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November 01, 2019 Feature

Danger! Heed Warnings or Risk Fees

Courts use fee-shifting statutes as swords against recalcitrant attorneys

By Andrew J. Kennedy

Litigators, beware: bad behavior during litigation may lead to unexpected—and undesirable—results under fee-shifting statutes. Two cases illustrate that under certain fee-shifting provisions, persistent misconduct and repeated failure to heed court warnings may result in paying your opponent’s attorney fees, denial of your own attorney fees, monetary sanctions, and disciplinary action.

Beware the consequences of attorney misconduct

Beware the consequences of attorney misconduct

Photo illustration by Elmarie Jara | Getty images

$600,000 Fee Award in “Exceptional” Patent Case

In Drop Stop LLC v. Zhu, the U.S. Court of Appeals for the Federal Circuit considered the propriety of a $600,000 fee award under 35 U.S.C. § 285, which allows the prevailing party in patent infringement actions to recover reasonable attorney fees “in exceptional cases.” Drop Stop owned a patent for a product that prevents items from falling between a car’s front seat and the center console. It sent a cease-and-desist letter requesting the defendants to stop selling a competing product, alleging infringement. The defendants did not comply with the request, relying on an attorney’s informal non-infringement opinion, but omitted the attorney’s disclaimer that his “informal opinion cannot be relied upon definitely” and that further analysis was required for a “reliable outcome.”

Drop Stop sued and served five defendants through their registered agents after discussions for waiver of service failed. The defendants defaulted and argued that service was improper when moving to set aside the default. Though the district court vacated the default, it concluded that the defendants were “unduly delaying this litigation by keeping this case at the starting gate.”

Following an unsuccessful mediation, the defendants added a patent misuse defense based on the parties’ settlement discussions, which the district court struck on cross-motions to dismiss. Nevertheless, the defendants raised those stricken defenses in their cross-motion for summary judgment and filed “a series of ex parte motions.” The district court granted the plaintiff partial summary judgment, and the parties later settled, stipulating to entry of judgment in favor of the plaintiff on the remaining infringement claims and court determination of the plaintiff’s fee motion.

The district court awarded the plaintiff $600,000 in attorney fees, finding the totality of the defendants’ conduct throughout the case constituted exceptional circumstances warranting attorney fees under section 285. In so holding, it cited as “problematic” the defendants’ (i) reliance on the informal non-infringement opinion and removal of the attorney’s disclaimer, (ii) evasion of service, (iii) addition of defenses based on confidential information disclosed in mediation, (iv) “late timing of their discovery,” and (v) “frivolous ex parte practice.”

The federal circuit affirmed on appeal, relying upon U.S. Supreme Court precedent holding that “‘a party’s unreasonable conduct—while not necessarily independently sanctionable—[may] nonetheless’ [be] exceptional.” Because the “[d]efendants’ conduct permeated every stage of the litigation” and largely caused the plaintiff to incur the requested fees, the appellate court also affirmed the lower court’s decision not to apportion fees by issue.

“Vexatious Conduct” Results in Discipline

Similarly, an attorney’s persistent misconduct during litigation led to the wholesale denial of her fee petition as well as disciplinary action—despite the fact that she achieved a favorable result. In Office of Disciplinary Counsel v. Pollick, a federal judge referred the attorney to the Disciplinary Board of the Supreme Court of Pennsylvania after the lawyer filed a “grossly excessive” and defective fee petition.

In the underlying case, Young v. Smith, counsel filed a civil rights suit against a school district and a teacher and won damages totaling $325,000 in the first trial. Because counsel had engaged in misconduct, however, including mischaracterizing evidence, expressing personal outrage, and attempting to inflame the jury, the court granted the defendants’ request for a mistrial. The second round of proceedings yielded a summary judgment for the teacher and a jury verdict for the school district. On appeal, the U.S. Court of Appeals for the Third Circuit reversed the summary judgment ruling but affirmed the grant of a new trial, noting the attorney’s history of misconduct during the first trial.

Prior to a third trial, the plaintiffs accepted the teacher’s Rule 68 offer of judgment for $25,000 and recovery of “reasonable attorneys’ fees and costs as to the claims against [the teacher] only, up until the date of [the] offer.” Instead of limiting her fee petition to the terms of the offer, the lawyer requested fees of $733,002.23 for her work in the overturned first trial and her unsuccessful second trial against the school district.

