Beck v. Test Masters Educational Services, Inc.

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
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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.
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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
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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
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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.
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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
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