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Category: Fee Issues on Appeal

Attorneys’ Invoices in Prior Case May Be Admitted to Support Testimony

July 13, 2021

A recent Metropolitan News story, “Attorneys’ Invoice in Prior Case May Be Admitted to Support Testimony”, reports that a landowner who was sued by a man induced by a real estate agent into believing he had a contractual right to purchase her property when no contract had been formed was given a second chance yesterday by the Court of Appeal to win recompense from the realty company in a “tort of another” case for the attorney fees she incurred in the prior action.

The opinion was authored by Justice William Dato of the Fourth District’s Div. One. It reverses a judgment to the extent that San Diego County Superior Court Judge Ronald L. Styn denied attorney fees to plaintiff Hue Thi Dong Mai.

Styn did so, with expressed reluctance, in light of the Oct. 19, 2018 decision by the Fourth District’s Div. Three in Copenbarger v. Morris Cerullo World Evangelism, Inc. He read the case as barring Mai’s introduction of invoices for attorneys fees she expended in the breach-of-contract action against her, as inadmissible hearsay, and precluding him from taking judicial notice of what work was done in the prior case, over which he had also presided.

Mai was sued by John Fike who had been told by realtor Victoria Robinson of Keller Williams that a deal for the purchase of Mai’s property had been reach, when it hadn’t. After telling Fike that an accord had been reached, Robinson—desiring to obtain a commission on a sale for more than $1 million—then sought to persuade Mai to sell at the price she had set, but she declined.

After Fike dropped his suit, Mai sued Robinson and the company that owns Keller Williams under the “tort of another” doctrine which, Dato noted, “allows for the recovery of attorney’s fees as damages when a plaintiff is forced into litigation with a third party due to the tortious conduct of the defendant.” She obtained a judgment for $50,000 for emotional distress but nothing for the attorney fees she had expended in the action brought by Fisk.

Once Styn realized that attorney fees were being sought as damages subject to proof at trial, and not as costs which could be reckoned by reference to his own assessment of the value of services, he expressed a powerless to deviate from what he saw as constraints set down by Copenbarger and denied an award of those fees. Dato said he would read Copenbarger narrowly to avoid a conflict with other decisions.

He said of Copenbarger: “We are… of the opinion that its commentary on the inadmissibility of the invoices would only apply to cases where plaintiffs attempt to read the detailed entries on the bills during their testimony to prove the specific repairs made or services rendered—and not where the invoices are offered for the more limited and appropriate purpose of corroborating testimony that they actually paid certain amounts and/or to make a prima facie showing that the charges were reasonably incurred.

“As pertinent to this case, Mai sought to introduce redacted copies of the attorney invoices only to support her testimony that she paid the billed amounts and as some evidence that the amounts were reasonable….The trial court erred in broadly reading Copenbarger to preclude both Mai’s testimony and receipt of the invoices for these limited and appropriate purposes.  This evidence would have satisfied Mai’s prima facie burden to establish how much she paid for legal services and the reasonableness of that amount.”

Dato went on to say that Copenbarger “strongly implies—though it does not hold” that judicial notice of the content of the file in a previous action would be improper. He said: “The sounder and long-established rule is that materials filed by attorneys on behalf of litigants can be judicially noticed and provide evidence to support an award of attorney’s fees.  As relevant to this case, the materials filed on Mai’s behalf by her attorneys in the Fike action were properly subject to judicial notice and provide some evidence of the work performed defending that case.” A remand was ordered for the limited purpose of setting attorney fees.

Ninth Circuit Leaves Yahoo Jury Awarded Attorney Fees Intact

June 24, 2021

A recent Law 360 story by Melissa Angell“Ninth Circ. Leaves Yahoo Atty Fee Award Alone in Coverage Spat” reports that the Ninth Circuit left Yahoo Inc.'s jury award of more than $600,000 in attorney fees untouched after an AIG subsidiary accused the tech giant of not presenting the correct recoverable amount, with the panel finding that Yahoo shared adequate billing records.

A three-judge panel unanimously ruled that it would not "disturb" the jury award Yahoo received after hearing out National Union Fire Insurance Co. of Pittsburgh, Pa.'s challenge to the attorney fees. The insurer had argued that Yahoo lumped all legal fees together, including those that are not recoverable.

