Maricopa, County of v. Office Depot Incorporated
Filing
130
ORDER granting 112 Motion for Attorney Fees. Defendant is awarded $610,402.56 in attorneys' fees and $68,277.29 in non-taxable expenses, for a total of $678,679.85. Signed by Judge H Russel Holland on 05/10/2017.(KAS)
WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
MARICOPA COUNTY, a political subdivision )
of the State of Arizona,
)
)
)
Plaintiff,
)
)
vs.
)
)
OFFICE DEPOT, INC., a Delaware
)
corporation,
)
)
Defendant.
)
_______________________________________)
No. 2:14-cv-1372-HRH
ORDER
Motion for Attorneys’ Fees and Non-Taxable Expenses
Defendant moves for an award of attorneys’ fees and non-taxable expenses.1 This
motion is opposed.2 Oral argument was requested but is not deemed necessary.
Background
This case involves plaintiff Maricopa County’s purchase of office supplies from
defendant Office Depot Inc. via the U.S. Communities program. U.S. Communities is a
cooperative purchasing organization for government and non-profit entities. Certain U.S.
1
Docket No. 112.
2
Docket No. 126.
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Communities’ members serve as “lead agencies” which bid out supplier contracts that allow
other U.S. Communities members to “piggyback” on the contracts, meaning that they can
purchase goods from the supplier at the prices in the lead agency’s contract.
Plaintiff piggybacked on a Master Agreement that was between defendant and Los
Angeles County. As the supplier under the Master Agreement, defendant also entered into
an Administration Agreement with U.S. Communities.
Plaintiff commenced this action on May 1, 2014 in state court, which was subsequently removed to this court on the basis of diversity jurisdiction. In its complaint, plaintiff
asserted five claims against defendant, three fraud claims (statutory fraud, common law fraud
and deceit, and negligent misrepresentation) and two contract claims. Plaintiff sought “no
less than $6.75 million in damages....”3
Plaintiff’s breach of contract claims were based on allegations that defendant
“promised [plaintiff] ... that it would receive the lowest prices offered to any state or local
governmental entities in the United States for goods it purchased from” defendant4 but that
defendant “failed to provide [plaintiff] with the lowest prices it offered to any state or local
governmental entities....”5 Plaintiff’s fraud claims were based on allegations that defendant
had “misrepresented to [plaintiff], among other things, that the prices it charged ... for office
3
Complaint at 2, ¶ 5, Exhibit A, Notice of Removal, Docket No. 1.
4
Id. at 13, ¶ 73.
5
Id. at ¶ 75.
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supplies were the lowest it charged to any other state and local governmental entity in the
United States.”6
Defendant moved to dismiss7 all of plaintiff’s claims. The court granted defendant’s
motion in part and denied it in part.8 The court dismissed plaintiff’s contracts claims that
were based on allegations that defendant breached the Master Agreement, and the court
dismissed plaintiff’s fraud claims.9 Plaintiff’s contract claims which were based on
allegations that defendant breached the Pricing Commitment in the Administration
Agreement survived the motion to dismiss.10 The court concluded that plaintiff was an
intended third-party beneficiary of the Administration Agreement with a right to enforce the
Pricing Commitment.11
After fact discovery was complete, the parties cross-moved for summary judgment on
whether defendant had breached the Administration Agreement. In the cross-motions, the
parties advanced different interpretations of the Pricing Commitment. The court found that
plaintiff’s proposed interpretation was not supported by the extrinsic evidence. The court
6
Id. at 12, ¶ 64.
7
Docket No. 10.
8
Order re Motion to Dismiss at 19, Docket No. 24.
9
Id.
10
Id. at 19-20.
11
Id. at 16.
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concluded that defendant had not breached the Administration Agreement and thus granted
defendant’s motion for summary judgment and denied plaintiff’s partial motion for summary
judgment.12 Judgment was entered on December 1, 2016, dismissing plaintiff’s complaint
with prejudice.13
Defendant now moves for an award of $1,076,678.35 in attorneys’ fees and
$68,277.29 in non-taxable expenses.
Discussion
“A party requesting an award of attorneys’ fees and non-taxable expenses must show
that it is (1) eligible for an award; (2) entitled to an award; and (3) requesting a reasonable
amount of attorneys’ fees.” Smith v. Ariz., Case No. CV-13-00332-PHX-SRB, 2014 WL
11342455, at *1 (D. Ariz. Feb. 11, 2014) (citing LRCiv. 54.2(c)).
Defendant is eligible for attorneys’ fees pursuant to A.R.S. § 12-341.01(A), which
provides that “[i]n any contested action arising out of a contract, express or implied, the court
may award the successful party reasonable attorney fees.” Defendant is also eligible for
attorneys’ fees and non-taxable expenses pursuant to Section 1717(a) of California’s Civil
Code, which provides that
[i]n any action on a contract, where the contract specifically
provides that attorney’s fees and costs, which are incurred to
enforce that contract, shall be awarded either to one of the
parties or to the prevailing party, then the party who is deter12
Docket No. 105 at 25.
13
Docket No. 106.
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mined to be the party prevailing on the contract, whether he or
she is the party specified in the contract or not, shall be entitled
to reasonable attorney’s fees in addition to other costs.
