Source: https://fr.scribd.com/document/399146885/Winklevoss-Brothers-Charlie-Shrem-s-Legal-Fees
Timestamp: 2019-05-22 06:02:54
Document Index: 747758953

Matched Legal Cases: ['§ 6212', '§ 6212', '§ 6212', '§\n6210', '§ 6210', '§ 6212']

Winklevoss Brothers - Charlie Shrem's Legal Fees | Attorney's Fee | Complaint
enregistrerEnregistrer Winklevoss Brothers - Charlie Shrem&amp;#39;s Legal Fees pour plus tard
Makro vs Coco Charcoal (Implied vs Express Warranty)
73 Fair empl.prac.cas. (Bna) 1571, 70 Empl. Prac. Dec. P 44,573 Mary Ann Luciano, Plaintiff-Appellant-Cross v. The Olsten Corporation Frank N. Liguori Gordon J. Bingham Martin Gelerman, Defendants-Appellees-Cross-Appellants, 109 F.3d 111, 2d Cir. (1997)
04-02.Occena v. Marquez
Case 1:18-cv-08250-JSR Document 98 Filed 02/07/19 Page 1 of 13
US!;;_· ~u'\ y
UNITED STATES DISTRICT COURT DOC'! rMENT
SOUTHERN DISTRICT OF NEW YORK ELECTRONICALLY FILED
DOC #: _ _ _---j~+r-..,,--
WINKLEVOSS CAPITAL FUND, LLC,
DATF rn rfi·
18-cv-8250(JSR)
On October 2, 2018, the Court granted the ex parte motion
of plaintiff Winklevaus Capital Fund, LLC ("WCF") for pre-
judgment attachment of assets belonging to defendant Charles
Shrem. Dkt. 30. On November 8, 2018, after receiving full
briefing and oral argument from both sides, the Court denied
WCF's motion to confirm the order of attachment and lifted the
attachment already in place. Dkt. 52. Now before the Court is
Shrem's motion pursuant to Rule 6212(e) of the New York Civil
Practice Law and Rules (N.Y. C.P.L.R.) for attorneys' fees and
costs that he incurred in opposing WCF's motion for confirmation
For the reasons stated below, Shrem will be awarded
attorneys' fees in the amount of $44,986.80, and costs in the
amount of $1,053.
Case 1:18-cv-08250-JSR Document 98 Filed 02/07/19 Page 2 of 13
Rule 6212(e) provides as follows:
The plaintiff shall be liable to the defendant for all
costs and damages, including reasonable attorney's
fees, which may be sustained by reason of the
attachment if the defendant recovers judgment, or if
it is finally decided that the plaintiff was not
entitled to an attachment of the defendant's property.
Plaintiff's liability shall not be limited by the
N.Y. C.P.L.R. § 6212(e). "This subdivision was added in 1977 to
make the attaching plaintiff strictly liable for all damages
occasioned by a wrongful attachment." Roth v. Pritikin, 787 F.2d
54, 59 (2d Cir. 1986) (citing commentary to Rule 6212(e)); see
also Merck & Co. v. Technoquimicas S.A., No. 01-cv-5345(NRB),
2001 WL 963977, at *3 (S.D.N.Y. Aug. 22, 2001) (noting that "it
is significant that§ 6212(e) is not worded in the conditional;
it states that fees 'shall' be awarded to a defendant whose
assets were wrongfully attached"); Bank of N.Y. v. Nickel, 14
A.D.3d 140, 149 (N.Y. 1st Dep't 2004) ("Rule 6212(e) requires
the court to award damages, including attorneys' fees, without a
showing of fault, for wrongful attachment."). In other words,
"New York law requires an award of fees by virtue of the fact
that the attachment was vacated as unwarranted." Merck, 2001 WL
963977, at *3.
