McNamara v. Infusion Software Incorporated ( 2020 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 Mary M cNamara, Individually, and on ) No. CV-17-04026-PHX-SPL ) 9 Behalf of All Other Similarly Situated, ) 10 ) O R D E R Plaintiffs, ) ) 11 vs. ) ) 12 Infusion Software, Inc., et al., ) 13 ) ) 14 Defendants. ) 15 Before the Court is Plaintiffs’ Motion for Attorneys’ Fees and Costs. (Doc. 254) 16 Defendants oppose the Motion on several grounds. (Doc. 257) The Motion is fully briefed 17 and for the reasons that follow, the Motion will be granted in part.1 18 Plaintiff brought a collective action alleging violations of the Fair Labor Standards 19 Act (“FLSA”), 29 U.S.C. § 201, et seq.. This is not a traditional class action case, which is 20 a key fact for the Court’s analysis of the Motion. This is a FLSA collective action, which 21 is different from a class action: participants affirmatively choose to be bound by the 22 settlement agreement and there are no absent class members whose claims are being settled 23 because such absent class members are not bound by the case’s outcome. See, e.g., 24 Hoffman-La Roche, Inc. v. Sperling, 493 U.S. 165, 170 (1989); Maguire v. Trans World 25 Airlines, Inc., 55 F.R.D. 48, 49 (S.D.N.Y. 1972). The parties submitted a Revised 26 27 1 Because it would not assist in resolution of the instant issues, the Court finds the 28 pending motion is suitable for decision without oral argument. See L.R. Civ. 7.2(f); Fed. R. Civ. P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). 1 Settlement Agreement (the “Settlement Agreement”) for the Court’s approval, and the 2 Court approved the Settlement Agreement. (Doc. 253) In the Settlement Agreement, the 3 parties outlined, and the Court approved, the following awards: “(1) $1,525,000.00 as total 4 payment to Plaintiff and the Collective to be paid as set forth in Exhibit A to the Settlement 5 Agreement; and (2) Plaintiff’s reasonable attorneys’ fees and costs as determined by the 6 Court once Plaintiff and Defendants will have filed briefing on the issue.” (Doc. 253 at 4) 7 It is clear from the Settlement Agreement, and it should be clear from the Court’s April 28, 8 2020 Order, that the attorneys’ fees and costs which might be awarded to Plaintiff are not 9 included in the collective action award itself, they are a separate sum to be paid by 10 Defendants in addition to the $1,525,000.00. This is not a common fund case. 11 Plaintiff has requested a total of $872,680.00 in attorneys’ fees and $34,053.77 in 12 costs, for a total of $906,733.77. (Doc. 259 at 11) Defendants dispute the following aspects 13 of the attorneys’ fees requested: (1) the Ninth Circuit has set a benchmark that 25% of the 14 total settlement award for attorneys’ fees in class action settlements is reasonable—and 15 Plaintiffs are requesting attorneys’ fees of approximately 58% of the settlement award or 16 37% of the total fund; (2) Plaintiffs are seeking recovery for administrative and clerical 17 tasks; (3) many of the time entries include internal conferences; (4) the request for $16,200 18 for future work is excessive; (5) the appropriate hourly rates to be used to calculate the fees 19 are lower than those used by Plaintiffs in their calculation; and (6) applying 2020 rates for 20 the work done since 2017 is unreasonable. (Doc. 257 at 1) Defendants also dispute several 21 aspects of the requested costs as follows: (1) costs associated with video recordings are not 22 recoverable; (2) the legal research entries are too vague and should not be awarded; (3) 23 Plaintiffs seek recovery for general firm overhead expenses, such as IT services, which 24 should not be awarded; (4) $90.61 in costs not associated with this case were not removed 25 from the application; and (5) the parties agreed to use the same deposition for this case and 26 the spin-off arbitrations, meaning the deposition costs should be allocated equally between 27 the arbitrations and this case, reducing the amount recoverable. (Doc. 257 at 1–2) The 28 2 1 Court addresses those arguments in turn. 2 1. The Percentage-of-Fund v. Lodestar Method Standard and Footnotes Issue 3 Defendants argue that the Ninth Circuit has set a 25% of the total settlement award 4 benchmark as a reasonable award of attorneys’ fees in FLSA collective actions. (Doc. 257 5 at 4) Plaintiffs argue that such benchmark is only applicable to common funds cases, and 6 that this case is not a common fund case. (Doc. 259 at 7–8) 7 The FLSA and the Settlement Agreement provide for Plaintiffs’ recovery of 8 reasonable attorneys’ fees and costs. 