Schnitzer Steel Industries, Inc. et al v. Continental Casualty Company et al
Filing
480
OPINION AND ORDER: I find that all of the factors from ORS § 20.075 that I am required to consider are either irrelevant, neutral or weigh in favor of granting Schnitzers petition for feesboth the fees it claims for litigating the case, and the fees it claims for preparing its fee petition. I order that the parties recalculate the total fees owed to Schnitzer based on the hours previously claimed, but with the rates for each timekeeper that I set out above. I will then review this calculation and award it as the reasonable attorney fees award in this case. Schnitzers Petition for Fees 449 is GRANTED according to the foregoing instructions. Signed on 11/12/14 by Judge Michael W. Mosman. (dls)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAND DIVISION
SCHNITZER STEEL INDUSTRIES,
INC., an Oregon corporation; and
MMGL CORP., a Washington corporation,
No. 3:10-cv-01174-MO
Plaintiffs,
OPINION AND ORDER
v.
CONTINENTAL CASUALTY
CORPORATION, an Illinois corporation;
and TRANSPORTATION INSURANCE
COMPANY, an Illinois corporation,
Defendants.
MOSMAN, J.,
Schnitzer Steel Industries, Inc. (“Schnitzer”) was the prevailing party in the above
captioned case. Under Oregon law, as the prevailing party, Schnitzer is entitled to its reasonable
attorney fees. ORS § 742.061. Schnitzer’s counsel seeks $3,483,878 in attorney fees for litigating
the case on the merits, and $49,681 for fees incurred in their preparation of their fee petition.
BACKGROUND
On September 28, 2010, Schnitzer filed its complaint seeking damages for breach of
contract in excess of $3,000,000 plus interest, and declaratory relief to resolve disputes regarding
the parties’ relationship going forward. (Complaint [1].) The claims arose out of Schnitzer’s
Portland Harbor insurance claim that had been pending with Continental Casualty Corporation
(“Continental”) for an extended period of time. (Memo. in Support of Costs [448] at 1.)
Schnitzer alleged that Continental refused to pay, underpaid, or paid only after a substantial
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delay Schnitzer’s defense costs in the Portland Harbor matter. (Id.) Schnitzer retained two law
firms to prosecute its claim: Jones Day and Stoel Rives.
After extensive discovery, numerous motions for summary judgment, and failed attempts
at mediation and settlement, the parties ultimately tried the case in April 2014. The jury returned
a verdict in favor of Schnitzer on every claim presented. The jury awarded Schnitzer the full
amount of requested damages—$8,601,700. (Verdict [394].)
Continental filed post-trial motions regarding attorney fees, equitable estoppel, and
laches. I denied each of Continental’s motions, and entered judgment in favor of Schnitzer.
(Order [419].) I confirmed the jury’s damages award, awarded prejudgment interest of
$2,463,867, and held that Schnitzer was entitled to recover its reasonable attorney fees and costs.
Id.
LEGAL STANDARDS
In diversity cases, attorney fee awards are governed by state law. Schumacher v. City of
Portland, 2008 WL 219603, at *2 (D. Or. Jan. 23, 2008). In this case, ORS § 742.061(1)
provides the relevant rules regarding whether or not an award of attorney fees is appropriate.
That statute states, in relevant part:
if settlement is not made within six months from the date proof of loss is filed
with an insurer and an action is brought in any court of this state upon any policy
of insurance of any kind or nature, and the plaintiff's recovery exceeds the amount
of any tender made by the defendant in such action, a reasonable amount to be
fixed by the court as attorney fees shall be taxed as part of the costs of the action
and any appeal thereon.
ORS § 742.061(1). This statute is intended to “encourage the settlement” of insurance claims and
to “reimburse successful plaintiffs reasonably for moneys expended for attorneys fees in suits to
enforce insurance contracts.” Chalmers v. Or. Auto. Ins. Co., 263 Or. 449, 452 (1972). When the
2 – OPINION AND ORDER
conditions enumerated in ORS § 742.061(1) are met, attorney fees must be awarded. See
Petersen v. Farmers Ins. Co. of Oregon, 162 Or. App. 462, 466 (1999).
