RTI Connectivity Pte. v. Gateway Network Connections, LLC

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RTI CONNECTIVITY PTE. LTD., a Singapore private limited company and RUSSELL A. MATULICH, Plaintiffs, v. GATEWAY NETWORK CONNECTIONS, LLC, Defendant.

Civ. No. 22-00302 LEK-RT

United States District Court, D. Hawaii

June 29, 2023

ORDER: GRANTING DEFENDANT'S OBJECTION TO FINDINGS AND RECOMMENDATION TO GRANT PLAINTIFFS' MOTION FOR ATTORNEYS' FEES AND COSTS [DKT. 21]; REJECTING THE MAGISTRATE JUDGE'S F&R; AND DENYING PLAINTIFFS' MOTION FOR ATTORNEYS' FEES AND COSTS

Leslie E. Kobayashi, Judge.

On October 11, 2022, Plaintiff RTI Connectivity Pte. Ltd. (“RTI-C”) and Russell A. Matulich (“Matulich” and collectively “Plaintiffs”) filed their Motion for Attorneys' Fees and Costs (“Fee Motion”). [Dkt. no. 17.] On March 31, 2023, the magistrate judge issued the Findings and Recommendation to Grant Plaintiffs' Motion for Attorneys' Fees and Costs (“F&R”). [Dkt. no. 21.^[1] The magistrate judge recommended that the Plaintiffs' Fee Motion be granted in part and denied in part and that Plaintiffs be awarded $24,666.00 in attorneys' fees and $1,029.07 in general excise tax (“GET”), for a total award of $25,695.07. F&R, 2023 WL 3995480, at *7.

Before the Court is Defendant Gateway Network Connections, LLC's (“GNC” or “Respondent”) objection to the F&R (“Objection”), filed on April 14 2023. [Dkt. no. 22.] Plaintiffs filed their response to the Objection on April 28, 2023 (“Response”). [Dkt no. 23.] The Court has considered the Objection as a nonhearing matter pursuant to Rule LR7.1(d) of the Local Rules of Practice for the United States District Court for the District of Hawaii (“Local Rules”). GNC's Objection is hereby granted, and the F&R is rejected for the reasons set forth below. In light of those rulings Plaintiffs' Fee Motion is denied.

BACKGROUND

Plaintiffs originally filed their Motion for Expedited Order to Confirm and Enforce Pre-Award Ruling and Award of Arbitration Panel (“Motion to Confirm”) in state court on June 27 2022. See GNC's Notice of Removal, filed 7/11/22 (dkt. no. 1), Decl. of Randall C. Whattoff (“Whattoff Removal Decl.”), Exh. 1 (Motion to Confirm).^[2]Removal was based upon the Convention on Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. § 201, et seq., and diversity jurisdiction. See Notice of Removal at ¶¶ 7, 12.

When the Notice of Removal was filed, there was a hearing on the Motion to Confirm scheduled in the state court for July 21, 2022. See Whattoff Removal Decl., Exh. 2 (Notice of Court Date, filed 6/28/22 in the state court, and Amended Notice of Hearing Re Motion for Expedited Order to Confirm and Enforce Pre-Award Ruling and Award of Arbitration Panel, filed 6/30/22 in the state court). This Court initially scheduled a September 2, 2022 hearing on the Motion to Confirm. See Minute Order - EO: Court Order Setting Briefing Schedule, filed 7/12/22 (dkt. no. 5). This Court later granted Plaintiffs' motion to shorten time and advanced the hearing date to July 26, 2022. See Plaintiffs' Ex Parte Application to Advance Hearing on Plaintiffs' Motion for Expedited Order to Confirm and Enforce Pre-Award Ruling and Award of Arbitration Panel, filed 7/15/22 (dkt. no. 9) (“Motion to Advance Hearing”); Minute Order - EO: Order Granting Plaintiffs' Motion to Shorten Time, filed 7/15/22 (dkt. no. 10). The hearing on the Motion to Confirm was held by video-teleconference, see Minutes, filed 7/26/22 (dkt. no. 12), and on July 28, 2022, this Court issued the Order Granting Plaintiffs' Motion for Expedited Order to Confirm and Enforce Pre-Award Ruling and Award of Arbitration Panel (“7/28/22 Order”), [dkt. no. 13].^[3] In the 7/28/22 Order, this Court rejected GNC's argument that the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq., applied and concluded that Haw. Rev. Stat. Chapter 658A governed the Motion to Confirm. 2022 WL 2981518, at *5. This Court also concluded that: it had jurisdiction under Chapter 658A to consider a motion to confirm an interim award by the Arbitration Panel; id. at *6; even if the FAA applied, this Court would still have jurisdiction to review the 6/17/22 Interim Order; id. at *7; and the 6/17/22 Interim Order had to be confirmed under Chapter 658A, or under the FAA, if it applied, id. at *8-10.

