PAUL L. MALONEY, District Judge.
This matter is before the Court on Plaintiff Bashir Toliver's objections (ECF No. 289) to the Magistrate Judge's Report and Recommendation (ECF No. 288) regarding attorney fees and costs. The parties reached settlement regarding the underlying claims, but reserved the issue of reasonable attorney fees and costs to the Court. The parties stipulated that plaintiff
Plaintiff seeks a total of $572,666.63 in fees and $42,721.87 in costs. Defendants object to the amount of fees and costs being sought. Defendants argue generally that the proposed hourly rates and the hours worked are unreasonable, and that the claimed costs are excessive and, in some instances, unsubstantiated. Defendants also contend that the lodestar should be further reduced to reflect Plaintiff's limited success.
The Magistrate Judge conducted a hearing on the petition. Having considered the record, as well as the parties' oral and written submissions, the Magistrate Judge concluded that plaintiff's fee request was "excessive, both as to the hourly rates claimed and the number of hours expended." (Id. at PageID.4659). Further, the Magistrate Judge noted "at the outset that plaintiffs' counsel . . . failed to heed [the Court's] previous admonition to substantiate the reasonableness of their hourly rates and their time expenditures." (Id.). "Accordingly, [the Magistrate Judge] recommend[ed] that the fee petition be granted, but in a substantially-reduced amount" of $181, 818.75 in fees and $40,854.29 in costs. (Id. at PageID.4659, 4683).
The Court adopts the following summary of the Report and Recommendation for purposes of this motion.
This litigation began on March 25, 2011, when Federico Gomez Luca filed a complaint seeking to bring a collective action under the FLSA. (ECF No. 1). The allegations centered on defendants' "donning and doffing" policies at their meat- processing facility, the central issue being whether the employees were being adequately compensated for the time it took them to put on ("don") and take off ("doff") certain protective equipment. (Id.).
The Court issued an order on January 23, 2012, conditionally certifying this case as a collective action. (ECF No. 47). Nearly 200 current and former employees opted in. On March 8, 2012, the Court dismissed plaintiff Lucas from this case, finding that his and certain other putative claims of non-named plaintiffs were precluded by a previous settlement in Bessey v. Packerland Plainwell, Inc., No. 4:06-cv-95 (W.D. Mich.). (ECF No. 63). The Court allowed plaintiff's counsel to substitute the named plaintiff with one whose claims were not precluded by the Bessey settlement. (ECF No. 63 at PageID.389). On April 29, 2013, the Court substituted Bashir Toliver for Frederico Gomez Lucas as the named plaintiff, pursuant to the parties' stipulation. (ECF No. 156).
The number of opt-in plaintiffs diminished during the course of the litigation; some as a result of the Bessey claim preclusion, and some due to their failure to comply with the Court's orders compelling discovery. Seven of the plaintiffs accepted offers of judgment, totaling $1,032.50 (ECF No. 159), further reducing the total number of opt-in plaintiffs. The remaining 43 opt-in plaintiffs were covered by a settlement agreement reached during a March 17, 2015, settlement conference.
The discovery included fifteen depositions; a number of interrogatories, document requests, and requests for admission for 66 opt-in plaintiffs; and two inspections of defendants' meat-cutting facility. (See ECF No. 262 at PageID.3963-64). While plaintiff points to the 260-some docket entries in this case (see id. at Page ID.3963), the scope of this case can be better understood by looking at the number and nature of the motions filed prior to settlement:
The procedural history leading up to the resolution of the underlying motion is an exclamation point on the contentious nature of this multi-year litigation. After over four years of litigation, both parties filed a joint motion for settlement on April 8, 2015, which was granted on May 13, 2015. (ECF No. 267.) Plaintiff then filed a motion for attorney fees and costs (ECF No. 261); Defendants filed a response (ECF No. 265). Thereafter, on May 28, 2015, the Court referred the motion for attorney fees and costs consistent with 28 U.S.C. § 636(b)(1)(A).
Plaintiff then filed an ex parte motion for leave to file a reply brief (ECF No. 269), which was denied. (ECF No. 270.) Plaintiff filed a renewed motion for leave to file a reply brief (ECF No. 271), which was granted on June 12, 2015. (ECF No. 275.) After a reply was finally filed (ECF No. 277), a motion for order to show cause was filed by Plaintiff. (ECF No. 273.) The Court ordered a response to the motion (ECF No. 281), but then dismissed the motion. (ECF No. 282).
