Opposition Defendants Century Theatres Inc And Cinemark Usa Incs Opposition To Plaintiffs Motion For Attorneys FeesMotionCal. Super. - 2nd Dist.July 26, 2006Electronically FILED by Superior Court of California, County of Los Angeles on 01/16/2019 04:40 PM Sherri R. Carter, Executive Officer/Clerk of Court, by M. Duran,Deputy Clerk AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 23 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER NORTON ROSE FULBRIGHT US LLP PETER H. MASON (State Bar No. 71839) LESLEY HOLMES (State Bar No. 271903) KELSEY A. MAHER (State Bar No. 302681) 555 South Flower Street, Forty-First Floor Los Angeles, California 90071 Telephone: (213) 892-9200 Facsimile: (213) 892-9494 Email: peter.mason @nortonrosefulbright.com lesley.swanson.holmes @nortonrosefulbright.com kelsey. maher@ nortonrosefulbright.com NORTON ROSE FULBRIGHT US LLP MICHAEL A. SWARTZENDRUBER (admitted pro hac vice) BARTON W. COX (admitted pro hac vice) 2200 Ross Avenue, Suite 3600 Dallas, Texas 75201 Telephone: (214) 855-8000 Facsimile: (214) 855-8200 Email: michael.swartzendruber @nortonrosefulbright.com beau.cox @nortonrosefulbright.com Attorneys for Defendants CENTURY THEATRES, INC. AND CINEMARK USA, INC. SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES FLAGSHIP THEATRES OF PALM Case No. SC 090481 DESERT, LLC dba CINEMAS PALME D’OR, a California limited liability (Assigned for all Purposes to the Hon. Lisa corporation, Hart Cole, Dept. O) Plaintiff, DEFENDANTS CENTURY THEATRES, INC. AND CINEMARK USA, INC.’S V. OPPOSITION TO PLAINTIFF FLAGSHIP THEATRES OF PALM DESERT, LLC’S CENTURY THEATRES, INC., a California MOTION FOR ATTORNEYS’ FEES corporation, et al., Date: March 5, 2019 Defendants. Time: 8:30 a.m. Dept.: O Action Filed: July 26, 2006 Trial Date: April 4, 2018 Reservation ID: 180627326255 LODGED CONDITIONALLY UNDER SEAL 84036989.1 DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 23 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER TABLE OF CONTENTS L INTRODUCTION i ce casei susie cn snus aausssn su asosssis suns 62 20555408 545055508 55585 55 0 2055548 S955 5.58 R508 24085 IL. LEGAL STANDARDS FOR FEE AWARDS .....ccciiiiiiiiecececee ee III. ARGUMENT cc ss comasis ssa so susussis svussss su cas sais asics. 555558 5250853705 565055578 S5585 55.0 2055548 085 #38 RA 25 A. Flagship’s Proffered Lodestar Should Be Reduced Initially by At Least SIZE ecoscomcnaosoesamssctr XN E E SN I. Flagship Failed To Carry Its Burden To Establish a Reasonable LOAESTAL ... coven eee eee eee eee eee eeeeeeeeee 2. Flagship’s Inflated “Modified Block Billing” Entries Magnify the Standard Block Billing Problems..............c.......... 3. The Portion of Perkins Coie’s Lodestar Derived from the Post-Contingency Fee Period Is Inflated and Unreasonable..... 4. Flagship Should Not Recover the Fees Incurred as a Result af Its Own Spelialion cmewmmmsmmmm m s ssmmessmmsrmssm 5. Flagship’s Lodestar Includes Time for Non-Recoverable PErSONS cove 6. Flagship’s Lodestar Should Be Reduced by At Least 50% ...... B. The Lodestar Should Further Be Adjusted Downward To Account for Flagslip’s LAMiTel SUISOEES. «cums uses smmmssmmsmmss sms ise ssa: 1. Courts Routinely Discount Fee Awards When Plaintiffs Achieve Only Limited SUCCESS ......ccouververnienieeiinieesiececee 2. Plaintiff’s Limited Success Necessitates a Downward AdJUSTMENT e scece eee sees 3: Flagship’s Attempts to Turn Negligible Success into a Resounding Victory Through Attorneys’ Fees Should Be Disregarded .........coceeviiiniiniec eee a. This lawsuit did not end clearances in the industry ...... b. Neither the 2011 appellate court decision nor the jury verdict were particularly important to California lav or antitrust 18w generally... ews sss sms C. A Fee Enhancement Is A NON-STarter.........ccocevvierniinieeieeniinieenie cec UN. CONCLUSION ressmasonemosoessssnssssiessomsssostsmsssssas sass Sa ee 0 EE SE REA SE Se AER 84036989.1 -2- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER TABLE OF AUTHORITIES Page(s) Cases 569 E. Cnty. Blvd. LLC v. Backcountry Against the Dump, Inc., 6 Cal. App. Sth A286, 435 CONEY sx sums nsmwsnss swsssnsn mss 5505045 55555550555 55.50 5555558 SH85355-49 SE53550 4553 10, 16 Brown v. Stackler, 612 F.2d 1057 (7th Cir. 1980)..ccueieiieiiie eee eects eters sites e ee sre sabe anneas 6, 16 Burton Ways Hotels, Ltd. v. Four Seasons Hotels Ltd., No. CV 11-303-PSG, 2015 WL 13081297 (C.D. Cal. Jan. 21, 2015) ..ccceevvierieeieeiieiieeie 23 Cadkin v. Bluestone, No. CV 06-0034 ER, 2007 WL 9637060 (C.D. Cal. Apr. 9, 2007) .....ccceveereerieareeneeneeeeieeenne 12 Ceglia v. Zuckerberg, No. 10-CV-00569A(F), 2012 WL 503810 (W.D.N.Y. Feb. 14, 2012) ....cccceeviuiriiiiriie 13 Chavez v. City of Los Angeles, 47 Cal. 4th 970 (2010) «eevee ieee eee sees sta ee ese sa essa sabe e nae 10, 11, 26, 27 Christian Research Inst. v. Alnor, 165 Cal. App. 4th 1315 (2008)...c.ueeeeiieeiieeiiieiieiie ee 7,10, 11, 12, 35 Ctr. for Biological Diversity v. Cnty. of San Bernardino, 188 Cal. App. 4th 603 (2010)....cccueieiieeie cts etree testes sabes sees saa eeee 9,11 Darling Int’l., Inc. v. Baywood Partners, Inc., No. C-05-3758 EMC, 2007 WL 4532233 (N.D. Cal. Dec. 19, 2007) ...ccovvueeieerieriienieereannes 12 Envtl. Prot. Info. Ctr. v. Dep’t of Forestry & Fire Prot., 190 Cal. App. 4th 217 (2010). ...eciiieiieeiie eee seater esa e ieee nee sbae eee 10 Farrar v. Hobby, 506 U.S. 103 (1992) ...eiiiieeie eects eee teeters sete sabes sabe seen 26, 27,29, 31 Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc., 198 Cal. App. 4th 1366 (2011)..ccueiiiiieiieeie eee eee eee estes eevee sees 31,32 Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc., No. B257148, 2016 WL 3011192 (Cal. Ct. of App. May 24, 2016) .......covcueecueenieriieniieeieene 29 Gorman v. Tassajara Dev. Corp., 178 Cal. App. 4th 44 (2009)......eiiiieiie citer te esate ete ee estes sbbe sabe eae eeseessae sabe anneas 9 Harman v. City and Cnty. of San Francisco, 136 Cal. App. 4th 1279 (2000)......ceiiiieiieeieeieeiie ters sbe estes stee este sere esee seen 22,27 Hensley v. Eckerhart, 461 U.S. 424 (1983) eee ceases eee ste eevee reese saa ees 10, 16, 22, 26, 27, 28, 31 84036989.1 -3- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER Ketchum v. Moses, 24 Cal. 4th 1122 (2001) coeeeeeeeeieeeee cece ee ee ee eect rrr eee e ae ee eetarbe ae ae sees ennnns 9,10, 34 Kirsch v. Fleet Street, Ltd., 1208 Badd 1D C2 CTR, 1°08) rn som rss, oss. isnsssse.t 4,5 535,500. 13 Mann v. Quality Old Time Serv., Inc., 139 Cal. App. 4th 328 (2000).....ccueeiiriieriiriiiecie ette cesses erica aes 10, 26, 27 New York v. Microsoft Corp., 297 F. Supp. 2d 15 (D. D.C 2003) ...oeiiieeiieeieeeete ete e ters eevee est sbaeeebeenneas 28 Orange Cnty. Water Dist. v. Sabic Innovative Plastics US, LLC, 14 Cal. APP. 5th 343 (2017). ues eee ete settee ete sate sabe e eee t ee sbae enna ennes 32 PLCM Grp. v. Drexler, 22 Cal. AH. 1 OBA. CODD) «5.55005 nss50.18 msm swans nmwssss 25555575:08 5455555 555755 50-45 FH53578. 455545 5055555 SARS RTE SFR 9 Redwood Theatres, Inc. v. Festival Enter., Inc., 200 Cal. APP. 3d 687 (1988)....eeeueieiieiie eit eae eee t testes sateen sree tee sbae esse anne 32 Riverside v. Rivera, ATT US. 561 (19860)... eects ete eee e ee ea eee e seats ae ee eras ae ee enanens 27 Serrano v. Priest, 20 Cal. 3A 25 (1977) erecta eee ee eee eee ae ee essere ae ae ee en anaes 9,12 Serrano v. Unruh, 38 Clall 3 TLL C1 DBL sm mmm crass sons rcs, sos 50, ST in SAT, 55 6, 16 Sokolow v. Cnty. Of San Mateo, 213 Cal. APP. 3d 231 (1989)... eee etcetera s es esate sabes a ee saan 11,27 Thayer v. Wells Fargo Bank, N.A., 92 Cal. APP. 4th 819 (2001)..ueieiieiie eee eee esate sae sateen reste saae ene ens 11 Tic-X-Press v. Omni Promotions Co. of Ga., B15 F.2d 1407 (11th Cir. 1987) ueueeiie ieee eee eee eects eee aaa eee ee erar ae ee seen 28 William Inglis & Sons Baking Co. v. Continental Baking Co., Inc., O81 BE. 2d 1023 (Oh Cit: TODD), css. nssmss ssnomsssns sms rs mss 005m 66555 550555 is dais 57s ss asses 28 Rules and Statutes CATEWTLEITE AAG 55.50 sms sss. 955558 5550559548 5555855 SH55345.06 55535 SHS55 5738 SH33 75 SF555 009 FHS 535 SAF 595 58 HGRA S585 17, 28, 32 Other Authorities California State Bar Committee on Mandatory Fee Arbitration, Detecting Attorney Bill Padding, Arbitration Advisory 2003-01 (Jan. 29, 2003) (available: http://www.calbar.ca.gov/portals/0/documents/mfa/2014/2003-01 Detecting- Alty-Bil l-Pauld 00s EIT xcmsmmesmssmssemsmmmmssssmmmms summer seas 12 84036989.1 -4- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 23 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER Ken Moscaret, Fee Awards: Fee-Shifting Cases Versus Attorney’s Fees as Damages, Association of Business Trial Lawyer Northern California Report, Vol. 23, No. 2 (2014) (available: http://www.abtl.org/report/nc/abtlnorcalvol23n02.pdf) .......cccveeeiiiniiiiniiiieeee “Lionsgate Joins Fox, Par & Uni in Nixing Exhibitor Clearance Requests: What Does This Mean for the Biz?” (available: https://deadline.com/2016/05/lionsgate-now-you-see-me-2-exhibitor- clearance-circuit-dealing=1201703735/) «cususs crssssnis sussass cussssnisssosnss sasns ss 5555555 555555555 5755555 £7585 55.58.65 “Perkins Coie Represents Flagship Theatres of Palm Desert in Successful Antitrust Suit Against Cinemark” (available: https://www.perkinscoie.com/en/news-insights/perkins-coie-represents- flagship-theatres-of-palm-desert-in.html) ........ccccceriiiiiiiiiiii eee 84036989.1 -5- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER IL. INTRODUCTION “A fee request that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether. ‘If . . . the Court were required to award a reasonable fee when an outrageously unreasonable one has been asked for, claimants would be encouraged to make unreasonable demands, knowing that the only unfavorable consequence of such misconduct would be reduction of their fee to what they should have asked in the first place. To discourage such greed, a severer reaction is needful. ...”” -- Serrano v. Unruh, 32 Cal. 3d 621, 635 (1982) (“Serrano IV”) (quoting Brown v. Stackler, 612 F.2d 1057, 1059 (7th Cir. 1980) (denying fee request)). Flagship’s fee request shocks the conscience. Flagship seeks $20.7 million in fees in a case where it abandoned or lost three of the four theories it originally asserted, had two years’ of its evidence stricken as a sanction for spoliating evidence, recovered no injunctive or equitable relief, and recovered $1.25 million in monetary damages-Iless than 14% of the amount sought at trial. Despite this result, Flagship asks the Court to award it fees equal to sixteen times the actual damages awarded. As explained below, California law mandates that the Court reject Flagship’s outrageous, insupportable fee request and apply a critical analysis to the facts of this case in order to determine a reasonable fee for Flagship, if any. The first step in that analysis is to calculate the appropriate “lodestar,” which is a base amount equal to the time reasonably spent on each compensable task multiplied by a reasonable hourly rate for the attorney performing that task. Flagship claims a lodestar of $14.8 million, but it falls far short of its evidentiary burden to support that amount. Indeed, having offered no expert testimony supporting its lodestar,! Flagship relies primarily upon a compilation of Perkins Coie billing records that merely show how much time was entered into the firm’s billing system each day. Yet those records inherently obscure how much time Perkins Coie spent on particular tasks (e.g., a deposition or sanctions briefing) because they consist largely of vague, “block billed” entries that lump all tasks performed during a given day into a single “block” of time, making it impossible to assess the reasonableness of that time on a per-task basis. For that precise reason, "Mason Decl., 2, Ex. A (Deposition of Kenneth Moscaret) (“Moscaret Dep.”) at 114:9-10 (“I didn’t actually look at the lodestar in any form. That was not part of my engagement.”). 