{"id":412,"date":"2018-02-28T07:48:23","date_gmt":"2018-02-28T07:48:23","guid":{"rendered":"http:\/\/staging.direction.com\/rpb\/?p=412"},"modified":"2018-08-15T19:43:00","modified_gmt":"2018-08-15T19:43:00","slug":"attorneys-fees-claim","status":"publish","type":"post","link":"https:\/\/rpb-law.com\/attorneys-fees-claim\/","title":{"rendered":"E.D. Va. Whacks Attorneys\u2019 Fees Claim: Further Split on Court Revealed"},"content":{"rendered":"
\n

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).\u00a0 In August 2016, Judge Anthony Trenga ruled on Plaintiffs\u2019 Motion for an Award of Attorneys\u2019 Fees in In re Star Scientific, Inc. Derivative Litigation<\/em>, Case No. 1:13-cv-0550 (AJT\/JFA)<\/a>. \u00a0Plaintiffs\u2019 counsel asserted that their fees exceeded $1.6 million, but petitioned for $975,000. \u00a0Judge Trenga, however, awarded only $488,062.<\/p>\n

The ruling is significant not because of the outcome as to total fees awarded, but because of two points:\u00a0 (1) Judge Trenga\u2019s clear analysis applying McAfee v. Boczar<\/em>, 728 F.3 81, 88 (4th Cir. 2013), and (2) his finding that reasonable attorney\u2019s fees in this district are $400\/hour for partners, $200\/hour for associates, and $100\/hour for paralegals.\u00a0 These rates are far below the rates approved multiple times by this Court under the Vienna Metro<\/em> matrix standard, and they represent further divide among the judges of the Eastern District regarding reasonable hourly rates.<\/p>\n

Derivative Action Claims<\/strong><\/p>\n

In re Star Scientific<\/em> involved several derivative actions filed in both state and federal courts on behalf of the shareholders of Star Scientific, Inc.\u00a0 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\u2019s court.\u00a0 The claims eventually settled, and part of the settlement agreement was that plaintiffs\u2019 lead counsel would apply to the Court for award of fees and expenses with respect to both the federal and state actions.<\/p>\n

The Court approved the settlement in accord with Fed. R. Civ. P. 23.1 and took the Fee Application under advisement.\u00a0 Judge Trenga then directed the parties to mediate the issue of fees before Magistrate Judge Anderson, but that mediation was unsuccessful.<\/p>\n

Analytical Framework<\/strong><\/p>\n

The district court applied the three\u2013step procedure for determining the proper award of attorney\u2019s fees in the Fourth Circuit as set forth in McAfee v. Boczar.<\/em>\u00a0 Under McAfee<\/em>, 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.<\/em>, 480 F.2d\u00a0 714, 717-19 (5th<\/sup> Cir. 1974). \u00a0\u00a0The second step is to subtract fees for time spent on unsuccessful claims unrelated to the successful ones. \u00a0\u00a0And third, the Court then awards some percentage of the remaining amount depending upon the degree of success enjoyed by the plaintiff.<\/p>\n

Reasonable rates<\/strong><\/p>\n

In In re Star Scientific<\/em>, plaintiffs\u2019 counsel submitted hourly attorney rates ranging from $775\/hour down to $275\/hour.\u00a0 Using the time records and applying these rates, the total fees added up to $1,672,000. \u00a0On their own, counsel slashed this sum down to $975,000.\u00a0 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.\u00a0 Applying these rates to the claimed hours yields a total of $976,125.<\/p>\n

Billable hours \u2013 Total Work and 50% Reduction<\/strong><\/p>\n

The District Court seemed frustrated by the lack of specificity in the billing records: \u201c[T]he Court is unable to assess with any accuracy the number of hours reasonably and effectively devoted to legal work.\u201d\u00a0 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).\u00a0 This 50% figure appears to be a combination of the court\u2019s frustration with the billing records but also recognition of the results obtained in the nature of the litigation.<\/p>\n

Star Scientific<\/em> Rates versus Vienna Metro<\/em> Rates<\/strong><\/p>\n

In June 2014, we posted on this Blog about the Vienna Metro<\/em> matrix.\u00a0 In the Vienna Metro v. Pulte Home Corp<\/em>., Case No. 1:10-cv\u20130052, Judge Lee approved attorneys\u2019 fees ranging from $250\/hour to $820\/hour. \u00a0In his award, Judge Lee applied a 50% across-the-board reduction to the plaintiff\u2019s fees recovery because the plaintiff prevailed on only one of several counts in the complaint. \u00a0In the Blog post, we observed that \u201cJudge Lee make clear that the reduction was due to limited success in the litigation and not due to the hourly rates charged by counsel.\u201d<\/p>\n

Now in In re Star Scientific<\/em>, 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.\u00a0 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.<\/p>\n

The differences between the two cases as to what are reasonable hourly rates in the Eastern District are huge \u2014 the Vienna Metro <\/em>rates are roughly double the rates recognized in In re Star Scientific.\u00a0 <\/em>After Vienna Metro<\/em> and its progeny, it seems that several judges on the Eastern District are uncomfortable with the approval of comparatively high hourly rates.\u00a0 Judge Trenga\u2019s decision in In re Star Scientific<\/em> will no doubt be frequently cited in future disputes over what are reasonable rates in this district.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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).\u00a0 In August 2016, Judge Anthony Trenga ruled on Plaintiffs\u2019 Motion for an Award of Attorneys\u2019 Fees in … Continue reading E.D. Va. Whacks Attorneys\u2019 Fees Claim: Further Split on Court Revealed<\/span><\/a><\/p>\n","protected":false},"author":5,"featured_media":1104,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[],"class_list":["post-412","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-attorneys-fee-awards"],"acf":[],"_links":{"self":[{"href":"https:\/\/rpb-law.com\/wp-json\/wp\/v2\/posts\/412","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rpb-law.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rpb-law.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rpb-law.com\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/rpb-law.com\/wp-json\/wp\/v2\/comments?post=412"}],"version-history":[{"count":0,"href":"https:\/\/rpb-law.com\/wp-json\/wp\/v2\/posts\/412\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rpb-law.com\/wp-json\/wp\/v2\/media\/1104"}],"wp:attachment":[{"href":"https:\/\/rpb-law.com\/wp-json\/wp\/v2\/media?parent=412"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rpb-law.com\/wp-json\/wp\/v2\/categories?post=412"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rpb-law.com\/wp-json\/wp\/v2\/tags?post=412"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}