Opposition Brief — Emigrant Savings Bank v. Metavante Corp.

No. 10-740

IN THE

Supreme Court of the Untted States

EMIGRANT SAVINGS BANK,

Petitioner,

Vv.

METAVANTE CORPORATION,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Seventh Circuit

BRIEF IN OPPOSITION OF RESPONDENT

METAVANTE CORPORATION

PAUL R. GARCIA, P.C

Counsel of Record

ANDREW B. BLOOMER, P.C

JAMES R. P. HILEMAN

KIRKLAND & ELLIS LLP

300 North LaSalle

Chicago, IL. 60654

(312) 862-2000

paul.garcia@kirkland.com

February 23, 2011

WILSON-EPES PRINTING CO., INC (202) 789-0096 WASHINGTON, D. C. 20002

CORPORATE DISCLOSURE STATEMENT

Pursuant to Rule 29.6 of the Rules of this Court,

respondent Metavante Corporation states that its

parent company is Metavante Holdings, LLC

(formerly Cars Holdings, LLC), which is wholly-

owned by Fidelity National Information Services,

Inc. Fidelity National Information Services, Inc. is a

publicly-traded corporation.

|

F

TABLE OF CONTENTS

Page

CORPORATE DISCLOSURE STATEMENT ..

TABLE OF CONTENTS. . il

TABLE OF AUTHORITIES 1V

INTRODUCTION... . l

COUNTERSTATEMENT OF THE CASE i.

A Background 5

B The Expert Issue 7

6 The Fee Issue 9)

REASONS FOR DENYING THE WRIT 13

|. THE EXPERT ISSUE PETITIONER POSITS I:

ILLUSORY AND NOT WORTHY OF REVIEW

\ The Seventh Circuit Properly

Affirmed The Admission Of Mr

Moffat’s Opimions In This Bench

Trial And Appropriately Deferred

To The Weight The District Court

Gave Both Parties’ Experts

Testimony i

There Is No Conthict Among an

Circuits 15

( This Case Is A Poor Vehicle

Address The expert Issue

Petitioner Has Put Forward

1

Il. THE “ERIE ISSUE” PETITIONER ADVANCES

Is ILLUSORY AND NoT WorRTHY OF

RR ES ee ee Se 18

A. At Both Parties’ Request, The

Seventh Circuit Followed Circuit

Law In Deciding Whether The

District Court Abused Its

Discretion By Relying On

Redacted Invoices. ....................... ee 18

B. There Is No Conflict Among The

Ra dn See eee Le ee a 2 26

C. This Case Is Not The Appropriate

Vehicle For Addressing The “Erie

Issue” Petitioner Has

BbenneunGencteared.. ..........<. << .coccececccccccceccesces- 30

a ee. oe ee

RESPONDENT'S APPENDIX A:

yf St ee | ys eee Resp. App. la

RESPONDENT'S APPENDIX B:

a re Nagios ciceccececectssensssavacicsarns Resp. App. 3a

RESPONDENT'S APPENDIX C:

Ba il OF TI eictcrstecticser gre nwncnnvadesckneseaees Resp. App. 4a

RESPONDENT'S APPENDIX D:

wee. Sup. C2. B. 213 ...........:...... ees Resp. App. 5a

1V

TABLE OF AUTHORITIES

Page(s)

Cases

Balcor Real Estate Holdings, Inc. v. Walentas-

Phoenix Corp.,

73 F.3d 150 (7th Cir. 1996) .........ccccccesee. 12

Bock v. Computer Assocs. Int'l, Inc.,

No. 99 C 5967, 2002 WL 511560

(N.D. Ill. Apr. 3, 2002) ........ccccccecececeeeeeeees 29

D.L. Anderson’s Lakeside Leisure Co., Inc. v.

Anderson,

757 N.W. 2d 803 (Wis. 2008)................... 22

Daubert v. Merrell Dow Pharmaceuticals, Inc.,

i ae a oe. | re 15

Gasperini v. Ctr. for Humanities, Inc.,

vt BUR Me 5). 7h | Same enone neers 21

Glamann v. St. Paul Fire & Marine Ins. Co.,

424 N.W. 2d 924 (Wis. 1988)................... 25

Hanna v. Plumer,

<BR ie 4 19, 31

Ideal Elec. Sec. Co. v. Int'l Fidelity Ins. Co.,

129 F.3d 143 (D.C. Cir. 1997)............ 26, 28

Kumho Tire Co. v. Carmichael,

OR. Re Ey 0 EL: ) Re 15

Lee v. Flintkote Co.,

583 F.2d 1275 (D.C. Cir. 1979)................ 28

Medcom Holding Co. v. Baxter Travenol Labs.,

200 F.3d 518 (7th Cir. 1999) ................... 12

ce

V

Radford v. J.J.B. Enters., Ltd.,

472 N.W. 2d 790 (Wis. Ct. App. 1991) ....20

Shadley v. Lloyds of London,

776 N.W. 2d 838 (Wis. Ct. App. 2009) ....21

Shady Grove Orthopedic Assocs., P_A. v.

Allstate Ins. Co..,

130 S. (4. 1431 (OP ......006 ee 4

Standard Theatres, Inc., v.

Wis. Dept. Transp., Div. Hghwys,

349 N.W. 2d 661 (Wis. 1984).........000000.... 23

Taco Bell Corp. v. Cont Cas. Co.,

388 F.3d 1069 (7th Cir. 2004) ................. 20

Tax Track Systems Corp. v.

New Investor World, Inc.,

478 F.3d 783 (7th Cir. 2007) .........0....0.... 20

Touchett v. EZ Paintr Corp.,

111 N.W. 2d 419 (Wis. 196))................... 24

United States v. Decoud,

456 F.3d 996 (9th Cir. 2006) ...........00.0.... 16

United States v. Mamah,

332 F.3d 475 (7th Cir. 2003) ..........0.000---. 16

United States v. Redlightning,

624 F.3d 1090 (9th Cir. 2010) .......000000.2.. 16

United States v. Vesey,

338 F.3d 913 (8th Cir. 2008) .......... Renee 16

United States v. Williams,

504 US. 96 (GSS) ncccccccccusaneeee 3

United States v. York,

572 F.3d 415 (7th Cir. 2009) ................... 15

Urban Masonry Corp. v. N&N Contractors, Inc.,

676 A.2d 26 (D.C.C.A. 1996).................2. 28

Village of Shorewood v. Steinberg,

496 N.W. 2d 57 (Wis. 1993).............. ocudes 24

Walker v. Armco Steel Corp.,

446 UD. T40 CIGOD)....... ...-.<0000ccscencccesssesvens 19

Westar Energy, Inc. v. Lake,

552 F.3d 1215 (10th Cir. 2009) .........26, 27

Wright v. Mercy Hospital of

Janesville, Wis., Inc., 557 N.W

2d 846 (Wis. Ct. App. 1996)...............20, 23

Zeidler v. A@W Restaurants, Inc.,

No. 99 C 2591, 2001 WL 561367

GD. I. Maw 21. 004) .........-..5.c25 29, 30

Statutes

are. © GS ........<:00.0. of ne 28

me U.S.C. § 2072 ........-.-. at. nce

Rules

FED. R. APP. P. 32.1(a).... 7 sobican ea

. ee ee : eee susie 24

wae me. Cry. P. Gl .........<--..000 icdneeeeee 2,18

FED. R. CIv. P. 54(d)(2) ............ ... 4, 18, 24, 32

OD | een

Supreme Court Rule 14.4...................0.cscessccsssss0e. 4

Wis. Sup. Ct. R. 20:1.5 ... ie

INTRODUCTION

On each of the two issues presented, the petition

for a writ of certiorari asks the wrong question,

embarks down the wrong road to answer it, and

unsurprisingly comes up with the wrong answer.

