Rubenstein et al v. Advanced Equities, Inc. et al

Filing 24

MEMORANDUM OPINION & ORDER granting 18 Motion for Attorney Fees. Petitioners are directed to pay Respondent AEI $140,474.50 in attorneys' fees and $8,939.33 in costs. The Clerk of the Court is directed to enter judgment and to close this case. (Signed by Judge Paul G. Gardephe on 2/10/2015) (spo)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC#:~~~~---~~~­

DATE FILED:

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}10 /IS-

ERIC RUBENSTEIN, AARON SEGAL,
SCOTT CARDONE, and DAVID
LANDSKOWSKY,
Plaintiffs/Petitioners,

MEMORANDUM
OPINION & ORDER

- against 13 Civ. 1502 (PGG)
ADV AN CED EQUITIES, INC., BYRON
CROWE, DWIGHT BADGER, and KEITH
DAUBENSPECK,
Defendants/Respondents.

PAUL G. GARDEPHE, U.S.D.J.:
Petitioners Eric Rubenstein, Aaron Segal, Scott Cardone, and David
Landskowsky are former employees of Respondent Advanced Equities, Inc. ("AEI"), a brokerdealer subject to the Financial Industry Regulafory Authority ("FINRA"). Respondents Byron
Crowe, Dwight Badger, and Keith Daubenspeck are former officers and directors of Advanced
Equities Financial Corporation ("AEFC"), the parent company of AEI.
The parties submitted to a FINRA arbitration panel a dispute arising out of
Petitioners' employment agreements with AEI. (Roth Aff. (Dkt. No. 1) Ex. 3) The arbitrators
found in favor of Respondents. (Id. Ex. 2) Petitioners then m~)Ved for an order vacating the
arbitration award (Dkt. No. 1), while Respondents cross-moved for an order confirming the
award. (Dkt. No. 8) This Court denied Petitioners' motion to vacate and granted Respondents'
motion to confirm the arbitration award. (Dkt. No. 17)
This Court also granted Respondents "an award reflecting reasonable attorneys'
fees and costs incurred in connection with the [cross-]motions."

ilib. at 35) The parties were

directed to submit additional briefing addressing "[t]he appropriate amount of that award." (lg,_)
The parties have made supplemental submissions, and this Court will now rule on this issue.

BACKGROUND
I.

THE CONTRACT DISPUTE
Headquartered in Chicago, AEI is a registered broker-dealer specializing in late-

stage private equity financing. (Pet. Mot. to Vacate Br. (Dkt. No. 1) at 4; Resp. Mot. to Confirm
Br. (Dkt. No. 10) at 4) In 2006, AEI opened a New York office and began recruiting brokers to
join that office, including Tim Herrmann and Todd Harrigan. 1 (Pet. Mot. to Vacate Br. (Dkt. No.

1) at 4; Resp. Mot. to Confirm Br. (Dkt. No. 10) at 5) During the recruitment process, Herrmann
and Harrigan met with AEI's President- Jeff Fisher- and with Respondents Daubenspeck and
Badger. (Pet. Mot. to Vacate Br. (Dkt. No. I) at 4-5) On November 16, 2006, Herrmann and
Harrigan entered into employment agreements with AEI. (Id.; Resp. Mot. to Confirm Br. (Dkt.
No. 10) at 5)
Herrmann and Harrigan spoke with Petitioners Rubenstein, Landskowsky, and
Cardone about joining AEI's New York office. (Pet. Mot. to Vacate Br. (Dkt. No. 1) at 6, 10;
Resp. Mot. to Confirm Br. (Dkt. No. 10) at 5) In January 2007, Rubenstein, Landskowsky, and
Cardone began talking with Fisher about that possibility. (Pet. Mot. to Vacate Br. (Dkt. No. 1) at
10) Rubenstein also met with Respondents Daubenspeck, Badger, and Crowe in Chicago to
discuss AEI's proposed terms of employment. (lg,_) On March 30, 2007, Rubenstein,
Landskowsky, and Cardone entered into employment agreements with AEI 'and joined its New
York office. See Roth Aff. (Dkt. No. 1) Exs. 5, 6, 9.

1 Herrmann and Harrigan were claimants in the FINRA arbitration proceeding but are not parties
to this action. See Roth Aff. (Dkt. No. 1) Ex. 3.

