Alan Baker et al v. Allstate Insurance Company et al

ORDER AWARDING IN PART, DEFENDANTS COSTS AND FEES 40 by Judge Otis D. Wright, II: The Court AWARDS IN PART Allstates request for Costs and Attorneys Fees in the amount of $ 17,808.00. (lc). Modified on 2/28/2020

Central District of California, cacd-2:2019-cv-08024

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Page ID #:817 1 O 2 3 4 5 6 7 8 United States District Court 9 Central District of California 10 11 ALAN BAKER et al, Case No. 2:19-cv-08024-ODW (JCx) 12 Plaintiffs, 13 v. ORDER AWARDING IN PART, DEFENDANT'S COSTS AND FEES 14 ALLSTATE INSURANCE COMPANY [40] 15 et al, 16 Defendants. 17 I. INTRODUCTION 18 Before the Court is Defendant Allstate Insurance Company's ("Allstate") 19 Memorandum of Costs and Fees against Christopher G. Hook ("Hook"), former 20 counsel of Plaintiffs Alan Baker and Linda B. Oliver ("Plaintiffs"). (Mem. of Costs & 21 Fees ("Mem."), ECF No. 40.) Allstate requests $41,748 in costs and attorneys' fees. 22 (Mem.) For the reasons discussed below, the Court AWARDS IN PART Allstate's 23 Costs and Attorneys' Fees. 24 II. FACTUAL AND PROCEDURAL BACKGROUND 25 On November 26, 2019, Sheppard Mullin, on behalf of its client Allstate, 26 submitted an Ex Parte Application ("Application") seeking (1) dismissal of the case; 27 (2) disqualification of Hook as Plaintiffs' Counsel; (3) a Temporary Restraining Order 28 against Hook; (4) a Protective Order preventing depositions; and (5) Sanctions in the Page ID #:818 1 amount of $6370. (Ex Parte Appl. ("Appl.") 1, 7, ECF No. 20.) Allstate's counsel, 2 Peter H. Klee ("Klee"), submitted a declaration indicating that he and Marc Feldman 3 ("Feldman") are the only attorneys who prepared the Application and they billed a 4 total of thirteen hours. (Decl. of Peter H. Klee ("Klee Decl. I") in Supp. of Appl. ¶ 8, 5 ECF No. 22.) The Court then ordered the Parties to appear before the Court on 6 December 16, 2019, and show cause why the Court should not levy sanctions against 7 Hook. (Min. Order, ECF No. 25.) On December 3, 2019, Hook filed an untimely 8 opposition (Opp'n to Appl., ECF No. 26.), and Allstate replied on December 5, 2019. 9 (Reply to Opp'n, ECF No. 27). 10 On December 16, 2019, Allstate and its counsel, Plaintiffs and their new 11 counsel, and Hook appeared before this Court on the issue of whether the Court 12 should issue sanctions. During the hearing, the Court determined that Hook had acted 13 in bad faith and demanded that Hook pay monetary fee sanctions. (See generally Tr. 14 of Hr'g, ECF No. 44.) Hook accepted and agreed to pay monetary fees to Allstate for 15 its "reasonable costs and fees" associated with its Application. (Tr. of Hr'g, 16:8–12.) 16 The Court granted monetary fee sanctions against Hook and ordered Allstate to 17 prepare an application for costs and fees up through the hearing date. (Tr. of Hr'g, 18 17:7–13; Min. Order, ECF No. 37.) On December 31, 2019, Allstate filed its 19 Memorandum for Costs and Attorneys' fees in the amount of $41,748, a sharp 20 increase from its initial request of $6370. (Compare Mem 1 with Appl. 1.) The Court 21 now determines the amount of sanctions it shall impose. 22 III. LEGAL STANDARD 23 A district court has the primary responsibility for controlling the conduct of the 24 attorneys who practice before it. Gas-A-Tron of Ariz. v. Union Oil Co. of Cal., 534 25 F.2d 1322, 1325 (9th Cir. 1976); see Trone v. Smith, 621 F.2d 994, 999 (9th Cir. 26 1980). When an allegation is made that "an attorney has violated his moral and 27 ethical responsibility, an important question of professional ethics is raised." Gas-A- 28 Tron of Ariz., 534 F.2d at 1324–25. It is the duty of the district court to "examine the 2 Page ID #:819 1 charge, since it is that court which is authorized to supervise the conduct of the 2 members of its bar." Id. The courts, as well as the bar, "have a responsibility to 3 maintain public confidence in the legal profession." Id. This means that an attorney 4 admitted to the State Bar may be disciplined under the court's inherent power for 5 conduct that violates the State Bar's rules of professional conduct, including conduct 6 that occurs outside court. United States v. Wunsch, 84 F.3d 1110, 1114 (9th Cir. 7 1996). 