BCS Services, Inc. v. Heartwood 88, Inc. et al

Filing 994

MEMORANDUM OPINION AND ORDER regarding petitions for attorney's fees and costs, signed by the Honorable Matthew F. Kennelly on 12/7/2012. The case is set for a status hearing on 12/20/2012 at 9:30 a.m. as more fully described in this decision. (mk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

PHOENIX BOND & INDEMNITY CO., et al.,
Plaintiffs,
vs.
JOHN BRIDGE, et al.,
Defendants.

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Case Nos. 05 C 4095
and
07 C 1367

MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
The plaintiffs in this case asserted claims against a number of defendants under
the Racketeer Influenced and Corrupt Organizations Act (RICO) and for tortious
interference with prospective advantage under state law. The claims involved an
annual sale at which the Cook County Treasurer auctions liens for past due property
taxes, a mechanism for collecting back taxes. Plaintiffs alleged that the defendants
rigged the sale over a period of several years. The scheme is described in greater
detail in the Court’s previous decisions in this case.
In this decision, the Court addresses plaintiffs’ petition for attorney’s fees and
expenses.
Procedural history
1.

The two cases and the appeals
Plaintiffs filed their original federal suit (Case No. 05 C 4095) in 2005. Judge

Holderman dismissed that suit in December 2005, but the Seventh Circuit overturned

the dismissal in February 2007. Phoenix Bond & Indem. Co. v. Bridge, 477 F.3d 928
(7th Cir. 2007). The Supreme Court granted certiorari and affirmed in June 2008.
Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 629 (2008). Plaintiffs filed a second
suit (Case No. 07 C 1367) in March 2007, shortly after the Seventh Circuit’s ruling, in
which they added new plaintiffs and new defendants. In September 2010, Judge
Holderman granted summary judgment in favor of the defendants in both cases. The
Seventh Circuit overturned that ruling in March 2011 and remanded the case. BCS
Servs., Inc. v. Heartwood 88, LLC, 637 F.3d 750 (7th Cir. 2011). The cases were then
reassigned to the undersigned judge’s docket.
2.

The trial and the jury’s verdict
The cases were jointly tried to a jury in October – November 2011. Plaintiffs

settled with a significant number of defendants before and during trial. The cases
proceeded to verdict against two groups of defendants, referred to at trial as the “Sass”
defendants and the “Gray” defendants. These defendants were first added when the
second lawsuit was filed in March 2007.
Plaintiffs’ claims that were decided by the jury involved two separate RICO
enterprises. The evidence, however, overlapped to a significant extent, and plaintiffs
also pursued (with the Court’s approval) a theory of damages that took into account the
misconduct of all of the defendants.
The jury found for the plaintiffs on one or more RICO claims against all of the
Sass defendants and many of the Gray defendants. Consistent with the terminology
used at the trial, the Court will refer to the Gray defendants who were found liable as the
BG defendants.

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On the RICO claims, the jury awarded the plaintiffs (before trebling) a little over
$2,100,000 in compensatory damages against the Sass defendants and a little over
$667,000 against the BG defendants. The jury also awarded plaintiffs a total of
$2,447,800 in punitive damages against various Sass and BG defendants on plaintiffs’
state-law claims.
The jury found for defendant Bonnie Gray on all of plaintiffs’ claims against her
and failed to reach a verdict on plaintiffs’ claims against defendants Wheeler-Dealer,
Ltd. and Timothy Gray. Plaintiffs later dismissed their claims against Wheeler-Dealer
and Timothy Gray. Atlantic Municipal Corp., another one of the BG defendants, filed for
bankruptcy after judgment was entered. The present fee petition ruling does not apply
to these defendants.
3.

Entry of judgment
In January 2012, following extensive briefing, the Court addressed the

defendants’ contentions that they were entitled to a setoff for the amounts plaintiffs had
received from other defendants via settlement. The Court concluded that the BG
defendants were not entitled to a setoff because plaintiffs had obtained nothing in
settlement from any other defendants who were claimed to have been part of the Gray
RICO enterprise. See Phoenix Bond & Indem. Co. v. Bridge, Nos. 05 C 4095 & 07 C
1367, 2012 WL 8706, at *1 (N.D. Ill. Jan. 2, 2012).
The Court concluded that the Sass defendants were entitled to a setoff, “to be
applied against the total amount of money to which plaintiffs are entitled to recover from
the Sass defendants on the RICO claim, namely, the total damages (including trebling)
plus any award of attorney’s fees and expenses.” Id. at *2. Plaintiffs had obtained a

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total of $7,075,000 in settlement from other members of the “Sabre” enterprise, in which
the Sass defendants were claimed to have participated. The Court then determined
that a little over forty-six percent of the settlement payments should be allocated to
state-law punitive damages (and thus not subject to setoff) and that the remainder
should be allocated to compensatory damages. See Phoenix Bond & Indem. Co. v.
Bridge, Nos. 05 C 4095 & 07 C 1367, slip op. at 4-5 (N.D. Ill. Jan. 24, 2012).
On January 25, 2012, the Court directed the entry of judgment against the
defendants whom the jury had found liable. Part of the judgment involved punitive
damages on plaintiffs’ state law claims, which are not at issue here. The judgment
regarding the RICO award was as follows:
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Plaintiff Phoenix Bond against Sass defendants: trebled RICO damages of
$2,625,000, less a setoff of $1,905,259.71, for a net of $719,740.29.

