United Marketing Solutions, Inc. v. Fowler et al

Filing 114

MEMORANDUM ORDER on Pltff United Marketing Solutions ("UMS"), Inc.'s 46 Objections to Magistrate Judge Theresa C. Buchanan's Award of Attorneys's Fees and Costs on Defendant's Motion to Compel, that for the reasons sta ted herein, the Court sustains UMS' objection because Magistrate Judge Buchanan's Order is clearly erroneous and contrary to law, and the 46 Objections to the Order are sustained in part and denied in part, and further, that Magistrate Judge Buchanan's Order awarding Fees and Costs on Deft's 29 Motion to Compel is reversed, and this matter is remanded for further proceedings consistent with this Order. /s/ by District Judge Gerald Bruce Lee on 3/2/11. (tbul, )

-TCB United Marketing Solutions, Inc. v. Fowler et al

Doc. 114

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United Marketing Solutions,
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plaintiff,

Case No,

l:09-cv-1392-GBL-TCB

ANGIE M. FOWLER, et al
Defendants,
)

MFMm?MTOUM ORDER

THIS MATTER is before .-v,o Court on Plaintiff United the murt Tnr ,s («UMS») Objections to Magistrate Marketing Solutions, Inc. s IWb
Judge Theresa C. Bucnanau

v,

»C Buchanan's Award of Attorney's Fees and Costs

before the Court is whether Magistrate .udge Buchanan, award
. fees and costs to Defendants Angie and *nA rosts to of $16,857.60 in *

Timothy Fowler (collectively, "Fowlers", <DKt. *, 39) iunreasonable and therefore <*-** erroneous or contrary to
!.» The court sustains UMS' objection to the rate

^termination, reverses Magistrate audge Buchanan. Order because it is dearly erroneous and contrary to lav,, and remands the .atter for further proceedings consistent with
this Order.

Dockets.Justia.com

I. BACKGROUND

This case concerns the breach of a franchise agreement relating to the distribution of mass-mailed business

advertising coupons to residential homes. In May 2002, the
Fowlers entered into a ten-year Area Franchise License

Agreement ("Agreement" or "Contract") with UMS whereby the
Fowlers became franchisees within UMS' direct mail coupon and
advertising system.

From May 2002 until July 2009, the Fowlers operated their
UMS franchise under the name United Marketing Solutions for Greensboro, Inc. On July 7, 2009, the Fowlers informed UMS
that they were terminating the agreement with UMS. Soon thereafter, the Fowlers opened a substantially similar business, employing a number of individuals who had recently
been employed by UMS.

On November 3, 2009, UMS filed its Complaint against the
Fowlers in the Circuit Court of Fairfax County, and in

December 2009, the case was removed to this Court. UMS claims breach of contract for wrongful termination and violation of
the non-solicitation and non-competition provisions. On June

7, 2010, the Fowlers moved under Federal Rule of Civil
Procedure 37 to compel UMS' responses to interrogatories,

production of documents, and supplemental initial disclosure.

Magistrate Judge Buchanan granted the motion and found that an
award of costs and fees incurred in bringing the motion was

appropriate under Rule 37. On July 16, 2010, after reviewing
the Fowlers' fee request, Magistrate Judge Buchanan ordered
that UMS pay the Fowlers $16,857.60 in fees and costs. UMS now objects to Magistrate Judge Buchanan's ruling as

contrary to law for four reasons: (1) UMS' counsel informed
the Fowlers' counsel that they would try to resolve the

discovery issue, but the Fowlers' counsel filed the Motion to

Compel anyway; (2) the Court awarded travel expenses when the
Fowlers' counsel was already required to appear before the Court on that particular day; (3) the Court awarded travel

expenses and fees for out-of-state counsel when local counsel
would have been less expensive; and (4) the rates charged by

the lawyers and paralegals when preparing the Motion to Compel
were not reasonable, and the Fowlers did not provide

sufficient evidence to establish the prevailing market rate.
II. Standard of Review

The Court will not disturb a magistrate judge's ruling on

nondispositive trial matters unless the ruling was "clearly
erroneous or is contrary to law." Fed. R. Civ. P. 72(a). A

court's finding is "clearly erroneous when although there is
evidence to support it, the reviewing court on the entire

evidence is left with the definite and firm conviction that a
mistake has been committed." Minyard Enterprises, Inc. v.

