Otay Mesa Property, L.P. v. United States , 2015 U.S. Claims LEXIS 1461 ( 2015 )

In the United States Court of Federal Claims
No. 06-167L (and consolidated cases)
(Filed: November 6, 2015)
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OTAY MESA PROPERTY, L.P., et al., *
*
*
Plaintiffs, * Fifth Amendment Taking; U.S. Border
* Patrol’s Use of Seismic Intrusion
v. * Sensors on Plaintiffs’ Property;
* Attorneys’ Fees and Expenses; 42
THE UNITED STATES, * U.S.C. § 4654.
*
Defendant. *
*
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Roger J. Marzulla, with whom was Nancie G. Marzulla, Marzulla Law, LLC, Washington,
D.C., for Plaintiffs.
Davené D. Walker, with whom was John C. Cruden, Assistant Attorney General, United
States Department of Justice, Environment and Natural Resources Division, Washington,
D.C., for Defendant.
OPINION AND ORDER REGARDING
AWARD OF ATTORNEYS’ FEES AND EXPENSES
WHEELER, Judge.
On June 5, 2015, Plaintiffs Otay Mesa Property, LP, Rancho Vista Del Mar, Otay
International, LLC, OMC Property, LLC, D&D Landholdings, LP, and International
Industrial Park, Inc. (collectively, “Otay Mesa”) filed a motion for recovery of attorneys’
fees and costs under the Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970 (“URA”). 42 U.S.C. § 4654(c). Pursuant to the URA, this Court must
award a plaintiff who recovers compensation for the taking of property by a federal agency
“such sum as will in the opinion of the court . . . reimburse such plaintiff for his reasonable
costs, disbursements, and expenses, including reasonable attorney . . . fees.” Id. In this
case, Plaintiffs brought a successful claim against the Government for its permanent
physical taking of an easement over their property in Southern California. On June 10,
2015, this Court entered a final judgment of $802,501.23 in Plaintiffs’ favor.
Otay Mesa requests attorneys’ fees in the amount of $1,705,631.59 and expenses in
the amount of $397,943.01, plus costs of $85,242.82 to be considered separately by the
Clerk of Court. The attorneys’ fees are based on 5,725.50 hours billed by two firms. The
total attorneys’ fee amount includes a ten percent contingency fee of $80,472.84. Otay
Mesa’s requested expenses range from early 2006 through September 30, 2015.
The Government objects to Otay Mesa’s requests on multiple grounds and proposes
a total award of $965,947.68, including costs. Along with arguing for a six-stage
downward percentage adjustment in the number of hours billed, the Government raises no
fewer than thirteen separate arguments in its opposition to Otay Mesa’s motion. Although
many of the Government’s objections are unwarranted, the Court finds it appropriate to
apply a percentage reduction to the number hours billed and expenses incurred during the
first phase of litigation. For the reasons set forth below, Otay Mesa is entitled to recover
$1,172,050.34 for attorneys’ fees and $276,134.75 for expenses incurred in this litigation.
The Clerk of Court will consider Otay Mesa’s Bill of Costs separately.
Background
Otay Mesa’s motion for attorneys’ fees comes before the Court after three trials,
two appeals to the Federal Circuit, a stipulation to liability by the Government, and a final
judgment awarding Otay Mesa $802,501.23. A detailed factual background and history of
this case can be found in the Court’s previous opinions. See Otay Mesa Prop, L.P. v.
United States, 779 F.3d 1315, 1327 (Fed. Cir. 2015) (“Otay Mesa II”); Otay Mesa Prop.,
L.P. v. United States, 110 Fed. Cl. 732, 747 (2013) (“Damages and Interest Decision”);
Otay Mesa Prop., L.P. v. United States, 670 F.3d 1358, 1360 (Fed. Cir. 2012) (“Otay
Mesa I”); Otay Mesa Prop., L.P. v. United States, 93 Fed. Cl. 476, 479-84 (2010)
(“Damages Decision”); Otay Mesa Prop., L.P. v. United States, 86 Fed. Cl. 774, 775-85
(2009) (“Liability Decision”). The Court will provide a brief overview of the factual and
procedural history that led to Otay Mesa’s current motion for attorneys’ fees.
