Opinion
23-CV-620 (LGS) (RWL)
02-26-2024
ELI REISMAN, individually, and on behalf of a class of all persons and entities similarly situated, Plaintiff, v. NORTHEASTERN POWER & GAS, LLC, Defendant/Third-Party Plaintiff, v. ELECTRIC GREEN LIFE INC., ELECTRIC GREEN LIFE, LLC, and MARK BASSILI, Third-Party Defendants.
REPORT AND RECOMMENDATION TO LORNA G. SCHOFIELD: INQUEST AND MOTION TO VACATE
ROBERT W. LEHRBURGER, UNITED STATES MAGISTRATE JUDGE.
This action started as a claim by Plaintiff Eli Reisman (“Reisman”) against Northeastern Power & Gas, LLC (“NEPG”) for alleged violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227(b) (“TCPA”). NEPG then asserted a third-party claim for contractual indemnification against Electric Green Life Inc., its alter ego Electric Green Life, LLC (“EGL”), and EGL's President Mark Bassili. NEPG settled its dispute with Reisman and, pursuant to its agreement with EGL, sought recovery of the settlement amount, attorney's fees, and costs from EGL and Bassili. Both EGL and Bassili failed to appear in the action. District Judge Lorna G. Schofield entered default judgment against EGL and Bassili and referred the matter to me for a damages inquest. Since then, Bassili appeared and moves to vacate the default judgment, which also has been referred to me. For the reasons set forth below, I recommend that the Court deny Bassili's motion and enter judgment awarding NEPG a total of $106,091.58.
FACTUAL AND PROCEDURAL BACKGROUND
The factual background is drawn from several sources including: Reisman's initial Complaint, filed at Dkt. 1 (“Compl.”); NEPG's Third-Party Complaint, filed at Dkt. 19 (TP Compl.”); the Declaration of Ryan D. Watstein, Esq. In Support Of NEPG's Motion For Alternative Service, filed May 4, 2023, at Dkt. 40-2 (“5/4/23 Watstein Decl.”); the Declaration of Ryan D. Watstein, Esq. In Support Of Default Judgment, filed July 14, 2023, at Dkt. 58 (“7/14/23 Watstein Decl.”); the Declaration of Ryan D. Watstein, Esq. In Support Of NEPG's Motion For Damages, Attorneys Fees, And Costs, filed September 21, 2023, at Dkt. 71-1 (“9/21/23 Watstein Decl.”); as well as Bassili's filings as cited herein.
A. NEPG's Contract With ELG And Bassili
NEPG is an energy service company that started serving customers in New York in 2022. (TP Compl. ¶ 14.) NEPG retained EGL to provide only inbound marketing services, meaning that EGL could not make calls to solicit consumers but instead could only service consumers who affirmatively called in response to advertising. (Id. ¶¶ 1821.) NEPG and EGL entered into an Independent Contractor Consulting Agreement for EGL's services on September 23, 2022 (the “Agreement”). (Id. ¶ 24.) In the Agreement, EGL agreed to comply with all laws and regulations, including the TCPA. (Id. ¶ 28.) The Agreement also includes an indemnification provision holding NEPG harmless, and requiring EGL to indemnify NEPG, for any claims, damages, settlement, or expenses (including attorney's fees and litigation costs) arising out of EGL's performance, nonperformance, or breach of the Agreement. (Id. ¶ 29.) The indemnification obligation extends to, among others, EGL's officers, directors, and employees and thus includes Bassili. (Id. ¶¶ 29-30.) The Agreement is governed by New York law, provides for exclusive jurisdiction in New York County, New York, and expresses the parties' consent to personal jurisdiction in New York. (Id. ¶ 32.) Bassili signed the Agreement on behalf of EGL. (Id. ¶ 24.)
B. The Parties' Claims
On January 25, 2023, Reisman filed a class action complaint against NEPG claiming that he had received unauthorized marketing calls for NEPG's services in violation of the TCPA. (Dkt. 1.) In response, NEPG terminated its relationship with EGL (TP Compl. ¶ 39), and, on March 23, 2023, sent EGL an indemnification demand to which EGL never responded. (TP Compl. ¶ 40.) On April 3, 2023, NEPG filed its Third-Party Complaint against EGL and Bassili, seeking indemnification under the Agreement. (Dkt. 19.) NEPG served ELG through its registered agent, and served Bassili by email as authorized by the Court. (7/14/23 Watstein Decl. ¶¶ 11-12.)
NEPG was not able to serve Electric Green Life, Inc., Bassili's Canadian company. (5/4/23 Watstein Decl. ¶ 6.)
