Payless Shoesource, Inc. v. W/J Commercial Venture L.P. et al
Filing
57
MEMORANDUM AND ORDER granting in part and denying in part 43 Motion for Attorney Fees; granting in part and denying in part 46 Motion for Attorney Fees. Signed by Magistrate Judge K. Gary Sebelius on 8/8/2012. (ch)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
PAYLESS SHOE SOURCE, INC.,
Plaintiff,
v.
W/J COMMERCIAL VENTURE, L.P, et al.,
Defendants.
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Case No. 10-4156-KGS
ORDER
This matter comes before the Court upon Plaintiff’s Motion for Attorneys’ Fees and
Expenses (ECF No. 43) and Defendant Retail Center Partners, Ltd.’s Motion for Attorney’s Fees and
Costs (ECF No. 46). For the reasons stated below, the Court grants in part each motion.
I.
Background
Plaintiff Payless ShoeSource, Inc. (“Payless” or “Plaintiff”) operates retail stores to sell shoes
and related accessories.1 Payless leases nearly all of the stores that it operates.2
On December 18, 1996, Volume Shoe Corporation (“Volume”) entered into an agreement
with Watt Johnson Commercial Venture (“WJCV”) to lease space in the North Lake Square
Shopping Center in Pasadena, California (“North Lake Square Lease”).3
Defendant W/J
Commercial Venture, L.P. (“W/J Commercial”) is the successor-in-interest to WJCV, and Payless
1
Pet. ¶ 2, ECF No. 1-1.
2
Devine Decl. ¶ 25, ECF No. 44-3.
3
Id. ¶ 26.
is the successor-in-interest to Volume under the North Lake Square Lease.4
On July 19, 1983, Volume entered into an agreement with Watt Commercial Properties, Inc.
(“WCPI”) to lease space in the Compton Town Center Shopping Center in Compton, California (the
“Compton Lease”).5 Defendant Compton Commercial Redevelopment Company (“Compton
Commercial”) is the successor-in-interest to WCPI, and Payless is the successor-in-interest to
Volume under the Compton Lease.6
On January 31, 1992, Payless entered into an agreement with Nadine I. Watt to lease space
in the Palo Woods Shopping Center in Harbor City, California (“Palo Woods Lease”).7 Defendant
Ginger Root Commercial Associates LLC (“Ginger Root”) was the successor-in-interest to Nadine
I. Watt.8
On August 12, 1997, Payless entered into an agreement with Retail Centers, Ltd. (“RCL”)
to lease space in the North Mesa Plaza Shopping Center in Las Vegas, Nevada (“North Mesa
Lease”).9 Retail Center Partners, Ltd. (“Retail Center”) is the successor-in-interest to RCL under the
“North Mesa Lease.”10
Watt Properties, Inc. dba Watt Management Company (“Watt”) operates and manages the
4
Id.
5
Id. ¶ 27.
6
Id.
7
Id. ¶ 28.
8
Id.
9
Id. ¶ 29.
10
Id.
2
shopping centers where the space is leased under the North Lake Square, Compton, Palo Woods, and
North Mesa Leases.11
In addition to rent, each agreement requires Payless to pay a share of the landlord’s expenses
to operate, repair, and maintain the common areas of the shopping centers where the space is leased
(“common area maintenance” or “CAM” costs). Each lease also requires Payless to pay a share of
the landlord’s real estate taxes and insurance expenses. CAM costs, taxes, and insurance charges
will be referred to as “Pass-Through Expenses” in this Order. The leases define the expenses that
can be included in CAM costs and how the other Pass-Through Expenses are calculated.
The North Lake Square, Compton, and Palo Woods leases each contain a “Most Favored
Nation” provision that limits Payless’ pro-rata share of the Pass-Through Expenses.12 Prior to
initiating this lawsuit, Payless became concerned that it was being over-charged for Pass-Through
Expenses, and through its outside auditors, requested documentation from Watt relating to the
calculation of Pass-Through Expenses.13 Payless contends that Watt did not provide the requested
information to Payless or its auditors.14
After determining that the landlords were overcharging for Pass-Through Expenses, Payless
filed suit against Defendants in the District Court of Shawnee County, Kansas.15 The parties then
11
Id. ¶ 30.
North Lake Square Lease § 20.05, ECF No. 14-1; Compton Lease § 20.05, ECF No. 142; Palo Woods Lease § 20.05, ECF No. 14-4.
12
13
Devine Decl. ¶ 33, ECF No. 44-3.
14
Id.
15
Id. ¶ 34.
3
entered into an Agreement (“Mediation Agreement”) dated April 14, 2010, wherein Payless agreed
to dismiss its complaint without prejudice so that the parties could focus on attempting to mediate
the dispute.16 The mediation occurred on October 19, 2010, but the parties were unable to resolve
their dispute.17
On November 23, 2011, Payless re-filed its action in the District Court of Shawnee County,
Kansas (“Re-filed Action”).18 In its petition, Payless asserted that Defendants overcharged Payless
for Pass-Through Expenses since 2004.19 Payless sought damages in excess of $75,000 and a
declaratory judgment that it is entitled to access Watt’s documents relating to Pass-Through
Expenses.20 Defendants removed the Re-filed Action to this Court based upon diversity of
citizenship and filed a collective answer asserting 27 affirmative defenses.21
On or about August 17, 2011, the parties executed an agreement to settle this case
(“Settlement Agreement”).22 The parties agreed that Payless is entitled to a refund of $174,054.76
for Pass-Through Expenses under the North Lake Square, Compton, and Palo Woods Leases.23 The
Settlement Agreement also provides that Payless is the prevailing party in this litigation under
16
Id. ¶ 35.
17
Id. ¶ 39.
18
Pet., ECF No. 1-1.
19
Id.
20
Id.
21
Answer, ECF No. 5.
22
Devine Decl., attach. D (“Settlement Agreement”), ECF No. 44-3.
23
Settlement Agreement § 1.1.
4
Sections [20.06] of the North Lake Square, Compton, and Palo Woods Leases and entitled to recover
its reasonable attorneys’ fees and costs.24
Under the Settlement Agreement, Payless and Retail Center are each entitled to argue that
it is the prevailing party under Section [22.06] of the North Mesa Lease, such that it is entitled to
recover its reasonable attorneys’ fees and costs.25 The Settlement Agreement provides further that
the Court will determine any claims for attorneys’ fees and expenses.
On September 1, 2011, the Court granted the parties’ joint motion to add Palo Woods LLC
(“Palo Woods”) as a defendant in this case.26 Although Palo Woods did not sign the Settlement
Agreement, the parties agreed that Palo Woods is the successor-in-interest to defendant Ginger Root
under the Palo Woods Lease.27 The Court approved the parties’ Settlement Agreement on September
7, 2011.28
Payless and Retail Center have now filed cross-motions for attorneys’ fees. Payless seeks
$459,954.37 in attorneys’ fees and costs incurred in pursuing the claims under all four leases,
including the North Mesa Lease. Retail Center seeks $62,201.82 in attorneys’ fees and costs
incurred in defending the claims brought under the North Mesa Lease.
II.
Analysis
A.
Nevada and California Law Govern the Determination of Attorneys’ Fees and
24
Id. § 7.1.
25
Id. § 7.2.
26
Order, ECF No. 40.
27
Settlement Agreement at 2, ECF No. 44-3.
28
Order, ECF No. 44.
5
Costs.
The Court must first determine whether to apply federal law, Kansas law, Nevada law and/or
California law.
In diversity cases, a federal court must apply federal procedural law and state substantive
law.29 If the matter is substantive, then a court looks to the substantive law of the forum state,
including its choice-of-law principles to determine the applicable state law. Attorney fees are a
substantive matter controlled by state law.30 Accordingly, the Court will determine what state law
governs based upon Kansas law.31 Under Kansas choice-of-law principles, rules relating to whether
attorney fees are to be awarded are substantive.32
The North Mesa Lease contains a provision that it “must be interpreted and construed under
the laws of the State where the Premises are located.”33 The North Lake Square, Compton, and Palo
Woods Leases each contain a similar choice-of-law provision as the North Mesa Lease.34
Kansas law recognizes the principle of freedom to contract and, under most circumstances,
29
Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).
30
Combs v. Shelter Mutual Ins. Co., 551 F.3d 991, 1001 (10th Cir. 2008).
Morrison Knudsen Corp. v. Grp. Improvement Techniques, Inc., 532 F.3d 1063, 1077
n.12 (10th Cir. 2008) (stating that a federal court sitting in diversity applies “the choice of law
principles of the state in which it sits”).
31
32
Carolina Indus. Prods., Inc. v. Learjet, Inc., 189 F. Supp. 2d 1147, 1187 (D. Kan.
33
North Mesa Lease § 22.11, ECF No. 14-3.
2001).
North Lake Square Lease § 20.10, ECF No. 14-1; Compton Lease § 20.10, ECF No. 142; Palo Woods Lease § 20.10, ECF No. 14-4.
34
6
permits parties to choose the law applicable to their contract.35 “Where the parties to a contract have
entered into an agreement that incorporates a choice of law provision, Kansas courts generally
effectuate the law chosen by the parties to control the agreement.”36 The enforceability of a
contractual choice-of-law provision generally turns on whether the forum selected bears a reasonable
relation to the contract at issue.37 But Kansas courts will not enforce a choice-of-law provision if
applying another state’s law would be contrary to Kansas public policy.38
Here, the leased premises under the North Mesa Lease are located in Nevada. The leased
premises under the North Lake Square, Compton, and Palo Woods Leases are located in California.
The Court finds there is a reasonable relationship between Nevada and the North Mesa Lease and
a reasonable relationship between California and the North Lake Square, Compton, and Palo Woods
Leases. No party has argued that applying Nevada and California law would violate Kansas public
policy. Accordingly, the Court will apply Nevada law when analyzing entitlement to attorneys’ fees
under the North Mesa Lease and California law when analyzing the issue under the North Lake
Square, Compton, and Palo Woods Leases.
Even if the Court did not interpret the choice-of-law provisions to encompass the issue of
attorneys’ fees, the Court would still apply Nevada law to the North Mesa Lease and California law
to the North Lake Square, Compton, and Palo Woods Leases. In the absence of a choice-of-law
35
Brenner v. Oppenheimer & Co., 44 P.3d 364, 374 (Kan. 2002).
