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Loatman v. Summit Bank

October 15, 1999

ANNETTE LOATMAN, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
V.
SUMMIT BANK, DEFENDANT.



The opinion of the court was delivered by: Simandle, District Judge:

OPINION

This case involves plaintiff's request for attorney's fees pursuant to this Court's opinion and order of August 29, 1997 in which defendant was ordered to pay all of plaintiff's reasonable attorney's fees stemming from specific actions by the defendant Summit Bank for which it was sanctioned by this Court under its inherent power. Loatman v. Summit Bank, 174 F.R.D. 592 (D.N.J. 1997). This court held that defendant Summit Bank engaged in direct contact with the putative class representative, plaintiff Annette Loatman, under circumstances that were "oppressive, unfair and disruptive of the proper course of this class action proceeding." 174 F.R.D. 605. Defendant's actions were found to have "led to months of otherwise unnecessary motion practice and discovery, all of which delayed the proper course of this litigation." Id. Under the inherent power of the court to preserve orderly judicial processes and to assure that others will not be tempted to employ harassment tactics striking at the heart of the class action procedure, including the relationship between class counsel and their client, the court found that the burden of plaintiff's costs and fees in addressing defendant's misconduct shall be borne by defendant, in an amount of reasonable counsel fees and expenses to be determined by the court after submissions of appropriate affidavits of costs and fees. Id.

Plaintiff's counsel submitted the application for fees in compliance with L. Civ. R. 54.1 on September 19, 1997 requesting a total of $155,705.95, for fees and costs by four separate firms. The total requested is divided among them as follows:

Firm Hours Fees Costs

Poplar & Eastlack 84.10 $25,230.00 $0.00

Trujillo Rodriguez & Richards 54.25 $11,848.65 $206.75

Tomar Simonoff Adourian O'Brien Kaplan 98.40 $23,520.00 $823.25

Jacoby,& Graziano

Chimicles, Jacobsen, & Tikellis 295.50 $92,567.50 $1,509.80

TOTALS 532.25 $153,166.15 $2,539.80

These attorney's fee affidavits contain a total of 396 entries of allegedly billable events by an array of attorneys acting for Loatman.

Thereafter, on October 3, 1997, defendant submitted a brief in opposition to plaintiff's application for fees which contains numerous specific objections. *fn1 Plaintiff responded on October 17, 1997, generally reiterating their position that the fees applied for reflected services performed in response to defendant's sanctionable conduct and providing affidavits on customary attorneys' fees in support of the lodestar affidavits they submitted with the original application.

Finally, defendant responded on October 31, 1997, essentially summarizing the objections to plaintiff's application for fees.

In a piece of litigation marked by extreme polarization, this court is now confronted with the task of determining an appropriate monetary sanction lying at the collision of fee petitions which are sometimes excessive, vague, and duplicative, and defendant's opposition which contests essentially every single entry, often without plausible reason and occasionally with distortions of the record. A time-consuming and distasteful review process has been the result. I am not inclined to permit litigation over every minute of time claimed, and some simplifying and rounding off have been added occasionally, in my discretion, so that a just and fair sanction can be calculated. It should scarcely require noting that this determination of an appropriate sanction against disruption and delay of orderly proceedings has regrettably necessitated so much further expenditure of court time.

I. BACKGROUND

This dispute arises in the context of a class action litigation in which the plaintiff, Annette Loatman, was seeking to represent the class of plaintiffs who were borrowers who had purchased so-called "force- placed" insurance coverage through the bank. Id. at 595. Defendant desired a settlement, but negotiations between plaintiff's class counsel and defendant's counsel had been going badly, and on June 19, 1996, defendant's Senior Vice President, Charles Maraziti, contacted Mrs. Loatman and her husband and attempted to convince her to settle the case for $25,000, an amount which is about 15 times the worth of her personal claim. Id. at 598. He did this in direct violation of the court's instructions that no settlement offers should be made without clarification of ethical considerations related to the effect of a proposed settlement on the other members in the potential class. Id. at 595.