84036989.1 -6- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER many California courts and commenters, including the California Bar Association and Flagship’s own fee expert, recommend reducing, or rejecting, lodestar proof premised upon block billing. Making matters worse, numerous Flagship timekeepers recorded daily “blocks” (e.g., 5.0 hours for the entire day) that were objectively inflated beyond the time actually expended on the individual tasks they performed that day. We know this because some Perkins Coie timekeepers recorded their time using a “modified block billing” method-where the time spent on each task is recorded by parenthetical within the narrative and then summed to a daily total.> In more than one hundred instances, timekeepers recorded daily time totals that exceeded the sum of their per- task entries. Although Flagship now seeks to trivialize this massive red flag,’ the fact is that those hundred-plus objectively inflated time entries constitute the only instances where Cinemark is able to see and call out the conduct. Neither Cinemark nor the Court can assess the degree to which the balance of the block billed entries (i.e., the ones that lack task-specific time notations) were likewise inflated; block billing inherently precludes that inquiry, which is why California courts abhor it as adequate lodestar evidence. See Christian Research Inst. v. Alnor, 165 Cal. App. 4th 1315, 1330 (2008) (affirming trial court decision to reduce lodestar by 90% where block-billed time entries appeared excessive and obscured nature of work performed). Although the existence of these objectively inflated time entries ought to be concerning enough, Flagship’s lodestar calculation suffers from still other defects. As explained below, after the case converted to a contingency fee in 2012, Perkins Coie’s approach to the case changed dramatically. During the first six-year, hourly-fee portion of the case, 10 Perkins Coie lawyers (plus several paralegals and support staff) billed Flagship for approximately 3,000 hours, worth approximately $1.2 million in fees. Those relatively reasonable hours and fees covered preparing a lawsuit, conducting written discovery, producing and reviewing thousands of documents, 2 This is sometimes referred to as “modified single-task” billing. Compare Mason Decl., 2, Ex. A (Moscaret Dep.) at 145:19-146:1 (calling the practice “modified block billing”) with id. at 161:10-19 (calling the practice “modified single-task’ billing). 3 Flagship and its lead lawyers were seemingly unaware that several Perkins Coie associates were routinely recording inflated daily totals in the firm billing system until Cinemark identified the issue during fee-related discovery. This is significant because it disproves Flagship’s assertion that Perkins Coie carefully self-audited its bills throughout the pendency of this case-which is the fundamental basis of Flagship’s lodestar “proof.” This plainly was not done, at least with care, as no one reviewing the statements in any detail could have missed all of the hundreds of errant time entries that Cinemark has brought to light. 84036989.1 -7- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER conducting nine depositions, preparing expert reports, responding to a case-dispositive summary judgment, beginning to prepare for trial, and pursuing an appeal. Yet in the six-year segment of the case after Perkins Coie switched to a contingent fee arrangement, the firm permitted 78 timekeepers to record approximately 30,000 hours and generated “fees” of $13.6 million-more than fen times the hours and fees actually billed during the preceding six years. As detailed below, those staggering numbers from the second stage of the case are punctuated by objective examples of extraordinary inefficiency-e.g., spending hundreds of hours preparing for short depositions, nearly $1 million on a single appeal, and approximately $250,000 preparing the 19- page fee request and accompanying declarations to which this brief responds. Time of that magnitude is neither reasonable nor compensable from Cinemark. Flagship’s lodestar must also be reduced to account, at least in some measure, for the 2,761 hours (worth nearly $1.3 million) that its lawyers spent defending its spoliation of evidence. Flagship’s destruction of evidence was an issue of significant consequence in this case. Not only did both sides spend large sums investigating and briefing the issue in the trial and appellate courts, but Flagship’s spoliation also directly led to (1) Flagship’s loss of two years’ worth of evidence and damages at trial and (ii) a four-year delay in the trial of this case, which itself dramatically increased the costs for both sides. It would, obviously, be unfair and unreasonable for Perkins Coie and Flagship to profit from Flagship’s spoliation by recovering fees that would not have been incurred but-for Flagship’s destruction of evidence. To assist Cinemark and the Court in determining the appropriate lodestar calculations, Cinemark has retained Clement Glynn, a member of the American College of Trial Lawyers, who has extensive experience in California attorneys’ fees practices and norms. As explained in his accompanying Declaration, Mr. Glynn opines that the combination of factors at play here-the objectively inflated time entries, the block billing, the increased costs caused by Flagship’s spoliation, the unreasonable time Perkins Coie spent on certain basic tasks, and the duplication of effort that pervades large segments of Perkins Coie’s billing records-warrants, at the very least, a 50% reduction to the claimed lodestar. This results in a proper lodestar of $7,395,740. 84036989.1 -8- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER After determining the proper lodestar, the next step in arriving at a reasonable fee is to determine whether the lodestar should be adjusted upward or downward based upon the degree of success that Flagship achieved at trial relative to the scope of its allegations and the amount of damages it requested. Here, Flagship alleged that Cinemark engaged in “circuit dealing” with at least 35 different distributors over a span of 15 years (though it was ultimately limited to seeking damages for 13 years as a sanction for spoliation). Based upon those sweeping allegations, Flagship proffered a damages model of $9.1 million that purported to take into account films released by the dozens of distributors it put at issue over that 13-year period. But the jury rejected the vast majority of Flagship’s case and awarded only $1.25 million in damages. Seeking to explain that result, Flagship argued at the JINOV stage that the jury likely discounted Flagship’s damages model by more than 86% because it found that Cinemark had engaged in circuit dealing with just a few of the 35 distributors and that such conduct occurred during just two of the 13 years for which Flagship sought damages. Under California law, such limited success demands a downward adjustment to the lodestar. Although Flagship recovered less than 14% of its claimed damages, in light of the prevailing case law, Cinemark submits that a 50% degree-of-success discount to the properly calculated lodestar of $7,395,740.00 is appropriate. Applying this adjustment would result in a total fee to Flagship of $3,697,870. Accordingly, Cinemark urges that a reasonable fee, if any is to be awarded, would be a maximum of $3,697,870. II. LEGAL STANDARDS FOR FEE AWARDS A party seeking an attorneys’ fee award bears the burden to prove that the fees it seeks are reasonable. Ctr. for Biological Diversity v. Cnty. of San Bernardino, 188 Cal. App. 4th 603, 615 (2010); Gorman v. Tassajara Dev. Corp., 178 Cal. App. 4th 44, 98 (2009). California follows the lodestar approach to evaluating the reasonableness of fee requests. See Ketchum v. Moses, 24 Cal. 4th 1122, 1131-32 (2001); PLCM Grp. v. Drexler, 22 Cal. 4th 1084, 1095 (2000). A trial court should begin by calculating the lodestar amount based on the “careful 3 compilation of the time spent and reasonable hourly compensation of each attorney.” Ketchum, 24 Cal. 4th at 1131-32 (citing Serrano v. Priest, 20 Cal. 3d 25, 48 (1977)) (“Serrano III’). This is 84036989.1 -9- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER done on a task-by-task basis. See 569 E. Cnty. Blvd. LLC v. Backcountry Against the Dump, Inc., 6 Cal. App. 5th 426, 435 (2016), as modified on denial of reh’g (Dec. 29, 2016). To support recovery, the fee applicant’s evidence must “allow the court to consider whether the case was overstaffed, how much time the attorneys spent on particular claims, and whether the hours were reasonably expended.” Christian Research Inst., 165 Cal. App. 4th at 1320. To meet its burden, fee applicants must carefully scrutinize their fee request to ensure that any excessive or unnecessary time entries are not submitted to the Court. Hensley v. Eckerhart, 461 U.S. 424, 434 (1983) (“Counsel for the prevailing party should make a good faith effort to exclude from a fee request hours that are excessive, redundant or otherwise unnecessary.”). Courts must carefully review a plaintiff’s evidence and have broad discretion to reduce or simply deny a fee award if a plaintiff’s proposed lodestar appears unreasonable, excessive, or inflated. Ketchum, 24 Cal. 4th at 1132 (“[T]rial courts must carefully review attorney documentation of hours expended.”); Christian Research Inst., 165 Cal. App. 4th at 1320 (“the trial court need not simply award the sum requested” but “may properly reduce compensation on account of any failure to maintain appropriate time records.”); Id. at 1329 (affirming trial court’s finding that “the inflated, noncredible, often vaguely documented hours claimed by counsel precluded turning Alnor’s contingent fee arrangement with counsel into a windfall.”). Once the trial court calculates the appropriate lodestar, that figure may then be adjusted upward or downward to account for various factors, including (1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, (4) the contingent nature of the fee award, and (5) the plaintiff’s limited success in the litigation. Ketchum, 24 Cal. 4th at 1132; Mann v. Quality Old Time Serv., Inc., 139 Cal. App. 4th 328, 342 (2006). The most critical factor in arriving at a “reasonable” attorney fee is the degree of success obtained by the prevailing party. Hensley, 461 U.S. at 436; Envtl. Prot. Info. Ctr. v. Dep’t of Forestry & Fire Prot., 190 Cal. App. 4th 217, 240 (2010) (“California