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United States ex rel ATC Distribution Group, Inc. v. Ready-Built Transmissions

September 7, 2007

UNITED STATES OF AMERICA EX REL ATC DISTRIBUTION GROUP, INC. PLAINTIFFS,
v.
READY-BUILT TRANSMISSIONS, INC., ROBERT L. JONES, SR. ET AL., DEFENDANTS.



The opinion of the court was delivered by: Gabriel W. Gorenstein, United States Magistrate Judge

OPINION AND ORDER

On March 27, 2003, ATC Distribution Group, Inc. ("ATC") filed this action on behalf of the United States pursuant to the False Claims Act, 31 U.S.C. §§ 3729 et seq. against defendants Ready-Built Transmissions, Inc., Robert L. Jones, Sr., and Robert L. Jones, Jr. After the United States intervened, the parties reached a settlement under which defendants were required to pay the Government $160,000. ATC has now made an application for attorney's fees.

I. APPLICABLE LEGAL PRINCIPLES

A prevailing party in an action under the False Claims Act is entitled to "receive an amount for reasonable expenses which the court finds to have been necessarily incurred, plus reasonable attorneys' fees and costs." 31 U.S.C. § 3730(d). The statute further provides that "[a]ll such expenses, fees, and costs shall be awarded against the defendant."

"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." Hensley, 461 U.S. at 433; accord Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, 493 F.3d 110, 114 (2d Cir. 2007); Grant v. Martinez, 973 F.2d 96, 99 (2d Cir. 1992), cert. denied, 506 U.S. 1053 (1993). As a general rule, the amount of an attorney's fees award is within the discretion of the Court. See, e.g., Hensley v. Eckerhart, 461 U.S. 424, 433, 437 (1983); Saulpaugh v. Monroe Cmty. Hosp., 4 F.3d 134, 145 (2d Cir. 1993), cert. denied, 510 U.S. 1164 (1994). "The initial burden of proof that the fee is reasonable falls on the relator, who must submit evidence regarding the number of hours expended and the hourly rate claimed." United States ex rel. Poulton v. Anesthesia Assocs., Inc., 87 F. Supp. 2d 351, 354 (D. Vt. 2000) (citing Hensley, 461 U.S. at 433); accord 601 W. Assocs. v. Kleiser-Walczak Constr. Co., 2004 WL 1117901, at *3 (S.D.N.Y. May 18, 2004).

II. DISCUSSION

ATC's initial application to the court sought a total award of $140,134, including fees, expenses, and interest.*fn1 This amount consists of (1) $99,163 for work performed by outside firms who represented ATC during the case and (2) $40,971 for work performed by ATC's in-house counsel. See Sedory Aff. ¶¶ 5, 9.

The defendants filed papers opposing the motion.*fn2 ATC then filed additional papers seeking fees for the briefing on the fee application itself.*fn3 In the new fee application, ATC sought an additional $21,691.26 for its outside counsel. See Sedory Supp. ¶¶ 2, 5. ATC stated that its in-house counsel expended an additional 32.5 hours, see id. ¶ 3, but did not compute the total amount sought with respect to such hours. It did, however, request reimbursement for an additional $604.30 for interest and expenses, see id. ¶ 6. Defendants opposed this request in a surreply. See Surreply to Supplemental Affirmation of Richard T. Sedory, filed Apr. 9, 2007 (Docket #33) ("Def. Surreply").