Mrs. Loatman informed her attorneys of the contact the same night. Id. at 598. They contacted the court the next day, June 20, 1996, requesting a hearing regarding the granting of a Temporary Restraining Order ("TRO") prohibiting the defendant from any further direct contact with Mrs. Loatman. Id. at 599. The court set a return date of June 24, 1996. Plaintiff filed her brief in support of the motion for a TRO the next day, June 21, 1996. Id.

As a result of the June 24, 1996 hearing, an order was issued on June 26, 1996, granting the TRO or preliminary injunction. Id. On the same day, a hearing was granted on plaintiff's application for expedited discovery so that information could be gathered regarding the circumstances surrounding Mr. Maraziti's behavior and whether defendant's counsel had any involvement in the incident. Additionally, defendant was ordered to show cause why the TRO should not be extended for the duration of the litigation. On July 10, 1996, the temporary restraining order and the order to show cause were amended, and on July 22, 1996, plaintiff's counsel filed a motion to compel discovery and for sanctions, which was met by a cross-motion filed August 2, 1996. In the meantime, the parties engaged in expedited discovery aimed at the issue of the defendant's contacts with plaintiff.

At the hearing on August 15, 1996, the court determined, for reasons stated in the Oral Opinion of that date, that a permanent order should be entered under Rule 23(d), Fed. R. Civ. P., to bar defendant Summit Bank, its officers, employees, and attorneys, from having any communication with plaintiff Loatman outside the presence of her attorney, and also to bar defendant from initiating any communication about the litigation with any member of the uncertified class of plaintiffs without prior court approval under Rule 23(d). (See Order filed August 16, 1996.) Accordingly, a discovery motion by plaintiff to compel testimony and production of documents (and a cross-motion by defendant for a protective order) pertaining to the issue of the impermissible defendant conduct became moot and these discovery motions were dismissed, no further discovery being necessary. The dismissal of the discovery motions was expressly without prejudice to an application for appropriate sanctions. *fn2 (Id.) On October 1, 1996, plaintiff submitted a motion for sanctions against defendant based mainly on Maraziti's improper contact with Ms. Loatman, but later withdrew it to pursue negotiations with defendant. This court, therefore, dismissed plaintiff's motion for sanctions without prejudice so negotiations could proceed.After negotiations again proved fruitless, plaintiff reinstated her motion for sanctions, and at the July 18, 1997 hearing in this court, the parties argued the motion along with several others. Then on July 25, 1997, before the decision was rendered on plaintiff's sanction motion, defendant instituted a meritless cross-motion for sanctions against plaintiff. This court resolved both motions in its opinion of August 28, 1997, denying defendant's motion for sanctions and granting in part and denying in part plaintiff's motion for sanctions against defendant and ordering defendant to pay plaintiff's reasonable costs and fees incurred as a result of defendant's sanctioned behavior.

II. DISCUSSION

Because they are in a position of familiarity with the facts of a case, district courts have discretion in determining the appropriate amount of fee awards. Hensley v Eckerhart, 461 U.S. 424, 437 (1983). In Hensley, which arose under the Civil Rights Act's fee award statute 42 U.S.C. § 1988, the Supreme Court determined that reasonable attorney's fees are determined using the lodestar approach, calculated by multiplying the number of hours worked by an appropriate hourly rate. Id. at 433. The party applying for fees bears the burden of submitting evidence in support of the request, and the court has the discretion to reduce the fee award where such supportive documentation is lacking. Id. Although the present award is made under the inherent authority of the court rather than under s 1988, the Hensley type of lodestar analysis provides a useful framework, subject to simplifying assumptions that facilitate the determination of a just award to redress the defendant's misconduct in a monetary sense without unduly prolonging this fee dispute.

