Saint Alphonsus Medical Center - Nampa et al v St Luke's Health System Ltd

Filing 665

MEMORANDUM DECISION re motions for attorney fees. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)

UNITED STATES DISTRICT COURT
IN THE DISTRICT OF IDAHO
SAINT ALPHONSUS MEDICAL CENTER NAMPA, INC., TREASURE VALLEY
HOSPITAL LIMITED PARTNERSHIP,
Case No. 1:12-CV-00560-BLW (Lead
SAINT ALPHONSUS HEALTH SYSTEM,
Case)
INC., AND SAINT ALPHONSUS
REGIONAL MEDICAL CENTER, INC.
MEMORANDUM DECISION
Plaintiffs,
v.
ST. LUKE’S HEALTH SYSTEM, LTD.
Defendant.
FEDERAL TRADE COMMISSION; STATE
OF IDAHO
Plaintiffs,
v.

Case No. 1:13-CV-00116-BLW

ST. LUKE’S HEALTH SYSTEM, LTD.;
SALTZER MEDICAL GROUP, P.A.
Defendants.
INTRODUCTION
The Court has before it motions for attorney fees filed by the private plaintiffs (St.
Al’s and Treasure Valley Hospital) and the State of Idaho. The motions are fully briefed
and at issue. In the decision below, the Court explains the amount of fees it awards to
each of the movants.
LITIGATION BACKGROUND
Following a bench trial, the Court issued a decision unwinding the merger
between St. Luke’s and Saltzer. That decision was appealed and affirmed. See Saint
Alphonsus Medical Center v. St. Luke’s, 778 F.3d 775 (9th Cir. 2015).
Memorandum Decision – page 1

Pursuant to agreement of all counsel, the Court bifurcated the issue of attorney
fees. See Docket Entry Orders (Dkt. Nos. 485 & 486). That agreement stated that the
Court would decide first whether the private plaintiffs were entitled to an award of
attorney fees as a prevailing party, and then decide later the amount of the award.
In that first phase, the Court decided that the private plaintiffs were entitled to an
award of fees. See Memorandum Decision (Dkt. No. 607). In making that ruling, the
Court rejected St. Luke’s argument that the private plaintiffs did not prevail because the
Court never addressed their argument that the merger would exclude competition in the
markets for pediatric services in Nampa, inpatient hospital services in Ada and Canyon
counties, and two outpatient hospital services markets in Ada and Canyon counties. St.
Luke’s argued that because the Court’s ruling focused on the adult primary care market –
essentially adopting the arguments of the FTC and State – the private plaintiffs were not
prevailing parties.
The Court disagreed, citing Ninth Circuit authority that even when a court “fail[s]
to reach certain grounds” argued by a plaintiff, “the unaddressed claim may support a fee
award” when the plaintiff succeeds on any significant issue in the litigation and achieves
some of the benefit it sought in bringing the suit. See Gerling Global Reinsurance Corp.
of America v. Garamendi, 400 F.3d 803, 809-10 (9th Cir. 2005). The Court went on to
explain that the private plaintiffs achieved full success and played a major role in the
outcome of the case:
Here, the private plaintiffs achieved all the benefit they sought in bringing
the suit, and succeeded on a significant issue. Importantly, both sets of
plaintiffs presented evidence demonstrating that the merger would result in
Memorandum Decision – page 2

higher prices. The Government plaintiffs used this evidence as direct proof
of their antitrust claims. The private plaintiffs used this evidence to argue
that if St. Luke’s had the market power before the merger to raise prices
when it purchased physician practices, it would have the market power after
the merger to exclude competitors.
So both sets of plaintiffs pursued this evidence as part and parcel of their
case. While the private plaintiffs pursued it as only part of their case, and
the Court did not address in full their claims, Gerling makes it clear that
this is not fatal to their fee petition. Counsel for the private plaintiffs did
not duplicate the work of Government counsel, and played a major role in
discovery, pre-trial proceedings, and the trial itself in providing evidence
that the Court used in finding that the merger would result in higher prices.
The private plaintiffs succeeded on this major issue, and are thus entitled
to fees under Gerling even though the Court did not address their claim that
higher prices demonstrated an ability to exclude competitors.
See Memorandum Decision, supra at pp. 4-5. Following that decision, the private
plaintiffs and the State briefed the issue as to the amount of the fees to be awarded. The
Court will resolve that issue below.
LEGAL STANDARD
When calculating the amount of attorney fees to be awarded in a litigation, this
Court must apply the lodestar method, multiplying the number of hours reasonably
expended by a reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983).
The court may consider a variety of factors when computing the lodestar rate:
(1) the time and labor required; (2) the novelty and difficulty of the
questions involved; (3) the skill requisite to perform the legal service
properly; (4) the preclusion of other employment by the attorney due to
acceptance of the case; (5) the customary fee; (6) whether the fee is fixed
or contingent; (7) time limitations imposed by the client or the
circumstances; (8) the amount involved and the results obtained; (9) the
experience, reputation, and ability of the attorneys; (10) the undesirability
of the case; (11) the nature and length of the professional relationship
with the client; and (12) awards in similar cases.
Carter v. Caleb Brett LLC, 757 F.3d 866, 869 (9th Cir.2014)
Memorandum Decision – page 3

