Court Opinion

ID: 4587283
Source: CourtListenerOpinion
Date Created: 2020-11-18 00:00:43.076614+00
Date Added: 2024-06-11T13:49:42.782481
License: Public Domain

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

JONATHAN DIMAIO, et al,
Plaintiffs,
. Civil Case No. 20-445 (RJL)
CHAD WOLF,
in his official capacity as Acting Secretary of
Homeland Security, F I L E D

NOV 17 2020
UNITED STATES DEPARTMENT OF

Clerk, U.S. District & Bankruptcy
HOMELAND SECURITY, ef al, Courts for the District of Columbia

Defendants.

 

MEMORANDUM OPINION
(November |Z, 2020) [Dkt. # 30]

This is an Administrative Procedure Act case challenging the U.S. Department of
Homeland Security rule, issued on February 5, 2020, that purported to make residents of the
State of New York ineligible to enroll or re-enroll in U.S. Custom and Border Protection’s
Trusted Traveler Programs, including the Global Entry program. After approximately six
months of litigation and negotiations, the parties have now reached a settlement agreement to
resolve the case in full, and seek an order from this Court incorporating that agreement into a
final order of dismissal. On October 16, 2020, I held a hearing to inquire further into the
reasonableness of the attorney fees component of that settlement agreement. Having

considered the parties’ submissions, the arguments and representations made at the hearing,

]
and the relevant law, I find that the attorney fees agreed to by the parties in this case are not
reasonable, and therefore will DENY the parties’ request to incorporate their agreement into
a final order of dismissal.
BACKGROUND

On February 5, 2020, the Acting Secretary of the Department of Homeland Security
sent notice to officials at New York State’s Department of Motor Vehicles, stating that
“effective immediately,” DHS would bar residents of New York from enrolling or re-
enrolling in Customs and Border Protection’s Trusted Traveler Programs, including the
Global Entry Program. DHS explained that its decision was due to a recent New York law,
the “Green Light Law,” that both allows undocumented tmmigrants residing in New York to
obtain driver’s licenses and bans federal immigration officials from accessing state DMV
databases absent a court order. DHS claimed that the New York law compromised CBP’s
ability to confirm whether individuals applying to Trusted Traveler Programs met the
eligibility requirements because DHS was unable to access New York’s DMV records.

On February 14, 2020, plaintiffs brought suit challenging that DHS policy. Plaintiffs
are New York residents who planned to enroll in Trusted Traveler Programs or had an
application pending when the policy was announced. According to the complaint, the policy
affected approximately 80,000 New York residents who had applications pending for Trusted

Traveler Programs. Plaintiffs contended DHS’s policy violated the APA because it: (1) was

i)
not adopted in compliance with the required notice-and-comment procedure; (2) was
arbitrary, capricious, and an abuse of discretion; and (3) was not in accordance with law,

On March 13, 2020, plaintiffs filed a motion for partial summary judgment. I held an
oral argument on that motion on June 22, 2020. Following oral argument, defendants filed a
Notice of Correction on July 23, 2020, stating that the Acting Secretary of Homeland
Security had “determined that it is appropriate to restore New York residents’ eligibility to
participate in Trusted Travel Programs (‘TTPs’), effective immediately.” The Notice further
admitted that certain statements made by defendants during and before the litigation were
“inaccurate in some instances and [gave| the wrong impression in others,” including
statements made in defendants* summary judgment briefing. Essentially, defendants had
represented in this Court and elsewhere that the data restrictions imposed by New York’s
Green Light Law precluded CBP from conducting adequate risk assessments of New York
applicants for TTPs, when in fact several states and other jurisdictions, whose residents were
eligible for TTPs, had in place similar restrictions. These inaccurate and misleading
statements, according to defendants: themselves, “undermine a central argument in
Defendants’ filings to date: that CBP is not able to assure itself of an applicant’s low-risk
status because New York fails to share relevant DMV information with CBP for TTP
purposes.”