A threshold consideration in the upward or downward adjustment of the fee award is the degree of success achieved by the work for which fees are requested. Id. at 434. In addressing this issue, the court must ascertain whether the work is related to a claim in regard to which the fee applicant achieved a substantial measure of success, in which case the work is compensable. Id. However, work performed in pursuit of an unsuccessful claim cannot be considered to have contributed to the result achieved, and is therefore not compensable. Id. at 435.

The court may exclude from the fee award compensation for time not reasonably expended for other reasons as well. Id. For example, where cases are overstaffed, the court may deduct charges for unnecessarily duplicative work. Id at 433. The Third Circuit has said, "members of the bar are quasi-officers of the court and they are expected to be careful ... in their representations to the court." Hall v. Roselle, 747 F.2d 838, 841-42 (3rd Cir. 1984). Accordingly, the fee applicant should exercise "billing judgment" and "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." Hensley, 461 U.S. at 434.

The court may also choose to reduce a fee award when services that could be performed by associates or paralegals at lower rates were performed and billed at partner rates because, as defendant points out, "A Michelangelo should not charge Sistine Chapel rates for painting a farmer's barn." Ursic v. Bethlehem Mines, 719 F.2d 670, 677 (3d Cir. 1983); Daggett v. Kimmelman, 617 F.Supp. 1269, 1281 (D.N.J. 1985), aff'd, 811 F.2d 793 (3d Cir. 1987). Moreover, while a partner may nevertheless justify the billing of a high rate based on his or her ability to complete tasks more efficiently than lesser paid workers, a fee applicant may not charge a high hourly rate based on his or her experience and expertise and then also bill for an inordinate number of hours. Id.

The burden of showing that the rates applied for are comparable to rates charged for similar legal work by attorneys in the community of comparable skill, experience, and reputation is on the fee applicant. Blum v. Stenson, 4655 U.S. 886, 895 n.11 (1984). It is within the court's discretion to reduce the rate at which services are billed to one that is customary in the prevailing market. Public Interest Research Group of New Jersey Inc. v. Windfall, 51 F.3d 1179, 1185 (3d Cir. 1995).

Finally, in applying for fees awarded by the court for sanctionable conduct, the parties should adequately explain how the fees sought are related to the sanctioned conduct. In re: Tutu Wells Contamination Litigation, 120 F.3d 368, 390-391 (3d Cir. 1997)(upholding a district court's denial of a portion of the fees sought partly because the party's submission to the court did not clearly show the relationship of the expenses to sanctionable conduct and finding that the court's refusal to devote its resources to the scrutiny of the submissions for the benefit of the plaintiff was within its discretion in preventing a "second major litigation" under Hensley, 461 U.S. 424 at 437).

III. ANALYSIS

A. Hourly Rates

The first question to be decided is whether the rates charged by plaintiff's counsel are within the limits of customary fees charged by attorneys of similar experience and expertise in the prevailing market. Defendant argues that the rates submitted by plaintiff are excessive. In support of this proposition, defendant has submitted fee affidavits from various attorneys. Plaintiff has also submitted such affidavits in support of the fees it requests.

The following is a chart of the name abbreviations used by plaintiff's counsel organized by firm, along with each attorney's fee and year of graduation from law school or admission to the bar:

Firm: Poplar & Eastlack

CDP Carl D. Poplar 1967 $300.00

Firm: Tomar, Simonoff, Adourian, O'Brien, Kaplan, Jacoby & Graziano

CNR Charles N. Riley 1973 $250.00

DSM Donna Siegel Moffa 1982 $200.00

Firm: Trujillo, Rodriguez, & Richards (on and after April, 1997)

LJR Lisa J. Rodriguez 1983 $335.00

INR Ira Neil Richards 1986 $290.00

JP James Penzi 1996 $120.00

KIT Kenneth I. Trujillo 1986 $290.00

Firm: Chimicles, Jacobsen,& Tikellis (until ...


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