Barranco v. 3D Systems Corporation et al

Filing 437

ORDER Denying Plaintiff's Partial Objections and Adopting, As Modified, The Magistrate Judge's Findings and Recommendation To Grant in Part and Denying In Part Defendants 3D Systems Corporation and 3D System, Inc's Motion For An Award of Attorneys' Fees re 423 "On the basis of the foregoing, Plaintiff Ronald Barranco's June 29, 2018 partial objections to the magistrate judge's June 15, 2018 Findings and Recommendation to Grant in Part and Deny in P art Defendants 3D Systems Corporation and 3D System, Inc.'s Motion for an Award of Attorneys' Fees are HEREBY DENIED. The magistrate judge's F&R is HEREBY ADOPTED as MODIFIED by Part I of this Order, explaining the reasons for approving Ms. Mergo's $320 hourly rate." Signed by JUDGE LESLIE E. KOBAYASHI on 8/16/2018. (cib,)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
)
)
Plaintiff,
)
)
vs.
)
)
)
3D SYSTEMS CORPORATION, a
Delaware corporation, 3D
)
)
SYSTEMS, INC., a California
corporation, ABRAHAM
)
)
REICHENTAL, DAMON GREGOIRE,
)
)
Defendants.
_____________________________ )
RONALD BARRANCO,

CIVIL NO. 13-00412 LEK-RLP

ORDER DENYING PLAINTIFF’S PARTIAL OBJECTIONS AND
ADOPTING, AS MODIFIED, THE MAGISTRATE JUDGE’S
FINDINGS AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART
DEFENDANTS 3D SYSTEMS CORPORATION AND 3D SYSTEM, INC.’S
MOTION FOR AN AWARD OF ATTORNEYS’ FEES
On June 15, 2018, the magistrate judge issued his
Findings and Recommendation to Grant in Part and Deny in Part
Defendants 3D Systems Corporation and 3D System, Inc.’s Motion
for an Award of Attorneys’ Fees (“F&R”).

[Dkt. no. 423.]

On

June 29, 2018, Plaintiff Ronald Barranco (“Plaintiff” or
“Barranco”) filed his partial objections to the F&R
(“Objections”).

[Dkt. no. 429.]

On July 9, 2018, Defendants 3D

Systems Corporation and 3D Systems, Inc. (“Defendants” or “3D
Systems”) filed their response to the Objections (“Response”).
[Dkt. no. 432.]

The Court has considered the Objections without

a hearing, pursuant to Rule LR7.2(e) of the Local Rules of
Practice of the United States District Court for the District of

Hawai`i (“Local Rules”).

Plaintiff’s Objections are denied and

the F&R is adopted, as modified, for the reasons set forth below.
BACKGROUND
The background of this matter is well known to the
parties, and the Court will only discuss the background relevant
to the Objections.

On May 27, 2016, following a trial, the jury

returned verdict in favor of Defendants on all of Plaintiff’s
claims and in favor of Defendants on their counterclaim for
breach of a noncompete agreement.

[Dkt. no. 282.]

On May 9,

2017, in its Order Denying Plaintiff’s Oral Motion for Judgment
as a Matter of Law, this Court concluded, based on the jury’s
verdict, that Defendants were entitled to an equitable
accounting.

[Dkt. no. 300.]

On November 20, 2017, this Court

conducted a one-day bench trial to perform the equitable
accounting.

[Minutes, (dkt. no. 383).]

On March 30, 2018, this

Court issued its Findings of Fact and Conclusions of Law and
Order (“FOF/COL”).

[Dkt. no. 391.1]

The FOF/COL ruled:

“judgment shall enter in favor of 3D Systems on its breach of
contract counterclaim in the amount of $522,860.24.”

307 F.

Supp. 3d at 1103.
On April 13, 2018, Defendants filed their Motion for an
Award of Attorneys’ Fees (“Motion”).

[Dkt. no. 395.]

On May 9,

2018, Plaintiff filed his memorandum in opposition, and

1

The FOF/COL is also available at 307 F. Supp. 3d 1075.
2

Defendants filed their reply on May 23, 2018.
413.]

[Dkt. nos. 409,

The F&R recommended that, pursuant to Haw. Rev. Stat.

