A recent Law.com by Riley Brennan, “Nearly $700K in Attorney Fees and Costs Awarded Following $8M Judgment in Wrongful Incarceration Case,” reports that, following an $8 million civil rights judgment his favor, a former Massachusetts prisoner and his Chicago-based counsel were awarded an additional $743,395.87 in attorney fees and costs.  U.S. District Judge Timothy S. Hillman of the District of Massachusetts partially granted and partially denied a former prisoner’s motion for attorney fees and costs, awarding the plaintiff $675,194.88 in fees and $68,200.99 in costs in an April 7 opinion.

The case originated from plaintiff Natale Cosenza’s Section 1983 action, which alleged constitutional claims against various defendants, including the city of Worcester and multiple Worcester police officers, “stemming from his conviction and 16-year incarceration for armed burglary.”

 A jury ultimately found two of the defendants—Kerry Hazelhurst and John Doherty—liable for violations of plaintiff’s civil rights and awarded $8 million in compensatory damages and $30,000 in punitive damages.  Cosenza then moved for the awarding of attorney fees and costs, with defendants arguing against the proposed rates, billing, hours, and costs.  Hillman determined that most of the billing was appropriate, with the majority of the plaintiff’s attorneys’ rates being reasonably allocated.  However, there were three exceptions.

According to Hillman, “three partners spent a significant amount of time drafting motions, work that is typically done by associates and reviewed by partners.  Those three partners will be reimbursed at the mid-level associate rate of $300 for those hours.  Similarly, work on the ministerial portions of fee petitions is reimbursed at a reasonable paralegal rate of $100 an hour.”

Further, Hillman determined from the three attorneys’ descriptions that “only one described their work as legal,” and thus only that attorney’s hours should be “reimbursed at the associate rate, as there are substantive legal issues raised in the fee petition.  The other attorneys will be reimbursed at a paralegal rate for those hours.”

Plaintiff’s also requested for reimbursement of the services of an investigator, which defendants argued against, finding “that there should be no reimbursement for the services of an investigator where the case ultimately turned on the evidentiary record from the original criminal case.”  However, the court didn’t agree.

According to Hillman, the defendants failed to cite any case law for their argument.  Additionally, it did not strike the court as “unreasonable to hire an investigator in a case where the plaintiff’s allegations were that the police lied and destroyed evidence, even if the plaintiff is unable to point to a specific piece of evidence the investigator discovered that was introduced at trial.”  Thus the court, in factoring the investigator’s travel costs to serve defendants and conduct her investigation, determined $100 an hour was a reasonable rate.

In terms of the plaintiff’s counsel’s hours, defendants argued that the case was severely overstaffed, and that two attorneys would have been sufficient.  According to the court, this assertion was on the theory that the case as the case was defended by two attorneys, two attorneys was sufficient for plaintiffs.

“First, reasonable staffing for bringing and prosecuting a civil rights case is not identical to reasonable staffing for defending a civil rights case.  Apart from the normal burden of proof the plaintiffs must shoulder, they must overcome qualified immunity and evidentiary hurdles. But more importantly, the defendants’ objection to facing down 11 opposing attorneys is misleading,” said Hillman.

Hillman disagreed with the defendants’ assertion, highlighting that five of the total eleven attorneys requested minimal hours.  The remaining attorneys, that requested substantial hours, “were split into pre-trial and trial teams of three attorneys each.  Thus, at any given time in the litigation, plaintiff had three counsel and defendants had two—given the structural differences noted above, not an unreasonable staffing discrepancy.”

A similar structure was set up amongst the counsel’s paralegals, leading the court to conclude that a reduction for overstaffing was not warranted.  The court also rejected the defendants’ argument “that because their counsel worked 536 hours between May 4, 2022, and February 13, 2023, and the plaintiff’s counsel worked 770 hours during that time period, the time spent by defendants’ counsel is reasonable and a 30% reduction is in order.”

“Defendants cite no case law to support this position, which would allow an across-the-board reduction for a discrepancy in hours that is not even reflective of the total time spent on the case nor, in the court’s view, particularly egregious,” said Hillman.  “The relevance of that time period is also unclear to this court.  This court does not find a reduction for overbilling warranted on that ground.”

