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Ashendorf & Associates Ltd., Michael Freedman, and Jayhun v. Smi-Hyundai Corporation

July 21, 2011

ASHENDORF & ASSOCIATES LTD., MICHAEL FREEDMAN, AND JAYHUN REZAYEV, PLAINTIFFS,
v.
SMI-HYUNDAI CORPORATION, A DELAWARE CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Hon. Otis D. Wright, II United States District Judge

Order GRANTING Plaintiffs' Application for a Fee Award [14] [Filed05/23/11]

I. INTRODUCTION

Currently before the Court is Plaintiffs, Ashendorf & Associates, Ltd., Michael Freedman, and Jayhun Rezayev's (collectively, "Plaintiffs"), Application for a Fee Award Pursuant to the Court's May 12, 2011 Order. (Dkt. No. 14.) The Court deems the matter appropriate for decision without oral argument. See Fed. R. Civ. P. 78; L.R. 7-15. For the following reasons, the Court GRANTS Plaintiffs' Application, with reductions in attorneys' fees as set forth below.

II. BACKGROUND

On August 17, 2010, the United States District Court for the Eastern District of Virginia entered a judgment in favor of Plaintiffs and against SMI-Hyundai Corporation ("SMI") in the amount of $292,910.91. (Dkt. No. 1, Exh. 3.) In an attempt to satisfy their judgment, Plaintiffs caused subpoenas duces tecum to be served on two companies,Lubix Corporation ("Lubix") and SMI-Hyundai Global Technologies, Inc. ("SMIG"). (Dkt. No. 1, Exhs. 1-2.) The subpoenas directed Lubix and SMIG to produce documents evidencing any ownership interest that SMI had, if any, in either company. (Id.) Lubix and SMIG, however, failed to comply with the subpoenas. (Cornehl Decl. ¶ 2.)

As a result, on March 22, 2011, Plaintiffs applied to this Court for an order to show cause why Lubix and SMIG should not be held in contempt for failing to comply with the subpoenas duces tecum. (Dkt. No. 1.) The Court granted Plaintiffs' Application and set a hearing on the matter for May 9, 2011. (Dkt. No. 7.) Neither Lubix nor SMIG, however, appeared at the hearing. (Dkt. No. 11.) Consequently, on May 12, 2011, the Court issued an Order holding Lubix and SMIG in contempt of Court for failing to comply with the subpoenas. (Dkt. No. 13.) The Order provided that Plaintiffs could seek attorneys' fees and costs in connection with bringing their enforcement action. (Dkt. No. 13.) On May 23, 2011, Plaintiffs submitted such an application, in which they requested $19,831.25 in attorneys' fees and $493.37 in costs. (Dkt. No. 14.) The Court will discuss the reasonableness of Plaintiffs' requests below.

III. LEGAL STANDARD

"Sanctions for civil contempt may be imposed to coerce obedience to a court order, or to compensate the party pursuing the contempt action for injuries resulting from the contemptuous behavior, or both." General Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1380 (9th Cir. 1986) (citing United States v. United Mine Workers, 330 U.S. 258, 303-04 (1947)). "The Ninth Circuit has held that a court may sanction a contemnor by ordering that she pay a party's attorneys' fees and costs." Bademyan v. Receivable Management Services Corp., No. CV 08-00519 MMM (Rzx), 2009 WL 605789, at *4 (C.D. Cal., Mar. 9, 2009). Such sanctions, which are typically compensatory in nature, are limited to "actual losses sustained as a result of the contumacy." General Signal Corp., 787 F.2d at 1380; In re Crystal Palace Gambling Hall, Inc., 817 F.2d 1361, 1366 (9th Cir. 1987).

"Once a party has established that it is entitled to an award of attorneys' fees, '[i]t remains for the district court to determine what fee is reasonable.'" Bademyan, 2009 WL 605789, at *4 (citing Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). The "lodestar method" is "the fundamental starting point in determining a 'reasonable attorney's fee.'" Rouse v. Law Offices of Rory Clark, 603 F.3d 699, 704 (9th Cir. 2010). To calculate the lodestar, a district court must multiply "the number of hours the prevailing party reasonably expended on the litigation by a reasonable hourly rate." Morales v. City of San Rafael, 96 F.3d 359, 363 (9th Cir. 1996). The party seeking fees bears the burden of documenting the hours expended in the litigation and must submit evidence supporting those hours and the rates claimed. See Hensley, 461 U.S. at 433. Although district courts are provided great deference in determining the reasonable hourly rate and total number of hours, they must clearly and concisely explain any adjustments to an attorney's fee request. Gates v. Deukmejian, 987 F.2d 1392, 1398 (9th Cir. 1992).

Once calculated, the lodestar figure is presumed reasonable. Crawford v. Astrue, 586 F.3d 1142, 1149 (9th Cir. 2009). District courts, however, can adjust further the lodestar amount to accurately reflect a reasonable fee by looking at the twelve factors discussed in Kerr v. Screen Extras Guild, 526 F.2d 67, 70 (9th Cir. 1975).*fn1 Some of the Kerr factors -- such as the experience of counsel, the quality of representation, the novelty or complexity of the issues, and the results obtained -- are subsumed into the initial lodestar calculation. See Blum v. Stenson, 465 U.S. 886, 898 (1984). These factors can be accounted for in either the reasonable rate component or the reasonable hour component of the lodestar calculation. Cabrales v. County of Los Angeles, 864 F.2d 1454, 1464 (9th Cir. 1988).

IV. DISCUSSION

Plaintiffs' Application seeks attorneys' fees and costs associated with the work of three attorneys at Mayer Brown -- Christopher Kelly ("Kelly"), a senior partner; Andrew Nicely ("Nicely"), a partner; and Lisa Cornehl ("Cornehl"), a seventh-year associate --and one paralegal -- Edward Brown. The Court begins its analysis by determining the reasonableness of Plaintiffs' attorneys' fee request by reference to the lodestar method of calculation.

A. THE REASONABLENESS OF THE ATTORNEYS'HOURLY RATE

Determination of a reasonable hourly rate is not made by reference to the rates actually charged by the prevailing party. See White v. City of Richmond, 713 F.2d 458, 461 (9th Cir. 1983). Rather a district court is charged with setting a reasonable hourly rate that is "calculated according to the prevailing market rates in the relevant community." Blum, 465 U.S. at 895. In determining a reasonable hourly rate, the district court must consider the novelty and complexity of issues, the ...


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