Davis et al v. Detroit Downtown Development Authority et al
Filing
107
OPINION & ORDER Imposing Sanctions. Signed by District Judge Mark A. Goldsmith. (Sandusky, K)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ROBERT DAVIS, et al.,
Plaintiffs,
Case No. 17-cv-11742
Hon. Mark A. Goldsmith
vs.
DETROIT DOWNTOWN
DEVELOPMENT AUTHORITY, et al.,
Defendants.
____________________________/
OPINION & ORDER
IMPOSING SANCTIONS
On January 26, 2018, this Court issued an opinion and order granting in part and denying
in part Defendants’ various motions for sanctions. Davis v. Detroit Downtown Dev. Auth., No.
17-11742, 2018 WL 564235 (E.D. Mich. Jan. 26, 2018). The Court ordered Defendants to “file
an affidavit setting forth the fees and costs incurred in responding to the claims identified as
frivolous in the amended complaint and the motion to strike.” Id. at *7. Defendants timely filed
affidavits (Dkts. 86 & 87), and Plaintiffs filed a response (Dkt. 97). After reviewing the affidavits,
the Court determined that the information provided was insufficient for the Court to accurately
determine the fees incurred by Defendants and ordered Defendants to file revised affidavits.
5/30/2018 Order (Dkt. 100). Defendants did so (Dkts. 101 & 102), and Plaintiffs filed a response
(Dkt. 105).1 After reviewing the parties’ filings, the Court awards sanctions in the amount of
$13,506.00.
1
Defendants filed a motion to strike (Dkt. 104) the first response filed by Plaintiffs (Dkt. 103),
arguing that the response contained “scandalous and defamatory” allegations. Plaintiffs then filed
1
I.
BACKGROUND
In its order granting in part and denying in part Defendants’ motions for sanctions, the
Court awarded sanctions to Defendants Detroit Downtown Development Authority (“DDA”) and
Detroit Brownfield Redevelopment Authority (“BRA”) pursuant to 28 U.S.C. § 1927 for costs
incurred: (1) defending against the Racketeer Influenced Corrupt Organizations Act (“RICO”)
claim in Plaintiffs’ amended complaint, Davis, 2018 WL 564235, at *3; (2) defending against the
Freedom of Information Act (“FOIA”) claim in Plaintiffs’ amended complaint, id.; and (3)
responding to Plaintiffs’ motion to strike, id. at *4.
Defendants filed affidavits stating that they did not keep time separately for each legal
theory advanced by Plaintiffs, so they made a good-faith effort to determine how much time was
spent responding to the RICO and FOIA claims. See 2/9/2018 Fink Aff. ¶ 6 (Dkt. 86); 2/9/2018
Phillips Aff. ¶ 6 (Dkt. 87). To that end, the law firm Kotz Sangster Wysocki, P.C. (“KSW”) says
that it spent a total of 65.8 hours responding to the RICO and FOIA claims and the motion to strike.
Specifically, attorney Jeff Sangster, who charges $330/hour, spent three hours responding to the
RICO and FOIA claims in Defendants’ motion to dismiss and three hours preparing motions for
sanctions. Attorney Anthony Sciara, who charges $245/hour, spent 8.4 hours preparing motions
for sanctions. Attorney Tyler Philips, who charges $170/hour, spent three hours responding to
Plaintiffs’ motion to strike and 48.4 hours preparing the motions for sanctions. See generally
an amended response, which they claim resolves Defendants’ concerns. As Plaintiffs’ first
response is no longer their operative filing, the Court grants Defendants’ motion to strike and
strikes Plaintiffs’ response (Dkt. 103).
2
6/13/2018 Phillips Aff. (Dkt. 101). The total amount of attorneys’ fees incurred by KSW was
$12,776. 2
Defendants’ other counsel, Fink & Associates Law (“FAL”) also submits that it spent 90.75
hours working on the defense of frivolous claims and charged a blended rate of $300/hour.