Southeastern Chemical * Solvent Co., 184 F.3d 373, 380 (4th Cir. 1999) (citing United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)). An order is contrary to law "when it fails to apply or misapplies relevant statutes, case law, or rules of procedure." Attard Industries, Inc. v. U.S. Fire Ins. Co.,
NO. I:10cvl21, 2010 WL 3069799 at *1 (B.D. Va. 2010) (citing
DeFazio v. Wallis, 459 F. Supp. 2d 159 (E.D.N.Y. 2006).
III. ANALYSIS

The Court sustains UMS' objection to the reasonableness

of the fee award for insufficient supporting evidence because

Magistrate Judge Buchanan's Order requiring UMS to pay the Fowlers $16,857.60 in fees and costs was clearly erroneous and contrary to law. The Court overrules UMS' other objections
because Magistrate Judge Buchanan's determinations on these
issues are not clearly erroneous or contrary to law. First,

UMS argues that their counsel informed the Fowlers' counsel that they would try to resolve the discovery issue, but the record on the motion to compel shows that the Fowlers' counsel
attempted to reach UMS' counsel on several occasions to no avail. Second, Magistrate Judge Buchanan did not err when she
awarded travel expenses to the Fowlers' counsel. Magistrate

judge Buchanan reduced the fees for June 18, 2010 by one-half
because the Fowlers' lawyer was already going to appear in court for the Plaintiff's Motion for Leave. Third, Magistrate judge Buchanan did not err in awarding fees to out-of-state
counsel. Even though the attorneys were from out-of-state,

Magistrate Judge Buchanan sought to award fees at the rate
appropriate for Northern Virginia.

Regarding the reasonableness of the fee award, Magistrate
judge Buchanan clearly erred because the Fowlers have not

provided sufficient evidence to establish the prevailing
market rate for legal fees in the Eastern District of Virginia
or to confirm that the rates from the cases upon which

Magistrate Judge Buchanan seemed to rely are the prevailing
market rates for the Eastern District of Virginia during the
relevant time period.

If the court grants a Rule 37 motion to compel discovery,

the court must require the party "whose conduct necessitated
the motion" to "pay the movant's reasonable expenses incurred

in making the motion, including attorney's fees." Fed. R.
Civ. P. 37(a) (5) (A) . In calculating an award of attorneys'

fees, a district court must first determine a lodestar figure

by multiplying the number of reasonable hours expended times a
reasonable rate. See Grissom v. The Mills Corp., 549 F.3d

313, 320 (4th Cir. 2008). In Robinson v. Equifax Information
Servs., LLC, the Fourth Circuit further expounded that the district court's discretion should be guided by the following
twelve factors:

(1) the time and labor expended; (2) the novelty and
difficulty of the questions raised; (3) the skill

required to properly perform the legal services
rendered; (4) the attorney's opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney's expectations at the outset of the litigation; (7) the time
limitations imposed by the client or circumstances;

(8)

the amount

in controversy and the results

obtained; (9) the experience, reputation and ability of the attorney; (10) the undesirability of the case
within the legal community in which the suit arose;

(11) the nature and length of the professional relationship between attorney and client; and (12)
attorneys' fees awards in similar cases.

Robinson, 560 F.3d 235, 243-244 (4th Cir. 2009).

In the Fourth Circuit, the fee applicant has the burden

of establishing the reasonableness of the requested rate. See

Plyler v. Evatt, 902 F.2d 273, 277 (4th Cir. 1990). The fee applicant's attorneys must produce affidavits about their own
rates, and the fee applicant must produce "satisfactory

specific evidence of the prevailing market rates in the
relevant community for the type of work for which he seeks an award." Id. The Fourth Circuit has ruled that affidavits

from other local lawyers are sufficient to verify the

prevailing market rate so long as the lawyers are familiar
with the fee applicants and the rates of the community for
similar work. See Robinson, 560 F.3d at 245.

