Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_02-cv-01575/USCOURTS-caed-2_02-cv-01575-8/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition For Removal--Other Contract

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

JOHN HEALY,

NO. CIV. S-02-1575 LKK/DAD

Plaintiff,

v. O R D E R

MCI WORLDCOM NETWORK

SERVICE, INC., a Delaware,

corporation; ELECTRONIC

DATA SYSTEMS CORPORATION,

a foreign corporation; and 

EDS/SHL CORPORATION, a Delaware

corporation,

Defendants.

 /

Plaintiff John Healy’s suit included claims for breach of

contract, fraud, and intentional infliction of emotional

distress. In due course, the parties moved for cross-summary

judgment. On August 2, 2005, the court granted in part, and

denied in part, plaintiff’s motion for summary judgment as to

the breach of contract claim and denied all other motions. The

matter proceeded to trial on November 8, 2005. Pursuant to the

Case 2:02-cv-01575-LKK -DAD Document 186 Filed 03/02/06 Page 1 of 15
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1 California Civil Code § 1717(a) provides that parties to

a contract may agree to reasonable attorney’s fees, in addition to

other costs, regardless whether he or she is the party specified

in the contract. 

Section 2.5 of the Separation Agreement at issue in the

instant case provides that “[a]ny breach of the terms of this

agreement by Employee . . . shall entitle MCI to recover the

consideration as set forth above, along with reasonable attorneys’

fees incurred by MCI to defend any such action to the extent

permitted by law.” 

2

court’s Findings of Fact and Conclusions of law filed on January

6, 2006, judgment in the amount of $3,024,988.48 was rendered in

favor of plaintiff. Plaintiff now moves for attorney’s fees and

litigation costs against defendants under California Civil Code 

§ 1717. 

Where, as here, the suit was based on California

substantive law, an award of attorneys' fees incurred in the

suit is governed by state law. See Kona Enters., Inc. v. Estate

of Bishop, 229 F.3d 877, 883 (9th Cir. 2000). Under California

law, a prevailing party is ordinarily not entitled to attorneys'

fees unless the parties have previously agreed to the fees, or

the fees are otherwise provided by statute. See Lerner v. Ward,

13 Cal.App.4th 155 (1993) (citing, inter alia, Reynolds Metals

Co. v. Alperson, 25 Cal.3d 124 (1979)). Defendants do not

dispute that plaintiff prevailed in this litigation and is

entitled to an award of attorneys’ fees.1 Defendants, however,

challenge plaintiff’s calculation of the attorney’s fees and

costs on various grounds. I address the motion based on the

pleadings and the parties’ papers.

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2 Plaintiff’s counsel explains that there existed a

contingency fee arrangement under which he would receive 33.3% of

the recovery. Under Scenario A, plaintiff requests 

$1,512,494.24, whereas under Scenario B, plaintiff requests

$1,068,207.20 in attorney’s fees.

3

A. METHOD OF CALCULATION

Defendants challenge the various theories upon which

plaintiff seeks attorney’s fees, arguing that such theories

disregard the “lodestar method.” Opp’n at 6. Defendants’ point

is well-taken. 

Indeed, plaintiff offers the court three scenarios for

calculating attorney’s fees, two of which completely ignore

established law. In Scenario A, plaintiff suggests that the

court should add 33.3% of the judgment (the contingency rate

plaintiff and his counsel agreed to) to the total judgment and

provide plaintiff’s counsel with one-third of that amount. In

Scenario B, plaintiff suggests that a straight contingency rate

of 33.3% should be applied to calculate the attorneys’ fees,

giving counsel 1/3 of the total judgment.2 Plaintiff argues

that the purpose of attorneys’ fees is “to make the prevailing

party whole” (internal quotations omitted). The court rejects

both methods for calculating attorneys’ fees because they are

inconsistent with governing law. Both federal and California

courts have adopted the “lodestar” method for calculating

attorney’s fees. Hensley v. Eckerhart, 461 U.S. 424, 433

(1983); Serrano v. Priest, 20 Cal. 3d 25, 48-49 (1977). To

determine the appropriate fee amount, the court multiplies the

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4

number of hours reasonably expended in the litigation by a

reasonable hourly rate. Id. 