Subsections (1) and (2) of ORS § 20.075 list the factors the Court must consider in
determining the amount of an award of attorney fees. The factors listed in subsection (1) are:
(a)
The conduct of the parties in the transactions or occurrences that gave rise
to the litigation, including any conduct of a party that was reckless,
willful, malicious, in bad faith or illegal.
(b)
The objective reasonableness of the claims and defenses asserted by the
parties.
(c)
The extent to which an award of an attorney fee in the case would deter
others from asserting good faith claims or defenses in similar cases.
(d)
The extent to which an award of an attorney fee in the case would deter
others from asserting meritless claims and defenses.
(e)
The objective reasonableness of the parties and the diligence of the parties
and their attorneys during the proceedings.
(f)
The objective reasonableness of the parties and the diligence of the parties
in pursuing settlement of the dispute.
(g)
The amount that the court has awarded as a prevailing party fee under
ORS 20.190.
(h)
Such other factors as the court may consider appropriate under the
circumstances of the case.
ORS § 20.075(1). The factors listed in subsection (2) are:
(a)
The time and labor required in the proceeding, the novelty and difficulty
of the questions involved in the proceeding and the skill needed to
properly perform the legal services.
(b)
The likelihood, if apparent to the client, that the acceptance of the
particular employment by the attorney would preclude the attorney from
taking other cases.
(c)
The fee customarily charged in the locality for similar legal services.
(d)
The amount involved in the controversy and the results obtained.
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(e)
The time limitations imposed by the client or the circumstances of the
case.
(f)
The nature and length of the attorney's professional relationship with the
client.
(g)
The experience, reputation and ability of the attorney performing the
services.
(h)
Whether the fee of the attorney is fixed or contingent.
ORS § 20.075(2).
When analyzing the factors under ORS § 20.075, the Court should “includ[e] in its order
a brief description or citation to the factor or factors on which it relies.” McCarthy v. Or. Freeze
Dry, Inc., 327 Or. 185, 188 (1998). But the Court “ordinarily has no obligation to make findings
on statutory criteria that play no role in the court’s decision.” Frakes v. Nay, 254 Or. App. 236,
255 (2012).
DISCUSSION
I.
Application of ORS § 742.061
Continental begins its opposition to Schnitzer’s fee petition with a very interesting
argument regarding the applicability of ORS § 742.061 to this case. Schnitzer tries to brush away
Continental’s argument as a frivolous attempt to avoid paying a fee award that Schnitzer argues
is clearly mandated by statute. I disagree with Schnitzer that this is a clear cut decision, but
ultimately agree with Schnitzer that ORS § 742.061 does apply to this case.
Continental argues that the plain language of ORS § 742.061 does not apply to this case.
(Defs.’ Opposition [464] at 7.) The statute clearly states that it applies when “an action is brought
in any court of this state upon any policy of insurance . . .” (ORS § 742.061.) Continental argues
that because Schnitzer did not bring its claim in a court of Oregon, but rather a court in Oregon,
this statute does not apply. Continental’s best piece of evidence to support its position is a recent
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Ninth Circuit opinion interpreting the phrase “the courts of” in the context of a forum selection
clause. In that case, the Ninth Circuit held:
We conclude[] that the choice of the preposition “of” in the phrase “the courts of
Virginia” was determinative—“of” is a term “denoting that from which anything
proceeds; indicating origin, source, descent, and the like.” Thus, the phrase “the
courts of” a state refers to courts that derive their power from the state—i.e. only
state court—and the forum selection clause, which vested exclusive jurisdiction in
the courts “of” Virginia, limited jurisdiction to the Virginia state courts.
In short . . . a forum selection clause that specifies “courts of” a state limits
jurisdiction to state courts, but specification of “courts in” a state includes both
state and federal courts.
Simonoff v. Expedia, Inc., 643 F.3d 1202, 1205–06 (9th Cir. 2011) (internal citations omitted).
