Jefferies LLC v. Gegeheimer

Background

Jefferies LLC sought additional attorneys’ fees, costs, and pre- and post-judgment interest after prevailing in an action to confirm a Financial Industry Regulatory Authority (FINRA) arbitration award against Jon A. Gegenheimer. The arbitration arose from a contract dispute concerning Gegenheimer’s agreement to join Jefferies as a managing director and a liquidated-damages provision. The arbitration panel awarded Jefferies $1,000,000 in liquidated damages and $483,245.36 in attorneys’ fees and costs.

In an earlier order, the court confirmed the arbitration award and denied Gegenheimer’s motion to vacate it. The court also determined that Jefferies was entitled to reasonable attorneys’ fees under the parties’ agreement and directed Jefferies to submit a fee application. The Second Circuit later affirmed the court’s earlier order.

Fee Request

Jefferies sought $509,649.66 in additional attorney fees for 1,327.9 hours of work and $24,031.29 in costs, as well as interest. Gegenheimer did not dispute that the agreement entitled Jefferies to some fee award, but he challenged the reasonableness of the amount requested.

The court found the billing rates reasonable. It found the hours substantially unreasonable, citing, among other examples, 34.3 hours billed for a three-page letter, 363.3 hours spent preparing a brief opposing the motion to vacate, and more than 250 hours devoted to parallel briefing about the forum-selection issue. The court also noted that the requested litigation fees and costs were disproportionate to the $1,000,000 damages award, although it found that Gegenheimer contributed to the litigation’s expense by challenging the arbitration award, filing a related action in the Northern District of California, and appealing the earlier order.

The court applied an across-the-board 30 percent reduction to Jefferies’s attorney-fee request, resulting in a fee award of $356,754.76. It allowed Jefferies to recover the full $24,031.29 in requested costs, including legal-research and additional copying costs.

Interest

The court ruled that New York’s 9 percent interest rate applied to the amount of the award before the court entered judgment. Under the FINRA rules and the parties’ arbitration agreement, interest applied from the award date. The court ruled that the federal post-judgment interest rate applied after the arbitration award was reduced to a judgment.

Disposition

Judge Naomi Reice Buchwald granted Jefferies’s motion for attorneys’ fees in part. The clerk was directed to enter an amended judgment in favor of Jefferies and against Gegenheimer for $1,483,245.36 under the arbitration award; 9 percent annual pre-judgment interest on that amount from April 8, 2019, through June 17, 2020; federal post-judgment interest on that amount through the amended judgment date; additional fees and costs of $380,786.05; and federal post-judgment interest on the resulting $1,864,031.41 total from the amended judgment date. The clerk was also directed to terminate the pending motions and close the case.