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Category: Fees more than Damages

Connecticut State Worker Seeks Fees After Trial Win

March 1, 2024

A recent Law 360 story by Brian Steele, “Conn. State Worker Wants Atty Fees After Noose Trial Win”, reports that a Black employee of Connecticut's state energy and environmental regulator is asking a federal judge to award more than $200,000 in attorney fees after he prevailed in a lawsuit alleging that he was racially tormented and exposed to nooses in a hostile work environment.

The Law Office of W. Martyn Philpot Jr. represents Omar Tyson, who won $5,000 in a Feb. 14 jury verdict on his claims that his supervisors at the Connecticut Department of Energy and Environmental Protection, or DEEP, failed to protect him from a co-worker's racial hostility.  Tyson asked U.S. District Judge Jeffrey A. Meyer of the District of Connecticut for a ruling that recognizes certain "economic realities" of prosecuting the suit, arguing further that he is entitled to the award under Title VII of the Civil Rights Act and court rules.

"It is not hyperbole to suggest that civil rights cases such as the one at bar are often lost, with no recovery," Tyson's memorandum said.  "The results of a loss of this sort can often be calamitous for both the client and a small firm where there has been a substantial expenditure of time and expense.  Moreover, the incentive created by Congress was to attract competent attorneys to take on socially significant, yet difficult cases, on a contingent fee basis."  The motion asks for $200,750 in fees based on a $500 hourly rate, and about $7,700 in expenses like taking depositions and issuing subpoenas.

Tyson claimed in his November 2021 amended complaint that he suffered race-based mistreatment starting in 2011, also alleging that on two occasions, he found a hangman's noose near his workstation.  A colleague taunted and bothered Tyson at work, once pointing a cane at him as if it were a gun, and referred to the Black community as "you people" and "your people" when Tyson was present, among other offensive comments and behavior, according to the complaint.

A rate of $500 per hour "is the prevailing rate in the community" and similar to the fees charged by comparable attorneys, according to Tyson, who paid a $5,000 retainer.

"In this matter, the plaintiff's attorney's fee award should be determined in accordance with the well-established lodestar calculation method," the memo said.  "The pertinent factors for calculating the lodestar include, but are not expressly limited to: the novelty and complexity of the litigation involved, the skill and experience of the attorney, the overall quality of the representation, and the understanding that payment of fees will generally not come until the end of the case, if at all."

Law Firm Seeks Attorney Fees More Than Settlement Amount

December 18, 2023

A recent Law 360 story by Emily Sawicki, “NJ Firms Fights $29K Fees For Debt Suit That Settled For $10K”, reports that a New Jersey law firm that reached a $10,000 settlement on claims it engaged in an illegal debt collection scheme is fighting an attempt by the plaintiff's firm to collect $29,000 in fees, arguing the number was inflated due to "excessive" billing.  Parsippany, New Jersey-based Fein Such Kahn & Shepard PC asked U.S. Magistrate Judge Rukhsanah L. Singh to slash the fee request entered last month by Marcus & Zelman LLP, including removing $7,390 it says was incurred amid a separate state court case and cutting back on other hours.

In its Nov. 6 motion for attorney fees, Marcus & Zelman argued the case was more complex than it appeared to be.  "[A] considerable amount of attorneys time was required to prosecute this action, despite the simple nature of the claim," Marcus & Zelman said.  "Given the extensive amount of time and work required to be expended on this matter, it is respectfully submitted that the 59.1 hours expended by Marcus & Zelman LLC was a reasonable amount of hours to be expended in the litigation of this action."

In its reply, Fein Such disagreed.  "The motion includes an itemized billing recap for the fees sought," Fein Such wrote in its Tuesday letter to Judge Singh.  "A review of those fees, however, shows that a portion of the fees claimed are not recoverable and another portion is excessive for the work done."

New Jersey resident Anne Hameed retained Marcus & Zelman in a Fair Debt Collection Practices Act complaint she launched against Fein Such in August 2022, in which she accused the firm of trying to charge her for thousands of dollars in medical debt she said had been covered by her insurance company.  In her complaint, Hameed said Fein Such notified her that she was being sued in New Jersey state court for outstanding medical debt, but when she conferred with the purported creditor, a surgical center, she was told there was no outstanding balance.

Notwithstanding this, Hameed said, the firm continued to pursue a "frivolous lawsuit" in New Jersey Superior Court that resulted in Hameed's bank accounts being frozen.  Marcus & Zelman also represented Hameed briefly in that suit before it was dismissed.  In October, the two sides settled her FDCPA suit for $10,000 plus attorney fees for Marcus & Zelman.

