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WHITEHEAD v. CHEVROLET

United States District Court, N.D. Illinois


May 6, 2004.

ANGELIA M. WHITEHEAD, Plaintiff
v.
GATEWAY CHEVROLET, OLDSMOBILE, INC., CRAIG ANDREA, LEE DRYZBEK, and THOMAS OKIMOTO, Defendants

The opinion of the court was delivered by: ARLANDER KEYS, Magistrate Judge

REPORT AND RECOMMENDATION

This matter comes before the court for a recommendation on defendants' motion for sanctions pursuant to Rule 37(b). For the reasons set forth below, the court recommends that defendants' motion be granted and that $15,202.00 enter against plaintiff's counsel, Christopher Langone.

BACKGROUND

  Plaintiff, Angelia M. Whitehead, through her counsel, Mr. Langone, filed this RICO action against defendants Gateway Chevrolet, Oldsmobile, Inc., Craig Andrea, Lee Dryzbek, and Thomas Okimoto (collectively "Gateway"). On February 2, 2004, Judge Conlon granted Gateway's motion to dismiss Ms. Whitehead's amended complaint, and also found that Ms. Whitehead's counsel, Mr. Langone, had incorporated confidential information into the amended complaint in flagrant violation of a protective order entered between Gateway and Mr. Langone in a prior and unrelated litigation, Beene v. Gateway Chevrolet, Inc., 02 C 830 (the Protective Order). Judge Conlon further decided that Mr. Langone's deliberate violation subjected him to sanctions under Rule 37(b), and asked this court to determine the appropriate amount.

  Pursuant to Judge Conlon's referral, this court ordered Gateway to provide an itemization of expenses incurred responding to Mr. Langone's violation. Gateway's counsel, Burke, Warren, MacKay & Serritella, has submitted a detailed statement, which requests $21,523.27 in attorney's fees and costs.

  DISCUSSION

  Before calculating the appropriate sanction, the court must address a preliminary matter. Mr. Langone has gone to considerable lengths to argue that the district court does not have the authority to impose Rule 37(b) sanctions for his particular misconduct. Mr. Langone's efforts are in vain. That ship has already sailed. Judge Conlon has determined that the court has such authority, and this court will not revisit her decision. Further, Judge Conlon's referral order is limited to the issue of what should be the appropriate sanction, not whether there should be sanctions. And if there was any doubt regarding the scope of the referral, such doubt was dispelled when Judge Conlon denied Mr. Langone's motion for clarification of her referral order on April 14, 2004. Thus, many of Mr. Langone's arguments in opposition to Gateway's motion are rejected as irrelevant.

  1. Attorney's fees

  Under Rule 37(b), the appropriate sanction is for Mr. Langone to pay Gateway's reasonable expenses, including attorney's fees, caused by his violation. Fed.R.Civ.P. 37(b)(2). A determination of attorney's fee requires calculation of the lodestar. Mathur v. Board of Trustees of Southern Illinois University, 317 F.3d 738, 742 (7th Cir. 2003). The lodestar is the product of an attorney's reasonable hourly rate and the number of hours reasonably expended. Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). The party seeking the fee award bears the burden of proving the reasonableness of the hours worked and the hourly rate claimed. Id.

  a. Hours

  Gateway submits the hours of two attorneys, Ira Levin and Kimberly Smith. Mr. Levin billed 38.6 hours, and Ms. Smith billed 64.1 hours. These hours represent three general categories of work. First, Gateway requests reimbursement for hours spent reviewing Ms. Whitehead's RICO case statement.*fn1 Next, Gateway describes hours spent preparing its motion to strike and dismiss Ms. Whitehead's amended complaint. Lastly, Gateway includes time devoted to drafting the present motion for sanctions. Mr. Langone argues that the first category of work should be excluded entirely, and the second category should be significantly reduced.*fn2

  Before considering these objections, the court must briefly address Mr. Langone's argument that none of Ms. Smith's hours are appropriate. Mr. Langone argues that Gateway should not recover for any of Ms. Smith's work, because she also violated the Protective Order. Ms. Smith is Gateway's counsel. Gateway is certainly free to share its confidential information with its own counsel. Further, the Protective Order expressly provided "[a]ny party may freely disclose . . . its own confidential documents . . . without impairing the obligations imposed by this Order upon others." See Protective Order, par. 11. Thus, Mr. Langone's request is both illogical and directly contrary to the Protective Order, and is, therefore, rejected.