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Plaintiff BCS Services against Sass defendants: trebled RICO damages of
$3,697,500, less a setoff of $1,905,259.71, for a net of $1,792,240.29.

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Plaintiff Phoenix Bond against BG defendants: trebled RICO damages of
$913,875.

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Plaintiff BCS Services against BG defendants: trebled RICO damages of
$1,089,000.

To put it another way, the total jury award against the Sass defendants, with RICO
trebling, was $6,322,500. Due to the effect of the settlement-based setoff, this was
reduced to a total of $2,511,980.58. The total jury award against the BG defendants,
with RICO trebling, was $2,002,875.

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4.

Plaintiffs’ fee petition
Plaintiffs have now filed a petition under RICO for an award of attorney’s fees

and expenses. As stated in their reply brief, they request a total of $11,843,042.80 in
attorney’s fees and $1,067,085.26 in expenses. Plaintiffs represent that before filing the
fee petition, they removed a little over $1,900,000 worth of attorney time that was
actually put into the case, and in their reply brief they withdrew just under $38,000 more.
Plaintiffs have also filed a supplemental fee petition seeking an additional
$287,323.50 in attorney’s fees and $4,266.82 in expenses. The supplemental fee
petition concerns work done following entry of judgment, preparation of the fee petition
and related materials, and work on matters relating to the bankruptcy filings of certain
defendants.
Discussion
The RICO statute provides that a prevailing plaintiff “shall recover . . . the cost of
the suit, including a reasonable attorney’s fee.” 18 U.S.C. § 1964(c). As a starting
point, courts rely on the “lodestar” method of calculation: the time reasonably expensed
on the litigation multiplied by a reasonable hourly rate. See, e.g., Hensley v. Eckerhart,
461 U.S. 424, 433 (1983). The fee applicant bears the burden on these points. Id. at
437.
The parties have filed an enormous volume of materials with the Court. These
include attorney time records, detailed and voluminous spreadsheets listing objections
to time entries, a joint statement identifying disputed issues, position papers on those
issues, and further briefs. The Court notes that defendants have objected on one basis
or another (or multiple bases) to virtually every time entry by plaintiffs’ attorneys.

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The Court has grouped defendants’ objections into the following categories:
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“relatedness” issues concerning attorney work that defendants contend is
unrelated or insufficiently related to the claims against them and thus not
compensable;

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“recordkeeping” issues involving the sufficiency of plaintiffs’ attorneys’
description of their work;

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“reasonableness / excessiveness” issues involving the degree of plaintiffs’
success, comparison with fees charged by defense counsel, and
reasonableness of particular elements of plaintiffs’ request;

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“apportionment” issues involving whether each group of defendants should be
responsible for less than 100 percent of a fee award;

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“hourly rate” issues involving the rates claimed;

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“expense” issues involving expert fees and other elements of plaintiffs’
request for reimbursement of expenses; and

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the supplemental fee petition.

The Court will address each of these categories in turn.
1.

Relatedness issues
The Court addresses the following arguments under the heading of relatedness.

First, the Sass and BG defendants were not named in the federal litigation until the filing
of the second federal case, in 2007. They contend that they should not be held
responsible for attorney’s fees and expenses incurred before that time. Second,
defendants argue that they should not be held responsible for fees incurred in pursuing
defendants in other RICO enterprises or other defendants in their same RICO

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enterprises, including defendants found not liable or dropped from the case. Third,
defendants take issue with particular components of the fee award, concerning work
relating to a state court lawsuit; a lawyer disciplinary complaint filed against one of the
plaintiffs; a dispute with a formerly named plaintiff; and negotiating settlements with
other defendants.
“[W]here as is the case here, a plaintiff is entitled to fees arising from one claim,
that plaintiff may also obtain fees for other successful claims arising from the same
common nucleus of facts.” Uniroyal Goodrich Tire Co. v. Mut. Trading Corp., 63 F.3d
516, 525 (7th Cir. 1995) (citing Hensley, 461 U.S. at 435). There is no question that the
plaintiffs’ claims against all of the defendants – other defendants claimed to be in the
same enterprises as the Sass and BG defendants, those claimed to be in different
enterprises, and even those sued before the Sass and BG defendants – all arose from
the same common nucleus of facts. All of the claims concerned the conduct of the
annual tax lien sale and the rules and regulations surrounding the sale; all concerned
the same or an overlapping period of years; and plaintiffs’ theory of damages
appropriately took into account the conduct and results of the sale as a whole. Just as
importantly, all of the claims relied on a common legal theory and thus required
consideration and litigation of numerous legal issues common to all of the defendants.1
With this background in mind, the Court turns to the defendants’ objections.
Period before Sass and BG defendants were named. The 2005 lawsuit and the
2007 lawsuit were unquestionably interrelated, and they were consolidated for both
1