WCF argues that, despite the fact that attachment was
granted and then vacated as unwarranted, Rule 6212(e) does not
require an award of fees here. WCF first contends that an award
Case 1:18-cv-08250-JSR Document 98 Filed 02/07/19 Page 3 of 13
of fees is not merited as Shrem was "not a prevailing party on
attachment." Plaintiff Winklevoss Capital Fund, LLC's Opposition
to Defendant's Motion for Attorneys' Fees and Costs ("Opp."),
Dkt. 83, at 2-3. WCF relies on case law interpreting private
parties' fee agreements and statutory fee provisions other than
Rule 6212(e) for this argument since the language of "prevailing
parties" is nowhere to be found in Rule 6212(e), which
conditions a fee award solely on an attachment and a subsequent
vacatur. 1
Even assuming, contrary to the plain language of Rule
6212(e), that an additional "prevailing party" element must be
shown, Shrem has clearly made such a showing here, since, as a
result of his submissions, WCF's motion was denied and the
attachment vacated. Yet WCF argues that it too "prevailed"
because, at the oral argument on the motion to confirm
attachment, Shrem's counsel offered to put $61,000 into an
escrow account pending judgment in this matter and the Court
ordered Shrem to do so, clarifying that the order was
1 WCF primarily relies on a case discussing the proper
interpretation of an attorneys' fees provision in a divorced
couple's separation agreement, which provided that the
defaulting party would be responsible for the other party's
attorneys' fees. See D.S.C. v. P.C., 68 N.Y.S.3d 378 (N.Y. Sup.
Ct. 2017). The cases cited in the D.S.C. decision concern
similarly unrelated fee provisions, such as landlord-tenant laws
entitling non-breaching parties to attorneys' fees. See, e.g.,
Graham Ct. Owner's Corp. v. Taylor, 24 N.Y.3d 742 (2015); Nestor
v. McDowell, 81 N.Y.2d 410, 415-416 (1993).
Case 1:18-cv-08250-JSR Document 98 Filed 02/07/19 Page 4 of 13
"independent of where [the Court] come[s] out on the
attachment." See Hearing Transcript dated November 8, 2018, at
19:15-20. As WCF had only managed to attach assets of a de
minimis value before the attachment was vacated, WCF takes the
position that it "partially prevailed" on the issue of
attachment as it attained more financial security after the
attachment order was vacated than while it was in effect. Opp.
at 3-4. It may be the case that WCF found itself in a better
financial position immediately after the hearing than
immediately before, 2 however, it is irrelevant as the controlling
fact is that attachment was granted and then vacated. The funds
in escrow are unrelated to the attachment issue, as the Court
stated; moreover, New York courts have explicitly distinguished
between funds placed in escrow and funds subjected to an order
of attachment. 3 Accordingly, the Court finds no merit to WCF's
argument that it "partially prevailed."
2 The Court is dubious as to WCF's characterization of its
comparative position before and after the vacatur; while WCF had
only been able to attach a small sum of assets prior to the
vacatur, had the attachment order been confirmed rather than
vacated, WCF would have been free to continue to pursue
successful attachment of assets to the tune of 5,000 bitcoin -
which WCF alleges were worth $31,362,500 at the time the
complaint was filed, see Compl. ~ 3 - rather than the mere
$61,000 in escrow it found itself with after vacatur.
3 In Salamanca Trust Co. v. McHugh, 156 A.D.2d 1007, 1007-08
(N.Y. 4th Dep't 1989), the court dismissed the defendant's
counterclaim of wrongful attachment where the defendant placed
assets in escrow pending the resolution of a lawsuit after a
Case 1:18-cv-08250-JSR Document 98 Filed 02/07/19 Page 5 of 13
Next, WCF argues that fees should not be awarded as "Shrem
suffered no actual attachment to speak of" as WCF only succeeded
in attaching a "de minimis" amount of assets (less than $5)
prior to the vacatur. Opp. at 4. However, Rule 6212(e) is clear:
plaintiff is liable "for all costs and damages, including
reasonable attorneys' fees" where plaintiff is granted an
attachment and later found unentitled to that attachment. Of
course, as WCF points out, a defendant is not entitled to fees
where no order of attachment was ever granted. See Augsbury v.
