Opinion
1:21-cv-00044-ADA
06-15-2022
FINTIV, INC. Movant, v. STMICROELECTRONICS, INC., Respondent.
MEMORANDUM OPINION AND ORDER
ALAN D ALBRIGHT UNITED STATES DISTRICT JUDGE
Came on for consideration this date is STMicroelectronics, Inc.'s Motion for Requested Attorney's Fees. After careful consideration of the Motion, the parties' briefs, and the applicable law, the Court GRANTS-IN-PART STMicroelectronics, Inc.'s Motion. The Court awards STMicroelectronics, Inc. (“ST”) $51,438.44 in costs and fees.
I. BACKGROUND
The lawsuit underlying this Action is Fintiv, Inc. v. Apple, Inc., No. 1:21-cv-00896-ADA (W.D. Tex.), in which Plaintiff, Fintiv Inc. (“Fintiv”) has sued Defendant Apple Inc. (“Apple”) for patent infringement. Fintiv owns U.S. Patent No. 8,843,125 (“the '125 patent”), titled “System and Method for Managing Mobile Wallet and its Related Credentials.” See ECF No. 1-1 ¶ 2. Fintiv asserts inter alia that Apple directly infringes the '125 patent by making, using, selling, offering for sale, and/or importing Apple devices utilizing Apple Pay/the Apple Wallet application. See ECF No. 1 at 2.
In February of 2020, Fintiv served non-party ST with a subpoena (the “Subpoena”) seeking eleven categories of documents and testimony on twelve topics. See id. at 1. Fintiv purportedly decided to subpoena ST “because reputable public sources [led] Fintiv to believe that ST provides or provided chips for the Accused Products.” Id. at 3. ST responded to the subpoena by representing that it “does not manufacture or design the Accused Products listed in the Subpoena or STMicro Chips referenced” therein. Id. Accordingly, ST did not produce any documents or put forward a witness to be deposed. Though the parties met and conferred in July of 2020, they failed to resolve ST's objections. Id. at 3-5.
On December 9, 2020, Fintiv initiated this Action, moving in the U.S. District Court for the Northern District of Texas for an order compelling ST's compliance with the Subpoena. ECF No. 1 at 11. On January 14, 2021, after the parties briefed the propriety of transfer under Federal Rule of Civil Procedure 45(f), this Action was transferred to the docket of the undersigned. See ECF No. 19.
On April 20, 2021, after extensive briefing and oral arguments, the Court denied Fintiv's motion to compel and determined the Federal Rules of Civil Procedure 37(a)(5)(B) and 45(d)(1) mandated the award of ST's “reasonable costs and attorney's fees incurred in defending” Fintiv's motion. Id. at 4-5. The Court instructed the parties to “work together to agree on the appropriate amount of such award.” Id. Apparently unable to reach a compromise, ST's counsel submitted a declaration outlining ST's requested costs and fees, to the tune of about $92,182.50, on May 28, 2021. See ECF No. 36 at 4. For context, Fintiv's final offer was $20,000 in fees and costs. See ECF No. 55 at 6 n.12.
Weeks before ST's counsel executed that declaration, Fintiv moved for reconsideration of the Court's decision to grant costs and fees. ECF No. 32. On August 12, 2021, after full briefing, the Court denied that motion and ordered that ST should recoup any fees attributable to defending Fintiv's reconsideration motion. Id.
On September 15, 2021, the Court again heard oral arguments, this time regarding the parties' disagreement as to amount of costs and fees to be awarded. See ECF No. 50. By that time, ST had adjusted its requested award up to $104,000, accounting for fees incurred in opposing Fintiv's reconsideration motion. See id. at 3:16-23. The Court took the issue under advisement and then, on September 16, 2021, ordered briefing on the issue of the reasonableness of ST's requested award. See ECF No. 49.
