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Category: Practice Area: Civil Rights / Public Interest

Judge Acted Arbitrarily in Setting ADA Attorney Fee Award

October 8, 2021

A recent Metropolitan News story, “Judge Acted Arbitrarily in Setting ADA Attorney Fee Award,” reports that a District Court judge, in setting an attorney-fee award, acted arbitrarily in disregarding the services of three of five lawyers who represented the plaintff in securing a settlement of his action under the federal Americans With Disabilities Act and the state Unruh Act and by making a 10 percent deduction as a penalty for the law firm inflating its fees, the Ninth U.S. Circuit Court of Appeals held.

Its memorandum opinion comes in a case bought by the Center for Disability Access, a division of the San Diego law firm of Potter Handy LLP, on behalf of Antonio Fernandez, who is wheelchair-bound. The center brings hundreds of ADA and Unruh actions each year, using a stable of plaintiffs, including Fernandez.

Yesterday’s appeal came in a case instituted in the U.S. District Court for the Central District of California against Roberta A. Torres, who owned real property in Whittier and against CBC Restaurant Corp., which operated the Corner Bakery Café on Torres’s property. The suit was brought over the height of the counter.

In making his award of attorney fees, Judge Fernando M. Olguin said in a July 14, 2020 order:

“Despite many years of experience litigating the two claims in this case in virtually hundreds of cases, and a docket that reflects little, if any, litigation in this case, plaintiff seeks $15,762.50 for the work performed by five attorneys….Further, the cases filed by plaintiff include nearly identical complaints and subsequent filings.”

Olguin made note of three of the several ADA-based actions the center has recently brought in the Central District with Fernandez serving as the plaintiff.

The judge opined that the “assignment of so many experienced attorneys to such a simple case replete with boilerplate documents resulted in substantial task padding, duplication, over-conferencing, attorney stacking, and overall excessiveness,” declaring:

“Given the simplicity of the case and ADA accessibility cases in general, the quick settlement and apparent lack of any contested litigation matters in this case, and the lack of any dispositive motions, no more than one partner and one associate was necessary to prosecute this case. Thus, the court will reduce the fee award by cutting the fees for three of the five attorneys.”

He opted to take cognizance only the services of the lead attorrney, Christina “Chris” Carson, who was admitted to practice on Dec. 2, 2011, and Mark D. Potter, whose State Bar membership goes back to Dec. 1, 1993.

Potter sought recompense at an hourly rate of $595 and Carson wanted to be paid $450 an hour. Olguin said that taking into account the various factors customarily assessed in setting attorney fees, “$425 is reasonable for attorney Potter, and an hourly rate of $275 is reasonable for attorney Carson.” Noting that there was a “quick settlement of this routine, non-complex case, where plaintiff did not file or oppose any dispositive motions,” Olguin declared that “the court will apply a ten percent reduction.” After subtracting “10% of the time billed for general excessiveness,” he awarded $3,897 in attorney fees—slightly less than 25 percent of what was sought.

Olguin allowed the $642.50 in costs that were claimed.

Reversal came in an opinion signed by Circuit Judges Susan P. Graber and John B. Owens and by District Court Judge Charles R. Breyer of the Northern District of California, sitting by designation. The judges said:

“While we agree with the district court that Fernandez’s lawyers overbilled, it was ‘arbitrary’ to ignore entirely the time billed by three of the five lawyers….These three appear to have performed at least some necessary work….To the extent that overstaffing resulted in inefficiencies, the district court should reduce the fee award in proportion to those inefficiencies, rather than Through a ‘shortcut.’ ”

The opinion continues:

“The district court also abused its discretion in calculating the hours of the two attorneys whose work it considered. The court provided cogent reasons for its specific cuts as to various tasks, but its final additional 10% reduction for ‘general excessiveness’ lacked any justification.”

Olguin did not abuse his discretion in setting the rates for Carson ans Potter, the Ninth Circuit said, because they had nor provided evidence substantiating the higher value they ascribed to their services.

The case is Fernandez v. Torres, 20-55723.

Harvard Sues Insurer Over Attorney Fees

September 20, 2021

A recent Law 360 story by Eli Flesch, “Harvard Sues Insurer For Legal Fees in Affirmative Action Suit,” reports that Harvard University sued Zurich American Insurance Co. for excess coverage of costs it incurred fighting a lawsuit challenging its affirmative action policies, saying the insurer wrongly denied coverage on the basis that it didn't get a timely notice of the suit.  The Ivy League school told a Massachusetts federal court that Zurich was ducking its obligation under a $15 million excess insurance policy to pay for legal fees connected to allegations that it has engaged in illegal racial balancing to the detriment of Asian American applicants.  Harvard defeated the underlying suit in two lower courts but still faces a government investigation and a potential U.S. Supreme Court fight.

