Free Response in Opposition to Motion - District Court of Arizona - Arizona

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Jay A. Zweig (011153) Mark A. Fuller (012149) Michelle R. Matheson (019568) GALLAGHER & KENNEDY, P.A. 2575 E. Camelback Road, Suite 1100 Phoenix, Arizona 85016-9225 (602) 530-8407 Attorneys for Defendants UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Matthew Shaffer, Plaintiff, vs. No. CIV-03-2344-PHX-FJM DEFENDANTS' RESPONSIVE MEMORANDUM IN OPPOSITION TO PLAINTIFF' MOTIONS FOR S ATTORNEYS' FEES AND EXPENSES

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State of Arizona Citizens Clean Elections Commission; Colleen Connor and Chad Jacobs, husband and wife; and Jessica Funkhouser and Lindy Funkhouser, husband and wife; John Does I-X; Jane Does I-X, Defendants. Defendants State of Arizona Citizens Clean Elections Commission ("CCEC"), Colleen Connor and Chad Jacobs, (collectively "Defendants") submit their Responsive Memorandum in opposition to Plaintiff's Motion for Award of Attorneys' Fees and Expenses (Doc. #142) filed October 18, 2005, Plaintiff's Supplemental Motion for Award of Attorneys' Fees and Expenses (Doc. #168) filed April 3, 2006 and Plaintiff's

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Memorandum in Support of Motion for Attorneys' Fees (Doc. #169) also filed April 3, 2006. Even though plaintiff failed to prevail on the vast majority of his claims, he asks this Court to award him all of his attorneys' fees for all twelve of the claims that he pursued. There is no legal support to award plaintiff attorneys' fees on his scattershot collection of unsuccessful claims and this Court must reduce the lodestar calculation to reflect plaintiff's limited success. Plaintiff also improperly asks this Court to shift his fees to defendants at a higher hourly rate than he and his counsel agreed that plaintiff would pay. The fact that some fees for plaintiff's success on one of his Section 1983 claims may be the responsibility of the taxpayers of Arizona does not entitle plaintiff or his counsel to a windfall on the hourly rate. Defendants respectfully suggest that this Court reduce plaintiff's requested hours by at least 50 per cent, and that the fee award should be calculated at the $250 per hour rate contracted for by plaintiff. Applying these reductions, a reasonable fee award in this case should not exceed $115,000.

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A.

The Fee Award May Not Include Time Expended on Unrelated Claims that Proved Unsuccessful.

Although plaintiff's Judgment on his Section 1983 liberty interest claim entitles him to some award of attorneys' fees as a prevailing party1 under 42 U.S.C. § 1988,2 plaintiff's request is excessive under the standards established for such an award under Hensley v. Eckerhart, 461 U.S. 424 (1983) and its progeny. Prevailing party fee awards under Section 1988 were intended to attract competent counsel to "ensure effective access to the judicial process for persons with civil rights grievances" but were not intended to "produce windfalls to attorneys". Id. at 429, 430 n.4 citing H.R. Rep. No. 941558, p. 1 (1976). Accordingly, if a plaintiff obtained only "partial or limited success," full compensation is excessive. Thorne v. City of El Segundo, 802 F.2d 1131, 1141 (9th Cir. 1986) citing Hensley, 461 U.S. at 435-437. Plaintiff brushes aside the fact that he succeeded on less than 17 percent (2 of 12) of his claims, arguing that partial success is "immaterial" and he should receive every dollar of possible fees. See Doc. #169 at p. 2:24-25. But the Supreme Court's standard is that the trial court must evaluate the "significance of the overall relief obtained by the

Defendants do not dispute that plaintiff meets the threshold necessary to be deemed a prevailing party under Section 1988 by achieving more than a de minimis judgment on his Section 1983 liberty interest claim, as this requires only that plaintiff succeeded on "any" significant issues in the litigation which achieved "some" of the benefit the party sought in bringing the suit. Texas Teachers Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 791-93 (1989); Farrar v. Hobby, 506 U.S. 103 (1992).
1

At page 7:15-16 of his Memorandum in Support, plaintiff erroneously asserts that he is entitled to reasonable attorneys' fees "pursuant to 42 U.S.C. § 1988 and pursuant to 42 U.S.C. § 2000e-5(k)." Plaintiff had no claim under Title 42 U.S.C. § 2000e.
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plaintiff in relation to the hours reasonably expended on the litigation" in reaching its fee award. Hensley, 261 U.S. at 435. Interpreting Hensley, the Ninth Circuit has repeatedly found that a party's full or partial degree of success is the most critical factor to be considered. See Webb v. Sloan, 330 F.3d 1158 (9th Cir. 2003) citing Hensley, 461 U.S. at 440; White v. City of Richmond, 713 F.2d 458, 461 (9th Cir. 1983) citing Hensley, 461 U.S. at 436; Thorne v. City of El Segundo, 802 F.2d 1131, 1141 (9th Cir. 1986) citing Hensley, 461 U.S. at 435-37. Notably, it was this difference of opinion that largely contributed to the parties' inability to resolve the attorneys' fee award without this Court's assistance. See Defendants' Separate Statement of Defendants' Counsel

