Beck v. Test Masters Educational Services, Inc. , 73 F. Supp. 3d 12 ( 2014 )


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  • UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF COLUMBIA    E @
    JARROD BECK, ERIN GALLOWAY, NOV ’1 i) 201%
    and KEERTHI REDDY, mm, U. 3 9,3“, ,3: Banmmcy
    mum Yet the meme!  Ccéumbizz
    Plaintiffs,
    v. Civil Action. No. 1:04-cv-01391 (RCL)
    TEST MASTERS EDUCATIONAL
    SERVICES, INC.,
    Defendant.
    MEMORANDUM OPINION
    Plaintiffs Jarrod Beck, Erin Galloway, Keerthi Reddy (collectively “plaintiffs”) seek
    attorneys’ fees and expenses from defendant Test Masters Educational Services, Inc. (“TES”).
    This Court entered summary judgment in favor of plaintiffs for claims under the DC. Consumer
    Protection Procedures Act, DC. Code § 23-3905(k)(2)(A) on December 18, 2013. The Court
    also awarded each plaintiff $1,500, for a total of $4,500, in statutory damages against TES and
    allowed plaintiffs to seek attorneys’ fees. Plaintiffs now seek $963,415.85 in attorneys’ fees and
    costs pursuant to the Court’s order. For the reasons discussed below, plaintiffs’ Petition for
    Attorneys” Fees and Expenses will be granted for a reduced amount.
    I. BACKGROUND
    This case was originally filed in 2004 in the Superior Court of the District of Columbia,
    Case No. 04-CA-005586. Plaintiffs alleged claims of common law fraud, negligent
    misrepresentation, and violation of the DC. Consumer Protection Procedures Act, DC. Code
    § 23-3904(e), (f), (s) (“CPPA”), arising out of plaintiffs’ confusion between LSAT preparation
    courses offered by TES and a similar company, TestMasters. The case was removed to this
    Court on diversity grounds on August 13, 2004. Notice of Removal, ECF No. 1. Since removal,
    the case has been transferred to the US. District Court for the Southern District of Texas for
    Multidistrict Litigation proceedings and returned to this Court where summary judgment was
    granted against plaintiffs by Judge Robertson on January 27, 2010. Mem., ECF No. 48; Order,
    ECF No. 49. Plaintiffs appealed the summary judgment and the DC. Circuit affirmed summary
    judgment on the common law fraud and negligence claims, but reversed as to the CPPA claims.
    Beck v. Test Masters Educ. Servs., Inc., 407 Fed. App’x 491 (DC. Cir. 2011). The case returned
    to this Court for multiple motions, discovery disputes, and finally, summary judgment on
    plaintiffs” remaining CPPA claims on December 18, 2013. Order, ECF No. 196; Mem. Op.,
    ECF No. 197.
    The Court entered judgment against TES for violation of the CPPA and encouraged the
    parties to meet and confer to determine a reasonable amount of attorneys’ fees. Order, ECF No.
    196. Failing to reach an agreement, plaintiffs filed their initial Petition for Attorneys’ Fees and
    Expenses on January 31, 2014. Pet. for Att’y Fees and Expenses, ECF No. 203. The Court
    denied plaintiffs’ request for injunctive relief and awarded $1,500 per plaintiff, for a total of
    $4,500, in statutory damages on June 20, 2014. Order, ECF No. 218; Mem. Op., ECF No. 219.
    The Court again encouraged the parties to determine a reasonable amount of attorneys’ fees and
    dismissed the initial Petition for Attorneys’ Fees and Expenses without prejudice to be refiled
    within thirty days if the parties were unable to come to a resolution.
    Plaintiffs filed the present Petition for Attorneys’ Fees and Expenses on July 21, 2014.
    Pet. for Att’y Fees and Expenses, ECF No. 221. Plaintiffs seek $963,415.85 in attorneys’ fees
    and expenses. Defendant filed its Opposition to plaintiffs’ Petition on August 4, 2014. Mem. in
    Opp’n to Pls.’ Pet. for Att’y Fees and Expenses, ECF No. 222. Plaintiffs entered their Reply to
    Rule 68’s restrictions on the amount of plaintiff s attorney’s fees request to circumstances when
    a proper offer of judgment is made). Second, TES cites no case indicating that a unilateral
    9
    settlement offer may be admissible to prove the reasonableness or unreasonableness of plaintiffs
    request for attorneys’ fees. TES’s $15,000 settlement offer that predates nine years of litigation
    costs does not shed any light on the “objective reasonableness” of plaintiffs’ current request.
