A recent Law 360 story by Collin Krabbe, “Wis. Judge Awards Attys $2.7M in Fees Over $1M Settlement,” reports that a Wisconsin federal judge has awarded attorneys a dollar figure for fees and costs that is more than double the amount of a $1.05 million settlement negotiated to resolve claims by residents of the town of Superior who had to evacuate their homes following a 2018 explosion at a nearby refinery owned by Husky Energy Inc.

U.S. District Judge William M. Conley said in an opinion that Zimmerman Reed LLP will receive $2.7 million in fees and costs, reducing the fees requested by 25%, in the suit against Husky Oil Operations Ltd. and Superior Refining Company LLC. Still, the judge noted the defendants' perceived aggressive litigation tactics "at virtually every turn in this case."

"Taking into account theJu degree of counsel's success in achieving a class settlement, the time spent on unsuccessful claims and theories, and excessive fees driven by defendants' aggressive tactics, therefore, the court concludes that a reduction of 25% in fees is appropriate," the judge noted.  Zimmerman Reed submitted billing records reflecting 6,251 hours of work with hourly rates ranging from $350 to $845 for attorneys and $200 to $315 for paralegals, for a grand total of $3,151,017 in attorney fees and $359,948 in costs, according to the order.

But the judge reduced the fee amount to $2.3 million, noting that the settlement award was "significantly less" than plaintiffs initially sought.  Less than a third of the potential class ultimately submitted claims, and under the settlement, each class member got around $167.23 — not including "offsets for earlier, voluntary reimbursements by defendants," the order said.  The $1.05 million settlement was given final approval last year in a suit that stems from an explosion at a refinery in Superior on April 26, 2018, which caused a fire that allegedly created a risk of hydrogen fluoride being released and potentially harming residents.

In ruling on fees and costs, Judge Conley took issue with compensation for time spent on unsuccessful claims and legal theories.  "From the court's own review, plaintiffs appear to have billed at least several hundred hours relating to claims and theories that were unsuccessful, particularly in developing its unsuccessful classwide damages theory and in opposing defendants' successful motion for summary judgment," Judge Conley's order said.  "However, it is not possible to determine precisely how many of plaintiffs' 6,251 hours were allocated to successful versus unsuccessful claims," according to Judge Conley.

Finally, the judge said a review of the fees incurred by defendants reflect total fees of about $4 million, which is roughly $1 million more than Zimmerman Reed was asking to be awarded.  The judge added that "this substantially larger fee paid is certainly consistent with this court's perception of the aggressive litigation tactics by defendants at virtually every turn in this case."

The judge also disregarded the defendants' argument that Zimmerman Reed's rates were unreasonable.  Zimmerman Reed Partner Gordon Rudd told Law360 that "this was an extremely hard-fought case.  The litigation involved residents who were forced to evacuate their homes due to a refinery fire and explosion in Superior, Wisconsin.  Both Husky Oil Operations and Superior Refining Company aggressively litigated the case and aggressively challenged the attorneys' fees being requested by the homeowners."

"We are pleased with the result that the homeowners achieved and with the Court's recognition that scorched earth litigation strategies by companies can result in the award of increased fees and costs incurred by plaintiffs in responding to these tactics," Rudd added.  The judge also disregarded the contention that class counsel agreed in contingency fee contracts to accept only 33% of any recovery acquired in litigation, noting that Zimmerman Reed's retainer agreements with individually named plaintiffs had separate fee clauses for "individual and class recovery."

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 Metropolitan News story, “$260,000 Fee Award Proper Though Damages Were $2,500” reports that the Ninth U.S. Circuit Court of Appeals has affirmed an attorney fee award of nearly $260,000 in a case in which a prison inmate was awarded $2,500 based on ill-effects from a chemical grenade having accidentally been discharged, with fumes seeping into the area of the cells.  District Court Judge Haywood S. Gilliam Jr. of the Northern District of California made the award under California’s private attorney general statute, Code of Civil Procedure §1021.5, ruling that the statutory criteria were met, including a benefit to the public that overshadows the personal benefit to the prisoner, Daniel Manriquez.

