Opinion
02 Civ. 9120 (SAS) (DFE).
October 17, 2006
Nina H. Kazazian, Esq., Denver, Colorado, For Plaintiff.
Christina L. Feege, Esq., Littler Mendelson, P.C., New York, New York, For Defendants.
OPINION AND ORDER
On July 24, 2006, Magistrate Judge Douglas F. Eaton issued a Report and Recommendation (the "Recommendation") in which he recommended that plaintiff be awarded attorney's fees in the amount of $89,646.86 and $10,134.80 in costs. Plaintiff filed Objections to the Recommendation on August 4, 2006, which defendants opposed. Without the Court's permission, plaintiff filed a reply memorandum. For the reasons stated below, the Recommendation is hereby adopted with the following modifications.
See Recommendation at 19.
See Plaintiff's Objections to the Report and Recommendation of U.S. Magistrate Judge ("Objections").
See Memorandum of Law in Opposition to Plaintiff's Objections to Report and Recommendation of U.S. Magistrate Judge ("Opposition"). Plaintiff requested that defendants' Opposition be stricken because it was not timely served. See 8/23/06 Letter from Nina H. Kazazian. Defendants' Opposition, which was due by August 21, 2006, was faxed at 12:28 a.m. on August 22, 2006. See 8/23/06 Letter from Christina L. Feege. In the interest of having a complete record, the Court will excuse this minor delay. Plaintiff's request is therefore denied.
See Plaintiff's Reply to Objections to the Report and Recommendation of U.S Magistrate Judge ("Reply"). Although plaintiff requested permission to file a reply, see 9/11/06 Letter from Nina H. Kazazian, she did not receive express approval to do so from this Court.
I. STANDARDS
A. Attorney's Fees
District courts have the discretion to award attorney's fees and costs in cases brought under the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. In considering whether an award of fees and costs is appropriate, courts must consider the following factors:
See 29 U.S.C. § 1132(g)(1) ("In any action under this subchapter . . . by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party.").
"(1) the degree of the offending party's culpability or bad faith, (2) the ability of the offending party to satisfy an award of attorney's fees; (3) whether an award of fees would deter other persons from acting similarly under like circumstances, (4) the relative merits of the parties' positions, and (5) whether the action conferred a common benefit on a group of pension plan participants."
Krizek v. Cigna Group Ins., 345 F.3d 91, 102 (2d Cir. 2003) (quoting Chambless v. Masters, Mates Pilots Pension Plan, 815 F.2d 869, 871 (2d Cir. 1987)).
Once it has been determined that an award of fees and costs is appropriate, the next step is to determine the amount of that award. As explained by the Supreme Court,
a plaintiff may present in one lawsuit distinctly different claims for relief that are based on different facts and legal theories. In such a suit, even where the claims are brought against the same defendants . . . counsel's work on one claim will be unrelated to [her] work on another claim. Accordingly, work on an unsuccessful claim cannot be deemed to have been expended in pursuit of the ultimate result achieved. The congressional intent to limit awards to prevailing parties requires that these unrelated claims be treated as if they had been raised in separate lawsuits, and therefore no fee may be awarded for services on the unsuccessful claim.
Hensley v. Eckerhart, 461 U.S. 424, 434-35 (1983) (quotation marks, citation and footnote omitted).
Furthermore, "the degree of the plaintiff's success in relation to the other goals of the lawsuit is a factor critical to the determination of the size of a reasonable fee, not to eligibility for a fee award at all." Accordingly, a court should reduce the lodestar amount by any amount of time deemed unreasonable, unnecessary or unrecoverable. Rather than comb through detailed time sheets, a court can "exclude excessive and unreasonable hours from its fee computation by making an across-the-board reduction in the amount of hours." Numerous appellate courts have approved of the use of a percentage reduction to adjust fee awards for unsuccessful claims.
Texas State Teachers Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 790 (1989) (emphasis in original).
See Quarantino v. Tiffany Co., 166 F.3d 422, 425 (2d Cir. 1999) ("In determining the number of hours reasonably expended for purposes of calculating the lodestar, the district court should exclude excessive, redundant or otherwise unnecessary hours, as well as hours dedicated to severable unsuccessful claims.") (citing Hensley, 461 U.S. at 434).
Luciano v. Olsten Corp., 109 F.3d 111, 117 (2d Cir. 1997). See also Hensley, 461 U.S. at 436-37 ("The district court may attempt to identify specific hours that should be eliminated, or it may simply reduce the award to account for the limited success. The court necessarily has discretion in making this equitable judgment."); Kirsch v. Fleet St., Ltd., 148 F.3d 149, 173 (2d Cir. 1998) (percentage reductions permissible "`as a practical means of trimming fat from a fee application'") (quoting New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1146 (2d Cir. 1983)).