law, like federal law, considers the extent of a plaintiff’s success a crucial factor in determining the amount of a prevailing party’s attorney fees.”) (citing Chavez v. City of Los Angeles, 47 Cal. 4th 970, 989 (2010)). Indeed, “under 84036989.1 -10- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER [California] state law as well as federal law, a reduced fee award is appropriate when a claimant achieves only limited success.” Chavez, 47 Cal. 4th at 989; see also Sokolow v. Cnty. Of San Mateo, 213 Cal. App. 3d 231, 247 (1989) (“Even after determining that a party is entitled to fees . . . the trial court must still determine what amount of fees would be ‘reasonable’ in light of the relative extent or degree of the party’s success in obtaining the results sought.”). III. ARGUMENT A. Flagship’s Proffered Lodestar Should Be Reduced Initially by At Least 50% . Flagship’s proffered lodestar lacks sufficient evidence, is objectively inflated, and must be reduced to account for the following fundamental deficiencies:* (1) the submission of vague “block billing” records that preclude the Court from understanding the time spent on particular tasks and assessing its reasonableness; (2) the submission of more than one hundred objectively inflated “modified block billing” entries; (3) a lack of reasonable billing supervision and restraint following the contingency fee conversion that led to inefficient hours being expended on particular tasks; (4) the improper inclusion of thousands of hours ($1.3 million) spent defending Flagship’s own spoliation of evidence; and (5) Flagship’s failure to demonstrate the recoverability of time spent by numerous non-lawyers for which it seeks fees. For these reasons, Cinemark requests that the Court reduce Flagship’s lodestar calculation by at least 50% before assessing whether the lodestar should be further reduced to account for Flagship’s relative lack of success (as addressed in Section IIL.B, infra). 1. Flagship Failed To Carry Its Burden To Establish a Reasonable Lodestar. As the fee applicant, Flagship alone bears the burden of proving the reasonableness of its proffered lodestar. Biological Diversity, 188 Cal. App. 4th 603, 615; see Christian Research Inst., 165 Cal. App. 4th at 1320. That burden requires Flagship to present evidence showing that each task was (i) performed at a reasonable rate and (ii) completed in a reasonable amount of time. Thayer v. Wells Fargo Bank, N.A., 92 Cal. App. 4th 819, 833 (2001). Although Perkins 4 There are so many discrete instances of overbilling on particular tasks that it is impracticable to list each. This Section focuses primarily on the major flaws in Flagship’s lodestar, including specific examples of how these broader issues manifested themselves in excessive time being sought for particular tasks (e.g., depositions, etc.). A more granular analysis of the myriad instances in which Perkins Coie included excessive time for particular tasks may be seen at pages 14-20 of the Declaration of Clement Glynn (“Glynn Decl.”), filed in conjunction with this Brief. 84036989.1 -11- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER Coie’s rates may have been reasonable, Flagship has failed to meet its burden even to support, much less prove, the reasonableness of the extraordinary amount of time the lawyers spent on various tasks, particularly during the six-year contingent fee stage of the case. Perkins Coie’s primary proof of time spent consists mainly of a compilation of billing records. But those records do not, for the most part, even identify the amount of time spent performing individual tasks-which is the critical inquiry in a lodestar analysis. See Serrano Ill, 20 Cal. 3d at 48, n.23. Rather, most of Perkins Coie’s lawyers recorded time by “block billing,” wherein a lawyer records narrative descriptions of all work done during a single day under a single time entry that is not apportioned on a task-by-task basis. This billing method precludes the Court from determining how much time was spent on any given task-much less assessing the reasonableness of that time-because only one lump-sum time entry covers all tasks. See Glynn Decl., {18-20 . For that reason, block billing has been widely condemned when offered as proof of a lodestar. For instance, the California Bar Association strongly discourages its members from using block billing when representing plaintiffs in fee-shifting cases. See California State Bar Committee on Mandatory Fee Arbitration, Detecting Attorney Bill Padding, Arbitration Advisory 2003-01, at 7 (Jan. 29, 2003) (available: http://www.calbar.ca.gov/portals/0/documents/mfa/2014/ 2003-01 _Detecting-Atty-Bill-Padding_r.pdf). Consistent with the Bar’s admonition, California trial courts routinely apply large percentage reductions to lodestars premised upon block billing to account for potential fee inflation and the inherent difficulty of assessing the reasonableness of time that is block billed. See, e.g., Christian Research Inst., 165 Cal. App. 4th at 1319, 1330 (affirming trial court’s reduction of fee request by 90% because block-billed entries made it difficult to assess reasonableness of fees); Cadkin v. Bluestone, No. CV 06-0034 ER, 2007 WL 9637060, at *2 (C.D. Cal. Apr. 9, 2007) (reducing block-billed entries by 20%); Darling Int’l., Inc. v. Baywood Partners, Inc., No. C-05-3758 EMC, 2007 WL 4532233, at * 9 (N.D. Cal. Dec. 19, 2007) (noting that both federal and state case law “disfavor[] the practice” of block billing and applying a percentage reduction even though, in that case, “there [was] little reason to doubt the 84036989.1 -12- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER overall veracity of the records.”).’ Flagship’s own expert, Mr. Moscaret, has likewise repeatedly condemned block billing when offered as proof of a lodestar. Indeed, he has published articles characterizing block billing as “objectionable.” Ken Moscaret, Fee Awards: Fee-Shifting Cases Versus Attorney’s Fees as Damages, Association of Business Trial Lawyer Northern California Report, Vol. 23, No. 2, at 4 (2014) (available: http://www.abtl.org/report/nc/abtlnorcalvol23no2.pdf). At conferences, he cautions audiences “not to block bill” because “it can be problematic when it comes time to request fees.” Mason Decl., 2, Ex. A (Moscaret Dep.) at 146:6-11. And he has testified that fees based upon block billing records should be disallowed entirely or significantly reduced. Mason Decl., 16, Ex. O (Decl. of Kenneth Moscaret in Opposition to PI's Pet. for Award of Attorneys’ Fees, Litigation Expenses, and Costs, Passantino v. Johnson & Johnson Cons. Prods., Inc., No. C96-5044 RIB, 1997 WL 34620187 (W.D. Wash. 1997)) (“Passantino Decl.”) at *4 (opining that all time from a one-year period should be “disallowed” because he “found it wholly impossible to determine whether the charges were reasonable,” and that block billing from other segments of the case should be subjected to an additional across-the-board reduction). Cinemark’s expert, Mr. Glynn, agrees that block billing prevents the Court from conducting its core function of assessing whether the fees charged for particular tasks were reasonable. Consistent with the California Bar’s position, case law, and Mr. Moscaret’s prior testimony, Mr. Glynn opines that a significant percentage reduction for block billing is necessary in this case-even if Perkins Coie’s billing proof were not marred by myriad other significant problems. See Glynn Decl., | 21. That said, as detailed below, Mr. Glynn also opines that Flagship’s lodestar must be further reduced because it is plagued by flaws far more significant than block billing alone. 2. Flagship’s Inflated “Modified Block Billing” Entries Magnify the Standard Block Billing Problems. In addition to ordinary block billing, here we have the extraordinary circumstance that 3 Courts around the country likewise take harsh views of fee requests supported by block billing, often slashing such requests by 50% or more. See, e.g., Kirsch v. Fleet Street, Ltd., 148 F.3d 149, 173 (2d Cir. 1998); Ceglia v. Zuckerberg, No. 10-CV-00569A(F), 2012 WL 503810, at *16-17 (W.D.N.Y. Feb. 14, 2012). 84036989. 1 -13 - DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER Flagship’s evidence facially demonstrates, mathematically, that Flagship’s time entries were inflated. Approximately 25% of Flagship’s time entries were recorded using the “modified block billing” method, sometimes referred to as “modified single-task billing.” Compare Mason Decl., 12, Ex. A (Moscaret Dep.) at 145:19-146:1 (calling the practice “modified block billing”) with id. at 161:10-19 (calling the practice “modified single-task™ billing). When using this approach, a timekeeper records a single “block” of time for the day but also notes in the narrative description the particular amounts of time spent performing each individual task encompassed within the daily total. Unlike traditional block billing, this “modified” approach thus allows the Court to understand how much time the attorney spent performing individual tasks. But here, Perkins Coie’s modified block billing entries reveal that timekeepers routinely recorded more total time for a single day than they actually worked on tasks that day. Indeed, there are more than one hundred instances of timekeepers inflating their daily time totals. For example, in December 2012, three different timekeepers inflated six different daily time totals: Billed Billed Tkpr Name [3 Amt Narrative Conference with K. Galipeau regarding upcoming document production (.3); participate in conference with E. Castillo regarding research for opposition to motion to continue; review defendant’s motion to Bennett, Katherine D. 12/13/2012 2.90 $928.00 | continue and supporting documentation (1.3); Revise and finalize opposition motion and Castillo, Elvira 12/18/2012 5.10 | $1,861.50 | accompanying declaration (3.8); Edit opposition to motion for continuance (.3); telephone conferences with J. Viviano regarding Flagship production (.6); email B. Cox regarding production of Flagship hard copy documents (.4); coordinate production of same (.3); draft responses to requests for Galipeau, Katherine G. 12/18/2012 3.60 | $1,242.00 | admission and interrogatories (1.9); Draft responses to requests for admission and form interrogatories (1.7); telephone conference with S. Mason regarding same (.3); conference with K. Bennett regarding same Galipeau, Katherine G. | 12/19/2012 4.20 | $1,449.00 | (.2); Review and edit opposition to motion for continuance (3.1); assist B. Tabor and S. Mason Bennett, Katherine D. 12/21/2012 6.50 | $2,080.00 | regarding discovery responses (2.0); 84036989. 1 -14 - DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER Conference with T. Boeder regarding case work regarding third party depositions (.6); assignments to J. Viviano regarding electronic discovery review and production (1.0); assist regarding creating charts in preparation for third-party depositions (.5); review and respond to emails from litigation team regarding third party subpoenas (.5), edit discovery responses (4.5); teleconference with S. Mason and B. Tabor regarding discovery Bennett, Katherine D. 12/28/2012 7.60 | $2,432.00 | responses (.4); In each instance, the task-specific time notations add up to less than the daily totals-so, had this segment of the case been billed hourly, Perkins Coie would have invoiced Flagship for hours of work that were never performed.