Doe v. Quest Diagnostics, Inc. et al
Filing
70
MEMORANDUM OPINION AND ORDER re: 63 MOTION for Attorney Fees pursuant to the Court's June 29, 2016 Order [Dkt. No. 60], filed by Quest Diagnostics, Inc., 64 MOTION for Attorney Fees as per Court's Order dated June 29, 2016 (Doc. #60), filed by Ferdinand B. Banez, Counseling Services of New York, LLC. For the foregoing reasons, Plaintiff's motion to dismiss without prejudice pursuant to Rule 41(a)(2) is conditioned upon the payment of certain of De fendants' fees as follows: $32,342.90 to Quest and $675.00 to CSNY and Banez. Defendants' motions for the payment of fees are accordingly GRANTED in part and DENIED in part. Following the receipt of confirmation of payment, the Court will dismiss the action without prejudice. Plaintiff may elect to dismiss the case with prejudice and will not be required to pay any fees. Defendant Quest's request to redact the discounted hourly rate charged from documents associate d with its fees motion is DENIED. Defendant Quest shall file on ECF by October 7, 2016, the letter previously sent to Chambers dated July 13, 2016, and Quest's memorandum of law in support of its motion for legal fees and accompanying papers. The Clerk of Court is respectfully requested to close the motions at Docket Nos. 63 and 64. (Signed by Judge Lorna G. Schofield on 10/3/2016) (tro)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
JANE DOE,
:
Plaintiff,
:
:
-against:
:
QUEST DIAGNOSTICS, INC., et al.,
:
Defendants. :
:
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10/3/2016
15 Civ. 8992 (LGS)
MEMORANDUM
OPINION AND ORDER
LORNA G. SCHOFIELD, District Judge:
Defendants Quest Diagnostics Inc. (“Quest”), Counseling Services of New York, LLC
(“CSNY”), and Dr. Ferdinand B. Banez (“Banez”) move for attorneys’ fees and costs pursuant to
the Court’s June 2016 Opinion and Order granting Plaintiff’s motion to dismiss without prejudice
under Rule 41(a)(2), Fed. R. Civ. P. For the reasons below, Defendants’ motions are granted in
part.
I.
BACKGROUND
Familiarity with the facts and procedural background of this case are assumed. In
summary, Plaintiff Jane Doe filed a putative class action asserting exclusively state law claims
against Quest, CSNY and Banez, alleging that Defendant Quest has a very similar facsimile
number to a non-party marketing company called APS; that APS received by facsimile thousands
of medical forms intended for Quest; and that Quest violated HIPAA and other federal and state
privacy laws by failing to take steps to prevent the release of personal medical data to APS. The
Complaint also alleges that Defendants CSNY and Banez failed in their duty to ensure Plaintiff’s
medical information was being properly submitted. Federal jurisdiction is allegedly based on the
Class Action Fairness Act and the alleged diversity between at least some class members and
Defendants.
The parties prepared for and attended a Rule 16 scheduling conference. They also
litigated the issue of whether Plaintiff could proceed anonymously in this action. CSNY and
Banez answered the Complaint. Quest instead filed a motion to dismiss under Rule 12(b)(1) for
lack of Article III standing under federal law and, alternatively, under Rule 12(b)(6) for failure to
state a claim under state law. Plaintiff filed her opposition and Quest filed its reply.
After filing her opposition to the motion, Plaintiff requested a pre-motion conference for
an anticipated motion to dismiss the case voluntarily and without prejudice. Defendants opposed,
asking that the Court deny Plaintiff’s request or award fees. Plaintiff explained at a later court
conference that she sought voluntary dismissal to refile the action in state court and avoid a
situation where Article III standing was found lacking with respect to Quest, requiring her to
litigate against Quest in state court, while continuing to litigate against CSNY and Banez in
federal court. By Opinion and Order filed June 29, 2016, Plaintiff’s request for voluntary
dismissal of her complaint without prejudice was granted pursuant to Rule 41(a)(2), and
Defendants were invited to file motions for attorneys’ fees and costs. The opinion stated,
“Defendants have not shown that dismissal would cause prejudice or even harm, other than
having to start litigation again and rendering Quest’s motion to dismiss moot. Nevertheless,
Defendants have incurred costs and face the likely prospect of their action being refiled in state
court and may file a motion for fees and expenses.”
CSNY and Banez filed a motion requesting $7,868.50 representing all of their fees and
costs in this matter. Quest requests fees of $76,009.63 for four categories of legal work: (1)
preparing the portion of the motion to dismiss for lack of Article III standing, (2) opposing
Plaintiff’s motion for voluntary dismissal, (3) opposing Plaintiff’s motion to proceed under a
pseudonym, and (4) efforts related to the initial conference.
