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The NALFA

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Category: Litigation Tactics / Strategy

Federal Circuit Backs $4.2M Fee Award in IP Case

May 11, 2021

A recent Law 360 story by Adam Lidgett, “Fed. Circ. Backs Apple and Cisco’s $4.2M Fee Win in IP Case,” reports that the Federal Circuit has refused to undo a lower court order allowing Apple and Cisco to collect $4.2 million in attorney fees from tech company Straight Path in a patent case, despite arguments that a California federal judge wrongly found the case was exceptional.  In a short order, a three-judge appellate panel affirmed the California federal court's decision handing Cisco $1.9 million and Apple $2.3 million in fees from Straight Path in a dispute over internet phone patents.  The panel gave no reason behind its decision.

The order came just days after oral arguments in which the panel had a hard time believing that U.S. District Judge William Alsup — who delivered the fee award almost a year ago — lacked the discretion to do so.  Judge Alsup declared the case exceptional since Straight Path's infringement claims contradicted a position it had advocated at the Federal Circuit in appealing a Patent Trial and Appeal Board decision.

The fee dispute between the parties has been a lively one, sparking fireworks in the courtroom during a May 2020 hearing when Judge Alsup scolded Apple and Cisco for initially requesting $10 million in fees after beating the suit.  The judge said the tech giants "played games," used "abusive" tactics and were motivated by "greed, G-R-E-E-D."  He required them to resubmit their fee bids and appointed a special master to determine a reasonable amount of fees and costs.  In May of last year, the court awarded Cisco $1.9 million — half of its initial request — while Apple netted $2.3 million of its initial $3.9 million ask.

Straight Path argued that as a result, Federal Circuit precedent required it to reverse Judge Alsup's finding of exceptionality, which is required for a prevailing party in a patent dispute to get fees.  Desmarais LLP attorney Justin P.D. Wilcox, an attorney for Cisco, told Law360 that his team was "pleased with the Federal Circuit's ruling and that the Federal Circuit affirmed Judge Alsup, who down at the district court had ruled that Cisco was entitled to attorneys' fees for the exceptional case that Straight Path had brought."

Quinn Emanuel Wins $14M in Attorney Fees in $5M Trial Case

April 30, 2021

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.”

Attorney Raises Concerns of Hourly Rates for K&L Gates

March 21, 2021

A recent Law 360 story by Rachel Scharf, “Atty in Failed WWE Case Blasts ‘Suspect’ K&L Gates Fee Bid,” reports that a lawyer who was previously sanctioned for his conduct in pursuing now-dismissed claims that World Wrestling Entertainment Inc. hid the risks of head injuries said that the company can't score more than half a million dollars in legal fees, calling K&L Gates LLP's billing rates "suspect."  Attorney Konstantine W. Kyros of Kyros Law Offices PC, who was sanctioned in 2018 for overly lengthy and frivolous filings, told a Connecticut federal judge that the nearly $574,000 fee requested by WWE and its CEO, Vince McMahon, is based on K&L Gates partner Jerry S. McDevitt's "patently unreasonable" $950 hourly rate, or nearly twice that of his co-counsel from Day Pitney LLP. Kyros also said McDevitt had overbilled for his time.

"WWE chose to provide this Court with suspect fees.  Mr. McDevitt spent far too much time performing basic work, numerous entries exist for nonrecoverable subjects, including research, drafting and conferencing over the crime-fraud exception, and over $20,000 for a PowerPoint presentation," Kyros said.  "These suspicious fees may require audit so the Court can properly discern any appropriate percentage reduction."

The fee fight stems from consolidated litigation dating back to 2014 alleging that WWE hid the risks of brain injuries from wrestlers, causing star wrestlers including Jimmy "Superfly" Snuka and Harry Masayoshi "Mr. Fuji" Fujiwara to develop chronic traumatic encephalopathy, or CTE.  The lawsuit was put to bed in September 2020 by a Second Circuit panel, after U.S. District Judge Vanessa Lynne Bryant tossed out a number of the actions in 2018 and ordered Kyros to pay WWE's attorney fees as a sanction for failing to heed the court's repeated warnings against frivolous filings.

Reached for comment, McDevitt denied Kyros' overbilling allegations and said the attorney is trying to duck paying for the time that WWE's counsel was forced to spend uncovering the "unethical tactics" that got him sanctioned.  "Mr. Kyros' deceptive and frivolous allegations are emblematic of his pattern throughout the case," McDevitt told Law360.  "He is now saying it should not have taken so much time and expense to expose his fraud on the court and serial misconduct, which he attempted to hide in mountains of deceptive and false pleadings and papers with the court."

But Kyros argued that WWE's fee application wrongly stretches the so-called Rule 11 sanction from 2018 in an attempt to recoup expenses far outside the order's scope, including an additional $39,000 for costs tied to applications following the Second Circuit appeal.

"This is not a sweeping sanctions award. It does not provide for all bills tangentially related to the sanctions motions," Kyros said in Friday's brief.  "WWE's fight to justify their unconscionable fee applications is too attenuated from the sanctioned conduct to warrant granting."  In a comment to Law360, Kyros said he is continuing to pursue the litigation, including by lodging a petition asking the U.S. Supreme Court to review the Second Circuit's dismissal.  "Our team is proud to have stuck with the wrestlers in pursuit of their important claims, and despite WWE's liberal use of misguided Rule 11 filings we have stayed with the case to its conclusion," Kyros said.

