Court Opinion

ID: 9940752
Source: CourtListenerOpinion
Date Created: 2024-02-15 15:03:22.664598+00
Date Added: 2024-06-11T13:45:44.176778
License: Public Domain

COURT OF CHANCERY
                                        OF THE
                                  STATE OF DELAWARE
KATHALEEN ST. JUDE MCCORMICK                                    LEONARD L. WILLIAMS JUSTICE CENTER
        CHANCELLOR                                                500 N. KING STREET, SUITE 11400
                                                                 WILMINGTON, DELAWARE 19801-3734

                                        February 14, 2024

     Peter J. Walsh, Jr.                             Samuel D. Cordle
     Michael A. Pittenger                            Peter C. Cirka
     Hayden J. Driscoll                              Abrams & Bayliss LLP
     Potter Anderson & Corroon LLP                   20 Montchanin Road, Suite 200
     1313 N. Market Street, 6th Floor                Wilmington, DE 19807
     Wilmington, DE 19801

     Michael A. Barlow
     Quinn Emanuel Urquhart
     & Sullivan, LLP
     500 Delaware Avenue, Suite 220
     Wilmington, DE 19801

                   Re:   Charlie Javice v. JPMorgan Chase Bank, N.A., et al.,
                         C.A. No. 2022-1179-KSJM

      Dear Counsel:

            This letter resolves Plaintiff Charlie Javice’s Motion for Payment of

      Unresolved Advancement Amounts (the “Rule 88 Motion”). 1

            By way of background, I granted the plaintiff’s claim for advancement on May

      8, 2023 (“May 8 Ruling”). 2 The parties later agreed on a form of Fitracks Order

      implementing the May 8 Ruling, which I entered on June 27, 2023. 3 The plaintiff

      submitted her initial demand pursuant to the Fitracks Order on June 28, 2023,

      1 C.A. No. 2022-1179-KSJM, Docket (“Dkt.”) 80 (“Pl.’s Opening Br.”).

      2 Dkt. 61 (Del. Ch. May 8, 2023) (TRANSCRIPT), application for certification of
      interlocutory appeal denied, 2023 WL 4561017 (Del. Ch. July 13, 2023), interlocutory
      appeal refused, 303 A.3d 616 (Del. Aug. 16, 2023) (TABLE).
      3 Dkt. 67.
C.A. No. 2022-1179-KSJM
February 14, 2024
Page 2 of 7

seeking fees and costs in connection with five proceedings since mid-2022. 4 The

defendants objected to nearly half of the amounts due. The senior lawyers for both

sides have met and conferred, and that process resulted in compromises on some

issues. The defendants continue to object to time entries representing approximately

22% of the amount sought by Javice.

      The defendants’ remaining objections to the Rule 88 Motion challenge three

categories of time entries:

      •      Work performed in connection with Javice’s six counterclaims asserted
             in the District of Delaware (the “Counterclaims Objection”);

      •      Work performed in connection with the pursuit of insurance coverage
             (the “Insurance Work Objection”); and

      •      Work logged through “round-hour” billing entries (the “Round-Hour
             Objection”) and “block-billing” entries by Javice’s counsel (the “Block-
             Billing Objection”).

      A.     The Counterclaims Objection

      Javice asserted six counterclaims in the District of Delaware action, JPMorgan

Chase Bank, N.A. v. Javice, et al. 5

      •      Counterclaim 1 sought nine declarations, including a declaration that
             Javice was improperly terminated under her employment agreement. 6

      •      Counterclaim 2 asserted that JP Morgan breached the employment
             agreement. 7

4 Dkt. 80, Barlow Aff., Ex. 1A at 1.

5 Dkt. 80, Ex. 1 (Case No. 1:22-cv-01621-MN (D. Del. Feb. 27, 2023)).

6 Id. ¶¶ 107–10.

7 Id. ¶¶ 111–18.

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C.A. No. 2022-1179-KSJM
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      •      Counterclaim 3 asserted that JP Morgan breached the payment-
             direction agreement. 8

      •      Counterclaim 4 asserted that JP Morgan breached the implied covenant
             of good faith and fair dealing contained in the employment agreement. 9

      •      Counterclaim 5 asserted that JP Morgan breached the implied covenant
             of good faith and fair dealing contained in the payment-direction
             agreement. 10

      •      Counterclaim 6 asserted that JP Morgan took retaliatory actions
             against Javice. 11

      In her complaint, Javice did not seek advancement in connection with these

counterclaims. Consequently, I did not address her entitlement to advancement in

connection with these counterclaims in my May 8 Ruling.

      Javice argues that I already ruled that she is entitled to advancement for the

“Subsequent Investigation and Dispute,” defined by the plaintiff to include the

defendants’ investigation of Javice and “any other potential or threatened claims

relating to Plaintiff’s conduct prior to or in connection with the Merger as an officer

of TAPD or following the Merger as an employee of JPM Morgan Bank or an

affiliate.” 12 But the truth is that I was not presented with this issue and did not rule

on it. The broadly worded language in the Fitracks Order cannot cover up that fact.

8 Id. ¶¶ 119–28.

9 Id. ¶¶ 129–37.

10 Id. ¶¶ 138–45.

11 Id. ¶¶ 146–56.

12 Dkt. 85 at 3 (citing Dkt. 1 ¶ 6; Dkt. 26 at 24 (Pl.’s Mot. for Summary Judgment);

Dkt. 26, Proposed Order); see Fitrack Order at 1–2.

