Summary
recommending a 20% reduction of the requested attorneys' fees to account for block billing and excessive hours
Summary of this case from In re Navidea Biopharmaceuticals LitigationOpinion
18-CV-1236 (JSR) (KHP)
08-29-2018
SUK JOON RYU, a/k/a James S. Ryu, Plaintiff, v. HOPE BANCORP, INC., as successor by merger to Wilshire Bancorp, Inc., Defendant.
REPORT AND RECOMMENDATION TO: THE HONORABLE JED S. RAKOFF, UNITED STATES DISTRICT JUDGE
FROM: KATHARINE H. PARKER, UNITED STATES MAGISTRATE JUDGE
Plaintiff Suk Joon Ryu, the former Senior Vice President and Chief Operating Officer of BankAsiana, commenced this action seeking advancement of attorneys' fees he has incurred and will continue to incur in connection with federal investigations and a civil action (the "Embezzlement Action") arising out of his alleged embezzlement from BankAsiana. On April 26, 2018, the Honorable Jed S. Rakoff issued a thorough and well-reasoned opinion and order (the "April Order") holding that Plaintiff is contractually entitled to advancement by Hope Bancorp, Inc. of attorneys' fees incurred (1) in defense of the federal investigations and civil claims relating to Plaintiff's alleged embezzlement; (2) in connection with Plaintiff's two compulsory counterclaims (one for defamation and one for illegal seizure of funds) in the Embezzlement Action; and (3) in connection with this action for advancement (the "Advancement Action"). This matter was subsequently referred to the undersigned to establish and administer a summary procedure for advancement of Plaintiff's legal fees by Defendant. (Doc. No. 35.)
Hope Bancorp, Inc. is the successor by merger to Wilshire Bancorp, which, in turn, acquired BankAsiana on or about October 1, 2013. (Doc. No. 1, Complaint ("Compl.") ¶¶ 1, 12.)
On May 8, 2018, Plaintiff submitted to Defendant invoices reflecting the legal fees and expenses incurred in the relevant actions through May 4, 2018 and that Plaintiff maintains are subject to advancement pursuant to the April Order (the "May 8 Invoices"). This Court directed Defendant to provide Plaintiff its written objections to the May 8 Invoices and to pay any undisputed amounts, after which the parties were to meet and confer regarding Defendant's objections. Following the meet-and-confer process, Defendant maintained its position articulated at the May 29, 2018 conference before this Court that none of the fees sought by Plaintiff had been "incurred" and, accordingly, need not be advanced to Plaintiff. On June 26, 2018, Plaintiff moved for advancement of the legal fees and expenses reflected in the May 8 Invoices. For the reasons set forth below, this Court respectfully recommends that Plaintiff's motion be GRANTED, subject to the limitations set forth in this Report and Recommendation. Additionally, this Court sets forth below a recommended procedure for advancement of fees going forward.
DISCUSSION
I. The Legal Fees Reflected in the May 8 Invoices Have Been Incurred by Plaintiff and Are Subject to Advancement Pursuant to the April Order
As set forth in the April Order, Plaintiff is contractually entitled to the advancement of fees and costs "incurred" in connection with the claims and proceedings described above. (See April Order at 30.) Plaintiff and Defendant both acknowledge that the dictionary definition of "incurred" renders legal fees and expenses due when the client "becomes liable" for them and "has a legal obligation to pay them." (Doc. No. 58, Plaintiff's Memorandum of Law ("Pl. Br.") at 11-12; Doc. No. 61, Defendant's Memorandum of Law ("Def. Br.") at 3.) Yet, contrary to its concession regarding the meaning of the term "incurred," Defendant argues that the Court should hold that Plaintiff's legal fees are not "incurred" until he has paid them. (Def. Br. at 4-5.) Defendant's novel argument as to the meaning of the word "incurred" must be rejected out of hand. Judge Rakoff already determined that the agreement governing advancement of fees is complete, clear, and unambiguous on its face. (See April Order at 6-7.) Thus, this Court applies the ordinary meaning of the word "incurred." See, e.g., Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569 (2002) ("[A] written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms.").
Additionally, if the Court were to accept Defendant's definition of the word "incurred," the right to advancement would be meaningless. As Defendant acknowledges, the very purpose of advancement is to "provide corporate officials with immediate interim relief from the personal out-of-pocket financial burden of paying the significant on-going expenses inevitably involved with investigations and legal proceedings." (Def. Br. at 5.)