C. Bassili's Willful Failure To Appear
Neither EGL nor Bassili appeared, answered, or responded to the Third-Party Complaint. (Id. ¶ 13.) Bassili purposefully avoided appearing in the instant action despite having knowledge of it. In its order authorizing service on Bassili by electronic mail, the Court found that prior communications between Bassili and NEPG “show that Mr. Bassili has actual knowledge of the suit ... as they involved discussion of the litigation and [NEPG]'s efforts to serve Mr. Bassili.” (Dkt. 41 at 3 (internal quotation marks omitted).) Moreover, “[d]espite being in contact with [NEPG], Mr. Bassili . refused to provide an address for service.” (Id. at 2.) Rather than cooperating, Bassili threatened, harassed, and disparaged NEPG and said that he would be “GONE LIKE GHOST.” (5/4/23 Watstein Decl. Exs. A-G.) And, amid invective and curses, Mr. Bassili threatened to “bury[ ] [NEPG] in a counter suit.” (Id. Decl. ¶ 5.)
D. Bassili's And EGL's Default
NEPG filed for entry of default against both EGL and Bassili, which the Clerk of Court entered on June 2, 2023. (7/14/23 Watstein Decl. ¶¶ 14-15 and Dkts. 47-48.) On June 29, 2023, NEPG notified the Court that NEPG and Reisman had reached a settlement of Reisman's TCPA claim. (Dkt. 50.) The settlement amount was $12,500. (9/21/23 Watstein Decl. ¶ 7.) About two weeks later, on July 14, 2023, NEPG moved by order to show cause for default judgment against EGL and Bassili on NEPG's third-party indemnification claim. (Dkt. 56.) The Court issued the order to show cause on July 18, 2023. (Dkt. 59.) The order required EGL and Bassili to show cause at a telephonic hearing on August 9, 2023, why default judgment should not be entered against them. NEPG duly served the order to show cause on EGL and Bassili. (Dkt. 60-61.)
The parties filed a voluntary dismissal of Reisman's claim on August 3, 2023. (Dkt. 63.)
Neither EGL nor Bassili appeared for the August 9 hearing. (See Dkt. 66 at 2.) Accordingly, on August 14, 2023, the Court granted and entered default judgment (the “Default Judgment”), finding that EGL and Bassili are jointly and severally liable to NEPG “for any and all damages NEPG ultimately sustains in this litigation” and for “NEPG's expenses incurred in this litigation, including all settlements and reasonable attorney's fees and costs.” (Dkt. 66 at 1-2.) The Court reserved jurisdiction to determine the amount of damages, reasonable fees, and costs due to NEPG and referred the matter to me for inquest. (Id. at 2.)
E. NEPG's Damages, Fees, And Costs
On August 23, 2023, I issued a scheduling order requiring NEPG to file its application for damages, fees, and costs by September 21, 2023. (Dkt. 69.) The order directed that any response from the defaulting defendants was to be filed by October 23, 2023, and any reply from NEPG was to be filed by November 6, 2023. Pursuant to the scheduling order, NEPG filed its damages and fee application on September 21, 2023 (Dkts. 70-71), and, on September 25, 2023, served EGL and Bassili with both NEPG's inquest application and the court's scheduling order. (Dkt. 72.)
NEPG has expended $93,662.50 in attorney's fees and $1,089.58 in costs defending the underlying action against Reisman and prosecuting the Third-Party Complaint against EGL and Bassili. (9/21/2023 Watstein Decl. ¶¶ 9-10.) Taking those figures into account, along with the $12,500 settlement with Reisman, NEPG seeks to recover a total of $107,252.08. (Dkt. 71 at 3.)
F. Bassili's Belated Appearance And Motion To Vacate
On October 13, 2023, Bassili filed an appearance pro se. (Dkt. 73.) Nine days later, on October 22, 2023, Bassili filed a form letter requesting an extension to respond on the inquest for damages from October 23, 2023 to November 20, 2023. (Dkt. 74.) NEPG opposed Bassili's request. (Dkt. 75.) NEPG asserted that Bassili offered no explanation for why he failed to respond to any of the filings to date; that Bassili had delayed proceedings by purposefully evading service; that Bassili's need for an extension was belied by his own statements that he already had counsel and knew of the litigation many months earlier; that Bassili had previously sent, and recently resumed sending, harassing and threatening messages to NEPG's President and its counsel; and that further delay would prejudice NEPG. (Dkt. 75 at 1-2.)
On November 9, 2023, Bassili filed a letter “motion to reopen” that is in essence a motion to vacate the Default Judgment. (Dkt. 77 at 1.) In that document, Bassili claimed he (1) had “no clue” about the lawsuit or the default judgment hearing; (2) had a “solid defense” to Reisman's claims; and (3) had been “hacked” on April 24, 2023 such that “all data” was inaccessible until September 2023; he had no access to his personal email at markbassili9@gmail.com; and as a result, he experienced a “severe mental break.” (Id.) NEPG filed an opposing brief on November 16, 2023. (Dkt. 79.) Responding to Bassili's alleged excuses for default, NEPG noted that (1) Bassili had, as the Court already determined, known about the lawsuit months earlier and purposefully evaded service; (2) Bassili's alleged defense is at best a defense to Reisman's claim against NEPG, not to NEPG's claim for indemnification; and (3) NEPG served Bassili at an email address -mark@electricgreenlife.com - that Bassili does not allege was hacked. (Id.)
