Gold et al v. NCO Financial Systems, Inc. et al, No. 3:2009cv01646 - Document 29 (S.D. Cal. 2010)
Court Description: ORDER granting in part plaintiffs' motion for attorneys fees 23 ; the Court awards plaintiffs $6207.43 in attorney's fees plus $71 in costs. Signed by Judge Larry Alan Burns on 8/20/10. (kaj)
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Gold et al v. NCO Financial Systems, Inc. et al Doc. 29 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 JAQUI B. GOLD, ROBIEMIN A. GOLD, 12 CASE NO. 09cv1646-LAB (CAB) Plaintiffs, ORDER GRANTING IN PART PLAINTIFFS’ MOTION FOR ATTORNEY’S FEES vs. 13 14 NCO FINANCIAL SYSTEMS, INC.; et al., 15 Defendants. 16 17 In the early stages of litigation of this case, Defendant NCO Financial Systems (“NCO” 18 or “Defendant”) made an offer of judgment pursuant to Fed. R. Civ. P. 68, which Plaintiffs 19 accepted. The offer was for a sum of money, plus “reasonable attorney’s fees and costs, 20 to be mutually agreed upon by the parties, or if no agreement can be reached, to be 21 determined by the Court in accordance with 15 U.S.C. § 1692k.” Defendant OSI Collection 22 Services, Inc. had been dismissed earlier, leaving NCO as the sole Defendant. 23 The parties do not dispute that the Court can and should award costs and attorney’s 24 fees; their only disagreement concerns the amount Plaintiffs have requested. Defendant 25 argues the costs and fees are unreasonable and excessive, and asks the Court to reduce 26 them. Specifically, Defendant argues the claimed hourly rate is too high; fees should not be 27 awarded for unproductive or unnecessary work; the case was overstaffed in that work was 28 needlessly assigned to multiple attorneys instead of one attorney, or to attorneys instead of -1- 09cv1646 Dockets.Justia.com 1 staff; and not all the costs being claimed are the “costs of the action” as defined by 28 U.S.C. 2 § 1920. Defendant raised an additional objection — that Plaintiff sought fees incurred after 3 the offer of judgment had been accepted — but Plaintiff conceded this point and agreed the 4 award should be reduced to reflect this. Defendant also points out the amount recovered 5 was only $3,000, and the amount sought in fees and costs is nine times that. 6 The Court held a hearing on this issue and gave its preliminary decision, which it now 7 confirms in this written decision. 8 I. Legal Standards 9 The parties agree the Court should use the lodestar method. Using this method, the 10 Court begins by multiplying the number of hours reasonably spent on the litigation by a 11 reasonable hourly rate, and then makes any necessary adjustments to account for factors 12 not already subsumed within the initial calculation. Mendez v. County of San Bernardino, 13 540 F.3d 1109, 1129 (9th Cir. 2008). 14 In determining a reasonable hourly rate, the Court considers the prevailing market 15 rate in the community. Barjon v. Dalton, 132 F.3d 496, 500 (9th Cir. 1997). Plaintiffs’ 16 principal counsel, Thomas Lyons, Esq., is based in Minnesota. Plaintiffs’ decision to hire him 17 was one of preference, not necessity. Therefore, the relevant community is this district. Id. 18 (explaining that the relevant community is generally the forum in which the district court sits, 19 though rates outside the forum may be used if local counsel was unavailable). 20 The Court must exclude hours that were not reasonably expended — for example, 21 hours that are excessive, redundant, or otherwise unnecessary. Hensley v. Eckerhart, 461 22 U.S. 424, 433–34 (1983). Fees are properly reduced when the task is overstaffed, id., when 23 hours are submitted in block format, Welch v. Metro Life Ins. Co., 480 F.3d 942, 948–49 (9th 24 Cir. 2007), or when the work performed is inadequately identified. Fischer v. SJB-P.D. Inc., 25 214 F.3d 1115, 1121 (9th Cir. 2000). Overstaffing can include duplicative billing for 26 unnecessary conferences between colleagues, Welch, 480 F.3d at 948–49, or failure to 27 appropriately delegate tasks to staff or colleagues with lower billing rates. Northon v. Rule, 28 494 F. Supp. 2d 1183, 1187 (D.Or. 2007) (reducing fee award where, among other things, -2- 09cv1646 1 senior attorney failed to delegate relatively simple tasks to junior associates). The party 2 seeking fees bears the burden of adequately documenting the hours claimed. Gates v. 3 Deukmejian, 987 F.2d 1392, 1397–98 (9th Cir. 1992). 