The Court sustains UMS' objection because the Fowlers did not produce sufficient evidence of the prevailing market rate for attorney's fees in the Eastern District of Virginia during the relevant time period.1 The Fowlers submitted Certification in Support of Attorney's Fee Application on Motion to Compel
(Dkt. 35), but this is not enough. While the attorney's own

affidavits are necessary, they are not sufficient because the fee applicant must also provide specific evidence of the prevailing market rates with affidavits from local attorneys familiar with the fee applicant and local prevailing legal fee rates. The Fowlers and their counsel have not provided such
evidence.

in addition, Judge Buchanan erred in relying solely on

U.S. v. IIF Data Solutions, No. I:06cv641, 2010 WL 1726767

(E.D. Va. 2010) and Zhou Jie Plant, et al. v. Merrifield Town
Center Limited Partnerships, et al., No. I:08cv374, 2010 WL

4674435 (E.D. Va. 2010) to determine the reasonable hourly
rate for the Fowlers' attorneys and paralegals. When

'Other than the fee applicants' failure to produce evidence of
the prevailing market, Magistrate Judge Buchannan s

application of the other Robinson factors to the Fowlers' fee
request is not clearly erroneous or contrary to law.

evaluating fee requests in IIP Data Solutions, the court considered the "Grissom Table," which was a table that the

United States Court of Appeals for the Fourth Circuit created in 2008 to tailor the D.C.-based rates of the "Laffey Martrix"
to the Northern Virginia area.2 See IIF Data Solutions, 2010 WL
1726767 at *16 (E.D. Va. 2010)(citing Grissom, 549 F.3d at

323;. in Grissom, the court noted that the Laffey Matrix has been accepted by the District of Columbia Circuit as "a useful
starting point" for determining the prevailing rate for

litigation counsel in D.C. See Grissom, 549 F.3d at 322. However, the Fourth Circuit has ruled that the Laffey Matrix alone is insufficient to carry the fee applicant's burden of

proof. See Robinson, 560 F.3d at 245. Similarly, the Grissom
Table is a useful benchmark to guide the Court's analysis, but
it is not sufficient on its own.

in this case, Magistrate Judge Buchanan appears to rely

on the rates that the court in IIF Data Solutions determined
were reasonable based on the Grissom Table. For example, the

rates for Blumstein, Amberly, and Bayer all correspond with

the hourly rates set by the Grissom Table. However, it is
unclear how Magistrate Judge Buchanan set Mr. Einbinder's rate 2The U S. Attorney's Office for the District of Columbia
created the Laffey Matrix as a basis for determining attorneys' fees in litigation claims.

of $400 an hour because this is above the rate set by the
Grissom Table. Furthermore, it is unclear how the $90

paralegal rate was determined because the Grissom Table does
not include a rate for paralegals.

District courts have discretion in determining attorneys' fees, but there must be evidence supporting the reasonableness of these fees. Cases like IIF Data Solutions, which rely on the Grissom Table, can provide useful starting points for the Court to consider when determining attorneys' fees, but the burden is still on the fee applicant to produce evidence of the prevailing market rates during the relevant time period.
Evidence of the prevailing market rate is especially important in the present case because IIF Data Solutions references rates that are two years old: Grissom was decided in December 2008. in relying on these rates, Magistrate Judge Buchanan
had no evidence stating that the legal rates in July 2010 were

the same as those set forth in 2008. Indeed, the national recession affected the Northern Virginia legal market, and

legal rates have likely changed. Accordingly, to confirm the
reasonableness of these rates, there needs to be evidence

demonstrating that these rates, which appear to come from the
2008 Grissom Table, are the prevailing market rates in

Northern Virginia in 2010 for the Fowlers' attorneys and
paralegals.

Finally, Magistrate Judge Buchanan writes that "the level of proof demanded in awarding fees and costs in a discovery motion should not be that required in award of fees
and costs for the entire course of litigating a case."

Magistrate Judge Buchanan cited no authority, and the Court
can find no cases, supporting such a proposition. Therefore, the Court sustains UMS' objection because Magistrate Judge
Buchanan's Order is clearly erroneous and contrary to law.

IV.

CONCLUSION

For the foregoing reasons, the Court sustains UMS'

objection because Magistrate Judge Buchanan's Order is clearly
erroneous and contrary to law. It is hereby

ORDERED that Plaintiff United Marketing Solutions, Inc.'s

Objections to Magistrate Judge's Order (Dkt. No. 46) are
SUSTAINED in part and DENIED in Part. It is further

ORDERED that Magistrate Judge Buchanan's Order awarding

Fee's and Costs on Defendant's Motion to Compel (Dkt. No. 39)

10

i. REVERSED, and this matter is REMANDED for further
proceedings consistent with this Order.

The Clerk is directed to forward acopy of this Order to
counsel of record.

ENTERED

this &«f

day of March, 2011

Alexandria, Virginia
Gerald Bruce Lee

United States District Judge

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