Captain Lori Albunio et al., Appellants,v.The City of New York, et al., Defendants, Mary D. Dorman, Nonparty-Respondent.BriefN.Y.February 18, 2014To be Argued by: PAUL O’DWYER (Time Requested: 20 Minutes) New York County Clerk’s Index No. 113037/03 Court of Appeals of the State of New York CAPTAIN LORI ALBUNIO and LIEUTENANT THOMAS CONNORS, Plaintiffs-Appellants, – against – THE CITY OF NEW YORK, THE NEW YORK CITY POLICE DEPARTMENT, INSPECTOR JAMES HALL, Individually and as an Employee, and FREDERICK PATRICK, Individually and as an Employee, Defendants. ––––––––––––––––––––––––––––– MARY D. DORMAN, Non-Party Respondent. BRIEF FOR NON-PARTY RESPONDENT LAW OFFICE OF PAUL O’DWYER Attorney for Non-Party Respondent 134 West 26th Street, Suite 902 New York, New York 10001 Tel.: (646) 230-7444 Fax: (646) 230-7381 Date Completed: August 16, 2013 i TABLE OF CONTENTS Page TABLE OF AUTHORITIES ................................................................................... iii INTRODUCTION ..................................................................................................... 1 STATEMENT OF FACTS ........................................................................................ 2 A. The Underlying Proceedings ........................................................................... 2 B. The Fee Dispute Litigation .............................................................................. 4 SUMMARY OF ARGUMENT ............................................................................... 11 ARGUMENT ........................................................................................................... 14 Point 1 Construction of a retainer agreement is a matter of state and not federal law ............................................................................................................................ 14 i. New York State courts have relied on relevant federal court decisions only for guidance in how to calculate fee awards, not for construction of a retainer agreement ....................................... 14 ii. Attorney-client retainer agreements have historically been a matter of state and not federal law ...................................................... 18 iii. Even the federal court cases that Plaintiffs cite allow for an arrangement such as the one entered into between Ms. Dorman and Plaintiffs ......................................................................... 21 Point 2 Plaintiffs are seeking an impermissible advisory opinion from this Court ............. 27 Point 3 The Appellate Division correctly enforced the language of the retainer agreements................................................................................................................ 29 i. The language of the retainer agreements was plain and unambiguous and understood by Plaintiffs ......................................... 31 ii. The provisions of the retainer agreements were eminently fair and reasonable ..................................................................................... 38 ii iii. In the event the retainer agreements are found to be ambiguous and not understood by the parties, the Court must remand the case back for an evidentiary hearing as to what had been explained to Plaintiffs at the time the agreements were executed ...................................................................................... 40 Point 4. The Appellate Division correctly refused to set aside the retainer agreements for the work done on appeal ............................... 42 CONCLUSION ........................................................................................................ 46 iii TABLE OF AUTHORITIES Page(s) Cases: Albunio v. City of New York, 101 A.D.3d 656, 955 N.Y.S.2d 876 (1st Dep't 2012) .................11, 15, 19, 34 Albunio v. City of New York, 16 N.Y.3d 472, 947 N.E.2d 135, 922 N.Y.S.2d 244 (2011) ........................... 4 Albunio v. City of New York, 35 Misc. 3d 1238A, 954 N.Y.S.2d 757 (N.Y. Sup. Ct. 2012) ................... 4, 45 Albunio v. City of New York, 67 A.D.3d 407, 889 N.Y.S.2d 4 (1st Dep't 2009) ........................................... 4 Alderman v. Pan Am World Airways Alvarado v. Fed Ex Corp, 2011 WL 4708133 (N.D. Cal. 2011) ............................................................. 25 , 169 F.3d 99 (2d Cir. 1999) ...................................................................... 11, 19 Barwari v. Mukasey, 282 Fed. Appx. 896 (2d Cir. 2008)................................................................ 24 Bates v. Kuguenko, 100 F.3d 961 (9th Cir. 1996), 1996 U.S. App. LEXIS 29385, 1996 WL 654449 (9th Cir. 1996) ......... 10, 26 Bizar & Martin v. U.S. Ice Cream Corp., 228 A.D.2d 588 (2d Dep't 1996) ................................................................... 40 Cuomo v. Long Island Lighting Co. Daly v. Hill, 790 F.2d 1071 (4th Cir 1986) ........................................................................ 25 , 71 N.Y.2d 349 (N.Y. 1988) ............................................................... 12, 28, 29 Diaz v. Franco, 257 A.D.2d 449, 683 N.Y.S.2d 267 (1st Dept. 1999) ................................... 17 Eulista v. City of Chicago, 696 F.3d 690 (7 Cir. 2012) ............................................................................ 27 Fornuto v. Nisi, 84 A.D.3d 617, 923 N.Y.S.2d 493 (1st Dept. 2011) ..................................... 17 iv Gair v. Peck, 6 N.Y.2d 97, 160 N.E.2d 43, 188 N.Y.S.2d 491 (1959) ............................... 20 Gray v. Dummitt, 2007 U.S. Dist. LEXIS 93993 (E.D.N.Y. 2007) ........................................... 19 Gray v. Dummitt Griffin v Washington Convention Center, 172 F. Supp.2d 193 (D.D.C. 2001) .......................................................... 25-26 , 2009 U.S. Dist. LEXIS 9776 (E.D.N.Y. 2009) ............................................. 19 Hamilton v. Ford Motor Co, 636 F.2d 745 (DC Cir. 1980) ......................................................................... 25 Jacobson v. Sassower, 66 N.Y.2d 991, 489 N.E.2d 1283, 499 N.Y.S.2d 381 (1985) ................. 30, 41 Jiggetts v. Downing, 3 A.D.3d 326, 771 N.Y.S.2d 78 (1st Dept. 2004) ......................................... 17 King v. Fox, 418 F.3d 121 (2d Cir. 2005) .................................................................... 16, 20 King v. Fox, 7 N.Y.3d 181, 851 N.E.2d 1184, 818 N.Y.S.2d 833 (2006) ..................passim Koeppel v. Koeppel, 95 A.D.3d 453, 944 N.Y.S.2d 48 (1st Dept. 2012) .......................... 13, 36, 37 Lawrence v. Miller Leonard v. Argento, 699 F.2d 874 (7th Cir. 1983) .......................................................................... 25 , 11 N.Y.3d 588, 901 N.E.2d 1268, 873 N.Y.S.2d 517 (2008) ................. 29, 30 McGrath v. Toys "R" Us, Inc., 409 F.3d 513 (2d Cir. 2005) .................................................................... 16, 20 McGrath v. Toys ‘R’ Us, Inc., 3 N.Y.3d 421, 821 N.E.2d 519, 788 N.Y.S.2d 281 (2004) ............... 15, 16, 17 Montgomery v. Noga, 168 F.3d 1282 (11 Cir. 1999) ......................................................................... 26 New York Public Interest Research Group, Inc. v. Carey, 42 N.Y.2d 527 (1977) .................................................................................... 28 v Pickett v. Sheridan Health Care Ctr., 664 F.3d 632 (7th Cir. 2011) ................................................................... 22, 23 Quint v. AE Staley Manufacturing Company Ross v. Douglas County, 244 F.3d 620 (8th Cir. 2001) .......................................................................... 25 , 245 F. Supp. 2d 162 (D. Maine 2003) ........................................................... 22 Seligson, Morris & Neuburger v. Fairbanks Whitney Corp., 22 A.D.2d 625, 257 N.Y.S.2d 706 (1st Dept. 1965) ..................................... 34 Shaw v. Manufacturers Hanover Trust Co., 68 N.Y.2d 172 (N.Y. 1986) ........................................................................... 27 Sorrenti v. City of New York Sullivan v. Crown Paper Board, 719 F.2d 667 (3rd Cir. 1983) ......................................................................... 25 , 17 Misc. 3d 1102A (N.Y. Sup. Ct. 2007) ........................................................ 3 T.D. v. New York State Office of Mental Health Talbott v. Bowen, 832 F.2d 111 (8th Cir. 1987) , 91 N.Y.2d 860 (1997) .................................................................................... 29 .......................................................................... 25 Uy v. Bronx Mun. Hosp. Ctr., 182 F.3d 152 (2d Cir. 1999) .......................................................................... 19 Velarde v. Pace Membership Warehouse, 105 F.3d 1313 (9th Cir 1997) ........................................................................ 26 Venegas v. Mitchell, 495 U.S. 82, 110 S. Ct. 1679, 109 L. Ed. 2d 74 (1990) .........................passim Williams v. New York City Hous. Auth., 61 A.D.3d 62, 872 N.Y.S.2d 27 (1st Dep't 2009), leave to appeal denied, 13 N.Y.3d 702, 914 N.E.2d 365, 885 N.Y.S.2d 716 (2009) ................................................................... 17-18, 22 Wolfgang v. Hampton Hill Villas Condo. Bd. of Mgrs, 30 A.D.3d 1057 (4th Dep't 2006) ............................................................ 40, 42 Wotman v. Chang, 2012 NY Misc. LEXIS 3370 (S. Ct. 2012) ................................................... 36 vi Zakrzewska v. New School Statutes & Other Authorities: , 14 N.Y.3d 469, 928 N.E.2d 1035, 902 N.Y.S.2d 838 (2010) ................. 16-17 42 U.S.C. § 1988 ................................................................................................ 17, 19 22 N.Y.C.R.R. § 1200, Rule 1.2 .............................................................................. 20 22 N.Y.C.R.R. § 1200, Rule 1.5 .............................................................................. 20 22 N.Y.C.R.R. § 1200, Rule 1.16 ............................................................................ 