It is neither necessary nor appropriate to attempt to disaggregate the time that plaintiffs’
attorneys spent on the state-law tortious interference claims, on which attorney’s fees are not
recoverable. The overlap between those claims and the RICO claims was complete, or virtually
so.

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discovery and trial purposes. They involved what amounts to the same RICO claim.
The Sass and BG defendants were not parties to the 2005 lawsuit and did not become
defendants until plaintiffs filed the 2007 lawsuit, but that does not mean that plaintiffs’
fees incurred in connection with the earlier lawsuit are non-recoverable. “[T]here is no
blanket impediment to including time spent in another litigation in a fee award . . . .”
Gulfstream III Assocs., Inc. v. Gulfstream Aerospace Corp., 995 F.2d 414, 420 (3d Cir.
1993). If the other litigation was “inextricably linked” to the present lawsuit, the fees and
expenses spent in that litigation properly may be included in the fee award. Id.2
There is no question that this is so with regard to the 2005 case. The earlier
case is inextricably linked to this one, for the reasons described above. The Court
therefore overrules defendants’ objection to the fees plaintiffs’ claim from the period
before the Sass and BG defendants were named as parties in this litigation.
Time spent pursuing defendants in other RICO enterprises or other defendants in
same RICO enterprises as Sass and BG defendants. The Sass and BG defendants
have offered no viable basis for excluding in their entirety fees that they contend
plaintiffs incurred in pursuing other defendants in the present cases. Plaintiffs’ claims
against other defendants in the same RICO enterprises as the Sass or BG defendants
were inextricably intertwined with their claims against those defendants. In particular,
plaintiffs’ RICO claims against the Sass and BG defendants required them to prove the
existence and nature of the enterprises in whose conduct these defendants were
claimed to have participated. In addition, their RICO conspiracy claims required them to
2

Contrary to the BG defendants’ argument, Gulfstream III Associates does not require proof
that work product generated in the other litigation was used in the present litigation. The Third
Circuit described that as a means by which a party could show an “inextricable link,” not the only
means. See id. at 420-21.

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prove the existence and scope of the conspiracies involving these defendants.3 This
necessarily required them to discover and marshal, and eventually offer, evidence
concerning participants other than the defendants who went to trial. As plaintiffs argue,
the fact that the defendants “chose to risk going to trial, and lost, does not mean that
they can now pretend as though they were not part of the . . . Enterprise or that Plaintiffs
did not have to spend time proving its existence and their participation in it.” Pls.’
Resps. to Defs.’ Objs. to Pls.’ Fee Pet. at 10-11.
There was also a very significant overlap between the claims against the Sass
and BG defendants and those against defendants in other RICO enterprises. As
described earlier, plaintiffs had to discover and marshal evidence concerning the
conduct of the tax sale, the Treasurer’s requirements, the materiality of the types of
false statements each defendant was claimed to have made, and the effect of a bidder’s
false certifications on the sale – and these are just some of the common factual issues.
In addition, as referenced earlier, plaintiffs’ theory of damages took into account, and
appropriately so, the conduct and results of the sale as a whole, including how and the
extent to which the participation of all allegedly ineligible bidders impacted plaintiffs.
Finally, the legal issues underlying the RICO claims involving the different enterprises
were unquestionably common across the case as a whole.
In short, the claims against the defendants in the various enterprises were largely
intertwined. Largely, however, does not mean completely. There was an appreciable
amount of evidence that was specific to each enterprise, or to defendants within that
3

The Court also notes that the Sass defendants have already received a credit on their damage
award for settlement payments that plaintiffs obtained from other defendants in the same RICO
enterprise as the Sass defendants, on the ground that these were payments that compensated
for the same injury.

