Yenidunya Investments v. Magnum Seeds, et al

Filing 44

ORDER signed by Judge William B. Shubb on 02/16/12 ORDERING that defendants' 32 Motion for Attorney Fees is GRANTED in the amounts of $125,324.75 in attorneys' fees and $1,002.21 in untaxed costs. (Benson, A.)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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YENIDUNYA INVESTMENTS, LTD., a
Cyprus, EU Corporation;

NO. CIV. 2:11-1787 WBS

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Plaintiff,

MEMORANDUM AND ORDER RE:
MOTION FOR ATTORNEYS’ FEES

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v.
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MAGNUM SEEDS, INC., a
California Corporation; and
GENICA RESEARCH CORPORATION, a
Nevada Corporation;

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Defendants.

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/
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Plaintiff Yenidunya Investments, Ltd. brought this
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action against defendants Magnum Seeds, Inc. (“Magnum”) and
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Genica Research Corporation (“Genica”) for declaratory relief and
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accounting arising out of defendants’ allegedly wrongful
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violation of plaintiff’s rights as a Magnum shareholder.
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Presently before the court is defendants’ motion for attorneys’
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fees.
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I.

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Factual and Procedural Background
In October 2003, Spiros Spirou & Co. (“SS & Co.”)

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obtained common stock in Magnum by converting a $2,267,995.00

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loan into 2,267,995 shares of Magnum.

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1).)

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Agreement,” which contained a “call-option” that required any

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shareholder to sell its shares back to Magnum when certain

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conditions were met.

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incorporated by reference a “Buy-Out Agreement,” which contained

(Compl. ¶ 7 (Docket No.

As a shareholder, SS & Co. signed an “Amendment to Buy-Out

(Id. ¶ 15.)

The Amendment also

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a prevailing party attorneys’ fee clause.

(Id. Ex. D at 91.)

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Both the Amendment to the Buy-Out Agreement and the Buy-Out

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Agreement were attached to the Complaint.

(Id. Ex. D.)

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In late October 2003, SS & Co. transferred the

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2,267,995 shares of Magnum common stock to plaintiff, which is an

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affiliated company of SS & Co.

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offered to purchase all of the outstanding shares of Magnum from

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the existing shareholders.

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Agreement” dated March 7, 2005, Genica offered to pay plaintiff

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$1,133,997.50 over a ten-year period.

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the offer to purchase its shares and never executed or delivered

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the Stock Purchase Agreement.

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shareholders accepted Genica’s offer to purchase their shares and

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executed the Stock Purchase Agreement, triggering the call option

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in the Amendment to the Buy-Out Agreement.

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Note” was delivered to plaintiff at closing pursuant to the Stock

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Purchase Agreement.

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Agreement and the Promissory Note were attached to the Complaint

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and contain prevailing party attorneys’ fee clauses.

(Id. ¶ 8.)

(Id. ¶ 13.)

(Id.)

(Id. ¶ 19.)

In March 2005, Genica

In a “Stock Purchase

(Id.)

Plaintiff declined

All other Magnum

(Id.)

A “Promissory

Both the Stock Purchase

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(Id. Exs.

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C, E.)

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Over six years later, on July 6, 2011, plaintiff filed

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for declaratory relief seeking to be recognized as a Magnum

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shareholder.

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“a declaration that neither the Stock Purchase Agreement, the

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Promissory Note, the Buy-Out Agreement or the Amendment to Buy-

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Out Agreement are valid and enforceable agreements with respect

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to YENIDUNYA.”

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(Docket No. 1.)

The Complaint asked the court for

(Compl. ¶ 22.)

On August 11, 2011, defendants moved to dismiss

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plaintiff’s complaint on the ground that it was barred by the

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statute of limitations.

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defendant’s motion on October 31, 2011, finding that the statute

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of limitations had run because “the gravamen of [plaintiff’s]

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Complaint is that the Promissory Note was never a valid

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contract.”

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November 7, 2011, plaintiff moved for the court to reconsider its

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prior order.

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motion, explaining that plaintiff’s claims were “barred by the

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statute of limitations and that the time for the Court to make a

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determination of the underlying legal issues had passed.”

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7, 2011, Order at 7:10-12 (Docket No. 29).)

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(Docket No. 12.)

The court granted

(Oct. 31, 2011, Order at 9:7-9 (Docket No. 23).)

(Docket No. 25.)

On

The court denied plaintiff’s

(Dec.

Presently before the court is defendants’ motion for

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attorneys’ fees pursuant to attorneys’ fees clauses in the Buy-

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Out Agreement, Stock Purchase Agreement, and Promissory Note.

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(Docket No. 32.)

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recover $127,206.96 in attorneys’ fees and costs for their work

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defending this action.

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////

As the prevailing party, defendants seek to

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II.

Discussion

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“A federal court sitting in diversity applies the law

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of the forum state regarding an award of attorneys’ fees.”

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Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir.

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2000).

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U.S.C. § 1332(a), the court must apply California law in deciding

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plaintiff’s motion for attorneys’ fees and untaxed costs.

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Kona

Because this case arises under diversity jurisdiction, 28

Although California law “ordinarily does not allow for

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the recovery of attorneys’ fees,” California Civil Code section

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1717 provides for an award of attorneys’ fees where “the parties

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contractually obligate themselves” to so compensate each other.

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Farmers Ins. Exch. v. Law Offices of Conrado Joe Sayas, Jr., 250

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F.3d 1234, 1237 (9th Cir. 2001) (citing Cal. Civ. Code § 1717;

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Trope v. Katz, 11 Cal. 4th 274, 279 (1995)).

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specifically instructs:

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Section 1717

In 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 determined 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.

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Cal. Civ. Code § 1717(a).

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they are the prevailing party and that the action was “on a

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contract” that included an attorneys’ fee provision.

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A.

