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Johnson v. Ford Motor Co.

United States District Court, S.D. West Virginia, Huntington Division

March 22, 2018

CHARLES JOHNSON, et al., Plaintiffs,
v.
FORD MOTOR COMPANY, Defendant.

          MEMORANDUM OPINION AND ORDER

          Cheryl A. Eifert, United States Magistrate Judge

         On December 27, 2017, this Court entered a Memorandum Opinion and Order sanctioning Defendant for making material misrepresentations during the discovery process, which significantly increased Plaintiffs' costs of litigation. (ECF No. 1111). In recompense, the Court awarded Plaintiffs attorneys' fees and costs and expert fees and costs attributable to Ford's discovery misconduct. The matter was referred to the undersigned United States Magistrate Judge to determine the appropriate amount of fees and costs to be awarded to Plaintiffs. (Id. at 20).

         On December 29, 2017, the undersigned issued a briefing schedule. (ECF No. 1120). The parties have now completed their briefing, and the matter is ready for resolution. In their brief, Plaintiffs ask for fees and costs in the total amount of $692, 225.52. (ECF No. 1166 at 15). Ford counters by arguing that once duplicative, excessive, vague, and unsupported amounts are deducted from Plaintiffs' request, they are entitled to an award of $223, 610.97. (ECF No. 1152 at 20).

         The undersigned notes that the law governing awards of attorneys' fees and costs in this circuit is well established. Moreover, the issues in dispute are clear; therefore, oral argument would not assist the Court in resolving the matter. For the reasons that follow, the Court ORDERS Defendant, Ford Motor Company (“Ford”), to pay Plaintiffs the sum of $488, 028.31 in sanctions. Ford is further ORDERED to make this payment within thirty (30) days of the date of this Order.

         I. Attorneys' Fees

         The Court has concluded that Plaintiffs are entitled to reimbursement of attorneys' fees for time associated with preparing, negotiating, and arguing the source code protective order entered in this litigation, as well as pursuing Plaintiffs' motion for sanctions. In addition, Plaintiffs seek reimbursement of travel time to and from a secured room in Dearborn, Michigan where their counsel and experts were required to go in order to review source code produced by Ford. According to affidavits supplied by Plaintiffs, the total amount of attorneys' fees sought is $351, 256.63. (ECF No. 1143 at 6-7).

         In response, Ford concedes that Plaintiffs are entitled under the Court's order to attorneys' fees related to: (1) negotiating the source code protective order, (2) traveling to Dearborn, Michigan to use the secured source code room, and (3) drafting and arguing the motion for sanctions. (ECF No. 1152 at 2). However, Ford contends that Plaintiffs have not limited their fee application to those tasks. Furthermore, Ford argues that the number of attorney hours claimed by Plaintiffs is extreme, and the requested hourly rates substantially exceed reasonable, appropriate, and prevailing rates in this jurisdiction. (Id. at 2-3). After subtracting duplicative and excessive hours, and reducing the hourly rates to “reasonable” amounts, Ford asserts that Plaintiffs are entitled to attorneys' fees in the amount of $77, 824.25. (ECF No. 1152 at 20).

         The parties agree that when calculating an award of attorneys' fees in this circuit, the court must follow a three-step process. McAfee v. Bozcar, 738 F.3d 81, 88 (4th Cir 2013) (“The proper calculation of an attorney's fee award involves a three-step process.”) First, the court must “determine a lodestar figure by multiplying the number of reasonable hours expended times a reasonable rate.” Robinson v. Equifax Information Services, LLC, 560 F.3d 235, 243 (4th Cir. 2009) (citing Grissom v. The Mills Corp., 549 F.3d 313, 320 (4th Cir. 2008)). The burden of establishing a reasonable rate and demonstrating that a reasonable number of hours was expended rests with the party seeking attorneys' fees. McGee v. Cole, 115 F.Supp.3d. 765, 771 (S.D. W.Va. 2015) (citing Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). The United States Court of Appeals for the Fourth Circuit (“Fourth Circuit”) has enumerated twelve factors to consider when determining a lodestar figure, including the following:

(1) the time and labor expended; (2) the novelty and difficulty of the questions raised; (3) the skill required to properly perform the legal services rendered; (4) the attorney's opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney's expectations at the outset of the litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation and ability of the attorney; (10) the undesirability of the case within the legal community in which the suit arose; (11) the nature and length of the professional relationship between attorney and client; and (12) attorneys' fees awards in similar cases.