    TES’s settlement offer further declines in relevance because plaintiffs’ made a counteroffer to
    which TES failed to respond.
    IV. CONCLUSION
    For the foregoing reasons, plaintiffs” Petition for Attorneys’ Fees and Expenses will be
    granted in the amount of $854,623.90 for attorneys’ fees and $73,083.99 for expenses and costs,
    for a total of $927,707.89. A separate Order accompanies this Memorandum Opinion.
    Signed Royce C. Lamberth, United States District Judge, on November 10, 2014.
    ll
    defendant’s Opposition on August 14, 2014. Reply in Supp. of Pet. for Att’y Fees and Expenses,
    ECF No. 223. Defendant sought leave to file a Surreply to plaintiffs” Reply on September 3,
    2014. Mot. for Leave to File Surreply, ECF No. 225; Surreply to Pls.’ Reply in Supp. of Pet. for
    Att’y Fees and Expenses, ECF No. 226. Plaintiffs’ filed a Response to defendant’s Motion for
    Leave to File a Surreply on September 5, 2014. Opp’n to Def.’s Mot for Leave to File Surreply,
    ECF No. 227.
    II. LEGAL STANDARD
    The CPPA allows prevailing claimants to recover “reasonable attorney’s fees.” DC.
    Code § 28-3905(k)(2)(B). The Court awarded attorneys’ fees to plaintiffs in summary judgment,
    alongside statutory damages for their CPPA claims, and plaintiffs are entitled to recover
    reasonable fees and costs incurred in this case. In re InPhonic, Inc., 
    674 F. Supp. 2d 273
    , 279
    (D.D.C. 2009). Fees awarded on a successful claim “must be reasonable in relation to the
    success achieved,” and a plaintiff may only recover fees “for work related to the claim” on which
    plaintiff was successful. Williams v. First Gov ’t Mortg. & Investors Corp, 
    225 F.3d 738
    , 746
    (DC. Cir. 2000). “Fees for time spent on claims that ultimately were unsuccessful should be
    excluded only when the claims are ‘distinctly different” in all respects, both legal and factual,
    from plaintiff’s successful claims.” Id. (quoting Morgan v. District of Columbia, 
    824 F.2d 1049
    ,
    1066 (DC. Cir. 1987)). Considering the public policy interests served by the CPPA, this Court
    does not recognize a proportionality requirement when a requested amount in attorneys’ fees
    exceeds the amount awarded in statutory damages. Id. at 747.
    “‘The most useful starting point for determining the amount of a reasonable fee is the
    3”
    number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.
    Baker v. D. C. Pub. Schs., 
    815 F. Supp. 2d 102
    , 107 (D.D.C. 2011) (quoting Hensley v.
    Eckerhart, 461 US. 424, 433 (1983)). “The plaintiff bears the burden of demonstrating that the
    number of hours that its counsel has spent on a particular task is reasonable.” Id. (citing
    Holbrook v. District of Columbia, 
    305 F. Supp. 2d 41
    , 45 (D.D.C. 2004)). A plaintiff may
    satisfy this burden by submitting invoices with sufficient detail to allow the Court to determine
    whether or not the hours claimed were justified. Holbrook, 305 F. Supp. 2d at 45. Once a
    plaintiff has provided detailed billing records and invoices, a “presumption arises [in plaintiff s
    favor] that the number of hours billed is reasonable[,] and the burden shifts to the defendant to
    rebut the plaintiff’ 5 showing of reasonable hours.” Watkins v. Vance, 
    328 F. Supp. 2d 27
    , 31
    (D.D.C. 2004); see Baker, 815 F. Supp. 2d at 107; In re InPhonic, Inc, 674 F. Supp. 2d at 280;
    Herbin v. District of Columbia, No. 02-1185, 
    2006 WL 890673
    , at *5 (D.D.C. Apr. 4, 2006). A
    party objecting to the requested amount of attorneys’ fees must justify an adjustment of the
    lodestar and “submit facts and detailed affidavits to show why the applicant’s request should be
    reduced or denied.” Nat’l Ass ’n of Concerned Veterans v. Sec ’y of Def. , 
    675 F.2d 1319
    , 1337
    (DC. Cir. 1982) (Tamm, J ., concurring); see Baker, 815 F. Supp. 2d at 107; Covington v.
    District of Columbia, 
    839 F. Supp. 894
    , 898—99 (D.D.C. 1993). If appropriate, the Court may
    also reduce the lodestar amount to account for unreasonable, excessive, deficient, or duplicative
    entries in a plaintiffs” fee petition. Envtl. Def. Fund, Inc. v. Reilly, 
    1 F.3d 1254
    , 1258 (DC. Cir.
