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CHICAGO MESSENGER SERVICE, INC. v. NEXTEL COMMUNICATIONS

January 12, 2005.

CHICAGO MESSENGER SERVICE, INC., and VETERANS MESSENGER SERVICE, INC., Plaintiffs,
v.
NEXTEL COMMUNICATIONS, INC., and NEXTEL WEST CORP., Defendants.



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

REPORT AND RECOMMENDATION

TO: THE HONORABLE CHARLES R. NORGLE UNITED STATES DISTRICT JUDGE

As their names suggest, Chicago Messenger Service, Inc., and Veterans Messenger Services, Inc. (collectively, "Messenger") provide messenger delivery services. In November 2001, Messenger sued Nextel Communications, Inc. and Nextel West Corp. (collectively, "Nextel") in state court, alleging that Nextel breached an agreement it had to provide Messenger with the communications services and equipment Messenger needed to operate its businesses. Specifically, Messenger sued Nextel for breach of contract, consumer fraud, fraud, tortious interference with contract and tortious interference with prospective economic advantage. Nextel removed the case, and filed a counterclaim, alleging that it had performed all of its obligations under the contract with the defendants, and that the defendants had failed to pay what they owed Nextel under the contract. Nextel moved for summary judgment, and, in a Memorandum Opinion and Order entered September 23, 2003, the district judge granted the motion, finding the plaintiffs liable to Nextel, but reserving for trial the question of the amount of damages to be awarded. Shortly thereafter, the plaintiffs submitted proposed findings of fact and conclusions of law on the question of damages. Based upon those findings and conclusions, Nextel asked the court to enter judgment in its favor on the damages issue, and the district judge granted the motion. On January 29, 2004, Judge Norgle ordered the Clerk to "enter judgment pursuant to Federal Rule of Civil Procedure 58"; additionally, the court's order provided that, "[a]s to the issue of attorney fees, the parties shall comply with Local Rule 54.3." Chicago Messenger Service v. Nextel, No. 01 C 8820 (N.D. Ill. Minute Order of Jan. 29, 2004). The next day, Judge Norgle signed a Judgment Order, ordering Messenger to pay Nextel $128,729.54, plus late fees in the amount of $1,930.94 per month from November 28, 2001 to the date of judgment, as well as attorneys' fees and costs.

  The defendants satisfied the part of the judgment relating to the contractual damages and the late fees, but the parties continue to squabble over that part of the judgment relating to attorneys' fees and costs. As a result of that squabble, Messenger filed a Motion for Clarification of Local Rule 54.3; Nextel responded and also filed a Motion to Enforce Local Rule 54.3. The district judge referred the motions to this Court on October 12, 2004.

  Federal Rule of Civil Procedure 54 provides that, as a general rule, "costs other than attorneys' fees shall be allowed as of course to the prevailing party unless the court otherwise directs. . . ." Fed.R.Civ.P. 54(d) (1). The Rule also allows parties to petition the court for an award of attorneys' fees. Local Rule 54.3 provides that "[t]he parties involved shall confer and attempt in good faith to agree on the amount of fees or related nontaxable expenses that should be awarded prior to filing a fee motion." L.R. 54.3(d). To this end, the rule requires the movant to provide the respondent with the time and work records on which the fee motion will be based, as well as records showing the hourly rates paid for litigation services provided in the case, and records supporting the requested related nontaxable expenses. Id., ¶¶ (d) (1)-(4). If, after the above information is furnished, the parties still cannot agree on the amount of fees and expenses, the respondent is required to disclose the total amount of attorneys' fees paid (or soon to be paid) by respondent for the litigation; the rule also requires the respondent to furnish time and work records, hourly rate evidence, evidence supporting related nontaxable expenses, and any other evidence supporting respondent's opposition to the fee motion. Id., ¶ (5). On February 9, 2004, Goldberg Kohn, counsel for Nextel, wrote to Freeborn & Peters, counsel for Messenger, in an attempt to reach an agreement as to the amount of the attorneys' fees award. Along with that letter, counsel enclosed a declaration from the lead Goldberg Kohn partner on the case, which, in turn, enclosed the firm's billing records on the case. The records are copies of the actual bills sent to Nextel, which have either already been paid or will be paid shortly, in the ordinary course of business. The bills reflect entries for particular tasks, and each entry shows the date on which the task was performed, a description of the task, the initials of the attorney who performed the task, the amount of time spent on the task, and the total amount billed for the task.

  In response to this package, Messenger's counsel sent Nextel's counsel a letter dated February 27, 2004. This letter quoted the portion of Local Rule 54.3 addressing what should occur if the parties cannot agree on the amount of fees to be awarded, thereby suggesting, without ever really stating, that Messenger disputed the amounts claimed in Goldberg Kohn's billing statements. Rather than challenging — specifically or generally — Nextel's billing records, Messenger's counsel simply shared that Messenger had been billed, or would soon be billed, a total of $150,860.77 in connection with the litigation against Nextel, and that Messenger had already paid a total of $131,427.45 for litigation services.

