Opinion
NO. 3-01-CV-0857-G
May 1, 2002
FINDINGS AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Plaintiffs Millennium Restaurants Group, Inc. d/b/a Cabaret Royale and Steven W. Craft have filed an application for attorney's fees and costs as the prevailing parties in this civil rights action. For the reasons stated herein, plaintiffs should be awarded $171,470.00 in attorney's fees and $150.00 in costs.
By order dated April 19, 2002, the motion was referred to United States Magistrate Judge Jeff Kaplan for "determination." However, a post-trial motion for attorney's fees is a case-dispositive matter that cannot be determined by a magistrate judge without the consent of the parties. Blair v. Sealift, 848 F. Supp. 670, 678 (E.D. La. 1994); see also FED. R. Civ. P. 54(d)(2)(D) (court may refer motion for attorney's fees to magistrate judge under Rule 72(b) as if it were a dispositive pretrial matter). Consequently, the magistrate judge will issue a report and recommendation in connection with this motion pursuant to 28 U.S.C. § 636 (b)(1)(B).
I.
Cabaret Royale is an adult entertainment club featuring erotic dancing that is licensed by the City of Dallas to operate as a "Sexually Oriented Business." On April 17, 2001, the City notified plaintiffs that their license would be revoked based on a violation of the following ordinance:
The chief of police shall revoke a license if the chief of police determines that one or more of the following is true:
* * * *
(6) On two or more occasions within a 12-month period, a person or persons committed an offense occurring in or on the licensed premises of a crime listed in Section 41A-5(a)(8)(A) for which a conviction has been obtained, and the person or persons were employees of the sexually oriented business at the time the offenses were committed.
DALLAS CITY CODE § 41A-10(b)(6). In particular, four Cabaret Royale dancers had been convicted of public lewdness, one of the offenses specified under this section, during the 12-month period preceding the City's action. See § 41A-5(a)(8)(A)(ii)(aa). All four convictions were based on conduct that occurred during a dance performance at the club.
On May 7, 2001, plaintiffs filed suit in federal district court to enjoin enforcement of the ordinance. The Court found that the City's attempt to revoke plaintiffs' license, based on past performances by entertainers, "operates as an unconstitutional prior restraint on First Amendment rights." Millennium Restaurants Group, Inc. v. City of Dallas, Texas, 191 F. Supp.2d 802, 808 (N.D. Tex. 2002) (Fish, C.J.). A final judgment was entered on April 19, 2002. Plaintiffs now seek $171,470.00 in attorney's fees and $2,815.62 in costs as the prevailing parties in this litigation. The City acknowledges that plaintiffs are entitled to reasonable fees and costs, but argues that the hourly rates charged by counsel and the total hours billed are excessive. The motion has been fully briefed by the parties and is ripe for determination.
Plaintiffs are entitled to attorney's fees and costs pursuant to 42 U.S.C. § 1988. This statute provides, in relevant part:
In any action or proceeding to enforce a provision of sections 1981, 1981a, 1982, 1983, 1985, and 1986 of this title . . . the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs . . .42 U.S.C. § 1988 (b).
II.
The traditional calculation of a reasonable attorney's fee involves a three step-process. See Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1983). First, the Court must determine the reasonable number of hours expended on the litigation and the reasonable hourly rates for participating attorneys. Id., 103 S.Ct. at 1939; Louisiana Power Light Co. v. Kellstrom, 50 F.3d 319, 324 (5th Cir.), cert. denied, 116 S.Ct. 173 (1995). Next, the reasonable number of hours is multiplied by the reasonable hourly rate. Hensley, 103 S.Ct. at 1939; Kellstrom, 50 F.3d at 324. The product of this calculation is the "lodestar." Shipes v. Trinity Industries, 987 F.2d 311, 319-20 (5th Cir.), cert. denied, 114 S.Ct. 548 (1993); Brantley v. Surles, 804 F.2d 321, 325 (5th Cir. 1986). Finally, the lodestar may be adjusted upward or downward depending upon the particular circumstances of the case. Shipes, 987 F.2d at 319-20; Brantley, 804 F.2d at 325. The Court must consider: (1) the time and labor required; (2) the novelty and difficulty of the issues involved; (3) the skill required to litigate the case; (4) the ability of the attorney to accept other work; (5) the customary fee for similar work in the community (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances of the case; (8) the amount involved and results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the "undesirability" of the case; (11) the nature and length of the attorney-client relationship; and (12) awards in similar cases. Shipes, 987 F.2d at 320 n. 6; Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974). Some of these factors are subsumed in the lodestar amount and should not be considered in making any necessary adjustments. See Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 565, 106 S.Ct. 3088, 3098, 92 L.Ed.2d 439 (1986) (second, third, seventh, eighth, and ninth factors cannot serve as independent bases for increasing basic fee award); Walker v. U.S. Department of Housing and Urban Development, 99 F.3d 761, 771-72 (5th Cir. 1996) (same).