ANALYSIS
Hourly Rates
There is no dispute that the hourly rates charged by the attorneys are reasonable.
The Court’s own analysis confirms that conclusion.
Number of Hours – Private Plaintiffs
The private plaintiffs claim that they spent about 22,000 hours on this case, and
they seek recovery for all those hours in their fee request. St. Luke’s objects, arguing that
80% of that time was spent on claims that were never ruled upon by the Court. The
private plaintiffs counter that all of their time was intertwined with the successful claims
and cannot be separated out as urged by St. Luke’s.
A prevailing party cannot recover a fee award for hours spent on a claim that is
not related to a successful claim. Hensley v. Eckerhard, 461 U.S. 424, 435 (1983). This
Court is “required to analyze whether [the movant] achieved only limited success in the
underlying litigation and how her requested fee award should be reduced to account for
her limited degree of success.” Ryan, 786 F.3d at 764. A court must ask “whether the
unsuccessful claim arises from the same core of facts as the successful claim and whether
it is likely that some of the work performed in connection with the unsuccessful claim
also aided the work done on the merits of the successful claim.” Schwarz v. Sec’y of
Health & Human Servs., 73 F.3d 895, 903 (9th Cir.1995).
In this case, the Court’s final decision rested on the effects of the merger on the
adult primary care market. The Court did not reach the issues raised by the private
plaintiffs concerning the alleged anticompetitive effects in markets other than the adult
Memorandum Decision – page 4

primary care market. These issues that the Court did not resolve are referred to by the
parties as the “vertical” issues.
St. Luke’s argues that counsel for the private parties spent 80% of their time on the
vertical issues, and that their fee request should therefore be reduced by that percentage.
They base their argument in part on an examination of the billing records of counsel for
St. Al’s from the Honigman and Duke-Scanlan lawfirms. That review, St. Luke’s claims,
revealed that 27% of the hours were devoted to the vertical issues, and many other hours
were so vaguely labeled that they cannot be attributed to any prevailing issue. See
Exhibit 4 (Dkt. No. 636-4); Stein Declaration (Dkt. No. 636) at ¶ 9. When a full analysis
is done, St. Luke’s argues, at least 80% of counsels’ billable hours were spent on issues
that were unrelated to the successful claims. Id.
Counsel for the private plaintiffs responds that St. Luke’s mislabeled many of the
hours and that “no more than 10% of the efforts of [their counsel] related to tasks that
were ‘primarily or exclusively’ unrelated to the claims decided by the Court.” See St.
Al’s Reply Brief (Dkt. No. 646) at p. 5; Ettinger Reply Declaration (Dkt. No. 646-1) at
¶ 2. And even the hours included in that 10% relate mainly to the referrals issue that the
Court addressed in its final decision, argues counsel for the private plaintiffs. Id. The
private plaintiffs identify only 6 of the 71 depositions in which they participated that
involved “evidence exclusively or primarily devoted to the vertical case.” See St. Al’s
Reply Brief, supra at p. 3.
This Court “should defer to the winning lawyer’s professional judgment as to how
much time he or she was required to spend on the case.” Ryan, 786 F.3d at 764. The
Memorandum Decision – page 5

Court agrees with counsel for the private plaintiffs that the vast majority of their time was
devoted to the adult primary care issue rather than to the vertical issues. The evidence
and documents submitted by counsel for the private plaintiffs were frequently crucial to
the Court’s overall understanding of the case, and provided a foundation for the Court’s
final decision. Often, the adult primary care issues overlapped with the vertical issues.
For example: (1) the private plaintiffs alleged that the geographic market for adult
primary care was identical with the market for pediatric primary care; (2) testimony
regarding barriers to entry applied to adult primary care and other markets; and (3)
evidence concerning St. Luke’s quality defense and efficiencies related directly to the
adult primary care issue but also to the vertical issues. The time spent on overlapping
issues is compensable under the authorities cited above because it is impossible to
untangle the related issue from the unrelated issue.
But some hours are not so tangled and can be parsed out as having been devoted
solely to vertical issues unrelated to the final decision. The Ninth Circuit has held that
the “district court has the authority to make across-the-board percentage cuts . . . in the
number of hours claimed . . . as a practical means of [excluding non-compensable hours]
from a fee application.” Gonzalez v. City of Maywood, 729 F.3d 1196, 1203 (9th Cir.
2013). After listening to four weeks of trial, and reviewing thousands of pages of
documents, the Court finds that 10% of the hours were devoted to pursuing vertical issues
unrelated to the successful claims. This represents the time spent by the private plaintiffs
pursuing the anticompetitive effects in the markets for pediatric services in Nampa,
inpatient hospital services in Ada and Canyon counties, and two outpatient hospital
Memorandum Decision – page 6

