Tag Archives: Attorney’s Fees

Supreme Court of Virginia Provides Added Guidance on Attorney’s Fees Awards

The Supreme Court of Virginia released three decisions in recent months that provide added guidance on attorney’s fees awards.   While these are state court decisions, it is Virginia law, not federal law, that governs attorney’s fees awards on matters arising under Virginia law in the federal courts.  For example, attorney’s fees awarded by a federal court under the Virginia Business Conspiracy Act are governed by Virginia state law.  Also, fee awards by a federal court pursuant to a Virginia contract claim where the contract includes an attorney’s fees provision are governed by Virginia state law.

We have posted multiple times on attorney’s fees awards in the Eastern District.  For example, D. Mauler, New Trends in Attorney’s Fees Declarations? (November 15, 2016); D. Mauler and J. Kurz,  E.D. Va. Whacks Attorneys’ Fees Claim: Further Split on Court Revealed (September 30, 2016); D. Mauler, Recent Opinion Highlights Differing View in EDVa on Appropriate Hourly Rates (September 22, 2015).   While there are obvious overlaps in the consideration of attorney’s fees under federal precedents as opposed to Virginia law, separate consideration of recent developments at the Supreme Court of Virginia merits attention.

The Prevailing Standard for Attorney’s Fees Awards Under Virginia Law

As the starting point, the party claiming legal fees must plead a claim for the award of fees.  in Graham v. Community Management Corp., Record No. 161066 (Oct. 12, 2017), the Supreme Court confirmed that Rule 3:25 requires in most matters pleading the claim for fees (the few exceptions are covered in subpart A of the Rule).  In Graham, the prevailing defendant had not requested attorney’s fees in any pleading, including her pleas in bar, demurrers and answer.  After the defense verdict, she returned with a claim for fees based on the employment contract that was the basis for the plaintiff’s original claim.  The Fairfax Circuit Court held that the claim was waived when not pled, and the Supreme Court, applying the “express language of Rule 3:25(C),” affirmed.

A party seeking an award of fees then has the burden of proving a prima facie case that the fees were reasonable and necessary.  A party may not recover fees for duplicative work or for work that was performed on unsuccessful claims.  In determining whether the prima facie case is established, the factfinder may consider some or all of the seven factors identified in Chawla v. BurgerBusters, Inc., 255 Va. 616 (1998):

In determining whether a party has established a prima facie case of reasonableness, a fact finder may consider, inter alia, (1) the time and effort expended by the attorney, (2) the nature of the services rendered, (3) the complexity of the services, (4) the value of the services to the client, (5) the results obtained, (6) whether the fees incurred were consistent with those generally charged for similar services, and (7) whether the services were necessary and appropriate.

Chawla involved an attorney’s fees provision in a commercial lease.  Both parties sought fees.  A threshold issue was where the initial burden of proof fell – on either the party seeking fees must or the defending party to prove the fees were unreasonable.  Relying on Seyfarth Shaw v. Lake Fairfax Seven Ltd. Partnership, 253 Vas. 93 (1997), the Supreme Court held that “the party claiming legal fees has the burden of proving prima facie that the fees are reasonable and were necessary.”

Lambert v. Sea Oats Condominium Association, Inc.

In an April 2017 decision, Lambert v. Sea Oats Condominium, 293 Va. 245 (2017), the Plaintiff sought recovery of $500 from her condominium association after she paid to repair an exterior door.  Ms. Lambert lost in the general district court but prevailed when she took the case to the circuit court.   In pursuit of her claims, she spent more than $9,500 in attorney’s fees to win $500.   She claimed recovery of her attorney’s fees pursuant to the statutory provision in Va. Code § 55-79.53.  The circuit court awarded only $375 reasoning that the fee award should be proportional to the damages.

The Supreme Court rejected the circuit court’s analysis.  Courts may consider the amount of damages a plaintiff recovers, and they do so within the scope of the “results obtained” factor.   The Court directed, however, “that merely applying a ratio between the damages actually awarded and damages originally sought will not satisfy the reasonableness inquiry.”  The issue is “the necessary costs of effectively litigating a claim.”  The Court determined that the circuit court abused its discretion by failing to consider all the relevant factors, and it remanded the case back to the circuit court, directing the trial court to include “an award of the cost of the amount of reasonable attorney’s fees incurred at trial and in this appeal.”

