H.D.V. - Greektown, L. L. C. et al v. Detroit, City of

Filing 182

ORDER adopting in part 179 Report and Recommendation; Overruling 181 Objections and granting in part and denying in part 174 Second Motion for Attorney's Fees. Signed by District Judge Arthur J. Tarnow. (MLan)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
H.D.V. - GREEKTOWN, L.L.C., ET AL.,
Case No. 06-11282
Plaintiffs,
SENIOR U.S. DISTRICT JUDGE
ARTHUR J. TARNOW

v.
CITY OF DETROIT,

U.S. MAGISTRATE JUDGE
R. STEVEN WHALEN

Defendant.
/

ORDER ADOPTING IN PART REPORT AND RECOMMENDATION [179];
OVERRULING PLAINTIFFS’ OBJECTION [181]; GRANTING IN PART PLAINTIFFS’
SECOND MOTION FOR ATTORNEY’S FEES [174]
Plaintiffs H.D.V. - Greektown, 415 East Congress, and K&P Inc. filed a
Second Supplemental Motion for Attorney’s Fees and Costs [174] on September
20, 2016. Defendant City of Detroit filed a Response [176] on October 4, 2016.
Plaintiffs filed a Reply [178] on October 18, 2016.
On September 28, 2017, the Magistrate Judge issued a Report and
Recommendation (“R&R”) [179] recommending that the Court grant in part and
deny in part Plaintiffs’ Motion. The R&R further recommends that the Court award
Plaintiffs’ counsel a total of $905,718.56, subject to the orders of the Bankruptcy
Court. [Dkt. #180].

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For the reasons stated below, the R&R [179] is ADOPTED in part;
Plaintiffs’ Objection [181] is OVERRULED; and Plaintiffs’ Second Motion for
Attorney’s Fees [174] is GRANTED in part and DENIED in part.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs, closely-held Michigan limited liability companies in the adult
entertainment business, alleged that Defendant violated their First Amendment
rights by hindering the operation of their businesses with regulations.
On August 23, 2011, Plaintiffs obtained a $2.95 million settlement in this §
1983 action. The parties stipulated that the Court would decide the issue of
attorney fees pursuant to 42 U.S.C. § 1988 and that Plaintiffs were prevailing
parties for purposes of determining such fees and costs.
On October 4, 2011, Plaintiffs filed their first Motion for Attorney Fees and
Costs [148], in which they sought over $1.5 million. On May 23, 2016, the
Magistrate Judge issued an R&R [162] recommending that the Court grant in part
and deny in part Plaintiffs’ Motion. Specifically, the R&R recommended that the
Court reduce Plaintiffs’ request for attorney fees by 60%. The R&R [162] further
recommended that the Court decline to grant a fee enhancement, and impose a 3%
cap on the fees incurred litigating the attorney fee issue (“fees for fees”). On March
31, 2015, the Court issued an Order [169] adopting the R&R and overruling
Plaintiffs’ objections.
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Plaintiffs filed a Notice of Appeal [170] on April 20, 2015. On appeal, the
Sixth Circuit affirmed in part, reversed in part, and remanded to the district court.
H.D.V. - Greektown, LLC v. City of Detroit, 660 F. App’x 375, 378 (6th Cir. 2016).
The Sixth Court held, inter alia, that the district court abused its discretion when it
failed to adequately explain why a 60% reduction was appropriate. Id. at 385. The
Court further held that the award must be recalculated in light of the Sixth Circuit’s
decision in The Ne. Ohio Coal. for the Homeless v. Husted, 831 F.3d 686, 720 (6th
Cir. 2016).1 Id. at 387.
In their Second Supplemental Motion for Attorney’s Fees and Costs [174],
Plaintiffs argue that they are entitled to additional attorney fees and costs, such as
costs related to appellate litigation. Plaintiffs further argue that they are entitled to
a substantial fee enhancement because of the City of Detroit’s bankruptcy status.
In its Response [176], Defendant does not contest Plaintiffs’ right to recover
the additional attorney fees and costs associated with the appeal. Moreover,
Defendant concedes that Plaintiffs’ hourly rates are reasonable. Id. at 11. Although
Defendant maintains that the total amount Plaintiffs seek is excessive, Defendant
nevertheless waives any objections contesting the total time incurred by counsel in
preparing the instant Motion. However, Defendant argues that Plaintiffs are neither

In Husted, the Sixth Circuit abrogated Coulter v. State of Tenn., 805 F.2d 146,
151 (6th Cir. 1986) to the extent that Coulter imposed a 3% cap on “fees for fees.”

