CUPERSMITH et al v. PIAKER & LYONS, P.C. et al
Filing
124
DECISION AND ORDER granting 104 Motion for Attorney Fees. Defts are hereby awarded, and pltfs Macon L. Dixon, Audrey E. Dixon, Barry DeSantis, and Jean A. DeSantis are directed to pay the sum of $7,250.20 by 5/8/16, representing the atty's fees associated with the failed depositions of pltfs Macon Dixon and Barry DeSantis and the subsequent motion for sanctions. Signed by Magistrate Judge David E. Peebles on 4/8/16. (sfp, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF NEW YORK
NEAL A. CUPERSMITH, et al.,
Plaintiffs,
Civil Action No.
3:14-CV-1303 (TJM/DEP)
v.
PIAKER & LYONS, P.C., et al.,
Defendants.
APPEARANCES:
OF COUNSEL:
FOR PLAINTIFFS:
KANG HAGGERTY
& FETBROYT LLC
123 South Broad St., Ste. 1670
Philadelphia, PA 19109
EDWARD T. KANG, ESQ.
GREGORY H. MATHEWS, ESQ.
DAVID P. DEAN, ESQ.
JACKLYN FETBROYT, ESQ.
FOR DEFENDANTS:
BOND, SCHOENECK,
& KING PLLC
Avant Building, Ste. 900
200 Delaware Ave.
Buffalo, NY 14202
DAVID E. PEEBLES
CHIEF U.S. MAGISTRATE JUDGE
CHARLES SWANEKAMP, ESQ.
BRADLEY A. HOPPE, ESQ.
DECISION AND ORDER
This is an action arising out of a Ponzi scheme operated by McGinn
Smith & Co., Inc., and several affiliated companies and individuals
(collectively "McGinn Smith") brought by a group of investors who suffered
financial losses as a result of the fraud. In a prior report, recommendation,
and order, which has been adopted and affirmed on appeal to the assigned
district judge, I recommended that claims brought by four of the plaintiffs be
dismissed based upon their refusal to appear for deposition, and awarded
defendants costs, including a reasonable attorney's fee, based upon that
failure. Defendants' attorneys have now submitted a properly supported fee
application. Based upon that application, defendants will be awarded costs
and attorney's fees, as set forth below, against the four dismissed plaintiffs.
I.
BACKGROUND
Plaintiffs commenced this action on September 11, 2014. Dkt. No. 1.
In their complaint, plaintiffs, a group of seventy investors, assert claims
based upon economic losses suffered as a result of the large-scale fraud
scheme perpetrated by the various related McGinn-Smith entities and
individuals. Id. at 5. Those claims are brought against defendants Piaker &
Lyons, P.C., which served as McGinn Smith's auditor and tax preparer, and
Ronald L. Simons and Timothy N. Paventi, with whom Piaker & Lyons, P.C.,
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allegedly worked while the Ponzi scheme was being operated. Id. Although
plaintiffs' complaint originally asserted four causes of action, the sole
remaining claim alleges that defendants aided and abetted the fraud
committed by McGinn Smith. Id. at 28-30.
In connection with discovery in this matter, plaintiffs Macon Nixon and
Barry DeSantis failed to appear for properly noticed depositions on October
29, 2015 and December 1, 2015, respectively, notwithstanding the court's
warning that failure to participate could result in dismissal of their claims.1
Dkt. No. 100 at 4. In light of plaintiffs' failure to be deposed, on December
15, 2015, defendants moved for the imposition of sanctions against them,
including dismissal of the claims asserted on behalf of the Nixon and
DeSantis plaintiffs, as well as costs and attorney's fees. Dkt. No. 87.
Following briefing and oral argument concerning the matter, I issued a
report, recommendation, and order (1) recommending that the claims of
plaintiffs Macon Nixon, Audrey Nixon, Barry DeSantis, and Jeanne
DeSantis be dismissed; and (2) awarding defendants "the costs, including
reasonable attorney's fees, incurred in preparing their []motion, as well as
preparing for the Nixon and DeSantis depositions" pursuant to Rules
1
In a previous order, the court concluded that defendants should be permitted to
conduct depositions of any plaintiff or related plaintiffs, including husbands and wives,
whose McGinn-Smith investment equaled or exceeded $100,000. Dkt. No. 62. Plaintiffs
Macon and Audrey Nixon, as well as plaintiffs Barry and Jean DeSantis, fall into this
category. Dkt. No. 87-1 at 2.