The Administration Agreement, which is to “be governed exclusively by and construed in
accordance with the applicable laws of the State of California,” provides that “[i]f any action
at law or in equity is brought to enforce or interpret the provisions of this Agreement, the
prevailing party shall be entitled to reasonable attorney’s fees and costs....”14
In order to be entitled to fees pursuant to A.R.S. § 12-341.01(A), defendant must first
show that this was a “contested action arising out of a contract.” Although plaintiff asserted
statutory and tort claims (the fraud claims) as well as contract claims, “‘[i]t is wellestablished that a successful party on a contract claim may recover not only attorneys’ fees
expended on the contract claim, but also fees expended in litigating an interwoven tort
claim.’” Modular Mining Systems, Inc. v. Jigsaw Technologies, Inc., 212 P.3d 853, 860
(Ariz. Ct. App. 2009) (quoting Ramsey Air Meds., L.L.C. v. Cutter Aviation, Inc., 6 P.3d315,
318 (Ariz. Ct. App. 2000)). Plaintiff’s fraud claims and contract claims were interwoven as
evidenced by the court’s order on defendant’s motion to dismiss. The court held that
plaintiff’s common law fraud claims were barred by the economic loss rule because they
were “based on the same alleged conduct as [plaintiff’s] contract claims[.]”15 And, the court
14
Administration Agreement at 2-3, ¶¶ 16, 22, Exhibit 3, Declaration of Paul T.
Hourihan [etc.], which is appended to Defendant’s Motion for Attorneys’ Fees and NonTaxable Expenses, Docket No. 112.
15
Order re Motion to Dismiss at 19, Docket No. 24.
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found that “[p]laintiff’s statutory fraud claim [was] based on allegations that defendant
represented that its contracts guaranteed that plaintiff would be charged the lowest
governmental pricing for office supplies”, which were “representations as to the meaning of
the contract, not representations of fact.”16 Defendant is entitled to recover fees expended
on both plaintiff’s fraud claims and plaintiff’s contract claims, as long as defendant meets
the other requirements of A.R.S. § 12-341.01.
In order to be entitled to fees under A.R.S. § 12-341.01, defendant must also show that
it was the successful party. “To determine whether a party is successful under Section
12–341.01, a court should consider ‘the totality of the circumstances and the relative success
of the litigants.’” Medical Protective Co. v. Pang, 740 F.3d 1279, 1283 (9th Cir. 2013)
(quoting McAlister v. Citibank, 829 P.2d 1253, 1262 (Ariz. Ct. App. 1992)). “Where, as
here, a case involves multiple claims..., ‘the successful party is the net winner.’” Id. (quoting
Berry v. 352 E. Va., LLC, 261 P.3d 784, 788 (Ariz. Ct. App. 2011)). “Courts may determine
the relative success of the parties by using a ‘percentage of success factor’ test, or by looking
at the ‘totality of the litigation.’” Id. (quoting Schwartz v. Farmers Ins. Co. of Ariz., 800
P.2d 20, 25–26 (Ariz. Ct. App. 1990)).
Defendant contends that it is entitled to fees under Section 12-341.01 for the period
of time up until its motion to dismiss was granted. Although as plaintiff points out,
defendant was only partially successful on the motion to dismiss, all but one of plaintiff’s
16
Id.
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claims were dismissed as a result of defendant’s motion to dismiss. In addition to plaintiff’s
fraud claims being dismissed, the court also dismissed plaintiff’s contract claims which were
based on the Master Agreement. Plainly, defendant was the successful party as far as the
motion to dismiss was concerned.
“If the court finds that a party is the ‘successful party’ as envisioned in A.R.S. §12341.01, the court may then exercise its discretion on whether to award reasonable attorneys’
fees.” Lexington Ins. Co. v. Scott Homes Multifamily Inc., Case No. CV-12-02119-PHXJAT, 2016 WL 5118316, at *4 (D. Ariz. Sept. 21, 2016). “[T]here is no presumption that a
successful party should be awarded attorney fees under § 12-341.01.’” Motzer v. Escalante,
265 P.3d 1094, 1095 (Ariz. Ct. App. 2011).
In determining whether to exercise its discretion
to award attorneys’ fees under § 12-341.01(A),
the Arizona Supreme Court concluded in Associated Indemnity that a court may consider, among
other factors, the following:
(1) the merits of the unsuccessful parties’ claim or
defense; (2) whether litigation could have been
avoided or settled; (3) whether assessing fees
against the unsuccessful party would cause extreme hardship; (4) whether the successful party
prevailed with respect to all relief sought; (5) the
novelty of the issues; and (6) whether the award
will overly deter others from bringing meritorious
suits.
Lexington Ins. Co., 2016 WL 5118316, at *4 (quoting Velarde v. PACE Membership
Warehouse, Inc., 105 F.3d 1313, 1319 (9th Cir. 1997)).
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Plaintiff urges the court to exercise its discretion and not award defendant any
attorneys’ fees under Section 12-341.01(A). Plaintiff argues that fees should not be awarded
because doing so would discourage litigants from advancing positions which have merit.
