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Skanga Energy & Marine Ltd. v. Arevenca S.A.

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
May 19, 2014
11 Civ. 4296 (DLC) (DF) (S.D.N.Y. May. 19, 2014)

Summary

finding reasonable hourly rates of $600 for a partner and $300-$325 for associates for discovery sanctions

Summary of this case from Doe v. Delta Airlines, Inc.

Opinion

11 Civ. 4296 (DLC) (DF)

05-19-2014

SKANGA ENERGY & MARINE LIMITED, Plaintiff, v. AREVENCA S.A., et. al., Defendants.


MEMORANDUM AND ORDER

DEBRA FREEMAN, United States Magistrate Judge :

In this action, referred to me for discovery disputes, defendant Petroleos De Venezuela S.A. ("PDVSA") has written to the Court pursuant to Local Civil Rule 37.2 (Dkt. 154), asking for a conference prior to making a discovery-related motion. In particular, PDVSA seeks leave to move, under Rule 37 of the Federal Rules of Civil Procedure, for an award of the attorney's fees it incurred in defeating a motion for a protective order made by plaintiff Skanga Energy & Marine Limited ("Skanga"). Having reviewed PDVSA's letter, the response filed by Skanga (Dkt. 160), PDVSA's reply (Dkt. 161), and PDVSA's supplemental submission (Dkt. 190), to which Skanga did not reply, the Court finds that the parties have provided sufficient information to enable the Court to decide the underlying fee request, without the need for further briefing. The Court concludes that PDVSA is entitled to an award of fees under Rule 37, but that the amount of the award should be less than the amount sought by PDVSA. For the reasons set forth below, the Court awards fees in the amount of $5,420.

BACKGROUND

On February 4, 2014, Skanga filed a motion for a protective order, seeking (1) to shield from discovery, as attorney work-product and on the basis of attorney-client privilege, any communications and materials prepared by Adebayo Osho ("Osho"), who, according to Skanga, "served a dual role of [its] Director and Attorney," and (2) to quash PDVSA's notice for Osho's deposition. (Motion for a Protective Order, dated Feb. 4, 2014 (Dkt. 130) (the "Protective Order Motion").) PDVSA opposed the Protective Order Motion (see Response in Opposition to Motion, dated Feb. 5, 2014 (Dkt. 131)), Skanga filed a reply (see Response in Support of Motion, dated Feb. 6, 2013 (Dkt. 133)), and PDVSA filed a motion for leave to file a sur-reply (see Motion for Leave to File Sur-Reply in Opposition, dated Feb. 19, 2014 (Dkt. 135)). This Court denied Skanga's Protective Order Motion on the merits, and denied PDVSA's motion for leave to file a sur-reply as moot. (See Corrected Order, dated Feb. 28, 2014 nunc pro tunc to Feb. 25, 2014 (Dkt. 141) (the "February Order").)

The date on the reply was apparently a typographical error, as it was filed on February 6, 2014. (See Dkt. 133.)

By letter to the Court dated March 12, 2014, PDVSA argued that it was entitled to the reasonable attorney's fees it had expended in opposing the Protective Order motion, contending that the motion had not been "substantially justified." (Letter to the Court from Lawrence Martin, Esq., dated Mar. 12, 2014 (Dkt. 154) ("3/12/14 Martin Ltr."); see also Fed. R. Civ. P. 37(a)(5)(B).) On March 17, 2014, Skanga filed an opposition (see Letter to the Court from Femi Salu, Esq., dated Mar. 17, 2014 (Dkt. 160) ("3/17/14 Salu Ltr.")), and, on March 18, 2014, PDVSA filed a reply (see Letter to the Court from Lawrence Martin, Esq., dated Mar. 18, 2014 (Dkt. 161) ("3/18/14 Martin Ltr.")).

By Order dated May 6, 2014 (Dkt. 178), this Court directed PDVSA to supplement its submission with respect to the amount of time, per day, being sought for the work of one of the associates assigned to the case, and invited Skanga to reply. PDVSA filed a supplemental submission on May 9, 2014. (Dkt. 190.) Skanga did not file a reply, and the deadline to do so has now passed.

