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Bretford Manufacturing Inc. v. Smith System Manufacturing Co.

March 10, 2006

BRETFORD MANUFACTURING, INC., PLAINTIFF,
v.
SMITH SYSTEM MANUFACTURING COMPANY, DEFENDANT.



The opinion of the court was delivered by: John F. Grady, United States District Judge

MEMORANDUM OPINION

The remaining project in this protracted case is to set the amount of fees and costs Smith System Manufacturing Company ("Smith") will receive for defending Bretford Manufacturing Inc.'s ("Bretford") unfounded trade dress claim in this court and on appeal. The parties have submitted a Joint Statement pursuant to Local Rule 54.3 and have briefed the issues on which they disagree.

Before addressing the areas of disagreement, it will be useful to discuss the burden of persuasion. District courts are required to apply the rule announced in Hensley v. Eckerhart, 461 U.S. 424, 433 (1983), that:

The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. This calculation provides an objective basis on which to make an initial estimate of the value of a lawyer's services. The party seeking an award of fees should submit evidence supporting the hours worked and rates claimed. Where the documentation of hours is inadequate, the district court may reduce the award accordingly.

Later in the opinion, the Court observed that [a] request for attorney's fees should not result in a second major litigation. Ideally, of course, litigants will settle the amount of a fee. Where settlement is not possible, the fee applicant bears the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates. The applicant should exercise "billing judgment" with respect to hours worked, see supra, at 434, and should maintain billing time records in a manner that will enable a reviewing court to identify distinct claims.

Id. at 437 (emphasis added).

Determining how much time was "reasonably expended" by an attorney on a particular task is usually extremely difficult even if the attorney's billing records show the amount of time spent on the task. How long, for instance, should it have taken to research a specifically identified legal issue? Difficult as such determinations may be, this is the assignment district judges have been given, and they do the best they can. But when the time records do not describe tasks with particularity, and do not reveal the amount of time claimed to have been spent on each particular task, the judge is in no position to make a reasonable estimate of the amount of time that should have been required. This is the problem with "block billing," where the attorney simply lists a string of tasks performed on a particular day and the total time spent on them, without indicating how much time was spent on each of the tasks. Time records prepared in that manner clearly do not satisfy the documentation requirements of Hensley. This is not new information. It is what this court said in Williams v. State Board of Elections, 696 F. Supp. 1561 (N.D. Ill. 1988). The Seventh Circuit has made it very clear that a fee applicant must show the time spent on specific tasks rather than simply the total time spent on a bundle of tasks. In Tomazzoli v. Sheedy, 804 F.2d 93 (7th Cir. 1986), the Court affirmed the action of the trial court in reducing the fees requested by the applicant, noting, among other things, that many of the time entries gave only vague descriptions of the legal research done and, "[f]urther, the total numbers of hours attributable to research alone is uncertain; in some instances [the attorney] lists 'research' along with other tasks performed and gives but a single total for the combined work." Id. at 98. Other courts have made similar observations. See, e.g., Robinson v. City of Edmond, 160 F.3d 1275, 1281 (10th Cir. 1998) ("[A] district court may discount requested attorney hours if the attorney fails to keep 'meticulous, contemporaneous time records' that reveal 'all hours for which compensation is requested and how those hours were allotted to specific tasks.'"); Role Models Am., Inc. v. Brownlee, 353 F.3d 962, 971 (D.C. Cir. 2004) (commenting that when time records "lump together multiple tasks," it is "impossible to evaluate their reasonableness"); Kaiser v. MEPC Am. Props., Inc., 518 N.E.2d 424, 429-30 (Ill. App. Ct. 1987).

The fee dispute between Smith and Bretford also involves another aspect of the Hensley case. The plaintiffs there had achieved only partial success, but the trial judge refused to eliminate the time spent on the unsuccessful claims when determining the fee award. The Supreme Court reversed and remanded for such a determination, stating that "the district court should award only that amount of fees that is reasonable in relation to the results obtained." 461 U.S. at 440. In connection with its holding that the fee applicant "should maintain billing time records in a manner that will enable a reviewing court to identify distinct claims," the Court quoted with approval the following language from a First Circuit case:

As for the future, we would not view with sympathy any claim that a district court abused its discretion in awarding unreasonably low attorney's fees in a suit in which plaintiffs were only partially successful if counsel's records do not provide a proper basis for determining how much time was spent on particular claims.

