Ceglia v. Zuckerberg et al

Filing 285

MEMORANDUM/BRIEF re 283 Decision and Order,,, in Support of Fee Application by Facebook, Inc., Mark Elliot Zuckerberg. (Snyder, Orin)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
-----------------------------------PAUL D. CEGLIA,
Plaintiff,
v.
MARK ELLIOT ZUCKERBERG and
FACEBOOK, INC.,
Defendants.
------------------------------------

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Civil Action No. 1:10-cv-00569RJA

DEFENDANTS’ FEE APPLICATION

Thomas H. Dupree, Jr.
GIBSON, DUNN & CRUTCHER LLP
1050 Connecticut Avenue, NW
Washington, DC 20036
[phone]
Terrance P. Flynn
HARRIS BEACH PLLC
726 Exchange Street
Suite 1000
Buffalo, NY 14210
[phone]
January 20, 2012

Orin Snyder
Alexander H. Southwell
GIBSON, DUNN & CRUTCHER LLP
200 Park Avenue, 47th Floor
New York, NY 10166-0193
[phone]

TABLE OF CONTENTS
Page

INTRODUCTION .......................................................................................................................... 1
STATEMENT OF FACTS ............................................................................................................. 2
DEFENDANTS’ LAWYERS AND THEIR EFFORTS TO SECURE CEGLIA’S
COMPLIANCE................................................................................................................... 6
ARGUMENT ................................................................................................................................ 10
1.

The Hours Expended Ensuring Compliance with The Court’s Orders Are
Reasonable ............................................................................................................ 11

2.

The Hourly Rates Claimed by Defendants’ Counsel Are Reasonable
within the Relevant Market ................................................................................... 14
A.
B.

Defendants’ Rates Are Reasonable New York City Rates ....................... 16

C.

Defendants Paid More Than The Claimed Rates ...................................... 17

D.
3.

New York City Rates Should Apply......................................................... 14

The Requested Rates Should Not Be Discounted ..................................... 18

Defendants Should Also Be Awarded Their Attorneys' Fees in Preparing
the Instant Fee Application ................................................................................... 19

CONCLUSION ............................................................................................................................. 20

i

TABLE OF AUTHORITIES
Page(s)
Cases
Arbor Hill Concerned Citizens Neighborhood Ass’n v. County of Albany,
522 F.3d 182 (2d Cir. 2010).................................................................................................... 18
Citizens State Bank v. Dixie County,
1:10-cv-224-SPM-GRJ, 2011 U.S. Dist. LEXIS 113752 (N.D. Fla. Oct. 3, 2011) ................ 20
Corley v. Rosewood Care Center, Inc. of Peoria,
142 F.3d 1041 (7th Cir. 1998) ............................................................................................ 2, 20
Disabled Patriots of America, Inc. v. Niagara Group Hotels, LLC,
07CV284S, 2008 U.S. Dist. LEXIS 33780 (W.D.N.Y April 24, 2008) ................................. 16
Donovan v. CSEA Local Union 1000,
784 F.2d 98 (2d Cir. 1986)...................................................................................................... 19
Ebbert v. Nassau County,
2011 U.S. Dist. LEXIS 150080 (E.D.N.Y. Dec. 22, 2011) .................................................... 15
GMC v. Villa Marin Chevrolet, Inc.,
240 F. Supp. 2d 182 (E.D.N.Y. 2002) .................................................................................... 10
Healey v. Leavitt,
485 F.3d 63 (2d Cir. 2007)...................................................................................................... 10
Hensley v. Eckerhart,
461 U.S. 424, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983) .......................................................... 10
In re Nortel Networks, Inc., et al.,
No. 09-10138(KG) (Bankr. Del. Dec. 14, 2011) .................................................................... 16
In re Telik, Inc. Securities Litig.,
576 F. Supp.2d 570 (S.D.N.Y. 2008)...................................................................................... 17
Innkeepers USA Trust, et al.,
No. 10-13800 (SCC) (Bankr. S.D.N.Y. Dec. 6, 2011) ........................................................... 16
Lunday v. City of Albany,
42 F.3d 131 (2d Cir. 1994)...................................................................................................... 11
Ng v. HSBC Mortg. Corp.,
07-CV-5434 (RRM) (VVP), 2010 U.S. Dist. LEXIS 33486 (E.D.N.Y. April 5, 2010) ......... 20

ii

TABLE OF AUTHORITIES
(Continued)
Page(s)
On Time Aviation, Inc. v. Bombardier Capital, Inc.,
354 Fed.Appx. 448 (2d Cir. 2009) .......................................................................................... 15
Perdue v. Kenny A.,
130 S.Ct. 1662 (2010) ............................................................................................................. 10
Robbins & Myers, Inc. v. J.M. Huber Corp.,
01-CV-00201S(F), 2011 U.S. Dist. LEXIS 45386 (W.D.N.Y. April 27, 2011)... 10, 13, 15, 19
Sheehy v. Wehlage, 02CV592A,
2007 U.S. Dist. LEXIS 11722 (W.D.N.Y. Feb. 20, 2007) ..................................................... 20
Southern New England Telephone Company v. Global NAPS Inc.,
624 F.3d 123 (2d Cir. 2010).................................................................................................... 15
Wash. Mut. Bank v. Forgue,
2008 U.S. Dist. LEXIS 6753 (W.D.N.Y. Jan. 30, 2008) ........................................................ 14
Weyant v. Okst,
198 F.3d 311 (2d Cir. 1999).................................................................................................... 19
Rules
Fed. R. Civ. P. 37 ...................................................................................................................... 5, 14

