Free Reply - District Court of Arizona - Arizona

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Helen Perry Grimwood - 006355 N. Douglas Grimwood - 003414 THE GRIMWOOD LAW FIRM plc 3101 North Central Avenue, Suite 940 Phoenix, Arizona 85012-2666 (602) 265-4995 -andKeith F. Overholt ­ 007473 Michael J. Farrell - 015056 JENNINGS, STROUSS & SALMON, P.L.C. A Professional Limited Liability Company The Collier Center, 11th Floor 201 East Washington Street Phoenix, Arizona 85004-2385 (602) 262-5837 Attorneys & Guardians ad Litem for Defendant Trust Funds: Arizona Pipe Trades Defined Contribution Pension Trust Fund; Arizona Pipe Trades Health and Welfare Trust Fund; and Arizona Helpers and Pre-Apprentices Health and Welfare Trust Fund IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Plumbing and Air Conditioning Contractors of Central and Northern Arizona; Steven Baker, trustee; and William Crowe, trustee, Plaintiffs v. Plumbing and Air Conditioning Contractors of Arizona, Tucson Area; et al., Defendants. ) Cause No. CIV 03-1684 PHX FJM ) ) ) DEFENDANTS ARIZONA PIPE ) TRADES HEALTH AND WELFARE ) ) TRUST FUND AND ARIZONA PIPE ) TRADES DEFINED CONTRIBUTION ) TRUST FUND'S REPLY ) MEMORANDUM IN SUPPORT OF ) MOTION FOR ATTORNEY'S FEES ) AND RELATED NON-TAXABLE ) ) EXPENSES PURSUANT TO FED. R. ) CIV. P. 54(b) ) )

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Defendants Arizona Pipe Trades Defined Contribution Trust Fund and Arizona Pipe Trades Health and Welfare Trust Fund (collectively "Trust Funds") hereby submit their Reply in support of their Motion for Attorney's Fees and Non-Taxable Expenses. This Reply includes the "Supplemental Declaration of Helen Perry Grimwood In Support of Fee Application" ("Supp. Grimwood Dec."), attached hereto as Exhibit 1. I. THE TRUST FUNDS ARE ENTITLED TO ATTORNEY'S FEES. Plaintiffs' Response devotes considerable space to arguing that the Trust Funds are not entitled to recover attorney's fees and non-taxable expenses. However, as noted in the Trust Funds' Motion, the Court has already rejected that argument by ruling correctly - that the Trust Funds are eligible for and entitled to their "reasonable attorney's fees and costs with respect to the defense of this matter." [Order filed May 31, 2005, at 7 (doc. 165)] Even if the Court were to reconsider its Order, Plaintiffs' argument should still be rejected. As the Court has found, (1) Plaintiffs "had an erroneous, and unreasonable, approach to resolving this dispute (which should subject them to fees)" and (2) Plaintiffs "failed to produce any substantial evidence to support their claims[.]" [Doc. 165, at 7]. In addition, "[a]ttorneys' fees may ... be awarded in the absence of specific statutory authority where a party has by his own effort and expense preserved a fund which benefits others." Snider v. All State Administrators, Inc., 481 F.2d 387, 392 (5th Cir. 1973) (citing Mills v. Electric Auto-Lite, 396 U.S. 375, 90 S. Ct. 616, 24 L. Ed. 2d 593 (1970)). Here, the Trust Funds' successful defense against Plaintiffs' attempts to split the Funds preserved the Trust Funds' integrity and therefore conferred a benefit on all Trust Funds beneficiaries. Thus, consistent with the Court's prior decision, the Trust Funds are entitled to recover attorney's fees incurred "with respect to the defense of this matter," and such recovery is not limited to the ERISA claim. Plaintiffs then attempt to portray the Trust Funds as a mere "nominal party" with

