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applying the § 1988 lodestar analysis to award attorney fees on a Kansas state law statutory claim
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CIVIL ACTION No. 00-2069-KHV
August 10, 2001
MEMORANDUM AND ORDER
Plaintiff has settled his medical malpractice claims against defendants. This matter comes before the Court on Plaintiff's Motion For Approval Of Attorneys Fees And Expenses (Doc. #103) filed March 12, 2001. Plaintiff has entered into two settlement agreements — one with Shawnee Mission Medical Center ("SMMC") and individual nurse defendants Pennie Messmer, Erin Schmidt, John Mundy, Rosemary Mullen and Nadine Paegel for the sum of $300,000.00, and one with individual doctor defendants John A. Holmes, M.D. and Firmin Snodell, M.D. — the settlement proceeds total $664,243.87. Under a contingency fee agreement for 50 per cent of the settlement recovery less expenses, plaintiff asks the Court to approve reasonable attorneys fees of $300,000.00 and reasonable litigation expenses of $64,243.87.
Specifically, plaintiff seeks approval of $120,796.35 in attorneys fees and $58,407.31 in litigation expenses from the settlement with SMMC and $179,203.65 in attorneys fees and $5,836.56 in litigation expenses from the settlement with Snodell and Holmes. Plaintiff does not explain the requested allocation between the two settlement agreements, and the Court does not attempt to delineate which settlement agreement should fund the fees and expenses approved herein.
Parenthetically, the Court notes that at the settlement hearing on April 23, 2001, Ronald J. Stites, lead counsel for plaintiff, testified that he agreed to reduce the contingency percentage to 45 per cent because the parties did not go to trial. The total amount of attorneys fees requested in plaintiff's supplemental memorandum, however, is $300,000.00 (50 per cent of the settlement recovery less expenses).See Plaintiff's Supplemental Memorandum In Support Of Plaintiff's Motion For Approval Of Attorneys' Fees And Expenses ("Plaintiff's Supplemental Memorandum") (Doc. #126) filed May 7, 2001 at 4. The form contingent fee contract which plaintiff signed contains two blanks for contingency amounts depending on whether the case goes to trial, but 50 per cent has been handwritten in both blanks:
Client employs Attorney to represent him, her or it and, if necessary, to institute and prosecute suit and, as compensation for Attorney's legal services, Client agrees to pay and hereby assigns to Attorney Fifty per cent (50%) of the net amount recovered in said claim by compromise or settlement anytime prior to two weeks before the case is set for trial. If Client's case is settled within two weeks of trial, or is tried, then Client agrees to pay and hereby assigns to Attorney Fifty per cent (50%) of the net amount recovered, regardless of whether said claim is compromised or settled prior to the actual commencement of trial or during the course of trial.Attorney's Contingent Fee Contract, Exhibit B toMemorandum In Support Of Plaintiff s Motion For Approval Of Attorneys' Fees And Expenses (Doc. #118) filed April 20, 2001. Mr. Stites did not explain why the agreement does not contain a lower contingency percentage in the event of settlement.
At the settlement hearing, counsel for plaintiff informed the Court that they did not keep contemporaneous time and billing records from which the Court could assess the reasonableness of the proposed fee. Counsel presented an estimated summary of total hours spent on various tasks, but they did not break down the number of hours performed by each individual. See Exhibit A, Memorandum In Support Of Plaintiff's Motion For Approval Of Attorneys' Fees And Expenses (Doc. #118) filed April 20, 2001. In response to the Court's concern about the lack of specificity in the fee application, plaintiff's counsel requested additional time to submit itemized affidavits. The Court granted that additional time and after the hearing, counsel purported to reconstruct time and billing records. The "reconstructed" records claim that counsel and legal staff spent 1,423.5 hours on the case, at hourly rates ranging from $150.00 to $250.00 for attorneys and $25.00 to $60.00 for paralegals and legal staff, for a total of $219,110.50. See Plaintiff's Supplemental Memorandum at 3.
For example, the summary states that "over 230 hours of attorney, paralegal and staff man hours" were spent requesting, digesting, summarizing and analyzing medical records, but it does not state how many hours were spent by each individual or category of individuals. See id. Counsel for plaintiff did not have information on the breakdown of the 230 hours, i.e., how many of those hours were performed by attorneys as opposed to paralegals or staff, and counsel did not adequately explain how the total hours were calculated.