Plaintiffs are businesses owned and operated by various members and associates of
the De La Fuente family. Collectively, Plaintiffs own eleven adjoining parcels of land near
the Mexican border in the Otay Mesa area of San Diego County, California. Otay Mesa I,
670 F.3d at 1360. In 1992, Rancho Vista Del Mar granted the United States Border Patrol
a twenty-foot-wide easement along the border with Mexico to enable the Border Patrol to
conduct surveillance and respond to illegal alien activity in the area. Liability Decision,
86 Fed. Cl. at 775. The easement allowed the Border Patrol to conduct law enforcement
on foot, by vehicle, or on horseback. However, in 2006, Plaintiffs filed suit in this Court
alleging that the Border Patrol had increased its operations beyond the scope of the
easement in the aftermath of the September 11, 2001 terrorist attacks. Id. at 776.
2
On March 3, 2006, Plaintiffs Otay Mesa Property, Rancho Vista Del Mar, and Otay
Mesa International filed a complaint with this Court to recover just compensation for the
Government’s alleged taking. Judge Lawrence Baskir was assigned the case, and
subsequently denied Plaintiffs’ unopposed motion to amend their pleadings to add
Plaintiffs International Industrial Park (“IIP”) and D&D Landholdings (“D&D”) to the
action. Id. Thereafter, Plaintiffs IIP and D&D each filed separate complaints with this
Court, and the cases were assigned to Judges Thomas Wheeler and Margaret Sweeney
respectively. After additional filings, the cases before Judges Baskir and Sweeney were
eventually transferred to Judge Wheeler and consolidated. In the meantime, Judge Baskir
had bifurcated the case before him into a liability phase and a damages phase and so the
parties continued to move forward with discovery on liability after consolidation. Pls.’
Motion at 4.
Shortly before the liability trial and after extensive fact and expert discovery, the
Government stipulated to partial liability for the physical taking of an easement due to its
placement of seismic sensors on five of Plaintiffs’ eleven parcels. Liability Decision, 86
Fed. Cl. at 775. Consequently, even though Plaintiffs’ claims were barred by the six-year
statute of limitations set forth in 28 U.S.C. § 2501, based on the Government’s concession,
this Court determined that the Government “was liable for the physical taking of an
easement over the five parcels” and awarded Otay Mesa $3,043,051 plus interest in
compensation. Damages and Interest Decision, 110 Fed. Cl. at 734 (citing Liability
Decision, 86 Fed. Cl. at 790). The parties cross-appealed this Court’s decision. On appeal,
the Federal Circuit held “that the Border Patrol’s blanket easement to install, maintain, and
service sensors on Otay Mesa’s property constituted a permanent physical taking,” and
remanded the case to this Court to reconsider damages. Otay Mesa I, 670 F.3d at 1365.
In December 2012, this Court conducted a remand trial on damages to identify a
valuation method that would “fulfill[] the goal of awarding Otay Mesa just compensation”
for the Government’s “minimally invasive permanent easement to use undeveloped land
that is unilaterally terminable by Otay Mesa.” Id. at 1368-69. On remand, this Court held
that Otay Mesa was not entitled to damages for the Government’s taking of an easement
over land that could be developed for industrial use, but was entitled to damages for land
that could be used for environmental mitigation purposes. Damages and Interest Decision,
110 Fed. Cl. at 734. Specifically, the Court determined that the Border Patrol’s easement
required Plaintiffs to involuntarily assume the small risk that California authorities may
decide the environmentally sensitive land was no longer suitable for mitigation. Id. The
Court held that “[a] fair and reasonable outcome is to award the Plaintiffs a five percent
reduction in the value of their mitigation land because of the potential denial of a mitigation
request.” Id. An expert for Plaintiffs testified that the mitigation land carried a fair market
value of $9,110,400. Id. Accordingly, the Court awarded Plaintiffs $455,520 in damages
for the Government’s taking, with interest calculated from the date the Government
stipulated to liability, August 28, 2008. Id.
3
Once again, the parties appealed to the Federal Circuit. On appeal, the Federal
Circuit affirmed this Court’s decision to deny damages for the easement over the
development property and award $455,520 in damages for the easement over the mitigation
property. Otay Mesa II, 779 F.3d at 1317-18. Regarding the interest calculation, the
Federal Circuit vacated the decision to compute interest beginning on August 28, 2008,
and held that Otay Mesa was entitled to interest from the date the Government first placed
the sensors on the property. Id. at 1318.
On June 4, 2015, the parties stipulated to the amount of interest accrued through that
date, totaling $346,981.23. Joint Stipulation, Dkt. No. 290. Accordingly, this Court
directed the Clerk of Court to enter judgment for Plaintiffs in the amount of $802,501.23,
representing the value of the taking plus interest. Order for Entry of Final Judgment, Dkt.