Shortly thereafter, on August 25, 2020, the parties filed a Joint Motion to Dismiss,

attaching a settlement agreement that resolves the case in full. Among other things, the
settlement agreement provides for defendants to pay attorney fees and expenses totaling
$212,139.70 to plaintiffs’ counsel, Arnold & Porter Kaye Scholer, LLP (‘Arnold & Porter’’).
The parties request an order from this Court incorporating the settlement agreement into an
order of dismissal. I held a hearing on October 16, 2020, to inquire further into the
reasonableness of the attorney fees portion of the settlement agreement.
LEGAL STANDARDS

Federal Rule of Civil Procedure 41(a) provides for voluntary dismissal of actions in
federal courts. Per Rule 41(a)(1)(A)(i), a plaintiff may dismiss an action without a court
order by filing “ta stipulation of dismissal signed by all parties who have appeared.” Here,

however, the parties move this Court for an order of dismissal that incorporates the parties’

 

settlement agreement. Rule 41(a)(2) provides that, “[e|]xcept as provided in Rule 41(a)(1), an
action may be dismissed at the plaintiffs request only by court order, on terms that the court
considers proper.” Fed. R. Civ. Proc. 41(a)(2) (emphasis added).

Incorporation of the settlement agreement into an order of dismissal pursuant to Rule
41(a)(2) would allow the Court to maintain jurisdiction to enforce the parties’ agreement,
whereas “[p|rivate settlements do not entail . .. judicial approval and oversight,” and “federal
courts are without jurisdiction to enforce a private settlement agreement unless its terms are
incorporated into [an] order of dismissal.” Arthur v. District of Columbia, 106 F. Supp. 3d
230, 233 (D.D.C. 2015) (internal quotations and citations omitted). However, this Court will
incorporate the parties’ settlement agreement into an order of dismissal pursuant to Rule
41(a)(2) only if the Court “considers proper” the terms of such an agreement.
ANALYSIS

The parties have made it clear to the Court that their settlement agreement does not
require judicial approval and is in fact self-executing. Fine. Negotiating an agreement in a
pro bono case that bypasses judicial approval and requires defendants to pay in excess of
$200,000 in attorney fees might warrant a tip of the proverbial cap from fellow practitioners,
but it is irrelevant to a judicial analysis of whether to incorporate the parties’ agreement into
an order of dismissal. Indeed, while I am satisfied that the remaining provisions of the
parties’ agreement are fair and reasonable, | am quité concerned, and have been from the
outset, about the reasonableness of the amount of attorney fees agreed to by the parties.

As the parties are undoubtedly aware, courts do not have many opportunities to opine
on the reasonableness of attorney fees when the amounts are agreed to by the parties. The
Court here, however, is mindful of its responsibility to ensure that the fees are reasonable
under the circumstances in order to make a fulsome determination of whether the terms of the
settlement agreement are “proper” pursuant to Rule 41(a)(2). | take this obligation especially
seriously where, like here, the agreed-upon fees will be taken from the public fisc. Unlike
defendants’ counsel, the Court has requested the actual billing records from Arnold & Porter
reflecting attorney hours billed to this case, and has received the same. Upon review of the

number of attorneys working on the case, the number of hours billed, and the billing rates of
the attorneys (ranging from $750 to $990 per hour), | have concluded that the attorney fees
agreed to in this case are not reasonable. How so?

First, Arnold & Porter’s billing records show that eight total attorneys—two partners
and six associates—billed time on this matter. The Court finds this number of attorneys to be
entirely unnecessary to the needs of the case. In a case of this complexity-—which spanned
only six months and entailed drafting and arguing only one substantive motion—the Court
believes that two partners and two associates would have been more than sufficient to
complete the needed work.

Second, the Court finds that charging defendants for time billed at Arnold & Porter’s
standard, corporate rates is not reasonable under the circumstances here. Arnold & Porter 1s,
according to its own website, a “world-class” firm, handling complex regulatory, litigation,
and transactional solutions for its corporate clients’ most complex challenges. In a case of
this kind, where the agreed-upon fees will ultimately be paid by the taxpayer, applying
Arnold & Porter’s standard corporate rates makes little sense. “The Court believes that a more
reasonable approach to calculate reasonable hourly rates under these circumstances would be
to do so under the Laffey Matrix.