4 II. Discussion 5 A. Rates 6 Plaintiffs represent Thomas Lyons’ reasonable hourly rate as $400, but provide little 7 support for this other than citing cases where other courts approved his rates at $325 to 8 $400 per hour. Local counsel Christina Wickman represents her customary rate for cases 9 of this type is $250 per hour. Local counsel Robert Stempler, who performed a small 10 amount of work early in the case, represents his customary rate for this type of case is $350 11 per hour. Mr. Lyons represents that the customary rate for Sharon McMahon, a paralegal he 12 employs, is $90 per hour. 13 Defendants challenge all three attorneys’ hourly rates, arguing $295 is a reasonable 14 rate for Mr. Lyons and Mr. Stempler, and $125 is reasonable for Ms. Wickman. In reply, 15 Plaintiffs argue the Court should look to the prevailing rate in Minnesota. Plaintiffs argue 16 that, while local counsel may have been available, it was necessary to hire Mr. Lyons 17 because of his expertise in military matters. Plaintiffs also cite evidence that another 18 attorney’s hourly rate of $355 was recently found reasonable in this district. 19 With regard to the military issues, there is no showing Mr. Lyons’ expertise in this area 20 was ever required. The case settled relatively early and, as the Court noted at the hearing, 21 the issues were not particularly novel or complex. Even in the pleadings, the military issues 22 were incidental.1 There was nothing wrong with Plaintiffs’ hiring Mr. Lyons, but to pay a 23 premium for his expertise when it was not called on is unreasonable. 24 25 26 27 28 1 The amended complaint alleges NCO called Mrs. Gold, demanding payment. When Mrs. Gold said she could not pay and that her husband was deployed with the Navy, NCO allegedly threatened to call his commanding officer to discuss the failure to pay. At the time, Corpsman Jacqui Gold was on a ship in the Indian Ocean. Corpsman Gold learned about the call later. The remaining allegations concern the frequency and time of calls, the caller’s tone of voice and other remarks, and Plaintiffs’ emotional reactions to the call. The fact that Corpsman Gold was at sea does not, as Plaintiffs have argued, render the case unusually complex. -3- 09cv1646 1 The Court also finds the evidence of rates charged by a local colleague, Joshua 2 Swigart, Esq., unconvincing. First, Mr. Swigart’s declaration never comments on the 3 requested $400 rate; rather, he merely attested to the reasonableness of Ms. Wickman’s 4 fee, noting she is a partner in her own consumer rights firm. Second, Plaintiffs cite only one 5 case where $355 was found to be a reasonable hourly rate, Shaw v. Credit Collection 6 Servs., 09cv883-LAB. In that case, however, the $355 hourly rate applied to 0.3 hours of 7 work performed by a senior partner,2 while 6.5 hours performed by an associate were billed 8 at $225 per hour. Mr. Swigart’s own declaration identifies a different case, Bellows v. NCO 9 Financial Systems, 07cv1413-W, in which his own hourly rate of $355 was found reasonable. 10 Bellows was a much more complex case, however; among other things, it was a putative 11 class action. 12 Review of the other cases mentioned in Mr. Swigart’s declaration shows that in other 13 cases, lower rates were approved. In McDonald v. Bonded Collectors, LLC, 233 F.R.D. 576 14 (S.D.Cal. 2005), Mr. Swigart’s $315 hourly rate was found reasonable, though he only billed 15 0.7 hours. Among the other cases, Defendants point to Myers v. LHR, Inc., 543 F. Supp. 16 2d 1215 (S.D.Cal., 2008), where Mr. Swigart’s hourly rate of $295 was found reasonable. 17 The Court agrees Ms. Wickman’s requested hourly rate is very close to a reasonable 18 rate for this case. She was filling a supporting role, though in fact she appears to have 19 contributed significantly to the litigation beyond merely serving as local counsel. 