No. 293. On June 5, 2015, Plaintiffs filed a motion to recover attorneys’ fees and costs
pursuant to the URA. The parties have fully briefed this motion, and on October 5, 2015,
the Court heard closing argument.
Discussion
I. Recovery Under the URA
Generally, our legal system adheres to the “American Rule,” whereby each party to
a lawsuit bears its own attorneys’ fees regardless of the outcome. Hensley v. Eckerhart,
461 U.S. 424, 429 (1983). Nevertheless, Congress may authorize courts to award
attorneys’ fees to prevailing parties in specific instances. Section 4654(c) of the URA is
one such instance. The Fifth Amendment of the United States Constitution prohibits the
taking of private property for public use by the Government without “just compensation.”
U.S. Const. amend. V, § 4. Although the term “just compensation” includes only the value
of the property taken, the URA provides for the recovery of costs associated with litigating
Governmental-taking cases in certain circumstances. 42 U.S.C. § 4654(a), (c). Pursuant
to the URA, a successful litigant in a Fifth Amendment takings case is entitled to recover
“his reasonable costs, disbursements, and expenses, including reasonable attorney,
appraisal, and engineering fees, actually incurred because of such a proceeding.” 42 U.S.C.
§ 4654(c).
Courts frequently use the “lodestar” method to determine reasonable attorneys’ fees
pursuant to a fee-shifting statute. This method involves multiplying “the number of hours
reasonably expended on the litigation . . . by a reasonable hourly rate.” Hensley, 461 U.S.
at 433. However, strict adherence to the lodestar method is not required. “Generally, in
determining the amount of reasonable attorneys’ fees to award under federal fee-shifting
statutes, the district court is afforded considerable discretion.” Bywaters v. United States,
670 F.3d 1221, 1228 (Fed. Cir. 2012) (citing Hensley, 461 U.S. at 437). When a plaintiff
has achieved only “partial or limited success,” the lodestar calculation may lead to an
4
excessive fee award. Hensley, 461 U.S. at 434. Along with other factors, a court may
consider the degree of success obtained by the plaintiff and adjust the calculation
accordingly. Id. To make such an adjustment, a court may reduce the number of hours
“reasonably expended” on the litigation in its initial calculation of the lodestar figure, but
it generally may not engage in a wholesale “reduc[tion of] the lodestar figure itself.”
Bywaters, 670 F.3d at 1232.
The party seeking the fees bears the burden of showing that the hourly rate is
reasonable. Rates are presumptively reasonable when they are in line with the prevailing
market rate – the rate “prevailing in the community for similar services by lawyers of
reasonably comparable skill, experience and reputation.” Blum v. Stenson, 465 U.S. 886,
896 n.11 (1984). One way to determine whether a rate is reasonable in Washington, D.C.,
is to consult the Updated Laffey Matrix, a billing survey of District of Columbia market
rates. Bywaters, 670 F.3d at 1235 (citing Salazar v. District of Columbia, 123 F. Supp. 2d
8, 15 (D.D.C. 2000) (explaining that “the Updated Laffey Matrix has been used by the
United States District Court for the District of Columbia to determine the amount of a
reasonable attorney fee on several occasions.”)).
II. Attorneys’ Fees
a. Reasonable Number of Hours
Plaintiffs seek reimbursement of attorneys’ fees based on 5,603.90 hours of work
by attorneys from Marzulla Law and 121.60 hours of work by Michael H. Fish, an appellate
attorney who assisted with both appeals in this case. The Government raises no fewer than
ten objections to these hours and proposes various adjustments based on the type of work
performed as well as a general percentage reduction to the overall number of hours billed.
The Court will address the specific requested adjustments before turning to the general
percentage reduction.
i. Preliminary Report
Otay Mesa requests reimbursement for a $10,000 flat fee paid to Marzulla Law for
a litigation strategy memorandum the firm prepared prior to filing the initial complaint in
this case. Pls.’ Reply at 13. Otay Mesa argues that the report was a “necessary initial step
in preparing the litigation” because Marzulla Law investigated the applicable facts and law
to this case to prepare the report. Id. The Government argues that Otay Mesa should not
be reimbursed for this expense because the report covers topics not at issue in this litigation
and contends that the $10,000 fee is better characterized as a “client development expense.”
Gov’t Resp. at 9. The Court agrees. Given that a firm typically would not bill a client for
time spent on client development, it would be inappropriate to shift such a fee to the
Government. See Hensley, 461 U.S. at 434 (“Hours that are not properly billed to one’s
client also are not properly billed to one’s adversary pursuant to statutory authority.”