20 N.Y. Judiciary Law § 474 ............................................................................ 12, 20, 21 New York City Human Rights Law .......................................................................... 2 N.Y.C. Adm. Code § 8-502(f) ..........................................................................passim FRAP Second Circuit Local Rule 32.1.1 ................................................................. 24 FRAP Ninth Circuit Local Rule 36.3(a) .................................................................. 26 1 INTRODUCTION Non-party respondent Mary D. Dorman submits this brief in the within case. The essence of Plaintiffs’ argument is that this case is controlled not by state but by federal law, which mandates deduction of all statutory fees for trial and appellate work from Ms. Dorman’s contingency fee so that they have to pay her nothing, thus overriding completely the express terms of their retainer agreements, notwithstanding the absence of any claim whatsoever by Plaintiffs that they misunderstood the relevant terms of the retainer agreements, or that they were unfair or unreasonable. The essence of Ms. Dorman’s argument is that she and Plaintiffs plainly intended to include any statutory fees for the trial with the amount of the verdict for contingency purposes, that they likewise intended that her retainer agreements for appellate work would be treated separate and apart from the retainer agreement for the trial, and that the terms of the retainer agreements to that effect are clear and unambiguous. New York State law controls, and in the absence of any claim by Plaintiffs that they misunderstood the terms of the retainer agreements, or that the result is unfair or unreasonable, the agreements must be enforced. 2 STATEMENT OF FACTS A. The Underlying Proceedings In May 2003, Plaintiffs retained a law firm, Spar and Bernstein PC, to represent them in an action in New York State Supreme Court against the City of New York, the New York City Police Department and two individual NYPD employees (hereinafter “Defendants”), alleging unlawful retaliation, in violation of the New York City Human Rights Law (“HRL”). Each Plaintiff executed an identical retainer agreement with Spar and Bernstein, which provided for a 40 percent contingency fee or "reasonable attorneys' fees as determined by the court, whichever is greater" (R 30-33).1 Plaintiffs subsequently discharged Spar and Bernstein, and on March 2005, entered into two identical retainer agreements with Ms. Dorman. 2 1 Citations to the Record on Appeal are denoted by the letter R followed by the relevant page numbers. (R 28-29) Unlike the retainer agreements with Spar and Bernstein, these retainer agreements provided for a contingency fee of one-third "of the sum recovered, whether recovered by suit, settlement or otherwise", to be "computed on the net sum recovered after deducting taxable costs and disbursements, including expenses for expert medical testimony and investigative or other services properly chargeable to 2 Like Ms. Dorman, Spar and Bernstein also sought the intervention of the trial court to enforce their retainer agreements with Plaintiffs. That matter was ultimately settled. 3 the enforcement of the claim or prosecution of the action. But for the following or similar items there shall be no deduction in computing such percentages:…. liens, assignments or claims in favor of hospitals, for medical care and treatment by doctors and nurses, or of self insurers or insurance carriers" (R 28-29). In November 2006, after a seventeen-day trial, a jury awarded $479,473.00 to Albunio and $507,198.00 to Connors. This verdict was upheld after post-trial motions and then reduced to judgment. Sorrenti v. City of New York, 17 Misc. 3d 1102A (N.Y. Sup. Ct. 2007). Pursuant to N.Y.C. Adm. Code § 8-502(f) (“the court, in its discretion, may award the prevailing party costs and reasonable attorney's fees”), Plaintiffs were awarded $279,756.00 in statutory counsel fees plus $17,070.00 in disbursements. Defendants then appealed the judgment to the Appellate Division, First Department, and each Plaintiff executed a second retainer agreement with Ms. Dorman for representation on that appeal (R 34-35). These agreements provided that in the event Plaintiffs were unsuccessful on the appeal, they would not have to pay Ms. Dorman anything, and that in the event they were successful on appeal, Ms. Dorman would be entitled to the greater of $20,000 from each, or any fees that might be awarded by the Court. Each retainer agreement provided that "this agreement is separate and apart from the former retainer agreement between the parties regarding the initial underlying Supreme Court action and shall 4 not supersede them". (R 34-35) The Appellate Division upheld the verdict, with one judge dissenting, Albunio v City of New York, 67 A.D.3d 407, 889 N.Y.S.2d 4 (1st Dep't 2009), and granted Defendants leave to appeal to the Court of Appeals. Ms. Dorman then executed a third retainer agreement with each Plaintiff for the case at the Court of Appeals (R 36-37). These retainer agreements mirrored the retainer agreements for representation in connection with the appeal to the Appellate Division. In June 2011, a unanimous Court of Appeals upheld the decision. Albunio v City of New York, 16 N.Y.3d 472, 947 N.E.2d 135, 922 N.Y.S.2d 244 (2011). Upon Ms. Dorman’s application, the trial court granted in part and denied in part Ms. Dorman’s motion for attorneys’ fees and disbursements, for all of the appellate work. The Court awarded her $270,785.93, of which $36,820 was for Ms. Dorman’s co-counsel, counsel herein. Albunio v City of New York, 35 Misc.3d 1238A, 954 N.Y.S.2d 757 (N.Y. Sup. Ct. 2012). B. The Fee Dispute Litigation On August 10, 2011, Ms. Dorman forwarded to Plaintiffs her proposed distribution of the funds she held, which added the counsel fees for the trial work to the verdict, as the sum to be distributed, to a total of $1,955,798 (including interest on all sums). Of this sum, Connors was to receive $656,681, Albunio was 5 to receive $649,134, and Ms. Dorman was to receive $649,983. (R 41) Plaintiffs (through their new attorney) disputed Ms. Dorman's proposed distribution, arguing (for the first time since they had retained her, some six years earlier) that all of the statutory fees which had been awarded Ms. Dorman, including the fees for her appellate work, should be deducted from her one-third contingency fee, so that they owed her nothing. (R 38 – 40). Thus, according to Plaintiffs, they should each have received the full amount of the verdict recovered from the trial, a total of $1.55 million ($781,279 for Connors and $769,958 for Albunio, including interest), while Ms. Dorman’s compensation should be limited to the statutory fees for her trial and appellate work, and nothing else.3 If Ms. Dorman had not applied for fees, Connors would have received $520,852, Albunio would have received $513,305, and Ms. Dorman would have received $517,078. According to Plaintiffs, the net result of Ms. Dorman’s application for fees for the trial work would have been to reduce her own recovery by $129,000 ($237,000 if the interest on the award and disbursements are excluded), while increasing Plaintiffs’ recoveries by $129,000 each. The net result of her application for appellate fees would have been to wipe out her contingency fee altogether. 3 Plaintiffs also claim that even the disbursements and pre-judgment interest on the statutory fees should be deducted from the verdict. See, Plaintiff’s brief, p. 6, stating that the statutory fees for the trial were $387,491. Thus, although Plaintiff’s assert that the statutory fees are Ms. Dorman’s, they nonetheless argue that they should get a credit for the accrued interest on these fees. 6 Ms. Dorman then filed an Order to Show Cause, asking the trial court to enforce the retainer agreements according to their terms, namely, that the statutory fee award for the trial work be deemed part of the "sum recovered" for purposes of the one-third contingency fee calculation, and that the fees awarded for work done on the two appeals be considered separately. (R 20 -21) In her affidavit filed in support of the Order to Show Cause, Ms. Dorman stated that she had explained the terms of each of the retainer agreements with each of the Plaintiffs prior to them being signed, and on a number of other occasions, and that they had expressed no disagreement (R 23 – 24, ¶ 7, 12 - 16). Further, and by contrast to the retainer agreements Plaintiffs had executed with Spar and Bernstein, their earlier attorneys, Ms. Dorman’s retainer agreements with Plaintiffs did not provide that any statutory fees awarded would be deducted from the contingency fee. Her affidavit states that when Defendants appealed the judgments to the Appellate Division, she again explained to both Plaintiffs that the statutory fee award “went into the pot” as part of the total recovery for contingency purposes, and that neither of them disagreed.4 Plaintiffs opposed Ms. Dorman's Order to Show Cause. They each submitted identical affidavits, stating that at the time the retainer agreements were (id.) 4 Plaintiffs’ attorney states that this was the first time Ms. Dorman explained this to Plaintiffs. (Plaintiffs’ brief, p. 7) That is incorrect. The record reflects that Ms. Dorman explained the terms of the retainer agreements to Plaintiffs at the time they were signed. (R 23). 