iii

DEFENDANTS’ FEE APPLICATION
INTRODUCTION
On January 10, 2012, this Court found that Plaintiff Paul Ceglia contumaciously defied
this Court’s discovery orders and ordered him to pay the reasonable attorneys’ fees and costs that
Defendants incurred in attempting to secure his compliance. See Doc. No. 283 at 30 (“Plaintiff
is ORDERED to pay . . . the expenses, including attorney’s fees, Defendants have incurred in
attempting to obtain Plaintiff’s email account information as directed by ¶ 5 of the August 18,
2011 Order.”). The Court also directed Defendants to file within ten days their affidavits of costs
and attorneys’ fees. Id.
As explained below and in the accompanying declaration of Alexander H. Southwell,
Defendants incurred substantial legal fees in attempting to obtain Ceglia’s compliance with the
Court’s orders related to his email account information. The work included preparing and
prosecuting Defendants’ Accelerated Motion to Compel (Doc. Nos. 129, 149-151), preparing the
Opposition to Plaintiff’s Motion to Set a Delayed Briefing Schedule (Doc. No. 137), preparing
the reply to the Court’s Order to Show Cause why Ceglia should not be sanctioned (Doc. No.
161), and preparing this Fee Application and supporting documentation.
Defendants, however, do not seek full reimbursement for all the fees they have incurred.
Rather, to avoid any dispute as to the reasonableness of this fee request, Defendants have
excluded certain work, declined to seek reimbursement for several timekeepers, and have made
an across-the-board 25 percent cut to their standard hourly rates. By limiting their Fee
Application in these ways, Defendants have substantially reduced their total request.
In light of the fact that Defendants have already discounted by a substantial amount the
fees that were actually charged and paid, Defendants request that this Court approve the claimed
amount in full. Defendants further request that they be awarded the fees they reasonably
1

incurred in preparing this application. Finally, this Court should order that Ceglia may not file
any additional non-responsive papers or pleadings in the case or otherwise prosecute this action
unless and until he satisfies the full award. Payment of a sanction is the cost a party must bear
“for the privilege of continuing to litigate.” Corley v. Rosewood Care Center, Inc. of Peoria,
142 F.3d 1041, 1057 (7th Cir. 1998).
STATEMENT OF FACTS
Since this Court granted expedited discovery on July 1, 2011, Defendants have been
forced to expend substantial time and resources to compel Ceglia’s compliance with his courtordered obligations. One such obligation was for Ceglia to provide his consent to the acquisition
of email account information — an obligation imposed after Ceglia had failed to produce
numerous documents and storage devices required by the July 1, 2011 Order. See Aug. 18, 2011
Order (Doc. No. 117) ¶ 5. After Ceglia obstructed this order by providing consent forms that
violated the Court’s order, Defendants were forced to file their Accelerated Motion to Compel on
this time-sensitive issue. See Doc. No. 128. This Court granted Defendants’ motion and ordered
Ceglia to show cause as to why he should not be sanctioned.
Following additional briefing on the sanctions issue — briefing in which Ceglia’s former
counsel disclosed that Ceglia had instructed them to defy the Court’s orders — on January 10,
2012, the Court granted Defendants’ motion for sanctions, finding that Ceglia had “continually
failed to comply with the August 18, 2011 Order,” “chose to knowingly ignore the unambiguous
orders of the court,” and demonstrated “a plain lack of respect for the court’s order which cannot
be countenanced.” Decision and Order (“D&O”) (Doc. No. 283) at 22-23, 27. The Court
imposed a $5,000 civil contempt fine and held that Ceglia must reimburse Defendants for the
costs, including attorneys’ fees, that they have incurred as a result of Ceglia’s “unjustified refusal
to fully comply with explicit court orders” — a refusal that “cannot be tolerated.” D&O at 24,
2

28. Specifically, the Court ordered that Ceglia pay “the expenses, including attorney’s fees,
Defendants have incurred in attempting to obtain Plaintiff’s email account information as
directed by ¶5 of the August 18, 2011 Order,” and directed Defendants to submit their affidavits
of costs and attorneys’ fees. Id. at 30.
The Court is fully familiar with this case, and many of the key facts bearing on the
present Fee Application are ably described in the Court’s D&O. This application therefore does
not provide a full recitation of all of the relevant facts, but instead summarizes the legal work
relevant to the fee award.
As the Court is aware, the August 18 Order — which was necessitated by Ceglia’s failure
to produce highly relevant emails that he had been directed to produce by the Court’s July 1
Order — required Ceglia to produce, among other things, completed consent forms provided by
Stroz Friedberg by August 29, 2011, which would permit Stroz Friedberg access to Ceglia’s
webmail accounts. See Aug. 18, 2011 Order (Doc. No. 117) ¶ 5. Ceglia then made four
separate, duplicative, and baseless motions to stay the August 18 Order, each of which the Court
denied. See Doc. Nos. 116, 119, 125, 127.
During this time, Ceglia’s lawyers Jeffrey Lake and Nathan Shaman informed Ceglia of
the August 18 Order and of his obligation to provide information related to his email accounts.
But Ceglia repeatedly refused to comply with the August 18 Order and instructed his counsel not
to comply. See Lake Decl. ¶ 2 (Doc. No. 153-1); Shaman Decl. ¶ 3 (Doc. No. 153-2).
Ultimately, Ceglia instructed his attorneys to provide rewritten consent forms and imposed a
contingent condition, even though the insertion of this language violated the Court’s order. See
Lake Decl. ¶ 4 (Doc. No. 153-1); Shaman Decl. ¶ 4 (Doc. No. 153-2). In the days following
Ceglia’s production of these deficient forms, in order to assess compliance with the Court’s
August 18 Order and to satisfy their meet-and-confer obligations under the Local Rules,
3

