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Category: Prevailing Party Issues

Judge Cuts Gibson Dunn’s Fee Request in Half

September 22, 2023

A recent Law 360 story by Ryan Boysen, “Gibson Dunn Fees Halved in NY Eviction Law Dispute”, reports that attorneys from Gibson Dunn & Crutcher LLP can recover $385,000 in fees for successfully blocking a pandemic-era anti-eviction law on behalf of New York landlords, after a federal judge rejected arguments that they should not be paid at all, but found their initial request of $735,000 "unreasonably excessive."

In a 26-page ruling, U.S. District Judge Gary R. Brown said the Gibson Dunn team in question deserves credit for four months of frenzied work that finally led the U.S. Supreme Court to enjoin New York's COVID-19 Emergency Eviction and Foreclosure Prevention Act, or CEEFPA, in August 2021 — even though a new, nearly identical law was then passed shortly thereafter.

Judge Brown slashed the initial $735,000 fee request nearly in half after finding the 10-attorney team was too big, too "top-heavy" and billed too many hours, some of them at too-high hourly rates.  That decision came even though the Gibson Dunn attorneys had argued the $735,000 figure already reflected "significantly discounted" rates and some pro bono hours for which they did not bill at all.  "Upon review of the billing records, the court … finds that the number of hours expended by Gibson Dunn on this litigation to be unreasonably excessive for several reasons," Judge Brown said.

In civil rights cases the "prevailing party" is able to seek legal fees from their opponent, on the grounds that when a plaintiff "succeeds in remedying a civil rights violation," the benefits of doing so inure to the rest of society as well, according to the ruling.  Judge Marks, the defendant in the landlords' initial lawsuit, had argued that the Gibson Dunn team should not receive any fees because its efforts only resulted in enjoining a law that had been set to lapse just days later.

"The stark truth is that plaintiffs failed to recover a judgment against [Marks] at all, rendering this fee application null," Judge Marks said in a brief opposing Gibson Dunn's fee request.  Judge Brown said that analysis was not quite on the money, however.  Even if a party receives only a stay or preliminary injunction, and never obtains a final judgment in its favor, it can still be considered a "prevailing party" if the court ruled in its favor on the merits, the ruling said.

"Moreover, 'a party prevails under [Section 1988 of the Federal Rules of Civil Procedure] where it obtains a preliminary injunction against enforcement of a law that is later amended or repealed,'" Judge Brown said, quoting the 2021 ruling in HomeAway.com Inc. v. City of New York.  Nonetheless, Judge Brown declined to award the Gibson Dunn team the entirety of the fees it asked for.

His reductions began with the hourly rates sought by the Gibson Dunn team.  Randy M. Mastro and Akiva Shapiro billed $550 each per hour; senior associates Jessica C, Benvenisty and William J. Moccia billed $375; midlevel associates Erich A. Bruhn, Lauren K. Myers and Seton Hartnett O'Brien $287.50; and junior associates Lavi M. Ben Dor, Bina Nayee and Maxwell A. Peck $200.  These are the rates Gibson Dunn said had already been "significantly discounted" from the firm's "customary rates," the ruling said.

Judge Brown gave Mastro his $550 an hour rate given his widely acknowledged status as a towering figure of the New York Bar and his extensive experience with civil rights litigation, but reduced Shapiro's rate to $450 an hour.  Judge Brown also reduced the senior associates' rates to $325 an hour, the midlevel associates' rates to $250 an hour, and the junior associates' rates to $150 an hour.  Most of the reduction in the overall dollar amount received by the Gibson Dunn team came in the form of hours, however.

The attorneys claimed they spent nearly 2,000 hours on the CEEFPA case, but Judge Brown said that after he reviewed their billing records it seemed to him that Mastro, Shapiro and the senior associates spent too much time doing work that could have been done by lower-level associates, too much time in meetings, and too much time on "vague and block-billed" entries.

The entries with which he took issue included items such as "conference with team," "various correspondence with team members," "participate in team strategy call," "work on various issues going forward," "emails regarding status," and "work on various issues."  "In sum … the court finds that an across-the-board reduction of 50% of the hours billed by plaintiffs' counsel is appropriate," Judge Brown wrote.

