Free Response - District Court of Arizona - Arizona

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Quarles & Brady Streich Lang LLP
Firm State Bar No. 00443100 Renaissance One Two North Central Avenue Phoenix, Arizona 85004-2391
TELEPHONE 602.229.5200

Attorneys for Plaintiffs Richard K. Walker (#004159) ([email protected]) Eric B. Johnson (#020512) ([email protected]) IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Plumbing and Air Conditioning Contractors of Central and Northern Arizona, et al., Plaintiffs, vs. Plumbing and Air Conditioning Contractors of Arizona, Tucson Area, et al., Defendants. Norm Record, Sr., Nancy Record, Norm Record, Jr., George Michels and Michael L. Collins, Counterclaim Plaintiffs, vs. Steven Baker and William Crowe, Counterclaim Defendants. Pursuant to Local Rule 54.2, Plaintiffs Plumbing and Air Conditioning Contractors of Central and Northern Arizona, Steven Baker and William Crowe ("Plaintiffs"), hereby submit their Response in Opposition to Defendants Plumbing and Air Conditioning Contractors of Arizona--Tucson Area, Local Unions 469 and 741 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, Norm Record, Sr., Nancy Record, Norm Record, Jr., George Michels, Michael Collins, Ray Carter and Wayne Bryant ("Defendants") Application for Attorney's fees and non-taxable expenses.
NO. CIV 03-1684-PHX-FJM RESPONSE IN OPPOSITION TO DEFENDANTS' APPLICATION FOR ATTORNEY'S FEES

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DATED this 19th day of August, 2005. QUARLES & BRADY STREICH LANG LLP Two North Central Avenue Phoenix, AZ 85004-2391 By s/Eric B. Johnson Richard K. Walker Eric B. Johnson Attorneys for Plaintiffs MEMORANDUM OF POINTS AND AUTHORITIES FACTUAL BACKGROUND. In this lawsuit, Plaintiffs alleged four causes of action against Defendants. In particular, Plaintiffs alleged the following: Count 1 (Violation of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq.); Count 2 (Violation of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 186(c)(5)); Count 3 (Violation of ERISA, 29 U.S.C. § 1001 et seq.); and Count 4 (Violation of Arizona Common Law of Trusts). Defendants/Counterclaimants also asserted a

counterclaim alleging a violation of ERISA. Trial was held on May 10-12, 2005. Pursuant to the Court's Order filed May 31, 2005, judgment was granted in favor of Defendants on Plaintiffs' remaining claims and in favor of Plaintiffs/Counterdefendants on the counterclaim. In particular, the Court found that while Plaintiffs did not bring their claims in bad faith, there was not "substantial evidence" presented at trial to support their claims. Plaintiffs respectfully disagree with the Court's ruling and have filed a notice of appeal with the Ninth Circuit. In particular, Plaintiffs believe that they did present substantial evidence in support of their claims and a brief summary of some of the evidence Plaintiffs believe support their claims is attached as Exhibit A. As explained below, though Plaintiffs were unsuccessful on their claims, an award of attorneys' fees against the Plaintiffs is not proper in this case.

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II.

ARGUMENT AND LAW. A. DEFENDANTS ARE NOT ENTITLED TO ATTORNEY'S FEES.

Defendants base their fee application entirely upon section 502(g)(1) of ERISA, 29 U.S.C. §1132(g)(1), even though this section is applicable to only two of the five claims asserted by Plaintiffs. Moreover, section 502(g)(1) states in relevant part that "the court in its discretion may allow a reasonable attorney's fee and costs of action" in an ERISA action. (emphasis added) When considering whether to award fees, district courts must consider the following factors: (1) the degree of the opposing parties' culpability or bad faith; (2) the ability of the opposing parties to satisfy an award of fees; (3) whether an award of fees against the opposing parties would deter others from acting in similar circumstances; (4) whether the parties requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and (5) the relative merits of the parties' positions. Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir. 1980) (citation omitted). No one of the aforementioned "Hummell factors" is decisive, and some may not be pertinent in a given case. Carpenters Southern California Administrative Corp., 726 F.2d 1410, 1416 (9th Cir. 1984). Courts routinely award attorney's fees when a plan

