Gray et al v. Toyota Motor Sales, U.S.A., Inc. et al

Filing 56

MEMORANDUM & ORDER re: 52 and 53 Motions for Leave to File are GRANTED. Defendant's Motion 46 for Attorney Fees is GRANTED IN PART. (See Order for details.) Ordered by Judge Joanna Seybert on 7/16/2013. (Nohs, Bonnie)

Download PDF
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------X WILLIAM S. GRAY, AUTO PARTNERS, LLC, SUNRISE AUTOMOTIVE, LLC d/b/a SUNRISE TOYOTA & SUNRISE SCION, Plaintiffs, MEMORANDUM & ORDER 10-CV-3081(JS)(ETB) -againstTOYOTA MOTOR SALES, U.S.A., INC., Defendant. ----------------------------------------X APPEARANCES For Plaintiffs: David A. Rosenfeld, Esq. Joseph Russello, Esq. Samuel H. Rudman, Esq. Robbins Geller Rudman & Dowd LLP 58 South Service Road, Suite 200 Melville, NY 11747 Jonathan Paul Whitcomb, Esq. Diserio Martin O’Connor & Castiglioni LLP One Atlantic Street, 8th Floor Stamford, CT 06901 Scott M. Harrington, Esq. Diserio Martin O’Connor & Castiglioni LLP 50 Main Street, Suite 1000 White Plains, NY 10606 For Defendant: Carl J. Chiappa, Esq. Nathaniel S. Boyer, Esq. Hogan Lovells US LLP 875 Third Avenue New York, NY 10022 SEYBERT, District Judge: Currently pending before the Court is Defendant Toyota Motor Sales’ (“Defendant” or “TMS”) motion for attorneys’ fees, costs, and disbursements (See Docket Entries 46 & 47). In connection with this motion, Defendant also moved for leave to file a reply memorandum of law (Docket Entry 52) and Plaintiffs William S. Gray (“Gray”), Auto Partners, LLC (“Auto Partners”), and Sunrise Automotive, LLC d/b/a Sunrise Toyota and Sunrise Scion (“Sunrise” and collectively, “Plaintiffs”) moved for leave to file a sur-reply (Docket Entry 53). the parties’ accordingly, briefs, those including motions The Court has considered the are reply and For GRANTED. sur-reply the and following reasons, Defendant’s motion for attorneys’ fees is GRANTED IN PART. BACKGROUND The Court presumes familiarity with the facts of this case, which Memorandum are and detailed Order in granting the Court’s Defendant’s August motion to 25, 2011 dismiss. See Gray v. Toyota Motor Sales, U.S.A., Inc., 806 F. Supp. 2d 619 (E.D.N.Y. 2011). Briefly, Plaintiffs were the owners and operators of Sunrise, a franchised Toyota Dealer. Plaintiffs alleged that Defendant unreasonably At base, withheld its consent to two prior sales, ultimately forcing Plaintiffs to sell Sunrise for less than at least what one buyer was willing to pay. Plaintiffs asserted eight claims: (1) breach of the Dealer Agreement between Sunrise and Defendant; (2) breach of the implied covenant of good faith 2 and fair dealing; (3) tortious interference with contract; (4) tortious interference with a fraud; prospective (7) economic violation of advantage; New York’s (5) negligence; Franchised Motor (6) Vehicle Dealer Act (the “Dealer Act”); and (8) violation of the Day in Court Act. Defendant granted its moved motion, to moved dismiss, for disbursements (Docket Entry 33). motion on September Entry 45). In Defendant moved 17, the to 2012 attorneys’ after fees, the Court costs, and The Court granted Defendant’s (the September recover and its “September Order, the attorneys’ Order,” Docket Court noted that fees incurred in defending against Plaintiffs’ claims under the Dealer Act and in defending against Plaintiffs’ seven other claims. Order at attorneys’ 2.) fees The Court under the went Dealer on to Act hold are (September that, although discretionary, as opposed to mandatory, Defendant here was entitled to attorneys’ fees. (September Order at 2-4.) DISCUSSION Defendant now seeks $253,980.75 in attorneys’ fees and $1,370.26 in costs. These amounts represent Defendant’s fees in defending against all of Plaintiffs’ claims. The Court will first address whether Defendant is entitled to fees in defending against all of