Recent Opinion Highlights Differing Views in EDVA on Appropriate Hourly Rates

In a recent decision, Judge T.S. Ellis, III, of the Eastern District of Virginia issued a comprehensive and useful primer on applying for attorney’s fees after successful litigation of a contract claim. While this decision provides useful guidance to practitioners, it also illustrates a significant disagreement among the judges of the Eastern District regarding appropriate hourly fee rates for attorneys in Northern Virginia. This blog post is the second on this case (and the first can be found here.)

In Route Triple Seven Ltd. Partnership v. Total Hockey, Inc., No. 1:14-cv-30, 2015 WL 5123302 (E.D. Va. Aug. 28, 2015), the landlord of a strip mall in Loudoun County brought suit against a tenant corporation that sold hockey equipment in a retail store, claiming breach of the lease. Judge Ellis granted summary judgment for the defendant on the landlord’s breach of lease claims, and the tenant filed a post-summary judgment petition for attorney’s fees.

By half-way into Judge Ellis’s opinion, the tenant may have felt pretty good about its attorney’s fees claim. That likely ended, however, when the judge focused on the amount of fees claimed by the tenant. The tenant initially claimed nearly $225,000, while the landlord argued that $112,000 was the proper figure.

Judge Ellis began with the traditional “lodestar” set of factors to examine the reasonableness of claimed attorney’s fees, which is essentially the “reasonable hourly rate” multiplied by the “hours reasonably expended.” While simple on its face, those factors provide wide discretion to a court, and Judge Ellis took full advantage of that discretion. The tenant had two law firms and six attorneys on its defense team, and the tenant submitted the following hourly rates to the court (the third column reflects the rates actually allowed by Judge Ellis):

Table Graphic for Route Triple Seven Case

The tenant’s expert witness on attorney’s fees opined that the submitted hourly rates were reasonable, and the expert relied upon a previous EDVA decision, Vienna Metro LLC v. Pulte Home Corp., 786 F.Supp.2d 1090 (E.D. Va. 2011), which approved similar hourly rates for Northern Virginia attorneys. Judge Ellis, however, distinguished the rates in Vienna Metro LLC, stating that it “involved complex commercial real estate litigation, not a straightforward lease dispute.” The judge also critiqued the submitted rates, stating that the tenant failed to explain why the McGuireWoods partner’s higher rate was justified when he had fewer years of experience than the Armstrong Teasdale partner with a lower rate.

Moreover, this case is a further example of Judge Ellis’s disagreement with the higher hourly rates outlined in Vienna Metro LLC. (See here for a previous blog post about an earlier decision denying higher hourly fee rates.) According to Judge Ellis, the expert witness’s declaration,

does not override this Court’s long and extensive experience in this district. Many capable and experienced attorneys and paralegals litigate breach of contract cases like this case at rates lower than the rates submitted by [the tenant]. At bottom, the Vienna Metro Matrix is a glove that does not fit here. It describes a type of litigation significantly more complex than presented in this case.

Finally, Judge Ellis turned to the time-entry task descriptions submitted by the tenant. The judge complimented the tenant’s attorneys for exercising billing discretion and removing a number of time entries from the fee petition. But Judge Ellis then went on to criticize some of the entries for “two common flaws: (1) lumping and (2) vague task descriptions.”

Regarding “lumping” of entries, Judge Ellis described this as “grouping, or lumping, several tasks together under a single entry, without specifying the amount of time spent on each particular task.” (internal quotation marks omitted). The judge cited the following time entries as examples of improper “lumping”:

  • “Draft notice of appearance; review changes to answer and counterclaim with D. Greensnap; multiple telephone calls with co-counsel; revise answer and counterclaim; prepare answer, counterclaim, Rule 7.1 disclosure, and notice of appearance for filing (2.1)”
  • “Review Route Triple Seven’s Responses to Total Hockey’s first set of interrogatories and first request for the production of documents to Total Hockey; calculate deadlines for objections and responses and calendar deadlines; review deficiency letter; correspond with co-counsel (1.7)”
  • “5.20 Continue analysis of record and appellant’s brief; conference with L. Bentele re preparation of Total Hockey brief; review cases cited in appellant’s brief.”

Turning to the “vague task descriptions,” Judge Ellis cited the following examples:

  • Numerous entries that describe a task as “revise discovery”
  • “brief call with M. Reh”
  • “research issues involving discovery”
  • “review law concerning issues in the case”
  • “continue analysis of legal file”

Due to the perceived lumping and vague task descriptions, Judge Ellis applied a 15% reduction to the tenant’s fee award. After calculating the allowed hourly rates for each attorney, Judge Ellis awarded the tenant $150,527.35 in attorney’s fees, down from the $224,428.00 originally requested by the tenant.