7 signed there had been no discussion about the statutory fees (R 59 – 60, ¶ 2; 63 – 64, ¶ 2). They did not state, or even suggest, that they expected or understood any statutory fees to be deducted from the contingency fee, or that they were not aware of the potential for a statutory fee award. They did not deny that Ms. Dorman had explained fully to them her intent to add the statutory fees for the trial to the amount of the verdict at the time of the appeal to the Appellate Division, or that they did not disagree; they merely stated that “there is no writing anywhere” indicating that they had agreed to this arrangement. Nonetheless, they continued to allow Ms. Dorman represent them, without voicing any disagreement. They argued that they signed the retainer agreements for the work on appeal (which did not require them to pay any fees whatsoever to Ms. Dorman) because otherwise they would have had to hire another attorney to represent them, which would have been “too expensive”. (R 60, ¶ 4; 64, ¶ 4)5 Plaintiffs’ attorney argued that federal law prohibited adding the statutory fees to the verdict for contingency fee calculation purposes, and that instead it had to be subtracted from the contingency fee, that the retainer agreements for the work done on appeal should be disregarded, and that any statutory fees awarded for appellate work should also be subtracted from the one-third contingency fee, so 5 As with all contingency cases, the risk Ms. Dorman assumed in each of her retainer agreements with Plaintiffs was that if the case was lost at this Court, she would have worked for over six years on this case and received nothing. 8 that Plaintiffs would owe Ms. Dorman nothing (R 57, ¶ 21). Plaintiffs made no factual allegation, and raised no argument, that their retainer agreements for the trial were vague, ambiguous, not understood, the products of duress, or that they were unreasonable or unconscionable. Neither did they request an evidentiary hearing to dispute Ms. Dorman’s statements that she had explained the terms of the retainer agreements to Plaintiffs before they signed them and subsequently. Their sole argument was that they were prohibited by federal law. With regard to the retainer agreements for representation on appeal, Plaintiffs claimed that Ms. Dorman “demanded” an additional $20,000 from each of them for doing the appeals, and that they had no choice but to agree because it would have been “too expensive” for them to hire another attorney to represent them on appeal (even though it is not typical for an attorney who tried the case to also do all of the appellate work). (R 60, ¶ 4; 64, ¶ 4) Plaintiffs’ assertion is seriously misleading: Ms. Dorman requested – rather than demanded - $20,000 only if successful and not awarded counsel fees; if unsuccessful, or if counsel fees awarded were more than $20,000, Plaintiffs would not have to pay her anything. And indeed, Plaintiffs have not had to pay her, and have not paid her, anything for her work done on appeal. That they nonetheless take issue with these retainer agreements, from which they have benefited 9 handsomely and which have not required them to lay out a penny, is astounding. In response, Ms. Dorman argued that she and Plaintiffs had plainly intended to include the statutory fees as part of the sum recovered for contingency purposes, that such an arrangement was not prohibited by law, and that as the retainer agreements were not unconscionable or unreasonable, they had to be enforced. She also argued that the retainer agreements for the work done on appeal had to be enforced according to their terms, having been freely negotiated and entered into. (R 70 - 78) On May 1, 2012, Justice Shulman issued a decision and order which granted in part and denied in part Ms. Dorman's Order to Show Cause.6 The Decision then went on to find that (R 8 – 18) Justice Shulman found that the agreements were "clear and unambiguous", and that “nothing in the retainers support Plaintiffs’ interpretation mandating that the statutory fee award be deducted from Dorman's one-third plus interest". He noted that the retainers authorized Ms. Dorman to retain one-third "of the sum recovered, whether recovered by suit, settlement or otherwise" and that "the only deductions from this sum are expressly stated in the retainers’ last paragraph. Notably absent is any deduction for statutory fee awards". 6 Justice Schulman denied Ms. Dorman’s application to treat $7,500 retainers paid to her by Plaintiffs as non-refundable. That part of his decision was also upheld by the Appellate Division and is not appealed here. 10 "Plaintiffs do not contend that their initial retainers with Dorman are unconscionable and this court concludes that they were reasonable when entered into and are reasonable in hindsight. The retainers are straight-forward contingent fee agreements providing for counsel to be compensated at the standard rate of one-third of any recovery obtained. Nor do they become unconscionable once Dorman prevailed on her applications for fees…. As Plaintiffs observed, the retainers contained no mention of statutory fees. As Dorman notes she was under no obligation to submit a claim for fees. That she did so demonstrates the zealousness that has characterized her representation of Albunio and Connors from its inception. “The bottom line is that Dorman's efforts increased each Plaintiffs recovery, as well as her own, by approximately $129,000.00. Plaintiffs proposed distribution of the judgments, interest and statutory fees would result in Dorman's share remaining the same, while increasing their own recoveries by approximately $190,000.00. Dorman being under no obligation to seek additional fees, it is unlikely she would have undertaken this additional task without obtaining some benefit for herself as well as Plaintiffs. “In analyzing the facts and circumstances surrounding the agreement, including the parties intent and value of the attorney services in proportion to the fees charged Plaintiffs intended to obtain two-thirds of any sum recovered. Their proposed calculations would result in a recovery of approximately 90%, which was clearly never contemplated when they entered into the retainers. (R 15 – 16) (internal quotations and citations omitted). On appeal, a unanimous Appellate Division upheld Justice Shulman’s decision, in a brief unsigned opinion. The Court held that: “The broad terms of the contingency fee agreement providing for a fee of 33 1/3 percent of "the sum recovered, whether recovered by suit, settlement or otherwise," unambiguously require that the award of attorneys' fees be included in "the sum recovered." The cases cited by plaintiffs involve retainer agreements with narrower provisions (see e.g. Bates v Kuguenko, 1996 U.S. App. LEXIS 29385, 1996 WL 654449, *1, [9th Cir 1996] [contingency fee to be computed as percentage of "damages recovered"]). Nor does this State follow the rule found in certain federal statutes that 11 contingency counsel must take the larger of the contingency fee or the statutory fee (see e.g. id., 1996 U.S. App LEXIS 29385, *3, 1996 WL 654449, *1). The parties' wholly separate retainer agreements for the appeals to this Court and the Court of Appeals expressly set the statutory fees for the appeals apart from the statutory and contingency fees for the trial level work.” Albunio v. City of New York, 101 A.D.3d 656, 955 N.Y.S.2d 876 (1st Dep't 2012). On April 13, 2013, this Court granted Plaintiffs’ motion for leave to appeal. SUMMARY OF ARGUMENT In their opening brief, Plaintiffs advance five arguments, none of which have any merit. First, they argue, at great length, that pursuant to several decisions from this Court and the Appellate Division, their retainer agreements with Ms. Dorman must be governed by federal court decisions made under federal civil rights statutes rather than by New York state law. (Plaintiff’s brief, pp. 12 – 15) This argument is misapplied here. The state court cases on which Plaintiffs rely for this argument look to federal court decisions for guidance only in the manner of calculation of an attorney fee award, not for the construction of a state court retainer agreement. Moreover, Plaintiffs’ argument is flatly contrary to the well-settled law that attorney-client retainer agreements are exclusively matters of state and not federal law. Alderman v. Pan Am World Airways, 169 F.3d 99, 103 (2nd Cir. 1999). 12 Plaintiffs next argue that this Court should adopt a rule for future cases that prohibits an attorney from retaining both the statutory fee and the contingency fee. (Plaintiff’s brief, pp. 15 – 22) However, as Plaintiffs concede, that is not an issue in this case. This Court cannot rule on a matter which is not in controversy, and is prohibited from providing advisory opinions such as the one requested, Cuomo v. Long Island Lighting Co., 71 NY2d 349 (1988). This part of Plaintiffs’ argument must be summarily rejected. Plaintiffs next argue that under “controlling” federal cases, New York State courts cannot allow statutory fees to be included with a verdict in order to determine the “sum recovered” subject to contingency, unless the retainer agreement “expressly” authorizes it. (Plaintiffs’ brief, pp. 22 – 30). Again, this argument fails. The Courts below correctly found the term “sum recovered” to be plain and unambiguous in the context of this case, Plaintiffs have never claimed they expected or thought they had agreed otherwise, and in any event, New York law does not require such an “express” provision in a retainer agreement. The relevant statutory provision governing attorney-client contracts, NY Judiciary Law § 474, provides that “The compensation of an attorney… is governed by agreement, express or implied, which is not restrained by law”. So long as it is understood by the client, reasonable, and not the product of duress or overreaching by the attorney – claims that are not raised here – the terms of the retainer 13 agreements must be upheld. Plaintiffs next argue that the Appellate Division was incorrect when it found the fee provisions of the retainer agreements to be clear and unambiguous, because an average plaintiff might not understand their terms. (Plaintiff’s brief, pp. 30 – 33). This argument fails very simply for the lack of any claim by Plaintiffs that they themselves actually misunderstood the terms of the retainer agreements. Instead, they merely argue that a hypothetical client might do so. This is plainly insufficient. The rule requiring construction of an ambiguous clause in a retainer agreement in favor of the client and against the attorney is intended as shield against attorney overreaching, and not as a sword for Plaintiffs’ personal gain, where there is no allegation that they did not understand or were misled by the relevant provisions in the retainer agreements, or by Ms. Dorman.7 Plaintiffs finally argue that the Appellate Division was incorrect in finding that the retainer agreements for representation on appeal were to be treated as separate and apart from the retainer agreements for the trial itself, despite the explicit language in those retainer agreements to that effect (Plaintiff’s brief, pp. 34 – 40). They argue – again – that New York courts must follow federal civil rights statutes, which treat the work done on appeal as part of the work done at the trial. 