IN RE: NAVIDEA BIOPHARMACEUTICALS LITIGATION
1:19-cv-01578
S.D.N.Y.Aug 24, 2020Background
- Navidea sued former officer Michael Goldberg for breach of contract, breach of the covenant of good faith and fair dealing, and related claims; Goldberg counterclaimed and faced a separate Delaware action by Navidea’s subsidiary Macrophage.
- Goldberg moved to dismiss Navidea’s breach of fiduciary duty claim and sought indemnification/advancement of attorneys’ fees; the Court dismissed the fiduciary claim and found Goldberg entitled to fees for defending that claim.
- Magistrate Judge Freeman issued an R&R recommending (inter alia) declining ancillary jurisdiction over advancement requests tied to the Delaware action; awarding indemnification for fees defending the fiduciary claim; allowing advancement for fees defending Navidea’s remaining claims; and adopting a protocol for future advancements.
- The district court adopted the R&R in full but declined to award any specific fee amounts because Goldberg failed to provide contemporaneous billing records allocating time to particular claims.
- The court ordered Goldberg to file properly supported fee applications (with detailed time entries separating defense of each claim) by September 30, 2020, warned that failure could result in withdrawal with prejudice or sanctions, and adopted the magistrate’s advancement protocol with an extra meet-and-confer requirement.
Issues
| Issue | Plaintiff's Argument (Navidea) | Defendant's Argument (Goldberg) | Held |
|---|---|---|---|
| Ancillary jurisdiction over advancement for Delaware action | Decline jurisdiction; unrelated action | Court should exercise ancillary jurisdiction because advancement issues overlap | Court declined to exercise ancillary jurisdiction (different parties, claims, burdens; judicial economy weighs against it) |
| Indemnification for fees defending dismissed fiduciary claim | N/A (Navidea did not oppose finding entitlement) | Entitled to indemnification for reasonable fees incurred defending the fiduciary claim | Court held Goldberg is entitled to indemnification but denied award pending a properly supported lodestar fee application by Sept 30, 2020 |
| Advancement for fees defending Navidea’s remaining claims in this case | Advancement should be conditioned on repayment undertaking and reasonableness review | Entitled to advancement now; no need to assess reasonableness before advancing | Court allowed advancement in principle, subject to an unsecured undertaking to repay and a properly supported fee application showing reasonable fees |
| Advancement for fees related to Delaware action, and for prosecuting counterclaims/third-party claims | Advancement for Delaware and third-party/counterclaim fees not warranted | Sought advancement for these fees (invoked Citadel for counterclaims) | Court denied ancillary-jurisdiction award for Delaware fees; declined advancement for third-party claims and left Citadel-based compulsory-counterclaim argument for later, if properly presented |
| Procedure / billing records & sanctions | Protocol and periodic advances suffice | Protocol unfair; monthly applications onerous; sought looser process | Court adopted magistrate’s protocol, added 1-hour meet-and-confer requirement, ordered detailed billing records, and warned of sanctions or withdrawal with prejudice for noncompliance |
Key Cases Cited
- Tancredi v. Metro. Life Ins. Co., 378 F.3d 220 (2d Cir. 2004) (ancillary jurisdiction over collateral fee disputes rests in district court discretion)
- Chesley v. Union Carbide Corp., 927 F.2d 60 (2d Cir. 1991) (factors for exercising ancillary jurisdiction include relatedness and judicial economy)
- Millea v. Metro-N. R. Co., 658 F.3d 154 (2d Cir. 2011) (lodestar—reasonable hours times reasonable rate—serves as starting point for fee awards)
- Blum v. Stenson, 465 U.S. 886 (U.S. 1984) (party seeking fees bears burden to show reasonableness)
- N.Y. State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136 (2d Cir. 1983) (fee applications must include contemporaneous time records specifying date, hours, and work done)
- Citadel Holdings Corp. v. Roven, 603 A.2d 818 (Del. 1992) (contractual advancement may include compulsory counterclaims that defeat or offset the plaintiff’s claims)
- Sun-Times Media Group, Inc. v. Black, 954 A.2d 380 (Del. Ch. 2008) (permissive counterclaims are offensive, not defensive, and generally not indemnifiable/advancable)