® Importantly, this was not a one month anomaly or the result of mere typographical or mathematical errors. In the next month, January 2013, the same three timekeepers lodged eleven inflated entries. Glynn Decl., 22. In February 2013, there were five more. Id. In March 2013, there were six more. Id. And, in April 2013, there were again eleven more inflated entries. Id. That amounts to 40 facially inflated time entries in just five months. After Cinemark asked about the inflated entries at depositions, Flagship filed a Supplemental Declaration in which Mr. Boeder attempted to trivialize the fees inflated by such time entries. See Supplemental Decl. of Thomas Boeder In Support of Flagship Mot. for Attorneys’ Fees (“Suppl. Boeder Decl.”) at qq 2-3. In essence, Mr. Boeder suggests that the inflated modified block billing entries are no big deal because they account for only a small portion of Flagship’s claimed $14.8 million lodestar. Id. That misses the point entirely. The modified block billing entries facially reveal an issue of larger concern: whether Flagship’s block billing totals, in general, exceeded the true time spent in a given day on actual task-by-task work and thus further undercut Flagship’s fee application proof. The modified block billing entries are the only entries that provide sufficient information for the Court to assess whether the daily “blocks” of time actually match the real time spent on individual tasks (because one can check the ® When asked about these entries at his deposition, Mr. Moscaret postulated that perhaps the phantom 1.3 hours in Ms. Bennett's 12/13/12 entry were attributable to a meeting with Ms. Castillo for which there is no task-specific parenthetical. Mason Decl., |2, Ex. A (Moscaret Dep.) at 154:20-157:25. Yet Ms. Castillo billed no time for any meetings with Ms. Bennett that day-even though she typically does bill for meetings. Id. Faced with those facts, Mr. Moscaret conceded that he cannot explain the phantom 1.3 hours included in Ms. Bennett's 12/13/12 entry. Id. Nor is there any evidence or basis for the Court to do so. 84036989. 1 -15- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER math by totaling the internal task-specific time spent). The overstated modified block billing entries thus only highlight the already-serious doubts about the reliability of the far more prevalent pure block-billed entries submitted in support of Flagship’s fee request-those for which there are no task-specific time entries from which to “check” whether the daily totals are accurate or were also inflated. In other words, the facially inflated block billing entries are not the whole problem; rather, they are the tip of a massive iceberg-the rest of which is obscured by the inherent vagueness of block billing. The fact that these hundred-plus inflated time entries appear in Flagship’s “proof” in support of its fee request shows that Perkins Coie did not conduct a rigorous review of its records when submitting the request-a critical task that is required in order to claim that fees are reasonable and thus recoverable. See Hensley, 461 U.S. at 434 (stressing the burden of the fee applicant to scrub fee request of any unnecessary hours); see also Glynn Decl., ] 22-23. No one conducting a detailed review of these records for accuracy and reasonableness could have missed hundreds of objectively inflated “modified block billing” entries. The reality is that Perkins Coie simply offered up the entirety of its billing records and asked for virtually every dollar ever entered into the computer system-except for the less than 1% of fees that Mr. Boeder apparently wrote off at some point during the case. Glynn Decl., {11(a), n.2, 16.” Under these circumstances, the Court would be well within its discretion to deny the fee request altogether. Serrano IV, 32 Cal. 3d at 635 (“A fee request that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether.”) (citing Brown, 612 F.2d at 1059 (denying inflated fee request altogether on the grounds that if “the Court were required to award a reasonable fee when an outrageously unreasonable one has been asked for, claimants would be encouraged to make unreasonable demands, knowing that the only unfavorable consequence of such misconduct would be reduction of their fee to what they should have asked in the first place.”)); 569 E. Cnty. Blvd., 6 Cal. App. Sth at 432 n.7 (“[T]here is authority that holds an unreasonably inflated fee request permits the 7 Notably, Mr. Boeder does not indicate the months or years when those write-offs occurred. Common sense suggests that they occurred during the far cheaper hourly phase of this case-the phase when Flagship would have cared about the write-offs and during which we see virtually no objectively inflated entries. 84036989. 1 - 16 - DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER trial court to deny any request for fees at all.””) (emphasis in original). 3. The Portion of Perkins Coie’s Lodestar Derived from the Post- Contingency Fee Period Is Inflated and Unreasonable. Approximately 99% of the objectively inflated “modified block billing” entries appear during the contingency fee period of the case. Glynn Decl., { 22. This is not coincidence. Rather, the evidence indicates that the inflated time entries began in late-2012 because Perkins Coie seemingly stopped tracking how much time its people recorded to the case file once it converted to a contingent fee arrangement. Glynn Decl., | 15, 22-25. Comparisons between the hourly-fee period and the contingency fee period bring this issue into focus. During the case’s first six years, Perkins Coie billed Flagship for approximately 3,000 hours and $1.2 million in fees. Mason Decl., 3, Ex. B (Flagship Attorney’s Fee Motion Information Provided by Stipulation) (“Flagship Fee Info”) at 1. Those hours and fees covered virtually every phase of litigation, except a full trial. During that period, Perkins Coie prepared the lawsuit, conducted written discovery, contended with discovery motions, prepared for and attended nine depositions, worked up two experts, responded to a case-dispositive summary judgment, began preparing for trial, and pursued an appeal. Glynn Decl., 15 As of May 2012, Flagship had paid only $323,163 of the $1.2 million owed, leaving an unpaid balance of $870,279. Mason Decl., 3, Ex. B (Flagship Fee Info) at 1. As a result, on May 1, 2012, Perkins Coie and Flagship entered into a Partial Contingency Fee Agreement. Glynn Decl., Ex. 2 (Contingency Fee Agreement). Under that contract, Perkins Coie was entitled to recover the past due $870,279 plus 40% of any additional monies (including fees) recovered in the lawsuit. Id. Whereas during the hourly fee period Perkins Coie had to bill judiciously so as not to lose its cash-strapped client (or drive it into bankruptcy), that incentive flipped once it took a financial interest in the case. Going forward, much of Perkins Coie’s (and Flagship’s) joint motivation-to keep fees reasonable and to manage the scope of the case and supportable allegations-Ilargely faded. This was true because they both understood that a verdict of any size would create the potential to recover attorneys’ fees under the Cartwright Act (40% of which would go to Perkins Coie, and 60% of which would actually serve as a hedge to Flagship against 84036989.1 -17 - DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER whatever enhanced claims/damages it could not prove at trial). See Glynn Decl., 26 And, of course, if Perkins Coie were to proffer to the Court (as it ultimately has done) virtually all time charged to the file in its billing system, then the more time recorded by timekeepers, the greater its “lodestar” submission would ultimately be. Consistent with these changed incentives, the billing records show that Perkins Coie dramatically altered its approach to the case after it stopped sending hourly bills to its client in May 2012. Whereas Flagship had previously focused on alleged conspiracies with two distributors (Universal and Sony), in August 2012, its contention became that Century, and later Cinemark, had conspired with more than 30 different distributors. Compare Mason Decl., {4, Ex. C (Order Granting Summary Judgment (July 17, 2008)) at 1 (noting only 2 distributors) with Mason Decl., 5, Ex. D (Flagship’s Responses to Defendants’ Second Set of Special Interrogatories (Oct. 30, 2012)) (“Pl.’s 2012 Rog. Resp.”) at 1-10 (alleging more than 30 distributors); see also Mason Decl., (14, Ex. M (Flagship’s Responses to Defendants’ Fourth Set of Special Interrogatories (May 8, 2017)) (“PL.’s 2017 Rog. Resp.”) at 4-8 (identifying additional distributors to bring total to 35). Illustrating the exaggerated nature of that drastically expanded allegation, at trial, Flagship subpoenaed only two distributor witnesses-again, Universal and Sony-and actually called only one of those (Universal) to testify. Mason Decl., 20. In fact, despite having named them as co-conspirators, Flagship never even mentioned at trial many of the 35 distributors that it put at issue after switching to a contingency fee. Mason Decl., §6, Ex. E (Trial Transcript) (“TT”) at 2565:9-19, 2573:7-13 (acknowledging, in hearing arguments on Defendants’ Motion for Nonsuit, that “several of these other [distributors] have never been mentioned” in Flagship’s case-in-chief); Mason Decl., {7, Ex. F (Defendants Memorandum in Support of its Motion for Nonsuit (Apr. 25, 2018)) at 10-11. In addition to expanding the scope of its allegations, Flagship also demanded that nationwide discovery be conducted, which resulted in vastly greater document production costs. Mason Decl., {8, Ex. G (Flagship’s Opening Brief to the Court of Appeal (December 24, 2009)) at 25-35. This case obviously would have been far less expensive-for both sides-had Flagship not required nationwide discovery or drastically 84036989.1 -18 - DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER exaggerated the number of distributors supposedly involved in “circuit dealing.”® Perkins Coie next recruited an army of lawyers to pursue Flagship’s ever-widening allegations. Whereas 10 lawyers and several paralegals and other support staff worked on the case during the client-billed period, Perkins Coie utilized an astonishing 78 timekeepers during the contingency fee period of the case. Glynn Decl., | 15.° During the six-year contingency fee phase, those timekeepers proceeded to bill roughly fen times the hours that were billed during the six-year hourly fee portion. Glynn Decl., § 15. Those colossal hours resulted in recorded fees of approximately $13.6 million-more than eleven times the fee amount generated by Perkins Coie during the six years when it was actually billing its client. Id. Comparing the quantities of time recorded for performing similar tasks during the two phases further illustrates the excessiveness of Perkins Coie’s time during the contingency fee period. Perkins Coie recorded materially greater fees for like-tasks during the contingency segment as compared to the earlier hourly phase: eo Cinemark Witness Depositions: Perkins Coie deposed multiple Cinemark witnesses during both phases of the case. 0 2008: In April 2008, Perkins Coie spent approximately 37.8 hours ($17,696) preparing for and taking two Cinemark depositions. This equates to an average of less than 19 hours per deposition. 