United States District Court, D. New Jersey
MICHAEL A. HAMMER UNITED STATES MAGISTRATE JUDGE.
matter comes before the Court by way of a motion for fees and
costs filed by Petitioner's attorneys (collectively
“Counsel”) [D.E. 57], and David Shaun Neal's
(“Mr. Neal”) motion to strike Petitioner's
motion for fees [D.E. 61]. Pursuant to Fed.R.Civ.P. 78 and Local
Civil Rule 78.1, the Court decided this motion without oral
argument. For the reasons set forth below, the Court grants
Counsel's motion [D.E. 57], awards Counsel $694, 174.07
in fees and $63, 183.14 in costs, and denies Respondent's
motion to strike [D.E. 61].
District Court's June 30, 2016 Opinion addressing the
parties' cross-motions for summary judgment thoroughly
set forth the factual background and legal issues in this
matter and the related actions. D.E. 24. Because the Court
writes for the parties' benefit, it sets forth only the
facts relevant to the current motions. Mr. Neal provided
information technology services to Asta Funding Inc.
(“Asta”). Opinion of U.S. District Judge Kevin
McNulty, June 30, 2016, D.E. 24, at 2 (“McNulty
Opin.”). When this relationship began, Mr. Neal
provided these services through Bach Consulting, an entity
owned by Robert F. Coyne (“Mr. Coyne”).
Id. In 2007, Mr. Coyne discontinued use of Bach
Consulting and formed NWS with Mr. Neal. Id. Mr.
Neal continued to provide information technology services for
Asta through NWS, pursuant to an agreement between NWS and
Asta that contained an arbitration provision. Id.
There are six interrelated actions arising from these
business relationships, which are the subject of
Petitioner's instant motion for attorneys'
initial action, Asta Funding, Inc. v. New World
Solutions, Inc., David Shaun Neal, and Robert F. Coyne,
Esq. (the “Arbitration”), Asta sought
arbitration against NWS, the consulting company owned by Mr.
Neal and Mr. Coyne, for breach of contract and unjust
enrichment pursuant to an arbitration clause in the
Information Technology Services Agreement between Asta and
NWS. On August 7, 2013, Asta filed an additional Supplemental
Statement of Claim against NWS, adding claims for fraud,
conversion, trespass and violations of the New Jersey
Consumer Fraud Act (“CFA”), the Federal Computer
Fraud and Abuse Act (“CFAA”) and the New Jersey
Computer Related Offenses Act (“NJCROA”). Asta
also moved to join Mr.Coyne and Mr. Neal based on the claims
asserted in the Supplemental Statement of Claim. Id.
However, the arbitrator denied Asta's request to join
both Mr. Neal and Mr. Coyne. Asta then initiated a second
arbitration action against Mr. Coyne and Mr. Neal. The
arbitrator consolidated the two arbitrations on October 16,
2013, upon determining that Mr. Coyne and Mr. Neal were both
personally bound by the arbitration provision.
November 18, 2013, Mr. Neal initiated a Declaratory Judgment
action (“DJ Action”), Neal v. Asta Funding,
Inc., Civil Action No. 13-6981 (KM), requesting a
judgment that he was not personally bound by the arbitration
provision at issue. The Arbitration and DJ actions continued
in tandem. Id. On June 26, 2013, the arbitrator
issued Prehearing Order 13 (Protective Order I), which
enjoined NWS and Mr. Neal from disclosing Asta business
information, pursuant to the Confidentiality Covenant
contained in the Information Technology Services Agreement.
Mr. Neal stated he would not respect Protective Order I. On
August 6, 2013, the arbitrator issued Prehearing Order 15
(Protective Order II), again ordering that Mr. Neal not
disclose Asta business information and deliver all relevant
information to Asta within five days of the order. Again, Mr.
Neal refused to comply with the order. After the arbitration
hearing from January 7, 2014 to January 24, 2014, the
arbitrator issued Hearing Order 3, which enjoined all parties
from disclosing confidential information. The arbitrator
concluded that Respondents had Asta's electronic
information and directed Respondents to give their computers
to the Court for forensic inspection and imaging. On March
14, 2014, Judge McNulty adopted the protections set forth by
the arbitrator's protective order.