Eleven individuals at the law firms of Torys LLP and Hanly Conroy Bierstein Sheridan Fisher & Hayes LLP performed work on ATC's case. The following chart, which includes the supplemental request, indicates each individual's name, title, last date working on the ATC case, total hours at each billing rate, the rate charged, and the total amount billed at that rate:

NameTitleLast Billing DateHoursRateAmount Thomas I. SheridanPartner12/31/200549.5$495$24,502.50   5/31/200635$525$18,375.00 Nicomedes Sy HerreraAssociate9/29/200348.2$325$15,665.00   5/31/200649.3$370$18,241.00 Zachary D. SilbersherAssociate7/17/200354.8$210$11,508.00   4/14/200412$255$3,060.00 Michael B. HofffmanParalegal12/20/20021$205$205.00 Zachary CohenParalegal7/17/20035.8$120$696.00 Michael BuchwaldParalegal4/14/20031.5$120$180.00 Darrell WilliamsParalegal7/17/20034.8$120$576.00   2/18/20040.4$130$52.00 Julio A. LucenaParalegal3/24/20044.6$45$207.00 Christine C. ReynaertSummer Associate7/17/200311.8$185$2,183.00 Julio A. LucenaAdministration11/13/20034.4$45$198.00 Doning Barber(untitled)10/31/20050.9$100$90.00   5/31/20068.55$110$940.50 Melissa C. Welch(untitled)3/31/200619.4$300$5,820.00    311.95 $102,499.00

See Ex. 1 to Sedory Aff. (totals created by the Court); Sheridan Aff.; Sedory Supp. The total amount in the table above does not include any expenses or interest.

In addition, ATC's in-house counsel, Richard T. Sedory, and its Coordinator of Litigation, Mark Fiedler, performed work towards the case, for which they initially applied for attorney's fees at the following rates:

NameHoursRateTotal Mark Fiedler248$82.00$20,336.00 Richard T. Sedory46.45$185.00$8,593.25  294.45 $28,929.25

See Sedory Aff ¶ 9, Ex. 6. ATC later applied for an additional reimbursement for 32.5 hours of Sedory's time, but did not specify a billing rate or total fee sought for those hours, see Sedory Supp. ¶¶ 3, 6.

The defendants make a number of arguments in response to the application. The Court has considered all their arguments and addresses the most salient ones below.

A. In-House Employees

The defendants "contend[] that no fees or expenses should be awarded" for time spent by the in-house counsel and a "litigation manager" (apparently performing paralegal duties) because they "were performing tasks in connection with their ususal and ordinary duties," and "would have been paid whether they were working on this matter or any other matter." Def. Mem. at 3.*fn4 The Court rejects this argument as "[i]t is well-settled that attorneys' fees and costs should be awarded for litigation performed by in-house counsel if such fees would be awarded for the same work performed by outside counsel." Video-Cinema Films, Inc. v. Cable News Network, Inc., 2004 WL 213032, at *6 (S.D.N.Y. Feb. 3, 2004) (citing Blum v. Stenson, 465 U.S. 886 (1984)); accord Holmes v. NBC/GE, 168 F.R.D. 481, 482 n.3 (S.D.N.Y. 1996) (citing cases).

ATC's application for the fees of its in-house counsel and paralegal suffers from a different defect, however. In New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136 (2d Cir. 1983), the Second Circuit held that a party seeking an award of attorney's fees must support the request with contemporaneous time records that show "for each attorney, the date, the hours expended, and the nature of the work done." Id. at 1148; accord Kirsch v. Fleet Street, Ltd., 148 F.3d 149, 173 (2d Cir. 1998); Lewis v. Coughlin, 801 F.2d 570, 577 (2d Cir. 1986); see also Cruz v. Local Union No. 3, IBEW, 34 F.3d 1148, 1160-61 (2d Cir. 1994) (accepting an application derived from contemporaneous records). "Attorney's fee applications that do not contain such supporting data 'should normally be disallowed.'" Barrera v. Brooklyn Music, Ltd., 346 F. Supp.2d 400, 412 (S.D.N.Y. 2004) (citing New York State Ass'n for Retarded Children, Inc., 711 F.2d at 1154). Here, the records for the two in-house employees list only the two individuals, the month in which they performed work, and the number of hours worked for that month. See Ex. 6 to Sedory Aff. In other words, ATC has not provided a description of the nature of the work performed by each individual by date. ...


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