Kelly v. McGraw-Hill Companies, Inc., The
Filing
137
MEMORANDUM Opinion and Order Signed by the Honorable Milton I. Shadur on 4/3/2013. Mailed notice by judge's staff. (srb,)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
SHAWN P. KELLY, etc.,
Plaintiff,
v.
McGRAW-HILL COMPANIES, INC.,
Defendant.
)
)
)
)
)
)
)
)
)
No.
10 C 4229
MEMORANDUM OPINION AND ORDER
Following the issuance of this Court’s August 31, 2012
memorandum opinion and order (“Opinion”), the currently live
issues between plaintiff Shawn Kelly (“Kelly”) and defendant
McGraw-Hill Companies, Inc. (“McGraw-Hill”) are (1) their
respective motions for sanctions against each other and
(2) Kelly’s motion for an award of attorney’s fees and costs.
This memorandum opinion and order is limited to the latter issue,
with the cross-motions for sanctions remaining under
consideration.
After a thorough review of Kelly’s initial submission
(Dkt. 126), McGraw-Hill’s objections (Dkt. 129) and Kelly’s reply
(Dkt. 135), this Court is constrained to agree with this pungent
conclusion from page 1 of Kelly’s reply:
Rather than employ objective means to show purported
unfairness or dishonesty, McGraw-Hill relies on its own
subjective view of its opponent’s argument. After
dissipating the smoke from this obfuscatory attempt at
framing the issue, what becomes clear is that it is
McGraw-Hill’s characterization of Kelly’s calculation
that is neither fair nor honest.
This opinion will first set out the legal predicate for Kelly’s
recovery, then will turn to the parties’ submissions.
Here is the relevant language from Section 3 of the Illinois
Sales Representative Act (the “Act,” 80 ILCS 120/3) after the
portion of that section that specifies damages for its breach:
A principal who fails to comply with the provisions of
Section 2 concerning timely payment or with any
contractual provision concerning timely payment of
commissions...shall pay the sales representative’s
reasonable attorney’s fees and court costs.
Maher & Assocs., Inc. v. Quality Cabinets, 267 Ill.App.3d 69, 81,
640 N.E.2d 1000, 1009 (3d Dist. 1994) teaches that, in contrast
to the pejorative holding required for the award of exemplary
damages:
However, no showing of culpability is necessary for the
imposition of reasonable attorney fees and court costs
under the Sales Act because these damages are
compensatory and not punitive and because the plain
language of section 3 of the Sales Act provides that
attorney fees and costs “shall” be imposed for a
violation of section 2 of the Sales Act.
Hence an award of attorney’s fees and costs is mandatory
when the sales representative shows (1) that he was entitled to
the commissions and (2) that the principal failed in its
obligation for their timely payment.
And on that score, the
Opinion expressly found that both of those requirements had been
fully satisfied and awarded Kelly summary judgment for $172,363
2
in commissions due under the contract between the parties.1
Kelly’s counsel has been meticulous in identifying the fees
applicable to those unpaid commissions in this multicount,
multiclaim case in which each party has been partially successful
and partially unsuccessful.
First his counsel carefully
eliminated all time that was identified as primarily or
exclusively related to his unsuccessful claims.
Then, having
done so, Kelly’s counsel reduced the remaining fee figure ratably
to reflect Kelly’s degree of success on his claims under the
Act.2
Kelly’s approach originally called for an award of 77% of
those remaining fees, but his counsel has later reduced that to
74% because of the one legitimate point made in McGraw-Hill’s
response.3
As a result, Kelly’s ultimate claim comes to
$209,715.80 in fees and $22,896.11 in costs.
1
For that purpose neither party has contested the
existence or validity of the 2008 Sales Representative Agreement
between them or the application of the Act to their relationship.
2
That approach conforms to the teaching in the seminal
decision in Hensley v. Eckerhart, 461 U.S. 424, 436-37 (1983) as
to the award of fees in multiclaim litigation:
There is no precise rule or formula for
making these determinations. The district
court may attempt to identify specific hours
that should be eliminated, but it may simply
reduce the award to account for the limited
success. The court necessarily has
discretion in making this equitable judgment.
