Katalyst Securities LLC v. Marker Therapeutics, Inc.

Background

The Financial Industry Regulatory Authority (FINRA) arbitration panel awarded Katalyst Securities LLC $1,798,501 in compensatory damages, $450,000 in attorneys’ fees, and $154,433.26 in pre-award interest, for a total of $2,402,397.87. The parties’ agreement stated that the arbitration decision would be binding and that the prevailing party in a “legal proceeding” could collect costs, disbursements, and reasonable attorneys’ fees from the other party.

Katalyst filed a petition to confirm the arbitration award in New York state court, and Marker Therapeutics removed the case to federal court. In a March 9, 2022 order, the court confirmed the award, awarded Katalyst $121,463.37 in additional pre-judgment interest and post-judgment interest, and entered judgment totaling $2,524,397.87. That earlier order did not award fees for litigation after the arbitration.

Katalyst later moved for $114,093.75 in attorneys’ fees and costs incurred in seeking confirmation of the award and defending against Marker’s motion to vacate it. Katalyst filed the motion two days after the 14-day deadline in Federal Rule of Civil Procedure 54(d)(2)(B). After judgment, Katalyst had also issued restraining notices and post-judgment discovery demands before Marker paid $2,525,456.04 by wire transfer.

Timeliness

The court held that the 14-day filing period was not an absolute jurisdictional deadline and could be extended for excusable neglect. It considered the lack of claimed prejudice to Marker, the two-day delay, Katalyst’s reason for waiting to see whether Marker’s payment would include fees, and the absence of evidence that Katalyst acted in bad faith.

The court found that Katalyst’s delay resulted from excusable neglect. Marker had known since at least September 7, 2021, that Katalyst intended to seek fees for additional litigation, and Marker did not claim prejudice from the two-day delay. The court therefore denied Marker’s request to deny the fee motion as untimely.

Contractual authorization for fees

The court applied the general rule that each party ordinarily pays its own attorneys’ fees, while noting that parties may change that rule by contract. The court interpreted the agreement’s reference to the prevailing party in a “legal proceeding” as covering litigation after arbitration, including the proceeding to confirm the award.

The court rejected Marker’s interpretation that the agreement covered only fees incurred in arbitration. That interpretation would have made the words “in a legal proceeding” unnecessary. The court concluded that the agreement authorized Katalyst, the prevailing arbitral party, to recover reasonable attorneys’ fees and costs from post-arbitration litigation in federal court.

In a footnote, the court rejected a separate indemnification argument Katalyst raised for the first time in its reply. The court found that provision did not apply because the case did not involve Katalyst seeking indemnification for losses from litigation brought by a third party. The court granted retroactively Marker’s request to file a sur-reply addressing that new argument.

Reasonableness of the requested amount

The court used the lodestar method, which generally calculates a reasonable fee by multiplying reasonable hourly rates by the number of reasonably expended hours. Katalyst requested hourly rates of $625 to $775 for partners, $325 to $395 for associates, and $125 to $145 for paralegals. Marker did not challenge those rates, and the court found them consistent with rates for comparable legal services in the relevant community.

Marker challenged $18,532.50 for work involving post-judgment restraining notices and discovery demands, arguing that the work was unnecessary because Marker was working toward obtaining board approval for payment. The court found the actions reasonable because Katalyst received no correspondence from Marker for a week after judgment, and the notices and discovery demands were permissible actions under New York law for a judgment creditor.

The court also found reasonable Katalyst’s approximately 245 total hours and the approximately 35.25 hours spent on post-judgment work. It concluded that the total request of $114,093.75 was reasonable and compensable.

Disposition

The court granted Katalyst’s motion for attorneys’ fees and awarded Katalyst $114,093.75 in attorneys’ fees and costs. The court also granted Marker’s request to file a sur-reply retroactively. The order resolved docket entries 20 and 27.