36
Id. at 375.
37
Altrutech, Inc. v. Hooper Holmes, Inc., 6 F. Supp. 2d 1269, 1273 (D. Kan. 1998).
Venture Commercial Mortg., LLC v. FDIC, No. 09-2285-KHV, 2010 WL 820711, at *5
(D. Kan. Mar. 5, 2010).
38
7
provision, Kansas courts generally apply the lex loci contractus doctrine to determine issues that
relate to the substance of the obligation and apply the law of the state where the contract is made.39
A contract is made where the last act necessary for its formation occurs.40 Here, the North Mesa
Lease was first sent to the tenant for execution and then signed by Retail Center in Nevada; similarly,
the North Lake Square, Compton, and Palo Woods Leases were first sent to the tenants for execution
and then signed by the respective landlords in California. Because the last act necessary for
formation occurred in Nevada for the North Mesa Lease and California for the North Lake Square,
Compton, and Palo Woods Leases, the Court would still apply Nevada and California law.
B.
Retail Center is the Prevailing Party under the North Mesa Lease.
Section 22.06 of the North Mesa Lease entitles the prevailing party to recover its expenses
and attorneys’ fees incurred in any action to enforce or defend its right under the lease. Section
22.06 states:
If either party incurs any expense, including reasonable attorney fees
and expert witness fees in connection with any action or proceeding
instituted by either Party to protect, enforce or defend rights or
obligations under this Lease, the prevailing Party in such action or
proceeding shall recover its reasonable expenses from the other Party.
Payless and Defendant Retail Center each claim to be the prevailing party under the North
Mesa Lease. As discussed above, Nevada law governs this issue.
Novak v. Mutual of Omaha Ins. Co., 28 P.3d 1033, 1039 (Kan. Ct. App. 2001); Layne
Christensen Co. v. Zurich Canada, 38 P.3d 757, 766–67 (Kan. Ct. App. 2002); Moses v.
Halstead, 58 F.3d 1248, 1252–1254 (10th Cir. 2009). Kansas courts generally look to the law of
the place where the contract was to be performed when the issue before the court relates to the
manner of performance. Layne Christensen Co., 38 P.3d at 766–67; Moses, 58 F.3d at
1252–1254.
39
40
Wilkinson v. Shoney’s, Inc., 4 P.3d 1149, 1160 (Kan. 2000).
8
Attorneys’ fees and costs are recoverable in Nevada pursuant to a contractual provision
contained in the parties’ agreement.41 A plaintiff can be considered a prevailing party for attorney
fee purposes if it succeeds on any significant issue in litigation that achieves some of the benefit it
sought in bringing the suit.42
In its Petition, Payless alleges that Retail Center over-charged Payless for Pass-Through
Expenses since 2004; Payless sought monetary damages from Retail Center and a declaratory
judgment that Payless is entitled to access Watt’s documents relating to Pass-Through Expenses.
Under the Settlement, the parties agreed that Payless would be refunded $174,054.76 for PassThrough Expenses through 2009.43 But none of the over-charges were allocated to Retail Center
under the North Mesa Lease, and there was no finding that Retail Center ever overcharged Payless.44
Payless acknowledges that “the [l]itigation did not result in recovery of overcharges for North Mesa
. . .”45
Although it did not receive a payment from Retail Center, Payless argues that it achieved
other benefits in this litigation related to the North Mesa Lease. Section 22.08 of the North Mesa
Lease entitles Payless to audit the books and records of Retail Center once during any twelve month
Nev. Rev. Stat. § 18.101; see Semenza v. Caughlin Crafted Homes, 901 P.2d 684, 689
(Nev. 1995) (affirming the district court’s award of attorneys’ fees to the prevailing party under
terms of purchase agreement); Sanchez v. Alsonso, 615 P.2d 934, 938 (Nev. 1980) (affirming the
district court’s award of attorneys’ fees to the prevailing party under terms of note).
41
Women’s Fed. Sav. & Loan Ass’n of Cleveland v. Nev. Nat’l Bank, 623 F. Supp. 469,
470 (D. Nev. 1985) (analyzing Nevada statute for awarding attorneys’ fees).
42
43
Settlement Agreement § 1.1, ECF No. 44-3.
44
Id., Ex. A.
45
Mem. in Supp. of Mot. for Attorneys’ Fees and Expenses at 14, ECF No. 44.
9
consecutive period. Payless contends that prior to this litigation, Retail Center (or Watt) refused to
provide its records to Payless in violation of the lease.46 Payless argues that it is the prevailing party
because it obtained the documents and records during this litigation.
Retail Center contends that any audit must be conducted at the location where Retail Center’s
books and records are maintained and that Retail Center is not obligated to copy and ship its records
to Payless. Thus, Retail Center argues that it did not violate the North Mesa Lease.
Regardless of whether Retail Center improperly withheld documents relating to the
calculation of Pass-Through Expenses, the Court does not believe that Payless’ receipt of these
records through discovery renders Payless a prevailing party in this litigation. The Settlement
Agreement does not include any finding or admission that Retail Center was obligated under the
North Mesa Lease to produce the records prior to this litigation. Payless obtained the records during
discovery because the records are relevant to the issues in the case, not because Payless prevailed
upon its claim that it was entitled to the documents under the terms of the lease.
Payless also argues that it is entitled to receive its full attorneys’ fees because it prevailed
upon the majority of the claims brought in this litigation. In support of its argument, Payless cites
various federal cases in which courts awarded a plaintiff his or her full attorneys’ fees even though
he or she did not succeed on all of the claims in the lawsuit. Under federal law, in cases where a
plaintiff succeeds on only some of his or her claims, courts are to consider (1) whether the plaintiff’s
successful and unsuccessful claims were related; and (2) whether the plaintiff’s overall level of
success justified a fee award based on the hours expended by plaintiff’s counsel.47 Part of the
46
Devine Decl. ¶ 33, ECF No. 44-3.
47
Flitton v. Primary Residential Mortg., Inc., 614 F.3d 1173, 1176–77 (10th Cir. 2010).
10
rationale for awarding full attorneys’ fees in these cases appears to be based upon the difficulty, if
not impossibility, of apportioning costs between tightly interwoven claims.48 But “[w]here the
plaintiff has failed to prevail on a claim that is distinct in all respects from his successful claims, the
hours spent on the unsuccessful claim should be excluded in considering the amount of a reasonable
fee.”49 In such cases, work on one claim will be unrelated to work on another claim, and work on the
unsuccessful claim cannot be deemed to be “expended in pursuit of the ultimate result achieved.”50
The Nevada Supreme Court has addressed the proprietary of apportioning costs when the
prevailing party pursued similar claims, based on the same factual circumstances, against multiple
defendants. In Mayfield v. Koroghli, the Nevada Supreme Court held that when a plaintiff pursues
claims based on the same factual circumstances against multiple defendants in the same case, it is
within the court’s discretion to determine whether apportionment is rendered impracticable by the
interrelationship of the claims against the multiple defendants.51
In a broad sense, this case involves a similar theory by Payless against all four Defendants
– Payless alleges that each Defendant breached its respective lease with Payless by overcharging for
See id. (awarding full attorneys’ fees where it was difficult to distinguish between the
time spent on the successful and unsuccessful claims); Robinson v. City of Edmond, 160 F.3d
1275, 1283 (10th Cir. 1998) (recognizing that in certain cases, “it is inappropriate for a district
court to evaluate the individual claims as though they were discrete and severable” and that fees
should not be reduced where the facts supporting the unsuccessful claims were part of “one
bundle of proof” with the successful ones); Manildra Milling Corp. v. Ogilvie Mills, Inc., 820 F.
Supp. 1330, 1335–36 (D. Kan. 1993) (not apportioning costs between unsuccessful and
successful claims because the claims centered on same issue and were so tightly wound together
that the same work was necessary for all claims).
48
49
Hensley v. Eckerhart, 461 U.S. 424, 440 (1983).
50
Id. at 435 (internal citations and quotations omitted).
51
Mayfield v. Koroghli, 184 P.3d 362, 369 (Nev. 2008).
11
Pass-Through Expenses. Because Defendants used the same agent (Watt) to operate and manage
the shopping centers and because Payless filed suit against all four Defendants in one action, there
was necessarily some overlap in how the case and discovery proceeded. For example, Watt
maintained the documents on behalf of all four Defendants and produced documents on behalf of
all four Defendants. But this does not necessarily mean that the claims were so interrelated that
apportionment is impractical under Nevada law.
Payless sued four different Defendants, alleging that each one breached a different lease with
Payless. Payless had to prove that it was overcharged under each contract, which involved separately
calculating the Pass-Through expenses for each lease. As Payless describes, “for each lease year,
it was necessary to make separate ‘pro rata share’ calculations of CAM, taxes, and insurance for each
location, which involved confirming the pools of expenses, eliminating any improper charges,
applying Payless’ pro rata share to the pool, and determining the proper charges.”52 Then, under the
most favored nation provision, “it was necessary to convert each of the charges to a per square foot
amount, then compare that amount to the per square foot charges for CAM, tax, and insurance of
each other tenant and the respective Shopping Center.”53
As a result, proving a violation of the North Mesa Lease was based upon a unique set of facts
and calculations as to that specific lease. Whether Payless was overcharged under the North Lake
Square, Compton, and Palo Woods Leases did not necessarily bear on whether Payless was
overcharged under the North Mesa Lease. Further, there appear to be some differences between the
terms of the North Mesa Lease and the other leases that could affect the Pass-Through Expense
52
Reply Brief in Supp. of Pl.’s Mot. for Attorneys’ Fees and Expenses at 18, ECF No. 54.
53
Id.
12
calculations. For example, the North Mesa Lease contained a cap or limitation on the maximum
annual increase in CAM charges.