G. Bassili's Continued Harassment Of NEPG And Its Attorneys
Around the same time Bassili filed his motion to vacate, he also renewed his harassment and threats, going so far as to threaten physical violence in an email on which NEPG's President was copied: “You and I are meeting toe to toe very soon. Violence is unavoidable. I will be armed. Outcomes could prove fatal.” (Dkt. 78 Ex. A.) On November 15, 2024, NEPG filed an “emergency” renewed motion to limit communications from Bassili. (Dkt. 78.) Then, on Thanksgiving morning, Bassili sent a ranting email to NEPG's outside counsel, copying NEPG's President, and threatening violence and referring to NEPG's President as, among other things, a despicable racial slur. (Dkt. 801.)
Based on Bassili's communications, NEPG asked the Court to prohibit Bassili from communicating with NEPG other than through outside counsel, award fees and costs as sanction for Bassili's continued threats and racial slurs, and deny his motion to vacate. (Dkts. 78, 80.) On November 29, 2023, the Court found that Bassili's emails “provide clear evidence of Mr. Bassili's continued harassment.” (Dkt. 83 at 3.) The Court ordered that Bassili direct all future communications with NEPG related to the litigation to NEPG's outside counsel, that Bassili refrain from making offensive statements in his communications, and that a violation of the order may result in sanctions. (Id.) The Court denied NEPG's request for attorney's fees associated with its emergency motion but without prejudice to renewal upon changed circumstances at a later date. (Id.)
I.
VACATUR
There is no basis to vacate the default judgment against either Bassili or EGL. As a corporate entity, EGL can only appear by counsel, Jones v. Niagara Frontier Transportation Authority, 722 F.2d 20, 22 (2d Cir. 1983), and has not done so. In short, there is no operative motion to vacate with respect to EGL. The only motion to vacate before the Court is Bassili's individual motion. That motion should be denied, however, because none of the relevant factors favor vacatur: Bassili willfully defaulted despite knowing about the litigation early in the case; he has not presented any meritorious defense to NEPG's indemnification claim; and setting aside Bassili's default would materially prejudice NEPG.
A. Applicable Legal Standards For Vacatur
Two Federal Rules of Civil Procedure govern vacatur of a default judgment. Prior to entry of final judgment, the Court may set aside a default for good cause. Fed.R.Civ.P. 55(c). “Although the rule does not define ‘good cause,'” the Second Circuit has “advised district courts to consider three factors in deciding a Rule 55(c) motion: (1) whether the default was willful; (2) whether the moving party has presented a meritorious defense; and (3) whether setting aside the default would prejudice the party for whom default was awarded.” State Farm Mutual Automobile Insurance Co. v. Cohan, 409 F. App'x. 453, 455 (2d Cir. 2011) (citing Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir.1993)). “Other relevant equitable factors may also be considered, for instance, whether the failure to follow a rule of procedure was a mistake made in good faith and whether the entry of default would bring about a harsh or unfair result.” Enron, 10 F.3d at 96.
Once final judgment is entered, the Court may relieve a party from it based on “mistake, inadvertence, surprise, or excusable neglect.” Fed.R.Civ.P. 55(c), 60(b)(1). The court's determination under Rule 60(b)(1) is guided by the same three principal factors: willfulness, the existence of a meritorious defense, and prejudice to the nondefaulting party. Even so, the standard under Rule 55(c) is more “forgiving” than under Rule 60(b). State Farm, 409 Fed.Appx. at 456 (citing New York v. Green, 420 F.3d 99, 109 (2d Cir. 2005)).
Default judgments generally are disfavored. State Street Bank & Trust Co. v. Inversiones Errazuriz Limitada, 374 F.3d 158, 168 (2d Cir. 2004). Accordingly, the rules governing vacatur of default, and the factors considered in applying them, are to be construed “generously.” Enron, 10 F.3d at 96. When considering a motion to set aside a default judgment, “doubts must be resolved in favor of the party seeking relief from the judgment in order to ensure that to the extent possible, disputes are resolved on their merits.” Green, 420 F.3d at 104 (citing Powerserve International, Inc. v. Lavi, 239 F.3d 508, 514 (2d Cir. 2001)). At the same time, “courts have an interest in expediting litigation [and] abuses of process may be prevented by enforcing those defaults that arise from egregious or deliberate conduct.” American Alliance Insurance Co. v. Eagle Insurance Co., 92 F.3d 57, 61 (2d Cir. 1996). Whether to grant or deny a motion to vacate ultimately is “addressed to the sound discretion of the district court.” State Street, 374 F.3d at 166.
As between Rule 55(c) and 60(b)(1), the Court in this instance will proceed on the basis that the Rule 55(c) “good cause” standard controls. The instrument by which the Court granted EMA's motion for default judgment is captioned as a “Default Judgment.” (Dkt. 66.) But the Second Circuit has clearly indicated that even a default judgment is not a final judgment where, as here, an inquest is pending. See Enron, 10 F.3d at 97 (entry of default “judgment” was invalid and must be treated as entry of “default” where district court had referred the matter for calculation of damages). Of course, because the Court finds that vacatur is not warranted under Rule 55(c), vacatur necessarily also is not warranted under the less forgiving Rule 60(b)(1).