B. REASONABLE HOURLY RATE

The appropriate hourly fee should be based on the rates

charged by counsel with similar experience, reputation, and

skill for similar cases in the legal community. White v. City

of Richmond, 713 F.2d 458 (9th Cir. 1983). The burden is on the

fee applicant to produce satisfactory evidence that the

requested rates are in line with those in the prevailing

community for similar services by lawyers of comparable skill,

experience, and reputation. Blum v. Stenson, 465 U.S. 886, 895

(1984). Plaintiff’s counsel seeks $450.00 per hour for services

rendered by Richard Edson(“Edson”) and $350.00 per hour for Ross

Nott (“Nott”). For the reasons stated below, the court

concludes that $325.00 per hour is the appropriate rate for

Edson’s services and $225.00 is the proper hourly fee for Nott. 

Edson has thirty years of experience and supports his

requested hourly fee with his own declaration where he explains

that he “talk[ed] to business litigation attorneys in the

Sacramento area,” and was told that “they charge anywhere from

$350.00 to $525.00 per hour.” Edson then chooses $450.00 as

“being approximately in the mid-range.” Edson Dec. at 1-2. Nott

has practiced law for eleven years and bases his requested

hourly fee of $350.00 per hour on two factors, the average

hourly rate of contingency cases he has worked on, and the

amount awarded plaintiff’s counsel in Velazquez v. Khan, CV-SCase 2:02-cv-01575-LKK -DAD Document 186 Filed 03/02/06 Page 4 of 15
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3 Eisen was admitted to practice law in California in 1969

and has been practicing law in Sacramento for over twenty years,

first with the law firm of Karlton, Blease and Vanderlaan, and

later with Rothschild & Eisen. In 1982, Eisen established his

present practice in Sacramento. Curran has been practicing law in

California since 1989 and has practiced law in Sacramento since

1992 with four different law firms. 

5

01-0246 (E.D. Cal.)(England, J.)(awarding plaintiff’s counsel

$300.00 with eight years of experience). 

Defendants challenge the reasonableness of Edson’s hourly

rate by arguing that lead counsel for defendant, Lee J. Hutton,

who also has thirty years of experience, only charged $250.00

per hour in the instant matter. Hutton Dec. at 1-2. The court

cannot consider Hutton’s hourly rate because he is employed in

Ohio and such evidence does not constitute rates which are “in

line with those prevailing in the [Sacramento] community for

similar services by lawyers of reasonably comparable skill,

experience, and reputation.” Blum, 465 U.S. at 895 n. 11

(1984). Defendants, however, also attach the declarations of

Jay-Allen Eisen (“Eisen”) and James F. Curran (“Curran”), two

attorneys employed in Sacramento which evidence that the

prevailing hourly rates for similar work performed by attorneys

of comparable skill, experience and reputation.3 Eisen declares

that he believes prevailing rates for attorneys in Sacramento

are between $300 and $350, Eisen Dec. at 4, while Curran opines

that lawyers in Sacramento with 20-35 years of experience charge

no more than $350 per hour for their services. Curran Dec. at

2. Curran concludes that “the ‘market’ rate for an 11-year

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6

veteran like Mr. Nott in Sacramento is approximately $125-175

per hour.” Id. at 4. 

Because plaintiff’s counsel has failed to present

sufficient evidence of the appropriate fee for Edson (indeed,

his evidence amounts to unsubstantiated hearsay), the court

determines that the rate of $325.00 per hour adequately reflects

the prevailing hourly rate for comparable attorneys with Edson’s

experience, reputation, and skill. After considering Nott’s

legal experience and the parties’ evidence, the court determines

that $225.00 per hour adequately reflects the prevailing hourly

rate for attorneys of comparable skill, experience, and

reputation. Cf. Asberry v. City of Sacramento, CIV. S-01-2343

at (E.D. Cal. Apr. 2004)(Karlton, J.)(Order at 2–4)(awarding

attorney with fifteen years of experience in Sacramento $275-

$325 per hour). 