Defendants must therefore show that

Prevailing Party
California Code of Civil Procedure section 1032(a)(4)

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provides in part that the “‘[p]revailing party’ includes the

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party with a net monetary recovery, a defendant in whose favor a

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dismissal is entered, a defendant where neither plaintiff nor
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defendant obtains any relief, and a defendant as against those

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plaintiffs who do not recover any relief against that defendant.”

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Cal. Code Civ. Proc. § 1032(a)(4).

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defendants’ favor after they prevailed on a motion to dismiss.

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(Docket No. 24.)

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statute of limitations are treated as dismissal on the merits for

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the purpose of awarding attorneys’ fees.

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Spendthrift Farm, Inc., 514 U.S. 211, 228 (1995) (“The rules of

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finality . . . treat a dismissal on statute-of-limitations

Judgment was entered in

Dismissals based on the expiration of the

See Plaut v.

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grounds the same way they treat a dismissal for failure to state

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a claim, for failure to prove substantive liability, or for

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failure to prosecute: as a judgment on the merits.”); McNabb v.

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Yates, 576 F.3d 1028, 1030 (9th Cir. 2009) (“A disposition is ‘on

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the merits’ if the district court either considers and rejects

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the claims or determines that the underlying claim will not be

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considered by a federal court.”).

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the prevailing party in this action.

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B.

Accordingly, defendants are

“On the Contract”
“California courts liberally construe ‘on a contract’

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to extend to any action ‘[a]s long as an action “involves” a

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contract and one of the parties would be entitled to recover

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attorney[s’] fees under the contract if that party prevails in

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its lawsuit.’”

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1997) (quoting Milman v. Shukhat, 22 Cal. App. 4th 538, 545

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(1994)) (alterations in original).

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In re Baroff, 105 F.3d 439, 442-43 (9th Cir.

The contracts upon which this action was brought each

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contain provisions regarding attorneys’ fees and costs.

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Out Agreement dated April 30, 2003, provides:
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The Buy-

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Attorneys’ Fees. In the event of any controversy, claim
or dispute between the parties hereto, arising out of or
relating to this Agreement or the breach thereof, the
prevailing party shall be entitled to recover from the
losing party reasonable expenses, attorney’s fees, and
costs.

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(Compl. Ex. D at 91.)

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7, 2005, provides:

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The Stock Purchase Agreement dated March

Attorneys’ Fees. . . . In any action at law or equity to
enforce any of the provisions or rights under this
Agreement, including any actions accruing pursuant to
“drag along” rights or obligations, the unsuccessful
party to such litigation, as determined by the court in
any final judgment or decree, shall pay the successful
party or parties all costs, expenses and reasonable
attorney fees incurred therein by such party or parties
(including without limitation such costs, expenses and
fees on any appeal or in connection with any bankruptcy
proceeding), and if the successful party recovers
judgment in any such action or proceeding, such costs,
expenses and attorneys’ fees shall be included in and as
part of such judgment.

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(Id. Ex. C at 41.)

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provides that:

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The Promissory Note dated March 8, 2005,

14. In the event of any arbitration or suit or action
under or in connection with this Note or the Security
Agreement, the prevailing party shall be entitled to
recover, in addition to its statutory costs and expenses,
its attorneys’ fees incurred incident to such proceeding
including attorneys’ fees incurred prior to and at trial
and on any appeal.
(Id. Ex. E at 96.)
Under these three agreements, the prevailing party is

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entitled to recover its attorneys’ fees and costs for suits

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arising out of or in connection with the contracts.

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plaintiff did not bring an action to enforce these agreements, it

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did seek declaratory judgment on their validity.

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therefore falls within the broad terms of the contract language

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and “involves” the contracts for the purposes of section 1717.
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Although

The action

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See In re Baroff, 105 F.3d at 442-43.

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Plaintiff’s argument that it did not bring suit on the

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contract and therefore would not have been entitled to attorney

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fees under the contract if it had prevailed on the merits is

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mistaken.

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settled that section 1717 allows the recovery of attorneys’ fees

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‘even when the party prevails on grounds the contract is

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inapplicable, invalid, unenforceable or nonexistent, if the other

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party had been entitled to attorneys’ fees had it prevailed.’”

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VSL Corp. v. Gen. Techs., No. C 96-20446, 1998 WL 124208, at *4

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(N.D. Cal. Jan. 5, 1998) (quoting Hsu v. Abbara, 9 Cal. 4th 863,

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870 (1995)).

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1717 is thus based on mutuality.

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attorneys’ fees on the basis that, had the opposing party

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prevailed, the opposing party would have been entitled to

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attorneys’ fees.

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fall short of [its] goal of full mutuality of remedy if its

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benefits were denied to parties who defeat contract claims by

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proving that they were not parties to the alleged contract or

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that it was never formed.”).

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“According to the California Supreme Court, it is well

The availability of attorneys’ fees under section
A prevailing party may recover

See Hsu, 9 Cal. 4th at 870 (“The statute would

Had plaintiff prevailed in this case by proving that

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the underlying contracts were invalid, plaintiff still could have

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requested attorneys’ fees based upon the contract provisions.

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The court would have examined whether defendants would have been

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entitled to attorneys’ fees if they had prevailed on the merits

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by showing the contracts were valid and binding on plaintiff.

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California caselaw is clear that the “obligation to pay attorney

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fees incurred in the enforcement of a contract includes
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attorneys’ fees incurred in defending against a challenge to the

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underlying validity of the obligation.”

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21 Cal. App. 4th 873, 878 (6th Dist. 1994) (internal quotation

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marks and citation omitted); see also Gilbert v. World Sav. Bank,

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FSB, No. C 10-05162, 2011 WL 995966, at *2 (N.D. Cal. Mar. 21,

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2011) (awarding defendant attorneys’ fees where plaintiff brought

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suit challenging the underlying validity of a mortgage note and

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deed of trust).