Defendants’ counsel reviewed these forms, analyzed the significance of Ceglia’s modification of
the language, considered the appropriate response, and drafted and revised a letter to Ceglia’s
then-counsel regarding the deficient forms. January 20, 2012 Declaration of Alexander H.
Southwell at ¶ 5; see also Sept. 1, 2011 Southwell Decl. Ex. C (Doc. No. 130-3) (letter from
Southwell to Lake regarding the deficient consent forms).
The meet-and-confer did not resolve the issue; Lake failed to respond to the letter and did
not provide compliant consent forms. Jan. 20 2012 Southwell Decl. ¶ 6. Defendants’ counsel
therefore drafted, revised, finalized, and filed on September 1, 2011 the Accelerated Motion to
Compel Compliance with Paragraph 5 of the August 18, 2011 Order (Doc. No. 129) and the
supporting declaration of Alexander H. Southwell (Doc. No. 130). Id. Because Ceglia was
obstructing the acquisition of email from his live webmail accounts — an inherently timesensitive issue due to the possibility of document loss or destruction — Defendants prepared and
filed their motion on an accelerated basis after consulting with local counsel, Terrance P. Flynn.
The next day, September 2, 2011, Ceglia filed a Motion to Set A Delayed Briefing
Schedule on Defendants’ Accelerated Motion to Compel (Doc. No. 134). Id. ¶ 7. This motion,
yet another delay tactic intended to obstruct, required Defendants to brief this meritless request
while Ceglia continued to frustrate the time-sensitive acquisition of his webmail. Defendants’
counsel reviewed this motion, considered a response to this motion, and discussed this motion
with the client. Id. Over the next few days, Defendants’ counsel drafted, revised, and finalized
an opposition to this motion and supporting declarations of Alexander H. Southwell and
Terrance P. Flynn, which they filed on September 6, 2011 (Doc. Nos. 137-140). Id. ¶ 8. On
September 9 and 12, 2011, the Court issued text orders setting the schedule for the Motion for a
Delayed Briefing Schedule (Doc. Nos. 141, 142). On September 20, this Court issued two
additional text orders: the first of these orders denied Plaintiff’s Motion for Extension of Time as
4

moot, and the second set a schedule for the response and reply to Defendants’ Accelerated
Motion to Compel (Doc. Nos. 146, 147).
On September 26, 2011, Ceglia filed his Response in Opposition to the Accelerated
Motion to Compel (Doc. No. 148). Defendants’ counsel reviewed this response, discussed the
effects of the response, and considered the content of the reply to this response. Id. ¶ 10. On
September 27, 2011, Defendants’ counsel conducted targeted research and drafted and filed the
reply and supporting declaration of Amanda M. Aycock (Doc. Nos. 149-150). Id. ¶ 11.
The next day, on September 28, 2011, the Court granted Defendants’ Accelerated Motion
to Compel and directed Ceglia “to show cause why Defendants’ request for sanctions, pursuant
to Fed.R.Civ.P. 37(a)(5), including costs and attorneys’ fees, based on Plaintiff’s failure to fully
and promptly comply with the Order should not be granted” (Doc. No. 152). Ceglia responded
on October 7, 2011, with a memorandum of law and declarations of Ceglia’s (now former)
lawyers Jeffrey Lake and Nathan Shaman, in which they disclosed that their client ordered them
not to comply with the Court’s orders (Doc. No. 153). Defendants’ counsel reviewed this
response, and drafted a reply to this response, which they filed on October 14, 2011 (Doc. No.
161). Id. ¶ 13.
On January 10, 2012, this Court granted Defendants’ request for sanctions and directed
Defendants to provide affidavits of costs and attorneys’ fees incurred (Doc. No. 283).
Defendants’ counsel reviewed this order, discussed the effects of the order, considered the
content of the affidavits requested by the Court, and reviewed and analyzed bills for the
applicable entries. Id. ¶ 14. Defendants’ counsel then drafted, discussed, conducted targeted
research, revised, finalized, and filed the instant Fee Application and supporting declaration of
Alexander H. Southwell. Id. ¶ 15.

5

DEFENDANTS’ LAWYERS AND THEIR EFFORTS TO SECURE
CEGLIA’S COMPLIANCE
Defendants’ counsel from the law firm Gibson, Dunn & Crutcher LLP (“Gibson Dunn”)
who devoted substantial time providing legal services covered by the Court’s sanctions award
are Orin Snyder, Thomas H. Dupree, Alexander H. Southwell, Matthew J. Benjamin, and
Amanda M. Aycock. Biographies are attached to the accompanying Southwell Declaration and
briefly outlined below, along with an explanation of each attorney’s role in the legal services for
which fees should be awarded. See Jan. 20 2012 Southwell Decl. Ex. A.
Mr. Snyder, a senior partner in Gibson Dunn’s New York office, is Co-Chair of the
Media, Entertainment and Technology Practice Group and Vice-Chair of the Crisis Management
Practice Group. A former Assistant United States Attorney in the Southern District of New
York, Mr. Snyder has over 25 years of experience in litigating both civil and criminal matters,
particularly high-profile and sensitive matters for prominent clients. Mr. Snyder has extensive
experience in fraud cases and in media, entertainment, and technology law. Mr. Snyder is
ranked as one of the best lawyers in the country by multiple organizations, including Chambers
USA: America’s Leading Lawyers for Business; The US Legal 500; New York Super Lawyers
2011; and Law360’s 2011 MVP’s. In 2010 and in 2012, Mr. Snyder was featured in The
American Lawyer stories naming Gibson Dunn “The Litigation Department of the Year” for four
consecutive years. Mr. Snyder earned his Juris Doctor, cum laude, at the University of
Pennsylvania Law School in 1986. Mr. Snyder’s standard billing rate in 2011 was $955. Mr.
Snyder’s role relevant to this Fee Application was primarily providing strategic counseling and
review and editing of briefs and letters. Defendants claim 9.75 hours of Mr. Snyder’s time in
this Fee Application.

