Opinion
No. CIV. S-02-1575 LKK/DAD.
March 1, 2006
ORDER
Plaintiff John Healy's suit included claims for breach of contract, fraud, and intentional infliction of emotional distress. In due course, the parties moved for cross-summary judgment. On August 2, 2005, the court granted in part, and denied in part, plaintiff's motion for summary judgment as to the breach of contract claim and denied all other motions. The matter proceeded to trial on November 8, 2005. Pursuant to the court's Findings of Fact and Conclusions of law filed on January 6, 2006, judgment in the amount of $3,024,988.48 was rendered in favor of plaintiff. Plaintiff now moves for attorney's fees and litigation costs against defendants under California Civil Code § 1717.
Where, as here, the suit was based on California substantive law, an award of attorneys' fees incurred in the suit is governed by state law. See Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000). Under California law, a prevailing party is ordinarily not entitled to attorneys' fees unless the parties have previously agreed to the fees, or the fees are otherwise provided by statute. See Lerner v. Ward, 13 Cal.App.4th 155 (1993) (citing, inter alia, Reynolds Metals Co. v. Alperson, 25 Cal.3d 124 (1979)). Defendants do not dispute that plaintiff prevailed in this litigation and is entitled to an award of attorneys' fees. Defendants, however, challenge plaintiff's calculation of the attorney's fees and costs on various grounds. I address the motion based on the pleadings and the parties' papers.
California Civil Code § 1717(a) provides that parties to a contract may agree to reasonable attorney's fees, in addition to other costs, regardless whether he or she is the party specified in the contract.
Section 2.5 of the Separation Agreement at issue in the instant case provides that "[a]ny breach of the terms of this agreement by Employee . . . shall entitle MCI to recover the consideration as set forth above, along with reasonable attorneys' fees incurred by MCI to defend any such action to the extent permitted by law."
A. METHOD OF CALCULATION
Defendants challenge the various theories upon which plaintiff seeks attorney's fees, arguing that such theories disregard the "lodestar method." Opp'n at 6. Defendants' point is well-taken.
Indeed, plaintiff offers the court three scenarios for calculating attorney's fees, two of which completely ignore established law. In Scenario A, plaintiff suggests that the court should add 33.3% of the judgment (the contingency rate plaintiff and his counsel agreed to) to the total judgment and provide plaintiff's counsel with one-third of that amount. In Scenario B, plaintiff suggests that a straight contingency rate of 33.3% should be applied to calculate the attorneys' fees, giving counsel 1/3 of the total judgment. Plaintiff argues that the purpose of attorneys' fees is "to make the prevailing party whole" (internal quotations omitted). The court rejects both methods for calculating attorneys' fees because they are inconsistent with governing law. Both federal and California courts have adopted the "lodestar" method for calculating attorney's fees. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); Serrano v. Priest, 20 Cal. 3d 25, 48-49 (1977). To determine the appropriate fee amount, the court multiplies the number of hours reasonably expended in the litigation by a reasonable hourly rate. Id.
Plaintiff's counsel explains that there existed a contingency fee arrangement under which he would receive 33.3% of the recovery. Under Scenario A, plaintiff requests $1,512,494.24, whereas under Scenario B, plaintiff requests $1,068,207.20 in attorney's fees.
B. REASONABLE HOURLY RATE
The appropriate hourly fee should be based on the rates charged by counsel with similar experience, reputation, and skill for similar cases in the legal community. White v. City of Richmond, 713 F.2d 458 (9th Cir. 1983). The burden is on the fee applicant to produce satisfactory evidence that the requested rates are in line with those in the prevailing community for similar services by lawyers of comparable skill, experience, and reputation. Blum v. Stenson, 465 U.S. 886, 895 (1984). Plaintiff's counsel seeks $450.00 per hour for services rendered by Richard Edson("Edson") and $350.00 per hour for Ross Nott ("Nott"). For the reasons stated below, the court concludes that $325.00 per hour is the appropriate rate for Edson's services and $225.00 is the proper hourly fee for Nott.
Edson has thirty years of experience and supports his requested hourly fee with his own declaration where he explains that he "talk[ed] to business litigation attorneys in the Sacramento area," and was told that "they charge anywhere from $350.00 to $525.00 per hour." Edson then chooses $450.00 as "being approximately in the mid-range." Edson Dec. at 1-2. Nott has practiced law for eleven years and bases his requested hourly fee of $350.00 per hour on two factors, the average hourly rate of contingency cases he has worked on, and the amount awarded plaintiff's counsel in Velazquez v. Khan, CV-S-01-0246 (E.D. Cal.) (England, J.) (awarding plaintiff's counsel $300.00 with eight years of experience).