7 Of course, Ms. Dorman strongly denies that the agreements were ambiguous, when considered in the context of the parties and the litigation. Koeppel v. Koeppel, 95 AD3d 453, 944 NYS2d 48 (1st Dept. 2012). 14 Accordingly, they argue, any fees awarded for work done on appeal should have been treated as subject to the retainer agreement for the trial itself, and thus subtracted from the contingency fee, so that Ms. Dorman is not entitled to any contingency fee whatsoever. However, federal law says no such thing, and New York State, not federal, law controls the extent of Ms. Dorman’s obligations to represent Plaintiffs on appeal. Furthermore, Plaintiffs expressly and freely agreed with Ms. Dorman that the retainer agreements for work done on the appeals would be treated separate and apart from the retainer agreements for the trial. There is no basis to set those retainer agreements aside. In short, the retainer agreements were fully understood by Plaintiffs, were fair and reasonable, and must be enforced. ARGUMENT Point 1. Construction of a retainer agreement is a matter of state and not federal law. i. New York State courts have relied on relevant federal court decisions only for guidance in how to calculate fee awards, not for construction of a retainer agreement. The Appellate Division held that the contingency fee agreements “unambiguously required” that the award of attorney fees be included in the “sum recovered” for contingency purposes, noted that “the cases cited by plaintiffs involve retainer agreements with narrower provisions”, and concluded that “this State [does not] follow the rule found in certain federal statutes that contingency 15 counsel must take the larger of the contingency fee or the statutory fee.” Albunio v. New York, supra, 101 A.D.3d 656. On appeal to this Court, Plaintiffs argue that the state courts are “obliged” to follow federal court decisions interpreting federal civil rights statutes containing language similar to the state laws, citing to this Court’s decision in McGrath v. Toys ‘R’ Us, Inc., 3 N.Y.3d 421, 821 N.E.2d 519, 788 N.Y.S.2d 281 (2004), and a number of Appellate Division decisions (Plaintiff’s brief, pp. 12 – 15). They argue that because the Appellate Division “casually disregard[ed] federal law”, it must be reversed. Plaintiffs are mistaken. This Court and the Appellate Division have cited to federal civil rights cases only as useful authority (and not as binding precedent) in construing statutory attorney fee provisions of comparable state or local laws, not on the permissible construction of a state court retainer agreement. McGrath v. Toys ‘R’ US, supra, 3 N.Y.3d 421, undermines, rather than supports, Plaintiffs’ argument that New York State courts are bound by federal precedents involving federal statutes comparable to the New York City Human Rights Law. In that case, a federal court jury awarded the plaintiffs nominal damages of $1 because of a violation of their rights to a public accommodation on account of sexual orientation and gender identity, in violation of the New York City Administrative Code § 8-502(f). Their attorneys were granted over $190,000 in 16 attorney fees. Defendants appealed to the US Court of Appeals for the Second Circuit, which in turn certified a question to this Court, “[b]ecause of ambiguities in New York law regarding the standards applicable to determining a reasonable fee award under Administrative Code § 8-502(f) in a case of nominal damages” McGrath v. Toys "R" Us, Inc., 409 F.3d 513 (2d Cir. 2005). Likewise, in King v. Fox, 418 F.3d 121 (2nd Cir. 2005), the Second Circuit Court of Appeals again certified to this Court questions regarding ratification of an attorney’s fee agreement, King v. Fox, 7 N.Y.3d 181, 851 N.E.2d 1184, 818 N.Y.S.2d 833 (2006), proving again that attorney-client retainer agreements are subject to state and not federal law, even if they arise in a federal litigation. Of course, that is not to say that the federal court decisions to which this Court cited in McGrath, supra, 3 N.Y.3d 421, are not persuasive, or that there is not a compelling rationale for why New York State courts should follow their reasoning. There clearly is: to further the common goal underlying similar anti- discrimination state and federal statutes. “Where state and local provisions overlap with federal statutes, our approach to resolution of civil rights claims has been consistent with the federal courts in recognition of the fact that, whether enacted by Congress, the State Legislature or a local body, these statutes serve the same remedial purpose--they are all designed to combat discrimination.” McGrath, supra, 3 N.Y.3d 429; accord, Zakrzewska v. New School, 14 N.Y.3d 469, 928 17 N.E.2d 1035, 902 N.Y.S.2d 838 (2010) (state and local civil rights statutes are “generally interpreted’ “consistently with federal precedent” where they are “substantively and textually similar”, id., 14 N.Y.3d 479). Treating retainer agreements as being subject to federal, rather than state, law fails to advance this remedial purpose. In any event, this Court’s holding in McGrath, supra, 421 N.Y.3d 421, is a far cry from the position urged by Plaintiffs, that New York State courts are bound by federal attorney fee decisions arising under comparable statutes, and should not be misconstrued as a decision to apply federal law generally on all questions arising under comparable statutes. The additional cases cited by Plaintiffs in support of this part of their argument (Plaintiffs Brief, p. 15) do not advance it any better. Fornuto v. Nisi, 84 A.D.3d 617, 923 N.Y.S.2d 493 (1st Dept. 2011), distinguished, rather than followed, federal law (“In any event, federal precedent on this issue is not binding in light of the remedial purposes of the City statute”, id., 84 A.D.3d 618). Jiggetts v. Downing, 3 A.D.3d 326, 771 N.Y.S.2d 78 (1st Dept. 2004) addresses eligibility for a fee award based on an abandoned cause of action, and is irrelevant to the issues in this case. Diaz v. Franco, 257 A.D.2d 449, 683 N.Y.S.2d 267 (1st Dept. 1999) involved an award of attorneys’ fees in an action pursuant to 42 U.S.C. § 1988, and is similarly irrelevant. And, indeed, in Williams v. New York City Hous. Auth., 61 A.D.3d 62, 872 18 N.Y.S.2d 27 (1st Dep't 2009), leave to appeal denied 13 N.Y.3d 702, 914 N.E.2d 365, 885 N.Y.S.2d 716 (2009), the First Department explicitly rejected the reasoning of numerous federal court decisions on gender discrimination claims, finding the HRL (the precise statute which Plaintiffs urge is indistinguishable from its federal counterparts) to be textually and otherwise different from its corresponding federal counterparts, and declined to follow them. The Court held that “all provisions of the City HRL required independent construction to accomplish the law's uniquely broad purposes” Williams, supra, 61 A.D.3d 74. Thus, even New York State courts do not always follow federal court decisions taken under comparable statutes. Instead, they have adopted, on a case- by-case basis, certain principles enunciated by federal courts that are consistent with or advance the remedial nature of the state or local civil rights law. These principles do not include interpretation of a New York State court retainer agreement. Plaintiffs’ main argument, that the New York State courts must treat federal court decisions arising under comparable statutes as binding precedent, must be rejected. ii. Attorney-client retainer agreements have historically been a matter of state and not federal law. The Appellate Division held that “Nor does this State follow the rule found in certain federal statutes that contingency counsel must take the larger of the 19 contingency fee or the statutory fee.” Albunio v. City of New York, supra, 101 A.D.3d 656. Plaintiffs take great issue with this holding, arguing repeatedly that the Appellate Division not only should have followed this rule, but that it was bound to do so. (Plaintiffs’ brief, pp. 12 – 15) As explained above, New York State courts are not “bound” by any federal court decisions, at least not in this context, and most certainly not on the issue of how to construe a retainer agreement between attorney and client. Such agreements have always been the province of state, and not federal, law, even when the issue arises in the context of a federal litigation. So, for example, in Uy v. Bronx Mun. Hosp. Ctr., 182 F.3d 152 (2nd Cir. 1999), the Second Circuit relied exclusively on New York State law to determine the appropriateness of a fee based on a private retainer agreement in addition to an award of statutory fees under 42 U.S.C. § 1988 (id., 155 – 157). In Alderman v. Pan Am World Airways, supra, 169 F.3d 99, the Court of Appeals held that “Federal courts apply state law when ruling on the interpretation of contractual attorney fee provisions”. (id., 103) Likewise in Gray v. Dummitt, 2007 U.S. Dist. LEXIS 93993 (E.D.N.Y. 2007), reversed on other grounds, objection sustained by Gray v. Dummitt, 2009 U.S. Dist. LEXIS 9776 (E.D.N.Y. 2009), the US District Court relied exclusively on New York state law, and not