Opinion ID: 2982668
Heading Depth: 3
Heading Rank: 1

Heading: Expenses of Electronic Legal Research

Text: ServiceMaster alleges that Smith’s award of $3,590.69 for costs incurred performing electronic legal research on Westlaw and PACER is not recoverable, and even if it is recoverable, the charges were not described with sufficient detail. Sixth Circuit law is unsettled regarding whether costs for electronic legal research are properly awarded or whether these costs should be considered part of the overhead included in the attorney’s hourly fee. See Auto Alliance Int’l, Inc. v. U .S. Customs Serv., 155 F. App’x 226, 229 (6th Cir. 2005) (“[T]his circuit has not definitively ruled on this question . . . .”); see also Deal v. Hamilton Cnty. Dep’t of Educ., 258 F. App’x 863, 866 (6th Cir. 2007) (the district court did not “abuse its discretion in denying the [Plaintiffs’] request for certain litigation expenses, including electronic legal research, travel expenses, and overtime meals”). Further, there is a 6 Smith et al. v. ServiceMaster Holding Corp., et al., No. 14-5481 split within the district courts of this circuit. Compare Moore v. Menasha Corp., No. 1:08–CV– 1167, 2013 WL 308960, at  (W.D. Mich. Jan. 25, 2013) (holding that “[w]hile it is a close question, the Court concludes that the modern practice is to charge clients separately for computer-research costs”), with Fharmacy Records v. Nassar, 729 F. Supp. 2d 865, 894 (E.D. Mich. 2010) (denying the expense, holding “the majority of courts which have considered the matter have denied recovery for computer legal research as a separate expense”).5 Some circuits consider electronic research costs to be incorporated in the attorney’s billing rate and thus not separately compensable. “The idea is that computer-assisted legal research essentially raises an attorney’s average hourly rate as it reduces (at least in theory) the number of hours that must be billed. As a form of attorney’s fees, the charges associated with such research are not separately recoverable expenses.” Montgomery v. Aetna Plywood, Inc., 231 F.3d 399, 409 (7th Cir. 2000) (citing Haroco, Inc. v. Am. Nat’l Bank & Trust Co. of Chicago, 38 F.3d 1429, 1440–41 (7th Cir. 1994)); see also Standley v. Chilhowee R-IV Sch. Dist., 5 F.3d 319, 325 (8th Cir. 1993) (“[T]he law of this Circuit is that computer-based legal research must be factored into the attorneys’ hourly rate, hence the cost of the computer time may not be added to the fee award.”). But other circuits routinely award electronic research as separate costs. “It is undisputed that a plaintiff may receive an award of costs for legal research.” Porter v. Astrue, 999 F. Supp. 2d 35, 43 (D.D.C. 2013) (citing Hirschey v. F.E.R.C., 777 F.2d 1, 6 (D.C. Cir. 1985) (“[A] charge of $142.61 for computer research is appropriate.”)). 5 There is a similar split within other circuits regarding the recoverability of computer research. In the Eastern District of New York, for example, courts “differ on whether to allow electronic research costs as a reimbursable item.” Adams v. City of New York, Nos. 07-CV-2325, 13CV271, 2014 WL 4649666, at  (E.D.N.Y. Sept. 16, 2014) (“The Court favors the approach of accounting for electronic research fees as part of the proportionate share of attorney’s fee and declines to award such expenses as a separate reimbursable item.”). 7 Smith et al. v. ServiceMaster Holding Corp., et al., No. 14-5481 Some circuits find that efficiency justifies awarding the cost of computerized legal research. “We agree that the use of online research services likely reduces the number of hours required for an attorney’s manual search, thereby lowering the lodestar, and that in the context of a fee-shifting provision, the charges for such online research may properly be included in a fee award.” Arbor Hill Concerned Citizens Neighborhood Ass’n v. Cnty. of Albany, 369 F.3d 91, 98 (2d Cir. 2004). We see no reason for an absolute rule that the cost of computer research is or is not recoverable. Any recovery should be for the actual cost of the online access or service. If the lawyer or firm pays a blanket access fee, rather than per search, there is no reason to distinguish the on-line research cost from the cost of the books that at one time lined the walls of legal offices, which was treated as overhead. If distinct charges are incurred for specific research directly relating to the case, and the general practice in the local legal community is to pass those charges on to the client, we see no reason why such properly documented charges should not be included in the recoverable expenses. In the instant case, the record of the local practice regarding computer research charges has not been developed. Auto Alliance Int’l, Inc., 155 F. App’x at 