Adams, 108 A.D.2d 978, 979 (N.Y. 3d Dep't 1985) ("The attachment
having been denied, it was proper ... to deny sanctions.");
Salamanca, 156 A.D.2d at 1008 (no right to fees where attachment
order never signed or entered) But this is irrelevant here as
the Court did grant an order of attachment, which was in effect
for over a month before being vacated.
WCF directs the Court to Kidder, Peabody & Co., Inc. v. IAG
Int'l Acceptance Group, NV, 28 F.Supp.2d 126 (S.D.N.Y 1998), in
which a court in this district found that, while there were "few
cases addressing the issue," "it is appropriate to limit the
reach of that strict liability [under§ 6212(e)] to cases where
request for attachment was granted orally but an order of
attachment was never signed or actually entered. The court held
that "[t]he mere fact that property has been subjected to some
form of restraint does not serve as a basis for the statutory
claim of wrongful attachment."
Case 1:18-cv-08250-JSR Document 98 Filed 02/07/19 Page 6 of 13
property is actually attached" and denied a motion for fees on
the grounds that no property had been attached successfully.
While Kidder is not binding on this Court and may have been
wrongly decided, for present purposes it is irrelevant. The
facts in Kidder were unusual. The plaintiff had obtained an ex
parte order of attachment, but it was vacated on the consent of
the parties before plaintiff ever actually encumbered any
property. See id. at 146. These facts distinguish Kidder from
the present case, where property was in fact attached. Kidder
says nothing about "de minimis" attachment; it draws a bright-
line between an attachment and a failure to attach. See id. at
146 (reasoning that 6212(e) "appears to encompass only actual
attachment of property - not the preliminary steps in the
In addition to finding no support for WCF's de minimis
attachment argument in the case law, 4 the Court considers this
4 The other cases cited by WCF similarly fail to support its
argument. See AdiPar Ltd. v. PLO Int'l Corp., No. 01-cv-
7685(MBM), 2002 WL 31740622, at *14 (S.D.N.Y. Dec. 6, 2002)
(finding that plaintiff could bring an unlawful attachment
action as failure of garnishees to surrender attached property
does "not conclusively establish that [plaintiff] was not
deprived of the use of its property"); Globex Int'l Inc. v.
Commercial Bank of Namibia Ltd., No. 99-cv-4789(JSM), 1999 WL
1211827, at *1 (S.D.N.Y. Dec. 17, 1999) (no entitlement to Rule
6212(e) damages where the court granted a temporary restraining
order and not an order of attachment); Shu Yiu Louie v. David &
Chiu Place Restaurant, Inc., 689 N.Y.S.2d 476, 478 (N.Y. 1st
Dep't 1999) (no entitlement to Rule 6212(e) damages where motion
for attachment denied); Provisional Protective Committee v.
Case 1:18-cv-08250-JSR Document 98 Filed 02/07/19 Page 7 of 13
argument inconsistent with the policy rationales behind 6212(e)
Attachment is "an extraordinary process, often causing great
damages, and is designed, ordinarily, for the purpose of being
used sparingly only." A. C. Israel Commodity Co. v. Banco Do
Brasil, S.A., SO Misc. 2d 362, 365 (N.Y. Sup. Ct. 1966); see
also Provisional, 121 A.D.2d at 273 (attachment is an
"extraordinary remedy") . Accordingly, the legislature has
structured the statutory scheme governing attachments to
encourage appropriately sparing use of ex parte attachment, both
by providing an alternative means of securing property (through
a temporary restraining order issued pursuant to C.P.L.R. §
6210) 5 and by shifting the costs of an improper attachment to the
plaintiff through Rule 6212(e). Rule 6212(e) explicitly includes
attorneys' fees as part of these costs on the understanding that
attorneys' fees incurred attempting to remove an attachment are
damages resulting from that attachment. Here, while plaintiff
failed to attach anyw~ere near the amount of property that it
hoped to with the ex parte attachment order, it did receive such
an order, pursue attachment for over a month, successfully
Williams, 121 A.D.2d 271, 273(N.Y. 1st Dept. 1986) (no
entitlement to Rule 6212(e) damages where the court granted a
temporary restraining order and not an order of attachment).
s The temporary restraining order procedure was added to the
C.P.L.R. in an effort "to encourage plaintiffs to make the
motion for attachment on notice rather than invariably resort to
the ex parte method." See C.P.L.R. § 6210, Practice
Case 1:18-cv-08250-JSR Document 98 Filed 02/07/19 Page 8 of 13
attach some amount of property, and force the defendant to incur
legal costs in seeking to vacate the attachment. This is exactly
the kind of endeavor that Rule 6212(e) seeks to deter where
there is no valid legal basis for attachment.