Defendant argues in the alternative that, even if it must advance fees as they are "incurred," Plaintiff has not in fact incurred any fees or costs from Steve Harvey Law LLC ("SHL") or Greenberg Freeman LLP ("GF"), his current counsel, because both firms were engaged on a contingency basis. This Court disagrees for the reasons discussed below.
Defendant does not dispute that Plaintiff incurred legal fees in connection with work performed by his former lawyers, Tressler LLP and the Law Offices of Jungsup Kim LLC. Defendant also does not dispute the amount of the fees and costs charged and paid by Plaintiff to his former lawyers. Accordingly, during a status conference on August 3, 2018, this Court ordered Defendant to pay the full amount of those fees in compliance with Judge Rakoff's April Order and this Court's May 29, 2018 Order (Doc. No. 38).
A. Plaintiff's Engagement of Steve Harvey Law LLC
There are two engagement letters that govern the relevant fee arrangement between Plaintiff and SHL - one for the Embezzlement and one for the Advancement Action. The letter governing payment for the Embezzlement Action is dated May 11, 2015, and the email exchange governing payment for the Advancement Action is dated February 8, 2018. Defendant states that the following language in the May 11, 2015 engagement letter reflects a contingency fee arrangement between Plaintiff and SHL with respect to the Embezzlement Action:
You do not have the funds to pay legal fees or expenses at this time. You do have a right to be indemnified for your legal fees in the Lawsuit under New Jersey law and the bylaws of Bank Asiana if you prevail. . . . We expect that you will be able to pay us for representing you in the Lawsuit including our hourly fees and all costs we advance on your behalf through Wilshire Bank's indemnification obligation once you prevail. Results are never 100% sure in any litigation, however, and there is a risk that even though you did nothing wrong you will not prevail and will not be entitled to indemnification. In that case, you will pay us for our work on the Lawsuit and all of the costs we incur as soon as you have the funds to do so.
(Doc. No. 57, Declaration of David V. Dzara, Esq. ("Dzara Decl."), Ex. 2.) Defendant argues that Plaintiff's obligation to pay SHL for its work is thus "contingent" on Plaintiff being indemnified by Defendant (in the event Plaintiff prevails) or having the funds to pay SHL (in the event Plaintiff does not prevail). Notably, this same language is not contained in the February 8, 2018 email exchange concerning the fee arrangement for the Advancement Action. Rather, that email exchange references the hourly rates set forth in the engagement letter for the Embezzlement Action and states that as of 2018, SHL would be raising its hourly rates and that the higher rates apply to both the Embezzlement and Advancement Actions. The email also states that SHL "will seek payment of all of our past and future fees and costs from Bank of Hope, but you remain responsible for payment of those fees if for any reason Bank of Hope does not pay them or is not required to pay them." (Id.)
The February 8, 2018 email also explains that at the time Plaintiff and SHL entered into the engagement letter for the Embezzlement Action, SHL did not know about Plaintiff's right to advancement of legal fees. (Id.; see also Doc. No. 55, Declaration of Stephen G. Harvey, Esq. ("Harvey Decl.") ¶ 8.)
Defendant confuses Plaintiff's ability to pay with Plaintiff's obligation to pay. In a contingent fee arrangement, "the obligation to pay depends on a particular result's being obtained." City of Burlington v. Dague, 505 U.S. 557, 561 (1992). The 2015 engagement letter with SHL makes clear that Plaintiff is obligated to pay SHL for its work on the Embezzlement Action regardless of the result obtained. The portion of the letter cited by Defendant does not concern whether Plaintiff must pay SHL, but rather when Plaintiff must pay SHL (i.e., when Plaintiff obtains the funds to do so, by indemnification or otherwise). The cases cited by Defendant (Def. Br. at 3-4) for the proposition that "contingent fees are not 'incurred' until after the contingency is satisfied" do not advance Defendant's argument because they discuss scenarios in which the contingent nature of an engagement is clear and undisputed. Here, by contrast, Plaintiff disputes that his fee arrangement with SHL was contingent in nature, and the plain language of the relevant agreement makes clear that it was not a contingent fee arrangement.