20 U.S.C. § 216(b). It is true that the Ninth Circuit 9 has stated that “the District Court has discretion . . . to choose either the percentage-of-the- 10 fund or the lodestar method” to determine the reasonableness of a reasonable fee. Vizcaino 11 v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002) It is also true that the Ninth Circuit 12 has established a 25% benchmark for a reasonable fee award in common fund cases. See, 13 e.g., Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268, 272 (9th Cir. 1989); In re 14 Bluetooth Headset Prods. Liab. Lit., 654 F.3d 935, 941 (9th Cir. 2011). However, it is clear 15 to the Court that the percentage-of-fund method is only applicable to precisely common 16 fund cases and no other type of cases. 17 Permitting attorneys in class actions to recoup their fees and costs from a 18 percentage of the common fund “rests on the perception that persons who obtain the benefit 19 of a lawsuit without contributing to its cost are unjustly enriched at the successful litigant’s 20 expense.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980). The percentage of the 21 common fund approach “allows a court to prevent this inequity by assessing attorney’s fees 22 against the entire fund, thus spreading fees proportionately among those benefited by the 23 suit.” Id. In other words, in lieu of requiring each class member to contribute his or her fair 24 share to the fees and costs associated with the litigation, the class members’ total recovery 25 is reduced and given to the attorneys. 26 This same logic, however, cannot be applied in the FLSA collective action context. 27 Unlike most other types of claims, “FLSA rights cannot be abridged by contract or 28 3 1 otherwise waived because this would nullify the purposes of the statute and thwart the 2 legislative policies it was designed to effectuate.” Barrentine v. Arkansas–Best Freight 3 Sys., Inc., 450 U.S. 728, 740 (1981). So, if a plaintiff is owed back wages under the FLSA, 4 he or she is entitled to be paid those wages without reduction. And when a plaintiff is 5 awarded back wages under the FLSA, he or she is also entitled to recoup reasonable 6 attorneys’ fees and costs from the defendant in addition to damages. 29 U.S.C. § 216(b) 7 (“The court in such action shall, in addition to any judgment awarded to the plaintiff or 8 plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant, and costs of the 9 action.” (emphasis added)). When these provisions are viewed together, it is clear that the 10 percentage of the common fund analysis is not proper in FLSA cases. 11 As discussed above, when a common fund is created to compensate a class of 12 plaintiffs and then reduced by a percentage in order to pay the attorneys’ fees and costs, 13 the plaintiffs’ recovery is reduced. In the FLSA context, such an outcome undermines the 14 statutory scheme set forth by Congress. FLSA plaintiffs, per the statute, are entitled to gain 15 all of the benefit from successful litigation without paying attorneys’ fees and costs. The 16 FLSA shifts the burden of paying fees and costs to the defendant. Utilizing the percentage 17 of a common fund approach shifts the burden of the cost of litigation back to the plaintiffs 18 in contravention of the statute. 19 Plaintiffs cites to cases which are all distinguishable from this case. Indeed, most of 20 the cases cited did not involve a FLSA collective action, and involved class actions, and 21 provided for recovery of fees from the actual total fund in the settlement agreement, 22 meaning it was subtracted from the total fund set forth in the settlement agreement. Even 23 the discussion regarding constructive common fund approach came in the context of non- 24 FLSA cases. See e.g., In re Bluetooth, 654 F.3d at 943. The Court also finds the authorities 25 from outside of the Ninth Circuit cited by Plaintiffs unpersuasive on their application of 26 the constructive common fund approach and their reasoning inapplicable in this case. 27 Finally, the Court notes that the case of Morden v. T-Mobile USA, Inc., 2008 WL 11506696 28 4 1 (W.D. Wash. April 16, 2008) is instructive. Indeed, that case involved a FLSA collective 2 action and the Court used the 25% benchmark for the requested fees. Morden, 2008 WL 3 11506696 at *2–3. The Court in that case found that “certain portions of the Plaintiffs’ 4 billing records indicate[d] that the lodestar [was] too high . . . . Certain entries suggest[ed] 5 that unproductive time was included . . . . evidence [did] not establish that Seattle counsel’s 6 rates [were] typical for the Seattle legal community.” Id. at *2. The Court then exercised 7 its discretion to use the percentage method and award a fee of 25%of the settlement fund. 8 Id. 9 