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II. APPLICABLE LAW
Dismissals and any conditions imposed pursuant to Rule 41(a)(2) are left to a district
court’s “sound discretion.” Cantanzano v. Wing, 277 F.3d 99, 109 (2d Cir. 2001). Generally,
“under the American Rule, absent statutory authorization or an established contrary exception,
each party bears its own attorney’s fees.” Colombrito v. Kelly, 764 F.2d 122, 133 (2d Cir. 1985)
(citing Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 247 (1975)). Rule 41(a)(2),
Fed. R. Civ. P., which provides for voluntary dismissal upon a court order “on terms that the
court considers proper,” is sometimes invoked as an exception, permitting courts to condition
dismissal of a suit without prejudice upon the payment of attorneys’ fees. See Gravatt v.
Columbia Univ., 845 F.2d 54, 55 (2d Cir. 1988) (“That [Rule 41(a)(2)] authority is frequently
exercised to require a plaintiff to pay a defendant the expenses incurred in defending against the
suit, once the plaintiff has elected to terminate the suit in favor of litigation elsewhere.”).
However, a fee award is far from automatic, and the courts of this Circuit appear split on whether
an award of fees requires a showing of bad faith and vexatious conduct. Hinfin Realty Corp. v.
Pittston Co., No. 00 Civ. 4285, 2014 WL 1653209, at *1 (E.D.N.Y. Apr. 23, 2014). Compare
Brown v. Brooklyn Indus. LLC, No. 13 Civ. 3695, 2015 WL 1726489, at *3 (S.D.N.Y. Apr. 15,
2015) (“Courts . . . ‘have refused to award fees and costs following a Rule 41(a)(2) dismissal
absent circumstances evincing bad faith or vexatiousness on the part of plaintiff’” (quoting BD ex
rel. Jean Doe v. DeBuono, 193 F.R.D. 117, 125 (S.D.N.Y. 2000)), Ogden Power Dev.-Cayman,
Inc. v. PMR Co., No. 14 Civ. 8169, 2015 WL 2414581, at *9-10 (declining to award fees absent a
showing of bad faith or vexatiousness), and Gap Inc. v. Stone Int’l Trading, Inc., 169 F.R.D. 584,
588 (S.D.N.Y. 1997) (court should impose attorneys’ fees and costs only “when justice so
demands), with Mercer Tool Corp. v. Friedr. Dick GmbH, 179 F.R.D. 391, 395-96 (E.D.N.Y.
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1998) (awarding fees following voluntary dismissal without prejudice), and Baldanzi v. WFC
Holdings Corp., No. 07 Civ. 9551, 2010 WL 125999, at *5 (S.D.N.Y. Jan. 13, 2010)
(conditioning dismissal without prejudice upon Plaintiff’s compensation of some of Defendant’s
fees and costs).
The Second Circuit, addressing the policy concerns underlying this rule, explained that
“[t]he purpose of such awards is generally to reimburse the defendant for the litigation costs
incurred, in view of the risk (often the certainty) faced by the defendant that the same suit will be
refiled and will impose duplicative expenses upon him.” Colombrito, 764 F.2d at 133. In
contrast, when an action is dismissed with prejudice, fees “have almost never been awarded.” Id.
at 134. The Colombrito court explained:
The reason . . . is simply that the defendant, unlike a defendant against whom a
claim has been dismissed without prejudice, has been freed of the risk of
relitigation of the issues just as if the case had been adjudicated in his favor after a
trial, in which event (absent statutory authorization) the American Rule would
preclude such an award.
Id. The imposition of terms and conditions generally serves to protect defendants. 8 James Wm.
Moore et al., Moore’s Federal Practice § 41.40 (3d ed.); 9 Charles Alan Wright and Arthur R.
Miller, Federal Practice and Procedure § 2366 (3d ed. 2016). However, an award of fees
remains firmly within a court’s discretion. Mercer Tool Corp. v. Friedr. Dick GmbH, 175 F.R.D.
173, 176 (E.D.N.Y. 1997). An award of fees “must be limited to compensation for work that
cannot be used in a second contemplated action, and the amount of fees must be supported by
evidence in the record.” Mercer Tool Corp., 179 F.R.D. at 396 (quoting Ames v. Clifford, No. 94
Civ. 6712, 1996 WL 563098, at *1 (S.D.N.Y. Oct 2, 1996)).
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III. DISCUSSION
A. Attorneys’ Fees
Quest’s motion for fees and CSNY and Banez’s motion for fees are granted in part.
Plaintiff has made clear her intention to refile this lawsuit in state court. A new state court action
will impose additional costs on Defendants, and at least some work undertaken in this action is
irrelevant in a subsequent state action. At the same time, Plaintiff has not exhibited bad faith or
vexatiousness. This action is in its early stages and no discovery has taken place, meaning that
the work thus far is not extensive, but is less likely to be useful on the merits of a later but similar
litigation in another forum.
In light of these circumstances and in the Court’s discretion, Plaintiff’s withdrawal of her
action without prejudice is conditioned upon her payment of half of Defendant Quest’s attorneys’
fees associated with bringing the Rule 12(b)(1) motion for lack of standing and all of Defendants’
fees associated with opposing Plaintiff’s motion for voluntary dismissal. If Plaintiff withdraws
her action with prejudice, she is not required to pay any of defendants’ fees or costs.