See, e.g., Harris v. Marhoefer, 24 F.3d 16, 18-19 (9th Cir. 1994) (approving district court's fifty percent reduction to the lodestar based on the partial success of the prevailing party, a comparison of relief requested versus relief obtained, and the number of successful claims versus unsuccessful claims); United States Football League v. National Football League, 887 F.2d 408, 415 (2d Cir. 1989) (affirming district court's twenty percent reduction of award to account for plaintiff's limited success); Zook v. Brown, 865 F.2d 887, 895-96 (7th Cir. 1989) (approving a seventy-five percent reduction to account for plaintiff's limited success); Institutionalized Juveniles v. Secretary of Pub. Welfare, 758 F.2d 897, 925 n. 44 (3d Cir. 1985) (stating that a district court may "make a percentage reduction for lack of complete success").
B. Report and Recommendation
A district court evaluating a magistrate's report may adopt those portions of the report to which no "specific, written objection" is made as long as those sections are not clearly erroneous. "However, a district court judge is required to make a de novo determination as to the aspects of the report and recommendation to which objections are made." A district judge may accept, reject, or modify, in whole or in part, the findings and recommendations of the magistrate.
Fed.R.Civ.P. 72(b); Thomas v. Arn, 474 U.S. 140, 149 (1985); Greene v. WCI Holdings Corp., 956 F. Supp. 509, 513 (S.D.N.Y. 1997).
CSC Holdings, Inc. v. Randazzo, No. 05 Civ. 0312, 2006 WL 2788231, at *1 (S.D.N.Y. Sept. 28, 2006) (citing United States v. Raddatz, 447 U.S. 667, 673-74 (1980)).
See 28 U.S.C. § 636(b)(1) (2005).
II. DISCUSSION
A. Main Fee Award
On December 22, 2003, summary judgment was granted in defendants' favor and the entire case was dismissed. Thereafter, plaintiff moved for reconsideration which was granted in part and denied in part. Of importance here, plaintiff's Fourth and Fifth Claims (the "ERISA claims") were reinstated on March 10, 2004. On May 1, 2004, plaintiff accepted defendants' Offer of Judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure (the "Offer"). The Offer, which resolved the ERISA claims in plaintiff's favor, specifically stated:
See Knoll v. Equinox Fitness Clubs, No. 02 Civ. 9120, 2003 WL 23018807, at *9 (S.D.N.Y. Dec. 22, 2003).
See Knoll v. Equinox Fitness Clubs, No. 02 Civ. 9120, 2004 WL 439500, at *6 (S.D.N.Y. Mar. 10, 2004) (the "Reconsideration Order").
See Recommendation at 3.
[P]ursuant to Rule 68 of the Federal Rules of Civil Procedure, defendants Equinox Fitness Club n/k/a Equinox Holdings, Inc., Equinox Wellness Center, Inc., Harvey J. Spevak, and The Equinox Health and Welfare Plan offer plaintiff Monica Knoll to take a judgment against Defendants on all remaining claims to be tried in the amount of $15,000, exclusive of reasonable costs and attorneys' fees accrued to date in connection with those claims, as may be determined by the Court.
Id. The Offer also included an offer to pay the premiums for a life insurance policy on plaintiff's behalf. Because no commercial life insurance policy was available given plaintiff's history of breast cancer, further litigation was needed to finalize the terms of the formal trust into which defendants would place segregated funds payable upon plaintiff's death.
Plaintiff cites Goodheart Clothing Co. v. Laura Goodman Enterprises, Inc. for the proposition that offers of judgment pursuant to Rule 68 are construed in accordance with ordinary contract principles. According to plaintiff, this Court is required to enter judgment in the same form and against the same parties set forth in the Offer. Plaintiff therefore objects to Judge Eaton's exclusion of individual defendant Harvey J. Spevak from the fee award. I find that all defendants, including Harvey J. Spevak, are liable for the fee award, jointly and severally. Plaintiff's first objection is sustained and the Recommendation will be modified accordingly.
See 962 F.2d 268, 272 (2d Cir. 1992).
See Objections at 3.
See Recommendation at 7 ("The claims that survived summary judgment were not brought against the individual defendant Harvey J. Spevak. . . . In my view, the listing of Spevak's name simply meant that, as the CEO, he was promising to use good faith efforts to cause the three other defendants to give Knoll the offered relief. It did not mean that he was offering to pay any costs and fees that might be determined by the Court.").
Of course, this does not mean that plaintiff can seek to enforce the award solely against Spevak if the remaining three defendants are able and willing to pay the judgment.