§ 607-14, Defendants be awarded:

“$1,299,408.50 in attorneys’

fees, $348,668.99 in prejudgment interest, and $71,642.97 in
nontaxable costs.”

[F&R at 30.]

The Objections followed

thereafter.
STANDARD
This Court has stated the legal standard applicable to
its review of magistrate judge’s findings and recommendations as
follows:
Local Rule 74.2 provides: “Any party may
object to a magistrate judge’s case dispositive
order, findings, or recommendations . . . within
fourteen (14) days after being served with a copy
of the magistrate judge’s order, findings, or
recommendations.” See also Fed. R. Civ. P. 72(b)
(“Within 14 days after being served with a copy of
the recommended disposition, a party may serve and
file specific written objections to the proposed
findings and recommendations.”).
. . . .
When a party objects to a magistrate judge’s
findings or recommendations, the district court
must review de novo those portions to which the
objections are made and “may accept, reject, or
modify, in whole or in part, the findings or
recommendations made by the magistrate judge.” 28
U.S.C. § 636(b)(1); see also United States v.
Raddatz, 447 U.S. 667, 673 (1980); United States
v. Reyna–Tapia, 328 F.3d 1114, 1121 (9th Cir.
2003) (en banc) (“[T]he district judge must review
the magistrate judge’s findings and
recommendations de novo if objection is made, but
not otherwise.”).

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Under a de novo standard, this Court reviews
“the matter anew, the same as if it had not been
heard before, and as if no decision previously had
been rendered.” Freeman v. DirecTV, Inc., 457
F.3d 1001, 1004 (9th Cir. 2006); United States v.
Silverman, 861 F.2d 571, 576 (9th Cir. 1988). The
district court need not hold a de novo hearing;
however, it is the court’s obligation to arrive at
its own independent conclusion about those
portions of the magistrate judge’s findings or
recommendation to which a party objects. United
States v. Remsing, 874 F.2d 614, 616 (9th Cir.
1989).
However, “‘[f]rivolous, conclusive, or
general objections [to a magistrate judge’s report
and recommendation] need not be considered by the
district court.’” Rodriguez v. Hill,
No. 13CV1191-LAB (DHB), 2015 WL 366440, at *1
(S.D. Cal. Jan. 23, 2015) (some alterations in
Rodriguez) (quoting Marsden v. Moore, 847 F.2d
1536, 1548 (11th Cir. 1988)). Thus, an objection
to findings “without any analysis as to why [they
are] inaccurate” is “insufficient to trigger
review of those findings.” United States v.
Rudisill, Nos. CR 97-327-PHX-ROX, CV 04-466-PHXROX, 2006 WL 3147663, at *1 (D. Ariz. Nov. 1,
2006) (citation omitted). If courts required
review in such circumstances, “‘judicial resources
would be wasted and the district court’s
effectiveness based on help from magistrate judges
would be undermined.’” Bridgeman v. Stainer,
No. 12-CV-212 BEN (PCL), 2014 WL 1806919, at *1
(S.D. Cal. May 7, 2014) (some citations omitted)
(quoting United State v. Midgette, 478 F.3d 616,
622 (4th Cir. 2007)); see also Reyna-Tapia, 328
F.3d at 1122 (“the underlying purpose of the
Federal Magistrates Act is to improve the
effective administration of justice” (citing
Peretz v. United States, 501 U.S. 923, 928, 111 S.
Ct. 2661, 115 L. Ed. 2d 808 (1991)). Further,
“[o]bjections that would not alter the outcome are
moot, and can be overruled on that basis alone.”
Rodriguez, 2015 WL 366440, at *1.

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Muegge v. Aqua Hotels & Resorts, Inc., Civil 09-00614 LEK-BMK,
2015 WL 4041313, at *2 (D. Hawai`i June 30, 2015) (some
alterations in Muegge) (some citations omitted).
DISCUSSION
I.

Nikole Mergo’s Hourly Rate
Plaintiff argues the magistrate judge erred by

describing Nikole Mergo, Esq., as an attorney with twenty-eight
years of experience, and notes she graduated law school in 1999.
[Objections at 5.]

Plaintiff argues the magistrate judge erred

in approving as reasonable Ms. Mergo’s requested rate of $320,
and argues her rate should be reduced to either $290 or $300 to
be comparable to the rate of $290 approved for Dawn Sugihara,
Esq., who graduated law school in 2001.

