Bank Ordered to Pay $6 Million in Damages -- and $10 Million in Attorney Fees
Judge notes other side's failure to provide its own legal bills for comparison, calling defendant's 'silence on this issue ... more than deafening'
December 01, 2009
The folks over at Emigrant Savings Bank won't easily forget Kirkland & Ellis. On behalf of Metavante Corp., the firm won $6 million in damages against the bank last May, after a breach of contract bench trial before Milwaukee federal district court Judge J.P. Stadtmueller. That was bad, but here's a big, fat insult to add to that injury: Last Friday the judge ordered Emigrant to pay nearly $10 million in attorney fees and costs to Kirkland and a Wisconsin firm.
The underlying case involves a technology outsourcing agreement Emigrant signed with Metavante in 2004. Metavante, represented by the Milwaukee firm Kravit Hovel & Krawczyk, claimed in a Wisconsin state court suit that Emigrant broke the terms of the agreement. Emigrant's lawyers at Constantine Cannon filed counterclaims and had the case removed to federal court. As the May 2009 trial date approached, Metavante brought in Kirkland.
Following a two-week trial, Stadtmueller ruled in favor of Metavante on all of its claims and rejected all of Emigrant's. He also ordered Emigrant to pay Metavante's legal bills, which he said was required under the outsourcing agreement. Emigrant objected to the bills submitted by Kirkland and Kravit Hovel, arguing that it shouldn't have to pay the full amount since the judge did not award Metavante the entire termination fee it sought. Emigrant also questioned the reasonableness of the fees.
But in Friday's decision, Stadtmueller rejected both of Emigrant's arguments. He found that under the agreement between Emigrant and Metavante, the legal costs of the "prevailing party" in a dispute would be paid by the other side and that Metavante was the prevailing party. And in dismissing Emigrant's objections to the reasonableness of Metavante's legal bills, he noted the seriousness of Emigrant's counterclaims, which "made the the stakes of the litigation immense, as Metavante would have been forced to pay hundreds of millions of dollars in damages as a result of an adverse judgment."
The judge also noted Emigrant's unwillingness to disclose its own legal bills for the sake of comparison. "Perhaps most damaging for Emigrant is their failure to disclose any of the costs and attorneys' fees incurred by themselves in this litigation, which would provide a strong basis to gauge the reasonableness of Metavante's fee petition," he wrote. "While Emigrant is not required to disclose [its] own costs to demonstrate the unreasonableness of Metavante's costs, the defendant's silence on this issue is more than deafening."
Emigrant's legal bills -- whatever they are -- are only going to get bigger. The bank has appealed Judge Stadtmueller's $6 million damage award to the 7th U.S. Circuit Court of Appeals (pdf) and has brought on none other than David Boies of Boies, Schiller & Flexner to help out on the appeal. Metavante, which is sticking with Kirkland at the 7th Circuit, filed its response brief (pdf) last week.
We left a message with Robert Begleiter of Constantine, who represented Emigrant at trial, but didn't hear back. (Fun fact: Emigrant CEO Howard Milstein's wife, Abby Milstein, is a partner at Constantine.)
Paul Garcia and Andrew Bloomer of Kirkland & Ellis represented Metavante at trial. Not surprisingly, Garcia told us Judge Stadtmueller got the fees opinion "exactly right," but said he expects Emigrant to appeal this ruling as well. "It's not over," he said.
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.