Defendant also points to a portion of both the 2015 and 2018 fee arrangements that provides for a bump-up to 150% of SHL's standard rates - a condition imposed in light of anticipated delay in getting paid and potential problems collecting fees from Plaintiff - as evincing a contingent fee arrangement. Defendant argues that SHL entered into the engagements for both actions understanding that the firm risked non-payment and, therefore, understood that absent a successful outcome it likely would not get paid. This argument is unpersuasive. SHL's perceived risk of non-payment stemmed from Plaintiff's inability to pay the firm's legal fees out of pocket, not Plaintiff's lack of obligation to pay. The language in the 2015 engagement letter quoted above expressly contemplates Plaintiff paying the firm's fees in the event of an unsuccessful outcome. Language in the 2018 email quoted above also expressly states that Plaintiff is obligated to pay past and future fees regardless of outcome. Additionally, SHL reduced its rates for both the Embezzlement Action and the Advancement Action to 100% of the firm's 2018 standard rates as of the date of the April Order granting Plaintiff's request for advancement of fees - when the risks justifying the increase in rates were eliminated. (Harvey Decl. ¶ 23; Dzara Decl., Ex. 1.) Plaintiff's fee arrangement with SHL otherwise did not change. (See id.) This further supports the notion that fees were (and will continue to be) incurred during the pendency of both the Embezzlement and Advancement Actions.
Defendant's final argument that SHL had a contingent fee arrangement with Plaintiff is that "SHL failed to issue any invoices to Ryu . . . until the May 8 Invoices" and Plaintiff failed to request invoices. Defendant contends that Plaintiff's willingness to accept SHL's fees without reviewing or marking up SHL's invoices "indicates he expected no obligation to pay." (Id.) This argument is unavailing. Again, Plaintiff's engagement agreements with SHL explicitly set forth Plaintiff's obligation to pay. Any lack of urgency on the part of Plaintiff or his counsel to generate or discuss invoices is irrelevant to whether SHL actually performed legal work and incurred costs on Plaintiff's behalf that Plaintiff had an obligation to pay under the terms of the engagement letters. The failure to maintain or generate contemporaneous time records could bear on the accuracy and reasonableness of the descriptions of work performed in the May 8 Invoices; but, there can be no dispute that SHL has performed legal work for Plaintiff for which it is contractually entitled to be compensated by Plaintiff.
Finally, Plaintiff entered into a third engagement letter with SHL in May of 2015 concerning a potential malicious prosecution claim against Wilshire Bank (now Bank of Hope) which is a true contingent fee arrangement. (Dzara Decl., Ex. 2.) This case does not involve, and Plaintiff is not seeking, advancement of fees and costs with respect to that potential action. (Id.) The engagement letter for that action, entered into at the same time as the engagement letter for the Embezzlement Action, states: "Separately, we expect to be paid on an hourly fee basis for all of the work we will do on the [Embezzlement Action] as set forth in [SHL's] separate letter to [Plaintiff] . . . ." (Id.) This too supports the conclusion that SHL's fee arrangement for defending Plaintiff in the Embezzlement Action was not contingent.
For all of the above reasons, this Court recommends finding that Plaintiff did not have a contingency fee arrangement with SHL concerning either the Embezzlement or the Advancement Action and, accordingly, SHL's fees reflected in the May 8 Invoices have been "incurred" by Plaintiff such that they are subject to advancement pursuant to the April Order. The reasonableness of the rates and hours reflected in the May 8 Invoices is addressed below. In light of the foregoing, the Court need not reach and does not address SHL's argument that Defendant waived its contingency fee argument by failing to raise it in briefing or oral argument on Plaintiff's Motion for Summary Judgment.
B. Plaintiff's Engagement of Greenberg Freeman LLP
Plaintiff retained GF to represent him only in connection with the Advancement Action. His engagement letter with GF permits the firm to bill on an hourly basis at its standard rates or, alternatively, to treat its fees as contingent, in which case it would charge 150% of its hourly rates. The relevant language is as follows:
If you or someone acting on your behalf does not to [sic] pay our fees as [sic] within 30 days of billing, then we may elect to treat our past due and/or future fees as a contingency fee, in which case payment will be due at the conclusion of the case and only if there is a recovery by judgment, settlement or otherwise on your behalf. In the event our fees are treated as a contingency fee, our rates will be 50% higher than our hourly rates (i.e., $720 and $195), which reflects the risk that we will incur of not getting paid in the event that we are not successful in recovering sums on your behalf.
