Safelite Group, Inc. et al v. Swanson et al

Filing 122

ORDER granting in part and denying in part 92 Plaintiffs' Motion for Attorney Fees (Written Opinion). Signed by Judge Susan Richard Nelson on 08/11/2017. (MJC)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Safelite Group, Inc. and Safelite
Solutions, LLC,

Civ. No. 15-1878 (SRN/SER)

Plaintiffs,

MEMORANDUM OPINION
AND ORDER

v.
Michael Rothman, in his official capacity
as Commissioner of the Minnesota
Department of Commerce,
Defendant.

Jay P. Lefkowitz, Christian R. Reigstad, and Steven J. Menashi, Kirkland & Ellis 601
Lexington Ave., New York, NY 10022; John E. Iole, Jones Day, 500 Grant St., Ste. 4500,
Pittsburgh, PA 15219; Emily Unger and Richard D. Snyder, Fredrikson & Byron, PA, 200
S. 6th St., Ste. 4000, Minneapolis, MN 55402, for Plaintiffs
Oliver J. Larson and Michael J. Tostengard, Minnesota Attorney General’s Office, 445
Minnesota St., Ste. 1800, St. Paul, MN 55101, for Defendant
________________________________________________________________________
SUSAN RICHARD NELSON, United States District Court Judge
This matter is before the Court on Plaintiffs’ Motion for Attorneys’ Fees and
Nontaxable Costs [Doc. No. 92]. For the reasons set forth herein, Plaintiffs’ motion is
granted in part and denied in part.

1

I.

BACKGROUND
A.

Factual Background

This case arises out of certain enforcement and regulatory actions taken by the
Minnesota Department of Commerce (the “DOC”) concerning Plaintiffs Safelite Group,
Inc. and Safelite Solutions LLC (collectively, “Safelite”). As set forth in more detail in
this Court’s Order of January 23, 2017, (the “Summary Judgment Order”), which is
incorporated herein by reference, Safelite is a nationwide business that provides auto-glass
replacement and repair as well as claims administration services for insurance companies.
(See Summ. J. Order at 2 [Doc. No. 89].)
As to its claims administration work in Minnesota, Safelite provides services for
third-party insurers Auto Club Group, Inc. (“AAA”), USAA, and American Family
Insurance (“American Family”). (Id.) In this role, Safelite manages a network of nonSafelite auto-glass replacement and repair shops (the “Network”), for which there is no
membership cost, although the Network shops must agree to adhere to certain pricing
terms for repair work. (Id.) Shops that are not in the Network are referred to as “nonNetwork” or “independent” shops.
By law, Minnesota insureds have the right to select any shop to perform auto-glass
repair or replacement work, Minn. Stat. § 72A.201, subd. 6(7), (14), and they pay for work
done at a “competitive price that is fair and reasonable within the local industry at large.”
Minn. Stat. § 72A.201, subd. 6(14). When a disagreement arises between a shop and an
insurer on what constitutes a fair price, the matter is subject to arbitration. See Minn. Stat.
2

§§ 65B.525; 72A.201, subd. 6(14). Using what is known as “balance billing,” shops may
pursue insureds for the difference between the amount that the shops charge and the
insurer pays. (Summ. J. Order at 4.) Balance billing is a legal practice in Minnesota. (Id.)
Alternatively, shops may write off the amount of the difference or take assignment of the
policy and try to collect the difference from insurers through arbitration. (Id. at 4-5.)
For Safelite’s Network shops, contracts between the insurers and the shops set the
price for auto-glass repair work. (Id. at 4.) Non-Network shops can set any price that they
like, even if it is more than the insurer will pay or considers fair. (Id.) Non-network shops
can use balance billing to recover from customers the amounts not paid by insurers. (Id.)
Some non-Network shops in Minnesota reserve the right to balance bill customers, (id.),
while some do not. (Id.)
Safelite has developed phone scripts for use in its claims administrator-role when
an insured calls to report auto-glass claims. (Id. at 5.) Minnesota law requires claims
administrators to notify the insured that he or she may choose any auto-glass vendor, and,
if the claims administrator recommends a vendor, it must give the following advisory (the
“Mandatory Advisory”): “Minnesota law gives you the right to go to any glass vendor you
choose, and prohibits me from pressuring you to choose a particular vendor.” Id. (quoting
Minn. Stat. § 72A.201, subd. 6(14).) Minnesota law also contains a provision barring
claims administrators from intimidating or inducing an insured to use a particular glassrepair company. Minn. Stat. § 72A.201, subd. 6(16) (the “Anti-Coercion Provision.”).
As discussed in the Summary Judgment Order, when insureds asked Safelite for
3

shop recommendations, Safelite would recommend one of its own shops or a shop within
the Network. (Summ. J. Order at 6.) If the insured indicated that he or she had selected a
non-Network shop, Safelite would inform the insured that he or she might be balance
billed for any difference between the shop’s charge and the insurer’s payment. (Id.)
Safelite’s scripts also communicated the Mandatory Advisory. (Id.)
Two non-Network shops–Alpine Glass, Inc. and Buy Rite Auto Glass, Inc. d/b/a/
Rapid Glass (collectively, “the Minnesota shops”)–and their respective owners, Michael
Reid and Rick Rosar, believed that Safelite was driving down the price of auto-glass repair
and replacement in Minnesota and taking away their business by steering customers to
Safelite’s shops or Network shops. (Id. at 6-7.) The Minnesota shops believed that
Safelite told insurers that they would be balance billed in order to encourage customers to
choose Safelite or Network shops. (Id.) They regularly complained to the applicable
regulatory entity, the DOC. (Id.) However, as noted in the Summary Judgment Order,
there was no evidence that the DOC had ever received a consumer complaint regarding
Safelite’s claims administration practices. (Id. at 7.)
After receiving more complaints from the Minnesota shops about Safelite, in 2013,
the DOC’s Director of Investigations, Martin Fleischhacker, undertook his own
investigation of Safelite’s administrative practices when he needed to replace a windshield
on his vehicle. (Id. at 8.) Regarding his telephone communications with Safelite, he
testified initially to feeling pressured not to use his non-Network glass vendor, and later
recalled that Safelite warned him that he might be balance billed if he chose a non4

