In Re: World Trade Center, No. 13-2699 (2d Cir. 2014)
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Mishkin appealed the district court's order denying an award of attorneys' fees for services performed as plaintiffs' liaison counsel in the bodily injury, non-respiratory cases arising out of the events of September 11, 2001. The court concluded that the district court abused its discretion in denying Mishkin a fee without further inquiry. Therefore, the court vacated the district court's order and remanded for the district court to determine whether Mishkin kept sufficiently detailed contemporaneous records as to be eligible for a fee award pursuant to New York State Ass'n for Retarded Children, Inc. v. Carey, and if Mishkin kept such records.
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13 2699 cv Mishkin v. Lopalo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT ____________________ August Term, 2013 (Argued: April 29, 2014 Decided: August 26, 2014) Docket No. 13 2699 cv ____________________ MARION S. MISHKIN LAW OFFICE, Plaintiffs Liaison Counsel: 21 MC 100 Bodily Injury, Non Respiratory, Non Injestion Cases, Appellant, v. CHRISTOPHER R. LOPALO, STANLEY KALATHARA, SCOTT EPSTEIN, MICHAEL SCOTT LEVINE, NEIL C. MASCOLO, JR., JEFFREY A. NEMEROV, JEFFREY SINGER, ANDREW J. SMILEY, FRANK A. ANDREA, III, CHRISTOPHER DOWNE, EVAN SACKS, ANDREW RICHARD DIAMOND, MICHAEL SETH LEYDEN, MICHAEL F.X. RYAN, JOEL MYRON LUTWIN, JOHN S. PARK, JOSEPH L. DECOLATOR, LEONARD LINDEN, STEVEN L. BARKAN, JOSEPH EHRLICH, DAVID JAROSLAWICZ, DAVID LAURENCE KREMEN, MICHAEL KREMINS, NOAH H. KUSHLEFSKY, Appellees.1 ____________________ 1 The Clerk of the Court is directed to correct the caption as above. 1 2 3 Before: WALKER, POOLER, and WESLEY, Circuit Judges. 4 the Southern District of New York (Alvin K. Hellerstein, J.) denying appellant, 5 the Marion S. Mishkin Law Office, an award of attorneys fees for services 6 performed as plaintiffs liaison counsel in the bodily injury, non respiratory cases 7 arising out of the events of September 11, 2001. Because we find the district court 8 abused its discretion in denying Mishkin any fee for her work without further 9 inquiry, we vacate and remand. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Appeal from the June 11, 2013 order of the United States District Court for ____________________ E. CHRISTOPHER MURRAY, Ruskin Moscou Faltischiek, P.C., Uniondale, NY, for Appellant Marion S. Mishkin Law Office. JOSHUA BARDAVID, New York, NY, for Appellees Frank A. Andrea, III, Michael Scott Levine, Joel Myron Lutwin, Neil C. Mascolo, Jr., John S. Park, Jeffrey Singer and Andrew J. Smiley . DAVID L. KREMEN, Oshman & Mirisola, LLP, New York, NY for Appellee Oshman & Mirisola, LLP (incorrectly sued as David Laurence Kremen). 2 1 2 POOLER, Circuit Judge: The Marion S. Mishkin Law Office ( Mishkin ) appeals from the June 11, 3 2013 order of the United States District Court for the Southern District of New 4 York (Alvin R. Hellerstein, J.) denying an award of attorneys fees for services 5 performed as plaintiffs liaison counsel in the bodily injury, non respiratory cases 6 arising out of the events of September 11, 2001. The district court, while 7 acknowledging Mishkin should receive a fee for her work as liaison counsel, 8 denied her any fee after finding her fee application inflated and unsubstantiated 9 by contemporaneously kept time records. We find the district court abused its 10 discretion in denying Mishkin a fee without further inquiry, and thus we vacate 11 and remand for further proceedings. 12 BACKGROUND 13 The underlying cases in this appeal involve state law claims for non 14 respiratory injuries suffered while working at the World Trade Center site after 15 the September 11 attacks. Mishkin alleges that at some point prior to 2005 the 16 New York State Supreme Court appointed her as liaison counsel for all plaintiffs 17 in cases where plaintiffs claimed a physical injury while working at the World 18 Trade Center site. However, there is no state court order in the record reflecting 3 1 such an appointment. In 2005, the underlying cases were removed from state 2 court to the United States District Court for the Southern District of New York. 3 Initially, the cases were included in the class of roughly 10,000 respiratory related 4 illnesses pending before that court. When the cases were transferred, Mishkin 5 and defendants liaison counsel wrote to the district court, introducing 6 themselves and proposing a briefing schedule for a remand motion. The district 7 court denied the remand motion on December 4, 2006. In 2006, the district court 8 asked Mishkin to provide a report regarding the non respiratory plaintiffs, and 9 referred to her as liaison counsel in acknowledging that report s receipt. 