6

Mr. Dupree, a partner in Gibson Dunn’s Washington, D.C. office, is an experienced trial
and appellate advocate. Mr. Dupree served in the Civil Division at the U.S. Department of
Justice from 2007 to 2009, ultimately becoming the Principal Deputy Assistant Attorney
General. In that role, Mr. Dupree was responsible for managing many of the government’s most
significant cases involving regulatory, commercial, constitutional, and national security matters
on behalf of virtually all of the federal agencies, the White House, and senior federal officials.
He has argued more than 60 appeals in the federal courts, including in all thirteen circuits and
before five en banc courts, and has represented clients throughout the country in a wide variety
of trial and appellate matters. In 2010, Mr. Dupree was named one of the top ten appellate
litigators in the United States under age 40 by Law360, and has been chosen as a national rising
star by Lawdragon magazine. Mr. Dupree earned his Juris Doctor with Honors from the
University of Chicago Law School in 1997. Mr. Dupree’s standard hourly billing rate in 2011
was $850. Mr. Dupree’s role relevant to this Fee Application was primarily drafting and editing
the briefs. Defendants claim 21.75 hours of Mr. Dupree’s time in this Fee Application.
Mr. Southwell, a partner in Gibson Dunn’s New York office, is Co-Chair of the firm’s
Information Technology and Data Privacy practice group and specializes in complex civil
litigation, white-collar criminal defense, and internal investigation matters, as well as
information technology, theft of trade secrets and intellectual property, computer fraud, national
security, and network and data security issues. From 2001 to 2007, Mr. Southwell served as an
Assistant United States Attorney in the United States Attorney’s Office for the Southern District
of New York, where he focused on, among other things, investigating and prosecuting computer
hacking and intrusion cases, intellectual property offenses, other high-technology offenses,
securities fraud, wire and mail frauds, child exploitation, and immigration crimes. Mr. Southwell
received his Juris Doctor, magna cum laude, from New York University School of Law in 1997.
7

Mr. Southwell’s standard billing rate in 2011 was $825. Mr. Southwell’s role relevant to this
Fee Application was primarily identifying and leading the discussion on the critical compliance
issue, developing strategy, corresponding with experts regarding webmail consents,
communicating with the clients, corresponding with opposing counsel, reviewing and revising all
briefs, and drafting his declarations. Defendants claim 24.50 hours of Mr. Southwell’s time in
this Fee Application.
Mr. Benjamin is a sixth-year associate in Gibson Dunn’s New York office whose practice
focuses on white-collar criminal defense and complex commercial litigation. In 2011, Mr.
Benjamin was recognized in Super Lawyers New York magazine as a Rising Star in litigation.
Mr. Benjamin earned his Juris Doctor degree in 2006 from New York University School of Law.
Mr. Benjamin’s standard billing rate in 2011 was $670. Mr. Benjamin’s role relevant to this Fee
Application was primarily identifying the key issues raised by Ceglia’s non-compliance,
corresponding with experts regarding the webmail consent forms, developing strategy, drafting
communications with the clients and with opposing counsel, reviewing and revising all briefs,
coordinating filing, and drafting declarations. Defendants claim 44.65 hours of Mr. Benjamin’s
time in this Fee Application.
Ms. Aycock is a second-year associate in Gibson Dunn’s New York office, focusing on
litigation. Ms. Aycock received her Juris Doctor, cum laude, from the University of
Pennsylvania Law School and a French Master of Global Business Law, cum laude, from the
Sorbonne and Sciences Politiques in 2010. Ms. Aycock’s standard billing rate in 2011 was $450.
Ms. Aycock’s role relevant to this Fee Application was primarily conducting research pertaining
to factual and legal issues raised, providing summary and analysis of such research, drafting and
finalizing accompanying documents (e.g., certificate of service, notice of motion) for filing,
proofreading and cite-checking all papers for filing, finalizing and filing motions and other
8

briefs, drafting her declaration, and drafting some correspondence with the clients and opposing
counsel. Defendants claim 76.30 hours of Ms. Aycock’s time in this Fee Application.
Defendants’ application includes legal services rendered in connection with Defendants’
Accelerated Motion to Compel, Plaintiff’s Motion to Set a Delayed Briefing Schedule, and the
Order to Show Cause — only those filings most directly relevant to ensuring Ceglia’s
compliance with paragraph 5 of the August 18, 2011 Order. The application also requests fees
for the time reasonably spent preparing this application and accompanying affidavit through
January 18, 2012. Defendants also seek reimbursement of any additional fees that could not yet
be detailed in this Fee Application or that will be incurred, including those incurred in
connection with any reply memorandum, oral argument, or enforcement of a fee award.
Information concerning those additional fees will be fully submitted once briefing and argument
(at the Court’s discretion) occur.
In summary, the time spent on legal services covered by the Court’s sanction award that
Defendants claim herein, totaling $84,196.33, which is fully detailed in the Southwell
Declaration and accompanying narrative descriptions, is presented in the chart below:

