Litigation Management & Attorney Fee Analysis Blog : Attorney Fee Analysis & Litigation Management Lawyer : Barger & Wolen Law Firm : Litigation Management, Legal Fees, Billing Guidelines

In Jackson v. Yarbray 2009 DJDAR 16000 (2009) the Second Appellate District affirmed in part, reversed in part and remanded the case for further proceedings. The opinion was ordered published only in part. 

In the published portion of the opinion, the court held that an award of attorney’s fees for the successful prosecution of an anti-SLAPP motion did not preclude the moving party from being awarded additional litigation fees, unrelated to the SLAPP suit fee award, in a subsequent malicious prosecution action. More importantly, the court ruled that the Defendant in the malicious prosecution action had the burden of proving that the fees requested, were covered by those awarded in the SLAPP suit motion.

ComputerXPress.com, Inc. (“Computer”) sued Lee and Barbara Jackson (“Jackson”) and others for fraud, and for numerous business torts. The complaint arose out of a merger that was not successful.

Jackson filed a partially successful special motion to strike pursuant to Code Civ. Proc. § 425.16. After protracted proceedings the causes of action for trade libel, interference with contractual relations, interference with prospective economic advantage, abuse of process, conspiracy and injunctive relief were dismissed. Jackson requested more than $300,000 in attorney’s fees but was awarded only $77,000 on the successful SLAPP motion. Computer then dismissed the remaining causes of action. Thereafter, Jackson sued Computer and its attorneys for malicious prosecution.

In the malicious prosecution action, Jackson prevailed against Computer and some, but not all, of the attorneys. Jackson was awarded $700,000 in emotional distress and $2.41 million dollars in punitive damages. Upon motion, the trial court declined to award reasonable attorney’s fees incurred in pursuing the successful malicious prosecution action. The Jackson’s appealed and the court of appeal affirmed in part and reversed in part. The court noted that the trial court erred in refusing to award the attorney’s fees incurred by the Jackson parties in the malicious prosecution action.

The court found that the Jackson parties, having established the liability of Computer and others, were entitled to recover the costs of defending the underlying action, including their reasonable attorney fees. The court stated that the lower court erroneously denied such an award based the erroneous conclusion that the fees previously awarded to Jackson in connection with their special motion to strike were the same as the fees previously awarded. The court held that the Defendant in the malicious prosecution had the burden of proof in showing that the fees were duplicative and not recoverable.

The court agreed with the trial court that, under the doctrine of collateral estoppel, a fee award following a successful special motion to strike may preclude further litigation concerning the reasonableness of the fees. However, this does not preclude an award of fees for services unrelated to that motion. For these reasons, and because the trial court improperly put the burden of proof on the Jackson’s, the court ruled that a retrial was required on special damages.

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Tags: Appeals, Code Civ. Proc. § 425.16, Jackson v. Yarbray, attorneys' fees

The United States Supreme Court recently heard arguments in a significant fee case. In Perdue v. Kenny A., the court was asked to decide whether a reasonable attorneys’ fee award under a federal fee shifting statute is subject to enhancement based on the quality of performance and results obtained by counsel. These factors are arguably already included in the lodestar calculation.

The Perdue matter arose out of a dispute in Georgia’s foster care system. Children’s Rights, Inc. and an Atlanta law firm, Bondurant, Mixson & Elmore, won a fee award for their work on behalf of abused and neglected children in Georgia’s foster care system. The firms alleged that deficiencies in Georgia’s foster care system violated various federal and state laws, including 42 U.S.C. § 1983. The case was initially filed in state court and was removed by the state to a federal court. After hotly contested litigation and a series of many mediations, the parties agreed to a proposed Consent Decree that was intended to address many of the problems that existed in the foster care system. The district court described the changes as “sweeping reforms.”

In addition to the Consent Decree, the parties also agreed that the children’s lawyers should recover attorneys’ fees pursuant to 42 U.S.C. § 1988. The parties, however, could not agree on the amount of the fee award and the district judge was asked to make the determination. The judge found a lodestar fee of $6 million, and then adjusted it upward by an additional $4.5 million, based on the performance of counsel. The Eleventh Circuit Court of Appeals upheld the fee award in 2008. The author of the Eleventh Circuit opinion said that he disagreed with the lower court’s decision, but felt bound to follow circuit court precedent which allows the court to enhance a fee award under section 1988.

The state filed a petition for certiorari, and the Supreme Court granted review with regard to one narrow question: “Can a reasonable attorneys’ fee award under a federal fee shifting statute ever be enhanced based solely on quality of performance and results obtained when these factors are arguably already included in the lodestar calculation?” We will continue to track this decision and will report further when the Supreme Court issues its decision.

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Tags: 42 U.S.C. § 1983, 42 U.S.C. § 1988, Appeals, Contingency Fees, Perdue v. Kenny A., United States Supreme Court, attorneys' fees

In Crawford v. Astrue 2009 DJDAR 15681 (Ninth Circuit 2009), the Ninth Circuit Court of Appeals reversed a fee award made by the district court. The Ninth Circuit concluded that the lower court failed to follow the mandate of Gisbrecht v. Barnhart, 535 U.S. 789 (2002). In Gisbrecht, the United States Supreme Court rejected the exclusive use of the lodestar approach in calculating fee awards in Social Security Disability Insurance (SSDI) cases. Instead, the court stated that the lower court must respect “the primacy of lawful attorney-client fee agreements” allowing for the use of contingency fee arrangements in SSDI cases.

In Crawford, the Ninth Circuit heard three consolidated appeals involving one major issue. The Plaintiffs retained counsel to challenge denials of disability insurance benefits by the Social Security Administration (SSA). Prior to initiating the litigation in each case, the Plaintiffs entered into written contingent-fee agreements. Under the agreements, the Plaintiffs agreed to pay the attorney 25 percent of any past-due benefits awarded by the court. This fee arrangement is the maximum allowed under 42 U.S.C. Section 406(b). In each case, the SSA awarded past-due benefits to the Plaintiffs. Without objection from their clients, the attorneys filed motions requesting fees of less than 25 percent. The application was supported with evidence of the work they had done. Nonetheless, the trial court in each case awarded significantly lower fees than the amounts agreed to under the contingency agreements.

The Ninth Circuit specifically noted that exclusive reliance on a lodestar calculation is invalid. The law requires that the attorneys in SSDI cases to establish the reasonableness of their fee. The factors to consider are the proportion of time the attorney spent on the case, lodestar calculation (as one factor), the quality of the work, and the risk assumed in accepting the case. Where a court largely relies on lodestar calculations this is not in compliance with the law. Moreover, the attorneys established that their performance seemed to be excellent, no wrongdoing existed in charging the fees, and they were at great risk in taking cases that would possibly yield no payment.

The Ninth Circuit concluded that the trial court incorrectly denied the attorneys’ requested fee.

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Tags: Appeals, Contingency Fees, Crawford v. Astrue, Gisbrecht v. Barnhart, Ninth Circuit