From $12 million, to $7 million, to $4 million, to $2.7 million in legal fees: a tale of an 8 year litigation
Posted on July 14th, 2016 by Legal Fee Advisors
By Emily Wilson
In a landmark copyright infringement case, 14 music recording companies brought action against the file sharing website, MP3tunes and its operator, Michael Robertson, and were awarded in excess of $12 million in damages (after expending the same amount in attorney fees). The companies and their respective publishers sought an award of fees and costs of just $4m (down from a previous $7m, excluding fees not related to the successful aspects of the action). The fees were then reduced 15%-20% by the courts for issues such as block-billing and high billing rates, with costs reduced by 65%.
Regarding block-billing, where there were multiple time entries for more than 8 hours, the Court considered that there was sufficient information “to afford confidence that the time billed was productively spent”, however the Court still felt that a “minimal reduction” in fees was warranted. Vague time entries, such as “Amended Complaint,” and “Document Review,” were also criticized and resulted in a “modest reduction” of fees. The hourly billing rates were then compared to similar approved rates in the New York district. The rates for two senior partners, $575 and $720 per hour, were considered high but nonetheless reasonable. It was the rates of many associates, $450+ per hour, and non-attorney personnel, $200+ per hour, that the courts took issue with and a “modest reduction” applied as a result.
Robertson contended there were a series of unnecessary time entries, such as five attorneys attending the three week trial. The Court rejected this argument, stating that the test is instead whether the firms “spen[t] the minimum necessary to litigate the case effectively.” Further, as the $12m fee was revised a number of times to $4m, this demonstrated that the firms had made a “good faith effort to exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary”. No reduction was therefore ordered in this respect. Ultimately, the Court stated there were three reasons the award of fees was warranted; Robertson’s misconduct during litigation, the unreasonable arguments he advanced, and finally the jury’s finding of willful copyright infringement.
As such a high amount of fees were at issue, the courts “decline[d] to engage Robertson in a line-by-line review”. It was easier for the Court to instead apply a broad reduction of 15%-20% with $2,740,517 in attorney fees awarded to the companies [and their respective publishers]. In terms of costs, the companies sought in excess of $500,000 and their publishers $167,000. The Court in turn awarded $105,000 and $143,000 respectively for photocopying, research, outside duplication and printing, and travel. The Court would not entertain an award of costs relating to rebuttal expert witnesses, consulting, and other professional services.
In such a voluminous litigation, spanning 8 years (with another appeal pending), this case demonstrates the Court’s frustration with parties whose conduct warrants a shifting of fees as a result of knowingly wasteful conduct, or delay. While firms and litigant-clients need to be aware that only the fees reasonably related to successful claims will be awarded – unreasonable or irrelevant fees and costs will just as quickly be scrapped.
Capitol Records, Inc. v. MP3tunes, LLC, No. 07CV9931, 2015 WL 7271565 (S.D.N.Y. Nov. 12, 2015)
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