Netflix Just Says No: Relativity Attorney Fees “Shocks The Conscience”; Relativity Fights Back


UPDATE, 11:28 AM: Relativity just shot back at Netflix over claiming its attorney fees are unreasonable, saying in a filing with the Bankruptcy Court today that the legal fees and costs are in line and that attorneys for its CEO Ryan Kavanaugh are fully entitled to have them re-imbursed. The studio states that Netflix “is obligated to reimburse Mr. Kavanaugh for the attorneys’ fees he incurs in connection with all proceedings in these Chapter 11 cases.” Relativity calls Netflix’s arguments “misleading.” They also said that the rates are “regular rates for the Jones Day lawyers.”

PREVIOUS, 10:55 AM: Relativity is seeking more than $1.2 million in attorney fees and costs against Netflix, which the studio says it incurred for a hearing in May to determine whether Netflix could stream two Relativity films  — Masterminds and The Disappointments Room — ahead of their theatrical releases. Netflix lost the argument and is now fighting Relativity over the company’s request to pay their lawyers’ legal fees and costs, telling the court the amount Relativity is seeking “simply shocks the conscience.” Relativity CEO Ryan Kavanaugh is also seeking attorney fees and costs.

While it is not unusual to argue in court to try to diminish fees and costs, this particular filing is looking to bar Kavanaugh from any relief whatsoever. He was represented personally in U.S. Bankruptcy Court by Skadden Arps, so just who will be responsible for paying this well-known law firm is in question at the moment.


According to the filing last week (just made available today), Kavanaugh and RML Distribution seek more than $1.264M in fees and costs. Netflix filed a motion last Thursday disputing this, noting that this “purportedly incurred in little over a month to litigate two motions through a three-day evidentiary hearing. They got there by staffing the case with nine lawyers charging over $800 per hour (four of which were charging over $1,000 per hour) and having eight lawyers attend the evidentiary hearing at a combined rate of $7,925 per hour. As a result, on a single hearing day, the eight attorneys attending the hearing billed a combined $93,834, even though only four of the eight entered an appearance and only two spoke. Counsel’s staffing and hours were facially excessive — indeed, shocking — and their billing rates (rising as high as $1,290 per hour) are far beyond the reasonable hourly rates recognized in this District.”

Later in the 30-page opposition motion, Netflix argues against Kavanaugh himself asking for these costs and fees that Skadden Arps incurred in representing him in court, saying that he is not entitled to the fees and costs since he is not a party to the motion. “In short, Mr. Kavanaugh has absolutely no basis in law, contract or otherwise to seek contractual attorneys’ fees or to claim to be a ‘prevailing party’ on a motion he did not bring, on a contract to which he is not a party, and under which he holds no rights.”

They also argue that Relativity is asking for fees under California law but not under federal bankruptcy laws that governed the proceedings, and as such, they have no claim.

The “attempt to obtain over $1,264,000 in attorney’s fees for the work of no less than 11 attorneys on a matter that took little more than a month simply shocks the conscience.”

The Bankruptcy Court held hearings on the dispute between Netflix and Relativity on May 19, 20, and 23.

Lawyers for Netflix further argue that its company had three attorneys compared to eight that Relativity and Kavanaugh had on the final day, May 23. Netflix wrote, “As five of these eight attorneys were from out of town, this also meant time and expenses billed for cross-country travel.” It adds: “At the very least” RML and Relativity should provide “an explanation justifying how it could possibly be reasonable for eight attorneys to attend a hearing that was handled by two.”

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