Plaintiff argues that its claims had merit and that this was a close case, as evidenced by the
fact that one of plaintiff’s claims survived the motion to dismiss and that the court found both
parties’ interpretation of the Pricing Commitment reasonable, if only the four corners of the
Administration Agreement were considered.17 Plaintiff also argues that fees should be not
awarded because this case involved a public agency attempting to protect the tax dollars of
its constituents. Finally, plaintiff argues that it did not bring its claims in bad faith.
The court is not persuaded by plaintiff’s arguments. While plaintiff’s complaint was
not frivolous nor brought in bad faith, all of plaintiff’s claims lacked merit. Defendant also
engaged plaintiff in a serious effort to avoid litigation. Assessing attorneys’ fees on a large
governmental agency such as plaintiff will not cause extreme hardship. The business
arrangement between defendant and plaintiff was novel but the issues to be resolved were
not. And, there is no reason to believe that imposing attorneys’ fees will deter plaintiff or
others from bringing meritorious suits. Defendant is entitled to attorneys’ fees under A.R.S.
§ 12-341.01(A).
As for defendant’s entitlement to attorneys’ fees and non-taxable expenses under
Section 1717(a) of California’s Civil Code, “[w]here a nonsignatory plaintiff sues a signatory
17
Order re Cross-Motions for Summary Judgment at 11, Docket No. 105.
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defendant in an action on a contract and the signatory defendant prevails, the signatory
defendant is entitled to attorney fees only if the nonsignatory plaintiff would have been
entitled to its fees if the plaintiff had prevailed.” Cargill, Inc. v. Souza, 201 Cal. App. 4th
962, 967 (Cal. Ct. App. 2011) (citation omitted). Plaintiff argues that it would not have been
entitled to fees under the Administration Agreement because it was not a party to that
agreement. Plaintiff cites to Sessions Payroll Management, Inc. v. Noble Const. Co., 101
Cal. Rptr. 2d 127 (Cal. Ct. App. 2000), in support of its argument. There, the attorney fee
clause in the contract provided:
In the event it becomes necessary for either party to enforce the
provisions of this Agreement or to obtain redress for the
violation of any provision hereof, whether by arbitration, or
otherwise, the prevailing party shall be entitled to recover from
the other party all costs and expenses associated with such
action, including statutory interest and reasonable attorney fees.
Id. at 130. The court held that a third-party beneficiary would not be entitled to attorneys’
fees under this clause because the recovery of attorneys’ fees was expressly limited to “either
party.” Id. at 133. The court explained that the word “‘party’ limits recovery of attorney fees
to a ‘party’ to the contract, reflecting the intent of Noble and Mackey to exclude nonsignatories, such as Sessions, from the scope of the attorney fee clause.” Id.
As defendant is quick to point out, the attorney fee clause in the Administration
Agreement is quite different from the one in Sessions. While the Sessions clause expressly
referred to disputes between the parties to the contract, the clause in the Administration
Agreement refers to any action involving enforcement of the terms of the agreement. The
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attorney fee clause in the Administration Agreement does not reflect an intent to exclude
non-signatories, such as plaintiff, from the scope of the clause. Because this was an action
involving enforcement of the terms of the Administration Agreement, plaintiff would have
been entitled to attorneys’ fees as a third-party beneficiary had it prevailed on its claim that
defendant breached the agreement. In turn, that means that, under California law, defendant
is entitled to attorneys’ fees and non-taxable expenses.
Turning then to the reasonableness of defendant’s request for attorneys’ fees,
“[r]easonability is generally analyzed under the ‘lodestar method[.]” Lexington Ins. Co.,
2016 WL 5118316, at *4. “The lodestar method of calculating reasonable attorneys’ fees is
a two-step process whereby a court multiplies the number of hours reasonably expended by
a reasonable hourly rate and then determines if any of the identified lodestar factors favor
enhancing or reducing the arrived at product.” Id. (citation omitted). The lodestar factors
have been incorporated into Local Rule 54.2(c)(3):
(A) The time and labor required by counsel;
(B) The novelty and difficulty of the questions presented;
(C) The skill requisite to perform the legal service
properly;
(D) The preclusion of other employment by counsel
because of the acceptance of the action;
(E) The customary fee charged in matters of the type
involved;
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(F) Whether the fee contracted between the attorney and
the client is fixed or contingent;
(G) Any time limitations imposed by the client or the circumstances;
(H) The amount of money, or the value of the rights, involved, and the
results obtained;
(I) The experience, ability and reputation of counsel;
(J) The “undesirability” of the case;
(K) The nature and length of the professional relationship between the
attorney and the client;
(L) Awards in similar actions; and
(M) Any other matters deemed appropriate under the circumstances.
LRCiv 54.2(c)(3).
Defendant argues that the $41,371.00 billed by its local counsel, Osborn Maledon,
was reasonable. Plaintiff raises no challenges to the rates billed by the Osborn Maledon
attorneys ($575, $290, $240) or the Osborn Maledon document clerk ($70).18 Plaintiff also
does not contend that the number of hours billed by Osborn Maledon (100.4 hours) was
unreasonable.
The court finds that the rates billed by Osborn Maledon were reasonable as were the
number of hours billed. The lodestar amount for Osborn Maledon is $41,371.00. There are
18
Declaration of David Rosenbaum [etc.] at 3, ¶ 14; 4-5, ¶ 19; which is appended to
Defendant’s Motion for Attorneys’ Fees and Non-Taxable Expenses, Docket No. 112.