This Court finds that it is not appropriate to use the percentage-of-fund method in 10 this case. Accordingly, the Court will use the lodestar approach to review Plaintiffs’ Motion 11 and requested fees and now proceeds to examine each remaining argument raised by 12 Defendants to determine a reasonable award of attorneys’ fees. 13 Defendants have objected to the footnotes added by Plaintiffs to allegedly explain 14 some of the time entries. (Doc. 257 at 2–4) Mostly, Defendants argue that the footnotes 15 deprived them of a true meet-and-confer process because they were added after Defendants 16 provided their detailed objections to the initial fees request, and “they are not, of 17 themselves, actual contemporaneous billing entries and deserve no deference, having been 18 added (in many cases years after the actual billing entries were written) simply to skirt 19 Defendants’ well-founded objections.” (Doc. 257 at 3) Plaintiffs argue that such footnotes 20 were added to clarify why the remaining entries were appropriate after having removed 21 other entries. (Doc. 259 at 1) Plaintiffs further argue that Defendants could have requested 22 to meet and confer more even after the Motion was filed, which they did not do. (Doc. 259 23 at 2) 24 The Court finds that it is not appropriate to consider the footnotes when reviewing 25 the time entries. Indeed, time entries should be correct and accurate at the time they are 26 made. When the time comes to submit an application for fees to the Court, permitting 27 Plaintiffs to add footnotes after the meet-and-confer process with opposing counsel to 28 5 1 substantively clarify time entries seems odd. Indeed, if such practice was allowed by the 2 Court, no time entry would potentially ever be final in the sense that when it was written 3 and entered, it captured exactly what the timekeeper did. Billing entries must clearly set 4 forth the task accomplished at the time they are written and recorded. Plaintiffs cannot be 5 allowed to clarify and add to those entries years later simply to attempt to save the entries 6 from the Court’s review. Accordingly, the Court will not consider the footnotes.2 7 2. Administrative and Clerical Tasks Entries 8 Defendants point to a large amount of entries they claim are for administrative and 9 clerical tasks and not compensable. (Doc. 257 at 6–7, Exs. E, G) Plaintiffs argue that the 10 time entries identified by Defendants were not simply clerical or administrative tasks and 11 that the Court should review the explanatory footnotes to see that the time entries capture 12 recoverable time. 13 In Missouri v. Jenkins, 491 U.S. 274 (1989), the Supreme Court noted that “purely 14 clerical or secretarial tasks should not be billed at a paralegal [or lawyer’s] rate, regardless 15 of who performs them . . . ‘[The] dollar value [of such non-legal work] is not enhanced just 16 because a lawyer does it.’” Id. at 288 n. 10 (quoting Johnson v. Georgia Highway Express, 17 Inc., 488 F.2d 714, 717 (5th Cir. 1974)). Furthermore, even when paralegals or legal 18 assistants perform clerical or administrative tasks, fees should not be awarded for such 19 tasks. Nadarajah v. Holder, 569 F.3d 906, 921 (9th Cir. 2009) (holding that such tasks 20 should have been “subsumed in firm overhead rather than billed at paralegal rates.”). 21 The Court has reviewed each entry identified by Defendants as improper 22 administrative and clerical tasks in documents 257-5 and 257-7. As explained previously, 23 Plaintiffs cannot save any inappropriate time entries by adding footnotes. Having reviewed 24 those time entries, the Court finds that all the entries identified in document 257-7 are 25 inappropriate. The Court cannot find a single entry in the 29 pages of the exhibit which is 26 27 2 Although the Court will not consider the footnotes in evaluating the time entries at issue in the Motion, the Court did review the footnotes before reaching this decision. 28 6 1 not a clerical or admirative task. Accordingly, the Court will reduce the fees request by 2 $96,485.00. The Court also wants to advise Plaintiffs’ counsel to carefully review future 3 application for attorneys’ fees, specifically in large cases such as this one. The entries the 4 Court reviewed in document 257-7 are flagrantly administrative and/or clerical tasks 5 regardless of how much Plaintiffs’ counsel tried to “dress them up” with fancy language in 6 the footnotes. Experienced counsel, such as Plaintiffs’ counsel here, should know better 7 than attempting to recover fees for entries such as saving client information to spreadsheet 8 or preparing documents for a meeting or conversing with IT regarding client portal login 9 issues or credentials. 