Alderson v. Devere USA, Inc.
- John Keenan
- 1:18-cv-05081
- U.S. District Court · Southern District of New York
- 16
In Alderson v. Devere USA, Judge Keenan granted counsel’s request for payment of outstanding defense fees and set an invoice-and-payment schedule.
Harris St. Laurent LLP, as Alderson’s counsel in this action, was entitled to seek payment of outstanding fees and expenses from deVere USA, Inc.; deVere had to follow the invoice and payment schedule, and the court left possible sanctions for later determination.
What happened
Alderson v. Devere USA, Inc. involved legal fees Benjamin Alderson incurred while defending a Securities and Exchange Commission case. An arbitration award, later confirmed by the court, required deVere USA, Inc. to advance his past and future defense costs. The court had previously established a process for submitting and paying invoices.
Alderson’s former counsel requested $281,633.18 in fees and costs. deVere argued that counsel could not seek payment because Alderson had changed law firms in the Securities and Exchange Commission case and had signed a settlement that, according to deVere, released it from liability for legal fees. The court rejected those arguments.
Judge Keenan granted counsel’s request. He ordered counsel to provide a final invoice by June 1, 2020, and required deVere to pay undisputed amounts and identify disputed amounts by June 15, 2020. If the parties could not agree, they had to report their positions and whether sanctions were warranted by June 22, 2020.
The detailed version
- Alderson v. Devere USA, Inc. · No. 1:18-cv-05081
- John Keenan
- May 26, 2020
Background
Benjamin Alderson brought this action seeking an order requiring his former employer, deVere USA, Inc., now doing business as Brite Advisors USA, Inc., to advance legal-defense costs connected to a Securities and Exchange Commission case. The court granted deVere’s request to compel arbitration. On January 2, 2019, retired Magistrate Judge Theodore H. Katz determined in an arbitration award that Alderson’s employment agreement required deVere to advance Alderson’s past and future defense costs. With both parties’ consent, this court confirmed the award on February 7, 2019, and closed the case.
The court then entered an order establishing a process for future invoices. Alderson’s counsel had to provide monthly invoices, and deVere had to pay undisputed portions and identify disputed portions within 10 days. The opinion describes repeated disputes over payments, including missed or delayed payments and several court conferences or filings. At a January 7, 2020 conference, deVere’s counsel agreed to a payment schedule. After a later dispute, the court ordered deVere to make a $100,000 payment by May 1, 2020; the opinion states that deVere made that payment on or about that date.
Current Fee Request
By May 2020, the Securities and Exchange Commission case had been settled in principle, and Alderson had replaced his counsel in that case with a different law firm. His former counsel therefore expected no further billing in that case and sought payment of approximately $282,000 in fees and expenses, specifically requesting $281,633.18 in the motion before the court.
DeVere argued that the former counsel could not demand payment because Alderson and deVere had executed a confidential settlement agreement on March 12, 2020. DeVere said that agreement released it from claims relating to the Securities and Exchange Commission case and from responsibility for past, present, and future attorney fees, expenses, and costs. DeVere also argued that the former counsel lacked standing to seek payment because it no longer represented Alderson in the Securities and Exchange Commission case.
Court’s Analysis
The court rejected both arguments. It held that the arbitration award, as confirmed by the court and followed by the parties, required deVere to pay all fees and expenses incurred by Alderson’s counsel in the Securities and Exchange Commission case, including the approximately $282,000 in the latest invoice. The court found deVere’s settlement-release argument unpersuasive, noting that deVere had not raised it when it made the $100,000 payment ordered earlier.
The court also rejected the argument that former counsel had to bring a new action to obtain payment. It explained that counsel substitution in this action required the court’s approval, and that Alderson had not requested substitution here. The fact that the firm no longer represented Alderson in the Securities and Exchange Commission case therefore did not affect its ability to demand payment under the arbitration award and the payment process previously established by the court.
Sanctions
The court discussed sanctions under 28 U.S.C. § 1927, Federal Rule of Civil Procedure 11, and the court’s inherent authority. It was troubled that deVere’s counsel had described the settlement as still under negotiation in April 2020 even though deVere later said the parties had executed it on March 12, 2020. The court also cited deVere’s repeated and apparently willful failure to comply timely with the arbitration award and the prior payment order.
The court did not impose sanctions in this order. Instead, if deVere and former counsel could not agree on payment of all outstanding fees, each side had to submit a letter by June 22, 2020, addressing whether sanctions against deVere and/or its counsel were warranted. Former counsel also had to include an accounting of excess costs, expenses, and attorney fees allegedly caused by the conduct at issue. The court stated that it would determine the amount owed and whether sanctions were appropriate.
Disposition
The court granted Plaintiff’s Counsel’s request. It ordered counsel to provide a final invoice by June 1, 2020. By June 15, 2020, deVere had to pay all undisputed portions and identify any disputed portions. If the parties could not agree, they had to submit their positions to the court by June 22, 2020.
Read the full 16-page opinion on CourtListener, the free public archive maintained by the Free Law Project.