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no lodestar factors that would require an increase or reduction to this amount. Defendant is
entitled to $41,371.00 in attorneys’ fees for the work done by Osborn Maledon.
Defendant also argues that the $1,035,307.35 in fees billed by Williams & Connolly,
the Washington D.C. firm that represented defendant, was reasonable. First. defendant
argues that the rates billed by Williams & Connolly were reasonable.19 The seven attorneys
who worked on this case billed at the following rates:
2014 rate
2015 rate
2016 rate
Daniel Katz
$756
n/a
$801
Paul Hourihan
$616.50
$639
$661.50
William Ashworth
$553.50
n/a
n/a
Juli Ann Lund
$526.50
$544.40
$562.50
Elise Baumgarten
n/a
$441
$495
Tracey Fung
$382.50
n/a
n/a
Noah Weiss
$355.50
$396
$445.50
The four paralegals who worked on this case billed at the following rates:
2014 rate
2015 rate
2016 rate
Alice Kim
n/a
n/a
$175.50
Sarah Winstead
$220.50
$229.50
$238.50
Hiwot Woldesemiat
n/a
n/a
$229.50
19
All of the rates below are taken from the Hourihan Declaration at 3, ¶ 11, which is
appended to Defendant’s Motion for Attorneys’ Fees and Non-Taxable Expenses, Docket
No. 112.
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Denise Zdelar
$229.50
n/a
n/a
The two litigation support staff people who worked on this case billed at the following rates:
2014 rate
2015 rate
2016 rate
Patrick Markey
n/a
$297
$306
Roger Faustin
$247.50
n/a
n/a
And the five library staff members who worked on this case billed at the following rates:
2014 rate
2015 rate
2016 rate
Julie Chen
$220.50
n/a
n/a
Nora Clinton
n/a
n/a
$247.50
Matthew Foley
$238.50
n/a
n/a
Deddeh Jones
$225
n/a
n/a
Natalie Yeager
$225
n/a
$243
Plaintiff only objects to the rates billed by Hourihan and Lund. Plaintiff acknowledges that
in corporate and commercial litigation between fee-paying
clients, there is no need to determine the reasonable hourly rate
prevailing in the community for similar work because the rate
charged by the lawyer to the client is the best indication of what
is reasonable under the circumstances of the particular case.
Schweiger v. China Doll Restaurant, Inc., 673 P.2d 927, 931–32 (Ariz. Ct. App. 1983). But,
plaintiff points out that “[t]he court ... is not bound by the agreement between the parties.
While it is unlikely that the court will adjust the hourly rate upward, upon the presentation
of an opposing affidavit setting forth reasons why the hourly billing rate is unreasonable, the
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court may utilize a lesser rate.” Id. at 932. Rather than offering an opposing affidavit,
plaintiff offers an expert report from William Klain, “a Member of Lang & Klain, PC, a law
firm located in Scottsdale, Arizona, where [he is] the head of the firm’s litigation group.”20
Klain opines that the hourly rates charged by Hourihan and Lund were excessive when
compared to the reasonable hourly rates prevailing in the Phoenix area.21 Klain averaged the
rates charged by Hourihan, a partner with 21 years of experience, to be $647.22 Klain then
compared Hourihan’s average rate of $647 to the rates charged by five lawyers at regional
and national firms in Phoenix with 20-23 years of experience, which were $375, $385, $435,
$475, and $500.23 Klain also compared Hourihan’s average rate of $647 to the Arizona Bar
Survey, which shows that the average hourly rate for lawyers with 20-29 years of experience
is $302.24 Klain averaged the rates charged by Lund, who has 18 years of experience, to be
$550.25 Klain compared Lund’s average rate of $550 to the rate charged by a Phoenix lawyer
with 18 years of experience, which was $350.26 Klain also compared Lund’s average rate of
20
Export Report of William G. Klain, Esq. at 1, Exhibit A, Plaintiff’s Response to
Defendant’s Motion for Attorneys’ Fees and Non-Taxable Expenses, Docket No. 126.
21
Id. at 5.
22
Id.
23
Id. at 6.
24
Id.
25
Id. at 5.
26
Id. at 6.
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$550 to the Arizona Bar Survey, which shows that the average hourly rate for lawyers with
15-19 years of experience is $286.27 Based on these comparisons, Klain opines that
Hourihan’s rate should be adjusted to $425 and Lund’s to $375.28 Plaintiff argues that these
adjusted rates are in line with what defendant would have been charged had it hired a local
Phoenix firm, rather than using a D.C. firm that had much higher rates.
The rates charged by Hourihan and Lund were the rates defendant agreed to pay29 and
based on the Schweiger presumption for commercial litigation, the court finds that these rates
were reasonable. Moreover, choosing Williams & Connolly because of its experience with
similar litigation was a prudent choice. The court has calculated Hourihan’s average rate to
be $639 and Lund’s to be $545. There are the rates that will be used for lodestar purposes.
Williams & Connolly billed 1,906.9 hours.30 The bulk of this time was billed by
Hourihan and Lund, with Hourihan billing 846.2 hours and Lund billing 718.2 hours.31 The
other five lawyers billed only 57.4 hours combined.32 The non-attorney timekeepers billed
27
Id.
