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Category: Trial / Jury / Verdict

Florida Supreme Court: No Interest on Attorney Fees

September 9, 2021

A recent Law 360 story by Carolina Bolado, “Fla. High Court Won’t Add Interest To Atty Fee Calculations,” reports that the Florida Supreme Court ruled that prejudgment interest should not be added to a judgment when determining if the judgment triggers a party's entitlement to attorney fees under the state's proposal-for-settlement statute.  In a 5-2 decision, the high court opted to stand by its precedent and found that prejudgment interest accrued after CCM Condominium Association Inc. made a settlement offer to Petri Positive Pest Control Inc. should not be included in the "net judgment" for the purposes of calculating whether CCM can be awarded attorney fees under the statute.

The court relied on its 2002 ruling in White v. Steak & Ale of Florida, which defined the plaintiff's total recovery as including only attorney fees, costs and prejudgment interest accrued up to the date of its settlement offer.  When considered against the text of the offer-of-judgment statute, the White ruling is not clearly erroneous, and the formula set out in that decision has been consistently applied by district courts around the state in the two decades since to exclude amounts that were not present on the date an offer is made, according to the opinion.

"We simply do not have a definite and firm conviction that this court's prior interpretation of the offer of judgment statute and the terms 'judgment,' 'judgment obtained,' and 'net judgment entered' is wrong," the high court said.  The ruling is a win for Petri, which was fighting CCM's attempt to recover attorney fees after prevailing in a dispute over a contract for termite extermination.  Under Florida's offer-of-judgment statute, a judgment needs to exceed a prior settlement offer by more than 25% to trigger an entitlement to attorney fees.

In this case, CCM had offered to settle its negligence and breach of contract suit against Petri for $500,000, but that offer was rejected.  After a trial in November 2016, a jury awarded CCM $551,881 in damages.  The trial court entered a judgment of $636,327, which included the jury's damages award plus $84,446 in prejudgment interest.  CCM then moved to recover attorney fees based on that figure, which exceeded its settlement offer by more than 25%.

Petri objected, pointing to the White decision, but the trial court disagreed and awarded CCM $73,579 in post-offer attorney fees and costs.  On appeal, the Fourth District Court of Appeal ruled that the prejudgment interest should not be included based on Supreme Court precedent, though the Fourth District said it would reach the opposite conclusion based on its own interpretation of the term "judgment entered" in the offer-of-judgment statute.

In a dissenting opinion, Chief Justice Charles T. Canady said the majority's result is "detached from the text of the statute."  "A fair reading of the text of the statute cannot support the interpretation articulated in the statements from White relied on by the majority," Justice Canady said.  "As the Fourth District explains, the authorities cited in White to support its discussion that is relevant to post-offer fees, costs and interest are cases interpreting a different statute, … which provides for the award of prevailing party fees to an insured in litigation against an insurer."

Petri's attorney, Thomas Hunker, told Law360 the language of the statute left much to the court's interpretation, but ultimately the court reached the right decision with an interpretation that is fair to the party receiving the offer.  "A contrary holding would've required an impossible amount of speculation on what might occur later in litigation, which would be unfair to a party who faces the prospect of sanctions when trying to evaluate whether or not to accept or reject a statutory proposal for settlement," Hunker said.

Law Firms Spar Over Attorney Fees Ahead of Trial

August 4, 2021

A recent Law 360 story by Celeste Bott, “Chicago Firm, Attys Spar Over Fees Ahead of Ex-Client’s Trial”, reports that Chicago law firm Wood Phillips and one of its former attorneys suing an ex-client for payment for their two decades of work in a patent case are embroiled in a contentious dispute over how potential recovery would be allocated between them, and the firm is asking an Illinois federal judge to weigh in on the applicability of its contingency fee agreements ahead of trial.

Wood Phillips Katz Clark & Mortimer and named partner John S. Mortimer are seeking to file either a pretrial motion to resolve whether the parties are bound by those agreements or, alternatively, to add a cross-claim against former Wood Phillips attorney Dean Monco for anticipatory breach of contract.

