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Fees Row In NJ Winery Laws Case Rejected By Supreme Court

supreme_courtThe U.S. Supreme Court on Monday refused to second-guess reductions to a more than $800,000 award of attorneys’ fees and expenses for consumers and a winery that successfully challenged New Jersey’s allegedly unfair barriers against out-of-state wineries.


The high court denied certiorari to consumer Robert Freeman and fellow petitioners a little more than one year after the Third Circuit slashed the fees confronting the New Jersey Department of Alcoholic Beverage Control. The petitioners contended in the underlying dispute that the state had run afoul of the Commerce Clause by discriminating against out-of-state wineries.


In its September 2013 opinion, the Third Circuit ruled that the district court improperly compensated the plaintiffs based on their prior appeal and the time spent arguing whether the lower court could award those appeal-related fees. The Third Circuit had rejected the plaintiffs’ request for an interim fee award without explanation, shortly after its 2010 decision that backed most of their constitutional arguments.


The district court also went too far in awarding fees for work solely involving a winery that exited the case through a voluntary dismissal, efforts to swap out one plaintiff winery for another, and time spent seeking more plaintiffs, the Third Circuit said last year.


Leading up to the battle over fees, the individual participants and Walter Hansel Winery Inc. failed to convince the Third Circuit that New Jersey’s ban on direct shipments of wine to consumers is unconstitutional – the prohibition covers both in-state and out-of-state wineries – but prevailed on arguments that other statutory restrictions were discriminatory.


For example, one such provision allowed in-state but not out-of-state wineries to sidestep wholesalers and sell directly to consumers, while another provision capped the amount of out-of-state wine that a consumer could import for personal use without a permit. In the wake of the appellate ruling, the New Jersey Legislature changed the statutory language at issue, and the parties reached a consent agreement.


While the district court awarded the plaintiffs $802,221 in attorneys’ fees and expenses, the Third Circuit in its 2013 decision trimmed fees tied to the earlier appeal, based on its 1992 decision in Yaron v. Township of Northampton, which bars district courts from entertaining fee applications once the appellate court already has.


The Third Circuit brushed aside the district court’s logic that Yaron was different because it involved prevailing defendants and that applying Yaron in the present dispute would clash with binding case law. It also made no difference Yaron involved a fee request after the case was over while the wine plaintiffs’ fee petition to the Third Circuit came before the litigation was finished.


“We are sympathetic to the appellees’ argument that what may have been a procedural denial should not bar a later fee award, but there is simply no sound basis to exempt this case from Yaron’s broad holding,” the opinion said. “Pursuant to that precedent, the district court lacked authority to award appellees fees for the prior appeal.”


Despite a win on the appeal fees and other issues, the state fell short in arguing that the district court didn’t do enough to exclude fees from the plaintiffs’ defeat on the direct shipment ban, which they said was excluded from the hours calculation that the district court ultimately accepted.


“ABC contends that appellees’ records were too vague to be credible, and that the district court should have further reduced the fee award to account for the fact that the direct-shipment ban was the focus of the case,” the opinion said. “It is clear, however, that the core of the lawsuit was the larger discrimination claim. Furthermore, appellees’ fee petition contained ample detail to support the district court’s determination.”


Representing the plaintiffs, James A. Tanford of Indiana University’s Maurer School of Law said his side remains baffled.


“Although we won on the merits in the Court of Appeals, and the Civil Rights Attorney’s Fees Award Act requires the court to award us a reasonable fee, the Third Circuit awarded nothing and did not explain why,” Tanford said. “Prior Supreme Court cases had said that a prevailing plaintiff in a constitutional case is entitled to reasonable fees to be paid by the state except in extraordinary cases, which the court must explain.”


An ABC spokesman declined to comment.


The plaintiffs are represented by James A. Tanford of Indiana University’s Maurer School of Law; Robert D. Epstein of Epstein Cohen Donahoe Mendes; and Gary S. Redish Winne Banta Hetherington Basralian & Kahn PC.


The state is represented by Assistant Attorney General Andrea Silkowitz.


The case is Freeman et al. v. New Jersey Department of Alcoholic Beverage Control, case number 13-1442, in the Supreme Court of the United States.


Source: Law360