Opinion
No. 3-05-CV-0292-D.
July 11, 2005
FINDINGS AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Plaintiff Southwestern Bell Telephone, L.P. d/b/a SBC Texas has filed an application for $20,577.10 in attorney's fees and costs incurred as a result of the improper removal of this civil action to federal court. For the reasons stated herein, the application should be granted as modified and plaintiff should be awarded the sum of $15,317.10.
I.
On January 12, 2005, plaintiff sued one of its customers, AccuTel of Texas, L.P., and various AccuTel subsidiaries and officers, in Texas state court for fraud and conspiracy. The state court petition alleges, inter alia, that defendants manipulated and falsified customer data in order to wrongfully obtain billing credits from plaintiff in violation of an interconnection agreement between the parties. ( See Plf. Orig. Pet. at 1-2). Defendants timely removed the case to federal court asserting federal question jurisdiction under 28 U.S.C. § 1331. Although none of the claims pleaded by plaintiff arise under federal law, defendants argued that the fraud and conspiracy claims "necessarily depend on the resolution of a substantial question of federal law under the Federal Telecommunications Act of 1996." (Def. Not. of Rem. at 2, ¶ 3). Defendants also filed a motion to dismiss the removed action on the grounds that plaintiff failed to exhaust its administrative remedies. Plaintiff then filed a motion to remand. In response to the remand motion, defendants argued that the FTA requires disputes, such as this one, to be brought before the PUC and then, on appeal, to a federal court in the Western District of Texas. Upon consideration of the motion to remand, the district judge determined that defendants' jurisdictional argument was more akin to a defense which does not make the case removable. Southwestern Bell Telephone L.P. v. Accutel of Texas, L.P., 2005 WL 957030 at *1 (N.D. Tex. Apr. 25, 2005) (Fitzwater, J.). The judge remanded the case to state court and indicated he would allow plaintiff to recover attorney's fees and costs incurred as a result of the removal. Id. Plaintiff now seeks such fees and costs.
The Federal Telecommunications Act of 1996 ("FTA") vests federal courts with jurisdiction to review disputes that arise in relation to interconnection agreements. The FTA provides, in pertinent part:
In any case in which a State Commission makes a determination under this section, any party aggrieved by such determination may bring an action in an appropriate Federal district court to determine whether the agreement . . . meets the requirements of section 251 of this title and this section.47 U.S.C. § 252(e)(6). The Fifth Circuit has construed this provision to mean that state regulatory agencies, such as the Texas Public Utility Commission ("PUC"), have "the authority to interpret and enforce the provisions of agreements[.]" Southwestern Bell Telephone Co. v. Public Utility Comm'n, 208 F.3d 475, 479 (5th Cir. 2000). Adverse decisions may be appealed to federal district court. Id. at 480.
II.
A district court has discretion to award "just costs and any actual expenses, including attorney's fees, incurred as a result of the removal." 28 U.S.C. § 1447(c). Here, the district judge has determined that plaintiff may recover "fees and costs incurred in federal court that would not have been incurred had the case remained in state court." Southwestern Bell Telephone, 2005 WL 957030 at *1, quoting Avitts v. Amoco Production Co., 111 F.3d 30, 32 (5th Cir.), cert. denied, 118 S.Ct. 435 (1997). In most cases, this includes the costs of opposing removal, seeking remand, and other expenses incurred because of the improper removal. Avitts, 111 F.3d at 32. By contrast, "ordinary litigation expenses that would have been incurred had the action remained in state court are not recoverable[.]" Id.
The method for calculating attorney's fees is well-established. The court calculates the lodestar, which is the product of the number of hours reasonably expended on the litigation, multiplied by a reasonable hourly billing rate. See Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1983); Louisiana Power Light Co. v. Kellstrom, 50 F.3d 319, 324 (5th Cir.), cert. denied, 116 S.Ct. 173 (1995). To determine the number of hours reasonably expended and an appropriate hourly rate, the court considers: (1) the time and labor required; (2) the novelty and difficulty of the issues involved; (3) the skill required to litigate the case; (4) the ability of the attorney to accept other work; (5) the customary fee for similar work in the community; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances of the case; (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 attorney-client relationship; and (12) awards in similar cases. Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974); see also Wermelinger v. Connecticut General Life Ins. Co., 1998 WL 401607 at *1 (N.D. Tex. Jul. 15, 1998) (Fitzwater, J.) (using Johnson factors to calculate attorney's fees under 28 U.S.C. § 1447(c)). The lodestar may be adjusted upward or downward depending upon the particular circumstances of the case. See Shipes v. Trinity Industries, 987 F.2d 311, 319-20 (5th Cir.), cert. denied, 114 S.Ct. 548 (1993).
III.