services markets in Ada and Canyon counties. While some of the time spent on these
vertical issues overlapped with successful issues and is compensable, as discussed above,
the Court finds that 10% of that time did not overlap and is not compensable. The Court
shall therefore reduce the fees sought by counsel for the private plaintiffs by 10%.
Time Spent on Appeal
St. Luke’s argues that the private plaintiffs did not cross-appeal from the Court’s
decision and added nothing of value to the Government’s appeal. The Court disagrees.
The private plaintiffs achieved a successful result and so their participation in the appeal
was a reasonable effort to protect that result. There was no duplication of effort: In the
briefing on appeal, the Government focused on legal standards while the private plaintiffs
focused on the specific evidence supporting the Court’s ruling. See Ettinger Declaration
(Dkt. No. 617-3) at ¶ 49. For these reasons, the Court will not reduce the hours spent on
the appellate issues.
Comparison with Defense Hours
St. Luke’s claims that counsel for the private plaintiffs and the State spent far
more hours on this case than did counsel for the defendants. St. Luke’s points out that
the private plaintiffs and the State spent 25,643 hours, and that although we do not know
the hours spent by the FTC, it is reasonable, St. Luke’s argues, to assume they spent
about 19,000 hours, adding up to a total of over 44,000 hours devoted to this case by the
plaintiffs. See Stein Declaration (Dkt. No. 636) at ¶¶ 3, 5, 7. Yet defendants only

Memorandum Decision – page 7

incurred 19,000 hours, and thus the plaintiffs spent 229% of the total time spent by
defendants. Id. at ¶ 7.1
Yet there is a question about this comparison raised by statements of St. Luke’s in
a related case. In St. Luke’s v. Allied World, Case No. 1:14-cv-475-BLW, St. Luke’s
sued its insurer (Allied World) arguing that it was responsible for St. Luke’s attorney fees
in this case. In pursuing that claim against Allied World, St. Luke’s stated that its
attorney fees in this case totaled over $17 million, a sum far above that sought by the
plaintiffs here.
This makes the Court skeptical that St. Luke’s only spent 19,000 hours on this
case. Of course it is possible that St. Luke’s hourly rates are dramatically higher than the
rates of plaintiffs’ counsel, which might explain how St. Luke’s nearly doubled its total
dollar billing despite working only 19,000 hours. But that is highly unlikely – both sides
hired highly-compensated specialty attorneys whose rates are set in a national market.
And it is telling that St. Luke’s does not rebut this argument in its final sur-reply brief.
See St. Luke’s Sur-Reply Brief (Dkt. No. 650-2).2 Finally, St. Luke’s has not submitted
any billing sheets to support its claim that it spent about 19,000 hours on this case.
Although opposing counsel’s billing records may be relevant to determining
whether the prevailing party spent a reasonable number of hours on the case, those

1

Neither side included the hours related to the FTC’s pre-litigation investigation. See Ettinger
Declaration, supra at ¶ 15; Reply Declaration of Stein (Dkt No. 650) at ¶ ¶ 2-6.
2

The Court will grant St. Luke’s motion to file the sur-reply brief (Dkt. No. 650).

Memorandum Decision – page 8

records are not dispositive. See Democratic Party of Wash. v. Reed, 388 F.3d 1281, 1287
(9th Cir.2004) (noting that opposing counsel’s billing records are “useful” in determining
the amount of a reasonable fee). Therefore, the district court has the discretion not to rely
on them. Gonzalez, 729 F.3d at 1202.
Here, the record simply is not clear whether there is actually the dramatic
discrepancy in hours alleged by St. Luke’s. Thus, the Court will not reduce the hours
based on those allegations.
Travel Time
The private plaintiffs and the State have requested $247,237.50 in attorney fees for
time spent traveling. St. Luke’s argues that plaintiffs should not be compensated for their
attorney fees incurred while traveling.
The Ninth Circuit has established that travel time is “reasonably compensated at
normal hourly rates if such is the custom in the relevant legal market.” See Davis v. City
& County of San Francisco, 976 F.2d 1536, 1543 (9th Cir.1992) vacated on other
grounds by, 984 F.2d 345 (9th Cir.1993). This District has in the past awarded fees for
travel time without discussion of whether it is within the custom of the relevant legal
market. See Mays v. Stobie, 2012 WL 914928 at *9 (D.Id. February 14, 2012) (awarding
fees for travel time). More recently, the Idaho Court of Appeals held that attorney fees
would not be awarded for travel time unless as a sanction. Portfolio Recovery Assoc.,
LLC v. Ruiz, 2015 WL 6441722 at *4 (Oct. 23, 2015).
The Portfolio case would be persuasive here if the relevant legal market was local
in nature. But this case presented complicated issues in the health care antitrust field, and
Memorandum Decision – page 9