On September 20, 2021, Justin Cohen, a partner at Holland & Knight LLP (“H&K”), ST's counsel, filed a declaration outlining ST's requested fees. ECF No. 51. Fintiv filed its opposition on October 8, 2021, ECF No. 54, to which ST filed a reply that same day, ECF No. 55. ST's reply listed its final request: $117,694.35, which accounted for fees incurred in drafting the reply itself. ECF No. 55-3 ¶ 5.
ST charged time for six different attorneys and one paralegal:
| Name | Title | Hourly Rate |
| Bruce Sostek | Partner | $1,021.50 |
| Max Ciccarelli | Partner | $810 |
| Michael Heinlen | Senior Counsel | $657 |
| Justin Cohen | Partner | $648 |
| Vishal Patel | Partner | $630 |
| Natalie Parker | Associate | $549 |
| Stacy Gunder | Paralegal | $319.50 |
See ECF No. 51 ¶ 19. According to Mr. Cohen, these rates reflect a | “professional discount.” Id. ¶ 14 n.4.
The issue of the reasonableness of ST's requested fees is now ripe for judgment.
II. LEGAL STANDARD
The Fifth Circuit uses the “lodestar” method to calculate attorney's fees for fee award purposes. See Tollett v. City of Kemah, 285 F.3d 357, 367 (5th Cir. 2002). The lodestar is calculated by multiplying the number of hours expended by the appropriate hourly rate in the community. See Singer v. City of Waco, Tex., 324 F.3d 813, 829 (5th Cir. 2003). The number of hours expended is reasonable unless the hours are “excessive, duplicative, or inadequately documented.” Id. And the district court has sufficient expertise to determine whether rates charged are reasonable. See Davis v. Bd. of Sch. Comm'rs of Mobile Cnty., 526 F.2d 865, 868 (5th Cir. 1976); Weeks v. S. Bell Tel. & Tel. Co., 467 F.2d 95, 98 (5th Cir. 1972) (“The court is itself an expert on the question and may consider its own knowledge and experience concerning reasonable and proper fees and may form an independent judgment either with or without the aid of testimony of witnesses as to value.”). “The lodestar . . . is presumptively reasonable and should be modified only in exceptional cases.” Watkins v. Fordice, 7 F.3d 453, 457 (5th Cir. 1993).
III. ANALYSIS
ST requests $117,694.35 for fees associated with this Action. ECF No. 55 at 8. Fintiv counters that $19,300 is a fair amount of compensation. See ECF No. 54 at 8. The Court finds that ST is entitled to $51,438.44. This represents the requested $117,694.35, less $3,386.70 of paralegal fees, reduced by 55%.
A. ST Can Recover for the Hearing on Reasonableness of Attorney's Fees
The Court is not convinced that Fintiv should be absolved from covering ST's fees incurred at the September 15, 2022, hearing. Fintiv alleges that awarding these fees penalizes Fintiv for requesting a hearing after a good-faith attempt to compromise on fees incurred up to that point. ECF No. 54 at 2. The Court again notes that Fintiv's final offer was $20,000, a $70,000 discount on the fees ST incurred by the end of May 2021. Id. Fintiv characterizes this a “good-faith” offer in view of a single decision from the U.S. District Court for the Northern District of Texas granting, by agreement of the parties, only $16,254.50 in fees for a successful defense against a third-party subpoena. Id. (citing Am. Fed'n of Musicians of the U.S., and Canada v. Skodam Films, LLC, No. 3:15-mc-122-M-BN, (N.D. Tex. Dec. 21, 2015)). One seven-year-old text order is too thin a reed upon which to build a good-faith basis, especially absent some showing that this Action and American Federation are factually similar. (And if Fintiv thought American Federation was on all fours, Fintiv's initial offer of $10,000 is still ungenerous, cutting against its “good-faith” argument.)
As ST argues, a more reasonable offer may have obviated the need for the September 15 hearing. ECF No. 55 at 6. Accordingly, the Court will not deduct fees related to that hearing from ST's award.