Petitioner first contends the Seventh Circuit

improperly conflated prongs (1) and (2) of Rule 702 of

the Federal Rules of Evidence based on a partial

quote of the opinion below juxtaposed against an

excerpt from the Rule itself. Contrary to petitioner's

assertion, the Seventh Circuit did not conclude “that

experience may substitute for data.” Pet. 13-14.

Rather, above and beyond the expert’s experience,

the Seventh Circuit specifically noted the facts and

data the expert considered, observing that in

reaching his conclusions the expert “placed

particular importance on ‘the level of deposits that

were achieved in the system, the number of accounts

that were opened, transactions that were involved,’

as well as Metavante’s responsiveness to Emigrant’s

concerns and issues.” 16a (citation omitted). The

Seventh Circuit also emphasized that the expert’s

testimony was not ipse dixit, but instead was based

on principles and methods from the financial sector

in precisely these areas of technology. 18a-19a. And

the Seventh Circuit acknowledged the expert

analyzed the data and facts from the same

perspective of financial services firms that have

evaluated technological innovations in the past. 20a.

The court’s conclusions satisfy all three subparts of

Rule 702.

The Seventh Circuit’s decision to affirm the

admission of the expert testimony in this case, and

its standard for doing so generally, cannot by any

2

stretch be called “lax” or in conflict with any other

circuit. Indeed, the Seventh Circuit on many

occasions has acknowledged the distinction between

an expert's qualifications on the one hand and the

factual bases for his opinions on the other, and has

rejected testimony that does not satisfy all three

subparts of Rule 702, just as it has admitted expert

testimony that does, as was the case here. At

bottom, the petition’s complaint is one going to the

weight to give the expert’s testimony in this bench

trial, not its admissibility. But all this is entirely

beside the point, because at the end of the day the

courts below expressly gave both parties’ experts’

opinions little if any weight. 2la, 79a-80a, 86a.

Thus, the evidence petitioner challenges did not

affect the judgment, making this case wholly

unworthy of review. See FED. R. Civ. P. 61.

The second issue is not appropriate for review for

the simple reason that the fee question in this case is

not and never has been what are reasonable

attorneys’ fees, but how to show reasonableness.

Petitioner's central argument in both the district

court and on appeal was that the district court

should have required the submission of a particular

type of evidence to demonstrate reasonableness.

Specifically, petitioner argued that respondent

should have been required to provide the district

court with unredacted invoices showing line-by-line

the specific tasks each attorney performed on a given

day. See Pet. Opening Br. in Appeal No. 09-3996 at

15-21; Pet. Reply Br. in Appeal No. 09-3996 at 4-12.

The petition’s assertion that the Seventh Circuit

“did not address Emigrant’s argument (raised in the

district court and on appeal) that submission of

redacted bulls effectively prevents the opposing party

from challenging reasonableness, as it is entitled to

do under Wisconsin law,” is manifestly inaccurate on

two levels. Pet. 11. First, the lower courts squarely

addressed—and __rejected—petitioner’s argument

about redacted bills. 47a fn. 20, 52a-54a, 53a fn.22,

67a, 67a fn.5. Second, the lower courts were never

asked to apply, and thus did not pass upon, whether

to apply Wisconsin law to the question of whether

redacted invoices could properly support a motion for

fees.

The only “what” question that was asked below or

was at issue—who is the “prevailing party” under

§ 17.8 of the parties’ fee-shifting agreement—was

indisputably answered by the lower courts according

to Wisconsin law. K12.! The petition’s repeated

statements that something other than Wisconsin law

was applied to that question are directly contradicted

by the record. After applying Wisconsin law to the

prevailing party question, the courts below at both

parties’ request followed federal procedures to review

the attorneys’ fees issue; the primary dispute was

over the use of redacted invoices. Petitioner did not

merely acquiesce to the application of Seventh

Circuit law on the question of redacted bills, but

affirmatively embraced it and urged its application.

Petitioner now improperly reverses course. Compare

United States v. Williams, 504 U.S. 36, 43-44 (1992).

1 The parties’ full agreement is labeled K1-41 and is attached to

Respondent’s brief in Appeal No. 09-3007. (The version of the

agreement included in petitioner’s appendix below did not

contain certain pages that undermined petitioner’s position.)

4

Perhaps most striking about the petition as it

pertains to the second issue presented is that it fails

even to mention the governing rule, Federal Rule of

Civil Procedure 54(d)(2), or the authority under

which it issued, the Rules Enabling Act, 28 U.S.C. §

2072. Rule 54(d)(2) specifically governs the timing

and contents of a motion for fees, the nature and

quantum of evidence required, and the proceedings

relating thereto. FED. R. Civ. P. 54(d)(2)(A)-(E).

Whether in its discretion a trial court should be

allowed to consider redacted attorney invoices as

part of a motion for fees falls squarely under Rule

54(d).

Accordingly, unlike the scenario about which the

petition hypothesizes, in cases like this one, courts

apply the federal rule unless it transgresses either

the terms of the Rules Enabling Act or constitutional

restrictions. Hanna v. Plumer, 380 U.S. 460, 471

(1965). See also, Shady Grove Orthopedic Assocs.,

P.A. v. Allstate Ins. Co., 1380 S. Ct. 1431, 1437 (2010).

Rule 54 transgresses neither. The petition’s failure

to grapple with Rule 54 at the outset rather than

saving it for reply—particularly since it is an

essential fork-in-the-road question, and both sides

argued Rule 54’s applicability below (see, e.g., Pet.

Reply Br. in Appeal No. 09-3996 at 11) (arguing that

Fed. R. Civ. P. 54(d)(2)(B)(Qii) requires the disclosure

of certain evidence)—is reason alone to deny the

petition. See Supreme Court Rule 14.4. In all

events, petitioner's complaint matters not because

Wisconsin law does not bar a trial court from

considering redacted invoices.

What is really going on here, as the district court

observed, is that petitioner’s conduct “is driven by

the hard reality of one trying to avoid its contractual

obligations.” 105a. Respondent brought a collection

action in a Wisconsin county court to get paid for its

services. Petitioner turned that routine dispute

literally into a federal case, removing it to federal

court. Later petitioner sought to exert settlement

pressure on respondent on the eve of mediation by

adding absurd fraud counterclaims seeking a quarter

billion dollars in alleged damages, plus unspecified

punitive damages. So far-fetched were petitioner’s

allegations that the district court found they did not

“even merit[] serious consideration as a fraud claim.”

105a. Petitioner now has pulled out all the stops to

avoid paying its tab, seeking review by the highest

Court in the land of an everyday breach-of-contract

case by dressing up the opinion below, not to mention

the record, in unrecognizable garb. The petition

should be denied.

COUNTERSTATEMENT OF THE CASE

Because petitioner's statement of the case is

incomplete and inaccurate, respondent presents the

following counterstatement.

A. Background

In January 2005, petitioner launched

EmigrantDirect online bank. Using respondent’s

services, petitioner opened more accounts with more

deposit dollars in 19 months that it had in the prior

1,800 months (150 years) of the bank’s existence.

136a 4] 77. So exceptional were respondent’s services

that 10 months after the launch of EmigrantDirect—

which in litigation petitioner claimed was well after

the alleged defects in respondent’s services were

prevalent and obvious, 134a {| 70—petitioner

approached respondent about expanding their

6

relationship to include using respondent’s services

for business accounts. 133a-34a J 69. Respondent

declined because by then petitioner was already

refusing to pay for the services it used. 10a, 144a

4 107. Shortly thereafter, in the fall of 2005,

respondent filed a lawsuit to get paid the money

petitioner owed.