participant has prevailed on an ERISA claim. McClure v. Life Ins. Co. of N. Amer., 84 F.3d 1129, 1136 (9th Cir. 1996) ("A plan participant who prevails in an action to enforce rights under the plan is ordinarily entitled to a reasonable attorney's fee if the participant `succeed[s] on any significant issue in litigation which achieves some of the benefit . . . sought in bringing suit' and if no special circumstances make an award unjust.") (citation omitted); see also Canseco v. Construction Laborers Pension Trust for S. Cal., 93 F.3d 600, 609-10 (9th Cir. 1996) ("Ordinarily, if a plan participant or beneficiary prevails in an action to enforce his rights under the plan, recovery of attorney's fees is appropriate, absent special circumstances making an award unjust.") (citation omitted).

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1

Nevertheless, as explained below (and ignored by Defendants), the above factors rarely weigh in favor of awarding fees against a plaintiff trying to enforce ERISA's statutory requirements, even if unsuccessful. See West v. Greyhound Corp., 813 F.2d 951, 956 (9th Cir. 1987) (explaining that application of Hummell factors "very frequently suggest that attorney's fees should not be charged against ERISA plaintiffs") (citation omitted); Carpenters, 726 F.2d at 1416 (same). 1. The Degree of the Opposing Parties' Culpability or Bad Faith Weighs in Favor of Denying Defendants' Request for Fees.

The Ninth Circuit has repeatedly refused to award attorney's fees against ERISA plaintiffs absent a showing of bad faith in the bringing of an ERISA claim. See Cline v. Industrial Maintenance Engineering & Contracting Co., 200 F.3d 1223, 1236 (9th Cir. 2000) ("While Appellants failed to prove any of their claims, the [r]ecord contains enough documentary material to support the Court's conclusion that a reasonable basis existed for Appellants to make their claims."); Cinelli v. Security Pacific Corp., 61 F.3d 1437, 1446 (9th Cir. 1995) (finding award of attorney's fees inappropriate where claims were not made in bad faith and were supported by a good faith argument to extend the law of the Ninth Circuit); West, 813 F.3d at 956 (refusing to award attorney's fees where no showing of bad faith or that contentions were "completely" without merit). No showing has been made that Plaintiffs brought their claims in bad faith.1 To the contrary, the claims asserted were brought out of the very real (and continuing) danger that the viability of the funds was in jeopardy. [See, Affidavits of Steven Baker, ¶¶ 7-9; William Crowe, ¶¶ 7-11, Exhibits B and C, respectively.] Moreover, it is undeniable and has never been contested by the Defendants that the ERISA governed plans that were the
Indeed, in denying relief to the Defendants based on their counterclaim, this Court itself held that "Defendants failed to establish at trial that [Plaintiffs'] involvement in this action was driven by impermissible motives or that they breached their duty of loyalty to the Defendant Trusts as to the Tucson participants." Order of May 31, 2005 at 6-7.

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subject of this lawsuit do not comport with ERISA's requirements. See 29 U.S.C. § 1102. Defendants implicitly concede that this factor weighs in favor of Plaintiffs, in that their only argument is that Plaintiffs litigated this case in a "heavy-handed manner." But, the fact that Plaintiffs vigorously pursued their claims (albeit unsuccessfully) does not provide a basis for an award of attorney's fees. Accordingly, Defendants' fee application should be denied. 2. The Ability of Plaintiffs to Satisfy an Award of Fees Favors Denial of Defendants' Application.

