Resilient Floor Covering Pension Fund et al v. M&M Installation, Inc. et al

Filing 163

ORDER by Magistrate Judge Bernard Zimmerman denying 131 Motion for Attorney Fees; finding as moot 142 Motion for Attorney Fees; granting in part and denying in part 155 Motion for Attorney Fees (rmm2, COURT STAFF) (Filed on 5/17/2012)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 11 RESILIENT FLOOR COVERING PENSION FUND, et al., 12 Plaintiff(s), 13 v. 14 15 M&M INSTALLATION, INC., et al, 16 Defendant(s). ) ) ) ) ) ) ) ) ) ) ) ) No. C08-5561 BZ ORDER ON MOTIONS FOR ATTORNEYS’ FEES AND MOTION TO AMEND JUDGMENT 17 18 Before the court are two motions for attorneys’ fees, one 19 submitted by Plaintiffs and the other by Defendants, as well 20 as Defendants’ motion to amend the judgment. 21 set forth below, Defendants’ motions are DENIED and 22 Plaintiffs’ motion is GRANTED IN PART. For the reasons 23 Defendants’ Motion for Attorneys’ Fees 24 Defendants move for attorneys’ fees under 29 U.S.C. 25 section 1451(e).1 That section commits the award of 26 1 27 28 This section reads: “In any action under this section, the court may award all or a portion of the costs and expenses incurred in connection with such action, including reasonable attorney’s fees, to the prevailing party.” 1 1 attorneys’ fees and costs to the discretion of the court.2 2 The Ninth Circuit has set forth five factors to guide the 3 district court’s exercise of discretion: 4 the opposing parties’ culpability or bad faith; (2) the 5 ability of the opposing parties to satisfy an award of fees; 6 (3) whether an award of fees against the opposing parties 7 would deter others from acting under similar circumstances; 8 (4) whether the parties requesting fees sought to benefit all 9 participants and beneficiaries of an ERISA plan or to resolve (1) the degree of 10 a significant legal question regarding ERISA; and (5) the 11 relative merits of the parties’ positions. 12 Rykoff & Co., 634 F.2d 446, 453 (9th Cir. 1980); see also 13 Cuyamaca Meats, Inc. v. San Diego & Imperial Counties 14 Butchers’ & Food Employers’ Pension Trust Fund, 827 F.2d 491, 15 500 (9th Cir. 1987). 16 Hummell v. S. E. Considering these factors, I decline to award Defendants’ 17 attorneys’ fees in this case. 18 acted culpably or that their positions must have appeared 19 meritless to them or to their counsel when viewed 20 prospectively rather than with the benefit of hindsight. 21 pointed out in my order on the parties’ cross-motions for 22 summary judgment, the Ninth Circuit invited Plaintiffs, and I cannot say that Plaintiffs As I 23 2 24 25 26 27 28 Awarding fees under this section is mandatory where a plan brings a successful action to collect unpaid employer withdrawal liabilities. Under ERISA, the award of attorneys’ fees to a pension plan is mandatory in all actions to collect delinquent contributions. 29 U.S.C. § 1132(g)(2). The Ninth Circuit has held that this mandatory attorneys’ fees provision applies in all actions to collect delinquent contributions owed under section 1145, including actions to collect unpaid employer withdrawal liabilities. Lads Trucking Co. v. Board of Trustees, 777 F.2d 1371, 1374 (9th Cir. 1985). 2 1 “encouraged” me, to address the issues of veil piercing and to 2 determine whether Simas Floor was liable to Plaintiffs under 3 section 1392(c) of the MPPAA for engaging in a transaction, a 4 principal purpose of which was to “evade or avoid” withdrawal 5 liability. 6 Plaintiffs pursued these claims in bad faith. 7 Defendants’ contention that there was “not a shred of evidence 8 to support a veil piercing claim,” is not true. 9 strongly argued that M & M was undercapitalized, a factor (See Docket No. 124.) I cannot therefore say that Moreover, Plaintiffs 10 which often supports piercing a corporate veil. 11 did not prevail on this issues; I merely concluded that there 12 were disputed issues of fact that could not be resolved on 13 summary judgment. 14 pursue a veil piercing claim based on the alleged 15 undercapitalization of M & M by its parent company, whose 16 shareholders were identical. 