United States District Court, E.D. New York
November 4, 2005.
GARY LABARBERA, LAWRENCE KUDLA, THOMAS GESUALDI, PAUL GATTUS, THEADORE KING, CHESTER BROMAN, FRANK FINKEL, and JOSEPH FERRARA, as Trustees and Fiduciaries of the Local 282 Welfare Pension, Annuity, Job Training and Vacation and Sick Leave Trust Funds, Plaintiff,
J.E.T. RESOURCES, INC., Defendant.
The opinion of the court was delivered by: ARTHUR SPATT, District Judge
MEMORANDUM OF DECISION AND ORDER
Before the Court is a disturbing application for attorneys'
fees. After having unsuccessfully moved for modest attorneys'
fees of $7,033 before this Court, the plaintiffs successfully appealed that decision and now seek an additional
sum of more than $90,000 in attorneys' fees. As set forth below,
the Court is unwilling to approve such a large sum in attorneys'
fees for a relatively straightforward and single issue appeal.
Looking into the future, it is conceivable that there may be a
motion filed for attorneys' fees for the appeal of the reduction
of attorneys' fees on the appeal of the decision not to grant
attorneys fees. This invariably leads to the question, when will
these multiplicitous requests for attorneys' fees come to an end?
The background of this case is set forth in this Court's Order
dated January 15, 2003, familiarity with which is assumed. For
purposes of clarity, some relevant facts and procedural history
will be restated. On June 13, 2001, the plaintiffs, who are the
trustees of the Local 282 benefit funds, commenced this action
against J.E.T. Resources, Inc. ("JET" or the "defendant"), under
the provisions of the Employee Retirement Income and Security Act
("ERISA") to compel JET to post a surety bond or its equivalent
pursuant to a collective bargaining agreement (the "agreement").
According to the plaintiffs, JET previously posted bonds for the
benefit of the union. However, in May of 2000, a bond expired and
was never renewed, in violation of the agreement.
On May 8, 2002, JET appeared before United States Magistrate
Judge E. Thomas Boyle and indicated that it would not be posting
a bond because it was no longer in business. On August 5, 2002, the parties appeared
before this Court for a bench trial. During the trial, the Court
stated that it would grant a judgment by default in favor of the
plaintiffs by directing JET to file a bond or its equivalent.
Following the trial, counsel for the plaintiffs moved for
attorneys' fees in the amount of $7,033.00 and costs in the
amount of $285.86 under 29 U.S.C. § 1132(g)(1), which provides
that "[i]n any action under this subchapter . . . by a
participant, beneficiary, or fiduciary, the court in its
discretion may allow a reasonable attorney's fee and costs of
action to either party." On January 15, 2003, the Court concluded
that section 1132(g) did not support an award of attorneys' fees
and costs for an action on a surety bond and denied the
plaintiffs' request. The plaintiffs appealed from that decision.
On May 20, 2004, the Second Circuit vacated the judgment and
remanded the case for the Court to consider anew plaintiffs'
application for attorneys' fees. The Second Circuit found that §
1132(g)(1) unambiguously authorizes the district court, in its
discretion, to award attorneys fees. The Second Circuit
instructed that the Court should, in exercising its discretion
under § 1132(g)(1), "undertake the five-factor inquiry set forth
in Chambless v. Masters, Mates & Pilots Pension Plan,
815 F.2d 869, 871 (2d Cir. 1987), and to be mindful that `ERISA's
attorney's fee provisions must be liberally construed to protect
the statutory purpose of vindicating retirement rights, even when
small amounts are involved,' id. at 872." Labarbera v. Clestra
Hauserman, Inc., 369 F.3d 224, 227 (2d Cir. 2004). On March 18, 2005, the plaintiffs filed their application for
attorneys' fees and costs pursuant to 29 U.S.C. § 1132(g)(1). The
plaintiffs now seek fees in the amount of $100,448.00 and costs
in the amount of $4,913.14. The Court notes that counsel for the
plaintiffs expended an additional 371.25 hours totaling
$93,415.00 in attorneys' fees during the appeal in this case.
However, the Court notes that it is only able to identify a total
of 342.5 hours spent on the appeal from the time slips attached
as an exhibit to the attorney's declaration.