10 The district court did not enter an order actually appointing Mishkin 11 liaison counsel in federal court until May 21, 2008. Her term was short, as the 12 district court, unhappy with Mishkin s performance, removed her as liaison 13 counsel in an order dated August 28, 2008. On September 12, 2008, the attorneys 14 for the non respiratory plaintiffs sent a joint letter to the district court urging 15 Mishkin be reinstated as liaison counsel. The letter stated that: 16 17 18 19 20 The sum and substance of Marion s contribution to the interests of all concerned in this litigation cannot be overstated. Through these past five years, Marion generated hundreds of group wide status, strategy and summary reports, coordinated group wide meetings 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 and appeared for our group in all of the court conferences in State and Federal Court, all to keep our group informed of the numerous procedural and substantive intricacies of this litigation. She has regularly furnished us with all of the pertinent court orders and corresponded with us on a continuous basis to promote the group s understanding of the issues and facilitate the group s compliance with the Court s procedures, instructions and deadlines. Marion authored and orally argued nearly all the briefs for our group and engaged in many productive discussions for us with the defense attorneys throughout these years. App x at 50. The district court relented and reappointed Mishkin on April 3, 2009, with 16 the caveat that she must work with a newly appointed co liaison counsel. The 17 appointment order tasked liaison counsel, in part, with coordinating responses to 18 queries from the district court and defendants, facilitating plaintiffs compliance 19 with district court orders, maintaining an official service list, consider[ing] 20 proposals for future case management orders or other case management 21 procedures and issues, and performing other administrative tasks as necessary. 22 App x at 28 29. 23 On January 23, 2012, Mishkin submitted an application for $1,868,445 in 24 fees for her work as liaison counsel. The district court denied that application 5 1 without prejudice to renew. At its hearing on the issue, the district court found 2 Mishkin s application sought fees for work that exceeded her role as liaison 3 counsel. The district court found Mishkin is entitled to a fee as liaison counsel. 4 But it has to be in relationship to the work that she should be doing as liaison 5 counsel. App x at 940. The district court also ruled that Mishkin could only 6 claim fees for work done while she was appointed by the district court, 7 excluding her time in state court and any time in federal court when she was not 8 acting by an order of appointment. 9 On April 26, 2013, Mishkin submitted a revised fee application seeking 10 $418,995 in fees for work done after May 21, 2008 and excluding the period of 11 time the district court had removed her as liaison counsel. Several plaintiffs 12 counsel responsible for funding liaison counsel s fees out of the fees they 13 received filed objections to Mishkin s fee request. The district court held a 14 hearing on the revised fee application on June 10, 2013. As it opened the 15 discussion regarding Mishkin s fee application, the district court noted that 16 Mishkin sought to be paid for 931.1 hours of work, including 179.7 hours spent 17 preparing her fee application. The district court described the hours spent 18 preparing the fee application extraordinary and outrageous, noting that the 6 1 time comprised 11 to 12 percent of the total time [Mishkin] spent on the case. 2 App x at 1384. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 During the colloquy, Mishkin s lawyer told the district court the objectors sought . . . to utterly deprive Ms. Mishkin of the fee she is entitled to for doing work that, as I have just expressed to your Honor . . . THE COURT: To be clear, Mr. Kublanovsky, she is entitled to a fee. MR. KUBLANOVSKY: She is entitled to her fee, your Honor. THE COURT: To a fee. MR. KUBLANOVSKY: To a fee. App x at 1389. 21 The district court described several services for which Mishkin sought 22 payment that the district court thought exceeded the scope of work set forth in its 23 appointment order. For example, the district court noted Mishkin sought to be 24 reimbursed for reviewing various motions for summary judgment, which the 25 district court described as well beyond any activity of liaison counsel. It s 26 makework, that s what it is. App x at 1397 98. 