Opinion
No. 87 Civ. 5773 (SWK).
November 16, 2005
OPINION ORDER
I. Introduction
In a September 7, 2005 Order, this Court adopted a Report and Recommendation ("Report") issued by United States Magistrate Judge Theodore H. Katz in its entirety. The Order (1) held nonparties Global Vision Products, Inc. ("Global") and Dr. Henry Edelson (together, "Contemnors") in civil contempt; and (2) awarded Plaintiff Pharmacia Upjohn Company ("Pharmacia") the costs and attorney's fees incurred in the course of securing Contemnors' compliance with this Court's April 16, 2003 and June 13, 2003 subpoenas (the "Subpoenas") and its July 18, 2003 Order (the "July 18 Order").
This Court also directed Plaintiff's counsel, Dreier LLP, to submit an affidavit detailing the time expended on Pharmacia's instant contempt motion, its motion leading to the June 30, 2004 hearing, and Edelson's July 21, 2003 and July 15, 2004 depositions. On September 21, 2005, Plaintiff submitted a two-page Affidavit and a thirty-six page printout (together, the "Fee Application") detailing the fees and costs generated by Contemnors' deliberate noncompliance in this nonparty discovery dispute. Contemnors object to various aspects of the Fee Application.
I. Discussion
A. Fees Generated in Preparing the Fee Application
Contemnors assert that Pharmacia is not entitled to attorney's fees associated with the preparation of the Fee Application. They argue that such efforts had no relation to the actual process of securing Contemnors' compliance with the Subpoenas or the July 18 Order and that "it would be manifestly unfair" to award such fees. (Global Br. 2, Oct. 7, 2005.) However, time expended on a fee application may be included in an award of attorney's fees. See Gagne v. Maher, 594 F.2d 336, 343 (2d Cir. 1999), aff'd, 448 U.S. 122 (1980). Plaintiff counsel's substantial efforts in assembling the Fee Application were the direct result of Global's willful evasion during discovery and excluding such fees would undercompensate Plaintiff for its counsel's efforts. Thus, the Court will not categorically exclude the time spent compiling Pharmacia's Fee Application.
Though the inclusion of such "fees on fees" helps to serve the compensatory function of civil contempt, the amount of time spent on a fee submission must be reasonable. See DiFilippo v. Morizio, 759 F.2d 231, 236 (2d Cir. 1985); Trichilo v. Sec'y of Health Human Serv., 823 F.2d 702, 708 (2d Cir. 1987); Mantel v. Niagara Mohawk Power Corp., No. 84 Civ. 2339, 1986 U.S. Dist. LEXIS 30906, at *4 (S.D.N.Y. Jan. 2, 1986). Here, Plaintiff's counsel and support staff spent 137.1 hours preparing the Fee Application, generating $38,690 in fees. The Court finds that this is an unreasonable amount of time to compile billing records. Moreover, Plaintiff's counsel charged as much as $475/hour for the largely clerical task of assembling the Fee Application. See Loper v. New York City Police Dep't, 853 F. Supp. 716, 720 (S.D.N.Y. 1994) (reducing fees for clerical work billed at legal rates). Therefore, the Court will cut the $38,690 fee by three-fourths, allowing only $9,672.50 in fees for assembling the Fee Application.
The Court, in coming to the 137.1 hour total, includes Plaintiff's entries for September 6-8, 2005 in their entirety. These entries were block-billed and fail to distinguish between time spent preparing the Fee Application and other, more substantive, legal work. The Court will therefore construe these entries against Pharmacia and include them in the 137.1 hour total.
B. Fees Related To Edelson's First Deposition
Contemnors also challenge fees associated with Edelson's first deposition. They claim that Pharmacia would have incurred such fees regardless of Contemnors' subsequent misconduct. This position, however, fails to acknowledge that much of the time spent preparing to depose Edelson and analyzing his responses could have been avoided had Contemnors originally cooperated with the Court's April 16, 2003 Order in a professional manner. Instead, Contemnors stalled the production of a series of checks responsive to the Subpoenas until July 9, 2004. (Report at 30.) These checks documented the transfer of assets owned by Global into offshore accounts controlled by Defendant Anthony Imbriolo. ( Id. at 16-18.) Because Edelson's actions had the effect of concealing these transfers and unnecessarily prolonging litigation, Contemnors' objection is denied.
C. Research Into Fraudulent Conveyance Law
Contemnors oppose Pharmacia's inclusion of time spent researching fraudulent conveyance law for a suit that was never filed. The Court, however, agrees with Pharmacia that the research was a reasonable step in securing Contemnors' compliance with the Subpoenas and the July 18 Order. After learning of the array of international money transfers from Imbriolo's April 9, 2004 deposition, it was reasonable, if not advisable, for Plaintiff's counsel to research the most appropriate course of action for its client. Accordingly, Contemnors' objection is denied.
