Watchous Enterprises, L.L.C. v. Pacific National Capital et al
Filing
459
MEMORANDUM AND ORDER granting in part and denying in part 452 Motion for Attorney Fees and Reconsideration. The court denies the portion of plaintiff's motion asking the court to reconsider its earlier Order holding that plaintiff can' t recover both attorneys' fees and the punitive damage award because such an award would produce a duplicative recovery. The court grants the portion of plaintiff's motion that asks for an award of $489,853.50 in attorneys' fees and $68,967.21 in expenses. See Order for further details. Signed by District Judge Daniel D. Crabtree on 3/11/2022. Mailed to pro se parties. Pacific National Capital - c/o Charles A. Elfsten at 3300 Irvine Ave. Ste 100, Newport Beach, CA 92660; Waterfall International Holdings Limited, Waterfall Mountain LLC, Waterfall Mountain USA LLC and William J. Mournes at 35 Birch Run Ave. Denville, NJ 07834 and Kendra Duval at 719 W 580 S, Orem, UT 84058-6012 by regular mail (sz)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
WATCHOUS ENTERPRISES, LLC,
Plaintiff,
v.
Case No. 16-1432-DDC
PACIFIC NATIONAL CAPITAL, et al.,
Defendants.
____________________________________
MEMORANDUM AND ORDER
Plaintiff Watchous Enterprises, LLC has filed a “Motion for Assessment of Attorneys’
Fees and Reconsideration” (Doc. 452). Defendants Mark Hasegawa and Charles Elfsten
responded to the motion by filing a Memorandum in Opposition (Doc. 455). Plaintiff then filed
a Reply (Doc. 456), a Statement of Consultation (Doc. 457), and another Memorandum in
Support of its Motion for Assessment of Attorneys’ Fees (Doc. 458).
After reviewing all the submissions, the court grants in part and denies in part plaintiff’s
“Motion for Assessment of Attorneys’ Fees and Reconsideration” (Doc. 452). Specifically, the
court denies the portion of plaintiff’s motion asking the court to reconsider its earlier Order
holding that plaintiff can’t recover both attorneys’ fees and the punitive damage award because
such an award would produce a duplicative recovery. The court grants the portion of plaintiff’s
motion that asks for an award of $489,853.50 in attorneys’ fees and $68,967.21 in expenses. The
court explains how it reaches these decisions, below.
I.
Factual and Procedural Background
Plaintiff filed this lawsuit more than five years ago. Doc. 1. The case has involved
extensive discovery, multiple amendments to pleadings, and significant motions practice,
including dispositive motions. In summer 2021, the case proceeded to a jury trial on four claims
against five defendants. After a four-day trial, the jury returned a verdict for plaintiff. Doc. 442.
Specifically, the jury found for plaintiff and against defendants William Mournes, Kendra Duval
(as personal representative for the Estate of Gordon Duval), Charles Elfsten, Mark Hasegawa,
and Mark Zouvas on plaintiff’s four claims for: (1) RICO violations under 18 U.S.C. § 1962(c);
(2) RICO conspiracy under 18 U.S.C. § 1962(d); (3) damages due to defendants’ fraud under
Kansas common law; and (4) civil conspiracy to commit fraud under Kansas common law. Id. at
1–15. Also, the jury found plaintiff was entitled to a punitive damages award against all five
defendants. Id. at 3, 6, 9, 12, 15. After hearing evidence on punitive damages, the jury awarded
punitive damages against all five defendants. See generally Doc. 444. Specifically, the jury
awarded $1,000,000 in punitive damages against William Mournes, $250,000 in punitive
damages against Kendra Duval (as personal representative for the Estate of Gordon Duval),
$1,000,000 in punitive damages against Charles Elfsten, $500,000 in punitive damages against
Mark Hasegawa, and $500,000 in punitive damages against Mark Zouvas. Id. at 1–5.
Post-verdict, the court granted plaintiff’s Motion for Default Judgment against defendant
Pacific National Capital based on its failure to secure legal counsel generally and for the trial.
Doc. 449 at 20. The court found Pacific National Capital liable to plaintiff for fraud and
awarded compensatory damages of $182,600. Id.
