Stormy Daniels’ Action Against Trump Goes Down in Flames

Stormy Daniels Complaint on Fire
As I discussed back in October, adult film star Stormy Daniels was originally suing Donald Trump under a declaratory relief action, seeking to invalidate a “hush” agreement she has signed and been paid for. Her attorney, Michael Avenatti, then tried to get cute by filing a defamation action. The alleged defamation resulted from an incident that purportedly occurred in a parking lot, where Daniels says she was threatened to keep her mouth shut. Trump referred to the story as a “con job,” and Avenatti on behalf of Daniels claimed that amounted to defamation since Trump was accusing Daniels of lying. I predicted at the time that the action would be thrown out on an anti-SLAPP motion, and that proved to be true. Daniels was hit with $293,000 in attorney fees.

But following the dismissal of the defamation action, I pointed out that still left the original declaratory relief action. Since the attorneys have presumably spent far more time on that matter than the ridiculous defamation claim, I said that Avenatti might get the last laugh as to attorney fees if he was able to prevail on that claim.

Avenatti isn’t laughing.

Today the judge threw out the declaratory relief claim as well, finding it was moot. You see, Trump had already stated that he was not going to sue to enforce the hush agreement, and in any event Daniels had already told the world about the alleged affair, so there was nothing left to decide.

In that sense, Daniels got what she was nominally seeking. She gets to talk about her relationship with Trump, without fear of being sued for breaching the hush agreement. But, as stated, that really wasn’t what she and Avenatti were after, as evidenced by the fact that they maintained the action long after Trump indicated he would not enforce the agreement. At that point, any reasonable attorney would have simply entered into a settlement, agreeing to dismiss the action in exchange for Trump agreeing not to enforce the agreement. That wasn’t done, presumably because Avenatti wanted to use the action to try and humiliate Trump, with depositions and such. With the dismissal, the action is entirely gone, with the only result being that Daniels now owes Trump $293,000 in attorney fees.

Which brings me to fees following anti-SLAPP motions.

Make no mistake; an anti-SLAPP motion is a big project. There are a number of cases holding that an anti-SLAPP motion should take about 50 hours to complete, from inception to oral argument, understanding that each case is unique, and that number can vary wildly depending on the circumstances. Subsequent cases criticized any “rule-of-thumb” approach to computing reasonable fees, but I have probably prepared and argued more anti-SLAPP motions than any other attorney in the country, from all indications, and I think that 50 hours is a reasonable average attorneys with little or no anti-SLAPP experience. Given my experience, I can typically prepare a motion in far less time.

So when Daniels lost her defamation action to Trump, I reported that the fees would be “at least” $50,000, figuring that Trump would likely have utilized $1,000 per hour attorneys for those 50 hours. But I suspected they would be much higher.

Recently, I was retained to provide my expert opinion on the reasonableness of a fee application following an anti-SLAPP motion. I am frequently retained for that purpose. The brief was just 11 pages long, and there were no circumstances that would make this motion particularly time-consuming, such as reopened discovery, or an appeal. By way of comparison, if I had been retained to prepare this motion, my fees would have been less than $20,000.

This large, Los Angeles law firm claimed it had incurred $400,000 in fees.

The time records were a sight to behold. The highfalutin attorneys had no experience with anti-SLAPP motions, so much of the time was spent just figuring out how to pursue one. Again, 50 hours is the rule-of-thumb for the entire process, but this firm had spent 80 hours preparing a memorandum on whether an anti-SLAPP motion should be pursued. Three attorneys spent a total of 50 hours preparing for the oral argument on the motion, even though only one attorney from each side is permitted to speak during argument. I guess they wanted to be sure that an attorney would be ready to argue even if two died on the way to court.

There is case law holding that if an attorney is found to have inflated the fee application, fees can be denied altogether since that reflects a lack of credibility. When I get extreme examples such as this, I always think this will be the one where I convince the court to deny the fees completely. It’s not that I want to deprive any attorneys of their reasonable fees, but the game has become that unscrupulous attorneys submit ludicrous fee applications, safe in the knowledge that the worse that will happen is that the court will reduce them. If courts followed the law and denied fees altogether when an obviously inflated application is submitted, that would go a long way toward keeping the claimed fees reasonable.

Inflated fee applications create at least three problems. First, if all applications are inflated, then judges will come to believe anti-SLAPP motions require far more than 50 hours, and it becomes a self-fulfilling prophecy.  Conversely, if judges become jaded and come to believe that attorneys all double their fees, then when an honest attorney like me submits a real fee application, that already reflects a significant discount based on the efficiency I have gained from doing so many of these motions, it will nonetheless be cut and my client will not be fully reimbursed for the fees he, she, or it paid to me. Thus, it becomes almost mandatory that attorneys inflate their fees in anticipation of the reduction.

I saw this back in the days when I handled Chapter 11 bankruptcies. When the going rate for attorneys was about $395 per hour, bankruptcy attorneys were all charging rates completely above the market, like $795 per hour. There was no justification for this – bankruptcy work is no more challenging than any other practice area – but the attorneys inflated their hourly rates in anticipation of the judges cutting the fees by 50%.

But worse, there are a lot of lazy judges, who rubber-stamp fee applications. So the attorneys who inflate their fees have the chance that they will hit the lottery, or at worst will get reduction that will bring them down to what they really charge.

In the case of the aforementioned $400,000 fee, based on my expert opinion the judge reduced the fees by $100,000, but in response to my argument that the fees should be denied altogether in recognition of the insane billing of 80 hours for a memo and 50 hours for oral argument prep, the judge responded, “That’s just what big firms do.”

Obviously, not having seen the invoices, I can’t opine specifically on the $293,000 awarded to Trump’s attorneys, but can say that my fees would have likely been less than one-tenth that amount.

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Aaron Morris, Attorney
Aaron Morris
Morris & Stone, LLP

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