# Opposition Brief — Emigrant Savings Bank v. Metavante Corp.

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_2832%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2011
- **Citation:** 563 U.S. 903

## Text

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.. ..........» 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.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_2832%3A2. Public record. Not legal advice.