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entitled to bill in quarter-hour increments for all tasks, nor entitled to an
enhancement of fees.
The R&R [179] recommends that the Court grant in part and deny in part
Plaintiffs’ Motion [174]. In particular, the R&R: accepts Plaintiffs’ claimed hourly
rates in computing the lodestar as reasonable (Section III-A); accepts Plaintiffs’
“fees for fees” award request as reasonable (Section III-B); recommends an 80%
reduction to certain fees and a 10% reduction to remaining fees (Section III-C);
recommends awarding costs associated with the appeal, but reducing quarter-hour
billing to one-tenth hour billing (Section III-D); and recommends denying
Plaintiffs’ request for a fee enhancement (Section III-D).2
On October 12, 2017, Plaintiffs filed an Objection [181] to the R&R.
Plaintiffs solely object to Section III-E, which recommends that the Court decline
to impose a fee enhancement.
STANDARD OF REVIEW
This Court reviews de novo the portions of the R&R to which objections
have been filed. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). The Court “may
accept, reject, or modify, in whole or in part, the findings or recommendations
made by the magistrate judge.” Id.
It appears as though the R&R’s use of the letter “D” in the header of the “Request
for Fee Enhancement” section was done in error. [Dkt. #179 at 17]. The Court
notes that the letter “E” is appropriate for this section. Hereinafter, the Court refers
to “D. Request for Fee Enhancement” as “Section III-E.”
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ANALYSIS
I.

Sections III-A, III-B, and III-D

First, with respect to Section III-A, Defendant does not contest the
reasonableness of Plaintiffs’ hourly rates. Accordingly, the Court adopts the
R&R’s finding that the hourly rates claimed by Plaintiffs in computing the lodestar
are reasonable.
Second, with respect to Section III-B, Plaintiffs do not object to the R&R’s
application of Husted and recommendation to award nearly the entire “fees for
fees” amount requested. Plaintiffs similarly do not object to the R&R’s Section IIID recommendation to bill certain hours in one-tenth hour increments, instead of
Plaintiffs’ proposed quarter-hour increments. Therefore, the Court adopts Sections
III-B and III-D of the R&R. See Erard v. Johnson, 905 F. Supp. 2d 782, 789 (E.D.
Mich. 2012) (noting that “[w]ith respect to portions of an R & R that no party has
objected to, the Court need not undertake any review at all.”)
II.

Section III-C

Plaintiffs do not object to the R&R’s Section III-C recommendation to
reduce attorney fees attributed to the BZA and Roe Plaintiffs by 80% and
remaining attorney fees by 10%. The Court adopts this Section’s conclusion, but
declines to adopt a portion of the analysis, and offers further clarification to
support its ruling to reduce the remaining fees by 10%.
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The district court should exclude from its fee calculation hours that were not
“reasonably expended.” Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). “There is
no precise formula for making these determinations . . . . [and] the district court has
discretion in determining the amount of the fee award.” Id. at 437.
The R&R properly notes that it is the duty of this Court to determine
whether the number of hours expended was reasonable. However, the Court finds
superfluous the R&R’s passage on Plaintiffs’ alleged misunderstanding of the
concept of reasonableness. Accordingly, the Court declines to adopt this portion of
the R&R [179].3
Nevertheless, the Court (and Plaintiffs) agree that a 10% reduction of the
remaining fees is warranted in this case. The Court adopts the R&R’s findings that
counsel’s initial claims for clearly non-compensable work such as the criminal
proceedings, and tangential activity such as communication with the media and
watching television, cast doubt on the entire petition, and thereby warrant a modest
reduction. See Ky. Rest. Concepts Inc. v. City of Louisville, 117 F. App’x 415, 419
(6th Cir. 2004) (noting that “[a] 10% reduction is a ‘modest amount.’”); see also
Barachkov v. Davis, 2013 WL 2149104, at *5 (E.D. Mich. May 16, 2013) (holding
that a “modest fee reduction is warranted based on redundant and otherwise
unnecessary billings submitted by Plaintiffs.”).
The Court refers specifically to the passage on pp. 11-13 of the R&R [179] which
repeats verbatim the analysis set forth in the previous R&R [162].
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Additionally, the Court adopts the R&R’s finding that the “surplus time”
Plaintiffs spent preparing the case further justifies a reduction in the award. See Ky.
Rest. Concepts, 117 F. App’x at 419 (affirming the district court’s consideration of
the fact that the “amount of overall attorney time [was] excessive” in reducing the
fee award).
Finally, the Court agrees with the R&R that a 10% reduction (as opposed to
a larger percentage) is appropriate here. This is mainly because counsel has already
suffered an 80% deduction in fees for the BZA and Roe Plaintiffs, and an
elimination of fees for the 2003 case and criminal proceeding, notwithstanding
counsel’s diligent work and zealous advocacy on the bulk of the case. Thus, the
Court adopts in part Section III-C.
III.