Regarding Consultation on Plaintiff's Application for Attorneys' Fees, attached hereto as Exhibit 1. Plaintiff chose to file an eight count complaint against three sets of defendants, amounting to 12 separate claims in this litigation: (1) retaliation against CCEC; (2) wrongful termination against CCEC; (3) defamation against Connor; (4) false light invasion of privacy against Connor and (5) CCEC; Section 1983 liberty interest against (6) Connor and (7) CCEC; Section 1983 first amendment interest against (8) Connor and (9) CCEC; (10) negligent retention against CCEC; and intentional interference with contractual relations against (11) Connor and (12) Funkhouser. Plaintiff prevailed on only two claims in this action: defamation and violation of his liberty interest under 42 U.S.C. § 1983. In these two claims, plaintiff sought an award for damages to his professional reputation as well as for pain, suffering and anxiety experienced as a result of Connor's statement in a memorandum to DPS and
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damages resulting from his perceived lack of a name clearing hearing.

See Jury

Instructions 7, 14, 20, and 22. As noted in the Court's Order remitting the verdict and disposing of other post-trial motions, the jury's awards on defamation and liberty interest claims addressed an "identical" harm. See Order (Doc. #155). Accordingly, under the Hensley analysis, these two claims were "related" for purposes of considering plaintiff's attorneys' fees motion.3 Plaintiff's other claims, however, must be distinguished as they bear no relationship to his one successful 1983 claim. Where a plaintiff was unsuccessful on claims that were "separate and distinct from the course of conduct that gave rise to the injury" for which plaintiff prevailed, the claims are unrelated and may not be included in the final fee award. Thorne v. City of El Segundo, 802 F.2d at 1141 citing Hensley, 461 U.S. at 434-35. In Counts I and II of his Complaint, plaintiff sought relief for wrongful termination in violation of the Arizona Employment Protection Act, A.R.S. § 23-1501. See Complaint, ¶ 132. Specifically, in Count I, plaintiff alleged that Connor terminated his employment in violation of Section 1501(3)(c)(i) of the Employment Protection Act for his refusal to violate the law by holding the Salmon campaign to a different accounting standard than had been applied to other campaigns. See Complaint, ¶ 138.

Defendants do not dispute that plaintiff's claim in Count IV for False Light Invasion of Privacy is similarly related, and therefore defendants do not dispute the small amount of fees associated with this unsuccessful claim. However, because the time entries submitted by plaintiff's counsel fail to comply with Local Rule 54.2, defendants cannot determine which, if any, time entries are attributable to this claim.
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This Court granted defendants' motion for summary judgment on this claim, finding that plaintiff could not identify that he was "asked, instructed, or pressured in any way to violate the constitution or a statute and therefore, cannot be said to have `refused' to do so." See Order (Doc. #74) at p. 9:22-24. Similarly, in Count II plaintiff alleged that he was wrongfully terminated and lost earnings and benefits in violation of Section 1501(3)(c)(ii) of the Employment Protection Act for reporting alleged violations of Arizona law. Plaintiff's principle allegations in this claim were: (1) that he reported to Connor that he believed CCEC's investigation into the Salmon campaign was politically motivated; (2) that he reported to Connor CCEC's failure to publish the bookkeeping standard it applied to the Salmon campaign; and (3) that he blew the whistle on Connor by telling her that neither she, nor anyone at CCEC, should be discussing the Salmon matter with Jessica Funkhouser. Id. at p.11. Plaintiff's wrongful discharge claims sought to remedy a course of conduct which was entirely separate and distinct from the conduct giving rise to his defamation and liberty interest claims. Indeed, plaintiff's termination claims have nothing to do with Connor's statement in the DPS memo. Rather, plaintiff claimed that he was fired for "blowing the whistle" on alleged violations of Arizona law by Connor and the CCEC. See Jury Instruction No. 5. The jury rejected plaintiff's wrongful termination claim, separating that claim from the Section 1983 name clearing hearing and the defamation claim. But, as this Court recognized when it reduced the Judgment by $440,000, the jury erroneously compensated Shaffer for damages for wrongful termination. See Order