17 Defendants It was not unreasonable for Plaintiffs to In addition, Plaintiffs’ counsel has submitted a 18 declaration stating that the Pension Fund has been certified 19 as “in critical status” by its actuary since March 2010. 20 I am therefore not persuaded that Plaintiffs could satisfy an 21 award of attorneys’ fees. 22 benefit for all plan beneficiaries, a factor that favors 23 Plaintiffs. 24 Finally, the issue related to a Moreover, even if some Hummell factors favored 25 Defendants, Defendants would still not be entitled to 26 attorneys’ fees because no judgment has been entered in their 27 favor as a “prevailing party” under section 1451. 28 argue that since Plaintiffs lost on their veil piercing claim 3 Defendants 1 against the individual Defendants, judgment should be entered 2 in their favor and they should be entitled to fees as the 3 prevailing party. 4 issue, which is to compel the payment of the withdrawal 5 liability, and are therefore the prevailing party. 6 Trucking, 777 F.2d at 1375 (“[Pension Trust Fund] is the 7 prevailing party; it won the ultimate issue; that it did not 8 prevail on each and every sub-issue is not grounds for a 9 piecemeal fees award.”). I disagree. Plaintiffs won the ultimate See Lads Accordingly, Defendants’ motion for 10 attorneys’ fees and their corresponding motion to amend the 11 judgment are DENIED. 12 Plaintiffs’ Motion for Attorneys’ Fees & Costs 13 Where a plan successfully brings an action to collect 14 unpaid employer withdrawal liabilities, an award of reasonable 15 attorney’s fees and costs is mandatory.3 16 at 1373-75. 17 full amount of withdrawal liability owed by Defendants, and 18 are therefore entitled to reasonable attorneys’ fees. Lads Trucking, 777 Plaintiffs sought and received a judgment for the 19 “The most useful starting point for determining the 20 amount of a reasonable fee is the number of hours reasonably 21 expended on the litigation multiplied by a reasonable hourly 22 3 23 24 25 26 27 Neither Plaintiffs nor Defendants address the mandatory nature of attorneys’ fees in withdrawal liability actions where the plan is successful. In light of the mandatory nature of an award of attorneys’ fees in withdrawal liability actions, I will not address the factors set forth in Cuyamaca Meats, 827 F.2d at 500, as the parties have done. See also Operating Engineers’ Pension Trust Fund v. Clark’s Welding & Mach., Case No. 09-0044, 2010 U.S. Dist. LEXIS 50676, 2010 WL 1729475, at *5 (N.D. Cal. Apr. 27, 2010) (“When the Court awards withdrawal liability, an award of reasonable attorneys’ fees is mandatory.”) 28 4 1 rate.” 2 district court should also exclude from this initial fee 3 calculation hours that were not ‘reasonably expended’” such as 4 “fee request hours that are excessive, redundant, or otherwise 5 unnecessary. . . .” 6 the Supreme Court: 7 8 9 10 11 12 Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). Id. at 434. “The As recently emphasized by [T]rial courts need not, and indeed should not, become green-eyeshade accountants. The essential goal in shifting fees (to either party) is to do rough justice, not to achieve auditing perfection. So trial courts may take into account their overall sense of a suit, and may use estimates in calculating and allocating an attorney’s time. Fox v. Vice, 131 S. Ct. 2205, 2216 (2011). With respect to the hourly rates sought by Plaintiffs, I 13 find that, with the exception noted below, the rates are 14 reasonable. 15 time and $150 per hour for paralegal time. 16 submitted evidence showing that these attorney rates are in 17 line with those prevailing in the marketplace. 18 Clark’s Welding & Mach., 2010 U.S. Dist. LEXIS 50676, 2010 WL 19 1729475 at *15-16 (attorney rates of $185 per hour and $255 20 per hour and paralegals at $110 per hour found reasonable in 21 withdrawal liability action); Board of Trustees of the 22 Boilermaker Vacation Trust v. Skelly, Inc., 389 F. Supp. 2d 23 1222, 1227-28 (N.D. Cal. 2005) (attorney rates of $210 per 24 hour and $345 per hour found reasonable in delinquent 25 contribution action). 