The trial judge denied the fee petition, sanctioned the lawyer $25,000, and referred her for disciplinary action. In doing so, the district court noted the attorney sought the recovery of fees and costs for portions of the litigation that she lost because of her own “vexatious conduct.” The trial court also observed the attorney had declined its invitation to resubmit the noncompliant fee petition, which was single-spaced, in 6- or 8-point font, and consisted of “hundreds of inappropriate, unethical entries that would likely be illegal if billed to a client.” The fee request also included improper “padding” of time and an unreasonable hourly rate. Significantly, the court noted that in the five months before the subject fee petition, two other judges had explicitly disapproved of the lawyer’s billing practices.

The Third Circuit affirmed, rejecting the plaintiff’s argument that the trial court erred in denying fees under 42 U.S.C. §1988(b), which permits a prevailing party in a section 1983 case to recover reasonable fees. In a precedential opinion, the Third Circuit joined the First and Fourth Circuits in holding that “a court may deny a request for attorney’s fee in toto where the request is so outrageously excessive that it shocks the conscience of the court”—a “high hurdle” that this attorney cleared.

The disciplinary board publicly reprimanded the attorney after determining her conduct violated several Pennsylvania Rules of Professional Conduct (RPC). It held that by filing a fee petition substantially similar to ones that other district courts previously found to be deficient, the lawyer violated RPC 1.1 and RPC 3.1, which respectively require attorneys to provide competent representation with requisite knowledge, skill, and preparation, and to only assert meritorious claims. Her fee request also violated RPC 1.5(a), which bars attorneys from collecting excessive fees. The board further concluded that the lawyer should have known her fee petition “would be deemed excessive and would require substantial revision by opposing counsel and/or the Federal Court and potentially additional proceedings.” That conduct violated RPC 3.2 and RPC 8.4(d), which respectively require “reasonable efforts to expedite litigation consistent with the interests of the client,” and bars conduct “prejudicial to the administration of justice.” Finally, the board held that the plaintiff’s counsel should have known that filing the fee petition would require the opposing counsel to file objections and thus contravened RPC 4.4(a), which prohibits “means that have no substantial purpose other than to embarrass, delay, or burden a third person.”

When lawyers engage in bad conduct, there are consequences.

John M. Barkett, Miami, OH

Cochair, Ethics & Professionalism Committee

Moral of the Story: Don’t Tick Off the Judge

“When lawyers engage in bad conduct, there are consequences,” says John M. Barkett, Miami, OH, cochair of the ABA Section of Litigation’s Ethics & Professionalism Committee. “In the first case, the consequence was an attorney fee award, the court having found that the litigation conduct warranted it under the ‘exceptional case’ provision of the Patent Act. In the second case, the court denied an attorney fee petition and awarded sanctions because the lawyer did not learn her lesson from all the other judges who had criticized her conduct,” Barkett observes.

Other Section of Litigation leaders agree. “In these two cases, counsel continued bad behavior in spite of warnings,” remarks Sarah E. Ricks, Camden, NJ, cochair of the Section 1983 Subcommittee of the Section’s Civil Rights Litigation Committee. Pollick “should be the exceedingly rare exception. Congress wanted to ensure our civil rights are vindicated in the federal court and the way that Congress ensured that is by creating an attorney-fee provision. The norm should be that attorney fees should be awarded,” Ricks says.

Section leaders also counsel practitioners to be wary of 28 U.S.C. § 1927, which allows a court to impose an award of attorney fees and costs against an attorney who unreasonably and vexatiously multiplies proceedings. “Section 1927 is rarely invoked. But litigators should be aware of it because its language is fairly broad,” states Barkett.

There may be more fundamental advice, according to Ricks. “The number one rule is do not tick off the trial court judge.”


Andrew J. Kennedy is an associate editor for Litigation News.

Hashtags: #attorneysfees, #sanctions


  • Model Rules of Prof’l Conduct 1.1, 1.5, 3.1, 3.2, 4.4, 8.3, 8.4.
  • Laura W. Givens, “Lawyer Forfeits Contingency Cut for Violating Ethics Rules,” Litigation News (May 3, 2019).
  • Drop Stop LLC v. Zhu, No. 2:16-cv-07916-AG-SS (Fed. Cir. Feb. 8, 2019).
  • Office of Disciplinary Counsel v. Pollick, No. 5 DB 2018, File No. C3-170600035 (Jan. 7, 2019).
  • Young v. Smith, Civil Action No. 3:07-cv-00854, 269 F. Supp. 3d (M.D. Pa 2017).
  • 42 U.S.C. § 1988(b).
  • Young v. Smith, Nos. 17-3190, 17-3201, 905 F. 3d 229 (3d Cir. Sept. 25, 2018) (precedential opinion).
  • Pa. Rules of Prof’l Conduct, RPC 1.1, RPC 1.5(a), RPC 3.1, RPC 3.2, RPC 8.4(d).

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