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Johnson v. LPL Financial Services


December 27, 2007


The opinion of the court was delivered by: Hon. Leo S. Papas U.S. Magistrate Judge


On July 25, 2007, the Court conducted a Settlement Conference in this action, at which a settlement was achieved. As part of the settlement, the parties consented to the jurisdiction of the undersigned to decide, inter alia, all disputes regarding settlement terms arising during the documentation thereof not resolved by the parties themselves. The parties also agreed that any decision by the undersigned with regard to the undersigned's decision regarding settlement terms, would be final, binding and non-appealable.

On August 31, 2007, Plaintiff's counsel informed the Court by letter that a dispute had arisen between the parties regarding the proper issuance of IRS Form 1099s after payment of the agreed settlement amount (hereafter "IRS dispute").

On September 5, 2007, Defendant's counsel responded via letter to Plaintiff's counsel's August 31, 2007 letter.*fn1 On October 4, 2007, Plaintiff's counsel responded to Defendant's counsel's September 5, 2007 letter.

On October 9, 2007, the Court ordered Plaintiff's and Defendant's counsel to appear for a hearing regarding the IRS dispute. In the October 9, 2007 Order, the Court stated:

To the extent a party has taken a clearly erroneous position regarding the IRS issues raised in Plaintiff's letter brief of August 31, 2007, Defendant's letter brief of September 5, 2007 and Plaintiff's letter brief of October 4, 2007, that party shall be ordered to pay the other party's expenses in litigating the issues discussed in those letter briefs.

On October 10, 2007, the hearing was held. Plaintiff's and Defendant's counsel attended the hearing. At the hearing, Plaintiff's counsel recognized that the position he held, as stated in his August 31 and October 4, 2007 letters, was erroneous.

At the October 10, 2007 hearing, Defendant's counsel requested that Plaintiff pay Defendant's attorneys fees incurred in litigating the IRS dispute. The Court ordered that Defendant file a declaration stating the time and fees incurred in researching and litigating the dispute.

On October 17, 2007, the Court issued a written Order Regarding Form 1099 Issuing Requirements After Payment of Settlement. The October 17, 2007 Order found Defendant's position to be correct.

On October 16, 2007, Defendant's counsel submitted the declaration, as ordered. On October 31, 2007, Plaintiff's counsel submitted a Reply to Defendant's counsel's declaration.

Thereafter, the Court requested that Defendant's counsel submit to it in camera, a supplemental declaration containing Defendant's counsel's unredacted billing statements regarding the IRS dispute. On November 26, 2007, Defendant's counsel submitted to the Court in camera, a Supplemental Declaration, attached to which were unredacted billing statements regarding the IRS dispute. Plaintiff's counsel was served with a redacted copy of Defendant's counsel's billing statements. On November 30, 2007, Plaintiff's counsel filed a Supplemental Reply to the Supplemental Declaration of Defendant's counsel.

The Court, having reviewed the letters, briefs, declarations of counsel, and billing statements, and GOOD CAUSE APPEARING, HEREBY ORDERS:

It is clear to the Court that by late August 2007, or by early September 2007, the parties could have resolved the IRS dispute. If the parties had done so, it is unlikely that Defendant would have sought its attorneys fees incurred in litigating the dispute.

Therefore, taking into account the events starting in early September 2007, the approach each party utilized in resolving the dispute and the expenses incurred by Defendant in establishing its position with regard to the dispute, the Court ORDERS that Plaintiff pay Defendant the sum of $8,610.00 (including costs), for attorneys fees and costs incurred in litigating the IRS dispute.

Payment of Defendant's attorneys fees, as ordered herein, is stayed until either the settlement agreed to by the parties is confirmed, or a final judgment is entered.


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