Cypress Advisors, Inc. v. Davis
Filing
347
ORDER by Chief Judge Philip A. Brimmer on 3/30/2021, re: 315 Davis's Renewed Rule 50(b) Motion for Judgment as a Matter of Law Regarding Claim for Civil Theft is DENIED; and 317 Cypress Advisors and Dean B. Zuccarello's Moti on for Attorneys' Fees and Costs is GRANTED in part and DENIED in part. ORDERED that Cypress Advisors and Dean B. Zuccarello are AWARDED attorneys fees in the amount of $120,947.80 for the work done by Sherman & Howard and $1,288,532 for the work done by Faegre for a total of $1,409,479.80. ORDERED that Cypress Advisors and Dean B. Zuccarello be AWARDED their reasonable costs pursuant to 28 U.S.C. § 1920.. (sphil, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 16-cv-01935-PAB-MEH
(Consolidated with Civil Action No. 17-cv-01219-PAB-MEH)
Civil Action No. 16-cv-01935-PAB-MEH
CYPRESS ADVISORS, INC.,
Plaintiff/Counter Defendant,
v.
KENT MCCARTY DAVIS,
Defendant/Counter Claimant/Third-Party Plaintiff,
v.
DEAN ZUCCARELLO,
Third-Party Defendant.
Civil Action No. 17-cv-01219-PAB-MEH
CYPRESS ADVISORS, INC.,
Plaintiff,
v.
KENT MCCARTY DAVIS and
C SQUARED ADVISORS, LLC,
Defendants.
_____________________________________________________________________
ORDER
_____________________________________________________________________
This matter is before the Court on Davis’s Renewed Rule 50(b) Motion for
Judgment as a Matter of Law Regarding Claim for Civil Theft [Docket No. 315] and
Cypress Advisors, Inc.’s and Dean B. Zuccarello’s Motion for Attorneys’ Fees and Costs
[Docket No. 317].
I. BACKGROUND
On July 29, 2016, Cypress Advisors, Inc. (“Cypress”) filed this action against
Kent McCarty Davis. Docket No. 1. Mr. Davis subsequently filed a claim against thirdparty defendant Dean Zuccarello. 1 Docket No. 60. On May 17, 2017, Cypress filed a
separate action against Mr. Davis, Jim Christopherson, 2 and C Squared Advisors 3. No
17-cv-01219-PAB-MEH, Docket No. 1. On September 3, 2019, the two actions were
consolidated because they shared “common question of fact and law” and “ar[o]se from
a common nucleus of fact—namely, the actions Davis took around the time he left
Cypress.” Docket No. 201 at 2 (quotations omitted). After trial in February 2020, the
jury found in favor of Cypress on its claim of civil theft against Mr. Davis. Docket No.
309 at 2. The jury was presented with evidence on the civil theft claim showing that in
June 2016 ZAK LLC, a client of Cypress, see Tr., Day 5, 710:22-711:3; Docket No. 322
at 2, mailed a check (the “ZAK Check”) to Mr. Davis that was made payable to Cypress.
Tr., Day 5, 712:8-12. Mr. Davis deposited the check, endorsing it with his own name on
behalf of Cypress. Id. at 712:14-22. At the time, Mr. Davis accepted the check, Mr.
Zuccarello testified that Mr. Davis was still an independent contractor for Cypress. Id. at
712:10-12. At the close of Cypress’s case, Mr. Davis moved for judgment as a matter
Mr. Zuccarello owns Cypress. Docket No. 241 at 2.
All claims were dismissed against Mr. Christopherson on January 8, 2019.
17-cv-01219-PAB-MEH, Docket No. 84
3 C Squared Advisors is Mr. Davis’s company. Docket No. 241 at 2.
1
2
2
of law on Cypress’s claim of civil theft pursuant to Fed. R. Civ. P. 50(a). Tr., Rule 50,
2:22-3:10. The Court denied the motion. Id., 29:19-20. Mr. Davis renewed his motion
after the close of evidence, asserting that Cypress never owned the ZAK Check. Id.,
49:23-51:3. The Court also denied that motion. Id., 52:10-14.
Final judgment was entered in this action on May 7, 2021. Docket No. 312.
Judgment was entered in favor of Cypress on its claim of misappropriation of trade
secrets against Mr. Davis, based on Mr. Davis’s retention of client information, with an
award of $499,327 in damages and on its claim of civil theft against Mr. Davis with an
award of $200 in statutory damages. Id. at 2. Judgment was entered in favor of Mr.