(Dzara Decl., Ex. 2; Plaintiff's Reply Memorandum of Law ("Pl. Reply Br.") at 4.) Plaintiff does not dispute that his arrangement with GF was a contingent fee arrangement. Under the terms of the engagement, contingent fees are due when there is a "recovery by judgment, settlement or otherwise." Here, the contemplated recovery has been obtained by virtue of the April Order, which requires advancement. Although Defendant has appealed the April Order, that appeal does not act as a stay. See United States v. Pescatore, 637 F.3d 128, 144 (2d Cir. 2011) ("If a person to whom a court directs an order believes that order is incorrect the remedy is to appeal, but, absent a stay, he must comply promptly with the order pending appeal.") (emphasis omitted) (quoting Maness v. Meyers, 419 U.S. 449, 458 (1975)). In determining whether to grant a motion for a stay pending appeal, courts analyze the following factors:
(1) [W]hether the stay applicant has made a strong showing that [it] is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.
See Ironshore Specialty Ins. Co. v. Eidos Partners, LLC, No. 13-cv-8434 (KBF), 2014 WL 3405029, at *1 (S.D.N.Y. July 7, 2014) (alterations in original) (citing Nken v. Holder, 556 U.S. 418, 434 (2009)). Defendant has neither moved this Court for a stay pending its appeal, nor has it made any showing with respect to the above-enumerated factors. Even if Defendant could make a showing that a stay is warranted, the condition of "recovery by judgment, settlement or otherwise" in Plaintiff's engagement letter with GF is so broad as to render the contingency satisfied. This conclusion is further reinforced by GF's reduction of its rates to the firm's base rates as of the date of the April Order, indicating that GF is no longer treating its fees as contingent, the contingency having been satisfied. (See Doc. No. 56, Declaration of Michael A. Freeman, Esq. ("Freeman Decl.") ¶ 13; Dzara Decl. ¶ 1.) Thus, there can be no doubt that fees incurred since the April Order are not contingent. This Court therefore recommends a finding that GF's fees reflected in the May 8 Invoices have been incurred by Plaintiff such that they are subject to advancement pursuant to the April Order. The Court addresses the reasonableness of GF's hourly rates and hours worked below. II. Reasonable Attorneys' Fees and Costs
A district court exercises "considerable discretion" in awarding attorneys' fees. Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cty. of Albany & Albany Cty. Bd. of Elections, 522 F.3d 182, 190 (2d Cir. 2008); see also Millea v. Metro-North R. R. Co., 658 F.3d 154, 166 (2d Cir. 2011). "The party seeking fees bears the burden of demonstrating that its requested fees are reasonable." TufAmerica Inc. v. Diamond, No. 12-cv-3529 (AJN), 2016 WL 1029553, at *3 (S.D.N.Y. Mar. 9, 2016), reconsideration granted in part, No. 12-cv-3529 (AJN), 2016 WL 3866578 (S.D.N.Y. July 12, 2016), and on reconsideration in part, No. 12-cv-3529 (AJN), 2018 WL 401510 (S.D.N.Y. Jan. 12, 2018) (citing Blum v. Stenson, 465 U.S. 886, 897 (1984)). Attorneys' fees are awarded by determining a presumptively reasonable fee, or a "lodestar," reached by multiplying a reasonable hourly rate by the number of hours reasonably expended. TufAmerica Inc., 2016 WL 1029553, at *3 (citing Millea, 658 F.3d at 166); see also Bergerson v. N.Y. State Office of Mental Health, Cent. N.Y. Psychiatric Ctr., 652 F.3d 277, 289-90 (2d Cir. 2011).
A. Hourly Rates
When evaluating hourly rates, the Court looks at "what a reasonable, paying client would be willing to pay, given that such a party wishes to spend the minimum necessary to litigate the case effectively." Bergerson, 652 F.3d at 289 (internal citations and quotation marks omitted). The Second Circuit's "forum rule" generally requires use of "the hourly rates employed in the district in which the reviewing court sits in calculating the presumptively reasonable fee." Id. (internal citation and quotation marks omitted); see also TufAmerica Inc., 2016 WL 1029553, at *5 (rate must be "in line with those rates prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation"). In order to determine whether requested hourly rates are in line with those prevailing in the community, courts look to (1) rates awarded in prior cases; (2) courts' own knowledge of hourly rates charged in the district; and (3) evidence submitted by the parties. Duran-Peralta v. Luna, No. 16-cv-7939 (JSR), 2018 WL 1801297, at *2 (S.D.N.Y. April 2, 2018). Courts in this district also have recognized that an "attorney's customary billing rate for fee-paying clients is ordinarily the best evidence of" a reasonable hourly rate. In re Stock Exchanges Options Trading Antitrust Litig., No. 99-cv-0962 (RCC), 2006 WL 3498590, at *9 (S.D.N.Y. Dec. 4, 2006).