2

In November 2006, Fisher recruited Petitioner Segal at a series of meetings, some
of which took place at AEI's New York office .. (Pet. Mot. to Vacate Br. (Dkt. No. 1) at 7) On
January 8, 2007, Segal entered into an employment agreement with AEI and joined its New York
office. See Roth Aff. (Dkt. No. 1) Ex. 8.
In their employment agreements, each Petitioner agreed to execute a promissory
note, pursuant to which AEI would make a loan to Petitioners that would be forgiven over the
first five years of their employment at AEI. See Roth Aff. (Dkt. No. 1) Exs. 5, 6, 8, 9.
Rubenstein, Landskowsky, and Cardone's agreements provide that
[i]n the event that (i) Advanced Equities terminates [Petitioner's] employment or
registration with Advanced Equities for ,Cause, as defined below or (ii)
[Petitioner] voluntarily terminates his employment or registration with Advanced
Equities, in either case, at any time prior to full and final satisfaction of [the]
Note, the then outstanding balance (bot4 principal and interest) under [the] Note
shall immediately become due and payable without notice, protest, presentment or
demand and no further forgiveness shall occur.
(Id. Exs. 5, 6, 9)
Segal' s employment agreement likewise provides for a loan that would be
forgiven over a five-year period. See id. Ex. 8. Segal' s promissory note states that
[n]otwithstanding anything contained herein to the contrary, in the event that
[Petitioner's] employment or registration with Advanced Equities is terminated
for any reason whatsoever or no reason at all, by [Petitioner] or by Advanced
Equities, in any case at any time prior to the full and final satisfaction of this
Note ... the then outstanding balance (both principal and interest) under this Note
shall immediately become due and payable without notice, protest, presentment,
or demand and no further forgiveness shall occur.
(Elisofon Deel. (Dkt. No. 9) Ex. 38) Each Petitioner's employment agreement states that the
accompanying promissory note's "terms [are] incorporated" in the contract. (Roth Aff. (Dkt.
No. 1) Exs. 5, 6, 8, 9) The promissory notes provide that Petitioners will be liable for "any and
all of the holder's costs in connection with the enforcement and collection [of unpaid amounts

3

due], including without limitation any and all attorneys' fees." (Elisofon Deel. (Dkt. No. 9) Exs.
38-40)

II.

THE ARBITRATION
On February 19, 2010, Petitioners - along with Herrmann and Harrigan- initiated

a FINRA arbitration proceeding against the Respondents and AEFC, asserting claims for breach
of contract, breach of FINRA rules, unjust enrichment, breach of the covenant of good faith and
fair dealing, fraud, constructive discharge, constructive trust, conversion, violations of the New
York Civil Rights Law, and unfair competition. 2 (Roth Aff. (Dkt. No. 1) Ex. 3)
Respondent AEI counterclaimed for breach of contract, breach of fiduciary duty,
unfair competition, and misappropriation of trade secrets. (Roth Aff. (Dkt. No. 1) Ex. 2)
The arbitration proceedings took place in New York. Three arbitrators conducted
twelve pre-hearing sessions and sixty hearing sessions that took place over thirty-two days.

ilih

Ex. 2) The arbitrators heard testimony from twenty-two fact witnesses and three expert
witnesses.

ilih Ex. 2, 3)
After Petitioners presented their case-in-chief, Respondents and AEFC moved to

dismiss all claims. On April 19, 2012, the arbitrators granted the motion as to most of

2

Petitioners' employment agreements provide that any dispute between them and AEI that
"cannot be settled by the parties within a reasonable time will be arbitrated before the offices of
the NASD Dispute Resolution in accordance with Employee's Form U-4 and NASD rules.
Venue for the proceeding will be determined pursuant to the NASD Code of Arbitration
Procedure and the rules and procedures ofNASD Dispute Resolution." See Roth Aff. (Dkt. No.
1) Exs. 5, 6, 8, 9. "NASO changed its corporate name to FINRA on July 30, 2007." Fiero v.
Fin. Indus. Regulatory Auth., Inc., 606 F. Supp. 2d 500, 504 (S.D.N.Y. 2009), rev'd on other
grounds, 660 F.3d 569 (2d Cir. 2011). After Petitioners submitted their statements of claim, the
parties agreed that FINRA' s rules would govern the arbitration proceeding. See Elisofon Deel.
(Dkt. No. 9) Ex. 4; Roth Aff. (Dkt. No. 1) Ex. 2.
4

Petitioners' claims, including as to all claims against the individual Respondents. (Roth Aff.
(Dkt. No. 1) Ex. 37) Only Petitioners' claims for breach of contract related to compensation for
AEFC stock options, and commissions and borius compensation allegedly owed by AEI,
survived the motion to dismiss. (ML)
On December 6, 2012, after the close of all the evidence, the arbitrators denied
Cardone, Landskowsky, Rubenstein, Harrigan, and Herrmann's claims in their entirety. (Roth