This case began as a collection action in

Wisconsin state court. la. After a year of litigation

and on the eve of mediation, Emigrant amended its

pleadings to allege fraud and several other new

counterclaims. lla. This uncomplicated, basic

contract case thus mushroomed into a complex,

massive litigation spanning years and sparking over

500 docket entries by the time of trial in May 2009,

“requiring the commitment of significant judicial

resources to bring the case to fruition.” 80a. The

district court dismissed or granted summary

judgment on most of petitioner’s counterclaims. Dist.

Ct. Dkt. 115, 426, 492. The remaining claims—

respondent’s claims for breach of contract and

declaratory judgment, and petitioner's counterclaims

for fraudulent inducement, intentional

misrepresentation, and breach of contract—were

tried to the bench, the Honorable J.P. Stadtmueller,

United States District Court for the Eastern District

of Wisconsin, in May 2009. During the two-week

trial, 28 witnesses testified live or by deposition, and

the parties filed more than 300 exhibits. 80a-81la.

Despite petitioner's vigorous efforts to transform it,

“this is,” as the district court aptly noted, “in the

final analysis a breach of contract case.” 80a.

Based on its “independent fact-finding process”

and consideration of all of the trial evidence, the

7

court found in favor of respondent on each and every

claim and counterclaim. Dist. Ct. Dkt. 550.

Petitioner appealed the counts tried to the bench, but

not the pretrial dismissal of Counts IV, V, VI, VII,

and VIII of petitioner’s counterclaims. Petitioner

also appealed the district court’s fee award. 55a-73a.

The Seventh Circuit consolidated the fees and merits

appeals. A unanimous panel of the Seventh Circuit

(Ripple, Manion, Tinder, J.J.) affirmed. See 1la-54a.

Petitioner did not petition for rehearing or rehearing

en banc.

B. The Expert Issue

David Moffat is an expert in the financial services

industry and the performance of financial technology

services agreements. 16a. Mr. Moffat, a former CEO

of a technology consultant company, has led a

number of technology application evaluations and

implementations by leading financial services

institutions including State Street Bank, Citibank,

Oppenheimer Funds, Vanguard, and_ Franklin

Templeton. Dist Ct. Dkt. 440-1 Ex. 4; Dist. Ct. Dkt.

518-7 at 6-7. Mr. Moffat has years of experience in

the development, distribution and management of

various financial services software products and the

negotiation of numerous service agreements with

global financial institutions similar to the services

and agreement at issue in this case. Id.

Mr. Moffat was the only expert to cxamine all the

appropriate facts and data so as to provide a reliable

basis to opine on the question of whether respondent

provided its financial technology services in a

commercially reasonable fashion. For example, Mr.

Moffat examined all of the data pertaining to

respondent's service level performance for all of the

8

applications and services it provided under the

parties agreement. See, e.g., 127a-130a J§] 44-57.

Petitioner's expert, Roger Nebel, in contrast did not.

13la {| 58. Mr. Nebel did not even compare

respondent’s services to any other direct bank when

evaluating whether they were provided in a

commercially reasonable manner. 133a 9 67. Mr.

Moffat also analyzed and based his opinion on

critical data such as the number of transactions

processed using respondent's services and_ the

number of accounts opened. Dist. Ct. Dkt. 541 at 4

D.

Upon consideration of two sets of fully-briefed

motions, one before trial and another after, the

district court denied petitioner's motion to exclude

and strike Mr. Moffat’s testimony. 79a. The Seventh

Circuit concluded, however, that the district court

did not sufficiently articulate its reasons for

admitting Mr. Moffat’s testimony in this bench trial,

and thus engaged in its own independent analysis

before concluding Mr. Moffat’s testimony satisfied

FED. R. Evib. 702. 16a-17a. The Seventh Circuit

held that petitioner’s “criticisms do not go to

admissibility but to the appropriate weight that

should be accorded to the evidence.” 20a. The

appellate court noted that the district court “made it

very clear that, in the final analysis, it found [the

parties’ expert testimony] of limited utility in making

a final determination in the case.” 2la. The district

court put it this way:

And in this particular case, while to be sure

the expert testimony was indeed instructive

on a whole host of subjects, in the final

analysis it fortunately or unfortunately, |

guess depending on one’s perspective, does

not control the day. As we will learn

momentarily, this is in the final analysis a

breach of contract case; and it is driven by

documentation together with the results of

the performance under the contract....

79a-80a. See also 86a.

The petition’s contention that the distnct court

nonetheless relied heavily on Mr. Moffat’s testimony,

and that Mr. Moffat was the only witness to testify

as to the commercial reasonableness of respondent's

services, cannot be reconciled with the record or the

lower courts’ opinions. Pet. 5. An avalanche of

documentary and testimonial evidence above and

beyond Mr. Moffat’s opinions demonstrated

convincingly that respondent provided its services in

a commercially reasonable manner. See, e.g., 128a 4

48, 129a | 50, 13la J 60, 132a 4 63, 134a-135a 44

71-72, 137a § 82, 14la-142a 4 99. The Seventh

Circuit affirmed the district court’s finding as to

commercial reasonableness after considering the

extensive record. 26a-29a.

>» The Fee Issue

The petition’s rendition of events here reads as if

there had been no findings of fact by the district

court after a hard-fought trial or a lengthy opinion by

the court of appeals after two full sets of briefs in the

combined appeals. The trial court made clear-cut

findings that, for example, there was no separate “in-

house claim,” which the Seventh Circuit affirmed.

45a. After petitioner contended it was a prevailing

party even though it lost on each and every claim

and counterclaim, the trial court framed the issue

under Wisconsin law as follows:

1O

In Wisconsin, to be a ‘prevailing party,’ it is

not required that a party win a lawsuit in ‘all

respects.’ Wis. Seafood Co. v. Fisher, 2002

WI 134 421, 255 Wis. 2d 833 (Ct. App. 2002).

Instead, a party has ‘prevailed’ if ‘he or she

succeeds on an any significant issue in the

litigation which achieves some of the benefit

sought by bringing suit.’ Footuille State

Bank v. Harvill, 146 Wis. 2d 524, 539-40 (Ct

App. 1988); see also Wis. Seafood Co., 2002

WI App. at 421

Where a_ party's claims ‘arise out of a

common core of facts,’ a ‘losing party is not

entitled to a reduction in attorney's fees for

lime spent on unsuccessful claims, if the

winning party achieved substantial success

and the unsuccessful claims were brought

and pursued in good faith.’ Raw werd vu. J.J.B

Enters., Ltd., 163 Wis. 2d 534, 550 (Ct. App.

1991).

6la-62a (parentheticals omitted); see also 74a-77a

(denying petitioner's motion to amend the judgment

or for a new trial). “Applying this to the case at bar,”

62a, the district court found respondent was the

“prevailing party,” and petitioner was not. 63a-64a.

The Seventh Circuit, in turn, held that the “district

court determined correctly that Emigrant’s success

on the in-house issue does not render it a ‘prevailing

party within the meaning of the contract.” 45a.

As for the question of “reasonable attorneys’ fees,”

that term does not appear in the operative provision

of the agreement, § 17.8:

—

a

17.8 Attorneys’ Fees and Costs. If any legal

action is commenced in connection with the

enforcement of this Agreement or any

instrument or agreement required under this

Agreement, the prevailing party shall be

entitled to costs, attorneys’ fees actually

incurred, and necessary disbursements in

connection with such action, as determined

by the court.

