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Category: Trial / Jury / Verdict

Beating RICO Case Merits $1.6M in Attorney Fees

February 29, 2024

A recent Law 360 story by Andrew Karpan, “Sales Rep Score $1.6M in Fees After Beating RICO Case”, reports that a federal judge in Los Angeles has ordered a biotech startup to pay more than $1.6 million in legal fees to two former employees, after the company failed to convince a jury that the pair broke racketeering laws when they worked for a rival that stole proprietary information when setting up shop.

While Bryan Banman and his companies, CTM Biomedical and CTM Medical Inc., were hit with a $62 million judgment last year for breaching his fiduciary duties to a company he used to run sales at called Skye Orthobiologics as well as a company Skye helps run called Human Regenerative Technologies, jurors rejected Skye's claims that Banman's companies and people they worked with somehow broke the Racketeer Influenced and Corrupt Organizations Act.

This gave Mike Stumpe and Nathan Boulais, the two sales representatives who worked for both Skye and later CTM, an avenue to ask U.S. District Judge Maame Ewusi-Mensah Frimpong to award them legal fees for having to litigate the case.

In her ruling, she did just that.  "The court agrees that this is an appropriate finding given that the litigation against Stumpe has concluded in dismissal of plaintiffs' claims against Stumpe by a jury, which has created a 'material alteration of the legal relationship' between the parties here," she wrote.  "As with Stumpe, plaintiffs similarly did not prove any of their claims against Boulais, making him the prevailing party," she added.

The judge also left the fee bids unchanged from what their lawyers had requested.  "The court further finds the hours expended ... reasonable to defend a litigation spanning over three years," she concluded about both cases, which involved 1,630 hours of billing from Stumpe's lawyers and 1,383.2 from Boulais'.  This came to a total of a hair over $1 million to Stumpe's team at Blank Rome LLP and a hair under $640,000 to Boulais' lawyers from Bienert Katzman Littrell Williams LLP.

According to the order, Bienert Katzman charged at a rate of "$405–$760 for attorneys and $100–$290 for other staff," while Blank Rome billed "$400–$725 for attorneys, $275 for a paralegal, and $225–$414 for other staff."

Boston Urged to Settle Case as Legal Bill Climbs

December 29, 2023

A recent Law 360 story by Chris Villani, “Boston Urged To Settle Shooting Case As Legal Bill Climbs”, reports that during an emotional hearing, a federal judge ordered both sides in a lawsuit over the fatal shooting of a Black man by Boston police to try to work out a deal, grilling the city's attorneys on their hourly fees in expensive litigation that has been stalled by numerous discovery violations.  While saying that the city still faces a "substantial" risk of default in the now six-year-old case, U.S. District Judge Mark L. Wolf lamented at the end of a six-hour hearing that Boston is paying more than a dozen attorneys, including recently hired Nixon Peabody LLP, to defend the case.

"I don't know of any municipality that has enough money," Judge Wolf said before counting the attorneys sitting shoulder-to-shoulder at the tables in front of him.  "There are 14 lawyers sitting in the courtroom being paid by the city to litigate the effects of the city's repeated failures to provide discovery and to obey court orders," the judge said.  "Most civil cases settle, and I don't think that inertia or oversight should be a reason that settlement in these circumstances isn't seriously explored."

Judge Wolf has repeatedly threatened to hand the city an automatic loss in a case he said is "more messed up than any case I have had in 39 years."  The plaintiff, Hope Coleman, says her son Terrence Coleman was 31 and suffering from schizophrenia when she called 911 in an effort to get him into treatment in 2016.  The responding officers, Kevin Finn and Garrett Boyle, say Terrence Coleman attacked responding EMTs and the officers themselves with a knife during an altercation that ended with Coleman being shot and killed.

At the outset of the marathon proceeding, the judge asked Nixon Peabody attorney Brian Kelly what the city was paying for his services. Kelly said it was $750 per hour, $500 less than his usual rate.  Turning to George Vien of Donnelly Conroy & Gelhaar LLP, an attorney for former Boston Police Commissioner William Evans, Judge Wolf asked, "Are you a bargain compared to Mr. Kelly?"

"I am a bargain in many ways, Your Honor," Vien said, adding that he was billing at $600 per hour.  Leonard Kesten of Brody Hardoon Perkins & Kesten LLP, representing the officers, objected to the airing of lawyers' hourly fees in the first of several tense back-and-forth moments between him and the judge.