Continental would have this court interpret the statutory language of ORS § 742.061 the same
way that the Expedia court interprets the term “of” when found in forum selection clauses.
Schnitzer scoffs at this argument and lists the following unconvincing counter arguments:
(1) Continental waived this argument when it failed to raise it in its original objections to the
proposed judgment form that Schnitzer filed; (2) there are at least 30 prior decisions where
courts have granted attorney fees under ORS § 742.061 after an action brought in federal court;
and (3) Continental is precluded from raising this argument because of the principles of judicial
estoppel. (Pls.’ Reply [471] at 2–9.)
Schnitzer’s first argument is a very weak argument in favor of waiver. The Judgment
submitted by Schnitzer that I signed states that “[n]othing herein shall be construed to limit or
abridge Schnitzer’s right under ORS 742.061 to the recovery of its attorney’s fees in future
proceedings . . .” (Judgment [458] at 6.) While this phrase certainly suggests that Schnitzer will
eventually be awarded attorney fess pursuant to this statute, Continental reasonably could have
believed that an objection to the form of a judgment was not the proper time to raise arguments
as to the applicability of a fee shifting statute—it is not unreasonable to think that such an
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objection would be better placed in an objection to the fee petition. I find that waiver is
inappropriate in this case and reject it as a basis for disposing of Continental’s argument against
the application of ORS § 742.061.
I also reject Schnitzer’s second argument that because 30 prior federal courts have
awarded fees in the past under ORS § 742.061 that I must therefore follow suit and award fees as
well. (Pls.’ Reply [471] at 8–9.) As Continental points out, none of those prior cases ever
considered the argument that Continental now raises. (Defs.’ Opposition [464] at 7 n.4.) Because
none of these cases dealt with the argument that Continental now makes, these 30 cases are of
little to no precedential value in deciding the argument before me.
Schnitzer’s third argument that I reject is that the principles of judicial estoppel apply to
this argument. The principles of judicial estoppel prevent a party from gaining an advantage by
taking one position at an early stage of the proceedings, and then seeking to gain a second
advantage at a later stage of the proceedings by taking a second position that is incompatible
with the first. See Rissetto v. Plumbers & Steamfitters Local 343, 94 F.3d 597, 600 (9th Cir.
1996). In determining whether judicial estoppel applies, courts generally consider 3 factors:
(1) whether the party’s later position is clearly inconsistent with the first; (2) whether the party
succeeded in persuading a court of the earlier position; and (3) whether the party would gain an
unfair advantage or impose an unfair disadvantage on its opponent if allowed to argue the second
position. New Hampshire v. Maine, 532 U.S. 742, 750–51 (2001). I do not believe that the
principles of judicial estoppel apply in this case. The principles of judicial estoppel exist to
prevent parties from manipulating courts, and that is not what I believe is going on here. While it
is true that Continental has itself received attorney fees awards pursuant to ORS § 742.061 for
cases held in federal court, I do not believe that that is very strong evidence that Continental is
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trying to manipulate the court in making an argument against the applicability to this statute in
this case. Continental was not seeking to defend itself from the application of ORS § 742.061 in
those previous cases, and therefore had no motivation to think of creative or complex arguments
as to why that statute might not apply. Continental has never taken an inconsistent position to the
one it takes now with regards to ORS § 742.061 at an early stage of these proceedings. In
addition, nothing in the position that Continental is now taking with regards to ORS § 742.061
creates an unfair advantage for Continental or unfair disadvantage for Schnitzer in dealing with
this fee petition. I therefore find that judicial estoppel should not apply to this argument.
