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Star Direct Telecom, Inc., A California Corporation and United States v. Global Crossing Bandwidth

July 20, 2012

STAR DIRECT TELECOM, INC., A CALIFORNIA CORPORATION AND UNITED STATES TELESIS, INC., A CALIFORNIA CORPORATION, PLAINTIFFS,
v.
GLOBAL CROSSING BANDWIDTH, INC., A CALIFORNIA CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Marian W. Payson United States Magistrate Judge

DECISION & ORDER

In a decision dated March 22, 2012, I granted plaintiff U.S. Telesis's motion for spoliation sanctions against defendant Global Crossing and ordered that Global Crossing reimburse U.S. Telesis for its attorneys' fees in bringing the motion and an earlier motion to compel. (Docket # 262). Familiarity with that decision is assumed. Despite my exhortations to the parties to negotiate an agreement regarding the amount of the fees to be reimbursed, no agreement was reached. Accordingly, I must now determine the appropriate amount of the fee award.

U.S. Telesis has requested reimbursement of $62,337 for 154.3 hours of work performed by two attorneys, Alex Weingarten ("Weingarten") and Eric Carlson ("Carlson"). (April 13, 2012 letter from Alex M. Weingarten, Esq.). Global Crossing opposes this request as unreasonable and suggests reimbursement of $15,800 is appropriate. (April 27, 2012 letter from Eric A. Linden, Esq.). At issue is the reasonableness of both the number of hours expended and the hourly rate requested.

DISCUSSION

In deciding the amount of attorneys' fees to be awarded to a prevailing party, the court must determine the lodestar figure, Perdue v. Kenny A., 130 S. Ct. 1662, 1672 (2010), known in this Circuit as the "presumptively reasonable fee," Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182, 190 (2d Cir. 2008). *fn1 See also Millea v. Metro-North R.R. Co., 658 F.3d 154, 166 (2d Cir. 2011) ("[b]oth this Court and the Supreme Court have held that the lodestar-the product of a reasonable hourly rate and the reasonable number of hours required by the case-creates a 'presumptively reasonable fee'"). The Supreme Court has reasoned that the lodestar method results in a presumptively reasonable fee because it "includes most, if not all, of the relevant factors constituting a 'reasonable' attorney's fee," such as the novelty and complexity of a case and the quality of an attorney's performance -- factors that will be subsumed in the determination of reasonable hours spent and reasonable hourly rates, respectively. Perdue, 130 S. Ct. at 1673 (internal quotation omitted). When fees are being awarded as a sanction, the lodestar figure may then be adjusted "as necessary to assure Rule 37's deterrent objective is achieved." Ceglia v. Zuckerberg, 2012 WL 503810, *4 (W.D.N.Y. 2012).

Calculating the lodestar figure begins with an examination of the prevailing hourly rates in the community in order to "roughly approximate[] the fee that the prevailing attorney would have received if he or she had been representing a paying client who was billed by the hour in a comparable case." Perdue, 130 S. Ct. at 1672 (emphasis in original). See Arbor Hill Concerned Citizens Neighborhood Ass'n v. Ctny. of Albany, 522 F.3d at 190 (court must determine the "reasonable hourly rate . . . a paying client would be willing to pay," recognizing that "a reasonable, paying client wishes to spend the minimum necessary to litigate the case effectively"). Once the reasonable hourly rate is determined, it must then be multiplied by the number of hours reasonably expended litigating the case in order to arrive at the lodestar figure or "presumptively reasonable fee." Id. at 193.

I. Reasonable Rate

To determine a reasonable hourly rate, the court must examine "the prevailing market rates in the relevant community." Perdue, 130 S. Ct. at 1672 (quoting Blum v. Stenson, 465 U.S. 886, 895 (1984)). See also Simmonds v. New York City Dep't of Corr., 2008 WL 4303474, *3 (S.D.N.Y. 2008) ("[t]he gravamen of a reasonable rate remains the market rate that a reasonable client would expect to pay given 'the nature of the representation and type of work involved in a case'") (quoting Arbor Hill, 522 F.3d at 184 n.2)). The burden rests with the party seeking reimbursement to produce "satisfactory evidence -- in addition to the attorney's own affidavits -- that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation." Anderson v. Rochester-Genesee Reg'l Transp. Auth., 388 F. Supp. 2d 159, 167 (W.D.N.Y 2005) (quoting Blum v. Stenson, 465 U.S. at 895-96 n.11). The relevant community is the district in which the case is litigated. Lochren v. Cnty. of Suffolk, 344 F. App'x 706, 708 (2d Cir. 2009); Arbor Hill, 522 F.3d at 191.

Here, U.S. Telesis's counsel is not from this district, but practices in Los Angeles, California, which is located in the Central District of California. U.S. Telesis has requested that its attorneys be reimbursed at a rate that it contends is reasonable for that geographic area. Specifically, U.S. Telesis seeks reimbursement for Weingarten's time at a rate of $450 per hour and for Carlson's time at a rate of $390. (See April 13, 2012 Weingarten Affidavit at ¶ 3). Weingarten affirms that he has been practicing since 1999 and has managed his own law firm continuously since 2005. (Id. at ¶ 4). Carlson has been practicing law since 1997 and is an associate at Weingarten's firm. (Id.).

