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NJ Judge Denies Attorney Fees Awarded By Magistrate

November 24, 2021 | Posted in : Billing Record / Entries, Fee Award, Fee Award Factors, Fee Dispute, Fee Jurisprudence, Fees & Judicial Discretion, Fees & Misconduct, Hourly Rates, Practice Area: IP Litigation

A recent Law 360 story by Nick Muscavage, “NJ Judge Denies $991K Atty Fees Awarded By Magistrate,” reports that a New Jersey federal judge ordered a magistrate judge to recalculate attorney fees for Arent Fox LLP in a patent dispute, finding that the jurist failed to apply prevailing precedent addressing applicable forum rates.  U.S. District Judge Robert Kugler ordered the magistrate judge to reconsider the $991,624 award through the lens of the Third Circuit's decision in Interfaith Community v. Honeywell International, a 2005 decision holding that counsel fee awards should be calculated using the forum of the dispute, subject to exceptions.

The award at issue was computed using the rates in Arent Fox's home forum of Washington, D.C., which are pricier than the dispute's forum of New Jersey federal court in Camden.  The Interfaith decision held that a party seeking to use the home forum of its counsel in the attorney fee calculation versus the dispute forum must show that the firm has expertise unavailable in the dispute forum or that the local counsel wasn't available.

"In the final analysis, then, since the order did not rely upon Interfaith as the prevailing precedent, Sabinsa had not been tasked to meet its legal burden under Interfaith and fully prove the reasonableness of its requested fees," Judge Kugler wrote, directing the magistrate judge to first determine the proper forum rate before recalculating the fees.

The award stems from a patent infringement case, in which Arent Fox and Saiber LLC represented the plaintiff, East Windsor, New Jersey-based Sabinsa Corp., which claimed that Prakruti Products Pvt. Ltd. was selling a turmeric supplement for which Sabinsa held the patent.  During a "contentious" discovery process, U.S. Magistrate Judge Karen M. Williams found that "Prakruti had withheld certain information from Sabinsa and also spoliated pertinent evidence," according to court documents.  She sanctioned Prakruti with an adverse inference, finding that Sabinsa's legal efforts to prove Prakruti's misconduct warranted an award of attorney fees against Prakruti.

Saiber claimed it billed $98,352 for legal services to Sabinsa, while Arent Fox claimed it billed $980,169.  On May 21, Judge Williams awarded Sabinsa's counsel $991,624 in attorney fees and costs in the amount of $13,035.  However, Judge Kugler said that Sabinsa showed "neither that Arent Fox had special expertise as patent attorneys not available from local attorneys in this vicinage nor that Sabinsa was unable to get needed patent expertise from local firms."

In its challenge to the magistrate judge's award, Prakruti also targeted the inclusion of Saiber, Sabinsa's local counsel, in the fee calculation.  Since Sabinsa cannot show Saiber was unwilling to represent the company as its patent counsel, the calculation of fees based on two different rates — the non-forum rate of the Arent Fox patent litigators and the forum rate of Saiber as local counsel — goes against the proper application of Interfaith, Prakruti argued.

Judge Kugler granted Prakruti's motion as to the time entries of Arent Fox, but denied the exclusion of Saiber in the fee calculation.  He remanded the time entries of Arent Fox to the magistrate judge for recomputation using the specific, relevant forum rate for the legal skill level with which the entry was executed, unless an Interfaith exception is demonstrated.  Judge Kugler said that the proper forum rate for the patent litigation expertise expended by Arent Fox must be first established.  He rejected Prakruti's assertion that Saiber's fees were duplicative of Arent Fox's and shouldn't have been factored in the attorney fee.