3
37(a)(5), 37(b)(2)(C), and 37(d)(3) of the Federal Rules of Civil Procedure.
Dkt. No. 100 at 11. Plaintiffs thereafter filed objections to the report and
recommendation and appealed the award of attorney's fees to Senior
District Judge Thomas J. McAvoy. Dkt. No. 107. In a decision and order
dated February 5, 2016, Judge McAvoy adopted the report and
recommendation in full and dismissed plaintiffs' appeal. Dkt. No. 111.
On January 27, 2016, defendants filed their fee application with the
court. Dkt. No. 104. Plaintiffs have since responded in opposition to that
request by memorandum filed on February 22, 2016. 2 Dkt. No. 112.
II.
DISCUSSION
A.
Calculation of Attorney's Fees Generally
Having already determined that an award of costs and attorney's fees
is warranted under Rule 37(a)(5)(A), the task of the court now shifts to
determining the appropriate amount to award. In this circuit, fee awards are
informed by, inter alia, the Second Circuit's instructive decision in Arbor Hill
Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182,
183-84 (2d Cir. 2008). Under the protocol announced in Arbor Hill, a court
must first consider whether the rates at which compensation is sought are
2
In their response, the Nixon and DeSantis plaintiffs primarily argue that the award
of costs and attorney's fees against them is unjust because their claims have been
dismissed. See generally Dkt. No. 112. While plaintiffs also generally argue that the
amounts sought are excessive, they do not include any specific criticisms of defendants'
fee application. Id.
4
those that a "reasonable, paying client would be willing to pay" before
multiplying that figure by the number of hours expended. Arbor Hill, 522
F.3d at 190-91; see also Lewis v. City of Albany Police Dep't, 554 F. Supp.
2d 297, 298 (N.D.N.Y. 2008) (Hurd, J.) ("Attorney's fees are awarded by
determining a presumptively reasonable fee, reached by multiplying a
reasonable hourly rate by the number of reasonably expended hours.").
Determination of the rate at which a reasonable client would be willing to
compensate for the services rendered is informed by several factors of
varying degrees of relevance,
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 .
. . the timing demands of the case, [and] whether
an attorney might have an interest (independent of
that of his client) in achieving the ends of the
litigation[.]
Arbor Hill, 522 F.3d at 184. Arbor Hill also reinforced the appropriateness of
considering the so-called "Johnson factors" when establishing a reasonable
rate, including
(1) the time and labor required; (2) the novelty and
the difficulty of the questions; (3) the level of skill
required to perform the legal service properly; (4) the
preclusion of employment by the attorney due to
acceptance of the case; (5) the attorney's customary
hourly rate; (6) whether the fee is fixed or contingent;
(7) the time limitations imposed by the client or the
5
circumstances; (8) the amount involved in the case
and the results obtained; (9) the experience,
reputation, and ability of the attorneys; (10) the
'undesirability' of the case; (11) the nature and length
of the professional relationship with the client; and
(12) awards in similar cases.
Arbor Hill, 522 F.3d at 186 n.3, 190 (discussing Johnson v. Ga. Highway
Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974), abrogated on other
grounds by Blanchard v. Bergeron, 489 U.S. 87, 92-93, 96 (1989)). The
Second Circuit cautioned that a court should also "bear in mind that a
reasonable, paying client wishes to spend the minimum necessary to litigate
the case effectively." Arbor Hill, 522 F.3d at 190.
B.
Determining a Reasonable Hourly Rate
The first step in determining an appropriate fee award is to determine
the reasonable hourly rates to be applied. When awarding attorney's fees,
courts in the Second Circuit apply the "forum rule," which was first
developed by the Supreme Court in Blum v. Stenson, 465 U.S. 886 (1984).
In Arbor Hill, the court explained that district courts "generally use the hourly
rates employed in the district in which the reviewing court sits in calculating
the presumptively reasonable fee." Arbor Hill, 493 F.3d at 192 (quotation
marks omitted); see also Blum, 465 U.S. at 895.
Some courts in this district have found that "[t]he prevailing hour rates
. . ., which are what a reasonable paying client would be willing to pay, are
6
$210 per hour for an experienced attorney, $150 per hour for an attorney
with more than four years' experience, $120 per hour for an attorney with
less than four years' experience, and $80 per hour for paralegals." Lewis,
554 F. Supp. 2d at 298-99 (citing Picinich v. United Parcel Serv., No.
01-CV-1868, 2008 WL 1766746, at *2 (N.D.N.Y. Apr. 14, 2008) (McCurn,
J.)); see also Paramount Pictures Corp. v. Hopkins, No. 07-CV-0593, 2008
WL 314541, at *5 (N.D.N.Y. Feb. 4, 2008) (Scullin, J.); New Paltz Cent. Sch.