"All my clients have ever wanted is a trial," Kesten said. "And they want a trial now, so they can clear their names. That's what should be happening."  "Excuse me," Judge Wolf said, cutting him off. "Are you going to answer the question of what's your hourly rate?"  "I think that my hourly rate is $300 per hour," Kesten said.

In addition to paying its own attorneys, the city has forked over $500,000 to pay for discovery mishaps that an attorney for Coleman, William Fick of Fick & Marx LLP, said "dwarfs anything I have seen in over 20 years of law practice, or in any case I have ever read."

"I feel a bit like I am surveying a battlefield with rabbit holes," Fick said as he argued that default should enter against the city. "Each one of those rabbit holes has a detailed and really jaw-dropping story about a discovery deficiency."  Fick said over 80,000 pages of documents have been turned over, adding that they "should have been produced years ago."

The city has argued that there is no need for a default, citing the hiring of Nixon Peabody and an outside e-discovery expert, as well as the $500,000 and counting it has paid Coleman's lawyers for their trouble.  "This is in fact a very important case, a very significant case, and a trial would let the public see what really happened," Kelly said.  "Plaintiff wants to win this with procedural maneuvering, because they know if it goes to a jury, they may well lose and get nothing."

Attorney Fees Slashed in Honda Valve Defect Class Action

December 7, 2023

A recent Law 360 story by Jonathan Capriel, “Honda Wins Bid to Slash Atty Fees in Valve Defect Suit”, reports that the counsel behind the $1.4 million valve defect jury verdict for Honda drivers that the automaker called an "abject failure" does not deserve $5.6 million in fees and costs, a California federal judge has ruled, approving only $1.5 million.  U.S. District Judge William Alsup dismissed Honda's arguments that fees and costs should be denied altogether because the ultimate almost $1.4 million class counsel got from the jury was a "pittance" compared to what they were seeking, saying that "that reasoning is inapplicable here, where a damages award was stipulated to and entirely consistent with the theory of liability."

"The jury found Honda liable on the Illinois claim, so the question is how fees and costs should be adjusted relative to damages, and not whether there should be fees and costs at all," Judge Alsup said.  Since the Illinois claims are what counsel prevailed on, Judge Alsup said Illinois law is what controls in this case.  Since counsel estimated 2,218.30 hours of work for trial preparation and trial itself and that went for both California and Illinois classes, Judge Alsup slashed the hours that went into the lodestar by 30%.

"This results in 1,552.81 hours of work for $1,247,957.38 of lodestar fees," he said.  "Adding back in the pre-trial amount this order finds reasonable and the amount asserted for post-trial motions, this order finds a lodestar of 1,934.64 attorney hours for a total of $1,508,841.10."  The motion for fees was filed in September by Greenstone Law APC and Glancy Prongay & Murray LLP and stated they spent three years litigating this case, but Honda says much of that work was on claims that never got off the ground.

$11M in Attorney Fees in Tobacco Breach of Contract Jury Win

November 20, 2023

A recent Law 360 story by James Mills, “Tobacco Co. Gets $10.8M in Fees in Breach of Contract Win”, reports that a California federal court awarded a tobacco company almost $11 million in attorney fees and distributions in a long-running antitrust dispute against rival tobacco company Swisher.  California-based Trendsettah USA Inc., which makes thin, narrow cigars known as cigarillos, was awarded $10,237,493 in attorney fees and $613,181 in distributions in its decade-long antitrust and breach of contract suit against Florida-based cigar maker Swisher International Inc.

The battle has had a twisting route, including multiple verdicts, two trips to the Ninth Circuit and an indictment of Trendsettah's chief executive.  "By the time this court enters its forthcoming judgment in accordance with the Ninth Circuit's mandate, there will have been three judgments entered on Trendsettah's breach of contract claims: the original 2016 judgment, the reinstatement of the judgment following Swisher's appeal in 2019, and the upcoming reinstatement of the contract judgment.  Each of the three ascertain damages of the same amount—the second two consisting of reinstatements of the original judgment," U.S. District Judge James V. Selna wrote.

Thanks to an earlier agreement between the two parties, Judge Selna had to calculate attorney fees for the breach of contract claims that Trendsettah won but ignore the fees involved in the antitrust portion, which was ultimately dismissed.  Trendsettah sued Swisher in 2014, claiming the tobacco giant orchestrated a plot to knock out its supply of cigarillos.  Trendsettah say Swisher used market dominance to force it into a supply contract for the cigarillos, then later scrapped the deal.

