Ousmane v City of New York

[*1] Ousmane v City of New York 2009 NY Slip Op 50468(U) [22 Misc 3d 1136(A)] Decided on March 17, 2009 Supreme Court, New York County Cooper, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 17, 2009
Supreme Court, New York County

Moussa Ousmane, Antonia Delgado and Mohammed Ali Individually, and on behalf of all others similarly situated as class representatives, Plaintiffs,

against

City of New York, Christopher Ward, Commissioner of the Department of Environmental Protection and the Chairperson of the Environmental Control Board, Gretchen Dykstra, Commissioner of the Department of Consumer Affairs, and Thomas R. Frieden, Commissioner of the Department of Health and Mental Hygiene, Defendants.



402648/04



For the Plaintiffs:

Sean Basinski, Esq.

Urban Justice Center

123 William Street, 16th floor

New York, NY 10038

For Defendant City of New York

Michael A. Cardozo, Esq.

Corporation Counsel

By Michelle Goldberg-Cahn

100 Church Street

New York, NY 10007

Matthew F. Cooper, J.

This is a class action lawsuit brought on behalf of street vendors fined by the New York City Environmental Control Board ("ECB") for code violations during the years 2003 and 2004. Plaintiffs charge that defendants, the City of New York and three of its departmental commissioners (collectively referred to as "the City"), violated the New York City Administrative Procedure Act ("CAPA"). Specifically, they allege that ECB increased the fines for vendors' violations of the City Health and Administrative Codes without going through the required CAPA rulemaking procedures. Plaintiffs now move for summary judgment on the CAPA violation. They also seek an order requiring the City to reissue refund checks that were previously mailed to vendors who paid the increased fines but whose checks were returned as [*2]undeliverable, as well as to locate current addresses so as to insure that the new checks are received. In addition, plaintiffs request that the order provide for a cy pres distribution to a nonprofit organization of any refund money that ultimately remains unclaimed. Finally, plaintiffs, who have been represented throughout the case by the Urban Justice Center, a nonprofit public interest law firm, seek an award of attorneys' fees. The fees sought, when enhanced by a multiplier, total over $600,000.

The City, while not actively contesting plaintiffs' right to summary judgment on their claim of the CAPA violation, cross-moves for partial summary judgment limiting the class of vendors entitled to judgment. It also opposes the imposition of any requirement on its part to take further efforts to locate vendors' addresses, and it objects to any cy pres distribution of unclaimed funds. Although the City acknowledges that plaintiffs are entitled to an award of some attorneys' fees, it takes issue with the amount plaintiffs have requested. Factual Background

This action arises from a Memo issued by ECB to Administrative Law Judges ("ALJs") on July 14, 2003, which increased fines against street vendors for violations of the New York City Administrative and Health Codes. The Memo's new penalty schedule, enforced by ECB from July 17, 2003, until October 4, 2004, removed an ALJ's discretion to impose a fine within a specified dollar range and instead mandated that the maximum amount of the fine be enforced. Prior to the Memo, the penalty level for a vendor violation was set at the minimum of the legal range: $25 for the first violation within each two-year period; $50 for the second; $100 for the third; and $250 for the fourth and subsequent violations. The Memo increased the penalties to the following maximum amounts: $50 for the first violation within each two-year period; $100 for the second; $250 for the third; and $1000 for the fourth and subsequent violations.

The three named plaintiffs, Moussa Ousmane, Antonia Delgado, and Mohammed Ali, are all street vendors who were found guilty after an ECB hearing of various code violations and fined according to the increased penalty levels provided for in the Memo. Mr. Ousmane was found guilty of violating NYC Administrative Code § 20-465(d) for vending less than twenty feet from a building entrance. Ms. Delgado was found guilty of violating NYC Administrative Code § 20-465(a) for vending on a sidewalk that was less than twelve feet wide. Mr. Ali was found guilty of violating NYC Administrative Code § 17-311(b) for failing to conspicuously display his license while vending. Each named plaintiff was ordered to pay a $1,000 fine.

In their complaint for declaratory and injunctive relief, plaintiffs allege that the procedures used by ECB to increase vendor fines violated CAPA, were arbitrary and capricious, and were an illegal extension of ECB's authority to enforce the New York City Charter and Administrative Code. Thus, the complaint contends that the increased fines were illegally assessed against the named plaintiffs, as well as against other vendors who ply their trade on the streets of New York.

On August 24, 2004, plaintiffs commenced the action and moved by Order to Show Cause for a preliminary injunction against the City. On September 28, 2004, Justice Carol R. Edmead of this court, after hearing extensive testimony and oral argument in a courtroom filled with vendors and their families, issued the preliminary injunction from the bench. Her order barred the City from implementing or enforcing the increased penalty schedule and from [*3]preventing license or permit renewals on the basis of a vendor's failure to pay the excess fines. The temporary restraining order was slightly amended and formalized on October 4, 2004, at which point the City ceased taking any further action to impose or collect the fines.

Subsequent to being granted the injunction, plaintiffs moved for class certification. The motion was granted on April 13, 2005. In a lively and thoughtful decision that addressed the plight of a distinct segment of the working poor, many of whom are recent immigrants with little resources or education, Justice Edmead certified the class to consist of all individuals who sell food and goods on the streets and sidewalks of New York City and who received notices of violation between July 17, 2003, and October 4, 2004. See Ousmane v. City of New York, 7 Misc 3d 1016(A) (Sup Ct, NY County 2005). In certifying a class that included all vendors fined during the entire period that the increased penalty schedule was in effect, Justice Edmead specifically rejected the City's application to limit the scope of the class to only those vendors who received final administrative determinations from ECB within the four month period prior to the commencement of the action.

