IN RE: NAVIDEA BIOPHARMACEUTICALS LITIGATION

Background

Navidea Biopharmaceuticals, Inc. sued Michael Goldberg for breach of contract, breach of the duty of good faith and fair dealing, breach of fiduciary duty, and a declaration of the parties’ contractual rights and obligations. Goldberg asserted counterclaims against Navidea and third-party claims against Macrophage Therapeutics, Inc., a Navidea subsidiary.

The court had previously dismissed Navidea’s breach-of-fiduciary-duty claim and ruled that Goldberg was entitled to indemnification—reimbursement for qualifying legal fees—and advancement—payment of qualifying fees before the case ends—for certain defense work. The court required Goldberg to submit properly supported fee applications, including billing records identifying the time spent on each claim and describing the work performed. It also previously ruled that Goldberg was not entitled to advancement for fees and costs related to prosecuting his third-party claims against Macrophage.

Magistrate Judge Freeman later recommended granting Goldberg’s fee applications in part and denying them in part. Goldberg objected. Judge Caproni reviewed the objections and adopted the recommendation in full.

Legal standard

The court explained that a party seeking attorney’s fees bears the burden of proving that the requested fees are reasonable. Courts generally calculate a presumptively reasonable fee by multiplying a reasonable hourly rate by a reasonable number of hours. Fee applications ordinarily must include contemporaneous time records stating, for each attorney, the date, hours spent, and nature of the work.

The court also required records that connected the work to specific claims. It rejected broad percentage estimates and unsupported allocations because they prevented the court from independently assessing the reasonableness of the requests.

Rulings on indemnification and advancement

The court held that Goldberg was entitled to $14,955 in indemnification for reasonable attorney’s fees incurred defending Navidea’s breach-of-fiduciary-duty claim. This amount included:

- $10,095 for 26.92 hours of Gregory Zimmer’s work at a reduced rate of $375 per hour; and - $4,860 for 10.8 hours of N. Ari Weisbrot’s work at $450 per hour.

The court approved the reduction of Zimmer’s rate because some of his work could have been performed by more junior attorneys or staff. It also approved limiting the award to hours supported by adequate records. No fees were awarded for work by Goldstein Law Partners, LLC because Goldberg submitted no contemporaneous time records allowing the court to assess the reasonableness of that firm’s flat fee.

The court also held that Goldberg was entitled to $1,237.50 in advancement for reasonable fees incurred through the fee application in defending Navidea’s remaining claims. That amount covered 3.3 hours of Zimmer’s work at $375 per hour. The court awarded no advancement for Weisbrot’s work because the request relied on a blanket percentage estimate, and it awarded no advancement for Goldstein Law Partners’ work because adequate time records were not submitted. Navidea’s obligation to pay the advancement was stayed until Goldberg provided the required undertaking to repay it if he was ultimately found not entitled to indemnification, unless he had already provided that undertaking.

Counterclaims, third-party claims, and litigation costs

The court denied Goldberg’s request for advancement of fees and costs incurred prosecuting his counterclaims against Navidea. The request was filed after the extended deadline. The court also stated that, even if timely, the request would be denied on the merits because Goldberg had not provided records identifying time spent prosecuting each counterclaim.

The court denied advancement for fees incurred prosecuting Goldberg’s third-party claims against Macrophage. It relied on its prior ruling that such fees were not covered and treated that prior ruling as binding in the later stage of the same case.

The court denied all indemnification and advancement of litigation costs incurred defending Navidea’s claims because Goldberg’s attorneys did not identify which costs related to which claims, leaving the court without a basis to assess reasonableness.

Motion to compel and final disposition

The court denied Goldberg’s motion to compel Navidea to comply with the existing advancement protocol and to hold Navidea in contempt. The protocol remained in place, but Navidea was not required to make additional advancement payments until Goldberg’s attorneys stopped relying on broad percentage estimates and supplied records identifying, for each attorney, the date, hours, nature of work, and claim involved.

The court’s conclusion states that Goldberg’s various applications for indemnification or advancement of attorney’s fees and expenses were granted in part and denied in part. His motion to compel was denied. The court directed the clerk to terminate the motions and ordered the parties to submit a joint update on the status of discovery by June 15, 2021.