229 (“Nor did [Plaintiffs] submit any evidence about general industry practice . . . concerning billing of computerized research charges.”). ServiceMaster further asserts that Plaintiffs’ record of the charges is inadequate. A typical entry for Plaintiffs’ electronic research reads: “Timekeeper: Jaime Pacheco; Date: 10/31/2009; Narrative: October 2009 Westlaw charges; Units: 1; Total Price: $2.84.” Plaintiffs explain that they ensured the costs were properly billed to the ServiceMaster case because their attorneys “designate[d] a client-specific billing code for each PACER or Westlaw session at the time the charge is incurred. When the bills for the electronic research are 8 Smith et al. v. ServiceMaster Holding Corp., et al., No. 14-5481 received, the bills are reviewed and recorded for each client in the law firm’s internal billing software.” Br. of Appellees at 33. This practice establishes that the expenses were actually incurred in connection with the litigation. However, the entries, without more do not establish that each charge was reasonably related to the issues raised in the case. Accordingly, even if the costs of electronic legal research can be separately awarded, it is not apparent that Plaintiffs have provided descriptions of their charges sufficient to justify such an award. We therefore remand to the district court for further development of the record and reconsideration of an award for the expenses of computer-based research. 2. Rates of Compensation for Law Clerks and Associates ServiceMaster argues that the district court erred in granting fees based on Plaintiffs’ requested hourly rates of $300, $375, and $450 for associates, and $175 and $225 for law clerks because these rates exceed the local rates of the forum.6 The district court found the rates reasonable, explaining that Plaintiffs’ Counsel, based in San Francisco, California, litigated the case against Defendants, national corporations. The Court finds the hourly rates requested by Plaintiffs’ counsel to be reasonable, particularly considering the rate discounts7 Plaintiffs’ Counsel provided in its lodestar figure. However, in this circuit, “[a] trial court, in calculating the reasonable hourly rate component of the lodestar computation, should initially assess the prevailing market rate in the relevant community.” Adcock–Ladd, 227 F.3d at 350 (internal quotation marks omitted) (emphasis in original) (quoting Blum v. Stenson, 465 U.S. 886, 895 (1984)). “[T]he starting point [for determining the reasonable amount of attorney’s fees] has been a ‘lodestar’ calculation—the product of the number of hours reasonably spent on the case by an attorney 6 ServiceMaster does not dispute that this circuit uses the lodestar to calculate attorney’s fees; it only takes issue with the rates charged for the associates and law clerks. 7 Andrus and Anderson, LLP discounted their hourly rates by 25 percent. 9 Smith et al. v. ServiceMaster Holding Corp., et al., No. 14-5481 times a reasonable hourly rate.” Moore, 355 F.3d at 565. The amount of fees awarded can be adjusted as the district court finds necessary under the circumstances of the particular case. Id. There is some Sixth Circuit authority that the relevant market need not be local to the venue. “Today’s holding is not to be interpreted as requiring district courts to always base the fees awarded non-private attorneys on local rates. District courts are free to look to a national market, an area of specialization market or any other market they believe appropriate to fairly compensate particular attorneys in individual cases.” Louisville Black Police Officers Org. v. City of Louisville, 700 F.2d 268, 278 (6th Cir. 1983) (emphasis in original). Further, a district court has discretion to consider the following factors and adjust the award accordingly: (1) the time and labor required by a given case; (2) the novelty and difficulty of the questions presented; (3) the skill needed to perform the legal service properly; (4) the preclusion of 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. Adcock–Ladd, 227 F.3d at 349 n.8 (citing Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717–19 (5th Cir. 1974)). The Tennessee Rate Report indicates that the local hourly rates for associates range from $190 to $335, well below the rates charged by Plaintiffs’ counsel. The report reflects that only partners commanded the $450 hourly rate. Plaintiffs submitted declarations from two Tennessee-area FLSA attorneys and from a fee expert and professor of law at Vanderbilt University. William B. Ryan, one of the FLSA attorneys, found the requested hourly rates justified because of the sophisticated nature of the litigation and of Plaintiffs’ counsel. Professor Brian T. Fitzpatrick testified that his research