D. Total Compensation For Legal Services
Finally, Contemnors challenge the Fee Application as a whole, arguing that the time spent by Plaintiff's counsel was excessive and generated unreasonable fees. In determining reasonable attorney's fees, district courts must calculate the "lodestar" figure by multiplying the number of hours reasonably expended by counsel on the litigation by the reasonable hourly rate. See Blanchard v. Bergeron, 489 U.S. 87, 89 (1989); Cruz v. Local Union No. 3 of the Int'l Bhd. Of Elec. Workers, 34 F.3d 1148, 1159 (2d Cir. 1994). To establish a reasonable hourly rate, "district courts generally must apply prevailing market rates for comparable attorneys of comparable skill and standing in the pertinent legal community." Savoie v. Merchants Bank, 166 F.3d 456, 463 (2d Cir. 1999). Contemnors do not challenge Dreier LLP's billing rates and the Court considers them, ranging from $225-$475, to be "in line with those [rates] prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Blum v. Stenson, 465 U.S. 886, 896 n. 11 (1984).
District courts, however, have considerable discretion in adjusting the lodestar calculation, see Hensley v. Eckerhart, 461 U.S. 424, 437 (1983); McGuire v. Russell Miller, Inc., 1 F.3d 1306, 1313 (2d Cir. 1993), and routinely reduce it in circumstances where attorney's fees appear excessive or reliant on vague descriptions of legal services. See United States Football League v. Nat'l Football League, 887 F.2d 408, 415 (2d Cir. 1989) (reducing lodestar by 10 percent); Sea Spray Holdings, Ltd. v. Pali Fin. Group, Inc., 277 F. Supp. 2d 323, 326 (S.D.N.Y. 2003) (reducing lodestar by fifteen percent); Gonzalez v. Bratton, 147 F. Supp. 2d 180, 213 (S.D.N.Y. 2001) (reducing lodestar by twelve percent); Local 32B-32J, SEIU v. Port Auth., 180 F.R.D. 251, 253 (S.D.N.Y. 1998) (reducing lodestar by twenty percent); Wilder v. Bernstein, 975 F. Supp. 276, 283-84 (S.D.N.Y. 1997) (reducing lodestar by ten percent). In this manner, "the court has discretion simply to deduct a reasonable percentage of the number of hours claimed as a practical means of trimming fat from a fee application.'" Kirsch v. Fleet Street, Ltd., 148 F.3d 149, 173 (2d Cir. 1998) (citing New York Ass'n for Retarded Children v. Carey, 711 F.2d 1136, 1146 (2d Cir. 1983)). The Fee Application in this case seeks $266,274.50 in fees for 782.9 hours of services rendered by the partners, associates and paralegals of Dreier LLP.
This calculation excludes the 137.1 hours spent assembling the Fee Application, as detailed in Section I-A of this Order.
After close consideration of the time expended by Plaintiff's counsel, the Court concludes that it cannot compensate Dreier LLP for all of the legal services listed in the Fee Application. Though the Court does not question the sincerity of the Fee Application and Pharmacia appeared to receive quality representation, it cannot justify awarding awarding such excessive fees for relatively uncomplicated legal work. See Clarke v. Frank, 960 F.2d 1146, 1153 (2d Cir. 1992) (affirming a reduction in attorney's fees for excessive billing in an uncomplicated case). Moreover, most of the entries in the Fee Application, while detailed, are block-billed, rendering it difficult for the Court to determine exactly how much time was spent on specific activities. Though no specific entry appears unreasonable per se, the aggregate amount of attorney's fees requested in the Fee Application is excessive in light of the services rendered. Therefore, the Court will reduce the lodestar calculation by twenty-five percent, resulting in fees of $199,705.88 as compensation for Dreier LLP's representation.
E. Apportionment of Legal Liability
The allocation of liability for multiple contemnors is a matter within the discretion of the district court. See Carroll v. Blinken, 105 F.3d 79, 82 (2d Cir. 1997). In situations "where the claims against the defendants are separate and distinct or where culpability is significantly unequal" courts may apportion fees separately, according to relative liability. Koster v. Perales, 903 F.2d 131, 139 (2d Cir. 1990). However, where those liable participate in each other's breaches, see Bennett v. Local Union No. 66, 958 F.2d 1429, 1440-41 (7th Cir. 1992), or collude in an ongoing breach, see Allen v. Allied Plant Maintenance Co. of Tenn., 881 F.2d 291, 298 (6th Cir. 1989), district courts may impose joint and several liability.
In this case, Global and Edelson defied the Court's subpoenas together. On April 16, 2003, Edelson received a personal subpoena directing him to turn over all documents relating to Imbriolo. (Report at 7.) Only two months later, Global received its own subpoena directing it to turn over the same information. ( Id.) As Chairman of the Board of Global, Edelson was acutely aware of the overlapping duties he and his company owed to the Court to turn over responsive documents. See Koster, 903 F.2d at 138. As a result, the Court will impose joint and several liability on Contemnors.
III. Conclusion
Plaintiff counsel's lodestar calculation is reduced to $199,705.88. After adding $9,672.50 for compiling the Fee Application and $6,781.46 in reasonable costs, Contemnors are jointly and severally liable to Pharmacia for a total of $216,169.84.
SO ORDERED.