Plaintiffs’ claims or just regarding the Dealer 3 Act only before turning to the amount of fees and costs requested. I. Plaintiffs’ Claims are Interrelated Defendant seeks attorneys’ fees incurred in litigating against all of Plaintiffs’ claims. Although it acknowledges that the Dealer Act provides the only authority for attorneys’ fees, Defendant asserts that Plaintiffs’ claims were so interrelated that attorneys’ fees for the litigation as a whole are appropriate. The Court agrees. The case law in this area is relatively sparse, and the parties seem to agree that General Motors Corp. v. Villa Marin Chevrolet, Inc., 240 F. Supp. 2d 182 (E.D.N.Y. 2002) is particularly instructive. There, General Motors Corporation (“GM”) sought attorneys’ fees pursuant to the Dealer Act, while Argonaut sought attorneys’ provision. Id., principal difficulty awarded in this at fees 184-85. in action pursuant The court calculating stems from the the to a contractual noted that “[t]he proper fees to fact that the be state statute upon which GM rests its fee request applies only to some of the claims and counterclaims in the litigation.” Id. at 185. In order to sort out this difficulty, the court looked to the principle, established by the Supreme Court, that where there are some successful claims, and other unsuccessful claims distinct from those on which the party seeking attorneys’ fees 4 succeeded, the court should exclude the unsuccessful claims from the lodestar analysis. Id. at 187 (citing Hensley v. Eckerhart, 461 U.S. 424, 434-35, 103 S. Ct. 1933 (1983)). Supreme Court held that where the claims Conversely, the are interrelated because they “involve a common core of facts” or are “based on related legal theories,” fees should generally be awarded for the litigation as a whole. Hensley, 461 U.S. at 435. Ultimately, though, the court in General Motors did not definitively answer whether cases involving Dealer Act claims in addition to other claims would necessarily mean that the claims voluntarily were interrelated. proposed their court found reasonable. 190. own Rather, reduction the in parties fees, there which the Gen. Motors Corp., 240 F. Supp. 2d at In so holding, though, the court did find that the claims were interrelated, and made a point to say that “a good argument can be made that all of the reasonable fees and expenses charged to both GM and Argonaut are potentially recoverable by both of them because all of the claims in all of the actions, whether they involve GM or Argonaut or both, are interrelated . . . .” Id. Here, a good argument can, and has been made, that the claims are interrelated. Initially, the Court notes that Plaintiffs, not Defendant, chose to bring multiple causes of action, several of which the Court determined were duplicative. 5 See Gray, 806 F. Supp. 2d at 624 (finding Plaintiffs’ claims for breach of covenant duplicative of of their good breach faith of and faith contract dealing claim); id. to at be 625 (finding Plaintiffs’ negligence claim to be “wholly premised on a contractual duty”). Plaintiffs’ Dealer Moreover, the Court ultimately dismissed Act claims in part based upon the same reasoning and analysis that it dismissed Plaintiffs’ breach of contract claim. For example, the Court characterized Plaintiffs’ breach of contract claim as “essentially [resting] on arguments that Defendant’s considering the Proposed Dealers’ CSI [i.e., consumer satisfaction index] scores in determining whether to bless unreasonable motive.” or the (2) proposed a Id. at 623. sales pretext for was an either (1) unspecified per se ulterior The Court went on to say that “[o]n the first point, the Court rejects Plaintiffs’ bald assertion that a CSI rating is not an acceptable reason to withhold consent.” Id. Section Later, 466 when of the addressing Dealer Plaintiffs’ Act, the Court claim stated pursuant that to “[a]s discussed already, imposing a CSI threshold is not a per se unreasonable restriction on a dealer’s right to transfer his franchise and, without more, state a claim for relief.” Plaintiffs’ allegations do not Id. at 627. Such analysis makes clear that Plaintiffs’ claims are based upon a “common core of facts.” 