Free Reply to Response to Motion - District Court of Colorado - Colorado

Case 1:04-cv-01258-LTB-BNB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 1:04-cv-1258-LTB-BNB STUDENT MARKETING GROUP, INC., Plaintiff, v. COLLEGE PARTNERSHIP, INC., f/k/a COLLEGE BOUND STUDENT ALLIANCE, INC., Defendant. STUDENT MARKETING GROUP, INC.'S REPLY TO DEFENDANT'S RESPONSE IN OPPOSITION TO PLAINTIFF'S MOTION FOR ATTORNEYS FEES Plaintiff Student Marketing Group, Inc. ("SMG"), by and through its undersigned counsel, files this Reply to Defendant's Response in Opposition to Plaintiff's Motion for Attorney Fees. In support of this Reply, SMG states as follows: As CPI acknowledges, this Court already has determined that SMG is entitled to attorney fees in this matter. The only issue is the amount of the fee award. As described in SMG's original Motion for Approval and Award of Fees, the principal timekeepers spent a total of 986.8 hours representing SMG in this litigation through September 1, 2005.1 SMG provided affidavits which identify the number of hours spent per timekeeper, a listing of the various tasks

1

By way of its Motion for Leave to File Supplement filed on October 4, 2005, SMG has sought to supplement its Motion for Approval and Award of Attorney Fees to include time spent on this matter from September 1, 2005 through October 1, 2005. Although this motion is still pending, the affidavits attached to this Reply include detailed records for both attorney time and disbursements through October 1, 2005. Because this matter is ongoing and the fees and costs continue to accrue, SMG reserves the right to update the fee request as permitted by this Court.

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performed by SMG's counsel, and a chart summarizing the amount of fees and disbursements charged to SMG per month. In its opposition, College Partnership, Inc. ("CPI") asserts that SMG's Motion for Approval and Award of Attorney Fees should be denied because SMG purportedly has not provided sufficient detail about the time spent and because the hourly rates allegedly exceed the prevailing rates for those services in the Denver area. CPI's Opposition does not provide a sufficient basis to deny SMG's claim for attorneys' fees for the following reasons. First, SMG has provided and is now providing ample information to support a fee award in the entire amount claimed. SMG believes that the information provided in its original motion is sufficiently specific to support an award of fees, as it outlined the services provided in detail and provided the numbers of hours expended by each attorney involved. Nonetheless, SMG submits the Supplemental Affidavit of Patrick J. McElhinny (Exhibit A) and the Supplemental Affidavit of Daniel Scheid (Exhibit B) which provide further detail as to the amount of time spent by each timekeeper on each additional task and an itemization of the disbursements. Second, contrary to CPI's assertion, the hourly rates charged for the services rendered do not "far exceed[] the prevailing rates" in the area. Indeed, CPI has not proffered any evidence to support this claim, as the conclusory affidavit it supplied overstates the rates actually charged by ignoring the fact that Kirkpatrick & Lockhart Nicholson Graham LLP's ("K&LNG's") rates were discounted. Moreover, the CPI affidavit does not describe, what, if any, investigation was undertaken to support the conclusions asserted and is unclear as to whether it even challenges the rates charged for the senior associate who did the vast majority of the work.

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A.

Calculation of Award of Attorney Fees Contrary to CPI's assertion that the fee award on this case must be calculated by