Half the costs of defendant’s motion to dismiss for lack of standing are awarded because,
although Article III standing is a uniquely federal issue, the analysis implicates issues of
causation and damages, which will continue to be relevant in state court. Fees related to the
initial pretrial conference and other fees are denied because the work will be at least indirectly
useful in the event the case is refiled. Defendants’ requests for fees related to opposing Plaintiff’s
motion to proceed under pseudonym are denied because that issue is likely to recur in state court.
Sidley Austin’s negotiated hourly fees for Quest ranging from $310 per hour for a
paralegal, to $504 for a mid-level associate, and $720 for a partner in 2016 are reasonable and
within the range of reasonable rates that have been approved in this District. See e.g. In re Nissan
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Radiator/Transmission Cooler Litig., No. 10 Civ. 7493, 2013 WL 4080946, at *17 (S.D.N.Y.
May 30, 2013) (awarding partner rates of $785-795 and associate rates of $325-$675). Marshall,
Conway & Bradley, P.C.’s hourly fees for CSNY and Banez, ranging from $135 to $150 per
hour, are also reasonable. The hours expended are also reasonable. Sidley Austin spent
approximately 32 hours opposing Plaintiff’s motion for voluntary dismissal and approximately
130 on the motion to dismiss. Marshall, Conway & Bradley, P.C. spent approximately five hours
opposing Plaintiff’s motion for voluntary dismissal.
CSNY and Banez are awarded $675 in fees associated with opposing Plaintiff’s request
for voluntary dismissal and Quest is awarded $32,342.90 in fees associated with opposing the
request for voluntary dismissal and bringing the Rule 12(b)(1) motion.
B. Redaction Request
Defendant Quest requests permission to redact the hourly rates its counsel charged from
its motion for attorneys’ fees on the grounds that the rates were discounted and the information is
confidential, competitively sensitive, and would harm the competitive interests of Quest’s
counsel. The request to redact the hourly rate charged to Quest is denied.
Courts recognize a strong presumption in favor of access to judicial documents. Bernstein
v. Bernstein Litowitz Berger & Grossmann LLP, 814 F.3d 132, 141 (2d Cir. 2016) (“A finding
that a document is a judicial document triggers a presumption of public access, and requires a
court to make specific, rigorous findings before sealing the document or otherwise denying public
access.” (internal quotation marks and citation omitted)). “The ‘presumption of access’ to
judicial records is secured by two independent sources: the First Amendment and the common
law.” Id. (citation omitted).
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In Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110, 124 (2d Cir. 2006), the Second
Circuit outlined a three-step process for determining whether a document may be sealed: First,
the court must determine whether the documents are “judicial documents,” -- i.e, “the item filed
must be relevant to the performance of the judicial function and useful in the judicial process.”
Id. at 119 (internal quotation marks omitted). Second, if the documents are judicial documents,
and therefore the common law presumption of access attaches, the court “must determine the
weight of that presumption.” Id. The weight is a function of “(1) the role of the material at issue
in the exercise of Article III judicial power and (2) the resultant value of such information to
those monitoring the federal courts.” Bernstein, 814 F.3d at 142. Finally, the court must
“balance competing considerations against it,” such as “the danger of impairing law enforcement
or judicial efficiency” and “the privacy interests of those resisting disclosure.” Lugosch, 435 F.3d
at 120.
Here, the Defendant’s billing records submitted in support of its motion for attorneys’ fees
are judicial records. These records are the basis for determining the amount of the award of
attorney’s fees in this case, and the hourly billing rates are critical to the determination that the
requested fee is reasonable. This information accordingly receives heavy presumption of access
that outweighs Quest’s and its counsel’s privacy interest. Quest’s argument that Skyline Steel,
LLC v. Pilepro, LLC, No. 13 Civ. 8171, 2015 WL 3739276 (S.D.N.Y. June 15, 2015), supports
its request for sealing is incorrect. That decision allowed counsel to redact its standard hourly
rates because they were “of no relevance to the instant motion,” but required disclosure of “the
fees . . . actually charged . . . as that relates directly to the issue on which the Court was asked to
rule.” Id. at *7. Accordingly, Quest may not redact the hourly fees that it actually charged and
that are the basis for the award.
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IV. CONCLUSION
For the foregoing reasons, Plaintiff’s motion to dismiss without prejudice pursuant to
Rule 41(a)(2) is conditioned upon the payment of certain of Defendants’ fees as follows:
$32,342.90 to Quest and $675.00 to CSNY and Banez. Defendants’ motions for the payment of
fees are accordingly GRANTED in part and DENIED in part. Following the receipt of
confirmation of payment, the Court will dismiss the action without prejudice. Plaintiff may elect
to dismiss the case with prejudice and will not be required to pay any fees. Defendant Quest’s
request to redact the discounted hourly rate charged from documents associated with its fees
motion is DENIED. Defendant Quest shall file on ECF by October 7, 2016, the letter previously
sent to Chambers dated July 13, 2016, and Quest’s memorandum of law in support of its motion
for legal fees and accompanying papers.
The Clerk of Court is respectfully requested to close the motions at Docket Nos. 63 and
64.
SO ORDERED.
Dated: October 3, 2016
New York, New York
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