H&R Block Tax Services, LLC v. Judy Strauss
DECISION and ORDERED, that Plaintiff H&R Block Tax Services, LLCs Motion (Dkt. No. 24) for a temporary restraining order seeking to hold Defendant Judy Strauss in contempt of the Courts Memorandum-Decision and Order dated February 4, 2015 is GRANTED; and it is further ORDERED, that the covenants against competition and solicitation described in the Courts Memorandum-Decision and Order dated February 4, 2015 be equitably extended to run for one year from the date of this Decision and Order; and it is further ORDERED, that Plaintiff be awarded $17,200 in compensatory damages; and it is further ORDERED, that Plaintiff be awarded $15,616.40 in attorneys fees and costs. Signed by Senior Judge Lawrence E. Kahn on July 07, 2015. (sas)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
H&R BLOCK TAX SERVICES, LLC,
DECISION and ORDER
This matter returns to the Court on Plaintiff H&R Block Tax Services, LLC’s (“Plaintiff,” or
“H&R Block”) Motion for a temporary restraining order seeking to hold Defendant Judy Strauss
(“Defendant”) in contempt of the Court’s Memorandum-Decision and Order dated February 4,
2015. Dkt. Nos. 20 (“February Order”); 24 (“Motion”). On March 12, 2015, the Court held a
hearing on the Motion and reserved judgment, permitting the parties to file memoranda of law on
the issues of contempt and damages. See Dkt. Nos. 29 (“Transcript”); 30. Accordingly, Plaintiff
submitted a Memorandum of law, Defendant responded, and Plaintiff filed a Reply. Dkt. Nos. 31
(“Memorandum”); 34 (“Response”); 35 (“Reply”). For the following reasons, the Motion is granted
and Plaintiff is awarded damages and attorneys’ fees and costs in the amount of $32,816.40.
The Court presumes the parties’ familiarity with the facts and history of this case, and recites
only those facts necessary to the resolution of the pending Motion.1 For a complete statement of
Plaintiff has also filed two additional Motions, see Dkt. Nos. 32; 33, which are currently
pending before the Court. However, because those Motions are not relevant to or necessary to the
disposition of the instant Motion, they will be addressed in a separate order and remain pending
Plaintiff’s claims and the history of this case, reference is made to the Complaint and the February
Order. Dkt. No. 1 (“Complaint”); Feb. Order.
Plaintiff is engaged “in the business of licensing others to operate tax return preparation
offices under the H&R Block service mark.” Compl. ¶ 5. In September 1984, Defendant entered
into a Satellite Franchise Agreement (the “SFA”) with Plaintiff’s predecessor-in-interest2 to enable
Defendant to operate a tax return preparation office in Cobleskill, New York under the H&R Block
service mark. Id. ¶ 1. The SFA automatically renewed every five years, and the parties continued
their contractual relationship until 2014. See id. ¶ 2; see also Dkt. No. 1-1 (“Exhibit 1”) ¶ 4. Prior
to the expiration of the most recent five-year term, Plaintiff informed Defendant that it would not be
renewing the 1984 version of the SFA; instead, Plaintiff offered Defendant a “current form” of the
franchise agreement. Compl. ¶ 2. Defendant declined to renew the SFA in its current form, and the
franchise relationship expired on September 1, 2014. Id. ¶¶ 2,12.
On January 26, 2015, Plaintiff filed a Motion for a temporary restraining order alleging that
Defendant was in breach of the SFA. See Dkt. No. 5. The Court held a hearing and subsequently
ordered, in relevant part, that Defendant “(1) refrain from directly or indirectly offering tax return
preparation and related services in or within forty-five miles of Cobleskill, New York; [and] (2)
refrain from solicitation of clients of the former H&R Block office in Cobleskill.” Feb. Order at 12.
On March 3, 2015, Plaintiff filed the instant Motion alleging that Defendant was in contempt
of the February Order by (1) preparing income taxes at a new location in Freehold, New York,
which was less than forty-five miles from Cobleskill, New York; and (2) continuing to solicit clients
before the Court.