The second Hummell factor also favors denying Defendants' fee application. Defendants seek attorney's fees in the sum of $348.468.25.2 An award of fees against the Plaintiff trustees will be financially crippling. [See, Exhibit B, ¶¶ 4-6, 10; Exhibit C, ¶¶ 26, 11.] Indeed, the Ninth Circuit has recognized the impropriety of imposing fee awards upon trustees who are unable to prove their case or who have brought an ERISA claim in error. See Carpenters, 726 F.2d at 1416. This is particularly true when Plaintiffs did not seek to advance their own personal financial interests in bringing the lawsuit. [See, Exhibit B, ¶ 7; Exhibit C, ¶ 7.] The point here is that Plaintiffs were fiduciaries, acting in accordance with the mandate of ERISA § 405(a)(1)4(a)(3), 29 USC § 1105(a)(1)d(a)(3) to take action to address breaches by co-fiduciaries and seeking to have rectified defects in the Trust Agreement that counsel for the Trust Funds had concluded left the very legality of the Funds open to questions. See PX-9 at 4. The Court should be very reluctant to award fees that create risk that future fiduciaries will be deterred from acting in accordance with this congressional mandate. The fact that imposing fee awards upon trustees may serve to harm the beneficiaries of a plan further supports the denial of an award of fees.
2

Notably, the actual fees incurred by Defendants are significantly lower as defense counsel have requested that the Court award fees at a rate more than 40 percent higher than what they actually charged their clients.

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Carpenters, 726 F.2d at 1416; see also Corder v. Howard Johnson & Co., 53 F.3d 225, 231 (9th Cir. 1994) (finding that factor weighed in favor of not awarding fees where payment of substantial fees would be heavy burden upon party). Moreover, it is the burden of the party seeking a fee award to provide affirmative evidence regarding the opposing parties' ability to pay.3 The Defendants have not met their burden in this regard. Indeed, as the attached affidavits plainly show, any substantial award of fees against Plaintiffs would inevitably create considerable hardship for them and, in the case of Messrs. Baker and Crowe, their families. [See, Exhibit B, ¶¶ 4-6, 10; Exhibit C, ¶¶ 2-6, 11.] In this case, the fees of the individual defendants have already been paid by their insurance carrier. The ability to pay under these circumstances clearly weighs in favor of Plaintiffs.4 It is also important to note that though Defendants/Counterclaimants were unsuccessful on their counterclaim, Plaintiffs/Counterdefendants have not sought fees as the prevailing party on this claim on the grounds that an award of fees would likely be as devastating to Defendant trustees as an award against Plaintiff trustees would be.5 Similarly, were fees to be awarded against PAC-Phoenix, there is a serious danger that the only result would be to put the association in bankruptcy. [See, Affidavit of Carl Triphan, Exhibit D.] Because the ability to pay weighs heavily in favor of having the parties pay only their own attorney's fees, Defendants' Motion should be denied.
3

See Hope v. International Brotherhood of Electrical Workers, 785 F.2d 826, 831 (9th Cir. 1986) (denial of attorney's fee award affirmed where plaintiffs were not shown to have brought claim in bad faith and defendants did not show that plaintiffs had resources to satisfy an award of fees); Blank v. Bethlehem Steel Corp., 738 F.Supp. 1380, 1382 (M.D. Fla. 1990) (refusing to find in favor of claimants on ability to pay fact where no affirmative evidence regarding ability to pay was provided). 4 The Ninth Circuit has also refused to award fees in situations where both parties are able to pay their own attorney's fees. See Honolulu Joint Apprenticeship and Training Comm. of United Ass'n v. Foster, 332 F.3d 1234, 1238 (9th Cir. 2003) (refusing to award fees where both parties equally capable of paying attorney's fees). Though the parties may eventually be able to pay their own attorney's fees, neither party is any position to pay the other's fees. 5 Remarkably, Defendants have actually sought reimbursement on the their counterclaim even though they were unsuccessful and Plaintiffs/Counterdefendants prevailed on the claim.

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6

3.

An Award of Fees Against the Plaintiffs Would Deter Others From Bringing Claims to Correct Plan Deficiencies.