Schnitzer makes one final argument in favor of rejecting Continental’s argument that
ORS § 742.061 should not apply in this case based on Erie principles that I adopt in part. I
believe that the Erie doctrine together with good public policy dictate that ORS § 742.061 should
apply in this case. If I were to find that ORS § 742.061 was not applicable to this case, it would
lead to the strange result that a federal court in Oregon sitting in diversity and an Oregon state
court, applying the same Oregon law, would reach different results about whether attorney fees
were available or not. Federal courts across the country applying ORS § 742.061 would look the
same (i.e. would not award attorney fees), but a federal court in Oregon and a state court in
Oregon would not. This result would also seem to stifle the stated purpose of ORS § 742.061
which is “is ‘to encourage the settlement of claims and to discourage the unreasonable rejection
of claims by insurers.’” See Axis Surplus Ins. Co. v. Lebanon Hardboard, LLC, No. CV 07-292MO, 2009 U.S. Dist. LEXIS 15754, at *7 (D. Or. Feb. 26, 2009) (internal citations omitted).
Parties would be able to get around this stated purpose by merely removing a case to federal
court.
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On the other hand, if I were to find that ORS § 742.061 did apply in this case because I
determine that a federal court in Oregon is a court “of” Oregon, it would lead to the strange
result that a federal court in Oregon sitting in diversity and a federal court in a foreign state
sitting in diversity, both applying Oregon law, would reach a different result as to whether or not
attorney fees are available. One would be a court “of” Oregon and the other would not. However,
it would result in the federal court in Oregon and the Oregon state court reaching the same result.
This seems like the proper result because it will avoid the intrastate forum shopping that Erie is
intended to prevent and it would support the stated purpose of this statute by not creating an easy
backdoor to thwart any impact it might have on encouraging settlements or discouraging
unreasonable rejections of insurance claims.
I do not believe that this is an easy argument to deal with. Continental makes an
interesting and compelling argument that linguistically this statute does not apply to this case.
However, given that its argument is based on linguistics alone, I believe that the proper result in
this case is the one that reduces intrastate forum shopping and supports the stated purpose of the
statute. Therefore, I find that ORS § 742.061 is applicable to this case.
II.
Appropriate Hourly Rates
Having determined that ORS § 742.061 does in fact mandate an award of attorney fees in
this case, I must now determine what is a reasonable attorney fees award. Pragmatically, there
are two main components in any attorney fees award: (1) determining whether or not the hourly
rates claimed by the attorneys and their staff are reasonable; and (2) determining whether or not
the total number of hours claimed by the attorneys and their staff is reasonable. ORS § 20.075
contains several factors that are relevant to determining the appropriate hourly rate for each
timekeeper. The most relevant factors are those that require the court to consider the complexity
8 – OPINION AND ORDER
of the case, the rates charged in the locality for similar legal services, the time limitations
imposed by the client or the case, and the experience, reputation, and ability of the attorney
performing the services. (ORS § 20.075(2).) Continental claims that rates sought by Schnitzer for
each one of its timekeepers are unreasonably large for the Portland market. (Defs.’ Opposition
[464] at 11–12.) I take up the reasonableness of each timekeeper’s hourly rates below.
A.
Joan Snyder
Ms. Snyder is a partner at Stoel Rives. Schnitzer’s fees expert, David Markowitz,
believes that $560 per hour is a reasonable billing rate for Ms. Snyder. (Markowitz Decl. [452] at
2.) Mr. Markowitz provides no support for this rate other than stating that he believes it to be
reasonable given Ms. Snyder’s experience, skills, and reputation in the area of environmental
law. Id. While I normally would not view this as a sufficient basis to justify a claimed billing
rate, Continental makes no objection to Ms. Snyder’s billing rate despite making rather detailed
objections to every other timekeepers’ hourly rate. I therefore find that it is appropriate to use
$560 per hour as the 2014 billing rate for Ms. Snyder. For the years prior to 2014, I adopt the
rates suggested by Mr. Markowitz in the table he attached to his declaration. (Id. Ex. 3.)
B.
