United States District Court, S.D. New York
November 16, 2005.
THE UPJOHN COMPANY, Plaintiff,
MEDTRON LABORATORIES, INC., et al., Defendants.
The opinion of the court was delivered by: SHIRLEY KRAM, Senior District Judge
OPINION & ORDER
In a September 7, 2005 Order, this Court adopted a Report and
Recommendation ("Report") issued by United States Magistrate
Judge Theodore H. Katz in its entirety. The Order (1) held
nonparties Global Vision Products, Inc. ("Global") and Dr. Henry
Edelson (together, "Contemnors") in civil contempt; and (2)
awarded Plaintiff Pharmacia & Upjohn Company ("Pharmacia") the
costs and attorney's fees incurred in the course of securing
Contemnors' compliance with this Court's April 16, 2003 and June
13, 2003 subpoenas (the "Subpoenas") and its July 18, 2003 Order
(the "July 18 Order").
This Court also directed Plaintiff's counsel, Dreier LLP, to
submit an affidavit detailing the time expended on Pharmacia's
instant contempt motion, its motion leading to the June 30, 2004
hearing, and Edelson's July 21, 2003 and July 15, 2004 depositions. On September 21, 2005, Plaintiff submitted a
two-page Affidavit and a thirty-six page printout (together, the
"Fee Application") detailing the fees and costs generated by
Contemnors' deliberate noncompliance in this nonparty discovery
dispute. Contemnors object to various aspects of the Fee
A. Fees Generated in Preparing the Fee Application
Contemnors assert that Pharmacia is not entitled to attorney's
fees associated with the preparation of the Fee Application. They
argue that such efforts had no relation to the actual process of
securing Contemnors' compliance with the Subpoenas or the July 18
Order and that "it would be manifestly unfair" to award such
fees. (Global Br. 2, Oct. 7, 2005.) However, time expended on a
fee application may be included in an award of attorney's fees.
See Gagne v. Maher, 594 F.2d 336, 343 (2d Cir. 1999),
aff'd, 448 U.S. 122 (1980). Plaintiff counsel's substantial
efforts in assembling the Fee Application were the direct result
of Global's willful evasion during discovery and excluding such
fees would undercompensate Plaintiff for its counsel's efforts.
Thus, the Court will not categorically exclude the time spent
compiling Pharmacia's Fee Application. Though the inclusion of such "fees on fees" helps to serve the
compensatory function of civil contempt, the amount of time spent
on a fee submission must be reasonable. See DiFilippo v.
Morizio, 759 F.2d 231, 236 (2d Cir. 1985); Trichilo v. Sec'y of
Health & Human Serv., 823 F.2d 702, 708 (2d Cir. 1987); Mantel
v. Niagara Mohawk Power Corp., No. 84 Civ. 2339, 1986 U.S. Dist.
LEXIS 30906, at *4 (S.D.N.Y. Jan. 2, 1986). Here, Plaintiff's
counsel and support staff spent 137.1 hours preparing the Fee
Application, generating $38,690 in fees.*fn1 The Court finds
that this is an unreasonable amount of time to compile billing
records. Moreover, Plaintiff's counsel charged as much as
$475/hour for the largely clerical task of assembling the Fee
Application. See Loper v. New York City Police Dep't,
853 F. Supp. 716, 720 (S.D.N.Y. 1994) (reducing fees for clerical work
billed at legal rates). Therefore, the Court will cut the $38,690
fee by three-fourths, allowing only $9,672.50 in fees for
assembling the Fee Application.
B. Fees Related To Edelson's First Deposition
Contemnors also challenge fees associated with Edelson's first
deposition. They claim that Pharmacia would have incurred such fees regardless of Contemnors' subsequent misconduct. This
position, however, fails to acknowledge that much of the time
spent preparing to depose Edelson and analyzing his responses
could have been avoided had Contemnors originally cooperated with
the Court's April 16, 2003 Order in a professional manner.
Instead, Contemnors stalled the production of a series of checks
responsive to the Subpoenas until July 9, 2004. (Report at 30.)
These checks documented the transfer of assets owned by Global
into offshore accounts controlled by Defendant Anthony Imbriolo.
(Id. at 16-18.) Because Edelson's actions had the effect of
concealing these transfers and unnecessarily prolonging
litigation, Contemnors' objection is denied.