In determining the total amount of fees to be awarded, Judge Eaton divided the time spent by plaintiff's counsel into periods according to certain key events. Judge Eaton then assigned a percentage to the amount of fees requested in each time period in order to calculate the total fee award. For example, Judge Eaton found that only ten percent of the fees incurred in 2003 related to plaintiff's ERISA claims. For the period January 1, 2004 through March 10, 2004, the date of the Reconsideration Order, Judge Eaton awarded sixty-five percent of the amount requested. For the period March 11, 2004 through April 13, 2004, the date the Offer was served by defendants, plaintiff's fee request was granted in full. Forty percent was awarded for the period April 14, 2004 through October 14, 2004, the date defendants sent Judge Eaton a draft version of the trust agreement. Judge Eaton provided no reason for his decision to pay only forty percent but noted that the draft trust agreement submitted on October 14, 2004 was very similar to the trust agreement signed fifteen months later, in January 2006. For the period October 15, 2004 through January 4, 2005, Judge Eaton awarded twenty-five percent of the request, again without providing a reason, but noted that by the latter date, defendants had served a revised trust agreement resolving certain outstanding tax issues. As of January 4, 2005, defendants' draft trust agreement included everything except a liquidated damages clause. Thus, plaintiff's only accomplishment after January 4, 2005, until she signed the trust agreement on January 20, 2006, was the inclusion of a liquidated damages provision. For unknown reasons, it took nearly thirteen months of negotiations to resolve the dispute over the liquidated damages clause. Because of this, Judge Eaton determined that the parties should bear their own costs and fees from January 5, 2005 onward.
See Recommendation at 17. Judge Eaton arrived at ten percent by comparing the number of pages devoted to plaintiff's Fourth and Fifth Claims (two pages) to the total number of pages (twenty-four) contained in her Memorandum of Law in Opposition to Defendants' Motion for Summary Judgment. See id. at 14.
Judge Eaton arrived at this percent by comparing the number of pages devoted to plaintiff's Fourth and Fifth Claims to the total number of pages contained in plaintiff's Memorandum of Law in Support of Motion for Reconsideration and her Reply Memorandum in Further Support of Motion for Reconsideration.
Fees incurred in 2002, amounting to $3,726.25, were awarded in full. See id. at 17.
See id. at 6.
See id. at 17.
Plaintiff objects to the reductions made by Judge Eaton, as well as the methodology he employed, in reducing the requested fees for time spent on unsuccessful claims. In plaintiff's view, Judge Eaton should have examined the actual time records submitted and deducted the time spent exclusively on the unsuccessful claims. However, as noted above, there is no requirement for a court to arrive at the lodestar figure by tabulating individual time entries. Moreover, the majority of time records submitted by plaintiff's counsel did not indicate whether the work performed was related to the successful ERISA claims. The Court has wide discretion to reduce a fee award on the ground that the billed hours are insufficiently documented.
See Objections at 6-8.
See id. at 6.
See supra Part I.
See Opposition at 4 ("Ms. Kazazian seems to have assumed that she would be awarded attorney's fees for virtually all the time expended on this matter, and on this basis, failed to provide Judge Eaton with any guidance as to the nature of her time entries or a reasonable estimate of time devoted exclusively to ERISA claims.").
See Casper v. Lew Lieberbaum Co., Inc., 182 F. Supp. 2d 342, 350 (S.D.N.Y. 2002) (collecting cases).
Although I question the page-counting methodology employed by Judge Eaton, I find that for work performed in 2003, ten percent of the request (a ninety percent reduction) is appropriate based on my own knowledge of this litigation. Before summary judgment was granted, issues such as fraudulent inducement, repudiation and rescission eclipsed the ERISA claims and were of paramount importance. It was only after these issues were decided unfavorably that plaintiff began to vigorously pursue the remaining ERISA claims. I also agree with Judge Eaton's award of sixty-five percent of the request (a thirty-five percent reduction) for the first period in 2004. During that period, plaintiff filed a motion for reconsideration, the majority of which was devoted to the reinstatement of the ERISA claims. However, the percentages used in determining the amounts to be awarded for the last two periods of 2004, forty percent and twenty-five percent, were based on Judge Eaton's subjective impressions of the litigation rather than any ascertainable methodology. Once plaintiff's Fourth and Fifth claims were reinstated, and her remaining claims were dismissed, all of counsel's efforts were necessarily related to the ERISA claims. Therefore, for work performed from March 10, 2004 through January 4, 2005, fees are compensable at one hundred percent. Given that little progress was made in what became a state of "permanent" litigation after January 4, 2005, I find that date to be the appropriate cut-off. A fee award should not provide a windfall to plaintiff's counsel, nor should it provide an incentive to unnecessarily prolong proceedings in the hope of an artificially inflated fee award. Accordingly, plaintiff is awarded $138,564.36 in attorney's fees.