The incident underlying Manriquez’s suit occurred on June 4, 2015.  According to allegations of the operative complaint, two employees at Pelican Bay State Prison, defendants Justin Vangilder and Juan Vasquez, while inside a control booth, were “horse playing” with a “military-grade” grenade which is “designed to quickly release oleoresin capsicum (‘OC’) into the air.”  One of them dropped the grenade, it went off, and the employees “opened the windows to the control booth, allowing a fog of OC to quickly fill the surrounding space.”

The inmate prevailed at trial and his lawyers sought an award of a fee in the amount of $467,425, arguing that the California Department of Corrections and Rehabilitation had “insisted on using this case as a ‘test case’ for prisoners who have been indirectly exposed to oleoresin capsicum,” had rejected reasonable settlement offers, and “forced Plaintiff to heavily litigate this case for going on three years now.”  Gilliam awarded $259,237.50.

 A three-judge panel—composed of Judge M. Margaret McKeown and Senior Judges A. Wallace Tashima and Sidney Thomas—upheld the award, saying that there was, as Gilliam found, a “significant benefit” conferred on the general public. Their memorandum opinion declares: “To be sure, the primary effect of Manriquez’s $2,500 judgment is arguably an enforcement of his personal interests against two correctional officers for an isolated incident, as there was no injunction or statewide policy changes.  But we hold that the district court did not clearly err* in its determination that Manriquez’s verdict has “larger implications” beyond his individual case. The district court explicitly took into consideration the fact that indirect exposure to chemical agents is not uncommon among inmates and that Defendants’ own witnesses testified at trial about the frequency with which chemical agents are used in prison facilities.  Moreover, the district court highlighted that there are approximately 95.000 men and women incarcerated in California, including approximately 1.900 inmates in Pelican Bay, where Manriquez was in custody.”

The Ninth Circuit judges also agreed with Gilliam that the public benefit transcends Manriquez’s personal interests, saying: “In the end, Manriquez was awarded a total of $2,500 while his counsel requested a total of $467,425 in attorneys’ fees for over 1,100 hours of work.  Had counsel not agreed to represent Manriquez on contingency, the value of the recovery for Manriquez’s pain and panic would not have justified the costs in litigating this case.  For the same reason—comparing the modest sum of the total damages to the attorneys’ fee requested—we agree with the district court that the interests of justice require the fees to not be paid out of Plaintiffs’ recovery.”

The defendants argued that even though Gilliam awarded less in fees than was sought, the amount is 84 times that allowed by the Prison Litigation Reform Act (“PLRA”).  The PLRA caps attorney fees 150 percent of any monetary which would mean a maximum award of $3,750.

The panel responded: “[T]he PLRA cannot be used as a basis to limit the attorneys’ fees granted under California Code of Civil Procedure § 1021.5.  In this case. Manriquez prevailed on both his state law negligence claim as well as his Eighth Amendment claim against Defendants.  The state law claim thus served as an independent basis for awarding attorneys’ fees, the amount of which is not governed or limited by the PLRA….Moreover, the district court is not required to apportion the work between Manriquez’s Eighth Amendment claim and his negligence claim because his claims are intertwined and based on the same common core of facts.”

A recent Law 360 story by Mike LaSusa, “3rd Circ. Bars Atty Fees For ‘Limited Success’ in NJ Wage Suit,” reports that the attorneys who won an unpaid wage suit on behalf of a pair of cooks in New Jersey can't recover nearly $120,000 in attorney fees after their "limited success" in the six-year case netted their clients less than $7,000, the Third Circuit ruled.  Attorneys from Troy Law PLLC had sought more than $118,000 for their work on behalf of Weigang Wang and Hailong Yu in their suit against fast-food chain company Chapei LLC, which does business as Wok Empire.  But the three-judge appeals panel said in a nonprecedential opinion that a lower court was right to block the plaintiff lawyers from shifting the burden of paying attorney fees to Wok Empire.

The lower court shot down Wang and Yu's claims under the federal Fair Labor Standards Act, which requires fee-shifting when plaintiffs win.  And although Wang and Yu won their claims under a New Jersey state wage and hour law, that statute only allows for but doesn't require fee shifting, the appeals panel said.  "Fee-shifting statutes can be abused by attorneys who over-litigate a case once they have confidence that their client will receive an award — no matter how small," the judges said. "Here, where the result was very limited success for the clients, and where the deficiencies identified by the district court compromised a meaningful review of the claimed fees under the lodestar method, it was not an abuse of discretion to deny fees altogether."