Davis on his claim for breach of contract against Cypress with an award of $280,987 in
damages. Id. Mr. Davis now renews his motion for judgment as a matter of law on
Cypress’s claim of civil theft pursuant to Fed. R. Civ. P. 50(b). Docket No. 315 at 2.
II. RENEWED RULE 50 MOTION
A. Legal Standard
Federal Rule of Civil Procedure 50 provides that judgment as a matter of law is
appropriate where “a party has been fully heard on an issue during a jury trial and the
court finds that a reasonable jury would not have a legally sufficient evidentiary basis to
find for the party on that issue.” Fed. R. Civ. P. 50(a)(1). “[I]n entertaining a motion for
judgment as a matter of law, the court should review all of the evidence in the record.”
Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). Although courts
are to review all of the evidence, there are limits as to what evidence they can consider.
For example, “the court must draw all reasonable inferences in favor of the nonmoving
party, and it may not make credibility determinations or weigh the evidence.” Id.
3
Moreover, the Court “must disregard all evidence favorable to the moving party that the
jury is not required to believe.” Id. at 151. In other words, “the court should give
credence to the evidence favoring the nonmovant as well as that evidence supporting
the moving party that is uncontradicted and unimpeached, at least to the extent that the
evidence comes from disinterested witnesses.” Id. (internal quotation and citation
omitted)
Where a party properly moves for judgment as a matter of law prior to the case
being submitted to the jury, that party may renew the motion after the jury returns its
verdict. See Fed. R. Civ. P. 50(a)(2), (b). However, the Court should grant such relief
“only where the proof is all one way or so overwhelmingly preponderant in favor of the
movant so as to permit no other rational conclusion.” Hinds v. Gen. Motors Corp., 988
F.2d 1039, 1045 (10th Cir. 1993). The Court applies the same legal standard for a
renewed motion under Rule 50(b) as is applied to the original motion for judgment as a
matter of law under Rule 50(a). See, e.g., Hysten v. Burlington N. Santa Fe Ry. Co.,
530 F.3d 1260, 1269-70 (10th Cir. 2008). However, there is an added limitation in that
generally “[t]he renewed motion under Rule 50(b) cannot assert grounds for relief not
asserted in the original motion.” Marshall v. Columbia Lea Reg’l Hosp., 474 F.3d 733,
739-40 (10th Cir. 2007). In diversity cases, federal law governs whether judgment as a
matter of law or a new trial is appropriate, but “the substantive law of the forum state
governs analysis of the underlying claim.” Valley View Angus Ranch, Inc. v. Duke
Energy Field Servs., LP, 2010 WL 4923979 at *4 (10th Cir. Dec. 6, 2010) (citations
omitted).
4
B. Analysis
Mr. Davis asserts that Cypress did not have standing to assert a claim for civil
theft and so the Court should enter judgment as a matter of law on that claim. Docket
No. 315 at 2. Mr. Davis argues that Cypress never possessed the ZAK Check and so it
cannot establish ownership, a necessary element of civil theft. Id. at 5. Cypress argues
that evidence at trial demonstrated that it did have ownership of the ZAK Check.
Docket No. 322 at 9. The parties agree that the elements necessary to prove civil theft
at trial were properly presented to the jury as:
1. Cypress owned the ZAK check;
2. Mr. Davis knowingly and without authorization exercised control over
the ZAK check; and
3. Mr. Davis did so with the intent to permanently deprive Cypress of the
use or benefit of Cypress's ZAK check.
Docket No. 315 at 6 (citing Docket No. 307 at 17); Docket No. 322 at 9. The parties
disagree, however, as to whether the evidence at trial was sufficient to show that
Cypress owned the check. Docket No. 315 at 5; Docket No. 322 at 9. Mr. Davis
asserts that, under Colo. Rev. Stat. § 4-3-420, if a payee does not receive delivery of
the check, it cannot bring a claim for conversion of that check because it does not have
an interest in it. Docket No. 315 at 7. Mr. Davis also asserts that he was not an agent
of Cypress at the time that he accepted the check. Docket No. 329 at 4.
Cypress argues that evidence was introduced at trial to show that Mr. Davis was
a contractor for Cypress at the time he accepted the check. Docket No. 322 at 13.
Additionally, Cypress claims that evidence showed that Mr. Davis signed the check with
5
his name and on behalf of Cypress. Id. Mr. Davis does not argue that an agent of
Cypress accepting a check does not sufficiently establish possession by Cypress.