Also, the court granted plaintiff’s request for an award of treble damages, attorneys’ fees,
and costs because the RICO statute, 18 U.S.C. § 1964(c), explicitly mandates such an award. Id.
at 5–6. But, the court recognized that “the jury was instructed to consider a range of factors in
reaching its determination of a proper punitive damages award” for the fraud claim under Kansas
law including “‘the probable litigation costs incurred by plaintiff.’” Id. at 10 (quoting Doc. 443
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at 2 (Instruction No. 2)). And, “plaintiff presented evidence to the jury—during the punitive
damages phase of trial—about the aggregate total cost that plaintiff incurred, including
attorneys’ fees” amounting to about $500,000. Id. The court expressed concern that an
attorneys’ fee award coupled with the punitive damages award “could produce a double damages
recovery, which the court can’t permit.” Id. So, the court concluded “that (1) plaintiff is entitled
to treble damages under RICO and punitive damages under Kansas common law, and (2) each
defendant is entitled to a credit on the respective punitive damages they owe plaintiff equal in
amount to the attorneys’ fees and costs that plaintiff already may recover based on the jury’s
civil RICO verdict.” Id. at 10–11.
On September 27, 2021, the court entered Judgment against defendants and awarded
plaintiff compensatory and punitive damages on its RICO, RICO conspiracy, fraud, and civil
conspiracy claims. Doc. 451.
Plaintiff’s current motion asks the court to award it $489,853.50 in attorneys’ fees and
$68,967.21 in non-taxable expenses. Doc. 452 at 2; Doc. 458 at 1. Also, plaintiff asks the court
to reconsider the portion of its Order finding that an award of attorneys’ fees is duplicative of the
jury’s punitive damages award and permitting defendants to credit the attorneys’ fee award
against the punitive damages awarded by the jury against each defendant. Doc. 452 at 2. The
court considers both requests, below.
II.
Motion for Reconsideration
The court first addresses the part of plaintiff’s motion asking the court to reconsider its
ruling that plaintiff’s attorneys’ fee award is duplicative of the punitive damages award, thus
requiring an offset against the punitive damages award.
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A. Legal Standard
The grounds “warranting a motion to reconsider include (1) an intervening change in the
controlling law, (2) new evidence previously unavailable, and (3) the need to correct clear error
or prevent manifest injustice.” Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir.
2000) (discussing Fed. R. Civ. P. 59(e)’s requirements); see also D. Kan. Rule 7.3(b) (explaining
reconsideration of non-dispositive orders must be based on “(1) an intervening change in
controlling law; (2) the availability of new evidence; or (3) the need to correct clear error or
prevent manifest injustice”). “Thus, a motion for reconsideration is appropriate where the court
has misapprehended the facts, a party’s position, or the controlling law.” Servants of the
Paraclete, 204 F.3d at 1012 (citation omitted). But, it “is not appropriate to revisit issues already
addressed or advance arguments that could have been raised in prior briefing.” Id. (citation
omitted); see also Banister v. Davis, 140 S. Ct. 1698, 1703 (2020) (explaining that, on a Rule
59(e) motion, “courts will not address new arguments or evidence that the moving party could
have raised before the decision issued”). A district court has discretion when deciding whether
to grant or deny a motion to reconsider. Hancock v. City of Okla. City, 857 F.2d 1394, 1395
(10th Cir. 1988).
B. Analysis
Plaintiff’s motion neglects the standard governing motions for reconsideration. It never
argues that the court should reconsider its earlier Order based on an intervening change in the
controlling law or new evidence previously unavailable. And, it never explicitly argues that the
court should reconsider its Order based on a need to correct clear error or prevent manifest
injustice. Just once, plaintiff asserts that the court “will commit error if it reduces the punitive
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damages[.]” Doc. 453 at 5. So, the court assumes that plaintiff intended to ask the court to
reconsider its Order based on a need to correct clear error.
Plaintiff’s motion never demonstrates clear error when the court ruled that plaintiff can’t
recover both RICO attorneys’ fees and the punitive damages award. As the court held, allowing
plaintiff to recover both awards would produce a duplicative damages award. The court
instructed the jury that it should consider several factors when determining the punitive damage
award, including plaintiff’s litigation costs. Doc. 443 at 2. Plaintiff presented evidence to the
jury that it had incurred about $500,000 in attorneys’ fees and expenses through the course of
this litigation. And, the jury eventually returned a verdict finding defendants liable for punitive
damages in an aggregate amount of $3,250,000. Doc. 444 at 1–5. The court assumes that the
jury followed the court’s instructions. Richardson v. Marsh, 481 U.S. 200, 206 (1987)
(describing the “assumption of the law that jurors follow their instructions” (citation omitted));
see also United States v. Urbano, 563 F.3d 1150, 1155 (10th Cir. 2009) (“This court generally
assumes jurors follow jury instructions.” (citation omitted)). Because the court instructed the
jury to consider plaintiff’s attorneys’ fees and expenses when determining the punitive damage
award, and it assumes that the jury followed those instructions, the court can’t permit plaintiff to
recover its attorneys’ fees both under RICO and the punitive damage award because that award
will produce a double damages recovery. See MidAmerica Fed. Sav. & Loan Ass’n v.
