Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-01499/USCOURTS-casd-3_17-cv-01499-3/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1964 Civil Remedies: Racketeering (RICO) Act

---

1

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

WELK RESORT GROUP, INC., et 

al.,

Plaintiffs,

v.

REED HEIN & ASSOCIATES, LLC 

dba TIMESHARE EXIT TEAM, et al.,

Defendants.

Case No. 3:17-cv-01499-L-AGS

ORDER GRANTING IN PART 

AND DENYING IN PART

DEFENDANT SCHROETER 

GOLDMARK AND BENDER’S 

MOTION FOR ATTORNEYS’ 

FEES AND COSTS

Pending before the Court in this action for interference with timeshare 

contracts is a motion for attorneys’ fees filed by Defendant Schroeter Goldmark 

and Bender (“Schroeter”). Schroeter prevailed on its special motion to strike 

pursuant to California Civil Procedure Code § 425.16 (“Anti-SLAPP Motion”), 

which resulted in the dismissal of all claims alleged against Schroeter. (See doc. 

no. 80 (“Anti-SLAPP Order”) at 36.) Schroeter requests attorneys’ fees in the 

sum of $170,212.50 and costs in the sum of $182.62 pursuant to § 425.16(1)(c). 

Plaintiffs Welk Resort Group, Inc. and Welk Resorts Platinum Owners Association

(collectively, “Welk”) filed an opposition. Schroeter replied. For the reasons 

stated below, Schroeter’s motion is granted.

With exceptions not applicable here, California Civil Procedure Code 

§ 425.16(1)(c) provides for “mandatory attorney fees” to a defendant who prevails 

Case 3:17-cv-01499-L-AGS Document 129 Filed 02/04/20 PageID.<pageID> Page 1 of 10
2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

on an anti-SLAPP motion. Ketchum v. Moses, 24 Cal.4th 1122, 1131 (2001); see 

also id. at 1141-42.

1

 The lodestar method applies to the calculation of the fee 

award. See id. at 1131-36, 1140; see also PLCM Group v. Drexler, 22 Cal.4th 

1084, 1095 (2000). The lodestar method entails multiplying the reasonable hourly 

rate by the reasonable number of hours. Id. 

Schroeter was represented by three attorneys from Klinedinst PC 

(“Klinedinst”). (See doc. no. 84-1 at 16-19; doc. no. 84-2 at 8-11; 84-3 at 44-74 & 

78-86.)2 Heather L. Rosing is an attorney with more than twenty years in practice, 

who is highly regarded among her peers. She is a certified specialist in legal 

malpractice law and practices in the area of professional liability. She was 

involved in the Anti-SLAPP Motion briefing because Welk alleged that Schroeter 

violated several ethical standards of the legal profession, including California 

Business & Professions Code §§ 6151 and 6152 (running and capping) and § 6155 

(Lawyer Referral Services Law). (See doc. no. 5; see also Anti-SLAPP Order at 6-

9, 14-15.) 

Robert M. Shaughnessy is an attorney with 25 years in practice. His 

background is in business and appellate litigation. He heads Klinedinst’s appellate 

department. He was involved in the Anti-SLAPP Motion briefing because the case 

arose from a business dispute which included allegations of violation of the 

Racketeer Influenced and Corrupt Organizations Act ("RICO") under 18 U.S.C. § 

1962(c), intentional interference with contract, unfair competition under California 

Business and Professions Code §§ 17200 et seq., and civil conspiracy. (See docs. 

no. 5 (first am. compl.) & 25 (second am. compl.)). Furthermore, the denial of an

/ / /

 

1 Unless otherwise noted, internal quotation marks, citations, and footnotes 

are omitted throughout.

2 All page citations in this order refer to those generated by the court’s 

CM/ECF system.

Case 3:17-cv-01499-L-AGS Document 129 Filed 02/04/20 PageID.<pageID> Page 2 of 10
3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

anti-SLAPP motion is immediately appealable. See Manzari v. Associated 

Newspapers Ltd., 830 F.3d 881, 886 (9th Cir. 2016).