Defendants challenge the reasonableness of Edson's hourly rate by arguing that lead counsel for defendant, Lee J. Hutton, who also has thirty years of experience, only charged $250.00 per hour in the instant matter. Hutton Dec. at 1-2. The court cannot consider Hutton's hourly rate because he is employed in Ohio and such evidence does not constitute rates which are "in line with those prevailing in the [Sacramento] community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Blum, 465 U.S. at 895 n. 11 (1984). Defendants, however, also attach the declarations of Jay-Allen Eisen ("Eisen") and James F. Curran ("Curran"), two attorneys employed in Sacramento which evidence that the prevailing hourly rates for similar work performed by attorneys of comparable skill, experience and reputation. Eisen declares that he believes prevailing rates for attorneys in Sacramento are between $300 and $350, Eisen Dec. at 4, while Curran opines that lawyers in Sacramento with 20-35 years of experience charge no more than $350 per hour for their services. Curran Dec. at 2. Curran concludes that "the `market' rate for an 11-year veteran like Mr. Nott in Sacramento is approximately $125-175 per hour." Id. at 4.
Eisen was admitted to practice law in California in 1969 and has been practicing law in Sacramento for over twenty years, first with the law firm of Karlton, Blease and Vanderlaan, and later with Rothschild Eisen. In 1982, Eisen established his present practice in Sacramento. Curran has been practicing law in California since 1989 and has practiced law in Sacramento since 1992 with four different law firms.
Because plaintiff's counsel has failed to present sufficient evidence of the appropriate fee for Edson (indeed, his evidence amounts to unsubstantiated hearsay), the court determines that the rate of $325.00 per hour adequately reflects the prevailing hourly rate for comparable attorneys with Edson's experience, reputation, and skill. After considering Nott's legal experience and the parties' evidence, the court determines that $225.00 per hour adequately reflects the prevailing hourly rate for attorneys of comparable skill, experience, and reputation. Cf. Asberry v. City of Sacramento, CIV. S-01-2343 at (E.D. Cal. Apr. 2004) (Karlton, J.) (Order at 2-4) (awarding attorney with fifteen years of experience in Sacramento $275-$325 per hour).
C. NUMBER OF HOURS BILLED
Plaintiff seeks to recover 1,165.10 hours of attorneys' fees for Edson and 173.5 hours for Nott expended in this litigation. Edson Dec. at 2; Nott Dec. at 8. In arriving at the lodestar figure, the district court should exclude hours that are "excessive, redundant, or otherwise unnecessary. . . ."Hensley, 461 U.S. at 434. Defendants object to the number of hours billed for various reasons, which the court addresses below. 1. Hours Spent on Fraud Claim
Defendants contend that the court should reduce plaintiff's hours by twenty-three percent to reflect time spent on fraud-related claims. According to defendants, attorney's fees are allowed in this matter only for the time spent on prosecuting the breach of contract actions and not on non-contractual claims. Opp'n at 18. Defendants claim that two of the witnesses at trial, Dorothy Culham and Barbara Iman, testified almost entirely on fraud issues and estimates that "one-half of the time, energy and attention in this litigation" pertained to plaintiff's fraud cause of action. Id. at 17. I cannot agree that the court must reduce hours plaintiff's counsel spent on the fraud claims.
Attorney's fees "need not be apportioned when incurred for representation on an issue common to both a cause of action in which fees are proper and one in which they are not allowed."Reynolds Metals Co. v. Alperson, 25 Cal.3d 124, 129-130 (1979);see also Abdallah v. United Sav. Bank, 43 Cal.App.4th 1101, 1113 (1996) (apportionment not required where claims are "inextricably interwined, making it impracticable, if not impossible, to separate the multitude of conjoined activities into compensable or noncompensable time units"). Such decisions are within the discretion of the court. Hubbard v. Twin Oaks Health and Rehabilitation Center, 406 F.Supp.2d 1096, 1100 (E.D. Cal. 2005) (Karlton, J.).
It would be impracticable for the court to apportion the fees because the two misrepresentations at issue made by Culham and Iman formed part of the basis for the breach of contract claim. In the instant case, the court finds it inappropriate to apportion attorneys' fees because all of plaintiff's causes of actions were grounded on the same common set of facts, and thus, the claims were "inextricably intertwined." See January 6, 2006 Findings of Fact Conclusions of Law at 6-11.