A. WHETHER TO AWARD ATTORNEYS' FEES
Under ERISA, an award of attorneys' fees and costs is within
the sound discretion of the trial court. Peterson v. Continental
Cas. Co., 282 F.3d 112, 122 (2d Cir. 2002). In making the
determination, the Court ordinarily looks to five factors:
(1) the degree of the offending party's culpability
or bad faith, (2) the ability of the offending party
to satisfy an award of attorney's fees, (3) whether
an award of fees would deter other persons from
acting similarly under like circumstances, (4) the
relative merits of the parties' positions, and (5)
whether the action conferred a common benefit on a
group of pension plan participants.
Locher v. UNUM Life Ins. Co. of Am., 389 F.3d 288, 298 (2d Cir.
2004); Salovaara v. Eckert, 222 F.3d 19, 27-28 (2d Cir. 2000);
Chambless v. Masters, Mates & Pilots Pension Plan,
815 F.2d 869
, 871 (2d Cir. 1987). In arguing that the Court should award attorneys' fees, the
plaintiffs rely on the factors that district courts consider in
exercising its discretion under 29 U.S.C. § 1132(g)(1) that were
set forth in Chambless. In response, JET ignored the
plaintiffs' reliance on the five Chambless factors and renewed
its argument one rejected by the Second Circuit that because
this case involves an action for a surety bond the plaintiffs are
not entitled to attorneys' fees under Section 1132(g)(1). JET
apparently does not contest the reasonableness of the hours spent
by plaintiffs' counsel or the fees charged. In addition, although
at the trial its counsel stated that it was no longer in
business, JET did not submit any evidence to support a contention
that it has insufficient funds to pay the fees.
In addressing the first and fourth factors set forth in
Chambless, the plaintiffs noted the degree of the defendant's
bad faith and the lack of merit in its position in this
litigation. Prior to this lawsuit, the defendant failed to
respond to the plaintiffs' numerous attempts to obtain a surety
bond or a settlement of the issue. After commencement of the
action, the defendant repeatedly indicated its intention to
comply with the bond provision of the collective bargaining
agreement, but nevertheless continually refused to post a surety
bond or settle the action and the case proceeded to trial. At the
trial, the merits of the action were essentially uncontested. JET
was a party to a collective bargaining agreement with Local 282
that required it to post a surety bond in favor of the Fund. In
fact, JET failed to renew a previously-posted surety bond. After a one day trial, judgment was entered against
the defendant in the amount of $10,000, which was the amount of
However, viewing this case as a whole, on appeal, the
defendant's position had merit. After examining the issue, this
Court determined that section 1132(g) does not support an award
of attorneys' fees and costs in an action to compel a surety bond
because it "does not involve the hiring of labor or the payment
of benefits." Id. Therefore, the defendant's position on appeal
was meritorious in that it was supported by the Court's decision
under what appeared to be the plain meaning of the statute. In
addition, there is no way to characterize JET's defense of the
Court's position during the course of the appeal as "bad faith
The second factor also weighs in favor of not awarding
attorneys' fees to the plaintiffs. Although the defendant does
not submit evidence as to their financial condition in this
motion, from the record it is clear that JET was no longer in
business prior to the trial. With reasonable certainty, it
appears that JET has no ability to post a bond or satisfy an
award of attorneys' fees, and in particular, an award of more
With regard to the third factor, the Court notes that an award
of $100,000 in attorneys' fees on an action to compel the posting
of a bond for $10,000 "would deter" other persons from not only
acting similarly, but possibly from entering into business in the first place. The Court declines to endorse the use of
attorney-fee shifting statutes as a remedial measure in a
As to the fifth factor in Chambless, the plaintiffs noted
that enforcement of the surety bond provision of the collective
bargaining agreement ensures the collection of contributions to
the Local 282 Trust Fund and ultimately benefits the participants
of the Fund.
Considering all of the factors and circumstances of this case,
the Court finds that the plaintiffs are entitled to the fees and
costs in the amount of $7,033.00 that were incurred during the
initial litigation at the district court level. However, as with
any other award under section 1132(g)(1), an award of attorneys'
fees and costs in connection with an appeal is discretionary.
See, e.g., Peterson, 282 F.3d at (choosing not to reallocate
the fees and costs incurred on an appeal). Here, the fees and
costs submitted for the appeal were grossly excessive and will be
substantially reduced as set forth below.
