Federal Trade Commission v. Skybiz.Com, Inc. , 102 F. App'x 649 ( 2004 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
JUN 29 2004
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
FEDERAL TRADE COMMISSION,
Plaintiff,
v. No. 03-5129
(D.C. No. CV-01-396-EA (M))
SKYBIZ.COM, INC.; WORLD (N.D. Okla.)
SERVICE CORPORATION;
WORLDWIDE SERVICE
CORPORATION; JAMES S.
BROWN; ELIAS F. MASSO;
KIER E. MASSO,
Defendants-Appellants,
and
STEPHEN D. MCCULLOUGH,
NANCI H. MASSO, NANCI
CORPORATION INTERNATIONAL,
ROBERT E. BLANTON, SKYBIZ
INTERNATIONAL LTD.,
Defendants,
_______________________________
MATHESON ORMSBY PRENTICE,
Appellees,
and
ROBB EVANS; ROBB EVANS &
ASSOCIATES,
Receivers.
ORDER AND JUDGMENT *
Before EBEL , ANDERSON , and BRISCOE , Circuit Judge.
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
SkyBiz and other plaintiffs appeal a district court’s award of attorney’s fees
to Matheson Ormsby Prentice, an Irish law firm that defended SkyBiz’s assets
from creditors in an interpleader action after the company’s assets were frozen at
the request of the Federal Trade Commission. Plaintiffs’ main objection concerns
the district court’s decision to award i 105,053 ($126,140.90 U.S.) 1
of a disputed
i 168,000 ($201,723.62 U.S.) sum to Matheson for time that was not well
documented. The district court had originally rejected the request for i 168,000
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
1
For ease of understanding, we have converted all amounts in Euros to U.S.
dollars at the single current exchange rate of one Euro to 1.20 U.S. dollars.
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($201,723.62 U.S.) as unsubstantiated, Aplt. App., Vol. II at 360; but, in its June
10, 2003 order, the district court awarded Matheson i 105,053 ($126,142.25
U.S.), justifying the partial award with a lodestar approach, which multiplies an
attorney’s hourly rate by the number of hours he worked. Id. , Vol. IV at 776.
The court explained that newly submitted time records better supported
Matheson’s claim to the fee, and that the transcript of a hearing in Irish courts
documented how valuable the firm’s services had been in protecting SkyBiz’s
assets. Id. Then, on July 15, 2003, in response to SkyBiz’s motion for
reconsideration, the district court justified the award of the same increase based
on the balancing of equities. Id. at 825-27. In that July 2003 decision, the
district court distinguished Ramos , the major case establishing use of a lodestar,
by observing that Ramos had been decided under a fee-shifting statute that
required a prevailing party, whereas the SkyBiz case had settled out of court .
Id. at 826-27 (citing Ramos v. Lamm , 713 F.2d 546, 552-55 (10th Cir. 1983),
overruled on other grounds by Pennsylvania v. Del. Valley Citizens’ Council for
Clean Air , 483 U.S. 711, 717 n.4 (1987)).
On appeal, plaintiffs reargue the amount of the award both under the
lodestar approach and under the balancing of equities. They generally argue that
the firm’s records were overly vague, that Matheson should not be rewarded
because it did not partake in the negotiations necessary for settlement in United
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States courts, and, without much explanation, that the district court should not
have departed from the lodestar approach in Ramos .
We review the award of attorney’s fees for abuse of discretion. Shaw v.
AAA Eng’g & Drafting, Inc. , 213 F.3d 538, 542 (10th Cir. 2000). Abuse of
discretion is “an arbitrary, capricious, whimsical, or manifestly unreasonable
judgment” under the circumstances. Coletti v. Cudd Pressure Control , 165 F.3d
767, 777 (10th Cir. 1999) (quotation omitted). In determining whether a district
court has abused its discretion, we give due deference to that court’s “evaluation
of the salience and credibility of testimony, affidavits, and other evidence.”
United States v. Robinson , 39 F.3d 1115, 1116 (10th Cir. 1994). We will not
disturb the decision of a district court unless it has “no support in the record,
deviates from the appropriate legal standard, or follows from a plainly
implausible, irrational, or erroneous reading of the record.” Id. To prevail,
plaintiffs must move us to the “definite and firm conviction that the lower court
made a clear error of judgment or exceeded the bounds of permissible choice in
the circumstances.” Moothart v. Bell , 21 F.3d 1499, 1504 (10th Cir. 1994)
(citations and quotations omitted).
Because the district court alternately used both the lodestar approach and a
balancing of the equities approach to justify its partial award of fees, we consider
the plaintiffs’ arguments against the court’s judgment under each method.
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First, we conclude that plaintiffs’ arguments against the award of attorney’s
fees to Matheson under the lodestar approach do not persuade us that the district
court’s decision was “arbitrary, capricious, whimsical, or manifestly
unreasonable.” Coletti , 165 F.3d at 777. The record shows that Matheson
prepared extensively for its work in Ireland. Although the district court did
express dissatisfaction with Matheson’s itemization of tasks, the court also found
that, under the newly submitted time records, a portion of the fees was “justified
and reasonable for the work performed.” Aplt. App., Vol. IV at 778. Under the
abuse of discretion standard, we have found the district courts’ use of
reconstructed time records permissible, Carter v. Sedgwick County, Kan .,
929 F.2d 1501, 1506 (10th Cir. 1991), and we have even permitted district courts
to award fees for the block billing of tasks . Cadena v. Pacesetter Corp. , 224 F.3d
1203, 1214-15 (10th Cir. 2000). Plaintiffs present no evidence that the district
court’s acceptance of the billing records in this case exceeded the bounds of this
deference. And plaintiffs’ contention that Matheson did not participate in the
negotiation to settle the case in the United States is beside the point. The lodestar
method considers what work a law firm has done and what it should be
compensated for, not what work it has not been a party to and for which it is not
requesting compensation. See Ramos , 713 F.2d at 552-55. Plaintiffs cite no case
law to the contrary.
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Second, we conclude that plaintiffs have not presented a compelling
argument against the district court’s weighing of the equities in this case. The
district court explained that it could depart from the fee-shifting analysis that had
undergirded Ramos because the SkyBiz case had settled without a judicial
determination of the prevailing party, and thus the district court could evaluate
the equities of the case without exclusively employing the lodestar method. The
district court appears to have properly distinguished Ramos , and plaintiffs again
cite no case law to the contrary. See also Nephew v. City of Aurora, Colo. ,
766 F.2d 1464, 1465-67 (10th Cir. 1985) (departing from the rigid lodestar
analysis in Ramos to consider the equity of the plaintiffs’ claim). Turning to the
merits of the district court’s decision on the equities, we note that, although the
district court did not award Matheson the entire amount that the firm sought, it
found that Matheson was entitled to a significant portion of the award it had
requested. Aplt. App., Vol. IV at 828. After weighing the evidence, the district
court concluded that Matheson’s fees were “for the most part reasonable,” and, in
light of how complicated the case had been, that “an enhancement was equitable
and appropriate.” Id. Matheson’s services had also been necessary to preserve
adequate funds for consumer redress. Id. Nothing in the materials that the
plaintiffs present convince us that the district court’s conclusion on the merits
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was a “clear error of judgment or exceeded the bounds of permissible choice.”
Moothart , 21 F.3d at 1504.
Accordingly, we hold that the district court did not abuse its discretion in
the award of attorney’s fees under either the lodestar or the balancing of the
equities approaches, and we AFFIRM the district court’s judgment.
Entered for the Court
Mary Beck Briscoe
Circuit Judge
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