Securities and Exchange Commission v. Sethi Petroleum LLC et al

Filing 239

MEMORANDUM OPINION AND ORDER re 216 Statement of Costs Incurred as a Result of Contempt by Securities and Exchange Commission. Plaintiffs Statement of Costs Incurred as a Result of Contempt (Dkt. #216) is hereby GRANTED and Contemnors Sameer Sethi, Praveen Sethi, and John Weber are ordered to pay the SEC, jointly and severally, $33,160 as costs incurred in bringing the contempt motion. Signed by Judge Amos L. Mazzant, III on 1/19/17. (cm, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

SECURITIES AND EXCHANGE
COMMISSION
v.
SETHI PETROLEUM LLC and SAMEER P.
SETHI

§
§
§
§
§
§
§

Civil Action No. 4:15-CV-00338
Judge Mazzant

MEMORANDUM OPINION AND ORDER
Pending before the Court is Plaintiff Security and Exchange Commission’s (“SEC”)
Statement of Costs Incurred as a Result of Contempt (Dkt. #216). After reviewing the
application, the Court finds that the application should be granted.
BACKGROUND
On August 9, 2016, the Court entered an order holding Sameer P. Sethi (“Sameer”),
Praveen Sethi (“Praveen”), and John Weber (“Weber”) (collectively, “Contemnors”) in contempt
of its Agreed Order Granting Preliminary Injunction, Asset Freeze, and Other Relief (Dkt. #169).
The Court ordered Sameer, Praveen, and Weber to pay the SEC’s costs incurred in the contempt
proceeding, upon approval of the SEC’s statement of costs (Dkt. #169 at p. 30).
On October 13, 2016, the SEC filed this application seeking costs incurred (Dkt. #216).
Contemnors have been given an opportunity to respond, but have not done so.
LEGAL STANDARD
“An award of attorneys’ fees and costs to the prevailing party in a civil contempt action is
determined according to the ‘lodestar method.’” SEC v. AmeriFirst Funding, Inc., Civil Action
No. 3:07-CV-1188-D, 2008 WL 2185193, at *1 (N.D. Tex. May 27, 2008) (quoting Microsoft
Corp. v. United Comput. Res. of N.J., Inc., 216 F. Supp. 2d 383, 387 (D.N.J. 2002)). The

computation of a reasonable attorneys’ fee award is a two-step process. Rutherford v. Harris
Cty., 197 F.3d 173, 192 (5th Cir. 1999) (citation omitted). First, the court must utilize the
lodestar analysis to calculate a “reasonable” amount of attorneys’ fees. Id. The lodestar is equal
to the number of hours reasonably expended multiplied by the prevailing hourly rate in the
community for similar work. Id. Second, the Court must consider whether the lodestar amount
should be adjusted upward or downward depending on the circumstances of the case and after
addressing the twelve factors from Johnson v. Georgia Highway Express, Inc., 488 F.2d 714
(5th Cir. 1974). Id.
The Johnson factors are:
(1) time and labor required; (2) novelty and difficulty of issues; (3) skill required;
(4) loss of other employment in taking the case; (5) customary fee; (6) whether
the fee is fixed or contingent; (7) time limitations imposed by client or
circumstances; (8) amount involved and results obtained; (9) counsel’s
experience, reputation, and ability; (10) case undesirability; (11) nature and length
of relationship with the client; and (12) awards in similar cases.
Id. at 192 n.23 (citing Johnson, 488 F.2d at 717–19).
The fee applicant bears the burden of proving that the number of hours and the hourly
rate for which compensation is requested is reasonable. See Riley v. City of Jackson, 99 F.3d 757,
760 (5th Cir. 1996); Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). The Court has discretion in
determining whether to adjust the lodestar upward or downward based on its analysis of the
Johnson factors. Riley, 99 F.3d at 760. “Many of [the Johnson] factors usually are subsumed
within the initial calculation of hours reasonably expended at a reasonable hourly rate and should
not be double-counted” in determining whether to adjust the lodestar. Jason D.W. v. Hous. Indep.
Sch. Dist., 158 F.3d 205, 209 (5th Cir. 1998) (internal citations omitted).
The lodestar is presumptively reasonable, and should be modified only in exceptional
cases. Watkins v. Fordice, 7 F.3d 453, 457 (5th Cir. 1993). The fee applicant who seeks more
2

than the lodestar amount has the burden of showing that “such an adjustment is necessary to the
determination of a reasonable fee.” City of Burlington v. Dague, 505 U.S. 557, 562 (1992)
(quoting Blum v. Stenson, 465 U.S. 886, 898 (1984) (emphasis added)).
ANALYSIS
In the present case, the SEC requests a total amount of $33,160 in attorneys’ fees and
costs (Dkt. #216 at p. 7).
The SEC seeks reimbursement for 68 hours of attorney work. The SEC attorneys do not
keep contemporaneous time records. However, the Fifth Circuit has rejected the requirement that
attorneys present contemporaneous time records of their work in order to recover attorney’s fees.
See Dennis v. Warren, 779 F.2d 245, 249 (5th Cir. 1985). Moreover, the “[g]overnment
attorneys . . . are not normally expected to record their hours, as they do not normally litigate in
fee-generating situations.” EEOC v. Local 638 & Local 28 of the Sheet Metal Workers’ Int’l
Ass’n, No. 71 Civ. 2877 (RLC), 1991 WL 278917, at *2 (S.D.N.Y. Dec. 18, 1991). The Court
finds that the SEC’s application, supported by time estimates, is sufficient to establish the
amount of hours reasonably expended on the contempt proceedings.
The SEC’s request is based on an hourly rate of $450 per hour, which is the SEC’s
conservative estimate of what a comparable hourly rate for similar work. The SEC’s lawyers do
not have a regular billing rate. However, attorneys in similar matters and markets have been
awarded similar amounts. See Billitteri v. Sec. Am., Inc., No. 3:11-cv-00191-F, 2011 U.S. Dist.
LEXIS 93907, at *42 (N.D. Tex. Aug. 4, 2011); Scheiner v. i2 Techs., Inc., Civil No. 3:01-CV418-H, 2004 U.S. Dist. LEXIS 28979, at *22 (N.D. Tex. Oct. 1, 2004). The Court agrees with
the SEC and finds that $450 per hour is a conservative estimate of the cost of legal services in
the market.

3

Multiplying the reasonable amount of hours by the reasonable fee in the market, the
Court finds the lodestar amount to be $30,600. There is a strong presumption that the lodestar
amount is the reasonable fee. Watkins, 7 F.3d at 457. The lodestar should only be adjusted when
necessary to make the fee reasonable. City of Burlington, 505 U.S. at 562. The SEC does not
seek enhancement in order to make the fee reasonable. Additionally, the Court, after analyzing
the Johnson factors, finds that enhancement is not appropriate in this case.
Finally, the SEC requests $760 for administrative staff expenses and $1,800 for witnessrelated expenses. In a contempt case, the court is authorized to award other expenses incurred in
proving the contempt. SEC v. AmeriFirst Funding, Inc., 2008 WL 2185193, at *5–6. The Court
finds that these costs are reasonable and necessary to prove the contempt and therefore should be
awarded to the SEC.
CONCLUSION
.

It is therefore ORDERED that Plaintiff’s Statement of Costs Incurred as a Result of
Contempt (Dkt. #216) is hereby GRANTED and Contemnors Sameer Sethi, Praveen Sethi, and
John Weber are ordered to pay the SEC, jointly and severally, $33,160 as costs incurred in
bringing the contempt motion.
SIGNED this 19th day of January, 2017.

___________________________________
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

4