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finding that evidence of one party's legal fees may be relevant to the issue of the reasonableness of the other party's fees
Summary of this case from Principal Fin. Sec. v. Raymond JamesOpinion
Successful plaintiffs in Fair Labor Standards Act action filed petition for attorney fees and motion to compel discovery. The District Court, Jarvey, United States Magistrate Judge, held that: (1) fees and expenditures of defendants were relevant; (2) only hours expended on issues in the complaint on which plaintiffs prevailed were relevant to the court's inquiry; and (3) hourly rates charged by St. Louis counsel was not indicative of prevailing market rates in Iowa.
Ordered accordingly.
Steven Clark Kohl and Percy L. Nymann, Nymann-Kohl, Sioux City, IA, for Sidney Murray and Gladys Murray and all others similarly situated.
Gene R. LaSuer and Jean A. McNeil, Davis Hockenberg Wine Brown Koehn Shors, PC, Des Moines, IA, and John Renick, McMahon Berger, St. Louis, MO, for Stuckey's, Inc., and PET, Inc.
ORDER
JARVEY, Chief United States Magistrate Judge.
This matter comes before the court pursuant to plaintiffs' December 6, 1993, motion to compel (docket number 302). The motion is granted in part and denied in part.
This discovery dispute arises out of a larger dispute over award of reasonable attorney fees to the prevailing plaintiffs in a suit under the Fair Labor Standards Act (FLSA) and 29 U.S.C. § 216(b). Defendants have resisted plaintiffs' fee claim both on the basis of the number of hours claimed and the hourly rate applied. Defendants' Brief in Support of Resistance to Renewed and Amended Motion to Determine Attorney Fees and Costs. With the present motion, plaintiffs seek to compel defendants to answer interrogatories concerning defendants' own attorney fees.
Plaintiffs propounded interrogatories to defendants seeking information concerning defendants' attorney fees. Defendants objected to the interrogatories on the grounds that the information requested was subject to the attorney-client privilege, irrelevant, and protected as attorney work product. Plaintiffs argue that all of the information is relevant to a determination of the reasonableness of their attorney fee claim. The parties exchanged letters in an effort to resolve the dispute without intervention of the court. Those letters indicate that defendants have primarily asserted that the requested information is irrelevant and that disclosure is in the discretion of the court (Plaintiffs' Exhibits D and F). Defendants at one point offered to disclose the hourly rates only of Des Moines counsel, but not the hourly rate of any other attorney nor the number of hours billed by any attorney (Plaintiffs' Exhibit D).
The interrogatories in question are as follows:
The United States Court of Appeals for the Third Circuit has recognized that evidence of fees and expenditures of other parties may be relevant to the issue of the reasonableness of the petitioner's fees, but leaves questions of discovery on this issue to the informed discretion of the district court. See In re Fine Paper Antitrust Litigation, 751 F.2d 562, 587 (3d Cir.1984). " Although the contours of a fee petition are rather well-settled, there is less guidance on the proper scope of discovery, if any, in connection with those petitions." Coalition to Save Our Children v. State Bd. of Educ., 143 F.R.D. 61, 64 (D.Del.1992) (quoting In re First Peoples Bank Shareholders Litigation, 121 F.R.D. 219, 223 (D.N.J.1988)). Whether discovery is appropriate depends, in part, on the objections raised by the opponent to the fee petition going to the reasonableness of the fee petition. Id. As noted above, defendants have resisted plaintiffs' fee claim both on the basis of the number of hours claimed and the hourly rate applied. Defendants' Brief in Support of Resistance to Renewed and Amended Motion to Determine Attorney Fees and Costs.
The court notes that " [a]bsent special circumstances, ... fee arrangements are not confidential professional communications protected by the attorney-client privilege." In re Grand Jury Proceedings Subpoena To Testify To Wine, 841 F.2d 230, 233 n. 3 (8th Cir.1988). Nor are such matters prepared in anticipation of litigation such that work product privilege would ordinarily apply. The court therefore turns to the question of the relevance of information concerning defendants' attorney fees to plaintiffs' attorney fee claim.
The work product privilege was designed to prevent " unwarranted inquiries into the files and mental impressions of an attorney" and recognizes that it is " essential that a lawyer work with a certain degree of privacy, free from unnecessary intrusion by opposing parties and their counsel." Hickman v. Taylor, 329 U.S. 495, 510-11, 67 S.Ct. 385, 393, 91 L.Ed. 451 (1947); In re Chrysler Motors Corp. Overnight Evaluation, 860 F.2d 844, 846 (8th Cir.1988); Simon v. G.D. Searle & Co., 816 F.2d 397, 400 (8th Cir.), cert. denied, 484 U.S. 917, 108 S.Ct. 268, 98 L.Ed.2d 225 (1987).