28
Exhibit 2 at 1, Klain Report, Exhibit A, Plaintiff’s Response to Defendant’s Motion
for Attorneys’ Fees and Non-Taxable Expenses, Docket No. 126.
29
Hourihan Declaration at 2, ¶ 9, which is appended to Defendant’s Motion for
Attorneys’ Fees and Non-Taxable Expenses, Docket No. 112.
30
Id. at 6, ¶ 20.
31
Id.
32
Id
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a total of 284.8 hours.33 Defendant argues that the time expended on this matter by the
Williams & Connolly timekeepers was reasonable because this litigation took 31 months and
involved multiple contracts, the application of the law of two states, and the taking or
defending of seventeen depositions in four different states. Hourihan avers that in his
opinion, the amount of time spent on this matter was reasonable.34
Plaintiff argues that the time expended on this matter by Williams & Connolly was
excessive. First, plaintiff challenges the fees associated with a public records request that
defendant made. Plaintiff contends that Williams & Connolly billed 59.4 hours for this
work,35 which involved making a public records request and then drafting a separate lawsuit
against plaintiff for allegedly failing to promptly respond to the request. The public records
lawsuit was never filed. Fees are allowed in a public record request action “if the person
seeking public records has substantially prevailed.” A.R.S. § 39-121.02(B). Given that
defendant never filed a public records suit, plaintiff argues that defendant could not have
substantially prevailed and thus plaintiff argues that defendant should not be allowed to
recover any fees for this work.
Defendant is entitled to recover fees for the public records work, which was part of
its discovery efforts, but the 59.4 hours billed was excessive. It should not have taken that
33
Id.
34
Id. at 7, ¶ 21.
35
Exhibit 7, Klain Report, Exhibit A, Plaintiff’s Response to Defendant’s Motion for
Attorneys’ Fees and Non-Taxable Expenses, Docket No. 126.
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many hours for defendant to send plaintiff a public records request and then draft a four page
complaint36 regarding plaintiff’s failure to respond promptly. It was also not reasonable for
a partner (Hourihan) to spend 19.1 hours on the public records request matter or for Lund,
an attorney with 18 years experience, to spend 28.2 hours. The 12.1 hours spent by the other
timekeepers on this task was reasonable, but it would have been sufficient for Lund and
Hourihan to have each spent one hour reviewing the other timekeepers’ work. The 59.4
hours billed for the public records will be reduced to 14.1 hours. 18.1 hours will be deducted
from Hourihan’s hours and 27.2 hours will be deducted from Lund’s hours.
Next, plaintiff argues that many of Williams & Connolly’s time entries do not comply
with Local Rule 54.2(e)(2), which provides that “[t]he party seeking an award of fees must
adequately describe the services rendered so that the reasonableness of the charge can be
evaluated. Plaintiff argues that Williams & Connolly failed to meet this requirement for the
following: 1) 7.1 hours of telephone conferences, 2) 75.4 hours of legal research, 3) 237.7
hours of document preparation, and 4) 110.1 hours of other preparation tasks.37 Plaintiff
argues that because defendant failed to adequately describe these tasks, all of this time
(347.80 hours) should be reduced by 33 percent.
36
Exhibit 12 at 2, Declaration of Juli Ann Lund [etc.], which is appended to
Defendant’s Reply in Support of Motion for Attorneys’ Fees and Non-Taxable Expenses,
Docket No. 128.
37
Klain Report at 9-10, Exhibit A, Plaintiff’s Response to Defendant’s Motion for
Attorneys’ Fees and Non-Taxable Expenses, Docket No. 126.
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The specific time entries to which plaintiff is objecting are identified in Exhibit 13 to
Klain’s report. The court has reviewed these entries and finds that Williams & Connolly’s
time entries provide sufficient detail.
Third, plaintiff argues that Williams & Connolly improperly billed for travel time.
Williams & Connolly billed 62.9 hours of travel-only time,38 even though “[o]rdinarily air
travel time should not be charged.” LRCiv 54.2(e)(2)(D). Williams & Connolly also billed
for 135.8 hours of travel time bundled with other tasks, but plaintiff argues that Williams &
Connolly’s time entries fail to adequately describe what tasks were performed during this
travel time. The Local Rules provide that “[i]f services are performed during [travel] time,
then describe such services rather than charging for travel time.” Id. Plaintiff argues that the
62.9 hours for travel-only time should be excluded and that the 135.8 hours for bundled time
should be reduced by 50 percent.
Defendant points out that the local rule says that travel is not ordinarily charged,
which means that there is not a complete bar to being awarded fees for travel. But, this was
not an extraordinary case and the 62.9 hours of travel-only time that was billed will be
excluded. The bundled time will not be excluded because Williams & Connolly’s time
entries appear reasonable and sufficient detail has been provided.
Fourth, plaintiff argues that the time spent on defendant’s motion to dismiss was
excessive. Plaintiff contends that William & Connolly expended 185.8 hours on the motion
38
Id. at 10.