Attorney
Orin Snyder
Thomas H. Dupree, Jr.
Alexander H. Southwell
Matthew J. Benjamin
Amanda M. Aycock
TOTAL

Total
Hours
9.75
21.75
24.50
44.65
76.30
176.95

9

Claimed
Rate
$716.25
$637.50
$618.75
$502.50
$337.50

Total Fees
$6,983.44
$13,865.63
$15,159.38
$22,436.63
$25,751.25
$84,196.33

ARGUMENT
Defendants’ claimed attorneys’ fees are reasonable and should be awarded pursuant to
the lodestar formula. Traditionally, “in determining a fee award, the typical starting point is the
so-called lodestar amount, that is ‘the number of hours reasonably expended on the litigation
multiplied by a reasonable hourly rate.’” Robbins & Myers, Inc. v. J.M. Huber Corp., 01-CV00201S(F), 2011 U.S. Dist. LEXIS 45386, at *5 (W.D.N.Y. April 27, 2011) (Foschio, J.) (citing
Healey v. Leavitt, 485 F.3d 63, 71 (2d Cir. 2007)). In Perdue v. Kenny A., 130 S.Ct. 1662, 1672
(2010), the Supreme Court explained that there is a “strong” presumption in favor of the
traditional lodestar method; that presumption may be overcome “in those rare circumstances in
which the lodestar does not adequately take into account a factor that may properly be
considered in determining a reasonable fee.” Robbins & Myers, Inc., 2011 U.S. Dist. LEXIS
45386, at *6 (citing Perdue, 130 S.Ct. at 1673). In calculating the lodestar amount, the initial
burden is on the requesting party to submit evidence supporting the number of hours worked and
the hourly rate claimed. Id. (citing Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). Ultimately,
the determination of a reasonable award is within the sound discretion of the Court. See
McGuire v. Russell Miller, Inc., 1 F.3d 1306, 1313 (2d Cir. 1993) (holding that in a fee
application, “the judge determines the amount of attorneys' fees owed . . . after the liability for
such fees is decided”); see also GMC v. Villa Marin Chevrolet, Inc., 240 F. Supp. 2d. 182, 185
(E.D.N.Y. 2002) (“[T]he determination of what is a reasonable [attorneys’ fee] award is within
the sound discretion of the trial court.”).

10

1.

The Hours Expended Ensuring Compliance with The Court’s Orders Are
Reasonable

Defendants’ claimed hours of legal services expended in connection with Defendants’
Accelerated Motion to Compel and ensuring compliance with the August 18 Order related to
Ceglia’s webmail, as directed by this Court, are reasonable. D&O at 27-28.
In calculating whether hours expended are reasonable, “district courts look to the facts
and complexity of the case and take into account their own experience with the case.”
Amerisource Corp. v. Rx USA In’l, Inc., 02-CV-2514 (JMA), 2010 U.S. Dist. LEXIS 52424
(E.D.N.Y. May 26, 2010), 2010 U.S. Dist. LEXIS 52424, at *32-33 (citation omitted). While the
fee applicant bears the burden of proving that the hours are reasonable, the hours should be based
not on what appears necessary in hindsight, but on whether “at the time the work was performed,
a reasonable attorney would have engaged in similar time expenditures.” Id. at *34; see also id.
at *35 (“[T]he substantial majority of the billing entries are adequately detailed and do not
appear duplicative or inconsistent with the particular task performed. Accordingly, the hours
shall not be reduced for vagueness, excess, or inefficiency.”); Lunday v. City of Albany, 42 F.3d
131, 134 (2d Cir. 1994) (affirming district court’s decision that “this court declines to second
guess experienced counsel in deciding whether the hours devoted to research [and] drafting . . .
were necessary. To engage in such detailed hour by hour review is to demean counsel’s stature
as officers of the court and I have no intention of substituting my after-the-fact judgment for that
of counsel who engaged in whatever research and other activities they felt necessary.”).
As detailed above and in the accompanying Southwell Declaration, the work covered by
the Court’s sanctions award includes the review of Ceglia’s deficient consent forms; meet-andconfer correspondence; the drafting and filing of the Accelerated Motion to Compel; review of
Plaintiff’s Response; the drafting and filing of Defendants’ Reply; and the processing of Ceglia’s

11

completed consent forms. Defendants have also included work related to the Plaintiff’s Motion
for a Delayed Briefing Schedule (Doc. No. 134), which sought a meritless “delayed briefing
schedule” on Defendants’ Accelerated Motion to Compel, and work related to this Court’s Order
to Show Cause as to why Defendants’ request for sanctions should not be granted (Doc. No.
152).
Defendants seek reimbursement for 177.60 hours of legal services for this work over a
five month period. See Jan. 20 2012 Southwell Decl. ¶ 17. The time was plainly warranted by
the multiple briefs needed, under tight timetables, to pursue Ceglia’s compliance with the
Court’s orders. During a three-day period, from August 29 to September 1, Defendants assessed
Ceglia’s non-compliance and obstruction of the time-sensitive acquisition of his webmail
account, attempted to meet-and-confer with opposing counsel, developed a strategy to move to
compel on that urgent issue, and drafted and filed a nine-page brief and accompanying
declaration. Defendants’ Accelerated Motion to Compel was met the next day, on September 2,
with an attempt by Ceglia to further obstruct compliance efforts through his motion to set a
delayed briefing schedule. During the next three weeks, Defendants were forced to file an eightpage opposition and two supporting declarations to this meritless motion, as well as a reply
memorandum and the supporting declaration on Defendants’ Accelerated Motion to Compel.
Within one day after Defendants filed their reply, on September 28, 2011, the Court granted
Defendants’ Accelerated Motion — recognizing the baseless grounds on which Ceglia had
attempted to excuse his month-long obstruction. In October 2011, Defendants prepared another
ten-page brief in response to the Court’s Order to Show Cause. During that same period,
Defendants sought to acquire the live webmail content that Ceglia had concealed access to for
over a month. The hours incurred were therefore reasonable to expend — indeed, necessary to
expend — to obtain Ceglia’s compliance with the Court’s orders.
12