Meanwhile, both parties appeared for a hearing regarding the original motion for attorney fees and costs. (See ECF No. 283). Having not received a failure to file a stipulation of dismissal in a timely manner, the Court issued a notice advising the parties that it intended to dismiss the case in the absence of such a dismissal within one week. (ECF No. 285). A stipulation of dismissal was finally filed on August 14, 2015 (ECF No. 286), and the order was signed three days later. (ECF No. 287).
The Magistrate Judge then issued a thorough and thoughtful Report and Recommendation on August 20, 2015. (ECF No. 288). Plaintiff filed an objection in a timely manner (ECF No. 289); Defendants did not file an objection, but did file a response in opposition to the objection. (ECF No. 291).
After being served with a report and recommendation (R&R) issued by a magistrate judge, a party has fourteen days to file written objections to the proposed findings and recommendations. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). Contrary to arguments advanced by both parties, a district court judge reviews
Nondispositive "pretrial matter[s]" may be referred to a magistrate judge; thereafter, "[a] judge of the court may reconsider any pretrial matter . . . where it has been shown that the magistrate judge's order is clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1)(B) (emphasis added). A magistrate judge's report and recommendation is not an appealable "order."
While a motion for attorney fees is, by its ordinary meaning, "nondispositive," the governing statute directs courts to treat the referral of such motions as it would "dispositive pretrial matters." See Fed. R. Civ. P. 54(D) ("[T]he court may . . . refer a motion for attorney's fees to a magistrate judge under Rule 72(b) as if it were a dispositive pretrial matter.").
The statute provides that "a judge may also designate a magistrate judge . . . to submit to a judge of the court proposed findings of fact and recommendations for the disposition, by a judge of the court, of any motion excepted in subparagraph (A)," typically, dispositive motions. 28 U.S.C. § 636(b)(1)(B). Then, "the magistrate judge shall file his proposed findings and recommendations under subparagraph (B) with the court"; "[w]ithin fourteen days after being served with a copy, any party may serve and file written objections to such proposed findings and recommendations as provided by rules of court." Id. § 636(b)(1)(C).
Finally, "a judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made. A judge of the court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge may also receive further evidence or recommit the matter to the magistrate judge with instructions." Id.
Thus, the Court's standard for review here, as with all reports and recommendations provided under 28 U.S.C. § 636(b), is de novo.
Only those objections that are specific are entitled to a de novo review under the statute. Mira v. Marshall, 806 F.2d 636, 637 (6th Cir. 1986) (per curiam) (holding the district court need not provide de novo review where the objections are frivolous, conclusive or too general because the burden is on the parties to "pinpoint those portions of the magistrate's report that the district court must specifically consider"). Failure to file an objection results in a waiver of the issue and the issue cannot be appealed. United States v. Sullivan, 431 F.3d 976, 984 (6th Cir. 2005); see also Thomas v. Arn, 474 U.S. 140, 155 (upholding the Sixth Circuit's practice).
The FLSA provides that "[t]he court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant, and costs of the action." 29 U.S.C. § 216(b). While an award of fees and costs is mandatory to a prevailing party, the amount of the award is within the sound discretion of the Court. See, e.g., Fegley v. Higgins, 19 F.3d 1126, 1134 (6th Cir. 1994).
The primary concern in evaluating a request for an attorney's fee "is that the fee awarded be reasonable." Reed v. Rhodes, 179 F.3d 453, 471 (6th Cir. 1999). "A reasonable fee is one that is adequate to attract competent counsel, but . . . [does] not produce windfalls to attorneys." Id. (internal quotation marks omitted) (alteration in original). Since the FLSA does not discuss what constitutes a reasonable fee, "[t]he determination of a reasonable fee must be reached through an evaluation of a myriad of factors, all within the knowledge of the trial court." Fegley, 19 F.3d at 1134.
The "lodestar method" of calculation, "the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate," is "[t]he most useful starting point for determining the amount of a reasonable fee." Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); see, e.g., Perdue v. Kenny A., 559 U.S. 542, 546 (2010); Isabel v. City of Memphis, 404 F.3d 404, 415 (6th Cir. 2005).