8 Accordingly, a fee award under the court's inherent power is meant to vindicate 9 judicial authority, rather than to provide a substantive remedy to an aggrieved party. 10 Mark Indus., Ltd. v. Sea Captain's Choice, Inc., 50 F.3d 730, 733 (9th Cir. 1995). 11 Nevertheless, a court may impose attorneys' fees and costs that are necessary to 12 compensate the innocent party, to vindicate the affront to the court, and to ensure that 13 such abuses are not repeated. Chambers v. NASCO, 501 U.S. 32, 56–57 (1991); In re 14 Girardi, 611 F.3d 1027, 1039, 1067–68 (9th Cir. 2010). Thus, the Court may award 15 attorneys' fees when the interests of justice so requires. Hall v. Cole, 412 U.S. 1, 4–5 16 (1973). Still, the fee award must relate to the "bad faith" conduct involved. Gen. 17 Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1380 (9th Cir. 1986). 18 For an award of monetary sanctions, the Court must determine a reasonable 19 hourly rate multiplied by a reasonable number of hours. Hensley v. Eckerhart, 461 20 U.S. 424, 433–34 (1983). Generally, in assessing attorneys' fees, the court should 21 calculate the "lodestar" figure by multiplying "the number of hours reasonably 22 expended on the litigation. . . by a reasonable hourly rate." Cairns v. Franklin Mint 23 Co., 292 F.3d 1139, 1157 (9th Cir. 2002). After computing the "lodestar," the district 24 court may then adjust the figure upward or downward taking into consideration the 25 twelve "reasonableness" factors.1 Id. Accordingly, the Court may reduce an 26 1 The twelve reasonableness factors include: (1) the time and labor required, (2) the novelty and 27 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 28 customary fee, (6) whether the fee is fixed or contingent, (7) time limitations imposed by the client 3 Page ID #:820 1 attorneys' fee award where the documentation is lacking or where the hours billed 2 were excessive, redundant, otherwise unnecessary, or not reasonably expended. 3 Hensley, 461 U.S. at 433–34. 4 IV. DISCUSSION 5 On December 16, 2019, the Court determined Hook acted in bad faith by 6 sending numerous profanity-laced emails, using discriminatory epithets, and 7 repeatedly threatening physical violence against Allstate's witnesses, attorneys, and 8 their families purportedly as negotiation tactics. (See generally Tr. of Hr'g, 16:8–12.) 9 Accordingly, exercising its inherent powers, the Court ruled that Allstate was entitled 10 to costs and attorneys' fees for bringing its Application. Chambers, 501 U.S. at 56–57 11 (a court may impose attorneys' fees and costs that are necessary to compensate the 12 innocent party). At the hearing, Hook also agreed to pay monetary sanctions. (Tr. of 13 Hr'g 16:8–12.) Accordingly, Allstate now moves for costs and attorney fees in the 14 amount of $41,748. (Mem. 1.) Hook opposes the Memorandum and requests that the 15 Court award Allstate no more than its original request of $6370. (Resp. to Mem. 16 ("Resp.") 2, ECF No. 46.) 17 A. Lodestar Analysis 18 Sheppard Mullin, who represents Allstate, had three attorneys bill on this matter 19 at the following rates and for the following number of hours: 20 Peter H. Klee Partner $490 16.8 hours 21 Marc J. Feldman Partner $490 46.8 hours 22 Jack Burns Partner $420 25.2 hours 23 TOTAL 88.8 hours 24 25 26 or the circumstances, (8) the amount involved and the results obtained, (9) the experience, 27 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. Evon v. Law 28 Offices of Sidney Mickell, 688 F.3d 1015, 1033 (9th Cir. 2012). 4 Page ID #:821 1 (Mem. 1–2; see Mem. Ex. 1 ("Costs and Fees Records"), ECF No. 40-1.) 2 Accordingly, the lodestar proffered by Sheppard Mullin is $41,748. 