Antitrust Law Daily Wrap Up, RICO—NDIll: Lien Purchasers Granted Damages in RICO Dispute , (Dec 10, 2012)

By Jody Coultas, J.D.

The federal district court in Chicago granted Phoenix Bond & Indemnity Co.’s petition and supplemental petition for attorney’s fees and costs against defendants in a Racketeer Influenced and Corrupt Organizations Act (RICO) claim (Phoenix Bond & Indemnity Co. v. Bridge, December 7, 2012, Kennelly, M.). Further calculations were required based on the rulings, and Phoenix was directed to make a supplemental submission embodying the reductions referenced in this decision.

Phoenix participated in an annual sale at which the Cook County Treasurer auctioned liens for past due property taxes, a mechanism for collecting back taxes. Phoenix alleged that the defendants rigged the sale over a period of several years. An original suit was filed in federal court and eventually reached the Supreme Court. A second suit was filed to add new plaintiffs and defendants. Those cases were then combined.

A jury found for the plaintiffs on one or more RICO claims against all of one group of defendants and many of another group of defendants and awarded damages. Phoenix settled with other defendants. Phoenix filed a petition under RICO for an award of attorney’s fees and expenses.

Two groups of defendants were not named in the federal litigation until the filing of the second federal case, and those groups contended that they should not be held responsible for attorney’s fees and expenses incurred before that time. The two lawsuits were interrelated and consolidated. Although the defendants were not parties to the first lawsuit, that did not preclude Phoenix from recovering fees related to that first lawsuit, according to the court.

Those same defendants argued that they should not be held responsible for fees incurred in pursuing defendants in other RICO enterprises or other defendants in their same RICO enterprises, including defendants found not liable or dropped from the case. The court held that they should not be charged with fees that are attributable only to other enterprises and defendants in them and that did not overlap or intertwine with the claims against those defendants.

Although one defendant was found not liable and others were dismissed, any time that might be considered to have been devoted to those particular defendants also supported the claims against the other defendants, who were alleged to be part of the same enterprise as these defendants due to the need to prove a RICO enterprise as well as the conspiracy-related elements of the RICO conspiracy claim. Therefore, the remaining defendants were liable for the time spent on the dismissed defendants.

None of the time devoted to the state court litigation is compensable under RICO’s fee-shifting provision, according to the court.

The court also dismissed the defendants’ arguments related to the sufficiency of the attorneys’ description of their work, the degree of Phoenix’s success, comparison with fees charged by defense counsel, and reasonableness of particular elements of plaintiffs’ request;

The court made a percentage reduction to account for the non-overlapping aspects of claims against defendants in different enterprises from those involving the complaining defendants. Some portion of the fees claimed involved non-overlapping elements of their claims against defendants in other enterprises making it appropriate to reduce the amount claimed. Twenty percent of the overall reasonable fee was properly attributable to non-intertwined aspects of the claims against defendants in other enterprises.

The court found that the expert fees, hourly rates and other elements of the request for reimbursement of expenses were reasonable.

Finally, the supplemental fee petition concerning work done following entry of judgment and preparation of the fee petition and related materials was granted by the court. However, fees related to work on matters relating to the bankruptcy filings of certain defendants were denied.

The cases are Nos. 05 C 4095 and 07 C 1367.

Andrew L. Mathews (Reed Smith LLP) for Phoenix Bond & Indemnity Co. Gabriel Bankier Plotkin (Miller Shakman & Beem LLP) for BG Investments, Inc.

Cases: RICO IllinoisNews