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(Doc. #74) at pp. 6-7. As it did with the verdict, this Court should reduce plaintiff's fee request to exclude work performed by his attorney on these unsuccessful claims.4 Also unrelated was plaintiff's claim in Count VI of plaintiff's Complaint alleging that Connor violated his First Amendment rights by ordering him not to discuss his criticisms of CCEC's investigation into gubernatorial candidate Matt Salmon's campaign. See Complaint ¶ 193-194. Plaintiff also claimed that Connor fired him in retaliation for publicly criticizing her. See Complaint ¶ 195. These unsuccessful theories have no relationship to plaintiff's defamation and liberty interest claims. On Count VI, the jury was instructed to determine whether Shaffer had made certain comments to Connor about the CCEC's improper handling of its investigation into the Salmon Campaign. See Jury Instruction No. 24. If so, the jury was further instructed to determine whether Shaffer's speech played a substantial or motivating role in his termination. Id. Like plaintiff's wrongful termination claim, this cause of action sought lost earnings and benefits to date, and any decreased future earning power as a result of the alleged First Amendment violation. See Jury Instruction No. 25. As such, it sought to remedy a separate and distinct injury than plaintiff's successful 1983 claim, and this Court should not award attorneys' fees for this unsuccessful claim.

Plaintiff's fees associated with his expert witness, Larry Stokes, must be similarly disallowed. Mr. Stokes testified solely as to plaintiff's alleged wage loss as a result of the termination of his employment. As such, any fees and expenses associated with Mr. Stokes are unrelated to plaintiff's Judgment on his Section 1983 liberty interest claim. This reduction alone amounts to 15.1 hours of attorney time in addition to Mr. Stokes' fee of $2,450. See Doc. #168 at Ex. D. See Billing Entries Related to Expert Witness Larry Stokes, attached hereto as Exhibit 2.
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Count VII of plaintiff's Complaint alleged that CCEC negligently retained Colleen Connor, knowing that she lacked sufficient legal or accounting knowledge to administer the CCEC. See Complaint ¶ 199. This claim, which boarded on frivolous, was voluntarily dismissed by plaintiff when faced with defendants' summary judgment motion. This claim was also unrelated to plaintiff's Judgment on his Section 1983 liberty interest, and plaintiff is entitled to no fees related to this claim. Finally, Count VIII of plaintiff's Complaint alleged that individual defendants Jessica Funkhouser and Colleen Connor intentionally interfered with his employment relationship with CCEC. See Complaint, ¶ 203-204. After expending at least 20 hours on this unsupported claim against Funkhouser, plaintiff agreed to dismiss her from the action. See Billing Entries Related to Claim Against Jessica Funkhouser, attached hereto as Exhibit 3. At trial, the jury rejected the remainder of this claim, which sought recovery for lost economic benefits of plaintiff's employment as well as emotional suffering resulting from Connor's alleged interference with Shaffer's contractual relationship with CCEC. See Jury Instruction Nos. 28, 29. Like plaintiff's claims for wrongful termination, this claim was separate and distinct from the allegations giving rise to plaintiff's successful Judgment on the Section 1983 liberty interest claim. Consistent with other precedents in this jurisdiction, defendants respectfully request that the Court should reduce the lodestar amount in this case by at least 50 percent for plaintiff's lack of success on 10 of the 12 claims asserted in this matter. See Harris v. Marhoefer, 24 F.3d 16 (9th Cir. 1994) (affirming 50 percent reduction to lodestar for lack of success based on the number of claims prevailed upon versus the
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number of claims dismissed or decided in defendant's favor); Fiolek v. Tucson Unified School Dist., CV-01-TUC-DCB (reducing fee request of $537,310 to $255,148), attached as Exhibit 4. Given that plaintiff succeeded on less than 20 percent of his claims, a 50 percent reduction to the lodestar is a fair and reasonable request. B. The Lodestar Must be Reduced to Reflect the Number of Hours Reasonably Expended on the Litigation.