26 hourly rates sought by Plaintiffs, but they do dispute the 27 reasonableness of the paralegal hourly rates, arguing that an 28 hourly rate of $115 is more in line with community standards. Plaintiffs request $250 per hour for attorney Plaintiffs See, e.g., Defendants do not dispute the attorney 5 1 (Def.’s Opp. Br. at 13.) I agree with Defendants that an 2 hourly rate of $150 is on the higher end of the spectrum for 3 paralegal rates in this district. 4 N. Cal. Health & Welfare Trust Fund v. Alvarado, Case No. 5 09-02552, 2011 U.S. Dist. LEXIS 39133, 2011 WL 1361572, at 6 *16-17 (N.D. Cal. Apr. 11, 2011) (awarding $110 and $115 7 hourly rates for paralegals in action for unpaid 8 contributions); Carpenters Pension Trust Fund for N. Cal. v. 9 Lindquist, Case No. 10-3386, 2011 U.S. Dist. LEXIS 111731, See, e.g., Dist. Council 16 10 2011 WL 4543079 (N.D. Cal. Sept. 29, 2011) (same). There is 11 support for awarding paralegals an hourly rate as high as 12 $150, particularly where evidence is submitted that the 13 paralegal is performing tasks akin to those of an attorney 14 (see, for example, White v. Coblentz, Patch, Duffy & Bass LLP 15 Long Term Disability Ins. Plan, 2011 U.S. Dist. LEXIS 125657, 16 2011 WL 5183854 (N.D. Cal. Oct. 31, 2011) and the cases cited 17 therein), but Plaintiffs have submitted virtually no evidence 18 to demonstrate that the paralegals who performed work in this 19 action should be billed out at rates on the higher end of the 20 spectrum. 21 paralegals who worked on this matter are their names and how 22 long they have worked at Plaintiffs’ counsels’ law group. 23 (See Corrected Declaration of Katherine McDonough (“McDonough 24 Decl.”) at ¶ 1.) 25 types of tasks performed, the paralegals’ experience, 26 training, and previous rates billed and received, I am not 27 inclined to award such a high rate. 28 requested rate to $125 per hour. The only information provided about the two Without additional information regarding the 6 I therefore reduce the Otherwise, I find the 1 requested rates are reasonable. 2 Regarding the number of hours billed, Plaintiffs’ counsel 3 have submitted billing records demonstrating that they spent 4 927.70 hours litigating this case.4 5 spent litigating this action before and after the appeal. 6 (McDonough Decl. ¶¶ 6-8.) 7 itemized accounting of the number of hours spent on each task 8 performed by counsel for which they request reimbursement. 9 (Id.) These hours comprise time Plaintiffs have provided an Defendants argue that Plaintiffs should not be 10 permitted to recover fees for work performed in the pre-appeal 11 phase of this action because Plaintiffs previously requested, 12 and were denied, those fees on account of failing to comply 13 with the meet and confer requirements of the Local Rules. 14 (See Docket No. 54.) 15 did not appeal the order denying their fees, they have waived 16 the right to recover those fees. 17 Plaintiffs have waived their right to recover fees and costs 18 for the pre-appeal phase of this action. 19 entitled to recover those fees it would permit them to revive 20 their original motion for attorneys’ fees despite the fact it 21 was denied on account of their failure to comply with the 22 relevant Local Rules. 23 original summary judgment order, Plaintiffs would have never 24 been given the opportunity to seek to collect these fees 25 (unless they had appealed the denial, which they did not do), Defendants argue that since Plaintiffs I agree with Defendants that If Plaintiffs were Had Defendants not appealed the 26 4 27 28 This figure incorporates a voluntary reduction of 32 hours for worked performed on the second motion for summary judgment related to Plaintiffs’ unsuccessful claim for veil piercing. 7 1 and it is only by virtue of the action having been remanded 2 that Plaintiffs are now able to even attempt to collect these 3 fees. 4 waived a right to fees and did not appeal from that ruling to 5 use an adverse ruling on the merits of an appeal to revive its 6 right to fees. 7 entitled to recover fees or costs for work performed during 8 the pre-appeal phase of this action. 