B. Willfulness
The most significant factor in the vacatur analysis is willfulness, which may alone be sufficient to deny a motion to vacate. Jaramillo v. Vega, 675 Fed.Appx. 76, 76 (2d Cir. 2017); De Curtis v. Ferrandina, 529 Fed.Appx. 85, 86 (2d Cir. 2013). “A default is willful when the conduct is more than merely negligent or careless, but is instead egregious and not satisfactorily explained.” Jaramillo, 675 Fed.Appx. at 76 (internal quotation marks omitted) (quoting Bricklayers and Allied Craftworkers Local 2, Albany, N.Y. Pension Fund v. Moulton Masonry & Construction, LLC, 779 F.3d 182, 186 (2d Cir. 2015) (in turn quoting S.E.C. v. McNulty, 137 F.3d 732, 738 (2d Cir. 1998)). “Although more than negligence is required, ‘the degree of negligence in precipitating the default is a relevant factor to be considered.'” Jaramillo, 675 Fed.Appx. at 76-77 (quoting Green, 420 F.3d at 108) (in turn quoting American Alliance, 92 F.3d at 59)).
Bassili's default was unquestionably willful. He declined to provide his address when NEPG requested it. (5/4/23 Watstein Decl. ¶ 6.) On April 7, 2023, NEPG's counsel emailed Bassili a file-stamped copy of the Third-Party Complaint, thus making Bassili aware of NEPG's claims against him. (Id. ¶ 4 and Ex. A at ECF 5.) Bassili indisputably received the email and was aware of NEPG's claims as he called NEPG's outside counsel later that evening to discuss the lawsuit. (Id. ¶ 5.) On April 11, 2023, Bassili sent an email to NEPG's counsel referencing the legal claims asserted against Bassili. (Id. Ex. B at ECF 10.) Indeed, the Court already has acknowledged Bassili's willful avoidance when it granted permission for alternative service. (Dkt. 41 at 3 (“The prior communications also show that Mr. Bassili ‘ha[s] actual knowledge of the suit,' ... as they involved discussion of the litigation and [NEPG]'s efforts to serve Mr. Bassili”).) On April 22, 2023, Bassili nevertheless threatened to disappear “LIKE [A] GHOST,” and did exactly that. (5/4/23 Watstein Decl. Ex. G at ECF 34.)
Bassili's explanation for his non-appearance is unavailing. Bassili claims that after NEPG tried to serve him formally on April 24, 2023, he was “hacked” causing a “complete shutdown of [his] life,” had a “mental break,” and could not access his email or various accounts. (Dkt. 77 at 1.) Even assuming Bassili's story were true, it is inapt because, as set forth above, Bassili indisputably was aware of the lawsuit before the post-April 24, 2023 hack and “mental break.” Moreover, Bassili repeatedly refers to the hacking of his personal email, markbassili9@gmail.com, but does not similarly assert that his email at mark@electricgreenlife.com - the email to which NEPG effected alternative service -was hacked or inaccessible. (See Dkt. 77 at ECF 9, 10, 11.) Even affording Bassili's pleadings a liberal reading to which pro se litigants are entitled, Bassili's default was hardly mistaken or excusable but instead was “egregious and was not satisfactorily explained.” McNulty, 137 F.3d at 738.
C. No Meritorious Defense
“In order to make a sufficient showing of a meritorious defense in connection with a motion to vacate, the defendant need not establish his defense conclusively, but he must present evidence of facts that, if proven at trial, would constitute a complete defense.” Cortez v. Lin, No. 19-CV-0905, 2019 WL 4256363, at *4 (S.D.N.Y. Sept. 9, 2019) (Schofield, J.) (quotation marks and citation omitted); accord Argus Research Group, Inc. v. Argus Securities, Inc., 204 F.Supp.2d 529, 533 (quoting Enron, 10 F.3d at 98). The defense and facts presented must be “good at law so as to give the factfinder some determination to make.” American Alliance, 92 F.3d at 61 (quotation marks and citation omitted).
Bassili proffers no defense meeting those standards. Instead, Bassili asserts in conclusory fashion that he has “a solid defense” and makes a number of disjointed statements, which, among others, (1) assert that “[t]he lawyer I paid for cleared EGL of all possible wrongdoing,” (2) allege that NEPG's President was aware that outbound calls could occur, and (3) question the veracity of Reisman's claim against NEPG. (Dkt. 77 at 1-3.) Bassili does not link any of those alleged facts to any actual defense of NEPG's contractual indemnification claim. Nor could he. The Agreement requires Bassili and EGL to indemnify NEPG for any settlement, fees, and costs arising out of EGL's performance, non-performance, or breach of its obligations under the Agreement. It is indisputable that Reisman sued NEPG in connection with a service provided by EGL, that NEPG settled its case with Reisman for a monetary payment, and that NEPG incurred legal fees and costs in connection with the litigation. At best, Bassili's assertions perhaps could be a defense to a direct claim by Reisman for violation of the TCPA. But they are irrelevant to Bassili's obligation to indemnify NEPG.