The succession of rights and liabilities under the SFA is not in dispute.
in Cobleskill by advertising “tax services” on the sign outside of her Cobleskill office, running a
newspaper advertisement indicating her services, and by receiving clients’ materials in Cobleskill
and then transporting them to Freehold to conduct the actual tax preparation. See Mot. At a
subsequent hearing on March 12, 2015, Defendant (1) conceded that the Freehold office was within
forty-five miles of Cobleskill, but asserted that she made a good faith effort to comply with the
geographical restriction in the February Order; (2) conceded that she was preparing income tax
services at her new location in Freehold; (3) asserted that the newspaper article had been prepared
weeks before and she had no control over its publication; and (4) conceded that she had not
removed or altered the sign in front of her Cobleskill office due to inclement weather, but agreed to
do so immediately following the hearing. See Tr. at 9-11. Because the issue of damages had not
been fully briefed, the Court reserved judgment on the Motion, and ordered the parties to brief the
Court on the prevailing legal standards for contempt in a civil action and the basis for the damages
sought. See id. at 13.
Plaintiff seeks to hold Defendant in contempt of the February Order and to impose the
following sanctions: (1) a one-year equitable extension of the covenant against competition and
solicitation as set forth in the SFA; (2) lost profits from the revenue generated by Defendant’s
preparation of income taxes during the contempt period; and (3) attorneys’ fees in connection with
the contempt proceedings. See generally Mot.
Before addressing the issue of damages, the Court must first consider whether Defendant is
in contempt of the February Order. Contempt is appropriate when “(1) the order the contemnor
failed to comply with is clear and unambiguous, (2) the proof of noncompliance is clear and
convincing, and (3) the contemnor has not diligently attempted to comply in a reasonable manner.”
Paramedics Electromedicina Comercial, Ltda. v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645, 655
(2d Cir. 2004). Neither party has raised an issue with respect to the first element; thus, the Court
considers only whether Plaintiff has met its burden in establishing the second and third elements.3
1. Clear and Convincing Proof of Noncompliance
The February Order provided, in relevant part, that Defendant must “refrain from directly or
indirectly offering tax return preparation and related services in or within forty-five miles of
Cobleskill, New York; [and] (2) refrain from solicitation of clients of the former H&R Block office
in Cobleskill.” Feb. Order at 12. At the hearing, Defendant’s counsel conceded that Defendant had
established a new office in Freehold, where she was performing income tax services, and that the
Freehold office was less than forty-five miles from the Cobleskill location. See Tr. at 9-10, 12.
Moreover, Defendant did not dispute that clients were dropping off their income tax information at
Defendant’s Cobleskill office, and those materials were then transferred to Freehold where the
actual tax preparation service was performed. See id. at 9-10. Finally, Defendant also did not
dispute that the sign in front of her Cobleskill office continued to display “tax services” and that
subsequent to the February Order, a newspaper article ran in Cobleskill indicating that Defendant
offered tax services. Id. at 8-9.
Defendant responds that Plaintiff’s Memorandum relies in large part on the Chow Affidavit,
which is comprised of inadmissible hearsay and thus fails to demonstrate a violation of the February
At the hearing, Defendant raised an argument that the February Order’s covenant against
“solicitation” was not entirely clear; however, Defendant appears to have abandoned this argument,
as it was not raised or referenced in her Response. Compare Tr. at 8, with Resp.
Order. See Resp. at 2-3. However, the Court finds it unnecessary to determine whether the Chow
Affidavit is based on inadmissible hearsay because Defendant has failed to refute—or even
address—her earlier concessions described supra. Therefore, Defendant’s undisputed admissions
that she continued to prepare income taxes in a location less than forty-five miles from Cobleskill,
failed to remove the sign in front of her business advertising tax services, and took part in a
newspaper advertisement that ran after the February Order was issued, are sufficient to support a
finding that Plaintiff has provided clear and convincing evidence of Defendant’s noncompliance.
Having found clear and convincing proof of Defendant’s noncompliance, the Court next
considers whether Defendant diligently attempted to comply in a reasonable manner with the
February Order and thus should not be held in contempt. First, regarding the preparation of income
taxes in Freehold, Defendant asserts that her efforts to comply with the geographic restriction were
diligent because she selected the location “based upon the assurances of her landlord.” Resp. at 4.
Defendant further states that she “then learned, by observation of her odometer, that the shortest
route from [her Cobleskill office] to her office in Freehold was 42.5 miles.” Id.
Neither of these assertions suggests that Defendant exercised diligence in attempting to
comply with the 45-mile restriction. Defendant has provided no evidence to indicate that her
landlord was a reliable source of information for determining the distance between the two office
locations, or even what information she was given by her landlord. However, even more
importantly, that Defendant’s vehicle’s odometer confirmed that the two offices were less than
forty-five miles apart negates a finding of diligence. Indeed, this assertion confirms that Defendant
obtained first-hand, reliable evidence that the two offices were less than forty-five miles apart; yet,
Defendant did not cease preparing income taxes in Freehold despite personal knowledge that she
was in violation of the February Order. Accordingly, the Court finds that Defendant did not attempt
to diligently comply in a reasonable manner with respect to the geographic restriction.