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enterprise, that was unrelated to and not intertwined with the claims against defendants
in other enterprises. Indeed, the Court previously declined to set off against the jury’s
awards against the BG defendants settlement payments that plaintiffs received from
defendants in separate enterprises, on the ground that these involved different injuries.
The BG and Sass defendants should not be charged with fees that are attributable only
to other enterprises and defendants in them and that did not overlap or intertwine with
the claims against the BG and Sass defendants. Cf. Barrow v. Falck, 977 F.2d 1100,
1105 (7th Cir. 1992) (“If in the end the plaintiff wins a full recovery, the court awards the
full cost of the legal work, excepting only time spent so single-mindedly on the
unsuccessful theory that it was ‘unrelated’ to the successful one. So, too, with multiple
factual claims.”).
The Court will address this point further in the “apportionment” section of this
decision.
Defendants found not liable. A defendant “should not ‘be required to
compensate a plaintiff for attorney hours devoted to the case against other defendants .
. . who are found not to be liable.’” Rode v. Dellarciprete, 892 F.2d 1178, 1185 (3d Cir.
1990) (quoting Baughman v. Wilson Freight Forwarding Co., 583 F.2d 1208, 1214 (3d
Cir. 1978)). On the other hand, “attorney hours fairly devoted to one defendant that also
support the claims against other defendants are compensable.” Id. (internal quotation
marks omitted).
As indicated earlier, defendant Bonnie Gray was found not liable, and defendants
Wheeler-Dealer, Ltd. and Timothy Gray were dismissed by plaintiffs after the jury could
not reach a verdict regarding the claims against them. The Court is persuaded,

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however, that any time that might be considered to have been devoted to those
particular defendants also supported the claims against the BG defendants, who were
alleged to be part of the same enterprise as these defendants. This is particularly so
due to, as described earlier, the need to prove a RICO enterprise as well as the
conspiracy-related elements of plaintiffs’ RICO conspiracy claim. The Court overrules
this particular objection by defendants.4
Negotiation of settlements with other defendants. In response to defendants’
objection to time relating to negotiation of settlements with other defendants, plaintiffs
represent that they have withdrawn entries representing (at their requested hourly rates)
$17,281 in attorney time. See Pls.’ Reply at 21. Plaintiffs were not required to withdraw
this time. As they note in their reply, the time spent on these matters necessarily
involved assessment of the merits of the claims and defenses, which is intertwined to a
significant extent with their prosecution of the claims against the remaining defendants
(including the Sass and BG defendants). The Court will nonetheless hold plaintiffs to
their withdrawal. No further reductions in this regard are necessary, however.
State court lawsuit. When Judge Holderman dismissed the 2005 case in
December 2005, he dismissed plaintiffs’ RICO claims for failure to state a claim and
dismissed their state claims for lack of federal jurisdiction given the dismissal of the
federal claims. See Case No. 05 C 4095, dkt. entry 127 (Dec. 21, 2005). Though
plaintiffs appealed the dismissal order, they refiled their state-law claims in state court,
to hedge their bets in case the Seventh Circuit affirmed the dismissal of the federal
claims. In the state court case, plaintiffs named as defendants two of the Sass
4

The Sass defendants cannot properly be held responsible for fees attributable only to the nonliable Gray defendants. This point, however, is subsumed in the general apportionment that the
Court will address later in this decision.

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defendants, as well as several other parties, including members of the so-called “Peters
Group.” It does not appear that a great deal of activity took place in the state court.
After the Seventh Circuit reversed Judge Holderman’s dismissal order and the
2005 case was remanded for further proceedings, plaintiffs dropped the state court
case, because it was no longer necessary. And, as previously noted, they filed the
second federal case, including the Sass defendants. They did not include the Peters
defendants because they had settled with those defendants in the interim.
The factual background for state law tortious interference claims is the same as
that for plaintiffs’ RICO claims. But time spent on the state law claims exclusively is not
compensable under RICO. For example, the time needed to prepare and file pleadings
that asserted only state-law claims, or to respond to motions directed exclusively to
those claims, is unrelated to the RICO claims and thus is not properly compensable.
On the other hand, if discovery was initiated or conducted in the state court case, then
the time devoted to that unquestionably would be compensable here due to the
overlapping nature of the state and federal claims. Plaintiffs have made no effort to
explain in their briefs that they did any work on the state court case overlapped in any
way with the RICO claims. The Court concludes that none of the time devoted to the
state court litigation is compensable under RICO’s fee-shifting provision.
Suit against former plaintiff Oak Park Investments. While the dismissal of the
2005 case was on appeal, Oak Park Investments, Inc. was dismissed as a plaintiff. In
March 2007, the law firm representing the plaintiffs sued Oak Park in state court to
recover unpaid legal fees. Plaintiffs’ fee petition in this case included at least one entry
that appears to relate to the fee-collection lawsuit. The Court agrees that this time is not

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properly compensable. After the Sass defendants noted this in their response brief,
plaintiffs reduced their fee request by the amount attributable to that entry, so it is no
longer at issue. See Pls.’ Reply at 29.
ARDC complaint against Phoenix Bond’s principals. The Court also agrees with
defendants that time plaintiffs’ counsel spent dealing with an ARDC complaint that the
BG defendants’ attorney filed against the two principals of plaintiff Phoenix Bond who
are lawyers is not compensable. The complaint was based on testimony they had given
during depositions in the present case in which they allegedly admitted making false
statements on forms submitted to the Cook County Treasurer.
The ARDC complaint was related to – or at least arose from – the present
litigation. The purpose for which the BG defendants’ lawyer made the complaint is a
subject of dispute. Plaintiffs refer to it as a “tactic,” suggesting that the BG defendants
were attempting to gain some advantage in the present litigation. The BG defendants’
attorney says that he made the report to comply with his obligations under the Rules of
Professional Conduct. The Court is unpersuaded that there is enough of a relationship
between the ARDC complaint and the present litigation to make the time counsel spent
working on it properly compensable in this case. The Court therefore excludes this time
from plaintiffs’ request.
2.