federal law, in determining the appropriateness of particular terms in a retainer agreement under which the attorneys were entitled to 20 recover fees under the federal civil rights statute. As argued supra (pp. 15 – 16), the US Court of Appeals has repeatedly certified to this Court questions of New York law on the construction of retainer agreements, including those involving fee-shifting federal statutes comparable to the statute at issue in this case. McGrath v. Toys "R" Us, Inc., supra, 409 F.3d 513; King v. Fox, supra, 418 F.3d 121. And as argued infra (pp. 22, 26), several of the federal court cases on which Plaintiffs rely have themselves looked to state law to determine enforceability of specific terms of a state court retainer agreement. It would be bizarre indeed if federal courts relied on New York State law in attorney- client fee disputes while New York State courts looked to federal law on precisely the same types of cases. Furthermore, authority to regulate agreements between attorney and client in New York, including their retainer agreements, is found in the New York Judiciary Law § 474, “Compensation of attorney or counselor”, and various provisions of the disciplinary rules (see, e.g., 22 N.Y.C.R.R. § 1200, Rules 1.2, 1.5, 1.16) In Gair v. Peck, 6 N.Y.2d 97, 160 N.E.2d 43, 188 N.Y.S.2d 491 (1959), this Court re-iterated that New York State courts were responsible for the oversight of retainer agreements between attorney and client, under settled principles of New York law. Plaintiffs cite to no New York State court decisions which have found federal court decisions binding on the construction of a retainer agreement, and the research has 21 not revealed any such decision. Requiring New York state courts to treat federal court decisions regulating the content of attorney-client retainer agreements or fee arrangements as binding precedent, would conflict with Judiciary Law § 474 and other legislative provisions, as well as with the well-established body of New York State caselaw on the issue. Again, this is not to state that court rulings from other jurisdictions may not be useful to consider, particularly when arising under similar statutes to the one at issue here. But usefulness is a far cry from binding precedent. The law is clear: retainer agreements between attorneys and clients are construed under New York State, and not federal, law. iii. Even the federal court cases that Plaintiffs cite allow for an arrangement such as the one entered into between Ms. Dorman and Plaintiffs. Plaintiffs cite to a host of federal court decisions in support of their argument that including the statutory fees with the verdict to determine the contingency fee, or keeping both the statutory fee and the contingency fee (although that is not even an issue in this case, see infra, Point 2), is somehow “forbidden” under federal law. However, many of these decisions have been implicitly overruled by the US Supreme Court’s decision in Venegas v. Mitchell, 495 U.S. 82, 110 S.Ct. 1679, 109 L.Ed.2d 74 (1990) (see infra, pp. 24 – 25). Others are simply not on point, involve applications for fees under different statutory schemes, or do not stand for the proposition for which Plaintiffs cite them. Ultimately, however, their conclusions 22 are all grounded in a court’s inherent and undisputed power to review attorney- client fee arrangements for fairness and reasonableness, concerns that Plaintiffs have not raised here. In Quint v. AE Staley Manufacturing Company, 245 F.Supp.2d 162 (D. Maine 2003) (Plaintiff’s brief, p. 17), the US District Court applied Maine state law (not federal law) to determine the reasonability of a fee award, including a contingency fee plus a statutory fee. The Court noted that “If civil rights plaintiffs are denied the ability to assign a statutory fee in addition to promising a contingent fee, they may be unable to retain counsel, thereby defeating the purpose of the fee- shifting statute.” This decision amply supports Ms. Dorman’s position in this case, not least because it highlights the importance to civil rights plaintiffs of being able to attract and retain qualified counsel, which in turns advances the “broad remedial purpose” of the HRL. Williams v. New York City Hous. Auth., supra, 61 A.D.3d 74. Pickett v. Sheridan Health Care Ctr., 664 F.3d 632 (7th Cir. 2011) (Plaintiff’s brief, p. 17) likewise supports Ms. Dorman’s position. There, the Seventh Circuit Court of Appeals reversed a District Court decision which offset a statutory fee award against a contingency fee (ironically, the precise action Plaintiffs are asking this Court to take), holding that “The contingent fee that an attorney earns from his client and the statutory fee that an attorney recovers from the losing party 23 represent distinct entitlements” and “Given that the parties freely negotiated the fee contract, the Court finds that payment of a statutory fee award to Webbert in addition to a contingent fee does not represent excessive compensation in this matter.” (id., 640) This shows that in fee dispute cases, the courts’ concern has been with whether or not the fee was reasonable and the contract was fairly entered into, not whether or not a prior court ruling precludes or dictates a particular outcome. And again, there has been no claim in this case that the fee was not reasonable or that the contact was not fairly entered into. Plaintiffs mis-cite, or at least misapprehend, the Supreme Court’s decision in Venegas v. Mitchell, 495 U.S. 82, 110 S.Ct. 1679, 109 L.Ed.2d 74 (1990), arguing it stands for the proposition that statutory fee awards (under 42 U.S.C. § 1988) are designed to reduce contingency fees. (Plaintiffs’ brief, p. 18). However, that was not the Supreme Court’s holding. On the contrary, the Supreme Court stated “We have never held that § 1988 constrains the freedom of the civil rights plaintiff to become contractually and personally bound to pay an attorney a percentage of the recovery, if any, even though such a fee is larger than the statutory fee that the defendant must pay to the plaintiff” and it rejected Venegas’ argument that “paying the contingent fee in full would greatly reduce his recovery and would impose a cost on him for enforcing 24 the civil rights laws” id., 110 S.Ct. 1683, 1684 (emphasis added). Plaintiffs’ main thrust in this case is that controlling law dictates that the statutory fee award must offset their own contractual obligations to Ms. Dorman, yet the US Supreme Court – which Plaintiffs urge this Court to follow – has explicitly rejected such an approach, and upheld an approach (at least in theory) that required the client to pay a full contingency fee, notwithstanding an award of statutory fees as well. The holdings in Venegas, supra, are instructive: it reiterated that in such cases, the statutory fee award establishes what the losing defendant must pay in legal fees to the plaintiff, not what the plaintiff must pay to her lawyer (id., 110 S.Ct. 1683), that ''statutory awards of fees can coexist with private fee arrangements" and (most relevant here) explicitly rejected the argument that a successful plaintiff can ignore a contingency fee agreement, in whole or in part, in favor of a statutory fee award to the attorney (id.). Barwari v. Mukasey, 282 Fed.Appx. 896 (2nd Cir. 2008) (Plaintiff’s brief, p. 19) is a summary order with little relevance, not least because it has no precedential value even in the Second Circuit (see, FRAP Second Circuit Local Rule 32.1.1, that summary orders have no precedential value). The Court’s concern in that case was because the assignment of fees by the client to the attorney was of dubious origin, and so it is easily distinguished from the case at 25 bar. Sullivan v. Crown Paper Board, 719 F.2d 667 (3rd Cir. 1983), Daly v. Hill, 790 F.2d 1071 (4th Cir 1986), and Hamilton v. Ford Motor Co, 636 F.2d 745 (DC Cir. 1980) have each been effectively overruled by the holding in Venegas v. Mitchell, supra, 110 S.Ct. 1679, while the Seventh Circuit decision in Leonard v. Argento, 699 F.2d 874 (7th Cir. 1983) applied the clear language of the retainer agreement to effect the intent of the parties, exactly as Ms. Dorman wants to do here; any contrary result reading is again inconsistent with Venegas, supra,110 S.Ct. 1679. (Plaintiffs’ brief, pp. 19 - 20) The outcome in Ross v. Douglas County, 244 F.3d 620 (8th Cir. 2001) (Plaintiff’s brief, p. 20) was clearly dictated by the unreasonableness of the fifty percent contingency fee based on the verdict plus counsel fees in that case, id., 622, (as compared with the thirty-three percent contingency arrangement in this case); furthermore, it relies on Talbott v. Bowen, 832 F.2d 111 (8th Cir. 1987), a decision that conflicts directly with the subsequently-decided Venegas v. Mitchell, supra, 110 S.Ct. 1679. Alvarado v. Fed Ex Corp, 2011 WL 4708133 (N.D.Cal. 2011) (Plaintiff’s Brief, p. 21) addresses statutory eligibility for counsel fees (and applied California state law) in a class action under the California State Fair Employment and Housing Act, plainly inapposite to this case. Griffin v Washington Convention 26 Center, 172 F.Supp.2d 193 (D.D.C. 2001) enforced the specific terms of a retainer agreement, and is again not particularly relevant to this case. Montgomery v. Noga, 168 F.3d 1282 (11 Cir. 1999) (Plaintiff’s Brief, p. 25) was a copyright infringement claim, which presents different considerations than a civil rights statute, while Velarde v. Pace Membership Warehouse, 105 F.3d 1313 (9th Cir 1997) (Plaintiff’s brief, pp. 25 – 26) was based on an Arizona statute limiting “recovery of attorney's fees to the amount that the prevailing party agreed to pay” and a retainer agreement which provided that, in the event that the court awards attorneys' fees, the attorneys would receive either "the 1/3 contingent fee (on the total amount recovered) or the amount awarded by the court, whichever is greater." Obviously, court awarded fees could not be set