A plaintiff must establish both that the number of hours requested are reasonable and also that the hourly rate he requests the defendants pay is reasonable. Hensley, 461 U.S. at 433 (1983). This is commonly referred to as the "lodestar" calculation. In reaching this formula the Supreme Court specifically noted that "[h]ours that are not properly billed to one's client also are not properly billed to one's adversary pursuant to statutory authority." Id. at 434 (emphasis in original). In reviewing plaintiff's time entries as part of the good faith consultation required under Local Rule 54.2(d)(1), the vast majority of counsel's time entries were so vague that defendants could not determine whether the work performed related to plaintiff's successful Section 1983 claim. As noted in the Local Rule, "[t]he party seeking an award of fees must adequately describe the services rendered so that the reasonableness of the charge can be evaluated. . . . If the time descriptions are incomplete, or if such

descriptions fail to adequately describe the service rendered, the court may reduce the award accordingly." Local Rule 54.2(e)(2). This District has gone to great lengths to put counsel on notice of the level of specificity required before the trial court will shift a prevailing party's fee to his

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opponent. The Local Rule gives detailed examples for common tasks such as telephone conferences, legal research, preparation of pleadings and travel time. Id. Despite this clear guidance, plaintiff nonetheless asks this Court to have defendants bear the expense even where his counsel has submitted vague and unspecified time entries such as: 1/20/2005 1/21/2005 1/21/2005 1/24/2005 1/25/2005 1/26/2005 1/27/2005 1/27/2005 1/28/2005 1/31/2005 5/23/2005 5/24/2005 8/25/2005 8/26/2005 9/12/2005 Work on response to motion for summary judgment Work on response to motion for summary judgment Continue work on Motion for summary judgment response Continue working on response to msj Continue working on response to msj Continue working on response to msj Continue working on motion for summary judgment response Continue work on response to msj Continue work on response to msj Finalize response to msj; statement of facts; affidavit etc. file all begin drafting motion to strike Work on response to motion for summary judgment Work on response to motion for summary judgment Work on pre-trial matters with opposing counsel; calls with court etc. Finalize all pretrial motions; file with court Prepare for trial 3.9 1.2 2.1 6.8 8.0 8.0 8.6 3.4 9.9 7.1 8.0 8.0 10.4 10.0 12.5

This type of generic billing, even resorting to descriptions of tasks performed as "etc." is typical of the billing records submitted by plaintiff. It also does not provide any task-based description of services or even state what claims were being addressed. This does not meet the standard required for a fee shifting award under Local Rule 54.2(e)(2). Moreover, despite the statement by Plaintiff's counsel that he has reduced his fee request to omit time spent addressing media inquiries, a number of time entries on this topics still remain. These are:

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9/4/02

9/5/02 9/9/02 9/19/02 9/23/02 9/25/02 10/1/02 10/2/02 10/3/02 1/6/03 2/18/03 2/25/03 2/26/03 3/26/03 6/6/03 6/11/03

Work on researching facts of case; call client regarding hearing; discuss media involvement; research whistleblowing merits; contact Salmon campaign regarding accuracy of accounting Calls from media; calls with client Call with client and with several media reps Call from KFYI; call with client Call with client regarding status; call from Salmon campaign; call from KFYI radio; letter from Colleen Call with client regarding status; call from Salmon campaign; call from KFYI radio; letter from Colleen Call from Matt; call to media; discuss theories of Claims Meeting with client; calls with Scott Salmon and with media Work with client (prepare for talk show); research Legal theories; research allegations against client E-mail from client; review media article from ROBB Receive and review article in the paper; e-mail from client Call from Capitol Times Reporter Review article in paper; e-mail from client; call to Scott Salmon Call with Chris Lavoy; e-mails from media Meeting with client; prepare for media interview Calls with Matt; call from newspaper; call from Casey regarding media

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0.4 1.1 0.1 0.1 0.1 0.5 1.2 0.4 0.3 0.1 0.3 0.3 0.2 1.4 0.6

Defendants should not have to compensate plaintiff for his attorneys' attempts to publicize this case or to ingratiate himself with the Salmon Campaign. And although plaintiff is entitled to reasonable compensation for fees in connection with his Motion for Attorney's Fees and Memorandum in Support, plaintiff has no basis for a claim for unspecified future time entries to which defendants will have no opportunity to respond. See Doc. # 169 at p. 5:10-12 ("additional fees will be set forth in a subsequent declaration upon filing of the Plaintiff's reply to the motion for fees.") The billing statements attached to plaintiff's Memorandum in Support
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demonstrate that plaintiff has already spent in excess of 60 hours of attorney time on this issue. See Billing Entries Related to Plaintiff's Motion for Attorneys' Fees and NonTaxable Costs, attached hereto as Exhibit 6. Allowing plaintiff a further amount of unspecified fees to draft a Reply is clearly excessive and should be disallowed. C. Plaintiff Cannot Shift His Fees to Defendants At a Higher Rate Than He Was Obligated to Pay.