Recordkeeping issues
Defendants object to a very significant proportion of the attorney time entries of

plaintiffs’ counsel on the ground that they are overly vague or insufficiently descriptive.
“[W]hen a fee petition is vague or inadequately documented, a district court may either
strike the problematic entries or (in recognition of the impracticalities of requiring courts

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to do an item-by-item accounting) reduce the proposed fee by a reasonable
percentage.” Harper v. City of Chicago Heights, 223 F.3d 593, 605 (7th Cir. 2000). See
also Hensley, 471 U.S. at 433 (“Where the documentation is inadequate, the district
court may reduce the award accordingly.”).
Defendants argue that if “no client in an arms-length relationship” would agree to
pay an attorney’s fees based on the nature of the attorney’s records, a court should
decline to award such fees. Matter of Chi., Milw., St. Paul & Pacific R. Co., 840 F.3d
1308, 1318 n.7 (7th Cir. 1988). The problem for defendants, however, is that the
plaintiffs, business entities headed by reasonably sophisticated business people, did
pay the fees of the principal law firm representing them for a significant period of the
litigation during which counsel represented them on an hourly fee-for-service basis.
See Affid. of Stanford Marks ¶ 3. Phoenix Bond’s principal considered the time entries
sufficient. Id. ¶ 6. The entries by those lawyers for that period are among those that
defendants attack as inadequate, and they are the equivalent of the others that
defendants attack. This by itself is sufficient to warrant overruling defendants’
objections.
That aside, the Court finds the entries made by counsel to be sufficient to allow a
reasonable assessment of the overall amount of properly compensable time. Some of
the entries are general to be sure, but they are not unduly vague under the
circumstances. Defendants also complain about so-called “block billing” – single time
entries that cover a number of activities or activities relating to more than one defendant
– but there is no prohibition of this as a basis for properly compensable time. See
Farfaras v. Citizens Bank and Trust of Chi., 433 F.3d 558, 569 (7th Cir. 2006). In a

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case this large and complex, in which attorneys are routinely performing multiple tasks
on any given day, it is neither surprising nor inappropriate for them to aggregate their
work into a single entry. See Top Tobacco, L.P. v. N. Atl. Operating Co., No. 06 C 950,
2007 WL 2688452, at *4 (N.D. Ill. Sept. 6, 2007). Indeed, in the Court’s experience, this
sort of timekeeping is the norm in the marketplace.5 The Court finds these entries
appropriate and sufficient as a basis upon which to determine the overall compensable
fees. The Court therefore overrules defendants’ objections.
3.

Reasonableness / excessiveness issues
Start-up time for newly added attorneys. Defendants are correct that when new

attorneys were added to the plaintiffs’ team, those attorneys required start-up time. But
the addition of new counsel was, as plaintiffs argue, “not only inevitable but to be
expected,” Pls.’ Reply in Support of Pet. at 14, given the length (six-plus years) and
complexity of the litigation. The requested time is not in the least bit unreasonable.
Multiple attorneys for particular tasks. Defendants are also correct that multiple
attorneys charged for particular tasks, including among other things deposition
preparation and attendance, as well as court appearances. In simpler cases, it is often
appropriate to preclude double-charging for activities of this type. This case, however,
was anything but simple, and the Court is persuaded that these charges were
reasonable given the complexity of the evidence and the interweaving of the claims
against the various defendants. With regard to court appearances, the Court can
5

For lawyers preparing for trial, for example, it is common and reasonable for them to record
preparation time as just that – trial preparation – without further specificity. It would be entirely
unreasonable to impose, at the risk of forfeiting a fee award, a standard that would require them
to disaggregate such time into its components, for example, “reviewed document A,” “reviewed
document B,” “developed strategy for cross-examining witness X.” Trial preparation involves a
variety of interrelated tasks that cannot be neatly subdivided for billing purposes. In the Court’s
experience, paying clients have no trouble understanding this.