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C.A. No. 2022-1179-KSJM
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Javice cannot shoehorn a claim for entitlement to fees incurred in connection with

these counterclaims into the Rule 88 Motion.

      Javice argues that the work incurred in support of the counterclaims would

have been done in connection with the other claims subject to advancement. 13 Under

Delaware law, “if the fees would have been incurred independently in defense of the

advanceable proceeding, such fees are wholly advanceable, even though the fees also

were useful or applicable in a non-advanceable proceeding.” 14 Javice states “[t]he

process of preparing the Counterclaims required a factual investigation that

encompassed the rationale for the deal, discussions regarding JPMorgan’s

investment thesis, the merger diligence process, and the nature of the synthetic data

project. . . .Whether or not Javice filed the Counterclaims, counsel would have

performed the same, or substantially similar work, in preparing Javice’s defense.” 15

      It is extremely difficult for me to assess, on this record, whether the work billed

in connection with the counterclaims would have been necessary in connection with

the claims subject to advancement. This difficulty is due in part to the fact that Javice

did not claim advancement for the counterclaims, so I lack the level of argument

needed to determine the factual overlap between those claims and the advanceable

matters.

      The Counterclaims Objection is sustained.

13 Pl.’s Opening Br. at 17–18.

14 Holley v. Nipro Diagnostics, Inc., 2015 WL 4880418, at *2 (Del. Ch. Aug. 14, 2015).

15 Pl.’s Opening Br. at 18.

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C.A. No. 2022-1179-KSJM
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      At this stage, Javice could seek leave to amend her complaint to add a claim

for entitlement to advancement in connection with this category of expenses. The

defendants could reassert the arguments made in connection with the Rule 88 Motion

in response. There might be other ways to resolve this issue, including a negotiated

resolution. But a Rule 88 motion is not the appropriate vehicle for presenting this

issue to the court for resolution.

      B.     The Insurance Work Objection

      Javice demanded advancement for the expenses she incurred in attempting to

obtain insurance coverage after JP Morgan refused her demand. 16 In her complaint,

Javice did not seek advancement in connection with this category of billing entries.

Consequently, I did not address her entitlement to advancement for this issue in my

May 8 Ruling. Javice argues that fees incurred in pursuit of insurance coverage are

included in fees-on-fees, but that is not so. Fees-on-fees do not cover fees incurred in

this action. Once again, Javice cannot shoehorn this request into a Rule 88 Motion.

      As with the Counterclaims Objection, Javice could seek leave to amend her

complaint to add a claim for entitlement to advancement in connection with the

insurance work. The defendants can reassert their arguments made in connection

with the Rule 88 Motion in response. Again, a Rule 88 motion is not the appropriate

vehicle for presenting this issue to the court for resolution.

16 Id. at 22–25.

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         C.    The Round-Hour And Block-Billing Objections

         The defendants argue that certain “round-hour” billing entries should not be

advanced because it is “mathematically improbable that 44% of [the time-keeper’s]

time was spent in round hours if time was being properly recorded in six-minute

increments.” 17 JP Morgan argues that statistics indicates that “approximately 10%

of entries should be round hours[.]” 18 Javice asserts that the time-keeper’s entries

were a product of how the time-keeper structured his day. 19 To this assertion, the

defendants argue that after they brought up the issue to Javice, the time-keeper’s

entries no longer were disproportionately whole numbers. 20

         The defendants also argue that certain time entries constitute “egregious”

block-billing, which has prevented the defendants from assessing the reasonableness

of the advancement demand. 21       In support of their block-billing objection, the

defendants point to a single District of Delaware case that concerned an award of

attorney’s fees, not advancement. 22

17 Dkt. 82 (“Defs.’ Answering Br.”) at 31–32.

18 Id.

19 Pl.’s Opening Br. at 29.

20 Defs.’ Answering Br. at 31–32 (citing Pl.’s Opening Br. at 29).

21 Id. at 32–33.

22 Id. (citing Blattman v. Siebel, 2021 WL 7411946, at *4 (D. Del. Aug. 10, 2021)

(Special Master’s Report and Recommendation), adopting report and
recommendation as modified, 2021 WL 7209226 (D. Del. Dec. 6, 2021)). In Blattman,
the court found that its ability to adequately review invoices had been stymied by
counsel’s use of block-billing and redactions. 2021 WL 7411946, at *4. The alleged
block-billing here was not combined with redactions that would stymie review.

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C.A. No. 2022-1179-KSJM
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         This court has held that “[a]dvancement is not the proper stage for a detailed

analytical review of the fees, whether in terms of the strategy followed or the staffing

and time committed.” 23      With a good faith certification from counsel, fees are

generally advanced. 24 Counsel certified that the fees incurred were actually incurred

and that they were reasonable, and the court has no reason to doubt that averment

at this stage of the proceedings. 25 The defendants’ objections to these categories of

expenses are overruled.

         IT IS SO ORDERED.

                                          Sincerely,

                                          /s/ Kathaleen St. Jude McCormick

                                          Chancellor

cc:      All counsel of record (by File & ServeXpress)

23 Duthie v. CorSolutions Med., Inc., 2008 WL 4173850, at *2 (Del. Ch. Sept. 10, 2008).

24 Id.

25 Dkt. 80, Barlow Aff. ¶¶ 4, 10.

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