Shearson/Am. Express, Inc., 962 F.2d 1470, 1473 (10th Cir. 1992) (“[A] plaintiff generally may
not double recover damages.” (citations omitted)).
Plaintiff fails to come forward with any arguments that convince the court it clearly erred
by reaching this conclusion. Instead, plaintiff asserts arguments that it could have raised or
rehashes arguments that it made previously when briefing the “Motion Concerning Form of
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Judgment.” Doc. 445; see also Doc. 448. And, that’s not proper argument on a motion for
reconsideration. See Castanon v. Cathey, 976 F.3d 1136, 1141 (10th Cir. 2020) (explaining that
motion to reconsider “may not be used to relitigate old matters” or “simply rehash[ ]” arguments
already asserted (citations and internal quotation marks omitted)); see also Servants of the
Paraclete, 204 F.3d at 1012 (explaining that it “is not appropriate to revisit issues already
addressed or advance arguments that could have been raised in prior briefing” on a motion to
reconsider (citation omitted)). In any event, none of plaintiff’s arguments require the court to
reconsider its Order.
First, plaintiff argues that once the jury found defendants liable for violating RICO, an
award of attorneys’ fees “became mandatory” under 18 U.S.C. § 1964(c). Doc. 453 at 3. That’s
correct. See, e.g., Genty v. Resol. Tr. Corp., 937 F.2d 899, 914 (3d Cir. 1991) (observing that
RICO’s “plain language . . . instructs that injured persons ‘shall recover’ treble damages and
costs and attorneys fees” and remarking that this statutory language connotes a mandatory
provision (quoting 18 U.S.C. § 1964(c))). And, the court awarded plaintiff’s attorneys’ fees
consistent with that statute. See Doc. 449 at 6. But, plaintiff goes on to argue that “the fact that
attorneys’ fees would be mandatorily awarded under § 1964(c) was considered by the jury during
the punitive damage phase of the trial in determining the appropriate amount of punitive
damages.” Doc. 453 at 3. That’s not true. The jury never was instructed about RICO’s
attorneys’ fees provision. But, in the punitive damages phase of the trial, the jury received
instructions about factors it should consider when determining a punitive damage award under
Kansas law. Those factors included:
1) The likelihood at the time of the alleged misconduct that serious harm would
arise from the defendant’s misconduct;
2) the degree of the defendant’s awareness of that likelihood;
3) the profitability of the defendant’s misconduct;
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4) the duration of the misconduct and any intentional concealment of it;
5) the attitude and conduct of the defendant upon discovery of the misconduct;
6) the financial condition of the defendant;
7) the total deterrent effect of other damages and punishment imposed upon the
defendant as a result of the misconduct, including the severity of the criminal
penalties to which the defendant has been or may be subjected; and
8) the probable litigation costs incurred by plaintiff.
Doc. 443 at 2 (emphasis added); see also Werdann v. Mel Hambelton Ford, Inc., 79 P.3d 1081,
1092 (Kan. Ct. App. 2003) (“[I]n fixing an award of punitive damages, a trial court may consider
the plaintiff’s probable litigation expenses, including attorney fees.” (citations omitted)). As
already discussed, the court assumes that the jury followed those instructions. Richardson, 481
U.S. at 206. The jury heard evidence from plaintiff that it had spent about $500,000 in litigation
fees and expenses. And, it awarded an aggregate punitive damage award against all five
defendants for $3,250,000—more than six times the amount of litigation expenses that plaintiff
presented to the jury. Given plaintiff’s limited evidence during the punitive damage phase of the
trial, the court fairly infers that the jury’s punitive damage award includes litigation expenses
plaintiff incurred and presented as evidence to the jury. So, the court can’t award plaintiff both
the punitive damages award and its attorneys’ fees under RICO because that would produce a
double recovery to plaintiff.
Second, plaintiff argues that the court’s Order reduced the jury’s punitive damages award,
thus violating plaintiff’s Seventh Amendment right to a jury trial. Our Circuit has explained that
“the Seventh Amendment protects a federal plaintiff’s right to have a jury determine the amount
of a punitive damage award.” Jones v. United Parcel Serv., Inc., 674 F.3d 1187, 1204 (10th Cir.
2012); see also Cap. Sols., LLC v. Konica Minolta Bus. Sols. U.S.A., Inc., 695 F. Supp. 2d 1149,
1152 (D. Kan. 2010) (Lungstrum, J.) (concluding that “the Seventh Amendment does require
that the jury also be allowed to determine the amount of any punitive damages awarded”). And,
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“‘in an ordinary remittitur case, the plaintiff must be offered a choice between a new trial and
accepting a remittitur to avoid a serious problem under the Seventh Amendment, which reserves
to the jury the determination of damages.’” Jones, 674 F.3d at 1204 (quoting O’Gilvie v. Int’l
Playtex, Inc., 821 F.2d 1438, 1447 (10th Cir. 1987)). But, this isn’t an ordinary remittitur case.
