Trustees of the Chicago Regional Council of Carpenters Pension Fund et al v. R.C.I. Enterprises, Inc.

Filing 51

MEMORANDUM Opinion and Order Written by the Honorable Gary Feinerman on 7/20/2011.Mailed notice.(jlj)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
TRUSTEES of the CHICAGO REGIONAL COUNCIL
OF CARPENTERS PENSION FUND, CHICAGO
REGIONAL COUNCIL OF CARPENTERS
WELFARE FUND, and CHICAGO REGIONAL
COUNCIL OF CARPENTERS APPRENTICE &
TRAINEE PROGRAM FUND,
Plaintiffs,
vs.
R.C.I. ENTERPRISES, INC.,
Defendant.

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09 C 3816
Judge Feinerman

MEMORANDUM OPINION AND ORDER
Plaintiff Trustees of the Chicago Regional Council of Carpenters fringe benefit trust
funds brought this ERISA action against Defendant R.C.I. Enterprises, Inc., seeking to collect
contributions allegedly owed by R.C.I. for hours worked by R.C.I. employees performing
bargaining unit work. On May 23, 2011, the court granted Trustees’ unopposed motion for
summary judgment, awarding $21,538.40 in contributions, audit fees, interest, and liquidated
damages, and ruling that Trustees were entitled to reasonable attorney fees and costs. Doc. 43.
Trustees have filed a petition for fees and costs, which R.C.I. does oppose. Trustees are awarded
$16,478.75 of the $18,988.75 they seek.
A district court must award “reasonable attorney’s fees” to the prevailing trustee in a
delinquent contributions case. 29 U.S.C. § 1132(g)(2)(D); see Anderson v. AB Painting &
Sandblasting Inc., 578 F.3d 542, 544 (7th Cir. 2009). As with most fee-shifting statutes, “[t]he
most useful starting point for determining the amount of a reasonable fee is the number of hours
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reasonably expended on the litigation multiplied by a reasonable hourly rate.” Ibid. (internal
quotation marks omitted). Adjustments then can be made to this starting point, known as the
lodestar, based on the factors set forth in Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). See
Anderson, 578 F.3d at 544 & n.1.
With respect to the hourly rate component of the lodestar, Trustees submit persuasive
evidence that their attorneys’ hourly rates—$180 for the junior lawyer who carried the laboring
oar, and $235 and $250 for a senior lawyer—are reasonable for this type of case. See Moriarty
v. Svec, 233 F.3d 955, 965 (7th Cir. 2000) (affirming district court finding that $165 per hour
was a reasonable rate and noting that “[t]he lawyer’s regular rate is strongly presumed to be
market rate for his or her services”). R.C.I. does not challenge the reasonableness of the hourly
rates, thus forfeiting the point. See Stark v. PPM Am., Inc., 354 F.3d 666, 675 (7th Cir. 2004)
(“once the attorney provides evidence of the market rate, the burden shifts to the opposing party
to show why a lower rate should be awarded”).
While the hourly rates are reasonable, the same cannot be said of the second component
of the lodestar, the hours that Trustees’ counsel expended on the case. At the outset of this
litigation, Trustees relied on an audit concluding that R.C.I.’s delinquent contributions amounted
to $348,880.47; they later submitted a revised audit reducing that figure to $108,162.95; and
they ultimately submitted a further revised audit showing only $9,396.81 in delinquent
contributions. The time that an attorney spends reviewing an audit, discussing the audit with the
defendant, and making downward adjustments to delete non-bargaining unit work ordinarily is
compensable. Here, however, the first two audits were so wildly inflated that it would be
unreasonable to require R.C.I. to reimburse Trustees for their counsel’s audit-related work.
Accordingly, the following time entries are disallowed:
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1.25 hours on 10/28/09: “Appearance before Judge Leinenweber for
initial status hearing. Conference with opposing counsel regarding
issues in the case and how to proceed to narrow discrepancies in the
audit.”

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1.25 hours on 11/25/09: “Examine and review audit findings in
preparation for meeting with opposing counsel.”

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0.25 hours on 11/30/09: “Telephone audit with opposing counsel to
discuss audit findings and set a date to meet and discuss related
issues.”

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1.25 hours on 12/9/09: “Confer with opposing counsel regarding
meeting to discuss the audit.”

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0.75 hours on 1/26/10: “Telephone conference with opposing
counsel to discuss the audit discrepancies in dispute.”

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2.75 hours on 9/20/10: “Examine and review audit and defendant’s
discovery responses in preparation for the deposition of Jason
Lawson. Telephone conference with John Libby regarding the new
rules for Flooring Addendum audits. Conference call with opposing
counsel to discuss the revision of the audit. Examine and review
revised audit. Conference call … regarding the same.”

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0.75 hours on 9/21/10: “Review revised audit. Conference …
regarding material handlers and electronic record individuals left in
the audit. Conference … regarding the same.”

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0.75 hours on 9/21/10: “Correspondence to … one of the electronic
record individuals remaining in the audit, requesting him to contact
me to discuss the type of work he performed for RCI.”