20 Having considered the evidence and the parties’ arguments, the Court determines Mr. 21 Lyons’ reasonable hourly rate for this case is $295, as is Mr. Stempler’s. The Court also 22 concludes $225 per hour, the rate recently awarded in Shaw, is reasonable for Ms. 23 Wickman’s work. 24 B. 25 Mr. Lyons billed 45.98 hours; Mr. Stempler, 2 hours; Ms. Wickman, 23.9 hours; and 26 Ms. McMahon, 1.28 hours. Defendants ask the Court to reduce Plaintiffs’ requested hours Hours Reasonably Expended 27 28 2 Plaintiff believed the partner who billed at this rate was Mr. Swigart; however, it was actually another partner, Robert Hyde, Esq. -4- 09cv1646 1 to account for block billing, duplicative work, communications that could not be billed to the 2 client, unproductive work, and administrative work billed by attorneys. Defendants seek a 3 reduction by 43.37 hours, broken down as follows: 6.97 hours for work performed after the 4 offer of judgment;3 7.76 hours for excessive fees, 7.01 hours for block billing or overbilling; 5 13.32 hours for inter-office communications and duplicate entries; 2.09 hours for work that 6 did not advance the litigation; 2.66 hours for unnecessary work; 3.06 hours for work that 7 should have been performed by administrators; and 0.5 hours for non-billable instructions 8 to staff. The Court has reviewed these and agrees Plaintiffs’ hours must be significantly 9 reduced. Plaintiffs do not attempt to rebut these objections in any detail, but broadly discuss 10 the complexity of the case and argue the hours are reasonable. 11 The Court agrees many of Plaintiffs’ billings were inappropriately block-billed. For 12 example, the first item in Mr. Lyons’ billing is for 4.03 hours for an intake conference, some 13 of which is billable and some of which was not. Some portion of this conference, for 14 example, involved discussing Mr. Lyons’ firm’s website and his qualifications, and answering 15 questions about the retainer agreement. As part of this conference, Mr. Lyons also billed 16 for looking up Defendant on the internet, a simple task that could and should have been 17 delegated. Looking at entries such as this, it is impossible to say with any certainty what 18 portion of the 4.03 hours Defendants should pay for. The Court therefore agrees a reduction 19 for block billing is appropriate. 20 Defendants also argue Plaintiffs inappropriately billed for inter-office communications. 21 In part they object that many of the entries are so vague it is impossible to know whether the 22 attorneys were doing work that advanced the litigation. And in part they object that many of 23 the entries describe work that would not ordinarily be billed to clients. In many cases, only 24 one attorney billed for the call, suggesting that the other didn’t consider it billable. But in 25 some cases both billed, and Defendants point out that the effect is a duplicative billing. 26 Where the relationship of the task to the litigation is marginal to begin with, doubling the 27 hours through duplicative billings is unreasonable. 28 3 As noted, Plaintiffs do not contest this reduction. -5- 09cv1646 1 While billing for conferences between counsel can be appropriate — for example, 2 where attorneys are collaborating on work or engaging in collective problem solving — the 3 Court agrees the entries identified here do not identify such work. Instead, the tasks are 4 either unidentified or pertain to business or administrative matters. As an example, on 5 March 13, 2009, Mr. Lyons billed 0.3 hours for a “long discussion” with Mr. Stempler, while 6 Mr. Stempler billed 0.2 hours for the same conference; neither explained the subject matter 7 or task at hand. As a second example, on September 14 and 15, 2009, Mr. Lyons and Ms. 8 Wickman together billed over an hour4 for emails about signatures on a substitution of 9 counsel motion. 10 Defendants also argue that such 2.09 hours spent on such tasks as file review, 11 checking voicemails, working on business matters, and the like did not advance the litigation 12 and are therefore not properly billed. Defendants also point out Mr. Lyons began working 13 on discovery matters even before the early neutral evaluation conference had been held, 14 and they argue the hours spent on discovery were needless at this early stage. The Court 15 agrees that much of Plaintiff’s counsel’s work was unnecessary, and the requested reduction 16 of 2.09 hours is very reasonable. 