Tabacco Company Calls $10M Fee Request ‘A Waste Of Time’

September 4, 2023

A recent Law 360 story by Jonathan Capriel, “Tabacco Co. Calls Rival’s $10M Fee Bid A Waste Of Time”, reports that tobacco industry giant Swisher is needlessly taking up everyone's time by filing a motion for $10 million in fees in a case that it lost on appeal, cigarillo company Trendsettah said in court documents, urging a California federal judge to consider its request for $11 million in fees as the "real prevailing party."  It's true that two years ago the trial court sided with Swisher in the antitrust and breach of contract lawsuit that Trendsettah had brought and approved Swisher's bid for attorney fees, Trendsettah said in its filing opposing fees.  But the fee order was conditioned on Trendsettah losing its Ninth Circuit appeal.

Even though Trendsettah won part of that appeal, Swisher went ahead with the fee motion, taking the position that it is the "prevailing party" and is "still entitled to recover $10,462,480.60" in attorney fees and other litigation costs, Trendsettah said.  "Swisher's decision to force motion practice over this issue is not a good use of anyone's time, and should be summarily rejected," Trendsettah said.  "That order [approving Swisher's fees] should therefore be vacated, and the court should proceed to adjudicate the fees that are now claimed by the real prevailing party on the contract claims."  Additionally, Trendsettah has filed its own motion seeking $11.76 million in attorney fees and $613,000 in "disbursements incurred in prosecuting this action."

The legal fight between the two companies, begun nearly a decade ago, has taken at least two detours into the Ninth Circuit and seen the indictment of one CEO. With fees and costs bids coming in from both sides, and a pending $19.9 million sanctions motion filed by Swisher, exactly which party will come out ahead remains "clearly uncertain" U.S. District Judge James Selna said in May.

Trendsettah originally filed suit in 2014 against Swisher for breach of contract and antitrust violations, claiming the tobacco company orchestrated a plot to snuff out the potential rival's supply of short, narrow cigars known as cigarillos. Trendsettah accused Swisher of using its market dominance to force it into a supply contract for the cigarillos, then later scrapped the deal.

Trendsettah won at trial, securing a $14.8 million jury award that was trebled to $44 million, plus $9.1 million on its breach of contract claim.  But in 2016 Judge Selna tossed the antitrust verdict portion and ordered a new trial, saying the jury had been working off improper instructions on a key provision of antitrust law.  Even though a Ninth Circuit panel reversed the judge's ruling three years later, Trendsettah's win would hit a massive pothole.

Federal prosecutors indicted Trendsettah's founder and CEO, Akrum Alrahib, alleging the company lied about the price paid for cigarillos imported from the Dominican Republic.  This was part of an effort to avoid paying federal excise tax, according to the government. He pled guilty in November 2021 to conspiring to avoid paying excise taxes.

Judge Selna said Alrahib had committed fraud against the district court. He granted Swisher's motion for relief from the entire verdict and again ordered a new trial in August 2019.  But by then, Trendsettah claimed it no longer had the money to afford a new trial and sought to voluntarily dismiss the case, at the same time the company was appealing the overturned verdict.

The case seemed to be winding down in December 2020, when Judge Selna granted Swisher's motion for fees in the entire litigation, awarding $7.96 million in attorney fees and $2.5 million in costs, according to court records.  Roughly two years later, the Ninth Circuit ruled that Judge Selna was only half right when he tossed the jury verdict in 2019.  The panel affirmed the dismissal of the antitrust claims, which held the larger award and the trebled damages, but upheld the jury's breach of contract finding, which was worth $9.1 million.

Trendsettah argues that its win on the breach of contract claims at the appellate level means that it is the true prevailing party and as such Swisher cannot now seek fees.  Additionally, it argues that the private label agreement the parties signed explicitly says that the prevailing party is owed fees and costs from the loser.

After subtracting legal work provided for the failed antitrust claims, Trendsettah counsel Gaw Poe LLP and Goldstein & Russell PC claim that they've put in 8,754 and 1,658 hours, respectively.  In total, that's worth more than $11 million, according to the motion for attorney fees.

Moreover, Trendsettah argued that the court should have no problem approving this request, as it is comparable to what it had already awarded.  "Both the total number of hours and the total amount of the award compare favorably to what the court had previously approved as reasonable totals for Swisher," Trendsettah's motions for fees said.  "This is particularly true given that Trendsettah brought this motion following two-and-a-half additional years of work since the court calculated Swisher's reasonable totals."