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personally attest that it was often (and perhaps typically) necessary for more than one
attorney to address or at least consult upon the multifarious issues that arose, making
attendance by multiple attorneys reasonable under the circumstances.
Carter & Reiner’s time. The Court is likewise persuaded that the time charged by
the law firm of Carter & Reiner, which the Sass defendants challenge, was reasonably
expended. Defendants are correct that numerous attorneys, including a fair number of
senior attorneys, charged significant time to the case, including attorneys with firms
other than Reed Smith (formerly Sachnoff & Weaver), the principal law firm that handled
the case for plaintiffs. That, however, is unsurprising given its length and the complexity
of the factual and legal issues involved, and the Court sees nothing unreasonable about
Carter & Reiner’s time, even when considered in conjunction with time charged by
lawyers from other law firms.
“Clerical” work. Defendants contend that plaintiffs have improperly requested
compensation for clerical-type tasks conducted by attorneys. In response, plaintiffs
identified and have withdrawn eight time entries. See Pls.’ Reply in Support of Pet. at
17. As for the remaining entries identified by defendants, the Court has reviewed them
in detail. The overwhelming majority cannot fairly be characterized as involving
“clerical” work, as it is relatively apparent that they concerned tasks that involved some
exercise of judgment. See Sass Defs.’ Exs., Tabs marked “Objection 6” for each law
firm. A very modest proportion of the entries include time for what might be considered
file management, but given the complexity of the case, these entries are completely
appropriate and reasonable. As plaintiffs argue, the “time spent managing the massive
record developed by both sides throughout the nearly seven year life of the litigation

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was reasonable and necessary” as a task performed by attorneys. Pls.’ Reply in
Support of Pet. at 16-17. And, by the same token, plaintiffs should not be limited to
recovery for this time at a paralegal-type rate. The Court can attest from experience
that organizational activity by the lawyers involved, including the lead lawyers, is
necessary in order to avoid having to spend extra time further down the road. The time
entries in this regard are anything but excessive. No further reductions are required.
Summer associates. It appears that defendants also object to time charged for
“summer associates” – law students working at one or more of the firms involved –
though the Court was unable to find in defendants’ materials any separate breakdown of
this time. The Court has sufficient experience, both before appointment to the bench,
with law students performing legal work to make some generalized judgments about this
time. As a general rule, law firms charge considerably less to clients for this time, but
not enough less given the amount of time needed to bring the students up to speed and
the inevitable wheel-spinning involved. The Court will reduce the time attributable to
these entries by one-third.
Time allegedly relating to 2010-11 appeal. Finally, defendants contend that
plaintiffs seek to charge $850,000 for the second appeal of the case in 2010-2011. This
is incorrect. As plaintiffs point out, a good deal of the time spent during this period, and
included in defendants’ figure, was spent at the district court level dealing with motions
for sanctions that defendants filed after they prevailed on appeal. The Court has
reviewed the time involved and finds that it was reasonable and not excessive given the
stakes involved and the complexity of the matters at issue.

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4.

Apportionment issues
Defendants argue that the fee request should be reduced based on plaintiffs’

purportedly limited success. The result, however, cannot seriously be characterized as
representing limited success. It is true that the jury awarded plaintiffs less than they
sought, but the damages awarded were quite substantial. Just as significantly, plaintiffs
prevailed on liability against defendants who fought tooth-and-nail for every square inch
of ground over a six-year period. The Court overrules this objection.
The BG defendants note that the fees plaintiffs seek represents many multiples
of the fees that the BG defendants’ attorneys charged. That is beside the point. During
the period of time that the undersigned judge presided over the case, it was relatively
apparent that the BG defendants had left the laboring oar on common issues – which
describes most of the case – to other defendants, including the Sass defendants. The
BG defendants’ situation does not represent a fair comparison.
Finally, the Court returns to the issue of apportionment of fees based on the
proposition that plaintiffs were pursuing multiple claims against multiple defendants.
The Court has already rejected the proposition that plaintiffs may not recover from the
Sass and BG defendants fees that might have been attributable to other defendants in
the same particular RICO enterprise. The Court has also found that there was
significant overlap involving the claims relating to different enterprises and thus has
rejected defendants’ contention that each defendant group should be charged with (at
most) fees only within its own enterprise.
The Court has also found, however, that some portion of the fees claimed by
plaintiffs involves non-overlapping elements of their claims against defendants in other