Defendants appealed the court's granting of class certification to the Appellate Division, First Department. On May 3, 2006, the appeal was argued. The very next month, however, the City suddenly chose to withdraw its appeal. On September 21, 2006, the Appellate Division granted the City's motion for permission to withdraw the appeal.

In the wake of the decision granting the preliminary injunction and then the later decision granting class certification, the City took certain steps with regard to the increased fines that had been imposed. First, on October 7, 2004, ECB erased approximately $1.7 million in unpaid fines previously assessed to vendors under the new penalty schedule. Then in August of 2006, while its motion to withdraw the appeal was pending before the Appellate Division, the City mailed 1,765 refund checks totaling $152,898.70 to vendors who had paid the excess fines under the penalty schedule. As of October 20, 2008, 792 of the refund checks had been cashed, totaling $83,081.03. Additionally, in June, 2008, ECB mailed interest checks totaling $12,113.41 to those vendors who submitted completed 1099 forms. None of these actions were done pursuant to court order, but instead appear to have been undertaken by the City on its own volition.

The refund checks that the City mailed out were sent to the addresses listed for the vendors on ECB's violation tracking database. These addresses were collected by officers when issuing citations to the vendors and were based on information provided by the vendor either through the production of photo identification or verbally when no identification was available. When a refund check was returned by the post office, ECB gave the vendor's name to the Department of Consumer Affairs ("DCA") or the Department of Health and Mental Hygiene ("DOHMH"). DCA and DOHMH, the agencies responsible for issuing licenses to general merchandise and food vendors respectively, then searched their records for an alternative address for each vendor. Based on the updated addresses from DCA and DOHMH, the City sent an additional 30 checks to vendors whose checks had been previously returned.

In September 2006, plaintiffs returned to court, this time seeking a preliminary injunction enjoining the City from communicating with the class regarding the subject matter of the lawsuit without approval of class counsel. Plaintiffs agreed to withdraw the motion after the parties entered into a stipulation. As agreed to by the stipulation, the City would send corrective notices to the class members, post notice of the refund and class action lawsuit at ECB and Department of Consumer [*4]Affairs offices, and continue to send out refund checks that had been returned or had never been sent in the first place. ECB sent the agreed-upon notice to all members of the class who were issued refund checks in August 2006 and included the notice in additional mailings to the class in December 2006. The notice was sent to each class member in English, Chinese, Arabic, Spanish, and Bengali. ECB posted copies of the notice at its main office on 66 John Street in Manhattan and at ECB adjudication centers in each borough.

Since the September 2006 stipulation, settlement talks aimed at resolving all aspects of the matter have broken down between the parties. Plaintiffs now move for summary judgment for final injunctive and declaratory relief on the underlying CAPA violation, request an order dictating the efforts to be made to insure that the remaining class members receive their refunds, demand that any unclaimed money be donated to a nonprofit organization through a court ordered cy pres distribution, and seek a substantial attorney's fees award for the work performed on this case since 2004. Defendants cross-move for partial summary judgment limiting the class of vendors entitled to judgment. Analysis

I. Motion for Summary Judgment and Cross-Motion for Partial Summary Judgment

Plaintiffs move for summary judgment on the ground that no issue of fact exists as to the City having violated CAPA when ECB raised vendor fines without first notifying the public, conducting public hearings, or providing for public comment. In opposing this motion, the City does not specifically address the alleged CAPA violation. Instead, it cross-moves for partial summary judgment seeking to limit relief to only those vendors who received final decisions from ECB concerning their fines within four months of the date this action was commenced.

The moving party in a motion for summary judgment has the burden of making a prima facie demonstration of entitlement to judgment as a matter of law by presenting evidence sufficient to eliminate any issues of material fact from the underlying claim. Winegrad v. New York University Medical Center, 64 NY2d 851, 853 (1985). This burden remains irrespective of the sufficiency of the opposing papers. Id. Although defendants in this case do not offer evidence of their own to support the legality of the increased penalty schedule, plaintiffs must still demonstrate that no material issue of fact exists regarding defendants' violation of CAPA through the issuance of the July 2003 Memo.

CAPA mandates that where an agency of the City of New York acts within the definition of a "rule" under CAPA §1041(5), the procedures outlined in CAPA §1043 with respect to notice, comment, public hearing, and publication must be followed prior to such action. 1700 York Assoc. v. Kaskel, 182 Misc 2d 586 (Civ Ct, New York County 1999). CAPA defines a "rule" as "the whole or part of any statement or communication of general applicability that (i) implements or applies law or policy. . . including an amendment, suspension, or repeal of any such statement or communication." CAPA §1041(5). A rule "shall include, but not be limited to, any statement or communication which prescribes standards which, if violated, may result in a sanction or penalty." Id. A statement or communication of general applicability is defined as "a fixed, general principle to be applied by an administrative agency without regard to other facts [*5]and circumstances relevant to the regulatory scheme" and must be formally adopted. Roman Catholic Diocese of Albany v. NY State Dept. of Health, 66 NY2d 948, 951 (1985); DeJesus v. Roberts, 296 AD2d 307, 310 (1st Dept 2002). Prior to implementing a rule, a City agency must (1) publish the full text of the proposed rule in the City Record at least thirty days prior to the public hearing, (2) include a draft statement of the basis and purpose of the proposed rule in the published notice, (3) submit copies of the proposed rule to the City Council, the chairs of all community boards, the news media, and civic organizations, and (4) provide the public the opportunity to submit written comments about the new rule. CAPA §1043.