[Id. at 6.]

In light of Plaintiff’s identification of the specific
factual error related to Ms. Mergo’s years of experience, this
Court reviews her hourly rate de novo.

See Motion, Aff. of

Nikole Setzler Mergo (“Mergo Aff.”) at ¶ 6 (“I have been a
billing attorney in the private sector legal practice for
nineteen (19) years.”).

The issue before this Court is whether

“the requested hourly rate reflects prevailing community rates
for similar services.”

Au v. Republic State Mortg. Co., Civ.

No. 11-00251 JMS-KSC, 2014 WL 770291, at *6 (D. Hawai`i Feb. 25,
2014) (citing Jordan v. Multnomah County, 815 F.2d 1258, 1263
(9th Cir. 1987)).

In evaluating Ms. Mergo’s hourly rate, this
5

Court considers the prevailing market rates in Honolulu, not the
prevailing markets rates in other jurisdictions where Defendant’s
mainland counsel also practices.

See Muegge, 2015 WL 4041313, at

*16 (some citations omitted) (citing Gates v. Deukmejian, 987
F.2d 1392, 1405 (9th Cir. 1992)).

The Court also considers the

experience, skill, and reputation of the attorney requesting the
fees.

Webb v. Ada Cty., 285 F.3d 829, 840 & n.6 (9th Cir. 2002).
Ms. Mergo describes her experience as follows.

She

graduated from the University of Virginia Law School in 1999.
[Mergo Aff. at ¶ 11.]

Since then, she has “continuously engaged

in the practice of law in the private sector in the Columbia,
South Carolina office of Nexsen Pruet,” focusing on complex
commercial litigation; served as the lead trial attorney and
client relationship partner for many of her firm’s largest
clients; regularly developed case strategy and supervised
partners, associates, and paralegals; and been recognized by and
listed in Chambers USA, Best Lawyers in America, Super Lawyers,
and Legal Elite of the Midlands.

[Id.]

In this case, Ms. Mergo

served as lead counsel, and as co-lead trial counsel alongside
Thomas Benedict, Esq.

[Id. at ¶ 12.]

Specific responsibilities

“included the management of all document productions, defending
and taking depositions, arguing motions, drafting briefs, and
trying both the jury trial and the accounting trial with . . .
local counsel.”

[Id. at ¶ 13.]

The Court is familiar with the

6

prevailing rates for legal services in Honolulu, and finds that
$320 per hour is consistent with the prevailing rates for an
attorney of Ms. Mergo’s experience and for the type of work
performed.
Plaintiff also argues a rate of $320 for Ms. Mergo is
unreasonable because, in Muegge, this Court found $275 to be a
reasonable hourly rate for an attorney with twenty-five years
experience.

See 2015 WL 4041313, at *16.

for two reasons.

This comparison fails

First, and most significantly, that attorney

adduced no evidence, apart from his own say-so, showing his
proposed hourly rate was reasonable.

Id. at *5 (citing BlueEarth

Biofuels, LLC v. Hawaiian Elec. Co., Civil No. 09–00181 LEK–KSC,
2015 WL 881577, at *3 (D. Hawai`i Feb. 27, 2015) (“In addition to
their own statements, attorneys are required to submit additional
evidence that the rate charged is reasonable.” (emphasis in
BlueEarth)).

Second, that case involved legal work performed

between 2009 and 2014.

Id. at *1.

In this case, Defendants

provided the affidavit of a partner at the firm Cades Schutte,
who has twenty-seven years experience practicing law, attesting
to the reasonableness of the rates requested by Defendants’ local
counsel.

[Motion, Aff. of Dennis W. Chong Kee at ¶¶ 1, 6.]

This

also supports the reasonableness of the similar rates requested
by Defendants’ outside counsel, including Ms. Mergo.

Moreover,

this case involves legal work performed from 2013 until 2017.

7

Prevailing rates in the Honolulu legal market have increased over
the years.

See Pelayo v. Platinum Limousine Servs., Inc., CIVIL

NO. 15-00023 DKW-KJM, 2016 WL 5402185, at *5 & n.5 (D. Hawai`i
Sept. 27, 2016) (increasing attorney’s hourly rate from $200 to
$225, in part, “to avoid stagnation of rates over time”).