The hours claimed are also reasonable because Defendants excluded certain categories of
legal services that might otherwise be included, in order to conservatively estimate the hours
incurred. The categories excluded from this Fee Application include the legal services:
•

Associated with the multiple stays Ceglia filed in August 2011 following the August 18
Order, even though those meritless stay requests further obstructed the acquisition of
Ceglia’s webmail;

•

Associated with attempting to obtain access to Ceglia’s webmail following Ceglia’s
belated production of those forms, including defense counsel’s ongoing communications
with Ceglia’s counsel regarding the improperly completed consent forms and with
various Internet Service Providers;

•

Provided by other junior associates and paralegals who served in a support role (the legal
services provided by Amanda Aycock, as the lead junior associate, are included in
Defendants’ claim);

•

Provided by local counsel former United States Attorney Terrance Flynn and Jim Nonkes
of Harris Beach PLLC, including strategizing about addressing and responding to
multiple text orders by the Court and the briefing on three different motions (Accelerated
Motion to Compel, Motion for Delayed Briefing, and the Order to Show Cause), as well
as logistical advice concerning the motions; and

•

Provided by in-house counsel.

Moreover, Defendants do not include costs associated with work within the scope of this Fee
Application, which were sizeable and include, but are not limited to, expert fees incurred
reviewing and discussing Ceglia’s deficient consent forms, legal research costs, long-distance
telephone call costs, and duplication, messenger, and courier expenses.
Defendants thus endeavored both to narrowly tailor the hours claimed in order to ensure
that the hours requested are not “excessive, redundant, or otherwise unnecessary,” Robbins &
Myers, Inc., 2011 U.S. Dist. LEXIS 45386, at *6, and also to reduce the overall claim by
excluding costs. Therefore, the requested hours should be found to be reasonable.

13

2.

The Hourly Rates Claimed by Defendants’ Counsel Are Reasonable within
the Relevant Market

The rates claimed by Gibson Dunn are also reasonable. Gibson Dunn typically charges
standard hourly rates, detailed in the supporting Southwell Declaration, that are comparable to
other peer law firms with attorneys located in New York City. However, as mentioned above,
Defendants do not seek reimbursement at Gibson Dunn’s standard hourly rates. Rather,
Defendants have voluntarily discounted their standard hourly rates by 25% for this Fee
Application. Thus, Defendants’ requested hourly rates are significantly less than Gibson Dunn’s
standard hourly rates, which are reasonable relative to other leading law firms.
A.

New York City Rates Should Apply

New York City market rates should apply to this Court’s determination of the
reasonableness of Defendants’ requested fees. This Court has ample discretion to determine that
the forum rule — which prefers the district in which an action is venued for determining market
rate under “prevailing party” statutes — does not apply in cases awarding attorneys’ fees as
sanctions for discovery violations under Fed. R. Civ. P. 37. See Robbins & Myers, Inc., 2010
U.S. Dist. LEXIS 108562 (rejecting plaintiff’s argument that the forum rule should apply in the
discovery sanction context and awarding defendants the New York metropolitan area rates of its
national law firm, located in New Jersey); see also Wash. Mut. Bank v. Forgue, 07-MC-6027CJS, 2008 U.S. Dist. LEXIS 6753, at *2 (W.D.N.Y. Jan. 30, 2008) (finding the forum rule
inapplicable and holding that “even if the rate were unreasonable for Rochester, New York
where this Court sits, the Court would find that the out-of-district hourly rate was reasonable”).
Instead, when calculating the costs imposed by discovery non-compliance, the Court has
discretion to grant the prevailing party its out-of-district rates to reimburse the prevailing party
for its actual costs in litigating the discovery dispute and to sanction the non-compliant party.

