E.D. Va. Whacks Attorneys’ Fees Claim: Further Split on Court Revealed

Star Scientific, Inc. is back in the legal news, but this it has nothing to do with Jonnie Williams and the McDonnell trial (Star Scientific, Inc. did not disappear, but instead changed its name to Rock Creek Pharmaceuticals).  In August 2016, Judge Anthony Trenga ruled on Plaintiffs’ Motion for an Award of Attorneys’ Fees in In re Star Scientific, Inc. Derivative Litigation, Case No. 1:13-cv-0550 (AJT/JFA).  Plaintiffs’ counsel asserted that their fees exceeded $1.6 million, but petitioned for $975,000.  Judge Trenga, however, awarded only $488,062.

The ruling is significant not because of the outcome as to total fees awarded, but because of two points:  (1) Judge Trenga’s clear analysis applying McAfee v. Boczar, 728 F.3 81, 88 (4th Cir. 2013), and (2) his finding that reasonable attorney’s fees in this district are $400/hour for partners, $200/hour for associates, and $100/hour for paralegals.  These rates are far below the rates approved multiple times by this Court under the Vienna Metro matrix standard, and they represent further divide among the judges of the Eastern District regarding reasonable hourly rates.

Derivative Action Claims

In re Star Scientific involved several derivative actions filed in both state and federal courts on behalf of the shareholders of Star Scientific, Inc.  The primary claims in the litigation were that the Board of Directors breached their fiduciary duties and also violated section 14 (A) of the Securities Exchange Act. The combined cases arrived in Judge Trenga’s court.  The claims eventually settled, and part of the settlement agreement was that plaintiffs’ lead counsel would apply to the Court for award of fees and expenses with respect to both the federal and state actions.

The Court approved the settlement in accord with Fed. R. Civ. P. 23.1 and took the Fee Application under advisement.  Judge Trenga then directed the parties to mediate the issue of fees before Magistrate Judge Anderson, but that mediation was unsuccessful.

Analytical Framework

The district court applied the three–step procedure for determining the proper award of attorney’s fees in the Fourth Circuit as set forth in McAfee v. Boczar.  Under McAfee, a court first determines the lodestar figure by multiplying the number of reasonable hours expended times a reasonable rate. To ascertain reasonable hours and rates under this analysis, a court applies the 12 factors set forth in Johnson v. Georgia Highway Express Inc., 480 F.2d  714, 717-19 (5th Cir. 1974).   The second step is to subtract fees for time spent on unsuccessful claims unrelated to the successful ones.   And third, the Court then awards some percentage of the remaining amount depending upon the degree of success enjoyed by the plaintiff.

Reasonable rates

In In re Star Scientific, plaintiffs’ counsel submitted hourly attorney rates ranging from $775/hour down to $275/hour.  Using the time records and applying these rates, the total fees added up to $1,672,000.  On their own, counsel slashed this sum down to $975,000.  Judge Trenga then determined that the reasonable rates in the Eastern District are $400/hour for partners, $200/hour for associates, and $100/hour for paralegals.  Applying these rates to the claimed hours yields a total of $976,125.

Billable hours – Total Work and 50% Reduction

The District Court seemed frustrated by the lack of specificity in the billing records: “[T]he Court is unable to assess with any accuracy the number of hours reasonably and effectively devoted to legal work.”  The court opted for a 50% reduction in the hours claimed, which resulted in a total fee award of $488,062 (half of the $976,125).  This 50% figure appears to be a combination of the court’s frustration with the billing records but also recognition of the results obtained in the nature of the litigation.

Star Scientific Rates versus Vienna Metro Rates

In June 2014, we posted on this Blog about the Vienna Metro matrix.  In the Vienna Metro v. Pulte Home Corp., Case No. 1:10-cv–0052, Judge Lee approved attorneys’ fees ranging from $250/hour to $820/hour.  In his award, Judge Lee applied a 50% across-the-board reduction to the plaintiff’s fees recovery because the plaintiff prevailed on only one of several counts in the complaint.  In the Blog post, we observed that “Judge Lee make clear that the reduction was due to limited success in the litigation and not due to the hourly rates charged by counsel.”