The July 14, 2003 ECB Memo established a new schedule of higher penalties for vendor offenses based on the number of prior offenses of the individual vendor. The Memo further removed the previously accepted range of fines which an ALJ could impose for a violation and mandated that fines be set at the maximum amount. This, the City admits, removed discretion from the ALJs when enforcing the penalties. Thus, the Memo was far from being merely a broad statement of general agency goals. Instead, by removing judicial discretion in the adjudication of fines, increasing the penalties, repealing the previous fine levels, and materially affecting the rights of vendors, ECB was implementing a new rule. The City, in opposing plaintiffs' motion for summary judgment, does not dispute that the Memo was a "rule" that came within the scope of the CAPA's requirements as to notice and publication.

It is further undisputed that ECB did not publish notice of the rule change in the City Record thirty days prior to its implementation, solicit written comments about the penalty increase, or submit copies of the full text of the proposed rule to the City Council, news media, or community boards. Plaintiffs, by providing evidence that the increased penalty schedule as set forth in the July 2003 Memo was a rule and that the mandated CAPA procedures were not followed in promulgating that rule, have met their burden of establishing a prima facie violation of CAPA.

The City's opposition to plaintiffs' summary judgment motion centers on its contention that it is improper to include as members of the certified class those vendors who did not challenge the increased fines imposed by ECB within four months of their imposition. The City largely bases its position on the Appellate Division's decision in Joseph L. Balkan, Inc. v. City of New York, 41 AD3d 136 (1st Dept 2007). The decision was rendered two years after the class in this case was certified and one year after the City withdrew its appeal of that determination.

Similar to this action, Balkan involved a challenge to increased penalties imposed in connection with violations adjudicated by the Environmental Control Board. The Appellate Division, in affirming the motion court's dismissal of the complaint, held that the only viable causes of action were those concerning final determinations made by ECB within four months prior to the commencement of the action. All others, the court held, were barred by the statute of limitations.

Whatever applicability Balkan may have to the circumstances presented by this class action, the fact remains that the decision was rendered long after the class in this case was certified. Where there is a subsequent change or development in the case law after an order is entered by a court, and where the time for appealing or rearguing the original order has passed, the original order stands regardless of whether or not there was a final judgment in the case. In re [*6]Huie, 20 NY2d 568, 571-2 (1967); Slater v. American Mineral Spirits Co., 33 NY2d 443, 446-7 (1974); Schwartzberg v. Axelrod, 159 AD2d 807, 809 (3d Dept 1990); See People v. Hernandez, 255 AD2d 112 (1st Dept 1998). Here, the City went so far as to argue the appeal from the class certification decision but subsequently withdrew the appeal prior to the Appellate Division ruling on the matter. Such a withdrawal of an appeal puts the City in the same position as if the appeal had never been taken. See Hernandez at 112.

Because the time period in which to appeal the class certification decision has long lapsed, the order certifying the plaintiff class stands as final, regardless of subsequent case law. See In re Huie at 571-2; see also Schwartzberg at 809; see also CPLR §5513. The appellate decision in Balkan, therefore, can have no impact on the class certification in this case, and Justice Edmead's decision of April 13, 2005, which remains the law of the case, is controlling. Moreover, the decision granting class status to all vendors who were subject to the increased fines between July 17, 2003, through October 4, 2004, is fundamentally fair and proper in view of the fact that few if any of the vendors had any kind of notice of the increased penalty schedule. See Ousmane v. City of New York, 7 Misc 3d 1016(A.)

Outside of its argument concerning the composition of the class, the City has come forward with nothing to dispute plaintiffs' entitlement to summary judgment. Accordingly, plaintiffs' motion for summary judgment must be granted and an order entered declaring that the increased penalty schedule as set forth in the ECB Memo of July 17, 2003 was illegally promulgated in violation of CAPA and is thus null and void. Additionally, plaintiffs' are entitled to an order permanently enjoining the City from taking any action to enforce, collect or retain the increased fines.[FN1] The City's cross-motion for partial summary judgment limiting the class members entitled to relief is denied.

II. Motion for an Order Directing the City to Reissue Checks and Research Addresses

Plaintiffs next request that the court order the City, pursuant to CPLR §907(2), to make further efforts to locate current addresses for those class members who did not receive their refund checks and to reissue those checks that have not yet been received and cashed. As stated previously, in August of 2006, ECB sent 1,765 refund checks totaling almost $153,000 to the addresses that it had for the vendors. For those checks returned to ECB, the records of the licensing agencies, either DCA or DOHMH, were searched and the checks were sent again to the most recent addresses contained in the agencies' records.

Each licensed vendor is required by City law to update his or her contact information, including mailing addresses, with DCA or DOHMH within ten days of a change. See Administrative Code §§ 17-309(b)(1), 17-312, 20-455(b)(1), and 20-462. In issuing the refund checks, ECB relied on the addresses obtained from the vendors at the time they were issued a citation and those listed in the licensing agencies' records. The City points out that the law squarely places the burden on a vendor to inform the appropriate licensing agency of his or her current address. The City also points out that not only did it cease enforcing the increased penalty [*7]schedule as soon as it was ordered to do so, but that on its own initiative it made extensive efforts to mail and then re-mail refund checks to vendors, as well as to refund any accrued interest. The City argues that under these circumstances, where it has already gone to great efforts to mail the refunds and where it is the vendors' responsibility to update current contact information, it should not have to expend further time and money locating the individual vendors.