Aff. (Dkt. No. 1) Ex. 2 at 3) The panel awarded Segal $18,000 in compensatory damages for an
unpaid bonus but denied his remaining claims. (Id.)
The arbitrators awarded AEI compensatory damages against each of the
Petitioners, reflecting unpaid balances on the promissory notes, together with pre-judgment
interest and attorneys' fees "pursuant to the terms" of the promissory notes. (Id. at 3-4) The
panel denied all of AEI' s claims against Harrigan and Hermann for outstanding balances on their
promissory notes, however, finding that
AEI had withheld funds from the Harrigan, Herrmann, and Segal loans for related
tax payments at the time of the loans. Unlike the Segal employment contract
which specifically states that Segal is liable for the entire loan balance outstanding
regardless of funds withheld for tax payments, the Harrigan and Herrmann
employment contracts are silent on the issue. Given that AEI had withheld funds
at its sole discretion and it is highly unlikely that Harrigan and Herrmann can
recover those funds, the Panel deems it fair to deduct funds withheld from the
outstanding Harrigan and Herrmann loan balances, leaving no net balance due on
their promissory notes. The Panel also deems it fair to enforce the clear terms of
Segal['s] employment contract. No funds were withheld for taxes from the
Rubenstein, Landskowsky, or Cardone loans and accordingly it is not an issue on
the net amount due on their promissory notes. All other AEI claims against
Harrigan and Herrmann are denied.

(ML at 4) The Panel denied all other requested relief. (IQJ

5

III.

THE CROSS-MOTIONS TOVACATE AND TO CONFIRM THE AWARD
On February 4, 2013, Petitioners moved to vacate the arbitration award in New

York state court. (Request for Judicial Intervention (Dkt. No. 1)) Petitioners asserted that the
arbitrators (1) wrongfully excluded pertinent evidence during the proceedings; and (2) acted with
manifest disregard for the law. (Pltf. Mot. to Vacate Br. (Dkt. No. 1) at 29-48) They argued that
"[t]he result of the Panel's egregious misconduct was that the arbitration proceeding was
fundamentally unfair so as to warrant vacatur of the Award in its entirety." (Id. at 28)
On March 6, 2013, Respondents filed a notice of removal. (Notice of Removal
(Dkt. No. 1)) On May 3, 2013, Respondents cross-moved for confirmation of the arbitration
award, and for post-award interest, attorneys' fees, and costs. (Dkt. No. 8)
On March 31, 2014, this Court denied Petitioners' motion to vacate and granted
Respondents' motion to confirm. (Dkt. No. 17) Based on the "unambiguous language" of the
promissory notes - which states that Petitioners are liable for "any and all of the holder's costs in
connection with the enforcement and collection [of unpaid amounts], including without
limitation any and all attorneys' fees" (Elisofon Deel. (Dkt. No. 9), Exs. 38-40) - this Court also
granted Respondents "an award reflecting reasonable attorneys' fees and costs incurred in
connection with the instant motions."

IV.

ilib at 34-35)

RESPONDENTS' APPLICATION FOR FEES AND COSTS
Respondent AEI seeks $143,890 in attorneys' fees and $8,939.33 in costs. (Resp.

Br. (Dkt. No. 20) at 8, 12)
Petitioners argue that AEI is entitled to either $7,641.46 or $32,353.52 in fees and
costs. (Pet. Br. (Dkt. No. 23) at 12) Petitioners do not dispute the rates or hours set forth in
Respondents' submission, but instead contend that (1) "this Court should ... limit attorneys' fees

6

to the time spent in connection with confirming that much of the arbitration award dealing with
the promissory notes (not in opposing Petitioners' motion to vacate the arbitration panel's
dismissal of their affirmative causes of action)"; and (2) Petitioners should not be found jointly
and severally liable for any award of fees and costs, but instead any award should be apportioned
to each Petitioner in an amount correlating with the compensatory award obtained by
Respondents against each Petitioner. (Id. at 1-3)

DISCUSSION
I.

AEI IS ENTITLED TO REASONABLE
ATTORNEYS' FEES AND COSTS INCURRED
IN CONNECTION WITH THE CROSS-MOTIONS
A.

Because Petitioners Moved to Vacate the Arbitration Award In Its
Entirety, AEI Was Required to Address All of Petitioners' Arguments
In their motion to vacate, Petitioners argued that the arbitrators ( 1) improperly

excluded relevant evidence during the proceedings; (2) acted with manifest disregard for the law
in a number ofrespects; and (3) that as a "result of the Panel's egregious misconduct ... the
arbitration proceeding was fundamentally unfair so as to warrant vacatur of the Award in its
entirety." (Pltf. Mot. to Vacate Br. (Dkt. No. I) at 28-48) (emphasis added).
Given that Petitioners challenged the validity of the Award "in its entirety," it was
necessary for Respondents to defend the Award "in its entirety." Stated another way, if
Petitioners' arguments had been accepted by this Court, the entire Award - including that portion
relating to the promissory notes - would have been vacated. Accordingly, it was necessary for
Respondents to address all of Petitioners' arguments concerning the cross-motions, and AEI is
entitled to an award reflecting the costs and reasonable attorneys' fees it incurred in responding
to Petitioners' arguments.