Any attorneys' fees shifted to defendants should be based on the appropriate hourly rate for legal services rendered in Phoenix metropolitan area. In this case, the fee agreement between plaintiff and his counsel set that rate at $250 per hour. See Doc. #169 at Exhibit B, ¶ 2. Plaintiff should not be allowed to pad his recovery by $40 per hour by shifting his fee obligation to defendants at the higher hourly rate of $290 per hour proposed for the first time in the fee application. The best evidence of plaintiff's

counsel's reasonable market rate is the actual rate he contracted for in this matter. Plaintiff should not achieve a 16 percent windfall in his hourly rate simply because the taxpayers of Arizona, not plaintiff, are paying the fees. A rate of $250 per hour is consistent with other fee awards in this District. In Shapiro v. Paradise Valley Unified School Dist., 374 F.3d 857 (9th Cir. 2004), the Ninth Circuit upheld an award of $250 per hour as reasonable in the Phoenix market in a fact intensive and time consuming case. This was also the hourly rate awarded in a recent civil rights action against Northern Arizona University for Tom Rogers, whom plaintiff himself proffers as an "authority" on the Phoenix market rate. See John Doe v. Owen

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Francis Cargol, et al., CIV-03-0248-PHX-SMM attached hereto as Exhibit 5; See (Doc. # 169) at Exhibit H. Moreover, the legal authority cited in support of plaintiff's argument that it is appropriate to calculate the lodestar at current, rather than historic hourly rates is inapposite. See Doc. #169 at p.6:19-25. In Missouri v. Jenkins, the U.S. Supreme Court, after calculating the lodestar figure, awarded plaintiff's counsel an enhancement to the lodestar due to the exceptional result and extraordinary length of the litigation. There, after 12 years of litigation, plaintiff had successfully achieved $460 million in damages and capital improvements to the Kansas City, Missouri school district. Missouri v. Jenkins, 491 U.S. 274, 276 (1989). For nearly three of the twelve years, plaintiff's counsel was totally precluded from accepting other employment due to the overwhelming demands of the litigation, requiring him to take out a substantial loan in order to pay his staff and meet other operating expenses. Id. at 284. At the time of the Court's decision, plaintiff had paid over $113,000 in interest on this debt and was continuing to borrow finances to meet interest payments. Id. The present case bears absolutely no resemblance to the results obtained in Missouri v. Jenkins, nor the hardship involved, and is not the type of extraordinary case in which a fee enhancement of any kind is proper. See also White v. City of Richmond, 559 F. Supp. 127 (N.D. Cal. 1981) (calculating lodestar using an average rate, not an enhanced rate as plaintiff claims).

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D.

Conclusion.

Plaintiff initially requested fees $219,997.50 in prevailing party attorneys' fees. Following post-trial motions and briefing of the attorneys' fees issue, plaintiff now seeks $264,865.50. In other words, plaintiff seeks to shift costs and attorneys' fees to the taxpayers of Arizona for every minute spent at all related to this lawsuit, despite significant expenditures of time spent on unsuccessful theories and on tangential matters, such as plaintiff's counsel speaking with the media. Such a wholesale fee award is not contemplated where, as here, plaintiff was unsuccessful on the vast majority of his claims. Moreover, knowing that he would pursue a fee award for his client if he was successful on either of his Section 1983 claims, plaintiff's counsel chose to prepare time entries that fail to adequately describe the services rendered. This Court should invoke the limitations imposed in Local Rule 54.2 and strike plaintiff's non-compliant time entries. Finally, plaintiff seeks to shift his fee obligation to defendants at a rate that is $40 per hour higher than what plaintiff was obligated to pay his attorney. There is no authority to support that 42 U.S.C. § 1988, which was enacted to ensure effective access to the judicial process for persons with civil rights grievances, would support using the fee award as an opportunity for a windfall to attorneys. Such a windfall would encourage parties to pursue futile claims and needlessly burdens both this Court's resources as well as the public who will ultimately be asked to foot the bill. For these reasons, defendants request that this Court reduce plaintiff's requested fee to an amount not exceeding
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$115,000. This represents a 50 percent reduction to the requested award, applying a $250 per hour rate for plaintiff's counsel. RESPECTFULLY SUBMITTED this 21st day of April, 2006. GALLAGHER & KENNEDY, P.A. By s/Jay A. Zweig Jay A. Zweig Mark A. Fuller Michelle R. Matheson 2575 E. Camelback Road, Suite 1100 Phoenix, Arizona 85016-9225 Attorneys for Defendants COPY of the foregoing electronically transmitted via the U.S. District Court Electronic Case Filing system this 21st day of April, 2006 to: Richard J. Harris, Esq. Co-Counsel for Plaintiff David C. Larkin, Esq. Co-Counsel for Plaintiff
568-0140/1357241

s/Dawn Sylvester

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