Opinion
Civil No. 00-354-JO
December 5, 2001
Laura C. Taylor, Michael M. Ratoza, Ratoza Long, Portland, OR, Attorneys for Plaintiffs.
Sharon Ann Reese, Kindercare Learning Centers, Inc., Portland, OR, Stephen A. Redshaw, Stoel Rives, Portland, OR, Attorneys for Defendant.
OPINION AND ORDER
In March 2000, plaintiffs brought this diversity action against defendant, alleging claims for breach of a franchise agreement, detrimental reliance, misrepresentation, and fraud. Eventually, the parties entered into a settlement agreement, which, as relevant here, reserved the issue of attorney fees and costs for determination by the court.
The case is now before the court on plaintiffs' application for attorney fees and costs (# 48). Plaintiffs request an award of $57,628.50 in attorney fees, and $12,609.76 in costs. Defendant has objected to the requested sums. After considering the parties' submissions and for the reasons set forth below, I award plaintiffs $44,281.00 in attorney fees and $5,636.30 in costs.
DISCUSSION
1. Plaintiffs' Attorney Fee Request
In the Ninth Circuit, the customary method of determining attorney fees is the "lodestar method." Morales v. City of San Rafael, 96 F.3d 359, 363 (9th Cir. 1996), amended on denial of rehearing, 108 F.3d 981 (9th Cir. 1997). The court calculates the "lodestar" amount by multiplying the number of hours the prevailing party reasonably expended on the litigation by a reasonable hourly rate. Morales, 96 F.3d at 363; see also Van Gerwen v. Guarantee Mut. Life Co., 214 F.3d 1041, 1045 (9th Cir. 2000). The party seeking the award of fees must submit evidence supporting the hours worked and the rates claimed. Van Gerwen, 214 F.3d at 1045. Hours that are not reasonably expended, i.e., hours that are "`excessive, redundant, or otherwise unnecessary,'" must be excluded. Id. (quoting Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)).
After determining the lodestar amount, the court assesses whether it is necessary to adjust the lodestar upward or downward based on the Kerr factors that are "not already subsumed in the initial calculation of the lodestar." Morales, 96 F.3d at 363-64. There is a "strong presumption" that the lodestar figure is a reasonable fee, and "`[o]nly in rare instances should the lodestar figure be adjusted on the basis of other considerations." Id. at 364 (quoting Harris v. Marhoefer, 24 F.3d 16, 18 (9th Cir. 1994)).
The twelve Kerr factors are: (1) the time and labor required; (2) the novelty and difficulty of the questions involved; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases. Kerr v. Screen Guild Extras, Inc., 526 F.2d 67, 70 (9th Cir. 1975).
Under the lodestar approach, many of the above factors are subsumed as a matter of law. Cunningham v. County of Los Angeles, 879 F.2d 481, 487 (9th Cir. 1988). Among the "subsumed factors" taken into account in either the reasonable hours component or the reasonable rate component of the lodestar calculation are: "(1) the novelty and complexity of the issues, (2) the special skill and experience of counsel, (3) the quality of representation, * * * (4) the results obtained," Cabrales v. County of Los Angeles, 864 F.2d 1454, 1464 (9th Cir. 1988), reinstated, 886 F.2d 235 (1989), and (5) the contingent nature of the fee agreement. City of Burlington v. Dague, 505 U.S. 557, 565-67 (1992).
Moreover, adjusting the lodestar on the basis of subsumed reasonableness factors after the lodestar has been calculated, instead of adjusting the reasonable number of hours or reasonable hourly rate at the first step, i.e., when determining the lodestar, is a disfavored procedure. Corder v. Gates, 947 F.2d 374, 378 (9th Cir. 1991).
With these principles in mind, I turn to plaintiffs' fee request. Defendant does not object to one component of the lodestar calculation, plaintiffs' requested hourly rates. The claimed rates are supported by plaintiffs' submissions, and I find them to be reasonable.
Defendant does challenge, however, the number of hours plaintiffs claim. The overall theme of defendant's objection is that the hours claimed are excessive and unreasonable in light of the degree of success obtained. On a more specific level, defendant argues that plaintiffs' request includes 86.5 hours of "double-billing," where two attorneys attended the same proceeding (court hearings, depositions, and meetings), and 50 hours for time spent in office conferences. Defendant also challenges plaintiffs' request for fees related to work performed on "meritless claims," pre-filing legal and factual investigation, discovery concerning California litigation involving Jani-King of California, and preparation of settlement materials characterized as the "Ruby Damage Claim."
With respect to defendant's argument that approximately 136.5 hours reflect double-billing and conferences and should be reduced 50 percent, I am not persuaded that the disputed hours are excessive or unreasonable merely because two lawyers attended some of the proceedings. Plaintiffs' submissions reveal that in general, counsel divided tasks appropriately among the various attorneys, law clerks, and paralegals assigned to the case, and the time expended on each task appears neither unreasonable nor excessive. Conferences between members of a litigation team often are a necessary and efficient method for planning strategy and sharing information, and 50 hours expended in conferences over the two plus years involved in this litigation is not excessive. Thus, I decline to reduce these challenged hours by 50 percent, as suggested by defendant.
Defendant also objects to the "approximately 100 hours" plaintiffs spent preparing the "Ruby Damage Claim." The product of this effort, Exhibit 11 to the Taylor Declaration, is a summary of plaintiffs' contract damages. From the time records, it appears that the document was created for purposes of settlement negotiations.