With respect to the newspaper advertisement, Defendant asserts that it “was arranged for
several weeks prior to the issuance of the Order” and that “[c]ancellation of the article was not, upon
information and belief, within the purview of [Defendant].” Resp. at 4. The Court is not persuaded
by Defendant’s argument. Specifically, Defendant acknowledges that the newspaper article was
arranged for prior to the February Order. See id. Defendant states that “upon information and
belief” she was unable to cancel the article. Id. However, Defendant has not asserted that she
actually attempted to cancel the article, or that she contacted the newspaper to seek modification to
ensure compliance with the February Order. See id. In other words, Defendant’s contention makes
clear that she did not make any attempt to comply with the relevant provision of the February Order,
and thus the Court finds that she did not exercise diligence with respect to the newspaper article.
Finally, with regard to the business sign outside of her Cobleskill office, Defendant
conceded at the hearing that she had not removed or altered it as directed in the February Order. See
Tr. at 10-11. Defendant stated that she had not removed the sign due to winter weather conditions
but would remove it, or at least cover the part displaying “tax services,” immediately following the
hearing. Id. at 11. Plaintiff has not asserted a continued violation regarding the sign, and thus it
appears that this issue has been resolved. See generally Mem.; Reply. Nonetheless, Plaintiff has
met its burden in establishing a lack of diligence on the part of Defendant with respect to the
covenants against non-competition and solicitation. Accordingly, the Court finds that Plaintiff has
met its burden in demonstrating that Defendant violated the February Order.
Having found Defendant in contempt of the February Order, the Court now considers the
appropriateness of the relief sought by Plaintiff.
1. Equitable Extension of Covenants
Plaintiff argues that it has suffered irreparable loss to its goodwill because Defendant’s
continued preparation of income taxes has, inter alia, prevented Plaintiff from properly transitioning
past and future clients to its new franchise location in Cobleskill. Mem. at 5. Moreover, as the
overwhelming majority of income taxes are prepared during the few months before April 15 of each
year, and Plaintiff violated the Court’s Order during a significant portion of the 2015 tax season,
Plaintiff contends as a matter of equity that the covenants against competition and solicitation
should be extended through the 2016 tax season to permit Plaintiff a proper opportunity to establish
its new franchise location in Cobleskill. Id.
Defendant has not opposed this requested relief, and the Court is persuaded by Plaintiff’s
argument that a one-year extension of the covenants is necessary to ensure that Defendant complies
with the February Order and to effectuate the purpose behind the covenants. Because Defendant
failed to comply with the February Order during almost the entirety of the peak 2015 tax season, the
Court finds that a one-year equitable extension of the covenants against competition and solicitation
to cover the peak 2016 tax season is appropriate.
2. Monetary Damages
At the hearing, the Court asked Plaintiff what amount of damages it was seeking, and
Plaintiff’s counsel responded that courts have awarded per diem damages up to $3,000 per day;
however, Plaintiff did not seek a specific amount at that time. See Tr. at 13. In its post-hearing
Memorandum, Plaintiff instead argues that a reasonable proxy of its damages is what Plaintiff
would have earned had the SFA still been in place during the contempt period. Mem. at 6.
Specifically, under the SFA, Plaintiff received royalties in the form of 40% of Defendant’s gross
revenue on income tax services; Plaintiff argues the royalty fee is an accurate measure of its
monetary damages. Id. In her Response, Defendant argues that Plaintiff’s request for $3,000 per
day is unreasonably high and would impose an insurmountable financial hardship on Defendant.
Resp. at 3. However, Defendant does not address Plaintiff’s contention to measure damages
pursuant to the SFA royalties provision. See generally id. The Court agrees with Plaintiff that the
royalty payments are a reasonable measure of Plaintiff’s monetary damages suffered as a result of
As to the exact amount of damages, Defendant’s counsel stated at the hearing that Defendant
had generated approximately $48,000 in revenue preparing income tax returns during the contempt
period. Tr. at 14. Pursuant to that statement, Plaintiff’s Memorandum indicates that Plaintiff seeks
$19,200, which is 40% of the purported $48,000 in revenue. Mem. at 6. However, Defendant’s
Response includes a profit and loss statement indicating that Defendant generated $43,000—not
$48,000—during the contempt period. See Resp., Ex. A. Plaintiff’s Reply does not challenge
Defendant’s evidence that her gross income during the relevant time period was $43,000. See
generally Reply. Accordingly, the Court finds that Plaintiff is entitled to $40% of $43,000, which
amounts to an award of $17,200 in damages, as compensation for lost royalties incurred during
Defendant’s violation of the Court’s Order.
