CITY OF ATLANTIC CITY v. ZEMURRAY STREET CAPITAL, LLC et al
Filing
360
OPINION. Signed by Judge Noel L. Hillman on 1/10/2022. (rtm, )
Case 1:14-cv-05169-NLH-AMD Document 360 Filed 01/10/22 Page 1 of 15 PageID: 5034
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
THE CITY OF ATLANTIC CITY
Plaintiff,
No. 1:14-cv-05169-NLH-AMD
v.
ZEMURRAY STREET CAPITAL, LLC,
et al.,
OPINION
Defendants.
APPEARANCES:
GILBERT L. BROOKS
DUANE MORRIS LLP
1940 ROUTE 70 EAST - SUITE 200
CHERRY HILL, NJ 08003
On behalf of Cumberland River Capital, LLC
CHERYL L. COOPER
LAW OFFICES OF CHERYL L. COOPER
342 EGG HARBOR RD. - SUITE A-1
SEWELL, NJ 08080
On behalf of Lantana Family Trust 1, Tennessee Business &
Industrial Development Corporation, Gary A. Lax, Michael J.
Lax, and Zemurray Street Capital, LLC
FELIX P. GONZALEZ
3403 IRON ROCK COURT
PENNSAUKEN, NJ 08109
On behalf of W. Wesley Drummon and Zemurray Street Capital,
LLC
GREGORY ALAN LOMAX
LAULETTA BIRNBAUM LLC
591 MANTUA BOULEVARD - SUITE 200
SEWELL, NJ 08080
On behalf of Zemurray Street Capital, LLC and Gary A. Lax
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JESSICA ALI MAIER
MCMANIMON, SCOTLAND & BAUMANN, LLC
75 LIVINGSTON AVENUE, SUITE 201
ROSELAND, NJ 07068
On behalf of the City of Atlantic City
JARED JAMES MONACO
ROTHSTEIN, MANDELL, STROHM, HALM & CIPRIANI
150 AIRPORT ROAD, STE 600
P.O. BOX 3017
LAKEWOOD, NJ 08701
On behalf of the City of Atlantic City
THOMAS E. MONAHAN
DASTI, MURPHY, MCGUCKIN, ULAKY, KOUTSOURIS & CONNORS
620 WEST LACEY ROAD
PO BOX 1057
FORKED RIVER, NJ 08731
On behalf of the City of Atlantic City
ROBERT S. ROGLIERI
TRENK ISABEL, P.C.
290 W. MT. PLEASANT AVE.
SUITE 2350
LIVINGSTON, NJ 07039
On behalf of the City of Atlantic City
RICHARD D. TRENK
TRENK ISABEL, P.C.
290 W MT. PLEASANT AVE.
SUITE 2350
LIVINGSTON, NJ 07039
On behalf of the City of Atlantic City
HILLMAN, District Judge
Presently before the Court is the Certification of Cheryl
L. Cooper, Esquire in Support of Defendants Gary and Michael Lax
Application for Sanctions (the “Certification”). (ECF 129).
2
The
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Certification documents costs and fees that Plaintiffs ask the
Court to approve pursuant to this Court’s order granting Both
Michael and Gary Lax’s motions for sanctions under Federal Rule
of Civil Procedure 11 against Plaintiff, the City of Atlantic
City. (ECF 119).
For the reasons expressed below, the Court
will grant only part of the amount requested in the
Certification.
BACKGROUND
The Court presumes the parties’ familiarity with the case
and only recounts the facts pertinent to the issue directly
before it.
On July 9, 2016, Michael and Gary Lax filed motions
under Federal Rule of Civil Procedure 11(c) asking the Court to
sanction Atlantic City and its attorneys, Thomas Monahan,
Christopher Khatami, and the Law firm of Gilmore & Monahan, P.A.
for pursuit of baseless and frivolous claims (the “Rule 11
Sanctions Motions”).
(ECF 96, 97).
After reviewing the
submissions of the parties, the Court granted the motions in
their entireties, directing Plaintiffs provide documentation of
the expenses incurred in connection with the Rule 11 Sanctions
Motions within 30 days.
(ECF 119).
On February 21, 2017,
Plaintiffs submitted the Certification as support for the direct
expenses incurred by the Laxes as well as attorneys fees and
costs.