Gregor A. Hensrude has been in practice for 16 years. His area of practice is 

business litigation and transactional work. He is licensed in the States of 

Washington and California, and practices out of Klinedinst’s Seattle, Washington 

office, where Schroeter’s offices are also located. (See doc. no. 64-3 at 1, 2-4, 18; 

doc. no. 64-8 at 4.)

The attorneys seek compensation at the rate of $450 per hour. "The 

reasonable hourly rate is that prevailing in the community for similar work." 

PLCM Group, 22 Cal.4th at 1095. The relevant local community is the community 

where the court is located rather than the local community of out-of-town counsel. 

Nichols v. City of Taft, 155 Cal.App.4th 1233, 1242-43 (2007); Rey v. Madera 

Unif. Sch. Dist., 203 Cal. App. 4th 1223, 1241 (2012); Ctr for Biological Diversity 

v. County of San Bernardino, 188 Cal. App. 4th 603, 617-19 (2010). In 2009, a 

court in this district concluded that $425 per hour was a reasonable hourly rate of 

Kinedinst attorneys’ work on an anti-SLAPP motion. Fleming v. Cornerstone, 

2009 WL 764940 (Mar. 18, 2009) (Hayes, J.). 

Welk opposes the motion arguing that the fees Kinedinst actually billed were 

much lower -- $240 and $230 per hour. (Cf. doc. no. 84-3 at 44-74.) Klinedinst 

explains that these rates represent a substantial volume discount they extend to 

their insurance company clients. (Doc. no. 84-2 at 5.) In support of its argument, 

Welk cites El Escorial Owners’ Ass’n v. DLC Plastering, Inc., 154 Cal. App. 4th 

1337, 1367 (2007). Its reliance is unavailing. El Escorial Owners Association 

involved contractual attorneys’ fees and did not apply the lodestar method. See id 

at 1365. It also does not include any discussion why the lower hourly rates 

charged the insurance company were reasonable. See id. at 1367. When applying 

the lodestar method, California courts award a reasonable hourly rate even when 

the fee agreement provides for a lower rate. See Chacon v. Litke, 181 Cal. App. 

Case 3:17-cv-01499-L-AGS Document 129 Filed 02/04/20 PageID.<pageID> Page 3 of 10
4

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4th 1234, 1260 (2010) (awarding $350 per hour although the fee agreement 

provided for $300 per hour). 

Welk also contends that the requested billing rate is unreasonable because 

the case should have been staffed by lower level attorneys. The Court disagrees. 

[T]he reasonable hourly rate used to calculate the lodestar is the 

product of a multiplicity of factors . . . the level of skill necessary, 

time limitations, the amount to be obtained in the litigation, the 

attorney's reputation, and the undesirability of the case.

Ketchum, 24 Cal.4th at 1138-39 (brackets omitted). 

In addition to punitive damages, Welk sought more than $15 million in 

compensatory damages against three Defendants, including Schroeter. (See doc. 

no. 25 at 22.) The initial complaint alleged a RICO claim against Schroeter, which 

raised the risk of treble damages. (Doc. no. 5 at 23-24.) Although the second 

amended complaint omitted Schroeter from the RICO claim, it contained a 

conspiracy claim which sought indirectly to expose Schroeter to the same risk. 

(Doc. no. 25 at 28-29.) In addition to exposing Schroeter to the risk of several 

million dollars in damages, the lawsuit attacked Schroeter’s professional reputation 

in the legal community by alleging it was involved in an unethical and unlawful 

client representation scheme. Finally, the anti-SLAPP motion involved a complex 

fact pattern. (See Anti-SLAPP Order at 2-3, 5-16.) 

Based on the complexity of the case requiring a high level of skill in the 

business litigation and professional responsibility areas, attorneys' qualifications, 

billing rates in this District, and the passage of time since Fleming v. Cornerstone, 

the Court finds the requested hourly rates reasonable.