3. Attorneys’ Fees
Finally, Plaintiff’s attorneys seek a total of $31,232.70 in costs and fees for 90.25 hours of
work related to the contempt proceedings, pursuant to Local Rule 83.5. See Mem. at 7 (citing L.R.
83.5(a) (“A reasonable attorney’s fee, necessitated by the contempt proceeding, may be included as
an item of damages.”)); see also Dkt. Nos. 31-2 (“Klarfeld Affidavit”); 31-4 (“Freeman Billing
Summary”). Defendant asserts generally that Plaintiff is not entitled to attorneys’ fees because it
has not met its burden in establishing that her violations, even assuming she did violate the Order,
were willful. Resp. at 5-6. However, Defendant has not specifically challenged the amount of
attorneys’ fees sought. See id.
a. Appropriateness of Attorneys’ Fees
As to the appropriateness of awarding attorneys’ fees, Defendant acknowledges that the
Second Circuit, while not abrogating the wilfulness requirement, has more recently taken a less
stringent view. See Resp. at 5-6; compare City of N.Y. v. Local 28, Sheet Metal Workers’ Int’l
Ass’n, 170 F.3d 279, 283 (2d Cir. 1999) (“The violation need not be willful, but it must be
demonstrated that the contemnor was not reasonably diligent in attempting to comply.”) (internal
quotation omitted); Weitzman v. Stein, 98 F.3d 717, 719 (2d Cir. 1996) (“[W]hile willfulness may
not necessarily be a prerequisite to an award of fees and costs, a finding of willfulness strongly
supports granting them.”), with Vuitton et Fils S.A. v. Carousel Handbags, 592 F.2d 126, 130-31
(2d Cir. 1979) (requiring a finding of willfulness before awarding costs of prosecuting contempt
motion); N.Y. State Nat’l Org. for Women v. Terry, 952 F. Supp. 1033, 1044 (S.D.N.Y. 1997)
(same). However, the Court need not determine the appropriate standard, because even under the
more stringent standard, Defendant’s contempt was wilful.
“Contempt is willful when the contemnor had actual notice of the order, could have
complied, did not seek modification, and did not make a good-faith effort to comply.” In re Lehman
Bros. Holdings Inc., 526 B.R. 481 (S.D.N.Y. 2014) (citing Bear U.S.A., Inc. v. Kim, 71 F. Supp. 2d
237, 249 (S.D.N.Y. 1999)). As discussed supra, Defendant did not make a good faith effort to
comply with the non-competition covenant; indeed, her own efforts to measure the distance between
the Freehold and Cobleskill offices revealed that she was in clear violation of the February Order,
and she did not seek any form of modification from the Court. Similarly, with respect to the
newspaper article and business sign, Defendant has not offered any persuasive arguments that she
made a good faith effort to comply with the Court’s Order or that she sought modification.
Accordingly, the Court finds that attorneys’ fees are appropriate in light of Defendant’s willful
violation of the February Order.
b. Amount of Attorneys’ Fees
Though Defendant has not challenged the amount of fees sought by Plaintiff, “‘[t]he fee
applicant bears the burden of establishing entitlement to an award and documenting the appropriate
hours expended and hourly rates.’” Cruz v. Local Union No. 3 of Int’l Bhd. of Elec. Workers, 34
F.3d 1148, 1160 (2d Cir. 1994) (quoting Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)).
Furthermore, the Court has “discretion to determine . . . what constitutes a reasonable fee.’” Millea
v. Metro-North R.R. Co., 658 F.3d 154, 166 (2d Cir. 2013) (citing LeBlanc-Sternberg v. Fletcher,
143 F.3d 748, 758 (2d Cir. 1998)). “[T]he lodestar—the product of a reasonable hourly rate and the
reasonable number of hours required by the case—creates a ‘presumptively reasonable fee.’” Id.
(citing Arbor Hill Concerned Citizens Neighborhood Ass’n v. Cnty. of Albany, 522 F.3d 182, 183
(2d Cir. 2008) and Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 551-52 (2010)). Though the
lodestar is not always conclusive, it is presumptively reasonable absent extraordinary or rare
circumstances. Id. at 166-67.