The Sixth Circuit has identified a dozen factors to assist trial courts in determining the reasonableness of a fee petition, both with respect to the hourly rates being sought and the time expended working the case:
Isabel, 404 F.3d at 415 (citing Reed, 179 F.3d 471-72, n.3). "[M]any of these factors usually are subsumed within the initial calculation of hours reasonably expended at a reasonable hourly rate." Hensley, 461 U.S. at 434 n.9.
Thus, the Magistrate Judge appropriately used the "lodestar method" as a starting point in his analysis. The Magistrate Judge found that Plaintiff's lead counsel, with the firm Sommers Schwartz, PC, sought exorbitant rates:
The Court finds troubling, as the Magistrate Judge noted, that "Plaintiffs' only proffered evidence supporting these rates is found in affidavits from Sommers Schwartz attorneys Matthew Turner and Neil Pioch, as well as an affidavit from paralegal Veronica Stewart." (ECF No. 288 at PageID.4667-68 (internal citations omitted)). Those affidavits "provide nothing . . . to substantiate the reasonableness of the rates they seek; nor do they offer anything to suggest that these rates are in line with market rates in West Michigan for lawyers of similar ability and experience." (Id. at PageID.4668). Further, "[e]ach simply makes essentially the same conclusory statement: `The hourly rates identified in the application reflect the knowledge, training and experience I have in FLSA cases, as well as other litigation matters.'" (Id.).
Even more troubling, however, is Plaintiff's sanction-worthy behavior with respect to the amounts that Mr. Turner seeks. The Report and Recommendation states:
(ECF No. 288 at PageID.4659-60.) The Court agrees with the Magistrate Judge's assessment, and admonishes Plaintiff's counsel for such an egregious request in light of the Court's prior order. Regardless, the Court will now analyze several objections that Plaintiff has raised.
The Report and Recommendation states that because of numerous deficiencies in the affidavits, discrepancies in the hourly rates, requests inconsistent with a prior court order, and the failure to provide "even a job title or function" "on behalf of a number of individuals" in another law firm made it nearly impossible to make a complete "reasonableness assessment." (See ECF No. 288 at PageID.4668-69.) The Court need not with detail restate the utter mess of supporting documentation submitted with Plaintiff's motion; the Magistrate Judge, in a methodical manner, documented the numerous issues contained therein, and Plaintiff has not raised serious objections to those deficiencies. Thus, the Court hereby ADOPTS the Magistrate Judge's report with respect to all of the deficiencies identified in Plaintiff's submission. (See, e.g., ECF No. 288 at PageID.4668-69).
In Plaintiff's section, the only citation for the proposition that the application of a flat rate was improper is to Adcock-Ladd v. Sec. of Treasury, 227 F.3d 343, 350 ("[T]he `prevailing market rate' is that rate which lawyers of comparable skill and experience can reasonably expect to command within the venue of the court of record.").
As Defendant notes, Plaintiff does not cite to a single case for the proposition that the use of a blended rate is contrary to law. Numerous other courts in the Sixth Circuit have used blended rates in fee awards. See, e.g., Goodman Properties, Inc. v. Blosser, 2012 WL 6765626, at *1 (E.D. Tenn. Nov. 13, 2012); Eppard v. ViaQuest, Inc., 2010 WL 41568868, at *4 (S.D. Ohio Nov. 2, 2010); see also Wells v. Corporate Accounts Receivable, 683 F.Supp.2d 600, 604 (W.D. Mich. 2010).
The use of a blended rate is particularly appropriate in cases, as here, where Plaintiff's own supporting documentation is wholly inadequate in several respects, and where, as here, an "across-the-board reduction to the fee petition" is appropriate, as opposed to a line-by-line assessment. (See ECF No. 288 at PageID.4670.)
The Court also finds that the Magistrate Judge appropriately identified a "mean" hourly rate of $275.00 for plaintiff attorneys who practice in the area of employment law, which is most closely analogous to an FLSA case. The Magistrate Judge used the 2014 edition of the State Bar of Michigan's Economics of Law Practice in Michigan ("Bar Survey"), which includes reported billing rates thoroughout Michigan. This is clearly an acceptable source. See, e.g., Lamar Advertising Co. v. Charter Twp. of Van Burden, 178 Fed. App'x 498, 501-02 (6th Cir. 2006).
Even if the Plaintiff was correct that the "mean" hourly rate does not adequately capture the mean of the attorneys who worked on this case, the blame lies squarely with the Plaintiff, and not the Court. (See ECF No. 288 at PageID.4668 ("Plaintiffs have fallen well short of meeting their burden of proof regarding the rates to be used in calculating the fee award in this case.")).