7

B.

That AEl's Submissions Were Filed on Behalf of
Both AEI and the Individual Respondents Does Not
Justify a Reduction in the Attorneys' Fee Award
Petitioners argue that AEI' s award should be reduced because its submissions to

this Court were made both on behalf of itself and on behalf of the individual respondents. (Pet.
Br. (Dkt. No. 23) at 3, 8-10) There is no factual or legal basis for this argument.
The same law firm represented AEI and the individual respondents, and it is
undisputed that AEI incurred and paid all of the fees related to the cross-motions. See Elisofon
Deel. (Dkt. No. 19) ~~ 7-10. It is likewise undisputed that all of the legal arguments made by
Respondents' counsel applied with equal force to AEI and the individual respondents. Stated
another way, all of the work performed on the cross-motions would have been necessary whether
or not the individual respondents were parties to this action. Accordingly, the attorneys' fee
award will not be reduced to reflect the fact that Respondents' submissions were made on behalf
of both AEI and the individual respondents.

II.

CALCULATION OF A REASONABLE ATTORNEYS' FEE AWARD
Respondent AEI seeks $143,890 in attorneys' fees. (Resp. Br. (Dkt. No. 20) at 8,

12) The proposed fee award reflects the work of three Herrick, Feinstein LLP ("Herrick")
partners and three associates, along with one paralegal. (Elisofon Deel. (Dkt. No. 19) ~

12~

id.

Ex. A at 16)

A.

Applicable Law
"As a general matter of New York law, ... when a contract provides that in the

event oflitigation the losing party will pay the attorneys' fees of the prevailing party, the court
will order the losing party to pay whatever amounts have been expended ... so long as those
amounts are not unreasonable." F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250,

8

1263 (2d Cir. 1987); see Diamond D Enterprises USA, Inc. v. Steinsvaag, 979 F.2d 14, 19 (2d
Cir. 1992) (same). "However, notwithstanding th[ is] general proposition ... , the amount to be
awarded as 'an attorney's fee is within the discretion of the court."' Terra Energy & Resources
Technologies, Inc. v. Terralinna Pty. Ltd., No. 12 Civ. 1337 (KNF), 2014 WL 6632937, at *4
(S.D.N.Y. Nov. 24, 2014) (quoting Gamache v. Steinhaus, 7 A.D.3d 525, 527 (2d Dept. 2004)).
Indeed, "'[w]hen determining a fee award based upon a contractual attorneys' fees agreement
between the parties ... courts have "broad discretion" and need not follow a specific formula.
As such, the Court need not pore over every hour and minute billed but only make adjustments
for any unnecessary, unreasonable, or excessive fees."' Union Cent. Life Ins. Co. v. Berger, No.
10 Civ. 8408 (PGG), 2013 WL 6571079, at *2 (S.D.N.Y. Dec. 13, 2013) (quoting Clarendon
Nat. Ins. Co. v. Advance Underwriting Managers Agency, Inc., No. 06 Civ. 15361 (BSJ), 2011
WL 6153691, at *2 (S.D.N.Y. Dec. 8, 2011) (quoting U.S. Fidelity & Guaranty Co. v. Braspetro
Oil Servs. Co., 369 F.3d 34, 74 (2d Cir. 2004))).
In determining whether a requested fee award is reasonable, the starting point is
the calculation of the "presumptively reasonable fee." Arbor Hill Concerned Citizens
Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182, 183 (2d Cir. 2008). This "initial
estimate" is calculated by multiplying "the number of hours reasonably expended on the
litigation ... by a reasonable hourly rate." Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). "In
determining a reasonable rate, a court 'may rely on its own knowledge of comparable rates
charged by lawyers in the district.'" Merck Eprova AG v. Brookstone Pharm., LLC, No. 09 Civ.
9684 (RJS), 2013 WL 3146768, at *l (S.D.N.Y. June 10, 2013) (quoting Morris v. Eversley, 343
F. Supp. 2d 234, 245 (S.D.N.Y. 2004)). In exercising its discretion, the Court must "bear in
mind all of the case-specific variables that we and other courts have identified as relevant,"

