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Category: Fee Issues on Appeal

Seventh Circuit Upholds Attorney Fee Win in FMLA Action

August 25, 2022

A recent Law 360 story by Caleb Drickey, “7th Circ. Upholds Teacher’s Win In FMLA Suit” reports that the Seventh Circuit upheld a pair of lower courts' decisions to declare that a Wisconsin governmental entity violated the Family and Medical Leave Act by de facto demoting a concussed teacher, and to grant her attorney fees for her bench trial victory.  In a published opinion, a three-judge panel ruled that the lower court was within its authority to issue a damages-free declaration that the Cooperative Educational Service Agency 5 violated the FMLA by taking away teacher Sarah Simon's work responsibilities after she returned from medical leave. The panel further held that the law mandated the payment of attorney fees in the case of a judgment in favor of workers.

"If this case involved an accomplished neurosurgeon returning from leave to a position that required only tracking the hospital's inventory, we doubt that anyone would question whether the surgeon suffered prejudice," U.S. Circuit Judge Thomas Kirsch said on behalf of the panel. "Simon … suffered harm for which the FMLA provides a remedy."

The opinion stems from the Cooperative's retraction of Simon's job responsibilities after she returned to work in the wake of a workplace concussion.  Although the Cooperative, which provides staff and equipment to 35 school districts in the state, maintained Simon's previous salary, a district court found that Simon's effective demotion to a support staffer prejudiced her, and it granted her a declaratory judgment and roughly $60,000 in attorney fees after a bench trial.

The panel ruled that a court-issued declaration of FMLA violations absent any monetary damages or injunctions to re-hire Simon, who has since taken another job, was within scope of the relief promised by the law.  The FMLA authorized courts to dispense "equitable relief," an undefined term that courts have interpreted to encompass binding orders to hire or promote workers.

The authority to grant declaratory judgments, the panel therefore concluded, could reasonably be inferred.  "It would make little sense for the FMLA to permit courts to grant these heavy-handed remedies yet bar them from using a lighter touch through entry of a declaratory judgment," the panel held.

The panel also affirmed the lower court's finding that the Cooperative prejudiced and harmed Simon even without suffering any cuts to her pay or benefits.  Citing the U.S. Supreme Court's 2002 decision in Ragsdale v. Wolverine World Wide Inc. , the panel held that the demotion of workers returning from medical leave to positions for which they were overly qualified caused injury.

The Commission's remission of Simon's ability to plan lessons and lead classes, the panel therefore concluded, unfairly created a gap in her resume, prejudiced her, and put her employer on the hook for remedies including declaratory judgments and the payment of attorney fees.

The panel affirmed the lower court's separate order of a $59,773.62 attorney fee bill, too.  That fee bill was not an improper imposition of punitive damages, the panel ruled, but was required by the text of the FMLA in the case of a judgment in favor of workers.  "The district judge merely applied the FMLA as written, which expressly requires attorney's fees after a judgment entered in the plaintiff's favor," the panel held.

Fourth Circuit Mostly Upholds Fee Award in Fee Dispute

August 10, 2022

A recent Law 360 story by Rachel Rippetoe, “4th Circ. Mostly Backs Firm’s $1.5M Win in Napoli Fees Fight reports that the Fourth Circuit has mostly upheld a $1.5 million outcome for Maryland law firm Keyes Law Firm LLC against a dozen defunct law firms connected to New York plaintiffs attorney Paul Napoli, rejecting all but one challenge on appeal — a question concerning the appropriate interest rate on sanctions stemming from the parties' discovery fights.

The appeals court said in a Thursday opinion that it affirmed all of a Maryland district court's rulings in a fee-agreement battle between firms over the referral of asbestos clients, "with one small exception" — the verdict's application of Maryland's 10% post-judgement interest rate attached to the discovery sanctions inflicted on the defendants.

Among many other objections in their appeal of a December 2020 ruling that said Napoli and his many firms owed Keyes $1.5 million, the defendants argued that the district court gave no reason why the state interest rate should be applied instead of the federal rate.

On that point, the Fourth Circuit agreed. The panel, including U.S. Circuit Judges Robert B. King, Allison J. Rushing and Eastern District of Virginia U.S. District Judge David J. Novak, who was sitting by designation, said that federal law trumps state law and no party had disputed this.

On all other matters though, despite both parties raising 24 issues "claiming almost limitless error" in the district court's handling of the case, the Fourth Circuit affirmed the lower court.

"Judge Craven of our court once remarked that '[s]o many points of error suggest that none are valid.'" the opinion read. "His observation applies with equal force here. The defendants offer twenty-one grounds for reversal and [Keyes Law Firm] another three. After carefully considering each one, we conclude that, with one minor exception, they all lack merit."

The underlying suit alleges that Napoli's initial law firm Napoli Bern Ripka Shkolnik LLP never made good on many of its 2,174 referral agreements with Keyes Law Firm, particularly after the firm divided in a drama-filled break up of partners Napoli and Marc Bern.

Before the breakup, Mary Keyes, founder of Keyes Law Firm, said she signed fee-sharing agreements with Napoli Bern and referred asbestos clients to the firm between 2012 and 2014.