2. Hours Reasonably Spent
Defendants contend that Edson's hours are not reasonably spent because they are excessive or duplicative and requests that the court adjusts Edson's hours accordingly. Defendants point to various examples in which they believe Edson "liberally recorded" time spent on legal tasks. The court has carefully examined Edson's twenty-six page billing statement and agrees with defendants that some of Edson's hours are excessive and not reasonably spent. For example, on February 12, 2004, Edson allegedly spent 3.6 hours on reviewing correspondence from opposing counsel on the joint status report, a task that the court believes should have taken no longer than thirty minutes. On August 21, 2005, Edson allegedly spent 5.5 hours on reviewing defendants' pretrial conference statement, a task that the court estimates should have taken no longer than thirty minutes. Edson also claims that he spent one hour and twenty-four minutes on February 17 and 26, 2004 reviewing the pro hac vice applications submitted by defendant, a task that the court believes should take no more than fifteen minutes. Such examples lead the court to believe that counsel's time calculation is inflated and unreasonable. Rather than expend judicial resources and list every time entry which the court believes is excessive, of which there appear to be many, the court reduces the hours Edson claims he spent by fifteen percent, or 174.77 hours, leaving Edson's total hours for services rendered at 990.33 hours. The court has reviewed Nott's records, and because they appear reasonable and because defendants do not specifically challenge his hours, the court shall utilize the 173.5 hours sought by Nott for the lodestar calculation.
D. OTHER REQUESTED DEDUCTIONS
Defendants argue that plaintiff is not entitled to $69,961.00 in fees that he seeks for the services of Anne Marie Flaherty because "he has not borne his burden of proof in establishing the number of hours she worked, the reasonableness of those hours, the amounts charged per hour and the reasonableness of the hourly rate." Opp'n at 13. The court agrees with defendants' contention.
Plaintiff has submitted a declaration stating that he paid Flaherty $69,961.00 for legal services between May 6, 2002 and January 21, 2003. Healy Dec. at 1. However, the fee applicant bears the burden of submitting "evidence supporting the hours worked and rates claimed." Hensley, 461 U.S. at 433. Plaintiff fails to tender evidence indicating the number of hours Ms. Flaherty worked, the rate at which she charged plaintiff, or what legal tasks she completed on behalf of plaintiff. Where, as here, plaintiff has provided no supporting documentation for his claim, the court must deny his request as to Flaherty's fees due to lack of evidentiary support. See City of Oakland v. McCullough, 46 Cal.App.4th 1, 10 (1996) (denying portion of fee request due to lack of evidentiary support).
EDS also argues that it is entitled to a set off for attorneys' fees it alleges plaintiff has already received from MCI. According to defendant, after MCI WorldCom filed for bankruptcy, the claims against it were dismissed, but plaintiff reasserted those claims against MCI WorldCom in Bankruptcy Court. Opp'n at 18. Plaintiff was allegedly paid by MCI WorldCom before trial in the amount of $49,492.80 as compensation for attorneys' fees incurred in connection with his severance pay claim. Id. at 19. Defendant asserts that unless it receives a credit for attorneys' fees already received, plaintiff stands to receive a double recovery. The record does not support defendant's claim. Defendant fails to submit any evidence that plaintiff has received this amount, and whether the amount constitutes attorneys' fees for the same claims raised in this litigation. For the reasons stated above, the court will not set off the attorneys' fees allegedly paid by MCI WorldCom in the bankruptcy proceedings.
It would appear that any fees received would be for bankruptcy litigation, a claim quite difference than the matter-at-bar.
E. MULTIPLIER
After determining a reasonable fee award and the number of hours the prevailing attorneys reasonably expended on the litigation, courts may then adjust the lodestar to reflect other particular aspects of a case. See Kerr v. Screen Extra Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975); Serrano v. Priest, 20 Cal.3d 25 (1977). When deciding whether to adjust the lodestar, courts often use the following twelve factors: (1) time and labor required, (2) the novelty and difficulty of the issues involved, (3) the skill requisite to perform the legal service properly, (4) the preclusion of other employment by the attorney due to acceptance of the case, (5) the customary fee, (6) whether the fee is fixed or contingent, (7) time limitations imposed by the client or the circumstances, (8) the amount involved and the results obtained, (9) the experience, reputation, and ability of the attorneys, (10) the "undesirability" of the case, (11) the nature and length of the professional relationship with the client, and (12) awards in similar cases. Kerr, 556 F.2d at 69-70.