Indeed, here, the court hasn’t ordered remittitur. It already has entered Judgment for plaintiff on
the punitive damage awards that the jury returned for plaintiff. Doc. 451 at 2–3.
But, the court does conclude that defendants should receive a credit against their
respective punitive damages awards for any payment of the attorneys’ fee award because
plaintiff chose to use evidence of its litigation expenses to support its punitive damages case.
Naturally, the court didn’t instruct the jury that plaintiff, as a party prevailing on a RICO claim,
would recover, by statute, its attorneys’ fees and expenses. In sum, allowing plaintiff to recover
both awards would produce a duplicative recovery. And, even if one views this approach as a
remittitur of sorts, the court has authority to reduce a punitive damages award that violates the
Due Process protections of the Fourteenth Amendment. See Jones, 674 F.3d at 1208 n.8
(explaining that reducing a punitive damage award to comply with the Due Process Clause
doesn’t implicate Seventh Amendment concerns (citations omitted)). “‘[T]he Due Process
Clause of the Fourteenth Amendment prohibits the imposition of grossly excessive or arbitrary
punishments on a tortfeasor.’” Id. at 1206–07 (quoting Hardeman v. City of Albuquerque, 377
F.3d 1106, 1121 (10th Cir. 2004)). When courts analyze the constitutionality of a punitive
damages award, the Supreme Court has instructed that they must “look to 1) the degree of
reprehensibility of the defendant’s action; 2) the disparity between the actual harm suffered by
the plaintiff and the punitive damage award; and 3) the difference between the punitive damage
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award and the civil penalties authorized or imposed in comparable cases.” Hardman, 377 F.3d at
1121 (citing BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574–75 (1996)).
Here, plaintiff has secured a judgment against defendants awarding it $365,200 in
compensatory damages for its RICO claims, $182,600 for its fraud and civil conspiracy claims,
and $3,250,000 for punitive damages. Under the three factors discussed above, the court finds
that the punitive damages award is constitutionally excessive because it duplicates the jury’s
consideration of plaintiff’s litigation expenses and the attorneys’ fee award plaintiff is entitled to
recover under RICO. See Jones, 674 F.3d at 1207–08 (concluding that a $2 million punitive
damages award was excessive because: (1) defendant’s “conduct resulted solely in economic
injury to” plaintiff and defendant “did not act with disregard for the health and safety of others”
thus the conduct was not “so reprehensible as to warrant a $2 million punitive damage award[;]”
(2) “the jury’s award of $630,307 in actual damages was substantial . . . in light of the injuries he
suffered[,]’ and thus, the $2 million “punitive damage award was grossly excessive[;]” and (3) a
“review of comparable employment cases support[ed] [the] conclusion that the jury’s punitive
damage award was excessive”). A recovery of the punitive damages award combined with the
attorney fee award uses plaintiff’s attorneys’ fees to double dip. Allowing plaintiff to recover its
attorneys’ fees under RICO without crediting those payments against the punitive damages
award based in part on plaintiff’s attorneys’ fees would result in “imposition of [a] grossly
excessive” and “arbitrary punishment” on defendants which violates the Due Process Clause. Id.
at 1206–07. Thus, the court declines to reconsider its decision prohibiting plaintiff from
recovering double damages.
Third, plaintiff argues that the court’s Order “essentially supersede[s] Kansas law
governing punitive damages” because it concludes plaintiff can’t recover both its attorneys’ fees
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under RICO and the punitive damages award that includes the jury’s consideration of litigation
expenses. Doc. 453 at 4. The court’s decision doesn’t supersede Kansas law. Indeed, it
enforces Kansas law. As already noted, the court has entered Judgment for plaintiff on the jury’s
entire punitive damages award under Kansas law. Doc. 451 at 2–3. But, the court won’t allow
plaintiff to “double recover damages” because the law does not permit it. MidAmerica Fed. Sav.
& Loan Ass’n, 962 F.2d at 1473.
Fourth, plaintiff argues that no duplication of damages occurred here because the RICO
attorneys’ fee award is remedial while the punitive damages award serves as a punishment.
Thus, plaintiff asserts, the awards aren’t duplicative because they serve different purposes. The
court agrees that one purpose of a punitive damage award is to punish. But—as plaintiff
requested at trial—the court instructed the jury that it “should consider” plaintiff’s litigation
costs when determining the amount of punitive damages to award. Doc. 443 at 2. Plaintiff
presented evidence of those actual costs to the jury and asked the jury to award it those costs as
part of a punitive damage award. The jury’s award—at least as it considered plaintiff’s litigation
costs—was, in effect, remedial because it compensated plaintiff for the litigation expenses it
incurred. Also, the differing purposes for awarding attorneys’ fees versus punitive damages
don’t overcome the court’s concern that it shouldn’t grant plaintiff a windfall by awarding it
double damages for its attorneys’ fees and expenses incurred in this litigation.