Robinson, 560 F.3d at 243-244 (citing Johnson v. Ga. Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974)).

         At the second step of the process, the court must subtract from the lodestar figure “fees for hours spent on unsuccessful claims unrelated to successful ones.” Grissom, 549 F.3d at 321 (quoting Johnson v. City of Aiken, 278 F.3d 333, 337 (4th Cir. 2002)). Once this calculation is completed, the court proceeds to the third step, which consists of the court increasing the step-two figure by “some percentage of the remaining amount, depending on the degree of success enjoyed by the [party seeking fees].” Johnson, 278 F.3d at 337. In this case, the Court need not formally proceed to the second and third steps, because the fees and expenses are being awarded as a discovery sanction, rather than as an award based upon a successful resolution of the case as a whole. In addition, Plaintiffs have already performed step two of the process by reducing the portion of their fee application related to the motion for sanctions by 50% to account for the fact that they only succeeded on one of two grounds asserted in the motion. Therefore, the Court focuses largely upon the lodestar figure.

         A. Reasonable Hourly Rate

         “When calculating reasonable fees, establishing the hourly rate is generally the critical inquiry.” Wolfe v. Green, No. 2:08-cv-01023, 2010 WL 3809857 *4, (S.D. W.Va. Sept. 24, 2010) (quoting Westmoreland Coal Co. v. Cox, 602 F.3d 276, 289 (4th Cir. 2010)). An hourly rate is considered reasonable when it is “in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation.” Blum v. Stenson, 465 U.S. 886, 890 n. 11 (1984). “[T]he community in which the court sits is the first place to look to in evaluating the prevailing market rate.” Rum Creek Coal Sales, Inc. v. Caperton, 31 F.3d 169, 179 (4th Cir. 1994). Nevertheless, when an applicant seeks reimbursement of fees charged by an attorney who primarily practices law in another jurisdiction, the court may determine that using community rates, rather than the attorney's home rates, is inequitable; particularly, when there is an absence of comparable attorneys in the community. National Wildlife Federation v. Hanson, 859 F.2d 313, 317 (4th Cir. 1988) (holding that a fee award based on an extrajurisdictional rate is appropriate when the complexity and specialized nature of the case means that no attorney with the requisite skills is available locally). To determine whether extrajurisdictional counsel are entitled to the prevailing hourly rates in their home jurisdiction, the court should consider the following questions: (1) did counsel provide services that were not available in the court's jurisdiction; and (2) did the client make a reasonable choice in hiring extrajurisdictional counsel, or did the client select an unreasonably expensive attorney? Id.

         Here, Plaintiffs seek reimbursement of fees charged by fourteen attorneys, with hourly rates ranging from $175 to $950, and by four paralegals billing between $115 and $275 per hour. Half of the attorneys and half of the paralegals have extrajurisdictional home bases. Plaintiffs argue that these practitioners are entitled to the prevailing hourly rates in their own communities, because they satisfy the two-part inquiry set forth in Hanson. (ECF No. 1166 at 6). According to Plaintiffs, the size and complexity of the instant action required them to hire a “coalition of law firms with experience in complex class action litigation, ” which could not be found exclusively in this jurisdiction. (Id. at 7). Ford counters this argument by pointing out that a local law firm, Spilman Thomas & Battle, PLLC, played a leadership role in the litigation and its billings account for 40% of the fees sought by Plaintiffs. (ECF No. 1152 at 7). Thus, the instant action is not so complex that no local lawyer is able to effectively prosecute it.

         The undersigned agrees with Ford. Although the subject matter of this case is complex, both factually and legally, Plaintiffs have failed to demonstrate that this jurisdiction lacks experienced lawyers capable of successfully prosecuting Plaintiffs' claims. As Ford notes, one of Plaintiffs' leading law firms is located in Charleston, West Virginia, and as discussed below, Plaintiffs make no showing that Spilman Thomas & Battle is the only local firm qualified to handle complex class action litigation. Moreover, Plaintiffs seek reimbursement of substantial expert fees. Given that Plaintiffs relied heavily on experts to navigate the technical aspects of the source code protective order and assist in locating evidentiary support for the motion for sanctions, the remaining tasks involved in negotiating the protective order and pursuing the award of sanctions could have been accomplished by a number of lawyers who regularly appear in this Court.