Wang and Yu brought the case in New Jersey federal court in 2015, seeking more than $180,000 in damages.  A bench trial eventually resulted in the dismissal of the workers' FLSA claims and their victory on claims brought under the New Jersey law.  The lower court awarded the workers about $6,600 in back wages and around $3,000 in costs, but declined to award any attorney fees, sparking the appeal to the Third Circuit.

The panel, however, said the lower court was "fully within its discretion" to block the attorneys' six-figure fee request, noting it amounted to about 18 times more money than their clients received.  "The declaration that accompanied the fee petition referred more to the plaintiff in [a] prior default judgment case than to the actual plaintiffs in this case.  Moreover, one of the attorneys had misstated his $350 hourly rate as $3550," the judges said.  "Most troubling was that one of the attorneys failed to provide a detailed bill for his time."

Heng Wang of Wang Gao & Associates, who represented Wok Empire, said he was excited by the ruling.  "The Third Circuit's ruling is a wakeup call to the plaintiff's bar," he said.  "There is no silver bullet for the plaintiff's lawyers to always obtain significant attorney's fees in wage-and-hour litigation."

A recent Law.com story by Nate Robson, “Quinn Emanuel Wins $14M in Legal Fees for Client’s $5M Case,” reports that Quinn Emanuel Urquhart & Sullivan landed nearly $14 million in legal fees and costs for a client, nearly three times the $5.4 million in damages awarded at trial in the underlying dispute.  The fees, granted by a federal judge in Minnesota, cap off an especially litigious case that came after most other parties settled once another defendant mortgage lender was hit with a $28 million verdict in 2018.

The recent trial involved ResCap Liquidating Trust, which was created in the wake of the 2012 bankruptcy of Residential Funding Corp. after it faced billions of dollars in liabilities tied to residential mortgage-backed securities it sold leading up to the 2008 housing collapse.  ResCap was formed to sue banks and mortgage lenders that sold the loans bundled into those mortgage-backed securities.

In the ruling against mortgage lender Primary Residential Mortgage Inc., U.S. District Judge Susan Richard Nelson repeatedly noted that PRMI’s litigation tactics were responsible for inflating ResCap’s legal fees as the case went to trial.  The judge said PRMI was aware “the parties would not ‘split the tab’ or ‘go Dutch’ on attorney’s fees and costs,” given its contractual agreement at issue in the case and the legal fees awarded in the first trial.  “Given all of this notice, PRMI cannot credibly express indignation now,” Nelson wrote.  “Its own poor judgment in relitigating settled issues throughout this litigation significantly drove up ResCap’s attorney’s fees and costs.”

Nelson said PRMI, represented by a team from Williams & Connolly, challenged relatively miniscule claims for damages and reargued items that were handled in the first trial against another lender.  Nelson pointed to one claim on a loan involving $30,000 in damages as an example.  PRMI’s stance on that loan required discovery, motion practice, expert and fact witness deposition testimony, and then trial testimony.  “While PRMI argues that ResCap’s fee request is out of proportion to its damages award, PRMI overlooks its own practice of litigating aspects of plaintiff’s damages claim in ways that were out of proportion to the amounts at issue, thereby driving up ResCap’s attorney’s fees,” Nelson wrote.

Nelson also rejected PRMI’s claim that paying nearly $14 million in legal fees and costs on a $5.4 million award is disproportionate, noting ResCap was also granted nearly $2 million in prejudgement interest, bringing the total to $7.4 million in damages.  The ruling, granting $10.5 million in attorney fees and $3.5 million in costs, also notes that fees don’t have to be proportional to the award.

Isaac Nesser, the lead attorney on the case for Quinn Emanuel, said neither side had cited a similar instance where legal fees so outpaced the award given.  Nesser said a key to landing the fees was building a record during court appearances of how much work was going into the case because of PRMI’s litigation strategy.

“It was important to us to build a record that we were being forced to spend time and money litigating issues that seemed disproportionate to the actual amount of damages in the dispute,” Nesser said.  “As a result, we came to the view that it was important for us to communicate that information clearly to PRMI and Judge Nelson.  And so we made a record of that any chance we could.”

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