Adair v. State

301 Mich.App. 547

836 N.W.2d 742

ADAIR

v.State of MICHIGAN (ON FOURTH REMAND).

Docket No. 230858.

Court of Appeals of Michigan.

Submitted June 20, 2013, at Grand Rapids.

Decided July 9, 2013, at 9:05 a.m.

Secrest Wardle, Troy (by Dennis R. Pollard and Mark S. Roberts), for plaintiffs.

Bill Schuette, Attorney General, John J. Bursch, Solicitor General, Richard A. Bandstra, Chief Legal Counsel, and Timothy J. Haynes, Assistant Attorney General, for defendants.

Before: TALBOT, P.J., and SAAD and FORT HOOD, JJ.

ON FOURTH REMAND

TALBOT, P.J.

This original action to enforce the Headlee Amendment ¹ returns to us by virtue of our Supreme Court's May 24, 2013 order to articulate on the record our specific factual findings regarding the amount of attorney fees that are properly compensable for Phase II of these proceedings and to enter an award in favor of plaintiffs consistent with our findings. Adair v. Michigan, 494 Mich. 852, 830 N.W.2d 383 (2013). After our review of the record, the report of the special master, the objections of the parties, and the applicable caselaw, we direct plaintiffs to submit an amended statement of attorney fees that conforms to our decision.

REASONABLE ATTORNEY FEES

As we observed in Adair v. Michigan (On Third Remand), 298 Mich.App. 383, 391, 827 N.W.2d 740 (2012), rev'd in part 494 Mich. 852, 830 N.W.2d 383 (2013):

The party requesting an award of attorney fees bears the burden of proving the reasonableness of the fees requested. Smith [v. Khouri] 481 Mich. [519, 528, 751 N.W.2d 472 (2008) ] (opinion by Taylor, C.J.). Smith establishes an analytical framework to guide the lower courts in determining what constitutes a “reasonable fee.” In general terms, the Smith framework requires a trial judge to determine a baseline reasonable hourly or daily fee rate derived from “reliable surveys or other credible evidence” showing the fee customarily charged in the locality for similar legal services. Id. at 530–531, 537 . Once the trial judge has determined this hourly rate, the judge must multiply this rate by the reasonable number of hours expended in the case. The product of this calculation serves as the “starting point for calculating a reasonable attorney fee.” Id. at 531, 537 . Finally, the trial judge may make up-or-down adjustments to the fee after considering certain factors enumerated in Rule 1.5(a) of the Michigan Rules of Professional Conduct and Wood v. DAIIE, 413 Mich. 573, 321 N.W.2d 653 (1982), and any additional relevant factors. Smith, 481 Mich. at 529–531, 537 [751 N.W.2d 472] (opinion by Taylor, C.J.).

Because the instant case is one to enforce the provisions of the Headlee Amendment, we also take into consideration the intent of Const. 1963, art. 9, § 32, which is to reimburse the taxpayer for the costs of maintaining the suit, Macomb Co. Taxpayers Ass'n v. L'Anse Creuse Pub. Sch., 455 Mich. 1, 8–10, 564 N.W.2d 457 (1997), and the balancing of the need to reimburse the taxpayer who brought suit against the potential harm to state taxpayers who must pay the costs awarded, Durant v. Michigan, 456 Mich. 175, 213, 566 N.W.2d 272 (1997).

Finally, we take guidance from the admonition in Smith that the analytical framework it established

is not designed to provide a form of economic relief to improve the financial lot of attorneys or to produce windfalls. Rather, it only permits an award of a reasonable fee, i.e., a fee similar to that customarily charged in the locality for similar legal services, which, of course, may differ from the actual fee charged or the highest rate the attorney might otherwise command. [ Smith, 481 Mich. at 528, 751 N.W.2d 472] (opinion of Taylor, C.J.) (citations omitted).

“[R]easonable fees ‘are different from the prices charged to well-to-do clients by the most noted lawyers and renowned firms in a region.’ ” Id., quoting Coulter v. Tennessee, 805 F.2d 146, 149 (C.A.6, 1986).