Scott Kaplan
Mr. Kaplan is also a partner at Stoel Rives. Mr. Markowitz opines that $480 per hour is a
reasonable billing rate for Mr. Kaplan. (Id.) Mr. Markowitz goes into much more detail regarding
his determination of Mr. Kaplan’s reasonable hourly rate. Mr. Markowitz consulted both the
Oregon State Bar 2012 Economic Survey (“Bar Survey”) and the 2014 Morones Survey
(“Morones Survey”). (Id. at 2.) According to the Bar Survey, the 95th percentile rate for all
attorneys admitted to practice 21 to 30 years is $470 per hour and the 95th percentile rate for
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business/corporate litigation attorneys is $450. (Id.) According to the Morones Survey, the
average hourly rate for an attorney with 30+ years of experience is $448 per hour. (Id.)
Mr. Kaplan has 25 years of experience as a corporate litigator. Without telling us how or
why Mr. Kaplan’s skills are above average, Mr. Markowitz argues that Mr. Kaplan’s above
average experience and skill warrant treating him as an attorney with 30+ years of experience.
Assuming that I chose to do that, Mr. Markowitz argues that by applying what he believes to be
reasonable growth rates to the two surveys rates, $480 per hour is a reasonable hourly rate for
Mr. Kaplan’s work on this case.
Continental argues that this rate is too high. Continental’s fees expert, William Stockton,
opines that none of the partners in this case should be able to charge an hourly rate that exceeds
$400. (Stockton Decl. [467] at 8.) Mr. Stockton bases his opinion on the Bar Survey and his own
anecdotal experience of the Portland market. (Id.)
Given the evidence that I have before me, I find that a reasonable hourly rate for
Mr. Kaplan in 2014 is $480. In reaching this number, I did not determine that Schnitzer’s expert
was more credible than Continental’s. The parties presented me with a battle of their experts’
subjective opinions without any objective way to choose between the two. What tipped the scale
in Schnitzer’s favor was the fee schedule that Mr. Kaplan attached to his declaration in support
of the fees petition that detailed what rates Stoel Rives actually charged its clients in the relevant
years. (Kaplan Decl. [450] Ex. 2.) Mr. Markowitz’s suggested hourly rates for the years 2010 to
2014 track the rates that Stoel Rives was actually charging its other clients for Mr. Kaplan’s
time. (Markowitz Decl. [452] Ex. 3.) For the years prior to 2014, I adopt Mr. Markowitz’s
suggested rates for Mr. Kaplan.
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C.
Crystal Chase
For the same reasons that I adopted Mr. Markowitz’s suggested rates for Mr. Kaplan, I
adopt the rates set out in his table for Ms. Chase as well. (Id. Ex. 3.)
D.
John Iole and Joseph Montgomery
Mr. Iole and Mr. Montgomery are partners at Jones Day. Mr. Markowitz opines that $619
per hour is a reasonable billing rate for someone of similar experience and skill as Mr. Iole or
Mr. Montgomery. (Id. at 5.) Mr. Markowitz only relies on the Morones Survey in making this
determination. (Id.) Mr. Iole’s current billing rate is $727.50 per hour and Mr. Montgomery’s is
$921.50 per hour. (Iole Decl. [451] Ex. F.) Mr. Markowitz points to the Morones Survey that
shows that the 2012 average billing rate for the 15 attorneys with the highest rates in Oregon was
$569 per hour. (Markowitz Decl. [452] at 5.) Given the data that has been collected so far,
Mr. Markowitz projects that that number will rise to $619 for 2014. (Id.) Mr. Markowitz believes
that Mr. Iole’s and Mr. Montgomery’s individual experiences on other large insurance cases
justifies them receiving the highest of rates available in the Oregon market. (Id.) Continental,
through Mr. Stockton, repeats the same arguments to lower this rate to $400 as it did for
Mr. Kaplan. (Stockton Decl. [467] at 8.)
