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Taylor v. Chaing

February 23, 2009


The opinion of the court was delivered by: Gregory G. Hollows U.S. Magistrate Judge


Introduction and Summary

"Plaintiffs seek a total adjusted award of $5,449,826.72 for their interim fees and expenses incurred to date." Plaintiffs' Reply Memorandum...Interim Fee Award (filed December 12, 2008) at 11. If granted, the "interim" fees award would constitute one of the highest fee awards ever awarded by this district. In light of Ninth Circuit precedent which requires a reasoned explanation for the award of fees, substantial work must be put into these Findings and Recommendations.

The overarching defect in plaintiffs' interim fees application is the number of hours claimed. Plaintiffs' attorneys seek recompense for over 7,000 hours, thus far in the litigation, not counting paralegal hours. In contrast, defendants' total hours expended thus far total a little over 2,000. Johansen Decl., docket # 200, ¶ 3. There is simply no justifiable reason for this 5000 hour discrepancy except for the excessive, at times grossly excessive, over billing by plaintiffs.*fn1

Chronology of the Case

The chronology of the case through remand to this court for calculation of interim attorneys' fees is well set forth in the Ninth Circuit opinion, Taylor v. Westley/Chiang, 525 F.3d 1288, 1289 (9th Cir. 2008). It is repeated here because the context of the proceeding is important to understand in determining the reasonableness of fees.

This controversy has been the subject of extensive litigation in the district court and has generated two prior appeals. In both the prior appeals, plaintiffs prevailed. In the first appeal, we determined that the State of California did not have the sovereign immunity that it claimed. See Taylor v. Westly (Taylor I ), 402 F.3d 924, 936 (9th Cir. 2005). In the second appeal, we concluded that the State's procedures for protecting the rights of owners of property in its escheat process were unconstitutional. See Taylor v. Westly (Taylor II ), 488 F.3d 1197, 1201-02 (9th Cir.2007). We required the district court to enjoin operation of the California escheat process and suggested that the district court require court approval of curative regulations. See id. at 1202.

After the plaintiffs had won these two victories on appeal, the district court issued a preliminary injunction pursuant to our mandate. The State then eliminated the statutory and administrative procedure that we had determined to be unconstitutional. The State promulgated an entirely new statutory procedure addressing escheat. See Cal.Code Civ. P. § 1501.5(c) (West 2008); see also id. at §§ 1531, 1531.5, 1532, 1563, 1565. Concluding that the amendments remedied the constitutional defects we identified in Taylor II, the district court granted the Controller's motion to dissolve the injunction.

In its most recent decision, May 12, 2008, the Ninth Circuit determined that the district court was correct in dissolving the injunction when defendants' procedures had been legislatively/administratively rectified to comport with due process, although the Ninth Circuit stated that its opinion in this matter was preliminary. With the specter of further proceedings in the district court, the Ninth Circuit directed the district court to award interim attorneys' fees:

The discrete stage of this litigation that plaintiffs won is over, because of the permanent change in the law that plaintiffs forced upon the State of California through the appeals and consequent injunction. Because of the magnitude of this case, and the disparity in litigation resources between parties, failure to award interim fees would create a considerable risk of starving out plaintiffs with what we have already determined to be good claims. The district court is directed to award interim attorney's fees for plaintiffs' work in the district court and in this Court regarding the challenge to California's old escheat statute.

With regard to these consolidated appeals, the plaintiff has lost the appeal addressing the dissolution of the preliminary injunction, but won the appeal addressing interim attorney's fees. The district court is directed to award interim attorney's fees for the work in district court and in this Court regarding the attorney's fees matter. We do not address calculation of reasonable attorney's fees, and leave that to the district court, to be resolved with such evidence, hearings, and testimony, as the district court may reasonably deem appropriate.

Id. at 1290 (emphasis added).

Fees and expense would be awardable under 42 U.S.C. § 1988.

Chronology of the Interim Fees Motion -- Post-Remand

The Ninth Circuit decision as set forth in part above was issued, as noted on May 12, 2008. Immediately thereafter, the Honorable William B. Shubb commenced a hearing on the issue of attorneys' fees, and decided to refer it to the undersigned on June 16, 2008. On June 27, 2008, the undersigned asked for status reports which were filed on July 8 and 11, 2008. On July 22, 2008, a scheduling order was issued which in part required further initial filings by plaintiffs and set forth a discovery schedule, if defendants opted for some discovery. On August 12, 2008, the district court received the mandate of the Ninth Circuit to commence what had already been commenced in respect to deciding interim attorneys' fees.