6 All of Plaintiffs’ claims essentially pertain to Defendant’s withholding consent to particular sales due to the proposed purchaser’s CSI rating, which Plaintiffs claim was a pretext. See Fleming v. MaxMara USA, Inc., No. 06-CV-6357, 2010 WL 1629705, at *12 (E.D.N.Y. Apr. 21, 2010) (“I conclude that plaintiff’s claims here, while premised on different grounds for relief, arise from a common core of facts and are not so ‘distinctly different’ that an award of attorneys’ fees to defendant would be warranted.”); Tran v. Tran, 166 F. Supp. 2d 793, 803 (S.D.N.Y. 2001) (finding that claims were interrelated because facts giving rise to all of the claims were the same); Alnutt v. Cleary, 27 F. Supp. 2d 395, 403 (W.D.N.Y. 1995) (“There can be little doubt that plaintiff’s claims involved a common core of facts and were based on related legal theories and that much of counsel’s time was devoted generally to the litigation as a whole” (internal quotation marks and citation omitted)). Accordingly, the claims here are interrelated and Defendant is entitled to recover for time spent on all of the claims. II. Amount of Attorneys Fees “Attorney’s fees must be reasonable in terms of the circumstances of the particular case . . . .” Am. World Airways, 169 F.3d 99, 102 (2d Alderman v. Pan Cir. 1999). In determining what fees are “reasonable,” the Court should “first calculate the ‘lodestar--the product of a reasonably hourly rate 7 and the reasonable number of hours required by the case,’ which the Second Circuit calls the ‘presumptively reasonable fee.’” Short v. Manhattan Apartments, Inc., 286 F.R.D. 248, 255 (S.D.N.Y. 2012) (quoting Millea v. Metro-N. R.R. Co., 658 F.3d 154, 166 (2d Cir. 2011)). This calculation “boils down to what a reasonable, paying client would be willing to pay, given that such a party wishes to spend the minimum necessary to litigate the case effectively.” F.3d 170, 174 (2d citation omitted). Simmons v. N.Y.C. Transit Auth., 575 Cir. 2009) (internal quotation marks and “Because attorney’s fees are dependent on the unique facts of each case, the resolution of this issue is committed to the discretion of the district court.” Clarke v. Frank, 960 F.2d 1146, 1153 (2d Cir. 1992). A. Reasonable Hourly Rate In determining the reasonable hourly rate, the Court must look similar to those services rates by “prevailing lawyers experience, and reputation.” 111, 115 (2d Cir. 1997) of in reasonably the community comparable for skill, Luciano v. Olsten Corp., 109 F.3d (internal quotation marks omitted) (quoting Blum v. Stenson, 465 U.S. 886, 896 n.11, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984)). The relevant “community” for the purposes of this analysis is “the district in which the court sits.” Polk v. N.Y. State Dep’t of Corr. Servs., 722 F.2d 23, 25 (2d Cir. 1983). 8 Although this “forum rule” creates a presumption of reasonableness, this presumption is rebuttable. See Simmons, 575 F.3d at 173 (“According to the forum rule, courts ‘should generally use the hourly rates employed in the district in which the reviewing reasonable court fee.” sits in (quoting calculating Arbor Hill the presumptively Concerned Citizens Neighborhood Ass’n v. Cnty. of Albany, 493 F.3d 110, 119, (2d Cir. 2007)). “In order to overcome that presumption, a litigant must persuasively establish that a reasonable client would have selected out-of-district counsel because doing so would likely (not just possibly) produce a substantially better net