Opinion ID: 167987
Heading Depth: 4
Heading Rank: 2

Heading: Reduction of A ttorney Fees

Text: ISR challenges the district court’s decision to reduce its requested attorney fees by one-half because it prevailed on only one of its two breach of contract claims, as well as the district court’s decision to reduce its requested attorney fees by one-third because it did not prevail against defendant Geerdes–one of the three defendants ISR had sued. The district court’s order states, in relevant part: Plaintiff tried two sets of claim[s] against these defendants: one for common law misappropriation of trade secrets and one for breach of contract. The attorneys’ fees may be allowed only for the claim for breach of contract as they are based on the prevailing party provision. Since the work performed by counsel is not separated out in his affidavit, or by his billing records, this Court cannot determine which hours relate to which claim. However, as noted above, when a plaintiff brings multiple claims, and the claims involve a “common core of facts” or “related legal theories” a fee applicant may claim all hours reasonably necessary to litigate those issues. Thus, the C ourt will not reduce the fees based on the fact that the attorney’s work on the trade secret claim may also have related to work on the contract claim on which plaintiff prevailed. However, the plaintiff brought two breach of contract claims under the license agreement against the Defendants Heumann and Shidler, one for breach of the covenant not to compete and one for 13 (...continued) No. 04-1221. Finally, on July 2, 2004, this court lifted the abatement in Case Nos. 03-1083 and 03-1107, fully remanded the cases “for whatever additional proceedings deemed necessary with respect to attorney fee issues,” and terminated the appeals. Accordingly, we conclude that we lack jurisdiction to consider Judge Babcock’s denial of ISR’s request for attorney fees and costs related to the dismissal of Geerdes’s counterclaims. That issue has been remanded for any necessary proceedings before Judge Figa. -23- breach of the confidentiality provision, and prevailed on only the latter of these claims. Thus, the Court will award only one-half of the sub-total amount set forth above under the prevailing party language of the license agreement . . . . Finally, since plaintiff prevailed only against D efendants Heumann and Shidler, and not against Defendant Gerdes, [sic] the court must reduce by one-third the lodestar amount, just as was done with Defendant Gerdes’ [sic] fee request . . . . App. at 174-75. On appeal, ISR maintains that its lack of success on its breach of the covenant not to compete claim was not a proper ground for the district court to reduce its attorney fees by one-half. In support, ISR asserts that both of its breach of contract claims were substantially interrelated, and again emphasizes the success it achieved in the litigation. In addition to the standard lodestar calculation, a district court may consider the reasonableness of the attorney fees in light of a party’s success or lack thereof, and then adjust the fee upward or dow nw ard. Chavez v. Thomas & Betts Corp., 396 F.3d 1088, 1103 (10th Cir. 2005) (citation omitted). W e believe that the Supreme Court’s decision in H ensley v. Eckerhart, 461 U.S. 424 (1983), is instructive on this matter. 14 In Hensley, the Supreme Court explained that where a plaintiff is deemed the “prevailing party,” despite success on only some 14 W e recognize that Hensley involved an award of attorney fees under 42 U.S.C. § 1988, as opposed to a private contract. Even so, we believe that Hensley’s principles are sound and provide useful guidance on the issue at hand. -24- claims for relief, two considerations are important when awarding fees: (1) whether the plaintiff lost on claims that were unrelated to his successful claims; and (2) w hether “the plaintiff achieve[d] a level of success that makes the hours reasonably expended a satisfactory basis for making a fee award[.]” Id. at 434. The first consideration requires a court to determine w hether the “plaintiff’s claims for relief . . . involve a common core of facts or [are] based on related legal theories.” Id. at 435. The second consideration requires a court to determine the “significance of the overall relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation.” Id. The Supreme Court noted, however, that a fee reduction would be appropriate “if the relief, however significant, [was] limited in comparison to the scope of the litigation as a whole.” Id. at 440. Despite the considerable discretion the district court had in making its award of attorney fees, id. at 436-37, we question the district court’s underlying rationale for reducing ISR’s fees by one-half. As a starting point, the district court properly recognized that ISR was entitled to attorney fees for only its claims under the license agreement. Agritrack, Inc. v. DeJohn Housemoving, Inc., 25 P.3d 1187, 1193 (Colo. 2001); Harwig v. Downey, 56 P.3d 1220, 1222 (Colo. Ct. App. 2002); see also Stichting M ayflower, 917 F.2d at 1248. The district court then stated, consistent with H ensley, that “when