Gavel in court - GuiltySeveral colleagues shared Judge Paul C. Huck’s August 23, 2019 sanctions order in Johnson v. Ocaris Management Group, Inc., Case No. 1:18-cv-24586 (S.D. Fla. August 23, 2019), and it provides a good counterpoint to the cases discussed in my last Sea to Shining Sea blog. The short sweet news is that Scott Dinan, Florida attorney, and his partner in the ADA business, Alexander Johnson were sanctioned by the court and required to disgorge certain fees (amounting to $59,900) and to pay a penalty in the same amount as well as notify other courts of the sanction. However, it is worth taking a closer look at the legal grounds on which the sanction rests because those grounds may apply to other serial litigants even if their conduct is not quite as outrageous as that of Dinan and Johnson.

Judge Huck listed four kinds of misconduct that justified his sanctions. Johnson and Dinan:

  • Filed numerous frivolous claims,
  • Knowingly misrepresented the billable time expended to litigate these claims,
  • Made numerous other misrepresentations to the Court, and
  • Improperly shared attorneys’ fees in violation of bar rules against fee sharing with non-lawyers.

The Court’s concern with the frivolous claims filed seems to have been based in part on the way Dinan and Johnson “abused” the ADA. In the Court’s words, Dinan and Johnson:

deliberately and knowingly abused the ADA and the legal system solely for their own financial gain, and in total disregard of the hearing-impaired for whom they sanctimoniously but disingenuously professed to have brought these lawsuits. In doing so, they have, unfortunately, undermined the credibility of legitimate ADA cases.

The basis for this conclusion is that many of the settlements made by Dinan and Johnson did not require any remedial relief, or required relief that was of no benefit to the hearing impaired. They were clearly in it only for the money. My own experience is that plaintiffs’ attorneys usually (not always) insist on some remediation relief but that in most cases neither they nor the plaintiff ever check to see if the remedial work was performed. Proving no one ever checked is difficult or impossible, so this isn’t a likely ground for attacks on serial filers less outrageous than Dinan and Johnson.

The second basis for sanctions was billing misrepresentations, including what the court found to be gross over-billing. This problem came up in default judgment cases where attorneys’ fees are awarded as a matter of course. The issue is interesting because in almost every default judgment opinion I’ve read from federal courts in California the court makes a downward adjustment to the billing rate claimed and usually makes a downward adjustment to the hours claimed. This also happens frequently in litigated claims. It appears that a little exaggeration or billing inflation is expected of attorneys who submit fee requests, for the California cases do not criticize the lawyers who asked for more than they got even when they find the request unreasonable. Nonetheless, Judge Huck’s hard look at Dinan’s billing practices could serve as an example in other ADA cases where default is the strategy. While the fees awarded in such cases seem modest by federal court standards ($3500 to $6000 or so) the exaggeration is fairly clear. It is unlikely that filing a form complaint with only the names changed, followed by service of process and a motion for entry of default could take more than 3 or 4 hours at most, but courts routinely accept the notion that it took four or more lawyers a total of 10 or more hours to accomplish these simple tasks. Part of the problem is simply the lack of context. If you consider any one case the hours look reasonable. When you look as Judge Huck did at a number of nearly identical cases the billing exaggeration becomes much more apparent.

Misrepresentations to the Court seem to be the most serious of Dinan’s and Johnson’s misconduct. Dinan exaggerated his experience and qualifications beyond what is common even in today’s atmosphere of endless self promotion, including some outright lies. He seems also to have lied about the size of the staff it took to run his litigation machine. What most annoyed the judge, however, was Dinan’s blatant hypocrisy in claiming that he was concerned with the rights of the disabled when his conduct revealed that he would willingly sacrifice the interests of those with disabilities for a little bit of money. If Dinan appeals these sanctions, which seems likely, it will be interesting to see what the 11th Circuit thinks of this. If hypocrisy is sanctionable, then few if any ADA plaintiff’s attorneys will be able to avoid sanctions. It is more likely, I think, that the 11th Circuit will find that exaggerating one’s commitment to the public good is not sanctionable. The real problem is filing suits without the intent to seek relief other than attorneys’ fees no matter what the motive.

Fee sharing between an attorney and non-attorney is forbidden by the ethical rules of most states so it is not surprising that Dinan’s sharing of fees with Johnson drew the judge’s ire although enforcing state bar ethics rules is usually not the job of federal judges. This could, however, point to a reasonable way to attack the business of serial plaintiffs. I’ve noticed that most plaintiffs’ attorneys will never agree to reveal how much money their clients got out of any settlement, but I assume that even if the amounts are nominal they are not zero. That would, under Judge Huck’s analysis, mean every ADA plaintiffs’ lawyer is engaged in unethical fee splitting. The problem is that while the ADA does not include any monetary relief for plaintiffs in private Title III cases, that does not mean the plaintiff is not entitled to demand money as a condition for settlement. Litigants often demand and get things they could never win in court as part of settlement. In an ordinary personal injury case, for example, neither side would be entitled to a confidentiality order, non-disparagement order, payout over time, or many similar things included in common settlement agreements. ADA claims look different because there is such a clear “no money for the plaintiff” rule, but the real question is whether an ADA plaintiff is entitled to demand money for settling an ADA claim. The ADA does not forbid this, and in cases taken on by DOJ damages are available to the plaintiff, meaning there is no hard rule that you just don’t get money as an ADA plaintiff.

There is, however, a good use for Judge Huck’s rationale. I believe a defendant can insist that in settlement negotiations the amount for the plaintiff and amount for the attorney be separated. If I offer the plaintiff’s attorney $3,000 for the plaintiff and $1,000 for the attorney the attorney is ethically obligated to inform the plaintiff of that offer and to consider whether the offer is in the client’s interest. I believe clever plaintiffs’ lawyers can work around it, but setting opposing client against opposing lawyer just sounds like a nice thing to do.

At the end of the day the strength of Judge Huck’s opinion lies in the argument that Dinan and Johnston filed frivolous claims because they never intended to seek the relief permitted by the statute and that Dinan lied about his qualifications and billing. The idea that hypocrisy could be sanctioned would strike terror into the hearts of most lawyers, and fee splitting is hard to prove without some explicit agreement. We’ll see in a year or so what the 11th Circuit thinks.