Keyes Law Firm, which specializes in representing clients in asbestos cases, was working with bankruptcy firm David Law Firm, which is now Cooper Hart Leggiero & Whitehead PLLC. The bankruptcy firm would send its asbestos clients that were not facing bankruptcy to Keyes for a small referral fee. But soon Keyes was flush with clients and entered a partnership with Napoli Bern, referring some of its asbestos clients to the national plaintiffs firm, which had more trial resources.

Keyes eventually served as a "sort of middle man" between the bankruptcy firm and Napoli Bern, Thursday's opinion said, with Keyes Law Firm receiving 6% of the settlements, the bankruptcy firm receiving 10% and Napoli Bern receiving 24%.

All was going smoothly until the Napoli Bern breakup, Keyes said. Napoli and Bern together made tens of millions of dollars representing New York City workers injured during the cleanup after the Sept. 11, 2001, terror attacks. But in 2014, the pair were embroiled in a battle over who would control the firm, following Napoli's battle with lymphoma.

The falling-out resulted in litigation on both sides, an even split of the firm's clients granted to both Napoli and Bern, and Napoli Bern being placed in a receivership, where it remains today. But it had another side effect, according to Keyes — her payments from Napoli from the ongoing settlements in the asbestos cases dwindled, and eventually discontinued.

In 2017, Keyes sued 17 defendants, representing several offspring of Napoli Bern, who she claims were simply alter egos for the original firm and Napoli himself, claiming breach of the association agreements.

Keyes had initially listed Marc Bern as a defendant, but in discovery, Keyes found out that when Napoli Bern split, Napoli was granted all of the 2,000 asbestos cases, according to Thursday's opinion. Her firm settled with Bern out of court and removed him and his firm from the suit.

On Dec. 23, 2020, after a nine-day trial, a jury sided with Keyes, ruling that her firm was owed $1.5 million. It also found that 13 of the 15 related firms named in the suit were liable, based on either the theory that Napoli Bern has assigned liability to the firm or the theory that the firm acted as an alter ego for Napoli Bern, or both theories at once.

The judge also hit the firms with sanctions and attorney fees mounting over $300,000 with a 10% post-judgement interest rate. This stemmed from a discovery battle filled with "bickering" in which Napoli and his firms failed to provide documents that would account for how much it owed Keyes in referral fees.

"The court found 'troublesome' that the defendants supposedly did not have records showing the gross recoveries for the 2,174 asbestos clients and expressed skepticism 'that this accounting is as chaotic...as it appears,'" Thursday's opinion said.

The defendants challenged all of these decisions on appeal, and Keyes appealed some of the rulings, including a decision to lower the verdict to reflect the amount that Keyes had already gained from its settlement from Bern.

The lower court also ruled that just because bankruptcy firm Cooper Hart, formerly David Law Firm, said it did not want any money from the suit does not mean that Keyes Law Firm is owed the firm's 10% stake in the settlements. Keyes appealed this decision, and like every issue but one, the Fourth Circuit affirmed the lower court.

Sixth Circuit Won’t Rehear Attorney Fee Coverage Decision

July 29, 2022

A recent Law 360 story by Ben Zigterman, “6th Circ. Won’t Rehear Attorney Fee Coverage Decision” reports that the Sixth Circuit declined to rehear an appeal decided earlier this month against two attorneys seeking coverage of attorney fee awards that Wesco Insurance Co. said were excluded "sanctions."

After the July 1 decision, Ohio attorneys Jason Wallace and Daniel Bache asked to have the full circuit rehear the appeal, arguing that a three-judge panel improperly interpreted the policy from an average attorney's perspective, rather than whether it was subject to multiple interpretations.

The Sixth Circuit declined the petition for a rehearing in a single-page order Thursday.

"The original panel has reviewed the petition for rehearing and concludes that the issues raised in the petition were fully considered upon the original submission and decision of the case," the order said. "The petition then was circulated to the full court. No judge has requested a vote on the suggestion for rehearing en banc."

In its decision, the panel found that the attorney fee award qualified as sanctions because the Individuals with Disabilities Education Act the claims were brought under make attorney misconduct a prerequisite for an attorney fee award.

Because Wesco's policy included an exclusion for sanctions under federal law, the panel said the insurer didn't owe coverage.

The case stems from suits filed by four northern Ohio school districts seeking to recover what they spent on attorney fees fighting litigation filed on behalf of parents and children under IDEA, according to court documents.

The school districts alleged the attorneys misstated basic facts about the students and schools in their pleadings and made false allegations that wasted district resources and teachers' time, the opinion said.

"This misconduct element makes clear that any awarded fees would constitute a 'sanction' under the ordinary meaning of that term (and so under Wesco's policy)," the panel wrote.

In their petition for a rehearing, Wallace and Bache argued that the panel should have interpreted the policy's terms liberally in its favor, not under their ordinary meaning or as an average attorney would define them.