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to dismiss ($99,471.60 in fees) and that Lund billed 114.1 hours and Hourihan billed 51.6.39
Klain opines that “[b]illing nearly $100,000 for a motion to dismiss is facially unreasonable,
especially considering that the issues - at least as described by [defendant] in its filings –
involved a simple matter of interpreting ‘plain language’ according to settled rules of
contract interpretation.”40 Plaintiff suggests that a more reasonable amount of time to have
spent on the motion to dismiss would have been 144 hours.
Defendant contends that Williams & Connolly only billed 173.6 hours in connection
with the motion to dismiss,41 and the court accepts defendant’s computation of the number
of hours expended on the motion to dismiss. But devoting almost 174 hours on a motion to
dismiss five claims was excessive. In general, the time the Williams & Connolly lawyers
expended on tasks was excessive. For example, Hourihan spent 30.9 hours preparing for the
oral argument on the motion to dismiss.42 The primary problem with the hours expended on
the motion to dismiss however is with how Williams & Connolly allocated work. Lund, a
lawyer with 18 years of experience, and Hourihan, a partner with 21 years of experience, did
39
Exhibit 5, Klain Report, Exhibit A, Plaintiff’s Response to Defendant’s Motion for
Attorney’s Fees and Non-Taxable Expenses, Docket No. 126.
40
Klain Report at 12, Exhibit A, Plaintiff’s Response to Defendant’s Motion for
Attorneys’ Fees and Non-Taxable Expenses, Docket No. 126.
41
Lund Declaration at 2, ¶ 5, which is appended to Defendant’s Reply in Support of
Motion for Attorneys’ Fees and Non-Taxable Expenses, Docket No. 128.
42
Exhibit 2 at 48-49, Hourihan Declaration, which is appended to Defendant’s Motion
for Attorneys’ Fees and Non-Taxable Expenses, Docket No. 112.
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most of the work on the motion to dismiss. Much of the research and drafting could have
been done by associates. This issue will be addressed below when the court considers the
lodestar factors.
Fifth, plaintiff argues that the time spent on general discovery tasks, not including
document production and management or depositions, was excessive. Plaintiff contends that
Williams & Connolly billed 228.8 hours for general discovery tasks.43 Klain opines that
“[s]pending over 225 hours on general discovery tasks was not reasonable, nor was it
reasonable to expend nearly $135,000 on these items.”44 Plaintiff suggests that a more
reasonable amount of time to have spent on general discovery tasks would have been 220
hours,45 but this amount includes the 59.4 hours already excluded for the work on the public
records request. That leaves 160.6 hours spent on general discovery tasks. This was not an
unreasonable amount of time to spend on these tasks.
Sixth, plaintiff argues that the time spent on document tasks, not including reviewing
documents for specifically-identified subjects such as for a particular deposition, was
excessive. Plaintiff contends that Williams & Connolly billed 366.2 hours for these general
43
Klain Report at 12, Exhibit A, Plaintiff’s Response to Defendant’s Motion for
Attorney’s Fees and Non-Taxable Expenses, Docket No. 126.
44
Id. at 13.
45
Exhibit 6, Klain Report, Exhibit A, Plaintiff’s Response to Defendant’s Motion for
Attorney’s Fees and Non-Taxable Expenses, Docket No. 126.
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document tasks.46 Klain avers that “[a]lthough Williams & Connolly billed almost $50,000
to create search terms and manipulate document databases, ... the lead attorneys still spent
over 200 hours simply reviewing documents[,]”47 which was over half the total number of
hours billed for general document tasks.
Defendant contends that Hourihan and Lund had to review the documents produced
by plaintiff personally because plaintiff did not make its first ESI production until November
30, 2015, which was shortly before depositions of plaintiff’s employees were to begin.
However, given that plaintiff’s fraud claims were dismissed early on and that there was only
one remaining claim by the time the lawyers were preparing for depositions, spending 200
hours reviewing documents was excessive. Time allowed for document tasks will be reduced
from 366. 2 hours to 183.1 hours. 100 hours will be deducted from Hourihan’s hours and
83.1 hours will be deducted from Lund’s hours.
Seventh, plaintiff argues that the time that Williams & Connolly billed for preparing
for, traveling to, and taking depositions was excessive. Plaintiff contends that there were
twenty-four depositions taken in this case48 and that Williams & Connolly billed 648.7 hours
46
Klain Report at 13, Exhibit A, Plaintiff’s Response to Defendant’s Motion for
Attorney’s Fees and Non-Taxable Expenses, Docket No. 126.
47
Id.
48
Defendant contends there were only seventeen depositions taken.
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for deposition-related work.49 Klain opines that this was unreasonable and that a more
reasonable amount would have been 516.2 hours.50
Defendant contends that Williams & Connolly only billed 595.90 hours for
depositions,51 which presumably includes the 62.9 hours for travel-only time (27.4 hours for
Hourihan and 35.5 for Lund) that is being excluded.52 That leaves 533 hours, which, if there
were 24 depositions taken as plaintiff contends, means that Williams & Connolly billed
slightly over 22 hours per deposition. This was excessive, in part because much of this time
was duplicative as it appears that both Lund and Hourihan attended most depositions. Time
allowed for preparing for and attending depositions will be reduced from 533 hours to 266.5
hours. 133.5 hours will be deducted from Hourihan’s hours and 133 hours from Lund’s
hours.