(ECF 129).
As part of the Certification, Plaintiffs have submitted
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affidavits of Michael and Gary Lax, outlining the costs they
incurred in connection with prosecuting the Rule 11 Sanctions
Motions. (See ECF 129 at 9-17).
In Michael Lax’s affidavit, he
states that he paid $22 for parking to attend a deposition in
Washington D.C. and that he drove 70 miles to and from the
Nashville airport to his home, and requests $37.80 for the
mileage. (Id. at 10). He requests reimbursement totaling $59.80.
(Id.)
Notably, he states that he paid cash for the $22 of
parking and therefore does not have a receipt. (Id.)
He bases
the request for mileage reimbursement on a statement by Ms.
Cooper that the “IRS reimbursement rate for auto mileage in
April 2016 was .54 per mile.”
(Id.)
Finally, he states that
Ms. Cooper’s hourly rate is $500 per hour and that he found her
bill “fair and accurate” (Id. at 11).
Gary Lax’s affidavit is much the same.
(Id. at 13-17).
He
states that he paid for his brother, Michael’s airfare to attend
the depositions, which came to a total of $675.96. 1 (Id. at 1415).
He also states that he paid for the hotel rooms for Ms.
Cooper and Michael and for Ms. Cooper’s parking when she parked
her car at the hotel.
(Id. at 14).
The affidavit also says
that he paid $23.75 for breakfast with Ms. Cooper and Michael
Though Gary Lax’s affidavit states that he attached the bill
for his brother’s roundtrip flight between Nashville and
Washington D.C. (Id. at 14-15), no bill is attached anywhere in
the Certification.
1
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the day of the depositions. (Id.)
According to Gary Lax’s
affidavit and a bill he attached, the total bill for the hotel
rooms, parking, and taxes came to $636.53.
(Id. at 17-19).
He
also requests $40 in taxi fees for the trip from the hotel to
the location of the deposition, based on his “recollection” that
the trips cost more than $20 each way and his approximation of
what he must have paid based on the cost of an UBER ride “of the
same approximate distance”. (Id. at 15).
requests reimbursement of $1,352.49.
In sum, Gary Lax
(Id. at 15).
To support the request for $79,541.72 in attorneys fees and
costs, the Certification attaches a spreadsheet detailing Ms.
Cooper’s billing related to the Rule 11 Sanctions Motions (Id.
at 22-31).
Ms. Cooper’s bill contains various entries related
to the Rule 11 Sanctions Motions, including legal research,
document review, drafting, and travel, among other tasks.
generally id. at 22-31).
(See
As stated in the affidavits, Ms.
Cooper’s bill indicates that her hourly rate for services is
$500 per hour.
(Id.)
However, the Certification does not
provide any documentation or explanation to support the
reasonableness of Ms. Cooper’s hourly rate.
Indeed, in a letter filed by Thomas Monahan, counsel for
Atlantic City, challenging the amount requested in the
certification, Mr. Monahan indicates that the Certification does
not explain the $500 hourly rate at all (ECF 130 at 3
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(“[P]laintiff objects to defense counsel’s $500/hour fee as
nothing was set forth in counsel’s certification why said rate
should be accepted by the Court, other than that counsel’s
clients claims within their certifications that they thought it
was fair.”))
Mr. Monahan argues that this Court should consider
any fee award it imposes on the “specific circumstances of this
matter.” (Id.)
DISCUSSION
As it has previously granted the Rule 11 Sanctions Motions
in their entirety, the only task remaining before the Court is
to determine a reasonable figure to award to the prevailing
parties.
Under Rule 11(c)(2), a Court may award a party who
prevails on a motion for Rule 11 sanctions “reasonable expenses,
including attorney's fees, incurred for the motion.” Fed. R.
Civ. P. 11(c)(2).
When awarding sanctions for a violation of
Rule 11 sanctions the Court may “include all or part of the
movant's fees and expenses directly resulting from the Rule
11 violation, to the extent warranted for effective deterrence.”
Est. of Hennis v. Balicki, 2018 WL 2230543, at *2 (D.N.J. May
16, 2018).