Plaintiff urges the Court to use this amount as the initial lodestar figure and adjust it upward to $300,000.00 based on the factors listed in K.S.A. § 7-121(b). See Plaintiffs Supplemental Memorandum at 7.
Kansas law provides that "compensation for reasonable attorney fees to be paid by each litigant [in a medical malpractice action] shall be approved by the judge after an evidentiary hearing and prior to final disposition of the case. . . ." K.S.A. § 7-121b. In determining the reasonableness of such compensation, the statute directs the judge to consider the following:
(1) The time and labor required, the novelty and difficulty of the questions involved and the skill requisite to perform the legal service properly.
(2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the attorney.
(3) The fee customarily charged in the locality for similar legal services.
(4) The amount involved and the results obtained.
(5) The time limitations imposed by the client or by the circumstances.
(6) The nature and length of the professional relationship with the client.
(7) The experience, reputation and ability of the attorney or attorneys performing the services.
(8) Whether the fee is fixed or contingent.
In determining reasonable attorneys fees under K.S.A. § 7-121b, the most useful starting place is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. See Hensley v. Eckerhart, 461 U.S. 424, 432 (1983) (determining reasonable fees under 42 U.S.C. § 1988). Under the lodestar analysis, the Court arrives at a lodestar figure by multiplying the hours reasonably spent on the litigation by a reasonable hourly rate and then determines whether the lodestar figure is subject to upward or downward adjustment.See Jane L. v. Bangerter, 61 F.3d 1505, 1509 (10th Cir. 1995). Plaintiff bears the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates. See Case v. Unified Sch. Dist. No. 233, 157 F.3d 1243, 1249-50 (10th Cir. 1998).
Plaintiff argues that the lodestar analysis and the policies behind it do not apply in this case. See Plaintiff's Supplemental Memorandum at 2-3. Plaintiff urges the Court to approve the contingency agreement because such agreements are customary in medical malpractice cases and counsel faced substantial risk of funding the expenses of litigation and receiving no compensation if plaintiff did not prevail. See id. at 4-6. Kansas courts, however, have found that the contingent j nature of the fee contract is only one factor used to determine the reasonableness of a fee award. See Bergeson v. Dilworth, 875 F. Supp. 733, 739 (D. Kan. 1995) (citing Farmco, Inc. v. Explosive Specialists, Inc., 684 P.2d 436, 444 (Kan.App. 1984)). In fact, the Kansas Supreme Court has cautioned that district courts cannot consider a contingency agreement as the controlling factor.See City of Wichita v. B G Prods., Inc., 252 Kan. 367, 374, 845 P.2d 649, 653 (1993). In this case, the lodestar analysis is particularly appropriate because the fee requested under the contingency agreement is inarguably excessive. See Bergeson, 875 F. Supp. at 739-40 (awarding attorneys fees on hourly basis where fees requested under contingency contract excessive).
Plaintiff also argues that state courts routinely approve attorneys fees based solely on a contingency agreement in medical malpractice cases. See id. at 2. This argument is essentially an argument that state courts habitually disregard K.S.A. § 7-121b, which provides that the contingent nature of the fee is only one of many factors to be considered. Plaintiff cites no authority for this proposition.
The factors listed in K.S.A. § 7-121b are the factors on which the lodestar analysis is based. See, e.g., Hensley, 461 U.S. at 430 n. 3 (citing Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974)), They are also the same factors listed in Rule 1.5 of the Model Rules of Professional Conduct, which the Kansas Supreme Court uses to determine whether a fee award is reasonable. See City of Wichita, 252 Kan. at 374, 845 P.2d at 654 (affirming fees based on hourly rate despite contingency agreement). InBhattacharya v. Copple, 898 F.2d 766 (10th Cir. 1990), the Tenth Circuit specifically found that a district court has the power under Section 7-121 b to set aside a contingent fee agreement.
[T]he express language of § 7-121b clearly indicates that the essential inquiry in setting a fee is reasonableness, regardless of any attorney-client relationship. Under § 7-121b a fee arrangement can be of evidentiary value but it does not displace a court's responsibility to determine a reasonable fee. In the absence of any suggestion in this case that the district court misapplied the factors under § 7-121b and made erroneous factual findings, it is difficult to see how the district court exceeded the bounds of permissible choice simply by rejecting the request of plaintiffs' attorneys for excess of forty percent (40%) of the total settlement package (based on plaintiffs' attorneys' own figures) and awarding fees based on an hourly rate.See id. at 769 (affirming district court decision to disregard contingency agreement and use hourly rate to determine reasonable attorneys fees under § 7-121b).