indicates that FLSA cases in other circuits command a higher hourly rate. 10 Smith et al. v. ServiceMaster Holding Corp., et al., No. 14-5481 The district court did not adequately explain its reasons for departing from the local rate for associates and did not discuss the governing criteria. Thus, we remand for further consideration. Additionally, the district court did not specifically address the reasonable hourly rates for law clerks, and neither party provided evidence of the market rates for such work. Because the trial court is required to “assess the prevailing market rate in the relevant community” (Adcock– Ladd, 227 F.3d 343 at 350), we remand the law clerk-rate issue for additional consideration as well. 3. Fees for Unsuccessful Motions, Issues, and Claims ServiceMaster argues that the district court erred in awarding fees for work on unsuccessful motions, issues, and claims. Specifically, ServiceMaster requests that the award be reduced by: 1) at least $46,897.20 for time spent on Smith’s unsuccessful defense of the motions to compel arbitration and 2) $126,092.20 for work related to Smith’s unsuccessful motion to compel discovery of class information and Smith’s unsuccessful pursuit of collective action. The district court did not address this objection in its order. “‘[T]he most critical factor’ governing the reasonableness of a fee award ‘is the degree of success obtained.’” Waldo v. Consumers Energy Co., 726 F.3d 802, 822 (6th Cir. 2013) (quoting Hensley v. Eckerhart, 461 U.S. 424, 436 (1983)). Where “a plaintiff obtains ‘limited success, the district court should award only that amount of fees that is reasonable in relation to the success obtained.’” Isabel v. City of Memphis, 404 F.3d 404, 416 (6th Cir. 2005) (quoting Hensley, 461 U.S. at 435). However, “where the plaintiff’s claims for relief involve common facts or related legal theories, such that much of counsel’s time will have been devoted generally to the litigation as a whole, the court should focus on the significance of the overall relief obtained by 11 Smith et al. v. ServiceMaster Holding Corp., et al., No. 14-5481 the plaintiff in relation to the hours reasonably expended on the litigation.” Imwalle v. Reliance Med. Prods., Inc., 515 F.3d 531, 552 (6th Cir. 2008) (quoting Hensley, 461 U.S. at 435). Further, this court has held that attorney’s fees related to a failed effort to pursue collective action can be recovered if “these expenses benefitted the . . . plaintiffs’ individual claims.” O’Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 576 (6th Cir. 2009). The district court made no findings supporting the award of attorney’s fees for work relating to the unsuccessful claims and defenses. There was no discussion of whether and to what extent the work related to the successful claims. We therefore remand for a determination and discussion of the issue whether the award should be reduced to account for the time attorneys spent on Plaintiffs’ unsuccessful claims, and if so, by how much. 4. Time Entry Descriptions ServiceMaster alleges that the district court erred by awarding fees based on time entries that lacked sufficient detail and impermissibly block-billed the time charged. Accordingly, ServiceMaster seeks a $8,738.50 reduction of the award for vague entries and $649 reduction for block-billed entries. The district court did not address these objections in its order.
Attorneys who seek fees have an obligation to “maintain billing time records that are sufficiently detailed to enable courts to review the reasonableness of the hours expended.” Wooldridge, 898 F.2d at 1177. The party seeking fees has “the burden of providing for the court’s perusal a particularized billing record.” Perotti v. Seiter, 935 F.2d 761, 764 (6th Cir. 1991). Although Plaintiffs’ counsel “is not required to record in great detail how every minute of his [or her] time was expended,” “at least counsel should identify the general subject matter of 12 Smith et al. v. ServiceMaster Holding Corp., et al., No. 14-5481 [] time expenditures, Hensley, 461 U.S. at 437 n.12); see also Wooldridge, 898 F.2d at 1177; Cleveland Area Bd. of Realtors v. City of Euclid, 965 F. Supp. 1017, 1020 (N.D. Ohio 1997). This court has held that “[in] obtaining the number of hours expended on the case, the district court must conclude that the party seeking the award has sufficiently documented its claim.” United Slate, Local 307 v. G & M Roofing & Sheet Metal Co., 732 F.2d 495, 502 (6th Cir. 1984). Where the documentation is inadequate, the district court may reduce the award accordingly. Hensley, 461 U.S. at 433. Because the district court in the instant case failed to make any findings regarding the sufficiency of the explanations provided by Plaintiffs’ counsel, we remand.