the loadstar method, in determining the appropriateness of a fee award based on a commercial agreement, the Court is called upon to determine if the frees requested are inequitable and unreasonable. U.S. ex rel. C.J.C., Inc. v. Western States Mech. Contractors, Inc., 834, F.2d 1533, 1547 (10th Cir. 1987). In making this determination, the Court is permitted to consider the factors set forth in cases which involve a fee award in the statutory context. Id.; see, e.g., Ramos v. Lamm, 713 F.2d 546, 552-56 (10th Cir. 1983). "The district court may choose to use these factors, not to compute a reasonable fee, but to assist in determining if the fees claimed are unreasonable or inequitable." Western States, 834, F.2d at 1550. The factors set forth in Ramos include: (i) the number of hours reasonably spent on this matter; (ii) the reasonableness of the hourly rate charged; and (iii) whether the fees sought should be adjusted based on the level of success achieved by the party requesting the fee award. See, e.g., Ramos, 713 F.2d at 552-56; Villescas v. Richardson, 145 F. Supp. 2d 1228, 1232 (D. Colo. 2001) rev'd on other grounds, 311 F.3d 1253. Generally, if a party has achieved full success on its claims, the fees sought should not be reduced. Villescas, 145 F. Supp. 2d at 1232-33. 1. Time Spent

SMG has previously submitted affidavits to this Court showing the total number of hours each timekeeper spent on this matter. CPI claims that this information was not sufficiently specific to allow the Court to determine whether the time spent by SMG's counsel was reasonable. In an effort to provide further detail to the Court and to CPI, SMG submits the Supplemental Affidavit of Patrick J. McElhinny attached hereto as Exhibit A and the Supplemental Affidavit of Daniel Scheid attached hereto as Exhibit B which provide further detail as to the amount of time spent by each timekeeper on each individual task. -3-

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As set forth more fully in the affidavits and the attachments thereto, SMG's principal timekeepers spent a total of 939.2 hours representing SMG in this litigation through September 1, 2005. SMG's counsel maintained meticulous records and SMG is only seeking recovery for the hours actually billed to SMG in this matter. Although CPI attempts to dismiss the significance of the time spent by SMG's counsel by referring to this matter as nothing more than "routine litigation," CPI fails to acknowledge that as of the date of CPI's response to SMG's motion for Attorney Fees, there were 145 pleadings filed in this case. Further, CPI valued its counterclaims at an amount in excess of $1.5 Million. If the $ 127,462.59 claimed and recovered by SMG is considered, there is a potential difference of over $1,627,462.59 in the two potential outcomes. The amount of fees requested by SMG is less than 18% of the value of that difference. Accordingly, the time spent on this litigation by SMG's counsel was neither inequitable nor unreasonable in light of the tasks required, the counterclaims asserted, and the positions taken by CPI. 2. Reasonableness of Hourly Rate

As set forth in SMG's Motion for Approval and Award of Fees, there were three attorneys and one senior paralegal at Kirkpatrick & Lockhart Nicholson Graham LLP ("K&LNG") principally involved in representing SMG in this matter. Also, SMG had one attorney, R. Daniel Scheid, who served as SMG's local counsel. The case was staffed to ensure economically efficient representation: a limited number of timekeepers were involved and the majority of the work was done by a mid-level associate who delegated tasks to more junior personnel when appropriate. In response to SMG's Motion for Approval and Award of Fees, CPI asserts that SMG's Motion should be denied or reduced because the hourly rates "far exceed[] the prevailing rates" in the area. CPI specifically challenges the reasonableness of the normal hourly rate of the -4-

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K&LNG partner and paralegal who spent time on this matter for SMG. The only assertion that CPI challenges the normal hourly rate charged by the associates (whose time constituted 2/3 of the total hours charged to SMG on this matter) appears in the concluding paragraph of its response and is bereft of any factual support.2 CPI does not challenge the rates charged by Attorney Scheid. Even assuming CPI is challenging the reasonableness of the hourly rates of all of K&LNG's timekeepers, this challenge is without merit for at least three reasons. First, CPI fails to acknowledge that K&LNG did not bill SMG its normal hourly rates for any time spent on this matter. Instead, because of the ongoing relationship between K&LNG and SMG on a variety of matters, including this litigation, K&LNG discounted its billing rates for SMG in 2004 and 2005. These volume-based discounts included an 8% discount for all time charged in 2004. In 2005, all of K&LNG's fees to SMG were discounted by at least 8%; when fees exceeded $175,000 for all SMG-related matters, K&LNG discounted fees incurred thereafter by 10%. Accordingly, the rates paid by SMG were substantially less than the rates regularly charged and received by K&LNG. Both CPI and the affidavit CPI submits in support of its response completely ignore this fact. Second, the rates charged by SMG's counsel are reasonable in the Denver, Colorado area for law firms which are similar to K&LNG. K&LNG is a large international law firm. As set forth in the affidavit of Daniel M. Reilly attached hereto as Exhibit C, boutique litigation firms and other large law firms with offices in Denver, Colorado have comparable rates. This is particularly true when considering the discount of between 8-10% which was applied to the time charged to SMG. After discount, the rate charged for Attorney McElhinny's time is between $377.20 and $404.80 per hour; the rate charged for Attorney Karg's time is