Defendants’ assertion that the time spent “getting attorneys up-to-speed on the case or discussing and strategizing about the case are not billable and request a 10% reduction,” was also rejected by Hillman, who didn’t find the “conferencing” hours for such a complex case unreasonable.  However, the plaintiff’s request for a 50% increase for their success was rejected.  “This was an unusual case, but this court does not find it justifies an increase.  And while this court recognizes the skill of plaintiffs’ counsel, that is reflected in the lodestar,” said Hillman .

The court also rejected the defendants’ counterargument, that due to the plaintiff’s “mixed success,” a 50% decrease was appropriate.  The court rejected the defendants’ theory that a downward variance was appropriate as the plaintiff achieved “nominal success,” finding that an $8 million judgment wasn’t merely considered a “nominal” success.

“Still, the plaintiff’s losses along the way must be accounted for,” determined the court.  “The plaintiff’s counsel did not delineate what they were working on in their fee petition.  That means a blanket reduction is necessary if the claims are not severable.”

“The legal theories and facts in this litigation are neither wholly severable nor so overlapping that they are incapable of independent analysis,” Hillman continued.  “The failure to intervene and malicious prosecution legal theories, for instance, largely overlap factually and overlap to some extent legally with the conspiracy claims insofar as they are all somewhat parasitic on a due process violation.  The doctrine of qualified immunity permeated this litigation, and while this court analyzed it claim-by-claim, it would be difficult for plaintiff’s counsel to separate research done on the doctrine in that way.  That said, although the underlying alleged facts were all of a similar type—they all supported allegations that plaintiff’s conviction was the result of the bad actions of law enforcement—they were all distinct from each other.”

The court issued a 20% reduction for pretrial work and a 5% reduction for post-trial work, to account for the “minor losses” plaintiff suffered after summary judgment.  Thus, the plaintiff’s fees, after the 25% reduction, and after applying the local Worcester rates and reductions for mixed success and overbilling, is reduced from $1,766,002.50 to $675,194.88.

In regards to the plaintiff’s cost requests of $86,605.41 under 28 U.S.C. § 1920 and 42 U.S.C. § 1988, defendants objected “to costs on several broad grounds, requesting an 80% reduction” without citing any case law.

The court rejected “defendants’ across-the-board reduction,” examining their objections in turn.  The defendants pointed to what they described as plaintiffs counsel’s “remarkable” travel costs, including repeated flights “back and forth from Chicago, railway travel, hotel, car rental and other costs for client meetings, ‘investigation,’ and deposition preparation.”

According to the court, a Chicago law firm incurring travel costs to litigate in Worcester isn’t remarkable, but the “out-of-state law firms must justify out-of-state costs by showing that no similar in-state services exist.”

“Plaintiff’s counsel argues Loevy & Loevy is a specialized firm that specializes in wrongful incarceration cases, but this court finds that plaintiff could have found comparable representation in Boston,” Hillman said.  “Therefore, only travel costs from Boston to Worcester are justified.”  Therefore, Hillman said, a reduction of $15,858.06 in travel costs was appropriate.

The court also deducted $1,001.36 for the plaintiff’s counsel using a rental car for the week of the trial to go from their hotel to the courthouse, after concluding that “a taxi or ride-share service would cost an average of $40 a day, and so over a six-day trial transportation should have cost them $240.”

Costs were further reduced by $1,145, after defendants alleged that the deposition costs were duplicative, as plaintiffs had requested costs the recordings of depositions and the transcripts.  The court determined that for at least one of the witnesses the video deposition was shown at trial, and the costs of the other video recordings were deducted.  $400 in costs were deducted as not all of the plaintiff’s attorneys granted pro hac vice filed motions or argued in the court, in response to defendants objection to all ten of the attorneys receiving reimbursement for pro hac vice admission.

Thus, after “reducing out-of-state costs ($15,858.06), the car rental ($1,001.36), recordings of depositions ($1,145), and excessive pro hac vice applications ($400), this Court finds $68,200.99 in costs proper,” the plaintiff was awarded a total of $743,395.87 in fees and costs.