The attorneys seek compensation for a total of 270.5 hours. This includes 

215.5 hours billed in relation to the Anti-SLAPP Motion and 55 hours attributed to 

the briefing of the pending motion for attorneys’ fees and costs. (Doc. no. 84-1 at 

12.) 

/ / /

Case 3:17-cv-01499-L-AGS Document 129 Filed 02/04/20 PageID.<pageID> Page 4 of 10
5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Hours billed to the Anti-SLAPP Motion comprise of factual background 

investigation, including the settlement negotiations, arbitrations and lawsuits 

between Schroeter’s clients and Welk, which preceded the filing of the instant 

action. It further involved research and drafting of the anti-SLAPP motion seeking 

to strike the first amended complaint. Instead of opposing the motion, Welk chose 

to file the second amended complaint. (See doc. no. 28.) In its response to Welk’s 

statement of non-opposition, Schroeter reserved its right to seek attorneys’ fees for 

preparation of the initial motion as a prevailing defendant, because Welk dropped 

three claims it had alleged against Schroeter in the first amended complaint. (Doc. 

no. 34.) The hours also cover preparation of the Anti-SLAPP motion to strike the 

second amended complaint, including re-drafting the points and authorities to bring 

them into compliance with Civil Local Rule 7.1 and Standing Order for Civil 

Cases, and coordination with co-defense counsel’s anti-SLAPP motion and 

motions to dismiss. Finally, the time includes preparation of the reply brief. 

Welk claims that 215.5 hours was excessive based on the counsel’s 

experience and the “non-complex” nature of the case. (Doc. no. 98 at 15.) It 

complains that the time includes “unrelated” matters (id. at 18) such as reviewing 

the amended complaints, reviewing filings in related cases that were not cited in 

the anti-SLAPP motion, and considering RICO allegations that ultimately were not 

included in the anti-SLAPP motions. Welk further argues the hours were 

unreasonable because Schroeter is seeking reimbursement for drafting two separate 

anti-SLAPP motions that were “substantively identical” (id. at 16), drafting its 

motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), and re-drafting 

of the second anti-SLAPP motion to combine it with Rule 12(b)(6) motion and 

coordinate with co-defendants’ counsel. Finally, Welk maintains that the 

attorneys’ time entries were too vague, and attorneys engaged in double billing. 

Upon review of detailed time entries filed in support of the motion (doc. no. 

84-3 at 44-74; doc. no. 84-2 at 4-7), Welk’s arguments are rejected. The time 

Case 3:17-cv-01499-L-AGS Document 129 Filed 02/04/20 PageID.<pageID> Page 5 of 10
6

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

entries include sufficient explanation to evaluate their reasonableness. To describe 

the case as “non-complex” is an unfair understatement in light of the fact pattern 

and legal issues raised by the parties. (See generally Anti-SLAPP Order.) 

Furthermore, given the facts and claims of this case, it was necessary for the 

attorneys to familiarize themselves with related proceedings to prepare the AntiSLAPP Motion. (See, e.g., Anti-SLAPP Order at 7, 9, 12.) Time billed to this 

work was therefore reasonable.

It was also reasonable and necessary for the attorneys to review the amended 

complaints filed by Welk. This was not only necessary to prepare a motion to 

dismiss, but to draft an Anti-SLAPP Motion as well. To prevail on the AntiSLAPP Motion, the attorneys had to successfully rebut Welk’s argument that its 

case had at least “minimal merit.” See Navellier v. Sletten, 29 Cal.4th 82, 89

(2002); see also Cal. Civ. Proc. Code § 425.16(b)(1); Metabolife Int'l, Inc. v. 