The

Court finds that $320 is a reasonable hourly rate for Ms. Mergo’s
legal services in this case.
II.

Mr. Benedict’s Hourly Rate
Defendants argue the magistrate judge only relied on

Ms. Mergo’s years of experience when deciding to reduce
Mr. Benedict’s requested rate to level of Ms. Mergo’s rate.
Defendants therefore contend: “increas[ing] Mr. Benedict’s rate,
to $360 or the originally requested $375, would be more
appropriate.”

[Response at 5.]

Defendants did not file any

objections to the F&R in accordance with Local Rule 74.2.

To the

extent Defendants are objecting to the F&R with respect to
Mr. Benedict’s hourly rate, rather than making an argument in
furtherance of their Response to Plaintiff’s Objections regarding
Ms. Mergo’s hourly rate, the Court declines to consider
Defendants’ untimely objection.
III. Calculation of Fees
Under the lodestar method,
[t]he Court must determine a reasonable fee by
multiplying “the number of hours reasonably
expended on the litigation” by “a reasonable
hourly rate.” Hensley v. Eckerhart, 461 U.S. 424,
8

433 (1983). Beyond establishing a reasonable
hourly rate, “a party seeking attorneys’ fees
bears the burden of proving that the requested
fees and costs are associated with the relief
requested and are reasonably necessary to achieve
the results obtained.” U.S. v. Chung, Civ. No.
07–00570 ACK–BMK, 2010 WL 5388006, *3 (Dec. 17,
2010). “A court must guard against awarding fees
and costs which are excessive, and must determine
which fees and costs were self-imposed and
avoidable.” Id. (citation omitted). A court has
discretion to “trim fat” from, or otherwise
reduce, the number of hours claimed to have been
spent on the case, and time expended on work
deemed “excessive, redundant, or otherwise
unnecessary” shall not be compensated. Id.
(citations and internal quotation marks omitted).
Muegge, 2015 WL 4041313, at *14.
Plaintiff objects that the F&R makes no factual
findings to show the reasonableness of staffing Defendants’ legal
team with ten attorneys.

No such findings were required.

The

magistrate judge carefully considered the reasonableness of the
hourly rates requested, the reasonableness of the hours expended,
and the necessity of the tasks upon which those hours were
expended.

The number of attorneys on Defendants’ legal team is

not an independent factor in the lodestar analysis.
Plaintiff speculates that, because Defendants’ legal
team was overstaffed, it billed too many hours and billed for
unnecessary tasks.
reasons.

Plaintiff’s speculation fails for multiple

First, Plaintiff does not show the alleged overstaffing

caused Defendants’ counsel to bill excessive hours or for
unnecessary tasks.

Second, the magistrate judge carefully

9

considered evidence of excessive hours and/or unnecessary tasks,
and recommended a twenty percent reduction of all fees.
Plaintiff fails to show how his concerns related to alleged
overstaffing are not already addressed by the twenty percent
reduction.

Third, the magistrate judge carefully considered the

specific relevance of alleged overstaffing under the loadstar
analysis, e.g., if unnecessary hours were billed for multiple
attorneys to coordinate work that could have been performed more
efficiently by fewer attorneys.

Cf. id. at *18 (providing

examples of uncompensable, unnecessary tasks caused by
overstaffing).

Plaintiff does not specifically object to any

billing item approved by the magistrate judge as unnecessary.
Plaintiff fails to identify any specific factual or legal errors
in the F&R; he merely disagrees with it.

Plaintiff’s conclusive

and general objections do not trigger de novo review of the F&R.
See id. at *2.
Next, Plaintiff appears to argue that, under Hawai`i
law, regardless of the lodestar analysis, he cannot be held
responsible for opposing counsel’s fees to they extent they are
substantially in excess of his own counsel’s fees.
at 7.]

[Objections

Specifically, Plaintiff states Defendants’ attorneys

billed 8,493 hours, while his attorneys billed “roughly 3,000”
hours, and argues:
The Supreme Court of Hawaii has limited a
defendant’s right to recover fees under HRS
10

§ 607-14, declaring that it would “be inequitable
to award a prevailing defendant attorney’s fees in
an amount nearly twice that which the plaintiff
could have recovered had he or she prevailed.”
Piedvache v. Knabusch, 88 Haw. 115, 119, 962 P.2d
374, 378 (1998), as amended (Oct. 21, 1998). Here
- and without considering the controlling
precedent set forth in Piedvache - the Findings
award fees that are far more than twice what
Mr. Barranco could have reasonably recovered.
[Id.]