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0.5 hours on 9/21/10: “Meeting with Karen M. Rioux to discuss the
audit adjustments under the Floor Addendum. Conference call … .”

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0.25 hours on 9/29/10: “Telephone conference with opposing
counsel regarding issues involved in the revised audit.”

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0.5 hours on 10/11/10: “Draft correspondence … regarding revised
audit and the two remaining electronic record individual classified
as material handlers who remain in the audit.”

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0.5 hours on 10/11/10: “Correspondence … regarding the removal
of certain electronic record individuals from the audit.”
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0.25 hours on 10/12/10: “Email correspondence … regarding
obtaining contact information for two electronic record individuals
in the audit.”

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0.25 hours on 10/25/10: “Correspondence … regarding adjusting the
audit to remove certain electronic record individuals.”

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1.0 hours on 10/28/10: “Review revised audit. Correspondence with
opposing counsel regarding the same.”

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0.75 hours on 11/5/2010: “Review correspondence … regarding
RCI audit and discrepancies related to [employee]. Telephone
conference with opposing counsel regarding the same.”

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0.75 hours on 11/8/2010: “Correspondence and telephone
conference with opposing counsel regarding the remaining
discrepancies in the audit and additional documents requested.”

Some of these time entries include work unrelated to reviewing the two inflated audits, but
because the entries were “block-billed”—making it impossible to tell how much time was spent
on the audits and how much time on compensable work—the entries are disallowed in their
entirety. See Rexam Beverage Can Co. v. Bolger, 620 F.3d 718, 738-39 (7th Cir. 2010); Lahiri
v. Universal Music & Video Distribution Corp., 606 F.3d 1216, 1222-23 (9th Cir. 2010); see
also Hensley, 461 U.S. at 437 (“The applicant should … maintain billing time records in a
manner that will enable a reviewing court to identify distinct claims.”).
The disallowed time consists of 13.25 hours billed by the junior attorney, whose hourly
rate was $180, and 0.5 hours billed by the senior attorney, whose hourly rate at the time was
$250. This results in a reduction of $2,510 from the $18,988.75 requested by Trustees, leaving a
figure of $16,478.75. (R.C.I. could have sought a reduction of the auditor’s fees on the same
grounds at the summary judgment stage, but it did not oppose Trustees’ summary judgment
motion, thus forfeiting any such challenge.)

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The court next evaluates whether adjustments should be made to the lodestar based on
the Hensley factors, which are: “(1) the time and labor required; (2) the novelty and difficulty of
the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of
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.” Hensley, 461 U.S. at 430 n.3.
R.C.I. focuses on the eighth factor, noting that while Trustees originally sought a recovery based
on $384,880 in allegedly delinquent contributions, they later came to realize that the delinquency
amounted to only $9,396.
The fact that Trustees’ ultimate recovery reflected only three percent of the delinquent
contributions originally alleged ordinarily would counsel a downward adjustment. See
Anderson, 578 F.3d at 544 n.1 (fee award may be adjusted due to “the amounts involved and the
results obtained”); Moriarty, 233 F.3d at 964-65 (“When the prevailing party has achieved only
a limited success, the standard lodestar method may yield an excessive award and the district
court may reduce the lodestar result.”). No such adjustment will be made here because R.C.I.’s
litigation tactics significantly increased the cost to Trustees of prosecuting this case. Three
examples illustrate the point. First, R.C.I.’s failure to file a answer required Trustees to file a
motion for default, which was withdrawn when R.C.I. decided to appear and answer. Docs. 914. Second, after R.C.I. answered, its failure to cooperate in discovery required Trustees to file a
motion to compel, which was withdrawn when R.C.I. decided to produce discovery. Docs. 2528. Third, before Trustees filed their summary judgment motion, R.C.I. could have stipulated to
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$9,396 in delinquent contributions, along with the associated interest and penalties—amounts
that R.C.I. never challenged and now admits it had no basis to challenge. Doc. 47 at 2. Instead,
R.C.I. put Trustees to the task of preparing and filing a summary judgment motion and Local
Rule 56.1 statement, which consumed a great deal of attorney time.
Having carefully reviewed both the docket sheet and Trustees’ attorney billing records,
the court expressly finds that, putting aside the disallowed time entries listed above, the time
spent by Trustees’ counsel was reasonably necessary to this case, either as part of the work any
plaintiff must undertake in ERISA contribution litigation or as part of the work made necessary
by R.C.I.’s litigation tactics. See Anderson, 578 F.3d at 546 (suggesting that fees may be
appropriate regardless of size of damage award where case “could have been resolved a greatly
reduced cost if [defendant] had cooperated with discovery requests”); S Indus., Inc. v. Centra
2000, Inc., 249 F.3d 625, 627-28 (7th Cir. 2001). Given this, it would be inappropriate to adjust
the lodestar based on the eighth Hensley factor.
R.C.I. does not press any of the other eleven Hensley factors, thus forfeiting any other
arguments for making a downward adjustment to the lodestar. Accordingly, Trustees are
awarded $16,478.75 in fees and costs.

July 20, 2011
United States District Judge

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