Payless also argues that it is the prevailing party under the North Mesa Lease because the
parties agreed how to calculate the limitation on CAM charges for the 2009 lease year. But Payless
raises this argument for the first time in its reply brief. As a result, the Court will not consider this
argument in determining whether Payless is the prevailing party under the North Mesa Lease.54
Even if the Court were to consider this argument, Court would still not find that Payless is
the prevailing party. As discussed above, the North Mesa Lease contained a cap or limit on the
maximum annual increases in CAM charges. Payless contends that Watt and Retail Center used a
different method of calculating the CAM cap for years 2005 through 2010 than it did for 1999
through 2004. Payless states that Retail Center’s “decision to change the manner in which CAM was
calculated could have affected the CAM cap.”55 In the parties’ Settlement Agreement, they agreed
that the correct cap on CAM charges for the 2009 Lease Year was $8,930.56 It is difficult for the
Court to determine how this differs from Retail Center’s calculation of the cap. Regardless, this does
not appear to have actually impacted the amount of CAM charges due for 2009 because Retail
Center did not refund any amount to Payless under the North Mesa Lease for 2009. Further, this
calculation affected only one year for which Payless sought a refund.57
See Liebau v. Columbia Cas. Co., 176 F. Supp. 2d 1236, 1244 (D. Kan. 2001) (“Courts
in this district generally refuse to consider issues raised for the first time in a reply brief.”).
54
55
Devine Supp. Decl. ¶ 17, ECF No. 54-1 (emphasis added).
56
Settlement Agreement § 5.3, ECF No. 44-3.
57
Payless alleged that it had been over-charged since 2004.
13
Under the Settlement Agreement, there was no finding that Retail Center breached the North
Mesa Lease, overcharged Payless for Pass-Through Expenses, or improperly withheld documents
from Payless.58 Payless settled the case without the payment of any overcharges by Retail Center.
Further, the Settlement Agreement contemplates a dismissal with prejudice of Payless’ claims
against Retail Center for 2009 and all prior years.59 As a result, the Court finds that Retail Center
is the prevailing party under the North Mesa Lease.
Because Payless did not prevail on its claim under the North Mesa Lease, Defendants argue
that the Court should reduce any fees awarded to Payless by 25%. Payless argues that an across-theboard reduction of 25% is not warranted because nearly every aspect of this litigation involved or
related to Payless’ claims under all four leases. In other words, Payless contends that the fees
incurred in this case were not significantly higher as a result of including claims against four
Defendants instead of three. Rather, Payless proposes to reduce the amount of its requested fees by
the portion allocable to the North Mesa Lease. The Court is persuaded by Payless’ argument.
For example, responding to Defendants’ motion to transfer was not more complicated or
expensive because the motion was filed on behalf of four Defendants instead of three. Even where
there might have been some increase in fees because of the inclusion of North Mesa, the increase is
not necessarily 25%. As Payless points out, the mediation statement, written discovery, deposition
preparation, settlement, the fee petition, and other aspects of the face focused significantly on
Cf. Women’s Fed. Sav. & Loan Ass’n of Cleveland v. Nev. Nat’l Bank, 623 F. Supp.
469, 480 (D. Nev. 1985) (finding plaintiff to be the prevailing party because it was successful in
proving that defendant breached the parties’ agreement, which was the most significant issue in
the litigation).
58
59
The dismissal is without prejudice as to 2010.
14
background information about commercial leases, Pass-Through Expense calculation, and other
general topics, with only a small portion of the work focused specifically on the North Mesa Lease
calculations.
Mr. Devine, the lead partner at the Williams Mullen law firm,60 has reviewed each time entry
for Williams Mullen’s work on this case to determine the extent, if any, a particular charge was
increased by work on the claim brought under the North Mesa Lease.61 Mr. Devine indicates that
approximately $46,794 in fees relates to the North Mesa Lease claim.62 He does not believe that
local counsel’s charges were increased as a result of North Mesa Lease claim.63 The Court has
reviewed Foulston Siefkin’s time entries and agrees with Mr. Devine. The Court will deduct
$46,794 from Payless’ award of attorneys’ fees.
C.
Payless is Entitled to $349,581.06 in Expenses and Attorneys’ Fees as the
Prevailing Party under the North Lake Square, Compton, and Palo Woods
Leases.
The North Lake Square, Compton, and Palo Woods Leases contain the following or a
substantially similar provision:
Section 20.06 Expenses and Attorney’s Fees. If either party incurs
any expense, including reasonable attorney’s fees, in connection with
any action or proceeding instituted by either party by reason of any
default or alleged default of the other party hereunder, the prevailing
party in such action or proceeding shall be entitled to recover its said
Williams Mullen was lead counsel for Payless. Lawyers with the Foulston Siefkin law
firm served as local counsel.
60
61
Devine Supp. Decl. ¶ 24, ECF No. 54-1.
Id. ¶ 26. $20,000 relates to fees incurred through July 31, 2011. $26,794 relates to fees
incurred after July 31, 2011.
62
63
Id. ¶ 27.
15
reasonable expenses from the other party.64
In the Settlement Agreement, the parties agree that Payless is the prevailing party under the
North Lake Square, Compton, and Palo Woods Leases and is entitled to recover its reasonable
expenses and attorneys’ fees.65
In its motion and supporting memorandum, Payless seeks to recover (1) $304,410.00 in
attorneys’ fees for Williams Mullen through July 31, 2011; (2) $11,533.17 in attorneys’ fees for
Foulston Siefkin through September 15, 2011;66 (3) audit fees of $32,214.10; (4) expert witness fees
of $13,666.80; (5) costs incurred by Williams Mullen through July 31, 2011 of $8,868.55; and (6)
costs incurred by Foulston Siefkin through September 15, 2011 of $1,261.67.67 In its reply, Payless
requests an additional $77,199.50 in attorneys’ fees for Williams Mullen, $830.40 in costs, and
$9,970.18 in expert fees incurred after July 31, 2011.
1.
Costs and expenses incurred by Williams Mullen through July 31, 2011 and
Foulston Siefkin through September 15, 2011
Payless seeks to recover the following categories of expenses as the prevailing party under
Section 20.06 of the North Lake Square, Compton, and Palo Woods Leases: (1) audit fees of
$32,214.10; (2) expert witness fees of $13,666.80; and (3) costs of incurred by Williams Mullen and
North Lake Square Lease § 20.06, ECF No. 14-1; Compton Lease § 20.06, ECF No. 142; Palo Woods Lease § 20.06, ECF No. 14-4. The Palo Woods Lease uses the term “Attorneys’
Fees” rather than “Fees.”
64
65
Settlement Agreement § 7.1, ECF No. 44-3.
From the Court’s calculations of the invoices supplied by Foulston Siefkin, the amount
of attorney fees incurred was $10,271.50. The amount of attorneys’ fees and costs totaled
$11,533.17.
66
In its motion, Payless erroneously listed the costs incurred by Foulston Siefkin as
$1,216.67 instead of $1,261.67.
67
16
Foulston Siefkin.
Fed. R. Civ. P. 54(d) provides that “[u]nless a federal statute, these rules, or a court order
provides otherwise, costs – other than attorney’s fees – should be allowed to the prevailing party.”
Local Rule 54.1 describes the procedure for parties seeking costs under Fed. R. Civ. P. 54. It
provides that any party requesting costs must “file a bill of costs on a form provided by the clerk”
along with a memorandum in support of the requested costs, which “(1) clearly and concisely
itemize[s] and describe[s] the costs;” (2) “set[s] forth the statutory and factual basis for the
reimbursement of those costs under 28 U.S.C. § 1920;” (3) “reference[s] and include[s] copies of
relevant invoices, receipts and disbursement instruments in support of the requested costs;” and (4)
“state[s] that the party has made a reasonable effort . . . to resolve disputes regarding costs.” Failure
to timely file the cost bill and supporting memorandum constitutes a waiver of the costs.68
Defendants contend that Payless is not entitled to recover its costs because it did not submit
a form AO133 along with a supporting memorandum as required by D. Kan. R. 54.1. In Wirtz v.
Kansas Farm Bureau Services, Inc., the undersigned addressed a similar argument similar to the one
made by Defendants in this case.69 The defendant in Wirtz argued that plaintiff’s requests for costs
should not be considered by the court because it was untimely and not submitted on the Bill of Costs
form prescribed in D. Kan. R. 54.1.70 The Court overruled defendant’s objections, stating that it
would “elevate the substance of plaintiff’s request above its form and address all of the items for
68
D. Kan. R. 54.1(3).
69
Wirtz v. Kan. Farm Bureau Servs., Inc., 355 F. Supp. 2d 1190, 1206 (D. Kan. 2005).
70
Id.
17
which the plaintiff seeks compensation.”71
Here, the Settlement Agreement specifies that Payless was to file its initial submission
“setting forth evidence, documentation, and argument concerning its reasonable expenses, including
but not limited to reasonable attorneys’ fees . . . ” within 28 days of the Court’s approval of the
settlement agreement.72 The Court adopted the parties’ proposed schedule, and Payless has
submitted its motion for costs and attorneys’ fees according to the Court’s briefing schedule.73
Following its approach in Wirtz, the Court will not find waiver simply because Payless did
not use the Court’s bill of costs form. Here, Payless provides detailed billing statements that reflect
the costs or expenses incurred by its attorneys. The statements from Payless’ attorneys separately
describe each cost and the date it was incurred. Williams Mullen also attaches invoices from
Advantage IQ and Retail Optimization for the audit and expert expenses being claimed by Payless.
Payless essentially provides the information that is contained on the Court’s bill of costs form.74 The
only exception is that Payless does not add up the costs by category (i.e. totaling all of the federal
express charges). But this is not particularly troubling because Payless provides the supporting
documentation to calculate this information.
Defendants do not explain how they have been prejudiced in responding to Payless’ request
for costs simply because Payless did not utilize this District’s bill of costs form. The issue for the
71
Id.
72
Settlement Agreement § 7.3.1.1, ECF No. 44-3.
73
Order, ECF No. 41.
Although Defendant Retail Center submitted its costs on this District’s bill of costs
form, it did not provide the Court with any more detailed information than what is reflected in
the billing statements from Payless’ counsel.
74
18
Court is whether Payless has properly supported its claim for costs. The Court now turns to the
specific costs and expenses requested by Payless.
Among other costs, Payless is seeking $45,880.90 in audit and accounting fees for experts
employed in a non-testimonial advisory capacity. Defendants argue that these type of expert and
audit expenses are not authorized by federal law.