A recent Law 360 by Piper Hudspeth Blackburn, “Sabre Says US Airways Not Entitled to Fees For $1 Win,” reports that Sabre urged a New York federal court to reject a magistrate judge's recommendation that the airline booking giant cover attorney fees for US Airways after a decade of antitrust litigation that resulted in a $1 jury award to the airline.  Sabre claims that U.S. Judge James L. Cott made a series of errors in his April 10 report, particularly in applying the Supreme Court's decision in Farrar v. Hobby, which established the standard for deciding whether a plaintiff prevailed in a civil rights case.  According to the report, Farrar applies only to the reasonableness of fee awards in civil rights cases and not mandatory fee statutes.

However, Sabre argued that the Supreme Court ruling shows that the "reasonable attorney's fee" due when a plaintiff obtains only nominal damages is no fee at all.  Courts have continued to apply this ruling in cases that include fee awards under the Clayton Act, Sabre continued.  US Airways, now owned by American Airlines, has insisted that the small amount of damages it received shouldn't affect its ability to recover costs and attorney fees.  Sabre also asked the court to reject Judge Cott's finding "that the meaning of 'reasonable attorney's fee' in the civil rights fee statute differs from the meaning of identical language in the Clayton Act."

In his report, Judge Cott pointed toward a Second Circuit decision on United States Football League v. National Football League because it contained issues nearly "identical" to this one.  In that case, the court had to determine whether a plaintiff is entitled to reasonable attorney fees "after decade-long antitrust litigation resulting in a $1 jury verdict only on Sherman Act Section 2 grounds."  Not only did the court decide that the plaintiff could recover attorney fees, it "further explained that civil rights cases are inapposite as they concern discretionary awards of fees, while Section 4 mandates them," the report continued.

However, Sabre said that the USFL decision is actually in line with its position, claiming that it bolsters the argument that Congress intended that the amount of fees awarded under "the civil rights statute 'be governed by the same standards which prevail in other types of equally complex Federal litigation, such as antitrust cases.'"

A recent Law 360 story by Dorothy Atkins, “9th Circ. Won’t Award $1.1M Atty Fee in Tribes’ Gambling Case,” reports that the Ninth Circuit rejected a request by five Native American tribes for $1.1 million in attorney fees for recently winning a federal Indian Gaming Regulatory Act suit against California for the state's bad faith negotiation tactics, finding that the federal statute does not authorize fee-shifting.  In a 14-page opinion written by U.S. Circuit Judge Daniel A. Bress, a three-judge panel rejected the tribes' argument that their suit, which only asserted federal claims under the IGRA, implicates "substantial and significant issues of state law" and entitles them to fees.

"We hold that because the plaintiffs prevailed on a federal cause of action, they are entitled to attorneys' fees only if federal law allows them," the opinion says.  "Because it does not, we deny the tribes' fee request."  The opinion noted that although the tribes "creatively" argue that the case is "highly unusual" because state law was supposedly "central and essential" to win its dispute, the tribes aren't entitled to fees because they only asserted and prevailed on a federal claim.

The panel additionally rejected the tribes' arguments that their position is supported by the Ninth Circuit's 2018 decision in Independent Living Center of Southern California Inc. v. Kent, which awarded attorney fees notwithstanding the fact that the action was not based on a state law cause of action.  The opinion pointed out that the facts of Kent were "somewhat knotty" and distinct from this litigation.

"Kent did not suggest that the prevalence of a state law backdrop could somehow justify applying a state law attorneys' fees provision to a purely federal claim," the opinion says.  "It did not create some kind of 'exception' to the usual rules, as the tribes maintain."

The Ninth Circuit's decision is the latest development in a lawsuit that was filed in January 2019 by the Chicken Ranch Rancheria, Chemehuevi Indian Tribe, Blue Lake Rancheria, Hopland Band of Pomo Indians and Robinson Rancheria, claiming that the state of California had acted in bad faith when the state allegedly insisted that the tribes negotiate unrelated topics for their soon-to-expire gambling agreements, which are required to operate games.