5
(quoting Copeland v. Marshall, 641 F.2d 880, 891 (D.C. Cir. 1980) (en banc)) (emphasis
in original)).
Pursuant to section 4654(c), expenses associated with filing a Fifth Amendment
takings claim are reimbursable; expenses incurred prior and not directly related to the filing
itself are not. See, e.g., Preseault v. United States, 52 Fed. Cl. 667, 671 (2002) (“Section
4654(c) does not provide for the reimbursement of expenses incurred by plaintiffs before
their decision to file suit in the Court of Federal Claims.”); see also Emeny v. United States,
208 Ct. Cl. 522, 527 (1975) (holding “that the plain language of 42 U.S.C. § 4654(c)
precludes the court from including in its award to the plaintiffs any reimbursement for
expenses incurred by the plaintiffs before they decided to file suit in the Court of Claims
under 28 U.S.C. § 1491.”). Although the Court acknowledges that Marzulla Law may have
used the factual and legal knowledge it gained by drafting the preliminary report in
litigating Otay Mesa’s takings claim, ultimately this fee was not incurred “because of such
proceeding.” 42 U.S.C. § 4654(c). As such, it is not within this Court’s purview to award
compensation to Otay Mesa for the litigation strategy memorandum. This memorandum
may have been a “necessary” pre-litigation expense, but such expenses are simply not
reimbursable under the URA.
ii. Work by Outside Attorneys
The Government contends that hours billed by Michael Fish, of Niddrie, Fish &
Addams, LLP (formerly known as Niddrie, Fish & Buchanan, LLP) and Cynthia Eldred,
Otay Mesa’s zoning and land use expert who testified in the 2009 damages trial, were
unnecessary and therefore are unreasonable. Specifically, the Government argues that it
should not reimburse Otay Mesa for Mr. Fish’s work because “he merely consulted and/or
reviewed work of Marzulla Law.” Gov’t Resp. at 12. As to Ms. Eldred’s fees, the
Government argues that the Court should reduce the total requested amount by fifty percent
because Ms. Eldred spent “a number of hours consulting on the litigation with the Marzulla
Law firm.” Id.
In response to the Government’s arguments, Otay Mesa explains that it hired Mr.
Fish as a specialized appellate attorney to assist with the two appeals in this case. Pls.’
Reply at 16. With regard to Ms. Eldred, Otay Mesa argues that the Government incorrectly
categorizes her expenses as attorneys’ fees. Pls.’ Reply at 19. Otay Mesa submitted Ms.
Eldred’s invoices to demonstrate that she consulted with Marzulla Law in her capacity as
an expert on land use and zoning in preparation for trial and during post-trial briefing. Pls.’
Reply at 19-20; Ex. 9.
This Court has explained that “the costs of having one set of experienced,
competent, and highly paid attorneys review the work of another set of experienced,
competent and highly paid attorneys is not reasonable.” Preseault, 52 Fed. Cl. at 680 (citing
Emeny, 208 Ct. Cl. at 530). The plaintiffs in Preseault had fourteen different attorneys
6
representing them throughout the case and sought fees and expenses for nine different legal
organizations. Here, a single firm represented Otay Mesa throughout the nearly ten years
of litigation in this case, with Roger Marzulla serving as counsel of record from the outset.
In this context, Otay Mesa’s requests for fees it incurred by hiring a specialized appellate
attorney and an expert on land use and zoning are neither excessive nor redundant. Under
these circumstances, the Court finds that the fees incurred for this specialized assistance
are reasonable.
iii. Paralegal Work
The Government argues that approximately 19.9 of the hours billed by Marzulla
Law are administrative in nature and therefore are non-compensable overhead costs.
Generally, costs associated with administrative services “are more appropriately charged
to overhead” and should therefore be included within an attorney’s hourly rate. Hopi Tribe
v. United States, 55 Fed. Cl. 81, 99 (2002) (quoting Batdorf v. Sec’y of Dep’t of Health
and Human Servs., 1990 WL 293394 *2 (Cl. Ct.)).
Contrary to the Government’s argument, the explanations accompanying the
disputed time entries describe the type of “required legal duties” for which this Court has
awarded recovery. Information Sciences Corp. v. United States, 86 Fed. Cl. 269, 291
(2009) (awarding recovery for time spent “organizing case documents”). As the Court
finds that it is reasonable to bill for this type of work at a paralegal rate, the 1.6 hours billed
at an associate rate of $295 on March 31, 2015 for time spent “summariz[ing] billing
information for petition on attorneys’ fees and costs” shall instead be billed at the paralegal
rate of $85. To account for this adjustment, the Court will deduct $336 before calculating
the average hourly rate for the lodestar calculation.
iv. Duplicative Hours
The Government also seeks reductions to account for duplicative billing. Gov’t
Resp. at 10-11, Tab 6; Gov’t Objections at 84. The Court agrees with Otay Mesa that most
of these entries appear to reflect work related to one task, but billed in separate time entries
over the course of one day, a best practice in billing at many firms. See Pls.’ Reply at 15.