In most diversity cases, the assessment of costs is governed by federal law, not state law.75
28 U.S.C. § 1920 delineates the expenses that a federal court may tax as costs against the losing
party. Expenses not specifically authorized by the statute or contract are not recoverable as costs.76
In other words, a district court has no discretion to award costs not authorized by statute or
contractual provision.77
28 U.S.C. § 1920(3) authorizes fees for witnesses. The witness fee specified in section 1920
is further defined in 28 U.S.C. § 1821. Section 1821 provides that a witness who attends a court
proceeding is entitled to an attendance fee of $40 per day and certain travel expenses. A party’s
expert witness fees are recoverable only up to the per-day statutory limit applicable to any witness
under 28 U.S.C. § 1821.78
As to non-testifying expert witnesses, the Supreme Court has held that “[n]one of the
Gobbo Farms & Orchards v. Poole Chem. Co., 81 F.3d 122, 123 (10th Cir. 1996);
Chaparral Res., Inc. v. Monsanto Co., 849 F.2d 1286, 1291–93 (10th Cir. 1988). A federal court
might be required to apply state law if a state statute expressly mandates the award of certain
costs not contemplated by federal law. Chaparral Res., Inc., 849 F.2d at 1293 n.7.
75
76
Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441–42 (1987).
77
Rangolan v. Cnty. of Nassau, 370 F.3d 239, 250 (2d Cir. 2004).
78
Chaparral Res., Inc., 849 F.2d at 1292.
19
categories of expenses listed in § 1920 can reasonably be read to include fees for services rendered
by an expert employed by a party in a nontestimonial advisory capacity.”79 Accordingly, Defendants
are correct that sections 1821 and 1920 do not authorize the audit and expert expenses claimed by
Payless. “[A]bsent explicit statutory or contractual authorization for the taxation of the expenses of
a litigant’s witness as costs, federal courts are bound by the limitations set out in 28 U.S.C. § 1821
and § 1920.”80
But Payless is not seeking to recover its expenses under 28 U.S.C. §§ 1821 and 1920.
Payless is relying upon the fee-shifting provisions in the parties’ lease agreements as the basis for
recovering its expenses. And the limitations of section 1920 do not apply if there is a contractual
provision that authorizes costs and expenses.81 At least one federal court has determined that state
law governs when a party relies upon a contractual provision to recover costs beyond those permitted
by 28 U.S.C. § 1920.82 As discussed above, California law governs the North Lake Square,
Compton, and Palo Woods Leases.
Cal. Civ. Proc. § 1033.5(b) specifies items that are allowable as costs to a prevailing party.
Section 1033.5(b) expressly states that fees for experts are not taxable as costs unless expressly
authorized by law or the expert was ordered by the court.
West Virginia Univ. Hosps., Inc. v. Casey, 499 U.S. 83, 87 (1991), superseded by
statute on other grounds by the Civil Rights Act of 1991, Pub. L. No. 102-166.
79
80
Crawford Fitting Co., 482 U.S. at 445.
Sherman Street Assocs., LLC v. JTH Tax, Inc., No. 3:03-cv-1875 (CFD), 2011 WL
5925063, at *4 (D. Conn. Nov. 21, 2011) (and cases cited therein).
81
Cataphora, Inc. v. Parker, No. C09-5749 BZ, 2012 WL 174817, at *1 (N.D. Cal. Jan.
20, 2012).
82
20
Cal. Civ. Code § 1717(a) states:
In any action on a contract, where the contract specifically provides
that attorney’s fees and costs, which are incurred to enforce that
contract, shall be awarded either to one of the parties or to the
prevailing party, then the party who is determined to be the party
prevailing on the contract, whether he or she is the party specified in
the contract or not, shall be entitled to reasonable attorney’s fees in
addition to other costs.
Appellate courts in California are split on whether section 1717 could allow for costs, such
as expert witness fees, that are not provided for in Cal. Civ. Proc. § 1033.5(b). In Bussey v. Affleck,
one Court of Appeal held that where a contract between the parties provides for the payment of
attorney’s fees and costs, expenses of experts paid by counsel may be recovered as attorney fees if
they represent an expense ordinarily billed to a client rather than an overhead component of the
attorney’s hourly rate.83
In Ripley v. Pappadopoulos, a different Court of Appeal disagreed with Bussey and
concluded that because the express provisions of Section 1033.5(b) do not allow for recovery of
expert witness fees as costs, such costs are not recoverable under a contract providing for attorney’s
fees.84 The court stated that an “undefined general contractual provision entitling the prevailing party
to ‘reasonable attorney’s fees and costs’ must be interpreted in light of” Section 1033.5’s limited
definition of costs.85
In Bussey and Ripley, the Courts of Appeal did not consider whether recovery of litigation
83
Bussey v. Affleck, 275 Cal. Rptr. 646, 648 (Cal. Ct. App. 1990).
84
Ripley v. Pappadopoulos, 28 Cal. Rptr. 2d 878, 882–885 (Cal. Ct. App. 1994).
See Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co., 54 Cal. Rptr. 2d 888, 904
(Cal. Ct. App. 1996) (discussing Ripley).
85
21
expenses not authorized under section 1033.5(b) would be permitted under a broad contractual
provision authorizing such expenses.86 Since Ripley, various courts have addressed this issue and
permitted recovery of costs beyond the limits under section 1033.5(b) if such costs were authorized
by the parties’ agreement.
For example, in Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co., a Court of Appeal
upheld the district court’s award of costs beyond those listed in section 1033.5(b) because the
contract between the parties authorized recovery of all “costs, charges, and expenses.”87 The court
further concluded that it did not “discern any legislative intent to prevent sophisticated parties from
freely choosing a broader standard authorizing recovery of reasonable litigation charges and
expenses.”88 Other courts have followed this approach and permitted the recovery of expenses not
contemplated by section 1033.5(b), including expert witness fees, when such expenses were
contemplated by the parties’ contract.89
Here, the North Lake, Compton and Palo Woods Leases all provide:
Section 20.06 Expenses and Attorney’s Fees. If either party incurs
any expense, including reasonable attorneys’ fees, in connection with
any action or proceeding instituted by either party by reason of any
86
Ripley, 28 Cal. Rptr. at 885 n.18 (analyzing Bussey).
Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co., 54 Cal. Rptr. 2d 888, 904
(Cal. Ct. App. 1996).
87
88
Id.
Cataphora, Inc. v. Parker, No. C09-5749 BZ, 2012 WL 17817, at *1 (N.D. Cal. Jan.
20, 2012) (permitting recovery of expert witness fees because the contract explicitly authorized
the prevailing party to recover fees for expert witnesses); see also LPP Mortg., Ltd. v. Bizar, No.
B184907, 2006 WL 1991411, at *1–*3 (Cal. Ct. App. July 18, 2006) (upholding an award of
costs that included items not recognized by section 1033.5 because the parties’ contract allowed
for the recovery of “all expenses of any nature . . .”).
89
22
alleged default or alleged default of the other party hereunder, the
prevailing party in such action or proceeding shall be entitled to
recover its said reasonable expenses from the other party.90
Section 20.06 authorizes the prevailing party to recover any expense. This provision is more
expansive than simply authorizing attorney’s fees and costs.91 The Court concludes that Section
20.06 is broad enough to encompass audit and expert accounting fees.92
Payless has explained that it employed both Advantage IQ and Retail Optimization to provide
litigation support and expert witness services. Michael Donahue, a Certified Public Accountant, was
Vice President of Lease Audit Services at Advantage IQ and directed Advantage IQ’s work on this
case from inception until he left Advantage IQ and formed Retail Optimization.93 Christine Herwit
then took over the work for Advantage IQ.94 This case involved the calculation of Pass-Through
Expenses under the leases. The services provided by Advantage IQ and Retail Optimization
North Lake Square Lease § 20.06, ECF No. 14-1; Compton Lease § 20.06, ECF No. 142; Palo Woods Lease § 20.06, ECF No. 14-4. The Palo Woods Lease uses the term “Attorneys’
Fees” rather than “Attorney’s Fees.”
90
Cf. Mem. Op. & Order, Dollar Tree Stores, Inc. v. Centro NP LLC & Excel Realty
Trust - NC, No. 2:07cv608 (E.D. Va. Dec. 5, 2008) (denying claim for expert accounting fees
because the contract referred only to “attorney fees and costs”).
91
See Armada Bulk Carriers v. ConocoPhillips Co., 505 F. Supp. 2d 621, 623 (N.D. Cal.
2007) (in a case applying New York law, awarding expert fees because the contract provision for
reimbursement of the prevailing party’s costs and expenses was broad, specifying that “all costs
and expenses (including reasonable attorney fees) shall be recoverable”); Capital Bank, PLC v.
M/Y Birgitta, No. CV 08-5893 PSG (SSx), 2010 WL 4241584, at *6 (C.D. Cal. Oct. 18, 2010)
(awarding $96,327.95 in expert witness fees because the cost provisions of the parties’ contract
allowed for reimbursement to the prevailing party of “all costs and expenses . . . reasonably
incurred . . .”).
92
93
Donahue Decl. ¶¶ 1, 5, ECF No. 44-5.
94
Id. ¶ 5.
23
included assisting with computing and analyzing the Pass-Through Expenses, attending the
mediation, reviewing the information produced by defendants in discovery, assisting Payless’
attorneys in preparing for depositions, and participating in discussions with Watt’s accounting
personnel about the overcharge calculations.95 The Court concludes it was reasonable for Payless
to incur these expenses.
Advantage IQ charged Payless 25% of any recovery under the leases.96 Advantage IQ’s
invoices for the work performed on the North Lake, Compton and Palo Woods Leases amount to
$32,214.10. Payless has submitted evidence establishing the reasonableness of these charges.97
Other courts have recognized the reasonableness of Advantage IQ’s contingency fees.98 Defendants
do not contest the reasonableness of these fees. The Court concludes that Payless is entitled to
$32,214.10.
Retail Optimization charged $13,666.80 for work performed from March 30 to June 12,
2011.99 This reflects 34.167 hours billed at a rate of $400 per hour. Payless has submitted evidence
establishing the reasonableness of this charge.100 Defendants do not contest the reasonableness of
the rate charged by Retail Optimization.