a plaintiff brings multiple claims, and the claims involve a ‘common core of facts’ or ‘related legal theories’ a fee -25- applicant may claim all hours reasonably necessary to litigate those claims.” App. at 174. Applying this standard, the district court refused to reduce ISR’s fees based on the lack of success on its misappropriation of trade secrets claim. But the district court then departed from this standard when it announced that because ISR prevailed on only one out of its two breach of contract claims, the court would reduce the requested attorney fees by one-half. Hensley rejected a mathematical approach whereby a district court compares “the total number of issues in the case with those actually prevailed upon.” 461 U.S. at 435 (internal quotations omitted). Here, the district court followed this very approach, comparing the total number of claims ISR raised under the license agreement to the number of claims ISR prevailed on under the license agreement. Following Hensley, we conclude that the district court’s apportionment of fees based on a success/failure ratio w as erroneous. W here claims, such as ISR’s, are based on related legal theories and a comm on core of facts, 15 the district court must focus on the significance of the overall relief obtained. Ramos v. Lamm, 713 F.2d 546, 556 (10th Cir. 1983); see 15 For instance, we note that the license agreement’s covenant not to compete prohibited Heumann, in relevant part, from “directly or indirectly . . . training other individuals for the purpose of teaching infants or young children to swim.” App. at 42. Similarly, the license agreement’s confidentiality provision prohibited Heumann from training or endeavoring to train instructors using ISR’s methods without ISR’s consent. Id. -26- also Robinson v. City of Edmond, 160 F.3d 1275, 1283 (10th Cir. 1998) (stating that “when a plaintiff achieves the principal goal of her lawsuit, lack of success on some of her interrelated claims may not be used as a basis for reducing the plaintiff’s fee award”). Here, the district court viewed ISR’s lawsuit as a series of discrete claims, rather than addressing the significance of the relief ISR obtained against Heumann and Shidler–a total of $100,000 in liquidated damages and permanent injunctive relief— in light of the scope of the litigation as a whole. W e are also concerned with the district court’s decision to reduce ISR’s fees by one-third based on its unsuccessful claims against Geerdes. In W ayne v. Village of Sebring, 36 F.3d 517 (6th Cir. 1994), the Sixth Circuit rejected the rationale that a plaintiff’s attorney fees should be reduced where the plaintiff is successful against some defendants, but not others, and the claims against all the defendants are related. The plaintiffs in W ayne brought civil rights claims under 42 U.S.C. §§ 1983 and 1985 against the Village of Sebring and its council members and manager. Id. at 522. The district court granted summary judgment in favor of the individual council members and manager. Id. During a jury trial, the district court entered a directed verdict against the Village of Sebring on the issue of liability and granted partial injunctive relief to the plaintiffs. Id. On appeal, the Sixth Circuit addressed several issues, including whether the district court abused its discretion in reducing the plaintiffs’ requested attorney fees on the basis that “some of the hours claimed were spent on unsuccessful claims -27- against [the] dismissed [council members and manager].” Id. at 532. The Sixth Circuit concluded that the district court’s reduction on that basis was improper: In the present case, there is only one common core of facts implicating both [the Village of] Sebring and the individual defendants who prevailed on summary judgment. No separate issues were raised against the prevailing defendants that were not raised against Sebring itself. . . . Under Hensley, it follow s that Plaintiffs’ claim for attorney fees should not be reduced simply because some indeterminate amount of time was expended on the prevailing individual defendants. Id. Similar to the plaintiffs in W ayne, ISR litigated its case against Heumann, Shidler, and Geerdes as a single action, and therefore its unsuccessful claims against Geerdes were substantially related to its successful claims against Heumann and Shidler. As ISR points out, even if it had not named Geerdes as a party to the action, Geerdes would still have been deposed and called as a w itness at trial. Thus, ISR attorney fees were generated on the case as a whole, rather than on a party-by-party basis. W e are sympathetic to the district court’s justification for reducing ISR’s attorney fees. This case involves multiple claims and multiple parties, and neither side separated out the work for the court. But when such a case involves related claims and a common core of facts, “the district court should focus on the significance of the overall relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation.” H ensley, 461 U.S. at 435. W e therefore -28- reverse the district court’s award of attorney fees to ISR and remand for further proceedings consistent with this opinion.