Fein Such argued in its letter this week that, according to the dates and times presented by Marcus & Zelman in its fee request, the firm was attempting to bill for hours spent crafting a filing for the state court case — the billing for which, Fein Such said, would "violate the 'American Rule' mandating that all parties in a legal matter must pay their own attorney fees, absent a fee shifting statute."

Fein Such called into question the amount of time attorney Ari Hillel Marcus said he spent working on various aspects of the case, including reportedly spending 2.4 hours to review a 2.1-hour transcript and spending 4.8 hours preparing for a two-hour deposition.  "It is submitted that, given Mr. Marcus's considerable experience as a consumer protection attorney as detailed in his declaration filed in support of this motion, that he has filed numerous FDCPA cases … [he] should not have to conduct extensive research to prepare a complaint with this simple fact pattern and cause of action," Fein Such said.

"Finally, the court should note that Mr. Marcus has billed $3,650 for research, drafting and finalizing the fee petition which consists of a largely boilerplate brief and two declarations that can and probably have been submitted in support of other fee requests with minimal revisions," Fein Such added.  "Considering that the billing for preparing the fee petition alone is slightly more than half of the modest settlement reached in this case, defendant submits that the billing for the fee petition is excessive and should be reduced."

NJ Law Firm Seeks $29K in Fees in $10K Settlement

November 7, 2023

A recent Law 360 story by Chart Riggall, “NJ Firm Wants $29K Fees in Debt Suit That Settled For $10K”, reports that a New Jersey law firm that recently negotiated a settlement on behalf of the victim of an alleged predatory debt collection scheme asked a federal judge to award it $29,000 in attorney fees, nearly three times the $10,000 settlement amount.  Marcus & Zelman LLP, which successfully represented Anne Hameed in the suit that settled last month, said Monday in its fee request that while the litigation "was relatively simple and straightforward, a significant amount of litigation and attorney involvement was required."

On top of the $29,000 in fees — tabulated from over 59 hours of work by two attorneys — the firm said it should recoup another roughly $1,600 in filing and transcription costs, bringing the total tab to over $30,000.

Filed in August 2022, Hameed's suit accused a Parsippany, New Jersey, firm, Fein Such Kahn & Shepard PC, of attempting to prey on her through a bogus medical debt collection scheme.  The firm had tried to collect thousands of dollars in medical debt that Hameed said her insurance had covered, at one point suing her and placing a levy on her finances that cleaned out her bank account, according to Hameed's complaint. Hameed sued under the Fair Debt Collection Practices Act,

Hameed and Fein Such settled the case on Oct. 5 for $10,000, with the court giving Marcus & Zelman a month to request fees.  In its filing, the firm said it was clear its client, Hameed, was the victorious party.  "Here, the plaintiff was awarded $10,000 in damages, despite statutory damages being capped at $1,000 in any action brought under the FDCPA," Marcus & Zelman said.  "Accordingly, it is indisputable that plaintiff 'prevailed' on her FDCPA claim in every sense of the word."

Though the requested fees far exceeded the baseline settlement amount, the firm said its billings would stand up to court scrutiny.  "Plaintiff's counsel do not double-bill or assign multiple counsel to review the same document," the firm said, later adding: "It is respectfully submitted that the attorneys' fees sought by plaintiff is reasonable, considering the amount of time and attention the litigation of this action required.  Plaintiff's counsel skillfully enabled the plaintiff to prevail in this action, despite the numerous hurdles and dilatory tactics utilized by the defendant."

Article: Attorney Fee Ruling May Complicate Claims Made Settlements

July 3, 2023

A recent Law 360 article by David Ross, “Atty Fee Reversal May Complicate Claims Made Settlement”, reports on the ramification of the Lowery v. Rapsody International decision.  This article was posted with permission.  The article reads:

A decision prefaced by "will likely make the average person shake her head in disbelief" is unlikely to end well for a party.  That was the outcome when an initially sought $6 million in legal fees was later awarded at $1.7 million by a district court.  In Lowery v. Rhapsody International Inc., the U.S. Court of Appeals for the Ninth Circuit reversed the fee award June 7 because class members obtained less than $53,000 in benefits.

The rationale for that decision could spell trouble for those seeking approval of claims-made class action settlements that do not have sufficient financial benefits actually received by class members or meaningful injunctive or non-monetary relief.


In Lowery, the Ninth Circuit panel addressed a claims-made class settlement.  For a little background, class settlements typically involve a claims-made or common fund structure.  A claims-made settlement involves claims submissions to determine the amount of benefits that a defendant will pay.  The ultimate amount is unknown, although, as in Lowery, caps may be in place to prevent a runaway payout amount.

In comparison, the defendant in a common fund settlement agrees to the total amount it will pay for the class settlement.  In other words, the overall amount is predetermined.  The common fund often includes settlement benefits, plaintiffs' attorney fee awards, service awards for the class representatives, and claims administration and notice costs.  In some settlements, hybrid structures are crafted that may include claims-made and common fund elements.