April 2, 2014, the arbitrator issued the Non-Confidential
Summary Award (“Summary Award”) and Confidential
Final Award (“Confidential Award”). Certification
of Steven Adler, Feb. 1, 2017, Ex. 1, D.E. 57-3. In pertinent
part, the arbitrator ruled as follows:
10. ORDERED, that ASTA is entitled to an award of reasonable
attorneys' fees and costs on its confidentiality, CFA
[New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et
seq.], CFAA [Computer Fraud and Abuse Act, 18 U.S.C.
§ 1030 et seq., ] and NJCROA [New Jersey
Computer Related Offenses Act, N.J.S.A. 2A:38-1A et
seq.] claims against all Respondents jointly, severally
and/or in the alternative, in the amount of $552, 897.00 not
including fees associated with the federal actions referenced
in the Confidential Final Award, through January 31, 2014;
and it is further
11. ORDERED, that ASTA is entitled to an award of the costs
to date incurred by ASTA, plus $10, 000 in investigation
costs, but excluding the fees of the Arbitration (which are
dealt with below), totaling $25, 370.60, against all
Respondents jointly, severally and/or in the alternative; and
it is further
12. ORDERED, that ASTA is entitled to an award against all
Respondents, jointly, severally and/or in the alternative, of
reasonable attorneys' fees and costs, incurred in this
arbitration after January 31, 2014 in connection with its
efforts to enforce the Hearing Orders, and to confirm this
Award and to collect any judgment; and such amounts may be
determined by a Court of competent jurisdiction. . . .
December 2013, Mr. Coyne filed a complaint in the United
States District Court for the Central District of California,
seeking both a declaratory judgment that he was not
personally bound by the arbitration provision, and an order
enjoining the arbitration. Asta successfully moved to
transfer venue from the Central District of California to
this Court. Coyne v. Asta Funding, Civil Action No.
14-2475 (KM), D.E 30, Dec. 20, 2013 (“Coyne I”).
The District Court dismissed this litigation on July 21,
April 21, 2014, Mr. Coyne filed another complaint in the
United States District Court for the Central District of
California. This complaint demanded that the District Court
vacate the arbitrator's Jurisdiction Award, which had
determined that the arbitrator could extend his jurisdiction
to Mr. Neal and Mr. Coyne. Again, Asta successfully moved to
transfer the action to this Court. Coyne v. ASTA
Funding, Civil Action No. 14-3932 (KM), D.E 1, Apr. 21,
2014 (“Coyne II”). The District Court dismissed
this action on June 30, 2016 in accordance with the Opinion
and Order that Judge McNulty entered in the DJ Action, the
Instant Action, Coyne II and the Vacate Action, confirming
the arbitrator's award.
2014, Mr. Neal filed Coyne v. Asta Funding, Civil
Action No. 14-3550 (KM) (“Vacate Action”), in
which he requested that the arbitrator's award be
vacated. Asta moved to dismiss the action. The Vacate Action
was later dismissed on June 30, 2016.
April 17, 2014, Asta filed the instant action by way of a
Petition to Confirm the Arbitration Award. Asta filed the
petition in accordance with Judge McNulty's April 10,
2014 Order in the DJ Action, which had directed the parties
to file any applications to confirmation of the arbitration
award, or to vacate or modify it, in a new action, which
would be consolidated for discovery with the DJ Action. In
the petition, Asta sought entry of an order: (1) entering a
judgment in its favor for the amount set forth in the Summary
Award; (2) compelling Respondents to comply with Section 14
of the Summary Award, which required Respondents to return
Asta's documents and property; (3) awarding Asta costs
and fees, including reasonable attorneys' fees; and (4)
providing for such other relief as the court may deem just
and proper. The District Court granted the petition on June
30, 2016, when the Court confirmed the arbitrator's
District Court's June 30, 2016 Opinion and Order
confirmed the Summary Award and Confidential Award, as well
as the Partial Final Award (“Jurisdiction Award”)
dated March 5, 2014. Opinion and Order, June 30, 2016, D.E.
24-25. The District Court granted summary judgment in
Asta's favor in the Instant Action and dismissed the DJ
Action, Coyne II, and the Vacate Action. McNulty's Opin. and
Order, D.E. 24, 25. The Court also granted Asta's motion
for summary judgment and denied Mr. Neal's and Mr.
