Opinion
CASE NO. 4:02-CV-5
August 1, 2003
John Charles Eichman, Jenkins Gilchrist, Dallas, TX, for Defendants: CAI Wireless Systems, Inc. and CS Wireless Systems, Inc.
Joe W. Redden, Jr., Beck, Redden Secrest, Houston, TX; Deborah L. Kelly, Hodgson, and Russ, Albany, NY, Attorneys for Plaintiffs.
Christopher Horton Rentzel, Bracewell Patterson, LLP, Dallas, TX; Brent Nelson Bumgardner, Munsch, Hardt, Kopf Harr, Dallas, TX; and Gregory Derrell May, Dallas, TX, Attorneys for Defendant.
MEMORANDUM OPINION AND ORDER ON ATTORNEYS' FEES
On November 20, 2001, Plaintiffs David Webb and Thomas Dixon (collectively "Plaintiffs") filed their Original Complaint against CAI Wireless Systems, Inc. and CS Wireless Systems, Inc. On May 13, 2002, Plaintiffs filed their First Amended Complaint alleging claims against Defendant Jared Abbruzzese. On May 13-16, 2003, this case was tried to a jury. On May 16, 2003, the jury returned a verdict in favor of Plaintiffs on both their common law fraud and stock fraud claims. On May 28, 2003, the Court rendered judgment in accordance with the jury's verdict. A Final Judgment was entered on June 2, 2003. On June 12, 2003, Plaintiffs filed a Motion for Attorneys' Fees and Related Nontaxable Expenses (Docket No. 121). On June 24, 2003, Defendant filed his Response in Opposition to Plaintiffs' Motion for Attorneys' Fees and Related Non-taxable Expenses (Docket No. 128). On June 30, 2003, Plaintiffs filed their Reply thereto (Docket No. 132). Having considered the parties' submissions, argument of counsel at the July 14, 2003 hearing, and the applicable law, the Court finds that Plaintiffs are entitled to recover $517,145 in attorneys' fees, $4,985.97 for computerized legal research, and $25,744.23 in expert witness fees.
ATTORNEY'S FEES
Plaintiffs request $517,145 in attorney's fees for the instant action. In a diversity case such as this one, "state rather than federal law governs the issue of the awarding of attorney's fees." McLeod, Alexander, Powel Apffel, P.C. v. Quarles, 894 F.2d 1482, 1488 (5th Cir. 1990); see also Vela v. City of Houston, 276 F.3d 659, 679 n. 23 (5th Cir. 2001). "Thus, the direct authority granted district courts by Fed.R.Civ.P. 54(d) to award attorney's fees must be exercised within the bounds of applicable state law." Id. Because the jury rendered a favorable judgment to the Plaintiffs under Texas law, Texas law controls the instant fee application . Id. As a result of the judgment entered by the Court, Defendant is "liable to" Plaintiffs for their "reasonable and necessary attorney's fees." Tex. Bus. Comm. Code § 27.01(e).
Texas law looks to the following factors to determine the reasonableness of the amount requested: "`(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service properly; (2) the likelihood . . . that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by the circumstances; (6) the nature and length of the professional relationship with the client; (7) the expertise, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent on results obtained or uncertainty of the collection before the legal services have been rendered.'" Arthur Andersen Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997) (quoting Tex. Disciplinary R. Prof. Conduct 1.04, reprinted in Tex. Gov't Code, tit. 2, subtit. G app. (State Bar Rules, art. X, § 9)). The burden is on the party seeking attorney's fees to establish an entitlement to the fees. See Stewart Title Guaranty Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991).
Plaintiffs' legal team supports its request with contemporaneously compiled records of the nature of the work performed, who performed the work, how much time was spent on each individual task, and the rates charged for each person's time, together with lead counsel's affidavit detailing the time and labor required, the novelty and complexity of the issues, the skill required to properly litigate the issues, the attorneys' customary fees, and the ability of the attorneys involved. Plaintiffs have produced detailed records in the form of a sworn affidavit indicating the attorneys and legal assistants who worked on this case:
The time worked on this case was altered at the hearing to include hours spent on this case up to, and including, the July 14, 2003 hearing.
A number of individuals are listed more than once. This is because their hourly rate changed during the course of this case.
Defendant maintains that he should not be responsible for the $83,237.50 in attorneys' fees before May 13, 2002, the date he was joined in this lawsuit. At the Court's request, Plaintiff has provided the Court with an in camera supplemental motion for attorneys' fees explaining whether and how each time entry of Plaintiffs' attorneys prior to May 13, 2002 was relevant to Plaintiffs' prosecution of their case against Defendant. In this motion, Plaintiffs have withdrawn the following requests:
12/3/01 Coordinated service of citation $ 87.50 12/5/01 Coordinated service of petition $ 87.50 1/8/01 Conferred on assignment — $ 87.50 3/27/02 Conference with — re further handling $106.25
Total $368.75
Thus, Plaintiffs request will be reduced by $368.75. The Court is satisfied that the time entries before May 13, 2002 were reasonable and relevant to Plaintiffs' prosecution of their case against Defendant.