1. Reasonable Number of Hours
To calculate the lodestar, the Court must determine the reasonable number of hours spent on
the case. See Dula v. Amereon, Ltd., No. 00 CIV. 8156, 2004 WL 1586410, at *4 (S.D.N.Y. July
15, 2004) (citing Weitzman v. Stein, 891 F.Supp. 927, 931 (S.D.N.Y. 1995)). In determining a
reasonable number of hours, the Court “should consider not only the parties’ submissions, but also
‘its own familiarity with the case and its experience generally.’” Rudd v. Advance Bedding Corp.,
No. 95 CV 2099, 1997 WL 104683, at *4 (E.D.N.Y. Feb. 20, 1997) (quoting Clarke v. Frank, 960
F.2d 1146, 1153 (2d Cir. 1992)). The Court should reduce the time for which compensation is
awarded for hours that were not “reasonably expended,” for example because they are excessive or
redundant. See Hensley, 461 U.S. at 434 (“The district court also should exclude from this initial
fee calculation hours that were not ‘reasonably expended.’ Cases may be overstaffed, and the skill
and experience of lawyers vary widely.”) (internal citation omitted); see also Orchano v. Advanced
Recovery, Inc., 107 F.3d 94, 98 (2d Cir. 1997). “In excluding hours that were not reasonably
expended, ‘the court has discretion simply to deduct a reasonable percentage of the number of hours
claimed as a practical means of trimming fat from a fee application.’” Osterweil v. Bartlett, No.
09-CV-825, 2015 WL 1066404, at *8 (N.D.N.Y. Mar. 11, 2015) (quoting Kirsch v. Fleet St., Ltd.,
148 F.3d 149, 173 (2d Cir. 1998)) (internal quotation marks omitted).
The party seeking an award for attorneys’ fees must support such application with
sufficiently detailed records of the nature of the work performed. See Lewis v. Coughlin, 801 F.2d
570, 577 (2d Cir. 1986). In the Second Circuit, attorneys seeking an award of fees from the Court
must submit contemporaneous time records from which the Court can determine whether the hours
expended were reasonable. N.Y. State Ass’n for Retarded Children, Inc. v. Carey, 711 F.2d 1136,
1148 (2d Cir. 1983) (“[A]ny attorney . . . who applies for court-ordered compensation in this Circuit
for work done after the date of this opinion must document the application with contemporaneous
time records. These records should specify, for each attorney, the date, the hours expended, and the
nature of the work done.”); see also Scott v. City of N.Y., 626 F.3d 130, 133 (2d Cir. 2010) (“Carey
establishes a strict rule from which attorneys may deviate only in the rarest of cases.”); Handschu v.
Special Servs. Div., 727 F. Supp. 2d 239, 249 (S.D.N.Y. 2010) (“The records must be made
contemporaneously, which is to say, while the work is being done or, more likely, immediately
thereafter. Descriptions of work recollected in tranquility days or weeks later will not do.”).
In support of its request for attorneys’ fees, Plaintiff has submitted Affidavits from Peter J.
Klarfeld (“Klarfeld”) and Paul Freeman (“Freeman”), and accompanying billing summaries from
their respective firms, Gray, Plant, Mooty, Mooty & Bennett P.A. (“GPM”) and Freeman Howard,
P.C. (“Freeman Howard”). Dkt. No. 31-3 (“Freeman Affidavit”); Klarfeld Aff.; Freeman Billing
Summary. Neither Klarfeld nor Freeman asserts that the billing summaries provided were kept as
contemporaneous time records, nor does either Affidavit address the timekeeping practices of either
firm requesting fees. See generally Klarfeld Aff.; Freeman Aff. Furthermore, both Affidavits assert
that the firms billed Plaintiff monthly for legal services, Klarfeld Aff. ¶ 8; Freeman Aff. ¶ 5, and the
billing statements submitted appear to be copies of those monthly bills, rather than
contemporaneous time records, see Klarfeld Aff. at 4-7; Freeman Billing Summary.