Network vendor. (Id.) Fleischhacker subsequently met with Reid and Rosar to focus the
DOC’s attention on Safelite, and pass along the best telephone recordings of Safelite
allegedly violating the law. (Id. at 9.)
In 2014, the DOC launched a formal investigation into Safelite and its Network
vendors AAA, USAA, and American Family. (Id. at 10.) The DOC served subpoenas on
the three vendors and Safelite, to which Safelite did not respond. (Id.) The DOC
threatened Safelite with a cease and desist order that would prevent it from doing business
in Minnesota unless it responded to the subpoenas. (Id.) The DOC did not pursue the
cease and desist order against Safelite, but instead focused on the insurers that used
Safelite as a claims administrator. (Id.) In its investigation of these insurers, Defendant
inspected Safelite scripts and listened to at least 100 calls between Safelite, insureds, and
representatives of non-Network shops. (Id. at 11.) During the calls, Safelite would inform
the insured of his or her right to choose a glass repair shop and would also indicate that the
insured might be balance billed if they proceeded to have the work performed by a
Minnesota shop. (Id. at 11-12.) The Minnesota shop would then inform the insured that
they would not be balance billed. (Id. at 12.)
The DOC believed that these calls showed a consistent effort by Safelite to
persuade insureds to use Safelite or a Network shop by stating that balance billing might
occur with a non-Network shop. (Id.) The DOC also found that balance billing in
Minnesota is uncommon, if it occurs at all. (Id. at 12-13.) The DOC further admitted that
it was unfamiliar with the billing practices of most shops in Minnesota and reached its
5

conclusions mainly from representations made by Reid, Rosar, and others associated with
the Minnesota auto-glass industry. (Id.) The Minnesota shops repeatedly contacted the
DOC during the investigation, expressing their hope that the investigation would benefit
non-Network shops financially, as they had provided information to help with the
investigation. (Id. at 13.) One of the DOC’s investigators regularly shared confidential
information about the status and likely outcome of the investigation with representatives
from the Minnesota shops, even though doing so violated the DOC’s policies and
procedures. (Id.)
In January 2015, the DOC concluded its investigation of AAA by issuing a consent
order. (Id.) The order stated that AAA’s conduct violated the Mandatory Advisory and
Anti-Coercion Provisions of Minn. Stat. § 72A.201, subd. 6(14) & (16) (hereinafter
“Subdivision 6(14)” and “Subdivision 6(16)”). (Id. at 14.) While the DOC noted that it
could pursue an enforcement action against AAA, it indicated its willingness to avoid such
action if AAA agreed to drop Safelite as a claims administrator and agreed to cease and
desist from telling insureds that they might be balance-billed by non-preferred glass
vendors, unless AAA had specific information proving the assertion true for a particular
vendor. (Id.) The DOC apparently entered into similar consent orders with USAA and
American Family. (Id. at 13, n.12.)

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B.

Procedural History

In April 2015, Safelite filed this suit against Michael Rothman, in his official
capacity as the Commissioner of the DOC, seeking declaratory and injunctive relief under
28 U.S.C. § 2201, 42 U.S.C. § 1983, and 42 U.S.C. § 1988 for alleged violations of the
First Amendment, Fourteenth Amendment, and the Dormant Commerce Clause. (Compl.
¶¶ 48-85 [Doc. No. 1].) The parties resolved Plaintiffs’ due process claims, and Safelite
sought summary judgment on its remaining claims. (Summ. J. Order at 16.)
In the Summary Judgment Order, the Court denied Safelite’s motion based on the
Mandatory Advisory language in Subdivision 6(14). (Id. at 45.) However, the Court
found that the DOC’s prohibition on Safelite’s “may-be-balance-billed” statements
violated the First Amendment’s protection of commercial speech. (Id.) Accordingly, the
Court (1) declared void the DOC’s regulatory requirements and enforcement action under
Subdivision 6(16), (2) enjoined and restrained the DOC from enforcing that provision so
as to prohibit Plaintiffs from providing insureds with truthful information about the
possibility that insureds might be billed by particular repair shops for the difference
between the shop’s fee and the insurer’s payment, and (3) enjoined the DOC from
enforcing the consent order between it and AAA. (Id. at 47-48.) Having granted Safelite
its requested relief on First Amendment grounds, the Court declined to rule on Safelite’s
Dormant Commerce Clause claim. (Id. at 47.)

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C.

Motion for Attorneys’ Fees

In connection with its summary judgment motion, Plaintiffs requested attorneys’
fees under 42 U.S.C. § 1988. However, because Safelite had submitted no briefing on the
issue at that time, the Court denied the request without prejudice. (Summ. J. Order at 48.)
Safelite subsequently filed the instant motion. It argues that as the “prevailing party, it is
entitled to fully recover its attorneys’ fees and costs under Section 1988(b), and no special
circumstances would render an award unjust. (Pls.’ Mem. Supp. Mot. for Attys’ Fees at 8
[Doc. No. 102].)
In this litigation, Safelite retained the law firms Kirkland & Ellis, LLP (principally
in New York), Jones Day (in Pittsburgh), and Fredrikson & Byron, P.A. (in Minneapolis).
Applying the lodestar methodology, discussed in greater detail below, Safelite asserts that
its attorneys’ fees, including fees for paralegal work, are reasonable. (Id.) Safelite
summarizes the lodestar as follows:
Counsel
Kirkland & Ellis, LLP

Hours Billed

Fees Requested

2,305.5

$1,675,821.31

Fredrikson & Byron, P.A.

