Serin v. N. Leasing Sys., Inc.

MELINDA SERIN, et al. Plaintiffs, v. NORTHERN LEASING SYSTEMS, INC., et al. Defendants.

CASE NO. 7:06-CV-1625

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

April 19, 2011

OPINION & ORDER

[Resolving Doc. No. 141, 153]

JAMES S. GWIN, UNITED STATES DISTRICT JUDGE:

In this racketeering case, Plaintiffs move under 18 U.S.C. § 1964(c) and N.Y. Gen. Bus Law § 349 for an award of attorney's fees and costs. [Doc. 141; Doc. 150; Doc. 151.] The Defendants oppose the motion. [Doc. 152.] The Plaintiffs replied. [Doc. 149.]

On February 24, 2011, Magistrate Judge Paul Davison recommended that the counsel's fee application be granted and that the Court award $543,248 in fees and $43,006.46 in costs. [Doc. 153.] The Plaintiffs and Defendants both file objection to the Report and Recommendation. [Doc. 154; Doc. 155.] The parties' objections are both opposed. [Doc. 158; Doc. 160.] The Defendants also replied. [Doc. 161.]

For the following reasons, the Court GRANTS IN PART the petition and awards $594,359 in fees and $43,006.46 in costs and expenses.

I. Background

Plaintiffs Melinda Serin, Judson Russ, Long Sui Lim, Gordon Redner, Peri Kettler, and Thomas Smith filed this action in 2006, alleging violations of the civil Racketeering Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 (RICO) and state law claims for deceptive business practices. [Doc. 1.] On October 3, 2008 the Plaintiffs filed an amended complaint. [Doc. 26.] In the amended complaint, the Plaintiffs allege that Defendants Northern Leasing Systems, Inc. ("Northern Leasing"), Jay Cohen, Rich Hahn, and Sara Krieger engaged in a racketeering scheme by forging leases bearing the Plaintiffs' names and signatures and then commencing lawsuits against them in New York City Civil Court in an effort to extort money. [Id.] Defendant Northern Leasing finances equipment leases, including leases of credit card point-of-sale terminals. [Id.; Doc. 43 at 3.] Jay Cohen, Rich Hahn, and Sara Krieger are officers of Northern Leasing. [Doc. 26 at 2-3.] In their amended complaint, Plaintiffs sought $10 million in damages, as well as costs and attorney's fees. [Id. at 33.]

On December 18, 2009, the Court denied the Defendants' motion to dismiss in all respects. Serin v. Northern Leasing Systems, Inc., 2009 WL 7823216 (S.D.N.Y., Dec. 18, 2009). The Court set the case for trial on September 20, 2010, and later moved the trial due to November 15, 2010, due to scheduling conflicts. [Doc. 48; Doc. 95.] The case settled on the eve of trial and the Court held a brief hearing on November 15, 2010, during which the parties submitted a letter agreement setting forth the basic terms of the settlement. [Doc. 138.] As part of the settlement agreement, Judson Russ received $200,000, Melinda Serin received $25,000, Long Sui Lim received $45,000, Gordon Redner received $10,000, Thomas Smith received $15,000, and Peri Kettler received $0. In all, the Plaintiffs obtained a settlement in the amount of $295,000. [Id.]

In their current application for fees, the Plaintiffs seek $3,457,282 in attorney fees and $43,006.46 in expenses, for a total award of $3,499,974.04, payable jointly by all of the Defendants.[Doc. 142 at 34; Doc. 150 at 9; Doc. 153 at 1-2.] In breaking down the fee total, the Plaintiffs request: (1) $371,280 in fees for Attorney Krishnan Chittur (618.8 hours billed at $600/hour); (2) $220,650 in fees for Attorney Andrey Strutinskiy (637.2 hours billed at $350/hour, $222/hour, and $100/hour, depending on the work completed); (3) $5,616 in fees for Attorney Seth Lesser (8.5 hours billed at $666/hour); (4) $20,450.50 in fees for Attorney H. Rajan Sharma (58.43 hours billed at $350/hour); and (6) $247,477.50 in fees for the work of Attorney Keith Altman and the other attorneys at Finkelstein & Partners, LLP (582.3 hours billed at $425/hour). [Doc. 150 at 8-9; Doc. 153 at 2.] In their requested fee calculation, the Plaintiffs also utilize a multiplier - multiplying the fee total of $864,320.50 by four - which yields a total requested fee amount of $3,457,282. [Doc. 150 at 8-9; Doc. 153 at 2.] The Plaintiff says that these fees are fair and reasonable, given the time spent on the case, the complexity of the subject matter, the quality of the representation, and the risks involved in prosecuting the suit. [Doc. 142; Doc. 149; Doc. 150.] The Plaintiffs also request $43,006.46 in expenses. [Doc. 142; Doc. 150 at 8-9; Doc. 153 at 2.] The Defendants dispute this fee total, saying: (1) that only Northern Leasing is liable for fees under the settlement agreement; (2) that the Plaintiffs are not entitled to any fees as a matter of law; (3) that the fees requested are excessive and are not supported by the time records; and (4) that there is no justification for use of a multiplier. [Doc. 152; Doc. 155.]