B. ST Did Not Fail to Properly Support the Hourly Rates Applied in Its Attorney's Fees Application
“To determine reasonable rates, a court considers the attorneys' regular rates as well as prevailing rates.” La. Power & Light Co. v. Kellstrom, 50 F.3d 319, 328 (5th Cir. 1995). “When an attorney's customary billing rate . . . is within the range of prevailing market rates, the court should consider this rate when fixing the hourly rate to be allowed.” Id. “An attorney's requested hourly rate is prima facie reasonable when he requests that the lodestar be computed at his or her customary billing rate, the rate is within the range of prevailing market rates[,] and the rate is not contested.” In re Heartland Payment Sys., Inc. Customer Data Sec. Breach Litig., 851 F.Supp.2d 1040, 1087 (S.D. Tex. 2012) (alteration in original) (internal quotation marks omitted) (citing Kellstrom, 50 F.3d at 328).
The Court will not acquiesce to Fintiv's request to reduce the hourly rates for ST's counsel, finding them reasonable. Fintiv primarily argues that ST did not support its fee application with satisfactory evidence of the prevailing market rate for similar services by lawyers of reasonably comparable skill, experience, and reputation. ECF No. 54 at 3-4. ST's only support was a declaration from ST's counsel, Mr. Cohen, and that alone cannot, in Fintiv's judgment, suffice. Id. (citing Alvarez v. McCarthy, No. 6-16-CV-00172-ADA, 2020 WL 1677715, at *6 (W.D. Tex. Apr. 6, 2020)).
ST argues that several pieces of evidence prove that the rates are reasonable. To be sure, Mr. Cohen's declaration is one piece of the puzzle. He testified that he is “personally familiar with the usual and customary fees associated with discovery disputes in intellectual property cases” and, as a result, is “personally familiar with the reasonable and necessary attorneys' fees associated with” litigating discovery motions. ECF No. 51 ¶ 6. And, in his opinion, the rates H&K charged were “reasonable” and “comparable” to fees charged by Dallas-based attorneys of “equal or comparable experience” at firms “with comparable personnel and resources.” Id. at ¶ 7. ST contends that Mr. Cohen's declaration alone is sufficient. ECF No. 55 at 8 (first citing Stancu v. Hyatt Corp./Hyatt Regency, Dallas, No. 3:17-CV-2918-L, 2018 WL 5084912, at *5 (N.D. Tex. Oct. 18, 2018) (N.D. Tex. Oct. 18, 2018); and then citing Wafer v. Quiktrip Corp., No. 3:19-cv-1665, 2021 WL 3566374, at *2 (N.D. Tex. June 28, 2021)).
Next, ST proffers this Court's own experience as evidence competent to inform its decision as to whether the rates are reasonable. Id. at 8 (citing Weeks, 467 F.2d at 97). “The court is itself an expert on the question and may consider its own knowledge and experience concerning reasonable and proper fees and may form an independent judgment either with or without the aid of testimony of witnesses as to value.” Weeks, 467 F.2d at 97.
Finally, ST proposes that the American Intellectual Property Law Association (AIPLA) Report of the Economic Survey reflects that ST's attorney's rates were reasonable. ECF No. at 6. That survey reflects that the 75th-90th percentile of rates for equity partners in Texas was $700-$900, and the third quartile for partner-track attorneys was $593. ECF No. 55 at 8.
Mr. Cohen, an attorney with fourteen-plus years of experience and two technical degrees, did most of ST's work. ECF No. 51 at 1-2. His rate was $648/hour. Id. at 7. The one partner-track associate aiding Mr. Cohen was H&K's Natalie Parker, who had nine years of experience as an attorney. ECF No. 54 at 4. Her rate was $549/hour. ECF No. 51 at 7. Based on its own experience, the AIPLA Survey, and Mr. Cohen's declaration, the Court finds all the complained-of hourly rates reasonable.