Id. at 437 n.12 (citing Nadeau v. Helgemoe, 581 F.2d 275, 279 (1st Cir. 1978), later abrogated on other grounds by Richardson v. Miller, 279 F.3d 1 (1st Cir. 2002)).

Local Rule 54.3 was adopted for the purpose of requiring the first look at a fee request to be taken by the persons who are probably in the best position to assess its reasonableness - counsel representing the other side. The assumption is that the attorneys for the respondent will have done work roughly paralleling that performed on behalf of the fee applicant. The Rule thus requires the parties to exchange information about their respective fees, to identify the basis of any objections to any hours claimed, see L.R. 54.3(d), and, if they are unable to agree on an appropriate award, to file a Joint Statement containing "a brief description of each specific dispute remaining between the parties as to the fees or expenses." L.R. 54.3(e)(3) (emphasis added). This court's experience is that, generally speaking, the Rule has worked very well and has saved district judges substantial amounts of time in ruling on fee disputes.

The Areas of Disagreement

Smith claims fees and expenses incurred during three periods of time. The first period is from January 10, 1998 through June 2000, when we granted Smith summary judgment on the trade dress claim. See Bretford Mfg., Inc. v. Smith Sys. Mfg. Co., 116 F. Supp. 2d 951 (N.D. Ill. 2000). During this period Smith was represented by the firm of Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP ("Pattishall"). Pattishall's fees were $325,336 and costs were $20,570.21, for a total of $345,906.21 during this first time period. Bretford does not object to any of Pattishall's requested hourly rates, nor to the expenses, but it does object to the number of hours claimed. Bretford suggests that Pattishall's fees should be reduced to $103,316.25, which is what Bretford paid its own attorneys for the same time period.

The second time period for which Smith claims fees and expenses is from October 2003 to December 2004, which covers the appeal to the Seventh Circuit and the later work involved in briefing the question of whether this is an "exceptional" case, making Smith eligible for an award of fees under § 1117(a) of the Lanham Act. Smith obtained new counsel to handle the appeal and fee question, McAndrews, Held & Malloy, Ltd. ("McAndrews"). Fees are also claimed for work done during this period by a separate attorney, Scott Hillstrom.

McAndrews charged Smith a total of $224,631.75 for its work on the appeal but seeks an award of only 50% of that amount, $112,315.88, on the basis of its estimate that 50% of McAndrews's time was spent on the trade dress issue. Smith is also seeking $948.48 in costs for the period, which is 50% of the $1,896.95 incurred. The same percentage reduction is made for Scott Hillstrom, for whom Smith seeks reimbursement of $6,656.25 in fees and $275.54 in expenses.

Bretford does not object to McAndrews's hourly rates or expenses but does disagree that 50% is an accurate estimate of the time McAndrews spent on the trade dress issue. Bretford believes it was closer to 33a. It believes the appropriate fee, therefore, would be $74,877.25.

As for Mr. Hillstrom, who apparently served as an intermediary between Smith and McAndrews, Bretford's position is that his services were unnecessary and that none of his fees should be taxed to Bretford.

The third period for which fees are sought is September 20, 2005 through December 2005, covering work in connection with the pending fee petition, following our decision to award Smith its reasonable fees in defending the trade dress claim. See Bretford Mfg., Inc. v. Smith Sys. Mfg. Co., 389 F. Supp. 2d 983 (N.D. Ill. 2005) ("Bretford II"). Smith seeks $63,467.50 in fees and $515.50 in related expenses. Bretford concedes the expenses but argues that the fees are excessive.

DISCUSSION

Our analysis will examine the hours claimed for each of the time periods indicated above. (As already noted, Bretford does not object to the requested hourly rates or the expenses, and we will therefore not comment on them.)

Pattishall's Fees for Defending the Trade Dress Claim

The time records submitted by Smith in support of Pattishall's $325,336 in fees consist of nothing more than copies of the invoices Pattishall submitted to Smith from February 10, 1998 through June 30, 2000. (Smith's Mem. in Support of its Petition for Attorneys' Fees and Costs, Ex. G.) Each of the invoices is in the block billing format, with a line for the date, followed by the initials of the attorney, then the total hours spent by the attorney on that date, then a serial listing of the work done by the attorney on that date and finally a dollar amount representing the total hours multiplied by that attorney's hourly rate. Each invoice includes a "Summary of Professional Services," showing ...


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