Federal Trade Commission v. Trudeau

Dist. Ct. did not abuse its discretion in denying request for attorneys’ fees by two law firms that represented entity that plaintiff-FTC believed was controlled by defendant, where law firms generated said fees in unsuccessful attempt to establish that entity was not controlled by defendant, and thus not liable for $38 million that had been imposed against defendant as contempt sanction. While law firms argued that Dist. Ct. should have awarded them their fees before submitting balance of assets from said entity to satisfy contempt sanctions, Ct. found that all assets of entity (i.e., $8 million) were properly sent to FTC on behalf of defendant’s victims, since law firms had failed to seek permission from Dist. Ct. prior to their engagement with entity and had failed to give Dist. Ct. proposed course of conduct. Moreover, defendant was directed turn over all proceeds of his improper commercial activities prior to law firms’ engagement to entity, such that instant turnover order served as lien on entity’s assets that was superior to any later claims for fees asserted by law firms.