    1993); Baker, 815 F. Supp. 2d at 109; Lynom v. Widnall, 
    222 F. Supp. 2d 1
    , 7 (D.D.C. 2002).
    III. ANALYSIS
    A. Lodestar Amount
    The Court’s determination of reasonable attorneys’ fees begins by calculating “the
    number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.”
    Baker, 815 F. Supp. 2d at 107. The Court finds that plaintiffs’ documentation of billing entries
    and expenses is sufficient to establish a reasonable lodestar amount. The lodestar amount,
    however, will be reduced to exclude attorneys’ fees and expenses that the Court previously
    declined to award in connection with plaintiffs’ Motion to Compel and Motion for Sanctions.1
    1. Number of Hours
    The Court looks at the amount of hours that plaintiffs claim to have “reasonably
    expended on the litigation.” Hensley, 461 US. at 433. The Court should exclude all time that is
    excessive, duplicative, or inadequately documented. Envtl. Def. Fund, Inc., 1 F.3d at 1258.
    Throughout ten years of litigation, plaintiffs have employed attorneys and staff at the
    Washington, DC. law firm of Tycko & Zavareei LLP. The parties have litigated in three
    separate trial courts and the DC. Circuit Court of Appeals, with multiple discovery disputes,
    requests for sanctions, and summary judgment motions. Plaintiffs provided record of their hours
    by a sworn declaration of a partner with an attached log reflecting the hours expended by each
    attorney and staff member. The hours log is based on contemporaneously recorded time entries
    for the attorneys and staff, and plaintiffs made discretionary cuts to eliminate time records
    unrelated to their successful claim and unproductive or otherwise extraneous time records.
    Reply in Supp. of Pet. for Att’y Fees and Expenses 19—20, ECF No. 223; Pet. for Att’y Fees and
    Expenses, Zavareei Decl., ECF No. 203-1.
    TES argues that plaintiffs’ proof of attorneys’ fees is deficient and objects to several
    broad categories of plaintiffs’ time entries. First, TES argues that plaintiffs have failed to
    provide “adequate testimony authenticating these documents” under the Federal Rules of
    Evidence and that plaintiffs’ hours log includes improper “excerpts” of reports generated by the
    attomeys’ billing software. Opp’n to Pls.’ Pet. for Att’y Fees and Expenses 25, ECF No. 222.
    1 See Mem. & Order, ECF No. 138.
    These objections are meritless. Consistent with the Court’s requirements, plaintiffs have
    “maintained contemporaneous, complete and standardized time records which accurately reflect
    the work done by each attorney.” Weisberg v. Webster, 
    749 F.2d 864
    , 873 (DC. Cir. 1984).
    Plaintiffs’ sworn declaration from the supervising attorney and the hours log, created using the
    firrn’s billing software and records, are exactly the sort of evidence normally considered by the
    Court in evaluating a fee award. Holbrook, 305 F. Supp. 2d at 45. The records are sufficient to
    allow the “Court to make an independent determination whether or not the hours claimed are
    justified.”2 Nat’l Ass ’11 of Concerned Veterans, 675 F.2d at 1327.
    Second, TES objects to broad categories of attorneys’ fees that it alleges are “examples of
    [p]lantiffs’ counsel’s gamesmanship, unreasonable positions, or simple failure to comply with
    3,3
    rules of procedure. Despite its proven ability to provide specific and detailed objections to
    plaintiffs’ hour logs, see Def.’s Objections to Pls.’ Delineated Doc. of Att’y Fees and Expenses,
    ECF No. 125, TES does not identify to which billing entries it objects or even a summary of how
    many hours it claims to be unreasonable. This Court requires that a party objecting to a request
    for attorneys’ fees must present detailed and specific reasons why the applicant’s request should
    be reduced or denied. Baker, 815 F. Supp. 2d at 107; Covington, 839 F. Supp. at 898—99. TES’s
    broad objections, lacking even specific invoice numbers or dates to help identify the problematic
    billing entries, are not sufficient to rebut the presumption that plaintiffs’ hours request is
    reasonable.