The Lowery case involved a claims-made class settlement in a music copyright class action. Rhapsody agreed to pay class members — copyright holders — for music played on its streaming service.  However, an earlier settlement between Rhapsody and the National Music Publishers Association to resolve the same copyright issues resulted in 98% of the class members waiving their right to participate in the settlement. This gutted the class.

Despite agreeing to pay up to $20 million for claims, Rhapsody wound up paying only $52,841.05 in claims.  Rhapsody also did not have to change its licensing practices, as Congress passed the Music Modernization Act in 2018, which allowed digital music providers to obtain blanket licenses.  On appeal, the panel found that the $1.7 million fee award to the plaintiffs' counsel, "more than thirty times larger than the amount paid to class members," was not reasonable.

The panel held that: courts must consider the actual or realistically anticipated benefit to the class­ — not the maximum or hypothetical amount — in assessing the value of a class action settlement.  On remand, the U.S. District Court for the Northern District of California was directed to "disregard the theoretical $20 million cap" and instead "start with" the actual amount the class claimed.

The panel noted that "rule is especially important when the class redemption rate is low" and another "approach would allow parties to concoct a high phantom settlement cap to justify excessive fees, even though class members receive nothing close to that amount."  The panel added that "the district court should consider cross-checking its lodestar calculation to ensure that it is reasonably proportional to the benefit provided to the class."  If the cross-check showed that the fee award exceeded 25% of the class benefits, that disparity might "suggest that the fee amount is unreasonable."

The panel added that except for extraordinary cases, a fee award should not exceed the value provided to the class, and remarked that it did not matter that "attorneys may have devoted hundreds or even thousands of hours to a case."

Potential Ramifications of the Lowry Decision

The takeaways from this decision will likely emanate far beyond copyright cases.  Class action plaintiffs attorneys may refuse to consider claims-made settlements in the Ninth Circuit, and insist on common fund settlements.  This position could extend to state court cases on the West Coast for fear that these courts might find the Ninth Circuit's decision persuasive.  Even for common fund settlements, the amount that class members actually will receive must be considered.

While common fund settlements predetermine the amount that the defendant will pay, the amount actually paid in benefits to class members might still depend on the take rate and the types of benefits available.  Common fund settlements are thus not entirely inoculated from the potential application of the panel's rationale in the Lowery decision.  A court still could consider the amount of attorney fees and the amount of the common fund actually allocable to class member benefits.

Thus, regardless of whether a common fund or claims-made settlement in the Ninth Circuit is pursued, the likely take rate and associated monetary benefit for class members should be carefully evaluated.

Looking Ahead in the Ninth Circuit

For any settlement, the impact of non-monetary and injunctive relief, which the Ninth Circuit recognized was not at issue in Lowery, should be considered. The panel noted a contrast to civil rights cases, where attorney fees awards did not need to be strictly proportional to monetary damages.  In civil rights cases, significant non-monetary and injunctive relief to the plaintiffs can be provided, but for copyright cases, attorney fees must consider the proportion between the award and the class benefits to confirm the award is reasonable.

That said, the panel recognized that in copyright cases such as infringement where substantial non-monetary relief or a meaningful benefit to society is encompassed, a fee award may exceed the monetary benefit provided to the class.  The Lowery decision does not have to be a death knell for claims-made settlements in the Ninth Circuit.  There is no reason to conclude that a well-structured claims-made settlement that provides significant settlement benefits to class members can no longer obtain court approval.  To the extent that material injunctive and non-monetary benefits are included, even more reason for optimism exists.

It also should be noted that the Lowery decision does not mean that all focus in a class settlement should be on boosting the amount paid to class members.  The key focus in Lowery was the amount of the plaintiffs' attorney fees in comparison to the amount of class member benefits.  So, maybe­ — just maybe­ — more reasonable attorney fees amounts can increasingly become part of class action settlements, whether structured as a claims-made or common fund settlement.

David Ross is a partner at Wilson Elser Moskowitz Edelman & Dicker LLP.

Ninth Circuit: Attorney Fees Cannot Exceed Value to Class

June 14, 2023

A recent Law.com story by Avalon Zoppo, “Attorney Fees Cannot Exceed Value to Class, 9th Circuit Makes Clear in Copyright Case,” reports that the U.S. Court of Appeals for the Ninth Circuit made clear its view that class action plaintiffs lawyers generally should not be awarded fees that exceed the amount their clients get from a settlement as the court struck down a $1.7 million fee award in which the class received less than $53,000 in a royalties dispute settlement.