280.7

$134,206.00

Jones Day

128.95

$102,523.75

Total

2,715.15

$1,912,551.061

(Id.) In support of the requested fees, Safelite’s counsel submits the following
documents: (1) the Declaration of Richard D. Snyder [Doc. No. 103], a partner at
1

This total is based on a request of $1,860,636.06 in attorneys’ fees and $51,915
in paralegal fees.
8

Fredrikson & Byron; (2) the Declaration of John E. Iole [Doc. No. 105], a partner at Jones
Day; (3) the Declaration of Jay P. Lefkowitz, P.C [Doc. No. 107], a partner at Kirkland &
Ellis; (4) counsels’ detailed billing records [Doc. Nos. 104; 106; 108]2; and (5) numerous
supporting exhibits containing case-related materials, attorney biographies, and
comparative billing surveys.
Safelite contends that the expended hours are reasonable, even though the case did
not go to trial, because counsel was required to devote significant time and effort to thirdparty discovery to establish critical facts concerning balance billing, “and also to uncover
the protectionist purpose behind the DOC’s actions.” (Pls.’ Mem. Supp. Mot. for Attys’
Fees at 13.) Moreover, Safelite maintains that it “achieved near total success.” (Id.)
Plaintiffs further assert that the requested billing rates are the prevailing rates for similar
work in their attorneys’ respective communities. (Id. at 15-18.) It urges the Court to apply
the billing rates for out-of-town counsel, which are higher than the rates of Minnesota
counsel, due to the expertise of Kirkland & Ellis in First Amendment litigation and the
experience of Jones Day in representing Safelite in similar litigation elsewhere. (Id.) But,
although Kirkland & Ellis paralegals Fern Copas and Kenneth Gazda typically bill at $420
per hour and $325 per hour, respectively, (Lefkowitz Decl. ¶ 35), for purposes of this fee
petition, Safelite reduced their billing rates to $150 per hour. (Id.)
Safelite also requests an award of nontaxable costs totaling $54,321.21, consisting
2

Magistrate Judge Menendez ordered that these billing records, initially filed
under temporary seal as confidential materials, are to remain under permanent seal.
(See Order of 6/23/17 at 1 [Doc. No. 121].)
9

of the following: (1) $43,747.09 in travel expenses, including airfare, lodging, and meal
costs incurred in travel to and from court hearings and depositions; (2) $9,613.55 in
printing and copying costs; and (3) 960.57 in delivery charges, including charges
associated with the delivery of deposition materials and shipping materials to Minneapolis
in connection with hearings.3 (Pls.’ Mem. Supp. Mot. for Attys’ Fees at 19-20.)
In sum, Safelite seeks a combined award totaling $1,966,872.27 (consisting of
$1,912,551.06 in attorneys’ fees and paralegal fees + $54,321.21 in nontaxable costs). (Id.
at 20.)
Defendant opposes the amount of Plaintiffs’ fee request, providing detailed charts
explaining its alternative calculations. (See Exs. D-I, Larson Decl. [Doc. No. 115].) The
DOC presents three primary arguments in opposition to Safelite’s motion. First, it argues
that Safelite’s fee request fails to allocate fees between the claims on which it prevailed
and those on which it did not prevail. (Def.’s Opp’n Mem. at 9 [Doc. No. 114].) Arguing
that Safelite’s unsuccessful claim concerning the Mandatory Advisory was distinct from
its successful claim concerning “may-be-balance-billed” statements, the DOC asserts that
the fee award should be proportionately reduced. (Id.) Further, the DOC argues that
because counsels’ billing records generally fail to allocate the time between claims, a
percentage adjustment in the amount of 33%-50% is appropriate. (Id. at 12.)

3

Safelite previously received a cost judgment in its favor [Doc. No. 117]
concerning taxable costs.
10

Second, the DOC contends that Safelite’s fees related to work performed by
Kirkland & Ellis and Jones Day are unreasonable and that out-of-town counsels’ hourly
rates should be reduced commensurate with the Fredrikson & Byron local billing rates.
(Id. at 13.) Defendant does not challenge the billing rates of Fredrikson & Byron’s
counsel, but argues that the hourly rates for out-of-town counsel should be capped at the
highest Fredrikson & Byron hourly rates. (Id.) Defendant illustrates the billing rate
differences in the following chart:
Fredrikson
Attorney

Position (Year Class)

Hourly Rate

Richard Snyder

Partner

$520-560

Emily Unger

Associate (2012)

$310-370

Kirkland & Ellis
Jay Lefkowitz

Partner

$1,275-1,380

Lawrence Marshall

Of Counsel

$1,125

Steven Menashi

Of Counsel

$870-1,060

Matthew Dexter

Partner

$895

Danielle Sassoon

Associate (2011)

$775-815

Christian Reigstad

Associate (2012)

$710-845

Thayne Stoddard

Associate (2014)

