Opinion ID: 2575840
Heading Depth: 2
Heading Rank: 3

Heading: DFS is Entitled to $23,515.70 in Attorneys' Fees.

Text: Having established that DFS is entitled to its reasonable and necessary attorneys' fees and that such an award of attorneys' fees is not limited to twenty-five per cent of the judgment, we now consider which attorneys' fees were shown to have been reasonably and necessarily incurred. As previously mentioned, DFS requests an award of attorneys' fees in the amount of $133,555.88, in addition to excise taxes in the amount of $5,565.28, for a total of $139,121.16. For support, DFS attached an invoice from Stubenberg & Durrett, Attorneys at Law [hereinafter the Stubenberg firm] describing each charge, as well as a declaration by Attorney Stubenberg stating, inter alia, that: (1) the attorneys' fees actually and reasonably incurred in connection with the Stubenberg firm's appellate representation of DFS amounted to $132,232.50; (2) DFS incurred computer-assisted research charges in the amount of $3,858.38; and (3) the hourly rates attributed to Attorney Stubenberg, Attorney Zahaby, and Attorney Lam were $325.00 per hour, $125.00 per hour, and $185.00 per hour respectively. Paiea, on the other hand, contends that the fees charged by the Stubenberg firm were excessive and unreasonable, citing the following charges as examples: (1) $33,112.50 (135.3 billed hours) spent on a motion to dismiss the appeal; (2) 325.4 billed hours for a sixteen-page answering brief; (3) 3.8 billed hours to review supreme court schedules and oral argument scenarios; and (4) four billed hours to prepare an oral argument outline. In addition, Paiea contends that awarding DFS $3,858.38 for computer-assisted research is improper inasmuch as such expenses are a component of a law firm's overhead and are therefore already reflected in attorneys' fees. Accordingly, Paiea argues that any award of attorneys' fees should not exceed $38,853.25.
The United States Supreme Court has previously addressed the question of what constitutes a reasonable fee, in the context of the Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C. § 1988 (West 1976), stating that: [t]he 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. Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). In Montalvo v. Chang, 64 Haw. 345, 358-359, 641 P.2d 1321, 1331 (1982) (citations omitted), overruled on other grounds by Chun v. Bd. of Trustees of the Employees' Retirement Sys. of the State of Hawai`i, 92 Hawai`i 432, 992 P.2d 127 (2000), [6] we endorsed a virtually identical method of calculation in the context of a class action litigation where the recovery resulted in a common fund from which the attorneys' fees were to be drawn: In essence, the initial inquiry is how many hours were spent in what manner by which attorneys. The determination of time spent in performing services within appropriately specific categories, is followed by an estimate of its worth. The value of an attorney's time generally is reflected in his normal billing rate. But it may be necessary to use several different rates for the different attorneys and the reasonable rate of compensation may differ for different activities. And when the hourly rate reached through the foregoing analysis is applied to the actual hours worked, a reasonably objective basis for valuing an attorney's services is derived. The inquiry, however, does not end here, for other factors must be considered. The product of the first and second steps nevertheless serves as the lodestar of the ultimate fee award. The first of the factors to be considered for possible adjustment of the lodestar determination is the contingent nature of success, a factor which may be of special significance where the attorney has no private agreement that guarantees payment even if no recovery is obtained. The second additional factor to be examined is the extent, if any, to which the quality of an attorney's work mandates increasing or decreasing the lodestar figure. If the court decides an adjustment is justified on this basis, it should set forth as specifically as possible the facts that support ... (its) conclusion. The foregoing algorithm is commonly referred to as the lodestar method. Id.; see also Chun, 92 Hawai`i at 434, 992 P.2d at 129 (In Montalvo, we adopted the `lodestar' method of awarding attorney's fees to plaintiffs' counsel in class action litigation where the recovery has resulted in the creation of a common fund from which the attorneys' fees are drawn) (emphasis added). Accordingly, we apply the lodestar method in the case at bar. Our initial task is to