I find that the rates charged by Mr. Iole and Mr. Montgomery outside of Oregon, together
with their extensive background in major insurance litigation, justify adopting $619 per hour as
the appropriate 2014 billing rate for Mr. Iole and Mr. Montgomery. I disagree, however, with
Mr. Markowitz that for 2010 up to the present $619 is the proper reasonable rate. In 2010,
Mr. Iole’s hourly rate was $625, and Mr. Montgomery’s was $775. (Iole Decl. [451] Ex. F.) That
means from 2010 until 2014, Mr. Iole’s and Mr. Montgomery’s hourly rates increased 16.4% and
18.9% respectively. I choose to take a conservative approach to calculating attorney fees and
11 – OPINION AND ORDER
therefore order that the fee suggested by Mr. Markowitz for 2010 be decreased by 18.9% and
then increased each year at an average growth rate of roughly 4.4%. I find that the appropriate
reasonable rate for the years 2010 to 2014 respectively are $521, $544, $568, $593, and $619.
E.
Rebekah Kcehowski
Ms. Kcehowski is an attorney with Jones Day. She began working on this case as a senior
associate, and in the course of the litigation she was made a partner. (Markowitx Decl. [452] at
5.) Mr. Markowitz opines that the respective rates for Ms. Kcehowski’s work on this case from
2011 to 2014 are $360, $380, and $400. (Id. at 6.) Mr. Markowitz calculated these numbers from
the Bar Survey and the Morones Survey in the same way as for earlier individuals discussed. He
references the 2012 95th percentile rate for lawyers with equivalent experience ($428), and the
2012 75th percentile rate for business and corporate litigators ($360). (Id.) Mr. Markowitz says
that we should use $360 as the appropriate rate without any arguments why, and then adjusts that
rate upwards for inflation for the subsequent years. (Id.)
Continental agrees that I should look to the relevant 75th percentile amount, but argues
that I should apply the 75th percentile rate of attorneys with 10–12 years of experience ($300)
and not the 75th percentile rate for business and corporate litigators. (Stockton Decl. [467] at 11.)
Like Mr. Markowitz, Mr. Stockton does not provide me with any substantial evidence for why I
should choose one over the other.
I therefore, again, am left with Jones Day billing rates as the tie breaker. According to the
billing rates table attached to Mr. Iole’s declaration, for the years that Ms. Kcehowski was
working on this case, Jones Day was billing clients in a range of $436.50 to $674.15 per hour
from the years 2011 to 2014 for her time. (Iole Decl. [451] Ex. F.) Given that clients outside of
Portland were willing to pay such a high rate for Ms. Kcehowki’s time, I find that it is
12 – OPINION AND ORDER
appropriate to give her the higher starting rate of $360 per hour for 2012. I therefore also adopt
the suggested rates set out in Mr. Markowitz’s table for Ms. Kcehowski. (Markowitz Decl. [452]
Ex. 3.)
F.
Johanna Miralles, Allison Parker, and Matthew Samburg
Johanna Miralles, Allison Parker, and Matthew Samburg are, or were at the time of their
work on this case, associates at Jones Day. I agree with Mr. Markowitz’s argument that there is
no obvious reason why these associates should bill at any lower of a rate than Ms. Chase’s actual
rates. (Id. at 6.) I therefore adopt her actual rates as the appropriate reasonable billing rates for
these similarly situated associates.
G.
Paralegal Rates
Neither party makes very compelling arguments to support their proposed rate for
paralegal work. Mr. Markowitz points out in his declaration that according to the Morones
Survey, the average paralegal billing rate for 2012 for all paralegals in Portland was $173 per
hour. (Id. at 7.) Given the absence of any compelling evidence showing that I should adopt
Mr. Markowitz’s suggested rate of $240–$250 or Mr. Stockton’s suggested rate of $100–$125, I
simply adopt the average rate from the Morones Survey as the appropriate rate—$173 per hour.
H.
Support Personnel Rates
Mr. Markowitz argues that the appropriate hourly rates for litigation technology assistants
and for production assistants are $140 per hour and $80 per hour respectively. (Id. at 7.) These
numbers are purely derived from Mr. Markowitz’s personal experiences. (Id.) Mr. Stockton,
without citing any authority, simply states that he thinks these fees should not be recoverable at
all. (Stockton Decl. [467] at 11–12.) I disagree with Mr. Stockton, and therefore find, given no
13 – OPINION AND ORDER
alternative proposed rates, that the appropriate rates to use for these timekeepers are $140 for
litigation technology assistants and $80 for production assistants.