Specifically, five attorneys spent 39.75 hours responding to the RICO and FOIA claims in the
motion to dismiss, 13.75 hours preparing portions of the reply brief in support of the motion to
dismiss that relate to the RICO and FOIA claims, three hours responding to the motion to strike,
and 34.25 hours responding to the RICO and FOIA-related claims in Plaintiffs’ motion for leave
to amend their complaint. See generally 6/13/2018 Fink Aff. (Dkt. 102). The total amount of
attorneys’ fees incurred by FAL was $27,225.3
II.
ANALYSIS
Section 1927 of Title 28 provides,
Any attorney or other person admitted to conduct cases in any court
of the United States or any Territory thereof who so multiplies the
proceedings in any case unreasonably and vexatiously may be
required by the court to satisfy personally the excess costs, expenses,
and attorneys’ fees reasonably incurred because of such conduct.
2
In its original affidavit, KSW stated that the total amount of attorneys’ fees incurred were
$16,320.70. See 2/9/2018 Phillips Aff. ¶ 7. However, KSW did not sufficiently explain the
breakdown of its fees in this affidavit – it simply provided a copy of its invoice and a total fee
amount – and KSW does not explain the discrepancy between the total number of hours in the
2/9/2018 affidavit and the 6/13/2018 affidavit. Because the 6/13/2018 affidavit provides a more
specific breakdown, the Court will rely on the hours provided therein.
3
Like KSW, FAL provided an original affidavit that stated that its total fee was $27,900 and
attached its invoice. See 2/9/2018 Aff. ¶ 8 (Dkt. 86). However, this number differs from the more
detailed breakdown provided in FAL’s 6/13/2018 affidavit; as with KSW, the Court will rely on
the more detailed affidavit.
3
“‘The primary concern in an attorney fee case is that the fee awarded be reasonable,’ that
is, one that is adequately compensatory to attract competent counsel yet which avoids producing a
windfall for lawyers.” Adcock-Ladd v. Sec. of Treasury, 227 F.3d 343, 349 (6th Cir. 2000) (citing
Reed v. Rhoades, 179 F.3d 453, 471 (6th Cir. 1999)). To calculate a reasonable fee, district courts
use the “lodestar” method, which requires a simple calculation: “the number of hours reasonably
expended on the litigation multiplied by a reasonable hourly rate.” Hensley v. Eckerhart, 461 U.S.
424, 433 (1983). A reasonable hourly rate is measured against “the prevailing market rate, defined
as the rate that lawyers of comparable skill and experience can reasonable expect to command
within the venue of the court of record.” Geier v. Sundquist, 372 F.3d 784, 791 (6th Cir. 2004).
The Court may look to “the most recent Economics of Law Practice survey issued by the State Bar
of Michigan to determine the prevailing market rate.” Somber v. Utica Cmty. Schs., Nos. 1311810, 13-14022, 2017 WL 6462341, at *2 (E.D. Mich. Sept. 8, 2017).
In a case involving sanctions under 28 U.S.C. § 1927, the lodestar approach is the “starting
point” for determining an appropriate sanction; however, because the purpose of § 1927 sanctions
is “‘to deter dilatory litigation practices and to punish aggressive tactics that far exceed zealous
advocacy,’ the amount ultimately awarded need not make a party whole or constitute full
restitution.” Infocision Mgmt. Corp. v. Foundation for Moral Law, Inc., Nos. 08-1342, 08-1412,
09-951, 2012 WL 369283, at *1 (N.D. Ohio Feb. 3, 2012) (quoting Red Carpet Studios v. Sater,
564 F.3d 642, 646 (6th Cir. 2006)) (internal citations and alterations omitted). Thus, the Court
must award an amount of attorneys’ fees and costs that will “deter and punish.” Tilmon-Jones v.
