Offshore Marine Contractors, Inc. v. Palm Energy Offshore, L.L.C. et al

Filing 280

ORDER ADOPTING REPORT AND RECOMMENDATIONS 276 re 262 Motion for Attorney Fees. Signed by Chief Judge Sarah S. Vance.(Reference: 10-4151)(lag)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
OFFSHORE MARINE CONTRACTORS, INC.

CIVIL ACTION

VERSUS

NO: 10-4151

PALM ENERGY OFFSHORE, LLC AND CHET
MORRISON WELL SERVICES, LLC

SECTION: R(3)

ORDER AND REASONS
Before the Court is the Motion of Palm Energy Offshore, LLC
(PEO) to Set Attorney's Fees and Costs,1 the Magistrate Judge's
Report and Recommendation (R&R),2 the objections of Chet Morrison
Well Services, LLC (CMWS) to the R&R,3 and PEO's response to
CMWS's objections.4 The Magistrate Judge recommends granting
PEO's motion in part and awarding PEO attorneys' fees in the
amount of $220,202.57 and costs in the amount of $7,635.56.5 The
Magistrate Judge's recommended attorneys' fees award of
$220,202.57 reflects a reduction from the fees award of
$257,789.73 originally requested by PEO.6 This reduction results

1

R. Doc. 262.

2

R. Doc. 276.

3

R. Doc. 277.

4

R. Doc. 279.

5

R. Doc. 276 at 9.

6

R. Doc. 262-1 at 1.

from the Magistrate Judge's recommended reduction in the hourly
rates charged by the main attorneys on the case.

I.

Background
A.

The Court's Fees Award

This consolidated action involves two cases. The Court
begins by briefly summarizing the claims involved in each case
and identifying those claims for which CMWS owes PEO attorneys'
fees and costs.
First, Offshore Marine Contractors, Inc. (OMC) brought suit
against PEO and CMWS for charter hire and alleged breach of an
oral agreement for repair costs and lost charter hire arising out
of damage to the leg of a vessel owned by OMC (OMC suit).7 In the
course of the OMC suit, (1) CMWS filed a counterclaim against
OMC;8 (2) PEO and CMWS brought cross-claims against one another
for indemnity for the charter fees sought by OMC;9 and (3) CMWS
brought a third-party claim against H.C. Resources, LLC (HRC).10
HRC was represented by the same counsel as PEO. The Court

7

Offshore Marine Contractors, Inc. v. Palm Energy Offshore,
LLC and Chet Morrison Well Services, LLC, No.2:12-cv-04151.
8

R. Doc. 10.

9

R. Docs. 26 & 27.

10

R. Doc. 30.
2

dismissed CMWS's third-party claim against HCR on December 11,
2012.11
Second, CMWS filed a separate suit against PEO and HCR on
December 12, 2012 for charter fees and breach of contract in
connection with same incident (CMWS suit).12 The Court
consolidated the CMWS suit with the OMC suit on February 6,
2013.13
Following a bench trial, the Court found CMWS liable for
PEO’s attorney fees and costs incurred in defending against OMC's
original claims in the OMC suit on the basis of an indemnity
provision in a Master Service Agreement between PEO and CMWS.14
On the same basis, the Court found CMWS liable for PEO's attorney
fees and costs incurred in pursuing its cross-claim for indemnity
against CMWS.15 PEO is not entitled to attorneys' fees in
connection with the CMWS suit. The Court referred the matter of
attorneys’ fees and costs to Magistrate Judge Knowles on October
7, 2013.16

11

R. Doc. 113.

12

Chet Morrison, LLC v. Palm Energy Offshore, LLC and H.C.
Resources, LLC, No. 1:12-cv-02973.
13

R. Doc. 140.

14

R. Doc. 243 at 29-34.

15

Id.

16

R. Doc. 243 at 35.
3

B.