III.
Application of ORS § 20.075 Factors
Having determined what the appropriate hourly rate for each time keeper is, I now turn to
determining the appropriate number of hours that should be billed on this case. ORS § 20.075(2)
requires me to consider the relevant factors in subsections (1) and (2) in determining this value.
The parties briefed arguments on what they believe to be the relevant sections. I take up those
arguments below. I conclude that Schnitzer’s number of hours worked on this case is reasonable.
A.
ORS § 20.075(1)(a): The Conduct of the Parties
Schnitzer makes a lot of the fact that it won on all of its claims at trial and therefore it
should get all the fees it asks for. (Petition for Fees [449] at 6–7.) I agree with Continental,
however, that this factor has little to do with the size of the fee award in this case, and therefore
does nothing to advance Schnitzer’s argument. The fact that Schnitzer won on all of its claims
has little probative value in determining whether or not the total time its lawyers spent winning
those claims was reasonable.
B.
ORS § 20.075(1)(b): The Objective Reasonableness of the Claims, and Defenses
Asserted by the Parties
Again, I find that this favor does not cut in either party’s favor. Schnitzer argues that the
fact that the jury took only a few hours to deliberate and award Schnitzer everything it had asked
for somehow evidences that Continental’s defenses at trial were objectively unreasonable.
(Petition for Fees [449] at 9). I agree with Continental that such an inference from those facts
would be inappropriate. (Defs.’ Opposition [464] at 14.) The fact that a party loses at trial on
certain claims or defenses does not without more imply that those claims or defenses were
objectively unreasonable. I believe that both parties’ respective claims and defenses were
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reasonable, and therefore find that this factor is neutral as to the ultimate fee award.
C.
ORS § 20.075(1)(c) & (d): Effect of Award on Good Faith Claims and
Defenses, and on Meritless Claims and Defenses in Future Cases
Schnitzer correctly states that the purpose of ORS § 742.061 “is ‘to encourage the
settlement of claims and to discourage the unreasonable rejection of claims by insurers.’” See
Axis Surplus Ins. Co., 2009 U.S. Dist. LEXIS 15754, at *7 (internal citations omitted). Awarding
Schnitzer all of its requested attorney fees would serve this purpose.
Continental first argues that it did not pursue any meritless defenses and so this factor is
inapplicable. It then argues that an award of all the fees sought by Schnitzer would deter even
good faith defenses by similarly situated defendants in the future. (Defs.’ Opposition [464] at
17–18.)
I agree with Continental that subsection (d) is not relevant to this case because
Continental did not pursue any meritless defenses. It did whittle down the number of defenses it
would present at trial over the course of the litigation, but that is a fairly common practice as
cases are refined and rethought throughout the discovery process. I do, however, find that
subsection (c) weighs quite heavily in Schnitzer’s favor given the stated purpose of ORS §
746.061. Granting attorney fees in any amount imposes a cost on defendants who present good
faith defenses at trial but who ultimately lose, and therefore any amount of attorney fees deters
all defendants from asserting any and all good faith defenses. The Oregon Legislature has
determined that this is an appropriate burden to place on defendant insurers in order to meet its
public welfare goals. I have no power to second guess that decision. I therefore find that ORS §
20.075(1)(c) weighs in favor of granting Schnitzer all of its reasonable attorney fees because it
helps accomplish the stated purpose of ORS § 742.061.
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D.
ORS § 20.075(1)(e): Objective Reasonableness of Parties’ Diligence
Schnitzer argues that it created and followed a litigation plan with the two firms that it
hired, which led to efficient and non-duplicative legal work on this case. (Petition for Fees [449]
at 7–9.) Continental argues that Schnitzer’s attorney billing sheets tell a different story.