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See Robbins & Myers, 2011 U.S. Dist. LEXIS 45386, at *10 (“Because the court is calculating
the attorneys' fees to be awarded as a sanction, the court is not required to apply the forum rule . .
. rather, the court has discretion to use out-of-district rates in fixing the amount of an attorneys'
fee awarded as a sanction and to deter similar conduct in the future.”) (citing On Time Aviation,
Inc. v. Bombardier Capital, Inc., 354 Fed.Appx. 448, 452 (2d Cir. 2009), and Southern New
England Telephone Company v. Global NAPS Inc., 624 F.3d 123, 149 (2d Cir. 2010) (reiterating
that sanctions awarded pursuant to Rule 37 are intended as a deterrent to misbehavior in
litigation)). Having directed his former lawyers to defy this Court’s orders, Ceglia stands guilty
of a particularly brazen form of discovery misconduct. And, of course, Ceglia’s obstruction was
designed to conceal evidence of his larger litigation fraud. In this circumstance, application of
out-of-district rates — as both an appropriate means of reimbursement and a stiff sanction for
discovery misconduct — is warranted.
Out-of-district rates are also appropriate given the type of defense this fraudulent lawsuit
requires. See Ebbert v. Nassau County, No. CV 05-5445 (AKT), 2011 U.S. Dist. LEXIS
150080, at *49 (E.D.N.Y. Dec. 22, 2011) (granting out-of-district rates based in part on the
attorneys’ “special expertise” they brought to the case). Ceglia’s lawsuit is based on a forged
contract and involves a purported, but baseless, multi-billion-dollar claim against one of the best
known companies in the world. The defense of that lawsuit is appropriately led by a team of
experienced litigators, local and out-of-district, with backgrounds and expertise in prosecuting
criminal fraud issues. Gibson Dunn litigators were also able to identify and engage, based on
prior experience and relationships, the world’s leading document examiners and experts in
computer forensics, who have been instrumental in uncovering Ceglia’s fraud.
Moreover, awarding a party fees based on out-of-district rates is particularly warranted in
cases such as this one where the prevailing party that brings the fee application did not originally
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choose the venue and was instead forced to litigate where the other party resides. See Disabled
Patriots of America, Inc. v. Niagara Group Hotels, LLC, No. 07CV284S, 2008 U.S. Dist. LEXIS
33780, at *12 (W.D.N.Y April 24, 2008) (finding Miami rates in a fee application reasonable
because the Florida plaintiff was forced to litigate in defendant’s home forum). Ceglia chose to
prosecute his lawsuit in Allegany County, New York; Defendants then removed to the federal
court in the Western District of New York.
Given the particularly egregious discovery misconduct for which this Court has
sanctioned Ceglia, the type of defense Ceglia’s fraudulent lawsuit requires, and Ceglia’s original
selection of venue, this Court should utilize out-of-district rates to determine the reasonableness
of Defendants’ requested, discounted hourly rates.
B.

Defendants’ Rates Are Reasonable New York City Rates

Gibson Dunn’s rates are reasonable relative to other peer global law firms with attorneys
located in New York, as confirmed by both judicial decisions and empirical data.
In 2011, bankruptcy judges regularly granted fee applications with hourly rates of over
$1,000 for some partners and of nearly $500 for first-year associates from New York City law
firms similarly situated to Gibson Dunn. See Jan. 20 2012 Southwell Decl. Ex. C (New York
Regional Report in Westlaw CourtExpress, Legal Billing Report, Vol. 13, No.3, Dec. 2011). For
instance, the international, 1,100-plus attorney firm of Cleary Gottlieb Steen & Hamilton LLP
was recently awarded fees with an hourly rate of $1,040 for certain partners and $470 for firstyear associates. See In re Nortel Networks, Inc., et al., No. 09-10138(KG) (Bankr. Del. Dec. 14,
2011) (Doc. No. 6979) (order granting fee application at stated rates). Additionally, Kirkland &
Ellis LLP, an international law firm with over 1,500 lawyers, was recently awarded fees billed at
an hourly rate of $995 for certain partners and $610 for third-year associates. See Innkeepers
USA Trust, et al., No. 10-13800 (SCC) (Bankr. S.D.N.Y. Dec. 6, 2011) (Doc. No. 2252) (order
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granting fee application at stated rates); see also In re Telik, Inc. Securities Litig., 576 F. Supp.2d
570, 589 (S.D.N.Y. 2008) (granting fee application in 2008 and finding that partner rates in 2005
as high as $830 per hour in New York City were within the “norm”).1
Moreover, a 2011 National Law Journal self-reported survey of billing rates at various
law firms confirms that New York City firms billed at rates comparable to or higher than those
being sought by Defendants here. See Southwell Decl. Ex. D (2011 NLJ Billing Survey).
Specifically, that survey demonstrates that the market for partner hourly rates is between $600
and $1,100. See id. Specifically, the partner billing rates last year at DLA Piper, Ceglia’s own
former counsel, were between $530 and $1,120; at Hughes Hubbard & Reed, partner billing rates
ranged from $625 through $990; and at Kaye Scholer, partner billing rates were between $685
and $1,080. Id.
Defendants’ claimed rates (as discounted in this Fee Application) are $716.25 for senior
partner Orin Snyder, $637.50 for partner Thomas J. Dupree, Jr., $618.75 for partner Alexander
H. Southwell, $502.50 for senior associate Matthew J. Benjamin, and $337.50 for junior
associate Amanda Aycock. These claimed rates are within the range of reasonableness
established by judicial decisions and survey data and are therefore reasonable in relation to
market rates in New York City.
C.

Defendants Paid More Than The Claimed Rates

The Second Circuit has held that district courts must consider “what a reasonable, paying
client would be willing to pay” when analyzing the rate contained in a fee application. Arbor

1
Indeed, this Court’s finding that an hourly rate of $530 was reasonable for a partner at a mid-sized national
firm located in New Jersey in Robbins & Myers, 2010 U.S. Dist. LEXIS 108562, further supports the conclusion that
partner hourly rates between $600 and $1,000 for a global firm based in Manhattan are reasonable for the relevant
market.