9

including "[t]he reasonable hourly rate ... a paying client would be willing to pay," "bear[ing] 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 (emphasis in original). Courts also consider "the
complexity and difficulty of the case, ... the resources required to prosecute the case effectively.
. . , the timing demands of the case, ... and other returns (such as reputation, etc.) that an
attorney might expect from the representation." Id. at 184.
"Foil owing the determination of the presumptively reasonable fee, the court must
then consider whether an upward or downward adjustment of the fee is warranted based on
factors such as the extent of [movant's] success in the litigation." Robinson v. City of New
York, No. 05 Civ. 9545 (GEL), 2009 WL 3109846, at *3 (S.D.N.Y. Sept. 29, 2009). A court
need not '"become enmeshed in a meticulous analysis of every detailed facet of the professional
representation"' to determine the proper award, Seigal v. Merrick, 619 F.2d 160, 164 n.8 (2d Cir.
1980) (quoting Lindy Bros. Builders, Inc. of Phila. v. Am. Radiator & Standard Sanitary Corp.,
540 F.2d 102, 116 (3d Cir. 1976)), nor should "[a] request for attorney's fees ... result in a
second major litigation." Hensley, 461 U.S. at 437. The burden is ultimately on the movant to
demonstrate the reasonableness of the hours spent and rates asserted. See id.
While a court may adjust the presumptively reasonable fee amount, there remains
throughout the fee determination process "[a] strong presumption that [this initial
calculation] ... represents a 'reasonable' fee." Pennsylvania v. Del. Valley Citizens' Council
for Clean Air, 478 U.S. 546, 565 (1986); accord Lunday, 42 F.3d at 134.

B.

Hourly Rates
Herrick represented AEI in this matter. (Elisofon Deel. (Dkt. No. 19) ~ 1) AEI

seeks $143,890 in attorneys' fees, reflecting 391 hours of work performed by Herrick. @ ~ 9,

10

13-16) The amount billed by Herrick also reflects a $5,000 "courtesy allowance."

ilib ~ 15)

Overall, the average hourly rate charged by Herrick is $368.
Two partners - Howard Elisofon and Carol Goodman - and three associates Heather Robinson, Keven Clauson, and Robert Sanzillo - along with paralegal Robin Richards
account for nearly all of the hours billed. 3 (Id.~ 12) Partner billings amount to 82 hours, at an
hourly rate of $525. The three associates billed 284 hours; Herrick billed each associate's time
at the same overall "blended" rate of $350 per hour. See id. ~ 12; id. Ex. A at 16; Resp. Br. (Dkt.
No. 20) at 11. The paralegal billed 25 hours at an hourly rate of $275. (Id.)
The determination of reasonable hourly rates is a factual issue committed to the
court's discretion, and is typically defined as the market rate a "reasonable, paying client would
be willing to pay."4 Arbor Hill, 522 F.3d at 184. "[D]istrict courts should use the 'prevailing
[hourly rate] in the community' in calculating ... the presumptively reasonable fee." Id. at 190
(second alteration in original). "[T]he 'community' for purposes of this calculation is the district
where the district court sits." Id. (citing Polk v. N.Y. State Dep't of Corr. Servs., 722 F.2d 23, 25
(2d Cir. 1983)). More specifically, courts should consider the market rates '"prevailing in the
community for similar services by lawyers of reasonably comparable skill, experience, and
reputation.'" Gierlinger v. Gleason, 160 F.3d 858, 882 (2d Cir. 1998) (quoting Blum v. Stenson,
465 U.S. 886, 896 n.11 (1984)). In determining what rates are reasonable, a court may also rely
on evidence as to the rates counsel typically charges, Farbotko v. Clinton County of New York,
433 F.3d 204, 209 (2d Cir. 2005), and "its own knowledge of comparable rates charged by
lawyers in the district." Morris v. Eversley, 343 F. Supp. 2d 234, 245 (S.D.N.Y. 2004) (citing

3

Partner Ron Levine billed 1.5 hours. (Elisofon Deel. (Dkt. No. 19) Ex. A at 16) His billing
rate is the same as that of Elisofon and Goodman - $525 per hour. (Id.)
4
As noted above, Petitioners have not argued that Herrick's billing rates are unreasonable.
11