In an 11-page complaint, one of Harvard's governing boards told the court that it had already maxed out its $25 million coverage limit under its policy with AIG unit National Union Fire Insurance Co. of Pittsburgh.  The university said it would continue to accrue legal fees because of a pending U.S. Department of Justice inquiry and the writ of certiorari that could bring the Title VI allegations of discrimination to the Supreme Court.

Harvard said it provided notice to Zurich of its claim in May 2017, far before its coverage under the AIG policy had been exhausted.  Despite that, the university said, Zurich denied its claim in October 2017 on the basis of "purported" late notice.  The insurer told Harvard in several letters that it would have been entitled to coverage under the policy had timely notice been given, according to the complaint.

But Harvard argued that the Zurich policy, which carried much the same terms as the AIG policy, required the university to tender notice of the claim "as soon as practicable," which it did.  Moreover, Zurich personnel were well aware of the discrimination suit, the university said, pointing out the considerable media attention drawn by the allegations.  The university is seeking a declaration of coverage and a finding of breach of contract.

The underlying suit, brought by Students for Fair Admissions, claimed that Harvard violated Title VI of the Civil Rights Act.  The group lost its case in 2018 after a closely watched three-week bench trial, a finding that the First Circuit upheld in November.  In June, the U.S. Supreme Court signaled it might take up the landmark challenge to Harvard's affirmative action admissions policy when it invited President Joe Biden's administration to weigh in on whether the school's race-conscious system is legal.

Article: Eleventh Circuit’s New Standard for Attorney Fees in ADA Cases...at Gas Stations

September 3, 2021

A recent article by David Raizman and Paul J. De Boe, “Eleventh Circuit of Appeals Creates New Standard for Standing in Title III Cases Against Gas Stations,” reports on a recent ruling on ADA litigation in the Eleventh Circuit Court of Appeals.  This article was posted with permission.  The article reads:

For years, Scott Dinin was one of South Florida’s most prolific filers of Title III of the Americans with Disabilities Act (ADA) cases.  His run ended two years ago, when, after obtaining default judgments against two gas stations on behalf of his client, Alexander Johnson, Dinin submitted a request for attorneys’ fees whose billing entries caught the attention of Judge Paul Huck of the U.S. District Court for the Southern District of Florida.  Judge Huck’s investigation into the matter brought to light a systematic practice of filing frivolous claims, knowingly misrepresenting the time counted as billable, making misrepresentations to the court, and improperly sharing attorneys’ fees with clients.  In his August 2019 order awarding extensive sanctions, Judge Huck described Dinin’s and Johnson’s operation as “an illicit joint enterprise … to dishonestly line their pockets with attorney’s fees from hapless defendants under the sanctimonious guise of serving the interests of the disabled community.”

Judge Huck’s sanctions included:

dismissal with prejudice of Johnson’s ADA and Florida Civil Rights Act claims;

disgorgement of improperly obtained settlement funds from 26 “gas pump cases”;

additional penalties of $59,900 against Dinin and $6,000 against Johnson; and

an injunction preventing Johnson and Dinin “from filing any future ADA complaints without first obtaining the court’s written permission.”

Judge Huck’s order corroborated and confirmed the suspicions of many in South Florida’s business and legal communities about questionable practices of some plaintiffs and their lawyers in Title III access litigation.  Johnson and Dinin appealed, and on August 17, 2021, the Eleventh Circuit Court of Appeals dismissed Dinin’s appeal and affirmed the district court’s order imposing sanctions on Johnson.

The Eleventh Circuit Dilutes Standing Requirements

While the court’s affirmance of sanctions has drawn the most interest, practitioners may want to note the court’s holding regarding standing in Title III cases brought against gas stations and similar Title III defendants that are not “destination-type establishments like hotels, hospitals, or restaurants.”  The court held that standing could be established without showing a “definite intention to visit” the specific establishment “in the future,” as would be required if the defendant were a supermarket or a “destination-type establishment.”  The court reasoned that gas stations are “visited on an as-needed basis, often based on convenience, proximity, or price on a given day,” and “cars are mobile and must be serviced wherever they happen to be at the time gas is needed.”  Therefore, standing exists if “[Johnson] regularly travels in the vicinity of the particular gas station.”

As the concurring opinion pointed out, the majority opinion did not cite any support for “water[ing] down the constitutional minimum for standing.”  All the same, practitioners may want to take note of this important holding when defending cases brought against gas stations or non-destination-type establishments.

David Raizman is nationally known for his disability rights practice, specifically for his work under Title III of the Americans with Disabilities Act.  In 2012, he was recognized by the Los Angeles Daily Journal as one of the top labor and employment attorneys in California and has been recognized multiple times as a Southern California Super Lawyer.