There is apparent disagreement among the judges of the Eastern District regarding appropriate hourly fee rates in Northern Virginia, as illustrated in this and other cases. While the Vienna Metro Matrix did not fare well in this opinion or in another recent decision by Judge Ellis (see here), the matrix was approved by Judge Gerald Bruce Lee in a 2014 case (see here). The Route Triple Seven opinion has multiple reminders for the careful practitioner, not only a reminder on how to properly describe one’s time entries, but also the importance of understanding the past opinions of each judge in the Eastern District.

E.D. Va. Whacks Attorneys’ Fees Claim: Further Split on Court Revealed

Star Scientific, Inc. is back in the legal news, but this it has nothing to do with Jonnie Williams and the McDonnell trial (Star Scientific, Inc. did not disappear, but instead changed its name to Rock Creek Pharmaceuticals).  In August 2016, Judge Anthony Trenga ruled on Plaintiffs’ Motion for an Award of Attorneys’ Fees in In re Star Scientific, Inc. Derivative Litigation, Case No. 1:13-cv-0550 (AJT/JFA).  Plaintiffs’ counsel asserted that their fees exceeded $1.6 million, but petitioned for $975,000.  Judge Trenga, however, awarded only $488,062.

The ruling is significant not because of the outcome as to total fees awarded, but because of two points:  (1) Judge Trenga’s clear analysis applying McAfee v. Boczar, 728 F.3 81, 88 (4th Cir. 2013), and (2) his finding that reasonable attorney’s fees in this district are $400/hour for partners, $200/hour for associates, and $100/hour for paralegals.  These rates are far below the rates approved multiple times by this Court under the Vienna Metro matrix standard, and they represent further divide among the judges of the Eastern District regarding reasonable hourly rates.

Derivative Action Claims

In re Star Scientific involved several derivative actions filed in both state and federal courts on behalf of the shareholders of Star Scientific, Inc.  The primary claims in the litigation were that the Board of Directors breached their fiduciary duties and also violated section 14 (A) of the Securities Exchange Act. The combined cases arrived in Judge Trenga’s court.  The claims eventually settled, and part of the settlement agreement was that plaintiffs’ lead counsel would apply to the Court for award of fees and expenses with respect to both the federal and state actions.

The Court approved the settlement in accord with Fed. R. Civ. P. 23.1 and took the Fee Application under advisement.  Judge Trenga then directed the parties to mediate the issue of fees before Magistrate Judge Anderson, but that mediation was unsuccessful.

Analytical Framework

The district court applied the three–step procedure for determining the proper award of attorney’s fees in the Fourth Circuit as set forth in McAfee v. Boczar.  Under McAfee, a court first determines the lodestar figure by multiplying the number of reasonable hours expended times a reasonable rate. To ascertain reasonable hours and rates under this analysis, a court applies the 12 factors set forth in Johnson v. Georgia Highway Express Inc., 480 F.2d  714, 717-19 (5th Cir. 1974).   The second step is to subtract fees for time spent on unsuccessful claims unrelated to the successful ones.   And third, the Court then awards some percentage of the remaining amount depending upon the degree of success enjoyed by the plaintiff.

Reasonable rates

In In re Star Scientific, plaintiffs’ counsel submitted hourly attorney rates ranging from $775/hour down to $275/hour.  Using the time records and applying these rates, the total fees added up to $1,672,000.  On their own, counsel slashed this sum down to $975,000.  Judge Trenga then determined that the reasonable rates in the Eastern District are $400/hour for partners, $200/hour for associates, and $100/hour for paralegals.  Applying these rates to the claimed hours yields a total of $976,125.

Billable hours – Total Work and 50% Reduction

The District Court seemed frustrated by the lack of specificity in the billing records: “[T]he Court is unable to assess with any accuracy the number of hours reasonably and effectively devoted to legal work.”  The court opted for a 50% reduction in the hours claimed, which resulted in a total fee award of $488,062 (half of the $976,125).  This 50% figure appears to be a combination of the court’s frustration with the billing records but also recognition of the results obtained in the nature of the litigation.

Star Scientific Rates versus Vienna Metro Rates

In June 2014, we posted on this Blog about the Vienna Metro matrix.  In the Vienna Metro v. Pulte Home Corp., Case No. 1:10-cv–0052, Judge Lee approved attorneys’ fees ranging from $250/hour to $820/hour.  In his award, Judge Lee applied a 50% across-the-board reduction to the plaintiff’s fees recovery because the plaintiff prevailed on only one of several counts in the complaint.  In the Blog post, we observed that “Judge Lee make clear that the reduction was due to limited success in the litigation and not due to the hourly rates charged by counsel.”