D. Prejudice
The third factor to consider is “whether and to what extent, vacating the default judgment will prejudice the non-defaulting party.” Green, 420 F.3d at 110. “Delay standing alone does not establish prejudice.” Enron, 10 F.3d at 98. Instead, vacating a default “may result in unfair prejudice if, for example, it thwarts the plaintiff's recovery, results in the loss of evidence, increases the difficulties of discovery or provides greater opportunity for fraud and collusion.” Cortez, 2019 WL 4256363 at *6; accord Green, 420 F.3d at 110 (quotation marks and citation omitted).
NEPG asserts that it will suffer great prejudice if the default judgment is vacated. In particular, NEPG has incurred considerable time and money litigating to obtain indemnification from Bassili, all the while dealing with his evasiveness, threats, and racial disparagement. NEPG contends that the prejudice from vacating default would be particularly acute as doing so would likely engender more of the same inappropriate behavior from Bassili.
Some courts have recognized expenditure of resources as prejudicial; others have not. Compare, e.g., Directv, Inc. v. Rosenberg, No. 02-CV-2241, 2004 WL 345523, at *4 (S.D.N.Y. Feb. 24, 2004) (“Defendant's obstinate conduct has caused Plaintiff to incur substantial attorney's fees and costs. Allowing Defendant to reopen litigation in this case would only unnecessarily add to Plaintiff's expenses. Thus, the Court finds that Plaintiff will be prejudiced if the default in this case were vacated.”) with Hernandez v. La Cazuela de Mari Restaurant, Inc., 538 F.Supp.2d 528, 534 (E.D.N.Y. 2007) (“The incurrence of these costs [of moving for default] does not establish prejudice”). In the circumstances of this case, the Court finds that NEPG will be substantially prejudiced if Bassili's default is set aside. Reopening the case against Bassili would merely delay the inevitable (given the absence of any meritorious defense) and require NEPG to incur additional litigation costs that it may well not be able to recover. Moreover, continued litigation would provide Bassili with a public platform to continue his racist and threatening harassment, despite the prospect of sanctions for doing so.
See 5/4/2023 Watstein Decl. Ex. E. (Bassili email asserting that he is “broke” and that NEPG “would never get a penny from me even down the golden brick road”).
E. Weighing The Factors
Bassili has not demonstrated good cause to vacate the Default Judgment. Bassili acted willfully in evading service and refusing to appear despite his knowledge of the Third-Party Complaint. He has not shown that he has any meritorious defense. And reopening the litigation would prejudice NEPG by exposing it to further costs and harassment despite the strong likelihood of the dispute ending with the same outcome in favor of NEPG. Considering all the relevant factors, vacatur should be denied.
II.
INQUEST: DAMAGES, FEES, AND COSTS
NEPG seeks recovery of damages, fees, and costs consisting of the $12,500 it paid to settle the case with Reisman, along with legal fees in the amount of $93,662.50 and $1,089.58 in costs. The Court finds that all three components should be awarded, although the fees and costs should be slightly reduced for reasons explained below.
A. Legal Standards On Inquest
When a defendant defaults, all well-pled facts alleged in the complaint, except those relating to the amount of damages, must be accepted as true. City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“It is an ancient common law axiom that a defendant who defaults thereby admits all well-pleaded factual allegations contained in the complaint”) (internal quotations marks omitted); Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (trial court is “required to accept all of [the plaintiff's] factual allegations as true and draw all reasonable inferences in its favor”). “This principle applies regardless of whether default is entered as a discovery sanction or for failure to defend.” Walpert v. Jaffrey, 127 F.Supp.3d 105, 129 (S.D.N.Y. 2015) (internal quotation marks omitted). The court may also rely on factual allegations pertaining to liability contained in affidavits and declarations submitted by the plaintiff. See, e.g., Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993); Fustok v. ContiCommodity Services, Inc., 873 F.2d 38, 40 (2d Cir. 1989). Nonetheless, the court “must still satisfy itself that the plaintiff has established a sound legal basis upon which liability may be imposed.” Shld, LLC v. Hall, No. 15-CV-6225, 2017 WL 1428864, at *3 (S.D.N.Y. Apr. 20, 2017) (internal quotation marks omitted); see also Finkel, 577 F.3d at 84. The Court has already found a sound legal basis for liability as set forth in the Default Judgment. (Dkt. 66 at 2.)
Once liability has been established, a plaintiff must provide admissible evidence establishing the amount of damages with reasonable certainty. Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., Division of Ace Young Inc., 109 F.3d 105, 111 (2d Cir. 1997) (district court “could not just accept [the plaintiff's] statement of damages” at “face value” without satisfying “the court's obligation to ensure that the damages were appropriate”); see also Lenard v. Design Studio, 889 F.Supp.2d 518, 527 (S.D.N.Y. 2012) (in an inquest following a default, “[a] plaintiff must ... substantiate a claim with evidence to prove the extent of damages”).