result.” Id. at 175. has Furthermore, “[i]n determining whether a litigant established consider such a likelihood, experience-based, the objective “counsel’s special expertise.” district court factors,” such must as Id. at 175-76. Defendant argues that it has overcome the presumption of the forum because “TMS rule, justifying reasonably higher, determined out-of-district that it needed rates, to hire counsel with specialized expertise in motor vehicle franchise law to defend this action.” (Def.’s Mot. for Fees, Docket Entry 47, at 3 (citing Goldman Decl. ¶ 4 & Chiappa Aff. ¶¶ 25-28).) The only evidence Defendant offers to rebut the forum rule is in-house counsel’s understanding, based upon her experience in the field, that there are few law firms that specialize in the 9 field of motor vehicle franchise law and that none of those firms have offices in (Goldman Decl. ¶ 3.) “The the Eastern District of New York. This, however, is insufficient. party seeking the award must make a particularized showing, not only that the selection of out-ofdistrict counsel was predicated on experience-based, objective factors, but also of the likelihood that use of in-district counsel would Simmons, 575 produce F.3d substantially 176. at a Although inferior Defendant assertion, there is no evidence to support it. result.” makes this In cases where the court has found the presumption rebutted, the party seeking fees has offered proof such as unsuccessful efforts to find indistrict counsel. See, e.g., Harvey v. Home Savers Consulting Corp., No. 07-CV-2645, 2011 WL 4377839, at *4 (E.D.N.Y. Aug. 12, 2011) (over necessary 100 law experience firms and were contacted, resources were but unable those to with serve as counsel); Star Mark Mgmt., Inc. v. Koon Chun Hing Kee Soy & Sauce Factory, Ltd., No. 07-CV-3208, 2010 WL 3925195, at *3 (E.D.N.Y. Sept. 9, 2010) (client affirmed that it had tried, and failed, to find in-district counsel), adopting report & recommendation as modified 2010 WL 3924674 (E.D.N.Y. Sept. 30, 2010); c.f. Barkley v. United Homes, LLC, No. 04-CV-0875, 2012 WL 3095526, at *6 (E.D.N.Y. July 30, 2012) (“A mere citation to a recent case from the Eastern 10 District of New York and a statement that counsel in the Eastern District of New York could not be located, requirement of without a more, does ‘particularized not satisfy showing’ the that Simmons in-district counsel were unable or unwilling to help plaintiffs.”). Here, Defendant did not even attempt to find in-district counsel. Likewise, Defendant has not made a particularized showing that in-district counsel would produce a substantially inferior result. Barkley, 2012 WL 3095526, at *7 (plaintiffs presented no specific evidence that in-district counsel would have been inferior); Realsongs, Universal Music Corp. v. 3A N. Park Ave. Rest Corp., 749 F. Supp. 2d 81, 90 (E.D.N.Y. 2010) (“Plaintiffs provide no specific information which would establish that local counsel with the requisite experience were unwilling or unable to take the case, or alternatively, no indistrict counsel possessed such experience.”). Thus, even though Defendant consented to the higher rates, the Court does not find that the forum rule presumption has been rebutted. Trudeau v. Bockstein, No. 05-CV-1019, 2008 WL 3413903, See *6 (N.D.N.Y. Aug. 8, 2008) (the fact that client actually assented to the rates is a consideration, but not dispositive). Accordingly, the Court will award Defendant fees in accordance with the forum rule. of New York have determined Courts in the Eastern District reasonable 11 hourly rates to be “approximately $300-450 per hour for partners1, $200-300 per hour for senior associates, and $100-200 per hour for junior associates.” Hugee v. Kimso Apartments, L.L.C., 852 F. Supp. 2d 281, (E.D.N.Y. 298-99 2012) (internal quotation marks and citation