B. WHAT IS A REASONABLE FEE?
Although the defendant did not contest the reasonableness of
the hours expended or the rate charged, the Supreme Court has
stated that the Court retains the discretion to determine what
fee is reasonable. Hensley v. Eckerhart, 461 U.S. 424,
103 S. Ct. 1933, 76 L. Ed.2d 40 (1983); see also Blanchard v.
Bergeron, 489 U.S. 87, 109 S. Ct. 939, 946, 103 L. Ed.2d 67
(1989) ("It is central to the awarding of attorney's fees . . . that the district court judge, in his or
her good judgment, make the assessment of what is a reasonable
fee under the circumstances of the case.").
It is clear that the Court must undertake its own independent
examination of the billing records and calculate a reasonable fee
award based upon the relevant factors. The Supreme Court set
forth the rules for determining a prevailing party's fee in the
seminal case of Hensley and stated that "the amount of the fee
. . . must be determined on the facts of each case." Id.
461 U.S. at 429, 103 S. Ct. 1933, 76 L. Ed 2d 40. Two important
factors in the determination of a "reasonable" fee are the number
of hours reasonably expended multiplied by a "reasonable" hourly
rate. In this regard:
The most useful starting point for determining the
amount of a reasonable fee is the number of hours
reasonably expended on the litigation multiplied by a
reasonable hourly rate. This calculation provides an
objective basis on which to make an initial estimate
of the value of a lawyer's services. The party
seeking an award of fees should submit evidence
supporting the hours worked and rates claimed. Where
the documentation of hours is inadequate, the
district court may reduce the award accordingly.
Id. at 433.
Further, the Court stated that the district court should
exclude from this initial fee calculation the hours that were not
"reasonably expended," as follows:
The district court also should exclude from this
initial fee calculation hours that were not
"reasonably expended." S. Rep. No. 94-1011, p. 6
(1976). Cases may be overstaffed, and the skill and experience of lawyers vary widely.
Counsel for the prevailing party should make a
good-faith effort to exclude from a fee request hours
that are excessive, redundant, or otherwise
unnecessary, just as a lawyer in private practice
ethically is obligated to exclude such hours from his
fee submission." In the private sector, `billing
judgment' is an important component in fee setting.
It is no less important here. Hours that are not
properly billed to one's client also are not
properly billed to one's adversary pursuant to
statutory authority." Copeland v. Marshall,
641 F.2d 880, 891 (1980).
Id. at 434 (emphasis added).
In that regard, the Court has carefully scrutinized the
plaintiffs' attorney declaration, time slips and billing records,
and the Court finds that the expenditure of time and the amount
of the fee charged for the appeal in this case was excessive. The
Plaintiffs submitted contemporaneous time slips that reflect
478.75 hours spent on the total litigation. The two associates
and one partner that did the majority of the work charged
approximately $250 and $350 per hour, respectively. In total,
counsel requests a total fee in the amount of $100,448.00. Of
this amount, the sum of $93,415.00 was billed in appealing the
Court's order that denied attorneys' fees in the amount of
$7,033.00. Even though a fee may not "be reduced merely because
the fee would be disproportionate to the financial interest at
stake in the litigation . . .," Kassim v. City of Schenectady,
415 F.3d 246, 252 (2d Cir. 2005), the court has discretion to
reduce the amount if it determines that the hours and rate
charged are superfluous or unreasonable. See Luciano v. Olsten Corp.,
109 F.3d 111, 115 (2d Cir. 1997).
The Court is generally cognizant of the amount of hours it may
take to litigate an appeal that contains many complicated issues.
See, e.g., Garden State Auto Park Pontiac GMC Truck, Inc. v.
Electronic Data Sys. Corp., 31 F. Supp. 2d 378, 385-86 (D.N.J.
1998) (finding it reasonable to spend 241.4 hours on an appeal
that involved an extensive appellate brief containing a "myriad
of issues" as well as preparation and attendance at mediation
prior to the disposition of the appeal). In contrast to the
issues in Garden State, this case involved a simple and
straightforward appeal that was solely related to the Court's
denial of their motion for attorneys' fees. The amount of the
fees was not disputed. The appeal only contained one narrow
issue, namely, whether the Court had discretion to award
attorneys' fees under section 1132(g)(1) in an action to compel a
surety bond. In addition, this was the same issue that was fully
briefed by the parties when the issue was before this Court in
the original motion for attorneys' fees. As such, the expenditure
of more than three hundred of hours on the appeal was totally
unnecessary and excessive.
