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Barranco v. 3D Systems Corp.

United States District Court, D. Hawaii

June 15, 2018

RONALD BARRANCO, Plaintiff,
v.
3D SYSTEMS CORPORATION, ET AL. Defendants.

          FINDINGS AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART DEFENDANTS 3D SYSTEMS CORPORATION AND 3D SYSTEM, INC.'S MOTION FOR AN AWARD OF ATTORNEYS' FEES[1]

          Richard L. Puglisi United States Magistrate Judge.

         Before the Court is Defendants 3D Systems Corporation and 3D System, Inc.'s Motion for an Award of Attorneys' Fees, filed on April 13, 2018 (“Motion”). See ECF No. 395. Plaintiff filed his Opposition May 9, 2018. ECF No. 409. Defendants filed their Reply on May 23, 2018. ECF No. 413. This matter is suitable for disposition without a hearing pursuant to Rule 7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawaii. After careful consideration of the parties' submissions and the relevant authority, the Court FINDS AND RECOMMENDS that Defendants' Motion be GRANTED IN PART AND DENIED IN PART.

         BACKGROUND

         On May 27, 2016, the jury returned a verdict in favor of Defendants on Plaintiff's claims for breach of contract, breach of the implied covenant, and unjust enrichment. ECF No. 282. The jury also found in favor of Defendants on their non-compete counterclaim against Plaintiff. Id. Plaintiff was granted judgment as a matter of law on Defendant's failure to convey counterclaim. ECF No. 287. Based on the jury's finding in favor of Defendants on their non-compete counterclaim, the court determined that Defendants were entitled to an equitable accounting. ECF No. 300. The court conducted a bench trial to perform the equitable accounting and issued its Order Regarding Findings of Fact and Conclusions of Law on March 30, 2018. ECF No. 391. The court ordered that judgment be entered in favor of Defendants on their counterclaim in the amount of $522, 860.24. Id. The Clerk of Court filed Judgment in favor of Defendants on April 2, 2018. ECF No. 392. The present Motion followed.

         ANALYSIS

         In diversity cases, the Court must apply state law in determining whether the prevailing party is entitled to attorneys' fees. Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000). Under Hawaii law, “[o]rdinarily, attorneys' fees cannot be awarded as damages or costs unless so provided by statute, stipulation, or agreement.” Stanford Carr Dev. Corp. v. Unity House, Inc., 141 P.3d 459, 478 (Haw. 2006) (citing Weinberg v. Mauch, 890 P.2d 277, 290 (Haw. 1995)).

         Here, Defendants seek an award of fees under Hawaii Revised Statutes Section 607-14. Section 607-14 provides that attorneys' fees shall be awarded “in all actions in the nature of assumpsit.” Haw. Rev. Stat. § 607-14. Section 607-14 also provides that such fees shall not exceed twenty-five per cent of the amount sued for if the defendant obtains judgment. Haw. Rev. Stat. § 607-14. To award attorneys' fees under Section 607-14, the court must determine whether: (A) the action is in the nature of assumpsit; (B) Defendants are the prevailing parties; (C) the fees requested are reasonable; and (D) the fees do not exceed twenty-five percent of the amount sued for by Plaintiff.

         A. Action in the Nature of Assumpsit

         Defendants assert that this action is in the nature of assumpsit because Plaintiff asserted claims for breach of contract, breach of the implied covenant, and unjust enrichment. ECF No. 395-1 at 11-13. Plaintiff does not dispute that this is an action in the nature of assumpsit. See ECF No. 409. Accordingly, Defendants are eligible for an award of attorneys' fees under Section 607-14.

         B. Prevailing Party Status

         As noted above, judgment was entered in favor of Defendants on all claims brought by Plaintiff and on Defendants' breach of contract counterclaim. See ECF No. 392. Accordingly, the Court concludes that Defendants are the “prevailing party” for purposes of Section 607-14. See also Blair v. Ing, 31 P.3d 184, 189 (Haw. 2001) (“a defendant who succeeds in obtaining a judgment of dismissal is a prevailing party for the purpose of fees under HRS § 607-14.”).

         C. Reasonable Attorneys' Fees and Costs

         Hawaii courts calculate the reasonableness of attorneys' fees based on a method that is nearly identical to the traditional “lodestar” calculation set forth in Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). See DFS Grp. L.P. v. Paiea Props., 131 P.3d 500, 505 (Haw. 2006). Under the lodestar method, the court must determine a reasonable fee by multiplying a reasonable hourly rate by the number of hours reasonably expended. See id. 505-06. In addition, the court may consider additional factors including the novelty of the questions involved and charges for similar service in the community. See Chun v. Bd. of Trs. of Emps.' Ret. Sys. of Haw., 106 P.3d 339, 358 (Haw. 2005); Chun v. Bd. of Trs. of Emps.' Ret. Sys. of Haw., 992 P.2d 127, 137 (Haw. 2000).