  Turning to Mr. Langone's specific objections, he first argues that Gateway cannot recoup fees for hours spent reviewing the RICO case statement, because this work occurred prior to his misconduct. But, as Gateway correctly recounts, the confidential information first appeared in the RICO case statement, and was later incorporated into the amended complaint. Thus, Mr. Langone's violation occurred when he filed the RICO case statement, and this temporal event marks the beginning of Hr. Langone's misconduct. Thus, Mr. Langone's first objection is overruled.

  Next, Mr. Langone objects to any hours spent reviewing the amended complaint. He claims that, regardless of any violation, Gateway still would have had to review the amended complaint. While this reasoning is incorrect, the objection is not wholly without merit. As discussed above, Gateway first reviewed the confidential information when it appeared in the RICO case statement. It then appears that Gateway reviewed the same information a second time when it surfaced in the amended complaint. The court cannot reimburse Gateway for this duplicative effort, and will, therefore, subtract three hours from Gateway's totals. FMC, Corp. v. Varonos, 892 F.2d 1308, 1316 (7th Cir. 1990) (the court should scrutinize the fee petition carefully for indications of duplicative time).

  Mr. Langone's remaining objections do not concern the substantive tasks themselves, but rather the number of hours that Gateway spent on them. Mr. Langone claims that Gateway devoted an excessive amount of time performing relatively uncomplicated tasks, and should not be compensated for their unnecessary efforts. Mr. Langone is correct that the fee award can only include hours "reasonably expended" on the litigation. The court will therefore consider Mr. Langone's final objections with an eye towards eliminating hours that are "excessive, redundant, or otherwise unnecessary." Hensley, 461 U.S, at 434.

  Gateway claims that it spent almost nineteen hours preparing, drafting, and filing its motion to strike and dismiss Ms. Whitehead's amended complaint. Mr. Langone calls the motion "uncomplicated" and characterizes Gateway's time as "grossly excessive." In response, Gateway claims that all the time was necessary because the motion encompassed four distinct grounds for relief, each of which required significant research. The court has carefully reviewed Gateway's motion to strike and dismiss, and agrees that Gateway's reported time is excessive. The motion's argument section is a mere five-pages long, the majority of which is comprised of factual summaries and string citations. While the court does not wish to degrade Gateway's product, nor intimate that Gateway fabricated its expenditures, the court cannot justify awarding all of Gateway's claimed hours, and will, therefore, deduct seven hours from the totals.

  Mr. Langone further objects to the twenty-one hours Gateway apparently spent on its reply brief, and claims that this outlay is "widely out of proportion to the quality of the work done." Mr. Langone maintains that he could have performed the same work in "2-3 hours, tops." The court has carefully reviewed Gateway's reply brief and agrees that Gateway's requested time is excessive. But Mr. Langone's suggested discount is unreasonable. The reply brief is a nine-page, well-reasoned response that persuasively counters a number of difficult arguments. Moreover, the brief attaches the affidavit of Alison M. Harrington, who was counsel of record in the Beene case, and Gateway is permitted to recoup time spent investigating and preparing Ms. Harrington's statement.*fn3 On the other hand, the reply brief does not appear worthy of the full twenty-one hours apparently spent on its preparation. The brief does not contain citations to any new or significant legal precedent. Rather, it appears that Gateway spent the majority of the twenty-one hours planning, drafting, and revising the document. While it might have indeed taken Gateway over twenty hours to craft the nine-page memorandum, the court can only award a reasonable fee for these efforts. Accordingly, the court will deduct an additional ten hours from Gateway's totals.

  Mr. Langone's last two objections again regard Ms. Smith's reported hours. Mr. Langone claims that Gateway cannot seek reimbursement for Ms. Smith's time spent performing clerical activities, like preparing notices and faxing correspondence. It is true that tasks easily delegable to non-professional assistance cannot be part of the award. Spegon v. Catholic Bishop of Chicago, 175 F.3d 544, 553 (7th Cir. 1999). The court has reviewed the petition and notes that Gateway has included 1.4 hours that Ms. Smith devoted to such clerical tasks, and this time will be deducted from Gateway's totals.

  Mr. Langone's final objection is that Mr. Levin duplicated a significant amount of Ms. Smith's work, and that Gateway should not be compensated for his redundant efforts. The court has scrutinized the fee petition, and notes that many of Mr. Levin's descriptions mirror those of Ms. Smith. As the court is not convinced that Mr. Levin performed distinct work, eight hours will be deducted to reflect this perceived redundancy.