    2 The Court previously accepted plaintiffs’ billing record presentation and found it to be sufficient. Mem. &
    Order, ECF No. 138
    3 TBS also argues that plaintiffs failed to segregate their attorneys’ fees to demonstrate exclusion of fees
    incurred in pursuit of unsuccessful claims. TES does not identify any specific entries that plaintiffs failed to
    segregate or instances when plaintiffs requested fees for time expended on the fraud or negligent misrepresentation
    claims or for plaintiffs’ work relating to compensatory damages. Plaintiffs contend that they “diligently excluded
    such entries.” Reply in Supp. of Pet. for Att’y Fees and Expenses, ECF No. 223. Without specific objections from
    TES, the Court will rely on plaintiffs’ sworn declaration and hours log.
    6
    The Court will, however, deny plaintiffs’ request for attorneys” fees and expenses related
    to the plaintiffs’ Motion for Sanctions under Federal Rule of Civil Procedure 37(b).4 The Court
    previously declined to award plaintiffs” full attorneys’ fees because it found that portions of
    TES’s opposition to discovery requests were “substantially justified” and sanctions were
    inappropriate. Mem. & Order 9—10, ECF No. 138. The Court awarded one-third of the
    requested amount and declined to award the remaining $34,153.65 for attorneys’ fees and
    $1,554.31 for expenses because the federal rules did not allow for the award. Id. at 21. Having
    previously declined to award full attorneys’ fees and expenses for plaintiffs’ Motion for
    Sanctions, the Court will not revisit its earlier decision.
    2. Hourly Rates
    Reasonable hourly rates are those “in line with those prevailing in the community for
    similar services by lawyers of reasonably comparable skill, experience, and
    reputation.” Covington, 57 F.3d at 1109 (internal quotations omitted). Plaintiffs have provided
    sufficient records to document a reasonable hourly rate for work completed by plaintiffs’
    attorneys. Plaintiffs’ attorneys billed at hourly rates between $250 and $400, and paralegals and
    staff employed on behalf of plaintiffs billed at an hourly rate of $60. The rates requested by
    plaintiffs align with those previously awarded to plaintiffs by this Court on March 1, 2013, Mem.
    & Order, ECF No. 138, and the rates approved by the current Lafi’ey index. Laffey v. Nw.
    Airlines, 
    572 F. Supp. 354
     (D.D.C. 1983), afd in part, rev ’d in part on other grounds, 
    746 F.2d 4
     (DC. Cir. 1984).5 Plaintiffs have presented evidence that their attorneys were qualified to
    request these hourly rates and that the rates are reasonable and customary for the DC.
    4 Sealed Mot. to Compel, for Issue-Related Sanctions, and for Monetary Sanctions, ECF No. 103.
    5 The current Lafi’ey rates are available at http://www.justice.gov/usao/dc/divisions/civil_Laffey_Matrix_
    2003-2012.pdf. Almost all of the rates requested by plaintiffs are below the accepted Lafley rate. Plaintiffs only
    request a rate equal to that listed on the Laffey index when the Court has not previously awarded attorneys’ fees for a
    particular individual.
    community. Thus, the lodestar amount, minus the hours and expenses for the Motion for
    Sanctions previously denied by this Court, is $927,707.89.
    B. Adjustment to the Lodestar Amount
    TES has mounted several additional challenges to plaintiffs’ Petition for Attorneys’ Fees
    and Expenses, and attempts to demonstrate that no attorneys” fees award is reasonable in light of
    plaintiffs’ limited success in the present litigation. TES’s arguments are largely without merit
    because they do not rebut the reasonableness of plaintiffs’ request nor do they justify an
    adjustment to the lodestar amount.
    1. Litigation Success
    TES argues that the Court should not award attorneys’ fees or expenses because
    plaintiffs’ were not “successful” in their suit. This argument is incorrect. The Court ruled in
    favor of plaintiffs’ CPPA claims and awarded plaintiffs’ statutory damages and reasonable
    attorneys’ fees and expenses. That is sufficient to demonstrate that plaintiffs’ were successful
    and that the Court properly, and in its discretion, awarded attorneys’ fees. In re InPhonic, Inc.,
    674 F. Supp. 2d at 279. Plaintiffs were not successful in each of their claims, but the Court’s
    order of summary judgment in their favor and award of CPPA statutory damages and attorneys’
    fees and expenses is sufficient for plaintiffs’ to be “successful” under the CPPA.