Regarding those refund checks that have yet to be received and cashed, the court retains discretion as to how to disburse the wrongfully assessed fines still in the City's possession. See Friar v. Vanguard Holding Corp., 125 AD2d 444, 446 (2d Dept 1986) (finding that the court still retains traditional equity power over unclaimed funds until they are distributed). The court also retains discretion in apportioning the expenses of notification of the judgment. CPLR § 904(d)(II).

Although the City makes a compelling argument against being required to bear the entire burden of insuring that another round of refund checks are deliverable, it should not be free from making any efforts at all. After all, it is the City that created the situation in the first place by illegally increasing and collecting the fines. What makes sense is for the City to work with the Street Vendor Project of the Urban Justice Center, plaintiffs' counsel, to formulate a plan for making one last concerted effort to get the remaining checks to the people for whom they are intended. The Street Vendor Project, a vendor organizing and advocacy group, is well known for its knowledge of and ties to the vendor community. In consultation with the Street Vendor Project, the City is to consider such steps as posting notice of the refunds in foreign language newspapers and distributing leaflets at locations frequented by street vendors, professionally and socially. Other possible avenues to explore are making outreach efforts through immigrant organizations, such as Esperanza Del Barrio in Upper Manhattan, and various veterans' groups.[FN2] Consideration should also be given to utilizing a computerized address location service, such as the U.S. Post Office's National Change of Address Database.

The excess fines that have yet to be refunded and are still retained by the City total no more than $70,000. In light of this relatively small amount, and taking into consideration the costs already incurred by the City in attempting to dispense the funds, the court will require the City to spend a maximum of $5,000 on further efforts to locate current addresses for those vendors who have not received their refunds. If any additional funds are necessary to fulfill the mutually agreed upon outreach plan, they can come out of the attorneys' fees that are being awarded to the Urban Justice Center for the work it has done in this case.

III. Motion for a Cy Pres Distribution

Plaintiffs further seek an order directing that any funds not claimed within one year after the City's last round of reimbursement checks be subject to a cy pres distribution to a nonprofit organization that works to benefit street vendors. Not surprisingly, plaintiffs ask that the funds go to the Urban Justice Center's Street Vendor Project, or if that is not acceptable, then to the Legal Aid Society Immigration Law Unit. The City opposes a cy pres distribution. [*8]

Cy pres means "as near as possible." A cy pres distribution is a procedural device often used in federal class action lawsuits where it is "difficult or impossible to identify the persons to whom the damages should be assigned or distributed." Mace v. Van Ru Credit Corporation, 109 F3d 338, 345 (9th Cir 1997). The purpose of such a distribution is to put the funds to its next best use, such as benefitting a group or organization that does work on behalf of the class as a whole, if payments cannot be made directly to the individual class members themselves. See Masters v. Wilhemina Model Agency, Inc., 476 F3d 423, 436 (2d Cir 2007).

While plaintiffs cite numerous federal cases in which cy pres distributions have been awarded, there appears to be only one reported New York State case dealing with the use of a cy pres distribution in a class action, and then only briefly in passing.[FN3]That case, Klein v. Robert's American Gourmet Food, Inc., 28 AD3d 63 (2d Dept 2006), was a suit brought on behalf of a class of health-conscious consumers nationwide who were lured by false advertising into purchasing the defendant's line of snack-food products, including Pirates Booty and Veggie Booty , under the impression they were substantially lower in fat and calories than they actually were. Over the objection of some class members, Nassau County Supreme Court approved a settlement where the defendant was to establish a fund of $3.5 million to issue and redeem discount coupons for the purchase of its products. In remitting the case for further review, the Appellate Division, Second Department directed Supreme Court to consider some form of cy pres distribution, in lieu of simply providing discounts to the general public, as a means of "confer[ring] a benefit, either direct or indirect, upon those members of the class who have the most serious grievances." Id. at 74.

The situation presented in this case, however, differs significantly from Klein and from the federal cases cited by plaintiffs. For one thing, in all of those cases the defendant was a private entity as opposed to a municipality or other government body. For another thing, and perhaps more importantly, in those cases there was a common fund out of which compensation was to be made to a large and amorphous group of potential distributees. Here there is no common fund. The only fund is the approximately $70,000 in fines that is still being held by the City and which was collected from a relatively small number of readily identifiable vendors. Thus, there is no doubt as to which specific class members the money should go and how much each should receive. Nor is there reason to doubt that with time, and with the renewed notice and outreach efforts, most, if not all, the vendors will come forward to receive their refunds. Until that time, allowing the City to hold the money will not, as plaintiffs contend, permit the funds to "revert to the wrongdoer," but rather will permit our municipal government "to utilize unclaimed property for the benefit of the citizenry at large while at the same time protecting the interest[s] of the rightful owner[s]." Friar, 125 AD2d at 446.

Under the circumstances presented, a cy pres distribution is neither warranted nor appropriate at this time. In the event, however, that after three years there remain funds that are still unclaimed and the parties are unable to agree as to their final disposition, then the matter may be restored to the calendar for further proceedings.