K12. While it does appear in § 5.5 of the agreement,

the district court found that § 17.8 is the controlling

provision because it is the most specific clause

relating to attorneys’ fees. 59a fn. 1. The district

court specifically found, again applying Wisconsin

law, that “[t]o determine what attorneys’ fees and

costs Emigrant is ‘liable’ for, ‘he court must refer to

the more specific section of the Outsourcing

Agreement that dictates when a party is entitled to

payment of its litigation costs. That section, 17.8,

states that....”. 60a. On appeal, petitioner did not

challenge the application of § 17.8 rather than § 5.5

of the agreement, and the Seventh Circuit applied

only § 17.8. 7a & fn.6, 44a-45a. See Resp. Br. in

Appeal 09-3996 at 19 (noting petitioner “does not

take issue with the district court’s conclusion” that

§ 17.8 governs); see generally Pet. Reply Br. in

Appeal No. 09-3996 (nowhere opposing respondent’s

assertion).

The petition’s suggestion that “[t}]he district court

held that these provisions should be read together” is

true only in the most literal sense that the court

“read them together” to find that § 17.8 applied and

§ 5.5 did not. Pet. 7. Nevertheless, the courts below

applied a gloss of reasonableness to respondent's

12

motion for fees “to guard against moral hazard—the

tendency to take additional risks (or run up extra

costs) if someone else pays the tab.” Medcom

Holding Co. v. Baxter Travenol Labs., 200 F.3d 518,

521 (7th Cir. 1999). See also, Balcor Real Estate

Holdings, Inc. v. Walentas-Phoenix Corp., 73 F.3d

150, 153 (7th Cir. 1996) (noting that courts

“interpolate the word ‘reasonable’ into clauses of this

kind”).

The substantial documentary and _ testimonial

evidence upon which the courts below based their

findings that the fees respondent actually incurred

under § 17.8 were reasonable included affidavits

from respondent’s general counsel and its outside

counsel, as well as monthly invoices showing which

lawyers spent how many hours at what rates, which

respondent paid in full with no assurance of

recovery. See Dist. Ct. Dkt. 559 & 593 (including

exhibits attached thereto). Based on this and other

evidence, the district court found the fees respondent

actually incurred were reasonable. 67a-73a. The

Seventh Circuit agreed. 53a-54a.

13

REASONS FOR DENYING THE WRIT

I. THE EXPERT ISSUE PETITIONER POSITS IS

ILLUSORY AND NOT WORTHY OF REVIEW.

A. The Seventh Circuit Properly Affirmed

The Admission Of Mr. Moffat’s Opinions

In This Bench Trial And Appropriately

Deferred To The Weight The District

Court Gave Both Parties’ Experts’

Testimony.

The opinion below reflects that the Seventh

Circuit understood and respected the distinction

between qualifying an expert because of his

experience on the one hand and the bases for his

testimony under the criteria of FED. R. EVID. 702(1)-

(3) on the other.

Separate and apart from Mr. Moffat’s extensive

and relevant experience, the court noted that he

based his opinion regarding the commercial

reasonableness of respondent’s services on key facts

and data in the record that allowed petitioner's

online bank to meet its financial objectives and

achieve substantial commercial success. 18a, 20a.

Those facts and data included the number of account

openings using respondent’s services over the course

of almost 19 months (> 257,000, 135a 4 75), the

number of applications processed (several million,

136a 4 £81), deposit dollars received (>

$6,700,000,000), and respondent’s service level

performance overall (> 99%) and for E-Banking

services specifically (> 98.7%), 129a | 50-53, 130a 4

57, 13la 4 59. See 16a (noting the importance Mr.

Moffat placed on this data). Petitioner’s objection

below was that Mr. Moffat should have considered

additional or different data, and he was subjected to

14

a vigorous cross-examination about this. 22a. These

bases for Mr. Moffat’s testimony pertain to FED. R.

EVID. 702(1).

The Seventh Circuit also emphasized that Mr.

Moffat’s testimony was not ipse dixmt, but instead

was based on principles and methods from the

financial sector in precisely these areas. of

technology, 18a-20a, 19a fn.9, which satisfies the

requirement that the testimony be the product of

“reliable principles and methods” under Rule 702(2).

Indeed, the Seventh Circuit expressly recognized

that Rule 702 requires “that the expert explain the

methodologies and principles that support his

opinion; he cannot simply assert a bottom line.” 18a-

19a (internal quotations and citation omitted). And

the Seventh Circuit acknowledged Mr. Moffat

analyzed the data and facts from the same

perspective of financial services firms that have

evaluated technological innovations in the past, 20a,

which meets the requirements of Rule 702(3). The

petition’s contention that the Seventh Circuit did not

address all of the requirements of Rule 702 is belied

by the opinion itself, whether it specifically cites to

the subparts or not.

The Seventh Circuit also made the

straightforward observation that “[a]n expert’s

testimony is not unreliable simply because it is

founded on his experience rather than on data;

indeed, Rule 702 allows a witness to be ‘qualified as

an expert by knowledge, skill, experience, training, or

education.’ Fed.R.Evid. 702.” 18a (emphasis

supplied by court). The Seventh Circuit quoted

directly from Rule 702, which states that “a witness

qualified as an expert by knowledge, — skill,

baal

Cot

experience, training, or education, may testify

thereto in the form of an opinion or otherwise” if

subparts (1) - (3) are satisfied. FED. R. EVID. 702.

The committee notes to Rule 702 emphasize that the

2000 amendments did not unsettle the proposition

that experience alone may provide sufficient

foundation for expert testimony: “Nothing in this

amendment is intended to suggest that experience

alone—or experience in conjunction with other

knowledge, skill, training or education—may not

provide a_ sufficient foundation for expert

testimony....” FED. R. EvID. 702 Adv. Comm. Notes.

The bottom line is the Seventh Circuit’s approach

was perfectly consistent with the dictates of Daubert

v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579

(1993), Kumho Tire Co. v. Carmichael, 526 U.S. 137

(1999), as well as both the letter and spirit of Rule

702. The court committed no error.

B. There Is No Conflict Among The Circuits.

The petition’s assertion that “[e]light other circuits

apply a stringent standard in keeping with amended

Rule 702,” Pet. 16, whereas “the lax standard for

admission applied by the Seventh and Ninth Circuits

effectively conflates the separate requirements of

Rule 702 that experts must be qualified and their

testimony reliable,” Pet. 12, is incorrect.

In this case and others, the Seventh Circuit has

demonstrated a clear appreciation for the distinction

between an expert’s qualifications to testify and the

bases for that testimony under subparts (1)-(3) of

Rule 702. See, e.g., United States v. York, 572 F.3d

415, 422-24 (7th Cir. 2009) (noting that, for an expert

based on experience, “Rule 702 requires more than a

qualified expert and helpful testimony. [The expert]

16

must have had a reliable basis for opining....”);?

United States v. Mamah, 332 F.3d 475, 477-78 (7th

Cir. 2003) (rejecting the argument that the district

court “disregarded [the experts’] impressive

educational backgrounds and professional

accomplishments in ruling’ their testimony

inadmissible” because it improperly “conflat[es]

subpart (1) of Rule 702, the requirement for

‘sufficient facts and data, with subpart (2) of Rule

702, the necessity for ‘a reliable foundation in

principles and methods”) (citation omitted). One

case petitioner cites ostensibly to demonstrate a

conflict between the Seventh and Eighth Circuits is

United States v. Vesey, 338 F.3d 913, 917 (8th Cir.

2003). Pet. 12, 16. But the Seventh Circuit actually

cited to Vesey in support of its conclusions—indeed

to precisely the same pages as the petition. See 18a-

19a fn.8.3

2 The same three Seventh Circuit judges comprising the panel

in this case—Judges Ripple, Manion, Tinder—comprised the

panel in York.

3 The Ninth Circuit—the other circuit the petition contends

conflates subparts (1)-(3)—likewise appreciates the distinction

between an expert’s qualifications and the bases for his

opinions under subparts (1)-(3). See, e.g., United States uv.