C. Research Into Fraudulent Conveyance Law
Contemnors oppose Pharmacia's inclusion of time spent
researching fraudulent conveyance law for a suit that was never
filed. The Court, however, agrees with Pharmacia that the
research was a reasonable step in securing Contemnors' compliance
with the Subpoenas and the July 18 Order. After learning of the
array of international money transfers from Imbriolo's April 9,
2004 deposition, it was reasonable, if not advisable, for
Plaintiff's counsel to research the most appropriate course of
action for its client. Accordingly, Contemnors' objection is
D. Total Compensation For Legal Services Finally, Contemnors challenge the Fee Application as a whole,
arguing that the time spent by Plaintiff's counsel was excessive
and generated unreasonable fees. In determining reasonable
attorney's fees, district courts must calculate the "lodestar"
figure by multiplying the number of hours reasonably expended by
counsel on the litigation by the reasonable hourly rate. See
Blanchard v. Bergeron, 489 U.S. 87, 89 (1989); Cruz v. Local
Union No. 3 of the Int'l Bhd. Of Elec. Workers, 34 F.3d 1148,
1159 (2d Cir. 1994). To establish a reasonable hourly rate,
"district courts generally must apply prevailing market rates for
comparable attorneys of comparable skill and standing in the
pertinent legal community." Savoie v. Merchants Bank,
166 F.3d 456, 463 (2d Cir. 1999). Contemnors do not challenge Dreier LLP's
billing rates and the Court considers them, ranging from
$225-$475, to be "in line with those [rates] prevailing in the
community for similar services by lawyers of reasonably
comparable skill, experience, and reputation." Blum v. Stenson,
465 U.S. 886, 896 n. 11 (1984).
District courts, however, have considerable discretion in
adjusting the lodestar calculation, see Hensley v. Eckerhart,
461 U.S. 424, 437 (1983); McGuire v. Russell Miller, Inc.,
1 F.3d 1306, 1313 (2d Cir. 1993), and routinely reduce it in
circumstances where attorney's fees appear excessive or reliant
on vague descriptions of legal services. See United States Football League v. Nat'l Football League, 887 F.2d 408, 415 (2d
Cir. 1989) (reducing lodestar by 10 percent); Sea Spray
Holdings, Ltd. v. Pali Fin. Group, Inc., 277 F. Supp. 2d 323,
326 (S.D.N.Y. 2003) (reducing lodestar by fifteen percent);
Gonzalez v. Bratton, 147 F. Supp. 2d 180, 213 (S.D.N.Y. 2001)
(reducing lodestar by twelve percent); Local 32B-32J, SEIU v.
Port Auth., 180 F.R.D. 251, 253 (S.D.N.Y. 1998) (reducing
lodestar by twenty percent); Wilder v. Bernstein,
975 F. Supp. 276, 283-84 (S.D.N.Y. 1997) (reducing lodestar by ten percent).
In this manner, "the court has discretion simply to deduct a
reasonable percentage of the number of hours claimed as a
practical means of trimming fat from a fee application.'" Kirsch
v. Fleet Street, Ltd., 148 F.3d 149, 173 (2d Cir. 1998) (citing
New York Ass'n for Retarded Children v. Carey, 711 F.2d 1136,
1146 (2d Cir. 1983)). The Fee Application in this case seeks
$266,274.50 in fees for 782.9 hours of services rendered by the
partners, associates and paralegals of Dreier LLP.*fn2
After close consideration of the time expended by Plaintiff's
counsel, the Court concludes that it cannot compensate Dreier LLP
for all of the legal services listed in the Fee Application.
Though the Court does not question the sincerity of the Fee
Application and Pharmacia appeared to receive quality representation, it cannot justify awarding
awarding such excessive fees for relatively uncomplicated legal
work. See Clarke v. Frank, 960 F.2d 1146, 1153 (2d Cir. 1992)
(affirming a reduction in attorney's fees for excessive billing
in an uncomplicated case). Moreover, most of the entries in the
Fee Application, while detailed, are block-billed, rendering it
difficult for the Court to determine exactly how much time was
spent on specific activities. Though no specific entry appears
unreasonable per se, the aggregate amount of attorney's fees
requested in the Fee Application is excessive in light of the
services rendered. Therefore, the Court will reduce the lodestar
calculation by twenty-five percent, resulting in fees of
$199,705.88 as compensation for Dreier LLP's representation.
E. Apportionment of Legal Liability
The allocation of liability for multiple contemnors is a matter
within the discretion of the district court. See Carroll v.
Blinken, 105 F.3d 79, 82 (2d Cir. 1997). In situations "where
the claims against the defendants are separate and distinct or
where culpability is significantly unequal" courts may apportion
fees separately, according to relative liability. Koster v.
Perales, 903 F.2d 131, 139 (2d Cir. 1990). However, where those
liable participate in each other's breaches, see Bennett v.
Local Union No. 66, 958 F.2d 1429, 1440-41 (7th Cir. 1992), or
collude in an ongoing breach, see Allen v. Allied Plant Maintenance Co. of Tenn., 881 F.2d 291, 298 (6th Cir.
1989), district courts may impose joint and several liability.
In this case, Global and Edelson defied the Court's subpoenas
together. On April 16, 2003, Edelson received a personal subpoena
directing him to turn over all documents relating to Imbriolo.
(Report at 7.) Only two months later, Global received its own
subpoena directing it to turn over the same information. (Id.)
As Chairman of the Board of Global, Edelson was acutely aware of
the overlapping duties he and his company owed to the Court to
turn over responsive documents. See Koster, 903 F.2d at 138.
As a result, the Court will impose joint and several liability on
Plaintiff counsel's lodestar calculation is reduced to
$199,705.88. After adding $9,672.50 for compiling the Fee
Application and $6,781.46 in reasonable costs, Contemnors are
jointly and severally liable to Pharmacia for a total of
$216,169.84. SO ORDERED.
© 1992-2005 VersusLaw Inc.