         Two law firms performed work for Defendants in this action. The attorneys' fees requested for work performed by Nexsen Pruet, LLC are:

ATTORNEY

HOURS

RATE

TOTAL

Nicole Setzler Mergo, Esq.

2091.4

$320

$669, 248.00

Christopher Lam, Esq.

1583.5

$350

$554, 225.00

Jennifer Cluverius, Esq.

175.4

$280

$49, 112.00

Jonathan Schultz, Esq.

458.8

$215

$98, 642.00

Sima Patel, Esq.

354.8

$230

$81, 604.00

Sara Svedberg, Esq.

224.4

$210

$47, 124.00

Kelvin Woods, paralegal

1309.2

$180

$235, 656.00

Mary Ann Buonforte, paralegal

135

$160

$21, 600.00

Cristen Maitelanen, paralegal

21.4

$150

$3, 210.00

Gray Wallington, eDiscovery Director

80.8 $210

$16, 968.00

Jennifer McCune Sharpe, Esq.

335.2

$180

$60, 336.00

“Document Review Team”[2]

1110.1

$75

$83, 257.50

TOTAL

$1, 920, 982.50

ECF No. 395-1 at 30; ECF No. 395-10 at 26-27.

         The attorneys' fees requested for work performed by Goodsill Anderson Quinn & Stifel, A Limited Liability Law Partnership LLP are:

ATTORNEY

HOURS

RATE

TOTAL

Thomas Benedict, Esq.

566.8

$375

$212, 550.00

Dawn Sugihara, Esq.

1, 132.3

$290

$328, 367.00

Marissa Owens, Esq.

155.2

$200

$30, 080.00[3]

Subtotal

$570, 997.00

General Excise Tax (4.712%)

$26, 905.38

TOTAL

$597, 902.38[4]

ECF No. 395-1 at 30; ECF No. 395-2 at 4, 7-8. In total, Defendants request an award of $2, 518, 884.88 in attorneys' fees and taxes. ECF No. 395-1 at 31.

         1. Reasonable Hourly Rate

         Hawaii courts consider the reasonable hourly rate in a manner similar to the traditional lodestar formulation, and some Hawaii state courts have considered federal law in determining a reasonable hourly rate. See, e.g., Cnty. of Haw. v. C & J Coupe Family Ltd. P'ship, 208 P.3d 713, 720 (Haw. 2009). The Court finds that federal case law regarding the determination of a reasonable hourly rate is instructive in this case. In assessing whether an hourly rate is reasonable, a court “should be guided by the rate prevailing in the community for similar work performed by attorneys of comparable skill, experience, and reputation.” Webb v. Ada Cnty., 285 F.3d 829, 840 (9th Cir. 2002) (citing Chalmers v. City of L.A., 796 F.2d 1205, 1210-11 (9th Cir. 1986)); see also Gates v. Deukmejian, 987 F.2d 1392, 1405 (9th Cir. 1992) (noting that the rate awarded should reflect “the rates of attorneys practicing in the forum district”). In addition to their own statements, the fee applicant is required to submit additional evidence that the rate charged is reasonable. Jordan v. Multnomah Cnty., 815 F.2d 1258, 1263 (9th Cir. 1987).

         Based on the information provided by counsel, the Court's knowledge of the prevailing rates in the community, and the Court's familiarity with this case, the Court finds that the hourly rates requested for Ms. Mergo, Ms. Sugihara, Ms. Owens, Ms. Patel, Ms. Sharpe, and the contract attorneys who were on the Document Review Team are reasonable. However, as discussed below, the Court finds that the remaining rates requested are unreasonable.

         First, Plaintiff argues that the rates requested should be reduced to the same rates that were previously awarded by this Court to Plaintiff's counsel in relation to a discovery motion. See ECF No. 409 at 11-12. The Court disagrees. Although a similar reasonableness analysis applies, that order was issued in September 2014. See ECF No. 100. In light of the time that has passed since its prior order, the Court finds that the hourly rates previously awarded no longer reflect the current prevailing rates in the community. However, as with the rates requested by Plaintiff's counsel at issue in that prior order, the rates requested by Defendants' counsel in the present Motion are slightly excessive and should be reduced.