B. Fee Application
The next issue concerns the fees associated with the fee application itself. In general, a prevailing party is entitled to reimbursement for time reasonably expended in preparing the fee application. Judge Eaton awarded plaintiff $5,000 for time spent preparing the fee application. Courts have complete discretion in this area, the exercise of which gives the district judge "great leaway." "If the fee claims are exorbitant or the time devoted to presenting them is unnecessarily high, the judge may refuse further compensation or grant it sparingly."
See Valley Disposal Inc. v. Central Vermont Solid Waste Mgmt. Dist., 71 F.3d 1053, 1059 (2d Cir. 1995).
Judge Eaton selected this amount because he found counsel's fee application "confusing and at times misleading." Recommendation at 14.
Gagne v. Maher, 594 F.2d 336, 344 (2d Cir. 1979), aff'd on other grounds, 448 U.S. 122 (1980).
Id.
In her unauthorized reply papers, plaintiff requests $45,330 in attorney's fees incurred in bringing this fee petition. This amount is inordinately high and must be deeply discounted. Courts have usually limited fee application awards to an amount substantially less than the fees awarded on the claim itself. To prevent any undue windfall, I hereby award plaintiff $14,000 in additional fees, which represents approximately ten percent of the main fee award.
See Reply at 7.
See, e.g., Baird v. Boies, Schiller Flexner LLP, 219 F. Supp. 2d 510, 525 (S.D.N.Y. 2002) (awarding on fee application ten percent of total attorney's fees awarded); Colbert v. Furumoto Realty, Inc., 144 F. Supp. 2d 251, 261-62 (S.D.N.Y. 2001) (recognizing that courts in Second Circuit have granted fee application awards in the range of eight to twenty-four percent of the total time claimed in the entire case).
C. Costs
Plaintiff also objects to the $4,697.50 reduction made by Judge Eaton to the total amount of requested costs ($15,738.55). Judge Eaton found that the testimony of Spevak and Kathy Reilly related only to the dismissed claims and therefore disallowed the court reporter fees for the depositions of these witnesses. Plaintiff has shown no reason to disturb that finding. Plaintiff is therefore awarded costs of $11,041.05.
See Objections at 10.
See Recommendation at 18.
Included in this amount is $906.25 charged by an accountant retained by plaintiff's counsel to evaluate the tax consequences of the trust agreement.
Finally, plaintiff objects to the exclusion of travel costs which includes travel, lodging and meals for ten trips from Denver, Colorado to New York. Plaintiff requested $13,114.55 in travel costs which Judge Eaton denied on the ground that plaintiff's counsel charged "New York" rates in computing the lodestar figure ($275, $295, and $325). I find this exclusion to be fundamentally unfair. Plaintiffs counsel was forced to appear in court so often due, in no small part, to the obstinate behavior of defense counsel. Travel expenses, like all costs, are generally compensable. Therefore, plaintiff is awarded $13,114.44 in travel costs.
See id. at 18. I note that New York rates are substantially higher than these requested rates. See, e.g., Pannonia Farms, Inc. v. USA Cable, No. 03 Civ. 7841, 2006 WL 2872566, at *3 (S.D.N.Y. Oct. 5, 2006) (approving partner rate of $400 per hour); The Design Tex Group, Inc. v. U.S. Vinyl Mfg. Corp., No. 04 Civ. 5002, 2005 WL 2063819, at *4 (S.D.N.Y. Aug. 24, 2005) (approving compensation of $395 to $485 per hour for partners' work); Stevens v. Aeonian Press, Inc., No. 00 Civ. 6330, 2002 WL 31387224, at *5 (S.D.N.Y. Oct. 23, 2002) (approving hourly rate of $460 for partners).
"`[A]ttorney's fees awards include those reasonable out-of-pocket expenses incurred by attorneys and ordinarily charged to their clients.'" LeBlanc-Sternberg v. Fletcher, 143 F.3d 748, 763 (2d Cir. 1998) (quoting United States Football League v. National Football League, 887 F.2d 408, 416 (2d Cir. 1989)).
III. CONCLUSION
For the reasons stated above, the Recommendation is hereby adopted, as modified. Plaintiff is awarded $152,564.36 in attorney's fees ($138,564.36 plus $14,000) and $24,155.49 in total costs ($11,041.05 plus $13,114.44). The Clerk of the Court is directed to close this motion [Document #74] and this case and enter Judgment accordingly.
SO ORDERED.