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interpretation question, defendants would have thus been entitled

Siligo v. Castellucci,

Had the court reached the contract

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to attorneys’ fees because the fees would have been incurred

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against plaintiff’s challenge to the underlying validity of the

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contracts.

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would have also been entitled to attorneys’ fees pursuant to

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section 1717.

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Because of mutuality, if plaintiff had prevailed, it

Here, in order to apply mutuality under section 1717,

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the court’s analysis must come full circle due to the unusual

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combination of circumstances in this case -- the fact that

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plaintiff brought this action as a declaratory judgment to have

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the underlying contracts invalidated along with the fact that

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defendant prevailed on statute of limitations grounds.

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mutuality, defendants are entitled to attorneys’ fees if

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plaintiff would have been entitled to attorneys’ fees had it

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prevailed.

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entitled to attorneys’ fees because defendants would have been

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entitled to attorneys’ fees had they prevailed on the merits of

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the underlying contracts.

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attorneys’ fees under section 1717 mutuality for prevailing on

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statute of limitations grounds because they ultimately would have

Applying

As discussed above, plaintiff would have been

Defendants are thus entitled to

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been entitled to attorneys’ fees had they ultimately prevailed on

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the merits of the contracts themselves.

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was brought “on a contract” for the purposes of applying section

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1717 and defendants are entitled to recover attorneys’ fees.

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C.

Accordingly, this action

Request to Delay Motion for Attorneys’ Fees
Federal Rule of Civil Procedure 54(d) provides in part

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that: “If an appeal on the merits of the case is taken, the court

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may rule on the claim for fees, may defer its ruling on the

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motion, or may deny the motion without prejudice, directing under

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subdivision (d)(2)(B) a new period for filing after the appeal

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has been resolved.”

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a notice of appeal as to the court’s Order on Motion to Dismiss

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and Order on Motion for Reconsideration.

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Plaintiff requests that the court stay defendants’ motion for

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attorneys’ fees pending the outcome of the appeal.

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Fed. R. Civ. P. 54(d).

Plaintiff has filed

(Docket No. 34.)

District courts “retain[] the power to award attorneys’

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fees after the notice of appeal from the decision on the merits

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ha[s] been filed.”

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Co., 718 F.2d 955, 957 (9th Cir. 1983).

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postponement of fee consideration until after the circuit court

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mandate, when the relevant circumstances will no longer be fresh

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in the mind of the district court judge.”

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Masalosalo by Masalosalo v. Stonewall Ins.
This “prevent[s]

Id.

Plaintiff’s sole justification for its request that the

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court delay awarding attorneys’ fees is that “judicial economy

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will be best served if this Motion is stayed pending the outcome

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of the appeal.”

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Although an award of attorneys’ fees would have to be vacated if

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the judgment is reversed, this is no different than any other

(Opp’n to Mot. for Att’ys Fees at 5:22-23.)

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case in which judgment is appealed and the prevailing party is

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awarded attorneys’ fees.

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The court is in a much better position at the present

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time, when the details of the proceedings are fresh in its mind,

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to judge the expertise and time required by defense counsel to

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prevail in this case than it would be when the appeal has been

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decided.

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requiring the court to revisit cases years after they were

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initially decided for the sole purpose of awarding attorneys’

Judicial economy would therefore not be served by

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fees.

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present motion for attorneys’ fees pending the outcome of the

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appeal.

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D.

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The court declines to exercise its discretion to stay the

Judicial Estoppel
“Judicial estoppel is an equitable doctrine that

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precludes a party from gaining an advantage by asserting one

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position, and then later seeking an advantage by taking a clearly

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inconsistent position.”

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270 F.3d 778, 782 (9th Cir. 2001).

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estoppel not only to prevent a party from gaining an advantage by

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taking inconsistent positions, but also because of “general

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consideration[s] of the orderly administration of justice and

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regard for the dignity of judicial proceedings,” and to “protect

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against a litigant playing fast and loose with the courts.”

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Russell v. Rolfs, 893 F.2d 1033, 1037 (9th Cir. 1990).

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Hamilton v. State Farm Fire & Cas. Co.,
A court invokes judicial

In New Hampshire v. Maine, the United States Supreme

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Court listed three factors that courts may consider in

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determining whether to apply the doctrine of judicial estoppel in

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a particular case: first, whether a party’s later position would
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be “clearly inconsistent” with its earlier position; second,

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whether judicial acceptance of an inconsistent position in a

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later proceeding would create the perception that either the

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first or the second court was misled; and third, whether the

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party seeking to assert an inconsistent position would derive an

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unfair advantage or impose an unfair detriment on the opposing

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party if not estopped.1

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New Hampshire, 532 U.S. at 750-51.

The first New Hampshire factor requires a finding that
a party’s later position is “clearly inconsistent” with its

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earlier position.

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successfully convinced this Court that it should not make any

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determination on the validity of the agreements at issue,” and

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should therefore “be bound by their actions and precluded from

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seeking affirmative relief under these same agreements.”

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to Mot. for Att’ys Fees at 7:25-27.)

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fees were predicated upon the court finding that the underlying

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agreements were valid and binding on both parties, plaintiff’s

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argument would be more persuasive.

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required to find that plaintiff is bound by the underlying

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contracts in order to award attorneys’ fees in this case.

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Id. at 750.

Plaintiff argues that “Defendants

(Opp’n

If the award of attorneys’

The court, however, is not

Even in cases in which the court has held that no valid

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contract existed, it has nevertheless awarded attorneys’ fees to

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the prevailing part.

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attorneys’ fees in cases in which the underlying contract is

See Hsu, 9 Cal. 4th at 876.

Denying

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In enumerating these factors, the Court noted that they
were not establishing inflexible prerequisites or an exhaustive
formula for determining the applicability of judicial estoppel.
New Hampshire, 532 U.S. at 751. Additional considerations may
thus inform the doctrine’s application in specific factual
contexts. Id.