It is also appropriate here to acknowledge Fintiv's objection to ST's paralegal fees. According to Fintiv, all these fees account for clerical work that ST must absorb as overhead costs. ECF No. 54 at 6. This argument is persuasive; the type of work billed for by Ms. Gunder is not that kind “traditionally done by an attorney.” City of San Antonio, Texas v. Hotels.com, L.P., No. 5-06-CV-381-OLG, 2017 WL 1382553, at *6 (W.D. Tex. Apr. 17, 2017); ProTradeNet, LLC v. Predictive Profiles, Inc., No. 6:18-CV-38-ADA, 2022 WL 2078032, at *3 (W.D. Tex. June 9, 2022) (finding that “purely clerical” work should not be reimbursed). ST has not offered any opposition on this point. Accordingly, the Court reduces the requested award in the amount attributed to Ms. Gunder: $3,386.70.
C. The Use of Block Billing by ST's Counsel is Permitted
Fintiv objects to ST's use of block billing and believes those entries should be stricken or reduced appropriately. ECF No. 54 at 7. The Court does not agree and will not implement reductions for block billing, at least because Fintiv has “not object[ed] to particular billing entries as inadequately documented,” and so the Court will not sua sponte “sift through fee records searching for vague entries or block billing.” KeyCorp v. Holland, No. 3:16-cv-1948, 2017 WL 606617, at *22 (N.D. Tex. Feb. 15, 2017); ProTradeNet, 2022 U.S. Dist. LEXIS 103056, at *10. Moreover, in reviewing ST's bill, the Court finds that the entries provide detail sufficient to review the tasks performed and to confirm that H&K's time was spent defending against Fintiv's motions. For these reasons, the Court will not strike or reduce the entries.
D. ST Cannot Recover Fees Outside the Scope of this Court's Order
Fintiv argues that ST should not recover for work done before Fintiv filed its motion to compel because this Court only awarded “fees incurred in opposing Fintiv's Motion to Compel and Motion for Reconsideration.” ECF No. 54 at 7 (quoting ECF No. 42 at 1). For example, Fintiv argues that work ST did reviewing the subpoena and conferring with Fintiv prior to the motion to compel is not compensable. Id. Fintiv also asserts that ST cannot recover for fees accrued after the Court ruled on the motion for reconsideration, like work done in preparing for the September 15, 2021, hearing on the reasonableness of the fee request. Id. at 7-8.
The Court does not find that Rule 45(d)(1)'s text explicitly or implicitly limits the fee award to only those fees incurred after the filing of a motion to compel. Nor does the Court find itself inescapably bound by the language of its own prior order. These fees are compensable because they are a direct consequence of Fintiv issuing the subpoena even though discovery in the underlying litigation produced no evidence that “any relevant ST NFC chip was used in the accused Apple products.” ECF No. 42 at 1; see also ECF No. 30 at 2-3. To be clear, the conduct justifying fee-shifting began, not with Fintiv's motion to compel, but with Fintiv's Subpoena. See ECF No. 30 at 3 (“The Court is concerned about litigants issuing subpoenas to third parties without any evidence that the third parties have information relevant to the litigants' claims or defenses.” (emphasis added)).
As such, the scope of ST's request-including those fees incurred before the motion to compel-is well tailored. That scope also properly includes work done in preparing for September 15, 2021, hearing for a few reasons. First, that hearing would not have occurred absent Fintiv's dogged pursuit of irrelevant information. See id. at 1 (“Fintiv's subpoena sought information that is not relevant to its suit against Apple.”); Stancu, 2018 WL 5084912, at *3 (some quotation marks omitted) (holding that a party seeking attorney's fees after successfully opposing a discovery motion may recover “time spent on additional briefing and any oral argument or hearing and can include ‘fees on fees' for the time expended in filing a motion for attorneys' fees” (quotation marks omitted)). Second, the Court is not convinced that Fintiv made good-faith attempts at compromising on reasonable attorney's fees. See Section III.A, supra.
E. ST's Requested Attorney's Fees Amount is Patently Unreasonable and Does Not Show the Exercise of Reasonable Billing Judgment
“[T]he burden of proof of reasonableness of the number of hours is on the fee applicant, and not on the opposing party to prove their unreasonableness.” Leroy v. Houston, 831 F.2d 576, 586 (5th Cir. 1987) (citation omitted). “Billing judgment requires documentation of the hours charged and of the hours written off as unproductive, excessive, or redundant.” Saizan v. Delta Concrete Prods. Co., 448 F.3d 795, 799 (5th Cir. 2006). If evidence of billing judgment is not submitted, a fee award should be reduced accordingly by a percentage intended to substitute for the exercise of billing judgment. Id.