based on a contingent fee that included counsel fees, and thus the Court of Appeals upheld the district court’s refusal to do so as reasonable. This case has little or no relevance to the matter at bar. Bates v. Kuguenko, 100 F.3d 961 (9 Cir. 1996) (Plaintiff’s brief, pp. 26 – 27) is an unpublished Ninth Circuit opinion, without precedential value in that circuit (See, FRAP 9th Circuit Local Rule 36.3(a)) and thus, obviously, of limited value to this Court. Although it asserts that Venegas v. Mitchell, supra, 495 US 82, ordinarily requires subtraction of a statutory fee from a contingency fee (Bates, supra, *1), as explained above, Venegas held no such thing, and in fact it expressly 27 declined to impose such a condition. Further, as the Appellate Division correctly noted, Bates turns on the construction to be given to the word "damages" (id.), while the pertinent language in the retainer agreements at issue here refers to "sum recovered" which is clearly a broader expression and casts a wider net than "damages”, thus making it further distinguishable. In Eulista v. City of Chicago, 696 F.3d 690 (7 Cir. 2012) (Plaintiff’s brief, p. 29), the client sought to keep 60% of the attorney fee award, despite a clear clause in the retainer agreement stating that statutory fees would be divided between the two attorneys. It is obviously distinguishable on its facts. Thus, despite Plaintiffs’ broad assertion that the Appellate Division erred in not following “controlling” federal law on this issue, these cases show that there is in fact no such controlling federal law. Instead, retainer agreements are reviewed under the relevant applicable state law, which in New York is whether or not they were understood by the client and were fair and reasonable. King v. Fox, supra, 7 N.Y.3d 191; Shaw v. Manufacturers Hanover Trust Co., 68 N.Y.2d 172, 176 (N.Y. 1986). None of the federal cases cited by Plaintiffs prohibit upholding the decision of the Appellate Division. Point 2. Plaintiffs are seeking an impermissible advisory opinion from this Court. Plaintiffs argue extensively that the decision of the Appellate Division, 28 stating that “Nor does this State follow the rule found in certain federal statutes that contingency counsel must take the larger of the contingency fee or the statutory fee” is in direct conflict with numerous federal court decisions which prohibit a plaintiff’s attorney from keeping both the statutory and full contingency fee, and so cannot be sustained. (Plaintiff’s brief, pp. 15 – 22) However, Plaintiffs’ attorney readily concedes that Ms. Dorman has never sought to keep both the contingency fee and the statutory fee for her trial work, and that this issue does not affect Plaintiffs in any way (“even though the Appellate Division decision does not apply in this situation….this Court should reverse… and provide guidance to New York courts for the future”, Plaintiffs’ brief, p. 17). 8 Plaintiffs lack standing to seek review of this (perceived) portion of the Appellate Division decision, which is in reality a request for an advisory opinion which does not affect any of the parties themselves. Issuing such an advisory opinion is not “the proper "exercise of the judicial function"”, New York Public Interest Research Group, Inc. v. Carey, 42 N.Y.2d 527 (1977) and is expressly disallowed in New York, Cuomo v. Long Island Lighting Co., 71 N.Y.2d 349 (N.Y. 1988) (“the courts may not issue judicial decisions that can have no immediate effect and may never resolve anything… It is therefore settled law that an action 8 It is not at all clear that the Appellate Division decision even addressed this issue. Nonetheless, as Plaintiffs have raised it, Ms. Dorman addresses their argument, even if only to assert that the Court should not engage it. 29 may not be maintained if the issue presented for adjudication involves a future event beyond control of the parties which may never occur", id., 354). This principle was upheld in T.D. v. New York State Office of Mental Health, 91 N.Y.2d 860 (1997), where this Court held that “once the Appellate Division… concluded that the challenged regulations were invalid… it was unnecessary… to prospectively declare the regulations invalid on additional common-law, statutory, and constitutional grounds. In doing so, the Appellate Division issued an inappropriate advisory opinion” id., 862. Having conceded that they are not aggrieved by this perceived portion of the Appellate Division’s decision, Plaintiffs have no standing to appeal it, and this Court has no authority to entertain it. This part of their argument must therefore be summarily rejected. Point 3. The Appellate Division correctly enforced the language of the retainer agreements. At its essence, this case is really not about a conflict between New York and federal law, or which should govern. Instead, it is whether or not the retainer agreements at issue are enforceable under New York law. The traditional principles applied to such disputes are whether or not the attorney can show that the fee agreement was “fair, reasonable, and fully known and understood by their clients”, King v. Fox, supra, 7 N.Y.3d 181, 190, cited in Lawrence v. Miller, 11 N.Y.3d 588, 901 N.E.2d 1268, 873 N.Y.S.2d 517 (2008). 30 “[A]n agreement to pay a legal fee may be invalid if it appears that the attorney got the better of the bargain, unless she can show that the client was fully aware of the consequences and that there was no exploitation of the client's confidence in the attorney", Jacobson v. Sassower, 66 N.Y.2d 991, 993, 489 N.E.2d 1283, 499 N.Y.S.2d 381 (1985). Further, this Court has expressly cautioned that “the power to invalidate fee agreements with hindsight should be exercised only with great caution. It is not unconscionable for an attorney to recover much more than he or she could possibly have earned at an hourly rate. Indeed, the contingency system cannot work if lawyers do not sometimes get very lucrative fees, for that is what makes them willing to take the risk--a risk that often becomes reality--that they will do much work and earn nothing.” Lawrence v. Miller, supra, 11 N.Y.3d 588, n. 4. In this case, the Appellate Division correctly found that the agreements were plain and unambiguous with regard to inclusion of the statutory fees as part of the sum recovered for contingency purposes. Further, the record shows that they were fully understood by the clients, that they were fair and reasonable when entered into, and that they were not unconscionable. Plaintiffs, their indignant tone notwithstanding, do not seriously dispute this. They raise no claim that they did not understand the terms of the agreements, or that they had expected them to mean something else. Instead, they simply assert 31 that a hypothetical client might not understand them. This hypothetical dispute is insufficient. In the absence of any actual, credible dispute about the meaning of the language and the intent and understanding of the parties at the time the agreements were signed, they must be enforced. i. The language of the retainer agreements was plain and unambiguous and understood by Plaintiffs. Plaintiffs argue that "a client would not understand that the 'sum recovered' includes statutory fees” (Plaintiffs’ brief, p. 10), ask “would a person of ordinary intelligence interpret the terms ‘sum recovered’ in a retainer agreement” as including statutory fees, and argue that "a client would not have such specialized knowledge". (Plaintiffs’ Brief, pp. 32 - 33). Other than this reference to what the average client “of ordinary intelligence” might understand, Plaintiffs offer nothing as to what they themselves understood. They further argue that “there is no evidence showing that at the time the retainer agreements were signed, the clients fully knew and understood what the contracts meant, in terms of adding the statutory fee to the judgment amount to determine the fee” and that the Appellate Division erred by assuming “that any non-legal civilian would understand the meaning of the words used” (id., p. 33) Their argument is flatly contradicted by the record, and by plain common sense. As an initial matter, this part of Plaintiffs’ claim (that they apparently did not 32 understand the retainer agreements) is defeated by the fact that it is presented almost entirely in the hypothetical – "a client would not understand”, and “a client would not have such specialized knowledge”. But what a client would or might understand is irrelevant. The only thing relevant is what Plaintiffs understood, and on this pivotal point they have offered nothing, despite ample opportunity to do so. Plaintiffs simply cannot succeed without some claim that they actually misunderstood what Ms. Dorman meant, not that they might have done so. After over two years of litigation on this specific issue, Plaintiffs have never stated their understanding at the time they executed the retainer agreements, or if it was different from Ms. Dorman’s. Under New York Law, it was Ms. Dorman’s burden to show that the agreements were fair and reasonable and fully understood by the clients. King v. Fox, supra, 7 N.Y.3d 191. Ms. Dorman fully discharged this burden. She stated she had explained the terms of the agreements to Plaintiffs when they were signed and on a number of occasions thereafter, and that Plaintiffs evidenced no disagreement (R 23 – 25, ¶ 7, 12 - 16). In response, Plaintiffs made absolutely no factual assertion, or even a legal argument, that they misunderstood the terms of the agreements, or that their understanding differed from Ms. Dorman’s. This is fatal to their claim. Even if they had made such a claim, however, it would be belied by the 33 record. In their 2003 retainer agreement with Spar & Bernstein, Plaintiffs agreed that in the event attorney fees were awarded by the court, the firm would be entitled “to the contingency fee or reasonable attorney's fees as determined by the court, whichever is greater" (R 30 - 33). Thus, Plaintiffs