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found to be invalid would fail to achieve section 1717’s goal of

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“full mutuality of remedy if its benefits were denied to parties

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who defeat contract claims by proving they were not parties to

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the alleged contract or that it was never formed.”

Id. at 870.

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Plaintiff cites no authority for its position that a

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party that prevails based on the statute of limitations is not

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entitled to fees based on the doctrine of judicial estoppel.

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court is aware of at least two cases holding that a defendant who

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prevails on the statue of limitations is entitled to fees

The

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pursuant to California Civil Code section 1717.

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Grolsche Bierbrouwerij Nederland, B.V. v. Dovebid, Inc., No. C

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11-00763, 2011 WL 5080175, at *2-3 (N.D. Cal. Oct. 26, 2011)

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(awarding attorneys’ fees to defendant pursuant to section 1717

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after defendant prevailed based on statute of limitations

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defense); VSL Corp., 1998 WL 124208 at *4 (same).

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court is not required to find the underlying contracts valid in

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order to enforce their attorneys’ fee provisions, defendants’

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motion for attorneys’ fees does not present a legal position that

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is “clearly inconsistent” with their earlier position that

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plaintiff’s claim was barred by the statute of limitations.

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Precluding defendants’ recovery of attorneys’ fees based on

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judicial estoppel would therefore be inappropriate in this

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matter.

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E.

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See, e.g.,

Because the

Lodestar Calculation
The purpose of California Civil Code section 1717 is

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“to establish uniform treatment of fee recoveries in actions on

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contracts containing attorney fee provisions.”

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Drexler, 22 Cal. 4th 1084, 1094-95 (2000) (quoting Santisas v.
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PLCM Grp. v.

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Goodin, 17 Cal. 4th 599, 616 (1998)).

To achieve this goal, the

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trial court is given “broad authority to determine the amount of

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a reasonable fee.”

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Olen, 21 Cal. 3d 218, 224 (1978)); see also Montgomery v. Bio-Med

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Specialties, Inc., 183 Cal. App. 3d 1292, 1297 (4th Dist. 1986)

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(providing that the trial court has “wide latitude in determining

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the amount of an award of attorneys[’] fees”).

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this authority, the court is primarily guided by principles of

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equity.

Id. at 1095 (citing Int’l Indus., Inc. v.

In exercising

See Beverly Hills Props. v. Marcolino, 221 Cal. App. 3d

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Supp. 7, 12 (Super. App. 1990) (“[T]he award of attorney[s’] fees

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under section 1717, as its purposes indicate, is governed by

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equitable principles.” (citing Int’l Indus., 21 Cal. 3d at 224)).

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“[T]he fee setting inquiry in California ordinarily

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begins with the ‘lodestar,’ i.e., the number of hours reasonably

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expended multiplied by the reasonable hourly rate.”

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22 Cal. 4th at 1095.

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prevailing in the community for similar work.”

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Margolin v. Reg’l Planning Comm’n, 134 Cal. App. 3d 999, 1004 (2d

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Dist. 1982)).

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“shall consider whether the total award so calculated under all

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of the circumstances of the case is more than a reasonable amount

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and, if so, shall reduce the section 1717 award so that it is a

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reasonable figure.” Id. at 1095-96 (quoting Sternwest Corp. v.

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Ash, 183 Cal. App. 3d 74, 77 (2d Dist. 1986)).

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propose that the base lodestar figure of $127.206.96 would be an

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appropriate amount for attorneys’ fees and untaxed costs in this

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case.

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“The reasonable hourly rate is that
Id. (citing

After calculating the lodestar, the trial court

(Mot. for Att’ys Fees at 1:19-20.)
1.

PLCM Grp.,

Reasonable Hourly Rates
13

Defendants

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A reasonable hourly rate is the prevailing rate in the

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community for similar work performed by attorneys of comparable

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skill, experience, and reputation.

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534 F.3d 1106, 1111 (9th Cir. 2008).

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fees must produce satisfactory evidence in addition to the

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attorney’s own affidavits or declarations that the rates are in

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line with community rates.”

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Inc., No. C 11-02532, 2012 WL 380304, at *6 (N.D. Cal. Jan. 17,

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2012) (citing Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984));

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see also Gorman v. Tassajara Develop. Corp., 178 Cal. App. 4th

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44, 98 (6th Dist. 2009) (noting that the “burden is on the party

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seeking attorney fees to prove that the fees it seeks are

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reasonable”).

14

Moreno v. City of Sacramento,
“The party requesting the

Bd. of Trs. v. Core Concrete Const.,

The relevant legal community is traditionally “the

15

forum in which the district court sits,” Camacho v. Bridgeport

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Fin., Inc., 523 F.3d 973, 979 (9th Cir. 2008), which in this case

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is the Eastern District of California.

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forum may be used if local counsel was unavailable, either

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because they are unwilling or unable to perform because they lack

20

the degree of experience, expertise, or specialization required

21

to handle properly the case.”

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500 (9th Cir. 1997).

23

“[R]ates outside the

Barjon v. Dalton, 132 F.3d 496,

During oral arguments, Mr. Macauley explained that his

24

firm, San Francisco-based Nossaman LLP, has represented defendant

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Magnum since at least 2005 and had first hand familiarity with

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the dispute between the parties over the last six years on the

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contracts in question.

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declaratory relief, Magnum naturally turned to Nossaman for

When plaintiff finally filed for

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representation because the firm was involved, having handled the

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initial buy-out transaction.

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had already had developed experience and expertise on the facts

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underlying this specific case.

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to a Sacramento-based firm, with presumably lower hourly rates,

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the attorneys would have had to spend significantly more time

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familiarizing themselves with the historical facts surrounding

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the disagreement.