$555-725

Jones Day
John Iole

Partner

$775-825

11

(Id.) The DOC argues that the Court should apply the local rates in the Minneapolis
market to all of the work performed, asserting that out-of-town counsel fail to justify their
significantly higher billing rates. (Id. at 15.)
Third, Defendant asserts that the attorneys’ efforts and level of staffing were
unreasonable in several ways. The DOC asserts that the reimbursement request for
approximately 2,700 hours of billed time is “grossly excessive,” particularly as the case
did not go to trial and only two contested motions were filed. (Id. at 19.) In comparison,
Defendant contends that its attorneys spent less than 900 hours in total defending this
action. (Id.) Because the “bulk-billing” by Kirkland & Ellis and Fredrikson & Byron
makes it difficult to review the reasonableness of any particular charge, the DOC argues,
the total hours of the loadstar calculation should be reduced by 40% to account for
excessive billing. (Id. at 20.) The DOC also asks that the Court reduce the amount of time
spent by counsel in preparation for oral argument on the preliminary injunction motion
(119.5 hours) and summary judgment motion (74.6 hours) to no more than 20 hours per
motion. (Id.) Further, the DOC argues that due to duplicative hours spent at depositions
and hearings, the Court should strike the billing entries of all but the lead attorneys taking
or defending a deposition, and the two primary attorneys at the motion hearings. (Id. at
21.)
Also related to the DOC’s contention of excessive staffing, it seeks to exclude
travel-related fees and costs, arguing that Safelite could have located competent local
counsel to handle the case. (Id.) Defendant therefore asks the Court to reduce the hours
12

awarded by at least 115 hours and to exclude all expenses associated with travel, seeking a
cost reduction from the requested amount of $43,747.09 to $6,453.74. (Id. at 22.) Further
in support of Defendant’s argument of unreasonable, excessive staffing, Defendant asks
the Court to exclude any time spent by paralegal Fern Copas on clerical tasks. (Id. at 2223.) The DOC also seeks to strike from any award all fees and expenses associated with
the deposition of Gary Hart. (Id. at 23.) Defendant asserts that Hart was irrelevant to the
case, and his testimony was not cited by either party or the Court. (Id.)
II.

DISCUSSION
A.

Prevailing Party

As applicable here, under 42 U.S.C. § 1988, courts have the discretion to award a
reasonable attorney’s fee to the prevailing party in an action brought under 42 U.S.C.
§ 1983. According to the Supreme Court, parties “prevail,” for purposes of attorney’s
fees, “if they succeed on any significant issue in litigation which achieves some of the
benefit the parties sought in bringing suit.” Farrar v. Hobby, 506 U.S. 103, 109 (1992)
(citation and internal quotation marks omitted). Elaborating on this standard, the Court
held that “a plaintiff ‘prevails’ when actual relief on the merits of his claim materially
alters the legal relationship between the parties by modifying the defendant's behavior in a
way that directly benefits the plaintiff.” Id. at 111–12.
The DOC does not dispute that Plaintiffs prevailed on their First Amendment
challenge to the DOC’s application of Subdivision 6(16), impliedly acknowledging that
Plaintiffs are entitled to a fee award as a prevailing party, albeit on a partial basis. (See
13

generally Def.’s Opp’n Mem. at 24) (arguing for a substantial reduction in Safelite’s
requested amount of fees and costs).) Defendant argues that because Plaintiffs fail to
sufficiently reduce their fee request to account for their lack of success on other claims, the
Court must significantly reduce any such award. (Id. at 9-10.) Moreover, because of the
block billing practices of counsel from Kirkland & Ellis and Fredrikson & Byron,
Defendant asserts that it is unable to apportion time spent on prevailing claims from time
spent on non-prevailing claims. (Def.’s Opp’n Mem. at 12.)
The Court finds that Plaintiffs “prevailed” on portions of their Section 1983 claim,
and therefore qualify for an award of reasonable attorneys’ fees, as determined by the
Court, under Section 1988. Where a plaintiff obtains partial success but his or her claims
involve a common core of facts or are based on related legal theories, courts must ask
whether the plaintiff failed to prevail on claims that were unrelated to the successful claim.
See Hensley v. Eckerhart, 461 U.S. 424, 434 (1983); see also Burks v. Siemens Energy &
Automation, Inc., 215 F.3d 880, 882 (8th Cir. 2000) (stating that courts must identify the
prevailing claims and then determine an appropriate amount of reasonable attorney’s fees,
in light of the extent of the plaintiff’s success). The U.S. Supreme Court observed in
Hensley that
[i]n some cases a plaintiff may present in one lawsuit distinctly different
claims for relief that are based on different facts and legal theories. In such a
suit, even where the claims are brought against the same defendants—often
an institution and its officers, as in this case—counsel’s work on one claim
will be unrelated to his work on another claim. Accordingly, work on an
unsuccessful claim cannot be deemed to have been ‘expended in pursuit of
the ultimate result achieved.’ The congressional intent to limit awards to
14

prevailing parties requires that these unrelated claims be treated as if they
had been raised in separate lawsuits, and therefore no fee may be awarded
for services on the unsuccessful claim.
461 U.S. at 435 (citation omitted); see also Wal-Mart Stores, Inc. v. Barton, 223 F.3d 770,
773 (8th Cir. 2000) (stating that if any issues on which the plaintiff lost are unrelated to the
prevailing claims, the unrelated issues are to be treated as separate and no fees can be
awarded). Most important to the analysis in determining a reasonable fee “is the
magnitude of the plaintiff's success in the case as a whole.” Wal-Mart, 223 F.3d at 773
(citing Jenkins v. Missouri, 127 F.3d 709, 716 (8th Cir. 1997)). Accordingly, if excellent
results are obtained, the plaintiff “is entitled to a fully compensatory fee award, which will
normally include time spent on related matters on which [the plaintiff] did not win.” Id.
On the other hand, if the plaintiff obtains only limited success, the plaintiff is only entitled
to a fee award that is reasonable in light of the mixed results. Id.
Safelite notes that it prevailed on its First Amendment challenge to Subdivision
6(16) and emphasizes that it “obtained essentially all of the relief it requested on its
Fourteenth Amendment (due process) claim, and its First Amendment challenge to the
DOC’s prohibition on warranty-related language.” (Pls.’ Mem. Supp. Mot. for Attys’ Fees
at 2.) However, as noted, the Court rejected Safelite’s First Amendment challenge to the
Subdivision 6(14) claim and did not rule on its Dormant Commerce Clause claim. As to
the relationship between Safelite’s successful claim and unsuccessful claim, the Court
finds that the challenge to Subdivision 6(14) was largely unrelated to Safelite’s prevailing
claim under Subdivision 6(16). As a general matter, Subdivision 6 of Section 72A.201
15

