Kindle v. Dejana

308 F.Supp.3d 698

Linda J. KINDLE and Michael Brewley, Plaintiffs,

v.Peter DEJANA, John Sipala, Saddle Creek, LLC, William F. Wynperle, Jr., Atrium Management Services, Inc., Administrative Committee for the Atrium Management Services, Inc. Employee Stock Ownership Plan, Atrium Funding LLC and Atrium Management Services, Inc. Employee Stock Ownership Plan, Defendants.

No. CV 14–6784 (SJF) (ARL)

United States District Court, E.D. New York.

Signed April 12, 2018

Daniel Mark Feinberg, Todd Jackson, Feinberg Jackson Worthman & Wasow LLP, Oakland, CA, Mason Adams Barney, Aaron Siri, Siri & Glimstad LLP, New York, NY, for Plaintiffs.

John Hoover Snyder, John H. Snyder PLLC, Lauren Nicole Rader, Nicole Joy Leibman, Sills Cummis & Gross P.C., New York, NY, Michael J. Geraghty, Sills Cummis & Gross P.C., Newark, NJ, for Defendants.

MEMORANDUM AND ORDER

FEUERSTEIN, District Judge

I. INTRODUCTION

Plaintiffs Linda J. Kindle and Michael Brewley brought this class action on behalf of themselves and other similarly situated participants in the Atrium Management Services, Inc. Employee Stock Ownership Plan (the "ESOP") who received an allegedly deficient cash distribution following the ESOP's termination on July 1, 2011.¹ Plaintiff alleges that Defendants Peter Dejana ("Dejana"), William F. Wynperle, Jr., Atrium Management Services, Inc. ("Atrium"), Administrative Committee for the Atrium Management Services, Inc. Employee Stock Ownership Plan (the "ESOP Committee"), John Sipala, and Saddle Creek, LLC ("Saddle Creek") (John Sipala and Saddle Creek, collectively the "Sipala Defendants") breached their fiduciary duties to Plaintiffs and other ESOP participants in connection with the valuation and sale of ESOP assets, in violation of Section 404 of the Employee Retirement and Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1104, 1132. Plaintiffs also allege that all Defendants violated Section 406 of ERISA, 29 U.S.C. § 1106, which prohibits certain interested-party transactions, in connection with the same sale and purchase of ESOP assets. See generally Second Amended Class Action Complaint ("SAC") [DE 72]. Following the parties' cross-motions for summary judgment, both of which were denied, see DE 120, the case proceeded to a bench trial. On September 5, 2017, during the first day of testimony, the parties entered into a stipulation which was placed on the record. See also DE 150–5 (Trial Transcript). The terms of the stipulation, in part, provided for the appointment of a Special Master to provide a neutral valuation of the "fair market of a 100% ownership interest in Atrium as of December 30, 2011." DE 150–4 (Report of Special Master); see DE 150–5. Following the Special Master's valuation, see DE 149, the Plaintiff filed the instant motion seeking attorneys' fees and costs. DE 150. Defendant Dejana opposes the motion, in part. See DE 151. For the reasons that follow, Plaintiff's motion is GRANTED, in part, and DENIED, in part, in accordance with this Memorandum and Order.

II. PLAINTIFF'S MOTION FOR ATTORNEYS' FEES & COSTS ²

A. Applicable Law

1. Attorneys' Fees

Both the Second Circuit and the Supreme Court have held that "the lodestar method—the product of a reasonable hourly rate and the reasonable number of hours required by the case—creates a 'presumptively reasonable fee.' " Millea v. Metro–North R.R. Co. , 658 F.3d 154, 166 (2d Cir. 2011) (quoting Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cty. of Albany , 522 F.3d 182, 183 (2d Cir. 2007) ). Generally, courts should determine the "presumptively reasonable fee" by looking to "what a reasonable paying client would be willing to pay." Arbor Hill , 522 F.3d at 183–84.

"[W]hether the calculation is referred to as the lodestar or the presumptively reasonable fee, courts will take into account case-specific factors to help determine the reasonableness of the hourly rates and the number of hours expended." Pinzon v. Paul Lent Mechanical Sys. , No. 11 Civ. 3384, 2012 WL 4174725, at *5 (E.D.N.Y. Aug. 21, 2012), adopted by 2012 WL 4174410 (E.D.N.Y. Sept. 19, 2012). These factors include:

[T]he complexity and difficulty of the case, the available expertise and capacity of the client's other counsel (if any), the resources required to prosecute the case effectively (taking account of the resources being marshaled on the other side but not endorsing scorched earth tactics), the timing demands of the case, whether an attorney might have an interest (independent of that of his client) in achieving the ends of the litigation or might initiate the representation himself, whether an attorney might have initially acted pro bono (such that a client might be aware that the attorney expected low or non-existent remuneration), and other returns (such as reputation, etc.) that an attorney might expect from the representation.

Arbor Hill , 522 F.3d at 184. "The party seeking reimbursement of attorneys' fees must demonstrate the reasonableness and necessity of hours spent and rates charged." Finkel v. Omega Comm'n Svcs., Inc. , 543 F.Supp.2d 156, 164 (E.D.N.Y. 2008) (citing New York State Ass'n for Retarded Children, Inc. v. Carey , 711 F.2d 1136 (2d Cir. 1983) ).

