fees incurred from the preparation of its memorandum seeking fees.

Judge Youchah reduced the total amount billed for preparing the motion for sanctions, reviewing the opposition and preparing the reply from nearly 90 hours to just over 67, reducing the fees by about 25% from $55,000 to $42,000.  However, the judge said, in the absence of an award for fees incurred in preparing the memorandum, the court would effectively reduce the award by another 30%, undermining the intent of the fee award granted.

Accordingly, Judge Youchah awarded Treasure Island $13,000 in fees-on-fees, bringing the total award back up to just over $55,000. In September, Affiliated was ordered to pay the fees and costs associated with the motion for sanctions, but not for past motions by the resort seeking to compel production of the insurer's claims procedures.

Treasure Island originally sued Affiliated in May 2020, alleging that the insurer wrongfully denied coverage for its pandemic losses and claiming that it was entitled to recover more than $1 billion in damages from the "communicable disease" under its all-risk policy.  The court's ruling on sanctions barred Affiliated from arguing that physical loss or damage can't be caused by a communicable disease, according to the order.

Former Twitter Executives Seek Coverage of Legal Expenses

August 22, 2023

A recent Law 360 story by Rose Krebs, “X Corp. Accused of ‘Shirking’ Its Obligations in Legal Fee Row”, reports that three former top Twitter executives continue to urge the Delaware Chancery Court to order the Elon Musk-owned social media giant, now called X Corp., to reimburse them for at least $1.1 million in legal costs, accusing the company of "perpetually making excuses" for not meeting its obligations.  In a brief, former Twitter CEO Parag Agrawal, former Chief Legal Officer Vijaya Gadde and former Chief Financial Officer Ned Segal told the court that the company is "gaining a well-earned reputation for shirking its commitments."

They took aim at a cross-motion for summary judgment and accompanying brief X Corp. filed last month, after Agrawal, Gadde and Segal had already sought to have Chancellor Kathaleen St. J. McCormick summarily order the company to pay legal fees they have incurred in connection with Twitter-focused lawsuits and regulatory inquiries.

The three assert that, in their summary judgment bid, they established "beyond any doubt that Twitter has breached its advancement obligations."  "From the beginning of this dispute, plaintiffs have operated by the book — making timely demands for advancement, providing undertakings, and submitting good faith certifications from counsel attesting to the reasonableness of plaintiffs' attorneys' fees," their brief said.  "Plaintiffs have done everything prescribed by Delaware law to obtain advancement from Twitter."

They accuse the company of causing months of delays and "perpetually making excuses for its failure to meet its advancement obligations."  "Although Twitter would like to pretend it is a party that dutifully pays its contractual obligations as they come due, it is in fact perpetually delinquent and is gaining a well-earned reputation for shirking its commitments," they contend.

In a filing last month, they said the social media giant had advanced them roughly $575,000 for their legal costs, but is still "wrongfully" withholding about $1.1 million owed, along with roughly $270,000 in interest and "fees-on-fees" for having to litigate the Chancery suit.  The three sued the social media giant in Chancery Court in April, saying they incurred significant expenses after becoming involved in several legal proceedings because of their former roles as Twitter executives.

They contend that per company bylaws and indemnification agreements, X Corp., as Twitter's successor, is obligated to advance their legal expenses.  Musk fired the three when he took ownership and control of the business in October 2022.  Indemnification agreements covering them, however, remain in effect for proceedings related to their former position as officers, the complaint said.  In a filing last month, the three argued: "Put simply, the world's richest person does not pay his bills."

But, its own filing, X Corp. has called into question the reasonableness of fees related to Gadde's appearance before the House Committee on Oversight and Reform during the committee's investigation into the influence of social media on U.S. elections.  In its own summary judgment filing last month, X Corp. called Gadde's request for fees excessive.

"Unlike many advancement actions, here, X Corp. does not challenge Gadde's entitlement to advancement of reasonable expenses — the company does not dispute that her testimony was required by reason of Gadde's role as former CLO of Twitter," the filing said. "Rather, the company here is challenging only the reasonableness of the fees for which Gadde seeks advancement with respect to the Congressional Inquiry."

X Corp. said Gadde is asking the company to advance "over $1.1 million" for fees incurred by her counsel, Sidley Austin LLP, "in connection with testifying for a single day."  That amount is "nearly 1,100%" what was incurred by two other former Twitter executives who also testified at the same hearing and were "similarly situated witnesses," X Corp. contended.

"The extreme delta between Gadde's legal fees and those of not one, but two separately represented, similarly situated, former Twitter executives who engaged similarly reputable law firms, is on its own sufficiently shocking to require that the reasonableness of Gadde's fees be thoroughly addressed now," the company argues.

X Corp. asked the court to "reduce any advancement award related to Gadde's representation in the congressional inquiry from $1,153,540.81 to $106,203.28 because Gadde failed to prove that all the fees and expenses were reasonably incurred."

But, ina filing, Gadde, Agrawal and Segal fired back.  "Twitter's challenge to these fees is particularly troubling given that Twitter's owner, Elon Musk, contributed to the exposure and complexity of the oversight inquiry when he publicly and repeatedly focused on Gadde and personally toured Capitol Hill to incite Republican lawmakers leading the oversight inquiry," their filing said.  They argued that "the record demonstrates that Gadde's fees incurred in the oversight inquiry are reasonable."