Although preparation of a damages summary for trial or settlement certainly is appropriate use of counsels' time, I agree with defendant that the amount of time Taylor claims was spent on the task (approximately 100 hours) seems excessive. On the other hand, plaintiffs' time records include entries totaling only approximately 40 hours, commencing in March 2001, that specifically describe work related to damages calculation. Because the time records otherwise reflect reasonable and efficient use of time, I find no rational basis on which to segregate out and reduce the time spent on damages calculations. Consequently, I decline to do so.
Defendant's more significant argument centers on the time plaintiffs incurred before filing the complaint (72.4 hours) and in the California investigation (83.48 hours). Defendant contends that much of this time was devoted to claims that plaintiffs should have known at the outset and ultimately conceded were meritless. While defendant may somewhat overstate plaintiffs' position, the record does reveal the following. In January 2001, after the case had been pending for about eight months, defendant filed a motion for summary judgment. The motion attacked plaintiffs' fraud and misrepresentation claims on statute of limitations grounds, and their claim for detrimental reliance on parol evidence grounds.
Plaintiffs obtained an extension of time to respond to defendant's motion. Then, on March 30, 2001, plaintiffs requested a status conference to discuss extension of the discovery deadline. In the letter requesting the conference, plaintiffs' counsel represented that "[p]laintiffs will amend their Complaint after the aforementioned depositions and reasonably believe that their Amended Complaint will render moot all of the issues raised in Defendant's Motion for Partial Summary Judgment."
Defendant contends that from their initial investigation and discussions with their clients, plaintiffs' counsel should have known that all claims but the breach of contract claim were doomed to fail and should not have pursued them. Defendant may be correct that it would have prevailed on the motion for summary judgment, but such a finding would require a certain amount of speculation. Consequently, although I believe some reduction in hours should be made to reflect the degree of success obtained, I decline to adopt defendant's proposals, i.e., a 50 percent reduction in "initial investigation" hours and total elimination of all California investigation hours.
Plaintiffs justify the California investigation in part based on defendant's alleged failure to cooperate in discovery and "evasive discovery tactics." Declaration of Laura Caldera Taylor ("Taylor Decl."), ¶ 20. Taylor also explains that she was required to travel to California because the lawyers involved in the California litigation would not or could not produce the documents to her. Taylor Decl., ¶ 17. Taylor asserts that the California investigation yielded evidence that Jani-King of California and certain of defendant's personnel engaged in a routine practice of misrepresenting earnings and bidding information to potential franchisees, which plaintiffs believed would demonstrate that "the conduct of the Defendant on the occasions alleged in the instant case w[as] a continuation of the California bad acts." Taylor Decl., ¶¶ 20, 24.
After careful review of the time records, related submissions, and the underlying pleadings in the case, I conclude that a 25 percent reduction in the hours awarded to plaintiffs' two primary attorneys — Michael Ratoza and Laura Taylor — would appropriately reflect the results obtained. A greater reduction is not warranted because it appears that much of the work of both attorneys advanced plaintiffs' viable claim (breach of contract) as well as the claims they intended to dismiss had the case not settled. The effect of these reductions is as follows:
The remaining attorneys, law clerks, and paralegals incurred very little time on the case as a whole and I decline to reduce their hours.
Attorney Claimed Awarded Fee Amount
Ratoza 97.85 73.39 $18,347.50 Taylor 298.03 223.53 $22,353.00
Taking into account these reductions, I hereby award plaintiffs the total sum of $44,281.00 in attorney fees.
2. Plaintiffs' Cost Bill
Plaintiffs seek an award of costs in the sum of $12,609.76. Plaintiffs acknowledge that their request includes categories not included in 28 U.S.C. § 1920, but contend that "the [settlement] agreement does not limit the amount or nature of the costs * * *." Plaintiffs' Memorandum in Support, p. 5. Defendant objects, noting that in the settlement agreement, the parties agreed that attorney fees and costs would be determined in accordance with Federal Rule of Civil Procedure 54(d) and Local Rule 54.4.
The settlement agreement contains no express provision allowing plaintiffs to recover costs beyond those enumerated in section 1920. In the absence of such a provision or any other contractual or statutory authorization, this court is bound by the limitations set forth in section 1920. E.g., Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441-42, 445 (1987).
Section 1920 does not authorize reimbursement of airfare, car rental expenses, computer research, private investigation, delivery services, facsimiles, videoconferencing, accounting services, postage, "supplies," and telephone expenses. Plaintiffs' request for reimbursement of costs incurred in these categories (a total of $4,618.31) is, therefore, denied.
The court is unable to determine from plaintiffs' submissions whether the claimed "delivery costs" include fees of private process servers. See Alflex Corp. v. Underwriters Laboratories, Inc., 914 F.2d 175, 178 (9th Cir. 1990) (fees paid to private process servers are recoverable under § 1920).
Plaintiffs' request for reimbursement of court reporter fees, court filing fees, and witness fees (a total of $5,136.30) is allowed.
With respect to plaintiffs' request for reimbursement of copying costs, $500.00 pertains to the "California Discovery Trip." Based on the evidence submitted, I am satisfied that these documents were "necessarily obtained for use in the case." 28 U.S.C. § 1920(4). Plaintiffs have failed to justify or explain the remainder of their request for copying costs (the sum of $2,355.15 in "Office" copies), and that portion of their request is disallowed.
CONCLUSION
Plaintiffs' application for attorney fees and costs (# 48) is granted and denied as set forth in this opinion. Plaintiffs are awarded the sum of $44,281.00 in attorney fees and $5,636.30 in costs.