propounds standards for the handling of car insurance claims. But the enumerated
subsections of Subdivision 6 address specific, different issues. Subdivision 6(14) requires
insurers to provide the Mandatory Advisory language, informing insureds that they have
the right to patronize any glass vendor of their own choosing, whereas Subdivision 6(16)
prohibits insurers from intimidating or coercing insureds to use a particular company or
location for glass repair work. And, here, as the DOC observes, (Def.’s Opp’n Mem. at
10), Safelite’s unsuccessful claim based on Subdivision 6(14) was unique as to the
requested relief. Under this claim, Safelite sought a declaration that the statute violated
the First Amendment by unconstitutionally compelling speech, relieving Safelite from
complying with the statute. (See Compl. ¶¶ 56, 60.) Safelite’s other claims did not seek
this result.
While the Court is unaware of any Eighth Circuit prohibition against the block
billing of attorney time, see Ewald v. Royal Norwegian Embassy, No. 11-CV-2116
(SRN/SER), 2015 WL 1746375, at *8 (D. Minn. April 13, 2015) (citation omitted), block
billing makes it difficult to determine the amount of time apportioned between Safelite’s
claims with any precision, as Defendant observes. (See Larson Decl. ¶ 17.) But mindful
of Safelite’s success in the case as a whole, see Wal-Mart, 223 F.3d at 773, with its ability
to do business in Minnesota at stake, the Court finds that a less drastic reduction than the
33-50% proposed by the DOC will appropriately account for work on the non-prevailing
claims, yet acknowledge the magnitude of Safelite’s overall success. The Court finds that
a percentage reduction of 15% will adequately address the work performed on non16

prevailing claims and also properly acknowledge Safelite’s success. Accordingly, once
the lodestar is determined, this overall percentage reduction will be applied to the total.
B.

Reasonable Attorneys’ Fee

The starting point for the determination of the amount of a reasonable attorney’s fee
involves calculating the lodestar, which provides an initial estimate of the value of the
attorney’s service. Hensley, 461 U.S. at 433. The lodestar is the product of the number of
hours reasonably expended on the litigation multiplied by a reasonable hourly billing rate.
Id. The reasonable hourly rate is the prevailing market rate in the relevant legal
community for similar services by lawyers of comparable skills, experience and
reputation. See Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984). In determining the
reasonable hourly rate, “district courts may rely on their own experience and knowledge of
prevailing market rates.” Hanig v. Lee, 415 F.3d 822, 825 (8th Cir. 2005). The party
seeking a fee award is responsible for providing evidence of hours worked and the rate
claimed. Wheeler v. Mo. Highway & Transp. Comm’n, 348 F.3d 744, 754 (8th Cir.
2003).
1.

Reasonable Hourly Rate

As noted, the DOC argues that the significantly higher attorney billing rates for
Plaintiffs’ out-of-state counsel should be capped at the highest level of Plaintiffs’ local
counsel.
In determining the reasonable hourly rate for the relevant legal community, courts
typically consider the ordinary rate for similar work in the community in which the case is
17

litigated. Emery v. Hunt, 272 F.3d 1042, 1048 (8th Cir. 2001). However, courts have
approved the use of out-of-state rates in certain circumstances, such as when a plaintiff is
unable, despite good faith efforts, to find local counsel willing and capable of providing
representation, id. (citing Avalon Cinema Corp. v. Thompson, 689 F.2d 137, 140 (8th Cir.
1982) (en banc)), where out-of-state counsel has particular expertise in an area of the law,
see Snider v. City of Cape Girardeau, 752 F.3d 1149, 1160 (8th Cir. 2014) (affirming
district court’s application of a non-local rate primarily due to plaintiff’s inability, in civil
rights case, to find competent legal counsel in local community, as well as the attorneys’
expertise in First Amendment litigation); Planned Parenthood, Sioux Falls Clinic v. Miller,
70 F.3d 517, 519 (8th Cir. 1995) (affirming the use of a non-local prevailing rate where
counsel had expertise in the area of reproductive rights), or where out-of-state counsel’s
rates are quite similar to local rates for comparable work. In re: NHL Players’ Concussion
League Litig., No. 14-MDL-2551 (SRN/BRT), 2017 WL 3276873, at *4 (D. Minn. July
31, 2017) (using out-state-counsel’s rates due to similarity to local rates and also because
counsel functioned as in-house counsel, was uniquely familiar with the subpoenaed
discovery, and the client had consented to this Court’s jurisdiction, but could have sought
resolution of the discovery dispute in the out-of-state district).
Here, Plaintiffs assert that the expertise of Kirkland & Ellis in First Amendment
litigation supports their request for a fee award at their New York billing rates. The Court
is not persuaded, however, that First Amendment expertise is unavailable in the local legal
community. More persuasive is Plaintiffs’ argument that both Kirkland & Ellis and Jones
18