17 As Defendants also point out, much of the work Plaintiffs’ counsel did could and 18 should have been delegated to staff and was either billable only at the rate for a paralegal, 19 or else not billable at all. This includes matters such as arranging for meetings and travel, 20 sending or obtaining documents, and the like. The top-heavy billings (nearly 46 hours for 21 Mr. Lyons, 26 hours for the two local counsel, and 1.28 hours for the paralegal), which 22 resemble an inverted pyramid, illustrate this point.5 23 4 24 25 26 27 Unraveling the exact time spent on these emails is impossible because Mr. Lyons’ entry is block-billed. His two entries on September 14 include 0.23 hours for a call and follow-up email to Ms. Wickman, and 0.28 hours for “continuation on substitution of attorneys for San Diego District.” Ms. Wickman on September 15 billed 0.6 hours for reading the emails and doing something unidentified about a power of attorney. Ms. Wickman’s billing entry also shows the communication concerned the “contract with Golds,” which may refer to the retainer agreement. 5 28 In other cases, courts have applied this factor after calculation of the lodestar amount, to reduce the total amount. See, e.g., Bridgeport Music, Inc. v. WB Music Corp., 520 F.2d 588, 596 (6th Cir. 2008) (affirming district court’s fee award, where district court reduced lodestar amount by 25% “to account for top-heavy billing by partners for work that 09cv1646 -6- 1 This raises an additional issue, however, regarding billing for intra-office 2 communication. While Mr. Lyons delegated some work to Ms. Wickman and Ms. McMahon, 3 he should have delegated more. But the delegation, such as it was, was appropriate and 4 necessary. Ms. Wickman’s own review of the materials and some of her communications 5 with Mr. Lyons and other involvement in the case are a necessary part of the delegation 6 process. The Court therefore finds it inappropriate to discount Ms. Wickman’s hours for the 7 second September 2, 2009 entry, the entries for December 3 through 7, the second 8 December 9 entry, the second December 21 entry, the first entry for January 6, 2010 (except 9 for the block billing deduction), the January 10 entry, the February 3 entry, and the first 10 February 12 entry. These amount to 5.7 hours the Court will not deduct from Ms. Wickman’s 11 billings. The delegation was not so extensive or efficient as to merit including both attorneys’ 12 hours, however, so Mr. Lyons’ hours will still be deducted. 13 Defendants’ opposition to the motion for attorneys’ fees gives only illustrative 14 examples, but the Court has independently reviewed the billings and agrees the hours 15 claimed are excessive. Defendants’ requested reductions are well within reason and are 16 approved. 17 C. Lodestar Calculation 18 After applying the reductions in hours claimed, the Court concludes the hours to be 19 used in the lodestar calculation are 19.71 hours for Mr. Lyons, 1.7 hours for Mr. Stempler, 20 and 12.8 hours for Ms. Wickman. Multiplied by the reasonable rates the Court has found, 21 the totals are $5814.45 for Mr. Lyons’ work, $501.50 for Mr. Stempler’s work, and $2880 for 22 Ms. Wickman’s work. Defendants have not disputed that Ms. McMahon properly billed 23 $115.20 so the Court adds this to the other fees. The lodestar amount is therefore 24 $9311.15. 25 /// 26 /// 27 28 could have been performed by associates). But here, Defendants have identified particular entries they think should be discounted. The end result is the same, except that, as long as it is feasible, discounting based on particular identified entries is likely more accurate. 09cv1646 -7- 1 D. Reduction for Limited Success 2 As Hensley points out, the lodestar calculation is not necessarily reasonable, and may 3 need to be reduced to account for a plaintiff’s limited success. 461 U.S. at 436. The Court’s 4 review of the billings and Plaintiffs’ pleadings suggests Mr. Lyons initially expected a large 5 award based on emotional harm. His work on retaining a forensic psychologist and his trip 6 to San Diego to meet Plaintiffs in person support this conclusion. 7 Instead of the large recovery Mr. Lyons may have expected, however, Plaintiffs 8 settled for $2000 in statutory damages plus $1000 in actual damages. Defendants also 9 argue this demonstrates Plaintiffs prevailed on only two of their causes of action. Thus, if 10 the Court awards the lodestar amount, Plaintiffs will have spent three times their damages. 