July 25, 2023
A recent Law 360 story by Brian Steele, “Ex-Client Owes McCarter & English $1M For Bills, Jury Finds”, reports that McCarter & English LLP won a clean sweep of a multiparty verdict in Hartford federal court when a jury awarded the law firm more than $1 million in its suit against a former client, which failed to pay a batch of legal bills after an adverse outcome in a trade secrets case in Kentucky.
A 10-person jury found that the California-based dietary supplement company Jarrow Formulas Inc. breached its contract with the law firm when it withheld payment on five invoices after the Kentucky federal trial ended in 2019, along with unrelated bills for intellectual property work. Jarrow countersued, claiming that the bills were improperly inflated by undisclosed rate hikes and that McCarter & English botched the trade secrets suit, but the jury rejected each of the counterclaims.
The firm, which has offices in Hartford and Stamford, Connecticut, also should be awarded prejudgment interest and does not have to pay Jarrow anything, the verdict said. The jury determined that Jarrow's breach of contract was willful and malicious, while McCarter & English's billing practices were the product of fair dealing. After the courtroom deputy polled the jury, U.S. District Judge Michael P. Shea praised jurors for their punctuality and attentiveness throughout the trial. "I can't remember a better jury that I've had," the judge said.
Caudill Seed & Warehouse Co. Inc. sued Jarrow in Kentucky in 2013 for misappropriation of trade secrets, and Jarrow was ordered to pay $2.4 million for willful and malicious misappropriation in July 2019. A judge later added more damages and attorney fees. Company founder and namesake Jarrow Rogovin testified in the Hartford case that he decided to fire McCarter & English and refused to pay outstanding bills, for which the firm quickly sued in the District of Connecticut. Jarrow's insurer declined to provide coverage for McCarter & English's bills in the Kentucky case. The firm's second amended complaint alleged that Jarrow owed $2.04 million.
Judge Shea had already granted partial summary judgment to McCarter & English and nearly $1 million in damages based on disbursements and the original hourly attorney rates before they rose, but left open the possibility of Jarrow receiving a refund after trial. That ruling in March 2021 noted that rates rose early on in the Kentucky case, but Jarrow paid the bills for six years.
The jury's verdict awarded McCarter & English another $1,057,173.93, and the judge asked the parties for briefs on the issues of prejudgment interest and punitive damages. The jury found in favor of the firm on Jarrow's claim under the Connecticut Unfair Trade Practices Act and on its legal malpractice claim, which sprung from McCarter & English's decision not to call Rogovin to testify live during the trial in Kentucky.
Rogovin first hired McCarter & English partner Mark D. Giarratana when the attorney worked at a different firm in 1996, and they maintained a professional relationship and friendship for 23 years, according to trial testimony from each. Giarratana said Rogovin paid all the Kentucky bills without complaint until after the verdict, while Rogovin said he did not read them thoroughly and failed to notice when the rates rose.