Dist. v. St. Pierre, No. 02-CV-0981, 2007 WL 655603, at *2 (N.D.N.Y. Feb.
26, 2008) (Scullin, J.). More recently, however, other courts in the district
have awarded fees calculated at higher hourly rates. See Legends Are
Forever, Inc. v. Nike, Inc., No. 12-CV-1495, 2013 WL 6086461, at *4
(N.D.N.Y. Nov. 18, 2013) (Peebles, M.J.) (awarding attorney's fees based
on an hourly rate of $350 for a partner, $275 per hour for an associate, and
$250 per hour for local counsel); Curves Int'l, Inc. v. Nash, No. 11-CV-0425,
2013 WL 3872832, at *5 (N.D.N.Y. July 25, 2013) (Kahn, J.) (finding hourly
rates of $275 for partners, $200 for experienced attorneys, $170 for
attorneys with less than four years of experience, and $90 for paralegals to
be reasonable); Zalewski v. T.P. Builders, Inc., Nos. 10-CV-0876,
11-CV-1156, 2012 WL 5880327, at *3 (N.D.N.Y. Nov. 21, 2012) (Sharpe, J.)
(awarding attorney's fees based on an hourly rate of $275 per hour for
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partners, $200 per hour for attorneys with more than four years' experience,
$170 per hour for attorneys with less than four years' experience, and $90
per hour for paralegals); Martinez v. Thompson, No. 04-CV-0440, 2008 WL
5157395, at *15 (N.D.N.Y. Dec. 8, 2008) (Peebles, M.J.) (awarding
attorney's fees based on an hourly rate of $275 per hour); Luessenhop v.
Clinton Cnty., N.Y., 558 F. Supp. 2d 247, 266 (N.D.N.Y. 2008) (Treece,
M.J.) (awarding attorney's fees based on an hourly rate of $235 per hour).
Moreover, although the Second Circuit has not yet found that a court in this
district has abused its discretion by continuing to apply the $210 hourly rate,
it has commented that this rate "perhaps lag[s] behind the market."
Bergerson v. N.Y. State Office of Mental Health, Cent. N.Y. Psychiatric
Center, 652 F.3d 277, 290 (2d Cir. 2011).
With this guidance as a backdrop, and mindful that in determining the
"presumptively reasonable fee," as described in Arbor Hill, the court should
be guided by "all of the case-specific variables that [the Second Circuit] and
other courts have identified as relevant to the reasonableness of attorney's
fees," 522 F.3d at 190 (emphasis in original), I conclude the hourly rates as
requested by defendants' counsel in this matter are reasonable, which are
lower than the prevailing rates recently awarded by courts in this district.
Specifically, the court will calculate the appropriate fee award utilizing the
8
following rates: for Bradley A. Hoppe, Esq., a member at Bond, Schoeneck
& King, PLLC, an hourly rate of $170; for Diane Pietraszewski, Esq., an
associate at Bond, Schoeneck & King, PLLC, an hourly rate of $140; and for
Gail Darrow, a paralegal employed by Bond, Schoeneck & King, PLLC, an
hourly rate of $80.
C.
Number of Hours for Which Defendants' Counsel Is Entitled to
Compensation
The next step in the fee award calculus requires a determination of
the number of hours reasonably expended by the three attorneys making
and arguing the motion. Defendants seek recovery of (1) 8.85 hours of
attorney work expended on preparing for the depositions of plaintiffs Macon
Nixon and Barry DeSantis, and (2) 40.3 hours of attorney and paralegal
work expended on preparing their motion for sanctions and attending oral
argument in connection with that motion. Dkt. No. 104-1 at 2-3. In support of
this request, defendants have submitted contemporaneous time records
that reflect the specific work undertaken and the amount of time spent to
accomplish each task. Dkt. No. 104-2. Where a time entry in the
contemporaneous records relates to preparation for more than one witness,
defendants divided the time entry equally among all such witnesses "so as
to accurately reflect the time devoted to [plaintiffs] Nixon and DeSantis."
Dkt. No. 104-1 at 2 n.1.
