Justia Legal Ethics Opinion Summaries

At issue in this appeal of a settlement class action was how the district court allocated the $10 million in fees to plaintiffs' attorneys. The Fifth Circuit vacated the district court's allocation order and remanded for elaboration of the trial court's reasoning under the framework set out in Johnson v. Ga. Highway Express, 488 F.2d 714, 717–19 (5th Cir. 1974), which include: (1) the time and labor involved; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the political "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases. View "Torres v. SGE Management, LLC" on Justia Law

Blackbird sued HIM for infringement of a patent relating to exercise equipment. Blackbird is owned and controlled entirely by attorneys, whose business model consists of purchasing patents and monetizing them “through litigation.” Nineteen months later, after a transfer of venue, Blackbird offered to settle for $80,000. HIM declined, asserting that the infringement allegations lacked merit and that HIM believed there was a strong likelihood that Blackbird would be ordered to pay attorney fees. Blackbird made another t offer, for $50,000. Again, HIM declined. Months later, Blackbird offered to settle for $15,000. HIM declined, again requesting that Blackbird pay some of its expenses. Blackbird then offered a “walk-away” settlement whereby HIM would receive a license to Blackbird’s patent for zero dollars, and the case would be dismissed. HIM declined. During discovery, HIM moved for summary judgment. After the motion was briefed and without notifying HIM in advance, Blackbird filed a notice of voluntary dismissal with prejudice, executed a covenant not to sue, and moved to dismiss for lack of subject matter jurisdiction. The district court dismissed Blackbird’s claims with prejudice, denied Blackbird’s motion to dismiss, and authorized HIM to seek costs, expenses, and attorney fees. The Federal Circuit affirmed an award to HIM of fees and expenses in the requested amount ($363,243.80), upholding findings that Blackbird’s litigation position was “meritless” and “frivolous.” Blackbird litigated in an unreasonable manner and the court properly considered the need to deter future abusive litigation. View "Blackbird Tech LLC v. Health in Motion, LLC" on Justia Law

The Patent Act provides two methods for challenging an adverse decision by the Patent and Trademark Office (PTO): direct appeal to the Federal Circuit, 35 U.S.C. 141, or a new civil action against the PTO Director in the Eastern District of Virginia, section 145. Under section 145, the applicant must pay “[a]ll the expenses of the proceedings.” NantKwest filed a section 145 civil action after its patent application was denied. The Federal Circuit affirmed summary judgment in favor of the PTO, which moved for reimbursement of expenses, including the pro-rata salaries of PTO attorneys and a paralegal who worked on the case. The Federal Circuit and the Supreme Court affirmed the denial of the motion, concluding that the statutory language referencing expenses was not sufficient to rebut the “American Rule” presumption that parties are responsible for their own attorney’s fees. Reading section 145 to permit an unsuccessful government agency to recover attorney’s fees from a prevailing party “would be a radical departure from longstanding fee-shifting principles adhered to in a wide range of contexts.” The phrase “expenses of the proceeding” would not have been commonly understood to include attorney’s fees at the time section 145 was enacted. The appearance of “expenses” and “attorney’s fees” together across various statutes indicates that Congress understands the terms as distinct and not inclusive of each other. View "Peter v. NantKwest, Inc." on Justia Law

On remand from the district court in light of the Supreme Court's opinion in CRST Van Expedited, Inc. v. E.E.O.C., 136 S. Ct. 1642 (2016), the Eighth Circuit affirmed the district court's award of attorney's fees, expenses, and costs to CRST. The court reviewed the district court's detailed order in which it exhaustively explained its rationale for why certain claims brought by the EEOC were frivolous, unreasonable, or without foundation, and held that the district court did not abuse its discretion in applying the Christiansburg standard.In this case, the district court reaffirmed its prior findings that the EEOC's failure to satisfy Title VII's presuit requirements satisfied the Christiansburg standard for the claims dismissed on this basis; the district court exhaustively explained why 71 of the claims dismissed on summary judgment were frivolous, unreasonable, or groundless; and the court rejected the EEOC's argument that it reasonably sought relief for the remaining women on summary judgment based on the pattern-or-practice method of proof. Furthermore, the court rejected the EEOC's arguments that CRST failed to satisfy the Fox standard regarding fees attributable to frivolous claims. View "Equal Employment Opportunity Commission v. CRST Van Expedited, Inc." on Justia Law

