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FTC v. SkyBiz.com, Inc., 03-5129 (2004)

Court: Court of Appeals for the Tenth Circuit Number: 03-5129 Visitors: 1
Filed: Jun. 29, 2004
Latest Update: Feb. 21, 2020
Summary: F I L E D United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS JUN 29 2004 FOR THE TENTH CIRCUIT PATRICK FISHER Clerk FEDERAL TRADE COMMISSION, Plaintiff, v. No. 03-5129 (D.C. No. CV-01-396-EA (M)) SKYBIZ.COM, INC.; WORLD (N.D. Okla.) SERVICE CORPORATION; WORLDWIDE SERVICE CORPORATION; JAMES S. BROWN; ELIAS F. MASSO; KIER E. MASSO, Defendants-Appellants, and STEPHEN D. MCCULLOUGH, NANCI H. MASSO, NANCI CORPORATION INTERNATIONAL, ROBERT E. BLANTON, SKYBIZ INTERNATIONAL LTD.
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                                                            F I L E D
                                                      United States Court of Appeals
                                                              Tenth Circuit
                UNITED STATES COURT OF APPEALS
                                                             JUN 29 2004
                        FOR THE TENTH CIRCUIT
                                                        PATRICK FISHER
                                                                  Clerk

FEDERAL TRADE COMMISSION,

           Plaintiff,

v.                                            No. 03-5129
                                      (D.C. No. CV-01-396-EA (M))
SKYBIZ.COM, INC.; WORLD                       (N.D. Okla.)
SERVICE CORPORATION;
WORLDWIDE SERVICE
CORPORATION; JAMES S.
BROWN; ELIAS F. MASSO;
KIER E. MASSO,

           Defendants-Appellants,

     and

STEPHEN D. MCCULLOUGH,
NANCI H. MASSO, NANCI
CORPORATION INTERNATIONAL,
ROBERT E. BLANTON, SKYBIZ
INTERNATIONAL LTD.,

          Defendants,
_______________________________

MATHESON ORMSBY PRENTICE,

           Appellees,

     and

ROBB EVANS; ROBB EVANS &
ASSOCIATES,

           Receivers.
                              ORDER AND JUDGMENT             *




Before EBEL , ANDERSON , and BRISCOE , Circuit Judge.



       After examining the briefs and appellate record, this panel has determined

unanimously to grant the parties’ request for a decision on the briefs without oral

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore

ordered submitted without oral argument.

       SkyBiz and other plaintiffs appeal a district court’s award of attorney’s fees

to Matheson Ormsby Prentice, an Irish law firm that defended SkyBiz’s assets

from creditors in an interpleader action after the company’s assets were frozen at

the request of the Federal Trade Commission. Plaintiffs’ main objection concerns

the district court’s decision to award   i 105,053 ($126,140.90 U.S.)    1
                                                                             of a disputed

i 168,000 ($201,723.62 U.S.) sum to Matheson for time that was not well

documented. The district court had originally rejected the request for        i 168,000



*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
1
       For ease of understanding, we have converted all amounts in Euros to U.S.
dollars at the single current exchange rate of one Euro to 1.20 U.S. dollars.

                                            -2-
($201,723.62 U.S.) as unsubstantiated, Aplt. App., Vol. II at 360; but, in its June

10, 2003 order, the district court awarded Matheson      i 105,053 ($126,142.25

U.S.), justifying the partial award with a lodestar approach, which multiplies an

attorney’s hourly rate by the number of hours he worked.       
Id. , Vol.
IV at 776.

The court explained that newly submitted time records better supported

Matheson’s claim to the fee, and that the transcript of a hearing in Irish courts

documented how valuable the firm’s services had been in protecting SkyBiz’s

assets. 
Id. Then, on
July 15, 2003, in response to SkyBiz’s motion for

reconsideration, the district court justified the award of the same increase based

on the balancing of equities.     
Id. at 825-27.
In that July 2003 decision, the

district court distinguished    Ramos , the major case establishing use of a lodestar,

by observing that Ramos had been decided under a fee-shifting statute that

required a prevailing party, whereas the SkyBiz case had settled out of court      .

Id. at 826-27
(citing Ramos v. Lamm , 
713 F.2d 546
, 552-55 (10th Cir. 1983),

overruled on other grounds by      Pennsylvania v. Del. Valley Citizens’ Council for

Clean Air , 
483 U.S. 711
, 717 n.4 (1987)).

       On appeal, plaintiffs reargue the amount of the award both under the

lodestar approach and under the balancing of equities. They generally argue that

the firm’s records were overly vague, that Matheson should not be rewarded

because it did not partake in the negotiations necessary for settlement in United


                                             -3-
States courts, and, without much explanation, that the district court should not

have departed from the lodestar approach in        Ramos .