However, four of these entries, accounting for 24 hours, are duplicative and therefore
unreasonable.1 The Court will therefore deduct these entries before calculating the lodestar
figure.
1
The 4 entries at issue are: (1) Barbara A. Wally, September 18, 2006, 0.50 hours, $87.50; (2) Lucy J.
Wiggins, November 12, 2009, 9.50 hours, $1,380; (3) Nancie G. Marzulla, March 26, 2010, 8 hours,
$3,600; (4) Roger J. Marzulla, February 11, 2013, 6 hours, $2,700.
7
v. Motion for Attorneys’ Fees and Closing Costs
Generally, fees and expenses associated with filing and litigating attorneys’ fees
under section 4654(c) are themselves recoverable under the URA as costs incurred because
of the inverse condemnation proceedings. Emeny, 208 Ct. Cl. at 532; see also Gregory v.
United States, 110 Fed. Cl. 400, 406 (2013) (billing 10.3 hours for preparing motion for
attorneys’ fees and costs was reasonable and reimbursable). Here, Marzulla Law estimates
that preparing and litigating Otay Mesa’s motion for attorneys’ fees and expenses will cost
an additional $20,000. Pls.’ Motion at 16. In response, the Government argues that “[t]he
URA allows for collection of costs actually incurred, not those that may be incurred in the
future,” and alternatively, that $20,000 is an excessive amount to charge for the remaining
work in this case. Gov’t Resp. at 7 (emphasis in original).
During oral argument on October 5, 2015, Otay Mesa submitted an invoice from
Marzulla Law for $9,360, the cost for the 24 hours the firm spent working on this matter
during September of this year. Oct. 5, 2015 Oral Arg. (“Tr.”) at 6. The Court has reviewed
this invoice and finds that the hours billed are reasonable, particularly in light of the
Government’s comprehensive, if not excessive, objections to Otay Mesa’s request for
reimbursement. Accordingly, the Government shall reimburse Otay Mesa for the
September billing. Additionally, the Court in its discretion awards Otay Mesa an additional
$2,500 for attorneys’ fees incurred because of October’s oral argument, for a total of
$11,860.
vi. Contingency Fee
In addition to $1,590,213.75 in fees billed by Marzulla Law through September
2015, Otay Mesa also seeks reimbursement for a ten percent contingency fee it paid
Marzulla Law. Pls.’ Motion at 2. Otay Mesa and Marzulla Law agreed on this ten percent
fee when initially negotiating payment. According to the Government, Otay Mesa is not
entitled to reimbursement for the contingency fee because it was not “actually incurred as
required by the URA” and “a reasonable fee has already been determined for the hourly
rate of Plaintiffs’ counsel.” Gov’t Resp. at 7. The Government’s argument is flawed for
two reasons.
First, the Government’s argument “fails to appreciate what a contingent fee is. It is
not based on any hours of work, only upon the ultimate result.” Osprey Pacific Corp v.
United States, 42 Fed. Cl. 740, 743 (1999) (emphasis in original). Here, the Court awarded
a judgment of $802,501.23 in Otay Mesa’s favor. With interest, Otay Mesa received
$804,728.43 from the Government, $80,472.84 of which it paid to Marzulla Law. Pls.’
Reply at Tab 8. Marzulla Law was only entitled to this amount because the contingency,
securing a net recovery for its client, occurred. The fee itself was actually incurred when
Otay Mesa made payment.
8
Second, the Government’s argument fails to explain why this fee is unreasonable.
Combining the contingency fee with the total hourly fee, the average hourly rate is only
$296 an hour for legal services, an amount well below the adjusted Laffey rate of
approximately $454 an hour. Although a contingency fee is not based on hours billed, this
calculation nevertheless demonstrates that the contingency fee itself is reasonable as part
of the overall amount paid by Otay Mesa in litigating its takings claim against the
Government.