95
Id. ¶¶ 15 & 17; Herwit Decl. ¶ 3, ECF No. 44-6.
96
Herwit Decl. ¶ 3; Donahue Decl. ¶ 20.
97
Id.
Am. J., Am. Multi-Cinema, Inc. v. Developers Diversified Realty Corp., No. 0916CV13428 (June 1, 2010 Circuit Ct. of Jackson Cnty., Mo.), ECF No. 44-8.
98
99
Donahue Decl. ¶¶ 21–22.
100
Id. ¶¶ 21–23.
24
In his declaration, Mr. Donahue describes generally the scope of work performed by Retail
Optimization. Payless attaches a copy of the invoice from Retail Optimization reflecting that Mr.
Donahue billed 34.167 hours for this case. But the invoice for Retail Optimization does not itemize
the amount of time spent on any particular task described in Mr. Donahue’s declaration. This is
important because there is no indication that Mr. Donahue spent all 34.167 hours on the North Lake,
Compton and Palo Woods Leases. As a result, the Court has no way to know how many of the
34.167 hours, if any, were spent calculating the Pass-Through Expenses for the North Mesa Lease.
Defendants have requested that the Court reduce by 25% any costs claimed by Payless to
reflect Payless’ lack of success on its claims under the North Mesa Lease. Payless has not suggested
an alternative method. Rather than disallowing the entirety of Retail Optimization’s fees, the Court
will adopt the approach requested by Defendants and reduce by 25% the fees incurred by Retail
Optimization. The Court concludes that Payless is entitled to $10,250.10.
Payless also seeks $8,868.55 and $1,261.67 for various costs incurred by Williams Mullen
and Foulston Siefkin, respectively. This includes expenses for court filings, photocopies, federal
express, online research, travel, postage, and delivery charges. As discussed above, the leases
provide for the prevailing party to recover any expenses. Thus, the Court is not limited by the
specific costs authorized in 28 U.S.C. §§ 1821 and 1920 or Cal. Civ. Proc. Code § 1033.5(b).
Defendants do not contest the reasonableness of any specific expenses incurred by Payless’
attorneys. Payless has submitted affidavits that the costs incurred were necessary and reasonable.101
The Court believes it is appropriate for Payless to recover the costs for court filings, photocopies,
federal express, online research, postage, and delivery charges.
101
Devine Decl. ¶¶ 59–60, ECF No. 44-3; Rankin Aff. ¶ 11, ECF No. 44-4.
25
But the Court is unable to determine the reasonableness of the travel costs sought by
Williams Mullen. Mr. Devine incurred travel costs in November 2010 that appear to have been
related to the mediation held in California. But there are no invoices showing the exact nature of
these expenses. Ms. Jarrell and Ms. Wheeling incurred travel expenses in March 2011 for a trip to
Payless’ headquarters to examine Payless’ storage systems for electronically stored information.
Likewise, there are also no invoices showing the exact nature of the travel expenses. As a result, the
Court cannot determine whether these travel expenses were reasonable. Accordingly, the Court will
not allow recovery of $2,890.82 in travel expenses.
Subtracting $2,890.82 from Williams Mullen’s claimed expenses of $8,868.55 results in
costs of $5,977.73 as follows:
•
•
•
•
•
Online research & Pacer: $2,749.32
Mediation: $2,062.50
Federal Express: $33.26
Photocopies: $1,132.65
Total: $5,977.73
Foulston Siefkin’s costs through September 15, 2011 are itemized below:
•
•
•
•
Filing Fees: $839.50
Delivery fees & postage: $134.92
Copying costs: $287.25
Total: $1,261.67
The Court has reviewed the time entries showing the legal research performed by Williams
Mullen. The Court does not believe that the online research costs were increased by including the
claim under the North Mesa Lease. Similarly, the Court believes that Payless should recover
$2,062.50 for the cost of mediation and the full amount of the filing fees of $839.50 because these
amounts would have been incurred regardless of the North Mesa Lease claim.
26
The Court cannot ascertain the degree to which the photocopying expenses, delivery charges,
postage, and federal express fees relate to work performed on the North Mesa Lease claim. Rather
than disallowing these entire amounts, the Court will adopt the approach requested by Defendants
and reduce these amounts by 25%, which results in costs of $1,191.06.
Thus, Payless is entitled to $6,842.38 in costs incurred by Williams Mullen through July
2011 and Foulston Siefkin through September 15, 2011.
2.
Attorneys’ Fees from Williams Mullen through July 31, 2011 and Foulston
Siefkin through September 15, 2011
Under California law, the trial court has broad authority to determine the amount of a
reasonable fee.102 The fee setting inquiry in California ordinarily begins by determining the
“lodestar” amount.103
The lodestar figure is calculated by multiplying the number of hours
reasonably worked by a reasonable hourly rate.104 The lodestar figure may then be adjusted upward
or downward based on case specific facts to fix the fee at the fair market value of the services
performed.105 In other words, the trial court should consider whether the lodestar amount is
reasonable under all of the circumstances of the case.106 Factors that the court may consider include:
(1) the novelty and difficulty of the questions involved and the skill displayed in presenting them;
(2) the extent to which the nature of the litigation precluded other employment by the attorneys; and
102
PLCM Grp. v. Drexler, 997 P.2d 511, 518 (Cal. 2000).
103
Id.
104
Id.
105
Id.
106
Id.
27
(3) the contingent nature of the fee award, based on the uncertainty of prevailing on the merits and
of establishing eligibility for the award.107 The burden is on the party seeking attorneys’ fees to
prove that the fees it seeks are reasonable.108
The reasonable hourly rate is that prevailing in the community for similar work.109 In the
unusual circumstance that local counsel is unavailable, a trial court may consider out-of-town
counsel’s higher rates.110 The use of the higher rates for out-of-town counsel requires a sufficient
showing that hiring local counsel was impracticable.111
Payless seeks to recover attorneys’ fees from Williams Mullen based upon the following
hourly rates:
Name
Description of Work
Hourly Rate
Hours
William F. Devine
Lead partner
$395
261.20
Bennett B. Borden
Partner, e-discovery
efforts
$395 / $425112
6.40
Kendra J. Jarrell
Lead associate responsible
for research, drafting,
preparation, discovery,
case management
$310 / $320
403.10
Robertson v. Fleetwood Travel Trailers of Cal., Inc., 50 Cal. Rptr. 3d 731, 757–58
(Cal. Ct. App. 2006).
107
108
Gorman v. Tassajara Dev. Corp., 100 Cal. Rptr. 3d 152, 196 (Cal. Ct. App. 2009).
109
PLCM Grp., 997 P.2d at 518.
110
Rey v. Madera Unified Sch. Dist., 138 Cal. Rptr. 3d 192, 207 (Cal. Ct. App. 2012).
111
Id.
The hourly rates for Mr. Borden, Ms. Jarrell, and Ms. Hunter were adjusted upward
effective February 1, 2011. Devine Decl. ¶ 49, ECF No. 44-3; Frieden Decl. ¶ 20, ECF No. 44-1.
112
28
Lauren M. Wheeling
Associate, discovery, ediscovery, document
compilation, review and
production, deposition
preparation
$295
105.80
Stephanie Hunter
Lead paralegal; document
review and management;
discovery and document
production; assist with
deposition preparation
$175 / $180
209.00
David N. Jones
Director of Williams
Mullen’s Electronic
Discovery Center (EDC),
assisting with e-discovery
matters
$215
4.20
Litigation support
Various EDC data
engineers and technicians,
assisting with e-discovery
matters
$165
12.60113
Payless also seeks to recover fees from its local counsel, Foulston Siefkin. Mr. Rankin, a
partner, charged between $305 and $330 per hour, Patricia Blankenship, a partner, charged $250 per
hour, and Jeremy Graber, an associate, charged between $170.00 and $185.00 per hour.114
Payless has submitted expert evidence in the form of a declaration by John C. Frieden that
the hourly rates in Topeka for similar litigation range from $275.00 to $325.00 per hour for partners,
$225.00 to $275.00 for associates, and $75.00 to $175.00 per hour for paralegals.115 In a 2011
113
Devine Decl. ¶ 51.
114
Rankin Decl. ¶¶ 8–9, ECF No. 44-4.
115
Frieden Decl. ¶ 25, ECF No. 44-1.
29
opinion, Judge Rogers considered the rates that judges in this District have utilized.116 Based upon
the evidence before the court and Judge Roger’s own familiarity with the relevant rates in the Topeka
community, Judge Rogers allowed the following hourly rates: $325 per hour for partners, $200 for
associates; $125 for law clerks; and $100 for paralegals and other support staff.117 Judge Rogers also
concluded that these figures represented the high end of the hourly rates in Topeka.118
The hourly rates charged by local counsel at Foulston Siefkin – Mr. Rankin,119 Ms.
Blankenship, and Mr. Graber – all fall within the range described by Mr. Frieden and Judge Rogers.
Accordingly, the Court finds that the rates charged by Foulston Siefkin are reasonable.
Mr. Frieden did not provide any details about the market rate for the services performed by
Mr. Jones and various other litigation support professionals. Although Mr. Frieden opined that the
these rates are reasonable, he does not provide the basis for such a conclusion. In accordance with
Judge Rogers’ 2011 opinion, the Court will utilize a rate of $100.00 per hour for Mr. Jones and other
members of the EDC group.
Based upon its own knowledge and Judge Rogers’ opinion, the Court believes that Ms.
Hunter’s hourly rate of $175/$180 is excessive for the Topeka market. For example, $175 per hour
is the same amount charged by Mr. Graber, an associate attorney at Foulston Siefkin. The rates
Kan. Penn Gaming, LLC v. HV Properties of Kan., LLC, 790 F. Supp. 2d 1307, 1319
(D. Kan. 2011), aff’d, 662 F.3d 1275 (10th Cir. 2011).
116
117
Id.
118
Id. at 1319–20.
Mr. Rankin’s rate for 2011 is $5.00 per hour higher than the range described by Mr.
Frieden. But the Court does not believe that a downward adjustment is warranted because this is
the standard rate charged by Mr. Rankin for work performed in the Topeka area. Rankin Decl. ¶
9.