Defendants opted to perform limited paper discovery. The final motion concerning that discovery was held on November 12, 2008, and resolved that day as well (written order issued November 19, 2008). The parties were tasked with filing final papers on the merits in December of 2008; because of perceived additions of new material in plaintiffs' papers, the last filing on the merits did not occur until January 5, 2009.


The issues herein involve traditional ones usually seen in attorneys' fees motions, as well as issues unique to this litigation. The court responds to the issues as follows.

A. Whether a Non- Member of the California Bar, or of This Court, May Recover Attorneys' Fees*fn2

Defendants object to any recovery of fees by counsel Daniel Culhane on the basis that Mr. Culhane is not a member of the California bar or the bar of this court. Ninth Circuit case law, prior to February 17, 2009, interpreting Birbrower, Montalbano etc . Superior Court, 17 Cal. 4th 119, 70 Cal. Rptr. 2d 304 (1998) directed a conclusion in defendants' favor, but only insofar as Mr. Culhane's activities were directed at "practice" while the case resided in the district court as opposed to the Ninth Circuit. On February 17, 2009, the Ninth Circuit, with Judge Rymer dissenting, decided Winterrowd v. American General, __F.3d__, 2009 WL 367696 (9th Cir. Feb. 17, 2009), and found that an attorney, very similarly situated to Mr. Culhane, i.e., not a member of the California bar, but authorized to practice in another state, was entitled to be awarded attorneys' fees in a California case for the non-appearance-in-court writing and research, and other legal activities. But for the provision in the Local Rules of the Eastern District of California, expressly making applicable to attorneys before it, all the rules of professional conduct extant in the State of California, Winterrowd would control.

There is no dispute that Mr. Culhane is not a member of the State Bar of California, nor has he been admitted to practice before this court. He does state in his declaration that he is admitted to the Colorado bar and is inactive in the District of Columbia bar. Declaration filed July 31, 2008. He also states that he has been admitted to practice before the Ninth Circuit; however, to the best of the undersigned's knowledge, he has made no actual appearance there in this case.*fn3 Mr. Culhane also declares that he has "worked as associate counsel in this case with William Palmer, attorney of record for Plaintiffs herein." After touting his experience, Mr. Culhane declares: "I collaborate closely with William W. Palmer, who supervises all of my work in this case." Mr. Culhane declares that he "is a member" of Mr. Palmer's firm. Mr. Palmer, in his July 31, 2008 declaration at para. 5 stated that Mr. Culhane "joined his firm and began working on the case under his supervision." Mr. Culhane never considered to be admitted pro hac vice until recently when his ability to recover attorneys' fees were at issue.

California law would seem to be important in deciding whether fees can be awarded for district court related activities in that the local rule in the Eastern District requires California bar membership for admission to the Eastern District bar with exceptions not pertinent here. E.D. Cal. Local Rule 83-180(a):

Admission to the Bar of this Court. Admission and continuing membership in the Bar of this Court are limited to attorneys who are active members in good standing of the State Bar of California.

Moreover, and unlike the local rule at issue in Winterrowd ,the court has made applicable the attorney professional conduct rules otherwise applicable in the State of California. E.D. Cal. Local Rule 83-180(e): expressly adopting the "standards of professional conduct required of members of the State Bar of California and contained in the State Bar Act, the Rules of Professional Conduct of the State Bar of California and decisions of any Court applicable thereto."

If the "practice of law" were limited under California rules to affirmative appearances in court, either in writing or person, Mr. Culhane's advice to his clients and ghost writing on behalf of Mr. Palmer would be of no import. However, California law is to the contrary, and includes legal research performed in a case, brief writing, and written or oral advice to clients in California even without appearing in court. Birbrower, 17 Cal. 4th at 128, 70 Cal. Rptr. 2d at 308. See also id. at 129, 70 Cal. Rptr.2d 309: "If we were to carry the Dissent's narrow interpretation of the term "practice law" to its logical conclusion, we would effectively limit section 6125's [unauthorized practice of law] application to those cases in which non-licensed out-of-state lawyers appeared in a California courtroom without permission." Further, "'No one may recover compensation for services as an attorney at law in this state unless [the person] was at the time the services were performed a member of the State Bar.'" Id. at 127, 70 Cal. Rptr. 2d at 308.