The Laffey Matrix sets out a general guideline for awarding attorney [ees based on
experience. ‘See generally Laffey v. Nw. Airlines, Inc., 572 ¥ Supp. 354, 371-75 (D.D.C.
1983) (establishing the first Laffey fee matrix, in the context of a longstanding employment

discrimination class action), aff'd in part, rev'd in part on other grounds, 746 F.2d 4

6
(D.C.Cir. 1984), overruled in part on other grounds, Save Our Cumberland Mountains, Inc.
v. Hodel, 857 F.2d 1516 (D.C. Cir.1988)). Updated versions of the Laffey Matrix are
regularly used by courts in this Circuit to determine reasonable hourly rates for legal work.
See Hayes v. D.C. Public Schools, 815 F. Supp. 2d 134, 143 (D.D.C. 2011). Indeed, the
United States Attorney's Office for the District of Columbia prepares an updated matrix
commonly applied to calculate reasonable attorney fees in this Circuit. See id.; Smith v.
District of Columbia, 466 F Supp.2d 151, 156. The updated USAO Laffey Matrix rates are,
not surprisingly, substantially lower than Arnold & Porter’s corporate billing rates. See
generally U.S. Atty’s Office for D.C. Laffey Matrix = 2015-2020,
https://www,justice.gov/usao-de/page/file/1189846/download (last visited October 22, 2020).
The Court finds that under the circumstances here, using the updated USAO Laffey Matrix 1s
more reasonable than using the standard Arnold & Porter corporate rates as provided in the
settlement agreement.

With two partners and six associates billing at Arnold & Porter’s standard rates, the
parties have agreed to an attorney fee award totaling $206,500.50. If the amount was
reduced to just two partners and two associates (assuming the retention of the two highest-
billing associates), and the USAO Laffey Matrix rates were applied, the attorney fee award
would total $82,562.20. This Court believes that attorney fees totaling $82,562.20 would be
much more reasonable and fair under the circumstances here than the award set forth in the

settlement agreement.
Defense counsel from the Department of Justice acknowledged at the October 16,
2020 hearing that while negotiating the settlement agreement, they did not request Arnold &
Porter’s billing records for review, nor did they suggest that attorney fees in this case be
calculated according to anything other than Arnold & Porter’s standard corporate rates. The
Court believes that the Department of Justice should have been much more aggressive in
protecting the public fisc. Perhaps, however, it is not so surprising that they weren’t in this
case. After all, itis not every day the Department of Justice and their clients have to confess
to written and oral misrepresentations on the record in a high profile case! lt would appear
that Arnold & Porter simply capitalized—unfortunately at taxpayer expense!—-on the
Government’s apparent desire to dispose of the case as quickly as possible. I certainly hope,
and expect, that the Department’s leadership will take the necessary steps in the luture,
especially in cases that involve embarrassing conduct of the type here, to ensure that the fees
agreed to by the Department, and ultimately paid by the taxpayer, are indeed fair and

reasonable.

 

| By way of mitigation, Arnold & Porter was quick to note in its pleading that the fees at
issue will be directed in their entirety to the Arnold & Porter Foundation, a tax-exempt
charitable organization that provides funding for fellowships for recent law school graduates,
scholarships to underrepresented law students, and grants to other charitable and educational
organizations. While | commend Arnold & Porter’s charitable intentions, for which they
undoubtedly receive much favorable public recognition, this is irrelevant to a judicial
analysis of whether the fees in a case like this are, in fact, fair and reasonable, and thus
“proper.” Indeed, there was a time earlier in my career when pro bono literally meant pro
bono and not a penny would be collected for the time expended by either a law firm or an
individual counsel who was providing the services on a pro bono basis.

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CONCLUSION
For all of the foregoing reasons, the Court DENIES [30] the parties’ Joint Motion to
Dismiss. The parties may file a stipulation of dismissal pursuant to Rule 41(a)(1)(a)(ii), or
may file another Rule 41(a)(2) motion after modifying the attorney fees portion of their
settlement agreement.

SO ORDERED. : e

|

RICHARD J N
United States District Judge