Boladian, 581 F. App’x 493, 498 (6th Cir. 2014) (upholding district court’s decision to impose an
award of only $20,000, “even though the court indicated that Bridgport’s fees [of $148,000] may
4
be reasonable under the ‘lodestar’ analysis,” as “the goal of 28 U.S.C. § 1927 [is] not to make a
party whole, but to deter and punish”).
A. Lodestar Calculation
Here, Defendants’ attorneys have set forth the number of hours that they approximated
spending responding to Plaintiffs’ frivolous filings. While the attorneys state that they did not
keep track of the specific time spent responding to each claim raised in the amended complaint,
they have engaged in a good-faith effort to estimate how much time was spent specifically
regarding the RICO and FOIA claims. To that end, FAL allocated approximately ninety hours to
defending against the RICO and FOIA claims and the motion to strike, out of a total of 625.5 hours
spent representing Defendants in June 2017. See 2/9/2018 Fink Aff. ¶ 6. This is about fourteen
percent of the total work performed by FAL for Defendants in the month of June. KSW says that
its attorneys also made a good-faith effort to determine how much time should be allotted to
defending against the RICO and FOIA claims, but it does not provide any information about the
total numbers of hours expended on work for DDA and BRA, nor the total number of hours spent
on the motion to dismiss.
The Court finds that Defendants’ counsel’s claimed hours expended far exceed the amount
of time that it would reasonably take to respond to the RICO and FOIA claims. Between the two
law firms, Defendants’ counsel estimate that it took them 42.75 hours to prepare the RICO and
FOIA portions of the motion to dismiss. 6/13/2018 Fink Aff. ¶ 7; 6/13/2018 Phillips Aff. ¶ 9.
While the Court understands that research and drafting can be time-consuming, and that drafts
must undergo multiple levels of review, this number is excessive. The dismissal of the RICO and
FOIA claims was fairly straightforward, and Defendants devoted a relatively small portion of their
motion to dismiss addressing these claims. The Court finds that fifteen hours – fourteen hours by
5
FAL and one hour by KSW – represents a more reasonable estimate of the number of hours
expended. For these same reasons, the Court finds that seven hours is a reasonable number of
hours to expend on RICO and FOIA claims in the reply brief in support of the motion to dismiss,
rather than counsel’s approximation of 13.75 hours expended, 6/13/2018 Fink Aff. ¶ 8.
Defendants’ counsel say that they spent six hours, combined, on preparing a response to
the motion to strike. 6/13/2018 Fink Aff. ¶ 9; 6/13/2018 Phillips Aff. ¶ 11. Counsel also
approximate that they spent 34.25 hours preparing the response in opposition to Plaintiffs’ motion
for leave to amend their complaint, as it relates to the RICO and FOIA claims. 6/13/2018 Fink
Aff. ¶ 11. The Court finds that six hours spent preparing a response to the motion to strike is
reasonable; however, no more than ten hours is a reasonable number of hours to spend researching,
analyzing, and drafting the response to the motion for leave to amend the complaint.
Finally, KSW states that it spent a combined 59.8 hours working on the second motion for
sanctions (Dkt. 34, which sought sanctions regarding the motion to strike) and the portions of the
amended motion for sanctions (Dkt. 77) that relate to the RICO and FOIA claims. 6/13/2018
Phillips Aff. ¶ 12. However, KSW later clarifies that this number represents the “total cumulative
time spent researching, analyzing, and drafting, Dkts 34 and 77.” Id. ¶ 13. KSW attorneys spent
a total of 4.5 hours preparing the second motion for sanctions. Id. KSW also approximates that
15% of the total time spent researching and drafting the amended motion for sanctions was related
to the RICO and FOIA issues in particular. Id. Therefore, KSW approximates spending 4.5 hours
on the second motion for sanctions (Dkt. 34), and 8.3 hours on the RICO and FOIA portions of
the amended motion for sanctions (Dkt. 77). The Court concludes that these, as well, are a
reasonable number of hours to expend on this work.