The Ninth Circuit has adopted Birbrower's rule for cases in which admission to the State Bar is required. In Z.A. v. San Bruno Park Sch. Dist, 165 F.3d 1273 (9th Cir. 1999), a non-California admitted attorney represented a client in an IDEA (special education) state administrative proceeding. As is the case here, the non-California attorney had been admitted to the bar of a federal court (N.D. Cal.), which at the time did not require state bar membership. When attorneys' fees for that proceeding were denied, the client brought suit in federal court seeking attorneys fees for the lawyer. The Ninth Circuit, relying on Birbrower held: " A person is or is not licensed to practice law in a particular forum. There is no half-way. If not licensed, one cannot practice in that forum, and cannot charge, or receive attorney's fees for such services under penalty of criminal law." Id. at 1276. (Emphasis added)

Similarly, in Shapiro etc. v. Paradise Valley Unified, 374 F.3d 857 (9th Cir. 2004), another fee shifting IDEA case, the Ninth Circuit refused to permit fees accruing from a state administrative hearing even though opposing counsel had "consented" to participation by the non-admitted attorney. No fees were to be authorized until the attorney had made a bona fide and approved application to be admitted pro hac vice.

However, in Winterrowd, the Ninth Circuit refused to find that an Oregon attorney, who had simply advised his son at length and reviewed pleadings, concerning a litigation pending in the Central District of California, was subject to the rules or case law of California when the case was pending in a federal court. Winterrowd emphasized that Birbrower itself had found that California law did not apply per force to practice in federal court. 2009 WL 367696, *4. It also found that the mere California State Bar admission requirement imposed by the Central District did not mean that all of California law applied to the practice of law in federal court. Id. At *4 (n.1). There was nothing before the Winterrowd court, however, akin to the Eastern District rule which expressly adopted the standards and case law applicable to attorney practice. This makes all the difference.

Winterrowd relied on In re Poole, 222 F.3d 618, 620 (9th Cir. 2000) for the directive that California law cannot control practice before the federal courts. Moreover, as Birbrower found: "The Act [unauthorized practice of law statute] does not regulate practice before United States Courts." Birbrower, 17 Cal. 4th at 130, 70 Cal. Rptr. 2d at 310. That is, the Act does not regulate practice unless the federal court itself requires adherence to the California law. Poole emphasized that the rules of practice before federal courts are governed by the local rules of that court: "Pursuant to their exclusive authority over members of their bar, federal courts have promulgated local rules pertaining to admission and discipline." Poole, 222 F.3d at 621. The Eastern District has promulgated such rules, and unlike many other districts, has directed that California law is to apply to its practice before this federal court.

Nor is this local rule simply some hortatory guidance. "Local rules are 'laws of the United States.' United States v. Hvass, 355 U.S. 570, 575, 78 S.Ct. 501, 504, 2 L.Ed.2d 496 (1958)." Marshall v. Gates, 44 F.3d 722, 724 (9th Cir. 1995). It will simply not do here to disregard the plain language of the Eastern District local rule which adopts California law, even its case law, as the rules of practice.

And, Mr. Culhane is not a complete stranger to this court. Like the attorney in San Bruno, Culhane has filed declarations in federal court advising the court as to the proper hourly rate and why plaintiffs were fully successful on their federal law claim. Through plaintiffs, he has requested the court to award him attorneys' fees for the work performed in this California case. If the Eastern District, through its express adoption of California law, cannot regulate this attorney, it is tantamount to holding that a federal court may not adopt state law as its rule of practice. Until such time as such a holding is directed, the undersigned will not argue with California law defining what constitutes the practice of law.