9 It is too much of a bootstrap to permit a party who Accordingly, I find that Plaintiffs are not That leaves 256.10 hours of potentially reimbursable 10 time.5 11 spent both drafting and preparing for oral argument on the 12 second summary judgment motion.6 13 time spent on the second summary judgment motion is excessive 14 given that Plaintiffs’ attorneys had already researched and 15 briefed a number of the issues in the parties’ motions. Of this amount, Plaintiffs seek 204 hours for time Defendants argue that the 16 17 18 19 5 This number is derived from Plaintiffs’ billing records, attached as Exhibit 1 to the McDonough Declaration. The first time entry in these records for the post-appeal phase of this action is on 1/26/2011. This order uses that billing entry as the starting point for determining the total number of post-appeal hours. 20 6 21 22 23 24 25 26 27 28 In their first motion for summary judgment, Plaintiffs sought reimbursement for 176.69 billable hours related to work performed on the cross-motions for summary judgment. (Docket No. 50.) Plaintiffs now seek reimbursement for a total of 373.50 billable hours for work performed relating to both rounds of the cross-motions for summary judgment. The difference between these two figures, rounded to the nearest hundredth, is 196.80. In their reply brief, however, Plaintiffs’ counsel claim to have worked 213.50 hours on the second round of summary judgment. This inconsistency is not addressed by Plaintiffs. I reviewed the billing records and added the hours from each time entry reflecting work performed on the second round of summary judgment briefing, which came to 204 hours. Given the inconsistencies in the briefs, I have chosen to use the 204 hour figure that is supported by the billing records. 8 1 Defendants also highlight the similarity in the statements of 2 facts between Plaintiffs’ first summary judgment motion and 3 their second motion, pointing out that the statement of facts 4 comprised 11 of the 33 pages in the brief. 5 counsel asserts that the second summary judgment brief 6 contained “expanded and revised” facts that shed light on the 7 history of Simas Floor and how M & M was formed, and also 8 included additional research on the alter ego doctrine. Plaintiffs’ 9 That there is overlap in the legal research and briefing 10 does not mean that the time spent in research and re-drafting 11 was entirely unnecessary or duplicative. 12 extended over many years, and it is not unreasonable for 13 Plaintiffs’ counsel to spend time conducting legal research to 14 ensure that Plaintiffs’ arguments were consistent with the 15 present status of the law. 16 534 F.3d 1106, 1112 (9th Cir. 2008) (“When a case goes on for 17 many years, a lot of legal work product will grow stale; a 18 competent lawyer won’t rely entirely on last year’s, or even 19 last month’s, research: Cases are decided; statutes are 20 enacted; regulations are promulgated and amended. A lawyer 21 also needs to get up to speed with the research previously 22 performed. All this is duplication, of course, but it’s 23 necessary duplication; it is inherent in the process of 24 litigating over time.”) (emphasis in original). 25 also presented some novel issues regarding the alter ego 26 doctrine, which made the legal analysis inherently more 27 complex, particularly given that there was little authority 28 applying the alter ego doctrine to a factual scenario similar This litigation has See Moreno v. City of Sacramento, 9 This case 1 to the one presented in this dispute. Indeed, a great deal of 2 the analysis turned on the historical application of this 3 doctrine in the context of traditional labor disputes, not 4 under the MPPAA. Nevertheless, 204 hours – which amounts to approximately 5 6 5 full-time workweeks – is on the higher end of what I would 7 expect Plaintiffs’ counsel to spend on the summary judgment 8 motion presented in this action, particularly since some of 9 the issues had already gone through one round of briefing. 10 is somewhat difficult to tell from the billing records what 11 precisely consumed so much of Plaintiffs’ counsels’ time, as 12 many of the records simply state “prepare Summary Judgment 13 Motion” or “further Prepare Summary Judgment Motion.” 