Day have previously represented Safelite in litigating similar constitutional claims.
(See Lefkowitz Decl. ¶ 18; Iole Decl. ¶¶ 3-6.) But counsels’ past representation does not
sufficiently bridge the chasm between the out-of-town billing rates and local billing rates
here. The Court understands that Safelite paid the usual and customary rates of the three
law firms for their respective legal services, (see Lefkowitz Decl. ¶¶ 33-34; Snyder Decl.
¶¶ 9-10; Iole Decl. ¶¶ 16, 18), and, due to their efforts, obtained a good result. However,
the “value” of counsels’ services in the context of a motion for attorneys’ fees involves a
specific inquiry into “reasonableness.” The statutorily permitted fee-shifting provisions of
Section 1988 represent a departure from the general “American Rule,” in which each party
must typically bear its own legal costs. See Heimerl v. Tech. Elec. of Minn., Inc., 9 F.
Supp. 3d 1002, 1032 (D. Minn. 2014) (citation omitted). In this context, the Court must
fairly determine a “reasonable fee,” which, as noted, typically involves reference to the
local, Twin Cities billing rates. The Court appreciates that Kirkland & Ellis has received
attorneys’ fees for work performed in other cases, in other jurisdictions, at the same billing
rates for which Safelite seeks reimbursement here. (See Exs. 12, 13, 14, & 15, Lefkowitz
Decl.) And, the Court understands that the billing rates of Kirkland & Ellis and Jones
Day, in their respective markets, are comparable to those of other large law firms in those
markets. (See Ex. 17, Lefkowitz Decl.) But here, between out-of-state counsel and local
counsel, the Court has calculated an $820 billing rate disparity for partners and a $475

19

disparity for same-level associates.4 This disparity is simply too great, with an
insufficiently strong basis for adhering to out-of-state counsels’ rates, to constitute a
reasonable billing rate. Accordingly, the Court applies the highest billing rates of counsel
at Fredrikson and Byron ($560 for partners, $370 for associates) to the out-of-state
attorneys’ fees here, resulting in a total of $1,074,029 in attorneys’ fees:
Attorneys’ Fees Using Maximum Fredrikson & Byron Rates
Attorney

Hours

Rate

Total

Jay Lefkowitz

217.7

$560

$121,912

Lawrence Marshall

63.7

$560

$35,672

Steven Menashi

284.2

$560

$159,152

Matthew Dexter

185.1

$560

$103,656

Danielle Sassoon

380.8

$370

$140,896

Christian Reigstad

550

$370

$203,500

Thayne Stoddard

277.9

$370

$102,823

John Iole

128.95

$560

$72,212

Richard Snyder

207.9

N/A

$110,4025

Emily Unger

72.8

N/A

$23,804

Total

2369.05

$1,074,0296

4

The differences are calculated as follows: Mr. Lefkowitz’s highest billing rate of
$1,380 - Mr. Snyder’s highest billing rate of $560 = $820; Ms. Reigstad’s highest billing
rate of $845 - Ms. Unger’s highest billing rate of $370 = $475.
5

The Court uses the actual total of billable hours and fees submitted by Fredrikson
& Byron, which takes into account slight variations of billing rates from 2015-2017.
6

Fees related to paralegal work are not included in this calculation.
20

(See Ex. I to Larson Decl.; Snyder Decl. ¶ 9; Iole Decl. ¶ 18; Lefkowitz Decl. ¶ 34.)
2.

Reasonable Work

As noted, the DOC challenges the reasonableness of certain work performed by
Plaintiffs’ counsel, seeking specific deductions as well as general, percentage-based
deductions. The DOC asserts that the reimbursement request for 2,369 hours of attorney
time and 346.1 hours of paralegal time is “grossly excessive,” particularly as the case did
not go to trial and only two contested motions were filed. (Def.’s Opp’n Mem. at 3, 19.)
In comparison, Defendant contends that its attorneys spent less than 900 hours in total
defending this action. (Id.) Defendant thus seeks an overall reduction in the lodestar
hours by 40% to account for the purportedly excessive billing by Safelite’s attorneys.
(Id. at 20.)
While reference to the billing fees or hours expended by opposing counsel can
sometimes be a useful gauge of reasonableness, see Am Travelers Life Ins. Co. v. AIG
Life Ins. Co., 354 F.3d 755, 759-61 (8th Cir. 2004) (upholding award of $66,839.76 in
attorney’s fees and costs in indemnification suit where, among other factors, defendant’s
attorneys charged only $38,554.29); Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208,
1220 (8th Cir. 1981) (affirming the award of $149,175 in attorney’s fees and $13,000 in
costs to plaintiff’s counsel in an ERISA case, and noting, in passing, that defense counsel
spent close to one million dollars in attorney’s fees), frequently, the comparison is
irrelevant. See Burks, 215 F.3d at 884 (describing the relationship as an “apples-to-

21

oranges comparison,” and noting that it requires courts to undertake an additional analysis
of whether defendant’s counsel billed a reasonable amount).
The Court is very familiar with this litigation, and while it involved no Court
intervention on discovery matters, it involved intensive discovery, full briefing and
hearings on Safelite’s preliminary injunction motion and summary judgment motion, and a
successful mediation of a portion of Plaintiffs’ claims. While Defendant contends that
“[t]he tasks performed by Safelite’s attorneys and the [DOC’s] attorneys were roughly
commensurate,” (Def.’s Opp’n Mem. at 3),7 the scope of those tasks was very different.
By necessity, Plaintiffs’ discovery was rather extensive because the DOC itself had
engaged in little, if any, data-gathering prior to initiating the challenged actions with
respect to Safelite and AAA. As a result, Plaintiffs reasonably propounded discovery into
areas that one would have expected the DOC to have undertaken, pre-investigation:
gathering information on whether balance billing is legal, whether it occurs, and if so, how
frequently. In addition, as noted in the Summary Judgment Order, the DOC produced no
empirical evidence in the form of expert testimony, studies, or even anecdotal evidence of
consumer deception or confusion regarding Safelite’s “may-be-balance-billed” statements.
(Summ. J. Order at 36.) Nor did it present any evidence that the prohibition of such
statements materially and directly advanced its purported interest in preventing deception.
(Id. at 37.) These facts reflect a disproportionate discovery burden on Safelite, due, in
7