Coyne's cross-motion for summary judgment in the DJ
Action. Id. Accordingly, the District Court entered
Judgment in Petitioner's favor for “$3, 243,
860.83, comprising (1) $2, 971, 234.99 as against all
Respondents, (2) $230, 485 as against Mr. Neal and NWS only,
and (3) $42, 140.94 for administrator and arbitrator fees as
against all Respondents . . . .” Judgment, June 30,
2016, D.E. 26.Thereafter, on July 21, 2016, the Court issued
an Order dismissing Coyne I. Civil Action No. 14-2475 (KM),
D.E 47, July 21, 2016.
February 1, 2017, Asta filed a motion seeking attorneys'
fees and costs. Pet'r's Br., D.E. 57, at 1.
Respondent Mr. Neal initially opposed Asta's motion
solely by filing a motion to strike on February 21,
Resp't Mot., D.E.61, at 1. However, in order to ensure
that Respondents were afforded a full and fair opportunity to
be heard on Petitioner's application, this Court, on
August 3, 2017, entered an Order providing Mr. Neal the
opportunity to submit any additional opposition to
Petitioner's motion for attorneys' fees. Order, Aug.
3, 2017, D.E. 73. Mr. Neal submitted a brief in further
opposition to Petitioner's motion. Brief in Opposition, Aug.
25, 2017, D.E. 80. Petitioner filed a reply in further
support of its fee application. Pet'r's Additional
Reply Br., Aug. 25, 2017, D.E. 74. The Court has considered
all of those submissions.
Petitioner's Motion for Attorneys' Fees
seeks a lodestar award of $741, 201.57 in fees and $63,
183.14 in costs that were incurred during the latter part of
the arbitration and in the five related actions, set forth
above in footnote 1, from the inception of each action until
December 31, 2016. Pet'r's Br. at 3. Asta asserts
that it is entitled to this award pursuant to the CFA, the
CFAA, and the NJCROA, which include a cost shifting provision
that allows injured parties to recover costs and fees against
a wrongdoer. Id. at 1. Pursuant to the arbitration
clause signed by the Respondents, Asta initiated arbitration
against NWS in 2012. Id. The arbitrator found in
favor of Asta and thus awarded Asta more than $3 million in
damages against NWS, Mr. Neal and Mr. Coyne. Summary Award,
Apr. 2, 2014. Judge McNulty confirmed the award issued by the
arbitrator in his June 30, 2016 Opinion and Order. McNulty
Opin. and Order, D.E. 24 & 25, June 30, 2016. Asta
contends that pursuant to Judge McNulty's Opinion and
Order in the Instant Action, which confirmed the
arbitrator's award, it is entitled to costs and fees,
including reasonable attorneys' fees. Pet'r's Br.
Declarations in Support of Fee Application
seeks to recover costs related to expert fees, transcription
and court reporting services, and Westlaw legal research.
Certification of Steven I. Adler, Esq (“Adler
Cert.”), D.E. 57-2, Feb. 1, 2017, ¶ 42. The fees
requested consist of $715, 086.07 for services provided by
Mandelbaum Salsburg, P.C. (“Mandelbaum”) and $26, 160.50
for services provided by Greenberg Glusker Fields Claman
& Machtinger LLP (“GGFCM”). Id. ¶
44. Mandelbaum expended 1, 793.20 hours during the course of
the litigation which is the subject of the motion for
attorneys' fees, through December 30, 2016. GGFCM expended 68.9
litigation, Asta hired Palisades Compliance, LLC
(“Palisades”) and The Sylint Group, LLC
(“Sylint”) as expert witnesses. Id.
¶¶ 52-55. Palisades was hired to review evidence
and to testify regarding the fraudulent conduct committed by
the Respondents related to the sale of counterfeit Oracle
software and support services. Id. ¶
52. For their services Palisades was paid $7, 875.
Id. ¶ 54. Further, Sylint was hired to help
establish Respondents' abuses of the CFA, CFAA and
NJCROA. Id. ¶ 53. Sylint was paid $30, 458 for
its services and was reimbursed $1, 776.27 in travel costs.