As noted above, the deficiencies in the Trust Agreements are contrary to the statutes governing ERISA plans. The importance of compliance with the ERISA

standards is beyond cavil as it is precisely because of these deficiencies that this litigation arose. Though Plaintiffs attempted to resolve these deficiencies in Court and were

unsuccessful, future parties should not be deterred from attempting to correct such problems, particularly when such deficiencies threaten the entire legality and/or continuing viability of a plan. This is particularly true regarding fee awards against ERISA fiduciaries. To award fees against them would create "a Hobson's choice for the fiduciary with a good faith belief that his co-fiduciary has breached his duty: by bringing a lawsuit, he would risk the imposition of expensive attorney's fees if he were to lose, but by doing nothing, he would risk the imposition of liability under § 1105." Salovarra, 222 F.3d at 31; Carpenters, 726 F.2d at 1416 (noting that plaintiff trustees are already deterred from bringing vexatious suits due to absence of personal gain and possibility of paying costs and fees). If Defendants are awarded fees in this case, it is virtually certain that a trustee will never bring an action regarding the Trust Funds again if the Trustees believe that they will be personally liable for such actions (depending upon whether or not they are successful). This is especially true with respect to trustees who, like Plaintiffs Baker and Crowe, do not have any personal stake in bringing litigation in their role as trustee(s). As explained by the Second Circuit: In fact, where, as in this case, an ERISA plaintiff has pursued a colorable (albeit unsuccessful) claim, the third Chambless6 factor likely is not merely neutral, but weighs strongly against granting
The third Chambless factor is essentially identical to third factor as set froth in Hummell. See Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869, 871 (2d Cir. 1987); Hummel, 634 F.2d at 453.

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fees to the prevailing defendant. Awarding fees in such a case would likely deter beneficiaries and trustees from bringing suits in good faith for fear that they would be saddled with their adversary's fees in addition to their own in the event that they failed to prevail; this, in turn, would undermine ERISA's essential remedial purpose of protecting beneficiaries of pension plans. Salovaara, 222 F.3d at 31 (emphasis in original) (citation omitted); see also Seitzman v. Sun Life Assurance Co. of Canada, Inc., 311 F.3d 477, 486 (2d Cir. 2002) ("The deterrence factor should be used `as a shield, to protect beneficiaries from the fear of having to pay to pursue an important ERISA claim in the event of failing to prevail,' and not `as a sword to discourage beneficiaries' from pursuing certain meritless claims.'") (quoting Gibbs v. Gibbs, 210 F.3d 491, 505 (5th Cir. 2000)); see also Corder, 53 F.3d at 231-32 (finding that even though "an award might deter groundless claims . . . it would also tend to deter marginal but meritorious claims."). 4. The Fourth and Fifth Factors of the Hummell Test Do Not Support Defendants' Fee Application.

As noted above, Hummell factors four and five provide that a court should consider: (4) whether the parties requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a significant legal question regarding ERISA; and (5) the relative merits of the parties' positions. Hummell, 634 F.2d at 453. As explained in Tingey v. Pixley-Richards West, Inc., 958 F.2d 908 (9th Cir. 1992), these factors are "more appropriate to a determination of whether to award fees to a plaintiff than a defendant." Id. at 909 (emphasis added) (quoting Marquardt v. North Am. Car Corp., 652 F.3d 715, 719 (7th Cir. 1981)). Because these factors are more generally used in determining whether a plaintiff in an ERISA action should be awarded fees, they are of little significance to this case. Furthermore, it was Plaintiffs who were seeking to benefit all participants and beneficiaries of the Plan by seeking to correct defects in the Trust Agreements that they

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were encouraged by the Trust Funds own counsel raised serious questions as to the Funds' legality (See Phx-9 at 4), and to prevent a continuation of what they believed to be breaches of fiduciary duty by Tucson Trustees in failing to take prompt and diligent action with respect to delinquent Tucson contractors. Because the aforementioned factors weigh in favor of not awarding fees to Defendants in an ERISA action, Defendants' fee application should be denied. B. The Fees Requested By Defendants Are Excessive. 1. Defendants Have Not Delineated the Alleged Fees Incurred for the Claims Asserted in the Litigation.