Attorney Who ‘Overlitigated’ Case Sees Fees Reduced

March 16, 2021

A recent Law 360 story by Kevin Penton, “Atty Who ‘Overlitigated’ Contractor Dispute See Fee Reduced,” reports that a California state appeals court has upheld a trial court awarding nearly $200,000 less in fees than what a lawyer sought for working on a dispute over an unlicensed contractor, finding that the lawyer representing himself in the matter "overlitigated" and got "embroil[ed]" in the case.  A three-justice panel of the Second Appellate District upheld the trial court's "sound discretion" in rejecting David S. Karton's bid to collect $286,110 in attorney fees and awarding him $90,000 instead, according to the opinion.  The court noted that when the dispute originated, the lawyer and Ari Design and Construction Inc. were $22,096 apart on how much the contractor owed him and his wife for a home construction job.

"In this appeal the Kartons have come out swinging, apparently believing the best defense is a good offense," the opinion reads.  "This approach demonstrates the trial court was within its discretion to conclude the Kartons conducted litigation that was less than civil."  Because California laws allow consumers to collect the entire amount they have paid a contractor who is unlicensed, Karton and his wife collected the entire $92,651 they had paid Ari by the time the lawyer learned in November 2015 that the contractor was not properly licensed or insured, according to the opinion.  With other penalties, the judgment added up to $133,792, not including post-judgment interest and attorney fees, according to the opinion.

Karton then sought to collect on over 600 hours of work, which the trial court cut down to 200.  The appellate court noted that Karton "overlitigated" and engaged in "incivility" in his briefing, through actions such as calling comments by his opposing counsel "frivolous" and alleging that they made false statements, according to the opinion.  "The trial court fairly attributed some of the overlitigation to Karton's personal embroilment in the matter," read the opinion, which upheld the lower court's conclusion that it would "seem unreasonable" for an attorney fee award to total approximately three times the damages in the matter.

"A $23,000 argument must be resolved, but it does not justify launching a disproportionate litigation offensive," the opinion read.  "The Kartons' strategy netted them windfall gains: the harshness of contractor licensing laws allowed them to recoup all their construction monies, plus $10,000, and to retain the benefit of months of free construction work."

Karton took issue with the appellate court describing as a "windfall" what he was statutorily entitled to, asserting that it is meant as a deterrent against workers who are injured on the job not having their medical bills paid.  He told Law360 that during a settlement conference, he and his wife offered to settle the case for $125,000 — including attorney fees — but that Ari rebuffed them.

The Nation’s Top Attorney Fee Experts of 2020

June 24, 2020

NALFA, a non-profit group, is building a worldwide network of attorney fee expertise. Our network includes members, faculty, and fellows with expertise on the reasonableness of attorney fees.  We help organize and recognize qualified attorney fee experts from across the U.S. and around the globe.  Our attorney fee experts also include court adjuncts such as bankruptcy fee examiners, special fee masters, and fee dispute neutrals.

Every year, we announce the nation's top attorney fee experts.  Attorney fee experts are retained by fee-seeking or fee-challenging parties in litigation to independently prove reasonable attorney fees and expenses in court or arbitration.  The following NALFA profile quotes are based on bio, CV, case summaries and case materials submitted to and verified by us.  Here are the nation's top attorney fee experts of 2020:

"The Nation's Top Attorney Fee Expert"
John D. O'Connor
O'Connor & Associates
San Francisco, CA
 
"Over 30 Years of Legal Fee Audit Expertise"
Andre E. Jardini
KPC Legal Audit Services, Inc.
Glendale, CA

"The Nation's Top Bankruptcy Fee Examiner"
Robert M. Fishman
Cozen O'Connor
Chicago, IL

"Widely Respected as an Attorney Fee Expert"
Elise S. Frejka
Frejka PLLC
New York, NY
 
"Experienced on Analyzing Fees, Billing Entries for Fee Awards"
Robert L. Kaufman
Woodruff Spradlin & Smart
Costa Mesa, CA

"Highly Skilled on a Range of Fee and Billing Issues"
Daniel M. White
White Amundson APC
San Diego, CA
 
"Extensive Expertise on Attorney Fee Matters in Common Fund Litigation"
Craig W. Smith
Robbins LLP
San Diego, CA
 
"Highly Experienced in Dealing with Fee Issues Arising in Complex Litigation"
Marc M. Seltzer
Susman Godfrey LLP
Los Angeles, CA

"Total Mastery in Resolving Complex Attorney Fee Disputes"
Peter K. Rosen
JAMS
Los Angeles, CA
 
"Understands Fees, Funding, and Billing Issues in Cross Border Matters"
Glenn Newberry
Eversheds Sutherland
London, UK
 
"Solid Expertise with Fee and Billing Matters in Complex Litigation"
Bruce C. Fox
Obermayer Rebmann LLP
Pittsburgh, PA
 
"Excellent on Attorney Fee Issues in Florida"
Debra L. Feit
Stratford Law Group LLC
Fort Lauderdale, FL
 
"Nation's Top Scholar on Attorney Fees in Class Actions"
Brian T. Fitzpatrick
Vanderbilt Law School
Nashville, TN
 
"Great Leader in Analyzing Legal Bills for Insurers"
Richard Zujac
Liberty Mutual Insurance
Philadelphia, PA