C. NUMBER OF HOURS BILLED

Plaintiff seeks to recover 1,165.10 hours of attorneys’

fees for Edson and 173.5 hours for Nott expended in this

litigation. Edson Dec. at 2; Nott Dec. at 8. In arriving at

the lodestar figure, the district court should exclude hours

that are “excessive, redundant, or otherwise unnecessary 

. . . .” Hensley, 461 U.S. at 434. Defendants object to the

number of hours billed for various reasons, which the court

addresses below.

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7

1. Hours Spent on Fraud Claim

Defendants contend that the court should reduce plaintiff’s

hours by twenty-three percent to reflect time spent on fraudrelated claims. According to defendants, attorney’s fees are

allowed in this matter only for the time spent on prosecuting

the breach of contract actions and not on non-contractual

claims. Opp’n at 18. Defendants claim that two of the

witnesses at trial, Dorothy Culham and Barbara Iman, testified

almost entirely on fraud issues and estimates that “one-half of

the time, energy and attention in this litigation” pertained to

plaintiff's fraud cause of action. Id. at 17. I cannot agree

that the court must reduce hours plaintiff’s counsel spent on

the fraud claims.

Attorney’s fees “need not be apportioned when incurred for

representation on an issue common to both a cause of action in

which fees are proper and one in which they are not allowed.” 

Reynolds Metals Co. v. Alperson, 25 Cal.3d 124, 129-130 (1979); 

see also Abdallah v. United Sav. Bank, 43 Cal.App.4th 1101, 1113

(1996)(apportionment not required where claims are “inextricably

interwined, making it impracticable, if not impossible, to

separate the multitude of conjoined activities into compensable

or noncompensable time units”). Such decisions are within the

discretion of the court. Hubbard v. Twin Oaks Health and

Rehabilitation Center, 406 F.Supp.2d 1096, 1100 (E.D. Cal.

2005)(Karlton, J.). 

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8

It would be impracticable for the court to apportion the

fees because the two misrepresentations at issue made by Culham

and Iman formed part of the basis for the breach of contract

claim. In the instant case, the court finds it inappropriate to

apportion attorneys’ fees because all of plaintiff’s causes of

actions were grounded on the same common set of facts, and thus,

the claims were “inextricably intertwined.” See January 6, 2006

Findings of Fact & Conclusions of Law at 6-11. 

2. Hours Reasonably Spent

Defendants contend that Edson’s hours are not reasonably

spent because they are excessive or duplicative and requests

that the court adjusts Edson’s hours accordingly. Defendants

point to various examples in which they believe Edson “liberally

recorded” time spent on legal tasks. The court has carefully

examined Edson’s twenty-six page billing statement and agrees

with defendants that some of Edson’s hours are excessive and not

reasonably spent. For example, on February 12, 2004, Edson

allegedly spent 3.6 hours on reviewing correspondence from

opposing counsel on the joint status report, a task that the

court believes should have taken no longer than thirty minutes.

On August 21, 2005, Edson allegedly spent 5.5 hours on reviewing

defendants’ pretrial conference statement, a task that the court

estimates should have taken no longer than thirty minutes. 

Edson also claims that he spent one hour and twenty-four minutes

on February 17 and 26, 2004 reviewing the pro hac vice

applications submitted by defendant, a task that the court

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believes should take no more than fifteen minutes. Such

examples lead the court to believe that counsel’s time

calculation is inflated and unreasonable. Rather than expend

judicial resources and list every time entry which the court

believes is excessive, of which there appear to be many, the

court reduces the hours Edson claims he spent by fifteen

percent, or 174.77 hours, leaving Edson’s total hours for 

services rendered at 990.33 hours. The court has reviewed

Nott’s records, and because they appear reasonable and because

defendants do not specifically challenge his hours, the court

shall utilize the 173.5 hours sought by Nott for the lodestar

calculation.

D. OTHER REQUESTED DEDUCTIONS

Defendants argue that plaintiff is not entitled to

$69,961.00 in fees that he seeks for the services of Anne Marie

Flaherty because “he has not borne his burden of proof in

establishing the number of hours she worked, the reasonableness

of those hours, the amounts charged per hour and the

reasonableness of the hourly rate.” Opp’n at 13. The court

agrees with defendants’ contention.