In determining what constitutes a reasonable hourly rate, courts in this Circuit generally adhere to the forum rule, which states that a district court should generally use the prevailing hourly rates in the district where it sits. See Restivo v. Hessemann , 846 F.3d 547, 590 (2d Cir. 2017), cert. denied , ––– U.S. ––––, 138 S.Ct. 644, 199 L.Ed. 2d 528 (2018) ; Simmons v. N.Y. City Transit Auth. , 575 F.3d 170, 175–76 (2d Cir. 2009) ; Polk v. N. Y. State Dep't of Corr. Servs. , 722 F.2d 23, 25 (2d Cir. 1983) ; see also Joseph v. HDMJ Restaurant, Inc. , 970 F.Supp.2d 131, 155 (E.D.N.Y. 2013) (internal citations omitted). "Courts in the Eastern District of New York [typically] award hourly rates ranging from $200 to $450 per hour for partners, $100 to $300 per hour for associates, and $70 to $100 per hour for paralegals." Houston v. Cotter , 234 F.Supp.3d 392, 402 (E.D.N.Y. 2017) (quoting D'Annunzio v. Ayken, Inc. , No. 11-CV-3303, 2015 WL 5308094, at *4 (E.D.N.Y. Sept. 10, 2015) ); United States ex rel. Joseph F. Tommasino, P.A., PhD v. Guida , No. 10 CV 4644, 2017 WL 878587, at *3 (E.D.N.Y. Mar. 6, 2017) ; Small v. New York City Transit Auth. , No. 09 Civ. 2139, 2014 WL 1236619, at *5 (E.D.N.Y. Mar. 25, 2014) (internal quotations omitted).

Notwithstanding application of the forum rule and in light of the numerous factors that courts in this circuit consider to determine a reasonable hourly rate, "the range of 'reasonable' attorney fee rates in this district varies depending on the type of case, the nature of the litigation, the size of the firm, and the expertise of its attorneys." U.S. ex rel. Joseph F. Tommasino, P.A., PhD, et al. v. Guida , No. 10-cv-4644, 2017 WL 878587, at *3 (E.D.N.Y. Mar. 6, 2017) (quoting Siracuse v. Program for the Dev. of Human Potential , No. 07-CV-2205, 2012 WL 1624291, at *30 (E.D.N.Y. Apr. 30, 2012) ). Moreover, the Second Circuit has explicitly authorized district courts to utilize "an out-of-district hourly rate—or some rate in between the out-of-district rate sought and the rates charged by local attorneys—in calculating the presumptively reasonable fee if it is clear that a reasonable, paying client would have paid those higher rates." Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cty. of Albany & Albany Cty. Bd. of Elections , 522 F.3d 182, 191 (2d Cir. 2008) (recognizing that "where circumstances have warranted it, we have not insisted on strict adherence to the forum rule"). Therefore, the forum rule's presumption concerning the range of reasonable rates within the district "may be rebutted—albeit only in the unusual case—if the party wishing the district court to use a higher rate demonstrates that his or her retention of an out-of-district attorney was reasonable under the circumstances as they would be reckoned by a client paying the attorney's bill." Id. ; Restivo , 846 F.3d at 590 ("[T]o rebut the presumption that the forum rule applies, the party seeking higher fees 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").

As to whether the hours expended by counsel are reasonable, the Court must "use [its] experience with the case, as well as [its] experience with the practice of law, to assess the reasonableness of the hours spent ... in a given case." Fox Indus., Inc. v. Gurovich , No. 03 Civ. 5166, 2005 WL 2305002, at *2 (E.D.N.Y. Sept. 21, 2005) (quoting Clarke v. Frank , 960 F.2d 1146, 1153 (2d Cir. 1992) ). A court should "exclude hours that were 'excessive, redundant, or otherwise unnecessary' to the litigation ...." Cho v. Koam Medical Servs. P.C. , 524 F.Supp.2d 202, 209 (E.D.N.Y. 2007) (quoting Hensley v. Eckerhart , 461 U.S. 424, 434, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983) ); Barbu v. Life Ins. Co. of N. Am. , No. 12-CV-1629, 2015 WL 778325, at *4 (E.D.N.Y. Feb. 24, 2015). Likewise, where counsel relies on vague / excessive entries or block billing practices which make it difficult for a court to assess reasonableness, an across-the-board fee reduction is warranted. Anderson v. Cty. of Suffolk , No. CV 09-1913, 2016 WL 1444594, at *6 (E.D.N.Y. Apr. 11, 2016) (recognizing that where "counsel relies on vague entries and block billing, courts are unable to review hours for reasonableness" and noting that "[c]ourts have imposed reductions as high as 40% based solely on vague billing entries"); see Barbu , 2015 WL 778325, at *5 (imposing a 33% reduction in total hours based upon vague entries and block billing); Caban v. Employee Sec. Fund of the Elec. Products Indus. Pension Plan , No. 10-CV-389, 2015 WL 7454601, at *8 (E.D.N.Y. Nov. 23, 2015) (33% reduction in overall hours spent due to...