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Hill Concerned Citizens Neighborhood Ass’n v. County of Albany, 522 F.3d 182, 184 (2d Cir.
2010). A reasonable, paying client would of course be willing to pay higher rates to obtain able
and experienced counsel when the stakes are high or there is significant media attention on the
case. Id. (“[T]he district court should, in determining what a reasonable, paying client would be
willing to pay, consider factors including, but not limited to, the complexity and difficulty of the
case . . . .”). An attorney’s customary rate is a significant factor in determining a reasonable rate.
See, e.g., Reiter v. Metropolitan Transp. Authority of New York, No. 01-CV-2762 (GWG), 2004
U.S. Dist. LEXIS 18167, at *13-14 (S.D.N.Y. 2004) (citing cases). “[A]s a logical matter, the
amount actually paid to counsel by paying clients is compelling evidence of a reasonable market
rate.” Id. (citing cases).
In his lawsuit, Ceglia alleges that he owns a substantial share of Facebook based on a
purported contract with Mark Zuckerberg and purported emails concerning that contract. Although

his claims have now been exposed as fraudulent, they were obviously potentially significant as
pled. Given the nature of the claims, as well as the public attention to the case, it is reasonable to
pay rates similar to those requested for experienced counsel with the resources of a national firm.
Indeed, in this case Defendants have in fact actually paid more than Defendants’ claimed rates,
Jan. 20 2012 Southwell Decl. ¶ 3, further supporting the reasonableness of those rates.
D.

The Requested Rates Should Not Be Discounted

Defendants have already taken care to carefully circumscribe the hours included in their
request, and have proactively discounted the claimed hourly rates; any further discounts,
therefore, are not warranted. The non-compliance by Plaintiff in this case is particularly
egregious — Ceglia outright refused to comply with this Court’s order — and is underscored by
the declarations of his own former attorneys, Lake and Shaman, that Ceglia directed them to

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ignore the Court’s orders. This contumacious defiance comes in the context of Ceglia’s massive
attempted extortion and litigation fraud, as well as his attempted cover-up.
Under these circumstances it is appropriate for the Court to grant Defendants’ Fee
Application in its entirety. Anything less than a full award cannot be deemed either adequate
recompense to Defendants or an appropriate penalty for Ceglia. This is an award of sanctions for
clearly reprehensible conduct that goes to the very ability of the judicial process to function in a
just manner, and the Court should therefore not further discount the fee request but grant
Defendants’ narrowly-tailored and reasonable Fee Application in full.
3.

Defendants Should Also Be Awarded Their Attorneys’ Fees in Preparing the
Instant Fee Application

It is well established that the costs, including attorneys’ fees and reasonable expenses,
associated with the Defendants’ preparation of the instant Fee Application are recoverable, as are
any additional fees involved in the preparation of a reply brief and any hearing on the
application. As this Court held in Robbins & Myers, Inc., a “party awarded attorneys’ fees . . . is
also entitled to compensation ‘for time reasonably spent in preparing and defending’ the fee
application.” 2011 U.S. Dist. LEXIS 45386 at *20-21 (citing Weyant v. Okst, 198 F.3d 311, 316
(2d Cir. 1999)); see also Donovan v. CSEA Local Union 1000, 784 F.2d 98, 106 (2d Cir. 1986)
(“The fee application is a necessary part of the award of attorney's fees. If the original award is
warranted, we think that a reasonable amount should be granted for time spent in applying for
the award.”). Thus, Defendants are entitled to recover attorneys’ fees and costs incurred in
connection with the preparation and defense of this attorneys’ fee award application. Defendants
have submitted evidence of these fees through January 18, 2012 with the instant application and
respectfully request the opportunity to supplement this Fee Application with any additional Fee

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Application-related fees, which can be fully submitted once briefing is concluded and argument
(if any) occur.
CONCLUSION
For the foregoing reasons, Defendants respectfully request that this Court order Ceglia to
pay Defendants’ attorneys’ fees in the total amount of $84,196.33, which will be augmented
when the instant application is fully briefed and heard, and that such amount be ordered paid
within fourteen days of this Court’s Order.2 Given Plaintiff’s extensive record of discovery
misconduct and recent blizzard of meritless and premature motions — all of which were denied
or withdrawn after Defendants were forced to expend significant resources in responding, see
Doc. Nos. 272 and 284 — the Court should also order that Ceglia may not file any additional
non-responsive papers or pleadings in the case and may not otherwise prosecute this action
unless and until he satisfies the award in full. Immediate payment of a sanction is the cost a
party must bear “for the privilege of continuing to litigate.” Corley, 142 F.3d at 1057.

2
See, e.g., Sheehy v. Wehlage, 02CV592A, 2007 U.S. Dist. LEXIS 11722, at *27 (W.D.N.Y. Feb. 20, 2007)
(requiring plaintiff to pay defendant’s attorneys’ fees for discovery abuse within fourteen days); Ng v. HSBC Mortg.
Corp., 07-CV-5434 (RRM) (VVP), 2010 U.S. Dist. LEXIS 33486, at *6 (E.D.N.Y. April 5, 2010) (same); Citizens
State Bank v. Dixie County, 1:10-cv-224-SPM-GRJ, 2011 U.S. Dist. LEXIS 113752, at *9 (N.D. Fla. Oct. 3, 2011)
(requiring plaintiff to pay defendant’s attorneys’ fees for discovery abuse within ten days).

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Dated:

New York, New York
January 20, 2012
Respectfully submitted,
/s/ Orin Snyder
Orin Snyder
Alexander H. Southwell
Matthew J. Benjamin
Amanda M. Aycock
GIBSON, DUNN & CRUTCHER LLP
200 Park Avenue, 47th Floor
New York, NY 10166-0193
[phone]

Thomas H. Dupree, Jr.
GIBSON, DUNN & CRUTCHER LLP
1050 Connecticut Avenue, NW
Washington, DC 20036
[phone]
Terrance P. Flynn
HARRIS BEACH PLLC
726 Exchange Street
Suite 1000
Buffalo, NY 14210
[phone]

Attorneys for Defendants Mark Zuckerberg and Facebook, Inc.

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