Finally, WCF argues that fees should be denied as the
attachment was vacated for a "technical" rather than a
"substantive" reason. Opp. at 6. This is incorrect. As the Court
clearly stated in its memorandum explaining the denial of the
motion to confirm attachment, it denied the motion because WCF
"failed to meet its burden to establish that either of the[]
[claimed] grounds for attachment applies." See Memorandum dated
November 15, 2018, Dkt. 59, at 3. It is difficult to imagine a
more substantive reason for vacatur. WCF argues, despite this
explanation, that the vacatur was "technical" because Shrem's
offer to place $61,000 in escrow "obviated the need for
attachment." Opp. at 6-7. As discussed above, $61,000 in escrow
hardly substitutes for the attachment of $31,362,500 worth of
bitcoin sought by WCF.
Accordingly, the Court finds that Shrem is entitled to
attorneys' fees and costs pursuant to Rule 6212(e)
II. Amount of Attorneys' Fees and Costs
When granting fee awards, district courts are given "broad
discretion" in determining what is reasonable under the
circumstances. Luciano v. Olsten Corp., 109 F.3d 111, 115 (2d
Case 1:18-cv-08250-JSR Document 98 Filed 02/07/19 Page 9 of 13
Cir. 1997). See also Cmty. Tv Sys. v. Caruso, 284 F.3d 430, 437
(2d Cir. 2002) (appellate review "of an award of attorneys' fees
is highly deferential to the district court"). "In determining
reasonable attorney's fees, the district court must calculate a
'lodestar' figure based upon the number of hours reasonably
expended by counsel on the litigation multiplied by a reasonable
hourly rate." Luciano, 109 F.3d at 115. "[C]ourts have endorsed
percentage cuts as a practical means of trimming fat from a fee
application." S.E.C. v. Byers, 590 F. Supp. 2d 637, 648
Shrem has requested $76,156 in attorneys' fees and $1,053
in costs for his opposition to the motion to confirm attachment.
See Defendant Charles Shrem's Motion for Attorneys' Fees and
Costs Pursuant to N.Y. C.P.L.R. §§ 6212(b), (e) ("Mem."), Dkt.
80, at 4. WCF does not obJect to the costs claimed but argues
that Shrem's fee request includes excessive hours and rates. See
Opp. at 7.
In determining reasonable hourly rates, the Court considers
"the range of rates that plaintiff's counsel actually charge
their clients," Rozell v. Ross-Holst, 576 F. Supp. 2d 527, 543
(S.D.N.Y. 2008), and whether those rates are "in line with those
rates prevailing in the community for similar services by
lawyers of reasonably comparable skill, experience, and
reputation," Luciano, 109 F.3d at 115. Shrem's counsel
Case 1:18-cv-08250-JSR Document 98 Filed 02/07/19 Page 10 of 13
represents that the hourly rates charged to Shrem represent a
10% discount on their normal billed rates. Affidavit of Donald
R. Pepperman in Support of Defendant Charles Shrem's Motion for
Attorneys' Fees and Costs ("Pepperman Aff."), Dkt. 81, ~ 11. The
majority of the rates they charged ($580 for a partner, $445 for
a senior associate, and $265 for an associate) are clearly
within the bounds of what has been approved by courts in this
district. See, e.g., H.B. Automotive Group, Inc. v. Kia Motors
America, Inc., No. 13-cv-4441 (VEC) (DF), 2018 WL 4017698, at *6,
*8 (S.D.N.Y. July 25, 2018) (summarizing cases approving hourly
rates in commercial matters ranging from $500 to $700 per hour
for partners and $300 per hour for junior associates). The $850
per hour rate charged for Mr. Klein is on the high end of those
approved by courts, but is not clearly out of bounds and the
Court further notes that it appears Klein's time was properly
allocated to tasks requiring a senior partner's attention. See,
~' In re Merrill Lynch & Co., Inc. Research Reports Sec.