Last, if the court refuses to reconsider its decision prohibiting plaintiff from recovering
both the attorneys’ fee award under RICO and the punitive damages award, plaintiff contends the
court at least should reconsider the portion of its Order permitting each defendant a credit for the
attorneys’ fees award against their respective punitive damages awards. Instead, plaintiff argues
that the court should employ a proportional approach that credits each defendant a percentage of
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the overall attorneys’ fee award against their individual punitive damages award based on the
proportion that each defendant owes toward the total amount of the punitive damages awards.
Doc. 453 at 6. Defendants Mark Hasegawa and Charles Elfsten disagree with this proposal,
arguing that the proportional approach conflicts with the requirement that defendants are liable
jointly and severally for the attorneys’ fee award. The court agrees with defendants.
Each defendant is jointly and severally liable for the attorneys’ fee award. And, each
defendant is individually liable for the individualized punitive damages award that the jury
awarded. To the extent any defendant pays some or all of the attorneys’ fee award, that
defendant can credit the amount paid against the individual punitive damages award he or she
owes.1 For example, if defendant Charles Elfsten pays the entire attorneys’ fee award of
$558,820, then he can credit that amount against the $1,000,000 punitive damages award he
owes. He still will owe the remaining amount of the individual punitive damages award against
him, and he can seek contribution from the other defendants based on their joint and several
obligations to pay the attorneys’ fee award. As another example, if Kendra Duval (as personal
representative for the Estate of Gordon Duval) pays the entire attorneys’ fee award, then she will
have discharged her obligation to pay the $250,000 individual punitive damages award against
her. And, she can seek contribution from the other defendants for the amounts they owe on their
joint and several obligations to pay the attorneys’ fee award. This approach provides each
defendant an incentive to pay the attorneys’ fee award first because it allows that defendant to
1
To the extent plaintiff is reading the court’s earlier Order as permitting each of the five
defendants to credit the total amount of the attorneys’ fee award against each of the five individual
punitive damages awards, the court never meant to convey such an approach. Plaintiff is correct that such
an approach impermissibly would reduce the punitive damage award by five times the amount of any
payment on the attorneys’ fee award. And, that’s not what the court ordered. Instead, as explained
above, the court orders as follows: For any defendant who makes payment of some or all of the joint and
several attorneys’ fee award, that defendant may credit the amount paid against the individual punitive
damages award that the paying defendant owes to plaintiff.
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offset more of the attorneys’ fees award against the amount of punitive damages owed, while
giving that defendant the ability to seek contribution against the co-defendants who are jointly
and severally liable for the fee award.
In sum, the court denies plaintiff’s Motion for Reconsideration. Plaintiff has failed to
demonstrate that the court committed clear error by concluding that plaintiff cannot recover both
attorneys’ fees under RICO and the entire punitive damages award because such a recovery is
duplicative. Instead, the court concludes: (1) plaintiff is entitled to recover the attorneys’ fee
award against all defendants jointly and severally and the individual punitive damages award
against each defendant individually; and (2) any defendant who pays some or all of the
attorneys’ fee award may credit that amount against the amount of punitive damages that the
paying defendant individually owes to plaintiff.
III.
Motion for Attorneys’ Fees
Next, the court addresses plaintiff’s request for attorneys’ fees and expenses. Plaintiff
asks the court to award it $489,853.50 in attorneys’ fees and $68,967.21 in expenses. Doc. 458
at 1. Our court’s local rule, D. Kan. Rule 54.2, governs requests for an award of statutory
attorneys’ fees. The local rule requires a party seeking attorneys’ fees to “promptly initiate
consultation with the other party or parties.” D. Kan. Rule 54.2(a). If the parties disagree about
an attorney fee award, the party seeking fees “must file . . . (1) a statement that, after consultation
in accordance with this rule, the parties have been unable to reach an agreement with regard to
the fee award; and (2) a memorandum setting forth the factual basis for each criterion that the
court is asked to consider in making an award.” D. Kan. Rule 54.2(c). The Rule provides that
the “statement of consultation must set forth the date of the consultation, the names of those who
participated, and the specific results achieved.” D. Kan. Rule 54.2(d). And it warns: “The court
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will not consider a motion for statutory attorney’s fees made pursuant to Fed. R. Civ. P. 54(d)(2)
until the moving party files the statement of consultation in compliance with this rule.” Id.