Paul De Boe is an associate attorney in the Miami office of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.  His practice focuses in the area of employment litigation including claims of discrimination, harassment, retaliation, wage and hour, and family and medical leave law violations.  Mr. De Boe also counsels and defends clients in claims brought pursuant to Title III of the Americans with Disabilities Act involving brick and mortar locations as well as website accessibility, and state and federal consumer protection laws.

Class Counsel Seek $4.3M in Fees in ERISA Settlement

August 17, 2021

A recent Law 360 story by Rachel Stone, “Columbia Workers’ Counsel Want $4.3M For ERISA Deal”, reports that a class of Columbia University workers and retirees asked a New York federal court for $4.3 million in attorney fees after reaching a $13 million settlement resolving claims that the university saddled their retirement plans with exorbitant fees and bad investments.  In the memorandum, the class of retirement plan beneficiaries argued that the attorney's request for the "market rate," or one-third of the settlement fund for class counsel Schlichter Bogard & Denton LLP, was reasonable, citing the complexity and risks of taking the case on a contingent fee basis.

"Class counsel leveraged their considerable experience in excessive fee litigation to achieve an efficient resolution of this matter, thereby avoiding the expense of a lengthy jury trial and substantial risk of nonrecovery," the memorandum said.  The class also argued that this attorney fee award would encourage more firms to take on similar cases in the public interest, which, like this case, further the Employee Retirement Income Security Act's goals of safeguarding workers' retirements.

Schlichter Bogard spearheaded a slate of cases against universities claiming their retirement funds charged beneficiaries too-high fees under ERISA, according to the memorandum.  The firm "retained the same level of commitment in each excessive fee case — to take the case as far as needed, appeal if necessary, invest whatever expenses were required and carry those expenses for potentially a decade or more," the class said.

The memorandum also referenced the class counsel's "extensive" discovery process to support their request for attorney fees. In total, the firm spent more than 15,000 hours on the case, sifting through more than 350,000 documents, deposing the named plaintiffs and dozens of others, according to the memorandum.  Plus, the class argued, ERISA matters are notoriously complicated.  The class also asked the court for nearly $640,000 in litigation expenses and $25,000 for each of the seven named plaintiffs who "risked their reputations and alienation from employers" in bringing suit against Columbia.

Seventh Circuit Upholds Attorney Fee Reduction in Discrimination Case

July 7, 2021

A recent Law 360 story by Clark Mindock, “7th Circ. Back $1M Atty Fee Cut in Bias Case,” reports that the Seventh Circuit upheld a finding that an attorney inflated his hourly rate and "grossly" overstated the hours that could have reasonably been expended on an Illinois discrimination case, ultimately cutting over $1 million in fees and costs.  A three-judge panel said that an Illinois district court acted within its discretion when it cut nearly $1 million from an attorney fee request by Joseph Longo of Longo and Associates Ltd., and cut around $400,000 in costs.

The reduced award came after the district court combed through Longo's submission and determined that he had inflated the number of hours put into the case by billing for things like trips from his office to the downtown Chicago courthouse and by billing over 18 hours of paralegal work at an attorney rate.  The circuit said there was "no question" that the district court had applied the correct analysis to determine Longo's award, despite appellate arguments from Longo that touched on "virtually every aspect of the district court's decision."

The panel warned Longo against again attempting to boost his award through similarly misleading accounting methods and arguments, which it called "plainly frivolous."  "All of Mr. Longo's contentions in his appellate brief are meritless. Some are simply frivolous," the circuit said.  "Although we do not impose sanctions today for Mr. Longo's apparent failure to heed past opinions critical of frivolous fee litigation conduct, we are unlikely to countenance such behavior in the future."

The underlying dispute dates back to 2012, when an employee of the Illinois Department of Transportation, Demarco Nichols, alleged that supervisors with the department had discriminated against him based upon his Muslim religion.  Nichols said in his complaint that he lost his job after requesting a place to pray during his lunch break and repeatedly notifying his supervisors of inappropriate behavior by colleagues.

After the complaint was filed in 2012, the case was tried and a jury awarded Nichols a judgment of $1.5 million in damages, which was later reduced to the statutory cap of $300,000, and $952,156 in equitable relief.  That verdict and the equitable relief were not challenged in the appeal involving the attorney fees.  After the win, Longo petitioned for $1,709,345 in attorney fees and $4,460.47 in costs. That figure included an hourly rate of $550, and Longo said he worked 3,107.9 hours on the case. 

He petitioned for those fees and costs through Title VII of the Civil Rights Act's fee-shifting provision.  In its review of the request, the district court found that the number of hours was inflated and inappropriately included higher-billed hours for paralegal work.  The court also said that the $550 figure was much too high, noting that a judge in a previous case had pegged Longo's hourly rate at $360 an hour.  As for billing for travel expenses, the lower court determined that those fees — which were billed at around 2.8 hours round-trip, or $1,008 for a trip at the $360 rate — were unreasonable, in part because there was no indication that Longo bills paying clients for those trips.