As a preliminary matter, Defendants' sole basis for an award of fees is 29 U.S.C. § 1132(g)(1). As explained above, the prerequisites for a discretionary award of attorney's fees under this section have not been met by Defendants. Even if Defendants were entitled to fees under this section (which they are not), Plaintiffs asserted a total of four claims against Defendants (only two of which were based upon ERISA). Nevertheless, Plaintiffs seek their attorney's fees for all of these claims but do not provide any statutory or other basis for seeking fees in regard to the claims not subject to section 1132(g)(1). In addition, even though Plaintiffs prevailed on the counterclaim asserted against them, Defendants nevertheless seek attorney's fees for pursuing this unsuccessful claim! Plaintiffs have no basis to recover fees for such a claim. Upon review of Defendants' task based billing records, it is clear that Defendants have not delineated between the fees incurred upon any of the various claims and counterclaims asserted in this action. Because it is impossible to make such a delineation based upon the records, Defendants are unable to assert a valid claim for any fees. Even if Defendants could recover any fees at all, at most, a reasonable amount would be up to a maximum of 40% of the reasonable fees incurred in the litigation (representing Plaintiffs' two ERISA claims). Based upon reasonable billing rates, this sum would amount to a

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total fees of $82,210.90. [See, Exhibit E.] 2. Defendants Have Not Itemized Their Time Entries.

Local Rule 54.2 provides that the itemized statement of billing submitted with a fee application must "describe the services rendered so that the reasonableness of the charge can be evaluated . . . If the time descriptions are incomplete or, or if such descriptions fail to adequately describe the service rendered, the court may reduce the award accordingly." Local Rule 54.2(e)(2). While the time records submitted by Defendants do provide task-based itemization on some days, the majority of the time records contain several descriptions of multiple tasks in a single time entry. This "lumping" of time makes it impossible to determine how much time was spent on each task and renders such fees nonrecoverable. Local Rule 54.2 also provides various examples for proper time entries describing services rendered, including entries involving telephone conferences, legal research, preparation of pleadings and other papers and travel time. As set forth in Exhibit F, the vast majority of the time entries submitted by Defendants do not comply with the rule. The lack of compliance with Local Rule 54.2 by itself warrants a reduction of fees in the amount of $256,093, leaving the total for the fees sought at $92,375. [See, Exhibit F.] 3. The Rates Sought by Defendants Are Excessive.

In defending this lawsuit and pursuing their counterclaim, the law firm of O'Donoghue & O'Donoghue allegedly performed services justifying an award of fees for Defendants totaling $285,827.25 (though Defendants were clearly not charged this entire amount). In their motion for attorney's fees, Defendants seek an additional $62,641 beyond this amount even though such fees were never incurred by or billed to Defendants. The two main billing attorneys in this case were Charles Gilligan and John McIntire, who billed total hours of 382.15 and 975.55, respectively. Messrs. Gilligan and McIntire both agreed to and charged their clients a billing rate of $195 per hour, but now

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claim that a "reasonable" rate for their work is actually $275 per hour. As a preliminary matter, aside from the dramatic increase in billing rates, Defendants proffer no explanation as to why virtually all of the work performed by defense counsel in this case was done by Messrs. McIntire and Gilligan, except for around ten percent of the billed hours, which was all that was recorded as having been billed by associates and/or law clerks. Charging $275 per hour for virtually every aspect of this litigation is patently unreasonable. There can be no doubt that various hours and/or activities could have been performed by less senior attorneys and/or paralegals at substantially lower billing rates. Moreover, despite the obvious skill and experience difference between Messrs. Gilligan and McIntire, as outlined in the declarations attached to Defendants' fee application, Defendants inexplicably seek fees at the rate of $275 for both attorneys. According to Defendants, Mr. McIntire became a partner just months before this litigation was commenced, and there is no apparent justification for the claim that he should now be compensated at precisely the same rate as Mr. Gilligan, who has practiced almost twice as long as Mr. McIntire and who, at least according to Defendants, has far more experience in litigating this type of case. Indeed, Defendants seek an hourly billing rate for these attorneys at more than twice the rate they claim to be appropriate for that of an associate, whose time as explained above is minimal because Defendants chose to have partners perform virtually every task in this litigation, however mundane or routine. Mr. McIntire billed almost one thousand hours to this case.7 As reflected in the billing records, many of the hours billed by Mr. McIntire were unnecessary, particularly for a partner seeking $275 for each hour expended. Had Mr. McIntire been billed at the associate rate proffered by Defendants (or had Defendants chosen to have an associate
7

As explained later, the hours purportedly recorded by Mr. McIntire (and potentially others), appear to be inflated due to apparent double billings and hours charged to activities for which fees cannot be recovered.