The Court finds that the rates charged by Plaintiffs' attorneys and legal assistants were reasonable given the relevant markets and experience of the attorneys. Also, given the amount involved, the favorable result obtained at trial in this case, and the uncertainty of collection, the Court finds that $517,145 in attorneys' fees was reasonable and necessary to achieve the judgment in this case. In sum, after having considered each of the Arthur Anderson factors set forth, this Court finds that $517,145 in attorneys' fees was reasonable and necessary to the proper and successful prosecution of this case on behalf the of Plaintiffs.
APPELLATE FEES
Plaintiffs also contend that in the event of an appeal it will be necessary for Plaintiffs' counsel to expend an additional 170 hours. 100 hours will likely be devoted by a partner at a billing rate of $400 per hour, 50 hours will be devoted by an associate at a billing rate of $275 per hour, and 20 hours will be devoted by a paralegal at a billing rate of $115, for a total of $56,050. Defendant takes issue with the sums set forth by Plaintiffs' attorneys to cover conditional attorneys' fees on appeal. Defendant argues that Plaintiffs have failed to explain why an additional 170 hours of time is necessary to respond to an appeal or that the rates charged are reasonable. The Court finds that based on the record before it, the rates charged and time spent in the event of an appeal are reasonable. Thus, in the event of an appeal by Defendant to the Fifth Circuit Court of Appeals, if the appeal is unsuccessful, Plaintiffs will be entitled to recover $56,050 as reasonable attorney's fee for such appeal.
COMPUTERIZED LEGAL RESEARCH CHARGES
Plaintiffs also seeks reimbursement for computer research charges in the amount of $4,985.97. A number of courts have found that the cost of reasonable computerized legal research is recoverable as attorney's fees. See United States v. Merritt Meridian Constr. Corp., 95 F.3d 153, 173 (2d Cir. 1996) ("[C]omputer research is merely a substitute for an attorney's time that is compensable under an application for attorney's fees. . . ."); Haroco, Inc. v. American Nat'l Bank and Trust Co. of Chicago, 38 F.3d 1429, 1440 (7th Cir. 1994); Johnson v. University College of the Univ. of Ala. in Birmingham, 706 F.2d 1205, 1209 (11th Cir. 1983). While it appears the Fifth Circuit has not addressed this issue, this Court finds the Fifth Circuit would adopt the rationale of the majority of jurisdictions that have permitted a party to recover computerized legal research expenses as attorney's fees. As the Seventh Circuit aptly stated in Haroco:
Computerized legal research involves an attorney sitting down in front of a computer and researching legal issues by searching through a database which now includes almost every resource one would find in the country's largest law libraries. In addition to the attorney charging the client for the time he or she spends doing this research, the companies that offer the computerized legal research services also charge a fee. Theoretically, even though the clients now pay two fees, their ultimate bill should be lower because the attorney should be able to do the research more quickly and efficiently. If this research had been done manually by an attorney sitting in the library reading through books rather than sitting before a computer screen, nobody would dispute that the attendant fees would be properly classified as attorney's fees and not costs. Recognizing this, we have previously held that computer research costs `are more akin to awards under attorney's fees provisions than under costs.' McIlveen v. Stone Container Corp., 910 F.2d 1581, 1584 (7th Cir. 1990). In fact such costs are indeed to be considered attorney's fees.Haroco, Inc., 38 F.3d at 1440. Accordingly, Plaintiffs are entitled to recover $4,985.97 in computer legal research costs as attorney's fees.
EXPERT WITNESS FEE
Plaintiffs request $26,030.89 in expert witness fees for their only expert Patrice Ferguson. Plaintiffs argue that they are entitled to collect expert witness fees pursuant to the Texas Stock Fraud Statute, Tex. Bus. Comm. Code § 27.01, which provides:
Any person who violates the provisions of this section shall be liable to the person defrauded for reasonable and necessary attorney's fees, expert witness fees, cost for copies of depositions, and costs of court.
Tex. Bus. Comm. Code § 27.01(e). Defendant does not dispute this. However, Defendant argues that the expert witness fees were not reasonable and necessary. The Court has reviewed the expense report and finds that the expert witness fees were reasonable and necessary. However, the Court will subtract $286.66 which relates to the travel expenses of Ms. Ferguson which are recoverable under 28 U.S.C. § 1920 as stated in the Court's memorandum opinion and order on Plaintiffs' Bill of Costs. Thus, Plaintiffs are entitled to $25,744.23 in expert witness pursuant to Section 27.01(e).
CONCLUSION
In sum, the Court finds that Plaintiffs are entitled to recover costs in the following amounts: $517,145 in reasonable attorneys' fees, $25,744.23 in expert witness fees, and $4,985.97 in computer legal research charges, for a total amount of $547,875.20 in attorneys' fees and related nontaxable expenses incurred through the trial of this case. In the event of an appeal by Defendant to the Fifth Circuit Court of Appeals, if the appeal is unsuccessful, Plaintiffs will be entitled to recover $56,050 as reasonable attorney's fee for such appeal. This is a separate final judgment awarding attorneys' fees and other nontaxable expenses.