The Colorado Supreme Court has ruled that a check made out to an employer is
the property of the employer when an employee receives the check on behalf of the
employer as part of his job. See Hucal v. People, 493 P.2d 23, 26 (Colo. 1971). Here,
evidence was introduced at trial that Mr. Davis signed for the check on behalf of
Cypress and was an independent contractor of Cypress. Tr., Day 5, 712:8-23; see Tr.,
Day 5, 661:13. Mr. Davis compares this case to a situation where an unrelated third
party steals a check, see Docket No. 315 at 8, but in this case, evidence was presented
that Mr. Davis was accepting the check on behalf of Cypress. Tr., Day 5, 712:14-23.
Mr. Davis relies on Newport Steel Corp. v. Thompson, 757 F. Supp. 1152, 1156
(D. Colo. 1990) (applying Colorado law), for the proposition that a check is not owned
by a person who is not in possession of the check. See Docket No. 315 at 8. Newport
Steel is distinguishable because there a party other than the payee designated on the
check was attempting to assert ownership over the check. See Newport Steel, 757 F.
Supp. at 1154. 4 In this case, evidence was introduced that the check was made out to
Cypress. Tr., Day 5, 712:8-11; 712:19-20. The Court finds that a rational jury could
have found that Mr. Davis accepted the check as an agent of Cypress’s. Therefore, a
rational jury could have found that the check was the property of Cypress. The Court
will deny Mr. Davis’s Rule 50 motion.
Mr. Davis cites cases from other states for the proposition that possession is
required for ownership, see Docket No. 315 at 8-9, but Mr. Davis’s assumption that he
was not acting as an agent for Cypress is not an undisputed fact.
4
6
III. ATTORNEYS’ FEES 5
The Cypress parties request attorneys’ fees and costs from the Davis parties on
their civil theft and trade secrets claims. Docket No. 317 at 2-3. The Davis parties
oppose an award of attorneys’ fees on the civil theft claim because they assert that Mr.
Davis is entitled to judgment as a matter of law and because the nominal damages
Cypress was awarded on the civil theft claim do not support an award of attorneys’ fees.
Docket No. 332 at 2. The Davis parties oppose a grant of attorneys’ fees on Cypress’s
trade secrets claim, arguing that the Cypress parties waived their right to recover fees
given that the jury did not find willful and malicious misappropriation and because the
evidence in the case does not support a finding of willful misappropriation. Id.
Additionally, the Davis parties argue that, if attorneys’ fees are awarded, they should be
reduced because they are not proportionate to the award of damages. Id. at 11.
Finally, the Davis parties argue the Cypress parties’ request for costs should be denied
because final judgment did not award costs to a specific party and because both parties
were partially successful. Id. at 14-18.
In order to be awarded attorneys fees under the Local Rules a party must provide
a motion “supported by affidavit” and the motion must include for each person for whom
fees are claimed “a summary of relevant qualifications and experience” as well as “a
detailed description of the services rendered, the amount of time spent, the hourly rate
charged, and the total amount claimed.” D.C.COLO.LCivR 54.3(a)-(b). The Cypress
parties included an affidavit supporting their motion for both firms they retained. Docket
Mr. Zuccarello joins Cypress’s motion, Docket No. 317 at 1, and both Mr.
Zuccarello and Cypress will be referred to as the “Cypress parties”. The Cypress
parties request fees and costs from Mr. Davis and his company C Squared Advisors,
id., who will be referred to jointly as the “Davis parties”.
5
7
No. 317-1; Docket No. 317-7. The Cypress parties also included the relevant
experience of the attorneys who billed time from each firm, Docket Nos. 317-5, 317-16,
and detailed descriptions of the time spent by each firm. Docket Nos. 317-2, 317-15.
The Court finds that the Cypress parties properly moved for attorneys’ fees under the
Local Rules.
A. Attorneys’ Fees
1. Legal Standard
Federal courts sitting in diversity apply relevant state statutes on attorneys’ fees.
See Johnson v. Life Invs. Ins. Co. of Am., 216 F.3d 1087, *6 (10th Cir. 2000) (table). A
determination whether to award attorneys’ fees necessarily begins with the American
Rule, which precludes an award of attorneys’ fees absent a specific contractual,
statutory, or procedural rule providing otherwise. City of Aurora ex rel. Util. Enter. v.
Colorado State Eng’r, 105 P.3d 595, 618 (Colo. 2005) (citing Alyeska Pipeline Serv. Co.
v. Wilderness Soc’y, 421 U.S. 240, 247 (1975)); see also Buder v. Sartore, 774 P.2d
1383, 1390 (Colo. 1989). An award of attorneys’ fees is an important sanction against
an attorney or party who improperly instigates or prolongs litigation. In re Marriage of
Aldrich, 945 P.2d 1370, 1378 (Colo. 1997). “The attorney fees statute is designed to
prevent burdensome litigation that interferes with the effective administration of justice.”