The purpose of the URA is to make the plaintiff in a successful inverse
condemnation proceeding whole. See, e.g., Moore v. United States, 63 Fed. Cl. 781, 788
(2005) (explaining that “the URA is uniquely tied to the Fifth Amendment principle of just
compensation. It is designed to make plaintiffs whole.”). To effectuate this purpose, the
Government must compensate a prevailing plaintiff for all reasonable fees and expenses
incurred in establishing her rights against the United States. Here, Otay Mesa has actually
incurred an $80,472.84 contingency fee. Moreover, including the contingency fee in
calculating the average hourly rate still produces a billing rate well below the average
market rate in Washington, D.C. Thus, the contingency fee is reasonable and was actually
incurred and the Court shall include this fee in calculating the total award.
vii. Credit
In 2013, Marzulla Law issued an $85,000 credit to the De La Fuente family to use
toward their legal fees after the De La Fuentes disputed a fee they had paid to Marzulla
Law in another matter. Tr. at 16. Otay Mesa applied $42,378.58 of the credit against its
legal fees in this case in 2013 and 2014. The Government contends the credit “lessens the
total fees actually incurred by Plaintiffs” and asks the Court to deduct $85,000 from any
fee award. Gov’t Resp. at 8. Otay Mesa disagrees that the credit should affect its award
in any way. Pls.’ Reply at 5. As the Court understands the matter, when the De La Fuentes
disputed a fee post-payment, Marzulla Law issued the family a credit for the disputed
amount rather than writing them a check. Otay Mesa then applied some of this credit
toward amounts due in this case. The Court fails to see how using a credit as payment for
legal fees makes such fees any less “incurred” than they would be had Otay Mesa paid with
a check. The use of a credit provides no basis for adjusting the award in this case.
viii. IIP Fees
The Government also argues that “not all Plaintiffs were successful” and asks the
Court to deduct an additional $96,412.25 from Plaintiffs’ request. Gov’t Resp. at 19; Gov’t
Proposal. The Court disagrees with the Government’s characterization. All of the
businesses involved in this case are owned and operated by the De La Fuente family.
Marzulla Law has represented this family through its businesses from the outset of this
litigation, and the Court considered the claims raised throughout this litigation as belonging
to a common entity. All of the De La Fuentes’ business entities shared in the damages
9
award. Accordingly, the Court will not adjust the total fee award in the case based on
whether hours were billed for work on one family business as opposed to another.
ix. Unsuccessful Claims: Percentage Reductions for Limited Success
Along with its itemized objections to Otay Mesa’s fees and expenses, the
Government proposes that “it is entirely appropriate to apply a reduction to the hours
expended” by Otay Mesa’s attorneys to account for what the Government characterizes as
Otay Mesa’s “limited successful claim.” Gov’t Resp. at 18. Specifically, the Government
argues that the Court should reduce the requested hours to reflect the fact that Otay Mesa
prevailed on only one claim, a claim to which the Government stipulated to partial liability
prior to trial.
Generally, when a plaintiff is successful in litigating pursuant to a federal fee-
shifting statute, “the court’s rejection of or failure to reach certain grounds is not a sufficient
reason for reducing a fee. The result is what matters.” Hensley, 461 U.S. at 435. Where
the result a plaintiff obtains represents more modest success, the trial court, in its discretion,
may adjust the lodestar calculation by reducing the number of hours reasonably expended
in relation to the ultimate outcome. As this Court has explained, “[i]n accounting for the
degree of success obtained, adjustments to the lodestar figure itself are proper only in ‘rare’
and ‘exceptional’ cases, but the trial court may consider the results obtained by the plaintiff
in determining the lodestar figure in the first place.” Gregory, 110 Fed. at 404 (citing
Bywaters, 670 F.3d at 1228-29).
In this case, the Government proposes that the Court adopt an approach similar to
the methodology it applied when calculating the attorneys’ fee award in Gregory. In
Gregory, this Court divided the litigation into separate time periods and applied various
percentage reductions to the number of hours billed during each period. 2 Gregory, 110
Fed. Cl. at 404. Otay Mesa argues that it would be inappropriate to apply the Gregory
method in this case. Pls.’ Reply at 9. Specifically, Otay Mesa asserts that the Court entered
a single judgment on behalf of all of the Plaintiffs in this case, whereas in Gregory only a
small percentage of the plaintiffs prevailed. Id. The Court agrees with Otay Mesa that the
instant case differs from Gregory in significant ways. However, the Government’s reliance
on the approach this Court used in Gregory is not entirely misguided.