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no real involvement in the case. This is a dramatic change from Plaintiffs' position in the lawsuit. Again, Plaintiffs raised novel questions regarding the governance and structure of the Trust Funds, including the fundamental structural question of who had the right to appoint the management trustees of the Trust Funds, and on that basis sought to split the Trust Funds. Plaintiffs do not dispute that polarization of the trustees on the issues of this case severely complicated case management for the Trust Funds. Despite these facts, Plaintiffs baldly assert that Trust Funds' counsel's role in this case was "minimal" prior to Plaintiffs' application for a Temporary Restraining Order. What Plaintiffs fail to recognize is that the Trust Funds Board retained both Jennings Strouss and The Grimwood Law Firm to monitor the lawsuit and ensure that the Trust Funds' interests were protected. The Trust Funds obviously had a strong interest in monitoring this lawsuit, as Plaintiffs sought from the very beginning to split the Trust Funds.1 Thus, the structural defect that formed the basis for Plaintiffs' allegations against Defendants caused a split on the Board, which in turn caused the Board to hire two sets of counsel to monitor the case, one from the perspective of the management-appointed trustees and one from the perspective of the union-appointed trustees. The Court expressly recognized the Trust Funds' need for two sets of counsel representing their interests when it declared the Trust Funds incapacitated for purposes of this litigation and appointed both Keith Overholt of Jennings Strouss and Helen Perry Grimwood of The Grimwood Law Firm as co-guardians ad litem. This appointment in and of itself raised more challenges for all involved, as the appointed guardians then had to assess their respective roles relative to the other parties in the case, having already

Plaintiffs now try to paint this remedy as only an "alternative" when in fact it was the only remedy requested in their initial Complaint. [Doc. 190, Exh. I, at 8, "Prayer for Relief"] It was only later ­ after the Trust Funds had retained undersigned counsel to monitor the case ­ that Plaintiffs proposed alternative remedies that did not involve splitting the Trust Funds. In any event, Plaintiffs never abandoned their request for this drastic remedy. Thus, even if Plaintiffs were correct that this was the only justification for trust Funds' involvement in the case, this justification was present until the Court granted judgment as a matter of law for the Trust Funds on this issue at the close of Plaintiffs' case. [Doc. 165, at 3]

1

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been involved as counsel for the Trust Funds at the direction of the trustees. Thus, it was necessary for the Trust Funds not only to retain counsel, but to retain two sets of counsel, reflecting the split among the trustees. Because the Court already has determined that the Trust Funds are entitled to recover "reasonable attorney's fees and costs with respect to the defense of this matter," such recovery must include the fees incurred by all counsel for the Trust Funds. II. THE ATTORNEY'S FEES SOUGHT ARE REASONABLE. Plaintiffs engage in several cherry-picking attacks on the Trust Funds' fees claim, attempting to reduce the amount claimed. However, each of these attacks is either overstated or simply misplaced, and none of them identify with specificity the disputed issues of material fact or separately identify each and every disputed time entry, as is required by L.R. Civ. 54.2(f). Therefore, Plaintiffs' vague assertions do not merit any reduction in the fee award. First, Plaintiffs argue that the Trust Funds have not split the fees incurred in defending the ERISA claims from the other claims, and argue that, because only one claim out of three was an ERISA claim, the fees award should be reduced by two thirds. Even ignoring the Court's previous Order, while Plaintiffs' simple math is compelling on its face, Plaintiffs omit that the bench trial in this matter was solely on the ERISA claim. Thus, the great majority of the fees incurred by the Trust Funds, and all fees and costs incurred after the Court's February 17, 2005 decision on the other claims [doc. 140], were in defense of ERISA claims. Plaintiffs then reiterate their assertion that none of their claims were brought against, or sought any relief from, the Trust Funds. At the same time, however, Plaintiffs acknowledge that one of their proposed remedies (and, as noted above, their initial requested remedy) was a split of the Trust Funds. How Plaintiffs can assert that this remedy is not relief against the Trust Funds, and not harmful to the Trust Funds and their

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beneficiaries, is a complete mystery, given the Court's express ruling that Plaintiffs presented no evidence that splitting the Trust Funds would "not adversely affect the rights of any beneficiary or the accomplishment of the trust purposes." [Doc. 165, at 3 (quoting Restatement (Third) of Trusts § 68 (2003))]. Plaintiffs' second attack is directed at the rates charged by The Grimwood Law Firm, based on apparent misunderstandings about Ms. Grimwood's experience, background, and billing rates, coupled with lavish praise for Mr. Overholt of Jennings Strouss because he charged a lower hourly rate. Ms. Grimwood has submitted a Supplemental Declaration that clarifies Plaintiffs' supposed factual misunderstandings. [Supp. Grimwood Dec. ¶ 1] As for the comparison to Jennings Strouss, it is true that Jennings Strouss charged less per hour than did The Grimwood Law Firm. However, as set forth in the Declaration of Mr. Overholt, submitted with Trust Funds' Memorandum in support of this Motion, the rates charged by Mr. Overholt and other Jennings Strouss lawyers "were below the customary charges of the firm, as well as below the comparable prevailing community rate for each attorney for whom fees are claimed." [Declaration of Keith F. Overholt, ¶ 4] It is natural that Jennings Strouss, which serves as general counsel to the Trust Funds, charged them lower rates, as there is an ongoing relationship. The Grimwood Law Firm, by contrast, was retained for this case only and does not have an ongoing relationship with the Funds. Plaintiffs' attack on The Grimwood Law Firm's rates is based solely on this apples-to-oranges comparison with Jennings Strouss' lower rates, and Plaintiffs' apparent misunderstanding about fundamental issues concerning Ms. Grimwood's practice and her billing rates. As Ms. Grimwood explains, while she has spent the last five years of her career as a member of The Grimwood Law Firm, her career includes two years clerking for federal and state appellate judges, and about 19 years with Osborn Maledon and Meyer Hendricks Victor Osborn & Maledon, one of the Nation's foremost commercial