The Court already granted movants’ request for out-
of-pocket expenses and attorneys fees and costs (ECF 119; see
also ECF 96; ECF 97), so all that is left now is to set a
reasonable amount.
In the context of fee awards provided for by different
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federal statutes, district courts generally determine reasonable
fees by looking to the lodestar formula: taking the “number of
hours reasonably expended on the litigation multiplied by a
reasonable hourly rate.” 2
433 (1983).
Hensley v. Eckerhart, 461 U.S. 424,
While this approach is not directly relevant to the
sanctions context, and courts often impose sanctions without
engaging in such calculations, courts in this Circuit have also
referred to this standard in calculating the proper sanctions to
impose in certain cases.
See Keister v. PPL Corporation, 257 F.
Supp. 3d 693 (M.D. Pa. 2016).
It is well accepted in this
district that “[t]he party seeking attorney's fees bears the
burden to prove the reasonableness of the fee request.”
Stadler
v. Abrams, 2018 WL 3617967, at *2 (D.N.J. July 30,
2018), aff'd, 785 F. App'x 66 (3d Cir. 2019) (evaluating what
amount of attorneys fees to grant under an analogous legal
provision allowing their award).
The Court’s assessment of
reasonableness must be grounded in facts before it and it “may
not make any findings of reasonableness based on a generalized
sense of appropriateness” but must instead rely on the record.
While the calculation of the lodestar formula often involves
calculation of a multiplier when awarding fees in the class
action settlement context, In re Schering-Plough/Merck Merger
Litig., 2010 WL 1257722, at *18 (D.N.J. Mar. 26, 2010)
(discussing the use of a multiplier in the context of awarding
attorneys fees from a class settlement), the Court finds that
that is not necessary here.
2
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Id.
“This burden is normally addressed by submitting affidavits
of other attorneys in the relevant legal community attesting to
the range of prevailing rates charged by attorneys with similar
skill and experience.” S.D. v. Manville Bd. of Educ., 989 F.
Supp. 649, 656 (D.N.J. 1998); Bilazzo v. Portfolio Recovery
Assocs., LLC, 876 F. Supp. 2d 452, 458 (D.N.J. 2012) (“In order
to meet this burden, the party seeking fees is initially
required to submit evidence supporting the hours worked and the
rates claimed.”)
As stated above, applying the lodestar formula requires a
two-step analysis. “The first step in applying the lodestar
formula is to determine the appropriate hourly rate.” In re
Schering-Plough/Merck Merger Litig., 2010 WL 1257722 at *17
(D.N.J. Mar. 26, 2010).
To make this determination, “the court
should assess the experience and skill of the prevailing party's
attorneys and compare their rates to the rates prevailing in the
community for similar services by lawyers of reasonably
comparable skill, experience, and reputation.” DirecTV, Inc. v.
Clark, 2007 WL 2212608, at *3 (D.N.J. July 27, 2007) (quoting
Rode v. Dellarciprete, 892 F.2d 1177, 1183 (3d Cir.1990)).
Affidavits from the attorney, other attorneys in the community,
as well as other evidence are often submitted to meet this
standard. See Chaaban v. Criscito, 2013 WL 1737689, at *10
(D.N.J. Apr. 3, 2013), report and recommendation adopted, 2013
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WL 1730733 (D.N.J. Apr. 22, 2013) (“In satisfying a prima facie
case of reasonable fees, attorneys may not rest on their own
affidavits.”)
Should the court determine “that the prevailing
party has failed to sustain its burden with respect to a
reasonable market rate, it must use its discretion to determine
the market rate.”
L.J. ex rel. V.J. v. Audubon Bd. of Educ.,
373 F. App'x 294, 297 (3d Cir. 2010).
In the instant matter, the Certification indicates that Ms.
Cooper charged both Gary and Michael Lax an hourly rate of $500.
(See ECF 129 at 22-31).
As Mr. Monahan notes in his submission,
(ECF 130 at 3), Ms. Cooper provides no information on why a $500
per hour rate is appropriate.
The Court has no information on
whether this is her usual rate, her years of experience, her
education, area of expertise, or how her rate compares to the
market rate in the community.
Therefore, it falls to the Court
to determine what is a reasonable market rate.
See L.J. ex rel.
V.J., 373 F. App’x at 297.