Now in In re Star Scientific, Judge Trenga is clear about his overall 50% reduction in the fee award, but he is also extremely clear as to what are reasonable hourly rates.  The judge could reached the same overall result using other avenues, but he chose to employ a simple fee matrix that seemingly is not tied closely to the facts of the case but instead has broad application.

The differences between the two cases as to what are reasonable hourly rates in the Eastern District are huge — the Vienna Metro rates are roughly double the rates recognized in In re Star Scientific.  After Vienna Metro and its progeny, it seems that several judges on the Eastern District are uncomfortable with the approval of comparatively high hourly rates.  Judge Trenga’s decision in In re Star Scientific will no doubt be frequently cited in future disputes over what are reasonable rates in this district.

Further Disagreement on the EDVA Bench over Attorney Rates

Multiple recent decisions from the Eastern District show a widening disagreement among the judges regarding “reasonable” hourly rates for attorneys.  This disagreement is manifesting itself most notably among the judges of the Alexandria Division as they rule on attorney’s fees petitions that involve lawyers from firms based in both Virginia and downtown DC.  Rates acceptable to at least one judge have been rejected by other judges within same division.  The bottom-line for practitioners is that it is not sufficient to be familiar with the general precedent in the Eastern District when applying for attorney’s fees.  Rather, practitioners must know their individual judge’s history and preferences, while carefully crafting the petition for attorney’s fees.

$400,000 Attorney’s Fee Cut by 67%

In Salim v. Dahlberg, 1:15-cv-468 LMB / IDD, 2016 WL 2930943 (E.D. Va. May 18, 2016), Judge Leonie M. Brinkema wrote a 49-page (!) opinion on just the question of recoverable attorney’s fees.  There, she rejected both the Laffey Matrix and the Vienna Metro matrix to determine reasonable hourly attorney rates in Northern Virginia.  In the 49-page opinion, Judge Brinkema goes into great detail to analyze the hourly rates requested by the plaintiff, the billing records submitted by the plaintiff’s counsel, the six supporting affidavits submitted by plaintiff (including many leading local practitioners in Alexandria), and the defendant’s opposition (which included only a single opposing affidavit).  In the end, Judge Brinkema largely sided with the defendant and cut plaintiff’s fees down from $400,000 to a just over $151,000.

In the underlying case, the plaintiff alleged various federal and state civil rights claims against the defendant.  After a favorable jury verdict, the plaintiff petitioned for attorney’s fees under Virginia Code Ann. § 8.01-42.1.  Plaintiff was represented by the firm of Victor M. Glasberg & Associates, and sought hourly rates for the work of two attorneys:  $550/hour for lead counsel with 39 years of experience, and $250/hour for an associate attorney with less than one year of experience.

Plaintiff’s counsel must have expected a fight to recover fees because they submitted six affidavits of leading local lawyers.  While Judge Brinkema noted that these six local lawyers were “well-known and well-respected by the Court,” none of the affidavits swayed the judge.  Instead, it was the defendant’s opposition and single affidavit submitted by Attorney Wayne G. Travell that carried the day.  Judge Brinkema objected that the plaintiff’s six affidavits were “conclusory” in nature and omitted detailed discussion of the plaintiff’s billing rates and records.

Vienna Metro and Laffey Matrices Rejected

Judge Brinkema rejected the Vienna Metro matrix, characterizing it as applying only to “complex civil litigation.”  Instead, her opinion relied primarily upon Judge T.S. Elliss’s opinion in Route Triple Seven (discussed in a prior EDVA Update here) which characterized a rate of $420 as the “upper limit for what counts as a reasonable rate for a very competent attorney in an uncomplicated . . . dispute.”  Further, Judge Brinkema also rejected the Laffey Matrix of DC-based attorney hourly rates published by the U.S. Department of Justice.  According to Judge Brinkema, DC-based hourly rates are not properly comparable for litigation in the Alexandria federal court.

While the defendant’s expert did not challenge the $550/hour rate sought by plaintiff’s lead counsel, Judge Brinkema cut it down anyway to $500/hour, and then reduced the recoverable hours by half.  Turning to fees requested for plaintiff’s junior counsel, Judge Brinkema cut the hourly rate down from $250 to $125 on the grounds that the newly-minted attorney had not yet been admitted to the Virginia Bar (having just recently graduated from law school).  Because of this, Judge Brinkema characterized the young attorney’s contribution as more akin to a law clerk, and she applied the lower hourly rated recommended by the defendant’s expert.

Conclusion

Judge Brinkema appears to be speaking to the bar in this 49-page opinion, which provides a roadmap for future petitions for attorney’s fees.  As the disagreement over hourly rates among the judges of the Eastern District grows, it is critical for practitioners to understand where each judge comes down on this issue.  This opinion is required reading for any practitioner who expects to submit an attorney’s fee petition to Judge Brinkema in the future.