A judge who balked at a $2 million Federal Trade Commission settlement that included no admission of wrongdoing by the defendant, and then approved it with unusual conditions, has ordered that some of the money go to defense counsel Venable for fees.
But U.S. District Judge Renee Bumb in Camden slashed the fee request by almost half, finding misplaced the firm's reliance on a National Law Journal survey of billing rates to show its fees were reasonable, rather than submitting affidavits from lawyers practicing in the relevant market: southern New Jersey.
"[T]his court affords no value to that survey because it: (1) is unsworn and based on self-reported figures by firms; (2) provides only a broad range of attorney's fees, without regard to the nature of the work performed or experience or skill of those performing it; and (3) contains no information as to reasonable rates for non-attorney personnel," Bumb said in a decision handed down Monday.
She held Venable was entitled to $129,095 in fees, a bit more than half the $250,077 it sought, on top of the $150,000 in retainer fees already paid.
The case, FTC v. Circa Direct, 11-cv-2172, accused Circa Direct of Margate and its principal, Andrew Davidson, of using fake online news sites to market acai berry diet products. The sites, with addresses like onlinenews6.com, were designed to resemble legitimate news portals, featuring purportedly objective reports by fictional reporters and commentators about dramatic weight loss achieved using acai berry.
Bumb signed a temporary restraining order and the parties later stipulated to a preliminary injunction.
In February, the FTC asked Bumb to approve a settlement that would make the injunction permanent and impose an $11.5 million judgment, which would be suspended if the defendants provided honest information about their financial condition and turned over assets valued at more than $2 million.
The settlement said it was without admission or finding of wrongdoing or liability. Although judges routinely approve settlements where no one admits doing anything wrong, Bumb balked.
She cited a Nov. 28, 2011, decision by U.S. District Judge Jed Rakoff in the Southern District of New York, in which he refused to sign off on a $250 million settlement resolving a Securities and Exchange Commission suit against Citigroup over marketing of collateralized debt obligations. Rakoff said that without an admission of wrongdoing, he could not determine if the resolution was fair, adequate and reasonable.
On Feb. 22, Bumb directed the parties to file supplemental briefs on whether she should use Rakoff's "fair, adequate and reasonable" standard and if so, whether the settlement met it.