Defendant-appellant John-David Gonzales (Gonzales) appealed trial court orders that led to the disbursement of settlement funds to respondents Michael Silvers, a law corporation (Silvers), Panish, Shea & Boyle (PSB), Michael W. Jacobs, Case Advance (CA), Nexus Physical Therapy, and Everence Association, Inc. (Silvers, PSB, Jacobs, CA, Nexus, and Everence were collectively referred to as lienholders). Defendants Gonzales and lienholders were named as parties in an interpleader action filed by plaintiff, respondent, and stakeholder Gregory Hood (Hood). Hood filed this action to resolve the competing claims of defendants to funds from the settlement of Gonzales v. Sears Holding Corporation et al., San Diego Superior Court case No. 27-2014-00040057-CU-PL-CTL (“the personal injury action”), which litigation was filed by Silvers in November 2014 after Gonzales was hurt in a bicycle accident. Gonzales in July 2015 agreed in writing to have PSB associate in as counsel. Silvers/PSB settled a portion of the personal injury action for $100,000. After Silvers/PSB withdrew as counsel of record in the personal injury action, Gonzales retained Jacobs, who obtained an additional settlement of $299,999.99 pursuant to an offer to compromise. Gonzales, however, refused to sign the settlement agreement and endorse the settlement check, terminated Jacobs as counsel, and retained Hood for the " 'determination and distribution' of the settlement funds." Despite his promise to do so, Gonzales again refused to endorse the settlement check. Within days after retaining Hood, Gonzales terminated him as legal counsel. In response, Hood informed Gonzales that, if he did not promptly retain new counsel to allow for the transfer of the settlement check and other settlement funds in Hood's possession, Hood would file an interpleader action, based on Hood's concern there were multiple claimants to the settlement funds and the settlement check would "expire" and not be honored by a bank. In anticipation of a hearing, the lienholders stipulated to a proposed distribution of the settlement funds among defendants. At the hearing, Gonzales (through his fifth attorney of record) agreed with the amounts owed to Silvers, PSB, and CA under that stipulation. Gonzales, however, disputed the amount sought by Jacobs, Nexus, and Everence. He also disagreed with the court's September 14 elisor order awarding costs and fees to Hood. For the most part, the Court of Appeal found all of Gonzales arguments “unavailing,” and affirmed. View "Hood v. Gonzales" on Justia Law

Plaintiffs filed suit alleging that TMBC's nationwide practice of charging a fee for preparing legal documents when selling boats and trailers constituted unauthorized law business in violation of Mo. Rev. Stat. 484.010 and 484.020. The Eighth Circuit affirmed the district court's grant of summary judgment to the class, but reversed the award of attorney's fees and costs. The court directed the district court to enforce a contractual fee-shifting provision that entitled the class to recover "all litigation costs and expenses, including reasonable attorneys' fees" from TMBC. On remand, the district court shifted $2,398,353.09 in attorney's fees to TMBC but awarded $700,000 in costs from the common fund. Plaintiffs appealed.The court held that plaintiffs suffered a concrete injury and therefore had standing to bring this action. The court found no error in the amount of attorney's fees and costs awarded, but reversed the district court's decision to award plaintiffs costs from the common fund rather than shifting them to TMBC. View "McKeage v. Bass Pro Outdoor World, LLC" on Justia Law

The Colorado Commission on Judicial Discipline (“the Commission”) recommended approval of a Stipulation for Public Censure and Suspension against Judge Lance P. Timbreza. In June 2019, Judge Timbreza was arrested and charged with Driving Under the Influence and Careless Driving. As he drove home from a party, Judge Timbreza crashed his vehicle into roadside trees and bushes while avoiding a collision with another vehicle. Judge Timbreza contacted the Commission by phone to report his arrest and the charges against him. Judge Timbreza pled guilty to Driving While Ability Impaired and was sentenced to one year of probation, alcohol monitoring, a $200 fine, useful public service, and two days of suspended jail time. By driving while his ability was impaired by alcohol, the Commission determined Judge Timbreza failed to maintain the high standards of judicial conduct required of a judge. The Commission found Judge Timbreza’s conduct violated Canon Rules 1.1 and 1.2 of the Colorado Code of Judicial Conduct. Consistent with the Stipulation, the Commission recommends the Colorado Supreme Court issue a public censure and a twenty-eight-day suspension of Judge Timbreza's judicial duties without pay. The Supreme Court adopted the Commission’s recommendation. View "In the Matter of: Judge Lance P. Timbreza" on Justia Law