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work on the day to day matters of this litigation as opposed to a partner), the difference between the fees sought for the hours billed by Mr. McIntire (as opposed to those at an associate's rate) would have been reduced by approximately $131,700. [See, Exhibit G.] Likewise, Defendants have failed to provide any evidence as to why the rate actually charged by Mr. Gilligan was unreasonable and should be moved substantially upward. For instance, counsel for Defendants alleged that they determined billing rates for Defendants based, in part, upon the financial wherewithal of Defendants. Nevertheless, the same financial constraints of Defendants are similar to that of Plaintiffs. Indeed, Plaintiffs are far behind in paying their own attorney's fees and having to pay Defendants' fees will only further cripple their financial viability. None of the parties in this litigation had an endless sum of funds. Plaintiffs brought this lawsuit because they believed that the legality of the funds was in serious question and because they believed that the Tucson Trustees were committing breaches of their fiduciary duty and depriving the funds of the use of resources that were rightfully theirs by failing to pursue delinquent Tucson Contractors with reasonable promptness and diligence. Instituting a punitive award against Plaintiffs (which ERISA does not provide for) by having Defendants recover a billing rate that they have just devised as being ideal is without basis. Defendants also allege that the rate of $275 per hour is a reasonable market rate for their services, even though they only charged Defendants at the rate of $195 per hour and counsel for the funds, Keith Overholt, who has even more experience than Mr. Gilligan, charged his client at the rate of $180 per hour.8 Indeed, the rates actually charged by defense counsel are the best evidence of what is reasonable in the market. As explained in Balcor Real Estate Holdings, Inc. v. Walentas-Phoenix Corp., 73 F.3d 150, 153 (7th Cir. 1996):
8

The defense counsel with the highest billable rate was the Grimwood Law Firm, who had two partners charging $235 per hour, despite the fact that the Grimwood Law Firm has probably the least amount of experience in litigating these type of claims.

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9

Courts award fees at the market rate, and the best evidence of the market value of legal services is what people pay for it. Indeed, this is not "evidence" about market value; it is market value. Although courts interpolate the word `reasonable' into clauses of this kind, the best guarantee of reasonableness is willingness to pay. Id. at 153. Because Defendants were successful on the defense of Plaintiffs' claims, they now allege that they should be compensated at a rate far above the lodestar rate. The reasonable rate for their services, however, are what the market dictates. Finally, the reasonableness of the rates actually charged by Defendants makes sense when one considers the fact that hiring a law firm based out of Washington D.C. has compounded the number of hours billed to Defendants, and warrants a lower billing rate than the one now requested by Defendants.9 Defense counsel alleges that Defendants would be "hard pressed to find within the Phoenix area law firm with O'Donoghue's unique expertise and experience in representing trustees and local unions where complex ERISA fiduciary issues relating to the administration of multiemployer benefit funds become enmeshed with collective bargaining agreements and the Labor-Management Relations Act." [See, Declaration of Charles Gilligan, Defendants' Motion, Exhibit 2.] Nonetheless, Defendants' counsel Ward, Keenen & Barrett had no problem finding and retaining Keith Overholt of Jennings Strouss, who is one of the most well known and respected attorneys in this field of law in Arizona and who would have been more than capable to represent Defendants in this lawsuit. [See, Affidavit of Rick Walker, ¶ 3, Exhibit H.] Moreover, there are countless other Phoenix firms who could have provided excellent representation to Defendants. [See, Declaration of Don Day, Exhibit I.] The billing rate of Mr. Overholt is undeniably the market rate and because Mr.
For instance, though Local Rule 54.2 specifically admonishes parties to not seek to recover fees for travel time (which defense counsel routinely billed for in several trips between Washington D.C. and Phoenix), Defendants nonetheless request that Plaintiffs reimburse Defendants at the rate of $275 per hour for defense counsel flying back and forth from Washington D.C. The Defendants are therefore seeking the amount of $19,662.25 for travel time.

