Today’s guest post is from Reed Smith counsel, and rock music aficionado, Kevin Hara. He describes the twists and turns of pursuing an unreasonable plaintiff and counsel who unwisely turned down a Florida offer of judgment in a sizable damages/lousy liability case. While the victorious defendant didn’t get all the costs and fees it wanted, the award was still sufficiently sizeable to be a Heartbreaker for the other side. As always our guest posters deserve all the credit (and any blame) for their work.

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Disclaimer: this post is not from the Butler Snow side of the blog

Although I am proud to consider myself a connoisseur of 80s music and pop culture, I have a deep appreciation for music many would consider to be superior, including classic rock, such as the Eagles, and the British invasion bands such as the Beatles and the Rolling Stones.  Today’s decision is an excellent example of the detrimental consequences of hubris, and evokes a Stones classic “You Can’t Always Get What You Want.”  (Perhaps equally apropos might be “I Can’t Get No Satisfaction).”  It’s rather remarkable to think the aforementioned songs were written in 1969 and 1964, respectively, yet they remain relevant, and the band is still touring 60 years later. Whether the Stones are still worth watching in person is another matter.)

In Cates v. Zeltiq Aesthetics, Inc., plaintiff—or likely his counsel—rejected the defendant’s offer of judgment and as a consequence paid a steep price once the trial court granted summary judgment in favor of the defendant, and the Eleventh Circuit affirmed.  2024 U.S. Dist. LEXIS 117010, at *3 (Mag. M.D. Fla. July 2, 2024), adopted, 2024 U.S. Dist. LEXIS 126027 (M.D. Fla. July 17, 2024).  This blog previously discussed the sound reasoning by the trial and appellate courts in granting summary judgment for the defendant due to the manufacturer’s accurate, clear, and unambiguous warnings, and lack of any design defect.  If anyone ever wondered whether a statutory offer of compromise actually has teeth and truly impacts a party who rebuffs such an offer—the answer is a resounding yes—at least in Florida.  Perhaps the result may indeed make plaintiff long for “Yesterday”  Although Cates should give pause to plaintiffs and their counsel who might otherwise spurn reasonable settlement offers, the case likewise reminds defense counsel who make offers of judgment to document their billable hours carefully, and to avoid any appearance of either block billing or repetition.  Don’t give courts any reason to let unreasonable plaintiffs off the hook.

In Cates, the plaintiff brought an action against the manufacturer of a medical device that provides “intense cooling to targeted areas of the body” in order to freeze and naturally eliminate fat cells.  Id. at *2.  Plaintiff claimed to have experienced Paradoxical Adipose Hyperplasia (“PAH”)—a recognized and warned-of complication of the procedure—and alleged product liability claims for defects in design and warnings, negligence, negligent and fraudulent misrepresentation.  Id.  PAH is a rare but serious side effect of cryolipolysis, in which the fat in the treated area enlarges and hardens, requiring surgical treatment.  Thus, Cates was probably a significant damages/lousy liability case.

Plaintiff sought the usual:  economic and noneconomic relief, punitive damages, attorneys’ fees and costs.  Id.  In March 2020, approximately seven months after plaintiff commenced the litigation, the defendant served a “Proposal for Settlement (“Proposal”) under Fla. Stat. §768.79 and Fla. R. Civ. P. 1.442,” offering to settle the case for $20,000.  Id. at *3.  Plaintiff declined the Proposal—which he undoubtedly later regretted—after which the trial court granted summary judgment in favor of defendant on all claims.  This result was affirmed on appeal in April 2021.  Id. at *3-4.  The ensuing fee dispute took three years (longer than the case’s dubious merits) to resolve.

Fla. Stat. §768.79 is designed to encourage settlements, penalizing a party who rejects a good faith offer and later recovers less than the settlement amount.  Numerous states have similar statutes, and California practitioners are no doubt familiar with the analogous California Code of Civil Procedure Section 998.  (Speaking of California, I was fortunate to attend a concert during the “Hell Freezes Over” tour that included an incredible acoustic rendition of “Hotel California”). Florida’s version provides, in relevant part “if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney’s fees,” from the date the offer was filed if the defendant is found not liable or plaintiff obtains a judgment “at least 25 percent less than” the offer. See Fla. Stat. §768.79(1). (emphasis added). 

