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Judge approves fee award in franchise fight

Peter Vieth//May 25, 2020

Judge approves fee award in franchise fight

Peter Vieth//May 25, 2020//

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An Alexandria federal judge has approved a nearly $129,000 fee award in a battle over franchise rights for a Herndon doctor and his urgent care clinic.

The fee ruling came after the doctor lost his legal team following a failed court-mediated settlement conference last year. Four attorneys withdrew and the remaining lawyer later was suspended by the Virginia State Bar.

U.S. District Judge Leonie M. Brinkema looked favorably on a billing statement in which the lead attorney charged only $400 an hour compared to higher rates considered reasonable for experienced Northern Virginia attorneys.

Brinkema’s May 8 opinion is AFC Franchising LLC v. Fairfax Family Practice Inc. (VLW 020-3-251).

Urgent care franchise

On its website, AFCF advertises operation of nearly 200 “non-emergency room urgent care” facilities in 26 states. Ahmad Fazal Nusrat and his Fairfax Family Practice Inc. signed up as franchisees in 2014, operating an AFC urgent care center in Herndon.

Financial troubles emerged in 2017 and 2018, according to the court’s opinion. The practice defaulted on obligations to creditors, including on royalty payments to AFCF. In July 2018, AFCF told the practice it was in default for failure to pay $13,062 and for blocking electronic debits on its bank account. AFCF terminated the franchise agreement in August 2018.

Despite the cutoff, the practice continued to use AFCF marks until at least October 2018, the judge said. AFCF sued; the practice answered and filed two counterclaims. The parties talked settlement over several months, culminating in an unsuccessful settlement conference before a magistrate judge on June 13, 2019.

The day after the settlement conference, four attorneys from the Vienna firm of McClanahan Powers PLLC withdrew from representation of Nusrat and his practice. They alleged a fundamental disagreement regarding case proceedings, settlement, damages and claims. They also alleged they had not been paid since Dec. 6, 2018.

Brinkema allowed withdrawal in part because the practice was still represented by Vincent M. Amberly of Leesburg. The action then lay dormant for several months.

In January, Brinkema remarked on the parties’ failure to move ahead on summary judgment as planned. She also noted that the Virginia State Bar had suspended Amberly’s license for six months effective Jan. 5, leaving Nusrat and his practice without counsel.

Most fee claims approved

Nusrat and his practice identified new counsel – Michael C. Whitticar of Gainesville – and the case proceeded to summary judgment. Brinkema awarded AFCF $24,091 in past-due royalties and $5,420.48 in royalties. The judge also imposed an injunction barring the practice from using or displaying the AFC marks.

AFCF – represented by James C. Rubinger of Reston – sought $160,147.50 in attorneys’ fees under terms of the franchise agreement. The practice contended fees should be limited to $25,000 to avoid rewarding the franchisor for “invoking the ‘nuclear option’” by terminating the franchise agreement over a relatively small amount of overdue royalties.

Brinkema set the fee award at $128,957.50 after adjustments. She said there was no question the hourly rate was reasonable.

“James Rubinger, the attorney who performed most of the work in this action and who has 40 years of experience, charges only $400 per hour, which is significantly less than the $505 to $820 per hour that is considered reasonable under the Vienna Metro matrix for attorneys in Northern Virginia with Rubinger’s level of experience,” Brinkema wrote, referring to a 2011 Eastern District benchmark case.

Charges of $200 and $275 per hour for associates and $125 for experienced legal assistants also were reasonable under that matrix, Brinkema said. The judge noted the case was “staffed leanly, with Rubinger doing almost all of the work.”

Brinkema also factored the complications created by the practice’s “dubious” counterclaims and the withdrawal of counsel the day after a settlement conference. The withdrawal “further demonstrates that defendant’s adherence to unreasonable positions made this action more complex and time consuming than it otherwise might have been,” Brinkema said.

The “nuclear option” of franchise termination was not unwarranted, the judge continued. Termination was “entirely reasonable,” Brinkema said.

“Contrary to defendant’s argument, an award of attorney’s fees in this action will not ‘reward’ plaintiffs; instead, it will reasonably compensate them for their efforts to protect their contractual and trademark rights,” Brinkema wrote.

Neither Rubinger nor Whitticar responded to requests for comment on Brinkema’s decision.

Amberly was reprimanded and placed on two years’ probation in 2017 after the Virginia State Bar Disciplinary Board found he repeatedly used the threat of criminal or disciplinary charges to obtain advantage in civil disputes.

Amberly was suspended for six months in January for violating rules involving diligence, client communication and safekeeping property. The findings in that case led to a show cause order this month for possible additional sanctions based on the probation terms of the 2017 disciplinary matter. Amberly’s show cause hearing is set for Aug. 13.

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