PEO's Requested Fees

PEO seeks $257,789.73 in attorney fees and $7,635.56 in
costs, for a total of $265,425.29.17 To support its fees request,
PEO filed into the record a spreadsheet with attorney names,
hours, and hourly rates broken down by month, and submitted
unredacted copies of its invoices to the Magistrate Judge and the
Court for in camera review.18 PEO asserts that its invoices
contain attorney-client communications and legal strategy, and
that the invoices are particularly sensitive because CMWS is in
the process of appealing the Court's decision in the consolidated
action to the Fifth Circuit Court of Appeals.19 To arrive at its
requested fees figure, PEO began by multiplying the number of
hours worked by each attorney by his or her hourly rate.20 PEO
then adjusted its hours downward to account for work completed
for parties (i.e. HRC) or in connection with claims (i.e. any
work on the CMWS suit) not covered by the Court's fees award
order.
1. Adjustments to Hours Billed Before December 14, 2012
Counsel for PEO also represented HCR. PEO asserts that it
eliminated all time entries for work conducted solely on HCR’s

17

R. Doc. 262.

18

Id. at 4.

19

R. Doc. 272. at 3.

20

R. Doc. 262-1 at 2.
4

behalf, as well as time spent monitoring sanctions disputes
between OMC and CMWS and time spent on PEO's motion to dismiss
OMC's complaint on procedural grounds.21 PEO asserts that this
work comprised 11 percent of its total billing.22 After these
adjustments, the fees for this period come to $114,502.18.
2. Adjustments to Hours Billed After December 14, 2012
CMWS filed its separate complaint against PEO on December
14, 2012. Attorneys’ fees and costs incurred by PEO in connection
with the CMWS suit are not covered by the fees award. First, PEO
suggests that all or almost all of the services billed after
December 14, 2012 relate to the original OMC suit, rather than to
the CMWS suit, because PEO did not dispute the Working Charter
Fees sought by CMWS in the CMWS suit.23 Second, PEO asserts that
it is difficult to segregate the legal services performed during
this time period.24 Therefore, PEO made an across-the-board
percentage reduction of 4.1 percent to all of its fees billed
after December 14, 2012.25 After applying the percentage
reduction to its fees billed after December 14, 2012, PEO arrived
at a figure for the post-December 14, 2012 period of $143,287.55.

21

R. Doc. 262-1 at 5.

22

Id.

23

Id. at 6-7.

24

Id. at 7.

25

Id. at 5-6.
5

3. Costs
PEO also sought $7,635.56 in costs.26 PEO reduced its
initial amount by 13 percent to reflect that its invoices
segregated costs not by claim, but by task.27
C.

Magistrate Judge Knowles' Recommendation

After reviewing PEO's Motion for Fees and the memoranda
filed in support and in opposition, the Magistrate Judge issued
his R&R on May 27, 2014.28
1. Reasonable Hours
The Magistrate Judge reviewed the invoices that PEO tendered
for in camera review "line-by-line."29 He found that PEO
exercised billing judgment in eliminating duplicative or
redundant work and in striking any time entry that did not fall
within the Court’s order.30 He accepted the 4.1 percent reduction
proffered by PEO for all hours billed after December 14, 2012.
2. Reasonable Rates
The Magistrate Judge compared the rates requested by PEO's
attorneys with prevailing local rates and recommended adjusting

26

Id. at 9.

27

Id.

28

R. Doc. 276.

29

Id. at 7.

30

Id.
6

PEO's rates downward.31 He examined the rates of the three
attorneys who did the vast majority of the work on the case and
suggested reducing Paul Goodwine's rate by 18.75 percent,
reducing Addie Arvidson's rate by 10 percent, and leaving Holly
Thompson's rate the same.32 Rather than apply the reduction
attorney-by-attorney, the Magistrate Judge averaged the two
reductions (18.75 percent and 10 percent), to arrive at a
midpoint of 14.38 percent.33 He then reduced the entirety of the
attorney fees figure by 14.38 percent. He also adjusted the rate
for the one paralegal on the case downward. After applying these
downward adjustments, he arrived at a recommended attorneys' fees
award of $220,202.57.34
3. Costs
The Magistrate Judge recommends awarding the full amount
requested for costs, $7,635.56.35
4. Summary
Judge Knowles recommends awarding a total of $227,833.13, to
be offset by PEO’s liability to CMWS. After the offset, the final
award to PEO would be $75,350.13.
31

Id. at 4.