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much time this would have taken a new firm, the additional hours

The attorneys at Nossaman therefore

If defendants had instead turned

While it is impossible to surmise exactly how

10

would have at least partially offset the higher hourly rate

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charged by Nossaman’s attorneys.2

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dealings with both parties in this dispute, it is appropriate to

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apply the prevailing rates for the community in which counsel is

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located -- San Francisco.

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1084, 1096 (finding no error in awarding “prevailing market rate

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for comparable legal services in San Francisco, where counsel is

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located” in a case heard in Los Angeles)

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Because of counsel’s prior

See PLCM Grp. v. Drexler, 22 Cal. 4th

Here, defendants seek the following hourly rates: $535

19

per hour for the services of David Kimport; $440 per hour for

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Brendan Macaulay; $410 per hour for Danielle Gensch; $400 per

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hour for John Hansen;

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Kim, and Sayed Ahmed; $270 per hour for Katy Young; $250 per hour

$340 per hour for James Vorhis, Chi Soo

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The court acknowledges that defendants cannot both turn
to an out-of-forum firm based on their experience with the case
and bill for research that a local firm would not have needed to
do based on familiarity with the forum. Accordingly, as
discussed further below, the court has reduced counsel’s billed
hours to exclude time spent researching the local rules and
reviewing the court’s calendaring procedures and deadlines.
15

1

for Sarah Andropoulos; and $165 per hour for Jane Towell.3

2

With respect to the prevailing market rate for services

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rendered by himself, Mr. Macaulay submitted his own declaration

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establishing the following facts.

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practicing law in the area of complex business litigation for

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nineteen years.

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graduated from Duke University School of Law in 1992 and has been

8

admitted to the United States District Courts for the Central,

9

Southern, Eastern, and Northern Districts of California, and the

Mr. Macaulay has been

(Macauley Decl. ¶ 2 (Docket No. 32).)

(Id.)

He

10

Ninth Circuit Court of Appeals.

Mr. Macaulay has

11

submitted “many fee requests in state and federal courts” and “no

12

court has ever opined that [his] rate was too high.”

(Id. ¶ 4.)

13
14

Defendants provide supporting evidence on the

15

prevailing rates awarded under attorneys’ fee provisions by

16

courts in “Northern California.”

17

rates awarded adjusted for experience level, Mr. Macaulay’s rate

18

of $440 per hour is at or below the prevailing rate for attorneys

19

in Northern California with similar years of experience.

20

reasonableness of Mr. Macaulay’s rate is also confirmed by the

21

court’s independent research.

22

F. Supp. 2d 918, 921 (N.D. Cal. 2011) (awarding $700 per hour for

23

1978 law school graduate in ADA case); Sierra Club v. E.P.A., 625

Based on the list of hourly

The

See, e.g., Armstrong v. Brown, 805

24
25
26
27
28

3

Defendants did not provide significant biographical
information on the attorneys, other than Mr. Macaulay, who worked
on this case. From what the court can gather from the papers,
Katy Young, James Vorhis, Sarah Andropoulos, Cho Soo Kim, and
Sayed Ahmed are associates; David Kimport, Danielle Gensch, and
John Hansen are partners; and Jane Towell is a Research
Librarian. (See Anastassiou Decl. Ex. B.)
16

1

F. Supp. 2d 863, 867 (N.D. Cal. 2007) (finding prevailing hourly

2

rate in San Francisco for experienced attorney to be $450 per

3

hour).

4

partners working on the matter, Mr. Kimport, Ms. Gensch, and Mr.

5

Hansen, are also within the range for prevailing market rates in

6

San Francisco.

Based on this evidence, the requested rates for the other

7

Neither party has provided the court with any evidence

8

establishing what the prevailing rate is for associate attorneys

9

or paralegals in San Francisco.

The court thus relies on its own

10

research to determine whether counsel’s proposed rates ranging

11

between $250 and $340 per hour for associates and $165 per hour

12

for a research librarian4 are reasonable given the prevailing

13

rate within the San Francisco legal community.

14

appear to fall within the prevailing rate in San Francisco.

15

Caplan v. CNA Fin. Corp., 573 F. Supp. 2d 1244, 1249 (N.D. Cal.

16

2008) (approving hourly rate of $350 for a sixth-year associate,

17

$330 for a fourth-year associate, and $200 for law student

18

clerks); Loretz v. Regal Stone, Ltd., 756 F. Supp. 2d 1203, 1211

19

(N.D. Cal. 2010) (approving rate of $350 per hour for associates,

20

and $225 per hour for paralegal); Oster v. Standard Ins. Co., 768

21

F. Supp. 2d 1026, 1035 (N.D. Cal. 2011) (approving $400 per hour

22

for associates and $150 per hour for paralegals in ERISA action);

23

Armstrong, 805 F. Supp. 2d at 921 (awarding $480 per hour for

24

associate who graduated in 2006 and $180 per hour for law

25

students and litigation assistants in ADA case).

These rates
See

26
27
28

4

Without further guidance, the court will treat the time
billed by Ms. Towell, counsel’s research librarian, as similar to
that of a paralegal for the purpose of awarding fees.
17

1

“The party opposing the fee application has a burden

2

of rebuttal that requires submission of evidence to the district

3

court challenging the accuracy and reasonableness of the . . .

4

facts asserted by the prevailing party in its submitted

5

affidavits.”

Gates v. Deukmejian, 987 F.2d 1392, 1397–98 (9th

6

Cir. 1992).

Plaintiff presents information about the prevailing

7

rates in Salinas and outdated caselaw on the prevailing rate in

8

Sacramento.

9

for legal services in San Francisco and therefore fails to

10
11

This evidence does not address the prevailing rate

challenge the reasonableness of defense counsel’s rates.
Accordingly, in light of counsel’s prior work with

12

defendants on this matter, the high quality of the briefs

13

submitted by defendants, the complexity of the underlying action,

14

and the declaration submitted by Mr. Macaulay, the court finds

15

that defendants’ proposed rates are reasonable given the

16

prevailing rates in San Francisco.

