United Realty Advisors, LP v. Verschleiser

Background

The plaintiffs—Jacob Frydman, United Realty Advisors, LP, and Prime United Holdings, LLC—requested $1,936,651.75 in attorney fees and costs under the Racketeer Influenced and Corrupt Organizations Act (RICO) and the Stored Communications Act (SCA). The request followed a 2022 jury trial in these consolidated cases. The jury found Eli Verschleiser liable for RICO violations and conspiracy, violations of federal computer-hacking and electronic-communications statutes, and several state-law claims. It awarded $2,133,005 in damages on the claims for which Verschleiser was liable, including $1 in nominal RICO damages, which the court trebled to $3, and $33,000 for federal computer-hacking claims. The final judgment awarded the plaintiffs $3,234,906.04 from Verschleiser, including damages, punitive damages, and prejudgment interest. Multi Capital Group of Companies, against which the plaintiffs had obtained a default judgment, was jointly and severally liable with Verschleiser for the trebled RICO damages and any RICO fee award.

Entitlement to Fees

The court held that the plaintiffs could seek fees under both statutes. The SCA allows a court to award reasonable fees and costs in a successful action, and the plaintiffs obtained both an SCA liability finding and related damages. RICO requires an award of reasonable attorney fees when its requirements are met. The court rejected Verschleiser’s argument that the plaintiffs were not entitled to RICO fees because they recovered only nominal damages. The jury specifically found that the RICO violations caused injury, and the nominal-damages award did not eliminate that finding. The court explained that the limited damages could justify reducing the amount of fees, but not denying the plaintiffs’ entitlement to an award.

Reasonableness of the Requested Fees

The court calculated a reasonable award by examining the requested hours, hourly rates, billing records, work product, and the results obtained. It found that the nearly $2 million request was excessive compared with the $33,003 recovered on the RICO and SCA claims. The court also found that the plaintiffs’ litigation strategy had multiplied proceedings and claims, and that the fee application included unsupported, vague, excessive, redundant, or unrelated work.

The court reduced or rejected the requests for each group of attorneys as follows:

- Lewis Fischbein: The court allowed $47,100 for work during the period beginning in mid-October 2018, after applying a 50% reduction. It denied the remaining fee request because earlier work involved unrelated matters, lacked time records, or was inadequately documented. - Herrick Feinstein LLP: The court denied the entire request. The records included work on other matters, contained vague entries, and did not adequately show that the work contributed to the favorable RICO and SCA results. The court also considered the plaintiffs’ separate allegations that Herrick’s conduct had harmed their ability to prove the hacking and damages claims. - The Law Offices of Neal Brickman, P.C.: The court applied a 20% reduction for vague entries and work unrelated to obtaining the RICO and SCA judgment, awarding $213,065.50. - Eckert Seamans Cherin & Mellott, LLC: The court applied a 60% reduction because the firm’s work was excessively staffed and duplicative, awarding $225,308.60.

These attorney-specific reductions produced $485,474.10. The court then applied an additional 40% reduction because of excessive litigation conduct and the plaintiffs’ limited success on the RICO and SCA claims. The resulting attorney-fee award was $291,284.46.

Costs and Disposition

The plaintiffs requested $231,968.75 in costs. The court excluded Herrick’s costs, Fischbein’s inadequately documented costs, and nearly $200,000 in expert-witness fees for experts whose reports had been stricken and whose testimony was not used at trial. The court reduced Eckert’s requested costs for duplication, overstaffing, and generally unrecoverable expenses such as meals, allowing $15,686.06.

Judge John G. Koeltl granted the plaintiffs’ motion for attorney fees and costs. The total award was $306,970.52, consisting of $291,284.46 in attorney fees and $15,686.06 in costs. The court stated that Verschleiser and Multi Capital Group of Companies were jointly and severally liable for the award, and directed the Clerk to close the fee-motion docket entry.