Winterrowd observed that Birbrower had referenced the Court of Appeal opinion in the state case to the effect that it had distinguished the situation from Birbrower where an outof-state attorney was working with a California bar member. And, California law does permit such activity by an out-of-state lawyer in limited circumstances. Cal. Rule of Court 9.47. However, the undersigned is not persuaded that being "supervised" by Mr. Palmer permits Mr. Culhane to practice law in California. Cal. Rule of Court 9.47, which allows supervision of out of state attorneys doing legal work in California in limited circumstances (both temporally and substantively) is not sustainable here. The requirements of subsection(b), which are conjunctive, requires that the supervised attorney be "already" representing the client for whom services are to be given, except in the situation where a prospective client is attempting to determine whether to retain the out-of-state attorney. Cal. Rule of Court 9.47(b)(2). This, of course is not the case here. An affirmative statement that the out-of-state attorney is not a member of the California Bar is required to be made on the webpage of either the supervising attorney or supervisee, § 9.47(b)(3). Such has not been done here. See Court Attachment A to these Findings and Recommendations which is the introductory page to the Palmer Law Group. The out-of-state, supervised attorney must not establish a "systematic or continuous presence in California for the practice of law," § 9.47(d), nor may the attorney "regularly engage in substantial business or professional activities in California," § 9.47(d)(5). Mr. Palmer states that Mr. Culhane has "joined his firm," and as the website attests, there are no limitations on that joinder. Mr. Culhane declares that he "is a member" of Palmer's California firm. One cannot reasonably argue that being a member of, and working on behalf of, the California firm is not a systematic or continuous presence in California. In addition, Mr. Culhane's fees in this matter exceed one million dollars incurred over the course of years; no reasonable argument can be made that such activities are not a "substantial" and "regular" business activity in California. "Supervision" is not a tool by which non-admitted attorneys may avoid admission requirements for an omnibus practice in California.*fn4

Having determined that California law governs the outcome here, the undersigned explores the one other exception set forth in Winterrowd which might allow Culhane to be compensated for all hours. The first is whether Culhane "would certainly have been permitted to appear pro hac vice as a matter of course had he or she applied," citing Spanos v. Skouras, 364 F.2d 161, 168 (2nd Cir. 1966). Winterrowd, 2009 WL 367696 *6. First, this dicta in Winterrowd (the Winterrowd panel did not ultimately base its decision on pro hac vice) would appear to be inconsistent with Shapiro, supra, in which the attorney was not awarded fees until he actually had made a pro hac vice application and was approved. Assuming that the two decisions are nevertheless not in conflict, it is far from certain that Culahne would have been permitted to appear pro hac vice in that the Eastern District local rules deny this ability if the appearing lawyer is regularly employed in California, or is regularly engaging in professional activities in California. E.D. Cal. Rule 83-180(b)(2). Again, not only is Mr. Culhane a "member of the [California] firm," and hence "regularly employed" in California, he also substantially practices in California as attested by his appearance and work in other escheat litigations around the state.

There are several reasons why Mr. Culhane's attorney work should not be compensated for fees accruing at the district court level. As "associate counsel," and "a member of the firm," Mr.Culhane is not some type of paralegal, or low level attorney tasked with routine legal work or research, performed at the request of the senior partner. Moreover, hiring an outof-state attorney to perform over $1,000,000,000 in legal work is not the type of "expense" which would ever be approved under § 1988. While in infrequent cases involving esoteric subjects such as foreign law, an attorney could act as an expert witness and be compensated as such, the present case is not one of them. Moreover, being an expert is different than simply taking on the attorney's mantle and performing as any litigation counsel would. Indeed, a need to seek over a million dollars worth of advice and writing from a counsel not of record would undercut the litigation counsel's request for a high hourly fee. One should not obtain premium rates if one is not up to the legal task at hand.

However, defendants are incorrect in arguing that all of Mr. Culhane's fees should be disallowed. As set forth above, the Eastern District requires such adherence, and requires State Bar admission; however, the Ninth Circuit does not. Ninth Circuit Rule 46(a). And, Mr. Culhane is a member of the Ninth Circuit bar. Mr. Culhane's activities directed to the Ninth Circuit are compensable; those directed to the district court are not. Thus, all Culhane hours expended at any time an appeal was pending (from notice of appeal to disposition) will be compensated as otherwise appropriate; all other hours expended will not.

The court finds that Mr. Culhane should not be permitted to recover fees for work directed at the district court level. However, in the event that the undersigned has relied too much on the Eastern District rules as the critical distinction between Winterrowd and this case, the better methodology would be to rule both ways -- the proper hours should Mr. Culhane not be permitted to practice before the district court, and the proper hours should Mr. Culhane be fully authorized to practice. In this way, a reviewing court would not have to remand the matter should the undersigned be in error.

B. General Computational Methodology

As a preliminary matter, the court notes that plaintiffs' counsel bears the burden of supporting his request for fees and costs. Fischer v. S.B. P.D. Inc., 214 F.3d 1115, 1121 (9th Cir. 2000).