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enterprises. This makes it appropriate to reduce the amount claimed. What is more
difficult is determining the appropriate reduction. The difficulty is largely inherent in the
fact that the claims against different enterprises were intertwined to a very significant
extent. It also derives in part, however, from two additional factors. First, the volume of
time entries involved would make an item-by-item reduction impractical irrespective of
the nature of the time entries. Second, the fact that plaintiffs’ attorneys did not, for the
most part, draw these sorts of distinctions in their time records makes an item-by-item
reduction impossible, or virtually so.
Given these factors, the Court believes it appropriate to make a percentage
reduction to account for the non-overlapping aspects of claims against defendants in
different enterprises from those involving the Sass and BG defendants. Cf. Northeast
Women’s Center v. McMonagle, 889 F.2d 466, 476 (3d Cir. 1989) (“In cases in which
the plaintiff’s successful and unsuccessful claims involve a common core of facts or
related legal theories, or where much of counsel’s time is dedicated to the litigation as a
whole, it is often impossible to divide counsel’s time on a precise claim-by-claim
basis.”); Harper, 223 F.3d at 604 (court may “reduce the proposed fee by a reasonable
percentage” if documentation is inadequate to make a more precise reduction).
Considering the case as a whole, as well as the significance of the common and
intertwined legal issues and the common and intertwined factual issues, the Court finds
that a twenty percent reduction is appropriate for each defendant group. In other words,
the Court concludes that twenty percent of the overall reasonable fee is properly
attributable to non-intertwined aspects of the claims against defendants in other
enterprises. To be more specific, the Court will determine an overall reasonable fee

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amount; the Sass defendants will be responsible for eighty percent of the overall
amount; and the BG defendants will be responsible for eighty percent of the overall
amount. The liability will be joint and several for sixty percent of the overall amount, but
only several for the other twenty percent.6
5.

Hourly rate issues
Defendants object to the hourly rates charged by a number of plaintiffs’

attorneys. A reasonable hourly rate is “one that is derived from the market rate for the
services rendered.” Pickett v. Sheridan Health Care Ctr., 664 F.3d 632, 640 (7th Cir.2
011) (internal quotation marks omitted). If the attorney has an actual billing rate that he
typically charges and obtains for comparable litigation, that is presumptively his market
rate. Id.; see also, e.g., Spegon v. Catholic Bishop of Chi., 175 F.3d 544, 555 (7th Cir.
1999) Once an attorney has offered evidence establishing his market rate, the burden
shifts to the opposing party to show why a lower rate should be awarded. See, e.g.,
Batt v. Micro Warehouse, Inc., 241 F.3d 891, 894 (7th Cir. 2001).
Plaintiffs have established that the hourly rates they seek in their fee petition are
consistent with the rates they actually charged to their clients during the period when
they were billing by the hour and that their clients, reasonably sophisticated business
people, actually paid. This is sufficient evidence that these rates are the market rates
for their services and that they are reasonable. See, e.g., Mathur v. Bd. of Trs. of S. Ill.
Univ., 317 F.3d 738, 743-44 (7th Cir. 2003). For good measure, however, plaintiffs
have offered other evidence that by itself justifies the reasonableness of their claimed
rates, including an affidavit by their lead trial attorney and another from an experienced
6

By way of example, if Court determined that the overall reasonable was $1,000,000, the Court
would assess $800,000 against the Sass defendants and $800,000 against the BG defendants,
with each group jointly and severally liable for $600,000 of the sum assessed.

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Chicago trial attorney.
Defendants have offered no evidence that rebuts the presumption that the rates
plaintiffs’ counsel claim are the appropriate rates for a fee award. They note that some
of the law firms representing the plaintiffs at various junctures charged lower rates than
Reed Smith, which supplied the lead attorneys and the only trial attorneys. In addition,
the BG defendants point out that their attorneys charged lower hourly rates. These
facts, however, are neither dispositive nor significant, particularly in view of the fact that
the rates sought by plaintiffs’ counsel are comparable to those charged by attorneys for
the Sass defendants, who like plaintiffs’ attorneys are with a large multi-city law firm.
For these reasons, the Court approves plaintiffs’ proposed hourly rates.
6.

Costs
a.

Expert fees

Defendants challenge the fees charged by plaintiffs’ experts, Scott Shaffer (about
$600,000) and Thomas Dunn (about $132,000). The fees billed are indeed quite large,
but the experts analyzed a very large amount of data in order to derive their opinions
and prepare for challenges by defendants both at deposition and at trial. Shaffer, in
particular, put together a damages model that required an enormous amount of work.
Defendants offer for comparison purposes the relatively modest fees charged by
their experts. The Court agrees with plaintiffs that the comparison is inapt: these
experts did not propose alternative damages models and did not testify at trial, and thus
their work is insufficiently similar to be comparable.
The testimony of plaintiffs’ experts was reasonably necessary to prove their case.
The Court overrules defendants’ objections and finds that the experts’ charges were

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reasonable.
The expert fees will not be apportioned under the formula the Court established
earlier. The entirety of the fees is appropriately attributable to all defendants given the
intertwined nature of the issues.
b.