Eighth, plaintiff argues that the time that Williams & Connolly billed for the crossmotions for summary judgment was excessive. Plaintiff contends that Williams & Connolly
49
Klain Report at 14, Exhibit A, Plaintiff’s Response to Defendant’s Motion for
Attorney’s Fees and Non-Taxable Expenses, Docket No. 126.
50
Klain Report at 14 and Exhibit 9 thereto, Exhibit A, Plaintiff’s Response to
Defendant’s Motion for Attorney’s Fees and Non-Taxable Expenses, Docket No. 126.
51
Lund Declaration at 2, ¶ 6, which is appended to Defendant’s Reply in Support of
Motion for Attorneys’ Fees and Non-Taxable Expenses, Docket No. 128.
52
According to Klain’s report, 58.4 hours of the travel-only time was billed in
connection with depositions and 4.5 hours was billed in connection with the motion to
dismiss. Exhibits 5, 9, Klain Report, Exhibit A, Plaintiff’s Response to Defendant’s Motion
for Attorney’s Fees and Non-Taxable Expenses, Docket No. 126. For ease of calculation,
the court has deducted all of the travel-only time from the hours billed for deposition work.
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billed 244.6 hours ($137,444.40) for the cross-motions, with Lund billing 161.6 hours and
Hourihan billing 49.4.53 Klain opines that “[s]pending almost $140,000 on cross-motions for
summary judgment is not reasonable, especially considering that this sum does not include
all of the discovery and document work previously billed.”54 Plaintiff argues that a more
reasonable amount would have been 189.7 hours.55
Defendant contends that Williams & Connolly only billed 237.80 hours on the crossmotions for summary judgment.56 Defendant argues that given the nature of the crossmotions, which consisted of 90 pages of briefing with 173 exhibits, this amount of time was
not unreasonable.
Although the amount of time expended on the cross-motions strikes the court as
excessive, as with the motion to dismiss, the primary problem with the cross-motions is that
the majority of the work was done by Lund, an attorney with 18 years of experience, rather
than by an associate who would have billed at a lower rate. There is no reason why an
associate could not have done much of the work on the cross-motions. Defendant repeatedly
53
Klain Report at 14 and Exhibit 11 thereto, Exhibit A, Plaintiff’s Response to
Defendant’s Motion for Attorney’s Fees and Non-Taxable Expenses, Docket No. 126.
54
Klain Report at 15, Exhibit A, Plaintiff’s Response to Defendant’s Motion for
Attorneys’ Fees and Non-Taxable Expenses, Docket No. 126.
55
Exhibit 11, Klain Report, Exhibit A, Plaintiff’s Response to Defendant’s Motion for
Attorney’s Fees and Non-Taxable Expenses, Docket No. 126.
56
Lund Declaration at 2, ¶ 7, which is appended to Defendant’s Reply in Support of
Motion for Attorneys’ Fees and Non-Taxable Expenses, Docket No. 128.
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refers to this as a complex case, but it was not that complex, and it certainly was not that
complex by the time work was being done on the cross-motions, when there was only one
claim left in the case. But as with the motion to dismiss, the court will address the allocation
of work problem when it considers the lodestar factors.
Ninth, plaintiff argues that the time that Williams & Connolly billed for general
litigation tasks that did not fall into any of the categories discussed above was excessive.
Plaintiff contends that Williams & Connolly billed 200.9 hours for general litigation tasks,
which included tasks such as drafting the answer, export reports, and settlement
discussions.57 Plaintiff argues that a more reasonable amount would have been 186.9 hours.58
As with most of the Williams & Connolly billing, this was excessive. Time allowed
for general litigation tasks will be reduced from 200.9 hours to 186 hours. 14.9 hours will
be deducted from Hourihan’s hours.
In sum, the court finds that the number of hours reasonably expended on this case by
Williams & Connolly was 1,334.2.59 Hourihan’s hours will be reduced by 293.9 hours60 and
57
Klain Report at 15, Exhibit A, Plaintiff’s Response to Defendant’s Motion for
Attorney’s Fees and Non-Taxable Expenses, Docket No. 126.
58
Exhibit 12, Klain Report, Exhibit A, Plaintiff’s Response to Defendant’s Motion for
Attorney’s Fees and Non-Taxable Expenses, Docket No. 126.
59
1906.9 - 45.3 (public records) - 62.9 (travel-only time) - 183.1 (document review) 266.5 (depositions) - 14.9 (general litigation) = 1334.2.
60
18.1 (public records) + 27.4 (travel-only time) + 100 (document review) + 133.5
(depositions) + 14.9 (general litigation) = 293.9.
-24-
Lund’s hours will be reduced by 278.8 hours.61 For lodestar purposes, Hourihan’s hours will
be 552.3,62 Lund’s will be 439.4,63 and the other timekeepers’ hours combined will be 342.5
hours.64 For lodestar purposes, Hourihan’s rate is $639, Lund’s is $545, and the other
timekeepers’ rates are as set out above. Hourihan’s lodestar amount is $352,919.70.65
Lund’s lodestar amount is $239,473.66
The other timekeepers’ lodestar amount is
$95,117.40.67 The total lodestar amount for Williams & Connolly is $687,510.10.68
The court then considers whether the any of the lodestar factors suggest that an
adjustment to this amount should be made. The lodestar factors do not suggest that any
increase would be appropriate. The lodestar factors also do not suggest that a reduction
would be appropriate other than for how Williams & Connolly allocated work. As discussed
above, rather than allocating work to associates who would bill at lower rates, the majority
61
27.2 (public records) + 35.5 (travel-only time) + 83.1 (document review) + 133
(depositions) = 278.8.
