Law Religion Culture Review

Exploring the intersections of law, religion and culture. Copyright by Richard J. Radcliffe. All rights reserved.

Tuesday, June 07, 2005

Not Quite the Ultimate Sanction, But Close, Part II.

Coincidences can be fun.

I was in court today defending an alleged securities fraud lawsuit, and the same motion calendar included a high profile case, Alan Sporn v. Home Depot, USA, Inc. that I wrote about earlier (here).

Hence, this happenstance allows me to scoop (again, I might add), the MSM, which previously covered the Sporn case, but was absent today.

Recapping Sporn, Plaintiff Alan Sporn sued Home Depot and “John Doe”. The gist of Mr. Sporn's complaint was that "John Doe" used Sporn's identity to obtain credit from Home Depot. He also alleged that the company made monthly credit inquiries of Equifax, a credit reporting agency, and because of these frequent inquiries, he was unable to obtain “the best rates of interest.” As a result of defendant’s conduct, plaintiff claimed he suffered physical and emotional distress, personal and business embarrassment, lost business opportunities, and lost creditworthiness.

Receiving no response to the complaint, Mr. Sporn's lawyer filed a request for entry of default (like a win by forfeit). Later, the trial court conducted a default prove-up hearing, and issued a default judgment in favor of plaintiff for $930,000.

About eight (8) months later, Home Depot filed a motion to set aside the default and default judgment. The trial court denied the motion. In turn, Home Depot appealed.

The Fourth District (Third Division) rejected the appeal, characterizing it as "frivolous" and "offensive" (here). Additionally, the appellate court returned the matter to the trial court for consideration of the amount of sanctions to be imposed against Home Depot for the appeal.

Today, the trial court conducted that sanctions hearing, which disclosed several developments.

1. Mr. Sporn and his counsel have collected $1,100,000.00, representing the principal and interest portions of the judgment.

2. Mr. Sporn's counsel, OC attorney Steve Young, has the matter on a 40% contingency fee (originally, 30%, plus 10% because Home Depot appealed).

3. Mr. Sporn is seeking a 10% sanction (thus, $110,000.00).

4. In response to court inquiries, Mr. Sporn's counsel said he did not record all of his time due to the contingent nature of his fee, but estimated that his time sheets will show about $76,000.00 in fees, using an hourly rate of $400 times the number of hours expended on appeal. However, he argued that it would be unfair to his client for the court impose any sanction other than the 10% contingency fee because otherwise his client will be out of pocket for the difference.

5. Home Depot estimates that Mr. Young's fees are in the range of $28-32,000.00, based on 70-80 hours at $400 per hour.

6. Mr. Sporn's counsel is to submit his time sheets to the court by Monday, June 13, 2005.

7. The trial court indicated that the "lodestar" (hourly rate times number of hours) may not be the end of the analysis. The court might employ a multiplier to the lodestar to reach the final number.