10 3. Internal Conferences Entries 11 Defendants have identified time entries which they contend are inappropriate fees 12 for “unnecessary internal meetings and conferences between attorneys.” (Doc. 257 at 7; 13 Ex. H) Defendants argue that Plaintiffs have included time entries where several 14 timekeepers billed for the same internal meeting and even where only one timekeeper billed 15 for an internal meeting it does not mean the meeting was necessary. (Doc. 257 at 7) 16 Plaintiffs argue that their practice is to “bill for conferences among timekeepers only if the 17 conference is necessary for the delegation of work that can be more economically done for 18 the client by a lower-cost timekeeper. Other inter-office conferences are billed by only one 19 of the timekeepers involved.” (Doc. 254 at 12) 20 A District Court can reduce a requested fee award for unnecessary internal 21 conferences. See, e.g., Welch v. Metro Life Ins. Co., 480 F.3d 942, 949 (9th Cir. 2007) 22 (reducing attorneys’ fee award for time spent on unnecessary and duplicative intra-office 23 conferences). Here, the Court has reviewed all the time entries identified by Defendants as 24 unnecessary internal conferences. (Doc. 257-8) The Court finds that the time entries 25 identified in document 257-8 are appropriate and will not reduce the requested fees on this 26 issue. Indeed, the Court finds that Plaintiffs’ counsels appear to have billed time, 27 sometimes by more than one timekeeper, when it was necessary to delegate work to save 28 7 1 money to their clients. This is not an unusual billing practice and the Court has seen, and 2 approved, fee requests where conferences between a partner and a junior associate were 3 billed by both timekeepers, and properly recovered, because the conference was necessary 4 for the partner to delegate work to the associate, resulting in a lower hourly cost. The Court 5 also finds that none of the entries identified in document 257-8 appear to be unnecessary 6 or duplicative. Accordingly, the Court will not reduce the requested fees based on the 7 entries identified Exhibit H to Defendants’ Response. 8 4. Future Work Fees 9 Defendants argue that Plaintiffs’ request for $16,200 in fees for future work is 10 “excessive considering their counsel has already received all settlement distributions.” 11 (Doc. 257 at 1) Plaintiffs’ counsel replied that they agree to waive part of the requested 12 amount and instead request 7.3 hours at $485.00 per hour (a total of $3,450.50) for Mr. 13 Denton’s time spent preparing the reply related to the Motion. (Doc. 259 at 11) 14 The Court finds that 7.3 hours for time spent preparing the reply is a little excessive 15 given Mr. Denton’s experience. The reply is a 12-page pleading with 4 pages of exhibits. 16 (Doc. 259) The Court finds that the issues raised by Defendants’ response are 17 straightforward and did not necessitate extended time to research and address. Accordingly, 18 the Court finds that five hours is a reasonable amount of time to spend preparing the reply. 19 The requested fees of $3,450.50 for 7.3 hours of Mr. Denton’s time will be reduced to 5 20 hours at $485.00 per hour for a total of $2,425.00. The requested fees will therefore be 21 reduced by $1,115.50. 22 5. Block Billing Entries 23 Defendants argue that several time entries are “block billed,” meaning they contain 24 several separate tasks grouped together in a single entry which makes it impossible to 25 evaluate the reasonableness of such entries. (Doc. 257 at 8; Ex. I) 26 A court may reduce the requested hours where counsel has “lump[ed] together 27 multiple tasks, making it impossible to evaluate their reasonableness.” Welch, 480 F.3d at 28 8 1 948. Here, the Court has reviewed all the time entries identified by Defendants as allegedly 2 improper “block billing.” (Doc. 257-9) The Court first notes that some of the entries 3 identified here have already been at issue in other parts of this Order because Defendants 4 raise several different arguments in opposition to some entries. Second, the Court 5 concludes that the entries identified in document 257-9 violate LR Civ. 54.2(d). The block 6 billing makes it difficult for the Court to assess what fees are excessive and what fees are 7 reasonable, and the Court will therefore reduce the amount of fees awarded by 25%. See 8 Shaft v. Soc. Sec. Admin. Com’r, 2014 WL 3809097, at *1 (D. Ariz. Aug. 1, 2014) (holding 9 the Court may reduce requested fees when the requesting party engaged in block billing 10 and the Court is unable with precision to separate out fees attributable to specific motions 11 and excessive work). Accordingly, the Court will reduce the requested fees by $2,152.38 12 for improper block billing. 