0 2017: In September and October 2017, Perkins Coie spent approximately 428 hours ($246,889) preparing for and taking four short Cinemark depositions (two of which were completed in 1.5 and 3.5 hours, respectively). This equates to an average of 107 hours per deposition. 8 Remarkably, Flagship argues that Cinemark’s defense of the case led to Perkins Coie’s high fees. PI's Mot. at 5. Flagship makes this assertion without identifying a single action taken by the defense that supposedly unnecessarily caused Perkins Coie’s fees to increase 11x after May 2012. Moreover, that assertion is belied by the fact that it was Flagship who (i) argued that virtually every distributor in the country conspired with Cinemark (but only called one distributor to trial), (ii) demanded nationwide discovery related to every distributor, and (iii) caused massive delay by destroying evidence, which dramatically drove up fees for all involved. Finally, to the extent Flagship argues that Norton Rose Fulbright’s appearance in the case elevated Perkins Coie’s fees, that assertion is debunked by Flagship’s own May 2012 contingent fee agreement, which was executed before Norton Rose Fulbright appeared in the case and expressly blamed the “high costs of litigation” at that time on Mr. Blecher’s “litigation strategies.” See Glynn Decl., Ex. 2 (Contingency Fee Agreement) at 3. ° Flagship has often invoked the names “David and Goliath; at 78 timekeepers, Perkins Coie is clearly no “David.” 84036989. 1 -19- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER 0 Upshot: Perkins Coie spent almost five times as many hours per deposition preparing for and deposing Cinemark witnesses during the contingency fee period as it spent during the hourly fee period. '° eo Flagship Witness Depositions: Mr. Tabor and Mr. Mason were each deposed during the hourly phase of the case and the contingency fee period of the case. 0 2008 Fact Depositions: Three timekeepers spent approximately 30.6 hours preparing for and presenting Mr. Tabor and Mr. Mason for deposition, which equated to $712,883 in fees. 0 2013 Fact Depositions: Seven timekeepers spent roughly 306 hours preparing for and presenting Mr. Tabor and Mr. Mason for deposition, which equated to $108,212 in fees. 0 Upshot: To prepare for and attend two slightly extended depositions of its own witnesses in 2013 after the contingent fee conversion, Perkins Coie expended ten-fold the hours in preparation/presentation time as it did for depositions of the same two witnesses during the time when Perkins Coie was actually billing its client hourly.'! e Appeals: The number of timekeepers, hours, and fees per appeal all grew after the case converted to a contingency fee: 0 2008 MSJ Appeal: 10 timekeepers spent 768.7 hours, which equates to $343,325 in fees. 0 2014 Spoliation Appeal: 19 timekeepers spent 1,944 hours, which equates to $958,862 in fees. 0 Upshot: Even though the issues presented by the spoliation appeal were materially simpler than the complex antitrust issues presented by the 2008 summary judgment appeal, Perkins Coie’s billing practices during the 10 See Glynn Decl., 125(d), (f), Exs. 9, 11. 1 See Glynn Decl., J 25(a), Exs. 5, 6 (providing breakdown of fees associated with the depositions). Mr. Glynn also notes numerous other examples of excessive time devoted to depositions in his Declaration. For instance, in 2012, Perkins Coie devoted more than 40 hours to preparing for and taking a tiny two-hour, third party deposition because its lawyers spent hours doing things like reviewing a “handbook on deposition objections.” Glynn Decl., 25(b). 12 See Glynn Decl., 25(1), Ex. 17 (providing breakdown of fees associated with each appeal). 84036989. 1 -20 - DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 23 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER second half of the case caused the claimed cost of the second appeal to grow to nearly $1 million and almost three times the actual cost of the first appeal. !? At bottom, the hours and fees requested for many tasks performed during the contingent fee phase are facially excessive. But their outlandish size truly comes to light when viewed through the prism of how much less Perkins Coie actually billed its client for similar tasks during the hourly fee period. Flagship’s attempt to force Cinemark to pay amounts it never would have billed its client highlights the unreasonableness of Flagship’s lodestar. Additional examples abound. For instance, numerous associates who were neither actively questioning live witnesses nor handling arguments routinely recorded upwards of 12 and even 15 hours per day without providing any meaningful explanation of what they were doing. That is simply not adequate lodestar proof. For example, Cara Wallace’s time entries during trial were as follows: Tkpr Name Date Billed Hrs | Billed Amt | Narrative Wallace, Cara 4/9/2018 12.50 $5,125.00 | Attend trial, and prepare for the same; Wallace, Cara 4/10/2018 13.40 $5,494.00 | Attend trial, and prepare for the same; Wallace, Cara 4/11/2018 15.00 $6,150.00 | Attend trial, and prepare for same; Wallace, Cara 4/12/2018 12.80 $5,248.00 | Attend trial, and prepare for same; Wallace, Cara 4/13/2018 12.90 $5,289.00 | Attend trial, and prepare for same; Wallace, Cara 4/15/2018 12.50 $5,125.00 | Prepare for trial; Wallace, Cara 4/16/2018 15.40 $6,314.00 | Attend trial, and prepare for the same; Wallace, Cara 4/17/2018 13.50 $5,535.00 | Attend trial, and prepare for the same; Wallace, Cara 4/18/2018 10.30 $4,223.00 | Attend trial, and prepare for the same; Wallace, Cara 4/19/2018 15.80 $6,478.00 | Attend trial, and prepare for the same; Wallace, Cara 4/20/2018 8.90 $3,649.00 | Attend trial, and prepare for the same; Wallace, Cara 4/21/2018 11.00 $4,510.00 | Prepare for trial; Wallace, Cara 4/22/2018 6.10 $2,501.00 | Prepare for trial; Wallace, Cara 4/23/2018 14.00 $5,740.00 | Attend trial, and prepare for the same; Wallace, Cara 4/24/2018 15.20 $6,232.00 | Attend trial, and prepare for the same; 13 The story was the same with respect to responding to the summary judgment motions themselves, which Flagship did three times-once in 2008 while charging hourly, and twice in the contingent fee portion of the case (2013 and 2017). As elsewhere, each successive response became more expensive than the prior. For the 2008 MSJ Response, six Perkins Coie timekeepers spent 268 hours, totaling $115,586 in fees; for the 2013 MSJ Response, eleven timekeepers spent 997 hours, equating to $422,600; and for the 2017 MSJ Response, thirteen timekeepers spent 1,160 hours, equaling $630,956. Glynn Decl., 25(h), Ex. 13. The fact that Flagship’s third summary judgment response cost $200,000 more than its 2013 response is particularly confounding, as the 2017 motion presented only a subset of the issues addressed in 2013, and the two motions relied upon much of the same evidence. 84036989.1 -21- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 23 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER Wallace, Cara 4/25/2018 10.00 $4,100.00 | Attend trial, and prepare for the same; Prepare for trial, including work on brief in opposition of nonsuit and brief in support Wallace, Cara 4/26/2018 5.90 | $2,419.00 | of Flagship’s jury instructions; Wallace, Cara 4/27/2018 11.00 $4,510.00 | Prepare for trial; Wallace, Cara 4/28/2018 12.60 | $5,166.00 | Prepare for trial; Wallace, Cara 4/29/2018 7.50 $3,075.00 | Prepare for trial; Wallace, Cara 4/30/2018 13.00 $5,330.00 | Attend and prepare for trial; Wallace, Cara 5/1/2018 12.50 $5,125.00 | Attend and prepare for trial; Wallace, Cara 5/2/2018 13.80 | $5,658.00 | Attend and prepare for trial; Wallace, Cara 5/3/2018 15.30 $6,273.00 | Attend trial, and prepare for the same; Wallace, Cara 5/4/2018 15.00 $6,150.00 | Attend trial, and prepare for the same; Wallace, Cara 5/5/2018 13.00 $5,330.00 | Prepare for trial; Assist in preparations for closing Wallace, Cara 5/6/2018 12.30 | $5,043.00 | arguments; Wallace, Cara 5/7/2018 9.40 $3,854.00 | Attend trial; Ms. Wallace examined no live witnesses, nor did she deliver opening, closing, or any other significant arguments. Yet Flagship seeks compensation for 341 hours of her time (over $140,000) for “preparing for” and “attending” trial-with no further explanation of what actual tasks she might have performed beyond observing the trial. This type of proof provides zero basis from which the Court could assess (or even speculate upon) the reasonableness of charging Ms. Wallace's time to Cinemark. '* And the excesses of Perkins Coie’s time only worsened after closing arguments. Six different timekeepers billed more than 111 hours while the jury deliberated. Glynn Decl., 25(n)-(0). Flagship provides no explanation for why six timekeepers needed to bill upwards of 8 hours per day awaiting the jury verdict. That is patently unreasonable, particularly as a basis for recovery against Cinemark. Finally, since obtaining the verdict, Perkins Coie has racked up nearly $740,000 in fees-approximately $275,000 of which was spent preparing its 19-page fee request and accompanying declarations. Glynn Decl., | 15, 25(t). Recording $740,000 during 14 An hourly-paying client would almost certainly refuse to pay for these types of vague task descriptions entered by a “non-core team member,” as Mr. Moscaret characterized Ms. Wallace. Mason Decl., 2, Ex. A (Moscaret Dep.) at 134:7-21. “Hours that are not properly billed to one’s client also are not properly billed to one’s adversary pursuant to statutory authority.” Harman v. City and Cnty. of San Francisco, 136 Cal. App. 4th 1279, 1310 (2006) (citing Hensley, 461 U.S. at 434). This Court should thus exclude the time. Notably, although he made no recommended reductions in this case, Mr. Moscaret has twice opined in other cases that law firms should not charge for time spent by young attorneys observing trial. Mason Decl., {16, Ex. O (Passantino Decl.) at ] 27-32; Mason Decl., ]17, Ex. P (Declaration of Ken Moscaret in Support of Defendant’s Opposition to Plaintiff’s Motion for Attorneys Fees, Bressler v. City of Los Angeles, 2007 WL 5514645, Cal. Sup. (2007)) (“Bressler Decl.”) at 98-99. 84036989.1 -22- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER the post-trial phase simply is not reasonable, much less recoverable. That amount is more than Perkins Coie billed Flagship during the first two years of this case-a period that encompassed investigating the facts supporting a potential lawsuit, filing the lawsuit, written discovery, document productions, depositions, motions to compel, and a summary judgment motion. Glynn Decl., 15. Flagship may have a judgment against Cinemark. That does not mean that Cinemark is Perkins Coie’s piggy bank, and Flagship’s attempt to make it one should not be rewarded. There is not space here to list every example of unreasonable per-task time. Mr. Glynn’s Declaration, however, provides analysis of other excessive expenditures at pages 14-20. 