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Overholt has even more experience than Mr. Gilligan in these type of cases, a reasonable rate for Mr. Gilligan would at most be the same as Mr. Overholt at $180 per hour. As explained above, because Mr. McIntire only became a partner just before this litigation was commenced, a reasonable billing rate for him would be $150 per hour (which is above the rate Defendants are seeking for associates, but not as high as Mr. Gilligan's reasonable rate. Based upon such reasonable market billing rates, the fees requested by Defendants would amount to a total of $205,527.25. [See, Exhibit E.] 4. Defendants' Time Entries Contain Double Billings and The Hours Expended by Defendants Are Excessive.

A District Court should exclude from a fee application any hours that are "excessive, redundant, or otherwise unnecessary." Van Gerwen v. Guarantee Mutual Life Co., 214 F.3d 1041, 1045 (9th Cir. 2000). As reflected in the time entries submitted by Defendants, many hours billed to Defendants were clearly excessive, redundant and unnecessary. Defense counsel allegedly billed a total of 1,478.80 hours in this case, with 1,358.20 of these hours being billed by partners. The hours spent by cousnel in this regard are well beyond what is reasonable, particularly when Defendants repeatedly allege how baseless they believed Plaintiffs claims to be (and despite the fact that they did not succeed on their counterclaim). To begin with, the task based billing records attached to Defendants' fee application clearly show that Defendants are seeking reimbursement for fees that were double-billed. An example this is in the hours billed in responding to Plaintiffs' motion for leave to file a second amended complaint to add an additional trust fund as a party.10
10

Despite the fact that discovery had already closed, Defendants alleged various new matters and provided new documents, never previously disclosed or produced, in their summary judgment motion that Plaintiffs believed necessitated adding the particular fund identified by Defendants as a party to this litigation. Though Plaintiffs had serious reservations regarding the authenticity of such documents, because discovery had closed, Plaintiffs were unable to explore fully the origins

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Despite the fact that any response to this motion should not have taken longer than a few hours, Defendants billed no less than 74.7 hours11 in crafting a response to it. After a cursory review of the billing records, it appears as if Defendants double billed their time on repeated occasions for the exact same activities performed. [See, Exhibit J.] It is Defendants' obligation, at a minimum, to seek reimbursement only for fees that were actually incurred. Based upon defense counsel's proposed rate of $275 per hour for Messrs. Gilligan and McIntire, Defendants appear to seek compensation for double bills at a minimum of $8,318.75. [See, Exhibit J.] Even where Defendants have not been apparently double billed, the amount of hours expended by Messrs. Gilligan and McIntire on particular tasks is excessive. Exhibits K-M provide an overview as to particular tasks where Defendants exerted an excessive amount of billable hours to which they now seek reimbursement.12 Aside from the aforementioned deficiencies in Defendants' fee application, it should be noted that Defendants also seek reimbursement for matters unrelated to the litigation. In particular, an arbitration was held as the result of the deadlock between the parties regarding contribution rates to particular funds. Though this matter touched upon issues in this litigation, it was entirely separate and did not involve the merits of any the claims alleged by Plaintiffs. Merely because the arbitration related to issues addressed in the litigation does not mean Defendants may now seek reimbursement for such fees. In particular, no part of section 1132(g)(1) of ERISA is invoked which would allow
of such documents through discovery. 11 At the 10% reduction in hours proposed by Defendants, this would still amount to a total of 67.3 hours. 12 For instance, by the time Defendants filed their initial pleading (Answer) in this case, approximately 89.5 hours had been billed to Defendants. All of the work leading up to the filing of the answer was performed by partners, even though much of that work clearly could have been performed by an associate or paralegal. At the rate of $275 per hour, Defendants now seek from Plaintiffs a total of $24,615 for preparing an Answer to Plaintiffs' Complaint. Some of this time appears to relate to the preparation of a motion to dismiss that was never filed (11.25 hours). Though Defendants go out of their way to note that they only filed minimal "offensive" motions in order to reduce fees, preparing motions (and then not filing them) is not economical.