17

2.

18

Under California law, a court determining the number of

Reasonable Hours Expended

19

hours reasonably expended on a case “must carefully review

20

attorney documentation of hours expended; ‘padding’ in the form

21

of inefficient or duplicative efforts is not subject to

22

compensation.”

23

(quoting Serrano v. Priest, 20 Cal. 3d 25, 48 (1977)).

24

district court may exclude from the initial fee calculation hours

25

that were “excessive, redundant, or otherwise unnecessary.”

26

Hensley v. Eckerhart, 461 U.S. 424, 434 (1983).

27
28

Ketchum v. Moses, 24 Cal. 4th 1122, 1132 (2001)
The

Plaintiff objects to the number of hours defense
counsel expended on this case on several grounds, including that:
18

1

(1) defense counsel spent significantly more time working on the

2

case than plaintiff’s counsel; (2) counsel billed for

3

administrative tasks that should not be compensated; (3) counsel

4

utilized vague and ambiguous block billing; (4) duplicate billing

5

by multiple attorneys should be reduced or striken; and (5)

6

counsel spent too much time on legal research.

7

In response to the aggregate number of hours that

8

defense counsel has billed, plaintiff argues that it is excessive

9

in comparison with the amount of time that plaintiff’s counsel

10

spent on the motions to dismiss.

11

at 16:23-17:9.)

12

action compared to the 96 hours that plaintiff’s counsel spent on

13

the two underlying substantive motions.

14

Plaintiff argues that the substantive motions were relatively

15

routine motions that should not have taken 270 hours to complete.

16

(Opp’n to Mot. for Att’ys Fees

Defense counsel spent 270.95 hours on this

(Id. at 16:26-17:4.)

The court notes that plaintiff is comparing two

17

separate figures: the time that defendant spent on the action as

18

a whole, including the motion for attorneys’ fees, versus the

19

time plaintiff spent on the substantive motion to dismiss and

20

motion for reconsideration.

21

compensated for all appropriate attorneys’ fees stemming from

22

their defense of this action, not only to the expenses relating

23

to the substantive motions.

24

defense counsel performed after being served with the Complaint

25

included: ensuring that a litigation hold was put in place;

26

communicating with plaintiff’s counsel regarding the deadline to

27

respond; communicating with the client regarding the facts of the

28

case; strategizing about the appropriate response; analyzing

Defendants are entitled to be

For example, other tasks that

19

1

jurisdiction and venue; reviewing the Complaint and all of the

2

attached documents; and reviewing the history of the transaction.

3

(Macaulay Supp’l Decl. ¶ 8 (Docket No. 42).)

4

The amount of time billed by defense counsel

5

additionally reflects the difficulty of the issues raised in this

6

action.

7

“simple” statute of limitations issue oversimplifies the

8

underlying litigation.

9

technically never addressed by the court, plaintiff made repeated

Plaintiff’s claim that this action was based on a

Although the merits of the Complaint were

10

arguments based on the merits of its claims -- such as the lack

11

of legends on the stock certificate, enforceability of drag-along

12

rights, validity of the agreements at issue, and certification

13

share issues.

14

research and address such issues should therefore come as no

15

surprise to plaintiff.

16

Yenidunya’s arguments lacked any legal support, or were contrary

17

to law.

18

in 10 minutes might require hours of research/briefing to

19

debunk.”

20

The court is sympathetic with defendants’ contention that there

21

were a significant number of complex legal issues that were

22

raised by plaintiff throughout the litigation that likely took

23

defense counsel many hours to research and brief.

24

The fact that defense counsel proceeded to

Defendants also explain that “many of

An argument that Yenidunya could craft without authority

(Reply to Opp’n to Mot. for Att’ys Fees at 9:25-10:2.)

“In challenging attorney fees as excessive because too

25

many hours of work are claimed, it is the burden of the

26

challenging party to point to the specific items challenged, with

27

a sufficient argument and citations to the evidence.

28

arguments that fees claimed are excessive, duplicative, or
20

General

1

unrelated do not suffice.”

2

Guarantee Ass'n, 163 Cal. App. 4th 550, 564 (2d Dist. 2008).

3

Plaintiff does not satisfy this burden because it does not

4

identify specific entries or activies as excessive.5

5

plaintiff providing specific areas in which hours should be cut,

6

the court finds that the total time expended by defense counsel

7

was reasonable.

8
9

Premier Med. Mgmt., Inc. v. Cal. Ins.

Absent

As to the specific type of tasks billed, plaintiff
argues that counsel billed tasks normally performed by paralegals

10

or legal secretaries.

11

14.)

12

calculating motion deadlines as such administrative tasks.

13

court finds that the time expended to become familiar with the

14

Eastern District Local Rules is in the nature of “general

15

education” and should not have been billed to the client.

16

generally, e.g., Perdue v. City Univ. of N.Y., 13 F. Supp. 2d

17

326, 346 (E.D.N.Y. 1998) (“Although Perdue’s attorneys are

18

entitled to reasonable compensation for time spent in researching

19

employment discrimination law, they should not be fully

20

compensated for their general education.”).

21

calculating motion deadlines should similarly not be charged to

22

the client as it is a primarily administrative task.

23

does not quantify how large of a reduction should be applied

(Opp’n to Mot. for Att’ys Fees at 17:10-

Specifically, it identifies reviewing the local rules and
The

See

Time spent

Plaintiff

24
25
26
27
28

5

Plaintiff does provide annotated copies of defense
counsels’ billing statements in which entries are color-coded by
activity. (See Anastassiou Decl. Ex. D.) This does not aid the
court in determining whether counsel spent excessive time on the
matter as a whole or on any one activity. Based on plaintiff’s
annotations, it appears that the only activity conducted by
defense counsel that it approves of is the actual drafting of
defendants’ motions.
21

1

under this objection.

2

hours” were spent on such tasks.

