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Sanctions — Attorneys’ Fees — How Much Is Too Much?

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The question in CS Stars LLC v. First AllAmerica Fin. Life Ins. Co., 2007 U.S. Dist. LEXIS 83738 (N.D. Ill. Nov. 13, 2007), was not whether sanctions should be awarded (that had been decided earlier) but whether the attorneys' fees request was too high. The sanctioned party argued that opposing counsel had over-lawyered the offense and that the request should be reduced. That argument sometimes works. See Joseph, Sanctions: The Federal Law of Litigation Abuse § 16(D)(5) (3d ed. Supp. 2007). Not here. District Judge James B. Zagel reasoned as follows:

‛Plaintiff's counsel argues that Sonnenschein's fees are disproportionately high as compared to the complexity of the issues. Essentially, Plaintiff's counsel argues that if the underlying claims were so devoid of merit, then it should not have taken so long for Sonnenschein to research and prepare its position. I agree that the work charged here took more time than one would ordinarily expect in a routine commercial case such as this one. But I nevertheless decline to reduce the hours on this basis. When a legally unjustified complaint is filed by a respectable law firm, the opposing lawyers may well discover the flaw in the complaint at a fairly early stage. The problem arises because the natural reaction of lawyers defending the case is that they may have missed something. They ask why would a lawyer file this baseless claim; perhaps we are missing the point. Even after they confirm, in their own minds, the correctness of their original impression, they must consider whether the matter is sufficiently base-less so as to justify a motion under Rule 11. 1 The blunt fact is that, in circumstances like these, as opposed to the case of the hapless pro se filer, extra work is required when a deeply flawed complaint is filed. That is clearly what occurred here.“).

Sanctions renvoi: When your good reputation circles back to bite you.

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New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.
New York Attorneys JHA handles range the gamut of complex financial and commercial litigation and arbitration, including securities, RICO, corporate and contract disputes, credit default swaps, derivatives, and class, mass, and derivative actions. The firm also represents law firms in major disputes.

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