Redlightning, 624 F.3d 1090, 1111-12 (9th Cir. 2010) (affirming

the exclusion of otherwise qualified expert to testify about the

phenomenon of false confessions because he “did not reasonably

point to any evidence in the record or other factors or data”

supporting his opinion); United States v. Decoud, 456 F.3d 996,

1013-14 (9th Cir. 2006) (acknowledging the distinction between

an expert’s qualifications based on experience and his

methodology to interpret drug code words the expert had not

enc’ -untered before).

17

C. This Case Is A Poor Vehicle To Address

The Expert Issue Petitioner Has Put

Forward.

This case is a poor vehicle for the Court to

address the expert issue raised by the petition. First

and foremost, as noted above Mr. Moffat plainly did

base his testimony “upon sufficient facts or data,” not

to mention founded his opinions on reliable methods

and principles that he carefully applied to the facts

of this case. FED. R. Evip. 702(1)-(3). See Dist. Ct.

Dkt. 541 (respondent noting in opposition to

petitioner’s motion to strike that Mr. Moffat based

his opinions on, inter alia, “the number of accounts

and amount of savings deposits Emigrant acquired

using Metavante’s Services,” the “significant volume

of transactions processed by those Services,” “system

outages, processing errors, and on-line creation

problems,” “the data regarding Metavante’s

performance,” and other facts and data far beyond

merely “service level performance’); 16a

(acknowledging Mr. Moffat’s reliance on this key

data).

Another reason why this case is an unattractive

vehicle for the Court’s review is that the expert

testimony had no bearing on the result of this bench

trial. The Seventh Circuit noted the district court

“made very clear that, in the final analysis, it found

wou41imMN

Ve SS4482 YY vO weavusssvy sae

making a final determination in the case.” 2la. See

also 86a (district court commenting that it “was left

in all honesty to evaluate most of what has been

presented to the Court in the context of what the lay

witnesses had to say about this”). Any alleged error

18

here thus did not affect the judgment, nor does

petitioner claim otherwise. See FED. R. CIv. P. 61.

Il. THE “ERIE ISSUE” PETITIONER ADVANCES IS

ILLUSORY AND NOT WORTHY OF KEVIEW.

A. At Both Parties’ Request, The Seventh

Circuit Followed Circuit Law In Deciding

Whether The District Court Abused Its

Discretion By Relying On Redacted

Invoices.

Federal Rule of Civil Procedure 54 states: “A

claim for attorney's fees and related nontaxable

expenses must be made by motion unless the

substantive law requires those fees to be proved at

trial as an element of damages.” FED. R. CIv. P.

54(d)(2)(A).4 The Rule governs among other things

the nature and quantum of evidence that must be

submitted, according to the sound discretion of the

district court, in support of a motion for fees. FED. R.

Civ. P. 54(d)(2)(B). The committee notes point out

that Rule 54(d)(2)(D) “explicitly authorizes the court

to establish procedures facilitating the efficient and

fair resolution of fee claims.” The notes further

provide that a local rule “might call for matters to be

presented through affidavits, or might provide for

issuance of proposed findings by the court, which

would be treated as accepted by the parties unless

objected to within a specified time.”

4 The petition does not suggest fees were an element of any

substantive claim in this case, and there was no _ such

contention below.

1Q

~v

The rule plainly covers things such as the type of

evidence a district court in its discretion might

choose to rely on in support of a motion for fees, such

as redacted or unredacted bills. See Walker v. Armco

Steel Corp., 446 U.S. 740, 749-50 (1980) (“The first

question must therefore be whether the scope of the

Federal Rule in fact is sufficiently broad to control

the issue before the Court.”). As such, this Court has

explained that:

[T]he question facing the court is a far cry

from the typical, relatively unguided Erie

choice: the court has been instructed to apply

the Federal Rule, and can refuse to do so only

if the Advisory Committee, this Court, and

Congress erred in their prima facie judgment

that the Rule in question’ transgresses

neither the terms of the Enabling Act nor

constitutional restrictions.

Hanna v. Plumer, 380 U.S. 460, 471 (1965).

Petitioner’s refusal even to acknowledge Rule 54, and

its only bare mention of Hanna for a different

proposition, is reason alone to deny the petition.

The petition’s assertion that “[t]he Seventh

Circuit ignored Emigrant’s argument that, under

Wisconsin law, Metavante was not entitled to fees

and costs attributable to the issue on which it lost

regardless of whether Emigrant were considered a

prevailing party directly contradicts the record. Pet.

10. As detailed above, the lower courts did apply

Wisconsin law to the question of which party

prevailed in the action. 6la-62a, 74a-77a. The

parties in the district court, the district court itself,

and the parties on appeal cited only Wisconsin law

on the “prevailing party” issue. The fact that the

20

Seventh Circuit did not restate the wealth of

Wisconsin law in affirming the district court’s

finding that respondent was the only prevailing

party under Wisconsin law does not remotely mean

the court sub silentio applied some other law. 45a.

In this case and others, the Seventh Circuit is

well aware that in a diversity action who the

prevailing party is under a fee-shifting agreement is

a question of state law. See, e.g., Tax Track Systems

Corp. v. New Investor World, Inc., 478 F.3d 783, 788-

89 (7th Cir. 2007) (construing “substantially

prevailing party”). Indeed, in its merits brief below

petitioner cited Taco Bell for the proposition that

“Wisconsin law governs the _ prevailing party

determination.” Pet. Opening Br. in Appeal 09-3007

at 65 (citing Taco Bell Corp. v. Cont’l Cas. Co., 388

F.3d 1069, 1077 (7th Cir. 2004)).

The lower courts’ proper application of state la»

to the prevailing party question is not open to seriou:

debate. Under Wisconsin law, “[a] losing party is not

entitled to a reduction in attorney fees for time spent

by opposing counsel on unsuccessful claims, if the

winning party was substantially successful and the

claims were made in good faith.” Wright v. Mercy

Hospital of Janesville, Wis., Inc., 557 N.W. 2d 846,

855 (Wis. Ct. App. 1996); Radford v. J.J.B. Enters.,

Ltd., 472 N.W. 2d 790, 797 (Wis. Ct. App. 1991).

Here, respondent won on each and every claim and

counterclaim, won either a judgment or a rejection of

about $260 million of the approximately $275 million

at issue in the case, and asserted all its claims and

defenses in good faith, as the lower courts found.

45a-47a, 63a fn.3, 63a-64a. The district court also

found the issues for which petitioner sought to

2.1

discount the fee award were inextricably intertwined

with the rest of the case. 62a-63a, 76a. The Seventh

Circuit agreed. 45a.

The petition’s contention that Wisconsin law

required a contrary conclusion because it supposedly

established a cap on the amount of fees to which

respondent was entitled is incorrect as a matter of

fact and law, and cannot shoehorn this case into the

circumstances of Gasperini v. Ctr. for Humanities,

Inc., 518 U.S. 415, 428-29 (1996). It does not fit.

Respondent—the only prevailing party under

Wisconsin law—was entitled to each and every dollar

of costs and fees it actually incurred, as both the

district court and a unanimous panel of the Seventh

Circuit concluded.®

5 The petition’s heavy reliance on, and characterization of,

Shadley v. Lloyds of London, 776 N.W. 2d 838 (Wis. Ct. App.

2009), is misplaced and inaccurate. Unlike § 17.8 here, which

awarded fees actually incurred in the action by the prevailing

party, the agreement in Shadley awarded fees to the successful

party, and nothing in the record supported a finding that the

parties intended to equate “successful party” with “prevailing

party.” Shadley, 776 N.W. 2d at 840-41, 843. Based on that

specific contract language, the Shadley court remanded for

apportionment of fees based on relative “success”—the recovery

of only $14,976 of the $100,000 sought in damages. /d. at 844.