The case is set to go to trial early next year, as the firm and attorneys seek to be compensated for more than 20 years of work for carbon fiber manufacturer Zoltek Corp.  The firm and Mortimer argue, in their motion for leave to file, that it would be unfair and would create "chaos and confusion" to have the plaintiffs arguing amongst themselves at trial.

But U.S. District Judge Martha M. Pacold appeared skeptical of those proposed procedural avenues during a status hearing, pushing the parties to address how a Rule 16 pretrial motion could resolve a substantive issue such as the applicability of the firm agreements, how it would impact how the trial would be conducted and whether a potential cross-claim is premature given there's no recovery to divvy up yet.  The judge also questioned whether a cross-claim against Monco was fair given the late stage of the litigation.

Acknowledging that resolving the intra-plaintiff dispute could assist in a potential settlement, the judge said that there still needs to be a legal basis for resolving the issue, not just a practical one.  "I don't think I have a kind of free-ranging power, even if I wish I might, to just decide random stuff," Judge Pacold said.  "There has to be a legal basis and legal hook for really every issue that is teed up.  So I certainly understand all those practical considerations, there just has to be a legal framework for resolving it."

Lee Grossman, an attorney representing Mortimer and the firm, told the court the vehicle for the pretrial motion could entail a jury instruction telling jurors to conduct the recovery for Monco, Mortimer, and the firm based on the formula laid out in the firm agreements at issue.  As for whether a cross-claim is premature ahead of a potential recovery at trial, Monco has already stated in interrogatories that he doesn't intend to honor the firm fee agreements, Grossman said.

"One party has already said, 'I'm not going to follow that contract,'" Grossman said. "In the interest of judicial economy, or whatever economy is left, I don't think it's a practical way to go."  But Monco argued to the court that Wood Phillips has made multiple improper attempts to adjudicate an unfiled and disputed contract claim against any future quantum meruit recovery from Zoltek, and that his former employer can't use Rule 16 to skip the required steps of filing a pleading and then a motion for summary judgment.

Paul Vickrey of Vitale Vickrey Niro & Gasey LLP, representing Monco, said allowing that avenue would lead to a "sideshow" at trial and would only invite confusion and delay. The firm agreements have nothing to do with the elements for determining quantum meruit under Illinois law, Vickrey said, and the firm can later challenge the results in state court if they so choose.

The calculations laid out in the agreements at issue are "hotly disputed," said Patrick F. Solon, another attorney for Monco. The contract claim that the firm is now trying to pursue was never filed, and there's been no pleading, no answers and no discovery on the matter, he said.  But Grossman countered that the fee agreements have been a cornerstone in the yearslong case.  "There's no discovery needed on these agreements," he said.  "They've been talked about in this case from day one."

Also, before the judge is a conditional bid by Monco to disqualify Grossman as counsel. Monco contends that if the firm is allowed to pursue its claim for his "anticipatory breach" of firm agreements, "using Grossman as their counsel [...] would result in Grossman suing his own former client in this very action."  Judge Pacold didn't rule on the pending motions immediately, saying she would either issue a decision after reviewing the materials and arguments or schedule another hearing for further discussion.

According to the 2017 complaint, Zoltek had hired Monco and Mortimer in 1996 to represent the manufacturer in a lawsuit against the federal government alleging that the B-2 bomber, which was developed by aerospace company Northrop Grumman Corp., infringed its patented method to produce carbon fiber sheets that help military aircraft avoid being detected by radar. Japanese conglomerate Toray Industries Inc. acquired Zoltek in 2014.

The litigation, which proved "extremely contentious and difficult," lasted 20 years, with the attorneys spending almost 13,000 hours representing Zoltek, the firm said.  But after a July 2016 strategy meeting in St. Louis, which Monco and Mortimer said led to their termination as counsel, the manufacturer then allegedly refused to pay the attorneys for overdue legal bills.

The manufacturer eventually settled the previous litigation for $20 million, but Wood Phillips and the attorneys got nothing, according to the complaint.  In July 2019, an Illinois federal judge said Monco and Mortimer can't pursue fees out of that settlement and must instead raise their claims against the company, with whom they had the attorney-client relationship.

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.

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.

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."