Justice Mims, the author of the Sea Oats opinion, uses his footnotes to provide broader guidance on attorney’s fees. For example, in footnote 1 he observes that attorney’s fees may be decided by a jury, and he suggests that the review of a jury verdict on fees should not be any different than the typical appellate review of determinations of punitive damages, physical pain, suffering or mental anguish.  Citing a 1959 decision, the Court observed that jury decisions are not disturbed “unless it appears that [they were] influenced by partiality, prejudice, corruption of the jury, or some mistaken view of the evidence.”  The footnote stops short, however, of providing a definitive statement of the standard of review applicable to a jury decision on attorney’s fees because, as the opinion observes, there was no jury award at issue in the Sea Oats case.

In his footnote 7, Justice Mims discusses the use of experts in the proof of the reasonableness of attorney’s fees.  While there is no per se requirement of an expert, the footnote instructs that proving that the requested fees are reasonable “may require supplying an expert who was undertaken a detailed evaluation of its attorneys billing records to testify about what amount is reasonable.” The opinion adds that “the likelihood that such testimony is necessary will often be proportional to the complexity of the case.”

A final point from Sea Oats addresses the pleading requirements when the plaintiff is seeking attorney’s fees. The condominium association argued that because Ms. Lambert had not identified in her complaint the amount of fees she sought she should later be precluded from claiming any fees.  The Supreme Court rejected the argument instructing that “the party who may be entitled to an award of attorney’s fees is merely required to notify the opposing party that it will seek them if it prevails, as required by Rule 3:25(B).”

Denton v. Browntown Valley Associates, Inc.

In Denton v. Browntown Valley Associates, Record No. 160999 (Va. Aug. 31, 2017), a decision also authored by Justice Mims, the Supreme Court made clear that the fees incurred in litigating the reasonableness of the underlying attorney’s fees are themselves recoverable.  For example, if the fee claim is for $50,000, and the proponent must spend $20,000 to prove the reasonableness of the fees, the total of $70,000 is recoverable.  The opinion explains, “The attorney’s fees that the prevailing party incurs while litigating the issue of attorney’s fees are no different from those it incurs while litigating any other issue on which it prevails.”

At the beginning of the discussion about attorney’s fees, the Denton opinion cites both Chawla and Sea Oats for the identification of the “seven nonexclusive factors for courts to consider when weighing the reasonableness of an award of attorney’s fees.”   Relying on Sea Oats, the Denton opinion repeats the principle that fees necessary to prove the reasonableness of the underlying attorney’s fees are recoverable applies to the fees incurred on appeal as well.

Summary

With Sea Oats, Denton, and Graham, the Supreme Court of Virginia is rounding out its discussion of attorney’s fees awards.  The Seyfarth Shaw and Chawla opinions summarized the law to 1998, and provided us with the 7-factor analysis.  Subsequent decisions, now capped with the three recent opinions, confirm the test for reasonableness, explain further necessary fees, comment on the need for a fees expert, and clarify the pleading requirements.   Denton adds that fees-to-prove-fees are recoverable, and that this extends to fees on appeal.

Despite this, the Court’s attorney’s fees mosaic is not yet fully complete.  Justice Mims provided some guidance on the review of jury verdicts on attorney’s fees and on the desirability, but not the necessity, of expert testimony to assist a jury.  But the Sea Oats opinion stops short of explicit instructions because there was no jury verdict at issue in that case.  The more complete mosaic may have to wait until the Supreme Court has before it the review of a jury verdict on attorney’s fees.

Supreme Court of Virginia Addresses the Reach of Conspirator Liability under the Virginia Business Conspiracy Act

The Supreme Court of Virginia recently addressed conspirator civil liability under the Virginia Business Conspiracy Act, Va. Code §§ 18.2-499 and -500.  Borrowing from Illinois law, the Court recited that “[t]he function of the conspiracy claim is to extend liability in tort beyond the active wrongdoers to those who have merely planned, assisted or encouraged the wrongdoer’s acts.”   While the case does not really change the substance of Virginia law, the opinion in Gelber v. Glock offers language that will likely appear in every future Virginia brief on conspirator liability and in the conspiracy jury instructions.