"Not only does the panel's decision fail to even mention this basic principle of strict construction against an insurer, it adopts an analytical framework by which the very concept of 'strict construction' of contractual language loses all meaning," Wallace and Bache wrote. "The panel's analysis improperly focused on what the most reasonable interpretation of the exclusion would be, when the only question properly at issue was whether this provision 'was reasonably susceptible to more than one interpretation.'"

The Sixth Circuit panel's decision affirmed the summary judgment ruling for Wesco in 2018 from U.S. District Judge Benita Y. Pearson. Wesco had filed suit in 2017, seeking a declaration that it doesn't owe coverage.

NALFA Releases 2021 Litigation Hourly Rate Survey & Report

July 19, 2022

Every year, NALFA conducts an hourly rate survey of civil litigation in the U.S.   Today, NALFA released the results from its 2021 hourly rate survey.  The survey results, published in The 2021 Litigation Hourly Rate Survey & Report, shows billing rate data on the very factors that correlate directly to hourly rates in litigation:

City / Geography
Years of Litigation Experience / Seniority
Position / Title
Practice Area / Complexity of Case
Law Firm / Law Office Size

This empirical survey and report provides micro and macro data of current hourly rate ranges for both defense and plaintiffs’ litigators, at various experience levels, from large law firms to solo shops, in regular and complex litigation, and in the nation’s largest markets.  This data-intensive survey contains hundreds of data sets and thousands of data points covering all relevant billing rate categories and variables.  This is the nation’s largest and most comprehensive survey or study on hourly billing rates in litigation.

This is the second year NALFA has conducted this survey on billing rates.  The 2021 Litigation Hourly Rate Survey & Report contains new cities, additional categories, and more accurate variables.  These updated features allow us to capture new and more precise billing rate data.  Through our propriety email database, NALFA surveyed thousands of litigators from across the U.S.  Over 8,400 qualified litigators fully participated in this hourly rate survey.  This data-rich survey was designed to aid litigators in proving their lodestar rates in court and comparing their rates to their litigation peers.

The 2021 Litigation Hourly Rate Survey & Report is now available for purchase.  For more on this survey, email NALFA Executive Director Terry Jesse at terry@thenalfa.org or call us at (312) 907-7275.

Eleventh Circuit Tosses Insurer’s Request for Attorney Fees

June 2, 2022

A recent Law 360 story by Josh Liberatore, “11th Circ. Tosses Insurer’s Bid For Atty Fees After Reversal” reports that an insurer can't seek attorney fees on a $1.6 million judgment it previously won against a Liberty Mutual unit, the Eleventh Circuit confirmed, which comes after the court recently vacated the insurer's win on claims that the Liberty unit breached its contract while defending a fatal accident suit.  In an unpublished opinion, the appellate panel denied Endurance American Specialty Insurance Co.'s bid for attorney fees as moot. 

In May, the Eleventh Circuit reversed Endurance's $1.6 million win, finding that it couldn't show how Safeco Insurance Co. breached an indemnity agreement it had with Comegys Insurance Agency Inc., which was insured by Endurance.  "Safeco did win its appeal," the panel noted, "so, Endurance may not seek attorneys' fees."  Endurance had asked the Eleventh Circuit to overturn a lower court judge's ruling that its claims for attorney fees stemming from the judgment against Safeco were time-barred because Endurance failed to seek the fees within 14 days of the judgment.

The coverage dispute stems from an accident between driver Robert Smith and a motorcyclist, who died.  Safeco insured Smith, who bought his policies through Comegys.  Smith faced a wrongful death suit for which Safeco assigned an attorney who defended the case, and eventually a $7.3 million consent judgment was entered against Smith, according to court documents.  The consent judgment included Safeco paying the motorcyclist's estate the limits of Smith's auto policy, $1.25 million, and assigning the estate Safeco's claim against Comegys for negligent procurement, based on the theory that Comegys failed to find Smith a more robust policy after he had inquired about raising his policy limits.

Endurance insures Comegys under an errors and omissions policy, according to its suit.  The motorcyclist's estate pursued Endurance and Comegys "for the limit of Comegys's policy with Endurance," according to court documents.  The companies eventually paid just over $1.5 million to end the claims, court records show.

Endurance then sought to recoup the money from Safeco, arguing Safeco had breached its contract with Comegys by refusing to indemnify it for the alleged negligence.  Endurance's argument hinged on Safeco assigning an attorney to defend Smith, who allegedly mentioned to the motorcyclist's estate the possibility of a negligent procurement claim against Comegys and recommended an insurance lawyer to the estate.  In July 2019, a jury found in Endurance's favor, and the lower court entered a $1.6 million judgment against Safeco.

While Safeco appealed that decision to the Eleventh Circuit, Endurance launched an appeal of its own, arguing it should be awarded attorney fees for the judgment.  However, the Eleventh Circuit reversed the judgment last month, finding that Endurance couldn't show how Safeco had breached its contract with Comegys.  Safeco had acted entirely within the terms of that agreement by providing an insurance policy to Comegys's customers, tendering the policy on time after the accident and providing an attorney to Smith to defend the suit, the Eleventh Circuit panel presiding over that case found.  Safeco can't be held liable for what Smith's attorney decided to do after that, the panel said.