Because this case is docketed in the Camden vicinage and
Ms. Cooper’s letterhead indicates that her office is in Sewell,
New Jersey, (ECF 129 at 1), the relevant market on which to base
the rate is southern New Jersey.
Connor v. Sedgwick Claims
Mgmt. Servs., Inc., 2012 WL 6595072, at *1 (D.N.J. Dec. 18,
2012) (determining the appropriate hourly rate based on
“prevailing rates in the southern New Jersey region”); L.J. ex
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rel. V.J., 373 F. App’x at 298 (considering the reasonable
hourly rate for an attorney in the southern New Jersey market).
In Connor, the Court found the “prevailing hourly attorney
billing rate in the southern New Jersey market [to be] $250.”
Connor v. Sedgwick Claims Mgmt. Servs., Inc., 2012 WL 608483, at
*5 (D.N.J. Feb. 23, 2012).
While Connor provides a helpful
guidepost, it is almost ten years-old and this Court will not
finish its analysis there.
While not accepted as dispositive by
New Jersey courts, courts in this district have relied on Clio’s
annual Legal Trends Report 3 and the fee schedules set forth by
Community Legal Services of Philadelphia (“CLS”).
See Bilazzo,
876 F. Supp. 2d at 470 (holding that the CLS was a helpful
metric in setting fee rates under the Fair Debt Collection
Practices Act); Warner v. Twp. of S. Harrison, 2013 WL 3283945,
at *10 (D.N.J. June 27, 2013) (applying CLS’ fee structures in a
case alleging misappropriation of personal information);
Stadler, 2018 WL 3617967 at *9 (considering CLS’ fee structures
in a civil rights case); Kaisha v. Lotte Int'l Am. Corp., 2019
WL 5079571, at *3 (D.N.J. Oct. 10, 2019) (declining to apply
CLS’s rates to a set of facts but finding “The Clio Report
provides a data point for the Court's consideration”).
In the
Clio is a cloud-based legal technology company that issues
annual reports on trends in the legal industry. (See 2017 Legal
Trends Report, https://www.clio.com/resources/legal-trends/2017report/).
3
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absence of more on point information on appropriate hourly rates
for Ms. Connor, this Court considers the Clio report and the CLS
fee structure.
Because the reasonableness of attorneys fees must be
analyzed based on the time the petition for attorneys fees was
filed, which in this case was 2017, the Court considers the data
closest in time to 2017.
LeJeune v. Khepera Charter Sch., 420
F. Supp. 3d 331, 340 (E.D. Pa. 2019)(holding that the relevant
rate is the “rate at the time of the fee petition”) (emphasis in
original); see also (ECF 129 (showing that the certification was
filed in February 2017).
The Clio 2017 Legal Trends Report
states that the average rate for New Jersey attorneys was around
$300 per hour.
(2017 Legal Trends Report,
https://files.clio.com/marketo/ebooks/2017-Legal-TrendsReport.pdf, at 43)).
CLS’ fee structure as of 2018 provides
hourly rates based on an attorney’s years of experience.
(Attorney Fees, https://clsphila.org/about-community-legalservices/attorney-fees/).
There is nothing in the record
stating the number of years of experience that Ms. Cooper has as
of 2017.
However, the certification indicates that Ms. Cooper
began representing Gary and Michael Lax in 2015.
at 9, 13).
(See ECF 129
Therefore, at the time of the fee application, Ms.
Cooper must have had at least around 2 years of experience.
Under the CLS framework, that would put her at a billing rate
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between $230 and $275 per hour. (Attorney Fees,
https://clsphila.org/about-community-legal-services/attorneyfees/).
Given that the complaint alleged counts ranging from
breach of contract to piercing the corporate veil, the Court
finds that setting an hourly rate toward the upper end of the
figures provided by Clio and CLS is appropriate.
Therefore,
this Court finds that the reasonable hourly rate for Ms.
Cooper’s work is $290 per hour.
The next component in analyzing fees under the lodestar
method is determining whether the amount of hours billed for the
work completed was appropriate.