Now in In re Star Scientific, Judge Trenga is clear about his overall 50% reduction in the fee award, but he is also extremely clear as to what are reasonable hourly rates.  The judge could reached the same overall result using other avenues, but he chose to employ a simple fee matrix that seemingly is not tied closely to the facts of the case but instead has broad application.

The differences between the two cases as to what are reasonable hourly rates in the Eastern District are huge — the Vienna Metro rates are roughly double the rates recognized in In re Star Scientific.  After Vienna Metro and its progeny, it seems that several judges on the Eastern District are uncomfortable with the approval of comparatively high hourly rates.  Judge Trenga’s decision in In re Star Scientific will no doubt be frequently cited in future disputes over what are reasonable rates in this district.

Further Disagreement on the EDVA Bench over Attorney Rates

Multiple recent decisions from the Eastern District show a widening disagreement among the judges regarding “reasonable” hourly rates for attorneys.  This disagreement is manifesting itself most notably among the judges of the Alexandria Division as they rule on attorney’s fees petitions that involve lawyers from firms based in both Virginia and downtown DC.  Rates acceptable to at least one judge have been rejected by other judges within same division.  The bottom-line for practitioners is that it is not sufficient to be familiar with the general precedent in the Eastern District when applying for attorney’s fees.  Rather, practitioners must know their individual judge’s history and preferences, while carefully crafting the petition for attorney’s fees.

$400,000 Attorney’s Fee Cut by 67%

In Salim v. Dahlberg, 1:15-cv-468 LMB / IDD, 2016 WL 2930943 (E.D. Va. May 18, 2016), Judge Leonie M. Brinkema wrote a 49-page (!) opinion on just the question of recoverable attorney’s fees.  There, she rejected both the Laffey Matrix and the Vienna Metro matrix to determine reasonable hourly attorney rates in Northern Virginia.  In the 49-page opinion, Judge Brinkema goes into great detail to analyze the hourly rates requested by the plaintiff, the billing records submitted by the plaintiff’s counsel, the six supporting affidavits submitted by plaintiff (including many leading local practitioners in Alexandria), and the defendant’s opposition (which included only a single opposing affidavit).  In the end, Judge Brinkema largely sided with the defendant and cut plaintiff’s fees down from $400,000 to a just over $151,000.

In the underlying case, the plaintiff alleged various federal and state civil rights claims against the defendant.  After a favorable jury verdict, the plaintiff petitioned for attorney’s fees under Virginia Code Ann. § 8.01-42.1.  Plaintiff was represented by the firm of Victor M. Glasberg & Associates, and sought hourly rates for the work of two attorneys:  $550/hour for lead counsel with 39 years of experience, and $250/hour for an associate attorney with less than one year of experience.

Plaintiff’s counsel must have expected a fight to recover fees because they submitted six affidavits of leading local lawyers.  While Judge Brinkema noted that these six local lawyers were “well-known and well-respected by the Court,” none of the affidavits swayed the judge.  Instead, it was the defendant’s opposition and single affidavit submitted by Attorney Wayne G. Travell that carried the day.  Judge Brinkema objected that the plaintiff’s six affidavits were “conclusory” in nature and omitted detailed discussion of the plaintiff’s billing rates and records.

Vienna Metro and Laffey Matrices Rejected

Judge Brinkema rejected the Vienna Metro matrix, characterizing it as applying only to “complex civil litigation.”  Instead, her opinion relied primarily upon Judge T.S. Elliss’s opinion in Route Triple Seven (discussed in a prior EDVA Update here) which characterized a rate of $420 as the “upper limit for what counts as a reasonable rate for a very competent attorney in an uncomplicated . . . dispute.”  Further, Judge Brinkema also rejected the Laffey Matrix of DC-based attorney hourly rates published by the U.S. Department of Justice.  According to Judge Brinkema, DC-based hourly rates are not properly comparable for litigation in the Alexandria federal court.