Regarding block-billing, this court has held that so long as the description of the work performed is adequate, block-billing can be sufficient. [Plaintiff] has cited no authority to support its argument that the use of block billing is contrary to the award of a reasonable attorney fee . . . in fact, our sister circuits have rejected block-billing objections to fee awards in a number of contexts. . . . [C]ounsel, of course, is not required to record in great detail how each minute of his time was expended. Pittsburgh & Conneaut Dock Co. v. Dir., Office of Workers’ Comp. Programs, 473 F.3d 253, 273 (6th Cir. 2007); see also Oakley v. City of Memphis, No. 06-2276 A/P, 2012 WL 2682755, at  (W.D. Tenn. June 14, 2012) report and recommendation adopted, No. 06-2276-STA-tmp, 2012 WL 2681822 (W.D. Tenn. July 6, 2012) aff’d, 566 F. App’x 425 (6th Cir. 2014) (“As far as this court is aware, the Sixth Circuit has never explicitly rejected the practice of block billing.”). However, we remand so that the district court can assess this objection in light of its reconsideration of the other issues addressed in this opinion. 13 Smith et al. v. ServiceMaster Holding Corp., et al., No. 14-5481 5. Unnecessary Work ServiceMaster next argues that the total award should be reduced by $1,732 for clerical tasks completed by lawyers and other billing professionals, and by $20,122.50 for entries that reflect multiple attorneys working on the same task. The district court did not address this argument. Accordingly, we remand to the district court for determination as to whether the award should be reduced to account for any clerical work performed by Plaintiffs’ counsel. ServiceMaster also contends that “[i]n multiple instances, Plaintiffs sought fees for two attorneys to perform the same task.” ServiceMaster points to instances where more than one lawyer billed for meetings, calls, and depositions in which all billing lawyers participated. However, ServiceMaster does not provide any relevant authority from this jurisdiction stating that when multiple attorneys work on a task, only one attorney can bill his or her time. This court has, “[i]n complicated cases, involving many lawyers, [] approved the arbitrary but essentially fair approach of simply deducting a small percentage of the total hours to eliminate duplication of services.” Sigley v. Kuhn, 205 F.3d 1341, 2000 WL 145187, at  (6th Cir. Jan. 31, 2000) (table). We remand this issue to allow the district to determine if the duplicative entries are warranted. 6. Fees for Attorney Travel Time Finally, ServiceMaster alleges that the district court erred by awarding Plaintiffs 95.2 hours of travel time, totaling $49,028, in attorney’s fees because Smith did not provide evidence that the attorneys worked while traveling.8 “The Sixth Circuit has often found travel time to be compensable if determined by the district courts to be the local practice regarding payment for travel time.” Monroe v. FTS USA, LLC, No. 2:08-cv-02100-JTF-cgc, 2014 WL 8 ServiceMaster does not contend that any of the travel time submitted by Plaintiffs’ counsel was unnecessary. 14 Smith et al. v. ServiceMaster Holding Corp., et al., No. 14-5481 4472720, at  (W.D. Tenn. July 28, 2014) (quoting Robinson v. Elida Sch. Dist., Bd. of Educ., 99 F.3d 1139, 1996 WL 593535, at  (6th Cir. Oct. 15, 1996)); see also Perotti, 935 F.2d at 764 (“We believe that matters of this sort [travel time] are within the discretion given the district court, which has greater familiarity with local practice than does this court, and we will not reverse on this record.”). The district court made no findings pertinent to the local practice regarding travel time, or whether the attorneys were performing legal services while traveling. Therefore, we remand this issue as well.