Monthly invoices for legal services are not sufficient to meet the standard for
contemporaneous time records. See Chien v. Barron Capital Advisors LLC, No. 09-CV-1873, 2012
WL 1069167, at *1 (D. Conn. Mar. 29, 2012) (finding that monthly invoices that “describe[d] in
detail work done on the case by specified individuals on particular dates during the preceding
month,” “satisf[ied] some of Carey’s requirements, . . . [b]ut . . . manifestly fail[ed] to qualify as
‘contemporaneous time records,’ as Carey also requires.”). Consequently, because Plaintiff has not
submitted contemporaneous time records as required in this Circuit, the Court will reduce the
number of hours for which fees are awarded by 30%.4 Cf. Serin v. N. Leasing Sys., Inc., 501 F.
App’x 39, 41 (2d Cir. 2012) (finding that district court had not abused its discretion in “reduc[ing]
the number of hours attributed to the relevant attorneys by thirty-five percent, in part due to the lack
of contemporaneous records”); Monaghan v. SZS 33 Assos., L.P., 154 F.R.D. 78, 84 (S.D.N.Y.
1994) (“[C]ourts in this Circuit intermittently have seen fit to adopt roughly a 30% fee reduction
rule for an attorney’s failure to keep contemporaneous time records of their services.”) see also
Orshan v. Macchiarola, 629 F. Supp. 1014, 1019 (E.D.N.Y. 1986) (“In this case, contemporaneous
time records have not been furnished. This deficiency would justify a 30% reduction as a sanction
for noncompliance.”) (citing Hensley, 461 U.S. at 438 n.13 and Rosario v. Amalgamated Ladies’
Garment Cutters’ Union, Local 10, 749 F.2d 1000, 1008 (2d Cir. 1984)).
After reviewing Plaintiff’s attorneys’ billing summaries, the Court further finds that the
number of hours billed—90.25 hours—are excessive for a straightforward contempt proceeding.
See Auto. Lift Inst., Inc. v. Backyard Buddy, Inc., No. 08-CV-1313, 2010 WL 2569237, at *1
(N.D.N.Y. June 24, 2010) (finding 38.1 hours spent on a contempt proceeding reasonable) (citation
omitted); Can. Dry Del. Valley Bottling Co. v. Hornell Brewing Co., No. 11 CIV. 4308, 2013 WL
6171660, at *4 (S.D.N.Y. Nov. 25, 2013) (reducing award of attorneys’ fees where “[n]either the
scope nor the complexity of the issues presented on the motion to enforce justifie[d] the number of
Reductions will be deducted proportionately from the number of hours reported for each
attorney or paralegal.
personnel who billed time on that motion.”); McGhee v. Apple-Metro, Inc., No. 03 CIV. 1870, 2005
WL 1355105, at *2 (S.D.N.Y. June 7, 2005) (reducing hours for a “garden-variety
discovery-sanction motion” from 140 hours to “a still fairly generous forty hours”). Furthermore,
certain entries on Plaintiff’s attorneys’ billing summaries contain only vague references to
conference calls, emails, or research, without any further detail or context, and are therefore
impermissibly vague. See, e.g., Klarfeld Aff. at 4 (“02/13/15 . . . email to Client.”), 5 (“02/24/15
. . . research”); Freeman Billing Statement at 1 (“02/20/15 . . . Telephone conferences (2) with
Attorney Greg Schaaf . . . 02/25/15 . . . Review e-mails”); see also Tito, 2014 WL 1092845, at *4
(finding time records that “include billing for emails between co-counsel, performing research,
reviewing files, and emailing [a] client,” but “contain no information as to the purpose of the emails,
the issues discussed between co-counsel, or the issues researched and their relation to the current
matter” to be impermissibly vague); N.Y. State Teamsters Conference Pension & Ret. Fund v.
United Parcel Serv., Inc., No. 98 CV 1902, 2004 WL 437474, at *3 (N.D.N.Y. Feb. 27, 2004)
(“[E]ntries such as ‘consultation, preparations for litigation’ [are] ‘woefully inadequate and
vague.’”) (citation omtitted). Consequently, the Court finds that a further 5% reduction to the
number of hours is warranted.
3. Reasonable Hourly Rates
As part of the lodestar, the Court must also determine a reasonable hourly rate. “As the
movant, it is Plaintiff’s ‘burden to establish the prevailing market rate.’” Jimico Enters., Inc. v.
Lehigh Gas Corp., No. 07-CV-0578, 2014 WL 1239030, at *6 (N.D.N.Y. Mar. 25, 2014) (citations
omitted). Furthermore, pursuant to the Second Circuit’s “forum rule,” “‘the hourly rates employed
in the district in which the reviewing court sits’” should be used in calculating a presumptively
reasonable fee. Bergerson v. N.Y. State Office of Mental Health, Cent. N.Y. Psychiatric Ctr., 652
F.3d 277, 290 (2d Cir. 2011) (quoting Simmons v. N.Y. City Transit Auth., 575 F.3d 170, 174 (2d
Cir. 2009)). In order to overcome the presumption that the forum district’s rates are reasonable, “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.”
