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Gold v. NCO Financial Systems

August 20, 2010


The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge


In the early stages of litigation of this case, Defendant NCO Financial Systems ("NCO" or "Defendant") made an offer of judgment pursuant to Fed. R. Civ. P. 68, which Plaintiffs accepted. The offer was for a sum of money, plus "reasonable attorney's fees and costs, to be mutually agreed upon by the parties, or if no agreement can be reached, to be determined by the Court in accordance with 15 U.S.C. § 1692k." Defendant OSI Collection Services, Inc. had been dismissed earlier, leaving NCO as the sole Defendant.

The parties do not dispute that the Court can and should award costs and attorney's fees; their only disagreement concerns the amount Plaintiffs have requested. Defendant argues the costs and fees are unreasonable and excessive, and asks the Court to reduce them. Specifically, Defendant argues the claimed hourly rate is too high; fees should not be awarded for unproductive or unnecessary work; the case was overstaffed in that work was needlessly assigned to multiple attorneys instead of one attorney, or to attorneys instead of staff; and not all the costs being claimed are the "costs of the action" as defined by 28 U.S.C. § 1920. Defendant raised an additional objection - that Plaintiff sought fees incurred after the offer of judgment had been accepted - but Plaintiff conceded this point and agreed the award should be reduced to reflect this. Defendant also points out the amount recovered was only $3,000, and the amount sought in fees and costs is nine times that.

The Court held a hearing on this issue and gave its preliminary decision, which it now confirms in this written decision.

I. Legal Standards

The parties agree the Court should use the lodestar method. Using this method, the Court begins by multiplying the number of hours reasonably spent on the litigation by a reasonable hourly rate, and then makes any necessary adjustments to account for factors not already subsumed within the initial calculation. Mendez v. County of San Bernardino, 540 F.3d 1109, 1129 (9th Cir. 2008).

In determining a reasonable hourly rate, the Court considers the prevailing market rate in the community. Barjon v. Dalton, 132 F.3d 496, 500 (9th Cir. 1997). Plaintiffs' principal counsel, Thomas Lyons, Esq., is based in Minnesota. Plaintiffs' decision to hire him was one of preference, not necessity. Therefore, the relevant community is this district. Id. (explaining that the relevant community is generally the forum in which the district court sits, though rates outside the forum may be used if local counsel was unavailable).

The Court must exclude hours that were not reasonably expended - for example, hours that are excessive, redundant, or otherwise unnecessary. Hensley v. Eckerhart, 461 U.S. 424, 433--34 (1983). Fees are properly reduced when the task is overstaffed, id., when hours are submitted in block format, Welch v. Metro Life Ins. Co., 480 F.3d 942, 948--49 (9th Cir. 2007), or when the work performed is inadequately identified. Fischer v. SJB-P.D. Inc., 214 F.3d 1115, 1121 (9th Cir. 2000). Overstaffing can include duplicative billing for unnecessary conferences between colleagues, Welch, 480 F.3d at 948--49, or failure to appropriately delegate tasks to staff or colleagues with lower billing rates. Northon v. Rule, 494 F. Supp. 2d 1183, 1187 (D.Or. 2007) (reducing fee award where, among other things, senior attorney failed to delegate relatively simple tasks to junior associates). The party seeking fees bears the burden of adequately documenting the hours claimed. Gates v. Deukmejian, 987 F.2d 1392, 1397--98 (9th Cir. 1992).

II. Discussion

A. Rates

Plaintiffs represent Thomas Lyons' reasonable hourly rate as $400, but provide little support for this other than citing cases where other courts approved his rates at $325 to $400 per hour. Local counsel Christina Wickman represents her customary rate for cases of this type is $250 per hour. Local counsel Robert Stempler, who performed a small amount of work early in the case, represents his customary rate for this type of case is $350 per hour. Mr. Lyons represents that the customary rate for Sharon McMahon, a paralegal he employs, is $90 per hour.

Defendants challenge all three attorneys' hourly rates, arguing $295 is a reasonable rate for Mr. Lyons and Mr. Stempler, and $125 is reasonable for Ms. Wickman. In reply, Plaintiffs argue the Court should look to the prevailing rate in Minnesota. Plaintiffs argue that, while local counsel may have been available, it was necessary to hire Mr. Lyons because of his expertise in military matters. Plaintiffs also cite evidence that another attorney's hourly rate of $355 was recently found reasonable in this district.

With regard to the military issues, there is no showing Mr. Lyons' expertise in this area was ever required. The case settled relatively early and, as the Court noted at the hearing, the issues were not particularly novel or complex. Even in the pleadings, the military issues were incidental.*fn1 There was nothing wrong with Plaintiffs' hiring Mr. Lyons, but to pay a premium for his expertise when it was not called on is unreasonable.

The Court also finds the evidence of rates charged by a local colleague, Joshua Swigart, Esq., unconvincing. First, Mr. Swigart's declaration never comments on the requested $400 rate; rather, he merely attested to the reasonableness of Ms. Wickman's fee, noting she is a partner in her own consumer rights firm. Second, Plaintiffs cite only one case where $355 was found to be a reasonable hourly rate, Shaw v. Credit Collection Servs., 09cv883-LAB. In that case, however, the $355 hourly rate applied to 0.3 hours of work performed by a senior partner,*fn2 while 6.5 hours performed by an associate were billed at $225 per hour. Mr. Swigart's own declaration identifies a different case, Bellows v. NCO ...

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