Counsel for the DOC acknowledges one exception–Safelite’s time spent
preparing the Complaint likely took more time than the DOC expended in preparing the
Answer. (Larson Decl. ¶ 10.)
22

part, to the DOC’s lack of pre-investigation legwork, but also due, in part, to Plaintiffs’
burden of proof. Accordingly, any comparison between the hours billed by Plaintiffs’
counsel and Defendant’s counsel is not a useful measure of the reasonableness of the hours
expended by Plaintiffs’ counsel. The Court therefore declines to make an overall
percentage reduction in the lodestar hours on this comparative basis.
Defendant also seeks specific deductions for certain types of work. First, the DOC
asks that the Court reduce the amount of time spent by counsel in preparation for oral
argument on the preliminary injunction motion (119.5 hours) and summary judgment
motion (74.6 hours) to no more than 20 hours per motion. (Def.’s Opp’n Mem. at 20.)
The Court declines to make this deduction. These motions were highly important to
Plaintiffs’ case and were motions for which Safelite carried the legal burden.
The DOC further argues that due to duplicative hours spent at depositions and
hearings, the Court should strike the billing entries of all but the lead attorneys taking or
defending a deposition, and the two primary attorneys at the motion hearings. (Id. at 21.)
While the Court appreciates the need for staffing at both the partner level and associate
level, the importance of coordination between national and local counsel, and the unique
insights that individual attorneys bring to litigation, staffing by more than one national
counsel partner at a given event is not reasonable here. Such staffing appears to have been
limited to the May 12, 2015 preliminary injunction hearing, which was attended by three
Kirkland & Ellis partners. (See Larson Decl. ¶ 13; Ex. F, Larson Decl.) A small reduction
will be included in an overall percentage reduction to account for this overstaffing. The
23

Court does not find any other basis for exclusion related to staffing levels or duplication of
effort, based on the Court’s review of the billing records.
Similarly, the DOC seeks to exclude billed travel time between New York and
Minneapolis from any award of nontaxable costs and attorney time, arguing that local
counsel could have handled these events. (Def.’s Opp’n Mem. at 21.) Specifically,
Defendant asks the Court to reduce the hours awarded by at least 115 hours and to also
reduce the New York-to-Minneapolis travel costs from the requested amount of
$43,747.09 to $6,453.74. (Id. at 22.) The Court declines to make this deduction in
attorney hours, and finds that the deduction described above concerning duplicative
attorney time at the May 12, 2015 hearing adequately addresses unnecessary travel time.
Such travel time would be subsumed in the attorneys’ overall billing entries for that date.
Regarding the fees associated with the deposition of Gary Hart, the Court declines
to make a deduction. It appears that the deposition was deemed necessary by Plaintiffs at
the time it was taken, (see Pls.’ Reply at 9. [Doc. No. 118]), and is subject to a fee award.
See North Dakota v. Heydinger, No. 11-cv-3232 (SRN/SER), 2016 WL 5661926, at *23
(D. Minn. Sept. 29, 2016) (awarding fees for depositions that appeared necessary at the
time, even though a subsequent order rendered them unnecessary).
As to the general areas noted above for which a lodestar reduction is appropriate,
the Court makes a 5% overall reduction, in addition to the previously-noted 15%
reduction, to account for Plaintiffs’ partial success, for a total reduction of 20% from the
billing total, at the adjusted local rates, of $1,074,029. The Court is also mindful that
24

Safelite’s fee petition does not include time for all hours worked. Rather, Attorney
Lefkowitz attests that Kirkland & Ellis excluded certain billing entries altogether or
reduced the hours sought for a given entry. (Lefkowitz Decl. ¶ 15.) However, for
purposes of this fee petition, the Court finds that the reductions described above result in a
reasonable award. Consequently, the reductions from the local billing rate total of
$1,074,029 result in an award of $859,223.20 in attorneys’ fees.
3.

Paralegal Work

As noted earlier, Defendant also asks the Court to exclude any time spent by
paralegal Fern Copas on clerical tasks. (Def.’s Opp’n Mem. at 22-23.) “Work done by
paralegals is compensable if it is work that would have been done by an attorney.” Miller
v. Alamo, 983 F.2d 856, 862 (8th Cir. 1993). The Court recognizes that Plaintiffs have
reduced the hourly billing rate for the work performed by Copas from $420 per hour to
$150 per hour. (Lefkowitz Decl. ¶ 35.) The Court finds the $150 billing rate more
reflective of billing rates in the local community for comparable work. See, e.g., Fancher
v. Klann, No. 14-CV-435 (DSD/JJK), 2015 WL 1810235, at *2 (D. Minn. Apr. 21, 2015)
(finding $125 per hour billing rate for paralegal work to be reasonable).
The DOC specifically challenges 48 of the 96 billing entries submitted by Copas,
(Ex. P, Larson Decl.) (identifying, by entry number, the billing entries to which it objects),
including time spent on tasks such as copying or loading documents, renaming documents,
indexing documents, preparing binders, and creating templates for discovery responses.
(Def.’s Opp’n Mem. at 22.) The DOC does not challenge other paralegal work. (See Ex.
25