4. Flagship Should Not Recover the Fees Incurred as a Result of Its Own Spoliation. Flagship’s fee request also ignores a massive expense that it brought solely upon itself: the time Perkins Coie spent defending Flagship’s own spoliation. Flagship has presented no evidence regarding the purported reasonableness of those fees. Neither its fee expert, Mr. Moscaret, nor any other declarant said a word about how it could be reasonable for Flagship to pass on to Cinemark the fees directly resulting from Flagship’s affirmative destruction of evidence. See Mason Decl., 2, Ex. A (Moscaret Dep.) at 113:23-114:3 (“I didn’t consider the spoliation-of-evidence issue.”). Flagship has thus failed to carry its initial burden to show that such fees should be included within the lodestar. Basic fairness and common sense mandate that fees Perkins Coie spent defending its own client’s admitted spoliation of evidence cannot be passed on to Cinemark. See Burton Ways Hotels, Ltd. v. Four Seasons Hotels Ltd., No. CV 11-303-PSG, 2015 WL 13081297 (C.D. Cal. Jan. 21, 2015) (applying California attorney fee law to reduce fee award for attorney time spent defending prevailing party’s spoliation because “it would be inequitable to compensate [prevailing party] for fees that it incurred defending itself from the repercussions of its own sanctionable conduct”). Cinemark’s expert's Declaration also supports that conclusion. Glynn Decl., Iq 11(b), 32-34. Although the “block billing” makes it difficult to quantify exact amounts, it appears that Flagship incurred approximately $1.3 million in fees associated with spoliation 84036989.1 -23- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER discovery, trial court briefing, and the appeal.'> None of those fees would have been incurred had Flagship not destroyed massive amounts of evidence, and that amount should be factored heavily, if not simply mathematically, into an appropriate reduction of the proffered lodestar. '° Flagship’s spoliation further increased the cost of this case in another important way: it caused a four-year delay of the trial. Indeed, this case was set for trial just weeks after the date on which Judge Goodman entered his terminating sanctions order. See Mason Decl., { 19. Perkins Coie had already largely prepared for trial. Had Flagship not destroyed evidence, this case would have gone to trial in 2014, and both Flagship and Cinemark could have avoided the fees associated with four years of additional litigation. See Mason Decl., 9, Ex. H (Deposition of Thomas Boeder) (“Boeder Dep.”) at 245:5-246:9 (admitting parties were prepared to begin trial when the terminating sanctions order issued, resulting in the trial not going forward). Instead, as a direct consequence of the four-year delay caused by Flagship’s spoliation, Flagship incurred approximately $4.5 million in otherwise unnecessary fees from the time the case was remitted to this Court on September 26, 2016 through March 11, 2018 (24 days before the actual trial began, the same number of days as those between the April 11, 2014 spoliation sanction order and the prior May 5, 2014 trial date). Although Cinemark does not contend that this $4.5 million necessarily should be deducted dollar-for-dollar, the fact that none of those fees would have been incurred but for Flagship’s spoliation should plainly be taken into material account when considering the appropriate fee in this case. 5. Flagship’s Lodestar Includes Time for Non-Recoverable Persons. Flagship’s proffered lodestar also includes time recorded by many persons whose fees are not recoverable. Forty-one of Flagship’s 85 timekeepers were non-attorneys. Mason Decl., {3, Ex. B (Flagship Fee Info) at Exhibit 1. Those non-attorneys accounted for nearly $2 million in fees. Id. Despite having the burden to prove its lodestar, Flagship has presented no evidence that 15 See Glynn Decl., 33, Ex. 25. 16 And this does not even take into consideration that Flagship seeks roughly $666,000 for fees incurred during the two-year Preclusion Period, a period during which the Court of Appeal dictated that Flagship was precluded from offering any evidence or seeking recovery. 84036989.1 24 - DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER time spent by this category of timekeepers-comprised of jury consultants, legal editors, e- discovery staff, and the like-is compensable in the Los Angeles market or under California law. Mr. Glynn, however, opines that the following categories of non-lawyer time should be excluded from the lodestar: (i) Flagship’s non-lawyer jury consultant ($183,000); (ii) non-lawyer e- discovery managers ($182,00); a “consulting manager” ($78,000); (iv) graphic designers ($26,000); and (v) time spent by non-lawyer “legal editors” ($10,000). Collectively, these timekeepers amassed approximately $479,000 in fees. That amount should be excluded. Glynn Decl., 27-30. In addition, while paralegal time often is compensable, duplicative work by paralegals is not. Flagship used 19 different paralegals.'’ That is objectively unreasonable. Flagship’s own expert, Mr. Moscaret, has opined that courts should be wary of fee applications where firms over- utilize paralegals because (i) such staffing leads to increased costs associated with getting each successive paralegal up to speed and through duplication of effort, and (ii) paralegals are a major “profit center” for law firms. Mason Decl., 17, Ex. P (Bressler Decl.) at 61 (testifying to the “common knowledge that paralegals are an important component of law firm profit margins, especially at major law firms . . . [P]aralegals are the most profitable timekeepers in a law firm.”). Here, Mr. Moscaret has expressed no opinion about the reasonableness of either using 19 different paralegals or the time they spent performing any particular tasks. See Mason Decl., 2, Ex. A (Moscaret Dep.) at 101:4-103:17. Mr. Glynn, however, notes that the paralegal over- staffing is consistent with the overall lack of oversight that plagued the contingent fee segment of this case and opines that this overstaffing should factor into the lodestar reduction. Glynn Decl., 27. 6. Flagship’s Lodestar Should Be Reduced by At Least 50% . As shown above, Perkins Coie’s pervasive block billing makes it impossible to calculate precise deductions for every instance of unreasonable time. Given that proof failure, along with Perkins Coie’s other excessive billing and attempt to recover its spoliation fees, Mr. Glynn opines 17 Not only did Flagship use an excessive number of paralegals, but, as Mr. Glynn's declaration describes at pages 17, 21-22, many of these paralegals engaged in excessive over-billing. See Glynn Decl., {25(), 27. 84036989. 1 -25- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER that a holistic approach to evaluating and reducing Flagship’s proffered lodestar is appropriate and consistent with governing law. Using that approach, Mr. Glynn’s analysis is that Flagship’s lodestar should be reduced by, at a conservative minimum, 50%. Glynn Decl., {] 11(c), 31, 34, 43. Applying a 50% reduction results in a lodestar of $7,395,740. B. The Lodestar Should Further Be Adjusted Downward To Account for Flagship’s Limited Success. Courts routinely adjust lodestar amounts downward to account for a plaintiff’s limited success. Such adjustments comport with the United State Supreme Court’s edict in Hensley, adopted by California law, that “the degree of success is the most critical factor” in determining the reasonableness of a fee award. See, e.g., Chavez, 47 Cal. 4th at 989-991; Mann, 139 Cal. App. 4th at 342-345; Glynn Decl., at J 35-42. Here-where Flagship lost or abandoned three- quarters of the claims originally asserted, had two years’ worth of its case and original damages claim terminated as a sanction for spoliation, recovered no injunctive relief, and received an actual damage award of less than 14% of the amount it requested of the jury-such a downward adjustment is required. 1. Courts routinely discount fee awards when plaintiffs achieve only limited success. As discussed supra, arriving at a “reasonable” attorneys’ fee award does not end with the lodestar calculation. The Court must also determine whether fees should be adjusted downward by “evaluating the overall relief [plaintiff] obtained in relation to the hours reasonably expended on the litigation.” Hensley, 461 U.S. at 435. As Hensley recognized, the “results obtained” factor “is particularly crucial where a plaintiff is deemed ‘prevailing’ even though he succeeded on only some of his claims for relief.” Id. A reduction in the fee amount is “appropriate if the relief, however significant, is limited in comparison to the scope of the litigation as a whole.” Id. at 439. While “[t]here is no precise rule or formula for making these determinations,” a court “may attempt to identify specific hours that should be eliminated, or it may simply reduce the award to account for the limited success.” Id. at 436-7. The Supreme Court followed Hensley with Farrar v. Hobby, which affirmed the Fifth 84036989.1 -26 - DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER Circuit’s reversal of a $280,000 attorney fee award where a plaintiff received a nominal damages award after seeking $17 million in damages. 506 U.S. 103, 116 (1992). Relying on Hensley, the Court held that “[w]here recovery of private damages is the purpose of . . . litigation, a district court, in fixing fees, is obligated to give primary consideration to the amount of damages awarded as compared to the amount sought.” Id. at 114 (quoting Riverside v. Rivera, 477 U.S. 561, 585 (1986) (Powell, J., concurring)). “In some circumstances, even a plaintiff who formally ‘prevails’ . should receive no attorney’s fees at all.” Id. at 115. Because the trial court’s award of $280,000 in fees failed to “consider[] the relationship between the extent of success and the amount of the fee award,” the Supreme Court affirmed the reversal of the award. Id. at 115-16. State and federal courts alike have embraced the Hensley and Farrar analyses. In Chavez, the California Supreme Court considered the trial court’s denial of a civil rights plaintiff’s $870,935.50 attorneys’ fee request after the plaintiff recovered only $11,500 in damages. 47 Cal. 4th at 989-991. Citing Hensley and its progeny, the Court explained that “the extent of a plaintiff’s success is a crucial factor” and “under state law as well as federal law, a reduced fee award is appropriate when a claimant achieves only limited success.” Id. at 989. In Chavez, a case spanning five years, multiple courts and an appeal, and the recovery of damages on only one of multiple claims, the Court found the plaintiff’s success “modest at best” and affirmed that “the trial court reasonably could and presumably did conclude that plaintiff’s attorney fee request [for 1,851.43 attorney hours] . . . was grossly inflated when considered in light of the single claim on which plaintiff succeeded, the amount of damages awarded on that claim, and the amount of time an attorney might reasonably expect to spend in litigating such a claim.” Id. at 990-91. “[I]n light of plaintiff's minimal success and grossly inflated attorney fee request, the trial court did not abuse its discretion in denying attorney fees.” Id." 18 Other California courts have likewise followed Hensley and Farrar, as have a litany of federal courts. In Harman, the court noted, in a civil rights case for private damages, “a district court, in fixing fees, is obligated to give primary consideration the amount of damages awarded as compared to the amount sought.” 