Wornick, 264 F.3d 832, 840 (9th Cir. 2001). In this regard, Welk had to show, and 

Schroeter had to rebut, that “the complaint is legally sufficient and supported by a 

prima facie showing of facts to sustain a favorable judgment.” Navellier, 29 

Cal.4th at 88-89. In ruling on this issue, the court considers the pleadings, among 

other things. Planned Parenthood Fed'n of Am., Inc. v. Ctr. for Med. Progress, 

890 F.3d 828, 833 (9th Cir. 2018) (citing Cal. Civ. Proc. Code § 425.16(b)(2)). 

Accordingly, there is often a substantial overlap between an anti-SLAPP motion 

and a Rule 12(b)(6) motion to dismiss. Schroeter’s motion to dismiss rested 

almost entirely on the arguments in support of its Anti-SLAPP Motion. (See doc. 

no. 64-1 at 25.) Although the Anti-SLAPP Motion was granted based on the

litigation privilege defense, it was prudent to brief alternative arguments why 

Welk’s claims lacked even “minimal merit.” To the extent the billing records 

show an overlap between the two motions, including consideration of the RICO 

claim, the fees were reasonably incurred in connection with the Anti-SLAPP 

Motion. 

Case 3:17-cv-01499-L-AGS Document 129 Filed 02/04/20 PageID.<pageID> Page 6 of 10
7

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Also rejected is Welk’s contention that Schroeter’s attorneys spent an 

unreasonable amount of time on the second Anti-SLAPP Motion after Welk filed 

the second amended complaint, and on re-drafting the briefs to comply with local 

and chambers rules, including coordinating with co-defendant counsel. Review of 

the time entries reflects that the work was necessary and efficiently performed. 

Finally, the great majority of the work was performed by Mr. Shaughnessy 

(186.7 out of 215.5 hours), which virtually eliminates the possibility of double 

billing. Review of the time billed by Ms. Rosing and Ms. Hensrude, does not 

reveal an undue overlap in the work. 

For the foregoing reasons, the Court finds that 215.5 hours were reasonably 

incurred in connection with the Anti-SLAPP Motion in light of the procedural 

history of this case, and complexity of the issues presented in the Anti-SLAPP 

motion and Welk’s opposition.

Schroeter also requests reimbursement of the fees incurred relative to the 

pending motion for attorneys’ fees. Welk does not oppose this request. Mr. 

Shaughnessy’s declaration states he billed 45 hours to prepare the moving papers, 

and he estimated an additional ten hours for the reply. (Doc. no. 84-2 at 12.) Fees 

recoverable under California Civil Procedure Code § 425.16(1)(c) “ordinarily 

include compensation for all hours reasonably spent, including those necessary to 

establish and defend the fee claim.” Ketchum, 24 Cal.4th at 1141. Upon review of 

the fee motion with attached exhibits, the Court finds the request to be reasonable.

Based on the foregoing, Schroeter’s request for reimbursement of 270.5 

hours at $450 per hour is reasonable. The lodestar is therefore calculated at 

$121,725.

Schroeter requests a 1.5 multiplier to be applied to its lodestar to the extent it 

is attributable to the Anti-SLAPP Motion. This amounts to an additional 

$48,487.50. (Doc. no. 84-1 at 12; doc. no. 100 at 10 n.4.) Welk opposes this

request.

Case 3:17-cv-01499-L-AGS Document 129 Filed 02/04/20 PageID.<pageID> Page 7 of 10
8

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

“[S]ection 425.16 permits the use of the so-called lodestar adjustment 

method[, which] allows a court awarding attorney fees to include a fee 

enhancement . . ..” Ketchum, 24 Cal.4th at 1131, 1136. After calculating the 

lodestar, a court considers whether the total award so calculated is reasonable. See 

PLCM Group, 22 Cal.4th at 1095-96. In adjusting the lodestar, the court may 

consider: "the nature of the litigation, its difficulty, the amount involved, the skill 

required in its handling, the skill employed, the attention given, the success or 

failure, and other circumstances in the case." Id. at 1096 (internal quotation marks 

and citation omitted). However, the court “should not consider these factors to the 

extent they are already encompassed within the lodestar.” Ketchum, 24 Cal.4th at 

1138. “[T]he party seeking a fee enhancement bears the burden of proof.” Id. 