Tucked into the back of a 39-page opinion dealing with a family feud over an estate, the Supreme Court provides its tutorial on conspirator liability.   Admittedly, this is not federal law, but VBCA claims often appear in E.D. Va. litigation when state claims are before the federal court under diversity jurisdiction or pendent jurisdiction.

The Family Feud Case

The case is Gelber v. Glock, Record No. 160500 (June 22, 2017), a decision from an appeal heard during the Supreme Court of Virginia’s February 2017 Session.  The facts are those of the classic family feud.  In an early will, Mrs. Gelber left her estate to be divided among her five children.  Subsequent estate documents seemingly altered this directive—Mrs. Gelber’s real and personal property was to go to just one of her daughters.  The Executors sued on multiple theories, including a claim that the lucky daughter was part of a civil conspiracy with one of her sisters and a brother-in-law.

The Circuit Court for Henrico County granted a Motion to Strike the conspiracy claim.   The Supreme Court found no error in this circuit court ruling.  Given this straightforward appellate finding, the Supreme Court perhaps likely could have addressed the conspiracy Assignment of Error in a single paragraph.  But the Justices chose to give us a powerful tutorial on conspirator liability under the VBCA.  The tutorial is perhaps dicta, but it is nonetheless part of the Supreme Court opinion.

The Language of the Virginia Business Conspiracy Act

The VBCA is a two-part statute found in Title 18 of the Virginia Code, the criminal law title.  Va. Code § 18.2-499 identifies the elements of the criminal conspiracy. The next section, Va. Code § 18.2-500, provides for civil remedies for conspiracy violations.  Subpart A of the section reads:

Any person who shall be injured in his reputation, trade, business or profession by reason of a violation of § 18.2-499, may sue therefor and recover three-fold the damages by him sustained, and the costs of suit, including a reasonable fee to plaintiff’s counsel, and without limiting the generality of the term, “damages” shall include loss of profits.

The Reach and Purpose of Civil Conspiracy Liability

The real punch from the Gelber decision is the confirmation of conspirator liability beyond the primary tortfeasor.  The decision explains, “the object of a civil conspiracy claim is to spread liability to persons other than the primary tortfeasor.”  Gelber at 37.  The Court expands its discussion in footnote 21.  Quoting from Beck v. Prupis, 162 F. 3rd 1090, 1099 n. 18 (11th Cir. 1998), aff’d, 529 U.S. 494 (2000), the Gelber Court adds that “[i]n a civil context … the purpose of the conspiracy claim is to impute liability– to make X jointly liable with D for what D did to P.”   This is language is straight from Prosser and Keeton on Torts § 46 (5th Ed. 1984).

The Gelber opinion continues, in the same footnote 21, “[t]hus, a civil conspiracy plaintiff must prove that someone in the conspiracy committed a tortious act that proximately caused his injury; the plaintiff can then hold other members of the conspiracy liable for that injury.”  In support of this statement, the Supreme Court cites authority not only from the 11th Circuit, but also from the 8th Circuit, and from the Utah federal court and the Illinois Supreme Court.

The cited Eighth Circuit decision, Simpson v. Weeks, 570 F.2d 240, 242-43 (8th Cir. 1978), provides a clever analogy, “[t]he charge of conspiracy in a civil action is merely the string whereby the plaintiff seeks to tie together those who, acting in concert, may be held responsible for any overt act or acts.”   The Utah federal court decision, Boisjoly v. Morton Thiokol, Inc., 707 F. Supp. 795, 803 (D. Utah 1988), explains that “[c]ivil conspiracy is essentially a tool allowing a plaintiff injured by the tort of one party to join and recover from a third party who conspired with the tortfeasor to bring about the tortious act.”

Finally, Gelber confirms that conspiracy liability is the same for low-level players as it is for conspiracy kingpins.  The cited Supreme Court of Illinois decision, Adcock v. Brakegate, Ltd., 645 N.E.2d 888, 894 (Ill. 1994), offers, “[t]he function of the conspiracy claim is to extend liability in tort beyond the active wrongdoers to those who have merely planned, assisted or encouraged the wrongdoer’s acts.”