Thus, it is not at all accurate for the petition to cite Shadley for

the proposition that Wisconsin courts require “a mathematical

calculation to determine the extent to which a party has

prevailed.” Pet. 31 (emphasis added). That said, here

respondent was properly determined to be 100% the prevailing

party under Wisconsin law. Above and beyond the reasoning of

the lower courts, the plain language of § 17.8 awards fees to the

prevailing party in the “legal action” as a whole, not to be

parsed out, as respondent argued below. See Resp. Br. in

Appeal No. 09-3007 at 65-66. Continued

22

At its core, the petition’s premise is mistaken.

Wisconsin law does not require the submission of a

particular type of evidence or the consideration of

specific factors to determine reasonableness of fees.

The petition thus fails on its own terms.

In D.L. Anderson’s Lakeside Leisure Co., Inc. v.

Anderson, 757 N.W. 2d 803, 822 (Wis. 2008), the

parties agreement stated in pertinent part: “In any

action concerning this Agreement, the party

obtaining the monetary judgment, after all offsets,

shall also be entitled to recover reasonable attorneys

fees and costs.” The Wisconsin Supreme Court

rejected defendant’s argument that the agreement

did not require the award of fees for non-contract

trademark infringement claims. Jd. at 823. What’s

more, the Wisconsin Supreme Court affirmed the

trial court's award of the entire fee amount out of

deference to its first-hand observations and

experience with the case, and did so without

engaging in any discussion of the specific type of

evidence required or factors that must be considered,

such as those in Wisconsin Supreme Court Rule

20:1.5 upon which the petition so heavily relies. Jd.

Here, the district court relied on D.L. Anderson’s

in awarding the full amount of fees respondent

Petitioner's claim to entitlement to its own fees is equally

unfounded. Pet. 25 fn. 12. Not only did petitioner lose on every

single claim and counterclaim, but petitioner neither moved

within the time frame prescribed by FED. R. Civ. P.

54(d)(2)(B)(i) nor sought leave to file a motion for fees out of

time, even though upon hearing the trial court’s ruling

petitioner declared it had prevailed on a major issue. 114a.

Petitioner thus waived any right to its own fees

92

“actually incurred” in this “legal action” under § 17.8

of the parties’ agreement. 58a. The petition’s failure

to address published Wisconsin Supreme Court

authority upon which the lower courts relied in favor

of unpublished Wisconsin lower court decisions is

emblematic of the petition’s basic shortcomings. See

Pet. 22-23.6

The petition’s statement that Wisconsin

“require/s] consideration of enumerated factors” to

determine reasonableness is simply incorrect. Pet.

24 (emphasis added). Wisconsin Supreme Court

Rule 20:1.5 is not a rule governing fee awards;

rather, it is a canon of professional conduct. It does

not define “reasonable attorneys’ fees.” ‘To the

contrary, the rule merely provides a list of “factors to

be considered in determining the reasonableness of a

fee” in the context of a lawyer’s relationship with her

client. Resp. App. 5a. “The factors specified in (1)

through (8) are not exclusive. Nor will each factor be

relevant in each instance.” Wis. Sup. Ct. R. 20:1.5

Comm. Notes. Although Wisconsin courts often find

Rule 20:1.5 useful in considering a fee petition, its

use is not mandatory. Standard Theatres, Inc., v

Wis. Dept. Transp., Div. Hghwys, 349 N.W. 2d 661,

672 (Wis. 1984); Wright, 557 N.W. 2d at 855.

Wisconsin trial courts have long been permitted in

the exercise of their discretion to consider a variety

® Tronically, petitioner argues federal law trumps Wisconsin's

rule against citing to unreported Wisconsin cases. Pet. 22 {n.9

Notwithstanding FED. R. App. P. 32.1(a)’s prohibition, the

petition’s primary support for this proposition is itself an

unpublished summary order the Seventh Circuit issued in

2000.

24

of different factors, including those based on a

federal standard originating in the American Bar

Association Canons of Professional Ethics. See

Touchett v. EZ Paintr Corp., 111 N.W. 2d 419, 423

(Wis. 1961).

The petition’s misstatements of the record and

Wisconsin law do not stop there. Indeed, much of the

remainder of the petition is a smorgasbord of

inaccuracies.

For example, the petition’s contention that once

respondent made a-=prima_ facie” showing of

reasonable attorneys’ fees petitioner had “no ability

to challenge the reasonableness of the specific fees at

issue” is incorrect. Pet. 20. Petitioner could have

requested an evidentiary hearing under FED. R. CIV

P. 43, but did not. See FED. R. Civ. P. 54(d)

Petitioner could have sought discovery or served

subpoenas, but did not. Or petitioner could have

submitted evidence already in its possession--the

amount of its own attorneys’ fees—which petitioner

assuredly would have done if respondent's fees

exceeded petitioner's. Again, petitioner did not. 53a

54a, 69a-70a. See Village of Shorewood v. Steinberg,

496 N.W. 2d 57, 63 (Wis. 1993) (affirming fee award

of $108,867 even though opposing party’s fees totaled

only $13,757). The fact of the matter is petitioner

made a strategic decision to rest on its argument

that respondent did not. carry its burden rather than

challenge the fee petition with meaningful evidence.

The petition’s assertion that “nowhere in

Wisconsin law does any sort of presumption of

reasonableness based on market factors appear,” Pet.

23, ignores that Wisconsin courts do indeed look to

the market and measure reasonableness based on

fees actually incurred rather than some estimate

based on an objective standard. See, e.g., Glamann

v. St. Paul Fire & Marine Ins. Co., 424 N.W. 2d 924,

927 (Wis. 1988). Here, evidence that a sophisticated

client negotiated a discounted fee, that its general

counsel carefully monitored both the legal work and

the billing for those services, and that the client paid

those bills with no assurance of recovery are all

powerful indicators of reasonableness. The petition

may derisively dismiss that hard evidence as

“market factors,” but there is no escaping the fact

that it is persuasive proof of the reasonableness of

respondent’s fees.

The petition’s related suggestion that the Seventh

Circuit shifted the burden onto petitioner, the non-

movant, is untrue. All agree respondent bore the

initial burden to demonstrate its fees actually

incurred under § 17.8 were reasonable. The question

was not who had the burden, but whether

respondent carried its burden. Again, petitioner’s

complaint here boils down to whether the district

court abused its discretion by relying on, among

other things, redacted bills.

Any suggestion that the panel’s (Ripple, Manion,

Tinder, J.J.) opinion was an ideological, doctrinal

decision that relied only on “market forces” is

misplaced. In fact, it was a careful, fact-based

decision driven by the specific circumstances of this

case. As the Seventh Circuit noted, the district court

“made the determination of reasonableness on the

basis of not only the presumptive validity of market

forces, but also the affidavits of the parties which

assured the court that rates had been negotiated,

26

supporting documentation had been reviewed and

pertinent questions asked.” 53a.7

B. There Is No Conflict Among The Circuits.

In suggesting a conflict exists between the

Seventh Circuit on the one hand and the Tenth and

District of Columbia Circuits on the other, the

petition cites Westar Energy, Inc. v. Lake, 552 F.3d

1215 (10th Cir. 2009), and Ideal Elec. Sec. Co. v. Int'l

Fidelity Ins. Co., 129 F.3d 143 (D.C. Cir. 1997). Pet.

32-33. The petition misstates both cases and their

import here.

