SAN FRANCISCO (CN) - A federal judge trimmed a request for more than $4.5 million in attorneys' fees from a merger dispute, citing block-billing, excessive time claims and other deficiencies.
Volcano Corporation requested $3,557,034.50 in attorneys' fees and $1,023,995.99 in costs, for a total of $4,581,030.49 after being granted summary judgment in a dispute over a merger agreement.
Volcano, a medical device maker, acquired CardioSpectra in 2007 in a $25.2 million merger that promised an additional $38 million in "milestone" payments to former Cardio shareholders.
The company's milestones were based on regulator approval of CardioSpectra's optical coherence tomography system for high-resolution imaging of coronary arteries. Volcano made its first milestone payment of $11 million, but did not follow through with subsequent payments after failing to acquire further regulatory approval, resulting in a shareholder lawsuit.
Lead plaintiff Christopher Banas sued Volcano in 2012, claiming Volcano breached its contractual obligation to use "good faith and reasonable commercial efforts to achieve Milestone 2 and that Volcano failed to pay shareholders after Milestones 3 and 4 were satisfied," according to U.S. District Judge William Orrick's summary of the proceedings.
Orrick on Dec. 12 granted Volcano's motion for summary judgment and denied Banas' cross motion for summary judgment, citing, in part, misinterpretation of the merger agreement.
Orrick said, however, that Volcano's subsequent request for attorneys' fees is excessive.
"Volcano seeks a staggering amount for a breach of contract case, which was resolved at summary judgment," Orrick wrote. "Its documentation of those fees and costs, however, was remarkably deficient."
Orrick cited "block-billing" as one deficiency.
"There is no way to determine whether the time claimed for any particular task is reasonable because Volcano did not identify the fees or time associated with these tasks individually," Orrick wrote. "I am reducing Volcano's bill by 20 percent for block billing."
Orrick added that while he agrees with "some" of the plaintiffs' criticisms of Volcano's documentation, he did not agree with all of them.
"The rates requested by Volcano, while high, are within the prevailing market rates for similar cases in the Northern District," Orrick wrote.
He awarded Volcano $2,586,963.38 in fees and $937,503.17 in costs, for a total of $3,524,466.55.
Volcano was represented by Cooley LLP.
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