In re Schering-Plough/Merck
Merger Litig., 2010 WL 1257722 at *17 (“In calculating the
second part of the lodestar formula, the time reasonably
expended, the district court should review the time charged,
decide whether the hours set out were reasonably expended for
each of the particular purposes described and then exclude those
that are excessive, redundant, or otherwise unnecessary. Time
expended is considered reasonable if the work performed was
useful and of a type ordinarily necessary to secure the final
result obtained from the litigation.”) (internal quotation marks
omitted).
The Court has a duty to review the fee request
carefully to determine if billing was reasonable. DirecTV, Inc.,
2007 WL 2212608 at *4 (“The district court must go line, by line
through the billing records supporting the fee request[.]”)
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(internal quotation marks omitted); Kaisha, 2019 WL 5079571, at
*2 (“The Court must review the time charged, decide whether the
hours set out were reasonably expended for each of the
particular purposes described and then exclude those that are
excessive, redundant, or otherwise unnecessary.”) (internal
quotation marks omitted).
In reviewing billing statements, the
Court must keep in mind the kinds of activities that are
compensable such as “the preparation of filing the lawsuit,
background research, productive attorney discussions and
strategy sessions, negotiations, routine activities such as
making telephone calls and reading mail related to the case,
monitoring and enforcing a favorable judgment, and travel among
other things.”
Warner, 2013 WL 3283945 at *11.
The Court has reviewed the bill attached as Exhibit 3 to
the Certification and finds that the entries are well documented
and fall into the range of tasks described above.
Further, to
the extent that Ms. Cooper billed for administrative tasks, her
time entries for such tasks were generally short. Montone v.
City of Jersey City, 2020 WL 7041570, at *11 (D.N.J. Dec. 1,
2020), appeal dismissed, 2021 WL 3626461 (3d Cir. Mar. 2, 2021
(finding reasonable an attorney’s bill for completing
administrative tasks where the attorney completed them fairly
quickly).
Because Plaintiffs have not objected to Ms. Cooper’s
time entries and the Court does not find issue with any of them,
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the Court will not reduce the time spent on preparing the Rule
11 Sanctions Motions for purposes of awarding attorneys fees.
Finally, this Court will make an adjustment to the amount
of fees to be awarded to Ms. Cooper for her time associated with
travel. See Warner, 2013 WL 3283945 at *13 (“This district has
previously held the prevailing rate for travel time in New
Jersey is fifty percent of the attorney's reasonable rate.”)
(internal quotation marks omitted).
The Certification reveals
that Ms. Cooper charged 9 hours for travel time in connection
with the Rule 11 Sanctions Motion.
(ECF 129 at 22-31).
Court will award fees for half that time: 4.5 hours.
The
In sum,
the Court believes that Plaintiffs are entitled to attorneys
fees and costs totaling $44,420.22.
The Court notes, though,
that Ms. Cooper was previously sanctioned in a separate matter
under Rule 11 on April 4, 2019 for an amount totaling $89,234.74
and that that amount has not been paid.
03292-NLH-AMD, ECF 240).
(See Dkt. No. 1:14-cv-
The Court is not aware of any reason
why it should not order the parties to show cause why the amount
of attorneys fees that it intends to award today should not be
used to offset the amount of attorneys fees owed in the other
matter and will therefore issue an Order to Show Cause in
conjunction with the issuance of this Opinion.
The Court will also award out-of-pocket expenses for
Plaintiffs to the extent that they have been adequately
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documented. See In re Schering-Plough/Merck Merger Litig., 2010
WL 1257722 at *19 (awarding expenses that had been entitled to
“adequately documented and reasonably and appropriately incurred
in the prosecution of the case”).
The only expenses that were
adequately documented by either Michael or Gary Lax were the
expenses Gary Lax incurred at the hotel at which Ms. Cooper and
Michael Lax stayed for the deposition.
(See ECF 129 at 18-19).
Therefore, the Court will award Gary Lax costs totaling $636.53.
CONCLUSION
For the reasons expressed above, Plaintiffs shall be
ordered to show cause as to why the award of attorneys fees in
the amount of $44,420.22 should not be applied to offset
outstanding fees owed in a separate matter.
The Court shall
also order that Gary Lax shall be awarded $636.53.
An appropriate Order will be entered.
Date: January 10, 2022
At Camden, New Jersey
/s Noel L. HIllman
NOEL L. HILLMAN, U.S.D.J.
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