Invoking the so-called "forum rule," Global Crossing counters that U.S. Telesis is entitled to reimbursement only at the rate for similar attorneys in this district. Specifically, Global Crossing contends that Weingarten should be reimbursed at a rate of $265 per hour and Carlson at $210. (See April 27, 2012 letter from Eric A. Linden, Esq.). U.S. Telesis has not responded to this argument.

Under the forum rule, "courts should generally use the hourly rates employed in the district in which the reviewing court sits." Simmons v. New York City Transit Auth., 575 F.3d 170, 174 (2d Cir. 2009) (quoting Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty of Albany, 493 F.3d 110, 119 (2d Cir. 2007)). "[D]eviation from the forum rule is only appropriate 'in the unusual case,' in which a litigant demonstrates that her selection of counsel was 'reasonable under the circumstances.'" Id. at 175 (quoting Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty of Albany, 493 F.3d at 119). Specifically, the Second Circuit has held: when faced with a request for an award of higher out-of-district rates, a district court must first apply a presumption in favor of application of the forum rule. In order to overcome that presumption, a litigant must persuasively establish that a reasonable client would have selected out-of-district counsel because doing so would likely (not just possibly) produce a substantially better net result. . . . The party seeking the award must make a particularized showing, not only that the selection of out-of-district counsel was predicated on experience-based, objective factors, but also of the likelihood that use of in-district counsel would produce a substantially inferior result.

Id. At 175-76.

In determining whether to apply the forum rule, some courts have distinguished between awards made pursuant to a fee-shifting statute and those made as a sanction. See, e.g., Ceglia v. Zuckerberg, 2012 WL 503810 at *8; Robbins & Myers, Inc. v. J.M. Huber Corp., 2011 WL 1598973, *3 (W.D.N.Y. 2011) ("the court has discretion to use out-of-district rates in fixing the amount of an attorneys' fee awarded as a sanction and to deter similar conduct in the future"); Disabled Patriots of Am., Inc. v. Niagara Grp. Hotels, 2008 WL 1867968, *3 (W.D.N.Y. 2008). For example, in Ceglia v. Zuckerberg, Judge Foschio recently observed that "in calculating . . . attorney's fees awarded as a sanction, the court is not required to apply the forum rule . . . ; rather, the court has discretion to use out-of-district rates in fixing the amount of an attorney's fee awarded as a sanction." 2012 WL 503810 at *8 (citing On Time Aviation, Inc. v. Bombardier Capital, Inc., 354 F. App'x 448, 452 (2d Cir. 2009)). In On Time Aviation, the Second Circuit upheld a district court's decision to apply an out-of-district rate as a deterrent in setting a sanction amount under Rule 11, acknowledging that "[t]he reasoning behind the calculation of awards under fee-shifting statutes [to compensate the victimized party] . . . is not . . . precisely analogous to that applicable to Rule 11 awards [to deter baseless filings]." 354 F. App'x at 452. Other courts, however, have applied the forum rule in awarding attorney's fees as a sanction. See, e.g., Rates Tech., Inc. v. Mediatrix Telecom, Inc., 2011 WL 1322520, *3 (E.D.N.Y. 2011) (declining to award out-of-district rate in intellectual property case); Field Day, LLC v. Cnty. of Suffolk, 2010 WL 5490990, *3 (E.D.N.Y. 2010) (rejecting contention that On Time Aviation stands "for the proposition that the forum rule is inapplicable where attorney's fees have been awarded as a sanction"); Carovski v. Jordan, 2008 WL 3540372, *4 (W.D.N.Y. 2008).

In this case, counsel asserts merely that the rates are reasonable in their geographic region, but provides no documentation to support that request. See, e.g., Ceglia, 2012 WL 503810 at *14 ("[i]deally, included in the fee applicant's attorney's affidavits should be information regarding the credentials of each attorney seeking reimbursement, as well as an affidavit by a disinterested local practitioner attesting to the relevant prevailing market rates") (citing McDonald v. Pension Plan of the NYSA-ILA Pension Trust Fund, 450 F.3d 91, 97 & n.5 (2d Cir. 2006)); Robbins & Myers, Inc. v. J.M. Huber Corp., 2011 WL 1598973 at *4 ("to establish the prevailing market rate, the party awarded attorneys' fees must offer evidence that the requested hourly rate is in line with the market rate in the community") (citing Blum, 465 U.S. at 896 n.11). This Court's own research reveals recent attorneys' fees awards in the Central District of California ranging from $275 for an attorney with ten years' experience to $500 for an attorney with over thirty years' experience. Compare, e.g., Rubenstein v. Nat'l Recovery Agency, Inc., 2012 WL 1425144, ...


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