This circuit uses the "lodestar" method of calculating attorneys' fees -- the court multiplies a "reasonable" hourly rate by the number of hours "reasonably" expended in the litigation. Widrig v. Apfel, 140 F.3d 1207, 1209 (9th Cir. 1998) (citing Hensley v. Eckerhart, 461 U.S. 424, 433 103 S.Ct. 1933, 1939 (1983)). This lodestar amount is presumptively "reasonable," and ordinarily constitutes the first (and last) prong of the analysis. See Morales v. City of San Rafael, 96 F.3d 359, 363 n. 9 (9th Cir. 1996), amended on other grounds, 108 F3d 981 (9th Cir. 1997). The court also, however, may conduct a second prong of the fee analysis by considering whether recovery of the lodestar amount is "reasonable" in light of twelve factors which may counsel in favor of adjusting the lodestar calculation. See Fischer v. SJB-P.D. Inc, 214 F.3d 1115 (9th Cir. 2000); Kerr v. Screen Extras Guild, Inc., 526 F.2d 67 (9th Cir. 1975).

The twelve Kerr factors are:

(1) the time and labor required, (2) the novelty and difficulty of the questions involved, (3) the skill requisite to perform the legal service properly, (4) the preclusion of other 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 70.

If the Court considers the Kerr factors, it may not "double count" any factor used to adjust the first prong determination of "reasonable" hours times "reasonable" rate. See Corder v. Gates, 947 F.2d 374, 377 (9th Cir. 1991). For example, if in computing the lodestar, the court reduced the attorney hours expended in light of the results obtained, the court may not again consider, in summary fashion, results obtained to reduce further the resulting computation. See, e.g. Chalmers v. City of Los Angeles, 796 F .2d 1205, 1210 (9th Cir.1986) reh'g denied, amended on other grounds, 808 F.2d 1373 (9th Cir.1987) (to the extent the Kerr factors are not addressed in calculating the lodestar, they may be considered in determining whether the fee award should be adjusted upward or downward, once the lodestar has been calculated). The Ninth Circuit prefers that any Kerr adjustments be made when computing the reasonable hours expended, and not in any summary second prong. Morales, 96 F.3d at 364; Gates v. Deukmejian, 987 F.2d 1392, 1404 (9th Cir. 1992).

Boiled down to its real essence, and within the parameters discussed above, there are two major reasonableness inquiries vis-a-vis hours spent on a litigation: (1) without regard to adequate success, is the actual time spent on an activity(s) that which would be spent by a competent attorney, and (2) assuming that the hours spent were necessary, i.e., unavoidable in the litigation, did the level of success obtained justify the expenditure of the otherwise necessary hours.*fn5 These reasonableness criteria do not overlap, do not apply to the same considerations, and are not a duplicative deduction when made. The first, for example, would go to determining whether 80 hours was necessary to draft an opposition to summary judgment, regardless of the level of success in the lawsuit ultimately obtained (did the attorney waste or pad time); the second goes to determining whether the reasonable amount of time spent on litigation activities as a whole found in inquiry (1) can be justified by the outcome of the case (the otherwise reasonable hours expended are so exorbitant in light of the relief obtained that an adjustment must be made). In this case, defendants argue both that the hours expended were unreasonable, and that the rather minimal relief obtained by the injunctive relief decree thus far in light of the expenditures to obtain that relief -- a tail wagging the dog argument.

This is precisely the methodology utilized in Morales, supra. The district court was to first calculate the "number of hours the prevailing party reasonably expended on the litigation" [to then be multiplied by the appropriate hourly rate], 96 F.3d at 363, and then the district court "was not only free but obligated to consider 'the results obtained'...or 'the extent of his success.'" Id. At 364. See also Dannenberg v. Valadez, 338 F.3d 1070, 1075 (9th Cir. 2003) ("[w]hen a plaintiff achieves only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount") (quotations and citation omitted); McGinnis v. Kentucky Fried Chicken of California, 51 F.3d 805, 810 (9th Cir. 1995) ("it is an abuse of discretion for the district court to award attorneys' fees without considering the relationship between the 'extent of success' and the amount of the fee award").