Ramirez v. N.Y. City Off-Track Betting Corp., No. 93 Civ. 682 (LAP), 1997 WL 160369, at *2
(S.D.N.Y. Apr. 3, 1997)).
Here, all of the partners are highly experienced in complex commercial litigation.
Elisofon and Levine have each practiced law for more than thirty years, while Goodman has
more than twenty years of experience. (Elisofon Deel. (Dkt. No. 19) Ex. E). Robinson
graduated from law school in 2006; Clauson has been a member of the bar since 2011; and
Sanzillo was a recent law school graduate. (Id.)
The rates Herrick attorneys charged here are within the range of rates that have
been approved by courts in this District. See,~. Sidley Holding Corp. v. Ruderman, No. 08
Civ. 2513 (WHP) (MHD), 2009 WL 6047187, at *26 (S.D.N.Y. Dec. 30, 2009), adopted 2010
WL 963416 (S.D.N.Y. Mar. 15, 2010) (noting that "recent fee awards within the district reflect
hourly rates in the range of $450.00 to $600.00 for experienced partners, $350.00 for senior
associates, $250.00 for junior associates, and $125.00 to $170.00 for paralegals") and citing
Edmonds v. Seavey, No. 08 Civ. 5646 (HB) (JCF), 2009 WL 1598794, at *2 (S.D.N.Y. June 5,
2009), aff'd, 2009 WL 2150971 (S.D.N.Y. July 20, 2009), and RBFC One, LLC v. Zeeks, Inc.,
No. 02 Civ. 3231(DFE),2005 WL 2105541, at *2 (S.D.N.Y. Sept. 1, 2005)); In re AOL Time
Warner Shareholder Derivative Litigation, No. 02 Civ. 6302 (CM), 2010 WL 363113, at *13
(S.D.N.Y. Feb. 1, 2010) ("Counsel use hourly rates ranging from $90 to $250 for paralegals,
from $175 to $550 for associates and other non-partner level attorneys and from $300 to $850 for
partners. These rates, though relatively high, fall within the range of those commanded by
leading lawyers in the Southern District, particularly those practicing at large firms or with high
profiles."); see also Elisofon Deel. (Dkt. No. 19) Ex. D at 4 (National Law Journal billing survey
finding that "[f]irms with their largest office in New York had the highest average partner and

12

associate billing rates, at $882 and $502, respectively. Similarly, TyMetrix has reported that
more than 25 percent of partners at large New York firms charge $1,000 per hour or more for
contracts and commercial work."). Accordingly, the Court concludes that the rates Herrick
charged for its attorneys are reasonable.
As to paralegal Robin Richards's billing rate of $275 per hour, however, this
Court finds that rate excessive. Fee awards in this District generally provide for paralegal rates
significantly below Richards's rate.

See,~.

Lucerne Textiles, Inc. v. H.C.T. Textles Co., Ltd.,

No. 12 Civ. 5456 (KMW) (AJP), 2013 WL 174226, at *6 (S.D.N.Y. Jan. 17, 2013) (finding $140
hourly paralegal rate reasonable and $265 hourly rate unreasonable); N.Y.C. Dist. Council of
Carpenters v. Rock-It Contracting, Inc., No. 09 Civ. 9479 (JGK) (AJP), 2010 WL 1140720, at *4
(S.D.N.Y. Mar. 26, 2010) ($125 per hour is a reasonable hourly rate for paralegal services);
Sidley Holding Coro, 2009 WL 604 7187, at *26 ($195 hourly rate for paralegal services is
unreasonable; approving rate of$125 per hour); VFS Fin., Inc. v. Pioneer Aviation, LLC, No. 08
Civ. 7655 (GBD) (AJP), 2009 WL 2447751, at *4 (S.D.N.Y. Aug. 11, 2009) (approving $125
paralegal hourly rate). Accordingly, the paralegal rate will be reduced to $140 per hour.

C.

Staffing and Time Expended
After determining appropriate hourly rates, courts must calculate the reasonable

number of hours billed in order to determine the presumptively reasonable fee. See Arbor Hill,
522 F.3d at 190. The Court will exclude any hours included in the fee application that were not
"reasonably expended." Hensley, 461 U.S. at 434. As with the determination of a reasonable
rate, the Court must consider both the "contemporaneous time records ... [that] specify, for each
attorney, the date, hours expended, and nature of the work done," New York State Ass'n for