6
As to Defendants’ counsel’s hourly rates, the Court finds that they are reasonable. KSW
charged an hourly rate of $170/hour for an associate, $245/hour for a senior associate with twelve
years of experience, and $330/hour for a partner. 6/13/2018 Phillips Aff. ¶ 3. According to the
State Bar of Michigan’s 2017 Economics of Law Practice survey, the median billing rate for an
associate is $225/hour, and for a senior associate, $260/hour. See 2017 Economics of Law Practice
Attorney Income and Billing Rate Summary Report, Ex. D to 6/13/2018 Phillips Aff., at 4 (Dkt.
101-4). The median billing rate for an equity partner is $300/hour; the mean billing rate is
$329/hour. Id. Thus, the rates charged by KSW are consistent with rates charged by other
Michigan attorneys.
As for FAL’s blended rate of $300/hour, the State Bar survey provides that the median
billing rate for an attorney in the Detroit area, but not downtown, is $225/hour. Id. at 5. However,
in determining whether a rate was reasonable, the Court may also “rely on a party’s submissions,
awards in analogous cases, state bar association guidelines, and its own knowledge and experience
in handling similar fee requests.” Van Horn v. Nationwide Prop. & Cas. Ins. Co., 436 F. App’x
496, 499 (6th Cir. 2011). In an affidavit, FAL explains that the hourly rate of $300 was agreed
upon by FAL and Defendants due to (1) the urgency of this matter and the need for it to be
prioritized over other litigation; (2) the complexity of the issues involved; (3) the significant
involvement of two of FAL’s partners, David Fink and Darryl Bressack; and (4) the uniqueness of
the litigation. 6/13/2018 Fink Aff. ¶ 5.
The Court finds that this explanation justifies FAL’s blended rate. This litigation involved
significant issues potentially affecting the future of the city of Detroit, which needed to be resolved
on an extremely expedited schedule.
Attorney David Fink’s biography shows that he has
experience representing the City of Detroit and other municipalities, and attorney Darryl Bressack
7
also has municipal law experience. See Exs. 1& 2 to 6/13/2018 Fink Aff. (Dkts. 102-1, 102-2).
Mr. Fink’s affidavit further notes that FAL’s partners had “significant recent experience” involving
tax increment finance issues. 6/13/2018 Fink Aff. ¶ 6. Further, Mr. David Fink and Mr. Bressack
– both partners and the founding attorneys of FAL – performed more than half of the work hours
that were expended responding to Plaintiffs’ frivolous claims. FAL stresses that this litigation
required “immediate and substantial time from FAL partners, including its senior partner.” Id.
The mean hourly rate for a managing partner is $300/hour, see 2017 Economics of Law Practice
Attorney Income and Billing Rate Summary Report at 4, and the 75th percentile is $350/hour.
Given the complexity of the issues involved in this case, the fast pace of the litigation, and the high
level of direct involvement from FAL’s partners, the Court concludes that the $300 per hour
blended rate is reasonable.
Thus, the total lodestar calculation is $13,506.00, as broken down in detail in the chart
below:
FAL
RICO/ FOIA claims in motion $4,200 (14hr x $300/hr)
to dismiss
RICO/ FOIA claims in reply
$2,100 (7hr x $300/hr)
Response to Motion to Strike $900 (3hr x $300/hr)
RICO/ FOIA claims in n/a
amended motion for sanctions
Second motion for sanctions
n/a
Response to motion for leave $3,000 (10hr x $300/hr)
to amend
Total
$10,200
B. Plaintiffs’ Objections
8
KSW
$330 (1hr x $330/hr)
n/a
$510 (3hr x $170/hr)
$1,551 ((.5hr x $300/hr) +
(1hr x $245/hr) + (6.8hr x
$170/hr))
$915 ((2.5hr x $170/hr) + (2hr
x $245/hr))
n/a
$3,306
Plaintiffs put forth several reasons why Defendants should not be awarded their requested
amount in attorneys’ fees. First, Plaintiffs argue that Defendants devoted fewer than three pages
of their thirty-nine-page motion to dismiss addressing the RICO and FOIA claims, and therefore
Defendants should be reimbursed for only three hours of attorney time, at a rate of $200/hour. Pls.