2

The Affidavit provided by CPI is not clear as to whether it is challenging the reasonablness of the rates charged by the K&LNG associates.

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between $193.20 and $216.20 per hour; the rate charged for Attorney Verdini's time is between $157.50 and $161.00 per hour; and the rate charged for Ms. Piso's time is between $162.00 and $165.60 per hour. These rates charged by K&LNG in this matter are consistent with the rates charged by other similar firms with offices in Denver, Colorado. See Exhibit C. 3 Third, CPI misstates the standard the Court should use to judge the award of attorney fees when the fee award is based on a commercial agreement. CPI confuses the award of attorney fees under a federal civil rights statute with an award of fees resulting from the terms of a commercial agreement. It is well-established in this Circuit that the award of attorney fees in a commercial agreement is "fundamentally different." U.S. ex rel. C.J.C., Inc. v. Western States Mech. Contractors, Inc. 834, F.2d 1533, 1547 (10th Cir. 1987). When scrutinizing attorney fees award under federal fee-shifting statutes, close scrutiny is justified. Id. In contrast, when considering the appropriateness of a fee award in commercial agreements, the court is enforcing the terms of the bargain already agreed upon by the parties. It is the court's responsibility to enforce the terms of that bargain and give the contracting parties the benefit of their bargain. While the court has discretion to adjust an award, it should only do so if it finds that the fee award would be inequitable and unreasonable. Id. at 1550 n.18. 3. Adjustment

As set forth in Villescas, the Court may adjust the fees sought based on the level of success achieved by the party requesting the fee award. Villescas, 145 F. Supp. 2d at 1233. "When a plaintiff achieves the principal goal of his lawsuit, lack of success on some of his interrelated claims may not be used as a basis for reducing the plaintiff's fee award. Hence,
3

The evidence provided by SMG is sufficient to justify the fee award and the hourly rate charged by SMG's counsel. Further, in Villescas, the Court determined that an hourly rate of $250 was reasonable for a case that started in 1997, seven years before this case. 145 F. Supp. 2d 1228. To the extent the Court finds that the hourly rates charged by K&LNG are not reasonable, then the Court should use the rate awarded in Villescas as a floor from which to consider the rates sought in this matter.

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when a plaintiff achieves most of all of what he aimed for . . . his lawyer should receive a fully compensatory fee." Id. (citations and quotations omitted). Here, SMG achieved what it aimed for: it was successful in defeating each of the counterclaims and in being granted summary judgment on the claims set forth in its Complaint. Further, when attorney fees are provided for by contract, "fees are routinely awarded and the contract is enforced according to its terms." Western States, 834 F.2d at 1548; Public Serv. Co. of Colo. v. Continental Cas. Co., 26 F.3d 1508, 1520-21 & n. 11 (10th Cir. 1994). This ensures that the non-breaching party is made whole and receives the benefit of its bargain. Western States, 834 F.2d at 1549. Although SMG achieved full success in this matter, it will not be made whole until CPI compensates SMG for the full costs of adjudicating this matter. As this Court has found, SMG is entitled to attorney fees under the commercial agreement between the parties. Only after receiving its full fee award will SMG receive the full benefit of its bargain with CPI. Because neither the hours spent representing SMG nor the hourly rates charged for this time are inequitable and unreasonable, the Court should grant SMG's Motion for Approval and Award of Fees in full. B. Disbursements In its Motion, SMG provided a breakout of the costs and disbursements which were charged to SMG each month. CPI claims that this was not sufficiently specific to allow CPI to scrutinize the costs. In an effort to provide more detail on the requested costs, SMG submits the Supplemental Affidavit of Patrick J. McElhinny attached hereto as Exhibit A and the