I. Reasonable Hours
The first step in calculating the lodestar is to determine the number of hours counsel reasonably expended on the litigation. See Case, 157 F.3d at 1249. The burden is on plaintiff to show that the hours claimed are reasonable. See Deters v. Equifax Credit Info. Servs., Inc., No. 96-2212-JWL, 1998 WL 12119 at *3 (D. Kan. Jan. 6, 1998) (quoting Blum v. Stenson, 465 U.S. 886, 897 (1984)). Attorneys normally do not bill all hours expended in litigation to a client, and "an applicant should exercise `billing judgment' with respect to a claim of the number of hours worked." Ellis v. Univ. of Kan. Med. Cir., 1163 F.3d 1186, 1202 (10th Cir. 1998) (quoting Malloy v. Monahan, 73 F.3d 1012, 1018 (10th Cir. 1996)). To show billing judgment, counsel for plaintiff should make a good-faith effort to exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary and the Court has a corresponding obligation to exclude hours not "reasonably expended" from the calculation.Id.
In this case, the Court's ability to determine reasonable hours is doomed by counsel's failure to keep contemporaneous time records. Counsel state that in the usual course of business they do not keep contemporaneous time and billing records. See Plaintiffs Supplemental Memorandum at 3. This is unfortunate, given the well established legal standards for evaluating reasonable attorneys fees.See, e.g., Sussman v. Patterson, 108 F.3d 1206, 1212 (10th Cir. 1997) (to satisfy burden of proving reasonable fee, counsel seeking fee must keep contemporaneous and detailed records of time); Ramos v. Lamm, 713 F.2d 546, 553 (10th Cir. 1983) (party claiming attorneys fees must be prepared to establish hours by contemporaneous time records if requested by trial court). Based on counsel's mere failure to keep contemporaneous records, the Court could deny attorneys fees altogether.See, e.g., Anderson v. Sec'y of HHS, 80 F.3d 1500, 1506 (10th Cir. 1996) (district court may totally deny attorneys fees where no contemporaneous records kept). The Court nevertheless finds that some fees are appropriate in this case. See, e.g., Broad. Music, Inc. v. R Bar of Manhattan, Inc., 919 F. Supp. 656, 661 (S.D.N.Y. 1996).
Plaintiff's "reconstructed" time records offer the Court minimal assistance, however, in determining what the amount of a reasonable fee would be. See Anderson, 80 F.3d at 1506 (reconstructed time records generally do not accurately reflect actual time spent; district court should scrutinize such records and adjust hours if appropriate). Counsel have not credibly explained how — without the benefit of any contemporaneous billing records — they have accurately "reconstructed," for multiple dates and multiple timekeepers to a tenth of an hour on very specific dates, the documents on which they base their application. Counsel claim that they spent 1,423.5 hours on the case, which appears to be grossly overstated, given the number of hours spent by defense counsel who presumably did keep contemporaneous time records. The two attorneys who represented the doctor defendants spent 448.85 total hours on the case. The Court has no reason to believe that this time was either excessive or insufficient to reasonably prepare the case for trial. Therefore, based on this comparison, the Court will reduce the total hours claimed by plaintiff's counsel by two-thirds, to 474 hours (1,423.5 times .333 equals 474.026). See Hensley, 461 U.S. at 432 (district court may reduce attorneys fees where documentation of hours is inadequate); Robinson v. City of Edmond, 160 F.3d 1275, 1281 (10th Cir. 1998) (court may discount requested attorney hours if attorney fails to keep "meticulous, contemporaneous time records") (quotingRamos, 713 F.2d at 554).
At the hearing, the Court approved attorneys fees of $46,537.43 for the doctor defendants, whose counsel billed 448.85 total hours at rates ranging between $100 and $135 for attorneys $45 and $65 for paralegals. The Court assumes that their fee applications were based on contemporaneous records because that billing practice is standard for medical malpractice defense in this area. Even if that assumption were incorrect, the total fees which defendants incurred are relevant in assessing the overall reasonableness of the fee requested by plaintiff and the amount of time reasonably expended on the case.