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and complex litigation law firms. After approximately one year of doing corporate transactional work, tax and estate planning, and the usual work done by associates with Osborn Maledon, from 1985 forward, Ms. Grimwood devoted her time to the "litigation side" of the firm, handling a full gamut of commercial and complex litigation, including substantial experience with high stakes trust litigation, breach of fiduciary duty litigation, board of director disputes, corporate governance disputes, highly complex class action and individual high stakes litigation involving a wide variety of issues related to large sums of money. Over the past five years, after forming her own law firm, Ms. Grimwood's work has focused more specifically on a significant volume of ERISA litigation. This has merely added to her otherwise substantial experience with complex legal issues and complex litigation, and the procedural expertise that accompanies such experience. This is one reason why Ms. Grimwood was eminently qualified to act as a guardian ad litem for the Trust Funds in this case. [Supp. Grimwood Dec. ¶¶ 4-6] Thus, contrary to Plaintiffs' assertions, Ms. Grimwood was highly qualified to work on this case. In addition, The Grimwood Law Firm's rates were reasonable, and Plaintiffs do not seriously argue to the contrary. Plaintiffs' argument that The Grimwood Law Firm's rates should be lowered to those charged by Jennings Strouss should be rejected. The $235 per hour rate charged for Ms. Grimwood's services in this litigation was already significantly below market, below the rate usually charged to her clients, and well below the rate charged for her time over five years when she was with Osborn Maledon. Ms. Grimwood cannot recall any court reducing her hourly rate in connection with a fee application. In at least the last ten years, fees for her time has been awarded in a number of cases, and as best she can recall it has always been awarded at her customary hourly rate, well in excess of $200 per hour. As Ms. Grimwood demonstrates, based on her review and filing of many fee applications, she cannot recall any, in recent time, in which

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a lawyer of her experience with complex litigation was below $235 per hour. [Supp. Grimwood Dec. ¶¶ 9-11] Plaintiffs also engage in a disingenuous attack on The Grimwood Law Firm's fees by asserting that "[t]here is no viable explanation as to why every ... task had to be performed by a partner level attorney ... ." Plaintiffs apparently mistake The Grimwood Law Firm for a firm such as their own, Quarles & Brady Streich Lang, with approximately 100 attorneys located in its Phoenix office alone. Plaintiffs simply ignore that The Grimwood Law Firm consists of two attorneys, neither of whom are associates. Moreover, the authority cited by Plaintiffs in their Response supports the awarding of The Grimwood Law Firm's full fee request, if for no other reason than the Trust Funds paid the charged fees. See Balcor Real Estate Holdings, Inc. v. Walentas-Phoenix Corp., 73 F.3d 150, 153 (7th Cir. 1996) ("[T]he best evidence of the market value of legal services is what people pay for it"). Plaintiffs further argue that the hours spent by Trust Funds counsel were excessive based on a vague assertion that the Trust Funds did not need to be present for "virtually every aspect of the litigation." This argument again ignores the reasons why the Trust Funds hired undersigned counsel ­ to monitor the lawsuit and ensure that the Trust Funds' interests were protected. Monitoring only the "highlights" of the litigation, whatever those highlights may have been, would not have adequately protected the Trust Funds' interests. Moreover, Plaintiffs' claim that having Mr. Overholt and Ms. Grimwood both attend depositions is "duplicative" again ignores the practical effects of the very structural defects that formed the bases of Plaintiffs' claims. Again, the Trust Funds' Board was split by these fundamental issues, and the entire case needed monitoring, from both a management and a union perspective. Given this, the Board sensibly hired Jennings Strouss to monitor from the perspective of managementappointed trustees, and just as sensibly hired The Grimwood Law Firm to monitor the