7 1 The district court offered to send the matter to a magistrate judge for 2 further consideration, but Mishkin declined. Instead, she asked the court to 3 award her a reasonable fee in your Honor s estimation. App x at 1406. The 4 district court then denied Mishkin s application in full, awarding her no fee. The 5 district court found that Mishkin s time records are not contemporaneous time records. They are reconstructed records. Ms. Mishkin may have had notations at the time she was performing this work of the fractions of hours that she performed for each category of service. We will not know for sure unless and until there might be discovery of her records. But the impression I have is these are all reconstructions, and that s why it took her so long to prepare the time records. They show a complete misunderstanding of what her work was as liaison counsel. 6 7 8 9 10 11 12 13 14 15 16 17 App x at 1409 10. Based on its factual findings that Mishkin s time records were 18 not kept contemporaneously, and that her application sought fees for work 19 beyond the scope of its appointment order, the district court awarded her no fee. 20 A final order was entered June 11, 2013. This appeal followed. 21 DISCUSSION 22 We review the district court s denial of an application for attorney s fees 23 for abuse of discretion. Scarangella v. Grp. Health, Inc., 731 F.3d 146, 151 (2d Cir. 8 1 2013). We review questions of law regarding the appropriate legal standard in 2 granting or denying attorneyʹs fees de novo. Id. 3 Mishkin argues that she need not produce contemporaneous time records 4 to get paid because the underlying cases arise under state law rather than federal 5 law. Under New York state law, Mishkin argues, counsel need not track time 6 contemporaneously for a court to award fees. Our Court has recognized that in 7 cases in which the right to attorneys fees is governed by state law, New Yorkʹs 8 more liberal rule allowing reconstructed records should apply. Riordan v. 9 Nationwide Mut. Fire Ins. Co., 977 F.2d 47, 53 (2d Cir. 1992) ( State law creates the 10 substantive right to attorney s fees, a right which cannot be deprived by applying 11 the contemporaneous time records rule adopted in this Circuit. (internal 12 citations omitted)); see also Schwartz v. Chan, 142 F. Supp. 2d 325, 331 (E.D.N.Y. 13 2001) ( [U]nder New York law, courts may award attorneyʹs fees based on 14 contemporaneous or reconstructed time records. ). 15 However, state law did not create the substantive right to attorney s fees 16 federal law did. We hold that when a district court appoints liaison counsel, that 17 appointment flows from the district court s inherent authority to manage its own 18 docket and is thus governed by federal, not state, law. See In re Zyprexa Prods. 9 1 Liab. Litig., 594 F.3d 113, 130 (2d Cir. 2010) (MDLs benefit from a lead counsel or 2 plaintiffs steering committee to coordinate and conduct pretrial proceedings on 3 behalf of all plaintiffs in order to avoid what otherwise might well become 4 chaotic. ); MacAlister v. Guterma, 263 F.2d 65, 68 (2d Cir. 1958) (Court s inherent 5 powers allow it to consolidate cases and appoint general counsel to supervise 6 and coordinate the conduct of plaintiffs cases. ); see also In re Air Crash Disaster at 7 Fl. Everglades on Dec. 29, 1972, 549 F.2d 1006, 1012 (5th Cir. 1977) (A district court 8 has inherent authority to bring management power to bear upon massive and 9 complex litigation to prevent it from monopolizing the services of the court to the 10 exclusion of other litigants. ). 11 As Mishkin s appointment was made possible by the district court s 12 inherent powers, and not by operation of state law, it follows that the authority to 13 pay her derives from federal law. Absent the appointment order entered by the 14 district court there is no authority to pay Mishkin. We thus reject her argument 15 that she is entitled to fees for work she performed as liaison counsel prior to her 16 appointment by the district court. Similarly, there are no grounds for collecting a 17 fee to pay liaison counsel from plaintiffs attorneys who settled their cases prior 18 to her appointment. 10 1 The rules that govern the payment of appointed counsel in a case arising 2 under federal law are well established in this Circuit. In New York State Assʹn for 3 Retarded Children, Inc. v. Carey, our Court crafted a new rule: any attorney . . . 