To assess whether the plaintiff has established a sufficient basis for damages, a court has the discretion, but is not required, to hold a hearing. See Fed.R.Civ.P. 55(b)(2); Fustok 873 F.2d at 40. An inquest into damages may be conducted on the papers, without an evidentiary hearing, where there is a sufficient basis on which to make a calculation. See Bricklayers 779 F.3d at 189; Tamarin 13 F.3d at 53-54; Maldonado v. La Nueva Rampa, Inc., No. 10-CV-8195, 2012 WL 1669341, at *2 (S.D.N.Y. May 14, 2012). There is sufficient basis to do so here; no party has requested an evidentiary hearing, and the Court has determined that none is needed.
Pursuant to the Agreement and Default Judgment (Dkt. 66 ¶ 2), NEPG is entitled to recover, among other things, the settlement paid to Reisman as well as its reasonable legal fees and costs. The settlement amount paid by NEPG to Reisman, $12,500, is undisputed and requires no calculation. (9/21/23 Watstein Decl. ¶ 7.) All that remains is to determine reasonable attorney's fees and costs.
B. Determining Reasonable Attorney's Fees
The traditional approach to determining a fee award is the “lodestar” calculation, which is the number of hours expended multiplied by a reasonable hourly rate. See Healey v. Leavitt, 485 F.3d 63, 71 (2d Cir. 2007). The Second Circuit has held that “the lodestar ... creates a ‘presumptively reasonable fee.'” Millea v. Metro-North Railroad Co., 658 F.3d 154, 166 (2d Cir. 2011) (quoting Arbor Hill Concerned Citizens Neighborhood Association v. County Of Albany, 522 F.3d 182, 183 (2d Cir. 2008), and then citing Perdue v. Kenny A. Ex Rel. Winn, 559 U.S. 542, 552 (2010)); see also Stanczyk v. City Of New York, 752 F.3d 273, 284-85 (2d Cir. 2014). To arrive at a lodestar calculation, “[t]he party seeking an award of fees should submit evidence supporting the hours worked and rates claimed.” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). NEPG has submitted such evidence here, including a declaration from counsel and copies of contemporaneous records of time expended by specific attorneys and paralegals. (9/21/23 Watstein Decl. ¶¶ 11-25 and Ex. 1.)
1. Hourly Rates
Courts assess the reasonableness of a proposed hourly rate by considering the prevailing market rate for lawyers in the district in which the ruling court sits. Polk v. New York State Department Of Correctional Services, 722 F.2d 23, 25 (2d Cir. 1983). “The rates used by the court should be current rather than historic hourly rates.” Reiter v. Metropolitan Transportation Authority Of New York, 457 F.3d 224, 232 (2d Cir. 2006) (internal quotation marks omitted). “[C]ourts may conduct an empirical inquiry based on the parties' evidence or may rely on the court's own familiarity with the rates if no such evidence is submitted.” Wong v. Hunda Glass Corp., No. 09-CV-4402, 2010 WL 3452417, at *2 (S.D.N.Y. Sept. 1, 2010) (internal quotation marks omitted). Additionally, “the range of rates that plaintiff's counsel actually charge their clients ... is obviously strong evidence of what the market will bear.” Rozell v. Ross-Holst, 576 F.Supp.2d 527, 544 (S.D.N.Y. 2008); see also Lilly v. County Of Orange, 910 F.Supp. 945, 949 (S.D.N.Y. 1996) (“The actual rate that counsel can command in the market place is evidence of the prevailing market rate”).
NEPG seeks fees for work performed by ten timekeepers, consisting of three partners, one counsel, two associates, and four paralegals. All of the rates charged to NEPG were “in line with” each timekeeper's “typical rate.” (9/21/23 Watstein Decl. ¶¶ 1524.) Lead counsel for NEPG is Ryan D. Watstein, a founding partner of Watstein Terepka, LLP; Watstein earlier represented NEPG in the instant matter when Watstein was a partner at Kabat Chapman & Ozmer, LLP. (Id. ¶ 1.) Watstein is a highly experienced litigator who has defended companies in numerous TCPA cases and class actions. (Id. ¶ 15.) His hourly rate for the work performed is $695.
Watstein and three other attorneys make up the vast majority of time expended by lawyers on the case. Stephen McGuinness, of counsel to Watstein Terepka, graduated from Harvard Law School and clerked for a federal judge; his hourly rate is $550. (Id.) 19.) Matthew A. Keilson, an associate at Watstein Terepka, has substantial experience litigating TCPA claims, and has been recognized locally as a “rising star” and nationally as an “associate to watch”; Keilson's hourly rate is $475. (Id. ¶ 17.) Michael S. Qin is a member of the Kabat firm and worked on the matter while Watstein was at that firm. (Id. ¶¶ 1,24.) He graduated from Harvard Law School and clerked for then-Judge Neil Gorsuch on the Tenth Circuit Court of Appeals. Qin's rate was $525 per hour. (Id. ¶ 24.) The remaining lawyers who put in minimal time are Alex Terepka and Melanie Ng. Terepka has extensive experience defending companies, including in dozens of TCPA claims, and clerked for two federal judges; his rate is $625 per hour. (Id. ¶ 16.) Ng is a junior associate experienced in defending companies in complex litigation matters and has litigated several TCP class actions; her billing rate is $420 per hour. (Id. ¶ 18.) The four paralegals, two who performed work at the Kabat firm, and two who performed work at Watstein Terepka after Watstein changed firms, each were billed at $290 per hour. (Id. ¶¶ 20-23.)