DISCUSSION

I. APPLICABLE LEGAL STANDARDS

The question of whether attorney's fees should be awarded to PDVSA under Rule 37(a)(5)(B), and, if so, the appropriate amount of the award, is properly before this Court, pursuant to Judge Cote's Order of Reference for discovery disputes (Dkt. 109). See Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522, 525 (2d Cir. 1990) ("Matters concerning discovery generally are considered 'nondispositive' of the litigation. . . . Monetary sanctions pursuant to Rule 37 . . . usually are committed to the discretion of the magistrate, reviewable by the district court under the 'clearly erroneous or contrary to law' standard." (internal citations omitted)).

Rule 37(a)(5), made applicable to motions for protective orders by Rule 26(c)(3), provides that, if a motion for a protective order is denied, then the court

must, after giving an opportunity to be heard, require the movant, the attorney filing the motion, or both to pay the party . . . who opposed the motion its reasonable expenses incurred in opposing the motion, including attorney's fees.
Fed. R. Civ. P. 37(a)(5)(B); see also Fed. R. Civ. P. 26(c)(3); Pegoraro v. Marrero, No. 10 Civ. 00051 (AJN) (KNF), 2012 WL 5964395 (S.D.N.Y. Nov. 28, 2012) (awarding attorney's fees to plaintiff, in connection with opposing defendants' motion for a protective order), adopted over objection by 2013 WL 1448769 (S.D.N.Y. Apr. 9, 2013). Only if "the [protective order] motion was substantially justified or other circumstances make an award of expenses unjust" must the court not impose such a sanction. Fed. R. Civ. P. 37(a)(5)(B).

For a motion to have been "substantially justified," it must have had a "reasonable basis in law and fact." See Pierce v. Underwood, 487 U.S. 552, 565 (1988) (resolving the meaning of the phrase "substantially justified" with respect to the award of attorney's fees under the Equal Access to Justice Act, 28 U.S.C. § 2412(d)). A party is entitled to the "costs that [it] would not have incurred but for" the other party's unsuccessful motion. Romeo and Juliette Laser Hair Removal, Inc. v. Assara I, LLC, No. 08 Civ. 442 (TPG) (FM), 2013 WL 3322249, at *3 (S.D.N.Y. July 2, 2013) (quoting Fox v. Vice, 131 S. Ct. 2205, 2211 (2011)). Accordingly, "the dispositive question is . . . whether the costs would have been incurred in the absence" of the motion. Id.

When a court determines that attorney's fees should be awarded under Rule 37(a)(5), the court then has discretion to determine the amount of fees that would be reasonable to include in the award. Hensley v. Eckerhart, 461 U.S. 424, 437 (1983). As a general matter, the "starting point" in analyzing whether the requested attorney's fees are appropriate is "the lodestar - the product of a reasonable hourly rate and the reasonable number of hours required by the case." Millea v. Metro-North Railroad Co., 658 F.3d 154, 166 (2d Cir. 2011) (lodestar calculation creates "presumptively reasonable fee" (citing Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182, 183 (2d Cir. 2008); Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 552 (2010))). There is a "strong presumption" that the lodestar represents the appropriate award, though "enhancements may be awarded in rare and exceptional circumstances." Perdue, 559 U.S. at 552 (internal quotation marks omitted).