City of Aurora, 105 P.3d at 618. The law, however, is not designed to “discourage
counsel from zealously representing a client, but rather to balance that duty against the
important policy of discouraging unnecessary litigation.” Id. (citing W. United Realty,
Inc. v. Isaacs, 679 P.2d 1063, 1069 (Colo. 1984)).
8
2. Civil Theft
Under Colorado law, “an award of attorney fees to a prevailing plaintiff on a civil
theft claim is mandatory.” Steward Software Co. v. Kopcho, 275 P.3d 702, 712 (Colo.
App. 2010), rev’d on other grounds, 266 P.3d 1085 (Colo. 2011). An award of fees is
meant to serve a primarily punitive purpose for civil theft cases. Id. at 713. As
discussed above in Section II.B., the Court declines to award Mr. Davis judgment as a
matter of law on the civil theft claim and so that argument cannot be a basis to deny an
award of attorneys’ fees to the Cypress parties. The Davis parties also assert that the
Court should decline to award damages on this claim because the damages are
nominal. See Docket No. 332 at 4-5. As a successful plaintiff, the Cypress parties may
recover “reasonable attorney fees” under Colorado statute. Colo. Rev. Stat. § 18-4-405.
3. Trade Secrets
If “willful and malicious misappropriation exists” in a trade secret claim, “the court
may award reasonable attorney fees to the prevailing party.” Colo. Rev. Stat.
§ 7-74-105. The Cypress parties argue that the evidence presented at trial shows that
Mr. Davis maliciously and willfully misappropriated Cypress’s trade secrets. Docket No.
317 at 8-12. In order to be liable for misappropriation of trade secrets a plaintiff must
show “that the defendant knew, or should have known, that the trade secret was
acquired by improper means.” Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d
823, 847 (10th Cir. 1993). The jury found that Mr. Davis was liable for misappropriation
of trade secrets, Docket No. 309 at 2, meaning that they found that Cypress proved Mr.
Davis knew or should have known the trade secret was taken by improper means. The
Davis parties argue Cypress cannot prove willful or malicious appropriation for two
9
reasons: first, because the jury did not find that Mr. Davis’s conduct was willful, and
second, because Mr. Davis acted with a good faith belief in his ownership of the contact
database and prospect lists that were the subject of this claim. Docket No. 332 at 5-11.
First, the Davis parties assert that willfulness was a question for the jury that the
Court may not decide. Id. at 6. Rule 49 of the Federal Rules of Civil Procedure states
that “[a] party waives the right to a jury trial on any issue of fact raised by the pleadings
or evidence but not submitted to the jury unless, before the jury retires, the party
demands its submission to the jury. If the party does not demand submission, the court
may make a finding on the issue.” Fed. R. Civ. P. 49(a)(3). If a party does not present
an issue to the jury, it “will be held to have waived its right to trial by jury on that issue”
for the “purpose of giving the judge an opportunity to correct any inadvertent failure to
submit the issue to the jury.” 9B Charles Alan Wright et al., Fed. Prac. & Proc. Civ.
§ 2507, Special Verdicts, Omitted Issues (3d ed. April 2021). On appeal, a court will
presume “the lower court made whatever finding was necessary in order to support the
verdict and judgment that was entered.” Id.
The issue of willfulness was raised in the pleadings in this case, see Docket No.
28 at 17, ¶ 86, but was not submitted to the jury. See Docket No. 309 at 2. Mr. Davis
cites cases stating that a court cannot contradict a finding of willfulness by the jury, see,
e.g., Pearl Invs., LLC v. Standard I/O, Inc., 297 F. Supp. 2d 335, 339 (D. Me. 2004), but
points to no cases stating that a court may not make a finding under Rule 49(a)(3) on
willfulness when that issue was not presented to the jury. See Docket No. 332 at 6-7.
The Court finds that the issue of Mr. Davis’s willfulness was not submitted to the jury
10
under Rule 49(a)(3) and also finds that it is appropriate for the Court to make such
findings.
Second, the Davis parties argue that Mr. Davis had a good faith belief that he
owned information he developed that was the subject of the trade secrets claim and that
a good faith belief in ownership is inconsistent with a finding of willful and malicious
appropriation. Id. at 9. Mr. Davis cites a case finding that trade secrets were not
willfully or maliciously appropriated where the defendant believed he could retain
information he developed. Id. at 8-9 (citing Express Servs., Inc. v. Averette, 2007 WL
9710850, at *5 (W.D. Okla. Sept. 28, 2007). However, in that case, there is no
indication the defendant was told that he was at risk of violating trade secret laws for
retaining information. See Express Servs., Inc., 2007 WL 9710850, at *1-2.