Plaintiffs seek an award of attorneys' fees pursuant to Haw. Rev. Stat. § 658A-25(c), and they argue their

attorneys' fees and costs were necessarily incurred due to Defendant's tactical decision to remove the Motion to this Court, the need to move to advance the hearing date due to the nature and sensitivity of matters under the scope of the subject interim award, and all of the associated filings and proceedings.

[Fee Motion, Mem. in Supp. at 2.] Plaintiffs request $31,987.50 in attorneys' fees and $1,507.25 in GET, for a total award of $33,494.75. [Id. at 6.]

The magistrate judge concluded that an award of attorneys' fees under § 658A-25(c) was discretionary and found that a discretionary award of fees was warranted under the circumstances of this case. F&R, 2023 WL 3995480, at *2-3. In so finding, the magistrate judge stated

there is no explanation of the timing of Defendant's removal. Defendant's strategical decision to remove this case to federal court with only two days left on its deadline to respond to the Motion to Confirm in state court irrefutably caused Plaintiffs to have to seek an advancement of the hearing date in federal court, which resulted in additional work to move the hearing date and a truncated briefing schedule with no reply permitted.

Id. at *3 (emphasis in original).

In analyzing whether the requested fees were reasonable, the magistrate judge found that the requested hourly rates were excessive and reduced the rates. Id. at *5-6. The magistrate judge also found that some specific time entries had to be deducted or reduced because they were duplicative, improperly block-billed, or represented clerical work that was not compensable. Id. at *6-7. Thus, the magistrate judge recommended that Plaintiffs' Fee Motion be granted, insofar as Plaintiffs should be awarded $24,666.00 in attorneys' fees and $1,029.07 in GET, for a total award of $25,695.07. Id. at *7. The magistrate judge recommended that Plaintiffs' Fee Motion be denied to the extent that Plaintiffs seek an additional $7,799.68. Id.

In the Objection, GNC urges this Court to reject the F&R and deny Plaintiffs' Fee Motion because “GNC had a reasonable basis for opposing the Motion to Confirm; it did not act improperly in removing the case to federal court; and the Court made important clarifications to the Interim Award in its order confirming the award.” [Response at 3.] If this Court adopts the F&R's finding that a discretionary award of attorneys' fees is warranted in this case, GNC argues the amount of the award should be limited to $6,911.00, which represents the attorneys' fees that Plaintiffs incurred in connection with the Motion to Advance Hearing. See id. If this Court rejects that argument, GNC does not object to the magistrate judge's analysis of the amount of reasonable attorneys' fees to be awarded. See id. at 3 n.1.

STANDARD

When a party objects to a magistrate judge's findings or recommendations, the district court must review de novo those portions to which the objections are made and “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1); United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc) (“[T]he district judge must review the magistrate judge's findings and recommendations de novo if objection is made, but not otherwise.”). Under a de novo standard, there is no deference to the lower court's ruling; rather, the Court “freely consider[s] the matter anew, as if no decision had been rendered below.” Dawson v. Marshall, 561 F.3d 930, 933 (9th Cir. 2009) (alteration in original) (quotations omitted); Freeman v. DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006).

Bank of Haw. v. Plimpton, CIVIL NO. 22-00220 JAO-WRP, 2022 WL 17039239, at *1 (D. Hawai'i Nov. 17, 2022) (alterations and emphasis in Bank of Haw.).

DISCUSSION

Haw Rev. Stat. § 658A-25(c) states:

On application of a prevailing party to a contested judicial proceeding under section 658A-22, 658A-23, or 658A-24, the court may add reasonable attorney's fees and other reasonable expenses of litigation incurred in a judicial proceeding after the award is made to a judgment confirming, vacating without directing a rehearing, modifying, or correcting an award.

When interpreting § 658A-25 and other portions of Chapter 658A relevant to this case, this Court is bound by the decisions of the Hawai'i Supreme Court. See Trishan Air, Inc. v. Fed. Ins. Co., 635 F.3d 422, 427 (9th Cir. 2011).

Plaintiffs sought confirmation of the 6/17/22 Interim Order pursuant to Haw. Rev. Stat. §§ 658A-18, 658A-22, and 658A-25 see Motion to Confirm at 2 (dkt. no. 1-3 at PageID.12), and GNC opposed the motion, see GNC's Mem. in Opp. to Plaintiffs' Motion for Expedited Order to Confirm and Enforce Pre-Award Ruling and Award of Arbitration Panel [Dkt. 1-3], filed 7/21/22 (dkt. no. 11). Thus, this was “a contested judicial proceeding under section 658A-22,” and Plaintiffs are the prevailing party because their Motion to Confirm was granted. This Court concludes that it has the discretion to add an award of reasonable attorneys' fees to the judgment entered pursuant to the 7/28/22 Order. See Judgment in Civil Case, filed 8/22/22 (dkt. no. 15); see also In re Arb. Between United Pub. Workers, AFSCME, Loc. 646, AFL-CIO & Dep't of Transp. (“UPW v. Dep't of Transp.”), 149 Hawai'i 215, 221, 487 P.3d 302, 308 (2021) (“not[ing] that courts . . . have discretion to grant or deny requests for attorney's fees under” § 658A-25(c))....