were well aware at the time they retained Ms. Dorman of the potential for statutory fees if successful at trial. Therefore, contrary to their argument, the potential for statutory fees was not "known only to specialists in the field" (Plaintiffs’ brief, p. 33), it was known to Plaintiffs also. Plaintiffs were also well aware that the Spar and Bernstein retainer agreements provided that any statutory fee would be deducted from their contingency fee (which, significantly, was 40%, rather than Ms. Dorman’s 33%), and that that their 2005 retainer agreement with Ms. Dorman made no such provision. Plaintiffs also knew that their retainer agreements with Ms. Dorman did not authorize deduction of any statutory fees from the “sum recovered” to determine the contingency, although it set forth other items to be deducted. (R 28 - 29) Thus, there are only two permissible constructions: either the statutory fees are added to the verdict to determine the “sum recovered”, or Ms. Dorman keeps both the contingency and the statutory fee (which she has not sought to do, even though it would be more favorable to her than sharing it with Plaintiffs). But under 34 the plain and unambiguous language of the retainer agreements, it cannot be deducted. Under these circumstances, “application of the agreement did not turn so much on the language used as on the context of events and circumstances in which it was made” Seligson, Morris & Neuburger v. Fairbanks Whitney Corp., 22 A.D.2d 625, 257 N.Y.S.2d 706 (1st Dept. 1965), a context which supports the finding of the court below that the “broad terms of the contingency agreement… unambiguously require that the award of attorneys’ fees be included in the “sum recovered”. Albunio , supra, 101 A.D.3d 656. Ms. Dorman made this precise argument to the trial court in her Order to Show Cause – that it was clear to Plaintiffs from her discussions with them, from the plain language of the agreements, as well as from their prior retainer agreements with Spar and Bernstein, that the statutory fees would be included with the verdict to determine the “sum recovered” subject to contingency. Despite the opportunity, Plaintiffs did not even attempt to rebut this with a factual claim that they had misunderstood their retainer agreements with Ms. Dorman, nor did they offer any statement whatsoever as to their understanding of the pertinent provisions of the retainer agreements. Ms. Dorman thus satisfied her burden under King v. Fox, supra, 7 N.Y.3d 181, to show that the agreements in question were fully understood and agreed to by Plaintiffs. Their failure to respond with any rebuttal 35 (other than a claim that “a client” might not have understood what Ms. Dorman meant) mandates denial of their claim and upholding the decision of the Appellate Division. Ms. Dorman also stated in her Order to Show Cause that she had explained to Plaintiffs the retainer agreements before they were signed (“both Albunio and Connors executed the retainer agreements with me in person, after discussions regarding the terms") and that she subsequently "advised both of them in person, that the fee award would be 'added to the pot' as a total recovery subject to the two thirds/one third distributions'. Neither expressed any disagreement" (R 23, ¶7; 24, ¶12, 13). In reply, Plaintiffs merely stated that when the retainer agreements were signed, there was no mention of statutory attorney fees (R 59 ¶2; 63 ¶2), that Ms. Dorman did not explain to them how such fees would be awarded or treated (id), and argue that their later failure to express any disagreement, when Ms. Dorman explained to them that statutory counsel fees would be included in the “sum recovered” for one-third contingency purposes, should not be taken as any indication of agreement (id.).9 9 Indeed, Plaintiffs’ failure to raise any objection at that time, and to instead continue being represented by Ms. Dorman could well constitute ratification of the earlier agreement. “Ratification may occur at any time, so long as a client has full knowledge of the relevant facts (including the terms of the agreement and the choice to disavow it) and has acquiesced. The fact that the agreement's terms may be more advantageous to the attorney does not change the result.” King v. Fox, supra, 7 N.Y.3d 191 36 However, if Plaintiffs disagreed with the terms of their retainer agreement when Ms. Dorman explained it, then it was incumbent on them to raise those disagreements at that time, and not several years later, after the case was over and Ms. Dorman had proceeded to represent them for close to seven years, pursuant to the retainer agreements with which they now claim they silently disagreed. Plaintiffs’ alleged silence cannot be read to create ambiguity on this issue, when the retainer agreements were clear and obvious to them. Koeppel v Koeppel, 95 A.D.3d 453, 944 N.Y.S.2d 48 (1st Dep't 2012) (a claim that a provision in a retainer agreement was unclear and/or ambiguous “refuted by a reading of the plain language of the 2006 retainer, in the context of the history of the Koeppel estates and trusts”, id., 95 A.D.3d 454). Wotman v. Chang, 2012 NY Misc. LEXIS 3370 (S.Ct. 2012) “[S]ince there is no ambiguity in the retainer agreement, Wotman’s attempt to create an ambiguity where none exists is unavailing” id., *22. Indeed, the language of the two retainer agreements for the appeals (R 34 - 37) further undermines Plaintiffs’ claims that Ms. Dorman first told them in March 2011 that she would add the statutory fees “to the pot” for contingency purposes, rather than subtracting them from a contingency fee. In these agreements, executed in 2009 and 2010, Plaintiffs agreed to pay Ms. Dorman $20,000 only if successful, and that she would deduct any statutory fees from this $20,000, unless the statutory fees were greater than $20,000, in which 37 case Plaintiffs would owe her nothing. In other words, they agreed that any statutory fees would be deducted from any fees they were obliged to pay her. This is the precise arrangement that Plaintiffs now claim the initial retainer must also be construed to reflect. If, as Plaintiffs argue, this language should be implied into the initial retainer agreements, then this explicit language would have been completely unnecessary in the subsequent agreements. At the very least, it would have alerted them that Ms. Dorman did not intend to deduct her statutory fees from her one-third contingency fee in the initial retainer agreement. Their claim to have first learned of this in March 2011, after her representation of them was complete, is implausible and simply not believable. See, Koeppel v. Koeppel, supra, 95 A.D.3d 453 (“Prior to the 2008 settlement, William did not claim a misunderstanding, or unfamiliarity with the terms of the 2006 retainer”, id., 454). Plaintiffs cite to an email they received from Ms. Dorman in 2009, four years after the retainer agreements had been signed, in which Ms. Dorman said that she would "credit the fees awarded to that third" (referring to the statutory fees and the one third contingency) as support for their position (R 68). The parties strongly dispute the meaning of this email, but its plain language, that the fees will be credited to, rather than deducted from, the one third contingency fee, certainly supports Ms. Dorman's position. However, because this email was written some 38 four years after the retainer agreements were signed, the case litigated, a verdict returned, and the counsel fees awarded, its relevance, if any, to the parties’ intentions or understanding at the time the retainer agreements were entered into, is limited. The obvious and undisputed facts are that Plaintiffs were aware from their 2003 retainer agreements with Spar and Bernstein, that their attorney might be entitled to statutory fees if successful at trial, that it was possible to structure a retainer agreement to provide that such a fee award could be deducted from their contingency fee, and that their 2005 retainer agreement with Ms. Dorman did not contain such a provision. It is simply impossible to reconcile these facts with Plaintiffs' belated claim that the contingency fee agreement must be completely rewritten to require deduction of the statutory fees from the contingency fee. In short, there is no evidence that Plaintiffs were unaware of the potential for statutory fees, or that they believed any such fees would be deducted from Ms. Dorman’s one-third of the verdict. They cannot argue now, with the benefit of hindsight and buyers’ remorse, that the agreements were ambiguous in that regard. The decision of the Appellate Division that they were not ambiguous must therefore be upheld. ii. The provisions of the retainer agreements were eminently fair and reasonable. The determinative issue on a dispute over a retainer agreement is whether or 39 not it was fair and reasonable and fully known and understood by the client at the time it was entered into. King v. Fox, supra, 7 N.Y.3d 190. In evaluating whether or not a retainer agreement is fair and reasonable, this Court has required consideration of “the facts and circumstances surrounding the agreement, including the parties’ intent and the value of the attorney’s service” id., 192; Ms. Dorman easily shows that the retainer agreements in this case were fair and reasonable, as she sought to share the fee award with the Plaintiffs, not keep it to herself on top of a contingency fee. To be sure, Ms. Dorman benefited from this arrangement, but so did Plaintiffs. As Judge Schulman pointed out in his decision, “Dorman’s efforts increased each Plaintiff’s recovery, as well as her own, by approximately $129,000. Plaintiffs proposed distribution… would result in Dorman’s share remaining the same while increasing each of their own recoveries by approximately $190,000. Dorman being under no obligation to seek additional fees, it is unlikely she would have undertaken this additional task without obtaining some benefit for herself as