3
That reduction was based on the elimination of the
expense reimbursement claim of $37,598.46 from both the numerator
and the denominator in Kelly’s calculation.
3
By contrast, McGraw-Hill has put forth a series of untenable
arguments reminiscent of the Russian defense of Stalingrad in
World War II, reluctantly retreating one figurative street at a
time as its successive arguments have been exposed as meritless.
It is of course important to recognize that in major litigation
such as this case involving numerous issues, the precise
allocation of time in an exercise of hindsight is necessarily
imprecise.
But McGraw-Hill’s efforts to slice and dice the
individual entries to generate a minimalist figure does it no
credit.
And its meretricious efforts to wield a meat cleaver to
hack away at Kelly’s claim are even more troubling, for it
proffers arguments that do serious damage to its overall
credibility.
Thus McGraw-Hill initially urged that an apt basis for
evaluating the time spent by Kelly’s counsel was to compare
Kelly’s recovery on the commission claim with a pre-suit demand
letter encompassing all of Kelly’s claims--a totally inapt theory
of allocation, under which only 8% of Kelly’s total time charges
would be awardable as fees.
When that premise was shot down,
McGraw-Hill compounded its inattention to proper standards by
urging incorrectly that because Kelly’s recovery on the renewal
commissions claim was less than the $330,000 Fed. R. Civ. P.
(“Rule”) 68 offer that McGraw-Hill had made for a total
4
settlement of the litigation,4
Rule 68 (which was of course
totally inapplicable to the situation) somehow disentitled Kelly
to the payment of fees incurred after the offer was not accepted.
Even apart from the sheer irrelevancy of the consequence that
Rule 68 places on an unaccepted offer of judgment, any
application of McGraw-Hill’s two bogus arguments in combination
(that is, if its counsel were to be consistent) would allocate
just 8% of the $330,000 offer to the commissions claim.
In that
event the actual award of nearly $200,000 in commissions would
dwarf the $26,400 or so that would be proportionately applicable
to that claim for commissions out of the $330,000 offer.
Nor does McGraw-Hill’s effort to call to its aid the
decision in Moriarty v. Svec, 233 F.3d 955, 967 (7th Cir. 2000)
support its position.
Indeed, McGraw-Hill’s total settlement
offer for the entire case--$330,000 including any fees--would
turn out to be less than Kelly’s total recovery of damages plus
appropriate fees attributable to its successful claim for
commissions.
In that respect Lenard v. Argento, 808 F.2d 1242,
1245 (7th Cir. 1987) has labeled an argument similar to that
advanced by McGraw-Hill here as “frivolous,” observing that “the
offer...was inclusive of fees.
[Plaintiff] went on to obtain a
judgment for damages and fees that, combined, is more than twice
4
In hindsight Kelly might have been better advised to
accept that offer, but he did not--and that turndown cannot be
used to torpedo the lodestar approach taken by Kelly here.
5
as large as the offer.”
This opinion has admittedly been highly critical of the
arbitrariness with which McGraw-Hill has approached the issue of
the fee award that the Illinois Act has established an
entitlement on the part of an unpaid sales representative such as
Kelly.
Lest it be mistakenly thought that such criticism has
been unwarranted, McGraw-Hill’s niggardly approach may perhaps be
judged best by the final sentence of its 16-page memorandum on
the curent motion, in which it “respectfully requests the Court
to award Kelly $18,037.65 in fees and expenses.”
How
generous--and how unsupportable in any reasonable and rational
terms.
In sum, this Court finds Kelly’s request for attorney’s fees
and costs to be sound in both principle and amount.
McGraw-Hill
is ordered to pay Kelly the sum of $209,715.80 as attorney’s fees
and $22,896.11 as costs, such payment to be made on or before
April 19, 2013.
This action is also set for a status hearing at
9:15 a.m. April 10 to discuss whether it is appropriate to enter
a final judgment terminating the case at this time, with
jurisdiction being retained to resolve the pending (and really
collateral) cross-motions for sanctions.
________________________________________
Milton I. Shadur
Senior United States District Judge
Date:
April 3, 2013
6
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?