United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
ROBERT M. DOW, Jr., District Judge.
Before the Court is Plaintiff's motion to reconsider the Court's September 9, 2014 Opinion and Order , granting motions for sanctions filed by Weaver & Martin, LLC  as well as Brent Brewer, Steven Byle, Jon Montague, Christopher Wilson, and Wilson, Haglund & Paulsen, P.C. . Also before the Court are Defendants' submissions documenting their requests for attorneys' fees [268, 269]. For the reasons set forth below, the Court grants in part and denies in part Plaintiff's motion for reconsideration. Plaintiff shall pay $8, 541.11 to Weaver & Martin and $7, 632.17 to the remaining Defendants. Attorney Benjamin shall pay $25, 623.33 to Weaver & Martin and $22, 896.51 to the remaining Defendants.
A. Motion to Reconsider
In its September 9, 2014 Opinion and Order, , the Court awarded sanctions against Super Pawn's attorney, J. Kevin Benjamin, because of his decision to file various versions of a second amended complaint ("SAC"). The Court had dismissed Plaintiff's first amended complaint ("FAC") against the currently moving Defendants, explaining in a twenty-nine page Opinion and Order  that each claim was time-barred and/or failed to state a claim because of certain factual deficiencies. It further stated that any future pleadings should address the identified deficiencies in accordance with Rule 11. Benjamin subsequently filed the same counts against the same defendants in the SAC, various versions of which he submitted without asking the Court for leave. While the SAC arguably addressed the deficiencies identified in the common law fraud and negligence claims, it disregarded the deficiencies identified in the securities fraud, ICFA, as well as breach of the duty of good faith and fair dealing claims, effectively repeating those claims despite the Court's legal analysis and warning. The Court therefore found that the filing of the SAC was sanctionable.
By way of background, Plaintiff first hired Benjamin prior to filing the original complaint. Approximately one month later, Plaintiff terminated Benjamin, first hiring Seth Kaplan, Robert Ouriel, and then Gordon Katz in his place. See [1, 3, 5, 90]. Ouriel withdrew shortly before the Court's Opinion and Order dismissing the FAC, and Kaplan withdrew shortly after it, leaving only Katz. See [148, 156]. Approximately two months after the Court dismissed the FAC, Plaintiff re-hired Benjamin as lead counsel, and Benjamin filed the SAC ten days later. See [165, 173]. Benjamin subsequently attempted to file two corrected versions of the SAC, naming different defendants, both without leave of Court. In the interim, Weaver & Martin filed a motion for partial summary judgment and a motion to dismiss in response to the SAC. The Court struck the extraneous versions of the SAC and made clear that Plaintiff must file a proper motion seeking leave to file an amended complaint. Plaintiff then requested leave to file a third amended complaint ("TAC"), naming all of the Defendants but failing to attach the proposed amended complaint. Plaintiff subsequently filed its proposed TAC, in response to which the movants for sanctions filed supplemental briefs. The Court denied Plaintiff's request to file a TAC and ordered the parties to proceed on the claims that survived the FAC. Defendants then moved for sanctions.
In their original briefs opposing sanctions, Plaintiff and Benjamin essentially pointed the finger at each other. Plaintiff claimed that the filing of the SAC was a tactical decision made by Benjamin; Benjamin claimed that he had to rely on his client and previous pleadings for the foundation of the complaint, given the ten-day crunch. Unpersuaded, the Court found Plaintiff jointly and severally liable for sanctions imposed against Benjamin. It explained:
Plaintiff knew that the Court had just dismissed its claims, and, by authorizing its new attorney to refile them (and/or by hiring him to do so), Plaintiff subjected itself to certain ethical obligations - namely, to permit its attorney only to file claims brought for a proper purpose and grounded in fact based on a "reasonable inquiry under the circumstances." Fed.R.Civ.P. 11(b); Fries v. Helsper, 146 F.3d 452, 458 (7th Cir. 1998) ("a court may impose sanctions on a party for making arguments or filing claims that are frivolous, legally unreasonable, without factual foundation, or asserted for an improper purpose"). The Court's March 29, 2013 Opinion (which expressly cited Rule 11 when giving Plaintiff leave to replead) should have sent a strong signal to Plaintiff concerning the untenable legal positions it advanced in its first amended complaint and, especially at that point, Plaintiff should have made additional efforts to determine whether certain factual assertions had any basis in fact. Instead, Plaintiff hired a new lawyer and authorized him (whether implicitly or explicitly) to make virtually the same claims against the same parties without regard for the consequences. For that reason, justice requires that Plaintiff Super Pawn be held jointly and severally liable with its attorney Benjamin for filing the frivolous SAC.
 at 17-18. Having found a violation of Federal Rule of Civil Procedure 11(b), the Court was required to impose sanctions under the Private Securities Litigation Reform Act ("PSLRA") in accordance with Rule 11. See 15 U.S.C. § 78u-4(c)(2). The Court ruled that it would impose sanctions equal to the reasonable attorney fees incurred as a direct result of the filing of the SAC, requesting fee petitions from the Defendants now moving for reconsideration.
B. Fee Petitions
1. Weaver & Martin
Defendant Weaver & Martin seeks $56, 940.61 for its defense against the SAC and pursuit of sanctions. In support of its petition, it has submitted a declaration of David Gustman, its lead attorney from Freeborn & Peters. Gustman states that his firm billed Weaver & Martin for reviewing the SAC; drafting a motion to dismiss; drafting motions for sanctions, reviewing and researching Plaintiff's "corrected" SAC; drafting a motion for sanctions in response to the SAC; drafting a partial motion for summary judgment and Rule 56.1 statement; reviewing, researching and responding to Plaintiff's motion for leave to file a third amended complaint; responding to Plaintiff's threat to file a motion for sanctions; and attending hearings related to the various amended complaints. Gustman stated that his standard hourly rate was $710, that he only charged $495 in this case, and that he applied the discount in calculating reasonable fees. He further stated that the junior partner on the case billed hourly rates ranging from $395 to $415. He attached copies of the bills submitted to his client, representing professional fees and out-of-pocket expenses submitted in invoices to the client. He deducted 30% of the sanction-related expenses because some of those expenses related to filings by Plaintiff's other attorneys, whom the Court declined to sanction. Weaver & Martin actually paid all but the last invoice.
2. Remaining Defendants
The remaining Defendants seek $50, 881.25 for their defense against the SAC and pursuit of sanctions. Their attorney, Christopher Wilson of Wilson & Oskam, attaches invoices related to reviewing the SAC; preparing a motion to dismiss; reviewing the filings of other Defendants in response to the SAC; reviewing Plaintiff's TAC; responding to Plaintiff's motion to amend its pleadings; and preparing a motion for sanctions. Wilson states that his firm charged its clients hourly rates ranging between $220 and $450. The clients' ...