Fintiv asserts that ST did not exercise billing judgment, giving several examples, chief among them inefficient staffing. ECF No. 54 at 4-5. This Court agrees. H&K's invoices list six attorneys: four partners, one senior counsel, and one associate. While only three H&K attorneys- Mr. Cohen, Mr. Heinlen, and Ms. Parker-completed 91% of the billed hours, ECF No. 55 at 7, the Court finds even the limited participation of three other partners to be excessive given the seniority of Mr. Heinlen, Mr. Cohen, and Ms. Parker-and the nature of this Action. This Action is an offshoot of a high-stakes and complex patent infringement case, yet the Court must acknowledge that this limited Action is peripheral. The stakes and complexity are commensurately lower. Mindful of that, the Court finds that H&K could have and should have delegated more work to Ms. Parker and even less-tenured associates. See Preston Expl. Co. v. GSP, LLC, No. H-08-3341, 2013 WL 3229678, at *9 (S.D. Tex. June 25, 2013) (noting courts have made significant reduction to fee awards using lodestar calculation where “partners performed many tasks that were more suited to associates or paralegals” and “case was overstaffed with partners who often duplicated each other's efforts”); Neles-Jamesbury, Inc. v. Bill's Valves, 974 F.Supp. 979, 987 (S.D. Tex. 1997) (holding that “[the] work allocation ha[d] not been justified” when “the work of the senior partner . . . and a junior partner . . . constitute[d] the vast majority of the time billed”). H&K defended the lopsidedness of its team by noting that some partners on the team left H&K [Redacted] ECF No. 50 at 14:6-13. Mr. Cohen conceded that “it could be great if staffing was more lean,” before claiming that H&K was “doing the best we can with the folks we have to handle the work as it comes in.” Id. at 14:14-17. The Court does not find this explanation persuasive for a firm of H&K's size and makeup. Regardless, Fintiv should not be charged a premium merely because H&K's own staffing issues prevented ST from assembling a suitably balanced team for the task. The Court finds it only fair and reasonable to apply a 55% discount off the total fee request to compensate for this lack of billing judgment.
Fintiv argues for an even steeper discount, repeatedly returning to the nature of Action as a simple motion to compel. See ECF No. 54 at 7-8. But any further reduction would underrate the volume of work Fintiv foisted upon ST. H&K had to: review and analyze Fintiv's subpoena; confer with Fintiv's counsel; review, analyze, and respond to Fintiv's motion to compel; confer with its client to understand the relevant facts and burden, and to prepare a declaration in support of its opposition to the motion to compel; research and respond to the Northern District of Texas's order regarding transfer of the dispute to this District; prepare for, attend, and argue the motion to compel at the January 26, 2021, hearing; prepare for, attend, and argue in support of an award of fees at the April 20, 2021, hearing; review, analyze, and brief a response to Fintiv's motion for reconsideration; prepare for, attend, and argue in support of a fee amount at the September 15, 2021, hearing; and prepare declarations in support of fees. And, as ST notes, Fintiv engaged ST in these discovery disputes for over a year. ECF No. 55 at 2. This Action involved more work than your run-of-the-mill motion to compel; any further reduction ignores that fact. For a job of this complexity, H&K's team was too top heavy. And, again, ST's [Redacted] professional discount is not enough to adequately account for that asymmetry and evidences a lack of billing judgment.
IV. CONCLUSION
It is therefore ORDERED that STMicroelectronic, Inc.'s Motion is GRANTED-IN-PART. As set forth above, the Court will reduce for unreasonable billing and fees outside the scope of the Court award. The Court awards ST attorney's fees in the total of $51,438.44, which shall be due and payable in full by Fintiv within 30 days from the issuance of this Order.