119
30
charged by the paralegals at Defendants’ local counsel in Topeka were $85.00 per hour. Payless
cites no authority from this District authorizing a hourly rate of $175 for a paralegal. The Court
adjusts Ms. Hunter’s rate to $100.00 per hour.
The hourly rates charged by Mr. Devine, Mr. Borden, Ms. Jarrell, and Ms. Wheeling are all
higher than the range described by Mr. Frieden, Payless’ expert, and the rates utilized by Judge
Rogers. Payless cites no authority from this District awarding fees at the hourly rates requested by
its counsel. With the exception of Mr. Devine, Mr. Frieden has not sufficiently explained to the
Court why it is appropriate to deviate from the range of rates that he described for the Topeka area.
Accordingly, the Court will adjust Mr. Borden’s hourly rate to $325, Ms. Jarrell’s hourly rate to
$275.00, and Ms. Wheeling’s hourly rate to $250.00.120 Because Mr. Devine specializes in retail
commercial litigation and in particular, litigation involving efforts by major shopping center owners
to overcharge retail tenants under the provisions of shopping leases, the Court finds Mr. Devine’s
hourly rate of $395 to be reasonable.121
The second part of the lodestar inquiry focuses on the amount of hours reasonably expended.
Mr. Devine testified that the work performed on this case was done at his direction. After reviewing
Williams Mullen’s billing records related to this case, Mr. Devine allocated each time entry to the
following various categories of work:
•
Preliminary Assessment: Initial calls and discussions with client and auditors;
preliminary analysis of potential claims and strategy ($2,738.50).
The hourly rates for Ms. Jarrell and Ms. Wheeling are higher than those charged by Mr.
Graber, an associate for Payless’ local counsel, because Ms. Jarrell and Ms. Wheeling are more
experienced attorneys.
120
121
Frieden Decl. ¶ 7.
31
•
Case Management: File and document management; litigation hold notices;
identifying and coordinating with local counsel; case status conferences; tracking
deadlines; complying with Local Rules ($5,156.00).
•
Claim Investigation and Strategy: Detailed claim analysis; digesting leases,
overcharge calculations, and spreadsheets; legal research on causes of action and
other issues; developing litigation strategy ($18,062.00).
•
Original Filing: Preparation and filing of the Initial Action, including Petition and
exhibits; service of process; pro hac vice admissions ($4,441.00).
•
Mediation: Communications with opposing counsel; negotiation and preparation of
Mediation Agreement; preparation and filing of dismissal documents; preparation of
claim information and supporting documentation; analysis of information provided
by Landlords; submissions to Mediator and Landlords; preparation for, travel for, and
participation in mediation; post-mediation discussions, communications, and
settlement efforts ($68,499.50).
•
Refiled Action and Affirmative Defenses: Preparation and filing of the Second
Action after mediation, including Petition and exhibits, pro hac vice admissions,
Corporate Disclosure Statement, Designation of Place for Trial, Scheduling Order,
and planning conference, pretrial conference, ESI conference, and related matters
($22,509.50).
•
Removal/Motion to Transfer: Landlord’s removal of the action to federal court and
opposition to Landlord’s request to transfer the action to the Central District of
California, including review of removal pleadings; analysis of Motion to Transfer
and supporting brief; legal research; preparation and filing of brief in opposition; and
review of Memorandum and Order denying motion ($18,689.00).
•
Initial Disclosures: Preparation of Initial Disclosures; compilation, review, and
production of documents; communications and discussions with opposing counsel
regarding production of electronic data; reviewing, organizing, and indexing
Landlord’s documents; and analyzing pass-through expenses spreadsheets
($11,199.00).
•
E-Discovery Issues, Compliance, Witness Interviews, Protective Order, and
Production: Investigating Payless’ electronic records and systems; developing
reasonable and cost-effective protocols from preserving, collecting, reviewing, and
organizing client records; arranging for collection and review of records and
electronic data; compliance with Rule 26(f) Report and federal rules; preparation of
Agreed Protective Order; developing scanning protocol to ensure accuracy and chain
of custody; interviews of key custodians, data stewards, Counsel, IT personnel, and
32
witnesses at Payless; meetings with lease auditors regarding collection of ESI;
coordinate data systems for uploading and sharing of data; overseeing electronic data
collection; reviewing and analyzing electronic data and documents for accuracy,
privilege, relevance, and responsiveness; running searches of electronic documents;
creating keywords and search terms for electronic documents; and preparing
production of documents and electronic data ($29,513.00).
•
Written Discovery: Interrogatories, requests for production, and requests for
admission, including drafting and service of discovery requests; reviewing and
analyzing Landlords’ Initial Disclosures and document production; communications
with counsel regarding discovery issues, Rule 30(b)(6) depositions; managing
deadlines and related issues; preparing and filing Joint Motion and Agreed Order
extending discovery deadline; and analyzing CAM reconciliations related to other
tenants ($21,322.00).
•
Depositions: Identification of Rule 30(b)(6) deposition topics; communications with
counsel regarding deposition designations, scheduling, and related issues; preparing
extensive deposition outlines; analyzing witness designations on multiple topics;
identifying, analyzing, collecting, and organizing several hundred anticipated
deposition exhibits; and related issues ($34,054.00).
•
Expert Witnesses: Communications with lease auditors (anticipated expert
witnesses); review and analysis of auditors’ work product concerning overcharge
claims, damage calculations, discovery, and opinions ($18,879.00).
•
Settlement: Settlement negotiations; claim analysis; review and analysis of
Landlords’ computations; conference calls with counsel and auditors regarding
claims and resolution; preparation for settlement conference; and preparation and
negotiation of Agreement, Joint Motion, Agreed Order, and other documentation
($19,792.50).
•
Fee Petition: Preparation of Payless’ petition for attorneys’ fees, audit fees, and other
expenses ($30,316.00).
Defendants do not challenge the reasonableness of any hours incurred by Payless’ local
counsel. Of the fourteen categories of work performed by Williams Mullen, Defendants challenge
the fees for Mediation, Re-filed Action and Affirmative Defenses, Written Discovery, Depositions,
and Expert witnesses, but do not identify any particular time entry or task that they contend was
unnecessary or took too long.
33
For example, Defendants contend that fees in the amount of $22,509.50 for the category of
“Refiled Action and Affirmative Defenses” was unreasonable because the complaint in the re-filed
action was virtually identical to the initial complaint. Further, Defendants contend that Payless’
counsel should not have devoted significant time to researching Defendants’ affirmative defenses
in light of Payless’ characterization of these defenses as frivolous.
The hours included in “Refiled Action and Affirmative Defenses” represent work performed
over a five month period that was broader than just preparing the re-filed petition and researching
Defendants’ affirmative defenses. Williams Mullen spent only three hours (amounting to $1,006.50
in fees) finalizing and re-filing the petition. Williams Mullen spent 21.7 hours (amounting to
$6,521.50 in fees) researching Defendants’ twenty-seven affirmative defenses and drafting a
memorandum outlining the elements of each. Even if these defenses were ultimately believed to be
frivolous, it was proper for Payless’ attorneys to research the defenses to reach this conclusion.
The remaining hours included in the category of “Refiled Action and Affirmative Defenses”
represent time spent on (1) filing applications for pro hac vice admission in state court, (2) drafting
Plaintiff’s opposition to Defendants’ motion to transfer venue; (3) preparing for the Rule 26(f)
planning conference, preparing the parties’ Report of Scheduling Conference, conferring with
Payless and Defendants’ counsel regarding electronically stored information (“ESI”), and attending
the scheduling conference; and (4) preparing a corporate disclosure statement and designation of
place of trial, preparing applications for pro hac vice admission in federal court, and reviewing local
rules. The Court finds that the hours included in the category of “Refiled Action and Affirmative
Defenses” were reasonable.
Defendants also claim that the $21,322 incurred for “Written Discovery” was unreasonable
34
because written discovery had a limited role in this case. Defendants point out that the written
discovery consisted of one set of interrogatories, one set of requests for admissions, and one set of
requests for production of documents. But of the 77.2 hours devoted to “Written Discovery,” nearly
half (38.5 hours; $10,285) was spent reviewing documents and records that Defendants had produced
with their Initial Disclosures. The remaining 38.7 hours were spent (1) developing discovery
strategy; (2) drafting and serving interrogatories, requests for production, and requests for
admissions; (3) compiling documents in anticipation of discovery requests from Defendants; (4)
conferring with Defendants’ counsel regarding document production and ESI protocols; and (5)
analyzing Defendants’ discovery responses. The Court finds that these hours were reasonable.
The Court need not dwell on every category of hours that Defendants claim to be
unreasonable. Payless’ lead counsel, Mr. Devine, testified that he was conscious to avoid duplication
of effort in this case and carefully considered the staffing of this case.122 He also testified that all of
the work performed by Williams Mullen was reasonable and necessary to prosecute Payless’
claims.123 Mr. Rankin, the partner in charge for Payless’ local counsel, testified that the charges by
Foulston Siefkin were reasonable.124 Payless’ expert on fees, Mr. Frieden, testified that he has
reviewed the work of Williams Mullen and Foulston Siefkin and, in his opinion, the work was
reasonable and necessary for the successful prosecution of this action.125 The Court has reviewed
the time entries of Payless’ counsel and finds that the hours spent on this case were reasonable.
122
Devine Decl. ¶¶ 14–15, 53, ECF No. 44-3.
123
Id. ¶ 48.
124
Rankin Aff. ¶ 11, ECF No. 44-4.
125
Frieden Decl. ¶¶ 28–29, ECF No. 44-1.
35
The Court calculates the lodestar figure for Williams Mullen through July 31, 2011 to be as
follows:
Name
Adjusted Hourly Rate
Hours
Total
William F. Devine
$395
261.20
$103,174
Bennett B. Borden
$325
6.40
$2,080
Kendra J. Jarrell
$275
403.10
$110,852.50
Lauren M. Wheeling
$250
105.80
$26,450
Stephanie Hunter
$100
209.00
$20,900
David N. Jones
$100
4.20
$420
Litigation support
$100
12.60
$1,260
Total: $265,136.50
As discussed above, the Court deducts $20,000 from this figure to reflect the time spent on
the North Mesa Lease claim. Thus, the lodestar figure for Williams Mullen through July 31, 2011
is $245,136.50.