Trendsettah won at trial in 2016, securing a $14.8 million jury award in the antitrust suit that was trebled to $44 million, plus $9.1 million on its breach of contract claim.  But Judge Selna later dismissed the antitrust portion of the verdict and ordered a new trial, saying the jury had been working off improper instructions on a key provision of antitrust law.  Rather than take a new trial, Swisher moved for summary judgment.  In December 2016, Judge Selna entered a judgment for Trendsettah on the breach of contract claims and one for Swisher on the antitrust and all other claims.

Three years later, the Ninth Circuit reversed the grant of summary judgment to Swisher and directed the court to reinstate the 2016 jury verdict in its entirety on remand.  Meanwhile, federal prosecutors indicted Trendsettah's founder and CEO, Akrum Alrahib, in April 2019, alleging the company lied about the price it paid for cigarillos imported from the Dominican Republic to avoid paying federal excise tax. In November 2021, Alrahib pled guilty to conspiracy.

However, in August 2019, Judge Selna said Alrahib had committed fraud against the district court and granted Swisher's motion for relief from the entire verdict and again ordered a new trial.  The Ninth Circuit got involved again in 2021, reversing the district court's dismissal of Trendsettah's breach of contract claims and remanding again with instructions to reinstate the jury's verdict on those claims, worth $9.1 million.  However, the appeals court upheld the district court's dismissal of the antitrust claims, which held the larger award and the trebled damages.

Trendsettah argued that its win on the breach of contract claims at the appellate level meant that it is the true prevailing party and that thus Swisher could not seek fees.  It also argued that the private agreement the parties signed explicitly said that the prevailing party is owed fees and costs from the loser.

Ninth Circuit: DOL Doesn’t Owe Attorney Fees

November 16, 2023

A recent Law 360 story by Kellie Mejdrich, “9th Circ. Says DOL Doesn’t Owe Atty Fees in Stock Plan Case”, reports that the U.S. Department of Labor doesn't have to pay an architecture firm's attorney fees after losing its suit accusing the firm of mismanaging an employee stock ownership plan, a split Ninth Circuit panel ruled, saying a lower court didn't abuse its discretion by finding the suit was justified.  In a published opinion, the majority of the three-judge panel affirmed the denial of attorney fees and non-taxable costs that Bowers + Kubota Consulting Inc. and its former owners had sought from a Hawaii federal court under the Equal Access to Justice Act, or EAJA.  The government first sued in 2018, alleging the company and its executives mismanaged the Bowers + Kubota ESOP by overvaluing stock in a $40 million sale, but the DOL lost its case in 2021 following a five-day trial.

In the opinion for the panel's majority, written by U.S. Circuit Judge Kenneth Kiyul Lee, the appellate court criticized the government's case for being "shoddy" and hinging on erroneous ESOP valuation data from a single expert witness that the district court ultimately rejected.  But the panel's majority said the district court didn't abuse its discretion when it denied Bowers + Kubota fees and non-taxable costs.  "The government reasonably relied on its expert's valuation opinion, despite its flaws, as the parties proceeded to trial," the opinion said.

"In short, the government's litigation position at the time of trial was weak on evidence but perhaps not without a reasonable basis," the majority later added. "We recognize that this is a close call."

U.S. District Judge Susan Oki Mollway found in September 2021 that the company and its former owners, Brian Bowers and Dexter Kubota, had complied with the Employee Retirement Income Security Act when structuring a $40 million sale of stock to the ESOP.  The judge ruled that the government's case collapsed because of errors in the expert witness's calculations, which formed the basis of the DOL's allegations that the valuation was too high.  The judge also awarded taxable costs to the firm and its former owners.  In February 2022, Judge Mollway rejected the architecture firm's bid for attorney fees and reduced deposition costs owed by the DOL.  The firm subsequently appealed.

Regarding the award of taxable costs, the panel's majority said that the district court had abused its discretion in reducing the award "by relying on a clearly erroneous finding of fact."  That is, the district court mistakenly believed that depositions for which the firm sought reimbursement had occurred after the court denied a motion for summary judgment, when they had occurred before the ruling, the panel's majority said.  "Because the district court's reduction of costs was mainly based on that clear error, it abused its discretion," the panel's majority said.  "We thus remand the issue of costs so that the district court may reconsider its decision on the corrected record."