Other costs

The Court has reviewed the other costs sought by plaintiffs and finds them to be
reasonable given the complexity and duration of the case and the volume of materials
filed with the Court and produced by and to opposing counsel.
The BG defendants’ statement of objections that was included in the parties’ joint
submission required by Local Rule 54.3 included a contention that plaintiffs had not
provided backup for their claimed costs. See Jt. Stmt. at 23. In response, plaintiffs
argued that because defendants “never requested the backup for costs and expenses
claimed[,] [p]laintiffs can hardly be held responsible for failing to provide information that
was not sought from them.” See Jt. Stmt., Ex. A at 23. The BG defendants did not
pursue this objection further in their brief in opposition to the fee petition, see dkt. entry
997, and the Court considers them to have abandoned the point.
The Court therefore overrules defendants’ objections to plaintiffs’ requested
costs. This includes the charges by “Chicago Winter,” a graphics firm that developed
and prepared trial exhibits, charts, and enlargements, which the Court finds reasonable.
Of these other costs, the Chicago Winter fees will not be apportioned under the
formula referenced earlier – because those fees were almost entirely focused on the
trial – but the remaining costs will be apportioned subject to that formula.

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7.

Plaintiffs’ supplemental fee petition
In May 2012, after their fee petition was fully briefed, plaintiffs filed a supplement

in which they sought an additional $287,323.50 in attorney’s fees and $4,266.82 in
expenses, broken down as follows:
Hours

Fees

Costs

Post-judgment work regarding
non-bankrupt defendants:

172.40

$97,040.50

$1,883.63

Work connected with fee petition:

349.80

$163,599.50

$2,383.19

51.95

$26,683.50

---

Work regarding bankruptcy
filings by certain defendants:

Work on the fee petition and supplemental petition. Defendants note, correctly
as far as the court can determine, that the approximately $164,000 claimed for fee
petition-related work is in addition to $91,572 claimed in the original fee petition for this
work, making the total about $255,000, representing about 616 hours of attorney time.
Defendants argue this is excessive.
There is no question that work on the fee petition was legitimately timeconsuming. The petition covered over six years of attorney work. More importantly,
defendants objected to the overwhelming majority of the attorney time entries submitted
by plaintiff – literally thousands of entries. Local Rule 54.3, for better or for worse,
imposes additional obligations on counsel prior to submitting a fee petition, which
increases the amount of time reasonably and necessarily devoted to its preparation and
briefing.
In addition, the material that the parties submitted in connection with the fee
petition was unusually voluminous. If piled in a single stack, it is well over a foot high,

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and this does not really capture the volume, because a great deal of it consists of
spreadsheets with abundant information packed into very small spaces. And most of
this material consists of objections made by defendants and support for those
objections. Defendants cannot on the one hand object to virtually every aspect of the
time claimed by plaintiff and then urge the Court to deny significant compensation for
dealing with those objections and justifying the relief sought in the petition.
All of that said, the Court is unpersuaded that over 600 hours of attorney time
was reasonably necessary for this work. Some of the work in question (though not
much of it) concerns items that plaintiffs should have caught on their own, including the
Oak Park Associates matter and other mistakes. More generally, however, 616 hours
of attorney time amounts to four lawyers billing eight hours per day for nineteen days
each. The fee petition and associated disputes were highly complex, but they were not
that complex. Because of the difficulty in sorting out exactly what time is reasonable
from exactly what time is unreasonable, the Court believes it appropriate to make a
percentage reduction of the total fees requested for preparing the fee petition (both
those claimed in the original petition and those claimed in the supplemental petition),
and reduces that aspect of the request by one-third. The associated expenses are
reasonable and are approved in full.
Post-judgment work regarding non-bankrupt defendants. The Court overrules
defendants’ objections to the time plaintiffs seek for other “post-judgment” work. This
includes time preparing for an arguing various points on which the Court ordered
argument (including researching and submitting additional authorities), and work
relating to citations to discover assets. Some of the descriptions are general, but not so

24

general as to render the time non-compensable. Plaintiffs have sufficiently shown that
this time and the associated expenses were reasonably and necessarily expended.
Work regarding bankruptcy filings by certain defendants. Certain of the
defendants in the Gray enterprise filed bankruptcy petitions following the judgment. The
Court is unpersuaded that any of this time is properly charged to the defendants who
remain in the case, and plaintiffs have not shown otherwise. These requested fees are
disallowed.
Conclusion
In addition to the points specifically addressed in this decision, the Court has
considered all of the other objections by the defendants and has found them to lack
merit. The Court grants plaintiffs’ petition and supplemental petition for attorney’s fees
and costs as described in this decision. Some further calculation will be required based
on the Court’s rulings, and the Court would like to get this done promptly in view of the
fact that the merits appeal in this case is already pending. For this reason, plaintiffs are
directed to make a supplemental submission embodying the reductions referenced in
this decision and separately quantifying each, by no later than December 12, 2012.
Defendants are directed to file a joint response to plaintiffs’ submission, by no later than
December 18, 2012. No reply will be permitted. The case is set for a status hearing on
December 20, 2012 at 9:30 a.m., at which time the Court expects to rule. These are all
firm dates.

_______________________________
MATTHEW F. KENNELLY
United States District Judge
Date: December 7, 2012
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