In Westar, contrary to the petition’s statement,

the court did not “predict{[} what the Kansas

Supreme Court would do” on the issue of what

factors to consider in determining the reasonableness

of a fee award. Pet. 32. Rather, those factors were

not in dispute because, as the Tenth Circuit

observed, the district court “analyze[d] the fee award

using essentially the same factors” as under Kansas

7 Respondent also urged the lower courts to consider

petitioner's no-holds-bar litigation strategy and obstreperous

behavior during discovery, which significantly drove up the cost

of this protracted litigation. See Resp. Br. in Appeal 09-3996 at

39-42, 42 fn.9. The district court felt it unnecessary to decide

this issue, 72a, though it noted on prior occasions the unusual

zeal with which the case had been litigated. Dist. Ct. Dkt. 493

(12/2/08 Tr. 9) (“{I]f every case that I had to deal with was dealt

with with the degree of intensity that is either driven by your

respective clients or the nature of your respective practices, we

could not function as a court ... [I]t take cases like this frankly

to bring changes in the rules....”). The Seventh Circuit did not

rely on this as a basis to affirm the fee award. Nonetheless, it

is a proper additional reason respondent was entitled to the full

fee award.

27

law. Westar, 552 F.3d at 1228. The actual question

in Westar was whether the company’s agreement to

pay its officers’ “expenses” required the company to

advance attorneys’ fees for the defense of an officer

charged with criminal wrongdoing. Id. at 1228-29.

One difficulty in answering the question was that the

specific agreement’s indemnity provision “define[d]

expenses to include attorneys’ fees ‘reasonably

incurred,” but the advancement provision did not.

Id. at 1229. It was in that unique advance pay

context that the Tenth Circuit tried to “predict what

the Kansas Supreme Court would do if faced with

the issue” of who bore the burden of proof to

determine the reasonableness of fees according to the

terms of that specific agreement. /d. at 1228.

Here, we have a different agreement whose fee

provision—§ 17.8 (K12)—was in fact construed

according to Wisconsin law, just as the parties jointly

requested. Further, all agree respondent bore the

burden of demonstrating the reasonableness of its

“attorneys fees actually incurred” under § 17.8 of the

agreement. Again, the only question was whether

respondent carried its burden by submitting, among

other evidence, redacted bills. The lower courts

concluded respondent did; petitioner persists in

arguing respondent did not. That conclusion by the

district court and a unanimous panel of the Seventh

Circuit is not at all in conflict with Westar.

The petition’s reliance on the law of the District of

Columbia is curious. For one, that jurisdiction does

not require a party to submit any evidence, let alone

itemized bills, in support of a fee petition in a

contractual fee-shifting case, allowing the trial court

who has witnessed the proceedings first hand to

28

determine reasonableness. See, e.g., Urban Masonry

Corp. v. N&N Contractors, Inc., 676 A.2d 26, 35

(D.C.C.A. 1996) (“We have often held that when the

court decides the reasonableness of an attorney fee

award, itemized bills and testimony are _ not

absolutely essential to support its finding.”) (citation

omitted).

Moreover, while the forum shopping concerns

may be the same, Erie does not mandate application

of District law, and the constitutional considerations

of Erie are not implicated (nor is the Rules Decision

Act, 28 U.S.C. § 1652) because “the District, unlike

the states, has no reserved power to be guaranteed

by the Tenth Amendment.” Lee v. Flintkote Co., 593

F.2d 1275, 1278 fn.14 (D.C. Cir. 1979). Ideal, relied

upon by petitioner, does not even mention Erie or

indicate the parties argued any potential tension

between federal and District law. 129 F.3d at 150-

oO2.

Contrary to petitioner's assertion, the Seventh

Circuit’s decision here does not conflict with Ideal.

Pet. 33 fn.19. The fact that the Ideal court concluded

itemized bills should have been provided in the

specific facts and circumstances of that case is of no

moment. It very well may be true that a district

court should consider such evidence in a given case.

Here, the Seventh Circuit expressly left open that

possibility, but affirmed the district court’s exercise

of discretion on the record of this case not to require

it. 53a. The court emphasized its narrow holding:

“We only hold that in most situations, as here, this

responsibility [of district courts to review fee

petitions] can be discharged without line-by-line

scrutiny of submissions.” 54a.

29

The petition’s representation that since Balcor no

court has looked beyond so-called irrefutable market

considerations is mistaken. Pet. 26-27. Setting

aside the fact that in this case the courts below relied

on much more than mere market forces, 53a-54a,

courts have not hesitated to require even more

exacting evidence when circumstances require it,

just as the Seventh Circuit contemplated might be

appropriate in other cases, but was not necessary

here.

In Bock v. Computer Assocs. Int'l, Inc., No. 99 C

0967, 2002 WL 511560 (N.D. Ill. Apr. 3, 2002), for

example, the fee-shifting agreement required the

payment of plaintiffs fees “whether or not he was

successful,” so plaintiff had no incentive to keep his

fees down. Jd. at *3. The Bock court therefore

conducted a more comprehensive anaiysis of

plaintiffs billing records and_ required _ the

submission of more detailed evidence of the work

performed. Id.

Similarly, in Zeidler v. A&W Restaurants, Inc.,

No. 99 C 2591, 2001 WL 561367 (N.D. Ill. May 21,

2001), several factors caused the court to question

the reasonableness of fees actually paid, including

that the prevailing party requested $250,000 in fees

in “a lawsuit involving a damage claim of at most

$300,000 ... and probably far less than that”; that

the prevailing narty submitted no affidavit “from a

responsible person within the company” regarding

fees or the expectation of recovery under the parties’

fee-shifting agreement; and there was a “significant”

disparity between the fees the prevailing party

sought and the fees the losing party incurred (a

comparison that cannot be made here because

30

petitioner steadfastly refused to disclose its own

fees). Id. at *3-5.

C. This Case Is Not The Appropriate Vehicle

For Addressing The “Erie Issue”

Petitioner Has Manufactured.

Even had the petition’s so-called Erie issue been

pressed or passed upon below, this case would be a

particularly inappropriate vehicle to address it for a

host of reasons, not the least of which is that the Erie

concerns of forum shopping and the inequitable

administration of the law are not implicated here.

For one, the result here would be the same

whether the factors under Wisconsin Supreme Court

Rule 20:1.5 were expressly applied or not. Those

factors are not meaningfully different from the ones

the lower courts actually employed in this case,

including: the stakes of the case, the fact that the

negotiated fees were discounted and paid without

assurance of recovery according to commercially

reasonable practices (such as the detailed review by

respondent’s general counsel), the rates charged, the

fact that fee write-offs were provided, the total hours

expended, affidavits from respondent and its outside

counsel, and the fact that petitioner did not cast any

doubt on the fees’ reasonableness by, for example,

disclosing its own fees as a measuring stick. See,

e.g., 67a-72a, 1lla-112a, Resp. Br. in Appeal 09-3996

at 49-51. Compare Resp. App. 5a.

Petitioner's complaint of forum shopping is

particularly off base since petitioner chose the forum

for this case by removing the action to federal court.

Petitioner's related suggestion that 1t was penalized

for exercising the right of removal is also misplaced.

Pet. 28. If as the petition contends, Pet. 20-21, the

31

Seventh Circuit truly had a clear and long-standing

rule in violation of Erie, which supposedly so

obviously worked to petitioner’s detriment, petitioner

certainly would have pressed the Erie issue below,

rather than raise it for the first time in its petition

for writ of certiorari. In any event, forum shopping

concerns in the context of a fee dispute like this one

are minimal because an award of fees is speculative

and entirely contingent on prevailing on the merits.

Another reason this case is not appropriate for

further review is because the specific terms of the

parties agreement entrusts the question of how to

measure fees exclusively to the trial court.