Plaintiff seeks attorney's fees in the amount of $20,430.50 for 66.8 hours of work at hourly rates ranging from $225.00 to $525.00. In addition, plaintiff requests $146.60 for copying, fax, and courier charges. Defendants do not oppose the cost items. The court therefore limits its inquiry to attorney's fees.
A.
The first task in calculating attorney's fees is determining the reasonable number of hours expended on the case. See Millennium Restaurants Group, Inc. v. City of Dallas, Texas, 2002 WL 1042117 at *2 (N.D. Tex. May 21, 2002). A fee applicant is required to document the time spent and services performed. Hensley, 103 S.Ct. at 1941; Cooper v. Pentecost, 77 F.3d 829, 832 (5th Cir. 1996). The court must review the records and exclude all time that is excessive, duplicative, or inadequately documented. Hensley, 103 S.Ct. at 1939; Von Clark v. Butler, 916 F.2d 255, 259 (5th Cir. 1990). The hours that survive this vetting process are those reasonably expended on the litigation. Watkins v. Fordice, 7 F.3d 453, 457 (5th Cir. 1993).
Plaintiff was represented in this action by the law firm of Thompson Knight, LLP. Two partners and an associate worked on the case after it was removed to federal court. Michael E. Schonberg, a lawyer with 13 years of experience, served as lead counsel and spent a total of 33.10 hours reviewing documents, performing legal research, drafting pleadings, and consulting with opposing counsel and the client. Andrew Melsheimer, an associate attorney, worked 32.80 hours. Schonberg also consulted with his partner, Luke Ashley, who spent 0.90 hours on the case. ( See Plf. App., Exh. A, Tab 1). Defendants specifically object to any time spent by counsel in reviewing and analyzing defendants' motion to dismiss and litigating the issue of attorney's fees. In addition, defendants suggest that the number of hours billed by counsel are unreasonable in light of the limited degree of success and the nature of the issues involved.
1.
The time records submitted by plaintiff show that counsel spent 1.5 hours reviewing and analyzing defendants' motion to dismiss. Defendants object that such fees are not recoverable because "that work will be usable in state court when the motion to dismiss is re-filed as a motion for summary judgment." (Def. Resp. Br. at 2, ¶ 3). Significantly, it was defendants who decided to file a motion to dismiss just one week after this action was removed to federal court. Instead of litigating the issues raised in that motion, plaintiff sought and obtained a postponement of all briefing deadlines until the court decided whether removal was proper. In so doing, plaintiff minimized, rather than increased, the amount of fees incurred in the federal proceeding. Plaintiff should be allowed to recover fees for the time spent in reviewing defendants' motion to dismiss and formulating an appropriate course of action.Defendants further object to 2.7 hours spent by plaintiff in preparing an itemized list of attorney's fees and corresponding with opposing counsel on the fee issue. Plaintiff is entitled to reasonable attorney's fees for litigating a fee claim. See Wermelinger, 1998 WL 401607 at *4, citing Alberti v. Klevenhagen, 896 F.2d 927, 937 (5th Cir.), vacated in part on other grounds, 903 F.2d 325 (5th Cir. 1990). Other than their general objection that the amount of time spent by counsel is "ludicrously high," defendants offer no evidence or argument as to why the 2.7 hours claimed by plaintiff is unreasonable. ( See Def. Resp. Br. at 5, ¶ 10). These fees should be allowed.
Nor have defendants shown that the amount of time spent by plaintiff in litigating the remand issue is unreasonable in light of the degree of success and the nature of the issues involved. Although defendants attempt to minimize the significance of obtaining a remand to state court, the choice of forum certainly was important to defendants when they elected to remove this action to federal court. In the context of this forum dispute, the result obtained by plaintiff was more than a trivial victory on "a single preliminary motion." ( See Def. Resp. Br. at 2, ¶ 4). The court also rejects defendants' argument that the issues related to remand were neither novel nor difficult. In its removal notice, defendants alleged only that plaintiff's claims "necessarily depend on the resolution of a substantial question of federal law under the Federal Telecommunications Act of 1996." (Def. Not. of Rem. at 2, ¶ 3). Defendants did not elaborate on their jurisdictional argument until they filed a response to plaintiff's motion to remand. This lack of specificity complicated plaintiff's task in challenging the propriety of removal.
2.