As the Report and Recommendation notes, while several affidavits recount the education and experience of the respective affiant, even the most complete "affidavits . . . provide nothing . . . to substantiate the reasonableness of the rates they seek; nor do they offer anything to suggest that these rates are in line with market rates in West Michigan for lawyers of similar ability and experience." (Id. at PageID.4668.)
Thus, because Plaintiff has fallen short of meeting his burden of proof regarding the rates to be used in calculating the fee award in this case, it leaves the Court with no better option than to apply the median hourly rate across all lawyers who worked on behalf of Plaintiff.
The Magistrate Judge recommended an hourly rate of $75.00 for work performed by paralegal Veronica Stewart. Plaintiff argues that $135.00 is necessary. The Court finds Plaintiff's argument here without merit. While Plaintiff cites to a single case where the Court adopted hourly rates of $130.00 to $170.00 for paralegals where the opposing party did not object, that case is clearly an outlier.
After noticing that "[t]he parties add[ed] the number[] [of hours] somewhat differently, the Magistrate Judge gave the benefit of the doubt to Plaintiff's count of total hours by using Defendants' calculation of Plaintiff's numbers at 1,570.87 plaintiff attorney hours.
However, the Magistrate Judge found that "[b]y any measure, [Plaintiff's] numbers indicate an excessive expenditure of time." (ECF No 288 at PageID.4672.)
Thereafter, in lengthy discussion, the Magistrate Judge found "fundamental flaws in the fee petition—unnecessary litigation, excessive hours, overstaffing, and top-heavy structure," not to mention a lack of supporting documentation, which "make[s] it impractical for the Court to conduct a line-by-line review." (See ECF No. 288 at PageID.4675). Further, "[t]hese problems pervade the fee petition, and they represent fundamental errors in judgment concerning the prosecution of this case. In these circumstances, several circuits have endorsed the complete denial of the petition, particularly where, as here, the amount sought is grossly disproportionate." (Id.). See, e.g., Vocca v. Playboy Hotel of Chicago, Inc., 686 F.2d 605, 607-08 (7th Cir. 1982) (per curiam); Peter v. Jax, 187 F.3d 829, 837-38 (8th Cir. 1999); Fair Housing Council of Greater Washington v. Landow, 999 F.2d 92, 96-97 (4th Cir. 1993); Lewis v. Kendrick, 944 F.2d 949, 957-58 (1st Cir. 1991) (on reharing).
The Magistrate Judge found that "[w]hile I would not sustain every individualized objection [by Defendants] to the various time entries, were I to approach this fee petition using a line-by-line analysis, the majority are well taken." (ECF No. 288 at PageID.4677 (emphasis added)). Thus, the Magistrate Judge appropriately used Defendants' argument for an appropriate fee award based on 758.95 attorney hours as a starting point
The Magistrate Judge then noted that this figure reflected roughly a 25% reduction from what Plaintiff now admits he seeks. (See ECF No. 288 at PageID.4677.) The Magistrate Judge essentially came to the same conclusion using two methods, then: approximately a 25% reduction was appropriate.
The Magistrate Judge also noted that "[w]hile it would be well within the Court's discretion to deny the fee petition outright, I find that such action would be unduly harsh in this case." (ECF No. 288 at PageID.4675).
While Plaintiff submits a "chart" attempting to show that five of the Magistrate Judge's concerns did not warrant a reduction, Plaintiff raises no objection to the broader point of the Magistrate Judge's conclusion: "were I to approach this fee petition using a line-by-line analysis, the majority [of Defendants objections to the entries] are well taken." (ECF No. 288 at PageID.4677).
Defendants likewise note that the objection "ignores the numerous deficiencies in their time entries highlighted in JBS' Response. Plaintiffs' time records contain 2,186 entries, most if not all, of which were improper, vague, unnecessary, entered as block billing, duplicative of other entries, clerical tasks being performed by attorneys, unreasonable, and self-inflicted." (ECF No. 291 at PageID.4850). While the Court does not rubber stamp Defendants' statement, it's clear that Plaintiff did not come close to addressing "all of the Magistrate Judge's concerns"; and "[o]nly those objections that are specific are entitled to a de novo review under the statute. Mira v. Marshall, 806 F.2d 636, 637 (6th Cir. 1986) (per curiam) (holding the district court need not provide de novo review where the objections are frivolous, conclusive or too general because the burden is on the parties to "pinpoint those portions of the magistrate's report that the district court must specifically consider"). Failure to file an objection results in a waiver of the issue and the issue cannot be appealed. United States v. Sullivan, 431 F.3d 976, 984 (6th Cir. 2005); see also Thomas v. Arn, 474 U.S. 140, 155 (upholding the Sixth Circuit's practice).