Id. ¶ 54. In total, Asta paid $40, 109.27 in
expert costs. Id. ¶ 55.
Legal Solutions (“Veritext”) provided court
reporting and transcription services during the arbitration
hearing days. Id. ¶ 56. In total Asta paid $9,
115.78 for Vertiext's services during the litigation.
preparation of and during litigation, Westlaw was used to do
necessary legal research. Certification of Lauren X.
Topelsohn (“Topelsohn Cert.”), D.E. 57-4, Feb. 1,
2017, ¶ 16. Two accounts were used to bill for the
research performed. Id. Ms. Topelsohn, co-lead
counsel for Asta in this case, used her own Westlaw account
and was later reimbursed. Id. Ms. Topelsohn pays a
flat monthly fee to Westlaw, which she allocates among all
her clients according to the research required for each
litigation. Id. ¶ 17. The other Westlaw fees
relate to the use of Mandelbaum's Westlaw license.
Id. Similarly, this account pays a flat monthly rate
and is then allocated among clients based on the amount of
research done for their litigation. Id. The cost of
legal research performed in all six related actions amounts
to $13, 958.09. Id.
noted above, Mr. Neal opposes Asta's motion for fees and
costs in both his motion to strike and in the opposition that
he filed on August 25, 2017. In the motion to strike, Mr.
Neal does not challenge the amount of fees and costs
Petitioner seeks. Instead, his opposition alleges procedural
defects in Petitioner's motion. First, Mr. Neal argues
that he was not properly served with the Petitioner's
motion for fees and costs under Local Civil Rule 54.1,
because Asta submitted documents only via ECF and Respondent
had not consented to ECF service. Resp't Mot. at 3.
Relatedly, Mr. Neal alleges that Asta falsely swore that
service had been accomplished in accordance with the
Court's Order. Id. Second, Mr. Neal contends
that Asta did not comply with Local Civil Rule 54.1 because
Asta did not file a notice of motion within thirty days of
entry of judgment. Id. at 4. Third, Mr. Neal argues
that Neil Deutsch, a lawyer who provided a letter to Asta on
prevailing attorneys' fees rates, breached his fiduciary
duty to Mr. Neal, who was his former client on the same
matter. Id. at 5. Taking this letter as void, Mr.
Neal then contends that Asta did not adequately comply with
the Court's Order to provide letters from three attorneys
relating to the attorney fee rates. Id.
opposition filed on August 25, 2017, Mr. Neal offers four
reasons why the Court should generally deny Asta's
motion. Resp't Opp. at 2-3. First, Mr. Neal argues that
the arbitrator exceeded his authority in awarding fees
because the contract between Asta and NWS did not provide for
an award of fees, and under New Jersey law, “each party
bears their own attorney fees.” Id. at 2.
Second, Mr. Neal contends that Asta seeks an award of fees in
other unrelated actions where fees have not been awarded,
although Mr. Neal does not specify the unrelated actions to
which he refers. Id. Third, Mr. Neal contends that
Asta has committed fraud upon the Court by furnishing
testimony that Asta knew to be false. Id. at 2-3.
Specifically, Respondent argues that while Asta maintained it
received no valuable service from Sun Interactive Systems
(“Sun”), there are many emails demonstrating that
Asta and Sun worked closely together. Id. at 2.
Additionally, Mr. Neal asserts that Asta's contention
that he stole emails was false because Asta's own emails
show that Asta directed Mr. Neal to forward his work emails
to his personal email address so that he could render
assistance around the clock. Id. at 3. Fourth, Mr.
Neal contends that Asta consistently delayed proceedings by
filing baseless motions and failing to adhere to the Federal
Rules of Civil Procedure or the Local Civil Rules, and that
Asta should not be compensated for those derelictions.
Id. However, like his assertion that Asta seeks fees
and costs for unrelated actions, Mr. Neal provides little
specific information to identify the baseless motions and
Petitioner's Reply Papers
response to Mr. Neal's motion to strike, Asta asserts
that it made numerous efforts to serve the Respondents.
Resp't Opp. at 6. Regarding Neil Deutsch's submission
on prevailing rates, Asta represents that it did not know of
Neil Deutsch's previous relationship with the