The request is based primarily on the contention that Welk’s action was filed 

essentially in bad faith by making representations of fact Welk knew were untrue. 

(See doc. no. 100 at 10.) It also points to the fact that the Anti-SLAPP motion 

resulted in a complete dismissal of the case against Schroeter, which was the result 

of exceptional representation. Klinedinst also claims that by charging discounted 

rates to Schroeter’s insurance company, it undertook the representation on 

something akin to a contingency basis by taking the risk that payment may not 

reflect the full value of their services. (Id.) 

The Court disagrees that enhancement is necessary for reasonable 

compensation.

[T]he legislative aim in including the attorney fee provision [in 

section 425.16] was apparently to strengthen enforcement of certain 

constitutional rights, including freedom of speech and petition for 

redress of grievances, by placing the financial burden of defending 

against so-called SLAPP actions on the party abusing the judicial 

system, and by encouraging private representation, including 

instances when a litigant cannot afford fees.

Ketchum, 24 Cal.4th at 1136.

/ / / 

Case 3:17-cv-01499-L-AGS Document 129 Filed 02/04/20 PageID.<pageID> Page 8 of 10
9

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Both aims weigh against a fee enhancement here. A sanction against abuse 

of the judicial system is inherent in the fee-shifting provision. It therefore cannot 

also serve as a reason to enhance the fees. See Ketchum, 24 Cal.4th at 1142, 1139 

(fee enhancement should not be “imposed for the purpose of punishing the losing 

party”). 

Furthermore, Klinedinst was not retained on a contingency basis by an 

indigent litigant. It was retained by Schroeter’s insurance company at a volumediscounted hourly rate. It was promised payment at the agreed-upon rate. By 

prevailing on the Anti-SLAPP Motion, it received not only the rate it was promised 

by the Schroeter’s insurance, but a higher, reasonable rate. The Court therefore 

finds that further enhancing Schroeter’s fees for contingency representation is not 

warranted. 

Finally, the Court declines to enhance Klinedinst’s fees based on exceptional 

representation. 

For the most part . . . quality of representation [is] already 

encompassed in the lodestar. A more difficult legal question typically 

requires more attorney hours, and a more skillful and experienced 

attorney will command a higher hourly rate. . . . Thus, a trial court 

should award a multiplier for exceptional representation only when 

the quality of representation far exceeds the quality of representation 

that would have been provided by an attorney of comparable skill and 

experience billing at the hourly rate used in the lodestar calculation. 

Otherwise, the fee award will result in unfair double counting and be 

unreasonable.

Ketchum, 24 Cal.4th at 1138-39. The Court awarded Klinedinst an hourly rate 

commensurate with the attorneys’ experience and expertise required to address the 

complexities of this case. Despite the high quality of representation which resulted 

in an excellent outcome for the client, the quality of representation did not exceed 

the level provided by attorneys commanding the same hourly rate. To further 

enhance the fees would amount to “improper double counting.” See id. at 1138. 

/ / /

Case 3:17-cv-01499-L-AGS Document 129 Filed 02/04/20 PageID.<pageID> Page 9 of 10
10

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Accordingly, Schroeter is awarded $121,725 for reasonable attorneys’ fees 

associated with the Anti-SLAPP Motion and pending motion for attorneys’ fees. 

Its request for a fee enhancement is denied.

Schroeter further requests $182.62 for costs, which Welk does not oppose. 

Upon review of the documentation provided in support of the cost request (doc. no. 

84-3 at 76), the Court finds them to be reasonable.

For the foregoing reasons, Schroeter’s motion for attorneys’ fees and costs is 

granted in part and denied in part. Welk shall pay Schroeter $121,725 for 

attorneys’ fees and $182.62 for costs.

IT IS SO ORDERED.

Dated: February 3, 2020

Case 3:17-cv-01499-L-AGS Document 129 Filed 02/04/20 PageID.<pageID> Page 10 of 10