On May 22, 2013, the United State Court of Appeals for the Second Circuit denied defendants Gristede’s Operating Corp.’s appeal from District Judge Paul A. Crotty’s award of $3,415,450 in attorneys’ fees and $442,609.85 in costs to plaintiffs after the parties entered into a $3,530,000 settlement on the eve of trial.
Defendants argued that the district court did not adequately review plaintiffs’ counsel’s billing records, inappropriately relied upon defendants’ litigation tactics to determine the fee, and awarded fees and costs that were disproportionate to the settlement. As such, defendants argued, the district court had “abused its discretion,” and that its judgment should be vacated.
In a summary order, the Court of Appeals rejected each argument in turn. First, the Court explained that the district court is not expected to achieve “auditing perfection,” or become “green-eyeshade accountants,” but to “do rough justice.” Order at p. 5-6. Second, the district court did not punish the defendants for exercising their right to vigorously defend the case, but only acknowledged their “vigorous approach” as an explanation for why plaintiffs’ counsel’s fees were so high. Id. at 7. Finally, the Court noted that “the most critical factor in determining the reasonableness of a fee award is the degree of success obtained,” not proportionality to the settlement amount. Id. at 8 (internal citations omitted). Because plaintiffs’ counsel had obtained a “significant monetary recovery” for their clients, the award was not an abuse of discretion. Furthermore, the Court said, “although the district court was permitted to cap the fee request at standard contingency-fee levels, it was not required to do so where, as here, it concluded that higher fees were reasonably incurred.” Id. at 9 (emphasis in original).
After seven years of litigation, the Court of Appeals affirmed Judge Crotty’s ruling that plaintiffs’ requested attorneys’ fees and costs were reasonable under the circumstances.