Gross v. Sun Life, 320 F.Sup.3d 240 (D.Mass. 2018)

When the Courts Deem Attorney’s Fees As Excessive

Gross v. Sun Life, 320 F.Sup.3d 240 (D.Mass. 2018)

Decision on Plaintiff’s motion for interest, attorneys’ fees and costs after Plaintiff prevailed in an appeal to the first circuit.  Prejudgment interest was set at 12%, which is the Massachusetts statutory rate and also reflected Defendant’s earnings over that time period.  The 1st circuit instructed the court to consider the dual objectives in awarding prejudgment interest: making the plaintiff whole and preventing unjust enrichment.  The court looked to plaintiff’s market rate borrowing cost (not substantiated) and missed opportunity cost (S&P 500 at 9.8%).  For unjust enrichment the Court looked at Defendant’s return on equity for the relevant years (9.5, 18.9, 12.2, 12.6, 12.4, 12.8%).  The court of appeals had instructed that awarding interest at a rate less than the value of the money earned would create a perverse incentive to delay payments while it earned interest.  The court also noted that Sun Life operates in Massachusetts and the state statutory interest rate reflects the legislature’s considered view of the likely rate or return.

Attorneys’ fees were based on the loadstar method of a reasonable rate times the number of reasonably expended hours.  The main attorney spent 322 hours over five years, including an appeal, summary judgment and appeal to the first circuit, which was found reasonable.  The court reduced the rate by 25% for the hours spent during the period when the lawyer threatened an opposing party’s witness in an effort to obtain an opinion more favorable to his client and then misrepresented his conduct about it.  Costs were reduced but the numbers were comparatively insubstantial.

The Takeaway: After the Plaintiff won an appeal in the first circuit courts, the courts investigated the compensation due to the Plaintiff’s original Attorney. The court ruled that the rate for the 322 hours listed by said Attorney were excessive based on the evidence available, and reduced the fees by 25%. The difference in cost wasn’t substantial.

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