Busche v. Nat'l R.R. Passenger Corp.

• Decision Date: 09 October 2020
• Docket Number: 1:18-cv-10322-NLH-AMD
• Parties: BRIAN BUSCHE, Plaintiff, v. NATIONAL RAILROAD PASSENGER CORP., doing business as AMTRAK, Defendant.
• Court: U.S. District Court — District of New Jersey

BRIAN BUSCHE, Plaintiff, v. NATIONAL RAILROAD PASSENGER CORP.,doing business as AMTRAK, Defendant.

1:18-cv-10322-NLH-AMD

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

October 9, 2020

OPINION

APPEARANCES:

DAVID T. SIROTKIN

MORELLI LAW FIRM, PLLC

777 THIRD AVENUE

31ST FLOOR

NEW YORK, NY 10017

On behalf of Plaintiff Brian Busche

DANIEL JOSEPH GILLIN

DANIEL EDWARD MULLIGAN

LANDMAN CORSI BALLAINE & FORD

ONE PENN CENTER

1617 JFK BOULEVARD

SUITE 955

PHILADELPHIA, PA 19103

On behalf of Defendant National Railroad Passenger Corp. d/b/a AMTRAK

HILLMAN, District Judge

This matter is before the Court on Plaintiff's counsel's motion for attorney's fees. There is no opposition to the motion. For the reasons to be discussed below, counsel's motion will be granted in part and denied in part.

BACKGROUND

This case arises from an accident that left Plaintiff Brian Busche severely injured while working. On January 25, 2018, Plaintiff, an employee of Defendant Amtrak, was repairing a mechanical crane on an Amtrak Mobile Maintenance Unit. Although the crane was supposed to be deactivated during the repairs, it suddenly became energized and struck Plaintiff, causing him to fall from his ladder. As a result, Plaintiff suffered a traumatic brain injury, as well as fractures to the hyoid bone in his neck, thyroid cartilage,¹ and injuries to his back and shoulders.

In April 2018,² roughly three months after the accident, Plaintiff retained the Morelli Law Firm, PLLC ("MLF"). In retaining the firm, Plaintiff entered into a contingency fee agreement at MLF's New York City office. [Doc. No. 23.]

On June 8, 2018, Plaintiff filed a complaint in this Court against Defendant under the Federal Employers' Liability Act(F.E.L.A.), 45 U.S.C. §§ 22-34; the Federal Safety Appliance Acts, 56 U.S.C. §§ 1-16; and the Boiler Inspection Acts, 45 U.S.C. §§ 22-34.³

On August 29, 2019, the parties mediated at National Arbitration and Mediation in New York. At the mediation, Defendant made a "final" settlement offer for $1 million. It appears that counsel rejected Defendant's "final" settlement offer. After two months of additional negotiations, the parties eventually settled for $3.75 million.

Pursuant to a New Jersey state court rule, N.J. Ct. R. 1:21-7(c), counsel seeks approval of a 27% contingency fee of the settlement amount beyond $3 million - i.e., 27% of $750,000. This rule sets the percentage of allowable contingency fees in tort cases in the New Jersey state court.⁴ Where the settlementexceeds $3 million, counsel, with written notice to his client, must apply to the court for a "reasonable fee" on the excess settlement funds.⁵ N.J. Ct. R. 1:21-7(c).

The retainer agreement between counsel and Plaintiff contains language identical to N.J. Ct. R. 1:21-7(c). The agreement between the parties provides:

Fees. If the law firm recovers money for the client which is greater than the disbursements in the case (see below) the client will pay the law firm a legal fee. The fee will be based on a percentage of the net recovery. Net recovery is the total recovered on the client's behalf, minus the unaffiliated third party out of pocket costs and expenses of the litigation, and minus any interest included in a judgment pursuant to R.4:42-11(b). The fee will be as follows:

(1) 33 1/3% on the first $750,000 recovered;

(2) 30% on the next $750,000 recovered;

(3) 25% on the next $750,000 recovered;

(4) 20% on the next $750,000; and

(5) on all amounts recovered in excess of the above by application for reasonable fee in accordance with the provisions of paragraph (f) hereof; and(6) where the amount recovered is for the benefit of a client who was a minor or mentally incapacitated when the contingent fee arrangement was made, the foregoing limits shall apply, except that the fee on any amount recovered by settlement before empaneling of the jury or, in a bench trial, the earlier to occur of Plaintiff's opening statement or the commencement of testimony of the first witness, shall not exceed 25%. However the law firm agrees that it will not seek a fee in excess of 25% of the net recovery over $2,000,000.00.

[Doc. No. 23 at 1.]

Based on the parties' agreement, counsel's fees on the first $3 million of the $3.75 million settlement totals $812,500. Counsel now seeks approval for fees on the remaining $750,000 in excess of $3 million - which request totals an additional $202,500 in attorney's fees. No party has filed a response to counsel's motion.