In addition, the "Supreme Court has barred any use of the sixth factor." Walker, 99 F.3d at 772. citing City of Burlington v. Dague, 505 U.S. 557, 567, 112 S.Ct. 2638, 2643-44, 120 L.Ed.2d 449 (1992).
A.
The first task in calculating attorney's fees is determining the reasonable number of hours expended on the case. A fee applicant is required to document the time spent and services performed. Hensley, 103 S.Ct. at 1941; Cooper v. Pentecost, 77 F.3d 829, 832 (5th Cir. 1996). The Court must review the records and exclude all time that is excessive, duplicative, or inadequately documented. Hensley, 103 S.Ct. at 1939; Von Clark v. Butler, 916 F.2d 255, 259 (5th Cir. 1990). The hours that survive this vetting process are those reasonably expended on the litigation. Watkins v. Fordice, 7 F.3d 453, 457 (5th Cir. 1993).Plaintiffs were represented in this action by three attorneys and two legal assistants with the Dallas law firm of Jackson Walker L.L.P. John A. Koepke, Mike Byrd, and David Gross spent a total of 556.7 hours on the case. The two legal assistants worked 13.5 hours. (Plf. Mot., Koepke Aff. at 2). The Court has reviewed the detailed billing records submitted by plaintiffs and finds that none of the hours expended were excessive or duplicative. Indeed, it appears that counsel did a commendable job of dividing the workload appropriately amongst themselves based on the seniority of members of the legal team. In addition, counsel does not seek reimbursement for 61.8 hours of work that was actually performed but not billed to their clients. Another 13.4 hours were written off as unnecessary or duplicative before this motion was filed. (Plf. Reply, Koepke Supp. Aff. at 2). This shows that counsel exercised proper billing judgment. See Hensley, 103 S.Ct. at 1940; Alberti v. Klevenhagen, 896 F.2d 927, 930 (5th Cir.), vacated in part on other grounds, 903 F.2d 352 (5th Cir. 1990).
Koepke's affidavit breaks down the number of hours expended by counsel as follows: (a) John A. Koepke — 147.4 hours; (b) Mike Byrd — 127.7 hours; and (c) David Gross — 281.6 hours. (Plf. Mot., Koepke Aff. at 2).
The City maintains that 88.6 hours were not "expended in pursuit of the ultimate result achieved." (Def. Resp. at 5 Exh. A). This includes time spent researching a due process claim that was not pursued, preparing state court pleadings, and working on a motion to stay that turned out to be unnecessary when the preliminary injunction was granted. ( Id.). As a general rule, a party is not entitled to attorney's fees for the prosecution of an unsuccessful claim. Hensley, 103 S.Ct. at 1940. However, claims that involve common facts or derive from related legal theories cannot be viewed as separate or discrete causes of action. See id.; Hernandez v. Hill Country Telephone Cooperative, Inc., 849 F.2d 139, 144 (5th Cir. 1988). The test is "whether the plaintiff has been successful on the central issue . . . as exhibited by the fact that he has acquired the primary relief sought." Commonwealth Oil Refining Co. v. EEOC, 720 F.2d 1383, 1385 (5th Cir. 1983), quoting Iranian Students Association v. Edwards, 604 F.2d 352, 353 (5th Cir. 1979).
Clearly, the due process and First Amendment challenges to the Dallas City ordinance arose out of the same operative facts. Although plaintiffs elected not to pursue a due process claim, their attorneys cannot be faulted for investigating the possibility. Nor should counsel be penalized for researching and preparing motions that ultimately proved unnecessary. Given the blistering pace of this litigation, the fact that plaintiffs' livelihood was at stake, and the City's vigorous efforts to uphold an unconstitutional ordinance, it was both prudent and prescient for counsel to prepare for every eventuality. See Baxter v. Crown Petroleum Partners 90-A, 2000 WL 269747 at *4 (N.D. Tex. Mar. 10, 2000) ("Having kicked the snow loose at the top by a vigorous, aggressive defense, defendants must now bear the consequences of the attorney fee avalanche at the bottom."). For these reasons, the Court finds that counsel reasonably expended 570.2 hours on the litigation.