13 6. Other Vague Entries and Arbitration Related Entries 14 Defendants list several entries which they argue are so vague that they should be 15 disallowed. (Doc. 257 at 8; Ex. J) Plaintiffs’ counsel argue that those entries are not vague, 16 and that the explanatory footnotes explain why they are not. (Doc. 259 at 4) 17 L.R. Civ. 54.2(e)(2)(A) requires that telephone conferences entries “identify all 18 participants and the reason for the telephone call.” L.R. Civ. 54.2(e)(2)(A). Furthermore, 19 legal research entries “must identify the specific legal issue researched and, if appropriate, 20 should identify the pleading or document the preparation of which occasioned the conduct 21 of the research.” L.R. Civ. 54.2(e)(2)(B). The Court reviewed each time entry identified by 22 Defendants as being allegedly vague. (Doc. 257-10) The Court finds that a reduction in the 23 fees captured by those time entries is appropriate because some of the entries are too vague 24 and do not comport with the relevant standard. Accordingly, the Court finds that a 25 reduction of $858.25 to the requested fees is warranted to account for entries in document 26 257-10 which are too vague. 27 Defendants have also identified time entries which they argue are related to the 28 9 1 arbitrations which spun-off from this litigation and should be disallowed. (Doc. 257 at 8; 2 Ex. K) Plaintiffs’ counsel argues that such time was “billed separately, and when tasks 3 were performed that would benefit multiple cases, that time was apportioned among the 4 various matters.” (Docs. 254 at 13; 259 at 4) Plaintiffs’ counsel further argues that 5 Defendants completely ignored this “undisputed information.” (Doc. 259 at 4) 6 The Court reviewed each entry identified by Defendants in documents 257-11 as 7 alleged arbitration-related fees. The Court finds Plaintiffs’ counsel explanation persuasive 8 on this issue. It is true that it is impossible for the Court to know with 100% certainty that 9 Plaintiffs’ counsel properly captured fees related purely to arbitrations and fees which 10 overlapped between some arbitrations and this case. However, Plaintiffs’ attorneys are held 11 to high ethical standards as practicing attorneys and the Court does not see a reason to 12 doubt the explanation provided here, which relies on the declaration of Mr. Denton. It is 13 true that a declaration related to attorneys’ fees is self-serving to some extent, being tied to 14 the attorneys recovering their fees, but it is also a declaration under oath. Accordingly, the 15 Court will not reduce the requested fee award based on the time entries identified by 16 Defendants as arbitration-related fees. 17 7. Hourly Rates 18 Defendants have raised two arguments regarding the hourly rate requested by 19 Plaintiffs’ counsel: (1) that the Court should not grant the request to apply 2020 rates; and 20 (2) that the rates are not reasonable even applying previous years’ rates. (Doc. 257 at 9– 21 11) Defendants argue that, although in some cases it is appropriate to apply current rates 22 to calculate a few award where the litigation spanned several years, it would be an improper 23 fee enhancement to apply 2020 rates in this case because the vast majority of the work 24 performed by Plaintiffs’ counsel was performed in 2019 and the parties reached a 25 settlement in December 2019. (Doc. 257 at 9) Plaintiffs’ counsel argue that court regularly 26 apply current rates in similar cases where attorneys’ fees are awarded years after the 27 litigation began. (Doc. 254 at 7–8) 28 10 1 The Supreme Court itself has reasoned that 2 compensation received several years after the services were 3 rendered—as it frequently is in complex civil rights 4 litigation—is not equivalent to the same dollar amount 5 received reasonably promptly as the legal services are 6 performed, as would normally be the case with private billings. 7 We agree, therefore, that an appropriate adjustment for delay 8 in payment—whether by the application of current rather than 9 historic hourly rates or otherwise—is within the contemplation 10 of the statute. 11 Missouri v. Jenkins, 491 U.S. at 283–84 (emphasis added). The time value of money is a 12 financial concept which clearly applies to an award of attorneys’ fees. It is true that this 13 concept becomes more and more relevant as more time passes between the rendering of 14 the legal services and the award of the fees. See, id. “In setting fees for prevailing counsel, 15 the courts have regularly recognized the delay factor, either by basing the award on current 16 rates or by adjusting the fee based on historical rates to reflect its present value.” 