       We review the award of attorney’s fees for abuse of discretion.      Shaw v.

AAA Eng’g & Drafting, Inc. , 
213 F.3d 538
, 542 (10th Cir. 2000). Abuse of

discretion is “an arbitrary, capricious, whimsical, or manifestly unreasonable

judgment” under the circumstances.       Coletti v. Cudd Pressure Control   , 
165 F.3d 767
, 777 (10th Cir. 1999) (quotation omitted). In determining whether a district

court has abused its discretion, we give due deference to that court’s “evaluation

of the salience and credibility of testimony, affidavits, and other evidence.”

United States v. Robinson , 
39 F.3d 1115
, 1116 (10th Cir. 1994). We will not

disturb the decision of a district court unless it has “no support in the record,

deviates from the appropriate legal standard, or follows from a plainly

implausible, irrational, or erroneous reading of the record.”    
Id. To prevail,
plaintiffs must move us to the “definite and firm conviction that the lower court

made a clear error of judgment or exceeded the bounds of permissible choice in

the circumstances.”    Moothart v. Bell , 
21 F.3d 1499
, 1504 (10th Cir. 1994)

(citations and quotations omitted).

       Because the district court alternately used both the lodestar approach and a

balancing of the equities approach to justify its partial award of fees, we consider

the plaintiffs’ arguments against the court’s judgment under each method.


                                             -4-
       First, we conclude that plaintiffs’ arguments against the award of attorney’s

fees to Matheson under the lodestar approach do not persuade us that the district

court’s decision was “arbitrary, capricious, whimsical, or manifestly

unreasonable.”    Coletti , 165 F.3d at 777. The record shows that Matheson

prepared extensively for its work in Ireland. Although the district court did

express dissatisfaction with Matheson’s itemization of tasks, the court also found

that, under the newly submitted time records, a portion of the fees was “justified

and reasonable for the work performed.” Aplt. App., Vol. IV at 778. Under the

abuse of discretion standard, we have found the district courts’ use of

reconstructed time records permissible,        Carter v. Sedgwick County, Kan   .,

929 F.2d 1501
, 1506 (10th Cir. 1991), and we have even permitted district courts

to award fees for the block billing of tasks     . Cadena v. Pacesetter Corp. , 
224 F.3d 1203
, 1214-15 (10th Cir. 2000). Plaintiffs present no evidence that the district

court’s acceptance of the billing records in this case exceeded the bounds of this

deference. And plaintiffs’ contention that Matheson did not participate in the

negotiation to settle the case in the United States is beside the point. The lodestar

method considers what work a law firm has done and what it should be

compensated for, not what work it has not been a party to and for which it is not

requesting compensation.      See Ramos , 713 F.2d at 552-55. Plaintiffs cite no case

law to the contrary.


                                               -5-
       Second, we conclude that plaintiffs have not presented a compelling

argument against the district court’s weighing of the equities in this case. The

district court explained that it could depart from the fee-shifting analysis that had

undergirded Ramos because the SkyBiz case had settled without a judicial

determination of the prevailing party, and thus the district court could evaluate

the equities of the case without exclusively employing the lodestar method. The

district court appears to have properly distinguished   Ramos , and plaintiffs again

cite no case law to the contrary.   See also Nephew v. City of Aurora, Colo.   ,

766 F.2d 1464
, 1465-67 (10th Cir. 1985) (departing from the rigid lodestar

analysis in Ramos to consider the equity of the plaintiffs’ claim). Turning to the

merits of the district court’s decision on the equities, we note that, although the

district court did not award Matheson the entire amount that the firm sought, it

found that Matheson was entitled to a significant portion of the award it had

requested. Aplt. App., Vol. IV at 828.     After weighing the evidence, the district

court concluded that Matheson’s fees were “for the most part reasonable,” and, in

light of how complicated the case had been, that “an enhancement was equitable

and appropriate.”    
Id. Matheson’s services
had also been necessary to preserve

adequate funds for consumer redress.      
Id. Nothing in
the materials that the

plaintiffs present convince us that the district court’s conclusion on the merits




                                            -6-
was a “clear error of judgment or exceeded the bounds of permissible choice.”

Moothart , 21 F.3d at 1504.

      Accordingly, we hold that the district court did not abuse its discretion in

the award of attorney’s fees under either the lodestar or the balancing of the

equities approaches, and we AFFIRM the district court’s judgment.


                                                    Entered for the Court



                                                    Mary Beck Briscoe
                                                    Circuit Judge




                                         -7-

Source:  CourtListener

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