As such, the Court finds it appropriate to reduce the number of
compensable hours charged by counsel. Ordinarily, a reduced award
of attorneys' fees is either based upon the court's lodestar
calculation or the balancing of the Chambless factors.
Seitzman v. Sun Life Assurance Co. of Canada, Inc.,
311 F.3d 477, 487 (2d Cir. 2002). In addition, when there is a fee application containing
excessive hours, it is within the discretion of the district
court to make an across the board percentage reduction. "Courts
have recognized that it is unrealistic to expect a trial judge to
evaluate and rule on every entry in an application. These courts
have endorsed percentage cuts as a practical means of trimming
fat from a fee application." NYSARC v. Carey, 711 F.2d 1136,
1146 (2d Cir. 1983).
Following this procedure, courts in this Circuit and elsewhere
have made percentage reductions of fee awards where there was
excessive billing. See Copeland v. Marshall, 641 F.2d 880,
903 (D.C. Cir. 1980) (22% reduction); S.E.C. v. Goren,
272 F.Supp 2d 202, 213 (E.D.N.Y. 2003) (hours reduced by 30%);
Elliot v. Board of Education of City of Rochester, 2003 WL
2296612 (W.D.N.Y. 2003) (10% reduction in hours); Sabatini v.
Corning-Painted Post Area School Dist., 190 F. Supp. 2d 509, 522
(W.D.N.Y. 2001) (hours for total non-travel items reduced by
After review of the papers submitted on the fee application and
considering the nature of the case, the factors discussed above,
and the time reasonably required to litigate the appeal in this
case, the Court is of the view that a portion of the time spent
by plaintiffs' counsel was unnecessary and that the fee was
excessive. Under these circumstances, a district court has the
discretion to deduct a reasonable percentage of the hours claimed
to effect the necessary reduction. In this regard, Courts need
not evaluate and rule on each and every entry. Accordingly, the
Court finds that a reduction of 50% of the hours claimed on the appeal by the
plaintiffs' counsel is warranted.
Further, the rate charged by the firm is outside the acceptable
range of reasonableness considering the facts and circumstances
of the appeal. The rates charged by counsel ($250-$350 per hour)
are unreasonably high for legal services in the Eastern District
of New York. For example, in 1998 the Second Circuit held that
rates of $200 for partners, $135 for associates, and $50 for
paralegals are reasonable rates for legal services in the Eastern
District of New York. Savino v. Computer Credit, Inc.,
164 F.3d 81, 87 (2d Cir. 1998); see also Luciano, 109 F.3d at 111-112
(collecting cases); Association for Retarded Citizens v.
Thorne, 68 F.3d 547, 554 (2d Cir. 1995); Cruz v. Local Union
No. 3, Int'l. Brotherhood of Electrical Workers, 34 F.3d 1148,
1160 (2d Cir. 1994); I.L.G.W.U. National Retirement Fund v. ESI
Group, Inc., No. 92-0597, 2003 WL 135797, at *3 (S.D.N.Y. Jan.
17, 2003). According to the Consumer Price Index Inflation Index,
after an upward adjustment of 15.9% the reasonable rate for legal
services in the Eastern District in 2005 would appear to be
approximately $250 for partners, $150 for associates, and $60 for
paralegals per hour.
The Court has reviewed the plaintiffs' request for costs and
finds them all to be reasonable and reimbursable. See
LeBlanc-Sternberg v. Fletcher, 143 F.3d 748, 763 (2d Cir.
1998). III. CONCLUSION
The Court now recalculates the fees to be awarded to
Attorneys' Fees incurred prior to the appeal $7,033.00
William Anspach, Esq.
and Eugene S. Friedman, Esq. 111.5 hours
Less 50% reduction
55.75 hours @ $250 per hour = $13,937.50
Amie Ravitz, Esq., and
Elise S. Feldman, Esq. 220.25 hours
Less 50% reduction
110.125 hours @ $150 per hour = $16,518.75
Cora MacLean, and Daniel Cohn 10.75 hours
Less 50% reduction
5.375 hours @ $60 per hour = $322.50
The total amount of fees for the appeal $30,778.75
Net total Fees $37,811.75
For all the foregoing reasons, it is hereby
ORDERED, that the plaintiffs are awarded total attorneys'
fees in the amount of $37,811.75 and costs in the amount
ORDERED, that the Clerk of the Court is directed to close
this case. SO ORDERED.
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