Simmons, 575 F.3d at 175 (2d Cir. 2009).
In determining what constitutes a reasonable hourly rate, a court should “consider factors
including, but not limited to,”
the complexity and difficulty of the case, the available expertise and capacity of the
client’s other counsel (if any), the resources required to prosecute the case effectively
(taking account of the resources being marshaled on the other side but not endorsing
scorched earth tactics), the timing demands of the case, whether an attorney might have
an interest (independent of that of his client) in achieving the ends of the litigation or
might initiate the representation himself, whether an attorney might have initially acted
pro bono (such that a client might be aware that the attorney expected low or
non-existent remuneration), and other returns (such as reputation, etc.) that an attorney
might expect from the representation.
Osterweil, 2015 WL 1066404, at *5 (quoting Arbor Hill, 522 F.3d at 184).
In its request for attorneys’ fees, Plaintiff offers broad assertions that the hourly rates of its
attorneys were reasonable, see Mem. at 8; Klarfeld Aff. ¶ 7; Freeman Aff. ¶ 4, yet does not reference
a prevailing market rate, in the Northern District or any other district. Furthermore, though Plaintiff
notes its long-standing relationship with GPM, and the need to prosecute this action efficiently as
justification for engaging Klarfeld’s assistance, see Klarfeld Aff. ¶ 6; Mem. at 8, it makes no
arguments as to the reasonableness of using the out-of-district rates of a Washington, D.C. law firm.
Though Plaintiff “cannot be faulted for wanting to retain counsel with the best possible reputation, it
is not [Defendant’s] responsibility to compensate for such counsel based on higher out-of-district
rates where [Plaintiff] has not shown that they were likely to produce a substantially better result
than competent counsel in the [Northern] District would produce for less . . . money.” Simmons,
575 F.3d at 177. Consequently, pursuant to the forum rule, the Court will use the prevailing rates in
the Northern District to calculate a presumptively reasonable fee.
Recent cases in the Northern District have upheld hourly rates between $250 and $345 for
partners; between $120 and $200 for associates; and between $80 and $90 for paralegals. See
Berkshire Bank v. Tedeschi, No. 11-CV-0767, 2015 WL 235848, at *3 (N.D.N.Y. Jan. 16, 2015)
(Kahn, J.) (citing cases); see also Deferio v. Bd. of Tr. of State Univ. of N.Y., No. 11-CV-0563,
2014 WL 295842, at *5 (N.D.N.Y. Jan. 27, 2014) (“The Second Circuit recently indicated that a
trial court did not abuse its discretion when it found that ‘[t]he prevailing hourly rates in [the
Northern District of New York] . . . are $210 per hour for an experienced attorney, $150 per hour for
an attorney with more than four years of experience, $120 per hour for an attorney with less than
four years’ experience, and $80 per hour for paralegals.’”) (citing Lore v. City of Syracuse, 670 F.3d
127, 175 (2d Cir. 2012)).
Plaintiff’s attorneys billed time at the following hourly rates: $467/hour for Klarfeld, a
partner at GPM in Washington, D.C. with over thirty-five years of experience in franchise law,
Klarfeld Aff. ¶¶ 3, 10; $216/hour for Julia Colarusso (“Colarusso”), an associate at GPM who
graduated law school in 2010, id. ¶ 11; $136/hour for Tracy Castillo (“Castillo”), a paralegal at
GPM, id. ¶ 12; $300/hour for Paul Freeman (“Freeman”), a partner at Freeman Howard specializing
in complex commercial litigation with over twenty-five years of practice experience, Freeman Aff,
¶¶ 2, 3, 7; $300/hour for Matthew Griesemer (“Griesemer”), a partner at Freeman Howard who
graduated from law school in 2007, id. ¶ 7; and $220/hour for Aaron DePaolo (“DePaolo”), an
associate at Freeman Howard, id.
The Court finds that Freeman’s hourly rate is reasonable. As discussed supra, experienced
partners in the Northern District are typically awarded hourly rates around $300. However, the rates
charged for the other two attorneys at Freeman Howard are either excessive or unsubstantiated.