Mr. Davis began working on his new company before leaving Cypress by setting
up a website to advertise his company to the restaurant industry. Tr., Day 2,
106:11-107:4. Mr. Davis used prospect lists from Cypress to form prospect lists for his
new company before he left Cypress. Tr., Day 5, 683:19-684:17; see Ex. 49. Mr. Davis
distributed contact lists from Cypress to his partner at C Squared, Mr. Christopherson,
before leaving the company. Tr., Day 5, 690:15-692:20, 693:1-20; see Exs. 107, 51, 52.
Mr. Davis was warned upon his termination from Cypress, in writing, that he would be
liable for misappropriation, undercutting his assertion that he had a good faith belief he
was the rightful owner of the information. Tr., Day 2, 59:12-19, 71:2-13; see Ex. 79-3.
Mr. Davis announced the launch of his new company to a variety of contacts including
contacts from the Cypress Database. Tr., Day 2, 95:9-12. After leaving Cypress, Mr.
Davis testified that he used prospect lists and contact databases from Cypress, Tr., Day
11
4, 411:9-13; Tr., Day 2, 7:3-6, 60:4-7, and evidence was presented showing he used
and distributed Cypress’s prospect lists over email to Mr. Christopherson. Tr., Day 5,
684:14-686:4, 686:5-25, 687:1-688:7, 688:13-689:10, 689:15-690:7; see Exs. 73, 74,
91, 107, 111. Mr. Davis testified that he used information from Cypress for his new
entity, C Squared. Tr., Day 2, 60:2-7.
The Tenth Circuit has looked for evidence of an “element of meaningful control
and deliberate action” to demonstrate willful acts. Weibler v. Universal Technologies,
Inc., 29 F. App’x 551, 554 (10th Cir. 2002). Mr. Davis was warned not to retain
information, but nevertheless disregarded that warning for the purpose of benefiting C
Squared. Evidence presented at trial showed that Mr. Davis knew he was retaining
information from Cypress and using it at his new company C Squared. His retention
and distribution of contacts and prospects lists shows meaningful control. He did not
just passively keep information, he distributed it. His actions demonstrate deliberation
as Mr. Davis actively used the information from Cypress for the benefit of his new
company. Based on the evidence presented at trial, the Court finds Mr. Davis did not
have a good faith belief in his ownership of the information and further finds that Mr.
Davis willfully and maliciously misappropriated trade secrets.
4. Reasonableness
To determine the reasonableness of a fee request, a court must begin by
calculating the “lodestar amount.” Robinson v. City of Edmond, 160 F.3d 1275, 1281
(10th Cir. 1998). The lodestar amount is the “number of hours reasonably expended on
the litigation multiplied by a reasonable hourly rate.” See Hensley v. Eckerhart, 461
U.S. 424, 433 (1983). A party seeking an award of attorneys’ fees must establish the
12
reasonableness of each dollar and each hour for which the party seeks an award. Jane
L. v. Bangerter, 61 F.3d 1505, 1510 (10th Cir. 1995). “A district court is justified in
reducing the reasonable number of hours if the attorney's time records are ‘sloppy and
imprecise’ and fail to document adequately how he or she utilized large blocks of time.”
Case v. Unified Sch. Dist. No. 233, Johnson Cty., Kan., 157 F.3d 1243, 1250 (10th Cir.
1998) (quoting Bangerter, 61 F.3d at 1510). A “reasonable rate” is defined as the
prevailing market rate in the relevant community for an attorney of similar
experience. Guides, Ltd. v. Yarmouth Group Prop. Mgmt., Inc., 295 F.3d 1065, 1078
(10th Cir. 2002). A district court must consider the market evidence in front of it to set a
reasonable rate and may lower or raise an attorney’s rate “if the market so dictates.”
Case, 157 F.3d at 1257.
The Cypress parties assert that they retained two firms, Faegre, Drinker, Biddle,
& Reath LLP (“Faegre”) and Sherman & Howard LLC (“Sherman & Howard”). Docket
No. 317 at 13; see Docket No. 317-1 at 3, ¶ 4; Docket No. 317-7 at 3, ¶ 2. Faegre billed
the Cypress parties a total of 5,416.4 hours at rates, for attorneys, of up to $665 an
hour, see Docket No. 317-2 at 111, for a total of $2,101,345.14. Docket No. 317 at 13.