Resp. to Affs. at 5, 8 (Dkt. 97). The Court has already addressed this point and feels that the
number of hours and the rates described above are appropriate.
Next, Plaintiffs argue that KSW’s request for attorneys’ fees should be rejected in its
entirety. Plaintiffs argue that KSW seeks reimbursement for filing the motions for sanctions
themselves, which were not associated with “responding to the claims identified as frivolous in
the amended complaint and motion to strike.” Pls. Resp. to Affs. at 6. In response, Defendants
argue that the motions for sanctions were a “necessary and logical consequence” of Plaintiffs’
frivolous filings, and that it would weaken the effect of sanctions for a litigant to be unable to
recover the costs of filing a sanctions motion. Defs. Reply in Supp. of Affs. at 2 (Dkt. 99).
Neither party points to case law to support the position staked out. The Court’s own
research shows that several courts have concluded that “[t]he time, effort, and money a party must
spend to get another party sanctioned realistically is part of the harm caused by that other party’s
wrongful conduct.” Norelus v. Denny’s, Inc., 628 F.3d 1270, 1298 (11th Cir. 2010); see also
Blixseth v. Yellowstone Mtn. Club, LLC, 854 F.3d 626, 631 (9th Cir. 2017) (“Like Norelus, we
conclude that the costs of obtaining sanctions may be included in a sanctions award under §
1927.”); In re Royal Manor Mgmt., Inc., 525 B.R. 338, 366 (B.A.P. 6th Cir. 2015) (citing Norelus
for the proposition that a court may include in the sanctions awarded under § 1927 the attorneys’
fees incurred in obtaining the award). This is a reasonable approach given the language of 28
U.S.C. § 1927; the costs incurred in obtaining a sanctions award are, “in the statute’s terms,
9
‘incurred because of such conduct.’” Norelus, 628 F.3d at 1298 (quoting 28 U.S.C. § 1927). Thus,
the Court sees no reason not to include costs arising from the sanctions proceedings in its
calculation of the sanctions award.
Finally, Plaintiffs argue that KSW is attempting to “double bill” identical work done for
DDA and BRA. Pls. Resp. to Affs. at 7. However, Defendants explain that they asked KSW to
split any time expended on this litigation equally between DDA and BRA. See Rebecca Navin
Aff., Ex. 1 to Defs. Reply in Supp. of Affs. in Supp. of Req. for Sanctions, ¶ 4 (Dkt. 99-1). Thus,
Defendants explain, if two hours were spent on a task, one hour would be billed to DDA and one
hour would be billed to BRA. Id. Plaintiffs’ argument of double-billing is without merit.
The Court finds that the appropriate lodestar amount is $13,506.00. Further, the Court
finds that this amount of sanctions is sufficient to punish and deter Plaintiffs’ counsel from further
frivolous filings. It represents the amount of work put in by eight attorneys across two law firms,
solely to respond to claims and filings that Plaintiffs’ counsel should have known were frivolous.
Plaintiffs’ counsel should consider this figure before attempting to file any future frivolous claims.
III.
CONCLUSION
For the reasons provided, the Court orders Plaintiffs’ counsel to pay $13,506.00 to
Defendants Detroit Downtown Development Authority and Detroit Brownfield Redevelopment
Authority. Payment must be made by November 27, 2018.
SO ORDERED.
Dated: November 6, 2018
Detroit, Michigan
s/Mark A. Goldsmith
MARK A. GOLDSMITH
United States District Judge
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CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served upon counsel of record and any
unrepresented parties via the Court's ECF System to their respective email or First Class U.S. mail
addresses disclosed on the Notice of Electronic Filing on November 6, 2018.
s/Karri Sandusky
Case Manager
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