Arizona Tribes: We Are ‘Prevailing Party’ Now Seeking Fees

August 17, 2023

A recent Law 360 story by Ali Sullivan, “Ariz. Tribes Say The Are ‘Prevailing Party’ In Mine Win”, reports that Native American tribes that successfully sued the federal government to stop construction on a copper mine in Arizona implored a federal judge to find the tribal nations prevailed under a federal historic preservation law, telling the court that their win requires the U.S. government to reimburse the tribes' legal costs.

The Tohono O'odham Nation, Pascua Yaqui Tribe and Hopi Tribe slammed the U.S. Forest Service for refusing to acknowledge their "resounding success" in the copper mine challenge.  The tribes, alongside environmental groups, obtained a court order in July 2019 blocking Rosemont Copper Co.'s proposed mine and vacating the Forest Service's decision approving the project, a ruling upheld by a divided Ninth Circuit panel last year.  Those results, the tribes argued, prove the Arizona-based tribal nations are the "prevailing parties" under the National Historic Preservation Act's waiver of sovereign immunity and therefore entitled to attorney fees and costs under the law's fee-shifting provision.

Although the federal and appellate courts did not rule on the tribes' NHPA claim, the rulings still rescued cultural resources from destruction and fulfilled the purpose of the law, the tribes argued.  "The NHPA authorizes the recovery of attorneys' fees and costs for 'any interested person' that 'substantially prevails' in 'any civil action brought' to enforce the Act," the tribes said.  "The tribes readily satisfy this fee-shifting provision because they succeeded on the 'dispositive issues' at the core of their lawsuit, including their NHPA claim."

A divided Ninth Circuit panel in May 2022 found that U.S. District Judge James A. Soto was correct to find that the Forest Service had inappropriately approved Rosemont's mining plan of operations, which included authorizations to permanently dump waste rock on 2,447 acres of national forest land to which the company does not hold valid mining rights.

Even though the tribes won "at all levels of the litigation," they haven't reached an agreement with the federal government over whether they are entitled to attorney fees and costs under the NHPA, the tribes told the court in June.  Instead, the court will decide the "threshold issue" to move along a potential fee settlement between the parties.  "We hope to be in a position to settle fees with the government, once the court rules on the prevailing-party issue," Stuart Gillespie, an Earthjustice attorney representing the tribes, said in an email to Law360.

The federal government contended last month that the tribes can't obtain fees under the NHPA because they did not win any relief based on that specific claim.  The Equal Access to Justice Act details certain size limitations for winning plaintiffs looking to obtain attorney fees from the U.S. government, federal officials said, capping entities' net worth at $7 million and their number of employees at 500.

The tribes — which do not meet that size limitation — can't "sidestep" the EAJA's maximums by asserting they prevailed under their NHPA cause of action, the government said.  That outcome would incentivize plaintiffs to tack doomed NPHA claims onto their lawsuits to qualify for attorney fees for which they would otherwise be ineligible, the government contended.

"If adopted, the tribes' theory of eligibility for fees under the NHPA's narrow waiver of sovereign immunity would virtually nullify the size limitations on EAJA's waiver of sovereign immunity,'' federal officials said.  The tribes countered that federal officials' "strawman arguments ... are sorely misplaced," arguing that, unlike the government's hypothetical, the court's ruling cut to the root of their NHPA claim.

"The tribes prevailed on the 'dispositive issue' that was 'closely connected' — indeed the crux of — their NHPA claim," the tribes said.  "Accordingly, they seek fees under the NHPA, not EAJA's fall-back provision — the very approach instructed by Congress, the courts, and the government's own fee-shifting policy."

Law Firm Denied Partner Billing Rates in Litigation

August 11, 2023

A recent ABA Journal story by Debra Cassens Weiss, “Big Law Firm Partners Awarded Fraction of Their $1,500-Plus Hourly Legal Fees”, reports that two Gibson, Dunn & Crutcher partners usually bill more than $1,500 per hour, but they trimmed the amount to only $950 per hour in a request for an award of attorney fees following successful litigation in the Southern District of Florida.  Even that amount was too much for a federal judge, who adopted a magistrate judge’s conclusion that $700 was a reasonable hourly fee for partners in Miami, Reuters reports.