The following table summarizes the timekeepers, hourly rates, hours expended, and fees sought (9/21/23 Watstein Decl. ¶ 25):
Timekeeper
Firm
Position
Rate
Hours
Fees Sought
Ryan D. Watstein
Both
Partner
$695.00
27.8
$19,321.00
Alex Terepka
Watstein Terepka
Partner
$625.00
.4
$250.00
Stephen McGuinness
Watstein Terepka
Of Counsel
$550.00
39.6
$21,780.00
Matthew A. Keilson
Watstein Terepka
Senior Associate
$475.00
58.6
$27,835.00
Melanie Ng
Watstein Terepka
Junior Associate
$420.00
2.2
$924.00
Jennipher Borey
Watstein Terepka
Paralegal
$290.00
8.2
$2,378.00
Risa Castro
Watstein Terepka
Paralegal
$290.00
5.9
$1,711.00
Karen Diehl
Kabat
Paralegal
$290.00
1.2
$348.00
Windy Thor
Kabat
Paralegal
$290.00
.2
$58.00
Michael S. Qin
Kabat
Member
$525.00
36.3
$19,057.50
The Court finds that the hourly rates charged are reasonable. Notwithstanding being filed as a putative class action, Reisman never filed a motion for class certification. The underlying case is a relatively straightforward TCPA claim, while NEPG's third-party claim against EGL and Bassili is a non-complex breach of contract matter. The Court thus does not look to rates typically charged for large, complex litigation. Even so, the rates charged are in line with hourly rates for relatively non-complex matters in this District. See, e.g., Proimmune Company, LLC v. Holista Colltech Ltd., No. 20-CV-1247, 2024 WL 54281, *3 (S.D.N.Y. Jan. 4, 2024) (finding reasonable an hourly partner of $895 and hourly associate rate of $395); Top Jet Enterprises, Ltd. v. Kulowiec, No. 21-MC-789, 2022 WL 1184245, *3 (S.D.N.Y. Apr. 21, 2022) (“With respect to associate and counsel rates, courts in this District have awarded hourly rates ranging from $300 to $750, depending on years of experience”);Global Brand Holdings, LLC v. Accessories Direct International USA, Inc., No. 17-CV-7137, 2020 WL 9762874, *7 (S.D.N.Y. May 29, 2020) (collecting cases and finding partner rates “in the range of $375 to $650” to be reasonable in “straightforward breach of contract actions”), R&R adopted, 2020 WL 13823745 (S.D.N.Y. Aug. 4, 2020); see also Tessemae's LLC v. Atlantis Cap. LLC, No. 18-CV-4902, 2019 WL 2635956, *4 (S.D.N.Y. June 27, 2019) (collecting cases supporting reasonableness of hourly rates ranging from $250 to $1,260 per hour for work on “a commercial litigation matter”). Moreover, each of the principal timekeepers, indeed all the timekeepers, have considerable experience defending companies against TCPA claims, class actions, and litigation in federal court. Their expertise well supports the rates charged, which are commensurate with their years of experience.
In Proimmune, the Court aptly observed that “cases examining prevailing community rates are backward-looking. So courts may increase the rates awarded in the same case over time as hourly rates continue to increase.” Proimmune Company, 2024 WL 54281, at *3 (quotation marks, brackets, and citation omitted).
2. Hours Worked
To determine the compensable hours, “the court must examine the hours expended by counsel and the value of the work product of the particular expenditures to the client's case.” Tlacoapa v. Carregal, 386 F.Supp.2d 362, 371 (S.D.N.Y. 2005) (citing Gierlinger v. Gleason, 160 F.3d 858, 876 (2d Cir. 1998)). “In making this examination, the district court does not play the role of an uninformed arbiter but may look to its own familiarity with the case and its experience generally as well as to the evidentiary submissions and arguments of the parties.” Gierlinger, 160 F.3d at 876 (internal quotation marks omitted). “The relevant issue ... is not whether hindsight vindicates an attorney's time expenditures, but whether, at the time the work was performed, a reasonable attorney would have engaged in similar time expenditures.” Grant v. Martinez, 973 F.2d 96, 99 (2d Cir. 1992); see also Mugavero v. Arms Acres, Inc., No. 03-CV-5724, 2010 WL 451045, at *6 (S.D.N.Y. Feb. 9, 2010) (same). A court thus should exclude from the lodestar calculation “excessive, redundant or otherwise unnecessary hours.” Quaratino v. Tiffany & Co., 166 F.3d 422, 425 (2d Cir. 1999); see also Luciano v. Olsten Corp., 109 F.3d 111, 116 (2d Cir. 1997) (“If the district court concludes that any expenditure of time was unreasonable, it should exclude these hours from the lodestar calculation”).