62
846.2 - 293.9 = 552.3.
63
718.2 - 278.8 = 439.4.
64
1334.2 - 552.3 - 439.4 = 342.5.
65
$639 x 552.3 = $352,919.70.
66
$545 x 439.4 = $239,473.
67
The other timekeepers’ amount is based on the calculations in Exhibit 2 to Klain’s
Report, Exhibit A, Plaintiff’s Response to Defendant’s Motion for Attorney’s Fees and NonTaxable Expenses, Docket No. 126.
68
$352,919.70 + $239,473 + $95,117.40 = $687,510.10.
-25-
of work on the motions to dismiss and the cross-motions was done by Hourihan and Lund.
The court finds that a twenty percent reduction would be appropriate, but this reduction will
only be taken from Hourihan’s and Lund’s lodestar amounts. Hourihan’s lodestar amount
is reduced to $282,335.7669 and Lund’s is reduced to $191,578.40.70 Defendant is thus
entitled to $569,031.56 for the fees billed by Williams & Connolly.71
Finally, defendant seeks $66,215.01 in non-taxable expenses incurred by William &
Connolly and $2,062.28 in non-taxable expenses incurred by Osborn Maledon, for a total of
$68,277.29. These expenses include costs for photocopying, courier and delivery services,
online legal research, expert services, parking expenses, and travel related to court
appearances and depositions.
Plaintiff does not argue that defendant would not be entitled to recover these expenses
pursuant to California Civil Code Section 1717. Rather, plaintiff raises a frivolous argument
that defendant provided no authority that would justify an award of non-taxable expenses.
As discussed above, defendant is eligible for non-taxable expenses pursuant to California
Civil Code Section 1717. Defendant is entitled to recover any non-taxable expenses that
were “‘reasonably necessary to the conduct of the litigation rather than merely convenient
or beneficial to its preparation.’” Genesis Merchant Partners, LP v. Nery’s USA, Inc., Case
69
$352,919.70 - $70,583.94 = $282,335.76.
70
$239,473 - $47,894.60 = $191,578.40.
71
$282,335.76 + $191,578.40 + $95,117.40 = $569,031.56.
-26-
No. 11-cv-1589 JM (WVG), 2013 WL 12094825, at *9 (S.D. Cal. Dec. 6, 2013) (quoting
Ladas v. Cal. State Auto. Assn., 19 Cal. App. 4th 761, 774 (Cal. App. Ct. 1993).
Plaintiff argues that the Williams & Connolly’s expenses are unreasonable. Plaintiff
contends that Williams & Connolly billed about $23,000 in airfare and $20,000 in other
expenses72 and argues that these costs were driven by defendant’s decision to hire D.C.
counsel to handle depositions in an Arizona case. Plaintiff also argues that some of the
individual expenses seem excessive such as a January 11, 2016 charge for $2,563.20 for
airfare for Hourihan; an April 10, 2015 charge for $2,512.20 for airfare for Lund; a January
15, 2016 hotel charge of $1164.72 for Hourihan; a January 15, 2016 hotel charge of
$2026.26 for Lund; and a January 22, 2016 hotel charge of $2,026.20 for Hourihan.
As observed above, defendant made a prudent choice in selecting Williams &
Connolly to represent it in this matter as the Williams & Connolly lawyers had experience
in similar litigation. As for the specific items to which plaintiff objects, defendant offers
copies of the hotel bills which show that the charges were for multiple night stays, with a
nightly rate of $256, which is not unreasonable.73 Defendant also offers evidence that it was
72
Klain Report at 14, Exhibit A, Plaintiff’s Response to Defendant’s Motion for
Attorney’s Fees and Non-Taxable Expenses, Docket No. 126.
73
Exhibits 19, 20, 21, Lund Declaration, which is appended to Defendant’s Reply in
Support of Motion for Attorneys’ Fees and Non-Taxable Expenses, Docket No. 128.
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billed for a reduced rate for the two airfares to which plaintiff objects, not the full rate set out
above.74 These reduced rates, while high, were not unreasonable.
In sum, defendant’s non-taxable expenses were reasonable. Defendant is entitled to
an award of $68,277.29 in non-taxable expenses.
Conclusion
Defendant’s motion75 for attorneys’ fees and non-taxable expenses is granted.
Defendant is awarded $610,402.56 in attorneys’ fees76 and $68,277.29 in non-taxable
expenses, for a total of $678,679.85.
DATED at Anchorage, Alaska, this 10th day of May, 2017.
/s/ H. Russel Holland
United States District Judge
74
Lund Declaration at 5, ¶¶ 25-26 and Exhibits 22, 23, appended to Defendant’s Reply
in Support of Motion for Attorneys’ Fees and Non-Taxable Expenses, Docket No. 128.
75
and Exhibits 22, 23 thereto Docket No. 112.
76
$41,371 (Osborn Maledon fees) + $569,031.56 (Williams & Connolly fees) =
$610,402.56.
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