Litig., 2007 WL 313474, at *22 (S.D.N.Y. Feb. 1, 2007) (finding
a rate of $850 per hour for a partner "high" but "not
inordinate") . The $265 per hour rate charged for paralegal work,
however, is clearly above the ordinary rate in this district,
even for paralegals such as Ms. Isomoto with extensive
experience. See H.B. Automotive, 2018 WL 4017698 at *9
(collecting cases reducing paralegal rates to $200) .
Case 1:18-cv-08250-JSR Document 98 Filed 02/07/19 Page 11 of 13
Accordingly, the Court finds a reduction in Isomoto's rate to
$200 per hour appropriate. This adjustment changes the total
lodestar requested to $74,978.
Turning to the hours billed on this matter, the Court notes
as a preliminary matter that Rule 6212(e) authorizes the award
of only those attorneys' fees that are "the natural and
proximate consequence of the wrongful attachment." A.C. Israel,
270 N.Y.S.2d at 286. A determination that an attachment is
unwarranted is not a determination on the merits of the
underlying action, and does not entitle a party to its
attorneys' fees in its conduct of the case as a whole, but only
to those fees incurred as a direct result of the wrongful
However, Shrem's fee request fails to isolate those tasks
specific to the order of attachment and instead includes a
number of hours more properly allocated to the general conduct
of the case. For instance, the billing records submitted to the
Court include time spent pursuing unsealing of the case and
working with plaintiff's counsel to create a joint discovery
plan. These activities are largely or wholly unrelated to the
issue of attachment.
The billing records also include time spent checking the
docket, reading the complaint, and reviewing the Court's rules.
Shrem argues that this time is appropriately included as "[n]o
Case 1:18-cv-08250-JSR Document 98 Filed 02/07/19 Page 12 of 13
reasonable or prudent attorney would undertake to oppose an
attachment motion without first reviewing the operative
complaint ... ". Opp. at 10-11. This is, of course, true. However,
in the Court's view, a reasonable defense attorney must always
review the complaint in the case, regardless of whether or not
there is an order of attachment at issue. This is a cost of
litigation, not a cost incurred by an improper attachment of
assets. The same holds true for activities such as checking the
docket and reviewing the Court's rules.
The billing records also include a number of entries for
client calls and strategy meetings of unspecified subject
matter. It is doubtful that the sole focus of these meetings and
calls was the order of attachment, particularly as the time
period concerned covers Shrem's initial retention of counsel and
their preliminary investigation and development of their case as
a whole, which would have to be undertaken regardless of any
order of attachment. Similarly, the time billed to investigation
of WCF's allegations in the complaint concerning the transfer of
5,000 bitcoin, while relevant to Shrem's argument on attachment
and, accordingly, properly included in this fee request in part,
was an expense that Shrem would have surely undertaken in any
circumstances as part of his defense on the merits and should
not be included in full in this fee request.
Case 1:18-cv-08250-JSR Document 98 Filed 02/07/19 Page 13 of 13
Without multiplying examples, the Court finds that the
claimed fees should be reduced by 40%. Accordingly, the Court
finds a fee award of $44,986.80 appropriate, which represents
60% of Shrem's adjusted lodestar request. The Court finds such a
reduction warranted given the inclusion of litigation activities
not properly attributable to the attachment order in the fee
request. The Court finds Shrem's request for costs reasonable.
In sum, Shrem is hereby awarded attorneys' fees in the
amount of $44,986.80 and costs in the amount of $1,053.
Plaintiff is directed to make payment of the amounts to them by
no later than February 19, 2019. The Clerk is instructed to
close docket number 80.
February~' 2019 JED S. RAKOFF, U.S.D.J.
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