Together, Plaintiffs' attorneys and other timekeepers expended 180.4 hours over the course of the year this case has been pending. (See 9/21/23 Watstein Decl. ¶ 25.) The Court has reviewed the records and finds the time spent to be reasonable. The total amount of time initially seems to be quite a lot for filing a pleading and obtaining default judgment. But NEPG's lawyers had to do far more than that, mainly because of Bassili's vexatious conduct. The work performed included, inter alia: investigating and litigating Reisman's claim, engaging in discovery, and negotiating settlement; preparing and filing the Third-Party Complaint against EGL and Bassili; moving for alternative service due to Bassili's purposeful evasion; moving for default judgment; moving to limit Bassili's communications laced with threats of violence, disparaging statements, and racial slurs; preparing inquest papers; as well as all the research, drafting, and strategizing, that went into those endeavors. (See 9/21/23 Watstein Decl. Ex. 1.) The hours spent, broken down by each individual and supported by contemporaneous documentation, were all reasonably necessary for the litigation of Plaintiffs' claims and response to Bassili's dilatory tactics. While the vast majority of work was performed at the partner and senior associate level, the records demonstrate considerable efficiency. Moreover, NEPG's pleadings, filings, and motion papers are economical and not over-worked.
The billing records submitted - the last date of which is September 20, 2023 - do not include time spent on NEPG's emergency renewed motion to limit communications from Bassili. That motion was filed November 14, 2023. (Dkt. 78.) Although the Court denied awarding attorney's fees for the motion without prejudice to later renewal based on changed circumstances (Dkt. 83 at 3), NEPG did not renew the motion or supplement the inquest record with the relevant time records.
There are, however, a handful of time entries that the Court should not approve. First, there is at least one entry indicating work associated with transferring material from the Kabat firm to Watstein's new firm. (9/21/23 Watstein Decl. Ex. 1 at ECF 14 at third to last entry.) A client would not reasonably be expected to pay for that charge, which was incurred due to a move by Watstein that is unrelated to the case. There also are a few entries where redactions conceal the entirety, or most, of the entry, thus preventing the Court from making any assessment of the work performed. (Id. at ECF 14 at last two entries, ECF 26 at fourth entry.) The total time for those entries is 1.1 hours and amounts to $510.50 that should not be included in the fee award.
3. The Amount Of Fees Awarded
Having determined that the fees sought are reasonable with the exceptions noted, the Court recommends that Plaintiff should be awarded fees in the amount of $93,152.00. C. Costs
To be awarded, costs must be properly substantiated through invoices or receipts, or “a sworn statement or declaration under penalty of perjury that certain amounts were expended on particular items.” Rosales v. Gerasimos Enterprises Inc., No. 16-CV-2278, 2018 WL 286105, at *2 (S.D.N.Y. Jan. 3, 2018) (awarding costs based on sworn statement by attorney under penalty of perjury); see also Mordant v. Citinsider LLC, No. 18-CV-9054, 2019 WL 3288391, at *3 (S.D.N.Y. July 22, 2019) (same); Dominguez v. 322 Restaurant Corp., 2019 WL 2053995, at *4 (S.D.N.Y. May 9, 2019) (same).
NEPG seeks $1,089.58 in costs. (9/21/23 Watstein Decl. ¶ 9.) Most of those costs - $903.50 - were disbursed for process serving services, for which NEPG has provided a receipt. (Id. Ex. 1 at ECF 35.). The remaining two cost items are reflected in the billing records; $36.08 for Federal Express, and $150.00 for “CodexTen, LLC - Miscellaneous.” (Id. Ex. 1 at ECF 14, 15.) The process serving and delivery costs are routinely recoverable expenses. Although there is no receipt for the FedEx charges, the Court is satisfied with the information provided in the billing records as well as Watstein's attesting to the costs incurred. (Id. ¶ 9.) The Court does not, however, have any basis to award the third item of costs. Although included in the billing records (Id. at Ex. 1 at ECF 15), there is no explanation of what “CodexTen, LLC” is or what service it provided; rather, the only description is “Miscellaneous.” That information is insufficient for any meaningful assessment by the Court. Accordingly, I recommend that NEPG be awarded costs in the amount of $939.58.
CONCLUSION
For the foregoing reasons, I recommend that (1) Bassili's motion to vacate be denied; and (2) NEPG be awarded $12,500 in damages, $93,152 in reasonable attorney's fees, and $939.58 in costs, for a total award of $106,591.58.
OBJECTIONS AND APPEAL
Pursuant to 28 U.S.C. § 636(b)(1) and Rules 72, 6(a), and 6(d) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days to file written objections to this Report and Recommendation. Any party shall have fourteen (14) days to file a written response to the other party's objections. Any such objections and responses shall be filed with the Clerk of Court, with courtesy copies delivered to the Chambers of the Honorable Lorna G. Schofield, United States Courthouse, 40 Foley Square, New York, New York 10007, and to the Chambers of the undersigned, United States Courthouse, 500 Pearl Street, New York, New York 10007. Any request for an extension of time for filing objections must be addressed to Judge Schofield. Failure to file timely objections will result in a waiver of the right to object and will preclude appellate review.