17 Pennsylvania v. Delaware Valley Citizens Council for Clean Air, 483 U.S. 711, 716 (1987). 18 Here, the case began in 2017 and the parties settled in December 2019. The Court 19 approved the Settlement Agreement on April 28, 2020 and Plaintiffs’ counsel timely filed 20 the Motion. The Court is unpersuaded by Defendants’ argument that applying past rates 21 for each year, meaning the 2017 rate to work done in 2017, the 2018 rate to work done in 22 2018, is so straightforward that it is the only proper method to calculate a reasonable fee. 23 Such argument ignores the concept of the time value of money and possibly any applicable 24 interest as Plaintiffs’ counsel pointed out. If the Court decided to apply each past year’s 25 rate to the work done during each of those years and stopped there as suggested by 26 Defendants, it would be completely ignoring the concept that a sum of money with a 27 specific worth in 2017 or 2018 is worth more in 2020 based on the time value of money. 28 11 1 The Court finds it would be unfair to Plaintiffs’ counsel. Accordingly, the Court finds that 2 applying the 2020 rates to this case is not an improper fee enhancement and will do so. It 3 is not when the parties settle which is relevant but when the fee is received contrary to 4 Defendants’ argument. See Missouri v. Jenkins, 491 U.S. at 283–84. Here, the fees will be 5 received by Plaintiffs’ counsel approximately three years after the beginning of this case. 6 The Court finds it is proper to apply the 2020 rates set forth by Plaintiffs’ counsel. (Doc. 7 254 at 7–8) 8 Turning now to the issue of whether the 2020 rates set forth by Plaintiffs’ counsel 9 are reasonable hourly rates, the Court finds, based on its experience in the Phoenix market 10 and currently prevailing rates, that the hourly rates set forth by Plaintiffs’ counsel are 11 reasonable. The Court finds Defendants’ arguments and comparison with its own 12 attorneys’ rates unpersuasive. Accordingly, the Court will apply the 2020 rates identified 13 by Plaintiffs’ counsel to the requested fees. 14 Accordingly, the lodestar figure in this case, taking into account the reductions set 15 forth previously in this Order, is $772,068.87.3 16 8. The Kerr Factors Adjustment 17 The Court must also consider the Kerr factors that have not been subsumed within 18 the initial lodestar calculation. See Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th 19 Cir. 1975); see also Cunningham v. County of Los Angeles, 879 F.2d 481, 487 (9th Cir. 20 1988). These factors are: “(1) the novelty and complexity of the issues, (2) the special skill 21 and experience of counsel, (3) the quality of representation, and (4) the results obtained.” 22 Jordan v. Multnomah County, 815 F.2d 1258, 1262 n.6 (9th Cir. 1987). There is a “strong 23 presumption that the lodestar figure represents a reasonable fee, and adjustments of the 24 lodestar are proper only in “rare” and “exceptional” cases. Blum v. Stenson, 465 U.S. 886, 25 26 3 This figure is: $872,680 (requested by Plaintiffs’ counsel; doc. 259 at 11) minus: 27 $96,485 for clerical tasks, $1,115.50 for future work, $858.25 for vague entries; and $2,152.38 for block billing = $772,068.87 28 12 1 898-901 (1984). 2 Although Plaintiffs were the prevailing party, it is significant that the monetary 3 result they obtained was just over $1,500,000.00, an amount that pales in comparison with 4 the amount of damages requested by Plaintiffs on July 29, 2019. Indeed, Plaintiffs 5 requested $16,441,921.40 in damages, excluding attorneys’ fees and costs. (Doc. 257-13 6 at 1). The Supreme Court has noted that “the extent of a plaintiff’s success is a crucial 7 factor in determining the proper amount of an award of attorney’s fees[.]” Hensley v. 8 Eckerhart, 461 U.S. 424, 440 (1983). The Ninth Circuit has likewise noted that “[t]he time, 9 to be compensated in an award, must be reasonable in relation to the success achieved. It 10 is an abuse of discretion for the district court to award attorneys’ fees without considering 11 the relationship between the extent of success and the amount of the fee award.” McGinnis 12 v. Kentucky Fried Chicken of California, 51 F.3d 805, 810 (9th Cir. 1994) (quotation marks 13 omitted) (citing Hensley, 461 U.S. at 436; Farrar v. Hobby, 506 U.S. 103, 114 (1992)). 