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Defendants to recover fees for such an activity. To the contrary, as provided in Cann v. Carpenters' Pension Trust Fund for N. Cal., 989 F.2d 313 (9th Cir. 1993): We construe the statute [29 U.S.C. § 1132(g)(1)] as limiting the award to fees incurred in the litigation in court. Congress chose the words, `[I]n any action . . . attorney's fee and costs of action . . . . ' The word `action' in its usual legal sense means `a suit brought in a court; a formal complaint within the jurisdiction of a court of law,' and `includes all the formal proceedings in court of justice attendant upon the demand of a right . . . in such court . . . .' The word `action' generally designates only proceedings in court, not administrative proceedings even though necessary and valuable. Id. at 316 (internal citations omitted). As such, any fees incurred to the arbitration are not recoverable. [See, Exhibit N.] Because of the countless problems embedded within Defendants' fee application and attachments, no fees can be awarded to Defendants based upon such suspect records. Even if any fees could be awarded by the Court, any such sum would have to be reduced as set forth above and in the attached Exhibits. B. DEFENDANTS ARE NOT ENTITLED TO REIMBURSEMENT FOR REQUESTED COSTS.

Pursuant to Exhibit D to Defendants' fee application, defense counsel seeks reimbursement for costs in the amount of $24,989.03. Defendants do not provide any justification for such an astronomical amount, nor do they comply with the provisions of Local Rule 54.2(e)(3) in attempting to recover such costs. Pursuant to the rule: In a separate portion of the itemized statement, identify each related non-taxable expense with particularity. Counsel should attached copies of applicable invoices, receipts and/or disbursement instruments. Failure to itemize and verify costs may result in their disallowance by the Court." Defendants do not identify each alleged cost with particularity other than to

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classify the costs as falling into categories such as "express mail" or "delivery charges." Moreover, it appears that the majority of these costs stem from the fact that defense counsel was located in Washington D.C. instead of locally.13 Defendants attempt to justify their costs by alleging that defense counsel was uniquely qualified to represent Defendants. No support is provided for this unilateral and self-serving conclusion, however, other than defense counsel has represented Defendant Unions for years. Nevertheless, as explained above, there are various well-qualified and respected attorneys in Phoenix who could have easily represented Defendants in this matter (and would not have had to incur unnecessary costs). Finally, in contradiction to Local Rule 54.2(e)(3), Defendants do not attach any copies of applicable invoices, receipts and/or disbursement instruments for which costs are sought. Because of the various problems relating to Defendants itemized fee

statements, at a minimum, such documents should be provided before any portion of Defendants' alleged costs may be awarded. III. CONCLUSION. Based on the foregoing, Plaintiffs respectfully request that Defendants' motion for attorney's fees and costs be denied. DATED this 19th day of August, 2005. QUARLES & BRADY STREICH LANG LLP Two North Central Avenue Phoenix, AZ 85004-2391 By s/Eric B. Johnson Richard K. Walker Eric B. Johnson Attorneys for Plaintiffs
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For instance, defense counsel seeks approximately $5,616.50 in costs just for "airfare" (not including other categories such as "meals," "local travel" or "hotel").

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CERTIFICATE OF SERVICE XX__ I hereby certify that on the 19th day of August, 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 for the following CM/ECF registrants: Michael J. Farrell ([email protected]

5 Helen Grimwold ([email protected] 6 Newton Grimwood ([email protected]) 7 David J. Ouimette ([email protected]) 8 Keith F. Overholt ([email protected]) 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 By s/Brenda St. Clair Brenda St. Clair Tom J. Hagen Attorney at Law 1 E.Camelback Road, #550 Phoenix, AZ 85012 Charles W. Gilligan, Esquire John M. McIntire, Esquire O'Donoghue & O'Donoghue, LLP 4748 Wisconsin Avenue, NW Washington, DC 20016 XX I hereby certify that on the 19th day of August, 2005, I served the attached document by United States mail on the following, who are not registered participants of the CM/ECF System: A copy of this document was provided to by United States mail to: Hon. Frederick J. Martone United States District Court Sandra Day O'Connor U.S. Courthouse Suite 526 401 West Washington Street, SPC 62 Phoenix, Arizona 85003-2158

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