The Cypress parties seek to recover $1,500,000 of this total. Id. at 14. Sherman &
Howard billed the Cypress parties 503.3 hours at rates ranging from $210 per hour to
$680 per hour, for the work done by attorneys and paralegals, see Docket No. 317-7 at
3, 4, ¶¶ 3, 5, for a total of $276,080.41. Docket No. 317 at 13. The Cypress parties
seek to recover the entire amount billed by Sherman & Howard. Id. at 14. The Davis
parties request a hearing on the reasonableness of the fees, including on the
“numerous[,] duplicative, unnecessary, and/or unspecific time entries,” but fail to point to
13
any specific entries that are unreasonable. Docket No. 332 at 14. The Davis parties
also do not contest the hourly rates set by either firm. See id. at 11-14. As the Davis
parties do not identify specific fees that are unnecessary and make only general
arguments without pointing to additional evidence that could be presented at a hearing,
the Court does not find that a hearing is necessary. See Gamble, Simmons & Co. v.
Kerr-McGee Corp., 175 F.3d 762, 774 (10th Cir. 1999) (ruling a district court need not
hold a hearing on attorneys’ fees when “it has sufficient knowledge to make a decision
without a hearing”). The Cypress parties assert that the fees are reasonable and
commensurate with local standards. Docket No. 317 at 8.
The Cypress parties argue that the amount Faegre charged was reasonable. In
support, they provide an affidavit from Mr. Zuccarello, Docket No. 317-1, a detailed
summary of the hours billed by Faegre, Docket No. 317-2, biographies for the attorneys
who billed time, Docket No. 317-5, and The Colorado Bar Association’s Economics of
Law Practice Survey, 2017 Edition (the “Practice Survey”). Docket No. 317-6.
In review of the hours provided, the Court finds that the time expended was
reasonable. In “cases with voluminous fee applications . . . it is unrealistic to expect a
trial judge to evaluate and rule on every entry in an application.” Am. Water Dev. Inc. v.
City of Alamosa, 874 P.2d 352, 387 (Colo. 1994); see also DeGrado v. Jefferson Pilot
Financial Ins. Co., 02-cv-01533-WYD-BNB, 2009 WL 1973501, at *10 (D. Colo. July 6,
2009). The Court will not make a finding on each entry submitted in the record of over
100 pages of bills, for the years of litigation in this case. The Court finds that ”billing
judgment” was exercised to limit the billed fees, see Case, 157 F.3d at 1250, and
discounts were applied to the overall charge. See Docket No. 317-2 at 2. The time
14
entries are for a few hours at a time and state what was worked on with specificity. See
id. at 3-137. The Court finds that the hours Faegre claims are appropriate for a case of
this length and complexity.
In determining a reasonable rate, the Court is left with less guidance. The
Cypress parties included the required information for a motion for attorneys’ fees under
the local rules, see D.C.COLO.LCivR 54.3, but do not explain how the information they
provide supports the finding that the charged rates are reasonable. The attorney
biographies do not specifically state the amount of time the attorneys have practiced,
see Docket No. 317-5, whereas the Practice Survey provides market rates for attorneys
based on the number of years they have been practicing. See Docket No. 317-6 at 38.
The Cypress parties do not provide an explanation as to how the average billable rates
in the Practice Survey should be compared to any specific Faegre attorneys in their
motion and supporting affidavit, and they do not provide any explanation of rates for
years outside of what is covered in the Practice Survey. See Docket No. 317 at 8;
Docket No. 317-1 at 2. In 2017, partners at Faegre billed the Cypress parties at an
average of $511 per hour. See 317-2 at 2. The rate for each partner that worked on
the case is not provided individually. See id. The Practice Survey provides that, for
2016, the mean billing rate for lawyers with 40+ years of experience was $324 per hour
and the median billing rate was $300 per hour. Docket No. 317-6 at 38. For all
“business-commercial litigation” lawyers, the median billing rate was $295 and the
billing rate for lawyers in the 75th percentile was $473. Id. at 39. The Cypress parties
do not provide any evidence that the rates they provide are reasonable despite
exceeding the average rates in Colorado. See Docket No. 317 at 7-8. A movant has
15
the burden to demonstrate that fees are reasonable. See Guides Ltd., 295 F.3d at
1079. Here, the Cypress parties have not demonstrated that the rates charged by
Faegre are reasonable. An assertion that the exhibits “support the award of attorneys’
fees” with no analysis is insufficient. Docket No. 317 at 7. The Cypress parties request
fees at an average rate of $387 for work done by partners, associates, of counsel,
paralegals, and employees providing client tech services. See Docket No 317-2 at 2.