Freeman Howard billed the same rate for Griesemer, an attorney with less than eight years of
experience, as for Freeman, who has over twenty years’ experience. See Freeman Aff. ¶ 7. Plaintiff
provides no justification for this high rate, other than to note that Griesemer is a partner in the firm.
Despite this fact, the Court finds his hourly rate excessive. See Deferio, 2014 WL 295842, at *8
(“[I]t would be unreasonable to expect a client to pay an attorney with (at the time) approximately
five years of litigation experience . . . at the same rate customarily charged by an attorney in this
District with more than 20 years of litigation experience”); see also Osterweil, 2015 WL 1066404, at
*7 (finding that $200 was a reasonable hourly rate for attorneys with nine to ten years’ experience
and “extensive experience in federal appellate litigation.”); Chem RX Pharmacy Servs., LLC v.
Leatherstocking Healthcare, LLC, No. 13-CV-209, 2014 WL 5107021, at *2 (N.D.N.Y. Oct. 10,
2014) (approving hourly rates of $220 and $225 for attorneys with between five and seven years of
experience, as well as judicial clerkships). Consequently, in consideration of his experience level
and status as a partner, the Court will approve an hourly rate of $225 for Griesemer. As for
DePaolo, Plaintiff has provided no information about his education or experience level, leaving the
Court with no way to determine whether the rate charged for his work is reasonable. See Wong v.
Hunda Glass Corp., No. 09 CIV. 4402, 2010 WL 3452417, at *3 (S.D.N.Y. Sept. 1, 2010) (“To
determine the currently prevailing reasonable rate, courts look first to the lawyer’s level of
experience.”). Therefore, the Court will approve an hourly rate of $120/hour for DePaolo,
commensurate with the hourly rate that has been found reasonable for associates with less than four
The Court also finds that the hourly rates billed by GPM exceed the reasonable rates that
have been approved in the Northern District without sufficient justification for such higher rates.
Klarfeld’s Affidavit notes his thirty-five years of experience and expertise, Klarfeld Aff. ¶ 10, and
Plaintiff states that Klarfeld was consulted on this case in order to make it more efficient, Mem. at 9.
However, Plaintiff does not argue that this litigation was especially complex, nor does Plaintiff or
Klarfeld attempt to justify the use of out-of-district rates. See generally Mem.; Klarfeld Aff. In
light of his experience and the expedited nature of this contempt proceeding, the Court will approve
an hourly rate of $345 for Klarfeld, commensurate with the upper-level of reasonable hourly rates
for experienced attorneys in the Northern District. Similarly, Colarusso’s hourly rate is higher than
the $150/hour that courts in this district have found reasonable for an associate with more than four
years’ experience. See, e.g., Osterweil, 2015 WL 1066404, at *8; Deferio, 2014 WL 295842, at *5;
Zhou v. State Univ. of N.Y. Inst. of Tech., No. 08-CV-0444, 2014 WL 7346035, at *2 (N.D.N.Y.
Dec. 23, 2014). Since Plaintiff has provided no justification for a higher hourly rate or the use of
out-of-district rates for Colarusso, the Court will award $150/hour for Colarusso’s hours. Plaintiff
similarly provides no justification for the high rate billed for paralegal time, and in fact does not
even mention Castillo’s level of education or experience. See Klarfeld Aff. ¶ 12. Consequently, the
Court will award only $80/ hour for paralegal time, commensurate with the reasonable rates
established in this District.
After reducing the total number of hours billed by 35%, and accounting for the reasonable
rates awarded, the Court awards Plaintiff $15,616.40 in fees and costs.5
Accordingly, it is hereby:
ORDERED, that Plaintiff H&R Block Tax Services, LLC’s Motion (Dkt. No. 24) for a
temporary restraining order seeking to hold Defendant Judy Strauss in contempt of the Court’s
Memorandum-Decision and Order dated February 4, 2015 is GRANTED; and it is further
ORDERED, that the covenants against competition and solicitation described in the Court’s
Memorandum-Decision and Order dated February 4, 2015 be equitably extended to run for one year
from the date of this Decision and Order; and it is further
ORDERED, that Plaintiff be awarded $17,200 in compensatory damages; and it is further
ORDERED, that Plaintiff be awarded $15,616.40 in attorneys’ fees and costs; and it is
ORDERED, that the Clerk of the Court serve a copy of this Decision and Order on all
parties in accordance with the Local Rules.
IT IS SO ORDERED.
July 07, 2015
This figure reflects $111.80 in costs, see Freeman Billing Summary at 2, which the Court
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