On February 24, 2011, Magistrate Judge Paul Davison recommended that the Court grant the fee petition and award Plaintiffs' counsel $543,248 in fees and $43,006.46 in costs. [Doc. 153.] Through some combination of the parties' various objections, the parties object to almost every portion of the Report and Recommendation. [Doc. 154; Doc. 155; Doc. 158; Doc. 160; Doc. 161.] A district court may "accept, reject, or modify, in whole or in part, the findings or recommendationsmade by the magistrate judge." 28 U.S.C. § 636(b)(1). When a timely objection is made, the district court's review of the contested portions is de novo; otherwise, the district court may adopt the portions not objected to so long as they are not facially erroneous. Pizarro v. Bartlett, 776 F. Supp.2d 815, 817 (S.D.N.Y. 1991); La Torres v. Walker, 216 F. Supp.2d 157, 159 (S.D.N.Y. 2000).

In considering an adequate and fair amount of attorneys' fees, the Court will take into account, and also finds highly relevant, the necessity (or lack thereof) of many of the motions filed in this case. The parties spent the majority of their time squabbling over largely petty discovery disputes, many resulting from Defendants failure to provide timely and compliant discovery responses. Indeed, by the Court's count, the parties filed at least nineteen discovery disputes over a period of about eight months, necessitating thirteen Court orders, Court review of tens of thousands of allegedly privileged documents, and several phone conferences. Even after the November settlement hearing, the Court has entertained and ruled upon two disputes over the basic terms of the settlement (which the parties already had agreed upon in open court). Morever, the parties, particularly the Plaintiffs, have constantly peppered the Court with a variety of faxes and letters complaining about the other side's conduct. Often the Court felt as though it was refereeing a dispute between squabbling teenagers, rather than adjudicating a serious lawsuit in federal court.

These disputes were largely unnecessary, could have been resolved by the parties on their own, and generally wasted the Court's time. The parties, as well as the attorneys representing them, are equally to blame for the behavior. The Defendants have purposely engaged in dilatory tactics, disputing every discovery request of the Plaintiffs, even where that information was obviously discoverable under Federal Rule of Civil Procedure 26; similarly, the Plaintiffs objected any time the Defendants withheld information, even where it was clearly justified for the Defendants to doso. Considering the sum for which this case ultimately settled, if either side had used even a fraction of the energy spent fighting over discovery to meaningfully discuss settlement, the case surely have settled months earlier for a mere fraction of the total cost incurred litigating this suit.

II. Analysis

II.A Standard of Review for Attorney's Fees

Under 18 U.S.C. § 1964(c), a successful litigant to a RICO cause of action "shall recover . . . the cost of the suit, including a reasonable attorney's fee." 18 U.S.C. § 1964(c). In the Second Circuit, courts utilize the "presumptively reasonable fee" approach in calculating fees, rather than the older "lodestar" approach. Simmons v. New York City Transit Auth., 575 F.3d 170, 174 (2d Cir. 2009). Under the current approach, the reasonable fee is determined by multiplying the attorney's reasonable billing rate by the reasonable number of hours spent on the case. Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. Of Albany, 493 F.3d 110, 117-18 (2d Cir. 2007). In determining whether the rate and hours are reasonable, a court must "bear in mind all of the case-specific variable that [the Second Circuit] and other courts have identified as relevant to the reasonableness of the attorney's fees." Arbor Hill, 493 F.3d at 117. These factors include:

(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

Id. at 114 n.3; Hensley v. Eckerhart, 461 U.S. 424, 430 (1983). It is the burden of the applicant to establish entitlement to fees. Id. at 437.

Under New York State's deceptive business practices statute, a "court may award reasonableattorney's fees to a prevailing plaintiff." N.Y. Gen. Bus. L. § 349(h); Wilner v. Allstate Ins. Co., 893 N.Y.S.2d 208 (N.Y. App. Div. 2010). Unlike RICO, this statute is not mandatory and leaves discretion with courts to decide if an award of attorney's fees is appropriate. Riordan v. Nationwide Mut. Fire Ins. Co., 977 F.2d 47, 53-54 (2d Cir. 1992); Berkshire Fashions Inc. v. Sara Lee Corp., 729 F. Supp....