B.
Counsel seeks compensation at the following hourly rates: (1) $335.00-$355.00 for John A. Koepke; (2) $320.00-$335.00 for Mike Byrd; (3) $275.00-$295.00 for David Gross; and (4) $115.00 for two legal assistants. (Plf. Mot., Koepke Aff. at 2). The evidence submitted by plaintiffs shows these rates to be "at or below the customary, reasonable and necessary fees for similar legal services in litigation of this nature in the federal courts in this community." (Id., Lowenberg Decl. at 2, ¶ 5; see also id., Selander Decl. at 2-3, ¶ 6). The City objects to these hourly rates and maintains that a reasonable rate for similar services is $250.00 per hour. (Def. Resp., Exhs. B C).
Koepke, Byrd, and Gross increased their hourly rates effective October 1, 2001. (Plf. Reply, Koepke Supp. Aff at 2).
The City does not contest the hourly rate sought for work performed by legal assistants.
When counsel requests compensation at his normal billing rate and that rate is shown to be within the range of market rates for attorneys of similar skill and experience, the burden is on the opposing party to show that a lower rate should be used. Islamic Center of Mississippi, Inc. v. City of Starkville, Mississippi, 876 F.2d 465, 469 (5th Cir. 1989); see also Watkins, 7 F.3d at 459 (court must articulate reasons for rejecting normal billing rate). In an attempt to meet this burden, the City relies on the affidavits of two Assistant City Attorneys. Doreen E. McGookey states that she has worked as a lawyer in the Dallas/Fort Worth market for approximately 12 years and is familiar with the customary and usual fees charged by attorneys for cases of this type. According to McGookey:
I have specialized in cases involving sexually oriented businesses for the past two years. Opposing attorneys who make claims for attorney's fees in these cases routinely request a fee of $250.00 per hour. As such, this is the prevailing rate and customary rate for attorneys handling cases for sexually oriented businesses. Fees for over $300.00 per hour have not been claimed in any lawsuit that I have handled where a Plaintiff has been successful in an award of attorney's fees against the City. In my opinion, any claim for attorney's fees over $250.00 is excessive and unreasonable.
(Def. Resp., McGookey Aff. at 1). Jason G. Schuette, a lawyer with 16 years of experience, offers similar testimony in his affidavit. ( Id., Schuette Aff. at 1).
With all due respect to McGookey and Schuette, their conclusory assertions based on antecdotal experiences do not overcome the presumption that counsel's normal billing rate is reasonable. There is no evidence that any of the unnamed attorneys involved in prior cases with the City have the same level of training, skill, and expertise as Koepke, Byrd, and Gross. Although fees in excess of $300.00 per hour may seem high, the Court cannot say they are excessive. See, e.g. Arnold v. Babbitt, 2000 WL 354395 at *7 (N.D. Tex. Apr. 6, 2000), aff'd, 252 F.3d 435 (5th Cir. 2001) (Table) (awarding fee of $350.00 per hour); Garza v. Sporting Goods Properties, Inc., 1996 WL 56247 at *34 (W.D. Tex. Feb. 6, 1996) (same). Accordingly, counsel will be compensated at their normal hourly billing rates.
C.
The lodestar amount is presumed to be a reasonable fee and should be modified only in exceptional cases. City of Burlington v. Dague, 505 U.S. 557, 562, 112 S.Ct. 2638, 2641, 120 L.Ed.2d 449 (1992); Watkins, 7 F.3d at 457. Although plaintiffs address the other Johnson factors in their brief, they do not seek a fee enhancement. (Plf. Mot. at 7, ¶ 7). Nor has the City articulated any basis for decreasing the lodestar amount. Consequently, no adjustment is warranted
In its response, the City suggests that $121,000.00 would be a reasonable attorney's fee based on a lodestar calculation of 484.0 hours worked at $250.00 per hour. (Def. Resp. at 6). However, the City presents no additional evidence or argument that would support a reduction of the lodestar amount determined by the Court.
D.