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lawsuit from the perspective of the union-appointed trustees. Moreover, as reflected in the time entries, Jennings Strouss and The Grimwood Law Firm economized and worked jointly where feasible. Jennings Strouss, for example, supervised the document production work, and provided paralegal support for both the pre-trial and trial stage. This gave the client the advantage of the lower hourly rates that Jennings Strouss charged, as discussed above. Finally, the Funds received the benefit of the specialized skills of both trial counsel: Mr. Overholt, with his formidable ERISA experience and in representing funds, and Ms. Grimwood, with similar experience and credentials in complex litigation and in board conflicts. [See Supp. Grimwood Dec. ¶ 12] Finally, Plaintiffs' argument that entries were not sufficiently broken out is incorrect. Contrary to Plaintiffs' assertion, each entry, taken in context, "adequately describes the services rendered so that the reasonableness of the charge can be evaluated" as required by Local Rul. Civ. 54.2(d)(2). Almost all of the time entries are grouped into related work. If anything, most of the descriptions are more detailed than time entries normally seen in litigation matters like this one, in which the concepts and issues with which the lawyers and court are struggling are complicated and involve interrelated thought, strategy, discussions and research. Nonetheless, if the Court would like to question counsel further about the particulars of any time entry, they are happy to give further testimony and/or documentation concerning the work that was being performed at each stage of the proceedings. [See Supp. Grimwood Dec. ¶ 13] It appears Plaintiffs do not actually quarrel with how undersigned counsel handled this case, but rather with the Trust Funds themselves for hiring and directing what Plaintiffs believe to be too many attorneys. Yet the Plaintiffs themselves were always represented by more attorneys than were the Trusts, both in pretrial proceedings and at trial.

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III.

THE NON-TAXABLE COSTS CLAIMED ARE REASONABLE. Plaintiffs attempt to argue that all non-taxable costs sought should be denied based

on a vague assertion that "some of the requests include nonrecoverable items." This assertion certainly does not comport with Plaintiffs' burden to "identify with specificity all disputed issues of material fact and ... separately identify each and every disputed time entry or expense item." L.R. Civ. 54.2(f). In fact, these were legitimate expenses incurred in this case. As such, they should be reimbursed. IV. CONCLUSION. For the reasons set forth above, the Court should award the Trust Funds all fees and nontaxable expenses requested. Respectfully submitted this 6th day of September, 2005. THE GRIMWOOD LAW FIRM PLC By /s/ Helen Perry Grimwood Helen Perry Grimwood N. Douglas Grimwood 3101 N. Central Avenue, Suite 940 Phoenix, Arizona 85012-2666 -andJENNINGS, STROUSS & SALMON, P.L.C. /s/ Michael J. Farrell Keith F. Overholt Michael J. Farrell The Collier Center, 11th Floor 201 East Washington Street Phoenix, Arizona 85004-2385

By

Attorneys & Guardians ad Litem for Defendant Trust Funds: Arizona Pipe Trades Defined Contribution Pension Trust Fund; Arizona Pipe Trades Health and Welfare Trust Fund; and Arizona Helpers and Pre-Apprentices Health and Welfare Trust Fund

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CERTIFICATE OF SERVICE I hereby certify that on September 6, 2005, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Helen Perry Grimwood - [email protected], [email protected] Newton Douglas Grimwood - [email protected], [email protected] David J. Ouimette - [email protected], [email protected] Jon E. Pettibone - [email protected], [email protected], [email protected] Michael S. Rubin - [email protected], [email protected] Dawn Christel Valdivia - [email protected] Richard K. Walker - [email protected], [email protected], [email protected] I hereby certify that on September 6, 2005, I served the attached document by mail on the following, who are not registered participants of the CM/ECF System: Charles W. Gilligan John M. McIntire O'Donoghue & O'Donoghue 4748 Wisconsin Avenue, NW Washington, DC 20016-4610 Tom J. Hagen Tom J. Hagen PC 1 E. Camelback Rd., #550 Phoenix, AZ 85012 Attorneys for Defendants: Plumbing and Air Conditioning Contractors of Arizona, Tucson Area; Local Union 469; Local Union 741; Norm Record, Sr., Trustee; Nancy Record, Trustee; Norm Record, Jr., Trustee; George Michels, Trustee; and Michael L. Collins, Trustee /s/ Kathrine A. Roberts Kathrine A. Roberts

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