2
Gregory involved a rails-to-trails class action lawsuit brought by 257 plaintiffs. This Court held that the
Government had taken easements on only 26 of the 331 parcels involved. The issue was how much of class
counsel’s total fees the successful plaintiffs could recover given that they represented no more than ten
percent of the class. This Court found that much of the work involved in litigating the matter “related to
all or many of the claims, and [could] not be parsed into parcel-by-parcel calculations.” Gregory, 110 Fed.
Cl. at 404. It therefore divided the litigation period into distinct timeframes and applied various percentage
reductions to the hours expended in each period. Id.
10
Here, the Government asks the Court to divide the nearly ten years of litigation in
this case into six periods and apply percentage reductions to the number of hours billed in
each period depending on the type of work involved. Gov’t Resp. at 16-19. Although the
Court agrees it is appropriate to divide the litigation into separate periods, in this case, the
Court finds that there are only two relevant time periods. The first period runs from the
filing of the initial complaint in this case through the first appeal to the Federal Circuit, and
dates from March 3, 2006 through March 19, 2012. Along with the first appeal, this period
includes the discovery efforts leading to the Government’s partial stipulation and the first
and second trials. The second period covers the remand trial on damages, the second
appeal, the calculation of interest, and Otay Mesa’s motion for attorneys’ fees, and dates
from March 20, 2012 through October 5, 2015.
1. Phase One
In total, Plaintiffs seek reimbursement for 5,725.50 hours billed in this case. After
deducting the duplicative hours discussed above, the total hours billed in the first phase
amount to 4,602.87, representing 4,528.27 hours by Marzulla Law and 74.6 hours by Mr.
Fish. The Government argues that the number of hours in this period should be reduced
for various reasons. First, the Government asks the Court to reduce the hours because Otay
Mesa prevailed on only one claim, to which the Government stipulated to partial liability
prior to trial. Gov’t Resp. at 16. Second, the Government asks the Court to apply a
“substantial discount” to the hours to account for work performed for the “non-prevailing”
plaintiffs. Id. at 17. Third, the Government contends that the Court should substantially
reduce the number of hours billed for the first damages trial “to ensure that Plaintiffs are
not awarded fees for work spent on their unsuccessful arguments.” Id. at 20. Finally, the
Government asks for a reduction to the hours spent on the first appeal given that Otay Mesa
was unsuccessful with its claims relating to the time period and scope of the easement. Id.
at 20-21. In total, the Government proposes approximately a 52 percent reduction in the
total number of hours billed during this period.
Otay Mesa objects to the Government’s proposed reductions, arguing that the
Government fails to identify specific work it deems unnecessary or unreasonable. Pls.’
Reply at 10. Otay Mesa also contends that the extensive work leading up to the
Government’s stipulation was necessary in order to obtain that stipulation. Id. at 11.
Lastly, as to the first damages trial and appeal, Otay Mesa points to this Court’s judgment
in its favor and the Federal Circuit’s rejection of the Government’s argument in favor of
nominal damages to dispute the Government’s limited success argument. Id. at 11-12.
The Court agrees with the Government that a reduction in hours for this time period
is appropriate. See, e.g., Gregory, 110 Fed. Cl. at 404 (finding it appropriate “to reduce
the number of hours to a level that would be ‘reasonably expended’ in litigating the 26
successful taking claims”). Except for the Government’s stipulation, Otay Mesa’s claims
were timed barred and the Court deems it appropriate to reduce the number of hours billed
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to account for time spent pursuing these stale claims through the first appeal. Nevertheless,
the Court allowed recovery for the taking to which the Government stipulated and the Court
recognizes the validity of Otay Mesa’s contention that Marzulla Law’s dogged efforts were
important in obtaining the Government’s stipulation. Given that there is no feasible way
to parse the recorded hours into time spent on successful as opposed to unsuccessful claims,
the Court in its discretion reduces the number of hours expended in first phase of litigation
by 40 percent. For Phase One, Otay Mesa shall recover fees for 2,761.72 hours.
2. Phase Two
Along with each of the proposed reductions in hours outlined above, the
Government requests additional reductions through March 19, 2015. In support of its
argument, the Government points to the difference between the damages amount initially
sought by Otay Mesa and the amount ultimately awarded. Gov’t Resp. at 2. The
Government’s argument fails to consider the effect of its stipulation to liability and the fact
that it has challenged nearly every claim and issue raised by Otay Mesa to date. See City
of Riverside v. Rivera, 477 U.S. 561, 580 n.11 (1986) (cautioning that “the government
cannot litigate tenaciously and then be heard to complain about the time necessarily spent
by the plaintiff in response.”).