While the defendant’s expert did not challenge the $550/hour rate sought by plaintiff’s lead counsel, Judge Brinkema cut it down anyway to $500/hour, and then reduced the recoverable hours by half.  Turning to fees requested for plaintiff’s junior counsel, Judge Brinkema cut the hourly rate down from $250 to $125 on the grounds that the newly-minted attorney had not yet been admitted to the Virginia Bar (having just recently graduated from law school).  Because of this, Judge Brinkema characterized the young attorney’s contribution as more akin to a law clerk, and she applied the lower hourly rated recommended by the defendant’s expert.


Judge Brinkema appears to be speaking to the bar in this 49-page opinion, which provides a roadmap for future petitions for attorney’s fees.  As the disagreement over hourly rates among the judges of the Eastern District grows, it is critical for practitioners to understand where each judge comes down on this issue.  This opinion is required reading for any practitioner who expects to submit an attorney’s fee petition to Judge Brinkema in the future.

Is there a New Cap on Recoverable Attorney Rates in EDVA?

There is yet further disagreement among the judges of the Eastern District regarding reasonable attorney hourly rates.  As we noted in a previous EDVA Update here, this disagreement is manifesting itself most frequently in the Alexandria Division, as judges there confront (and push back against) the higher hourly rates frequently charged by larger law firms in the Northern Virginia/ DC metro area.

Today’s example of the disagreement comes in the recent case of Integrated Direct Marketing, LLC v. Drew May, et al., 1:14-cv-1183, 2016 WL 3582065 (E.D. Va. June 28, 2016).  In this case, Judge Leonie M. Brinkema of the Alexandria Division of the Eastern District invited a plaintiff to file a motions for sanctions and attorney’s fees after successfully demonstrating that the defendant made materially false statements in both an affidavit and during courtroom testimony.  But after the plaintiff petitioned for over $63,000 in attorney’s fees, Judge Brinkema strongly criticized the hourly rates and record keeping of plaintiff’s counsel, and she cut the fee award down to only $17,000.

To justify their hourly rates, plaintiff (represented by attorneys from both the DC and Connecticut offices of Ogletree, Deakins, Nash, Smoak & Stewart, PC) relied upon the matrix of hourly rates approved by Judge Gerald Bruce Lee in Vienna Metro (discussed in a prior EDVA Update here).  But Judge Brinkema rejected the Vienna Metro matrix.  By doing so, she sided with Judge T.S. Ellis’s opinion in Route Triple Seven (also discussed in a prior EDVA Update here) in the ongoing dispute regarding hourly attorney rates.  Below is a summary of the experience levels of each attorney, the hourly rates sought by the plaintiff, and the rates awarded by Judge Brinkema:

Attorney’s Legal Experience Requested Hourly Rate Awarded Hourly Rate
30 years $ 545 $ 450
9 years $ 395 $ 350
6 years $ 335 $ 275
5 years $ 320 $ 250

To set these hourly rates, the court followed the rates determined by Judge Ellis in Route Triple Seven.  Significantly, Judge Brinkema did not rely upon any other expert witness testimony or evidence to set these hourly rates.  (And, as we saw in the Route Triple Seven case, there the court relied upon its own “experience” to determine an appropriate reasonable rate.)  These hourly rates are in sharp contrast to the $550 – $600 hourly rates approved by Judge Lee in Vienna Metro.

It is clear that a revolt against high hourly rates (or, at least, rates perceived as high) is brewing among many judges of the Alexandria Division of the Eastern District.  It also appears that a hard cap of approximately $450 – $500 for an experienced attorney’s hourly rate is forming, at least in the eyes of several judges who have rejected the Vienna Metro matrix.