The plaintiff’s rejection of the $20,000 offer that preceded summary judgment for the defendant triggered §768.79’s cost and fee recovery provisions and, therefore, the question was how much the defendant would recover.  The defendant sought “fees in the total amount of $1,101,189.63 for work performed by its attorneys after service of the offer of judgment through the entry of final judgment” (but did not seek appellate fees), which plaintiff opposed.  2024 U.S. Dist. LEXIS 117010 at *4.  The magistrate judge recommended an award of $655,690.19.  Id.  Although the defendant did not recover the entirety of the amount sought, the award is sizable enough to serve the statute’s intended deterrent function against plaintiffs who are apt to overvalue their cases, and demonstrates that the Florida offer of judgment statute is nothing to be trifled with.

In calculating fee awards, Florida follows the lodestar method which multiplies “the number of hours reasonably expended by a reasonable hourly rate,” with the party seeking fees bearing the burden to demonstrate the hours and hourly rates are reasonable.  Id. at *5 (citation omitted).  The applicant must produce “satisfactory evidence” that the rate requested comports with the “prevailing market rates” with sufficient documentation of the number of hours and applicable rate.  Id.  Further, the “Florida Supreme Court has held that attorneys’ fees awarded pursuant to section 768.79 are sanctions . . . for unreasonable rejections of offers of judgment.”  Id. at *6 (internal quotation marks and citation omitted).  Moreover, because the fee award is a penalty, everything is construed in favor of the party against whom the penalty is imposed.  Id.

That’s probably why the magistrate went over the defendant’s bills with a fine-toothed comb.  About the only thing not clipped was defense counsel’s rates, which both sides’ experts agreed were reasonable.  Id. at *13.  Particularly problematic were the criticisms of defendant’s redactions from counsel’s billing entries, which the court concluded made it “impossible to ascertain the tasks that were completed, much less whether they were reasonable and necessary,” and essentially “render[ed] the billing entries meaningless.”  Id. at *23.

Sorry, we agree with the defendant that significant redactions are necessary to maintain attorney-client privilege and work-product confidentiality.  Id. at *25.  The magistrate dismissed those arguments, citing a lack of ongoing litigation.  Id. at *25.  Talk about Sympathy for the Devil.  Well, this litigation may be over, but there might be more, and without redaction, privileged information would be disclosed and potentially make its way to other litigants.  More specifically, unredacted billing entries could provide plaintiff’s counsel with a roadmap of the defense’s litigation strategy and work product.

Thus, the decision sets up something of a “Catch 22” for defendants seeking costs under §768.79 (or, indeed, for other reasons), by criticizing “block billing,” id. at *29, 32, but then demanding that detailed billing not be redacted and must also be sufficiently descriptive to support a fee award.  To enforce these contradictory positions, the decision recommended an “across-the-board reduction on the hours requested, . . . proportional to the level of redactions by each firm.”  Id. at *28.

On a better note, the plaintiff also argued that the defendant failed to provide “evidence of the fees it actually paid to its attorneys,” and claimed that it should not have to pay amounts defendant did not.  Id. at *47.  The court dismissed that argument as “perfunctory and unpersuasive,” ruling defendant provided proof of its “flat fee arrangement . . . billing records and a fee expert Declaration – which is precisely what the law require[d].”  Id.

Despite the excessively rigorous and picayune examination of the defendant’s fees, it nonetheless recovered $655,690.19.  That should still be enough for Cates to be a cautionary tale to overly zealous plaintiff’s attorneys – and a reminder to defense counsel − that Fla. Stat. §768.69 has real heft.  Although billing and time entry can be mundane and tedious, it remains an important part of legal practice and needs the same precision and attention to detail as all other legal work.  Regardless, defense counsel no doubt were happy enough with the result that they could just “Take It Easy,” and “Let It Be” perhaps while enjoying Florida’s weather, taking in a “Tequila Sunrise.”