I at 2, Larson Decl.) Plaintiffs, however, contend that the challenged paralegal work was
necessary, noting, for example, that some of the challenged time entries include time billed
for “review[ing] documents for documents produced or related to Safelite,” (Ex. P, Larson
Decl. (challenging Entry 655); Ex. 4, Lefkowitz Dec. (at Entry 655)), “[p]roofread[ing]
[the] list of cases cited in summary judgment brief against opening and opposition briefs;
[performing a] Westlaw case pull of summary judgment briefs,” (Ex. P, Larson Decl.
(challenging Entry 674), Ex. 4, Lefkowitz Decl. (at Entry 674)), and “cite check[ing] cases
in draft reply brief.” (Ex. P., Larson Decl. (challenging Entry 682), Ex. 4, Lefkowitz Decl.
(at Entry 682)). Granted, the type of work identified above by Plaintiffs is the type that
attorneys would have otherwise performed. However, within the same billing entries are
descriptions of clerical work, such as “[d]ownload[ing] DOC summary judgment
documents,” (Ex. 4, Lefkowitz Decl. (at Entry 655)); “revis[ing] list,” (id. (at Entry 674)),
and “[p]repar[ing] key case binder and index; prepar[ing] preliminary injunction and
summary judgment briefing binder; prepar[ing] summary judgment declaration exhibit
binders.” (Id. (at Entry 682).) Again, while block billing is not prohibited, it makes it
difficult to ascertain the type of work that is compensable versus the type of work that is
not compensable in a fee petition. And while Plaintiffs submitted Copas’ billed time at a
reduced rate, the Court finds that the reduced rate is the appropriate rate in this legal
market and does not fully account for the non-compensable, clerical work. Rather, to
account for the portions of Copas’ block-billed time that includes clerical work, the Court
reduces Plaintiffs’ requested amount of $47,535 for Copas’ work by 40%, resulting in
26

$28,521 in compensable services. This amount, combined with the $4,380 in other
paralegal fees, results in an award of $32,901 for paralegal services.
3.

Enhancement or Reduction of Lodestar

After the Court determines the lodestar, it may adjust the figure upward or
downward, after taking into account various considerations, including the most important
factor – the results obtained. Hensley, 461 U.S. at 434. The following are some of the
factors that courts may consider:
(1) the time and labor involved; (2) the novelty and difficulty of the question
(3) the skill requisite to perform the legal service properly; (4) the preclusion
of employment by the attorney due to the acceptance of the case; (5) the
customary fee; (6) whether the fee is fixed or contingent; (7) time limitations
imposed by the client or the circumstances; (8) the amount involved and the
results obtained; (9) the experience, reputation and ability of the attorney;
(10) the “undesirability” of the case; (11) the nature and length of the
professional relationship with the client; and (12) awards in similar cases.
Id. at 430 n.3 (citing the “Johnson factors” set forth in Johnson v. Georgia Highway
Express, Inc., 488 F.2d 714 (5th Cir. 1974)). However, “many of these factors are
subsumed within the initial calculation of hours reasonably expended at a reasonable
hourly rate.” Gopher Oil, Inc. v. Union Oil Co. of Cal., 757 F. Supp. 998, 1011 n.16 (D.
Minn. 1991) (citation omitted). Also, given the strong presumption that the lodestar
amount is a reasonable fee, a court may increase that amount only in “rare and exceptional
cases.” Penn. v. Del. Valley Citizens’ Counsel for Clean Air, 478 U.S. 546, 565 (1986).
The Court finds that consideration of the results obtained has been factored into the

27

Court’s analysis of Plaintiffs’ partial success as a prevailing party. Application of the
other Johnson factors does not warrant an upward enhancement or downward departure.
C.

Costs

“[R]easonable out-of-pocket expenses of the kind normally charged to clients by
attorneys” are recoverable under Section 1988(b). Pinkham v. Camex, Inc., 84 F.3d 292,
294-95 (8th Cir. 1996). Plaintiffs seek $54,321.21, in nontaxable costs, consisting of
$43,747.09 in travel expenses, $9,613.55 in printing costs, and $960.57 in delivery
charges. (Lefkowitz Decl. ¶ 38.) Defendant does not object to the printing costs and
delivery charges, but contends that only $6,453.74 in travel expenses should be awarded,
based on Plaintiffs’ purported overstaffing. (See Ex. I at 2, Larson Decl.; Def.’s Opp’n
Mem. at 6.) As noted, the Court found the attendance of more than one Kirkland & Ellis
partner at the May 12, 2015 hearing to be non-compensable, but otherwise made no
reduction in attorneys’ fees based on staffing levels. Accordingly, expenses for the travel
of two partners (Mr. Dexter and Mr. Menashi) for the May 12 hearing will be deducted.
Based on the Court’s review of Plaintiffs’ travel expenses, (Ex. 19 at 2; 101-06, Lefkowitz
Decl.), the Court deducts $4,910.74 from the requested $54,321.21 amount, for a total
award of costs in the amount of $49,410.47.
THEREFORE, IT IS HEREBY ORDERED THAT:
1.

Plaintiffs’ Motion for Attorneys’ Fees and Nontaxable Costs [Doc. No. 92]
is GRANTED in part and DENIED in part; and

28

2.

The Court awards Plaintiffs attorneys’ fees in the amount of $859,223.20,
fees for paralegal services in the amount of $32,901, and nontaxable costs in
the amount $49,410.47, for a total award of $941,534.67.

Dated: August 11, 2017
s/Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Court Judge

29