Piedvache provides Plaintiff no support.

In that case,

the plaintiff brought suit in a court with a jurisdictional limit
of $20,000; and because attorneys’ fees under § 607-14 are capped
at twenty-five percent of a recovery, the plaintiff could not
have recover more than $5,000 in attorneys fees.
Hawai`i at 120, 962 P.2d at 379.

The prevailing defendant sought

to recover attorneys’ fees of $9,685.84.
376.

Piedvache, 88

Id. at 117, 962 P.2d at

That is, the fees request was “an amount nearly twice that

which the plaintiff could have recovered had he or she
prevailed.”

Id. at 120, 962 P.2d at 379.

Piedvache is silent as

to how many hours the non-prevailing party’s attorney billed and
does not compare the hours billed by each side.

Piedvache holds

that applying the twenty-five percent cap only to plaintiffs, but
not defendants, would be inequitable.

Id.

Plaintiff has not

objected to the magistrate’s finding that, because the Complaint
requested $7,818,000 in damages, the fees award does not exceed
the twenty-five percent cap under § 607-14.

Piedvache says

nothing about the instant case because Defendants’ fees award is
unaffected by the statutory cap.
11

Plaintiff also criticizes the F&R as uncritically
accepting of Defendants’ positions.

This Court disagrees.

To

the contrary, this Court commends the magistrate judges’s
thorough and judicious review of the instant matter.

Far from

uncritically accepting Defendants’ positions, the F&R, inter
alia: recommends a reduction of twenty percent of all hours
billed; [F&R at 18;] reduces the number of hours for document
reviewers by thirty percent (333 hours); [id. at 14;] reduces
certain attorneys’ time by 105, 127, and 18.8 hours; [id. at 1516;] and reduces certain paralegals time by 458.2 and 23.9 hours,
[id. at 25].
Finally, the Court notes that Plaintiff’s proposed
modification to the F&R is unreasonable.

Plaintiff makes the

conclusory assertion that Defendants’ legal team should have been
staffed with no more than seven attorneys; identifies seven
attorneys whose billing would be compensated; and reduces all
other attorneys’ billings to zero.

[Objections at 12-13.]

Plaintiff identifies no authority supporting a cap on the number
of attorneys whose billings are compensable under § 607-14.
Plaintiffs’ proposed cap of seven attorneys appears arbitrary.
Plaintiff does not attempt to explain how a cap of seven
attorneys relates to “establishing [an attorney’s] reasonable
hourly rate” and “proving that the fees and costs sought are
associated with the relief requested and are reasonably necessary

12

to achieve the results obtained.”

See Muegge, 2015 WL 4041313,

at *6 (citation and internal quotation marks omitted).
The Court finds that Plaintiff’s Objections have no
merit.

The Objections are denied in their entirety.
CONCLUSION
On the basis of the foregoing, Plaintiff

Ronald Barranco’s June 29, 2018 partial objections to the
magistrate judge’s June 15, 2018 Findings and Recommendation to
Grant in Part and Deny in Part Defendants 3D Systems Corporation
and 3D System, Inc.’s Motion for an Award of Attorneys’ Fees are
HEREBY DENIED.

The magistrate judge’s F&R is HEREBY ADOPTED as

MODIFIED by Part I of this Order, explaining the reasons for
approving Ms. Mergo’s $320 hourly rate.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, August 16, 2018.

/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge

RONALD BARRANCO VS. 3D SYSTEMS CORP., ET AL; CIVIL 13-00412 LEKRLP; ORDER DENYING PLAINTIFF’S PARTIAL OBJECTIONS AND ADOPTING,
AS MODIFIED, THE MAGISTRATE JUDGE’S FINDINGS AND RECOMMENDATION
TO GRANT IN PART AND DENY IN PART DEFENDANTS 3D SYSTEMS
CORPORATION AND 3D SYSTEM, INC.’S MOTION FOR AN AWARD OF
ATTORNEYS’ FEES

13