omitted); accord Cadles of Grassy Meadows II, L.L.C. v. St. Clair, No. 10-CV-1673, 2012 WL 6617448, at *2 (E.D.N.Y. Dec. 18, 2012). Here, Defendant seeks fees for Carl Chiappa and John Sullivan, Group, partners Paul litigation, Michaeli. Werner, and in the who junior Motor was a Vehicle senior associates Franchise associate Nathaniel Practice during Boyer and this David Mr. Chiappa graduated from New York University School of Law in 1978 and has been practicing in the area of automobile franchise for over 30 years. (Chiappa Aff. ¶ 15.) Mr. Sullivan is a 1980 graduate of New York University School of Law and “has worked on dozens of motor vehicle franchise cases over the past 15 years.” associate, (Chiappa Aff. ¶ 21.) who has since become Mr. Werner was a senior partner, who graduated from Defendant offers some case law finding rates as high as $480 per hour for partners. (Def.’s Mot. for Fees at 5 (citing Libaire v. Kaplan, No. 06-CV-1500, 2011 WL 7114006, at *3 (E.D.N.Y. June 17, 2011).) This Court, though, has generally held $450 an hour to be at the top of the range, absent considerations not present here. See Cuevas v. Ruby Enters. of N.Y., Inc., No. 10-CV-5257, 2013 WL 3057715, at *2 (E.D.N.Y. June 17, 2013) (JS)(WDW); Cadles of Grassy Meadows II, L.L.C., 2012 WL 6617448, at *2; see also Gen. Motors, 240 F. Supp. 2d at 188 (awarding partners rates of $315 at the beginning of the case and $375 at the end of the case). 1 12 Vanderbilt University Law School in 2002. (Chiappa Aff. ¶ 17.) Mr. Boyer and Mr. Michaeli are junior associates who graduated from Benjamin N. Cardozo School of Law and Columbia Law School, respectively, in 2009. (Chiappa Aff. ¶¶ 18, 23.) Although the Court has declined to apply higher outof-district Defendant’s rates, counsels’ relationship with experience counsel and in the the field firm and justifies rates at the high end of what courts in this district have awarded. See Barkley, 2012 WL 3095526 at *7 (“Given the extensive experience of plaintiffs’ attorneys and the complexity of the litigation, the court finds that application of hourly rates at the high end of these ranges is appropriate.”). Thus, the Court awards fees of $450 an hour for partners Chiappa and Sullivan, $300 an hour for senior associate Werner, and $200 an hour for junior associates Boyer and Michaeli. B. Number of Hours In calculating the number of “reasonable hours,” the Court must look to its own familiarity with the case and its experiences generally as well as to any evidentiary submissions and arguments made by the parties. 1153. See Clarke, 960 F.2d at The main issue is “whether, at the time the work was performed, a reasonable attorney would have engaged in similar time expenditures.” 1992). Grant v. Martinez, 973 F.2d 96, 99 (2d Cir. Thus, a court should “exclude hours that were excessive, 13 redundant, or otherwise unnecessary to the litigation.” Cho v. Koam Med. Servs. P.C., 524 F. Supp. 2d 202, 209 (E.D.N.Y. 2007) (internal quotation marks and citation omitted). Discovery in this case spanned approximately a year and Plaintiffs put forth eight separate causes of action. Moreover, Defendant has reduced by 50% its time spent on work for both TMS and TMC. (Chiappa Aff. ¶ 10.) not requesting fees for paralegals. Defendant also is (Chiappa Aff. ¶ 11.) Thus, Defendant’s requested number of hours spent working on this case is reasonable. With respect to the Rule 11 motion, Defendant acknowledges that it ultimately decided not to file the motion. (Chiappa Aff. ¶ 7.) Plaintiffs therefore assert that hours spent in researching and drafting the motion should be excluded from Defendant’s overall award. In unnecessary retrospect to unreasonable. repeated the the The Court disagrees. Rule litigation, but 11 at motion the may time have it was been not (See Chiappa Aff. ¶ 7 (“Our