In the wake of that decision, in September, tribal leaders sought to recoup $1.1 million they estimated spending on the litigation, noting that the attorney fee estimate was based on reduced rates and reflected a proper "lodestar" amount, or the number of hours reasonably spent on the litigation and a reasonable hourly rate for the attorneys.  That calculation, on the high end, proposes $980 per hour for Lester J. Marston of Rapport and Marston, which represents all the tribes except the Blue Lake Rancheria.  At the low end, it proposes $300 per hour for Marston's son, a law clerk at the same firm, the tribes argued.

But California fired back in October, arguing that the tribes are ineligible to recover fees under the IGRA, because the federal statute contains no provision for recovering such expenses.  Even if the tribes were eligible to recoup such expenses, the state argued that it is immune from furnishing those funds under the 11th Amendment of the U.S. Constitution because it never waived its sovereign immunity in the litigation.

In the opinion, the panel concluded that the tribes aren't entitled to fees but also noted that the prior panel decision also found that California explicitly consented to the federal court's jurisdiction over the dispute, and therefore the state can't now invoke its sovereign immunity defense in avoiding fees if they had been allowed under the IGRA.

A recent Law 360 story by Piper Hudspeth Blackburn, “Judge Wants Sabre to Pay Fees in Airline’s $1 Antitrust Win,” reports that a federal magistrate judge has recommended that airline booking giant Sabre should cover the costs of attorney fees for US Airways, which pursued antitrust claims that ultimately resulted in a mere $1 jury award after more than a decade of litigation.  In a report, U.S. Magistrate Judge James L. Cott determined that the airline is entitled to fees because of the "plain language" of federal antitrust law despite the nominal damages award. Judge Cott also noted that the amount could be reduced after looking at billing records.

Because a jury returned a verdict for US Airways on its monopolization claim under Section 2 of the Sherman Act, "a plain reading" of Section 4 of the Clayton Act allows US Airways to recover the cost of the suit, "including a reasonable attorney's fee," the report stated.  In 2022, a Manhattan federal jury found, after a three-week trial, that Sabre willfully maintained monopoly power through exclusionary conduct. It was a redo of a 2016 trial that had awarded US Airways $15 million in damages before the Second Circuit scrapped the verdict on technical legal grounds.

Sabre has argued that U.S. Supreme Court precedent shows that when a party recovers only nominal damages, the only reasonable fee is "usually no fee at all."  However, US Airways insists that the damages it received shouldn't affect its ability to recover costs and attorney fees.  According to Judge Cott, Sabre's argument fails because the precedent the booking company pointed towards, Farrar v. Hobby, doesn't apply to this case but rather to the reasonableness of fee awards in civil rights cases. Farrar holds that the reasonableness of a fee award is indicated by the size of damages awarded.

"Farrar concerned the entitlement to fees under § 1988 of the U.S. Code, not the Clayton Act or any other mandatory fee statute, and there is no suggestion in the opinion itself that its holding extended beyond § 1988," the report stated.  Judge Cott pointed toward a Second Circuit decision on "an identical issue" to this one, United States Football League v. National Football League, instead.  In that case, the court had to determine whether a plaintiff is entitled to reasonable attorney fees "after decade-long antitrust litigation resulting in a $1 jury verdict only on Sherman Act Section 2 grounds."

Not only did the court decide that the plaintiff could recover attorney fees, it "further explained that civil rights cases are inapposite as they concern discretionary awards of fees, while Section 4 mandates them," the report continued.  Judge Cott also rejected Sabre's argument that in the event it must pay attorney fees, the amount should be reduced by 99% because US Airways only "obtain[ed] .0000003% of its alleged damages ... and no injunctive relief."

While no legal rule requires that fees be proportional to the requested amount and the recovered damages, Judge Cott, wrote that the court can reduce the requested fees after analyzing billing records.  While "a downward adjustment is undoubtedly warranted" in this case, Judge Cott noted that the court couldn't determine the amount without first calculating the lodestar.

"The court's eventual reduction will be guided by comparable cases in this circuit, which do not necessarily dictate the extreme slashing that Sabre seeks," the report stated.  The litigation began in 2011, when US Airways sued Sabre, alleging that the company had monopolized the market for systems that connect airlines to travel agents and violated federal antitrust laws.