32

Id. at 5.

33

Id. at 6.

34

Id.

35

Id. at 9.
7

D.

CMWS's Objections

CMWS objects to the R&R.36 First, CMWS objects that PEO did
not carry its burden of proof because it produced the full
invoices only to the Magistrate Judge for in camera review.37
CMWS contends that it was prejudiced by its inability to examine
the invoices itself. CMWS asks the Court to either reject the R&R
on this ground or to order PEO to produce its invoices and grant
CMWS an opportunity to evaluate the reasonableness of the hours
expended itself and brief its specific objections.38 Second, CMWS
contends that a more equitable reduction of PEO's fees postDecember 14, 2012 is 23 percent, not 4.1 percent. Third, CMWS
argues that all of PEO's fees should be reduced by 50 percent to
reflect PEO's counsels' joint representation of PEO and HCR.39

II.

Standard of Review
Federal Rule of Civil Procedure 54(d)(2)(D) authorizes

referral of “a motion for attorney's fees to a magistrate judge
under Rule 72(b) as if it were a dispositive pretrial matter.” A
Magistrate Judge addressing a referred dispositive motion under
Rule 72(b) must prepare a “recommended disposition,” to which the
36

R. Doc. 277.

37

R. Doc. 277-1 at 2-3.

38

Id. at 3-4.

39

R. Doc. 277-1, p. 4-5.
8

parties can object. Then, the district judge “must determine de
novo any part of the magistrate judge's disposition that has been
properly objected to.” F.R.C.P. 72(b)(3).
Here, the Court referred the post-trial question of the
amount of fees and costs to the Magistrate Judge to prepare a
report and recommendation. Therefore, de novo review applies to
the portions of the report and recommendation properly objected
to. See also Blair v. Sealift, Inc., 848 F. Supp. 670, 674-79
(E.D. La. 1994) (collecting cases and holding that a post-trial
motion for attorneys' fees that is not a discovery sanction is a
dispositive matter subject to de novo review). After de novo
review, the Court “may accept, reject, or modify the recommended
disposition, receive further evidence, or recommit the matter to
the magistrate judge with instructions.” Id.

III. Discussion
A. Standard
The lodestar method is routinely used to determine
attorney's fee awards. Under the lodestar method, a court begins
by calculating the "'lodestar[,]' which is equal to the number of
hours reasonably expended multiplied by the prevailing hourly
rate in the community for similar work." Jimenez v. Wood Cnty.,
621 F.3d 372, 379 (5th Cir. 2010) (citing Rutherford v. Harris
County, 197 F.3d 173, 192 (5th Cir. 1999)). The court should
9

exclude all time that is excessive, duplicative, or inadequately
documented. Id. (citing Watkins v. Fordice, 7 F.3d 453, 457 (5th
Cir. 1993)). Once the lodestar amount is calculated, the court
may adjust it based on the twelve factors set forth in Johnson v.
Georgia Highway Express, Inc., 488 F.2d 714, 717–19 (5th Cir.
1974), abrogated on other grounds by Blanchard v. Bergeron, 489
U.S. 87 (1989). "The lodestar may not be adjusted due to a
Johnson factor, however, if the creation of the lodestar award
already took that factor into account. Such reconsideration is
impermissible double-counting." Heidtman v. County of El Paso,
171 F.3d 1038, 1043 (5th Cir. 1999). Moreover, there may be no
need to do additional Johnson adjusting at all, as "the lodestar
figure includes most, if not all, of the relevant factors
constituting a 'reasonable' attorney's fee." Perdue v. Kenny A.
ex rel. Winn, 559 U.S. 542, 553 (2010). Indeed, "there is a
'strong presumption that the lodestar award is the reasonable
fee.'" Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., 685 F.3d
486, 490 (5th Cir. 2012) (quoting Heidtman, 171 F.3d at 1044).
A district court must provide "a reasonably specific
explanation for all aspects of a fee determination." Perdue, 559
U.S. at 558. The party seeking attorney's fees bears the initial
burden of submitting adequate documentation of the hours
reasonably expended and of the attorney's qualifications and
skill. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). Once the
10