11 Plaintiffs point out that for a variety of reasons, fee awards need not be proportionate 12 to the recovery, and the Court agrees. See Owens v. Howe, 365 F. Supp. 2d 942, 947 (N.D. 13 Ind., 2005) (in Fair Debt Collection Practices Act case, holding that the fee award “need not 14 be proportionate to the settlement or judgment amount . . . as that would defeat the public 15 benefit advanced by the litigation”) (citing Morales v. City of San Rafael, 96 F.3d 359, 365, 16 as am on den. of reh’g and reh’g en banc, 108 F.3d 981 (9th Cir. 1997)). The relatively low 17 settlement amount, however, makes clear Plaintiffs did not succeed on most of their claims, 18 and their settlement for statutory damages plus $1000 is analogous to an abandonment of 19 the remaining claims. 20 While Plaintiffs argue this was a complex case, in fact it appears to have been fairly 21 ordinary. Even if Plaintiffs’ initial impression was reasonable, it eventually became clear the 22 case was rather straightforward and the claims would not likely bring a large recovery; and 23 the settlement reflects this. Bearing in mind the relatively low value of the claims, fees 24 should have been kept lower. Plaintiffs’ counsel’s error in over-valuing and over-preparing 25 the case should not be visited on Defendants. The Court is required to consider the 26 relationship between the fee award and the degree of success, McGinnis v. Kentucky Fried 27 Chicken of California, 51 F.3d 805, 809–10 (9th Cir. 1994), and has discretion to reduce the 28 /// -8- 09cv1646 1 fee award to account for the limited success. Robins v. Matson Terminals, Inc., 283 Fed. 2 Appx. 535, 535 (9th Cir. 2008). 3 While Plaintiffs obtained only $3000, they have also effectively deterred NCO from 4 engaging in offensive and objectionable collection tactics, and that deterrence is worth 5 something. See City of Riverside v. Rivera, 477 U.S. 561, 575 (1986) (discussing the 6 potential value a plaintiff’s recovery of damages in civil rights actions may have in light of its 7 deterrence effect). See also Van Skike v. Director, 557 F.3d 1041, 1047 (9th Cir. 2009) 8 (discussing the importance of encouraging attorneys to undertake Fair Debt Collection 9 Practices Act cases by making adequate fee awards). 10 11 Having weighed these factors, the Court concludes a 1/3 reduction is appropriate here. The Court therefore awards $6207.43 in attorney’s fees. 12 E. Costs 13 Plaintiffs have sought $2,406.51 for Mr. Lyons’ costs, $58 for Ms. Wickman’s costs, 14 and $13 for Mr. Stempler’s costs. Ms. Wickman’s costs are unremarkable and Defendants 15 do not object to them. Defendants object to all charges for experts, mailing, lunches, and 16 travel expenses, citing 28 U.S.C. § 1920 and arguing the costs were inadequately 17 documented. 18 Mr. Lyons’ expenses include $1,756.51 for a trip to San Diego to meet Plaintiffs 19 personally in Ms. Wickman’s office, for lunch on the way to that meeting, and for consultation 20 with a forensic psychologist who Mr. Lyons considered using as an expert witness. The 21 Court finds these charges unreasonable and will not award them. Mr. Lyons’ mailing 22 charges are simply designated “Postage” with no further explanation. The Court finds these 23 inadequately documented and will therefore not award them. The Court finds Mr. Stempler’s 24 costs for filing the complaint by mail to be a reasonable out-of-pocket litigation expense that 25 would ordinarily be paid by clients, and will therefore award them. See Molina v. Creditors 26 Specialty Serv., Inc., 2010 WL 235042, slip op. at *4 (awarding non-taxable costs of filing 27 the complaint). 28 /// -9- 09cv1646 1 Plaintiffs have also argued several other types of costs are awardable, including the 2 cost of electronic research and long-distance phone calls. They have not, however, 3 documented any such costs. 4 III. 5 6 Conclusion and Order For these reasons, the Court AWARDS Plaintiffs $6207.43 in attorney’s fees plus $71 in costs. 7 8 9 IT IS SO ORDERED. DATED: August 20, 2010 10 11 HONORABLE LARRY ALAN BURNS United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 10 - 09cv1646
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