Although the objections made by defendants lack merit, the court determines that a fee reduction is warranted on other grounds. First, at least three different time entries appear to duplicate other entries:
Date Description Time
02/10/2005 Receive Defendant's notice of 0.2 removal
02/11/2005 Receive and analyze notice of 0.7 removal and notify [client] regarding same; confer with [client] regarding Accutel mediation and lack of success; draft plan of action for going forward
02/11/2005 Review and respond to 0.3 correspondence re: removal
02/14/2005 Review and respond to 0.2 correspondence re: removal and assignment to Judge Fitzwater
03/23/2005 Review court's scheduling 0.6 order and remind associate of upcoming reply in support of motion to remand due
03/29/2005 Review scheduling order 0.4 issued by the court and calendar deadlines; forward to [associate]
(Plf. App., Exh. A, Tab 1) (emphasis added). These redundant entries, totaling 0.8 hours, should be deleted. See Wermelinger, 1998 WL 401607 at *2. Second, Schonberg and Melsheimer both charged for "intra-office conferences" on March 30, April 5, April 13, and April 14, 2005. Melsheimer also recorded at least seven different entries for "analyz[ing] and review[ing] email from M. Schonberg." These duplicate entries, totaling 3.1 hours, should be deleted. See Williams v. City of Balch Springs, 1999 WL 1146802 at *3 (N.D. Tex. Nov 17, 1999), citing Riley v. City of Jackson, 99 F.3d 757, 760 (5th Cir. 1997) (counsel may not recover for duplicative intra-office conferences). Third, the 0.9 hours spent by Ashley were duplicative of services performed by other attorneys. Fourth, Schonberg has included what appears to be 0.4 hours of time for a conference with his client "regarding AccuTel mediation and lack of success." (Plf. App., Exh. A, Tab 1). This occurred on the same day that plaintiff received the notice of removal. Any time related to the failed mediation constitutes an "ordinary litigation expense" that would have been incurred had the action remained in state court. Finally, of the 32.1 hours expended by Schonberg that thus far have been allowed by the court, an excessive amount of time was spent reading and analyzing court orders, drafting and conducting legal research, and supervising work performed by his associate. The court should reduce this time by 10.0 hours to 22.1 hours.
Schonberg billed a total of 0.7 hours on February 11, 2005 for reviewing the notice of removal and discussing the failed mediation with his client. Based on other time entries, the court has determined that approximately 0.4 hours was spent discussing mediation.
In sum, the court determines that Schonberg reasonably expended 22.1 hours and Melsheimer reasonably expended 30.1 hours, for a total of 52.1 hours, as a result of the improper removal of this action to federal court. Such time is not excessive when measured against similar cases. See, e.g. Brown v. Ascent Assurance, Inc., 191 F.Supp.2d 729, 733 (N.D. Miss. 2002) (awarding fees for 85 hours of work on remand issues); Wermelinger, 1998 WL 401607 at *5 (awarding fees for 95 hours of work); Summit Machine Tool Mfg. Corp. v. Great Northern Ins. Co., 883 F.Supp. 1532 (S.D. Tex. 1995) (awarding fees for 80 hours of work); Penrod Drilling Corp. v. Granite State Ins. Co., 764 F.Supp. 1146 (S.D. Tex. 1990) (awarding fees for 70 hours of work).
B.
Plaintiff seeks compensation at the hourly rate of $380.00 for Schonberg and $225.00 for Melsheimer. (Plf. App., Exh. A, Tab 1). In an affidavit attached to his fee application, Schonberg states that "the rates charged by counsel for SBC are reasonable and comparable to attorneys practicing in Dallas County, Texas." ( Id., Exh. A at 3, ¶ 8). Defendants do not object to these rates as excessive per se, but suggest using a blended rate of $302.50 per hour "to make the math easier." (Def. Resp. Br. at 6).
Defendants arrive at this "blended rate" by averaging the hourly rates charged by Schonberg and Melsheimer.
When counsel requests compensation at his normal billing rate and that rate is shown to be within the range of market rates for attorneys of similar skill and experience, the burden is on the opposing party to show that a lower rate should be used. Islamic Center of Mississippi, Inc. v. City of Starkville, Mississippi, 876 F.2d 465, 469 (5th Cir. 1989); see also Watkins, 7 F.3d at 459 (court must articulate reasons for rejecting normal billing rate). Here, defendants fail to present any argument, much less evidence, to challenge the billing rates suggested by plaintiff. Accordingly, fees should be calculated as follows:
Michael E. Schonberg 22.1 hours × $380.00 = $ 8,398.00 Andrew Melsheimer 30.1 hours × $225.00 = $ 6,772.50 __________ Total: $15,170.50
RECOMMENDATION
Plaintiff should be awarded $15,170.50 in attorney's fees and $146.60 in costs and expenses, for a total of $15,317.10.A copy of this report and recommendation shall be served on all parties in the manner provided by law. Any party may file written objections to the recommendation within 10 days after being served with a copy. See 28 U.S.C. § 636(b)(1); FED. R. CIV. P. 72(b). The failure to file written objections will bar the aggrieved party from appealing the factual findings and legal conclusions of the magistrate judge that are accepted or adopted by the district court, except upon grounds of plain error. See Douglass v. United Services Automobile Ass'n, 79 F.3d 1415, 1417 (5th Cir. 1996).