activities included attempts to persuade Plaintiffs to discontinue this action, on the ground that it had no factual or legal merit, so as to minimize fees and expenses incurred by all parties. In connection with that effort, we drafted a Rule 11 motion.”).) In any event, defense counsel affirms that the work on the Rule 11 motion was not for naught since they used the Rule 11 motion 14 as a first draft of their motion for fees and expenses. (Chiappa Aff. ¶ 7.) C. Plaintiffs’ Additional Arguments As the Court has significantly reduced the amount of the fee, the Court need arguments for reduction. not address However, Plaintiffs’ the Court additional will briefly address Plaintiffs’ argument that they do not have the financial means to satisfy a fee award and that any fee granted should be awarded as against Sunrise only. (Pls’. Opp. Br., Docket Entry 50, at 13-14.) Plaintiffs are correct that, at times, courts have noted the equitable nature of attorneys’ fees and considered a party’s financial ability to pay an award of fees. See Shangold v. Walt Disney Co., 275 F. App’x 72, 74 (2d Cir. 2008); Nature’s Enters., Inc. v. Pearson, No. 08-CV-8549, 2010 WL 447377, at *11 (S.D.N.Y. Feb. 9, 2010). However, in support of their argument that “Gray’s financial condition makes a substantial fee award unfeasible” (Docket Entry 50 at 14), Plaintiffs offer proof only of a number of judgments that have been entered against Gray. Wholly lacking from their submission on this point is proof that Gray cannot pay those judgments or that an additional award of attorneys’ fees against Gray would 15 subject him to financial ruin2. See Shangold, 275 F. App’x at 74 (affirming reduction of attorneys’ fees based on financial statements showing assets, expenses, and income); Gary Friedrich Enters., LLC v. Marvel Enters., Inc., No. 08-CV-1533, 2010 WL 3452375, at *3 (S.D.N.Y. Sept. 1, 2010) (concern about other judgments does not necessarily mean that plaintiffs cannot satisfy court judgment in this case); Mariani v. Banat Realty, No. 86-CV-2895, 1993 WL 86530, at *1 (E.D.N.Y. Mar. 18, 1993) (directing defendant to submit an affidavit describing financial assets, liabilities, income, and expenses). Accordingly, the Court finds that an award of attorneys’ fees in favor of Defendant and against all Plaintiffs is warranted, in the total amount of $150,050.3 D. Costs Finally, disbursements. Defendant (Chiappa seeks Aff. ¶ $1,370.26 2.) These in costs costs and include expenses such as printing, postage, and discovery vendor costs. Furthermore, in granting Defendant attorneys’ fees, the Court made the following statement: “Although the Court stops short of finding that the present action was ‘plainly lacking in merit,’ it notes that it was not a particularly close case.” (September Order at 4.) 2 This fee represents Chiappa’s time of 131.9 hours at $450 an hour for a total of $59,355; Sullivan’s time of 9.1 hours at $450 an hour for a total of $4,095; Werner’s time of 73.7 hours at $300 an hour for a total of $22,110; Boyer’s time of 302.15 hours at $200 an hour for a total of $60,430; and Michaeli’s time of 20.3 hours at $200 an hour for a total of $4,060. 3 16 (Chiappa Aff. ¶ 30.) reasonable, and The Court finds these expenses to be accordingly Defendant’s motion for costs and motion for disbursements in the amount of $1,370.26 is GRANTED. CONCLUSION For the foregoing reasons, Defendant’s leave to file a reply memorandum of law and Plaintiffs’ motion for leave to Defendant’s file motion a for sur-reply are attorneys’ GRANTED. fees is Additionally, GRANTED IN PART. Defendant is awarded $150,050 in attorneys’ fees and $1,370.26 in costs and disbursements. SO ORDERED. /s/ JOANNA SEYBERT______ Joanna Seybert, U.S.D.J. Dated: July 16 , 2013 Central Islip, NY 17

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?