13

Retarded Children v. Carey, 711 F.2d 1136, 1148 (2d Cir. 1983), and "its own familiarity with
the case ... and its experience generally." 5 Clarke v. Frank, 960 F.2d 1146, 1153 (2d Cir. 1992).
While "[t]he use of multiple attorneys ... is not unreasonable~ se," Simmonds
v. N.Y.C. Dep't of Corr., No. 06 Civ. 5298 (NRB), 2008 WL 4303474, at *6 (S.D.N.Y. Sept. 16, '
2008) (quoting Williamsburg Fair Hous. Comm. v. Ross-Rodney Hous. Coro., 599 F. Supp. 509,
518 (S.D.N.Y. 1984)) (alteration in original), assigning numerous attorneys to a simple and
straightforward matter presents a serious risk of inefficiency, duplication, and unnecessary
billing. See id. at *6-7. As the Second Circuit has recognized,
[i Jn assessing the extent of staffing and background research appropriate for a
given case, a district court must be accorded ample discretion .... [A] trial judge
may decline to compensate hours spent by collaborating lawyers or may limit the
hours allowed for specific tasks, but for the most part such decisions are best
made by the district court on the basis of its own assessment of what is
appropriate for the scope and complexity of the particular litigation.
New York State Ass'n for Retarded Children, Inc., 711 F.2d at 1146. The guiding principle to
determine whether redundancy has occurred is the "degree of effort reasonably needed to prevail
in the litigation." Id.; see also Sullivan v. Syracuse Hous. Auth., No. 89-CV-1205, 1993 WL
147457, at *3 (S.D.N.Y. May 3, 1993) (district court must ensure that fee award reflects only
work that was "necessary to the litigation" and "a cost efficient use of co-counsel and outside
counsel").
Here, although six Herrick attorneys billed time to this case, 6 the work appears to
have been performed in an efficient manner and duplication of effort is not apparent. Senior

5

Petitioners have not argued that the number of hours Herrick billed to this matter is
unreasonable.
6 As noted above, partner Ron Levine spent 1.5 hours reviewing a brief prepared by other
attorneys and conferring with Elisofon. (Elisofon Deel. (Dkt. No. 19) Ex. A at 3, 6, 16) Given
the very limited nature of Levine's involvement, this Court does not find a reduction in hours is
warranted.
14

associate Robinson and junior associate Clauson performed most of the work, with a first-year
associate conducting legal research. See Elisofon Deel. (Dkt. No. 19) Ex. A at 16, 29, 37; id. Ex.
B at 6. These associate attorneys, along with paralegal Richards, billed approximately 80% of
the 391 hours for which Respondent AEI seeks fees. The partners-who bill at a much higher
rate - billed only 20% of the hours for which Respondents seek an award.
Herrick has provided lengthy, detailed descriptions of all of the work for which
AEI seeks attorneys' fees. (Id. Exs. A, B) Based on its review of these invoices, this Court finds
that the total number of hours for which AEI seeks fees is reasonable under the circumstances.
In addition to preparing Respondents' motion to confirm the arbitration award, Herrick was
required to review a voluminous record from the arbitration proceedings in order to address the
many arguments Petitioners put forth in their motion to vacate. While a motion to confirm an
arbitration award is ordinarily a relatively straightforward exercise, see Florasynth, Inc. v.
Pickholz, 750 F.2d 171, 176 (2d Cir. 1984), Petitioners' motion to vacate - which asserted
numerous grounds for overturning the Award, see Pet. Motion to Vacate Br. (Dkt. No. 1)necessitated review of the voluminous arbitration record, legal research, and preparation of
papers. See Resp. Br. (Dkt. No. 20) at 11. This Court finds that the total number of hours
expended by Herrick is reasonable.

*

*

*

*

This Court has reduced the paralegal billing rate from $275 to $140 per hour, but
finds that Herrick's rates and hours are otherwise reasonable. Accordingly, AEI is entitled to a
total of $140,474.50 in attorneys' fees. 7

Richards billed 25.3 hours. (Elisofon Deel. (Dkt. No. 19) Ex. A at 16, 29, 37) At a rate of
$275 per hour, this amounts to $6,957.50. At a rate of $140 per hour, the total for the 25.3 hours
7

15

III.

COSTS
A.

Applicable Law
AEI is also entitled to an award of costs under the terms of the promissory notes.

Costs include "'those reasonable out-of-pocket expenses incurred by attorneys and ordinarily
charged to their clients."' U.S. Football League v. Nafl Football League, 704 F. Supp. 474, 483
(S.D.N.Y. 1989) (quoting Reichman v. Bonsignore, Brignati & Mazzotta P.C., 818 F.2d 278, 283
(2d Cir. 1987)); see also Kuzma v. l.R.S., 821 F.2d 930, 933-34 (2d Cir. 1987) (providing a nonexclusive list of recoverable costs, including "photocopying, travel, and telephone costs");
Anderson v. City of New York, 132 F. Supp. 2d 239, 245-47 (S.D.N.Y. 2001) (allowing
recovery for service, filing, and photocopying expenses, witness fees, and computerized legal
research costs). Recovery is not permitted for costs associated with routine office overhead. See
Kuzma, 821 F.2d at 934 ("[N]onrecoverable routine office overhead ... normally must be
absorbed within the attorney's hourly rate.")

B.