The three-judge panel, in a presidential decision last week, said the lower court wrongly calculated fees for plaintiffs’ counsel in a copyright case based on a settlement that provided for a fund of up to $20 million for class payouts.  The district court should have instead looked at the amount actually obtained by those who made claims, here $52,841.05, the Ninth Circuit said.

Judge Kenneth Lee, writing for the panel, said the $1.7 million award is one that will “likely make the average person shake her head in disbelief.”  “Except in extraordinary cases, a fee award should not exceed the value that the litigation provided to the class,” Lee wrote.  ”No rational person would spend, say, $1 million in legal fees— and endure the hassles and headaches of litigation — to recover only relief that is a small fraction of that amount.”

‘A Significant Decision’

Alexander Smith, a class action defense partner at Jenner & Block, said the opinion is the circuit’s clearest statement so far that the main principle for determining the reasonableness of attorney fees under Federal Rule of Civil Procedure 23 is the benefit to the class.  “It’s certainly a significant decision, and sort of crystallizes a point that the Ninth Circuit indirectly made over the years, which is that we are not going to tolerate class settlements that pay a disproportionate benefit to attorneys as opposed to the class members that they purport to represent,” said Smith, noting that the court has made similar rulings over the past few years.

Michelman & Robinson represented a class of musical composition holders in the lawsuit against streaming service Rhapsody International, now branded as Napster, accusing the company of infringing their copyrights by sharing songs without a license.  The district court approved $1.7 million in fees based on Rhapsody’s promise to set aside up to $20 million for class members who submit claims.  But the Ninth Circuit said the lower court should have focused its analysis on how much the class ended up taking home, adding that there was no meaningful injunctive or non-monetary relief justifying the fee award.

In a statement to Law.com, Mona Hanna, Michelman & Robinson’s Orange County office managing partner, said the court did not give enough weight to non-monetary benefits for plaintiffs that resulted from the lawsuit and that the firm is “considering our options moving forward.”

“There is no dispute that after years of failing to pay artists their legally mandated royalties, Rhapsody ceased that practice, entered into a settlement with the National Music Publishers’ Association, and created an internal artist board to watch over Rhapsody’s conduct and confirm compliance with the new procedures.   This lawsuit contributed to these significant changes and resulted in a settlement providing up to $20 million to eligible class members and other non-monetary benefits,” Hanna said.  “We believe the Ninth Circuit opinion does not appropriately acknowledge the benefits to the class and does not comport with prior authority.”

In reversing the award, the panel pointed to its 2021 holding in Kim v. Allison that courts must compare the amount anticipated to be paid and not the maximum payable amount.  In the civil rights class action against Tinder where a $1.2 million award was vacated, the company agreed to a theoretical settlement cap of up to $6 million but only $45,000 was paid out.

But leading plaintiffs class action lawyer Jay Edelson said lower courts, and the magistrate judge here in particular, did not view the circuit’s past rulings in this area as establishing a bright-line rule on the question.  The circuit now has cleared up that confusion, he said.  The panel, composed of Lee and Judges Milan Smith and Daniel Collins, said explicitly that “what matters most is the result for the class members.”

Edelson said the decision will have an outsized effect beyond the Ninth Circuit, where plaintiffs lawyers will be forced to grapple with the court’s logic.  “It’s very hard now for [class action plaintiffs lawyers] to make arguments in other courts, even outside the Ninth Circuit, and say, ‘No, it’s OK that we’re keeping 95% of the money,’” said Edelson, founder of Edelson PC.  “They’re going to have to try to explain why the Ninth Circuit’s logic was wrong.  And I don’t think that’s possible to do.”  Meanwhile, Smith predicted that the decision may push class action plaintiffs attorneys to negotiate common fund settlements over claims-made settlements.

Beyond Copyright?

Kian Hudson of Barnes & Thornburg said the court’s decision also touches beyond copyright cases.  But Hudson also said the court gestured toward a possible narrow exception for civil rights class actions.  The panel noted that fees awarded in civil rights cases “need not be strictly proportional to monetary damages” because they can benefit society through non-monetary relief such as ending civil rights abuses.

“Although this case arose in the copyright context, it’s important to note that the Ninth Circuit was applying Rule 23(h), which imposes a ‘reasonableness’ requirement to attorney fee awards in class-action cases regardless of the nature of the lawsuit,” Hudson said in an email.  “It thus seems clear that the court intends its approach to be applied across many substantive areas of law.”

Edelson said the Ninth Circuit made a similar holding in the context of a consumer class action against ConAgra over alleged false labeling on its Wesson vegetable oil as “100% all natural.”  Lee also authored that 2021 opinion, in which the court reversed $7 million in attorney fees for plaintiffs counsel based on a claims-made settlement where the food company put up a maximum of $70 million for claims but a little less than $1 million was paid out.