Summary: Gelber and VBCA Conspirator Liability

The Supreme Court of Virginia ranges far and wide for its authority on conspirator civil liability perhaps because a clear statement of civil liability tied to a conspiracy claim was previously missing from the Virginia case law.  For instance, plaintiffs looking for authority for conspirator civil liability have frequently cited Carter v. Commonwealth, 232 Va. 122 (1986), a criminal case about vicarious liability for the use on a firearm in a felony.  This is not to say that Virginia law was any different before Gelber, but that it was challenging to find on-target Virginia citations supporting conspirator civil liability.

Expect that the Gelber language will be prominent in trial briefs and jury instructions for future VBCA claims in the state courts and in the federal courts.

New Trend in Attorney’s Fees Declarations?

As the judges of the Eastern District continue to differ regarding reasonable hourly rates for attorneys, practitioners need to be aware of a potential new trend regarding declarations supporting or opposing petitions for attorney’s fees.  Unfortunately, that new trend appears likely to make such petitions more detailed and time-consuming – and therefore, more expensive.

Traditionally, declarations supporting a petition for attorney’s fees in the Eastern District have followed a familiar pattern: An outside attorney reviews the hourly rates charged, the number of hours charged, the docket sheet, and selected motions/briefs.  The resulting opinions were usually based upon a “general” review of or familiarity with the litigation.  These reviews were not usually “deep dives” into the documents, pleadings, or billing records for a good, simple reason:  keeping costs down.

This custom may need to change, based upon the recent case of Salim v. Dahlberg, 1:15-cv-468 LMB / IDD, 2016 WL 2930943 (E.D. Va. May 18, 2016), which was covered by the EDVA Update here.  In that case, Judge Leonie M. Brinkema of the Alexandria Division was faced with a petition for attorney’s fees after the plaintiff prevailed on part of his civil rights claim.  The petition was supported by declarations from six leading attorneys, all whom have extensive experience in the Eastern District.  As Judge Brinkema said in her opinion, all six were “well-known to and well-respected by the Court,” and all “summarily conclude[d] that the hourly rates charged and hours worked were reasonable.”

In opposition, the defendant submitted one declaration by attorney Wayne G. Travell, a partner with Hirschler Fleischer’s Tysons office.  Despite the lop-sided number of supporting declarations, Judge Brinkema rejected much of the plaintiff’s fee petition (along with the conclusions in the six supporting declarations) and essentially adopted much of the opinion and analysis expressed by Mr. Travell.

Mr. Travell’s declaration is extensive, at 18 pages long with 47 paragraphs.  He discusses in detail the steps he took to form his opinion (including documenting the telephone calls he had with the respective counsel).  He recounts the applicable law, and then provides a detailed recitation of the facts (citing and quoting from the pleadings in the case).  The heart of his declaration, however, appears to be nearly eight pages of detailed examination of the plaintiff attorney’s time records, including identifying alleged instances of double-billing, block-billing, and vague entries.

In her opinion, Judge Brinkema sided with Mr. Travell’s declaration because he “actually reviewed counsels’ billing records, provide[d] a detailed analysis of those records, discusse[d] the specific issues involved in the case, and evaluate[d] the work performed with respect to those issues.”  In contrast (according to the court’s opinion), the six supporting declarations were unpersuasive because none went into a “detailed analysis of plaintiff’s counsels’ time sheets; instead, the declarants base their conclusions almost exclusively on a review of the pleadings and of [plaintiff counsel’s] declaration.”

Mr. Travell’s declaration is another example of judicial pushback in the Eastern District against excessive attorney hourly rates (or, at least hourly rates perceived as excessive by the bench).  But it also likely signals that some judges will more closely scrutinize petitions for attorney’s fees, including attorney declarations that support and oppose those petitions.  For this reason, Mr. Travell’s declaration is likely a roadmap for future petitions in the Alexandria Division, if not throughout the Eastern District.  And the irony is straight-forward:  While the intent may be to hold down hourly rates, the added expense of more detail in such declarations will ultimately increase the cost of litigation overall.  But regardless of this impact, practitioners need to be aware of this possibility.

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.

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.

Conclusion

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.