"Yahoo presented detailed billing records and made its associate general counsel, Daniel Tepstein, available to testify on the nature of the legal work those records referenced," the opinion said. "While Yahoo's request for virtually all of its fees through the summary judgment stage may have been ambitious, Yahoo fulfilled its obligation to 'demonstrate[] how the fees ... should be apportioned.'"

The coverage dispute goes back to January 2017, when Yahoo filed suit alleging National Union had breached its policy by refusing to cover the company in several class actions accusing it of scanning customers' emails.

In October 2018, U.S. District Judge Edward J. Davila found that National Union largely failed to defend and indemnify Yahoo for $4 million in attorney fees that resulted from the class actions. The judge said it was up to a jury, though, to decide whether the insurer acted in bad faith in denying coverage.

Following a five-day trial in May 2019, a jury returned a verdict finding that National Union had acted in bad faith and should foot the bill for Yahoo's attorney fees.

But on appeal, the insurer asked the Ninth Circuit to reverse the award of over $600,000 in attorney fees or grant a new trial altogether, arguing that the district court failed to guide a jury on how to allocate and award attorney fees. National Union explained that the tech giant was not able to show which portions of its legal fees were spent on bad faith claims.

Yahoo, however, argued that the record reflects "substantial evidence" in support of the jury's verdict and pointed out that the insurer didn't bother to cross-examine Tepstein about the accuracy of the figures provided.

And on Wednesday, the panel determined that National Union's attempt to overturn the jury's fee award is "unavailing." The challenge is also too little to late, with the panel observing that the insurer's argument was raised "for the first time on appeal regarding the content of Yahoo's billing records."

The appeals court also addressed Yahoo's argument that a lower court got it wrong in determining that it is only entitled to 30 days interest on defense and settlement costs under a previous 2011 contract.

"Here, had both parties fully performed their contractual obligations, National Union would have initially paid all defense and settlement costs, and Yahoo would have reimbursed those costs within thirty days of receiving an invoice," the panel wrote, concluding that Yahoo has not demonstrated that it deserves special damages.

Federal Circuit Doubtful of Second Attorney Fee Request in IP Case

June 17, 2021

A recent Law 360 story by Christopher Cole, “Fed. Circ. Doubtful of Ex-Worker’s 2nd Atty Fee Bid in IP Case,” reports that Federal Circuit judges seemed skeptical of a manufacturer's ex-employee returning to the court seeking attorney fees incurred in a spat over control of a machine patent that ended in a voluntary dismissal that made no mention of fee payment.  Larry Butterfield has appealed to the circuit a second time in his quest to recover some $200,000 in fees after battling patent, breach-of-contract and trade secret misappropriation claims in Oregon federal court from his former employer Keith Manufacturing Co.

But it didn't take long in oral arguments for U.S. Circuit Judge Todd M. Hughes to question Butterfield's contention that an Oregon federal judge abused his direction by denying the fee bid a second time on Federal Circuit remand.  The lower court judge found in his second ruling that Butterfield was not in fact a "prevailing party" entitled to recover attorney fees, as he had previously ruled.  "Wasn't it well within his discretion to [reconsider] his prior order?"  Judge Hughes asked a Butterfield lawyer.  "What's the legal basis that would prevent him from reconsidering the case after we vacated his order?"  "I don't understand your procedural objections here at all," he added.  "That try-again doesn't mean that he is precluded from reconsidering the prevailing party status."

Butterfield's attorney, Shawn Kolitch of Kolitch Romano LLP, noted that the Federal Circuit's remand order was aimed squarely at the judge's purported overreliance on the U.S. Supreme Court's 2017 Microsoft Corp. v. Baker decision, in which the justices rejected the notion that the voluntary dismissal of an individual's claims with prejudice amounted to a final decision that could be appealed.  The Federal Circuit found in April 2020 that Microsoft wasn't applicable to the Keith suit.  Kolitch maintained that on remand, the judge again went too far, this time by using a procedural rule to reconsider his client's "prevailing party" status, without a required motion from Keith to do so.