A limited exception to the lodestar calculation exists if a plaintiff achieves only "nominal" or "technical" success. Farrar v. Hobby, 506 U.S. 103, 115, 113 S.Ct. 566 (1992). In that case, the court can simply award "low fees or no fees" without engaging in the lodestar calculation. See Morales, 96 F.3d at 362-63 (finding that plaintiff's damages award of $17,500 "while substantially less than what he sought, was not nominal"). The Farrar exception has rarely been applied in this circuit, in which the term "nominal damages" most frequently has connoted cases in which plaintiff received no recovery or exceptionally small monetary awards, such as $1. See Morales, 96 F.3d at 362 n. 6 (collecting cases). Even a plaintiff who received only "nominal" damages still may be deemed to have achieved significant success if he or she prevailed on "significant" issues or if the litigation served an important "public purpose." Id. at 362.

In this case the Farrar exception (skipping altogether a lodestar analysis) does not apply. The relief thus far, although arguably less than the complaint indicated was available, or even less than that sought by way of preliminary injunction, was more than nominal; therefore, the court must conduct a lodestar analysis. As explained earlier, this does not mean that adjustments to the lodestar will not be made because of a dearth of success on the merits. Plaintiffs' relative success, or lack thereof, remains a critical factor in adjusting the lodestar.

C. Appropriate Hourly Rate

The undersigned commences discussion by recognizing plaintiff's argument that hourly rates currently in effect should be the ones to be applied as these rates compensate for the delay in receiving fees over the years. In re Washington Public Power, 19 F.3d 1291, 1305 (9th Cir. 1994) (recognizing this methodology as one appropriate way to compensate for delay).

In Moreno v. City of Sacramento, 534 F.3d 1106, 1114 (9th Cir. 2008), a civil rights due process case tried in the E.D. California, the appellate court again set forth factors which go into the computation of an appropriate hourly rate: rates charged by attorneys in similar lawsuits, counsel's skill, fee awards in other cases, the contingent nature of fee recovery, and result obtained. With respect to the $300/hr. rate initially found by the district court, and with respect to analysis of the factors, the Ninth Circuit commented, "[s]o far so good." The Court went on to criticize the district court's deductions from that figure. Here, in a case which has not gone to trial, Mr. Palmer sought initially, $400/hr., and now seeks $450/hr.; Mr. Culhane initially sought compensation at the rate of $400/hr; however, the most recent fees declaration submitted by Mr. Palmer shows a rate of $450.00 for Culhane. Mr. Boydston seeks fees at $350/hour.

The Ninth Circuit has emphasized that "[a] court awarding attorney fees must look to the prevailing market rates in the relevant community." Bell v. Clackamas County, 341 F.3d 858, 868 (9th Cir. 2003).*fn6 "Generally, the relevant community is the forum in which the district court sits." Barjon v. Dalton, 132 F.3d 496, 500 (9th Cir.1997); Gates v. Deukmejian, 987 F.2d 1392, 1405 (9th Cir. 1993). The rate to be applied is that of plaintiffs' counsel in the Sacramento area who engage in civil rights actions against governmental entities.

A very important aspect of determining a reasonable rate is that "such rates should be established by reference to the fees that private attorneys of an ability and reputation comparable to that of prevailing counsel charge their paying clients for legal work of similar complexity." Davis v. City of San Francisco, 976 F.2d 1536, 1545 (9th Cir. 1992), vacated in part on other grounds, 984 F.2d 345 (9th cir. 1993) (emphasis added). In this case, as in most cases reviewed by the undersigned, there is no hard, objective evidence concerning what a "paying client" would actually disburse to his lawyer in comparable litigation. See also Welch v. Met. Life Ins. Co., 480 F.3d 942,946 (9th Cir. 2007) emphasizing "paying clients."*fn7 Rather, calculation of the rate in this case, and in general, appears to have been, for the most part, an exercise in hypothesizing what a paying client might pay (if ever there were one to be found), and getting one's litigation allies to chime in -- "that's what my rate is too." Then, an hourly rate becomes "established," when courts actually award that hourly rate. The potential for unwarranted inflation of the then established "reasonable hourly rate" is great because the increase methodology is also not based on hard, economic data, but on the same attorney suppositions, extrapolations and alliances which set the rate in the first place -- enough to make a first year economics student blush with embarrassment.

Mr. Culhane's sole statement is that "[m]y normal hourly billing rate is $400.00 for cases such as this one." Culhane Declaration, docket #168, ¶ 2. Mr. Palmer's is more descriptive in initially requesting a $400/hr. billing rate, but nowhere does he state that he has ever actually and routinely received such a fee from clients in similar cases. Palmer Declaration, July 31, 2008. The proof of billing rate here is much like a house seller who declares that the value of his house is $500,000, and this will be his selling price. However, the market value of the house is what it actually sells for, quite often a lower price than the asserted "selling price." Nevertheless, these figures are received in declarations which implicitly ask the court to recognize the requested billing rate as one that is actually, routinely received. Moreover, defendants had an opportunity to perform discovery on the issue of whether the asserted billing rate bore any resemblance to an actual market rate, but did not do so.