lodestar has been calculated, the party seeking a reduction of
the lodestar amount bears the burden of showing that a reduction
is justified. La. Power & Light Co. v. Kellstrom, 50 F.3d 319,
329 (5th Cir. 1995). Finally,
the determination of fees "should not result in a second
major litigation." The fee applicant . . . must, of
course, submit appropriate documentation to meet "the
burden of establishing entitlement to an award." But
trial courts need not, and indeed should not, become
green-eyeshade accountants. The essential goal in
shifting fees (to either party) is to do rough justice,
not to achieve auditing perfection. So trial courts may
take into account their overall sense of a suit, and may
use estimates in calculating and allocating an attorney's
time.
Fox v. Vice, 131 S. Ct. 2205, 2216 (2011) (citations omitted).
B.

CMWS's Objections
1.

PEO's Invoices

CMWS first objects to the Magistrate's refusal to issue an
order requiring PEO to file its invoices into the record. CMWS
argues that by not filing the invoices into the record, PEO "did
not carry its burden of proof."40 The Court finds that there is
no merit to this objection. It is true that a "fee applicant has
the burden to submit adequate documentation of the hours
reasonably expended." Wegner v. Standard Ins. Co., 129 F.3d 814,
822 (5th Cir. 1997) (citing Kellstrom, 50 F.3d at 324); Hensley,
461 U.S. at 433. PEO, however, has met this standard.

40

R. Doc. 277-1 at 3.
11

In Wegner, the Fifth Circuit allowed a district court to
base an attorney's fee award on Wegner's submission of "(1) a
computer printout listing the number of hours expended by and
hourly rates of the attorneys who worked on the case; and (2) an
affidavit from lead counsel reflecting her credentials and her
view that the attorneys' fees on the printout were reasonable and
necessary in the prosecution of the case" without "any time
sheets or descriptions of the work done." Id. at 822-23. Though
the Wegner court described Wegner's documentation as "sparse" and
"marginal at best," it nevertheless could not "say that it was so
vague or incomplete that the district court was precluded from
conducting a meaningful review of whether the hours claimed on
th[e] litigation were reasonably expended." Id.
Here, the documents filed by PEO into the public record
match the description of the documents submitted in Wegner almost
exactly. Thus, even if PEO had submitted only those documents,
the Court may still have determined that it had "sufficient
information before it to determine reasonable hours." Id. at 823.
But PEO did not submit only a computer printout listing hours and
rates to the Court. PEO also submitted over 80 pages of detailed
time entries to the Magistrate Judge and to the Court for in
camera review.
In light of the pending appeal in this matter, the Court
agrees with the Magistrate's decision to allow PEO to submit the