determine how many hours were shown to have been reasonably expended. See Sharp v. Hui Wahine, 49 Haw. 241, 246, 413 P.2d 242, 247 (1966) (the party requesting fees has the burden to prove that the requested fees were reasonably and necessarily incurred). To that end, after a thorough examination of the submissions of DFS and Paiea as well as a careful review of the record before us, we conclude that DFS has demonstrated that it expended 105 reasonable and necessary hours on the underlying appeal. [7] Our subsequent task is to determine a reasonable hourly rate. We note that four different attorneys, with four different hourly rates, worked on varying aspects of the underlying appeal. Accordingly, we conclude that the average of the four different rates constitutes a reasonable rate in the case at bar. The hourly rates for Attorneys Stubenberg, Durrett, Lam, and Zahaby are $325/ hour, $225/hour, $185/hour, and $125/hour, respectively. Thus, the average rate is $215/ hour. Finally, the lodestar method instructs us to multiply the reasonable rate by the sum of reasonable hours expended. See Montalvo, 64 Haw. at 358-359, 641 P.2d at 1331; Hensley, 461 U.S. at 433, 103 S.Ct. 1933. Accordingly, applying a rate of $215/hour to a sum of 105 hours, we conclude that DFS has shown that it has incurred $22,575.00 in reasonable and necessary attorneys' fees, and $940.70 in taxes. We therefore award DFS $23,515.70 in attorneys' fees.
DFS also requests $3,858.38 for computer-assisted research charges as an element of its attorneys' fee recovery. Paiea, on the other hand, contends that the inclusion of computer-assisted research charges in any award of attorneys' fees is improper inasmuch as computer-assisted research charges are already incorporated into a law firm's overhead and are thus already reflected in the attorneys' fees charged. Although we have not previously had occasion to pass upon the foregoing issue, the Intermediate Court of Appeals [hereinafter ICA], in Bjornen v. State Farm Fire and Casualty Co., 81 Hawai`i 105, 912 P.2d 602 (App.1996), squarely addressed a request for an award of computer-assisted research costs. [8] The ICA initially noted that several treatises regarded the costs related to computer-assisted research as subsumed within an attorney's fee and therefore such costs may not be awarded in addition to attorneys' fees. [9] Id. at 107, 912 P.2d at 604. The ICA subsequently conducted a survey of the federal jurisdictions, stating that: [t]he majority of federal courts subscribe to the view that costs of computer legal research are properly reflected as part of the law firm's overhead and, as such, are a factor to be included in the setting of attorneys fees as opposed to ordinary costs. In re San Juan Dupont Plaza Hotel Fire Litigation, 142 F.R.D. 41, 47 (D.Puerto Rico 1992). See Wolfe v. Wolfe, 570 F.Supp. 826, 828 (D.S.C.1983) (WEST-LAW charges are incidental to attorneys' services and, therefore, are not considered to be valid costs); Friedlander v. Nims, 583 F.Supp. 1087, 1088-89 (N.D.Ga.1984) (expenses of computerized legal research are properly considered a component of attorney fees and are not recoverable as costs). Id. at 108-109, 912 P.2d at 604-605. Accordingly, the ICA ruled that disbursements for computerized legal research ... are a component of attorney fees and are not taxable costs. Id. at 109, 912 P.2d at 606. [10] Inasmuch as we agree with the ICA's ruling, we are also compelled to conclude that the computer-assisted research charges in the present case are not recoverable as separately billed attorneys' fees. Although it appears that some federal jurisdictions might accept DFS' argument, [11] our endorsement of Bjornen precludes us from traversing a similar analytical path. Where a law firm passes its computer-assisted research charges to a client, allowing that client to recover those charges as an award of attorneys' fees debases the rule stated in Bjornen inasmuch as computer-assisted research charges would henceforth be recoverable so long as the party seeking recovery classifies the charges as separately billed attorneys' fees rather than taxable costs. We thus decline to render Bjornen susceptible to such form over substance arguments and take the present opportunity to expressly state what the rule in Bjornen logically implies  that computer-assisted research charges are subsumed within a law firm's overhead and therefore the client may not recover such costs by classifying them as separately billed attorneys' fees. Accordingly, we deny DFS' request to recover $3,858.38 in computer-assisted research charges.