14 At the same time, the Ninth Circuit has made clear that attorneys’ fee awards should 15 not be made strictly proportional to the amount recovered in the case. Evon v. Law Offices 16 of Sidney Mickell, 688 F.3d 1015, 1033 (9th Cir. 2012). The determination to be made is 17 the amount that constitutes a reasonable fee in light of all the circumstances in the case. 18 Here, the Court finds that an award of $772,068.87 in attorneys’ fees for a recovery of 19 $1,525,000.00 as set forth in the approved Settlement Agreement would be unreasonable. 20 The Court finds that a fee award of $650,000.00 represents the reasonable value of the 21 work performed by Plaintiffs’ counsel. This is a significant reduction from the lodestar 22 amount, but the Court views this as an exceptional case where departure from the lodestar 23 amount is warranted when there is such a huge difference between the potential damages 24 in this case and the final settlement award. Indeed, the issues were not so novel and 25 complex that this factor would weigh in favor of awarding the lodestar amount—although 26 the case involved many employees, this is a traditional FLSA case for back wages. The 27 Court finds that the remaining Kerr factors are neutral. 28 13 1 9. Video Depositions Costs 2 Defendants argue that some of the costs sought by Plaintiffs are associated with 3 videotaped depositions and are not recoverable as either taxable costs under L.R. Civ. 4 54.1(e) or under 28 U.S.C. § 1920(2). 5 Under the Fair Labor Standards Act, costs [‘of the action’] include reasonable out- 6 of-pocket expenses.” Van Dyke v. BTS Container Serv., Inc., 2009 WL 2997105, at *2 (D. 7 Or. Sept. 15, 2009) (citing Smith v. Diffee Ford–Lincoln–Mercury, Inc., 298 F.3d 955, 969 8 (10th Cir. 2002)). “Costs of the action “can include costs beyond those normally allowed 9 under Fed. R. Civ. P. 54(d) and 28 U.S.C. § 1920.” Id. (citing Herold v. Hajoca Corp., 864 10 F.2d 317, 323 (4th Cir. 1988)) (FLSA’s costs provision authorizes an award of costs as part 11 of a “reasonable attorney’s fee,” which would not be authorized under Rule 54 or 28 U.S.C. 12 § 1920). Based on the case law cited above, the Court does not read L.R. Civ. 54.1(e) as 13 prohibiting the recovery of video depositions costs as Defendants argued. The Court finds 14 that such costs were reasonably incurred by Plaintiffs’ counsel in preparation for a potential 15 trial and in the course of litigation. Accordingly, the Court will not reduce the costs requests 16 based on Defendants’ arguments on video deposition costs. 17 10. Legal Research Costs 18 Defendants next argue that the costs of computerized legal research, which are 19 recoverable under L.R. Civ. 54.2, should not be awarded here because “Plaintiffs’ list of 20 disbursements paid by Denton Peterson refers only to ‘Westlaw Online Legal Research,’ 21 and the supporting bills provide no additional detail about what was researched and for 22 what purpose.” (Doc. 257 at 15) Defendants cite to documents 254-4 and 254-5 in support 23 of their argument. 24 The Court finds that this argument is not well-taken and disingenuous from 25 Defendants. The Court reviewed every single invoice for Westlaw research submitted by 26 Plaintiffs’ counsel in document 254-5. Taking the name of the individual who conducted 27 legal research and the date charges were incurred and cross-checking that information with 28 14 1 document 254-4, the billing entries submitted by Plaintiffs’ counsel, the Court was able to 2 identify each and every single one of the charges and tie it to an actual time entry which 3 clearly identifies the issues researched. For example, as pointed out by Plaintiffs’ counsel, 4 the first invoice for Westlaw charges is on page 3 of document 254-5 and shows that Elena 5 Cottam performed research on November 2, 2017 and November 3, 2017. (Doc. 254-5 at 6 3) Turning to the billing entries in document 254-4, on page 4, a time entry for Elena 7 Cottam on November 2, 2017, states “research re severance agreement and effect on FLSA 8 claims.” (Doc. 254-4 at 4) A time entry on November 3, 2017, states “research re severance 9 agreement and FLSA claims.” (Doc. 254-4 at 4) All remaining legal research entries are 10 similarly adequate. Legal research entries must “if applicable, identify the pleading or 11 document the preparation of which occasioned the conduct of the research.” L.R. Civ. 12 54(e)(2)(B) (emphasis added) Not all legal research will be related to a specific pleading 13 or document. The Court finds that the records and time entries submitted by Plaintiffs’ 14 counsel for computerized legal research are proper under the relevant local rules and will 15 allow for recovery of those costs as requested by Plaintiffs’ counsel. Defendants’ argument 16 that the bills provide no additional detail about what was researched is factually incorrect. 