Gibson Dunn had successfully represented defendant Peak One Opportunity Fund in a lawsuit alleging that the lender harmed startup Social Life Network Inc. when it exercised an option to obtain stock at a discount and then resold it.  Gibson Dunn was entitled to fees and expenses under a contractual agreement between the two litigants. Gibson Dunn sought to recover more than $237,000.  Chief U.S. Magistrate Judge Edwin G. Torres recommended an award of nearly $158,000 in fees and expenses, a recommendation adopted by U.S. District Judge Darrin P. Gayles of Miami.

The award included only $700 per hour for the “high-level partner work” of Gibson Dunn partners Helgi Walker and Barry Goldsmith. Walker, co-chair of Gibson Dunn’s litigation practice, is based in Washington, D.C., while Goldsmith is in New York, Reuters reports.

Torres said he had no trouble understanding why Walker and Goldsmith charge more than $1,500 per hour for their services.  But when awarding fees to a prevailing party, “this court has long recognized that it cannot force the loser to pay for the luxury of unusually well-qualified counsel when the standard the court must apply is designed to ensure nothing more than competent legal representation,” Torres said, quoting from another decision.

Walker provided a statement to Reuters.  It is “not surprising that a national firm’s rates might be slightly reduced in a context where local market comparisons are being made,” she said.  “The headline here is that we were successful in getting our client awarded almost $150,000 in fees for the plaintiff’s inappropriate and meritless suit,” she said.

$8M in Attorney Fees Awarded in $12.8M False Ad Suit

August 10, 2023

A recent Law 360 story by Ryan Boyson, “’Joint Juice’ Attys Get $8M in Fees For $12.8M False Ad Suit”, reports that three plaintiffs firms have been awarded roughly $8 million in fees and costs for years of work that led to a $12.8 million false advertising judgment against Premier Nutrition over its Joint Juice supplement, after a California federal judge dismissed criticisms that those fees were "bloated and unreasonable."  In an eight-page order, U.S. District Judge Richard Seeborg granted the fee request, filed by attorneys from Blood Hurst & O'Reardon LLP, Lynch Carpenter LLP and Iredale & Yoo APC.

The lion's share of the roughly $8 million in total fees and costs awarded went to Blood Hurst, which began laying the groundwork for the false advertising class action against Premier back in 2012.  Judge Seeborg shaved the total award down by about $300,000, after the attorneys had originally sought roughly $8.3 million.  But he didn't come close to adopting the roughly $2.4 million fee award sought by Premier, which savaged Blood Hurst and Lynch Carpenter's billing practices as "bloated and unreasonable" and "riddled with inefficiencies" and "extravagant expenses."

"None of these arguments are particularly potent," Judge Seeborg said.  "The hours of work submitted by plaintiff's counsel and the structure of their practice appear reasonable, and in any event their professional judgment in these areas is entitled to deference."  "The fact that plaintiff's counsel has prosecuted this case for a decade without receiving compensation clearly militates in favor of exercising" the court's broad discretion on how to compensate prevailing parties," Judge Seeborg added.

Blood Hurst also has nine other certified class actions pending against Premier in various states, all claiming that the Post Holdings Inc. unit promoted its "Joint Juice" product as an effective joint health remedy, despite scientific studies on the product's active ingredient, glucosamine, finding it has no impact on joint health whatsoever, according to court documents.

Judge Seeborg allowed Blood Hurst to submit fees and costs for precursor litigation that made the current case — Mary Beth Montera v. Premier Nutrition Corp. — possible.  But he cautioned that if the firm prevails in the other Joint Juice class actions, it won't be allowed to bill for those hours again.  "It should go without saying ... that plaintiff's counsel will not be entitled to receive duplicative recovery should any of the other related cases be litigated successfully," Judge Seeborg said.

In contesting the class attorney fee request, Premier had contended that most of the pre-2021 work the attorneys were billing for had little to do with the Montera case specifically, and therefore should be denied.  But in the order, Judge Seeborg begged to differ.  "Before December 2016, plaintiff's counsel had already undertaken a substantial amount of work that facilitated a successful outcome in Montera," he wrote.