The party seeking fees bears the burden of demonstrating that its requested fees are, in fact, reasonable. See Blum v. Stenson, 465 U.S. 886, 897 (1984); Robinson v. City of New York, No. 05 Civ. 9545 (GEL), 2009 WL 3109846, at *3 (S.D.N.Y. Sept. 29, 2009). To that end, the fee application must be supported by contemporaneous time records that "specify, for each attorney, the date, the hours expended, and the nature of the work done." N.Y. State Ass'n for Retarded Children v. Carey, 711 F.2d 1136, 1148 (2d Cir. 1983). Vague and "block-billed" time records are insufficient to substantiate a party's claimed expenditure of time. See Thai-Lao Lignite (Thailand) Co., Ltd. v. Gov't of Lao People's Democratic Republic, No. 10 Civ. 5256 (KMW) (DF), 2012 WL 5816878, at *10 (S.D.N.Y. Nov. 14, 2012) (collecting cases). In such circumstances, a percentage reduction may be applied as a "practical means of trimming fat" from a fee application. Carey, 711 F.2d at 1142, 1146. Moreover, where "compensable and non-compensable tasks are included in the same entry, it must be presumed that the bulk of the time was devoted to non-compensable work." Mister Sprout, Inc. v. Williams Farms Produce Sales, Inc., 881 F. Supp. 2d 482, 491 (S.D.N.Y. 2012) (internal quotation marks and citation omitted). At the same time, in adjudicating the reasonableness of the fees sought, a court may take into consideration the opposing party's failure to challenge the hours expended or the rates requested. See Terra Energy & Resource Technologies, Inc. v. Terralinna Pty. Ltd., No. 12 Civ. 1337 (WHP), 2014 WL 1777984, at *3 (S.D.N.Y. Apr. 30, 2014).

The reasonable hourly rate is what "a reasonable, paying client would be willing to pay," Arbor Hill, 522 F.3d at 184, and varies by practice area and location, id. at 192. A court's determination of this rate "contemplates a case-specific inquiry into the prevailing market rates for counsel of similar experience and skill to the fee applicant's counsel," which may "include judicial notice of the rates awarded in prior cases and the court's own familiarity with the rates prevailing in the district." Townsend v. Benjamin Enterprises, Inc., 679 F.3d 41, 59 (2d Cir. 2012) (quoting Farbotko v. Clinton County, 433 F.3d 204, 209 (2d Cir. 2005)). The Second Circuit applies the "forum rule," under which out-of-district counsel should presumptively not be compensated at a higher rate than attorneys in the "district in which the reviewing court sits." Simmons v. New York City Transit Auth., 575 F.3d 170, 174-75 (2d Cir. 2009) (quotations and citations omitted).

II. PDVSA'S RULE 37 FEE APPLICATION

A. Whether Fees Should Be Awarded

Skanga opposes PDVSA's request for fees, but many of the arguments that Skanga raises misconstrue the nature of PDVSA's motion. In particular, Skanga argues that it has not violated any discovery order of the Court, that PDVSA's purported attempt to sanction it for a discovery violation is, variously, premature, unconstitutional, inequitable, and estopped, and that Skanga cannot "come[] to equity" due to its unclean hands in having engaged in purportedly "glaring" discovery violations of its own. (3/17/14 Salu Ltr., at 1-3.)

Skanga devotes considerably less space and attention in its papers to the substance of PDVSA's request under Rule 37(a)(5)(B), i.e., that PDVSA should be awarded the fees incurred in opposing Skanga's unsuccessful Protective Order Motion. In this regard, in an apparent effort to show that its motion was substantially justified, Skanga argues that, even though the Court denied the motion, the Court "agreed with the substance of Skanga and Osho's objection." (3/17/14 Salu Ltr., at 2.) More specifically, Skanga contends that, as the Court's February Order noted that Skanga could still object to or instruct Osho not to answer deposition questions that implicated attorney work-product or the attorney-client privilege, the Court must have "s[een] merit in a substantial part of Skanga's objection." (Id.) Thus, Skanga argues, its Protective Order Motion must have had a "reasonable basis both in law and fact." (Id.) Skanga also argues that circumstances here would make any sanctions award "unjust." (Id. at 3.) On this point, Skanga contends that it lost almost $12 million as a result of the conduct at issue in the case, that it has stopped all business operations, and that its ability to prosecute the case would be "cripple[d]," if it were required to pay sanctions to PDVSA. (Id. at 2-3.) Skanga represents that neither it nor its attorneys could afford to pay "any amount" awarded against them. (Id. at 3.)