Plaintiff has submitted a declaration stating that he paid

Flaherty $69,961.00 for legal services between May 6, 2002 and

January 21, 2003. Healy Dec. at 1. However, the fee applicant

bears the burden of submitting “evidence supporting the hours

worked and rates claimed.” Hensley, 461 U.S. at 433. Plaintiff

fails to tender evidence indicating the number of hours Ms.

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4 It would appear that any fees received would be for

bankruptcy litigation, a claim quite difference than the matter-atbar.

10

Flaherty worked, the rate at which she charged plaintiff, or

what legal tasks she completed on behalf of plaintiff. Where,

as here, plaintiff has provided no supporting documentation for

his claim, the court must deny his request as to Flaherty’s fees

due to lack of evidentiary support. See City of Oakland v.

McCullough, 46 Cal.App.4th 1, 10 (1996)(denying portion of fee

request due to lack of evidentiary support). 

EDS also argues that it is entitled to a set off for

attorneys’ fees it alleges plaintiff has already received from

MCI. According to defendant, after MCI WorldCom filed for

bankruptcy, the claims against it were dismissed, but plaintiff

reasserted those claims against MCI WorldCom in Bankruptcy

Court. Opp’n at 18. Plaintiff was allegedly paid by MCI

WorldCom before trial in the amount of $49,492.80 as

compensation for attorneys’ fees incurred in connection with his

severance pay claim. Id. at 19. Defendant asserts that unless

it receives a credit for attorneys’ fees already received,

plaintiff stands to receive a double recovery. The record does

not support defendant’s claim. Defendant fails to submit any

evidence that plaintiff has received this amount, and whether

the amount constitutes attorneys’ fees for the same claims

raised in this litigation.4 For the reasons stated above, the

court will not set off the attorneys’ fees allegedly paid by MCI

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WorldCom in the bankruptcy proceedings. 

E. MULTIPLIER

After determining a reasonable fee award and the number of

hours the prevailing attorneys reasonably expended on the

litigation, courts may then adjust the lodestar to reflect other

particular aspects of a case. See Kerr v. Screen Extra Guild,

Inc., 526 F.2d 67, 70 (9th Cir. 1975); Serrano v. Priest, 20

Cal.3d 25 (1977). When deciding whether to adjust the lodestar,

courts often use the following twelve factors: (1) time and

labor required, (2) the novelty and difficulty of the issues

involved, (3) the skill requisite to perform the legal service

properly, (4) the preclusion of other employment by the attorney

due to acceptance of the case, (5) the customary fee, (6)

whether the fee is fixed or contingent, (7) time limitations

imposed by the client or the circumstances, (8) the amount

involved and the results obtained, (9) the experience,

reputation, and ability of the attorneys, (10) the

“undesirability” of the case, (11) the nature and length of the

professional relationship with the client, and (12) awards in

similar cases. Kerr, 556 F.2d at 69-70. 

To the extent that a party seeks an enhancement, it bears

the burden of proof. See Ketchen v. Moses, 24 Cal.4th 1122

(2001). Nothing requires a trial court to include a fee

enhancement to the basic lodestar figure for contingent risk,

exceptional skill, or any other factor. Id. Courts retain the

discretion to do so in the appropriate case. Id. Notably, the

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Supreme Court has held that there is a “strong presumption” that

the lodestar figure represents a reasonable fee. Pennsylvania

v. Delaware Valley Citizens’ Council for Clean Air, 478 U.S.

546, 565 (1986). Plaintiff seeks a multiplier of two, arguing

that a multiplier is warranted because he claims the case is

“surprisingly complex” and because plaintiff’s counsel “accepted

the matter on a contingent basis.” Mot. at 8. While the court

acknowledges the difficulty of the case, given the facts, the

court concludes that a multiplier is not justified.