14 204 hours is on the higher end of the time that I would have 15 expected counsel to spend on this motion, and in light of the 16 vagueness of the billing records, I find that a moderate 17 reduction in the number of hours sought is warranted. 18 therefore reduce the hours requested for work relating to the 19 second round of summary judgment by ten percent, for a total 20 of 183.6 hours.7 Since I will Finally, Defendants argue that Plaintiffs should not be 21 22 entitled to recover time spent on the July 2011 settlement 23 conference because, in addition to being unreasonable and 24 excessive, Plaintiffs misrepresented their willingness to 25 settle their claims, which resulted in the settlement 26 27 28 It 7 Based on the billing records, this will amount to 37.44 reimbursable paralegal hours and 146.16 reimbursable attorney hours. 10 1 conference being an “utter waste of time.” 2 at p.13.) 3 to the July 2011 settlement and am not convinced that 4 Plaintiffs’ hours are excessive. 5 reduce these hours, particularly in light of the high 6 incentive placed on encouraging parties to meaningfully engage 7 in settlement discussions.8 I have reviewed Plaintiffs’ billing entries related I therefore decline to Plaintiffs have also submitted billing records showing 8 9 (Def.’s Opp. Br. that in the post-appeal phase of this action they incurred 10 $113.25 in costs for delivering pleadings and other documents 11 to the court. 12 Plaintiffs are entitled to recover these delivery costs as 13 part of their reasonable attorneys’ fees. 14 Construction Industry and Laborers Health and Welfare Trust v. 15 Redland Ins. Co., 460 F.3d 1253, 1257 (9th Cir. 2006). 16 Plaintiffs also seek to recover costs relating to computerized 17 legal research. 18 computerized research may be recovered if separate billing for 19 such expenses is “the prevailing practice in the local 20 community.” 21 Welfare Trust v. Redland Ins. Co., 460 F.3d 1253, 1258-59 (9th 22 Cir. 2006). 23 and the challenges to that evidence raised by Defendants, I 24 find that Plaintiffs have failed to meet their burden to show 25 that the recovery of computerized legal research costs is the (McDonough Decl. at ¶ 10, Exhs. 2-3.) Trustees of the In this circuit, reasonable charges for Trs. of the Constr. Indus. & Laborers Health & Based on the evidence submitted by Plaintiffs, 26 27 28 8 I also agree with Plaintiffs’ counsel that it is not proper for me to delve into the details of what happened during the settlement conference under the Local ADR Rules. 11 1 prevailing practice in this district. While Ms. McDonough’s 2 declaration states that “[i]t is the prevailing practice in 3 the Bay Area to bill computerized research charges to the 4 client,” no foundation is provided for this conclusory 5 assertion. (McDonough Decl. at ¶ 11.) 6 evidence – unchallenged by Plaintiffs – that it is in fact not 7 the prevailing practice in this district to charge clients for 8 computerized legal research, and that most firms pay a flat 9 monthly rate for these services in lieu of charging clients Defendants provided 10 separately on a “per search basis.” 11 Davenport at ¶¶ 4-6.) 12 research costs incurred in this case were hourly charges that 13 were in fact billed to the Pension Fund. 14 Katherine McDonough in Support of Reply at ¶ 19.) 15 may be the practice of Plaintiffs’ counsels’ firm, Plaintiffs 16 failed to counter Defendants’ evidence that this is not “the 17 prevailing practice” of firms in this district. I therefore 18 decline to award Plaintiffs these costs. (Declaration of Stephen Ms. McDonough states that the legal (Declaration of While this 19 Conclusion 20 For the reasons set forth above, IT IS SO ORDERED that 21 Plaintiffs are awarded $53,900.00. 22 attorney hours at a rate of $250 ($48,875) and 40.2 paralegal 23 hours at a rate of $125 ($5,025). 24 $113.25 in costs. 25 Dated: May 16, 2012 26 This sum comprises 195.5 Plaintiffs are also awarded Bernard Zimmerman United States Magistrate Judge 27 28 G:\BZALL\-BZCASES\RESILIENT FLOOR COVERING PENSION\ORDER ON SECOND MOT FOR ATTYS FEES v.3.wpd 12

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