4 who applies for court ordered compensation in this Circuit . . . must document 5 the application with contemporaneous time records . . . specify[ing], for each 6 attorney, the date, the hours expended, and the nature of the work done. 711 7 F.2d 1136, 1148 (2d Cir. 1983). The [f]ailure to do so results in denial of the 8 motion for fees. Riordan, 977 F.2d at 53. Thus, All applications for attorneyʹs fees, whether submitted by profit making or non profit lawyers, for any work done after the date of this opinion should normally be disallowed unless accompanied by contemporaneous time records indicating, for each attorney, the date, the hours expended, and the nature of the work done. 9 10 11 12 13 14 15 16 Carey, 711 F.2d at 1154 (numbering omitted). Carey establishes a strict rule from 17 which attorneys may deviate only in the rarest of cases. Scott v. City of New York, 18 626 F.3d 130, 133 (2d Cir. 2010) ( Scott I ). 19 Our Court has, however, allowed attorneys who failed to keep 20 contemporaneous time records to recover limited fees for any 21 contemporaneously documented time that [the attorney] was physically before 11 1 the district court. Scott v. City of New York, 643 F.3d 56, 58 (2d Cir. 2011) ( Scott 2 II ). Thus, entries in official court records (e.g. the docket, minute entries, and 3 transcriptions of proceedings) may serve as reliable documentation of an 4 attorneyʹs compensable hours in court at hearings and at trial and in conferences 5 with the judge or other court personnel. Id. While district courts are under no 6 obligation to award fees based on such time, we have held that such a regime 7 prevents a totally inequitable result . . . while, at the same time, preserving the 8 strong incentive Carey creates for lawyers to keep and submit contemporaneous 9 records. Id. 10 We turn, then, to Mishkin s fee application, mindful that when reviewing 11 voluminous fee applications, it is unrealistic to expect courts to evaluate and 12 rule on every entry in an application, Carey, 711 F.2d at 1146, and that [a] 13 request for attorneysʹ fees should not turn into a second major litigation. 14 Buckhannon Bd. & Care Home, Inc. v. W. Va., 532 U.S. 598, 609 (2001) (alteration in 15 original) (quoting Hensley v. Eckerhart, 461 U.S. 424, 437, (1983)). 16 The district court s finding that Mishkin failed to keep contemporaneous 17 time records is clearly erroneous. In response to questioning by the district court, 18 counsel reported that while Mishkin did not track her time on a computer, 12 1 Mishkin did not reconstruct her time for her fee application. Rather, 2 [e]verything was time stamped when she did it. She just had to go back and 3 review. There was no recording made of it such as we would have to print out 4 from a computer program, for example, a time record or an entry keeping 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 program. But she did have everything time stamped. App x at 1394 95. 24 completed, and that [her] billing was based on these contemporaneous records, 25 Carey is satisfied. Cruz v. Local Union No. 3, Intʹl Bhd. of Elec. Workers, 34 F.3d 26 1148, 1160 (2d Cir. 1994); see also David v. Sullivan, 777 F.Supp. 212, 223 (E.D.N.Y. 27 1991) ( Attorney affidavits which set forth all charges with the required In denying Mishkin a fee, the district court stated: The Second Circuit has insisted on contemporaneous time records for anyone seeking to be reimbursed for fees. These are not contemporaneous time records. They are reconstructed records. Ms. Mishkin may have had notations at the time she was performing this work of the fractions of hours that she performed for each category of service. We will not know for sure unless and until there might be discovery of her records. But the impression I have is that these are all reconstructions, and thatʹs why it took her so long to prepare the time records. App x at 1409 10. So long as an attorney made contemporaneous entries as the work was 13 1 specificity but which are reconstructions of the contemporaneous records satisfy 2 the rationale underlying Carey and suffice to permit recovery of attorneys fees. ); 3 Lenihan v. City of New York, 640 F. Supp. 822, 824 (S.D.N.Y. 1986) (typewritten 4 transcription of original records satisfy Carey). 5 Here, it is not clear from the record whether or not Mishkin kept 6 contemporaneous time records. Mishkin s attorney told the district court that she 7 tracked her time contemporaneously, and that she did have everything time 8 stamped. App x at 1395. The district court acknowledged that Mishkin may 9 have had notations at the time of performing her work of the fractions of hours 10 that she performed for each category of service, but went on to state it w[ould] 11 not know for sure unless and until there might be discovery of her record. 12 App x at 1409 10. On this evidence, the district court could not make a 13 determination that Mishkin did, or did not, keep contemporaneous records of 14 the date, the hours expended, and the nature of the work, Carey, 711 F.2d at 15 1148. It was clear error to deny Mishkin any fee on the basis of her failure to keep 16 contemporaneous time records without further inquiry into her timekeeping 17 practices. Accordingly, we remand to the district court to determine whether 18 Mishkin kept sufficiently detailed contemporaneous records as to be eligible for a 19 fee award under Carey. 