Section III-E and Plaintiffs’ Objection

Plaintiffs’ Objection [181] states: “A municipal chapter 9 bankruptcy is a
‘rare and exceptional circumstance’ justifying the award of enhanced attorney’s
fees.”
On November 12, 2014, the Bankruptcy Court issued an order confirming
the City’s bankruptcy plan (“the plan”). Defendant City of Detroit maintains that
the plan provides, inter alia, that the City pay debts such as attorney fees at $.10 to
$.13 on the dollar, over a thirty-year period. Because of the plan’s potential to
prolong payment of attorney fees, Plaintiffs argue that an enhancement of 1000%
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is necessary to make them “whole” and to ensure adequate representation of
plaintiffs with meritorious civil rights claims.
The district court may award a fee enhancement in “rare and exceptional
circumstances.” Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 552 (2010).
Plaintiffs bear the burden of proving that an enhancement is necessary. Id. at 553.
Plaintiffs must show that “. . . the lodestar fee would not have been adequate to
attract competent counsel.” Id. at 554.
Extraordinary circumstances that warrant fee enhancement include situations
in which:
[1] The method used in determining the hourly rate
employed in the lodestar calculation does not adequately
measure the attorney’s true market value . . . .
[2] the attorney’s performance includes an extraordinary
outlay of expenses and the litigation is exceptionally
protracted . . . . [and]
[3] [the] attorney’s performance involves exceptional
delay in the payment of fees.
Id. at 554-56.
Plaintiffs submit that the lodestar does not adequately take into account the
ninety percent reduction of their attorney fee award due to the City’s bankruptcy
filing. Plaintiffs further submit that the fact that they may not receive payment for
thirty years demonstrates an exceptional delay in the payment of fees. Finally,

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Plaintiffs maintain that capable attorneys will decline to represent meritorious civil
rights claimants if their work is not fully compensated.
Plaintiffs have not demonstrated that “rare and exceptional circumstances,”
as envisioned by Purdue, exist in this case. As the Magistrate Judge explained:
“There is nothing essential about this case that differentiates it from any other fee
petition or award where the City of Detroit was the defendant.” [Dkt. #179 at 17].
Plaintiffs have provided no evidence to support their assertion that the lodestar fee
is inadequate to attract competent counsel practicing in the City. Surely, there has
not been a significant reduction in the filings of civil rights actions against the City
since the Bankruptcy Court issued its order in November 2014.4
Furthermore, although Plaintiffs may face an exceptional delay in the
payment of fees, the delay was not “unjustifiably caused by the defense.” See
Purdue, 559 U.S. at 556 (explaining that fee enhancement may be appropriate
particularly where the defense unjustifiably causes the delay). The R&R
appropriately characterizes Plaintiffs’ Objection as a request to modify the
Bankruptcy Court’s final order. The Court cannot, and will not, grant Plaintiffs’
sweeping request. See In re City of Detroit, No. 13-53846, 2015 WL 603888, at *3
(Bankr. E.D. Mich. Feb. 12, 2015) (noting that 11 U.S.C. § 943 authorizes
In fact, the Court’s review of CM/ECF reveals that more civil rights actions were
instituted in 2017 than in 2013. The Court notes that of the cases docketed under
the nature of suit code “440 Civil Rights: Other,” 346 cases were filed in 2013,
while 355 cases were filed in 2017.
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bankruptcy courts to “monitor the payment of fees and the reimbursement of
expenses in or in connection with a chapter 9 case . . . .”). As the R&R explains,
“the nature of bankruptcy . . . is not a ‘rare and exceptional’ circumstance as
envisioned by Perdue.” Accordingly, the Court overrules Plaintiffs’ Objection and
adopts Section III-E of the R&R.
CONCLUSION
For the reasons stated above,
IT IS ORDERED that the R&R [179] is ADOPTED in part.
IT IS FURTHER ORDERED that Plaintiffs’ Objection [181] is
OVERRULED.
IT IS FURTHER ORDERED that Plaintiffs’ Second Supplemental Motion
for Attorney’s Fees and Costs [174] is GRANTED in part and DENIED in part.
IT IS FURTHER ORDERED that Plaintiffs’ counsel is awarded a total of
$905,718.65 in attorney fees and costs, subject to the orders of the Bankruptcy
Court in the City of Detroit municipal bankruptcy case.
SO ORDERED.

Dated: January 25, 2018

s/Arthur J. Tarnow
Arthur J. Tarnow
Senior United States District Judge

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