DISCUSSION

In deciding whether to approve counsel's application for its excess contingency fee, this Court must resolve two issues. As a preliminary matter, the Court must determine what law should be applied to counsel's application. Then, the Court must apply that law to determine whether the excess fee requested is appropriate.

1. Law applicable to counsel's fee application

In seeking approval of their fee, counsel asks this Court to apply a New Jersey state court rule. Counsel fails, however,to provide any support for why this Court should apply a state court rule of procedure in this federal action.

The Court's independent research reveals that N.J. Ct. R. 1:21-7 has been applied in this District in four different scenarios: (1) where counsel is admitted to appear before this Court pro hac vice;⁶ (2) where the fee agreement contains a choice of law provision;⁷ (3) where there is a fee disputebetween client and counsel;⁸ and (4) where the case involves the interests of minors.⁹

This case does not fall into any of those categories. The instant motion by Plaintiff's counsel for the unopposed approval of attorney's fees arises in a case based solely on federal law and not involving a minor, originally filed in this Court, by counsel admitted to practice in this District. Moreover, although the retainer agreement contains language that mirrors the New Jersey state court rule, it does not cite that rule, and the agreement does not contain any specific choice-of-law provision.

Thus, the Court finds that this case presents a fifth category - a fee application by admitted counsel in a federal statutory tort case - not expressly addressed in the Court'slocal rules or governing case law. As set forth more fully below, this Court now holds, although the route is admittedly circuitous, that N.J. Ct. R. 1:21-7 governs this fifth category, thus aligning this Court's local rule governing pro hac vice counsel with the obligations of counsel admitted to appear before this Court.

As noted above, supra note 6, Local Civil Rule 101.1(c)(4) provides that a "lawyer admitted pro hac vice is deemed to have agreed to take no fee in any tort case in excess of New Jersey Court Rule 1:21-7 governing contingent fees." The Court's Local Rules do not contain an express provision that lawyers who are admitted to practice in this District are also constrained by N.J. Ct. R. 1:21-7. Although some courts have seemed to presume no gap exists,¹⁰ this Court endeavors here to fill an apparent gap in our local rules.

Under Local Civil Rule 101.1(b), "Any attorney licensed to practice by the Supreme Court of New Jersey may be admitted as an attorney at law upon completion of a sworn application submitted to the Court." Under Local Civil Rule 103.1(1), the "Rules of Professional Conduct of the American Bar Association as revised by the New Jersey Supreme Court shall govern the conduct of the members of the bar admitted to practice in thisCourt, subject to such modifications as may be required or permitted by Federal statute, regulation, court rule or decision of law."

Correspondingly, in determining a fee request under N.J. Ct. R. 1:21-7, state courts are guided by the factors listed under Rule 1.5(a) of the New Jersey Rules of Professional Conduct.¹¹ See N.J. Ct. R. 1:21-7(e) ("In all cases contingentfees charged or collected must conform to RPC 1.5(a)."). Relevant here, RPC 1.5(c) provides, "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 law or by these rules."

Thus, under the Rules of Professional Conduct as adopted in New Jersey, which are applicable to attorneys admitted to practice in this District by virtue of being admitted to practice in New Jersey state court, a lawyer is precluded from entering into a contingency fee agreement that is prohibited bylaw or violates the RPCs or court rules. Proper contingency fee agreements must comply with RPC 1.5, the factors of which rule are incorporated into N.J. Ct. R. 1:21-7.

However, while N.J. Ct. R. 1:21-7 expressly incorporates RPC 1.5 the opposite is not true. RPC 1.5 does not expressly incorporate N.J. Ct. R. 1:21-7, nor do the local rules of this Court except for pro hac vice attorneys. And adopting N.J. Ct. R. 1:21-7, a state procedural rule to assess a fee request in a case involving a federal statutory tort would appear to violate the general rule that federal courts apply federal procedure and not state procedure. See, e.g., Leonardis v. Burns Intern. Sec. Services, Inc., 808 F. Supp. 1165, 1186, 1186 n.28 (D.N.J. 1992) (explaining that "it is an error of law to apply N.J. Rule 4:42-9(a)(6) - a New Jersey state procedural rule [regarding in which actions attorney's fees are permitted] - to a non-New Jersey cause of action," explaining that to do so would "violate the constitutional rule that in federal court actions with federal question jurisdiction, federal rules of procedure are followed") (citing First State Underwriters Agency of New England Reinsurance Corp. v. Travelers Ins. Co., 803 F.2d 1308, 1316 (3d Cir. 1986); New Jersey v. Kinder, 701 F. Supp. 486, 488 (D.N.J. 1988); Watson v. Manhattan & Bronx Surface Trans. Operating Auth., 487 F. Supp. 1273, 1276 (D.N.J. 1980)); Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., 559 U.S. 393,406-07 (2010) ("Congress has undoubted power to supplant state law, and undoubted power to prescribe rules for the courts it has created, so long as those rules regulate...