Opinion ID: 197312
Heading Depth: 3
Heading Rank: 2

Heading: PSC-Member Costs

Text: 64 a) Photocopying Costs 65 Appellants oppose the twenty-five-cent page rate at which the district court permitted reimbursement to PSC members for photocopying; in all, amounting to $184,000. The district court explained that it fail[ed] to see the difference between PSC members and any IRPA charging a client a reasonable amount for copying charges. Order No. 510-A, at 8 (Nov. 24, 1993). Appellants cite numerous decisions which hold the twenty-five-cent rate unreasonable, and argue that the PSC provided no proof that it actually incurred that cost to copy each page. 66 The PSC members offer three justifications for the approved rate. First, most photocopying was done at the PSC office and no reimbursement claim was made. Second, appellants knew early on in the litigation that the PSC had voted to permit its members to claim reimbursement at twenty-five cents per page. Third, the twenty-five-cent rate, standard in many law offices, had been allowed in the MGM case. Although the district court's cost-allowance rulings are entitled to deferential review, Grendel's Den, 749 F.2d at 950, we are persuaded that its ruling does not withstand scrutiny. 67 Unlike the PSC, the IRPAs are free to assess their own clients for photocopying in accordance with their respective contingent fee agreements and any applicable ethical-code provision. On the other hand, the PSC is a creature of the district court, whose mission is to promote more efficient litigation, see MCL § 20.223 (Designated counsel should render services as economically as possible under the circumstances.). In a common benefit case of this sort, therefore, the court must ensure that PSC members recover only their actual costs, with no profit margin. See Fogleman v. ARAMCO, 920 F.2d 278, 286 (5th Cir.1991) (To the extent that counsel charges a party more than actual cost for any service, be it reproduction of documents or telephone calls, counsel is recovering additional fees.); Spicer v. Chicago Bd. Options Exch., Inc., 844 F.Supp. 1226, 1260 (N.D.Ill.1993); In re Washington Pub. Power Supply Sys. Sec. Litig., 779 F.Supp. 1063, 1111-12 (D.Ariz.1990) (reducing in-house photocopying costs claimed at twenty or twenty-five cents: [t]hat this amount may be charged to regular clients by the firm, or that it is 'standard' in the firm's area of practice, is not controlling, [and] Class members will not be assessed an amount that produces a clear and unwarranted profit for the firm), rev'd on other grounds, 19 F.3d 1306 (9th Cir.1994). 19 68 Unlike the PSC's alleged failure to document the necessariness and reasonableness of other types of expenses (e.g., hotel charges, air fares), see supra Section II.A, its failure to document its own in-house photocopying costs presents a fundamental problem. As in-house photocopying costs are not incurred with outside providers (e.g., hotel, airline, or even an outside photocopying service), there is no third-party receipt to verify the expenditure and its amount. 20 69 Even if only by reasoned approximation, therefore, the PSC needed either to demonstrate the various components of its in-house photocopying costs (e.g., the prorated cost of purchasing or leasing the photocopier, the copy paper, and salaries attributable to making the copies), or show the prevailing cost of comparable outside copy services, see, e.g., Haroco, Inc. v. American Nat'l Bank and Trust Co. of Chicago, 38 F.3d 1429, 1441 (7th Cir.1994) (holding that charges for in-house reproduction may not exceed the charges of an outside print shop). See Grendel's Den, 749 F.2d at 950 (noting that the district court's discretion must, of course, be exercised within evidentiary bounds, and the court must provide a 'clear explanation of its reasons for the fee award' ). 70 The PSC does not pretend to have established that it actually incurred a twenty-five-cent-per-page photocopying cost. As all three PSC justifications for the requested twenty-five-cent rate, supra, are inapposite to this essential showing, we vacate the district court ruling, and direct the PSC members to reimburse appellants for all PSC in-house photocopying cost claims calculated at a rate exceeding ten cents per page. Thus, appellees are to remit $110,400 of the $184,000 disbursed to the PSC. 71 b) Hotel Rates 72 Lastly, appellants contend that the district court abused its discretion by allowing reimbursement to various PSC members for hotel-room charges ranging from $180 to $450 per day, notwithstanding its pretrial order cautioning that hotel accommodations/meals should be moderate, not deluxe.... Pretrial Order No. 127, at 44-45. Appellants assert that any hotel-room charge above the $116 per diem rate then deemed deductible by the Internal Revenue Service, should not have been reimbursed, that less expensive rooms were available in Puerto Rico, and that on occasion PSC members obtained less expensive rates. There was no abuse of discretion. 73 First, the district court correctly noted that substantial leeway was due PSC members regarding their scheduling needs during the frenetic early stages of the litigation, when most investigation and discovery had to be conducted. See Order No. 584, at 9 (noting that the PSC conducted over 2300 depositions, and retained twenty-nine expert witnesses); id. ([The investigative] stage was decisive in terms of immediately preserving evidence and conducting valuable investigations regarding the fire origin and spread. Time was of the essence and because of this, the activity was feverish, leaving scant opportunity to fine-tune the preparation and justification of expenses.). Consequently, the appropriate inquiry here is not simply whether an individual attorney might have booked a room at a lower rate during a given time period. Rather, the PSC frequently was required to coordinate lodging for many individuals and without much advance notice. 74 Thus, the appropriate inquiry must be whether the rate was reasonable in relation to the legitimate needs occasioned by the litigation tasks at hand. Against this backdrop, appellants have failed to demonstrate an abuse of discretion. None of the hotel rates strike us as facially abusive in these particular circumstances. Cf. Grendel's Den, 749 F.2d at 957 (finding abuse of discretion where hotel bill of $917 could be considered unreasonable on its face). 75 Second, as with other PSC-costs, see supra Section II.A, appellants settled, from the outset and without protest, for amorphous general standards, such as moderate and non-deluxe hotel accommodations, whereas they were free from the start to propose the $116 per-diem rate they now suggest. Furthermore, there has been no showing that the hotel charges for which reimbursement was sought were either deluxe or not moderate in the circumstances. 21 Finally, as concerns appellants' contention that PSC members did not keep adequate supporting documentation relating to the necessariness and reasonableness of each hotel expense, their position is foreclosed. See supra Section II.A. III