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Supplemental Affidavit of Daniel Scheid attached hereto as Exhibit B and the respective exhibits which provide an itemization as to the disbursements.4 C. Mr. Hiller's Fee As part of SMG's Motion for Approval and Award of Fees, SMG requested that CPI be required to pay Mr. Hiller directly for the fees charged for time spent preparing for and giving deposition testimony in this matter on behalf of CPI. This procedure would be more efficient rather than having SMG pay the invoice and then attempt to recover this charge from CPI. CPI disputes this proposal claiming that doing so would impair Mr. Hiller's claim for breach of contract or quantum meruit against SMG. Notably, Mr. Hiller is CPI's own expert witness. SMG did not retain him and has not contracted with him. CPI also disputes this proposal because the Court does not have sufficient evidence before it to determine the reasonableness of Mr. Hiller's fees and, therefore, it would be inappropriate for the Court to require CPI to pay Mr. Hiller's fees. Again, SMG is simply requesting that CPI pay the fees of CPI's own witness. CPI should be estopped from challenging the reasonableness of the fees charged by its own expert. WHEREFORE, Plaintiff Student Marketing Group, Inc. respectfully requests that the Court grant its Motion for Approval and Award of Attorney Fees and award SMG $279,547.06 which represents $255,373.40 in attorney fees and $24,173.66 in costs (the total costs and disbursements less the $5,169.32 which was awarded as part of the Bill of Costs entered on September 28, 2005).
4 CPI also challenges SMG's disbursements because they include amounts already taxed as costs against CPI in the Bill of Costs entered on September 28, 2005. Because the Bill of Costs was neither filed nor resolved until after SMG filed its original Motion for Approval and Award of Fees, SMG had no way of knowing precisely what costs would be taxed by the Clerk. By way of its Motion for Leave to File Supplement to Motion for Approval and Award of Fees, SMG has already sought to reduce the requested disbursements by the $5,169.32 already taxed against CPI in the Bill of Costs. The itemizations attached to Exhibits A and B hereto do not include the amounts already taxed against CPI in the Bill of Costs.

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Dated: October 19, 2005

Respectfully submitted: s/R. Daniel Scheid ______________ LEWIS SCHEID LLC R. Daniel Scheid River Point Building 2300 Fifteenth Street, Suite 320 Denver, CO 80202 Telephone: (303) 534-5040 Facsimile: (303) 534-5039 KIRKPATRICK & LOCKHART NICHOLSON GRAHAM LLP Patrick J. McElhinny, Esquire Dianna S. Karg, Esquire 535 Smithfield Street Henry W. Oliver Building Pittsburgh, PA 15222 Telephone: (412) 355-6500 Facsimile: (412) 355-6501 Counsel for Plaintiff, Student Marketing Group, Inc.

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CERTIFICATE OF SERVICE I hereby certify that on this 19th day of October, 2005, I electronically filed the foregoing REPLY TO DEFENDANT'S RESPONSE IN OPPOSITION TO PLAINTIFFS MOTION FOR ATTORNEY FEES with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: Rosemary Orsini, Esquire Brian Matise, Esquire BURG, SIMPSON, ELDREDGE, HERSH, JARDINE, P.C. [email protected] [email protected]

s/Diane L. Weber