To the extent that a party seeks an enhancement, it bears the burden of proof. See Ketchen v. Moses, 24 Cal.4th 1122 (2001). Nothing requires a trial court to include a fee enhancement to the basic lodestar figure for contingent risk, exceptional skill, or any other factor. Id. Courts retain the discretion to do so in the appropriate case. Id. Notably, the Supreme Court has held that there is a "strong presumption" that the lodestar figure represents a reasonable fee. Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 565 (1986). Plaintiff seeks a multiplier of two, arguing that a multiplier is warranted because he claims the case is "surprisingly complex" and because plaintiff's counsel "accepted the matter on a contingent basis." Mot. at 8. While the court acknowledges the difficulty of the case, given the facts, the court concludes that a multiplier is not justified.
F. BILL OF COSTS
Plaintiff also requests $13,727.89 for items listed in a bill of costs submitted to the court. Defendants rightly note that plaintiff seeks thousands of dollars in expenses that are simply not taxable pursuant to 28 U.S.C. § 1920. Defs.' Obj. at 2. At the outset, the court notes that it has spent an unreasonable amount of time deciphering plaintiff's bill of costs. The court was also required to call plaintiff to submit receipts and evidence of such costs because plaintiff's bill of costs was initially submitted to the court without any supporting evidence. Nevertheless, the court will do its best to decide which costs are proper and which are not. Defendants have submitted a lengthy list of objections to plaintiff's bill of costs. The court will turn only to those objections that warrant attention. 1. Duplicate Copies of Deposition Transcripts
Defendants object to plaintiff recovering $142.85 for a copy of Barbara Iman's deposition even though he had received the original and one copy at a cost of $530. The court agrees with defendant that this transcript was unnecessary and will subtract $142.85 from the bill of costs.
2. Subsistence Cost for Barbara Iman
Plaintiff seeks $695.40 in subsistence costs for Iman. As defendants point out, however, it appears plaintiff was overly sloppy in his compilation of the bill of costs. The only receipts plaintiff submits for $685.40 were for plaintiff's counsel's travel expenses to take Ms. Iman's deposition. These travel expenses cannot be considered witness fees as contemplated by 28 U.S.C. §§ 1820 and 1821. The court will subtract $695.40 from the bill of costs.
3. Copying Costs
Defendants object to $3,651.60 of the $4,084.11 plaintiff seeks in copying costs. Defendant objects to the $211.08 that plaintiff seeks in copying costs for his appellate brief in the interlocutory appeal on the motion to remand that EDS filed and won. The court agrees with defendant on this ground and $211.08 will be deducted from the bill of costs. EDS also objects to the $3,298.10 that plaintiff seeks for copying his trial exhibits because defendant argues that plaintiff was forced to "redo" his exhibits twice at the order of this court. The court agrees that defendant should not be saddled with costs associated with exhibits which were improperly presented to the court. The court also agrees with defendant that it is unclear what exactly the cost of the final set of exhibits should be because plaintiff has failed to set forth the costs for the final set. Because the court is unable to tell what it cost plaintiff to prepare the final set of exhibits, the court will therefore subtract two-thirds of the requested copying amount, or $2,198.73, from the bill of costs, representing plaintiff's two unsuccessful attempts at providing exhibits to the court.
4. Other Costs
Defendant objects to $3,522.28 representing counsel's travel expenses and "courier charges." See Plaintiff's Amended Bill of Costs at 10-22, 30, 35, 37-38, 46-47, 49-50, 56-58, 66-69. Although the court agrees with defendant that such travel expenses are not taxable and do not constitute "costs" as contemplated under 28 U.S.C. § 1920, these costs are properly recovered as part of an attorneys' fees motion. See Yasui v. Maui Elec. Co., Ltd., 78 F.Supp.2d 1124, 1130 (D.Haw. 1999). The court therefore awards $3,522.28 to plaintiff as part of his attorneys' fees motion.
CONCLUSION
Accordingly, plaintiff's counsel is AWARDED attorneys' fees and costs in the amount of $371,660.33.The court is also in receipt of defendants' application for approval of supersedeas bond. The application is APPROVED and the matter is automatically STAYED pursuant to Fed.R.Civ.P. 62(d).
IT IS SO ORDERED.