In determining what information, if any, may be discoverable concerning opposing parties' attorney fees in support of the prevailing parties' claim of reasonable attorney fees, it is helpful to keep in mind how a reasonable fee is determined under 29 U.S.C. § 216(b). No fee may be awarded for services on an unsuccessful claim. Hensley v. Eckerhart, 461 U.S. 424, 435, 103 S.Ct. 1933, 1940, 76 L.Ed.2d 40 (1983). The court first multiplies the reasonable number of hours worked by the prevailing attorney on successful claims by the reasonable hourly rate. Id. at 433-34, 440, 103 S.Ct. at 1939-40, 1943. The hourly rate must " be calculated according to the prevailing market rates in the relevant community." Blum v. Stenson, 465 U.S. 886, 895, 104 S.Ct. 1541, 1547, 79 L.Ed.2d 891 (1984).
The court concludes that, in light of these precedents, both the number of hours devoted to the case by defendants' attorneys and their hourly rates, to the extent that those rates reflect " the prevailing market rates in the relevant community," are relevant to plaintiffs' attorney fee claim. The court is not persuaded, however, that the hourly rates of all of defendants' attorneys is relevant to a determination of the " prevailing market rates in the relevant community." The court does not believe that the hourly rates prevailing in St. Louis are informative of the prevailing market rates in Iowa or in Sioux City. However, the court does not believe that prevailing rates in Sioux City or Des Moines depart so significantly from prevailing rates in other Iowa communities that the hourly rate of defendants' Des Moines attorney should be excluded from discovery. In fact, defendants have offered to disclose the hourly rate of their Des Moines counsel.
The hours expended by all attorneys, including in house counsel for the defendants, must be disclosed. It is unrealistic to base any comparison of hours expended only on the hours of defendants' local counsel, however involved he, she, or they may have been in the litigation, when some significant share of the burden of investigating, researching, and prosecuting the matter has fallen on out-of-state or in house counsel.
Finally, only the hours expended on issues of the complaint on which plaintiffs prevailed are relevant to the court's determination of reasonable fees. Hensley v. Eckerhart, 461 U.S. 424, 435, 103 S.Ct. 1933, 1940, 76 L.Ed.2d 40 (1983). With these conclusions in mind, the court will fashion the following requirements for answering plaintiffs' fourth set of interrogatories:
(1) Where itemized statements are required, defendants need only disclose information pertinent to issues in plaintiffs' complaint on which plaintiffs prevailed. The itemization need only describe generally the activity involved, such as discovery, research, time in court, preparation of briefs, motions, or other filings, and travel time. (2) More specifically, Interrogatory No. 1 must be answered in full, with the exception that the hourly rate(s) of out-of-state counsel need not be disclosed; Interrogatory No. 2 must be answered as described in (1) above; Interrogatory No. 3 must be answered to the extent of the total for itemized items; Interrogatory No. 4 must be answered to the extent described in (1) above.
The court recognizes that responding to these interrogatories as now required by the court may require a significant review of the records of defendants' attorneys. The court will therefore allow the parties a reasonable time within which to respond to the interrogatories.
Upon the foregoing,
IT IS ORDERED
That plaintiffs' December 6, 1993, motion to compel (docket number 302) is granted to the extent described above. Defendants shall provide appropriate answers to plaintiffs' fourth set of interrogatories within thirty (30) days of the date of this order.
INTERROGATORY NO. 1:
Please disclose the name, address, and hourly rate(s) charged by all attorneys representing Defendants in this case from the time of the commencement of this action in 1985 up to and including the present.
INTERROGATORY NO. 2:
Please provide an itemized statement of all hours devoted to this action by all attorneys representing Defendants in this case from the time of the commencement of this action in 1985 up to and including the present time.
INTERROGATORY NO. 3:
Please list the total amounts of attorneys fees paid to and/or charged by each attorney representing Defendants in this matter from the time of the commencement of this action in 1985 up to and including the present.
INTERROGATORY NO. 4:
Please provide an itemized statement of all hours devoted to this action by in house counsel of Defendants in this action, from the time of the commencement of this action in 1985 up to and including the present time.