[*9]IV. Attorneys' Fees

The last issue is the most contentious. This is the issue of attorneys' fees. It is contentious because of the great disparity between what each side believes is appropriate compensation for the legal work done on behalf of the class. Plaintiffs have submitted bills in the amount of $227,719. They seek to enhance this base amount by way of a multiplier of 2.75 to bring the total due to $626,228. They also seek to recover litigation expenses of $1,708. The City, on the other hand, asserts that plaintiffs should be awarded no more than $75,212 in attorneys' fees and $499 in expenses. Both sides have waived a legal fees hearing and have requested that the issue be decided on the parties' submissions.

Upon a judgment being rendered in favor of the class, an award for attorneys' fees may be made to the representatives of the class based on the reasonable value of legal services rendered. CPLR § 909. What constitutes reasonable attorneys' fees is "a matter generally left to the sound discretion of the trial court." Downes v. Aran, 273 AD2d 435, 436 (2d Dept 2000). Where the fee applications are voluminous, it is widely recognized that it is unrealistic to expect the trial judge to "evaluate and rule on every entry in an application." New York State Ass'n for Retarded Children v. Carey, 711 F2d 1136, 1146 (DC Cir 1982). The court, instead, will "look at the big picture to see if the total time expended for each portion of the case was reasonable." McIntyre v. Manhattan Ford, Lincoln-Mercury,176 Misc 2d 325, 329 (Sup Ct, NY County 1997).

There are two methods that may be utilized in determining the amount of reasonable attorneys' fees in a class action lawsuit. The first is the lodestar method, whereby the court scrutinizes the hours billed in the case and multiplies that amount by a reasonable hourly rate. See Matter of Rahmey v. Blum, 95 AD2d 294, 303 (2d Dept 1983). Upon determining the lodestar amount, the court may, in its discretion and under specific circumstances, increase the lodestar amount by applying a multiplier based on certain more subjective factors, such as the difficulty of the case, the risk of success and the quality of representation. See Goldberger v. Integrated Resources, Inc., 209 F3d 43, 47 (2d Cir 2000).

The second method is to base the fee on a percentage of the recovery. Id. The use of the percentage method would not be appropriate here because of the relatively small amount of money actually being held and because no common fund is being established. See In re Washington Public Power Supply System Securities Litigation, 19 F3d 1291, 1296 (9th Cir 1994). In a class action where there is a common fund created, the attorneys' fees are paid out of that fund; in this case, any fees awarded will be paid directly to plaintiffs' counsel by the City. In any event, plaintiffs have not requested that the court utilize the percentage of the recovery method but instead seek to have attorneys' fees determined solely on the basis of the lodestar method. Accordingly, the lodestar method will be utilized.

A. Hours Reasonably Expended

The first step to be taken in arriving at a fair and appropriate award of attorneys' fees under the lodestar method is to determine whether the number of hours claimed were reasonably "expended from contemporaneous time sheets." Becker v. Empire of America Federal Savings Bank, 177 AD2d 958 (4th Dept 1991); see also Rahmey, 95 AD2d at 300-301. The court need not automatically accept inadequately documented hours or those hours which reflect "padding, i.e., hours that are excessive or otherwise unnecessary." Rahmey, 95 AD2d at 301. The following factors are also to be considered in assessing the reasonable hours worked: the extent [*10]to which the hours reflect inefficiency or duplicative work; legal work versus non-legal work, investigations, and other work performed by non-lawyers; time spent in court differentiated from out-of-court efforts; and the court's own knowledge, experience and expertise as to the time required to complete a similar task. Id.; see also Matter of Spingarn, 164 Misc 2d 891, 894 (Sup Ct, NY County 1995).

Plaintiffs claim that a total of 822.8 hours was spent on the entirety of this case by four attorneys and one law student intern: 598.3 by lead attorney Sean Basinski, Esq.; 33.4 hours by Douglas Lasdon, Esq.; 134.8 hours by Nicholas Migliaccio, Esq.; 21 hours by Alexander Barnett, Esq.; and 35.3 hours by law student intern Mark Cantora. As required, the court has scrutinized the time sheets for the four attorneys and the law student and finds occurrences of billing at attorney rates for non-legal work, as well as instances of excessive, unnecessary and duplicative work. Examples include billing at attorney rates for faxing and photocopying documents, retrieving phone messages, observing oral argument in the Appellate Division, and drafting a reply memorandum of law in support of plaintiffs' preliminary injunction when such a reply was neither authorized nor accepted by the court. The time sheets also show that when any two or more of plaintiffs' attorneys discussed the case with each other in person or by telephone, each individual billed for his time, effectively doubling and sometimes tripling the hours billed for that interaction.

Based on a review of the submitted time sheets, the court finds it appropriate to reduce the billed hours, and thereby the total attorneys' fees awarded, by fifteen percent. See Perez v. Heckler, 1984 WL 62847 (SDNY 1984) (finding it reasonable to reduce the requested attorneys' fee award by fifty percent); see also Spingarn,164 Misc 2d at 898 (reducing attorneys' fees due to duplicative and unnecessary legal billing); see also Continental Bldg. Co., Inc. v. Town of North Salem, 150 Misc 2d 145, 155 (Sup Ct, Westchester County 1991). This fifteen percent deduction reflects a reasonable estimation of unnecessary, duplicative or otherwise improperly billed hours.

