Attorney fees
| Pages | 42-44 |
42 Volume 20, July–September 2014 international law update
© 2014 International Law Group, LLC. All rights reserved. ISSN 1089-5450, ISSN 1943-1287 (on-line) | www.internationallawupdate.com
ATTORNEY FEES
After a 32-year legal battle over
expropriation in Iran, D.C. Circuit
instructs the district court to grant
plaintiff McKesson $29,516 in attorney’s
fees. In applying the Treaty of Amity
between Iran and United States, the
court determines that Iranian law
applies to the action
After the Islamic Revolution of 1979,
McKesson Corporation (McKesson), an American
health information technology company, led suit
in 1982 in the District of Columbia federal District
Court after the Iranian government expropriated
McKesson’s share in an Iranian dairy company.
McKesson had partnered with Iranian
investors to create the dairy in Iran in the 1960s,
but the company and its personnel ed Iran
during the Revolution. McKesson accused Iran of
expropriating its interests in the dairy and sued for
damages. After a 32-year legal battle, including at
least half a dozen appearances in the D.C. Circuit,
Iran challenged the jurisdiction of U.S. courts
to hear the case over McKesson’s share in the
dairy. McKesson sought to recoup attorney’s fees
spent during the decades-long pursuit. Finally, in
May 2013, McKesson secured a judgment and
was awarded over $29 million in damages, plus
interest, caused by the seizure, along with $13.4
million in attorney’s fees. e key issue now is
whether the District Court properly calculated
the $13.4 million in attorney’s fees awarded to
McKesson under Iranian law.
Iran challenged the attorney’s fees on multiple
fronts, from the court’s jurisdiction to award them
at all, to the reasonableness of rates charged by the
law rms involved. e rms sought fees for work
done in the case from 2000 to 2012; pre-2000
attorney fees were the subject of a separate order.
According to expert testimony, Iranian law
did allow for recovery of attorney fees and costs.
Under the Treaty of Amity—the treaty between
Iran and the United States that McKesson brought
its claim under—the losing party can be made
responsible for attorney’s fees.
McKesson argued that the court should use
the law rms’ standard rates to calculate fees, while
Iran argued that the standards used in the Laey
Matrix should apply. Based on independent law
rm billing surveys, the District Court ruled that
both rms involved charged reasonable rates. e
court then granted McKesson’s request to use the
rms’ 2012 billing rates to calculate fees for work
done between 2000 and 2012 as an enhancement
to compensate for delays in being paid over the
past decade. However, the court also found
that Iran raised legitimate concerns about how
eciently McKesson’s attorneys managed the case
and also about the use of vague descriptions for
certain time entries in billing records.
e District Court held that it had authority
to award reasonable attorney’s fees under
international law or, alternatively, Iranian law, and
considered three fee petitions from McKesson.
Despite having decided that Iranian law controls,
the District Court assessed the reasonableness
of McKesson’s attorney-fee award using United
States case law. Iran contended that an ocial
tari applied to McKesson’s fee petitions under
Article 3 of Iran’s 2006 regulation on attorney’s
fees and Article 518 of Iran’s Civil Procedure Act
of 2000 (Act). Iran calculated that the tari only
yielded a mere $29,516 in fees for McKesson. Iran
now appeals the District Court’s fee awards of
attorney’s fees.
e U.S. Court of Appeals for the District
of Columbia Circuit vacates the $13 million
attorney’s fee award and remands. e Court
reasons that the burden of proof was on McKesson
to show that the tari did not apply, which it
failed to do. e D.C. Circuit further held that
discretion only exists where the tari does not
apply and, in McKesson’s case, the tari did.
For these reasons, the D.C. Circuit vacates and
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