Attorney Josh Sanford of Little Rock won his latest round with U.S. District Court Judge Billy Roy Wilson in a long-running feud over allegations Sanford charges excessive and unearned fees.
The 8th U.S. Circuit Court of Appeals in St. Louis last month reversed Wilson’s sanctions against Sanford and his namesake law firm that would have suspended them from participating in any Fair Labor Standards Act case in the Eastern District of Arkansas for two years. Wilson’s sanctions also would have required Sanford and his firm to provide a copy of Wilson’s order to every other court, state or federal, while they were suspended.
The 8th Circuit found that Wilson abused his discretion.
“We conclude that the district court neither gave proper notice of a specific pleading detailing the objectionable conduct nor gave clear notice as to the form of the sanctions it was considering,” according to the three-judge ruling by Chief Judge Lavenski R. Smith and Circuit Judges Steven M. Colloton and Duane Benton. (Smith’s term as chief judge ended March 10, and Colloton became chief judge on March 11.)
The appellate judges also found that Sanford and his firm were entitled to notice of the potential sanctions “that directly impact their reputation and livelihood,” the ruling said. “Furthermore, Sanford was entitled to notice that the district court was considering these harsh sanctions against him personally.”
Sanford recently told Arkansas Business that his “position is that if a three-judge panel agrees that Judge Wilson abused his discretion, then who am I to argue with those judges?”
Sanford said his attorney, Jeff Rosenzweig of Little Rock, and other attorneys across the country told him that they thought he would win at the 8th Circuit, but he wasn’t 100% sure.
“You always wonder what’s going to happen when they rule, because the abuse of discretion standard is so forgiving,” said Sanford, a 2001 graduate of the University of Arkansas at Fayetteville School of Law. “It’s set up to allow judges to do what they want. And so for a judge to be reversed on an abuse of discretion standard is a really big deal.”
The feud over the fees can be traced to June 2020, when Wilson found that Sanford’s firm deserved only a single dollar for its work for clients in a 2018 case against Welspun Pipes Inc. to collect unpaid overtime wages under the FLSA. A settlement delivered about $270,000 for about 250 underpaid employees and called for $96,000 in attorneys’ fees for the Sanford firm.
After the 8th U.S. Circuit Court of Appeals rejected his $1 ruling as unreasonable, Wilson awarded the firm $500 “based on SLF’s egregious conduct.”
SLF appealed that amount, but it was upheld in a June 2023 decision.
Wilson then ordered the firm and Sanford, as its managing partner, to attend a hearing where they were questioned about their settlement negotiations. In a 2023 filing, Wilson alleged that the firm and Sanford had attempted to “extort unearned fees from Defendant, unnecessarily extending litigation to get those unearned fees, and repeatedly submitted (in this case and others) fee requests for excessive hourly rates and inflated hours.”
After the hearing, Wison ordered his sanctions against the firm and Sanford, which included the 24-month ban from participating in any FLSA case in the Eastern District of Arkansas. That decision was stayed pending the appeal.
Sanford told Arkansas Business that when Wilson made the ruling, “it caught me off guard because it was disconnected to anything that had been going on in the case.”
Sanford appealed.
In its 19-page ruling, the 8th Circuit said that it might have tossed a sanction order and sent it back to the judge for further processing, but in this case, sending it back to Wilson wouldn’t have done much good.
The Court of Appeals had affirmed the $500 reduced fee award “based on the district court’s finding of the law firm’s ‘egregious’ and ‘unprofessional’ conduct,” the ruling said.
“Even if we assume that SLF and Sanford also engaged in sanctionable conduct under Rule 11, they have ‘already suffered inevitable financial and personal costs’ as a result of the proceedings in the [Welspun] case, … and the deterrent effect of the district court’s previous actions has not yet been tested.”
Impact of the Rulings
In 2022, Sanford’s law firm had 37 attorneys; now it has 11. “We have greatly shrunk our law firm headcount in part due to Judge Wilson’s rulings,” Sanford said.
Wilson’s decisions, “in which he takes away fees that I have earned and fees that defendants have agreed to pay me, have made it impossible for us to have a plaintiff’s FLSA practice here in the Eastern District of Arkansas,” Sanford said.
Plaintiffs’ lawyers act as police officers to make sure that laws are complied with, he said. The attorneys don’t charge the plaintiffs and are paid by the defendants if cases are successful.
But now, employers feel they can cheat employees out of wages without fear of being taken to court for their violations of the law, Sanford said.
“And in this area of the law, as in many areas of individual rights, and when there are no plaintiffs’ lawyers who can run a functioning business in an area of consumer protection or individual rights protection, then defendants, or employers, are free to see what they can get away with,” he said.
The post Court Reverses Sanctions on Sanford appeared first on Arkansas Business — Business News, Real Estate, Law, Construction.