  Nextel's counsel, in turn, responded with a letter, dated March 4, 2004, indicating that, in her view, the February 9 package satisfied Nextel's obligations under Local Rule 54.3, whereas the February 27 letter failed to satisfy Messenger's obligations under that rule. In this last letter, counsel for Nextel demanded that, if Messenger wished to dispute the hourly rates or the number of hours reflected in the billing statements, it provide the information necessary to explain the bases for the dispute, which would then — hopefully — facilitate a resolution of the disputed issues. Rather than respond to that letter, counsel for Messenger filed its Motion for Clarification of Local Rule 54.3. The next day, Nextel filed its Motion to Enforce Local Rule 54.3.

  The gist of Messenger's motion is that Nextel is not entitled to recover fees and costs incurred in connection with Messenger's complaint; rather, according to Messenger, Nextel is entitled to recover only those fees and costs incurred in connection with Nextel's counterclaim. Because Nextel's billing records do not permit Messenger to differentiate between time billed on the complaint and time billed on the counterclaim, the records are, in Messenger's view, deficient under Local Rule 54.3, which means all bets are off.

  In response to this argument, Nextel argues that fees and costs incurred in connection with the counterclaim are inseparable from those incurred in connection with the complaint. Additionally, Nextel faults Messenger for failing to provide the information required under Local Rule 54.3; Nextel asks the Court to either order Messenger to provide the information, or to award Nextel the full amount of fees and costs reflected in the billing records included in the February 9 package.

  Initially, the Court rejects counsel's suggestion that the time and effort spent on battling the plaintiffs' claims is somehow separate and distinct from the time and effort spent pursuing defendants' counterclaim. Given the nature of the parties' claims — at their core, the plaintiffs' claims arise out of the allegation that Nextel breached the contractual duties owed CMS and VMS, and Nextel's claim alleges breach of the same contract — the effort is inseparable. The Court agrees with Nextel on this point.

  Turning to Nextel's motion, the Court is mindful, given the track record of this case, that additional orders requiring the parties to comply with Rule 54.3 will likely result in more squabbling and — in all likelihood — more motions. Accordingly, the Court has determined that the wisest course of action, in terms of preserving judicial resources, is not to issue additional orders concerning the requirements of Rule 54.3, but to decide what is the appropriate amount of fees and costs to be awarded. This the Court does below.

  A reasonable attorney's fee is "the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). This calculation, known as the "lodestar," may then be adjusted upward or downward, depending on a variety of factors. Altergott v. Modern Collection Techniques, Inc., 864 F. Supp. 778, 780 (N.D. Ill. 1994). The party seeking the fees bears the burden of proving both that the hourly rates requested are reasonable and that the hours claimed to have been worked were reasonably expended on the litigation. Hensley, 461 U.S. at 433. And, although Courts have broad discretion in fixing the amount of the award, to the extent they deviate from the petitioner's claimed rates and hours, they must explain those deviations. McNabola v. Chicago Transit Authority, 10 F.3d 501, 519 (7th Cir. 1993).

  In its February 9 submission to Messenger, Nextel documented fees and costs totaling $226,966.20 through January 31, 2004. More specifically, Nextel documented the following hours and rates for its team of attorneys and paralegals:
BILLING PERSON HOURS & RATES TOTAL
Deborah R. Hogan (atty) 2.75 @ 240.00 $62,835.00 107.50 @ 290.00 92.50 @ 300.00 10.00 @ 325.00 Frederic R. Klein (atty) 15.50 @ 375.00 $51,652.50 69.75 @ 410.00 35.25 @ 450.00 3.00 @ 460.00
Matthew H. Metcalf (atty) 20.25 @ 190.00 $91,520.00 220.00 @ 215.00 163.25 @ 240.00 4.50 @ 265.00
Diane M. Ende (paralegal) .50 @ 70.00 $35.00
Mike Evans (paralegal) 13.75 @ 50.00 $777.50 1.50 @ 60.00
Linda K. McClain (paralegal) .25 @ 95.00 $23.75
Kathleen M. O'Connell 9.00 @ 95.00 $855.00 (paralegal)
Additionally, Nextel documented the following costs and expenses:
copying/labeling charges $8,900.42 telecopy charges $265.38 long distance telephone charges $143.76 computerized research services/research fees $3,826.54 filing fees/other court expenses $277.11 courier/expedited delivery charges $330.81 deposition-related expenses $4,682.93 meeting expenses (petty cash) $10.55 travel expenses $478.34
  Thus, the total reflected in the February 9 package is $226,614.59 ($207,698.75 in fees, plus $18,915.84 in expenses). These are the same fees and costs that Nextel now asks the Court to award.*fn1

  The Court first considers the rates claimed by Nextel, which range, over time, from $50 to $95 for paralegal services and from $190 to $460 for attorney services. Initially, Messenger has never challenged the reasonableness of the rates Nextel's attorneys charged for their time. In their motion, Messenger suggests that it is unable to contest the rates because Nextel failed "to provide sufficient detail in its billing narratives." See Motion, ¶ 7. But more detailed descriptions of the services provided would say nothing about the reasonableness of the rates charged by the individual attorneys. Moreover, based upon its ...


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