14 1 Even if on remand the court finds that Mishkin did keep 2 contemporaneous records, we note that a computer timekeeping system would 3 have simplified the entire process. Having chosen to keep time in an inefficient 4 manner, Mishkin cannot recoup the costs flowing from her burdensome method 5 of timekeeping. When an attorney chooses to submit reconstructions of 6 contemporaneously kept time records, denying fees for time spent preparing the 7 application is an appropriate and necessary penalty for omitting to include the 8 time records. Lewis v. Coughlin, 801 F.2d 570, 577 (2d Cir. 1986). 9 We can appreciate the district court s frustration in being asked to contend 10 with a second unwieldy fee application, one that failed to comply with its earlier 11 directive to not seek fees for services that exceeded the scope of the appointment 12 order, especially after Mishkin pushed for a ruling rather than send the matter to 13 a magistrate judge. However, the district court itself stated several times that 14 Mishkin was due a fee just not the fee she sought. Equity does not permit the 15 district court to pay her nothing simply because she insisted she was due more. 16 We stress that even if, on remand, the district court determines Mishkin 17 kept contemporaneous time records, it is under no obligation to pay Mishkin 18 what she sought. The district court may undertake a more detailed review of 15 1 Mishkin s fee application on remand, or it may send the matter to a magistrate 2 judge for a report and recommendation. In any event, the district court is not 3 obligated to undertake a line by line review of Mishkin s extensive fee 4 application. It may, instead, exercise its discretion and use a percentage 5 deduction as a practical means of trimming fat. McDonald ex rel. Prendergast v. 6 Pension Plan of the NYSA ILA Pension Trust Fund, 450 F.3d 91, 96 (2d Cir. 2006) 7 (internal quotation marks omitted). Using this form of rough justice, district 8 courts in our Circuit regularly employ percentage reductions as an efficient 9 means of reducing excessive fee applications. See, e.g., Romeo and Juliette Laser 10 Hair Removal Inc. v. Assara I LLC., No. 08 Civ. 442 (TPG) (FM), 2013 WL 3322249, 11 at *5 8 (S.D.N.Y. July 2, 2013) (reducing fees of principal biller, an associate, by 12 seventy five percent because her time charges were grossly excessive relative to 13 the nature of the work performed ); Days Inn Worldwide. Inc. v. Amar Hotels, Inc., 14 No. 05 Civ. 10100 (KMW) (KNF), 2008 WL 2485407, at *10 (S.D.N.Y. June 18, 2008) 15 (reducing attorneys fees by seventy five percent because a substantial amount 16 of work performed . . . was redundant and unnecessarily duplicative ); Lide v. 17 Abbott House, No. 05 Civ. 3790 (SAS), 2008 WL 495304, at *l 2 (S.D.N.Y. Feb. 25, 18 2008) (reducing attorney fee award by thirty percent for various reasons, 16 1 including excessive and unnecessary hours spent on indisputably 2 straightforward tasks ). The district court may chose whatever option it deems 3 best in reconsidering this matter on remand. 4 Finally, we note the district court, assigned to oversee the flood of litigation 5 that followed the events of September 11, has done an admirable job of managing 6 the legions of attorneys involved with the cases while keeping a careful eye on 7 costs. However, a bit more detail in the order appointing liaison counsel may 8 have helped here. The Manual for Complex Litigation suggests that when 9 appointing liaison counsel, the appointing court should 10 11 12 13 14 15 determine the method of compensation, specify the records to be kept, and establish the arrangements for their compensation, including setting up a fund to which designated parties should contribute in specified proportions. Guidelines should cover staffing, hourly rates, and estimated charges for services and expenses. 16 Manual for Complex Litigation (Fourth) § 14.215 (2014). Going forward, district 17 courts would do well to heed these recommendations. 18 CONCLUSION 19 For the reasons given above, we vacate the order of the district court and 20 remand for the district court (1) to determine whether Mishkin kept sufficiently 17 1 detailed contemporaneous records as to be eligible for a fee award pursuant to 2 Carey; and (2) if Mishkin kept such records, for further proceedings consistent 3 with this opinion to determine an appropriate fee for her work. 18
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