The Court calculates the lodestar figure for Foulston Siefkin through September 15, 2011 to
be $10,371.50.
3.
Attorneys’ Fees and Costs from Williams Mullen From August 1 Through
November 14, 2011
In its initial memorandum filed October 5, 2011, Payless seeks attorneys’ fees for Williams
Mullen through July 31, 2011. In its reply, Payless seeks an additional $77,199.50 in attorneys’ fees
for Williams Mullen from August 1, 2011 through November 14, 2011. Defendants object to
Payless’ attempt to recover attorneys’ fees incurred from August 1, 2011 through October 5, 2011
36
because these billings should have been submitted with Payless’ initial memorandum.
Williams Mullen’s charges for August and September 2011 amount to approximately
$27,336.50. There does not appear to be any legitimate reason why Payless did not include this
information with its October 5, 2011 memorandum, and no explanation is offered. Williams
Mullen’s billing department should have been able to generate this information prior to October 5,
2011. For example, in the reply filed on November 16, 2011, Williams Mullen included its fees
through November 14, 2011.
This potentially puts Defendants at a disadvantage because they did not have an opportunity
to review the August and September billings before filing their opposition. But Defendant Retail
Center has engaged in similar conduct. For example, in support of its motion for attorneys’ fees,
Defendant Retail Center submitted redacted billings from its attorneys. In its opposition, Payless
argues that it could not determine the reasonableness of the time spent by Retail Center’s attorneys
because the substance of the work performed had been redacted. Retail Center then submitted unredacted versions of its counsel’s billing statements with its Reply. Thus, Payless did not have an
opportunity to review the un-redacted billing statements when drafting its opposition to Retail
Center’s motion for attorneys’ fees. Under the circumstances of this case, the Court will consider
Williams Mullen’s billings from August 1, 2011 through October 5, 2011 and the un-redacted billing
statements from Retail Center’s counsel.
As discussed above, Payless requests an additional $77,199.50 in attorneys’ fees for Williams
Mullen from August 1, 2011 through November 14, 2011. $6,374 was incurred to prepare the
parties’ Settlement Agreement and issues related thereto. The $6,374 reflects 16 hours billed by Mr.
Devine at $395 per hour and .3 hours billed by Ms. Hunter at $180. The Court finds the amount of
37
time spent to be reasonable. Adjusting Ms. Hunter’s rate to $100 per hour, the Court finds that
Payless is entitled to $6,350.
The remaining $70,825.50 incurred by Williams Mullens relates to the fee petition, including
engaging and consulting Mr. Frieden as a fee expert, researching applicable standards, preparing the
motion for attorneys’ fees and supporting documents, analyzing Defendant Retail Center’s motion
for attorneys’ fees, preparing an opposition to Defendant Retail Center’s motion for attorneys’ fees,
and filing a reply in support of Payless’ motion for attorneys’ fees. This is reflected in the following
chart:
Name
Hourly Rate
Hours
Total
William F. Devine
$395
93.10
$36,774.50
Kendra J. Jarrell
$320
84.3
$26,976
Lauren M. Wheeling
$295
.3
$88.5
Stephanie Hunter
$180
37.5
$6,750
David N. Jones
$215
1.1
$236.50
216.30
$70,825.50
Total
Adjusting for reasonable hourly rates, the 216.30 hours amount to $63,892 as follows:
Name
Adjusted Hourly Rate
Hours
Total
William F. Devine
$395
93.10
$36,774.50
Kendra J. Jarrell
$275
84.3
$23,182.50
Lauren M. Wheeling
$250
.3
$75.00
Stephanie Hunter
$100
37.5
$3,750
David N. Jones
$100
1.1
$110
38
Total
216.30
$63,892
From this $63,892, the Court deducts $26,794 to reflect work performed on issues relating
to the North Mesa Lease.126 This results in $37,098 being billed from Williams Mullen from August
1, 2011 to November 14, 2011 to prepare the motion for attorneys’ fees and issues related thereto.
This $37,098 is in addition to the 97.6 hours ($26,227 as adjusted for hourly rates) spent by
Williams Mullen on the motion for attorneys’ from May 16, 2011 to July 31, 2011, and the 30.05
hours ($9,857.50) spent by Williams Mullen’s expert on this issue. Payless has not demonstrated
to the Court that it was reasonable for its attorneys to have charged $73,182.50 to prepare the motion
for attorneys’ fees.
Williams Mullen has filed fee petitions in at least two other cases involving similar lease
issues. Despite that there are unique issues and facts in each case, this should reduce the time
necessary to prepare the current motion. Indeed, at least some portions of the current motion appear
to be substantially similar to one of the prior motions.127 Much of the work performed on the motion
for attorneys’ fees from August 1, 2011 through November 14, 2011 was done by Mr. Devine. Some
of his time entries are described generally as “work on fee petition,” “prepare fee petition,” “prepare
information for fee petition,” or “prepare affidavits.” The Court does not believe that this work was
so complicated that it required an attorney with Mr. Devine’s experience and billable rate of $395
per hour. Accordingly, the Court will reduce the amount sought for Williams Mullen from August
126
Devine Supp. Decl. ¶ 26, ECF No. 54-1.
See Mem. in Supp. of Mot. for Att’ys’ Fees and Interest, Dollar Tree Stores, Inc. v.
Norcor Bolingrbook Assocs., L.L.C., No. 2:09-cv-66 (E.D. Va. Sept. 24, 2009), ECF No. 44.
127
39
1, 2011 to November 14, 2011 by 25%. This results in $27,823.50.
Payless also seeks to recover an additional $830.40 for various costs incurred by Williams
Mullen through November 14, 2011. The Court finds the costs to be reasonable but will deduct 25%
for the North Mesa Lease claim. This results in costs of $622.80.
Payless also seeks to recover the costs for employing Mr. Frieden as an expert. The Court
believes it was reasonable to employ Mr. Frieden in this capacity, and also finds his charges of
$9,970.18 to be reasonable.
4.
Summary of Attorneys’ Fees and Costs
Accordingly, the Court calculates the lodestar figure and recoverable costs for Payless as
follows:
Category
Amount Sought
Adjusted amount
Williams Mullen’s
Attorneys’ Fees through July
31, 2011
$304,410.00
$245,136.50
Williams Mullen’s
Attorneys’ Fees from August
1, 2011 through November
14, 2011
$77,199.50
$34,173.50
Foulston Siefkin’s Attorneys’
Fees through September 15,
2011
$10,371.50
$10,371.50
Advantage IQ’s fees
$32,214.10
$32,214.10
Retail Optimization’s fees
$13,666.80
$10,250.10
Expert fees for John Frieden
$9,970.18
$9,970.18
Williams Mullen’s costs
through July 31, 2011
$8,868.55
$5,686.25
40
Williams Mullen’s costs from
August 1, 2011 through
November 14, 2011
$830.40
$622.80
Foulston Siefkin’s costs
through September 15, 2011
$1,261.67
$1,156.13
Total:
$349,581.06
5.
Adjustment of Lodestar
As discussed above, the trial court should consider whether the lodestar amount is reasonable
under all of the circumstances of the case.128 Factors that the court may consider include: (1) the
novelty and difficulty of the questions involved and the skill displayed in presenting them; (2) the
extent to which the nature of the litigation precluded other employment by the attorneys; and (3) the
contingent nature of the fee award, based on the uncertainty of prevailing on the merits and of
establishing eligibility for the award.129 Having carefully considered these factors, the Court believes
that the lodestar is reasonable.
D.
Defendant Retail Center is Entitled to $61,185.83 in Expenses and Attorneys’
Fees as the Prevailing Party under the North Mesa Lease.
As discussed above, Defendant Retail Center is the prevailing party under the North Mesa
Lease and is entitled to its reasonable expenses and attorneys’ fees in defending the claims brought
under the North Mesa Lease. Retail Center seeks $62,069.94 in attorneys’ fees and $131.88 in costs.
Under Nevada law, a court may award attorney fees using the lodestar approach or a
128
PLCM Grp. v. Drexler, 997 P.2d 511, 518 (Cal. 2000).
Robertson v. Fleetwood Travel Trailers of Cal., Inc., 50 Cal. Rptr. 3d 731, 757–58
(Cal. Ct. App. 2006).
129
41
contingency fee basis.130 The Court will utilize the lodestar approach. Under the lodestar method,
the Court must first “multiply the number of hours reasonably spent on the case by a reasonable
hourly rate.”131 The Court must then consider whether to adjust the lodestar amount based upon the
factors enumerated by the Nevada Supreme Court in Brunzell v. Golden Gate National Bank, 455
P.2d 31, 33 (Nev. 1969).
The “Brunzell factors” include: “(1) the qualities of the advocate: his ability, his training,
education, experience, professional standing and skill; (2) the character of the work to be done: its
difficulty, its intricacy, its importance, time and skill required, the responsibility imposed and the
prominence and character of the parties where they affect the importance of the litigation; (3) the
work actually performed by the lawyer: the skill, time and attention given to the work; (4) the result:
whether the attorney was successful and what benefits were derived.”132
Through September 30, 2011,133 Retail Center seeks to recover attorneys’ fees based upon
the following hourly rates:
Name
Description
Hours
Hourly
Total
Rate
David E. Frank
Lead partner
54.61
$285
$15,563.85
Gregory W. Koonce
Associate
108.21
$262.50
$28,405.12
130
Shuette v. Beazer Homes Holding Corp., 124 P.3d 530, 549 (Nev. 2005).
131
Hsu v. Cnty. of Clark, 173 P.3d 724, 733 (Nev. 2007).
Brunzell v. Golden Gate Nat’l Bank, 455 P.2d 31, 33 (Nev. 1969) (internal citations
and quotation omitted).
132
133
The charges for local counsel are through October 5, 2011. Glenn Decl. ¶ 3, ECF No.
48.