Plaintiff filed the required Statement of Consultation. Doc. 457. Plaintiff asserts that it
initiated consultation with defendants on October 13, 2021, by providing copies of its billing
reports and proposing a conference to discuss the fee request. Id. at 1. Plaintiff reports that no
defendant responded to its communication. Id. Plaintiff next wrote defendants on October 22,
2021, again asking for a conference to discuss the fee request. Id. Again, no defendant
responded. Id. Thus, plaintiff asserts that defendants have refused to consult with plaintiff about
the fee request, and, as a consequence, the parties have been unable to reach an agreement. Id. at
1–2. On these facts, the court finds that plaintiff has complied with the requirements of D. Kan.
Rule 54.2.
When responding to plaintiff’s original motion asking for attorneys’ fees and expenses,
defendants Mark Hasegawa and Mark Elfsten asserted that they were not “attacking the
reasonableness of [the] requested fees or Plaintiff’s right to recover its fee incurred in pursuing a
successful RICO claim.” Doc. 455 at 2. Also, no defendant has responded either to plaintiff’s
Statement of Consultation (Doc. 457) or plaintiff’s supplemental Memorandum in Support of its
Motion for Assessment of Attorneys’ Fees (Doc. 458), which provides a detailed accounting of
the fees and expenses that plaintiff seeks. Because no defendant has responded to the part of
plaintiff’s motion seeking the requested amount of attorneys’ fees and expenses, the court may
“consider and decide the motion as an uncontested motion.” See D. Kan. Rule 7.4(b).
“Ordinarily, the court will grant [an uncontested] motion without further notice.” Id. But, as
explained below, the court grants the motion on its merits.
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A. Legal Standard
The district court has broad authority over awards of attorneys’ fees. Law v. Nat’l
Collegiate Athletic Ass’n, 4 F. App’x 749, 751 (10th Cir. 2001); United Phosphorus, Ltd. v.
Midland Fumigant, Inc., 205 F.3d 1219, 1234 (10th Cir. 2000).
When determining whether a requested fee award is reasonable, “a court must begin by
calculating the so-called lodestar amount of a fee” which is “the product of the number of
attorney hours ‘reasonably expended’ and a ‘reasonable hourly rate.’” Robinson v. City of
Edmond, 160 F.3d 1275, 1281 (10th Cir. 1998) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433
(1983) (further citations and internal quotation marks omitted)). The party requesting attorneys’
fees bears the burden to prove the amount of hours spent on the case and the appropriate hourly
rates. United Phosphorus, 205 F.3d at 1233 (citation omitted). Once an applicant satisfies this
burden, the court presumes that the lodestar figure is a reasonable fee. Robinson, 160 F.3d at
1281; see also Weaver v. JTM Performant Recovery, Inc., No. 2:13-cv-2408-JTM, 2014 WL
4843961, at *4 (D. Kan. Sept. 29, 2014) (“Once an applicant has met this burden, the lodestar
figure is presumed to be a reasonable fee.”).
After determining the lodestar, the court may adjust that figure upward or downward “‘to
account for the particularities of the suit and its outcome.’” Fox v. Pittsburgh State Univ., 258 F.
Supp. 3d 1243, 1254 (D. Kan. 2017) (quoting Zinna v. Congrove, 680 F.3d 1236, 1242 (10th Cir.
2012)). This approach requires the court to consider the factors in Johnson v. Georgia Highway
Express, Inc., 488 F.2d 714 (5th Cir. 1974), abrogated on other grounds by Blanchard v.
Bergeron, 489 U.S. 87 (1989). These Johnson factors are: (1) time and labor required; (2)
novelty and difficulty of the questions presented in the case; (3) skill requisite to perform the
legal service properly; (4) preclusion of other employment by the attorneys due to acceptance of
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the case; (5) customary fee; (6) whether the fee is fixed or contingent; (7) any time limitations
imposed by the client or circumstances; (8) amount involved and results obtained; (9)
experience, reputation, and ability of the attorneys; (10) undesirability of the case; (11) nature
and length of the professional relationship with the client; and (12) awards in similar cases. Id.
at 717–19.
Although the court may consider each of these factors, it need not consider those factors
“‘subsumed within the initial calculation of hours reasonably expended at a reasonable hourly
rate.’” Fox, 258 F. Supp. 3d at 1254 (quoting Mathiason v. Aquinas Home Health Care, Inc.,
187 F. Supp. 3d 1269, 1281 (D. Kan. 2016)). This is so because the “lodestar calculation is
meant to be the primary consideration when awarding fees rather than the Johnson factors.” Id.
(citing Anchondo v. Anderson, Crenshaw & Assocs., LLC, 616 F.3d 1098, 1103 (10th Cir.