         Second, the Court agrees with Plaintiff that the relevant location for considering reasonable rates is Honolulu, Hawaii, not the location of Defendants' mainland counsel. See ECF No. 409 at 13-14. For purposes of this Motion, the Court considers the prevailing market rates in Honolulu. See BMW of N. Am., LLC v. Mini Coupe Haw., LLC, Civil No. 12-00331 JMS-KSC, 2013 WL 1568546, *1 (D. Haw. Mar. 21, 2013), adopted by, 2013 WL 1568531 (D. Haw. April 12, 2013).

         Third, Defendants request $375 per hour for Mr. Benedict, an attorney with twenty-nine years of experience. Plaintiff argues that this rate should be reduced. ECF No. 409 at 12-13. The Court agrees. The Court notes that Defendants only requested $320 per hour for Ms. Mergo, an attorney with twenty-eight years of experience, who billed more than 2000 hours on this case, is Defendants' national outside litigation counsel, and acted as lead counsel in this matter. See ECF No. 395 at 30; ECF No. 395-10 at 5-6.[5] Based on the information provided by counsel, Mr. Benedict's role in this litigation, the Court's knowledge of the prevailing market rates in the community, the rate requested for Ms. Mergo, and the nature of this action, the Court finds that $325 per hour is a reasonable rate for Mr. Benedict. See Honolulu Acad. of Arts v. Green, No. CV 15-00355 DKW-KSC, 2017 WL 1086224, at *8 (D. Haw. Feb. 28, 2017), adopted by, 2017 WL 1091309 (D. Haw. Mar. 21, 2017) (finding $325 to be a reasonable rate for a lawyer with 25 years of experience).

         Fourth, Defendants request $350 per hour for Mr. Lam, an attorney with sixteen years of experience. Plaintiff argues that this rate should be reduced. ECF No. 409 at 12-13. The Court agrees. As noted above, the fact that Mr. Lam works in Charlotte, North Carolina is not relevant to determining the reasonable fee in this case. Further, the Court notes that Defendants requested $290 per hour for Ms. Sugihara, an attorney with one more year of experience than Mr. Lam. See ECF No. 395-1 at 20. Based on the information provided by counsel, the Court's knowledge of the prevailing market rates in the community, the rate requested for Ms. Sugihara, and the nature of this action, the Court finds that the requested rate for Mr. Lam is excessive and that $280 per hour is reasonable. See Du Preez v. Banis, No. CV 14-00171 LEK-RLP, 2017 WL 6523162, at *3 (D. Haw. Oct. 18, 2017), adopted by, 2017 WL 6519015 (D. Haw. Dec. 20, 2017) (awarding $275 per hour for an attorney with nineteen years of experience).

         Fifth, Defendants request $280 per hour for Ms. Cluverius, an attorney with twelve years of experience. Plaintiff argues that this rate should be reduced. ECF No. 409 at 12-13. The Court agrees. Based on the information provided by counsel and the Court's knowledge of the prevailing market rates in the community, the Court finds that the requested rate for Ms. Cluverius is excessive and that $240 per hour is reasonable. See Bruser v. Bank of Haw., No. CV 14-00387 LEK-RLP, 2016 WL 11185592, at *6 (D. Haw. Oct. 31, 2016), adopted by, 2017 WL 1534189 (D. Haw. Apr. 27, 2017) (finding that $210 per hour was a reasonable rate for an attorney with ten years of experience).

         Sixth, Defendants request $215 per hour for Mr. Schultz, an attorney with eight years of experience. Plaintiff argues that this rate should be reduced. ECF No. 409 at 12-13. The Court agrees. The Court notes that Defendants requested $200 per hour for Ms. Owens, an attorney with two more years of experience than Mr. Schultz. See ECF No. 395-1 at 20. Based on the information provided by counsel, the Court's knowledge of the prevailing market rates in the community, the rate requested for Ms. Owens, and the nature of this action, the Court finds that the requested rate for Mr. Schultz is excessive and that $195 per hour is reasonable. See Starr Adjustment Servs., Inc. v. Rucker, No. MC 17-00133 DKW-KSC, 2017 WL 4106075, at *3 (D. Haw. Sept. 15, 2017) (finding that a rate of $185 per hour was reasonable for an attorney with eight years of experience).

         Seventh, Defendants request $210 per hour for Ms. Svedberg, an attorney with five years of experience. Plaintiff argues that this rate should be reduced. ECF No. 409 at 12-13. The Court agrees. Based on the information provided by counsel, the Court's knowledge of the prevailing market rates in the community, and the nature of this action, the Court finds that the requested rate for Ms. Svedberg is excessive and that $175 per hour is reasonable. See Liberty Mut. Ins. Co. v. Sumo-Nan LLC, No. ...


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