42
Annie R. Embree
Associate
.38
$262.50
$99.75
Jennifer Holdener
Associate
.46
$212.50
$97.75
Jennifer Vincent
Paralegal
6.73
$130
$874.90
Jay Allen Eisen
Appellate Specialist
.13
$450
$58.50
Grant Glenn
Lead local counsel
10.73
$225
$2,414.25
Justin Whitney
Associate
.65
$150
$97.50
Nikki Babcock
Paralegal
.13
$85
$11.05
Amy Foster
Paralegal
.05
$85
$4.25
Total $47,626.92
Apparently, due to rounding parameters in the billing software, the actual amount billed to
Retail Center, and thus the amount of attorneys’ fees claimed, is $47,430.66.134
For the period October 1, 2011 through the filing of the Reply, Retail Center incurred an
additional $14,639.28 in attorneys’ fees. These fees were billed by attorneys Frank and Koonce at
the rates listed above.
Most of the hourly rates charged by Retail Center’s counsel fall within the range described
by Payless’ expert, Mr. Frieden, and are consistent with the rates that the Court found to be
reasonable with respect to Payless’ motion. With the exception of Ms.Vincent and Mr. Eisen, the
Court finds the rates charged by Retail Center’s counsel to be reasonable for the Topeka market.
The Court finds that Ms. Vincent’s reasonable rate is $100 per hour. This results in a
reduction of $201.90.
It is not clear why Retail Center or its counsel engaged the services of an appellate specialist,
Mr. Eisen, to research a venue issue. The Court will reduce Mr. Eisen’s rate from $485 to $285 –
134
Frank Decl. ¶ 3 & Ex. B, ECF No. 47.
43
the same as Mr. Frank’s rate. This results in a reduction of $21.45. Thus, a total of $223.35 would
normally be deducted from the amount billed to Retail Center. But because Retail Center was billed
$196.26 less than it should have been due to rounding errors, the Court will deduct only $27.09. The
Court will now turn to the reasonableness of the hours billed by Retail Center’s attorneys.
In support of its motion for attorneys’ fees, Retail Center submitted redacted time sheets from
its counsel. Payless contends that the redactions make it impossible to determine what services were
performed, whether those services were necessary, and whether the time devoted to those services
were reasonable. As a result, Payless argues that the Court should refuse to award $34,116.68 in fees
for Retail Center’s lead counsel (Frank Law Group) and $1,192.56 in fees for its local counsel
(Woner, Glenn, Reeder & Girard). As part of its Reply, Retail Center attaches un-redacted versions
of the time records. As discussed previously, the Court will consider the un-redacted time records.
The un-redacted time records largely cure the deficiencies described by Payless as to the time
entries for Frank Law Group. For example, in the redacted time sheets, the time entry for March 17,
2010 reflects that Mr. Frank performed legal research regarding an unidentified subject and sent an
e-mail to his clients regarding an unidentified topic. The un-redacted time sheets provide the
missing information and describe that the research and communications related to removal and venue
issues.
But there are still some time entries from Retail Center’s local counsel (Woner Glenn) that
contain general descriptions of the work performed without identifying the substance of the activity
performed. The Court is able to determine the subject matter of the majority of these time entries
by cross-referencing them with the un-redacted time entries from Frank Law Group. For example,
Mr. Glenn’s December 29, 2010 time entry states “. . . various communications.” Cross-referencing
44
Mr. Glenn’s time entry with the un-redacted time entry of David Frank reveals that the
communications related to the notice of removal. A January 26, 2011 time entry for Mr. Glenn
reflects only “communicated with counsel.” Cross-referencing this time entry with Mr. Koonce’s
un-redacted time entry for January 26, 2011 reveals that the substance of the communication related
to the parties’ planning report.
The Court cannot determine the substance of the communications described in Mr. Glenn’s
time entries of 1/4/2011, 3/15/2011, and 9/6/2011. These entries total $180.01. Accordingly, the
Court deducts $180.01 from Retail Center’s award.
Retail Center concedes that its billing invoices include two duplicate time entries that amount
to $136.50. Accordingly, the Court deducts $136.50 from Retail Center’s award.
Although conceding that it is not per se improper to award fees for unsuccessful motions,
Payless argues that the Court should not allow any compensation for the time spent on Defendants’
unsuccessful motion to transfer. Although Defendants might have had a stronger argument if they
had challenged jurisdiction,135 the Court finds nothing improper about Defendants filing a motion
to transfer based upon venue. Because the Court does not believe that the motion was frivolous or
baseless, the Court will award Retail Center the fees that its attorneys incurred in preparing the
motion for transfer.
Payless also argues that the Court should strike two time entries because they were not
contemporaneously kept. Payless points out that the February 2, 2011 invoice from Frank Law
Group contains a time entry dated 10/24/2011 – eight months after the bill. In its Reply, Retail
See Mem. & Order, Payless Shoesource, Inc. v. Diana Joye, as Trustee of the Dena
Trust, No. 11-4145-CM (D. Kan. Feb. 27, 2012), ECF No. 20 (granting Defendant’s motion to
transfer for lack of juridiction in a similar case).
135
45
Center explains that the February 2, 2011 invoice contains an inadvertent typographical error and
that the date should have been 1/24/2011.136 The Court does not believe there is any basis to strike
this time entry.
Next, Payless points out that the March 3, 2011 invoice from Frank Law Group includes a
time entry for December 30, 2011. Retail Center explains that this time entry reflects research done
by Jay Allan Eisen, who maintains a separate law office. The invoice from Mr. Eisen was received
during the February 2011 billing period and included on the next billing invoice. The Court finds
that Retail Center has adequately explained this time entry.
Next, Payless argues that the charges related to discovery issues were improperly divided
equally among all Defendants rather than billing the work related to a particular shopping center to
the landlord for that shopping center. Retail Center argues that it was reasonable to allocate the
discovery related charges equally because Payless served written discovery request on the four
defendants collectively – one set of interrogatories, one set of requests for production of documents,
and one set of requests for admissions – and all of the documents were maintained by one property
manager. Further, all of the potential deposition witnesses were common for each of the Defendants.
Under the facts of this case, the Court believes that allocating the discovery costs equally among the
Defendants is reasonable.
As discussed with respect to Payless’ motion for attorneys’ fees, Payless did not provide an
invoice from Retail Optimization reflecting how the work was allocated among the different claims.
And unlike the attorney’s fees, Payless did not attempt to allocate certain costs among the different
leases. Rather than striking these expenses in their entirety, the Court allowed Payless to recover
136
Frank Decl. ¶ 5, ECF No. 56-1.
46
75% of these costs by allocating them equally among the claims. Following the same approach, the
Court will allow Retail Center to recover 25% of the charges incurred for discovery.
Mr. Frank’s billing records for August 30 and September 1, 2011 include charges for an
agreed motion to add Palo Woods, LLC as an additional defendant in this case. During the course
of this litigation, the parties discovered that Palo Woods, LLC was the successor-in-interest to
Ginger Root as the owner and landlord for Palo Woods Shopping Center. The Court believes that
this charge should be allocated in its entirety to Palo Woods, not Retail Center. Accordingly, the
Court deducts $128.25 from the fees claimed by Retail Center.
Mr. Koonce’s time entry for February 14, 2011 includes time billed for drafting a tolling
agreement. Retail Center explains that its attorneys prepared tolling agreements between the
Defendants in conjunction with the necessary waivers of conflict involved in representation of the
four Defendants by one law firm. The Court does not believe that this activity qualifies as defending
the case within the meaning of Section 22.06 of the North Mesa Lease. In other words, drafting the
tolling agreement was necessary because the Defendants chose to be represented by the same
attorney, not because it was related to the actual defense of the claims. Accordingly, the Court
deducts $257.25 from the fees sought by Retail Center.
Payless also argues that the time entries for December 30, 2010 and January 3, 2011 should
be reduced or eliminated because they include time spent on drafting and revising the answer; more
specifically, Payless contends that several of the 27 affirmative defenses raised in the answer were
specious or frivolous. At least some of the affirmative defenses by Retail Center appear to have been
boilerplate. For example, the Court does not understand how a defense of contributory negligence
applies to a contract action. But it is not clear that all of the affirmative defenses were necessarily
47
frivolous. And the time allocated to Retail Center for drafting and revising the answer is only 1.01
hours, which also includes preparing pro hac vice motions and reviewing correspondence. In short,
counsel for Retail Center does not appear to have spent any significant time on the affirmative
defenses to warrant any reduction.
There are four time entries by Retail Center’s local counsel that Payless contends are
administrative activities and not properly chargeable:
Date
Timekeeper
Description
Time
Charge
10/04/11
GMG
“Review communication to
prepare file for
final closing.”
1.7
$95.63
12/2/10
GMG
“Worked on fee agreement and
requested
additional information for
agreement about
names of clients, etc.”
.90
$50.63
12/22/10
GMG
“Finalize fee agreement and
forwarded to
client.”
.60
$33.75
02/01/11
GMG
“…made arrangements for filing
of documents while most of staff
went home early because of
severe snowstorm.”
1.90
$106.88
$286.89
The Court is not convinced that these items are properly chargeable to a client. The Court
deducts $286.89 from Retail Center’s award.
With the exception of the specific items described above, the Court finds the remaining time
spent by counsel for Retail Center to be reasonable. The Court deducts a total of $1,015.99 from the
$62,069.94 sought in attorneys’ fees by Retail Center. This results in a lodestar figure of $61,053.95.
48
After carefully considering the factors identified by the Nevada Supreme Court in Brunzell v. Golden
Gate National Bank, 455 P.2d 31, 33 (Nev. 1969), the Court does not believe an upward or
downward departure from the lodestar figure is appropriate.
The Court finds the costs of $131.88 incurred by Retail Center to be reasonable.
Accordingly,
IT IS THEREFORE ORDERED that Plaintiff’s Motion for Attorneys’ Fees and Expenses
(ECF No. 43) is hereby granted in part. Payless is entitled to recover the total of $349,581.06 in
expenses and attorneys’ fees from W/J Commercial Venture, L.P., Compton Commercial
Redevelopment Company, and Ginger Root Commercial Associates LLC.
IT IS FURTHER ORDERED that Defendant Retail Center Partners, Ltd.’s Motion for
Attorney’s Fees and Costs (ECF No. 46) is hereby granted in part. Retail Center is entitled to
recover $61,185.83 in expenses and attorneys’ fees from Payless.
IT IS SO ORDERED.
Dated this 8th day of August 2012, at Topeka, Kansas.
s/K. Gary Sebelius
K. Gary Sebelius
U.S. Magistrate Judge
49
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