June 19, 2024

A federal judge on Wednesday barred a Little Rock attorney and the law firm he heads from practicing in federal court in the Eastern District of Arkansas for two years, citing their efforts to collect what the judge described as inflated attorneys fees in a class-action lawsuit settlement and drag out litigation over the issue.

The order by US District Judge Billy Roy Wilson sanctioning attorney Josh Sanford and the Sanford Law Firm was followed almost immediately by a notice of appeal.

The law firm won a class-action lawsuit filed in 2018 on behalf of Anthony Vines and Dominique Lewis, who represented a class of workers at Welspun Pipes Inc., accusing the company of underpaying the workers for overtime hours they worked. A complaint accused the company of rounding down hours worked on its electronic time clock, resulting in several hours of unpaid work each month, and of not paying overtime in accordance with federal wage and hour laws.

In May 2020, Wilson refused to approve a settlement in the case, balking over the $96,000 in attorney’s fees that were included.

He instead sent the parties back to the negotiating table with orders to “start from scratch” and keep attorneys’ fees out of the negotiations, which he said the 8th US Circuit Court of Appeals had declared must be decided separately, and he accused the Sanford firm of trying to “squeeze excessive fees” out of the company by tying the resolution of the claims to an agreement on fees.

The next month, Wilson approved a liability settlement in which Welspun agreed to pay $211,666 to be divided among 160 people, and an additional $57,673 to be divided among another 74 people who comprised a second class of employees who opted into the lawsuit after the settlement was reached.

When a separate fee negotiation failed to reach an agreement, however, the Sanford firm filed a new request in June 2020 for the same amount of fees it had originally sought. Wilson, in a blistering order, denied the request and awarded the Sanford firm $1, saying he was only awarded that amount because the statute said attorneys’ fees “shall” be paid to the winning party.

The ruling was immediately appealed to the 8th Circuit, which vacated Wilson’s order and remanded the case to him in August 2021, ordering Wilson to calculate an award of attorney fees using the lodestar calculation, in which a trial court multiplies the number of hours reasonably spent by trial counsel by a reasonable hourly rate to arrive at a final calculation.

The following month, Wilson was awarded the law firm $500 in attorney fees and $2,790.87 in costs. In that order, Wilson wrote, “This case continues to be drawn out because the Sanford Law Firm (SLF) wants to be paid for work it has never performed and never intended to perform. Additionally, the work SLF actually did perform was billed at inflated hourly rates and far exceeded the number of reasonable hours that should have been devoted to this case.” According to his September 2021 order, Wilson calculated a lodestar of $14,056.50 which he reduced to $500 “based on SLF’s egregious conduct,” and $2,790.87 in costs.

An appeal of that ruling elected in an unanimous decision by a three-judge panel on June 29 that Wilson did not abuse his discretion but had “complied to the letter with our directive on how to calculate an award of attorneys’ fees and provided ample justification for reducing the lodestar based on SLF’s unprofessional conduct.” That same day, Wilson issued an order to Sanford Law Firm to appear Wednesday before his court to show cause “as to why it should not be held in contempt of court and sanctioned under Federal Rule of Civil Procedure 11.”

On Wednesday, Sanford, accompanied by Little Rock attorney Jeff Rosenzweig, appeared in court. On July 6, Rosenzweig had filed a motion for order requesting a bill of particulars from Wilson laying out the details of his show cause order. The next day, he filed a motion asking for a continuance in order to have time to absorb the new information. That same day, Wilson denied both motions.

On Wednesday, Rosenzweig opened with a renewed motion for orders requesting a bill of particulars, which Wilson again denied.

“I don’t know how I can put it any plainer,” the judge said.

“You clearly said denied and we understand that,” Rosenzweig countered. “The problem is this… there’s no specificity as to what the Sanford Law Firm did in this case.”

Without knowing if the Sanford firm was facing civil or criminal contempt, Rosenzweig said, it had been impossible for him to craft a response to the judge.

Citing the 8th Circuit’s affirmation of Wilson’s order reducing the Sanford firm’s fee to $500, he said the firm had already been punished.

“He’s already been sanctioned,” Rosenzweig said. “Our concern is that we don’t know what we’re here for.”

As he overruled Rosenzweig’s objection, Wilson said he was considering a finding of civil contempt for violations of Rule 11 of Civil Procedure.

“Specifically,” he said, “settlement negotiations, fee demands, fee requests from the court and meritless appeals.”

Wilson then outlined five specific charges, saying that the Sanford firm had presented claims for improper purpose, caused unnecessary delays, needlessly increased the cost of litigation, presented frivolous arguments to support claims and arguments with no evidence to support them.

As Rosenzweig asked Wilson what document he was reading from, the judge said impatiently, “I’m reading my outline.”

“Oh,” Rosenzweig said, “you’re reading your outline. It’s not in the show cause order. That’s the problem.”

Greg Northen, who represented Welspun in the lawsuit, described the course of negotiations with the Sanford firm over the settlement and the firm’s fees. Northen said Welspun had provided a spreadsheet taken from the timekeeping system to open settlement talks and described how the talks moved forward.

“At some point in 2019,” he said, “we submitted a motion for approval.”

Northen said he didn’t recall making any complaints about the Sanford firm during the negotiations, saying he “didn’t have a practice of complaining about opposing counsel,” during negotiations.

Ultimately, he said, “We agreed to pay the amount demanded by the plaintiffs.”

“Since we don’t really know the specifics, or we didn’t until you read your outline that was not a part of the show cause order, we have no other evidence to present,” Rosenzweig said, as Northen exited the witness stand.

He maintained to Wilson that insufficient notice of what allegations were being made had hampered his ability to represent the Sanford firm.

“We don’t know what all we’re accused of,” he said.

Ignoring Rosenzweig’s complaint, Wilson stepped away from the bench, returning after 15 minutes to announce that both Sanford and the Sanford Law Firm would be suspended from practicing law in federal court in the Eastern District of Arkansas for two years. After the two-year period, Wilson ruled, both would be allowed to request lifting of the sanctions but would be required to submit supporting documents, “regarding how his practices have changed.” The judge also ruled that during the suspension, Sanford and the Sanford firm would be required to provide copies of the June show cause order and Wilson’s written ruling ordering the suspension to any jurisdiction in which they practice.

“Any attempt to circumvent this suspension by, for example, associating other lawyers,” Wilson said, “will be closely examined and Mr. Sanford is directed to advise any lawyers he associates with of this fact.”

“We ask that the ruling be stayed while we appeal to the 8th Circuit,” Rosenzweig asked immediately upon hearing Wilson’s order.

“Denied,” Wilson said, flatly. “Exception saved,” he added, indicating that the objection had been preserved in the record.

Rosenzweig then pointed out that the wording of the show cause order appeared to exclude Sanford personally from the sanctions.

“You appear to be sanctioning Mr. Sanford,” he said.

“That’s true,” Wilson replied.

“Will the court grant us a 10 day stay of the order so we can ask for relief in the 8th Circuit on an emergency basis?” Rosenzweig asked.

“No,” Wilson replied. “Exception saved.”

Tight-lipped and grim-faced as he left the courtroom following the hearing, Sanford did not comment on Wilson’s ruling.

“We’re going to appeal the ruling as soon as …” Rosenzweig began, then stopped. “We’re going to appeal. I’ll leave it at that.”

Within four hours of Wilson’s ruling, a notice of an appeal asking the 8th Circuit to review the order was filed, noting that Josh Sanford himself had not been named as a respondent to the show cause order, “but was still sanctioned.”

Information for this article was contributed by an Arkansas Democrat-Gazette archive article.