12

invoices for in camera review as opposed to filing them into the
record. The cases CMWS cites regarding waiver of attorney-client
and work-product privilege in the context of attorneys' fees
applications are not entirely on point.41 They establish the
proposition that invoices that reveal only the "fact of billing"
are not privileged. See, e.g. Hunter v. Copeland, No. 03-2584,
2004 WL 1161368, at *3 (E.D. La. May 24, 2004). They do not
address the situation presented here, in which the invoices
reveal significantly more "information on the services rendered."
Id.; C.J. Calamia Const. Co. v. ARDCO/Traverse Lift Co., No. 972770, 1998 WL 395130, at *3 (E.D. La. July 14, 1998) (observing
that billing records are generally privileged "to the extent that
they reveal the nature of services performed and/or the type of
work performed by an attorney" while "records that simply reveal
the amount of time spent, the amount billed, and the type of fee
arrangement between attorney and client are fully subject to
discovery"). The Court's review of the invoices reveals that the
billing entry descriptions provide a fairly fine-grained picture
of PEO's litigation strategy. Under the circumstances, in camera
review of the full invoices was appropriate.
2.

Adjustment to Hours After December 14, 2012

CMWS next objects to the percentage by which PEO decreased
its hours after December 14, 2012. In an attempt to equitably

41

See cases cited at R. Doc. 277-1 at 3 n.11.
13

account for the addition of claims not covered by the fees award
to the litigation at that time, PEO reduced its hours after
December 14, 2012 by 4.1 percent. CMWS proposes a 23 percent
reduction. The parties' proposed percentages reflect their
competing valuations of the "results obtained" by PEO in the
litigation.42 Neither party attempts to explain, however, why
PEO's level of success in the litigation has any relevance to
determining a fair estimate of the percentage of PEO's fees
attributable to the CMWS suit after December 14, 2012.
A fee applicant "should maintain billing time records in a
manner that will enable a reviewing court to identify distinct
claims." Hensley, 461 U.S. at 437. PEO admits that its records do
not permit it to segregate fees between the two suits with any
true accuracy here.43 Nevertheless, the Court allows that this
may be a case in which "[m]uch of counsel's time [was] devoted
generally to the litigation as a whole, making it difficult to
divide the hours expended on a claim-by-claim basis." Id. at 435.
Based on the Court's review of PEO's billing records, the
Court finds that PEO has fairly accounted for the time spent by
its counsel on the CMWS suit. First, although PEO does not
mention this in its briefing, the Court's review of PEO's billing
records reveals the PEO actually did eliminate in their entirety

42

R. Doc. 262-1 at 7; R. Doc. 277-1 at 4.

43

R. Doc. 262-1 at 7.
14

a great many entries from the post-December 14, 2012 period that
clearly pertained only to the CMWS suit. For example, PEO struck
every entry from its March 28, 2013 invoice, which captured time
spent in February, apparently because all of the entries related
to the motions to dismiss filed in the CMWS suit. Thus, the Court
finds that PEO has already accounted the lion's share of the work
done by PEO's counsel in connection with the CMWS suit by
striking entries related to the CMWS suit in their entirety. In
addition, based on the Court's "overall sense of [the] suit,"
Fox, 131 S. Ct. at 2216, the Court finds that work performed for
the CMWS suit not already taken into account by the struck
entries is de minimus. Accordingly, the additional 4.1 percent
reduction applied to the total hours billed for this period
reasonably accounts for any remaining attorney time spent on the
CMWS suit not already accounted for the individually struck
entries.
3.

Adjustment to Hours to Account for Work Performed
for HCR

Finally, CMWS contends that because "much of [PEO's]
counsels' work was for both PEO and HCR," all of PEO's entries
should be "reduced by 50%."44 PEO removed entries related to HCR
on an entry-by-entry basis. As to work that may have benefitted
both PEO and HCR, regardless of whether work done for PEO also

44

R. Doc. 277-1 at 4.
15

benefitted HCR, the work would still have needed to be done for
PEO. Thus, CMWS is not being billed for any fees that PEO would
not have incurred but-for PEO's counsels' representation of HCR.
No further reductions beyond those made to individual entries are
necessary.

IV.

Conclusion
For the foregoing reasons, the Court hereby approves the R&R

and adopts it as its opinion.
Hello This is a Test
New Orleans, Louisiana, this _______ day of ______________, 2014.
September
25th

___________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

16