2010)).
B. Analysis
Plaintiff asserts that its requested attorneys’ fee award is a reasonable amount of fees
incurred prosecuting this lawsuit. With its fee request, plaintiff has submitted an Affidavit
signed by counsel. Doc. 458-1. It explains that plaintiff’s fee request seeks fees for the time that
nine attorneys, four paralegals, and two law clerks spent working on the matter. Id. at 2 (James
Walker Aff. ¶ 4). Attached to the Affidavit are billing records showing that the attorneys spent
2,174.4 hours working on the case. Id. at 127, 129; see also Doc. 458 at 8. Plaintiff asserts that
the attorneys’ hourly rates and the hours expended on the litigation are reasonable. Doc. 458 at
3–17.
First, the court considers whether the hourly rates charged by the lawyers, paralegals, and
law clerks are reasonable. Plaintiff asserts that the average hourly rates the attorneys charged in
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the case ranged from $135 for a lawyer with two years’ experience to $346.81 for a lawyer with
45 years’ experience. Doc. 458 at 6–7. Also, the average hourly rates for paralegals and law
clerks ranged from $110 to $125. Id. at 7. Plaintiff asserts that these hourly rates are reasonable
and within the range of hourly rates for “what lawyers of comparable skill and experience
practicing in the area in which the litigation occurs would charge for their time.” Case v. Unified
Sch. Dist. No. 233, 157 F.3d 1243, 1256 (10th Cir. 1998) (citation and internal quotation marks
omitted). For support, plaintiff cites other cases from our court approving as reasonable hourly
rates similar to those charges by plaintiff’s attorneys and staff in this case. Doc. 458 at 5–6 (first
citing Lawson v. Spirit AeroSystems, Inc., No. 18-1100-EFM-ADM, 2020 WL 6343292, at *16–
17 (D. Kan. Oct. 29, 2020) (finding reasonable rates of $625 per hour for partner with 27 years’
experience, $425 per hour for counsel with 13 years’ experience, $350 per hour for associate
with seven years’ experience, and $185 for a paralegal with 27 years’ experience because they
were consistent with top-tier Wichita rates and top-tier employment litigation rates in Kansas
City); then citing M.B. v. Howard, ___ F. Supp. 3d. ___, 2021 WL 3681084, at *7, 14 (D. Kan.
Aug. 19, 2021) (noting that “cases assessing [the District of Kansas’s] market have found hourly
rates between $175 to $625 reasonable based on the attorney’s experience” and finding “a rate of
$150 per hour reasonable for paralegals and staff working the case”)). Also, plaintiff cites a
national survey showing that the average rates for lawyers in the Wichita area is between $190
and $500, depending on experience. Id. at 6 (citing R.L. Burdge, United States Consumer Law
Attorney Fee Survey Report 2015–2016, 243–44 (2018),
https://www.nclc.org/images/pdf/litigation/tools/atty-fee-survey-2015-2016.pdf (showing
average rates between $190 and $500 depending on experience for Wichita, Kansas)).
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The court agrees with plaintiff. The hourly rates charged by the lawyers, paralegals and
law clerks involved in this action are reasonable. The hourly rates are consistent with hourly
rates approved by our court in cases involving counsel with similar experience, as shown by
plaintiff’s cited cases and others. See, e.g., Mathiason v. Aquinas Home Health Care, Inc., 187
F. Supp. 3d 1269, 1281 (D. Kan. 2016) (Lungstrum, J.) (finding, in 2016, reasonable “hourly
rates ranging from $325.00 per hour for lead counsel, $350.00 per hour for a firm partner,
$200.00 per hour for an associate attorney, and $125.00 per hour for paralegal time”); Barbosa v.
Nat’l Beef Packing Co., LLC, No. 12-2311-KHV, 2015 WL 4920292, at *10 (D. Kan. Aug. 18,
2015) (Vratil, J.) (finding, in 2015, hourly rates ranging from $180 to $425 reasonable,
depending on each attorney’s level of experience, in an FLSA case). The court thus finds
reasonable the hourly rates charged by the attorneys, paralegals, and law clerks who worked on
this matter for plaintiff.
Next, the court considers the amount of time that plaintiff’s attorneys devoted to this
matter. Plaintiff seeks to recover attorneys’ fees for 2,174.4 hours its counsel spent prosecuting
the litigation. When determining whether the amount of time spent on a matter is reasonable, our
Circuit has instructed courts to consider:
(1) whether the tasks being billed would normally be billed to a paying client, (2)
the number of hours spent on each task, (3) the complexity of the case, (4) the
number of reasonable strategies pursued, (5) the responses necessitated by the
maneuvering of the other side, and (6) potential duplication of services by multiple
lawyers.