REASONABLE HOURLY RATE

The Smith Court offered the following guidance with regard to determining the hourly rate customarily charged:

The reasonable hourly rate represents the fee customarily charged in the locality for similar legal services, which is reflected by the market rate for the attorney's work. “The market rate is the rate that lawyers of similar ability and experience in the community normally charge their paying clients for the type of work in question.” Eddleman v. Switchcraft, Inc., 965 F.2d 422, 424 (C.A.7, 1992) (citation and quotation [marks] omitted). We emphasize that “the burden is on the fee applicant 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.” Blum v. Stenson, 465 U.S. 886, 895 n. 11, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984). The fees customarily charged in the locality for similar legal services can be established by testimony or empirical data found in surveys and other reliable reports. But we caution that the fee applicant must present something more than anecdotal statements to establish the customary fee for the locality. Both the parties and the trial courts of this state should avail themselves of the most relevant available data. For example, as noted earlier, in this case defendant submitted an article from the Michigan Bar Journal regarding the economic status of attorneys in Michigan. [Smith, 481 Mich. at 531–532, 751 N.W.2d 472 (opinion by Taylor, C.J.) (citation omitted).]

Before the special master, A. David Baumhart, III, plaintiffs presented the testimony of Fred M. Mester, a retired Oakland Circuit judge, to establish a baseline reasonable hourly rate of compensation for each attorney seeking to recover a reasonable fee in this matter. According to Mester, consistently with Smith, he began by determining the customary fee charged in the locality for similar legal services. To make this determination, he examined the Economics of Law Practice in Michigan surveys published by the State Bar of Michigan for 2000, 2003, 2007, and 2010 to determine the market rate for the attorneys' work in this case. Mester disregarded the 2000 study as irrelevant because the survey was published before this case commenced and because the data contained in the survey “look[ed] backwards[.]” He did consider the 2003 and 2007 surveys, but found the 2010 survey most useful and, thus, gave more weight to the 2010 survey to guide his calculations because the 2010 survey results were based on a larger sampling of lawyers and law firms. Nevertheless, he used the results of the 2003 and 2007 surveys to lower his baseline hourly rate calculation. Next, Mester concludedthat the applicable area of practice for calculating a market rate was appellate practice

because appellate law is basically what this case is all about. The case of originaljurisdiction was in the appellate courts. The matter was before the Supreme Court on at least three different occasions. We know that all appellate matters have another basic foundation in law that has to start the case at the trial level, but this matter dealt basically with appeals and argument before the Court of Appeals and Supreme Court of the State of Michigan.

After deciding that the appellate practice was the applicable area of practice, he reviewed the 2010 survey and learned that the mean hourly rate for the appellate field of practice was $259; that the mean hourly rate for Oakland County, where the offices of plaintiffs' attorneys were located, was $254; that the mean hourly rate for law firms located in Oakland County south of M–59 was $260; and that the mean hourly rate for law firms of a comparable size was $292. He averaged these means and arrived at an average mean hourly rate of $266. After he made these calculations, Mester concluded that a $250–an–hour rate would be an appropriate hourly base rate for all eight attorneys who billed hours in this case.

Mester did not determine the reasonableness of the hours billed, however, which is the second step of the Smith framework, because he was not asked to do so by plaintiffs and because he “didn't see that as my responsibility.” Rather, he proceeded to the third step of the Smith framework. Mester concluded that there were numerous considerations that warranted an upward adjustment of the hourly rate for Dennis Pollard, Richard Kroopnick, and William P. Hampton, attorneys for plaintiffs. These considerations included the outstanding quality of work exhibited by these attorneys in this case and other cases over the course of their respective careers, the professional standing of these attorneys, the reputation of Pollard and Kroopnick as pertains to Headlee matters, the length and complexity of the case, the extensive discovery and briefing needed, their having obtained a declaratory judgment that resulted in a $25 million appropriation by the Legislature, the incurring of $200,000 in costs that the attorneys “carried,” ² and the length of the attorneys' relationship with the school districts, which dated back to the 1970s. With these considerations in mind, Mester adjusted the $250 hourly rate upward to $450 an hour for Pollard, Kroopnick, and Hampton. He made no adjustment to the $250 hourly rate for the remaining five attorneys who assisted Pollard and Kroopnick: Kari Costanza, Mark Roberts, Daniel Villaire, Robert Schindler, and Matthew Drake.

We find the testimony of Mester to be unhelpful, as did the special master, and, therefore, we disregard his testimony. As observed in Smith, the market rate for an attorney's work is the rate that lawyers of similar ability and experience in the community normally charge their paying clients for the type of work in question. Smith, 481 Mich. at 531, 751 N.W.2d 472 (opinion of Taylor, C.J.). Smith directs that the market rate for an attorney's work be determined separately for each attorney who seeks to recover a...