Analysis
AEI seeks a costs award of $8,939.33, reflecting court fees, filing fees, legal

research expenses, attorney travel expenses, and printing and binding fees. (Resp. Br. (Dkt. No.
20) at 12) All of these expenses are properly included in a costs award. See,~' Anderson, 132
F. Supp. 2d at 245-47. In support of its application, AEI has submitted invoices itemizing each
of the costs. (Elisofon Deel. (Dkt. No. 19) Ex. A at 16, 29-30, 37-38; id. Ex.Bat 7) Petitioners
have not objected to any of these costs, and this Court finds them reasonable. Accordingly,
$8,939.33 in costs is allowed.

of work is $3,542, which amounts to a difference of $3,415.50. Accordingly, this Court's award
of$140,474.50 reflects a $3,415.50 reduction in the requested fee amount of $143,890.
16

IV.

JOINT AND SEVERAL LIABILITY
A.

Applicable Law
Petitioners argue that this Court should not hold them jointly and severally liable

for the award of attorneys' fees and costs, but instead should calculate a fee and costs award as to
each Petitioner, based on the amount the arbitrators awarded against that Petitioner. (Pet. Br.
(Dkt. No 23) at 11)
"The allocation of fee liability is a matter committed to the district court's
discretion." Koster v. Perales, 903 F.3d 131, 139 (2d Cir. 1990) (partially abrogated on other
grounds by Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and
Human Resources, 532 U.S. 598 (2001)) (citing Hensley, 461 U.S. at 437). In determining how
to allocate attorneys' fees, "district courts have appropriately considered a variety of factors ...
including the relative culpability of the parties ... and the proportion of time spent litigating
against each defendant." Id. "[T]he district court may allocate the fee award between the
responsible parties, ... or it may hold the responsible parties jointly and severally liable for the
fee award. The only limitation [on joint and several liability] is ... the pre-existing background
of substantive liability rules." Id. The court "should 'make every effort to achieve the most fair
and sensible solution that is possible.'" Id. (quoting Grendel's Den Inc. v. Larkin, 749 F.2d 945,
960 (1st Cir. 1984)). Accordingly, "although apportionment may in some cases be a more
equitable solution, there is no rule in this circuit that requires it whenever possible." Id.

B.

Analysis
Joint and several liability is appropriate here. The costs associated with

responding to Petitioners' motion to vacate cannot be split up and apportioned among the
Petitioners. The motion was filed on behalf of all of the Petitioners, and the arguments made in

17

this motion were made on behalf of all of the Petitioners. Accordingly, the "relative culpability"
or responsibility of the Petitioners for the fees and costs AEI incurred is the same. See id.
While Petitioners argue that the promissory notes do not "make[] each Petitioner
liable for attorneys' fees and costs incurred by AEI in attempting to collect monies owed by
other Petitioners" (Pet. Br. (Dkt. No. 23) at 10-11) (emphasis in original), this point is irrelevant.
Because the motion to vacate was filed on behalf of all Petitioners, and because the same
arguments were made on behalf of all Petitioners, AEI's attorneys' fees and costs would have
been the same regardless of how many individuals joined this suit. Accordingly, Petitioners will
be jointly and severally liable for the attorneys' fee and costs award.

18

CONCLUSION

Petitioners are directed to pay Respondent AEI $140,474.50 in attorneys' fees and
$8,939.33 in costs. 8 The Clerk of the Court is directed to enter judgment and to close this case.
Dated: New York, New York
February 10, 2015
SO ORDERED.

8

Respondents request that the Court order Petitioners to make payment "within fourteen days of
this Court's order." (Resp. Br. (Dkt. No. 20) at 12) Petitioners oppose this request, however,
and none of the legal authority cited by Respondents establishes that this Court is authorized to
grant such relief. See Resp. Reply Br. (Dkt. No. 22) at 8. In Adams v. New York State Educ.
Dep't, 630 F. Supp. 2d 333, 336 (S.D.N.Y. 2009), for example, defendants "withdrew their
objections and voluntarily consent[ ed]" to an order requiring payment within 30 days. Id.
Likewise in S.E.C. v. Northshore Asset Management, LLC, No. 05 Civ. 2192 (RO), 2006 WL
1642915, at *2 (S.D.N.Y. June 14, 2006), the court did not require payment of an attorneys' fee
award within a set time period. Instead, the court ordered that a $2500 sanction be paid within
60 days. Id. Finally, in Charles Labs, Inc. v. Banner, 79 F.R.D. 55, 58 (S.D.N.Y. 1978), the
court imposed a $250 sanction for discovery abuse and required that payment be made within 30
days. Id. The instant case involves a contractual right to attorneys' fees, however, and not a
court-imposed sanction. Because Respondents have provided no supporting authority for their
request that the Court require payment within fourteen days, Respondents' application is denied.
19