The three criticized the company for venting "invective at Gadde's counsel," including asserting that it engaged in "over-lawyering" and "extensive duplication of effort."  Gadde’s attorneys spent many hours prepping her for the committee’s questions, using five partners with hourly rates from $1,300 to $1,825, two associates charging more than $1,200 an hour and non-lawyer “policy adviser” Tracey LaTurner, who billed at $665 an hour.

"Aside from its invective, the only basis for Twitter's cross-motion is a false comparison between Gadde's attorneys' fees and the attorneys' fees of two other witnesses who testified in the same oversight inquiry," they said.

Construction Firm Challenges Utah’s Attorney Fee Request

October 31, 2022

A recent Law 360 story by Caleb Symons, “Utah’s $100K Atty Fee Bid Excessive Construction Co. Says” reports that one of the federal contractors working on a Colorado gold mine when it ruptured in 2015 denies owing the state of Utah more than $100,000 in attorney fees for mishandling certain records, calling the request "unreasonable" because it avoided a harsher punishment for that infraction.  The sanctions dispute — part of multidistrict litigation over the Gold King Mine blowout, which released 3 million gallons of toxic waste — centers around Utah officials' claim that Harrison Western Construction Co. withheld documents detailing its construction plans at the mine.

U.S. District Judge William P. Johnson ruled earlier this year that Harrison Western must pay the state's attorney fees in those proceedings, but the company now seeks to substantially reduce an estimate of its obligation.  Noting that the judge declined to issue a more severe punishment, the Denver-based construction firm said last week that Utah should not be allowed to recoup its full legal bill after achieving only "relatively minimal success" on its March 7 sanctions request.

Rather than covering more than $100,000 in attorney fees — which includes Utah's estimate of future expenses in the ongoing spat — Harrison Western proposed paying the state less than $29,000 for those costs.  "Given Utah did not prevail on the two primary sanctions it sought, it should not be awarded fees on fees," the company said.  "At most, it should be awarded only one-third of the attorney fees and costs sought for preparation of its fee request, as it prevailed on only one of three sanctions sought."

State authorities asked Judge Johnson in early October to approve their $105,578 sanctions bill, claiming that Harrison Western "refused to participate in a good-faith effort to resolve this motion for an award of attorneys' fees without requiring judicial intervention."  The company responded that Utah is entitled to only a fraction of that sum because the judge had approved only the "least severe" of its sanction requests.

Moreover, the state's compensation formula — based on an hourly fee of $795 for partners and $550 for associates — is well above the typical rate in both New Mexico, where the MDL is located, and the Rocky Mountain region, according to Harrison Western.  Nor has Utah shared enough information about the hours worked by its King & Spalding LLP lawyers to prove an accurate accounting, the company added.

Quinn Emanuel Client Hit With Attorney Fees in IP Action

May 5, 2022

A recent Law 360 story by Andrew Karpan, “Quinn Emanuel Client Hit With $160K In Fees In IP Fight” reports that a China-based client of Quinn Emanuel Urquhart & Sullivan LLP was ordered to cough up over $160,000 in legal fees after its defense in a copyright case ran afoul of California's anti-SLAPP statute.  The amount that Northern District of California Judge Edward Chen ultimately arrived at was about $12,000 less than the final fee request from lawyers at the small San Francisco firm Tyz Law Group PC after they beat a dismissal bid in a copyright suit they leveled on behalf of Moonbug Entertainment. Moonbug is the company behind the children's educational brand CoComelon, which runs popular shows on YouTube and Netflix.

The suit accuses a Fuzhou City-based company called BabyBus (Fujian) Network Technology Co. Ltd. of building "its Super JoJo YouTube business by blatantly copying CoComelon."  BabyBus' lawyers at Quinn Emanuel responded last September with allegations that Moonbug's lawyers had been "using baseless [Digital Millennium Copyright Act] notices to effectively shut down BabyBus' lawful, competitive business."  DMCA notices are sent to companies like YouTube to ask them to take down content that infringes someone's copyright.

The legal fight is ongoing.  But Judge Chen had rejected outright BabyBus' contention that the way Moonbug pursued its case against BabyBus violated certain state laws, such as Section 17200 of the California Business & Professions Code.  This defense was legally hopeless, Judge Chen wrote last year: "No amendment can cure the fact that the state law counterclaims are preempted by the Copyright Act."

"Moonbug estimated it spent 'roughly' 324 hours in total, accounting for both compensable and non-compensable time spent on the joint motions to dismiss and strike," Judge Chen wrote.  According to the decision, the Moonbug lawyers had initially offered to settle the dispute over their legal bills for the whole effort for $96,152. BabyBus offered to pay just $15,580 instead.

The Moonbug lawyers then asked the court for $155,620 in fees but, in a later filing in the matter last year,  they beefed the number up to $173,553.  The new figure included an additional $17,933 in what the company's lawyers called "reasonable fees-on-fees" that were "not accounted for in its original fees-on-fees request," referring to legal work done in connection with the fee motion.  Judge Chen told BayBus to pay out $161,683.

"Moonbug's request for fees on fees is not unreasonable," Judge Chen decided.  He also rejected an argument from the BabyBus team that Tyz Law had deliberately overstaffed its legal response in order to collect more in fees.  "Moonbug's use of five attorneys of various levels of experience on its anti-SLAPP motions is nothing out of the ordinary," the ruling read.  The ruling did, however, trim out a little over 10 hours of work that Tyz Law had attached to the motion "for unnecessary work on a reply brief."