After the first appeal in this case, the only remaining issue before this Court was to
determine the amount Otay Mesa should recover in just compensation, with interest, for
the Government’s taking of a permanent easement over Otay Mesa’s property. Given the
Government’s stipulation, Otay Mesa is entitled to reimbursement for its reasonable
attorneys’ fees and expenses incurred in securing just compensation for the Government’s
taking. Cloverport Sand & Gravel Co., Inc. v. United States, 10 Cl. Ct. 121, 127 (1986)
(holding that when the Government stipulated to liability for a taking, “the Uniform
Relocation Act applied at that point and mandated the award of reasonable attorneys’ fees
and expenses, even though there [was] limited success on the merits and certainly not the
results reached that the plaintiff had contemplated.”).3
The Government stipulated to the taking of an easement over Otay Mesa’s property.
Following the first appeal in this case, the remaining litigation was to determine the correct
amount of just compensation. Pursuant to the URA, Otay Mesa is entitled to all reasonable
fees and expenses incurred for such proceedings, and the Government should have been on
3
Going forward, the Government might consider the following advice offered by this Court nearly twenty
years ago in a similar case: “[o]nce the Government stipulates to liability, as it did in this case, then it should
be well aware and cognizant that it will be liable, in addition to damages in compensation, for all reasonable
attorneys’ fees and expenses incurred by the plaintiff. Accordingly, the Government should carefully assess
each case brought under section 1346(a)(2) or 1491 of Title 28, for the Government’s taking of private
property, both as to the Government’s potential monetary exposure for liability and for its potential
exposure as to attorneys’ fees and expenses.” Cloverport Sand & Gravel Co., Inc., 10 Cl. Ct. at 127.
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notice of this fact. Except for the duplicative hours discussed above, Otay Mesa is entitled
to recover for all hours expended on and after March 20, 2012, for a total of 1,098.63 hours.
b. Reasonable Billing Rates
The Government does not challenge the reasonableness of the hourly rates Otay
Mesa paid for legal services in this case. The attorneys from Marzulla Law practice in
Washington, D.C., and Mr. Fish is based in San Diego, California. Pursuant to the Updated
Laffey Matrix, Marzulla Law’s average hourly rate would be approximately $454. Pls.’
Reply at 6. Instead, Otay Mesa paid an average hourly rate of $282 to Marzulla Law for
its work and $287 an hour to Mr. Fish.4 Including the contingency fee, Marzulla Law’s
average hourly rate becomes $296, still well below the adjusted Laffey rate. The Court
therefore makes no adjustments to the billing rates.
III. Litigation Expenses and Costs
The URA also provides for reimbursement of Plaintiffs’ reasonable costs and
expenses. 42 U.S.C. § 4654(c). Otay Mesa requests reimbursement of $397,695.30 in
expenses for nearly ten years of litigation. These costs were actually incurred by Otay
Mesa for items such as couriers, postage, legal research, copying, travel and lodging, and
expert witness fees. The Court, in its discretion, finds it reasonable to award expenses in
the same proportion as applied to the recovery of attorneys’ fees. Thus, Otay Mesa is
entitled to recover 60 percent of incurred expenses through March 19, 2012, and one
hundred percent of all expenses incurred thereafter.
The Court has reviewed the Government’s other objections and proposed reductions
to Otay Mesa’s requests and finds that Otay Mesa has met its burden by establishing that
the contested expenses are reasonable, supported, and therefore compensable.
The Clerk of Court shall consider the amount due with respect to Otay Mesa’s Bill
of Costs separately.
Conclusion
The Court GRANTS IN PART Otay Mesa’s motion for attorneys’ fees, with
adjustments made for the reasonable number of hours spent litigating Otay Mesa’s
successful claim as to the Government’s taking of a permanent physical easement over
Otay Mesa’s property. The Court finds that counsels’ rates in this case are reasonable and
4
To calculate Marzulla Law’s average hourly rate, the Court used the total dollar amount billed by Marzulla
Law through September, 2015, less $10,000 for the litigation strategy report, $336 for the paralegal rate
adjustment, and $7,767.50 for the duplicative billing, divided by the total number of hours billed less the
24 duplicative hours. To calculate Mr. Fish’s average hourly rate, the Court simply divided the total dollar
amount billed by his firm by the number of hours worked.
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awards Otay Mesa $1,172,050.34 in attorneys’ fees. The Court also awards $276,134.75
to Otay Mesa for its reasonable expenses. In sum, the Clerk shall enter judgment for
Plaintiffs in the amount of $1,448,185.09.
IT IS SO ORDERED.
s/Thomas C. Wheeler
THOMAS C. WHEELER
Judge
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