1. Reasonableness of SHL's and GF's Base Hourly Rates
SHL seeks fees in connection with its representation of Plaintiff in both the Embezzlement Action and the Advancement Action. The base hourly rates sought for SHL's attorneys and staff are as follows:
| Name | Title | Years ofExperience | 2015 BaseHourly Rate | 2018 BaseHourly Rate |
|---|---|---|---|---|
| Stephen G. Harvey | Principal | 28 years | $525.00 | $650.00 |
| David V. Dzara | Senior Counsel | 14 years | $350.00 | $400.00 |
| Rachel K. Gallegos | Associate | 11 years | $225.00 | $250.00 |
| Michael Romeo | Associate | 1 year | $225.00 | $225.00 |
| Michael Solomon | Contract Attorney | 1 year | $175.00 | |
| Logan Miller | Contract Attorney | 1 year | $125.00 | |
| Maggie Riley | Senior Paralegal | More than25 years | $150.00 | $200.00 |
| Terance FitzSimmons | Paralegal | 2 years | $125.00 | |
| Theresa Bene | Paralegal | 1 year | $150.00 |
GF seeks fees in connection with its representation of Plaintiff in the Advancement Action. Its base hourly rates are as follows:
| Name | Title | Years ofExperience | Base Hourly Rate |
|---|---|---|---|
| Michael A. Freeman | Partner | More than 28 years | $504.00 |
| Sanford Greenberg | Partner | More than 28 years | $504.00 |
Plaintiff's counsel Stephen G. Harvey has submitted a declaration stating that the base rates sought by SHL are the firm's standard rates charged in 2015 and 2018. (Harvey Decl. ¶¶ 10-11.) This constitutes strong evidence that the rates requested are reasonable. In re Stock Exchanges Options Trading Antitrust Litig., 2006 WL 3498590, at *9; see also Tomazzoli v. Sheedy, 804 F.2d 93, 98 (7th Cir. 1986) ("For lawyers engaged in customary private practice, who at least in part charge their clients on an hourly basis regardless of the outcome, the marketplace has set that value.") (internal citation and quotation marks omitted). Additionally, this Court finds that - in light of rates awarded in prior cases as well as this Court's own knowledge of hourly rates charged in this District - partner rates of up to $650.00 and associate and counsel rates of up to $400.00 fall well within the prevailing rates in the community. See, e.g., Au New Haven, LLC v. YKK Corp., No. 15-cv-03411 (GHW) (SN), 2018 WL 333828, at *7 (S.D.N.Y. Jan. 5, 2018); Regulatory Fundamentals Group LLC v. Governance Risk Mgmt. Compliance, LLC, No. 13-cv-2493 (KBF), 2014 WL 4792082, at *2 (S.D.N.Y. Sept. 24, 2014) (finding that New York district courts have approved rates for experienced law firm partners in the range of $500 to $800 per hour and for law firm associates in the range of $200 to $450 per hour). In view of each SHL attorney's level of experience, this Court recommends a finding that each SHL attorney's base hourly rate - for both 2015 and 2018 - is reasonable.
Plaintiff's counsel Michael A. Freeman submitted a declaration stating that he and his partner Sanford Greenberg both have been practicing law for more than 28 years. (Doc. No. 56, Declaration of Michael A. Freeman, Esq. ("Freeman Decl.") ¶¶ 6, 18.) Each partner seeks to recover fees at an hourly rate of $504.00, which "includes the cost of [his] time plus routine expenses such as duplicating, printing, postage, [and] local travel, for which [GF] does not bill clients separately." (Id. ¶ 13, n.1.) An hourly rate of $504.00 for an experienced law firm partner already is in line with the prevailing rates in this District, even setting aside GF's inclusion of costs within that rate. See, e.g., Regulatory Fundamentals Group LLC, 2014 WL 4792081, at *2. Given this Court's recommendation that an hourly rate of up to $650.00 for Mr. Harvey - who also has 28 years of experience - be deemed reasonable, the Court similarly recommends that an hourly rate of $504.00 be deemed reasonable for both Mr. Freeman and Mr. Greenberg.