The Court finds that counsel for plaintiffs should be compensated for 570.2 hours reasonably expended on this litigation calculated at their usual and customary rates of $275.00-$355.00 per hour for attorney time and $115.00 per hour for legal assistant time. No upward or downward adjustment of the lodestar amount is warranted. Accordingly, plaintiffs should be awarded $171,470.00 in attorney's fees.
Plaintiffs also seek $25,000.00 in the event of an appeal to the Fifth Circuit. Although section 1988 permits the award of reasonable attorney's fees for a successful appeal, such fees should not be awarded "in advance of such services being rendered and before a judicial determination that plaintiffs are the prevailing parties on appeal and that the fees they incurred were reasonable." Zaffuto v. City of Hammond, 2001 WL 1020355 at *2 (E.D. La. Sept. 4, 2001, citing Alizadeh v. Safeway Stores, Inc., 910 F.2d 234, 238 n. 4 (5th Cir. 1990); see also Hanrahan v. Hampton, 446 U.S. 754, 756, 100 S.Ct. 1987, 1988, 64 L.Ed.2d 670 (1980).
III.
Plaintiffs also seek $2,815.62 in costs. A prevailing party is entitled to recover its costs "unless the court otherwise directs." FED. R. CIV. P. 54(d). Taxable court costs include: (1) fees paid to the clerk and marshal; (2) court reporter fees for all or part of a deposition transcript; (3) witness fees and related expenses; (4) printing costs; and (5) fees for copies of papers necessarily obtained for use in the case. See 28 U.S.C. § 1821 1920. A district court may decline to award statutory costs but may not award costs omitted from the statute. Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441-42, 107 S.Ct. 2494, 2497, 96 L.Ed.2d 385 (1987); Coats v. Penrod Drilling Corp., 5 F.3d 877, 891 (5th Cir. 1993), cert. denied, 114 S.Ct. 1303 (1994).Among the costs requested by plaintiffs are: (1) $23.21 in Federal Express charges; (2) $167.00 in delivery fees; (3) $427.46 in long distance telephone charges; (4) $892.00 for telecopies; and (5) $42.50 in courier fees. None of these cost items are authorized by the statute. Rather, they are simply part of attorney overhead. See Embotelladora Agral Regiomontana, S.A. de C.V. v. Sharp Capital, Inc., 952 F. Supp. 415, 417 (N.D. Tex. 1997); Migis v. Pearle Vision, Inc., 944 F. Supp. 508, 518 (N.D. Tex. 1996) (Kaplan, M.J.), rev'd in part, aff'd in relevant part, 135 F.3d 1041 (5th Cir. 1998). These costs should be disallowed.
Plaintiffs also request $1,116.15 in photocopy expenses. Costs of photocopies obtained for use in the litigation are recoverable upon proof of necessity. 28 U.S.C. § 1920 (4); see also Holmes v. Cessna Aircraft Co., 11 F.3d 63, 64 (5th Cir. 1994). Although the prevailing party need not "identify every xerox copy made for use in the course of the legal proceedings," it must demonstrate some nexus between the costs incurred and the litigation. Fogleman v. ARAMCO, 920 F.2d 278, 286 (5th Cir. 1991). Plaintiffs have failed to meet this burden. The invoices submitted by plaintiffs merely list a monthly lump-sum amount billed to the client for copying services. In his affidavit, John A. Koepke states only that "multiple copies" of unidentified pleadings were made for the various attorneys involved in the litigation. (Plf. Reply, Koepke Supp. Aff. at 2). This vague assertion does not enable the Court to determine whether the photocopy charges were necessary. See Fogleman, 920 F.2d at 286 (charges for multiple copies of documents, attorney correspondence, and other such items not taxable as costs).
The Court also notes that copies of pleadings made for the convenience of counsel are part of normal overhead and are not recoverable as taxable court costs. See In re Paoli Railroad Yard PCB Litigation, 1999 WL 569435 at *8 (E.D. Pa. Aug. 2, 1999); Krause v. American Sterilizer Co., 928 F. Supp. 543, 546 (W.D. Pa. 1996).
The only cost that plaintiffs are entitled to recover is the $150.00 filing fee. See 28 U.S.C. § 1920 (1). A second "filing fee" in the amount of $177.00 is not explained and should not be allowed. (Plf. Mot., Koepke Aff., Inv. #671781 at 2).
RECOMMENDATION
Plaintiffs' application for attorney's fees and costs should be granted, as modified. Plaintiffs should be awarded $171,470.00 in attorney's fees and $150.00 in costs as the prevailing parties in this litigation.