Robinson, 160 F.3d at 1281 (citation and internal quotation marks omitted). Plaintiff has
submitted 125 pages of detailed billing records recording the time that all attorneys and staff
devoted to the case. Doc. 458-1 at 5–129. The specific tasks recorded are proper charges for
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prosecuting plaintiff’s claims against defendants. And, after considering the Robinson factors,
the court finds the time spent on each task is reasonable.
To the extent that defendants complain about the level of effort plaintiff’s attorneys
devoted to this action, defendants must remember that they needlessly complicated plaintiff’s
effort to prosecute the case to completion. For instance, Judge Marten noted “defendants’
history of hiring and firing multiple sets of attorneys” coupled with the repeated requests to
continue the trial setting “remove[d] any doubt as to the nature of the pattern of delay.” Doc.
375 at 3.
Concluding that counsel’s hourly rates and the amount of time devoted to the matter are
reasonable, the court finds that the lodestar calculation—i.e., $489,853.50 —is reasonable. See
Robinson, 160 F.3d at 1281 (explaining that once an attorneys’ fee award applicant satisfies its
burden to prove the amount of hours spent on the case and the hourly rates charged are
reasonable, the court presumes that the lodestar figure is a reasonable fee).
The court also has considered the Johnson factors. It finds that several of these factors
are neutral here because they don’t affect the reasonableness analysis. These factors include: (4)
preclusion of other employment by the attorneys due to acceptance of the case; (6) whether the
fee is fixed or contingent; (7) any time limitations imposed by the client or circumstances; (10)
undesirability of the case; (11) nature and length of the professional relationship with the client;
and (12) awards in similar cases. Also, several other Johnson factors are “subsumed within the
initial calculation of hours reasonably expended at a reasonable hourly rate.” Fox, 258 F. Supp.
3d at 1254 (citation and internal quotation marks omitted). Thus, the court need not consider
those factors because the lodestar analysis already has accounted for them. Id. These factors
include: (1) time and labor required; (2) novelty and difficulty of the questions presented in the
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case; (3) skill requisite to perform the legal service properly; (5) customary fee; and (9)
experience, reputation, and ability of the attorneys.
The eighth Johnson factor—the amount involved and the results obtained—is the “most
critical factor in determining the reasonableness of a fee award[.]” Farrar v. Hobby, 506 U.S.
103, 114 (1992) (citation and internal quotation marks omitted). Here, the amount involved was
disputed, both on liability and damages, and hotly contested by defendants. The “result
obtained” is a jury verdict for plaintiff awarding plaintiff $365,200 in compensatory damages for
its RICO claims, $182,600 for its fraud and civil conspiracy claims, and $3,250,000 for punitive
damages. This award is substantial, and the court finds that the “result obtained” factor heavily
favors awarding plaintiff the requested attorneys’ fee award.
None of the Johnson factors presents any reason for the court to adjust the lodestar
upward or downward. To the contrary, the court concludes that the Johnson factors strongly
support and warrant an award of attorneys’ fees in the amount of $489,853.50. The court thus
finds that the requested fee award is a reasonable one.
Also, plaintiff seeks an award of $68,967.21 in expenses for document management fees,
travel expenses, transcript costs, and expert fees. Doc. 458 at 18–19; see also Doc. 458-1. A
prevailing party is permitted to recover “reasonable out-of-pocket expenses not normally
absorbed as part of law firm overhead[.]” Brown v. Gray, 227 F.3d 1278, 1297 (10th Cir. 2000).
The types of expenses plaintiff seeks here are ones that courts typically permit a prevailing party
to recover. See id. (explaining that “[s]ome expenses, such as travel, may be included in” an
award for fees and expenses); see also Wirtz v. Kan. Farm Bureau Servs., Inc., 355 F. Supp. 2d
1190, 1207–09 (D. Kan. 2005) (granting in part a request for an award of cost and expenses
including expenses for postage, photocopies, deposition transcripts, and expert witness fees).
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The court finds plaintiff’s requested expenses reasonable, and it awards plaintiff $68,967.21 in
expenses.
For these reasons, the court finds reasonable plaintiff’s request for an award of
$489,853.50 in attorneys’ fees and $68,967.21 in expenses. The court thus grants plaintiff’s
request for attorneys’ fees and expenses in these amounts.
IT IS THEREFORE ORDERED BY THE COURT THAT Plaintiff Watchous
Enterprises, LLC’s “Motion for Assessment of Attorneys’ Fees and Reconsideration” (Doc. 452)
is granted in part and denied in part, consistent with this Order.
IT IS SO ORDERED.
Dated this 11th day of March, 2022, at Kansas City, Kansas.
s/ Daniel D. Crabtree
Daniel D. Crabtree
United States District Judge
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