Skanga's arguments are groundless. First of all, its characterization of the Court's February Order is incorrect. (See Dkt. 144.) In noting that, if Osho were to be deposed, Skanga could raise objections or instruct Osho not to answer questions calling for privileged communications, the Court was in no way suggesting that Skanga was justified in moving for a protective order to block the deposition from proceeding at all. To the contrary, the Court was pointing out that Skanga's professed concerns regarding the need to protect privileged information were ones that could easily be addressed within the deposition context. Indeed, the Court expressly noted that Skanga's arguments on its Protective Order Motion were "unpersuasive" and that the circumstances surrounding that motion were suggestive of "little more than an effort by Skanga to prevent the deposition from going forward, despite this Court's previous ruling." (Id. at 2.) Skanga cites no legal authority to support its contention that the Protective Order Motion was substantially justified, and this Court concludes that it was not.

Second, the Court is unmoved by Skanga's argument that it would be unjust to award any fees here because Skanga would then be unable to litigate this case. Skanga's claim of poverty is unsubstantiated, and, as PDVSA points out, Skanga chose to bring suit in the United States and to file an unnecessary and meritless motion. (See 3/18/14 Martin Ltr., at 2.) Under Rule 37(a)(5)(B), Skanga is accountable for the consequences of those choices, and this Court sees no reason to divert from the dictates of the Rule.

B. Amount of Fee Award

PDVSA has sought an attorney's fee award of $8,515.50, for time expended by three attorneys. In support of its request for this sum, PDVSA has submitted an affidavit of lead counsel Lawrence H. Martin, Esq. ("Martin") (see Affidavit of Lawrence H. Martin, Esq., sworn to Mar. 12, 2014 (Dkt. 154-1) ("Martin Aff.")), time records for Martin and two other attorneys (see Martin Aff., Ex. A (Dkt. 154-2) ("Time Records")), and a copy of the National Law Journal's "2013 NLJ Billing Survey" (see Martin Aff., Ex. B (Dkt. 154-3) ("Survey")).

PDVSA has not identified or sought to recover any expenses, other than attorney's fees, incurred in opposing Skanga's motion.

Martin, a partner in the Washington, D.C. office of the law firm of Foley Hoag LLP ("Foley Hoag"), has had 16 years of practice experience and claims to have spent 2.5 hours opposing the Protective Order Motion, at a rate of $645 per hour. (See Martin Aff. ¶¶ 4-5.) The other attorneys for whom fees are sought are associates with the same firm: Nicholas Renzler, Esq. ("Renzler"), a second-year associate claimed to have spent 9.6 hours opposing Skanga's motion, at the rate of $380 per hour, and Benjamin Guthrie, Esq. ("Guthrie"), a first-year associate claimed to have spent 9.3 hours opposing the motion, at the rate of $350 per hour. (See id.) While Skanga does not challenge PDVSA's calculation of its fees, the Court nevertheless exercises its discretion to review the appropriateness of the amount of the requested award. See Hensley, 461 U.S. at 437.

1. Reasonable Hourly Rates

PDVSA cites no case authority in support of the hourly rates sought by its attorneys, so this Court relies primarily on its own review of recent cases in this district and on its own knowledge of prevailing rates in determining the reasonableness of the requested hourly rates. See Townsend, 679 F.3d at 59.

The rate of $645 per hour that PDVSA seeks for Martin's work is somewhat above the high end of the range of rates that, most commonly, have been approved in this district for recent work on commercial cases, by counsel with comparable levels of experience, at comparable firms. See, e.g., Nautilus Neurosciences, Inc. v. Fares, No. 13 Civ. 1078 (SAS), 2014 WL 1492481, at *3 (S.D.N.Y. Apr. 16, 2014) (approving, in a commercial dispute, hourly rate of $603 for a partner with over 20 years of experience); Canada Dry Delaware Valley Bottling Co. v. Hornell Brewing Co., Inc., No. 11 Civ. 4308 (PGG), 2013 WL 6171660, at *2-3 (S.D.N.Y. Nov. 25, 2013) (approving hourly rates of $575-600 for Philadelphia-based partner with approximately 30 years of experience); Merck Eprova AG v. Brookstone Pharmaceuticals, LLC, No. 09 Civ. 9684 (RJS), 2013 WL 3146768, at *1 (S.D.N.Y. June 10, 2013) (approving partner rates of $640 and $570 per hour); Amaprop Ltd. v. Indiabulls Fin. Svcs. Ltd., No. 10 Civ. 1853 (PGG), 2011 WL 1002439 (S.D.N.Y. Mar. 16, 2011) (approving hourly rate of $616 for attorney who graduated from law school in 1994). While the specialized expertise of a particular firm or attorney, the complexity of the litigation, or other circumstances may warrant atypically high fees in a given case, PDVSA has identified no such considerations in this case. Under the circumstances, the Court will reduce Martin's rate to $600 per hour.