Plaintiff challenged the district court's attorneys' fee award, arguing that the entire award was arbitrary because the district court did not adequately explain its decision to cut the number of hours expended by class counsel by 25%. The underlying class action was brought by plaintiff on behalf of a nationwide class of consumers, alleging that defendants marketed James Bond DVD and Blu-ray sets as containing all the Bonds films, when in fact they failed to include two movies. The parties settled and the settlement agreement included defendants' agreement to pay attorneys' fees and cost.The Ninth Circuit affirmed the attorneys' fee award, holding that the district court's order, when read in its entirety, explained the lodestar calculation it conducted and its application of the percentage-of-recovery analysis as a cross-check for reasonableness. Therefore, the panel found that the district court adequately explained its reasoning and did not abuse its discretion. View "Johnson v. Metro-Goldwyn-Mayer Studios, Inc." on Justia Law

Sepling, represented by SC, pled guilty to importing GBL, a controlled substance analogue, 21 U.S.C. 952; Sepling’s sentence would be calculated without consideration of the Guidelines career offender section. Sepling was released on bond pending sentencing and became involved in a conspiracy to import methylone, another Schedule I controlled substance. He was charged under 21 U.S.C. 963. A search uncovered three kilograms of methylone. Subsequent investigation revealed that the conspiracy involved approximately 10 kilograms. A Public Defender (APD) represented Sepling on the new charges. The prosecution agreed to withdraw the new charge; in exchange, Sepling’s involvement in the conspiracy would be factored into his GBL sentence as relevant conduct. The APD ceased representing Sepling. Sepling’s unmodified Guideline range for the GBL was 27-33 months. The methylone relevant conduct dramatically increased his base offense level. The PSR analogized methylone to MDMA, commonly called “ecstasy,” and held him responsible for 10 kilograms, resulting in responsibility equivalent to that for conspiring to distribute five and a half tons of marijuana, for a sentencing range of 188-235 months. SC did not object to that calculation, nor did he file a sentencing memorandum. Rather than researching the pharmacological effect of methylone, SC relied upon Sepling to explain the effects of methylone. SC, the government, and the court all confessed that they did not possess any substantive knowledge of methylone The Third Circuit vacated the 102-month sentence. Sepling was prejudiced by his counsel’s ineffectiveness. View "United States v. Sepling" on Justia Law

The website, www.legalmatch.com, connects individuals to lawyers, based on an intake form and client specifications. LegalMatch represents that it “does not screen or vouch for any of its users” and does “not imply an endorsement of any subscribing attorney or service …. LegalMatch does not screen individual cases or otherwise channel potential clients to select attorneys.” Only subscribing lawyers associated with the location and category selected by the potential client can affirmatively reach out to the individual. Lawyers and clients negotiate the parameters of their attorney-client relationship. The number of lawyers in a geographic location and category of legal expertise is limited by an algorithm that maintains LegalMatch’s profitability by balancing the number of clients and lawyers available. Potential clients use the site for free. LegalMatch receives no fee for the formation of an attorney-client relationship. When LegalMatch sued attorney Jackson to recover unpaid subscription fees, Jackson argued that LegalMatch was an uncertified lawyer referral service, in violation of Business and Professions Code section 6155. The trial court rejected Jackson’s argument. The court of appeal reversed. The act of referring is complete when LegalMatch routes a potential client to attorneys who match the geographic location and area of practice—regardless of whether LegalMatch exercises legal judgment on an individual’s issue before communicating that information to lawyers on its panel. View "Jackson v. LegalMatch.com" on Justia Law