3

Att’ys Fees at 11:2-3.)

4

on the court’s review of the billing descriptions.

5

the court will reduce Mr. Macaulay’s billable hours by two hours.

6

Defendants estimate that “no more than 1-2
(Reply to Opp’n to Mot. for

This estimate appears reasonable based
Accordingly,

In support of its argument that defense counsel

7

utilized vague and ambiguous block billing,6 plaintiff claims

8

that “multiple ‘block entries’ make it impossible for Plaintiff

9

and the Court to ascertain exactly how much time [defense

10

counsel] spent on each of the separate tasks.”

11

for Att’ys Fees at 17:18-20.)

12

on July 7, 2011, Mr. Macaulay billed 4.10 hours of time under one

13

entry which related to the performance of nine separate tasks.

14

(Id. at 17:17-18.)

15

specifically object to any other entry but requests that the

16

entries should be “substantially reduced or stricken entirely.”

17

(Opp’n to Mot. for Att’ys Fees at 18:15-16.)

18

(Opp’n to Mot.

For example, plaintiff notes that

Other than this entry, plaintiff does not

A district court should refrain from reducing fees

19

until it first determines whether “‘sufficient detail has been

20

provided so that [the Court] can evaluate what the lawyers were

21

doing and the reasonableness of the number of hours spent on

22

those tasks.’”

23

960825, at *8 (C.D. Cal. Apr. 7, 2009) (quoting Smith v. District

24

of Columbia, 466 F. Supp. 2d 151, 158 (D.D.C. 2006)) (alteration

Fitzgerald v. City of L.A., No. 03-1876, 2009 WL

25
26
27
28

6
“‘Block billing’ is ‘the time-keeping method by which
each lawyer and legal assistant enters the total daily time spent
working on a case, rather than itemizing the time expended on
specific tasks.’” Welch v. Metro. Life Ins. Co., 480 F.3d 942,
945 n.2 (9th Cir. 2007) (quoting Harolds Stores, Inc. v. Dillard
Dep’t Stores, Inc., 82 F.3d 1533, 1554 n.15 (10th Cir. 1996)).

22

1

in original).

The court must be “practical and realistic”

2

regarding how attorneys operate; if attorneys “have to document

3

in great detail every quarter hour or half hour of how they spend

4

their time . . . their fee[s] . . . will be higher, and the

5

lawyers will simply waste precious time doing menial clerical

6

tasks.”

Smith, 466 F. Supp. 2d at 158.
In this case, the vast majority of the block billing

7
8

involves the grouping of highly-related tasks that rarely cover

9

more than a few hours.

See Fitzgerald, 2009 WL 960825, at *8

10

(finding block-billing acceptable where “[m]any of [the] entries

11

identified as block-billing are actually different parts of the

12

same task”); cf. Role Models Am., Inc. v. Brownlee, 353 F.3d 962,

13

971 (D.C. Cir. 2004) (finding block-billed entries unreasonable

14

because they “include[d] time spent on bankruptcy matters, which

15

ha[d] nothing to do with th[e] appeal” and “prevent[ed] . . .

16

verifying that [appellant] deducted the proper amount of time”).

17

Furthermore, in most of counsel’s entries, the court is well-

18

equipped to “compare the hours expended against the tasks and

19

assess the reasonableness of those tasks.”

20

960825, at *8.

21

billing, the court does not find it necessary to reduce the hours

22

billed.

Fitzgerald, 2009 WL

Accordingly, having examined counsel’s block

Plaintiff next argues that duplicate billings by

23
24

multiple attorneys should be reduced or striken.

(Opp’n to Mot.

25

for Att’ys Fees at 18:17-26.)

26

counsel’s use of nine different attorneys on the case resulted in

27

excessive and duplicative internal communications between

28

counsel.

Plaintiff contends that defense

(Id. at 18:18-23; Anastassiou Decl. ¶ 13 (Docket No.
23

1

40).)

Plaintiff specifically notes that, as a result of this

2

duplicative work, in one of the invoices in which $20,617.25 in

3

fees was claimed by defendants, only $528.00 was billed for

4

drafting the motion to dismiss.7

5

(Macaulay Decl. Ex. A.)

While “[c]oncerns about overstaffing are a relevant

6

consideration,” determining whether there has been unnecessary

7

duplication often requires a difficult exercise of “judgment and

8

discretion, considering the circumstances of the individual

9

case.”

Fitzgerald, 2009 WL 960825 at *9 (citing Democratic Party

10

of Wash. State v. Reed, 388 F.3d 1281, 1286-87 (9th Cir. 2004)).

11

In this case, the majority of the work was done by two attorneys,

12

with five of the other billers working on the case for less than

13

nine hours each.

14

11:6-12.)

15

cause of duplication.

16

instances in which defense counsel billed for time spent on

17

interoffice correspondence and what it claims were duplicative

18

efforts in reviewing the Complaint or attorney work product,

19

plaintiff provides no persuasive reason why having two or three

20

attorneys discuss strategy on the case or review the Complaint

21

and attorney work product was unreasonable.

22

534 F.3d at 1113 (“Findings of duplicative work should not become

23

a shortcut for reducing an award without identifying just why the

24

requested fee was excessive . . . .”); Jefferson v. Chase Home

(Reply to Opp’n to Mot. for Att’ys Fees at

This suggests that overstaffing was not a significant
Other than simply highlighting all

See, e.g., Moreno,

25
26
27
28

7
In his supplemental declaration, Mr. Macaulay explains
that the month to which plaintiff is referring was the first
month following the Complaint being filed. (Macaulay Supp’l
Decl. ¶ 8 (Docket No. 41).) It is therefore appropriate that
counsel spent time reviewing the Complaint and researching the
motion to dismiss prior to beginning to draft the motion.