B. Reasonable Hourly Rate

The next step in assessing attorneys' fees is to determine a reasonable hourly rate for each attorney and each category of services rendered. Rahmey, 95 AD2d at 301. This determination is guided in large part by the "customary fee charged for similar services by lawyers in the community with like experience and of comparable reputation to those by whom the prevailing party was represented." Id. at 302. Since this case was brought in Manhattan and involves the rights of a distinctly disadvantaged segment of society, the relevant "community to which the Court should look is that of Manhattan civil rights attorneys." Heng Chan v. Sung Yue Tung Corp., 2007 WL 1373118, 2 (SDNY 2007). The applicable reasonable rate to be applied to each attorney should be "current rather than historic hourly rates." Gierlinger v. Gleason, 160 F3d 858, 882 (2d Cir 1998).

i. Sean Basinski, Esq.

Mr. Basinski is lead counsel on the case and the Director of the Street Vendor's Project at the Urban Justice Center. He is a 2001 law school graduate but was not admitted to the bar of the State of New York until May 9, 2005. Of the 598.3 hours billed by Mr. Basinski, 340.1 hours were logged prior to his admission to the bar while he was allowed to appear on the case under the supervision of an experienced attorney pursuant to a pre-admission practice order of the Appellate Division, First Department. Plaintiffs assert that a reasonable hourly rate for Mr. [*11]Basinski, based on his experience and qualifications, is $275 for all hours worked, both pre-admission and post-admission to the bar. The City challenges this assertion and argues that the reasonable hourly rate for Mr. Basinski's work is $100 pre-admission and $200 post-admission.

Plaintiffs properly point out that when determining the appropriate hourly rate for attorneys' fees, the court must use the current rate in the "community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Yang v. ACBL Corp., 2006 WL 435720 (SDNY 2006); see also Gierlinger,160 F3d at 882 (declaring that in order to provide adequate compensation where the services were performed a number of years before the award is made, the rates used by the court to calculate the lodestar should be current rather than historic hourly rates). The current rate applied to an attorney, however, cannot also be applied to the hours worked by that same attorney while he or she was awaiting admission to the bar. See Yang, 2006 WL 435720 at 2; see also McIntyre v. Manhattan Ford, Lincoln-Mercury, 176 Misc 2d 325, 329 (Sup Ct, NY County 1997) (approving a rate of $65 per hour for work performed by a law school graduate awaiting admission to the bar).

It is clear that this litigation was spearheaded from its inception by Mr. Basinski. It is also clear that prior to his admission to the bar Mr. Basinski possessed both a level of skill and experience far exceeding that of your typical law school graduate appearing in court under a pre-admission practice order. Nevertheless, the fact remains that Mr. Basinski's work done prior to his admission simply cannot be compensated at the same rate as that of a fully admitted attorney. The integrity of our system of legal representation requires that this be the case. The court does find, however, that the quality and value of Mr. Basinski's work demands a pay level higher than that than that of a paralegal or an ordinary law school graduate. Thus, an hourly rate of $165 is reasonable and appropriate for the work done on this case by Mr. Basinski prior to his admission to the bar.

For the work done by Mr. Basinski after his admission to the bar, plaintiffs request a rate of $275 per hour. The City counters with a rate of $200 based on Mr. Basinski's 2005 admission date. As a result of this admission date, Mr. Basinski, were he in the private sector, would be considered a third-year associate and his reasonable hourly fee determined in accordance with this level of experience. See Luca v. County of Nassau, 2008 WL 2435569, 10 (EDNY 2008). Although attorneys at the third-year associate level have been found to be entitled to an hourly rate of $200 or less, Mr. Basinski again has demonstrated a level of skill and experience that exceeds those of most third-year associates. See Torres v. City of New York, 2008 WL 419306, 2 (SDNY 2008). Based on Mr. Basinski's handling of this case, the intensity he brings as an advocate, and the success he obtained in having the City change the way it adopted a penalty fee schedule significantly impacting his clients, the $275 hourly rate sought for his services is reasonable and justified.

ii. Douglas Lasdon, Esq.

Mr. Lasdon is a 1981 law school graduate and the Executive Director of the Urban Justice Center. He has been practicing law for more than twenty-five years and has significant experience advocating for marginalized communities in the City and State of New York. Plaintiffs request an hourly rate for Mr. Lasdon's work of $425. Defendants argue for a reduction in this amount to no more than $375. The majority of the 33.4 hours Mr. Lasdon has billed for were spent in a supervisory role. [*12]

Based on Mr. Lasdon's experience, the type of litigation, the size of the class, and the success of the claim, $425 is a reasonable hourly rate. See Heng Chan v. Sung Yue Tung Corporation, 2007 WL 1373118 (SDNY 2007) (holding that $400 an hour is a reasonable rate for the associate director of the Urban Justice Center who primarily supervised other attorneys). Here, as in Heng Chan, Mr. Lasdon was acting in primarily a supervisory position. His expertise and experience with complex civil rights litigation and advocacy, gathered over his twenty-five years of practicing law, was required to ensure the class members received adequate representation. Due to the additional experience Mr. Lasdon has over the attorney in Heng Chan, the court finds $425 an hour a reasonable rate for Mr. Lasdon's legal services.

iii. Nicholas Migliaccio, Esq.

Mr. Migliaccio is a 2001 law school graduate who was admitted to practice law in 2002 and is an associate at The Mason Law Firm. Because he specializes in class action litigation, he was brought in on this case as co-counsel with regard to issues of class certification and settlement. Plaintiffs ask for an hourly rate of $275 for the134.8 hours Mr. Migliaccio spent reviewing and drafting documents and conferring with the other attorneys. According to the affirmation of his employer, Mr. Migliaccio is currently billed at $310 an hour and in 2007 was billed at $240 an hour. Based on the reasonable rates for attorneys in New York City of like experience, along with Mr. Migliaccio's experience with class action litigation, the requested rate of $275 is reasonable for the work conducted. See Heng Chan at 4 (awarding an hourly rate of $300 for a sixth-year associate); see also Rozell v. Ross-Holst, 576 F Supp 2d 527, 546 (SDNY 2008)(awarding an hourly rate of $350 to a 2001 law school graduate); see also Morris v. Eversley, 343 F Supp 2d 234, 247 (SDNY 2004)(finding a rate of between $230 and 250 for attorneys with seven to nine years of experience to be reasonable). iv. Alexander Barnett, Esq.