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Based on an independent review of defendants' time records, I find
that Attorney Hoppe spent approximately 4.44 hours preparing for the
deposition of plaintiff Macon Nixon, 3.82 hours preparing for the deposition
of plaintiff Barry DeSantis, and 19 hours (including 5.8 hours of travel time)
preparing for and arguing the motion for sanctions. Dkt. No. 104-2 at 2-5, 7,
11, 13, 16, 23-25. Attorney Pietraszewski expended 0.85 hours preparing
for plaintiff Barry DeSantis's deposition and 20.5 hours preparing
defendants' motion for sanctions. Id. at 9-15, 17-19, 21-23. Defendants'
records also reflect that Paralegal Darrow spent 1.5 hours preparing for
defendants' motion for sanctions. Id. at 20. Because the amount of time
expended on each task as listed in the time records accompanied by
defendants' motion appear reasonable, and there does not appear to be
any duplicative entries or work shared between the attorneys, I find that it is
appropriate to award defendants the amount of fees requested as reflected
in their time records.3
3
There are discrepancies between defendants' representation of the number of
hours expended in preparing for the failed depositions and motion for sanctions and the
court's calculations regarding those tasks. For example, Attorney Hoppe contends that
"counsel spent 5.35 hours preparing for the deposition of Mr. Nixon," Dkt. No. 104-1 at 2,
while my review of the contemporaneous time records reflects that Attorney Hoppe
spent 4.44 hours on the preparation of that deposition. Dkt. No. 104-2 at 2 (1.3 hours), 3
(1.025 hours), 4 (.733 hours), 5 (1.3 hours). There are no time records that suggest
Attorney Pietraszewski worked on the preparation of the deposition of plaintiff Macon
Nixon. With respect to the preparation of the deposition of plaintiff Barry DeSantis,
Attorney Hoppe suggests that counsel spent 3.3 hours on that task, Dkt. No. 104-1 at 2,
10
D.
Total Calculation
In light of the foregoing, an award of attorney's fees in the amount of
$7,250.20, calculated as follows, is warranted:4
Attorney/Paralegal
Hours
Rate
Total
Attorney Hoppe
21.46
$170
$3,648.20
5.8 (travel time) $85 5
$493.00
Attorney Pietraszewski
21.35
$140
$2,989.00
Paralegal Darrow
1.5
$80
$ 120.00
TOTAL:
IV.
$7,250.20
SUMMARY AND ORDER
Plaintiffs do not oppose the specific calculations of the attorney's fees
incurred by defendants' counsel in preparing for either the depositions of
while the court has found that Attorney Hoppe expended approximately 3.82 hours and
Attorney Pietraszewski expended 0.85 hours, for a total of 4.67 hours. Dkt. No. 104-2 at
3 (Attorney Hoppe: 1.025 hours), 7 (Attorney Hoppe: 2.55 hours) 13-14 (Attorney Hoppe:
0.24 hours), 15 (Attorney Pietraszewski: 0.85 hours). Turning to the preparation of and
attendance at the hearing in connection with the motion for sanctions, while Attorney
Hoppe contends that counsel (and, presumably, Paralegal Darrow) spent 40.3 hours on
those tasks, Dkt. No. 104-1 at 3, the court calculated 41 hours, which includes 5.8 hours
of travel time to and from the hearing. I have been unable to account for the
discrepancies between defendants' representation of the time spent on certain tasks and
my review of the contemporaneous time records. Having carefully and independently
reviewed the records, however, I have relied on my analysis, rather than the
representations included in Attorney Hoppe's declaration.
4
Defendants have not sought recovery of any costs associated with the failed
depositions or the preparation and argument of their motion for sanctions.
5
I have followed the custom in this district to allow only one-half a regular hourly
rate for travel time. See Lewis, 554 F. Supp. 2d at 299.
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plaintiffs Macon Dixon and Barry DeSantis or their motion for sanctions. In
any event, I find that the amounts sought are reasonable and well
supported. Accordingly, it is hereby
ORDERED defendants are hereby awarded, and plaintiffs Macon L.
Dixon, Audrey E. Dixon, Barry DeSantis, and Jean A. DeSantis are directed
to pay within thirty days of the date of this order, the sum of $7,250.20,
representing the attorney's fees associated with the failed depositions of
plaintiffs Macon Dixon and Barry DeSantis and the subsequent motion for
sanctions; and it is further
ORDERED that the clerk electronically forward copies of this order to
counsel for the parties.
Dated:
April 8, 2016
Syracuse, New York
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