Specifically, § 17.8 states in pertinent part that “the

prevailing party shall be entitled to costs, attorneys’

fees actually incurred, and necessary disbursements

incurred in connection with such action, as

determined by the court.” K12 (emphasis added). The

parties unique agreement here makes this a

particularly inappropriate case from which to

extrapolate any broader principle.®

The upshot of petitioner’s position would be to

drive a wrecking ball through Rule 54—or as this

Court put it many years ago, disembowel it. Hanna,

380 U.S. at 1145 (“To hold that a Federal Rule of

Civil Procedure must cease to function whenever it

alters the mode of enforcing state-created rights

would he to disembowel either the Constitution’s

grant of power over federal procedure or Congress’

8 Respondent raised this below as an alternative basis to affirm

the fee award, but the Seventh Circuit did not reach it. See

Resp. Br. in Appeal 09-3996 at 23-24.

32

attempt to exercise that power in the Enabling

Act.”). If petitioner were right, in every diversity

case in which the right to fees arose under a contract

or state statute, Rule 54 would be meaningless, and

federal courts would have to decipher and apply

potentially 50 different state rules. This would

further drive up litigation costs and engender still

more litigation unrelated to the merits. The

procedures and type of evidence federal district

courts are permitted to employ and consider in their

discretion under FED. R. CIv. P. 54(d) are designed to

avoid this sort of ballooning litigation unrelated to

the merits.

CONCLUSION

For the foregoing reasons, this Court should deny

the petition for a writ of certiorari.

Respectfully submitted,

PAUL R. GARCIA, P.C.

Counsel of Record

ANDREW B. BLOOMER, P.C.

JAMES R. P. HILEMAN

KIRKLAND & ELLIS LLP

300 North LaSalle

Chicago, IL 60654

(312) 862-2000

paul.garcia@kirkland.com

February 23, 2011

APPENDIX

Respondent’s Appendix A

FEDERAL RULE OF CIVIL PROCEDURE 54(d)(2)

(d) (2) Attorneys’ Fees.

(A) Claim to Be by Motion. A claim for attorney’s fees

and related nontaxable expenses must be made by

motion unless the substantive law requires those

fees to be proved at trial as an element of damages.

(B) Timing and Contents of the Motion. Unless a

statute or a court order provides otherwise, the

motion must:

(i) be filed no later than 14 days after the entry of

judgment;

(ii) specify the judgment and the statute, rule, or

other grounds entitling the movant to the award;

(iii) state the amount sought or provide a fair

estimate of it; and

(iv) disclose, if the court so orders, the terms of any

agreement about fees for the services for which the

claim is made.

(C) Proceedings. Subject to Rule 23(h), the court

must, on a party’s request, give an opportunity for

adversary submissions on the motion in accordance

with Rule 43(c) or 78. The court may decide issues of

liability for fees before receiving submissions on the

value of services. The court must find the facts and

state its conclusions of law as provided in Rule 52(a).

(D) Special Procedures by Local Rule; Reference to a

Master or a Magistrate Judge. By local rule, the

court may establish special procedures to resolve fee-

related issues without extensive evidentiary

hearings. Also, the court may refer issues concerning

Resp. App. 2a

the value of services to a special master under Rule

53 without regard to the limitations of Rule 53(a)(1),

and may refer a motion for attorney's fees to a

magistrate judge under Rule 72(b) as if it were a

dispositive pretrial matter.

(E) Exceptions. Subparagraphs (A)-(D) do not apply

to claims for fees and expenses as sanctions for

violating these rules or as sanctions under 28 U.S.C.

§ 1927.

DvD. . A a |

AVCOp. Mpp. Ja

Respondent’s Appendix B

28 U.S.C. § 2072

§ 2072. Rules of procedure and evidence; power to

prescribe

(a) The Supreme Court shall have the power to

prescribe general rules of practice and procedure and

rules of evidence for cases in the United States

district courts (including proceedings _ before

magistrate judges thereof) and courts of appeals.

(b) Such rules shall not abridge, enlarge or modify

any substantive right. All laws in conflict with such

rules shall be of no further force or effect after such

rules have taken effect.

(c) Such rules may define when a ruling of a district

court is final for the purposes of appeal under section

1291 of this title.

Resp. App. 4a

Respondent’s Appendix C

28 U.S.C. § 1652

§ 1652. State laws as rules of decision

The laws of the several states, except where the

Constitution or treaties of the United States or Acts

of Congress otherwise require or provide, shall be

regarded as rules of decision in civil actions in the

courts of the United States, in cases where they

apply.

Resp. App. ba

Respondent’s Appendix D

WISCONSIN SUPREME COURT RULE 20:1.5.

SCR 20:1.5. Fees

(a) A lawyer shall not make an agreement for,

charge, or collect an unreasonable fee or = an

unreasonable amount for expenses. The factors to be

considered in determining the reasonableness of a

fee include the following:

(1) the time and labor required, the novelty and

difficulty of the questions involved, and the skill

requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the

acceptance of the particular employment will

preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for

similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by

the circumstances;

(6) the nature and length of the professional

relationship with the client;

(7) the experience, reputation, and ability of the

lawyer or lawvers performing the services; and

(8) whether the fee is fixed or contingent.

(b)(1) The scope of the representation and the basis

or rate of the fee and expenses for which the client

will be responsible shall be communicated to the

client in writing, before or within a reasonable time

after commencing the representation, except when

Resp. App. 6a

the lawyer will charge a regularly represented client

on the same basis or rate as in the past. If it is

reasonably foreseeable that the total cost of

representation to the client, including attorney’s fees,

will be $1000 or less, the communication may be oral

or in writing. Any changes in the basis or rate of the

fee or expenses shall also be communicated in

writing to the client.

(2) If the total cost of representation to the client,

including attorney’s fees, is more than $1000, the

purpose and effect of any retainer or advance fee that

is paid to the lawyer shall be communicated in

writing.

(3) A lawyer shall promptly respond to a client’s

request for information concerning fees and

expenses.

(c) A fee may be contingent on the outcome of the

matter for which the service is rendered, except in a

matter in which a contingent fee is prohibited by par.

(d) or other law. A contingent fee agreement shall be

in a writing signed by the client, and shall state the

method by which the fee is to be determined,

including the percentage or percentages that shall

accrue to the lawyer in the event of settlement, trial

or appeal; litigation and other expenses to be

deducted from the recovery; and whether such

expenses are to be deducted before or after the

contingent fee is calculated. The agreement must

clearly notify the client of any expenses for which the

chent will be liable whether or not the client is the

prevailing party. Upon conclusion of a contingent fee

matter, the lawyer shall provide the client with a

written statement stating the outcome of the matter

and if there is a recovery, showing the remittance to

the client and the method of its determination.

(d) A lawyer shall not enter into an arrangement for,

charge, or collect a contingent fee:

(1) in any action affecting the family, including but

not limited to divorce, legal separation, annulment,

determination of paternity, setting of support and

maintenance, setting of custody and _ physical

placement, property division, partition of marital

property, termination of parental rights and

adoption, provided that nothing herein shall prohibit

a contingent fee for the collection of past due

amounts of support or maintenance or property

division.

(2) for representing a defendant in a criminal case or

any proceeding that could result in deprivation of

liberty.

(e) A division of a fee between lawyers who are not in

the same firm may be made only if the total fee is

reasonable and:

(1) the division is based on the services performed by

each lawyer, and the client is advised of and does not

object to the participation of all the lawyers involved

and is informed if the fee will increase as a result of

their involvement; or

(2) the lawyers formerly practiced together and the

payment to one lawyer is pursuant to a separation or

retirement agreement between them; or

(3) pursuant to the referral of a matter between the

lawyers, each lawyer assumes the same ethical

responsibility for the representation as if the lawyers

were partners in the same firm, the client is

Resp. App. 8a

informed of the terms of the referral arrangement,

including the share each lawyer will receive and

whether the overall fee will increase, and the client

consents in a writing signed by the client.