Mr. Barnett, until March of 2008, was a partner at The Mason Law Firm. He is a 1992 law school graduate and has more than fifteen years experience representing clients in class action litigation. Plaintiffs request an hourly rate of $400 for Mr. Barnett's work based on his experience and qualifications in class action litigation.

While plaintiffs have cited multiple cases of attorneys of Mr. Barnett's experience and years of practice being awarded hourly rates in excess of $400, the rate requested by plaintiffs for Mr. Barnett's services cannot be justified in this instance. After all, Mr. Lasdon, an attorney with ten more years of experience, was awarded a rate of only twenty-five dollars more an hour. Moreover, of the 21 hours billed by Mr. Barnett, only 0.5 of those hours was spent preparing legal documents while the rest were spent on conference calls and reviewing proposed settlement agreements. This type of supervisory work, while surely important to guide a novice class action litigator, cannot merit the $400 an hour rate demanded. In fact, there is little if any evidence of the work conducted by Mr. Barnett other than his submitted time sheet.

The court in Heng Chan, cited previously, found that a fifteen year attorney acting in a supervisory role was entitled to a fee of $400 an hour. 2007 WL 1373118 at 4. However, unlike Heng Chan, Mr. Barnett played no role in initiating this case, a case that was not particularly complex after the certification of the class and that never went to trial. Based on the particular work that Mr. Barnett did in this matter and his years of admission to the bar, the court finds that an hourly rate of $350 is reasonable. See Heng Chan, 2007 WL 1373118 at 4; see also Morris, [*13]343 F Supp 2d at 247 (finding $350 a reasonable hourly rate for attorneys with more than fifteen years experience).

v. Mark Cantora

Mr. Cantora was a law school intern at the Urban Justice Center when he spent 35.3 hours conducting research primarily on attorneys' fees and cy pres issues in this matter. Plaintiffs request compensation in the amount of $100 per hour for Mr. Cantora's work. At the time his work was conducted, Mr. Cantora had just completed his first year of law school. Based on the current market rates charged by paralegals in Manhattan, the hourly rate requested for Mr. Cantora's work is fair and reasonable. See Wise v. Kelly, 2008 WL 482399, 11 (SDNY 2008); see also Sylvester v. City of New York, 2006 WL 3230152, 9 (SDNY 2006) (finding paralegal hourly rates of $100 per hour reasonable).

C. Lodestar Amount

The third step in determining the appropriate amount of attorneys' fees is to calculate the lodestar by multiplying the reasonable number of hours expended by the reasonable hourly rate for the services. Rahmey, 95 AD2dat 303. Here, the court will first calculate an initial lodestar amount by using the total hours requested by plaintiff, as opposed to the "reasonable" number of hours, for each person who worked on the case. That calculation is as follows:

IndividualPositionRateHoursTotal Sean BasinskiUJC Attorney(pre-admission) $165340.1$ 56,117 Sean BasinskiUJC Attorney (post-admission)$275258.2$ 71,005 Doug Lasdon UJC Director$42533.4$ 14,195 Nicholas MigliaccioMason Firm Attorney$275134.8$ 37,070 Alexander BarnettMason Firm Partner$35021$ 7,350 Mark CantoraUJC Student Intern$10035.3$ 3,530 Total (pre-adjustment)822.8$189,267

This initial lodestar of $189,267 must, in this instance, undergo one further adjustment to arrive at the final lodestar amount. This is because the court has found that as a result of duplicative billing and the like it is necessary to subject the hours claimed by plaintiffs to a 15% across-the-board reduction. (See above Subsection "A. Hours Reasonably Expended.") The 15% reduction lowers the total hours deemed "reasonable" from 822.8 to 699.4. This in turn lowers the total lodestar awarded to plaintiffs to $160,877.

D. Enhancement Multiplier

Plaintiffs also request that a multiplier be applied to the lodestar. Consideration of a multiplier, often referred to as an enhancement or quality multiplier, is the final step in determining the amount of legal fees to be awarded in a class action under the lodestar method. A multiplier, when it is found warranted, is typically used to increase an award based on factors such as the risk of litigation, the complexity of the case, the quality of the representation, whether the litigation was novel, and whether the case was brought in furtherance of public policy. See Goldberger, 209 F3d at 54; Washington Fed. Sav. & Loan Ass'n v. Village Mall Townhouses, 90 Misc 2d 227, 232 (Sup Ct, Queens County 1977). In this case, plaintiffs are seeking a multiplier of 2.75, meaning that they are asking that the loadstar amount be almost tripled.

In attempting to determine whether an enhancement multiplier should be employed in this instance, the court notes at the outset that this class action was unquestionably brought in furtherance of public policy and involves an arguably novel issue, at least in terms of the ECB and its rules pertaining to street vendors. What is in contention here and what is of primary importance in terms of whether an enhancement multiplier is warranted is the risk of success of the litigation and the complexity of the case. See Goldberger, 209 F3d at 54. The City opposes plaintiffs' application for an enhancement multiplier primarily based on its perception of the [*14]litigation as presenting a minimal risk of success due to the early granting of the preliminary injunction and the case itself not being overly complex.