Finally, this Court recommends a finding that the rates of SHL's paralegals and contract attorneys are reasonable. "Courts in this District typically award rates not to exceed $200 per hour for paralegals." Duran-Peralta, 2018 WL 1801297, at *3. None of the rates sought for SHL's paralegals exceed $200.00, and a rate of exactly $200.00 for Maggie Riley is reasonable, given that she "worked in the legal profession for over two decades." See id. SHL's contract attorneys had limited legal experience, and their respective rates of $125.00 and $175.00 reflect that fact. For all of these reasons, this Court recommends that the base hourly rates sought for SHL's attorneys and support staff (for 2015 and 2018) and for GF's attorneys be deemed reasonable for purposes of a lodestar calculation as well as for future lodestar calculations in this action.
2. SHL's and GF's Rate Multiplier of 150%
As previously explained, "[t]he determination of reasonable hourly rates is a factual issue committed to the court's discretion, and is typically defined as the market rate a reasonable, paying client would be willing to pay." See, e.g., Rubenstein v. Advanced Equities, Inc., No. 13-cv-1502 (PGG), 2015 WL 585561, at *6 (S.D.N.Y. Feb. 10, 2015). SHL's perceived risk of non-payment by Plaintiff is insufficient to justify charging him 150% of the firm's standard hourly rates. Because Plaintiff had - and continues to have - a contractual obligation to pay SHL's fees regardless of the outcome of litigation, SHL has always had a right of recourse against its client in the event he failed to pay. Given this right of recourse, it would be unreasonable for SHL's attorneys to be compensated "as if [they] had sacrificed completely [their] right to payment in the event of an unsuccessful outcome." See Pennsylvania v. Delaware Valley Citizens ' Council for Clean Air, 483 U.S. 711, 716-17 (1987). Every attorney that enters into an hourly fee arrangement with a client accepts a risk that the client will fail to pay. Moreover, the rates that actually resulted from SHL's 150% multiplier constitute rates that this Court determines are out of line with those prevailing in this District and, necessarily, exceed SHL's customary billing rates.
Unlike SHL, GF elected to treat its hourly fees as a contingency fee pursuant to its retainer agreement with Plaintiff. However, with respect to GF, the Court determines that the 150% rate multiplier is nevertheless unreasonable because it is not "the market rate a reasonable, paying client would be willing to pay." See Rubenstein, 2015 WL 585561, at *6 (emphasis added). Per GF's retainer agreement, any contingency would be satisfied only if Plaintiff recovered a right to advancement. Accordingly, Plaintiff did not negotiate the 150% multiplier on his own behalf, but rather on behalf of Defendant. There is no evidence that Plaintiff himself was willing to pay 150% of GF's rates, and the Court sees no reason to award rates in excess of those already set by the market for GF's services. This Court, therefore, recommends denial of Plaintiff's request that the lodestar incorporate 150% of his firms' standard rates for work performed prior to the issuance of the April Order.
B. Hours Billed
When evaluating hours expended, the Court must make "a conscientious and detailed inquiry into the validity of the representations that a certain number of hours were usefully and reasonably expended." Haley v. Pataki, 106 F.3d 478, 484 (2d Cir. 1997) (quoting Lunday v. City of Albany, 42 F.3d 131, 134 (2d Cir. 1994) (per curiam)). In determining whether hours are excessive, "the critical inquiry is whether, at the time the work was performed, a reasonable attorney would have engaged in similar time expenditures." Samms v. Abrams, 198 F.Supp. 3d 311, 322 (S.D.N.Y. 2016) (quoting Grant v. Martinez, 973 F.2d 96, 99 (2d Cir. 1992)). "Hours that are excessive, redundant, or otherwise unnecessary, are to be excluded . . . and in dealing with such surplusage, the court has discretion simply to deduct a reasonable percentage of the number of hours claimed as a practical means of trimming fat from a fee application." Kirsch v. Fleet St., Ltd., 148 F.3d 149, 173 (2d Cir. 1998) (internal citations and quotation marks omitted); accord Alicea v. City of New York, 272 F. Supp. 3d 603, 608-09 (S.D.N.Y. 2017) (quoting Kirsch, 148 F.3d at 173); TufAmerica Inc., 2016 WL 1029553, at *3.
