Broker-Dealer Litigation - Greenberg Traurig LLP

Doucet v. First Fed. Guar., 72 So.3d 478 (La. Ct. App.), cert. denied, 76 So.3d 1207 (La. 2011).
On appeal in a suit for breach of fiduciary duty under Louisiana securities law, the court
reduced the plaintiff’s damages award, which had been improperly calculated by the trial court,
but held that the award of attorneys’ fees of 33.33% of the total amount of damages was not
excessive. The court noted that the trial court has discretion in awarding attorneys’ fees and the
amount would not be modified on appeal absent an abuse of discretion.
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Bachman v. A.G. Edwards, Inc., 344 S.W.3d 260 (Mo. Ct. App. 2011).
The Missouri Court of Appeals affirmed the lower court’s award of attorneys’ fees,
finding that the award was neither unreasonable nor an abuse of discretion. In the settlement of a
class action involving the defendants’ receipt of payments from affiliates of mutual fund
companies, the class received $26 million in cash and $34 million in vouchers. Class counsel
was awarded $21.6 million in attorneys’ fees and expenses.
Certain class members argued that the fee award was excessive in light of the amount
recovered and that vouchers should not be valued at face value for purposes of calculating
attorneys’ fees. In affirming the fee award, the court noted that fee awards are reviewed under
an abuse of discretion standard, and the party challenging the award must show that the “trial
court’s decision was against the logic of the circumstances and so arbitrary and unreasonable as
to shock one’s sense of justice.” The court found no abuse of discretion, noting that: (1) there
was no evidence (or allegation) of fraud or collusion behind the settlement, (2) the litigation
lasted five years and was substantively and procedurally complex; (3) the settlement was reached
weeks before trial after extensive discovery; and (4) given the weakness in plaintiffs’ claims, no
recovery was a possibility. The court further noted that in complex litigation and class actions, a
one-third contingent fee award was not unreasonable.
Bear Stearns & Co., Inc. v. Int’l Capital & Mgmt. Co., LLC, 926 N.Y.S.2d 826 (N.Y. Sup. Ct.
2011).
The court affirmed a FINRA arbitration panel’s award of attorneys’ fees to the claimant,
finding that the panel did not exceed its authority in making the award. The respondent argued
that the panel exceeded its authority as neither the parties’ contract nor FINRA rules provided for
such an award. The court rejected this argument and held that the parties, including the
respondent, acquiesced to the arbitration panel determining the issue of fees by making
reciprocal fee demands in their submissions. The court noted that the arbitration panel might
have also found that the parties’ agreement to arbitrate “controversies arising under or relating to
this agreement” was broad enough to encompass an agreement to arbitrate the issue of attorneys’
fees.
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