Before the settlement hearing, the Court also approved reasonable attorneys fees in the amount of $30,500.00 for SMMC and the nurse defendants. See Order (Doc. #116) filed April 9, 2001 andMotion By Attorney For Defendants Shawnee Mission Medical Center, Mesmer, Schmitdt, Paegel, Mundy and Mullen For Approval Of Attorney Fees (Doc. #94) filed March 6, 2001. Counsel for these defendants did not submit information regarding the number of hours billed or the hourly rate. The amount of the fee request was reasonable on its face, however, and counsel's supporting documentation was sufficient in light of the amount requested. Here, plaintiffs counsel seeks almost ten times as much, and half of plaintiffs' gross recovery. A more searching analysis as to reasonableness is therefore appropriate.
II. Reasonable Hourly Rates
In setting the hourly rate, "the court should establish, from the information provided to it and from its own analysis of the level of performance and skills of each lawyer whose work is to be compensated, a billing rate for each lawyer based upon the norm for comparable private firm lawyers in the area in which the court sits calculated as of the time the court awards fees." Ramos, 713 F.2d at 555. A reasonable hourly rate comports with rates "prevailing in the community for similar services for lawyers of reasonably competent skill, experience, and reputation." Blum, 456 U.S. at 896 n. 11. "A district judge may turn to her own knowledge of prevailing market rates as well as other indicia of a reasonable market rate." Metz v. Merrill Lynch, Pierce, Fenner Smith, Inc., 39 F.3d 1482, 1493 (10th Cir. 1994) (citation omitted). To determine a reasonable rate, the Court focuses on the rates of "lawyers of comparable skill and experience." Ellis, 163 F.3d at 1204 (citations omitted).
Plaintiff seeks $250.00 per hour for Ronald J. Stites, lead counsel with 18 years of experience representing plaintiffs in medical negligence cases; $250.00 per hour for Elizabeth Diane Baker, a self-employed attorney with 9 years of experience in medical negligence cases; $180.00 per hour for Carol A. Lindgren-Bron, an associate with over five years of experience in medical negligence cases; and $150.00 per hour for David A. Hoffman, who served as local counsel. Plaintiff has not shown, however, that the requested attorney rates are reasonable.
The record does not indicate how long Mr. Hoffman has practiced law or whether he specializes in any particular area of law, but the Court knows from Mr. Hoffman's experience in this Court that he has substantial experience in this area.
Plaintiff presents no evidence sufficient to show that the requested rates are in line with those prevailing in the Kansas City metropolitan area. The only market evidence which plaintiff presents is the affidavit of Michael L. Sexton, who states that the contingency agreement with plaintiff's counsel is customary. See Affidavit at ¶ 8, Exhibit F to Plaintiff's Supplemental Memorandum. These affidavits are insufficient to meet plaintiff's burden. See Lintz v. Am. Gen. Fin., 87 F. Supp.2d 1161, 1170 n. 6 (D. Kan. 2000) (citing Blum, 465 U.S. at 895 n. 11).
This Court has found that the prevailing market rate for lead counsel in employment discrimination or analogous litigation ranges from $120 per hour to $190 per hour, depending on counsel's experience in the field.See Lintz, 87 F. Supp. at 1171 (citing Baty v. Willamette Indus., Inc., No. 96-2181-GTV, 1999 WL 713959, at *2 (D. Kan. Aug. 16, 1999) ($155 per hour); Glover v. Heart of Am. Mgmt. Co., No. 98-2125-KHV, 1999 WL 450895, at *8-9 (D. Kan. May 5, 1999) ($ 120 per hour reasonable for counsel with three years experience); Cadena v. Pacesetter Corp., No. 97-2659-KHV, 1999 WL 450891, at *5-6 (D. Kan. Apr. 27, 1999) ($155 per hour reasonable for counsel with eight years experience in employment discrimination litigation); Hampton v. Dillard Dep't Stores, Inc., No. 97-2182-KHV, 1998 WL 724045, at *2 (D. Kan. Sept. 24, 1998) ($190 per hour reasonable for counsel with 28 years experience in "cutting edge civil rights litigation")),aff'd, 247 F.3d 1091 (2001)): see also Aquilino v. Univ. of Kan., 109 F. Supp.2d 1319, 1325 (D. Kan. 2000) ($155 for lead counsel); Outdoor Sys., Inc. v. City of Merriam, Kan., No. 98-2397-KHV, 2000 WL 575023, at *4-5 (D. Kan. Feb. 25, 2000) ($165 and $155 per hour for lead counsel, $120 per hour for co-counsel/associates);Starlight Int'l Inc. v. Herlihy, 190 F.R.D. 587, 592 (D. Kan. 1999) ($155 per hour for lead counsel and $120 per hour for other attorneys) (sanctions in securities fraud case). These cases do not involve medical malpractice, but the Court notes that defense counsel charged $ 135 per hour for lead attorneys, which is within the range of the prevailing market rate in employment discrimination or analogous litigation ranges.