well as plaintiffs... [Plaintiffs’] proposed calculations would result in a recovery of approximately 90%, which clearly was never contemplated when they entered into the retainers” (R 15 – 16) Plaintiffs’ complaint is not that they are getting less than they agreed to, it is that they are not getting more. But the statutory fee award is not a vehicle to 40 reduce or obliterate their contractual obligations to Ms. Dorman. Venegas v. Mitchell, supra, 110 S.Ct. 1683. Under these circumstances, there is simply no basis for Plaintiffs to claim that Ms. Dorman in any way exploited their confidences to get the better of the bargain, or that the agreements were not fair and reasonable. iii. In the event the retainer agreements are found to be ambiguous and not understood by the parties, the Court must remand the case back for an evidentiary hearing as to what had been explained to Plaintiffs at the time the agreements were executed. In the event the Court finds the agreements ambiguous, and not understood by the parties, then the only outcome can be a remand for an evidentiary hearing before the trial court, to ascertain what was stated and what the parties intended at the time the agreements were entered into. Bizar & Martin v. U.S. Ice Cream Corp., 228 A.D.2d 588, 589 (2d Dep't 1996) (“the reviewing court must weigh the relative probative force of conflicting testimony and of the conflicting inferences to be drawn”); Wolfgang v. Hampton Hill Villas Condo. Bd. of Mgrs, 30 A.D.3d 1057, 1058 (4th Dep't 2006) (“issue of fact precluding summary judgment in favor of defendants because the retainer agreement is ambiguous and there is conflicting extrinsic evidence with respect to the intent of the parties”). In this case, Ms. Dorman has made clear her intent at the time she signed the retainer agreement – that any statutory fees would be added to, not deducted from, the verdict for contingency purposes. The plain language of the retainer 41 agreements forbids deducting statutory fees from either the “sum recovered” or from Ms. Dorman’s contingency fee. Ms. Dorman stated explicitly that she explained these terms to Plaintiffs at the time they signed the retainer agreements in 2005, and thereafter (R 23 – 25) In response, Plaintiffs have offered nothing to the Court as to their intent or their understanding at the time the retainer agreements were signed. As a matter of law, then, their argument that the retainer agreements should be set aside, must fail. In Jacobson v. Sassower, 66 NY2d 991, the court found conclusive that “the defendant does not claim that she explained the nature and consequences of the non-refundable retainer clause to plaintiff before he executed the contract and the trial judge accepted plaintiff’s evidence that he did not understand the payment to be a minimum fee” id., 993 (emphasis added). The opposite is true here – Ms. Dorman established that she explained the terms of the retainer agreements to Plaintiffs, and they offered no evidence that they did not understand them, or that they understood that any statutory fees would be deducted from Ms. Dorman’s contingency fee. Plaintiffs’ (alleged) silence on this issue simply cannot create an ambiguity. However, if the Court finds that the retainer agreements were not plain and unambiguous with regard to the matter at hand, then the case must be remanded back for an evidentiary hearing on what had been explained to Plaintiffs at the time 42 they signed the agreements, and what their intentions were. Wolfgang v. Hampton Hill Villas Condo. Bd. of Mgrs, supra, 30 A.D.3d 1058; King v. Fox, supra, 7 N.Y.3d 192 (requiring the court to take into account “the circumstances surrounding the agreement and the parties’ intent”, id.). Point 4. The Appellate Division correctly refused to set aside the retainer agreements for the work done on appeal. The Appellate Division held that “the parties’ wholly separate retainer agreements for the appeals to this Court and the Court of Appeals expressly set the statutory fees apart from the statutory and contingency fees for the trial level work” (R 87, 88). Plaintiffs argue, yet again, these retainer agreements are pre-empted by federal court decisions which treat appellate work as part of the trial for fee calculation purposes. Thus, they argue that the fees for her work on appeal should be deducted from her contingency fee, reducing it to zero. (Plaintiffs’ brief, pp. 34- 40) This argument lacks any support in fact, in law or in plain common sense. The cases cited to by Plaintiffs all concern the manner in which statutory fees for appeals are calculated by the court. (see supra, pp. 22 – 28) They are irrelevant to the very separate question of enforcement of a New York state court retainer agreement. In New York (like most other jurisdictions) parties are free to fashion the terms of their retainer agreements, so long as they are fair, reasonable, and understood by the client. King v. Fox, supra, 7 N.Y.3d 181, 191. No such 43 claim having been raised here, the retainer agreements must be enforced. These retainer agreements established separate fee arrangements for each appeal, and explicitly provided that they were to be considered separate and distinct from the earlier retainer agreements for representation at the trial. There is simply no basis for not enforcing them. Plaintiffs' argument would mean, in essence, that Ms. Dorman would be paid the same amount of money whether or not she did the appeals: that she would be representing Plaintiffs for free. The retainer agreements provided that Plaintiffs would pay Ms. Dorman $20,000 for each appeal only if she was successful, or the difference between a statutory fee award if one was made and the $20,000, unless the statutory fees were greater than $20,000, in which case they would pay her nothing. Similarly, if the case was lost at either the Appellate Division or before this Court, she would get nothing, despite six years of work. There was no risk to Plaintiffs, it was all Ms. Dorman’s. Nevertheless, in an attempt to buttress their spurious claim, Plaintiffs repeatedly assert, falsely, that Ms. Dorman “demanded” additional monies from them, and imply that they were compelled to agree to an unfair retainer agreement because they could not afford to retain new counsel at short notice. This assertion is simply false. Ms. Dorman told Plaintiffs that she would represent them on appeal without being paid, and that she would require payment 44 from them only in the event (a) they were successful and (b) counsel fees were less than $20,000. The record does not reflect when this proposal was first made, but it was repeated to them, with a request for a final decision in January 2009, two months before the appeal was due. (R 67) This gave Plaintiffs ample time to obtain replacement counsel (and seek an extension of a briefing schedule, if necessary), an option that Ms. Dorman made clear was theirs to exercise.10 Plaintiffs elected to proceed with Ms. Dorman. They cannot now claim that they were forced under duress to enter into this agreement that cost them nothing at the time and that has cost them nothing since then. The mere fact that the alternative might have been more expensive does not render their agreements with Ms. Dorman the product of duress. Plaintiffs’ attorney, however, goes further, arguing that Ms. Dorman misrepresented the issue of fees to them when she said there was no guarantee that they would be awarded to her (Plaintiffs’ brief, p. 39), claims that a fee award in civil right cases is “almost automatic”, and that her advice to them, that a fee award was not guaranteed, was “questionable” and “doubtful” (id). This is flatly incorrect. An award of attorney fees under NYC Administrative Code § 8-502(f) is discretionary (“the court, in its discretion, may award the prevailing party costs and 10 Notably, the record is silent with regard to any efforts Plaintiffs made to find replacement counsel, or what, if anything, it would have cost them. 45 attorney fees” id.), and indeed, the Defendant City of New York opposed Ms. Dorman’s fee application (Albunio v. NYC, 35 Misc.3d 1238(A) (2012)). That Ms. Dorman has to submit a motion for fees on notice to Defendants, and that they opposed it, undermines the argument that it was “almost automatic”. And contrary to Plaintiffs’ assertion, Justice Schulman did not treat Mr. Dorman’s fee awards as “a foregone conclusion”. Instead, he noted it was “discretionary” Albunio, supra, 35 Misc.3d 1238(A), n.1. He duly considered Defendants’ opposition, noted that the Court had to determine whether or not the fees sought were reasonable (id., *7), and actually disallowed some of the requested fees (id., *13, 14). It is Plaintiffs’ argument, that an award of counsel fees was “almost automatic” that is questionable, and doubtful, at the very least. Next, Plaintiffs misstate the law, by asserting that “under ordinary circumstances, any appeal fees would be added to the statutory fees for work at the trial level… And the total would be subtracted from any contingency amount” (Plaintiffs’ brief, p. 40). However, Plaintiffs cite no law to that effect in New York, and even if there was, they are free to negotiate and enter into retainer agreements of their choosing, as they did with Ms. Dorman. That they might have agreed to continue the representation without executing a new agreement is of no moment. In sum, Plaintiff freely entered into fully enforceable retainer agreements with Ms. Dorman for representation on appeal. These agreements were fully explained and clear, and there is no claim to the contrary. That they now wish they had not done so is irrelevant. The agreements must be enforced. CONCLUSION For any and all of the above reasons, the decision of the Appellate Division must be affirmed. Dated: New York, NY August 16,2013 Respectfully submitted, PaulO 'Dwyer Law Office of Paul O'Dwyer, P.C. Attorney for Mary D. Dorman 134 West 26th Street, Suite 902 New York, NY 10001 46