Finding no other proposed rate from Cypress or Davis, the Court will consider the
Practice Survey as evidence of the market rates, see Case, 157 F.3d at 1256, and
lower the billable rate to the average billable rate for lawyers across Colorado in 2016,
namely, $254. Docket No. 317-6 at 37. Based on a total of 4,819.4 hours of work done
by attorneys, see Docket No. 317-2 at 2, multiplied by a billable hourly rate of $254
amounts to $1,224,127.60. For the work done by paralegals and staff doing client tech
services at Faegre, Cypress has not provided a reasonable rate. See Docket No.
317-1. The Court will use the average billable rate for paralegals with the median
amount of experience of polled paralegals in the survey, namely, $118. See Docket No.
317-6 at 43. Thus, 545.8 hours, Docket No. 317-2 at 2, multiplied by $118 amounts to
$64,404.40. 6 The Court finds that a total of $1,288,532 is a reasonable award of fees
for the work of Faegre.
For the hours spent by Sherman & Howard, the Cypress parties provide billing
records that provide the hourly rate for each person who worked on the case, Docket
No. 317-15 at 2, as well as detailed time entries. See id. at 4-26. Sherman & Howard
No reasonable rate has been provided for the hours labeled as Client Tech
Services and no reason has been given explaining why these fees are reasonable, and
so the Court will not award fees for the 51.2 hours of Client Tech Services. See Docket
No. 317-2 at 2.
6
16
spent a total of 503.3 hours on this case. Id. at 2. The Court finds this amount of hours
to be reasonable and that the entries reflect billing judgment in deciding what to charge
the client for.
To demonstrate that the requested rate for Sherman & Howard is reasonable, the
Cypress parties provide an affidavit from Peter G. Koclanes, an attorney at Sherman &
Howard, to explain the reasonableness of the fees. Docket No. 317-7 at 3, ¶¶ 1-2. Mr.
Koclanes states that the time Sherman & Howard expended was “reasonable and
necessary” to represent Cypress. Id. at 3-4, ¶ 4. Additionally, he states that the billable
rates of $680 per hour for himself, $235 an hour for one paralegal, and $210 an hour for
another paralegal “are within the market norm in the legal community.” Id. at 4, ¶ 5.
The biographies of Mr. Koclanes and Ms. Robarge, a paralegal who worked on this
action, are included in Cypress’s motion. Docket No. 317-16. A detailed description of
the hours Sherman & Howard spent on this action is included. Docket No. 317-15. To
prove that a fee rate is reasonable and within the market norm a “claimant must:
‘produce satisfactory evidence—in addition to the attorney's own affidavits—that the
requested rates are in line with those prevailing in the community for similar services by
lawyers of reasonably comparable skill, experience and reputation.’” Guides, Ltd, 295
F.3d at 1078 (quoting Blum v. Stenson, 465 U.S. 886, 895 n. 11 (1984)). Here, no
evidence beyond Mr. Koclanes’s affidavit is provided to justify Sherman & Howard’s
rates. “Where a district court does not have before it adequate evidence of prevailing
market rates, the court may use other relevant factors, including its own knowledge, to
establish the rate.” Id. at 1079. Here, the Court will also use the Practice Survey to set
a reasonable rate for Sherman & Howard. Sherman & Howard billed 346.8 hours for
17
Peter Koclanes. Docket No. 317-15 at 2. Mr. Koclanes has over thirty years of
experience. Docket No. 317-16 at 2. The average rate for lawyers with 30-39 years of
experience in 2016 was $292 per hour. Docket No. 317-6 at 38. 346.8 hours at $292
per hour provides a total of $101,265.60. Ms. Robarge, a paralegal with over twenty
years of experience, Docket No. 317-16 at 8, billed 151.9 hours. Docket No. 317-15 at
2. The average rate for paralegal with 20+ years of experience in 2016 was $126.
Docket No. 317-6 at 43. 151.9 hours at $126 per hour provides a total of $19,139.40.
Ms. Zoller is a paralegal who billed 4.6 hours. Docket No. 317-15 at 2. Ms. Zoller’s
relevant experience was not provided, so the Court will use the average rate for
paralegals with the median experience level, $118 per hour. See Docket No. 317-6 at
43. 4.6 hours at $118 per hour provides a total of $542.80. Accordingly, the Cypress
parties will be awarded a total of $120,947.80 for the work done by Sherman & Howard
and a total of $1,409,479.80 in attorneys’ fees for the work of both firms.
5. Reductions
The Davis parties argue that the Cypress parties’ request should be reduced
because they achieved minimal success at trial and prevailed on only two claims out of
fifteen between the two lawsuits. Docket No. 332 at 11. The Cypress parties respond
that the prevailing party in an action is not determined by counting claims and that, in
the nine claims and counterclaims presented to the jury, Cypress prevailed on all three
claims it originally brought. Docket No. 345 at 2.