3 "[W]hen faced with a massive fee application the district court has the authority 4 to make across-the-board percentage cuts either in the number of hours claimed or in 5 the final lodestar figure as a practical means of [excluding non-compensable hours] 6 from a fee application." Gonzalez v. City of Maywood, 729 F.3d 1196, 1203 (9th Cir. 7 2013) (alteration in original). "[W]hen a district court decides that a percentage cut 8 (to either the lodestar or the number of hours) is warranted, it must 'set forth a concise 9 but clear explanation of its reasons for choosing a given percentage reduction.'" Id. 10 1. Hours Expended 11 Foremost, Klee's initial representation to this Court, made under the penalty of 12 perjury, is that Sheppard Mullin billed 13 hours to bring the Application before this 13 Court and requested $6370 in monetary sanctions. (Klee Decl. I ¶ 8.) Sheppard 14 Mullin now seeks a do-over by asserting that it actually expended 33.2 hours to bring 15 its Application.2 (Mem. 1–2.) The Court denies Sheppard Mullin's attempt to back 16 door an additional 20.2 hours, which appear punitive, after it represented to the Court 17 it had only spent 13 hours to bring its Application, a representation that the Court 18 relied upon in granting monetary sanctions against Hook. Goodyear Tire & Rubber 19 Co. v. Haeger, 137 S. Ct. 1178, 1186 (2017) (holding that attorney fees awarded as a 20 sanction for bad faith conduct must be compensatory rather than punitive in nature). 21 Accordingly, the Court excludes the additional 20.2 hours. 22 Futher, Sheppard Mullin's Costs and Fees Records include four billing entries 23 that provide no description, merely state "PRIVILEGED," and amount to 3.7 hours.3 24 (See Costs and Fees Records.) Without more, the Court cannot determine whether the 25 2 Sheppard Mullin now asserts that Klee billed 4.6 hours, Feldman billed 19.3 hours, and Jack Burns 26 ("Burns") billed 9.3 hours to bring its Application, when it previously asserted that Klee billed 27 2 hours and Feldman billed 11 hours to bring the Application. (See Costs and Fees Records.) 3 Sheppard Mullin asserts that Klee billed 1.8 hours as privileged, Feldman billed 0.2 hours as 28 privileged, and Burns billed 1.7 hours as privileged. (See Costs and Fees Records.) 5 Page ID #:822 1 time expenditure is reasonable, and accordingly, the Court finds that Sheppard Mullin 2 is precluded from recovering these hours. Dubose v. Cty. of Los Angeles, No. CV 09- 3 7832 CAS (AJWx), 2012 WL 2135293, at *5 (C.D. Cal. June 11, 2012) (holding that 4 counsel is "required to identify the general subject matter of his time expenditures"). 5 Sheppard Mullin also attempts to recover 4.7 billable hours on items that do not 6 necessarily pertain to Allstate's Application, which include researching Plaintiffs' new 7 counsel's rights and reviewing media. Again, the Court finds that these hours were 8 unnecessarily incurred.4 Gen. Signal Corp., 787 F.2d at 1380 (fee awards must relate 9 to the "bad faith" conduct involved); Hudson v. Moore Bus. Forms, Inc., 898 F.2d 10 684, 687 (9th Cir. 1990) (parties have a duty to mitigate costs). 11 After reviewing Sheppard Mullin's Costs and Fees Records, the Court finds the 12 hours to be excessive and duplicative. Specifically, Sheppard Mullin engaged in 13 block-billing; for example, five billing entries exceed four-hour blocks. (See Costs 14 and Fees Records.) Additionally, although there are only three attorneys billing on 15 this matter, the billing records are riddled with duplicative entries that include 16 reviewing prior filings and case materials. (See Costs and Fees Records.) Therefore, 17 the Court finds that a 10% reduction for block billing time entries is warranted and an 18 additional 10% reduction for duplicative entries. See Forouzan v. BMW of N. Am., 19 LLC, No. CV-17-3875-DMG (GJSx), 2019 WL 856395, at *5 (C.D. Cal. Jan. 11, 20 2019); Pringle v. Adams, No. CV 10-1656-JLS (RZx), 2014 WL 3706826, at *6 (C.D. 21 Cal. July 23, 2014). Lastly, the court imposes an additional 10% haircut reduction to 22 Shepp