This Court, having carefully reviewed the invoices submitted by SHL, recommends a finding that the hours billed are somewhat excessive (though not as excessive as Defendant contends), justifying a 20% reduction in hours. SHL's hours billed for travel time, for example, are unreasonable given that "[c]ourts generally approve fees, at 50% of an attorney's usual rate, for reasonable travel conducted in service of ongoing litigation." See, e.g., C.D. v. Minisink Valley Cent. Sch. Dist., No. 17-cv-7632 (PAE), 2018 WL 3769972, at *10 (S.D.N.Y. Aug. 9, 2018). It is unlikely that a reasonable client would be willing to pay his Philadelphia attorneys for 100% of their travel time, knowing that they would be making frequent trips to Newark, New Jersey to litigate the Embezzlement Action and to New York City to litigate the Advancement Action. See id. Complete reimbursement of SHL's travel time would be particularly problematic because SHL already will receive billing rates keyed to this District, as opposed to those prevalent among smaller firms in Philadelphia. See id.; Bentley Labs. LLC v. TPR Holdings LLC, No. 14-cv-6306 (HBP), 2017 WL 4326536, at *3 (S.D.N.Y. Sept. 28, 2017) ("Although plaintiff's counsel's office is located in Woodbridge, New Jersey, the Second Circuit's forum rule requires me to consider the rates charged in the Southern District of New York in assessing reasonableness.").
Additionally, the Court agrees with Defendant that the number of hours billed by SHL for internal meetings and telephone conferences are unreasonable. See, e.g., Anthony v. Franklin First Fin., Ltd., 844 F. Supp. 2d 504, 509 (S.D.N.Y. 2012) (reducing attorneys' fees by 20% for unnecessary billing of, inter alia, "internal meetings between the attorneys assigned to the case"). A majority of SHL's billing entries include time spent engaging in internal discussion. The prevalence of time entries concerning internal meetings is compounded by SHL's use of "block entries" (i.e., billing a large number of hours for multiple tasks) such as the following:
| 06/15/2017 | David V.Dzara | Revise brief in opposition to motion for gagorder; draft and revise my declaration in supportof opposition; revise S. Harvey's and J. Ryu'sdeclarations in support of opposition; organizeall exhibits to declarations; confer with S. Harveyre opposition papers; finalize and file oppositionpapers; review local rules re motion to file underseal; confer with S. Harvey and R. Gallegos resame; emails and teleconferences with J. Ryu reopposition papers. | 8.00 [Hours] |
The use of block billing has "a tendency to obfuscate the amount of time expended on distinct tasks and introduces an element of vagueness into a fee application, making it difficult to determine if the reported hours are duplicative or unnecessary." See Duran-Peralta, 2018 WL 1801297, at *5; Clarke v. Hudson Valley Fed. Credit Union, No. 14-cv-5291 (KBF), 2016 WL 884667, at *3 (S.D.N.Y. Mar. 8, 2016) (noting that "[a]cross-the-board reductions in the range of 15% to 30% are appropriate when block billing is employed"). For these reasons, and because SHL appears to have spent excessive numbers of hours on such minor tasks as preparing pro hac vice motions, the Court recommends a 20% reduction of the requested attorneys' fees.
GF has billed just over 25 hours for its work on the Advancement Action. The tasks performed include editing Plaintiff's memoranda of law, reviewing Defendant's memoranda of law, and attending/participating in court conferences. For each task, the time spent appears commensurate with the work performed. Thus, this Court recommends finding that the number of hours requested by GF is reasonable.
C. Costs
SHL has incurred $32,024.97 in expenses thus far in litigating the Embezzlement Action and the Advancement Action. These expenses cover such services as printing, sending FedEx mailings to opposing counsel, conducting video depositions, obtaining deposition transcripts, traveling to attend depositions, and serving subpoenas. The Court recommends a finding that these expenses are appropriately itemized and are reasonable. The sole cost for which GF has billed its client is the $400.00 fee to commence the Advancement Action. The Court similarly recommends a finding that this expense is reasonable.
D. Prejudgment Interest
As Judge Rakoff explained in the April Order, "[b]ecause Delaware courts have often addressed indemnification and advancement, New York courts have looked to Delaware courts for guidance on these issues." (April Order at 20 n.5.) It is well-established that "[a] party from whom advancement is improperly withheld is entitled to interest computed from the date of demand, defined as the date on which the party specified the amount of reimbursement demanded and produced his written promise to pay." Pontone v. Milso Industries Corp., 100 A.3d 1023, 1058 (Del. Ch. 2014) (internal citation and quotation marks omitted). Accordingly, Plaintiff is entitled to prejudgment interest from Defendant at the legal rate of 9% per annum under N.Y. C.P.L.R. § 5004 running from January 10, 2018 for the amount submitted on that date, and from May 8, 2018 for the amount submitted on that date.