The rates that PDVSA seeks for the work of second-year associate Renzler ($380/hour) and first-year associate Guthrie ($350/hour) also exceed the rates that the Court has recently found to be reasonable for similar work by associates with similar levels of experience. See, e.g., Nautilus Neurosciences, 2014 WL 1492481, at *3 (approving hourly rate of $337.50 for an associate with approximately three years of experience); Canada Dry, 2013 WL 6171660, at *2-3 (approving hourly rates of $330-350 for a New York-based fifth-year associate). Moreover, the rates requested by PDVSA for its associates are not well supported by the 2013 National Law Journal Survey that PDVSA has submitted. While, given the Survey's hearsay character, the Court does not rely on it to demonstrate actual prevailing market rates, the Court does observe that the rates listed on the Survey for Foley Hoag itself suggest that PDVSA is seeking overly high rates for the associates who worked on this case. In particular, the Survey reflects that the highest hourly rate billed in 2013 by an associate in the Foley Hoag firm was $385, the lowest was $290, and the average was $325. (See Survey.) PDVSA has submitted no explanation as to why the first- and second-year associates on this case would reasonably command rates of $350 and $380 per hour, at the high end of the firm's own associate billing scale, and above the firm's own reported average rate for associates. In light of this apparent anomaly, the Court exercises its discretion to reduce Renzler's billing rate to the firm's reported average rate of $325/hour, and Guthrie's to $300/hour.

2. Reasonable Number of Hours

PDVSA seeks to recoup its costs for time expended: (1) researching Skanga's privilege claims after Skanga "first threatened on February 3, 2014 to 'seek court intervention;'" (2) reviewing the Protective Order Motion; (3) researching and writing its opposition papers; (4) preparing and filing its opposition papers; and (5) preparing its motion for fees. (See Martin Aff. ¶ 3.) As with counsel's requested rates, Skanga raises no objection to the reasonableness of counsel's claimed hours. Once again, however, the Court exercises its discretion to review the submitted time records, and finds that certain reductions are appropriate.

First, PDVSA is not entitled to recover fees for time expended by counsel on the day before Skanga filed its Protective Order Motion, even if that time was spent conferring or doing research in anticipation of a potential motion. In this regard, the Court will deduct 3.6 hours of Guthrie's time and two hours of Renzler's time for work undertaken on February 3, 2014, either in conferring within the firm or with opposing counsel, or in researching the standard to compel Osho's attendance at deposition. (See Time Records.) Even apart from the fact that the Court cannot determine how much of counsel's research was ultimately useful in opposing the motion that was eventually made, PDVSA is entitled to recover only those fees that it would not have incurred, but for Skanga's filing of the motion. Romeo and Juliette Laser Hair Removal, 2013 WL 3322249, at *3. Here, where PDVSA's attorneys chose to devote time to a potential motion before any was made, PDVSA cannot satisfy that "but for" test.

Only half of the 7.20 hours noted on Guthrie's time records were apparently included in PDVSA's fee application. (See Martin Aff. ¶ 9 (stating that Guthrie's house had been reduced "by half to take account of his relative juniority"); Time Records.)

Renzler's time was block-billed, as well as largely redacted, and thus the Court cannot ascertain how many of the recorded 6.10 hours actually related to work spent in anticipation of Skanga's motion. According to Martin, however, PDVSA is only seeking recovery for two of those hours. (See Declaration of Lawrence H. Martin, Esq., dated May 9, 2014 (Dkt. 190-1) ¶¶ 5-6.)