The risk of success in this litigation was largely dependent on the determination as to whether ECB's issuance of an increased penalty schedule for vendor violations was a "rule" within the definition of CAPA. While there was a lack of precedent involving this particular action by this particular agency, there was a body of prior case law defining what a "rule" is under CAPA and applying that definition to various types of actions involving other New York City agencies. See, e.g., 1700 York Assoc. v. Kaskel, 182 Misc 2d 586; Singh v. Taxi and Limousine Com'n of City of New York, 282 AD2d 368 (1st Dept 2001); DeJesus v. Roberts, 296 AD2d 307; 439 East 88 Owners Corp. v. Tax Com'n of City of New York, 307 AD2d 203 (1st Dept 2003). The granting of the preliminary injunction on September 28, 2004, although not dispositive of the outcome of the litigation, was a strong indication that plaintiffs would ultimately prevail on the merits. This, coupled with the existence of a reasonably similar body of case law on the key issue presented here, was enough to conclude that there was little risk of failure to the plaintiffs in pursuing their claim.

Even if the perceived risk of litigation here were far greater, it would have little effect on the question of allowing a multiplier. It has been held that "in fee awards for nonprofit law offices, an increase in the lodestar fee should not include any increment for the uncertain risk of achieving success in the litigation." Rahmey, 95 AD2d at 305. While the loadstar multiplier may be necessary in some class actions to entice private law firms to undertake difficult and uncertain cases, it is "not needed to induce nonprofit organizations, like [plaintiffs'] representative, which have been created and are paid for performing those very services." Id. Because the Urban Justice Center, plaintiffs' counsel in this matter, is a nonprofit public interest law firm specifically created and funded to represent New York City's most vulnerable and under-represented residents, the prospect of an enhancement multiplier cannot be deemed to have been needed to "induce" counsel to have taken this case.

Nor can it be said that this case was particularly complex, especially after the preliminary injunction was granted and the class certified. As the City points out, as soon as it was determined that the July 2003 penalty schedule constituted a rule invoking the rulemaking requirements of CAPA, the City began the process of properly promulgating the schedule into a rule. In addition, the City canceled all the outstanding fines and began issuing refunds to those vendors who had paid the fines. Although the City initially chose to appeal the decision certifying the class, once it withdrew the appeal there was little substantive litigation to speak of outside of this summary judgment motion. In fact, it appears that the major issue that prevented the parties from fully resolving the case was the question of plaintiffs' legal fees.

The court recognizes the quality of the legal work performed in this case by the Urban Justice Center, and the significance of the victory it achieved on behalf of not only street vendors in particular but of all those affected by New York City agency rulemaking in general. This recognition, however, does not mean that the sizeable lodestar amount of $160,877 should be increased further by a multiplier. The quality and significance of the work are factors that have already been taken into consideration "by allowing counsel to recover generous hourly fees." Goldberger, 209 F3d at 56; See also Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 US 546, 566 (1986). [*15]

Considering all the relevant factors presented here, the court, in the exercise of its discretion, determines that a multiplier is not warranted to enhance the lodestar amount. See Nager v. Teachers' Retirement Sys. of the City of New York, 57 AD3d 389 (1st Dept 2008). Accordingly, plaintiffs are awarded attorneys' fees in the sum of $160,877.

E. Litigation Expenses

The court has reviewed both sides' submissions with regards to litigation expenses. Although plaintiffs are not entitled to the $300 paid for a videotape that was never provided to the City, they are entitled to the cost of the deposition transcript. This cost, $1,408, is awarded to plaintiffs as reasonable and necessary litigation expenses.

Conclusion

In light of the foregoing, it is

ORDERED that plaintiffs' motion for summary judgment is granted; and it is further

ORDERED, ADJUDGED and DECLARED that the increased penalty schedule as contained in the Environmental Control Board Memo of July 14, 2003, was promulgated in violation of the New York City Administrative Procedure Act and is thus null and void; and it is further

ORDERED and ADJUDGED that defendants are permanently enjoined from taking any action to enforce the increased penalty schedule as contained in the Environmental Control Board Memo of July 14, 2003, to collect any further fines imposed in accordance with that schedule, or to retain any fines previously collected in accordance with that schedule; and it is further

ORDERED that the portion of plaintiffs' motion for an order directing defendants to take additional steps to make refund payments to members of the class is granted to the extent that defendants are directed to proceed in the manner set forth in this decision; and it is furtherORDERED that the portion plaintiffs' motion for a cy pres distribution is denied; and it is further

ORDERED that plaintiffs are awarded as against defendants the sum of $160,877 as and for reasonable attorneys' fees, together with the sum of $1,408 as and for reasonable and necessary litigation expenses; and it is further

ORDERED that defendants' cross-motion for partial summary judgment is denied.

This constitutes the decision, order and judgment of the court.

Dated: March 17, 2009ENTER:_____________________________MATTHEW F. COOPER, J.S.C. Footnotes

Footnote 1: It is noted that the City has now in fact changed the penalty schedule after following the procedures, including publication of the proposed changes in the City Record, required under CAPA.

Footnote 2: Because people who have served in the armed forces are given a preference in the allocation of general vendor licenses, a significant portion of the street vendor population is comprised of veterans.

Footnote 3: The cy pres doctrine has been applied by New York State courts almost exclusively within the context of probate proceedings.