24

1

Fin., No. 06-6510, 2009 WL 2051424, at *4 (N.D. Cal. July 10,

2

2009) (“Chase has identified few substantive areas of duplicative

3

effort, and does not make a persuasive case that the case was

4

overstaffed. . . . [B]ecause the bulk of the hours spent were

5

from a few attorneys, this does not appear unreasonable.”); see

6

also Fitzgerald, 2009 WL 960825, at *8 (“The Court does not find

7

the presence of lawyers at court meetings to be excessive or

8

unnecessarily duplicative in this case . . . Plaintiffs typically

9

only seek fees for two or three lawyers at those meetings.”).
Finally, with regard to the amount of research

10
11

performed by defense counsel, plaintiff contends that the

12

“attorneys at Nossaman claim to have extensive experience with

13

the underlying subject matter, which would indicated that should

14

[sic] already be well versed on the case law for the underlying

15

subject.”

16

identify any specific research task that it deems unnecessary,

17

but rather highlights each instance in which defense counsel

18

billed for time spent conducting legal research on the case.

19

Legal research is a core function of an attorney’s role in

20

litigating a case.

21

complex issues that likely required significant research to

22

respond to.

23

the time defense counsel billed for legal research was not

24

unnecessarily excessive and was favorably reflected in the

25

quality of defendants’ briefs.

(Anastassiou Decl. ¶ 13f.)

Plaintiff does not

This case presented a number of novel and

After reviewing the invoices, the court finds that

26

Defendants have estimated that Mr. Macaulay will spend

27

an additional 25 hours after January 1 to complete the motion on

28

attorneys’ fees, prepare a Reply, and prepare for and attend the
25

1

hearing.

(Mot. for Att’ys Fees at 9:4-6.)

2

objected to this request.

3

to Mr. Macaulay’s billed time.

4

Plaintiff has not

The court will therefore add 25 hours

After reviewing plaintiff’s objections to the number of

5

hours expended by defense counsel on this action, the court will

6

reduce Mr. Macaulay’s billed hours from 163.9 hours to 161.9

7

hours based on the inclusion of administrative tasks that should

8

not have been billed to the client.

9

Mr. Macaulay’s billed hours from 161.9 to 186.9 to reflect work

10

that has been completed after counsel’s last-submitted billing

11

statement.

12

reasonablely expended defending this action.

The court will also increase

The court finds that the remaining hours were

13

3.

14

After performing the lodestar calculations, the court

Adjustments To The Lodestar Figure

15

must “consider whether the total fee award so calculated under

16

all of the circumstances is more than a reasonable amount and, if

17

so, [must] reduce the . . . award so that it is a reasonable

18

figure.”

19

determination, the court considers “a number of factors,

20

including the nature of the litigation, its difficulty, the

21

amount involved, the skill required in its handling, the skill

22

employed, the attention given, the success or failure, and other

23

circumstances of the case.”

24

Robledo, 64 Cal. App. 3d 618, 623-624 (2d Dist. 1976)).

25

PLCM Grp., 22 Cal. 4th at 1095-96.

To make this

Id. at 1096 (quoting Melnyk v.

Multiplying the reasonable hours expended by defense

26

counsel by the hourly rates approved by the court, the lodestar

27

figure amounts to $125,324.75.

28

calculation:

The table below illustrates this

26

1

Attorney

Time Billed

Hourly Rate

Total

2

David Kimport

36.7 hours

x

$ 535

=

$ 19634.50

3

Brendan Macaulay

186.9 hours

x

$ 440

=

$ 82236

4

John Hansen

14.9 hours

x

$ 400

=

$ 5960

5

Katy Young

21.5 hours

x

$ 270

=

$ 5805

6

James Vorhis

1.4 hours

x

$ 340

=

$ 476

7

Sarah Andropoulos

4.5 hours

x

$ 250

=

$ 1125

8

Chi Soo Kim

1.8 hours

x

$ 340

=

$ 612

9

Danielle Gensch

8.5 hours

x

$ 410

=

$ 3485

10

Sayed Ahmed

17.5 hours

x

$ 340

=

$ 5950

11

Jane Towell

0.25 hours

x

$ 165

=

$ 41.25

=

$ 125324.75

12

Total

13

There are several factors that the court could used to

14

apply a negative multiplier to the lodestar amount, Morales v.

15

City of San Rafael, 96 F.3d 359, 364 n.9 (9th Cir. 1996), but

16

there is a strong presumption that the lodestar amount is

17

reasonable.

18

(9th Cir. 2000).

19

litigation, the number of hours reasonably expended by

20

defendants’ attorneys, the skill demonstrated by those attorneys,

21

and defendants’ overall victory on the underlying claims, the

22

court finds that the lodestar figure need not be adjusted.

23

Therefore, the court will award defendants $125,324.75 in

24

attorney’s fees.

Fischer v. SJB-P.D. Inc., 214 F.3d 1115, 1119 n.4
Given the nature and difficulty of this

25

iv.

Untaxed Costs

26

Defendants also ask that the award include payment for

27

a number of costs and expenses.

Out-of-pocket costs and expenses

28

incurred by an attorney that would normally be charged to a fee27

1

paying client are recoverable as attorneys’ fees.

2

Steelworkers of Am. v. Phelps Dodge Corp., 896 F.2d 403, 407 (9th

3

Cir. 1990).

4

Plaintiff notes that some of the costs “are perhaps more properly

5

considered overhead,” but does not object to them because they

6

“are not unreasonable” and “not terribly substantial.”

7

(Anastassiou Decl. ¶ 16.)

8

defendants untaxed costs of $1,002.21.

9

United

Defendants’ request includes $1,002.21 in costs.

Accordingly, the court will award

IT IS THEREFORE ORDERED that defendants’ motion for

10

attorneys’ fees be, and the same hereby is, GRANTED in the

11

amounts of $125,324.75 in attorneys’ fees and $1,002.21 in

12

untaxed costs.

13

DATED:

February 16, 2012

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16
17
18
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20
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22
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