    TES claims arguendo that plaintiffs’ attorneys’ fees far exceed their relative success on
    the merits. The Court has expressly rejected a rule of proportionality for attorneys’ fees awarded
    under the CPPA. Williams, 225 F.3d at 747. The CPPA serves several important public policy
    interests, namely protection from “unconscionable credit transactions exploiting a consumer’s
    likely inability to . . . protect her interests. DeBerry v. First Gov ’t Mortg. & Investors Corp, 
    743 A.2d 699
     (DC. 1999). The difference between plaintiffs’ $4,500 statutory damages award and
    the requested attorneys’ fees and expenses incurred in litigation is significant. This Court,
    however, does not require an attorneys’ fee award to be proportionate to a merits award because
    such a rule would “‘make it difficult, if not impossible, for individuals with meritorious . . .
    claims but relatively small potential damages to obtain redress from the courts.”’ Williams, 225
    F.3d at 747 (quoting City of Riverside v. Rivera, 
    477 U.S. 561
    , 578 (1986)). This Court only
    requires that the requested attorneys’ fees and expenses be reasonable in relation to the success
    achieved. “‘There is no precise rule or forrnula’ for determining the reasonableness of the
    relation between the fee requested and the relief obtained.” Id. at 746 (quoting Hensley, 461
    US. at 43 6). Plaintiffs seek attorneys’ fees and expenses incurred while litigating their CPPA
    claims. Plaintiffs’ attest, and TES presents no contrary evidence, that they have excluded billing
    entries for time devoted solely to pursuit of the negligent misrepresentation and fraud claims that
    were dismissed previously. Thus, to the extent that plaintiffs’ request is reasonable (as discussed
    above), the relatively small statutory damages award in this case does not limit the Court’s
    ability to award plaintiffs’ attorneys’ fees and expenses.
    TES also asserts that plaintiffs’ request for attorneys’ fees and expenses should be
    reduced because a third party, Robin Singh, paid a portion of plaintiffs’ attorneys’ fees. First,
    TES’s claims of champerty and maintenance are not appropriate. TES has cited no case to
    support its claim that third party’s payment of a consumer’s attorneys” fees limits plaintiffs’
    ability to recover attorneys’ fees or otherwise demeans the reasonableness of plaintiffs’ request.
    The language of the CPPA does not require that attorneys” fees be directly “incurred” by the
    plaintiffs to support an award. Instead, as a fee-shifting statute, the CPPA allows attorneys’ fees
    to be awarded to successful plaintiffs’ regardless of how the attorneys’ fees would otherwise be
    paid. See Blum v. Stenson, 465 US. 886, 894 (1984) (noting that “reasonable fees” in federal
    civil rights actions are to be calculated according to the prevailing community rates regardless of
    whether plaintiff is represented by private or nonprofit counsel); Covington, 57 F.3d at 1107
    (allowing attomey’s fee award at prevailing market rates even though attorneys typically charged
    their poorer clients a reduced rate for noneconomic reasons); Am. Fed ’n of Gov ’t Employees,
    AFL-CIO, Local 3882 v. Fed. Labor Relations Auth., 
    944 F.2d 922
    , 933 (DC. Cir. 1991)
    (awarding attomey’s fees under fee-shifting provision of the Back Pay Act to plaintiff employee
    even though plaintiff received union counsel’s services free of charge). Thus, Mr. Singh’s
    payments for plaintiffs’ attorneys’ fees from 2004 to 2010 do not diminish or undermine
    plaintiffs’ request.
    2. 2005 Settlement Discussions
    TES argues that plaintiffs’ rejection of a $15,000 settlement offer ($5,000 to each
    plaintiff) in 2005 weighs against the plaintiffs’ request for attorneys’ fees. TES’s previous
    settlement offer that predates 96% of litigation costs (including multiple summary judgment
    motions and appeals to the DC. Circuit), and does not include attorneys’ fees, is not relevant to
    the current determination of reasonable attorneys’ fees. First, TES’s $15,000 settlement offer
    was not an offer of judgment, and thus, it does not limit the Court’s later consideration of
    plaintiffs’ attorneys” fees. See Fed. R. Civ. P. 68; Clark v. Sims, 
    28 F.3d 420
    , 424 (4th Cir.
    1994) (vacating an order for attomey’s fees because a district court improperly limited recovery
    based on a settlement offer which failed to meet the requirements of Rule 68); Am. Lands
    Alliance v. Norton, 
    525 F. Supp. 2d 135
    , 145 (D.D.C. 2007) (noting that an offer of judgment
    made under Rule 68 is one of the few circumstances that would justify a reduced attorneys’ fees
    award for work performed after a settlement offer); Bonenberger v. Plymouth T wp., No. 96-403,
    
    1998 WL 472469
    , *341 (ED. Pa. July 27, 1998), afl’d 
    202 F.3d 253
     (3d Cir. 1999) (limiting
    10