E. Computation of Fees and Costs
Based upon the above, this Court recommends an award of (1) $646,311.63 in fees and $32,024.97 in costs (plus prejudgment interest) for compensable work performed by SHL; and (2) $13,003.20 in fees and $400.00 in costs (plus prejudgment interest) for work performed by GF. III. Advancement Procedure
Going forward in this case, the procedure for fee advancement shall be as follows:
1. By the 5th calendar day of each month, Plaintiff's counsel shall email to Defendant's counsel their invoices for fees and expenses incurred during the previous month that are subject to advancement pursuant to the April Order. Such invoices shall reflect the hourly rates this Court has deemed reasonable.
2. By the 15th calendar day of the month, Defendant's counsel shall respond in writing, identifying each specific time entry or expense to which Defendant objects and explaining the nature of the objection. The response shall cite any legal authority on which Defendant relies.
3. Defendant shall pay any undisputed amount contemporaneously with the response. An amount is not rendered "disputed" solely by virtue of Defendant's appeal of the April Order. As noted above, absent a stay, Defendant must comply promptly with the April Order as well as this Order pending appeal.
4. If Defendant disputes more than 50% of the amount sought in any advancement demand, it shall pay 50% of the amount sought, and Plaintiff's counsel shall hold the amount exceeding the undisputed amount in escrow pending resolution of the dispute as to that portion.
5. Before the last calendar day of the month, counsel for both parties shall meet and confer regarding any disputed amounts for the relevant period. Any additional advancement that results from the meet-and-confer session shall be paid with the next month's payment of undisputed amounts.
6. Not more frequently than quarterly, Plaintiff may file an application with the Court seeking a ruling on any disputed amounts. Plaintiff and Defendant shall not raise any new arguments not previously raised with the other side in the applicable demand, response, or meet-and-confer. The Court will determine if a hearing is warranted.
7. If the Court grants an application, in whole or part, then pre-judgment interest is due on the adjudicated amount from the date of the applicable advancement demand. Except in connection with a successful application, Plaintiff shall not seek or receive advancement for time spent preparing invoices or conferring regarding advancement requests.
CONCLUSION
For all of the foregoing reasons, this Court respectfully recommends that Plaintiff's motion for attorneys' fees be GRANTED, subject to the limitations set forth in this Report and Recommendation, and that Plaintiff be awarded (1) $646,311.63 in fees and $32,024.97 in costs (plus prejudgment interest) for compensable work performed by SHL; and (2) $13,003.20 in fees and $400.00 in costs (plus prejudgment interest) for work performed by GF. DATED: August 29, 2018
New York, New York
Respectfully submitted,
/s/_________
KATHARINE H. PARKER
United States Magistrate Judge
ADDENDUM: FEE CALCULATIONS
Steve Harvey Law LLC
| Date of Services | Rate Reduction | Fees |
|---|---|---|
| 4/28/2015 - 12/31/2017(Embezzlement Action) | Reduced from 150% to 100% | $539,183.29 |
| 1/1/2018 - 4/24/2018(Embezzlement Action) | Reduced from 150% to 100% | $103,487.50 |
| 4/25/2018 - 5/4/2018(Embezzlement Action) | No Reduction Required | $4,587.50 |
| 12/28/2017 - 4/24/2018(Advancement Action) | Reduced from 150% to 100% | $140,018.75 |
| 4/25/2018 - 5/4/2018(Advancement Action) | No Reduction Required | $20,612.50 |
| TOTAL: $807,889.54 | ||
| Less 20%: $646,311.63 |
| Date of Services | Rate Reduction | Fees |
|---|---|---|
| 2/2/2018 - 4/10/2018 | Reduced from 150% to 100% | $12,247.20 |
| 4/24/2018 - 5/2/2018 | No Reduction Required | $756.00 |
| TOTAL: $13,003.20 |
NOTICE
The parties shall have fourteen days from the service of this Report and Recommendation to file written objections to the Report and Recommendation, pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed. R. Civ. P. 6(a), (d) (adding three additional days only when service is made under Fed. R. Civ. P. 5(b)(2)(C) (mail), (D) (leaving with the clerk), or (F) (other means consented to by the parties)). If any party files written objections to this Report and Recommendation, the opposing party may respond to the objections within fourteen days after being served with a copy. Fed. R. Civ. P. 72(b)(2). Such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Jed S. Rakoff at the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Rakoff. The failure to file these timely objections will result in a waiver of those objections for purposes of appeal. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).