it was reasonable to hire counsel that specialized in this area. No qualified attorneys
practiced locally, and so out-of-state counsel were retained. Given this, the extensive
travel costs here were necessarily expended due to the need for specialized counsel.
Marbled Murrelet v. Pacific Lumber Co., 163 F.R.D. 308, 327 (N.D. Cal. 1995) (refusing
to disallow travel time where it would “deter out-of-town attorneys from undertaking this
type of representation in the future”).
St. Luke’s challenges the amount of the travel expenses, arguing that it appears
counsel often traveled by first class. But counsel responds that “I did not book first class
fares for my travel except on (at most) one or two occasions when the only available seat
for a flight that was necessarily booked late was in first class.” See Ettinger Reply
Declaration, supra at ¶ 27. There is no contrary evidence and so the Court credits
counsel’s representation about the lack of first class travel.
The Court’s review of the fees incurred during travel leads it to conclude that
those fees are reasonable. They are high in large part because this case was on a fast
track discovery schedule that required extensive travel on tight deadlines. Depositions
were taken in many different locations. Lead counsel, and his co-counsel, flew often
from Michigan to Idaho to take depositions, talk with witnesses, and attend Court
hearings. Id. at ¶ 29. Given these circumstances, the Court finds that the $247,237.50
award sought for the fees incurred during traveling is reasonable.
Interest
The private plaintiffs and State are entitled to interest on the fee award from April
29, 2015 (the date on which the Court found them to be prevailing parties and entitled to
Memorandum Decision – page 10

fees) until paid. Spain v. Mountanos, 690 F.2d 742, 748 (9th Cir. 1982) (holding that 28
U.S.C. § 1961 allows attorney fees); Friend v. Kolodzieczak, 72 F.3d 1386, 1391-92 (9th
Cir. 1995) (holding that interest runs from the date the entitlement to fees is secured).
The appropriate rate is the “weekly average 1-year constant maturity Treasury yield, as
published by the Board of Governors of the Federal Reserve System, for the calendar
week preceding the date of the Judgment.” Id. The Court will leave it to counsel to
calculate the precise amount of interest.
Costs
Pursuant to 28 U.S.C. § 1920, the private plaintiffs and the State seek recover of
their allowable costs. The Court finds them proper and will award (1) St. Al’s the sum of
$85,333.98; (2) TV Hospital the sum of $3,100.22; and (3) the State the sum of
$68,294.06.
These parties also seek non-taxable costs. In its discretion, the Court finds such an
award inappropriate and will deny that request.
Other Items
St. Luke’s has brought other challenges to the fee petition but the Court finds that
they are without merit.
Conclusion
The Court has considered all the Carter factors listed above. Carter, 757 F.3d at
869. This was a novel and complicated case. It required counsel with specialized
knowledge in the health care antitrust field or in courtroom litigation. The deadlines
were tight because the Court put the case on a fast track, largely precluding counsel from
Memorandum Decision – page 11

taking other employment. The private plaintiffs and the State achieved their goal of
unwinding the merger and so were found to be prevailing parties. Although some issues
raised by the private plaintiffs were not addressed by the Court, the vast majority of their
work concentrated on, and was related to, the adult primary care issue that was the core
of the Court’s final decision in their favor. The Court will reduce the award to the private
plaintiffs by 10% to account for the work they did on issues unrelated to those upon
which they prevailed.
The final awards, taking into account the 10% reduction for the private
plaintiffs, are as follows:

Party
St Al’s
TV Hospital
State of Idaho

Attorney Fee
Award
$7,061,550.07
$332,282.70
$875,694.15

Cost Award

Total Award

$85,333.98
$3,100.22
$68,294.06

$7,146,884.05
$335,382.92
$943,988.21

The Court will enter a separate Judgment setting forth its ruling on these
attorney fees motions and the specific sums awarded.

DATED: March 28, 2016

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

Memorandum Decision – page 12