Yet another attorney from another firm participated in this case, Mr. Boydston. It appears that this attorney may have been attorney-of-record in litigations filed in other forums related to this federal case. He claims a rate of $350/hr, but does little to establish the actual market rate which should be applied here. Boydston also includes hours of other associates, but charges them out at $350/hr. as well.*fn8

Plaintiffs' counsel also marshaled three declarations from competent attorneys to support the hourly rate: San Francisco lawyer Gary Fontana, Sacramento attorney John Diepenbrock, and Claremont lawyer Michael Bidart. The billing rates set forth by these lawyers respectively are: $635/hr. (with partners in his firm billing from $440-680/hr.), $450/hr. (complex litigation), no hourly rate given, but an opinion that $400/hr. is reasonable.

"However, declarations filed by the fee applicant do not conclusively establish the prevailing market rate." Camacho v. Bridgeport Financial, Inc., 523 F.3d 973, 980 (9th Cir. 2008). These declarations suffer, for the most part, from the dichotomy between billing rate and actual paid rate. Calculating an attorneys' fees hourly rate has to be something more than finding an attorney who has a high billing rate, and then proffering that "I am in the same class as the high billing attorney." Moreover, some economic sense has to be inserted into the hourly rate analysis lest attorneys' fees become a financial death penalty for those defendants who suffer the misfortune of losing a case. As seen below, word gets around concerning the level of hourly rates awarded by courts, i.e., the cases act as precedent. Courts should not permit an attorneys' fees hourly rate to enter an impossibly high, upward inflationary spiral.

The undersigned finds that plaintiffs have not justified an hourly rate of $450/hr-- a rate in excess of present, awarded rates, see below.

Defendants do not object to a an hourly rate of $300/hr. which is the highest rate paid to defendants' counsel in this case. Johansen Decl., docket #200, ¶ 5. Defendants' primary argument is that the fees generally awarded in the Eastern District do not exceed $325/hr. As noted in Moreno, the fees awarded in other cases is a factor to be utilized in setting the rate herein. Plaintiffs forget that the issue here is not simply what some client could or would pay them per hour, but what fees should be assessed against the opposing party -- the two are not necessarily the same. Plaintiffs are not entitled to retain the most expensive lawyers around with the idea that the opposition, who had no say in the matter of plaintiffs' counsel retention, will have to pay such expensive rates.

The undersigned starts with the Moreno case in which the Ninth Circuit was perfectly at ease with the notion that the hourly rate in a complicated due process condemnation case fully litigated in the Eastern District up through 2008 was $300/hr. 534 F.3d at 1115. Defendants set forth rates in other relatively recent cases in the Eastern District whose rates ranged from $300/ $350/hr. Defendants' Opposition filed December 5, 2009 at 23. See also Alaniz v. Peppercorn, 2008 WL 5000191 (E.D. Cal. Nov. 21, 2008) (a Title VII/FEHA case). Plaintiffs do not dispute these rates in terms of their demonstrating that Eastern District cases have consistently awarded attorneys' fees at a higher rate. Defendants themselves say that the highest rate paid to their attorneys is $300/hr. Johansen Decl., docket #200, ¶ 5.

The type of fee in this case was contingent. And as stated below, plaintiffs were successful enough such that no paring of the hourly rate is warranted based on these factors.

Balancing all factors, including that plaintiffs did not establish the rate of "paying" Sacramento clients, the court finds that an appropriate hourly rate is $335.00/hr.

Defendants do not challenge the $70/hr. hourly rate for paralegals. That rate will be awarded.

D. Reasonable Hours Expended

The sheer number of compensable hours requested, coupled with the sheer number of objections to those hours on myriad concerns, makes adjudication of the interim fees a monumental task. Nevertheless, dividing and conquering the issues, the undersigned finds below the reasonable hours expended.

The court utilizes the hours listed in Mr. Palmer's December 12, 2009 Supplemental Declaration filing as inclusive of all hours for which he and Mr. Culhane desire compensation. Mr. Boydston has submitted a separate tally of hours complicated by the events in this litigation in which the parties agreed to excise many ...

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