136 Cal. App. 4th at 1312-13 (quoting Riverside, 477 U.S. at 585). The court remanded the case with instructions to “recalculate the lodestar applying the proper standards of reasonableness,” then to “adjust the fee to reflect the plaintiff’s limited success by pursuing the two-step analysis dictated by Hensley,” including “reduc[ing] the award to reflect the limited nature of [plaintiff’s] relief in comparison with the scope of the litigation as a whole.” See also Sokolow, 213 Cal. App. 3d at 249-50 (remanding case to trial court with instructions to consider “the limited success achieved by [plaintiffs]” in arriving at a reasonable attorney fee award); Mann, 139 Cal. App. 4th at 342-47 (concluding that trial court failed to 84036989. 1 -27 - DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER The case law is resoundingly clear: there can be no reasonable fee award without a robust look at how the results obtained compare to the relief sought. See, e.g., Hensley, 461 U.S. at 439. 2. Plaintiff’s limited success necessitates a downward adjustment. Consistent with this case law, a significant downward adjustment to the lodestar is necessary in this case because Flagship’s degree of success was limited relative to the sweeping scope of its allegations. To start, Flagship abandoned or lost on most of the theories it asserted. Over the course of this case, Flagship has asserted a right to recovery under four separate theories (two discrete “circuit dealing” theories under the Cartwright Act; unfair competition; and interference with prospective economic advantage). Mason Decl., (10-12, Exs. I, J, K (Flagship’s Complaint, and Amendments and Supplements Thereto). It abandoned the latter two causes of action before trial, bringing to the jury only the two circuit dealing theories. Mason Decl., {13, Ex. L (Judgment Entered in Favor of Plaintiff (June 18, 2018)) (“2018 Judgment”) at 1-3. The jury found for Flagship on the “multi-theatre licensing” theory; it found for Cinemark on the “monopoly leveraging” theory. Id. Flagship thus prevailed on only one of four theories. But its success was even more limited, as the record shows that Flagship failed to convince the jury that Cinemark’s “multi-theatre licensing” was nearly so pervasive as claimed. Indeed, in 2012 and 2017, Flagship swore in discovery responses that Cinemark’s misconduct included circuit dealing and conspiracies with no fewer than 35 separate distributors. Mason Decl., 5, Ex. D (PL.’s 2012 Rog. Resp.) at 1-10; Mason Decl., 14, Ex. M (PL.’s 2017 Rog. Resp.) at 4-8. Flagship further alleged that Cinemark’s misconduct spanned 15 years, culminating in the ruination and forced closure of Flagship’s business. On the back of those allegations, Flagship sought at least $9.1 million in damages-a figure that took into account apply Hensley’s two-step inquiry and reducing attorney fee award by 50% to account for party’s failure to achieve all objectives). See also William Inglis & Sons Baking Co. v. Continental Baking Co., Inc., 981 F.2d 1023 (9th Cir. 1992) (requiring reduced fee award to account for lower-than-requested damages); Tic-X-Press v. Omni Promotions Co. of Ga., 815 F.2d 1407 (11th Cir. 1987) (approving of 50% reduction “based upon the limited success of the litigation reflected in the small damage recovery”); New York v. Microsoft Corp., 297 F. Supp. 2d 15, 36 (D. D.C 2003) (applying 30% reduction where plaintiff prevailed on two claims and “achieved some measure of success,” but it failed to succeed on four claims, noting that “its efforts were obviously aimed at a more robust result”). 84036989.1 -28 - DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER films licensed by dozens of distributors and would have trebled to more than $27 million. Mason Decl., 96, Ex. E (TT) at 2128:25-2129:4. Yet the jury rejected the vast majority of Flagship’s case and awarded it $1.25 million in actual damages. Mason Decl., ]13, Ex. L (2018 Judgement) at 3. This represents approximately 14% of the damages requested for alleged circuit dealing. Because no injunctive relief was awarded, Flagship’s recovery of only 14% of the damages sought represents the primary metric through which the degree of success should be evaluated. Farrar, 506 U.S. at 114 (“Where recovery of private damages is the purpose of . . . litigation, a district court, in fixing fees, is obligated to give primary consideration to the amount of damages awarded as compared to the amount sought.”). Seeking to defend that verdict at the JNOV stage, Flagship expressly admitted that its success was “limited” in relation to the vast scope of its allegations. In doing so, it proffered the following explanation to the Court for the jury’s $1.25 million damages award: eo The jury awarded damages using only two of the three components to which Flagship’s economist testified (lost profits and interest, but not lost theatre value); e The jury then limited its lost profits award to only six of the 35 distributors that Flagship alleged were engaged in circuit dealing with Cinemark; and e The jury then further “limited the period for which damages would be award [sic] to some portion of the first two years.” Mason Decl., {15, Ex. N (P1.’s Opp’n to Def.’s Motion for New Trial/JINOV (July 30, 2018)) at 34. Thus, even to Flagship, the best explanation for the jury’s reduced award was that the jury rejected most of Flagship’s allegations, finding them valid as to only a sliver of the distributors and years Flagship placed at issue. And, of course, that thin success at trial does not take into account the fact that Flagship lost-in an absolute sense-its claims spanning the two years (2007 through 2009) that were precluded at trial by virtue of the spoliation sanction. Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc., No. B257148, 2016 WL 3011192, at *6 (Cal. Ct. of App. May 24, 2016) (instructing trial court to order as a sanction for Flagship’s spoliation of evidence that Flagship be prohibited from offering evidence of or claiming damages for the period between spring 2007 and February 19, 2009). 84036989.1 -29 - DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER Under the governing law, that limited success warrants a substantial downward fee adjustment. See Glynn Decl., {{ 35-42. 3. Flagship’s attempts to turn negligible success into a resounding victory through attorneys’ fees should be disregarded. Defendants appreciate all too well the importance of this case to the parties and attorneys on both sides. But the case result simply did not have any wider-ranging implications on the film exhibition industry, on the law, or on society as Flagship suggests (without evidence) it does. The Court should disregard Flagship’s efforts to manufacture non-monetary “successes” to compensate for its limited monetary success. a. This lawsuit did not end clearances in the industry. To diminish the letdown of its limited damages award, Flagship contends that its “successful prosecution of this complex, antitrust case” has “resulted in substantial benefit to the public.” PL’s Mot. at 1. Flagship argues that those benefits include a policy-shift by three major distributors to no longer honor clearances, an industry-standard policy of playing films day-and- date, and greater opportunity for consumers to choose theatres at which to see movies. Id. at 4-5. These contentions are devoid of evidentiary support and entirely untethered from reality. First, the exhibition industry changes to which Flagship now points to bolster its verdict occurred two years before the trial of this case. Fox, Universal, and Lionsgate announced their change in clearance policy in the spring of 2016-a time when Flagship’s case was still on appeal from the spoliation dismissal. Mason Decl., 6, Ex. E (TT) at 2704:2-22.'° Cinemark’s River theatre began playing films day-and-date with the Palme then, and has continued to play day-and- date with its successor ever since. Id. at 1905:8-1906:16. Nothing in the exhibition industry, or in the Coachella Valley theatre market, has changed as a “result” of or in connection with Flagship’s “success” in this litigation. Importantly, the case law makes clear that courts measure a litigant’s degree of success based on the results obtained at the conclusion of the litigation- there is no basis in the law for bolstering an attorneys’ fee award based on natural shifts in 19 See also “Lionsgate Joins Fox, Par & Uni in Nixing Exhibitor Clearance Requests: What Does This Mean for the Biz?” (available: https://deadline.com/2016/05/lionsgate-now-you-see-me-2-exhibitor-clearance-circuit-dealing- 1201763755/.) 84036989.1 -30- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER industry behavior that occurred while the fee applicant was attempting to litigate its claims. See, e.g., Hensley, 461 U.S. at 440 (explaining that determination of a reasonable fee requires evaluation of the level of success achieved as an outcome of plaintiff’s suit and instructing that courts should award fees in relation to the results plaintiff obtained); Farrar, 506 U.S. at 115 (instructing that determination of a reasonable fee requires assessment of damages recovered as a result of its suit). Moreover, by 2016, this litigation, which Flagship credits for the change in policy, was in its tenth year. At no time during that decade did the distributors change their policies due to Flagship’s litigation-even though Flagship had sued two of them. To the contrary, Spencer Klein, Executive Vice President at 20th Century Fox, testified at trial that Fox’s 2016 policy change was based on an analysis of the changing exhibition landscape and the day-to-day practicalities of clearances, including the decreased number of allocated zones in the marketplace, the time associated with making allocation decisions, the time-consuming nature of handling clearance requests, and the general sense that “it was time to move on” in light of these business considerations. Mason Decl., 6, Ex. E (TT) at 2704:2-2707:14.