F. BILL OF COSTS 

Plaintiff also requests $13,727.89 for items listed in a

bill of costs submitted to the court. Defendants rightly note

that plaintiff seeks thousands of dollars in expenses that are

simply not taxable pursuant to 28 U.S.C. § 1920. Defs.’ Obj. at

2. At the outset, the court notes that it has spent an

unreasonable amount of time deciphering plaintiff's bill of

costs. The court was also required to call plaintiff to submit

receipts and evidence of such costs because plaintiff’s bill of

costs was initially submitted to the court without any

supporting evidence. Nevertheless, the court will do its best

to decide which costs are proper and which are not. Defendants

have submitted a lengthy list of objections to plaintiff’s bill

of costs. The court will turn only to those objections that

warrant attention.

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1. Duplicate Copies of Deposition Transcripts

Defendants object to plaintiff recovering $142.85 for a

copy of Barbara Iman’s deposition even though he had received

the original and one copy at a cost of $530. The court agrees

with defendant that this transcript was unnecessary and will

subtract $142.85 from the bill of costs.

2. Subsistence Cost for Barbara Iman

Plaintiff seeks $695.40 in subsistence costs for Iman. As

defendants point out, however, it appears plaintiff was overly

sloppy in his compilation of the bill of costs. The only

receipts plaintiff submits for $685.40 were for plaintiff’s

counsel’s travel expenses to take Ms. Iman’s deposition. These

travel expenses cannot be considered witness fees as

contemplated by 28 U.S.C. §§ 1820 and 1821. The court will

subtract $695.40 from the bill of costs.

3. Copying Costs

Defendants object to $3,651.60 of the $4,084.11 plaintiff

seeks in copying costs. Defendant objects to the $211.08 that

plaintiff seeks in copying costs for his appellate brief in the

interlocutory appeal on the motion to remand that EDS filed and

won. The court agrees with defendant on this ground and $211.08

will be deducted from the bill of costs. EDS also objects to

the $3,298.10 that plaintiff seeks for copying his trial

exhibits because defendant argues that plaintiff was forced to

“redo” his exhibits twice at the order of this court. The court

agrees that defendant should not be saddled with costs

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associated with exhibits which were improperly presented to the

court. The court also agrees with defendant that it is unclear

what exactly the cost of the final set of exhibits should be

because plaintiff has failed to set forth the costs for the

final set. Because the court is unable to tell what it cost

plaintiff to prepare the final set of exhibits, the court will

therefore subtract two-thirds of the requested copying amount,

or $2,198.73, from the bill of costs, representing plaintiff’s

two unsuccessful attempts at providing exhibits to the court.

4. Other Costs

Defendant objects to $3,522.28 representing counsel’s

travel expenses and “courier charges.” See Plaintiff’s Amended

Bill of Costs at 10-22, 30, 35, 37-38, 46-47, 49-50, 56-58, 66-

69. Although the court agrees with defendant that such travel

expenses are not taxable and do not constitute “costs” as

contemplated under 28 U.S.C. § 1920, these costs are properly

recovered as part of an attorneys' fees motion. See Yasui v.

Maui Elec. Co., Ltd., 78 F.Supp.2d 1124, 1130 (D.Haw. 1999). 

The court therefore awards $3,522.28 to plaintiff as part of his

attorneys' fees motion.

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5 The total amount is derived from adding the attorneys’ fees

to the bill of costs as follows:

Attorneys’ Fees

Hours Rate Total

Edson (990.33) $325 $ 321,857.25

Nott (174.77) $225 $ 39,323.25

Travel Expenses + $ 3,522.28

(inappropriately

 categorized as costs)

 

 $ 364,702.78

Bill of Costs

Amount Requested $ 13,727.89 

Deductions

Duplicate Iman deposition 142.85 

Iman subsistence cost 695.40 

Copy of appellate brief 211.08

Exhibit copying cost 2,198.73 

Travel & service costs 3,522.28 

 

$ 6,957.55

15

CONCLUSION

Accordingly, plaintiff’s counsel is AWARDED attorneys’ fees

and costs in the amount of $371,660.33.5

The court is also in receipt of defendants’ application for

approval of supersedeas bond. The application is APPROVED and

the matter is automatically STAYED pursuant to Fed. R. Civ. P.

62(d).

IT IS SO ORDERED. 

DATED: March 1, 2006.

/s/Lawrence K. Karlton 

LAWRENCE K. KARLTON

SENIOR JUDGE

UNITED STATES DISTRICT COURT

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