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Gibson Dunn Awarded Attorney Fees in NYC Rental Ordinance

March 2, 2021 | Posted in : Billing Judgment, Billing Practices, Expenses / Costs, Fee Award, Fee Reduction, Fee Request, Hourly Rates, Hours Billled, Prevailing Party Issues, Staffing Issues

A recent Law 360 story by Justin Wise, “Gibson Dunn Gets $600K Fee Award in HomeAway-NY Dispute,” reports that a New York federal judge awarded Gibson Dunn & Crutcher LLP lawyers roughly $600,000 in attorney fees and costs for their representation of a vacation rental company in its successful fight against a New York City rental ordinance law.  Gibson Dunn represented HomeAway.com Inc. in challenging a 2018 city ordinance intended to facilitate the enforcement of regulations on short-term rentals. U.S. District Judge Paul Engelmayer said HomeAway.com was clearly a prevailing party in the litigation, which had been consolidated with a similar suit brought by Airbnb, despite the case being dismissed as moot in 2020 after the city narrowed provisions in the law.

Judge Engelmayer ruled the company was successful in its challenge of the original ordinance and that a judgment in favor of attorney fees and costs against the defendant was merited.  "HomeAway's claim to have won durable relief here is especially convincing," he wrote, noting that "a legally infirm ordinance no longer recognizably exists" because of it and Airbnb's claims that its original scope was unconstitutional.  Judge Engelmayer, however, significantly reduced HomeAway's $1.4 million request, ruling that roughly $568,000 in attorney fees and about $27,000 in costs was appropriate.

The ordinance at the heart of the dispute would have required businesses like HomeAway and Airbnb to provide volumes of data on its customers every month, including material on property owners, booking transactions and the duration of stays.  Both short-term rental companies sought to block enforcement of the law in August 2018, and their cases were subsequently consolidated in the Southern District of New York.  Judge Engelmayer in January 2019 issued a preliminary injunction, ruling the parties were likely to succeed on their argument that the ordinance violated their Fourth Amendment right against unreasonable searches and seizures.

Judge Engelmayer said the work of HomeAway's counsel and Airbnb's counsel overlapped considerably throughout the litigation, which factored into the decision to reduce the original fees and costs request.  He noted it would have been unreasonable to ask the city to shoulder the costs of each case "to the extent there was duplication."  Judge Engelmayer also said Gibson Dunn's "top-heavy legal staffing" warranted a reduced judgment.

A majority of the hours billed by Gibson Dunn were logged by partners, according to court documents.  And while Engelmayer acknowledged more seasoned lawyers would be expected to take on the pre-discovery phase of this litigation, he said document and discovery deposition is generally expected to have lower billing rates.

New York City spokesman Nick Paolucci told Law360 that the original fee request was excessive and that the city is "pleased the award was reduced by over 60%." He said the award would be paid using taxpayer money.  New York had previously argued that the $1.5 million legal request amid a "financial crisis for our city defies the spirit of the law entitling prevailing parties in civil rights cases to pursue reasonable legal fees."  Under its settlement agreement with the city, Airbnb agreed to bear its attorney fees and costs.