%° No one testified at trial that Flagship caused the policy changes. Finally, Flagship’s attempt to take credit for ending clearances is misguided for yet one more reason: although Flagship’s initial goal in this litigation was to convince Century to drop its requests for clearances,?! Flagship expressly abandoned that goal more than ten years ago, after Cinemark obtained summary judgment in 2008. Indeed, Flagship argued fervently to the Court of Appeal that its lawsuit had never been about clearances but was, instead, focused solely on “circuit dealing.” See Flagship Theatres of Palm Desert, LLC v. Century Theatres, Inc., 198 Cal. 20 Even if Flagship’s attempt to take credit for causing distributors to change their clearance policies were not debunked by the basic timeline and trial testimony, it would fail simply because it lacks any evidentiary foundation. Indeed, the only “evidence” Flagship submitted in support of its credit grab is the inadmissible testimony of Flagship’s lead counsel-the only party with more to gain from an exorbitant attorneys’ fee award than Flagship itself. See Declaration of Thomas Boeder in Support of Flagship Mot. for Attorneys’ Fees (“Boeder Decl.”) at | 11- 13. In his deposition, Mr. Boeder admitted that his only source of “evidence” that this case influenced film licensing and exhibition industry practices was information he allegedly has heard from others, including his own clients, but he refused to disclose even who those others were in his deposition. Mason Decl., 9, Ex. H (Boeder Dep.) at 145:23-146:14; 146:21-147:6, 148:1-149:2, 151:25-152:9, 154:11-155:14. That is no evidence at all. See Defendants’ Objections to Boeder Decl. 2l See Boeder Decl. at 7 (stating that “the only relief Plaintiff was seeking [when it filed suit in 2006] was that Century agree to play films . . . day-and-date” with Flagship.”). 84036989. 1 -31- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER App. 4th 1366, 1375 (2011) (“Flagship I’) (“According to Flagship, this is a ‘circuit dealing’ case, not a case challenging clearances in the absence of circuit dealing.”).?? It is a bridge too far for Flagship to urge that a case not challenging clearances somehow ended all clearances nationwide. b. Neither the 2011 appellate court decision nor the jury verdict were particularly important to California law or antitrust law generally. Flagship makes much of the 2011 appellate court decision, calling it “the most detailed analysis of which Plaintiff is aware of law on circuit dealing claims by any court, state or federal, in the context of a private antitrust action” and crediting it with “broader significance with respect to law on circuit dealing generally.” Pl.’s Mot. at 3. It also credits the decision with creating “the foundation for analysis of a circuit dealing claim under Cartwright Act.” Id. at 4. Flagship exaggerates Flagship I's significance. Contrary to Flagship’s contention, Flagship I is neither the first, nor the most detailed, California case to address circuit dealing. In 1988, the First District Court of Appeal issued its Redwood opinion, which conducted a very deep analysis of “circuit dealing” law. See Redwood Theatres, Inc. v. Festival Enter., Inc., 200 Cal. App. 3d 687 (1988). As reflected by the fact that Flagship I cites Redwood at least eight times, it was Redwood that forged “the foundation for analysis of a circuit dealing claim under the Cartwright Act.” Moreover, in the eight years since Flagship I issued, only one reported California case has cited Flagship I, and that case did not cite it for any circuit dealing or antitrust proposition at all, but rather for a mere general principle of appellate review. Orange Cnty. Water Dist. v. Sabic Innovative Plastics US, LLC, 14 Cal. App. 5th 343 (2017), as modified on denial of reh’g (Aug. 25, 2017), review denied (Nov. 15, 2017). Finally, Flagship’s attempt to characterize the verdict in this case as particularly important to the industry is further belied by the total absence of media interest in the result. Despite the involvement of Mr. Cranston (a major film star), none of the major news networks or newspapers 22 The jury was instructed the same. Mason Decl., {18, Ex. Q (Final Jury Instructions (May 7, 2018)) at 19 (Special Instruction No. 3, Clearances). 84036989.1 -32- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER reported the verdict. To the contrary, the only evidence related to media coverage appears in Flagship’s billing records, which reveal that Perkins Coie spent $3,500 drafting a one-page press release for which it now wants Cinemark to pay. Glynn Decl., { 25(p). That press release apparently drew no interest from the media, as the only place one can find it on the internet is on Perkins Coie’s website. ? C. A Fee Enhancement Is A Non-Starter. Despite its limited degree of success, Flagship asks the Court to apply an upward adjustment to the lodestar to “compensate for risk, a 12-year loss of any interest on value of time worked, unreimbursed litigation disbursements such as expert witness fees and litigation support costs not qualifying as statutory costs under California procedure, and quality of representation.” P1.’s Mot. at 1. The Court should reject that request out of hand-for numerous reasons. First, the record is silent regarding any explanation or evidentiary support for the particular multiplier requested here: a 1.4x enhancement. One would expect such a request to be supported by evidence, e.g., expert testimony, but Flagship’s fee expert, Mr. Moscaret, testified unequivocally that he is not offering an opinion in support of the enhancement. See Mason Decl., 92, Ex. A (Moscaret Dep.) at 114:4-23 (admitting that he is “not testifying in this case that the plaintiff’s request for a 1.4 multiplier is reasonable.”). Devoid of expert support, the number was seemingly simply chosen at random by Mr. Boeder, as neither his Declaration nor deposition provides any meaningful explanation about how it was derived. Boeder Decl. at J 20; Mason Decl., 9, Ex. H (Boeder Dep.) at 258:16-260:24. The record thus simply lacks any evidence to support the requested 1.4x multiplier. Second, the key factor in assessing whether the lodestar should be adjusted upward or downward is the plaintiff's degree of success. Here, as thoroughly detailed above, Flagship achieved limited success, thus warranting a downward adjustment, not an upward one. Third, contrary to its assertions, Perkins Coie did not accept additional risk by taking this case on a contingency fee basis. In fact, converting the case to a contingency fee represented the 23 See “Perkins Coie Represents Flagship Theatres of Palm Desert in Successful Antitrust Suit Against Cinemark” (available: https://www.perkinscoie.com/en/news-insights/perkins-coie-represents-flagship-theatres-of-palm-desert- in.html.) 84036989.1 -33- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER only way that Perkins Coie stood a chance of recovering the $870,000 in sunk, unpaid fees it had incurred as of the date it converted the case. Mason Decl., 9, Ex. H (Boeder Dep.) at 205:3- 207:6, 221:4-225:16. Had Perkins Coie elected to withdraw from the case, it almost certainly would have been forced to write off that large sum. Perkins Coie thus traded a virtually guaranteed, nearly seven-figure loss for a contingent fee that endowed the firm with a 40% interest in the case. In making that decision, Perkins Coie’s management thoroughly analyzed the risks and rewards of taking this case on contingent fee and satisfied itself that the potential reward outweighed the risk. Id. at 226:8-228:17. That analysis obviously included the fact that Flagship hoped to recover trebled damages of many millions of dollars, more than 40% of which would have been paid to Perkins Coie under the Contingency Fee Agreement. But the verdict was not remotely as large as the $27+ million Flagship and Perkins Coie asked for, so Perkins Coie’s share of the recoveries is necessarily less. No case law supports Flagship’s attempt to add a multiplier in this case to make up for Perkins Coie’s miscalculation of the potential value of this case. Fourth, Flagship presents no legal authority for using a multiplier to compensate for “unreimbursed litigation disbursements such as expert witness fees and litigation support costs not qualifying as statutory costs under California procedure.” P1.’s Mot. at 1. Nor did it present any evidence of what those “litigation disbursements” were. It is remarkable that Flagship contends, without authority, that it should recover, under the guise of attorneys’ fees, expert witness fees and other litigation costs (e.g., jury consultant charges) that it understands are not recoverable under California procedure. Lacking both legal authority and evidence of the disbursements, the request should be denied. Fifth, although Cinemark recognizes that Perkins Coie lawyers exhibited skill in trying this case, that does not warrant an upward enhancement. As the California Supreme Court has noted, the factor of extraordinary skill, in particular, must be applied sparingly because it is susceptible to improper double counting: the value of the lawyers’ skill is already encompassed within the lodestar, as better lawyers command higher rates. See Ketchum, 24 Cal. 4th at 1138- 39. Here, Flagship retained a large, expensive law firm with good trial lawyers to handle its case. 84036989.1 -34 - DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES AN Un BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER So the skill exhibited at trial is already built into their lodestar rates, which Cinemark has not challenged. Finally, as shown above, Flagship’s fee request is unreasonably inflated in a number of different ways, which alone precludes any consideration of a multiplier. See Christian Research Inst., 165 Cal. App. 4th at 1329 (“Needless to say, the trial court need not consider a multiplier when presented with an inflated, unreasonable fee request.”). IV. CONCLUSION California law entitles Flagship to request a reasonable fee. It does not allow Flagship, or its lawyers, to recover in “attorneys’ fees” what they could not convince the jury to award in damages. The fact is that Perkins Coie made a decision, in 2012, to take a 40% interest in the recoveries of this case because it believed the case might yield tens of millions of dollars in trebled damages. That was a miscalculation. The case yielded a small fraction of what Flagship and Perkins Coie hoped to recover. Despite achieving that limited success, Flagship now submits an outrageously unreasonable fee request of nearly $21 million. It does so without competent evidence to support that sum. It does so despite having been the party whose ever-expanding allegations made the case more expensive. It does so despite the fact that its own destruction of evidence resulted in millions of dollars of increased cost. And it does so on the back of billing records that objectively show that its lawyers were inflating their time throughout the contingent fee phase of the case. On this record, the Court is well within its discretion to deny any fee at all. But, at a bare minimum, the Court must reject Flagship’s attempt to substitute fees for damages and must instead scrutinize Flagship’s evidence, reduce its proffered lodestar to account for the gaping holes in that evidence, and determine a reasonable award, if any, that takes into proper account the relative lack of success achieved here. Cinemark requests that the Court reject Flagship’s fee application entirely or, at most, award a maximum fee of $3,697,870. 84036989.1 -35- DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES Oo 0 3 O N n p 10 11 12 13 14 15 16 17 18 19 20 21 22 2 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER Dated: January 16,2019 NORTON ROSE FULBRIGHT US LLP 84036989.1 PETER H. MASON LESLEY HOMES KELSEY A. MAHER By Yim PETER H. MASON Attorneys for Defendants CENTURY THEATRES, INC. AND CINEMARK USA, INC. 38 = DEFENDANTS’ OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS’ FEES