As the Court discussed above, 1102 hours was an appropriate total for this litigation. Plaintiff then makes an argument that the Magistrate Judge improperly calculated that reduction from the 1,102.25 figure rather than the 1,439.22 figure. (See ECF No. 290 at PageID.4699).
Plaintiff is correct with respect to the big picture, but imprecisely captures the error. As the Court discussed, the Magistrate Judge first noted a (modified version of) Defendants' proposed total of hours as a starting point (758.95), which took into account Defendants' objections, most of which the Magistrate Judge found were valid. The Magistrate Judge, however, appropriately added back Mr. Pioch's independent contractor hours (343.3) after Plaintiff cleared up that discrepancy, and essentially overruled Defendants' objections to regard to those hours. That left the total to a rounded figure of 1102 hours, which the Magistrate Judge ultimately concluded was a "reasonable overall reduction" from what Plaintiff originally sought:
(ECF No 288 at PageID.4677).
The Court notes, however, that the Magistrate Judge appears to have added an unwarranted additional 25% reduction to the 1102 attorney hour figure, which brought the total down to 827:
(Id. at PageID.4677-78.) It's clear to the Court that in the conclusion to this section of the Report and Recommendation, an inadvertent additional 25% reduction was applied.
Plaintiff finally argues that the Magistrate Judge's recommendation to reduce the lodestar amount by an additional 25% based on Plaintiff's limited success" is improper. Plaintiff only argues that "the Magistrate failed to consider that the reduction of the number of Plaintiffs in the putative class had already been taken into consideration when he reduced the number of hours for which the Plaintiffs could recover"; thus, Plaintiff argues, "[t]he law is clear that because the lodestar figure is recognized as including most, if not all, of the Johnson factors in determining a reasonable fee, the Courts may not double count these factors by making adjustment up or down based on factors that were subsumed in the lodestar calculation." (ECF No. 288 at PageID.4700.)
The Court will first note that it has wide discretion to reduce the amount of fees based upon a plaintiff's "limited success." See Hensley, 461 U.S. at 440 ("Where the plaintiff achieved only limited success, the district court should award only that amount of fees that is reasonable in relation to the results obtained."); see also Carlson v. Leprino Foods Co., 2010 WL 299490 (reducing the fee award by approximately 40% for limited success on the basis that only 48 of the 84 opt-in FLSA plaintiffs recovered under the collective settlement).
Here, as the Magistrate Judge noted, "eighteen of the opt-in plaintiffs were involuntarily dismissed from the case, including the original named plaintiff, due to claim preclusion." (ECF No. 288 at PageID.4678). Further, "many of the opt-in plaintiffs failed to participate in discovery. This ultimately led to the dismissal of 104 opt-in plaintiffs from the case, more than half the original 200. (Id.). While a simple formula could be based upon the number of successful plaintiffs in relation to the original number of opt-in plaintiffs (resulting in a 75% reduction), that would not be reasonable. However, it's clear that some additional reduction is warranted for some relative "lack of success"—in addition to the reduction for the number of hours for multiple other issues (mostly resulting from Plaintiff's failure to properly document and provide support for the hours requested).
If the Court has discretion to apply a 50% reduction across-the-board for "limited success," it certainly has the discretion to apportion a smaller reduction—a 25% reduction in hours for a multitude of reasons unrelated to "limited success," and a 25% reduction in the total, appropriate lodestar for reasons related to "limited success." See, e.g., Snide v. Discount Drug Mart, Inc., No. 1:11-cv-244, 2013 WL 6145130 (N.D. Ohio Nov. 21, 2013). Plaintiff's argument that the Court is "double count[ing]" factors is without merit. A 25% reduction in the accurate lodestar amount
Accordingly, the Court
For the reasons contained in this opinion, the Court hereby
Fharmacy Records v. Nassar, 465 Fed. App'x 448, 455-56 (6th Cir. 2012).
(Id.).