After considering the skill, experience and reputation of counsel and the undersigned's own knowledge of the prevailing market rates, the Court finds that the following hourly rates are reasonable: $165 per hour for Ronald J. Stites; $145 per hour for Elizabeth Diane Baker; $120 per hour for Carol A. Lindgren-Bron; and $150 per hour for David A. Hoffman. The Court also finds that the requested hourly fees for paralegal work are reasonable: $60.00 per hour for two medical paralegals, Dawn R. Laderoute and Trish A. Farris; $50.00 per hour for case paralegals Joyce L. Garrison and Tonia E. Chambers; and $25.00 per hour for legal assistant Suzie L. Miller. See Aquilino, 109 F. Supp.2d at 1325 (awarding $65.00 per hour for paralegal work); Lintz, 87 F. Supp.2d at 1172 n. 11 (same);Outdoor Sys., 2000 WL 575023, at *4-5 ($70 per hour for paralegals).
III. Lodestar Calculation
The Court calculates the lodestar as follows:Paralegal Hours Hours Rate Amount 1,423.5 474.1
The Court has determined the allowed hours by multiplying the requested hours by .333 and rounding to the nearest tenth decimal point.
The Court finds that the other factors listed in K.S.A. § 7-121b are subsumed in the initial lodestar calculation. See Hensley, 641 U.S. at 434 n. 9 (while district court may consider other factors to adjust fee upward or downward, many of factors "usually are subsumed within the initial `calculation of hours reasonably expended at a reasonable hourly rate") (discussing factors identified inJohnson). Counsel assert that this case involved novel legal theories and that counsel faced substantial risk of not receiving any payment for expenses or fees. The United States Supreme Court has cautioned, however, that "[b]efore adjusting for risk assumption, there should be evidence in the record, and the trial court should so find, that without risk enhancement plaintiff would have faced substantial difficulties in finding counsel in the local or other relevant market."Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 483 U.S. 711, 730 (1987). Plaintiff presents no such evidence here. Accordingly, the Court will not adjust the lodestar figure. The Court therefore approves reasonable attorneys fees in the amount of $51,789.50.
V. Expenses
Plaintiff also asks the Court to approve expenses totaling $64,243.87. Specifically, counsel seek the following amounts:$64,243.87
Medical Records $ 1,866.17 Filing Fees 269.00 Photocopies and Reproduction 9,331.91 Delivery Charges 659.58 Court Reporting 5,487.13 Long Distance Charges 20.50 Mileage and Travel 1,131.60 Expert Fees 42,892.98 Attorneys Fees (Probate Estate) 2.585.00 See Exhibit G, Plaintiff's Supplemental Memorandum. Counsel provide no documentation to support their claim that such expenses are reasonable. Indeed, even the amount requested for filing fees does not match the $ 150.00 filing fee paid in this case. See docket entry on February 10, 2000. In short, counsel have provided absolutely no basis on which the Court can approve the requested expenses as reasonable. See, e.g., Aquilino, 109 F. Supp.2d at 1327 (noting that attorneys fees "include reasonable expenses that are usually itemized and billed separately, as long as expenses are reasonable). On this record, the $150.00 filing fee paid in this case is the only expense which the Court can determine was reasonably expended by plaintiff's counsel. IT IS THEREFORE ORDERED that the Plaintiff's Motion For Approval Of Attorneys Fees And Expenses (Doc. #103) filed March 12, 2001 be and hereby is SUSTAINED in part and OVERRULED in part. Pursuant to K.S. A. § 7-121b, the Court approves reasonable attorneys fees in the amount of $51,789.50 and reasonable expenses in the amount of $150.00.