Massive Whack to Fees Iran Owes McKesson

     (CN) - The application of Iranian law in a 32-year-old case means reducing attorneys' fees to McKesson from $13.4 million to just $29,500, a federal judge ruled.
     The pharmaceutical giant's 1982 complaint alleged that the Islamic Republic of Iran expropriated McKesson's equity interest in an Iranian dairy after the 1979 revolution and failed to pay its dividends.
     After winning damages of $29.3 million in 2013, McKesson sought reimbursement of the substantial costs of the litigation.
     A judge initially awarded $11 million in fees and costs to McKesson's counsel at Morgan, Lewis & Bockius LLP and Winston & Strawn LLP, but the figure plumped further with continued litigation.
     Though both parties agreed that Iranian law controlled the question of attorney's fees, as it governed the subject of the dispute, McKesson urged a calculation of fees under American law.
     Iran meanwhile claimed that, if the case had been filed in Iranian courts by Iranian counsel, application of an official tariff would yield a fee award of $29,516.
     A three-judge panel with the D.C. Circuit vacated the award Tuesday.
     "McKesson is content to use Iranian law insofar as it allows for fees and thus is more generous than the default American Rule (under 'American Rule' each litigant pays its own attorney's fees unless statute or contract provides otherwise)," Judge Karen Henderson wrote for the court. "But McKesson runs from Iranian law where it is less generous than U.S. law - i.e., where the applicable tariff yields a smaller award than might have been granted if McKesson had brought its action under a U.S. fee-shifting statute. We think the internal inconsistency of McKesson's argument is telling."
     McKesson did not dispute Iran's calculation that the company is entitled to $29,516 in fees under Iranian law, and that is the figure it must accept, according to the ruling.