Second, the Court notes that Renzler block-billed his time, clustering various tasks together in a single day, without breaking out the amount of time he spent on each. Martin states, in his affidavit, that he consulted with Renzler and made a "good faith effort to determine the amount of time billed for non-compensable activities" (Martin Aff. ¶ 8), but - especially because Renzler's time records have also been heavily redacted - the Court has no way to confirm that the amount that PDVSA is still seeking for Renzler's time is, in fact, reasonable. Although, at times, the Court has entirely disallowed any recovery of attorney's fees for block-billed time, see, e.g., Soler v. G&U, Inc., 801 F. Supp. 1056, 1061-62 (S.D.N.Y. 1992) (excluding from lodestar calculation all time entries with commingled activities), or has significantly discounted such time, see, e.g., Terminate Control Corp. v. Nu-Life Constr. Corp., 28 F.3d 1335, 1342-43 (2d Cir. 1994) (30% fee reduction for "lack of specific record keeping" was within the district court's discretion); Louis Vuitton Malletier v. Dooney & Bourke, Inc., No. 04 Civ. 5316 (RMB) (MHD), 2007 WL 1284013, at *3 (S.D.N.Y. Apr. 24, 2007) (reducing time claimed by an attorney by one-third, in part "because the time reports yield little insight into how this attorney's time was divided"), the number of block-billed hours for which PDVSA is seeking compensation here is fairly modest - only 7.6 hours (after subtracting the time recorded for February 3). Further, it appears that PDVSA has itself engaged in a scrutiny of the recorded hours, has sought to eliminate time spent on tasks unrelated to the Protective Order Motion, and has been conservative in its ultimate request. Under the circumstances, while the block-billed hours should still be reduced, the Court will only apply a 10-percent reduction to those hours.

According to Martin, counsel's billing records were "redacted to delete information subject to the attorney-client privilege . . . [and] to delete information not related to tasks associated with opposing Skanga's motion." (Martin Aff. ¶ 7.) --------

3. Lodestar Calculation

The Court finds no exceptional circumstances here that would warrant deviation from the lodestar. See Perdue, 559 U.S. at 552. Accordingly, the Court will award fees to PDVSA, under Rule 37(a)(5)(B), as follows:

Timekeeper

ReasonableRate

ReasonableHours

Total

Martin

$600

x

2.5

= $1,500

Renzler

$325

x

6.8

= $2,210

Guthrie

$300

x

5.7

= $1,710

$5,420

CONCLUSION

For all of the foregoing reasons, it is hereby ORDERED that, pursuant to Rule 37(a)(5)(B) of the Federal Rules of Civil Procedure, Skanga shall pay PDVSA $5,420, representing the attorney's fees reasonably incurred by PDVSA in connection with its opposition to Skanga's unsuccessful motion for a protective order. The Clerk of Court is directed to close the letter motion docketed in this action as Dkt. 154. Dated: New York, New York

May 19, 2014

SO ORDERED

/s/_________

DEBRA FREEMAN

United States Magistrate Judge Copies to: Hon. Denise Cote, U.S.D.J. All counsel (via ECF)


Summaries of

Skanga Energy & Marine Ltd. v. Arevenca S.A.

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
May 19, 2014
11 Civ. 4296 (DLC) (DF) (S.D.N.Y. May. 19, 2014)

finding reasonable hourly rates of $600 for a partner and $300-$325 for associates for discovery sanctions

Summary of this case from Doe v. Delta Airlines, Inc.

determining that the non-movant was "entitled to recover only those fees that it would not have incurred, but for filing of the motion"

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Case details for

Skanga Energy & Marine Ltd. v. Arevenca S.A.

Case Details

Full title:SKANGA ENERGY & MARINE LIMITED, Plaintiff, v. AREVENCA S.A., et. al.…

Court:UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

Date published: May 19, 2014

Citations

11 Civ. 4296 (DLC) (DF) (S.D.N.Y. May. 19, 2014)

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