         The undersigned acknowledges the Fourth Circuit cases cited by Plaintiffs in which fee awards were calculated using hourly rates from geographic markets outside the court's jurisdiction. (ECF No. 1166 at 6-7). However, in each of these cases, the court's decision was based on more than just the complexity of the case. In Hanson, supra, a case filed in eastern North Carolina, the party seeking attorneys' fees asked the court to apply Washington, D.C. rates. Unlike the plaintiffs in this case, however, the Hanson applicant did not rely solely on the complexity of the case to support its argument; instead the party produced evidence showing that: (1) its local counsel was unable to take the case; (2) the nearest counsel with experience in complex environmental litigation was located in Washington, D.C.; and (3) the applicant was unsuccessful in involving a local environmental defense fund. Accordingly, a sound basis existed for applying Washington, D.C. rates.

         Similarly, in Rum Creek Coal Sales, Inc., 31 F.3d at 178-79, the Fourth Circuit held that Richmond, Virginia rates were appropriate in a West Virginia case, in part due to the complex nature of the litigation. However, in addition, the court considered that (1) the Virginia lawyers were the applicant's regular counsel and were well-versed in the type of matters litigated; (2) outside counsel was necessary “since taking on the governor and the police of the state where the trial court is located, in the middle of a well-publicized coal miners' strike could be politically sensitive activity for a local West Virginia firm”; and (3) a substantial portion of the fees were incurred secondary to the party's appeal filed in Richmond, Virginia. Id. at 179.

         In Friends of Earth, Inc. v. Gaston Copper Recycling Corp., the court applied Washington, D.C. rates in South Carolina where the fee applicant demonstrated that attorneys' services of like quality were not available in the forum and the selection of attorneys was reasonable under the circumstances. Friends of Earth, Inc., No. 3:92-2574-MJP, 2007 WL 2363868, at *2 (D.S.C. Aug. 16, 2007). To establish its right to extrajurisdictional rates, the applicant supplied affidavits from local attorneys verifying an absence of available counsel in the jurisdiction capable of taking such a complex and expensive case on a contingent fee basis. Furthermore, the applicant used the affidavits to prove that the Washington, D.C. rates were comparable to South Carolina rates. Similar affidavits were submitted in N.C. Alliance for Transp. Reform Inc. v. U.S. Dept. of Transp., 168 F.Supp.2d 569, 580 (M.D. N.C. 2001) (relying on an affidavit from local counsel regarding the dearth of qualified lawyers in the jurisdiction and the unavailability of those lawyers that were sufficiently experienced).

         In ABT Bldg. Prods. Corp v. National Union Fire Ins. Co., the court based its decision to apply extrajurisdictional rates on the fact that the fee applicant used national counsel with vast institutional knowledge and prior experience in the same subject matter, noting that the efficiencies associated with national counsel counterbalanced their increased hourly rates. In addition, the party seeking reimbursement demonstrated that it had paid the fees requested without any expectation of their recovery. reasonable. ABT Bldg. Prod. Corp., No. CIV. 501CV100-V, 2005 WL 6124839, at *2-3 (W.D. N.C. May 31, 2005), aff'd sub nom. ABT Bldg. Prod. Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 472 F.3d 99 (4th Cir. 2006). Similar reasons for using New York rates in a North Carolina case were accepted by the court in Aventis Crop Science, N.V. v. Pioneer Hi-bred Intern, Inc., No. 1:00CV463, 2010 WL 2306677, at *5 (M.D. N.C. Jun. 8, 2010) (concluding that applicant's national counsel provided a unique service to fee applicant that was not available locally).

         In contrast to the fee applications in the above-cited cases, Plaintiffs offer no evidence or focused argument in this case. In fact, Plaintiffs provide no explanation for how they selected counsel; no evidence that they searched other local firms for comparable attorneys; and no corroboration that the extrajurisdictional attorneys in this case provided a unique service that could not be offered by less expensive and equally available counsel. Consequently, while the instant case certainly requires specialized skill, Plaintiffs have not adequately supported their request for extrajurisdictional rates.

         Having determined that the prevailing market rates in the Southern District of West Virginia should be applied, the undersigned next considers the evidence submitted by Plaintiffs to establish the prevailing rates, as well as Ford's arguments in opposition. As indicated below, the parties are significantly at ...


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