A recent Law 360 article by Tyler Brown, Jason Harbour and Justin Paget of Hunton Andrews Kurth LLP, “How Ch. 11 Ruling Ends War Between National, Local Rates” reports on a recent ruling on hourly rates in Chapter 11 cases.  This article was posted with permission.  The article reads:

On Oct. 18, the U.S. Bankruptcy Court for the Eastern District of Virginia approved the professional fee applications in the Nordic Aviation Capital bankruptcy cases, including the rates of each of the professionals as appropriate market rates.  This settles any remaining uncertainty in how professionals' hourly rates will be considered for approval in bankruptcy courts in the district. In particular, the bankruptcy court noted that

[m]uch ink has since been spilled differentiating so-called "local" rates from "national" rates. The distinction is much ado about nothing.  The market for professional services cannot be predetermined by geography alone.

Instead of relying on geography alone, the bankruptcy court stated that

the plain language of the Bankruptcy Code directs the Court to consider the "customary compensation charged by comparably skilled practitioners in cases other than cases under [Title 11]."  The Court must, therefore, look at whether the rates charged are consistent with those set in the relevant market.

To determine the relevant market, the court noted that the market rate will be set for the most part by the amount clients are willing to pay for professional services.  The factors clients may consider in the selection process might include the reputation of the professional, the specialization of the professional, the need for the professional's experience and expertise, the stakes of the transaction and the time pressures of the engagement.

The court also stated that a good understanding of the relevant market in any given case could be gleaned from the rates of professionals other than those engaged by:

    The debtor;

    Debtor-in-possession financing budgets;

    Monthly operating reports of the debtor;

    Information required by the U.S. trustee program guidelines; and

    The checks and balances built into the fabric of the reorganization process to police the market.

The bankruptcy court also reiterated that the applicable factors for approving professional fee applications are those enumerated in Title 11 of the U.S. Code, Section 330(a)(3), and the Johnson factors.

Additionally, the bankruptcy court noted that in applying the Johnson factors, "it must heed the Fourth Circuit's admonition against per se rules beyond those legislatively mandated," noting that the court cannot "abdicate the equitable discretion granted to it by establishing rules of broad application which fail to take into account the facts of a particular case and the overall objectives of the bankruptcy system."[6]

After identifying the applicable legal standard, the bankruptcy court addressed the evidence that was relevant to the approval of the professional fee applications, including the rates of the professionals.  As the fee applications were uncontested, the court stated that it issued the memorandum opinion to provide guidance to practitioners on the facts they need to develop in support of fee applications filed in bankruptcy cases pending before that court.

In taking the unusual step of issuing a lengthy memorandum opinion for uncontested fee applications, the bankruptcy court put to rest what one commentator recently suggested was a war between national and local rates in the Eastern District of Virginia in mega Chapter 11 cases.  The issue arose in connection with the appeal of the plan confirmation order in the Mahwah Bergen Retail Group Inc. cases on unrelated grounds.

After vacating confirmation in that case, the U.S. District Court for the Eastern District of Virginia ordered that the bankruptcy court issue proposed findings of fact and conclusions of law on any further fee applications in the case and questioned whether attorney rates should exceed the prevailing market rates in the Richmond division of the Eastern District of Virginia.

The district court's order created uncertainty as to how the bankruptcy court might subsequently analyze the rates of professionals from outside the Richmond division.  That uncertainty was short-lived.  Importantly, the memorandum opinion represented one of the bankruptcy court's first opportunities to address professional fee applications in a large Chapter 11 case since the entry of the district court order adopting the bankruptcy court's report and recommendation in the Mahwah Bergen bankruptcy cases.

In the memorandum opinion and the bankruptcy court's report and recommendation, two bankruptcy judges from the Eastern District of Virginia have extensively detailed the legal precedent in the U.S. Court of Appeals for the Fourth Circuit and the appropriate factual predicates for approving market rates.

In sum, the memorandum opinion provides comfort to all practitioners, including those from outside the Eastern District of Virginia, that the appropriateness of attorney rates in cases filed in the district will continue to be assessed through application of the factors identified in Section 330(a)(3) and the Johnson factors on a case-by-case basis, without any additional requirements or per se rules.

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