An interesting article ...

Case is over Vlad.


Judge Awards $25,000 in Fees for $1,000 Case
Shannon P. Duffy
The Legal Intelligencer
10-20-2003

http://www.law.com/jsp/article.jsp?id=1066080441663

In a case that ended with a jury verdict of $1,000, it might seem like a major victory when a federal judge awards the winning lawyers $25,000 in attorney fees -- unless, of course, the lawyers were asking for five times that amount.

In Sheffer v. Experian Information Systems, plaintiff Richard Sheffer filed suit under the Fair Credit Reporting Act against Sears Roebuck & Co. and three credit reporting agencies, complaining that despite his protests that he was still very much alive, the "deceased" notation remained on his credit report for months because the reporting agencies said Sears had "verified" his death.

Before trial, U.S. District Judge Berle M. Schiller cleared the way for Sheffer to seek punitive damages, saying there was evidence that Sheffer's hassles "were not the result of mere human error" and "were not promptly cured."

As a result, Schiller said, a jury "may be able to find that defendants acted with conscious or reckless disregard to the rights of consumers."

Two of the three credit reporting agencies settled with Sheffer prior to trial, and the third settled during trial, leaving Sears as the only defendant taking the case to verdict.

The eight-member jury found in favor of Sheffer, but awarded just $1,000 in compensatory damages and no punitive damages. Sheffer's lawyers -- James A. Francis, Mark D. Mailman and John Soumilas of Francis & Mailman in Philadelphia, along with attorneys Thomas L. Lyons Sr. and Thomas Lyons Jr. of Little Canada, Minn. -- sought an award of $126,543 in attorney fees and $14,010 in costs.

Now Schiller has ruled that although a small jury verdict doesn't necessarily mean that the attorney fees must be reduced, the facts of Sheffer's case called for significant cuts to the amount requested in the lawyers' fee petition.

Schiller reduced some of the lawyers' hourly rates and trimmed a significant number of hours from the fee petition, reducing it from more than $126,000 to just under $79,000.

He then slashed more than two-thirds of the remaining fees after finding that the jury's verdict showed that the lawyers had achieved only "de minimis" results for their client since they were demanding $300,000 in the trial -- and had rejected a $30,000 settlement offer.

In an interview, Francis said he was not surprised that the judge had reduced the fees because Sheffer's case was the rare case in which the plaintiffs were asking for significant punitive damages.

"Obviously, I would have preferred that the judge not reduce it is much as he did, but I have to concede that, under the law, he was right to order some reduction considering the jury's verdict," Francis said.

Francis emphasized that Schiller's decision also included a significant legal win for the plaintiffs because the judge rejected the notion that an attorney fee award must always be proportional to a jury verdict.

Sears' lawyers lodged a slew of objections to the fee petition, arguing that the plaintiffs' lawyers were billing at inflated hourly rates; that they overstaffed the case both at depositions and trial; and that some of the tasks performed by the senior lawyers should have been delegated to more junior lawyers.

Schiller sided with Sears on some of the objections, but rejected others.

Significantly, Schiller completely rejected Sears' argument that the senior lawyers should have delegated simpler tasks to junior lawyers.

"Given the number of junior attorneys available to work on this litigation, this court does not find plaintiff's attorneys' non-delegation of responsibilities unreasonable," Schiller wrote.

"It is reasonable for lead trial counsel to desire to expend his or her own time on some activities that, although within the competency of less highly paid associates, are better performed by the lead counsel to ensure the smooth functioning at trial."

Schiller also rejected Sears' argument that it was unnecessary for both Mailman and Francis to spend time responding to Sears' motion to dismiss.

In the motion to dismiss, Schiller noted, Sears argued that it could not be sued under the FCRA as a furnisher of information -- an issue that has never been addressed by the 3rd U.S. Circuit Court of Appeals.

"Although other circuits had addressed the issue, it required considerable research by plaintiff. In light of the nature and complexity of the arguments raised in Sears' motion to dismiss, I find that these hours were neither excessive nor duplicative," Schiller wrote.

But Schiller sided with Sears in finding that it was unreasonable for both Francis and Soumalis to attend a deposition. Although Sears argued that Soumalis could have handled the task alone, Schiller instead found that only Francis should be compensated for the deposition.

Schiller also sided with Sears in cutting all of the hours claimed by Mailman and Lyons Jr. for trial preparation since neither lawyer attended the trial.

"Hours attributed to trial preparation and collaboration by Mr. Lyons, Jr. and Mr. Mailman are excessive and duplicative, especially given the fact that neither appeared at trial and the two highly experienced attorneys who served as lead trial counsel had ample access to each other for collaboration," Schiller wrote.

Schiller also sided with Sears in its objection to hours billed for Soumalis' trial attendance.

"Plaintiff's counsel's table was amply staffed by Lyons and Francis. Soumalis was not the trial attorney; he did not participate in the examination of any witnesses and did not sit at counsel's table," Schiller wrote.

Instead, Schiller found, Soumalis "served as an actor, reading the deposition testimony of two third-party witnesses who did not attend trial."

Schiller concluded that Sears should not be charged for Soumalis' trial attendance and that his "acting skills" should be compensated at $50 per hour, rather than his associate rate of $160 per hour.

On the issue of the lawyers' hourly rates, Schiller cut the rates billed by both Francis and Mailman by $15 -- from $250 to $235 -- noting that it was "near the top of the guideline range" for lawyers with eight years of experience.

Schiller imposed more significant reductions on Lyons Jr. and Soumalis, cutting their proposed rates from $300 to $235, and $200 to $160, respectively.

 

I assume that this sets a precedent that the furnisher of information can be liable in the 3rd U.S. Circuit Court of Appeals.