  The final category of work reflected in Gateway's submissions, is time devoted to drafting the present motion for sanctions, and reply brief. Mr. Langone does not address these filings, as Gateway filed its fee statement relating to its motion for sanctions, after Mr. Langone filed his objections. Thus, the court must conduct its own review of Gateway's submissions, and eliminate those hours that are excessive, duplicative or unnecessary. Hensely, 461 U.S. at 434.

  Gateway spent approximately fourteen hours on its memorandum supporting its motion for sanctions, and approximately twenty-six hours on its reply brief. Gateway's motion is a mere six-pages long and not particularly complex. Rather, it is replete with string citations and factual summaries. It does not contain the type of sophisticated legal reasoning that would justify awarding fourteen hours in fees. Thus, the court will deduct six hours from Gateway's totals.

  The reply brief is a different story. This document is eighteen-pages long, and contains a substantial and thorough legal analysis. Gateway's extensive efforts were justified because Mr. Langone raised many new and complicated arguments in his response brief to which Gateway had to respond. Thus, much of Gateway's added expense was of Mr. Langone's own making. The court therefore approves of the entire twenty-six hours.

  Adding the above reductions and subtracting them from Gateway's totals, the court finds that Gateway is entitled to recover attorney's fees for 67.3 hours.

  b. Hourly Rate

  After determining the number of hours reasonably expended, the court must examine whether the requested hourly rate is reasonable. Hensley, 461 U.S. at 433. A reasonable hourly rate is calculated according to the prevailing "market rate" for the services rendered. People Who Care v. Rochford Bd. of Educ., Sch. Dist. No. 205, 90 F.3d 1307, 1310 (7th Cir. 1996). An attorney's market rate is the rate lawyers of similar ability and experience in the community normally charge their paying clients for the type of work in question. Bankston v. State of Illinois, 60 F.3d 1249, 1256 (7th Cir. 1995). The burden of proving the market rate is on the fee applicant, McNabola v. Chicago Transit Authority, 10 F.3d 501, 518-19 (7th Cir. 1993); however, once the applicant provides evidence establishing his market rate, the burden shifts to the opposing party to demonstrate why a lower rate should be awarded. People who Care, 90 F.3d at 1313. In support of its hourly rates, Gateway offers the affidavit of Mr. Levin, which sets forth both his and Ms. Smith's standard hourly rates.*fn4 Gateway also submits copies of checks from its client, Universal Underwriters Insurance Company (Universal), indicating that all bills have been paid in full. In response, Mr. Langone claims that the requested rates are too high and above the rates that Universal ordinarily pays its defense counsel. Despite these objections, the court accepts Gateway's rates as reasonable, and within the Chicago market rates for attorneys with similar training and experience.

  The best evidence that a firm is charging a reasonable rate is the client's payment of the bills. Balcor Real Estate Holding, Inc. v. Walentas-Phoenix Corp., 73 F.3d 150, 153 (7th Cir. 1996)("the best evidence of the market value of legal services is what people pay for it."). Here, Gateway submits reliable evidence that its client, Universal, paid its bills in full. This evidence is satisfactory to prove market rate.

  Mr. Langone has not offered anything to demonstrate why a lower rate should be awarded. Further, Mr. Langone's claim that Gateway's rates are too high is rather disingenuous, as he charges considerably more himself.*fn5 Because Mr. Langone has not rebutted Gateway's evidence of reasonableness, his objections to Gateway's rates are overruled.

  Multiplying the number of hours worked by each attorney by their hourly rates, Gateway is entitled to $15,202.00 in attorney's fees.*fn6

  2. Costs

  Gateway also requests $267.27 in costs. These costs include charges for duplication of documents, messenger services, and computer-based legal research. But Gateway does not provide any details regarding its costs, such as what was duplicated and at what cost per page, or what was sent via messenger. Without these specifications, the court has no basis to determine whether the costs were necessary and reasonable. Moreover, Gateway cannot recover its expenses for computerized legal research, as these charges are not considered "costs" but rather part of the attorney's fee award. Haroco, Inc. v. American National Bank and Trust Company of Chicago, 38 F.3d 1429, 1440-41 (7th Cir. 1994). Thus, Gateway's request for costs is denied in its entirety. CONCLUSION

  This court recommends that Gateway's motion for sanctions be granted consistent with this Report and Recommendation. This court also recommends that an award of $15,202.00 be entered against Plaintiff's counsel, Christopher V. Langone, in favor of Defendants, Gateway Chevrolet, Oldsmobile, Inc., Craig Andrea, Lee Dryzbek, and Thomas Okimoto.


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