Continental, however, fails to sufficiently support its position. Continental merely identifies 8
different examples of what it believes to be excessive or duplicative work, and it claims, without
identifying them, that there are many more such cases of overbilling. (Defs.’s Opposition [464]
at 15–16.) Continental fails to tell me how much time these tasks should have taken or identify
exactly where the duplicative billing occurred. I reviewed the Schnitzer billing sheets that
Continental attached to Mr. Sommermeyer’s declaration, but I fail to see any obvious examples
duplicative billing. (Sommermeyer Decl. [466] Ex. G.) Continental tells me that these are just a
few examples and that I should now go and find more. (Id. at 3; see also Defs.’ Opposition [464]
at 16.) Continental apparently believes that its time is more valuable than mine, and therefore
leaves the task of combing through the record to find evidence supporting their arguments up to
me. I disagree that its time is more valuable than mine. Because Continental has failed to provide
adequate evidence in support of its position that Schnitzer’s attorneys engaged in excessive
billing and duplicative work, I find that this factor weighs in Schnitzer’s favor.
E.
ORS § 20.075(1)(f): Objective Reasonableness of the Parties in Pursuing
Settlement
I find that this factor is neutral as to each party’s position. The parties tell conflicting
stories without providing any great evidence to sort out all of the details. Continental argues that
it attempted on numerous occasions to get Schnitzer to agree to meet with a mediator to attempt
to resolve their dispute outside of court. (Defs.’ Opposition [464] at 18.) Continental claims that
Schnitzer refused to participate unless Continental bore the burden of all the costs related to
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mediation. (Gottlied Decl. [465] Ex.s 1–7.) Schnitzer responds that the reason it refused to
engage in mediation unless Continental bore all of the costs was because previous attempts at
settlement had shown that Continental had no real desire to settle, but rather just sought to force
its “settlement terms” down Schnitzer’s throat. (Pls.’ Reply [471] at 19.) Nothing in
Continental’s briefing rebuts Schnitzer’s story, but Schnitzer has not provided much evidence to
support its story. Given the state of the evidence, I cannot find that either side was more or less
reasonable than the other. I therefore find that this factor weighs equally in each party’s favor.
F.
ORS § 20.075(2)(a): Time and Labor Required / Novelty and Difficulty
I have considered the arguments made by each party and find that this factor is neutral as
to each party’s position. Each party makes a few conclusory statements that this case was either
very complex or a simple breach of contract case. At its most fundamental level, this was a
simple breach of contract case. However, almost any case characterized in its most fundamental
form can look quite basic. This case took nearly 4 years to run its course. It was something more
than a simple breach of contract case. But whether or not it was as complex as Schnitzer argues it
was is unclear given the lack of evidence that they have presented. Given the state of the
evidence, I find that this factor weighs equally between the parties.
G.
ORS § 20.075(2)(d): Amount Involved and the Result Obtained
It is undisputed that Schnitzer won on all claims, receiving all the monetary relief that it
sought: roughly $8,600,000 in presently unpaid defense costs plus an additional $2,400,000 in
prejudgment interest. I find this to be an odd factor because it does not seem to inform a finding
of how much the attorneys are worth paying, but rather just a finding that they are in fact worth
paying some amount greater than zero because they won the case. Nevertheless, given that this is
a factor that I must consider, it undoubtedly weighs in Schnitzer’s favor.
17 – OPINION AND ORDER
CONCLUSION
For the foregoing reasons, I find that all of the factors from ORS § 20.075 that I am
required to consider are either irrelevant, neutral or weigh in favor of granting Schnitzer’s
petition for fees—both the fees it claims for litigating the case, and the fees it claims for
preparing its fee petition. I order that the parties recalculate the total fees owed to Schnitzer
based on the hours previously claimed, but with the rates for each timekeeper that I set out
above. I will then review this calculation and award it as the reasonable attorney fees award in
this case. Schnitzer’s Petition for Fees [449] is GRANTED according to the foregoing
instructions.
IT IS SO ORDERED.
DATED this 12th
day of November, 2014.
/s/ Michael W. Mosman ___
MICHAEL W. MOSMAN
United States District Judge
18 – OPINION AND ORDER
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