Reducing fees in proportion to the number of claims a party was successful on is
not the appropriate analysis. See Jane L. v. Bangerter, 61 F.3d 1505, 1511 (10th Cir.
1995). “Where a plaintiff has obtained excellent results, his attorney should recover a
18
fully compensatory fee. . . . In these circumstances the fee award should not be
reduced simply because the plaintiff failed to prevail on every contention raised in the
lawsuit.” Hensley v. Eckhart, 461 U.S. 424, 435 (1983). A court must “make a
qualitative assessment to determine what less-than-perfect results are ‘excellent,’
justifying full recovery, or to what extent plaintiffs’ ‘limited success’ should effect a
reduction in the lodestar. ‘There is no precise rule or formula’ for making such
determinations.” Bangerter, 61 F.3d at 1511 (quoting Hensley 461 U.S. at 436).
Although the Cypress parties did not prevail on every legal theory, judgment in
favor of the Cypress parties as to their civil theft and misappropriation of trade secrets
claims, Docket No. 312 at 2, is sufficient to demonstrate that Cypress was the prevailing
party. Dismissal of some claims does not prevent this finding. Cypress prevailed on its
claims of civil theft and misappropriation of trade secrets against Mr. Davis and C
Squared. Docket No. 309 at 2. Mr. Davis prevailed on his claim of breach of contract
against Cypress, but did not prevail on his claim of interference with prospective
business relations against Cypress or his claim for breach of contract against Mr.
Zuccarello. Id. at 6. Thus at trial, the Cypress parties prevailed on all of their claims
against Mr. Davis. The Court will decline to reduce an award of attorneys’ fees based
on the proportion of claims on which the parties were successful. The Court finds that
Cypress’s success on its claims at trial makes it the prevailing party with excellent
results that entitles it to fees without reductions.
B. Costs
The Davis parties argue that the Cypress parties should not be awarded costs
because they are not the prevailing party. Generally, a litigant who is the prevailing
19
party for purposes of attorneys' fees is also the prevailing party for purposes of costs.
Barber v. T.D. Williamson, Inc., 254 F.3d 1223, 1234 (10th Cir. 2001); see also Hensley,
461 U.S. at 433 (1983). Because the Court finds that the Cypress parties are the
prevailing parties for the purposes of attorneys’ fees, it also finds they are the prevailing
parties for costs. The Local Rules state that “the clerk shall tax costs in favor of a
prevailing party.” D.C.COLO.LCivR 54.1. As the Cypress parties filed a bill of costs
within the time allotted by the Court, see Docket No. 314 and Docket No. 318, the clerk
shall award the Cypress parties costs. The Court, however, agrees with the Davis
parties that Colorado law does not authorize the recovery of costs beyond the
categories provided in 28 U.S.C. § 1920. See Stender v. Archstone-Smith Operating
Trust, 958 F.3d 938, 945 (D. Colo 2020). The Cypress parties can only collect costs for
“(1) clerk and Marshal fees, (2) fees for ‘recorded transcripts necessarily obtained for
use in the case,’ (3) expenses for printing and witnesses, (4) expenses for
exemplification and necessary copies, (5) docket fees, and (6) compensation of
interpreters and court-appointed experts.” Id. at 941 (quoting 28 U.S.C. § 1920).
To the extent the Davis parties argue they are also prevailing parties, the Court
declines to award them costs based on their failure to file a bill of costs as required by
D.C.COLO.LCivR 54.1. The Court instructed the Davis parties to file a proposed bill of
costs by June 21, 2021 and they did not file one. See Docket No. 314.
IV. CONCLUSION
Accordingly, it is
ORDERED that Davis’s Renewed Rule 50(b) Motion for Judgment as a Matter of
Law Regarding Claim for Civil Theft [Docket No. 315] is DENIED. It is further
20
ORDERED that Cypress Advisors and Dean B. Zuccarello’s Motion for Attorneys’
Fees and Costs [Docket No. 317] is GRANTED in part and DENIED in part. It is further
ORDERED that Cypress Advisors and Dean B. Zuccarello are AWARDED
attorneys’ fees in the amount of $120,947.80 for the work done by Sherman & Howard
and $1,288,532 for the work done by Faegre for a total of $1,409,479.80. It is further
ORDERED that Cypress Advisors and Dean B. Zuccarello be AWARDED their
reasonable costs pursuant to 28 U.S.C. § 1920.
Dated: March 30, 2022
BY THE COURT:
____________________________
PHILIP A. BRIMMER
Chief United States District Judge
21
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?