The new appeals court scrap is the latest in a suit that Keith lodged in 2015 accusing former employee Butterfield of improperly obtaining a patent by filing an application based on inventions he made during his employment at Keith.  The patent details a headboard used as part of a machine to clear asphalt from a truck.  After Butterfield sent Keith a covenant not to sue on the patent, both sides filed a joint stipulation to dismiss the case with prejudice without a court order, according to the panel opinion.

The stipulation did not mention fees, and Butterfield filed a motion for attorney fees shortly thereafter, according to the opinion.  But U.S. District Judge Michael H. Simon denied the bid in 2017 after determining that the stipulation was not an appealable order under the Microsoft ruling, prompting the first appeal at the Federal Circuit.  Keith's suit has long since been dropped, with a stipulation of voluntary dismissal with prejudice.  But the two sides disagree whether that means Butterfield is the "prevailing party" in the suit.

A key legal question with the case back in the Federal Circuit is whether Butterfield obtained prevailing party status under Oregon law when the parties reached a stipulation of dismissal with prejudice.  Kolitch told the three-judge panel that under Oregon rules of civil procedure, a dismissed party is the prevailing party.  "That is standard when dismissed voluntarily," he said.  "There were no circumstances in this case indicating otherwise."

He also argued that even though Oregon state courts have a "procedural requirement" to enter a judgment document in cases of voluntary dismissal, that does not apply to federal courts because of the Erie doctrine, which says that if state and federal procedures conflict, district courts must follow the federal rules as long as they follow statute and are constitutional.

An attorney for Keith, Bruce Kaser of Vantage Law PLLC, who noted that Butterfield is trying repeatedly to overturn the federal court, said the Oregon rule requiring judgment to be entered to confer prevailing party status "is a substantive requirement" that Butterfield has not met.  Kaser said the appellant "doesn't have any authority" for the positions he has been taking in the effort to recover fees.  If the panel takes Butterfield's side, it would represent a major decision requiring "new topics and continuing education classes for both accountants and lawyers," Kaser said.

Tenth Circuit Sets Patent Standard for Trademark Attorney Fee Awards

June 13, 2021

A recent Reuters story by Blake Brittain, “10th Circuit Adopts Patent Law Standard for Trademark Attorneys’ Fees,” reports that the 10th U.S. Circuit Court of Appeals ruled Tuesday that the U.S. Supreme Court’s attorneys’ fees standard for “exceptional” patent cases also applies to trademark cases, joining every other U.S. circuit court in applying the standard to Lanham Act disputes.

The Supreme Court's 2014 decision in Octane Fitness made it easier for litigants to recover attorneys' fees under the Patent Act's fee-shifting provision, and it applies to trademark law because of the Lanham Act's identical provision, U.S. Circuit Judge Carlos Lucero wrote for a three-judge panel.

Plaintiff Derma Pen LLC and its attorney Michael Zimmerman of Zimmerman Booher didn't immediately respond to a request for comment. Jefferson Gross of Gross & Rooney, who represented defendants Joel and Sasha Marshall, also didn't immediately respond to a request for comment.

Derma Pen makes microneedles for skin treatments, and won a permanent injunction in Utah federal court in 2017 against Stene Marshall, who had been misusing the "Dermapen" name to sell his own products, to stop him from infringing its trademark.

Derma Pen later moved to hold Marshall's brother and sister-in-law Joel and Sasha Marshall in contempt for acting in concert with him to violate the injunction. They fended off Derma Pen's motion and won more than $190,000 in attorney fees in 2019 after U.S. District Judge David Nuffer in St. George, Utah found the case exceptional under Octane Fitness, which said that an exceptional case is "simply one that stands out from others" in the strength of a party's litigating position or unreasonable manner of litigation.

Nuffer noted in his decision on Derma Pen's claims against Joel and Sasha Marshall that Derma Pen provided no evidence of damages, had abandoned its trademark, and failed to comply with discovery orders, among other things.

Lucero, joined by Circuit Judges Harris Hartz and Allison Eid, decided to add to the "chorus of circuits" that have applied Octane Fitness to trademark cases, citing the relevant laws' identical language, indications in the Octane Fitness ruling that the two provisions should be interpreted the same, and Congress' reference to the Patent Act in enacting the Lanham Act provision.

Third Circuit Bars Attorney Fees For ‘Limited Success’

June 12, 2021

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."