17 11. Overhead Expenses 18 Defendants have identified several costs items, totaling $2,706.94, which they argue 19 are not recoverable because they are properly categorized as overhead and some of them 20 are not specific to this case. (Doc. 257 at 16) Plaintiffs argue that those costs were incurred 21 to convert electronic documents into a format readable by Plaintiffs because Defendants 22 produced large information of electronic information in “formats that were deliberately 23 difficult to read.” (Doc. 259 at 10) Plaintiffs also argue that it would be instructive to see 24 how much Defendants paid for IT services in this case, but that Defendants refused to turn 25 over their invoices to allow for a comparison. (Doc. 259 at 10) 26 The Court finds that those costs are not recoverable. Based on its review of the 27 invoices and the parties’ arguments, the Court is not convinced that those costs are nothing 28 15 1 more than costs associated with converting files in the traditional sense, even if the volume 2 was large here, and those costs are not recoverable as they should be subsumed in a firm 3 overhead. Furthermore, regarding the issue of the DocuSign subscription, the Court is not 4 persuaded that Plaintiffs’ counsel only used the subscription for this case and that it was 5 necessarily incurred in this case. Accordingly, the Court will not allow the recovery of the 6 $2,706.94 in costs identified by Defendants as overhead costs. 7 12. Apportionment of Deposition Costs 8 Defendants’ final argument related to the Motion is that some of the deposition costs 9 needed to be allocated among this case and the related arbitrations which took place before 10 the parties settled this action. (Doc. 257 at 17) Defendants provided a chart identifying the 11 deposition in this case and how the Court should allocate the costs of each deposition based 12 on the number of active cases at the time the deposition was taken. (Doc. 257-15) Plaintiffs 13 argue that no duplication of costs took place, meaning that none of those costs have been 14 recovered through any arbitration, and that more importantly, the allocation of costs 15 proposed by Defendants is not reasonable. (Doc. 259 at 11) 16 The parties agreed that because this case and related arbitrations might make use of 17 the same depositions, the same transcripts would be used interchangeably to avoid 18 duplication of costs. It appears that none of the arbitration claims went to a hearing and 19 that each of those claims settled. The parties agree that none of the claimants in any of the 20 arbitration proceedings received any of their costs. (Docs. 257 at 17; 259 at 11) Defendants 21 do not dispute that each deposition taken was noticed in, and necessary for, this case. 22 The Court is unpersuaded by Defendants proposed allocation, and reduction, of 23 costs for the depositions. Indeed, as Plaintiffs pointed out, the apportionment appears 24 unreasonable. This case involved 57 plaintiffs, who settled through the approved 25 Settlement Agreement. There were only 11 arbitration claimants who were forced to 26 arbitrate their claims related to this litigation because they had signed arbitration 27 agreements. Plaintiffs requested a total of $16,209.00 for deposition costs. Defendants 28 16 argue that a proper apportionment would reduce those requested costs down to $3,079.21. (Docs. 257 at 17; 257-15 at 4) In essence, out of the $16,209.22 of depositions costs 3 requested, Defendants argue that the 57 plaintiffs in this case account for $3,079.21 and 4 the 11 arbitration claimants account for $13,129.79. The Court is puzzled by this > apportionment and it seems grossly stacked “in favor” of the arbitration claims—meaning 6 those claims somehow draw most of the costs of the depositions. Defendants’ explanation that the calculation makes sense because the costs of each deposition should be divided by 8 the number of pending cases at the time the deposition was taken seems to be more about splitting hair than an actual reasonable effort to apportion costs. Accordingly, the Court 10 will award Plaintiffs the $16,209.22 in depositions costs they requested. Accordingly, based on the Court’s review of Plaintiffs’ request for costs, the Court 12 will award Plaintiffs $31,346.83 in costs.* 13 IT IS ORDERED that Plaintiffs’ Motion for Attorneys’ Fees and Costs (Doc. 254) is granted in part. IS IT IS FURTHER ORDERED that Plaintiffs are awarded $650,000 in attorneys’ 16 fees and $31,346.83 in costs. Dated this 21st day of August, 2020. 18 19 Ae 20 United States District Addze 21 22 23 24 25 26 27 4 This figure is: $34,053.77 (requested by Plaintiffs’ counsel; doc. 259 at 11) minus 28 $2,706.94 for overhead expenses = $31,346.83 17