Court Opinion

ID: 3047535
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:21:43.061155+00
Date Added: 2024-06-11T11:49:14.299773
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

VICKI WELCH,                              
                 Plaintiff-Appellant,
                 v.
METROPOLITAN LIFE INSURANCE
COMPANY; KAISER FOUNDATION                       No. 04-56768
HEALTH PLAN, INC., Long Term
Disability Plan; KAISER                           D.C. No.
                                                CV-04-00084-PA
FOUNDATION HEALTH PLAN, INC.,
                                                  OPINION
Medical Plan; KAISER FOUNDATION
HEALTH PLAN, INC., Life Insurance
Plan; KAISER FOUNDATION HEALTH
PLAN, INC., Retirement Plan,
              Defendants-Appellees.
                                          
         Appeal from the United States District Court
            for the Central District of California
          Percy Anderson, District Judge, Presiding

                    Argued and Submitted
            October 19, 2006—Pasadena, California

                       Filed March 6, 2007

   Before: Raymond C. Fisher and Consuelo M. Callahan,
   Circuit Judges, and Raner C. Collins,* District Judge.

                     Opinion by Judge Fisher

  *The Honorable Raner C. Collins, United States District Judge for the
District of Arizona, sitting by designation.

                                2495
2498      WELCH v. METROPOLITAN LIFE INSURANCE CO.

                         COUNSEL

Lisa S. Kantor (argued) and Glenn R. Kantor, Kantor & Kan-
tor LLP, Northridge, California, for the plaintiff-appellant.

Eric R. McDonough (argued) and Lawrence E. Butler, Sey-
farth Shaw LLP, Los Angeles, California, for the defendants-
appellees.

                         OPINION

FISHER, Circuit Judge:

  Plaintiff-Appellant Vicki Welch appeals the district court’s
order awarding her attorney’s fees under 29 U.S.C.
          WELCH v. METROPOLITAN LIFE INSURANCE CO.         2499
§ 1132(g)(1). She disputes the district court’s decisions to
award fees at an hourly rate of $250, to apply across-the-
board reductions in the number of hours requested because
Welch’s attorneys block billed and billed in quarter-hour
increments and to disallow time incurred for discrete tasks
such as attorney conferences. We affirm the district court’s
fee award in most respects but reverse in part, holding that the
district court erred in setting Welch’s counsel’s hourly rate at
$250 and in imposing a 20 percent across-the-board reduction
for block billing. We remand for a new determination of the
court’s fee award.

   FACTUAL AND PROCEDURAL BACKGROUND

  Welch sued Defendant-Appellee Metropolitan Life Insur-
ance Company (MetLife) under the Employee Retirement
Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-
1191, alleging that MetLife improperly denied her benefits
under a long-term disability plan. See 29 U.S.C. § 1132. Six
months after Welch filed suit, MetLife agreed to honor
Welch’s claim. Thereafter, Welch moved for an award of
costs and attorney’s fees pursuant to 29 U.S.C. § 1132(g)(1),
requesting $39,112 in fees for 11.5 hours of work at $375 per
hour and 87 hours of work at $400 per hour (for work after
January 1, 2004).

   In support of her motion, Welch submitted declarations
from four experienced ERISA attorneys who attested that they
charge clients between $400 and $475 per hour. In one decla-
ration, attorney Ronald Dean said that his $475 hourly rate “is
not contingent upon the result.” In addition, Welch submitted
four district court orders granting fees to lawyers from Kantor
& Kantor LLP — the law firm representing Welch — at rates
of $300 to $375 per hour.

  MetLife opposed Welch’s motion for attorney’s fees, argu-
ing that the requested fees were unreasonable. Although
asserting that Welch’s requested hourly rates were unreason-
2500        WELCH v. METROPOLITAN LIFE INSURANCE CO.
able, MetLife submitted four complaints that Kantor & Kan-
tor had recently filed in the Central District of California in
which the firm had requested fees on behalf of its client at the
rate of $375 per hour.1 MetLife presented no other evidence
regarding the prevailing market rate for ERISA plaintiffs’
lawyers.

   The district court awarded fees to Welch, but reduced the
requested hourly rate to $250. The court also imposed a 20
percent across-the-board reduction in the number of hours
requested because Kantor & Kantor had block billed its time,
and a 20 percent across-the-board reduction because Kantor
& Kantor billed in quarter-hour increments.2 Finally, the court
reduced the hours requested for time spent in meetings
between firm lawyers, conducting discovery, preparing a case
analysis memo and preparing the motion for attorney’s fees.
In sum, the district court awarded fees for 43.05 hours of
work rather than the 98.5 hours requested. The court’s reduc-
tions resulted in a final award of $10,762 in attorney’s fees to
Welch.

                   STANDARD OF REVIEW

   ERISA permits district courts to award “reasonable” attor-
ney’s fees and costs to either party. See 29 U.S.C.
§ 1132(g)(1). On appeal, we review the district court’s award
for abuse of discretion. Van Gerwen v. Guarantee Mut. Life
Co., 214 F.3d 1041, 1045 (9th Cir. 2000). “An abuse of dis-
cretion is found only when there is a definite conviction that
the court made a clear error of judgment in its conclusion
upon weighing relevant factors.” Hope v. Int’l Bhd. of Elec.
Workers, 785 F.2d 826, 831 (9th Cir. 1986) (citation omitted).
  1
   Kantor & Kantor raised its hourly rate to $400 in January of 2004.
  2
   “Block billing” is “the time-keeping method by which each lawyer and
legal assistant enters the total daily time spent working on a case, rather
than itemizing the time expended on specific tasks.” Harolds Stores, Inc.
v. Dillard Dep’t Stores, Inc., 82 F.3d 1533, 1554 n.15 (10th Cir. 1996).
          WELCH v. METROPOLITAN LIFE INSURANCE CO.         2501
We review de novo the district court’s determination of ques-
tions of law. Cann v. Carpenters’ Pension Trust Fund for N.
Cal., 989 F.2d 313, 315 (9th Cir. 1993).

                        DISCUSSION

   To calculate attorney’s fees awarded under § 1132(g)(1),
district courts utilize a two-step hybrid lodestar/multiplier
approach. First, the court establishes a lodestar by multiplying
the number of hours reasonably expended on the litigation by
a reasonable hourly rate. See Van Gerwen, 214 F.3d at 1045.
The party seeking fees bears the burden of documenting the
hours expended in the litigation and must submit evidence
supporting those hours and the rates claimed. See Hensley v.
Eckerhart, 461 U.S. 424, 433 (1983). In determining the
appropriate lodestar amount, the district court may exclude
from the fee request any hours that are “excessive, redundant,
or otherwise unnecessary.” Id. at 434. In addition to setting
the number of hours, the court must also determine a reason-
able hourly rate, “considering the experience, skill, and repu-
tation of the attorney requesting fees.” Chalmers v. City of
Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986). Second, in
rare and exceptional cases, the district court may adjust the
lodestar upward or downward using a multiplier based on
facts not subsumed in the initial lodestar calculation. See Van
Gerwen, 214 F.3d at 1045.

   Recognizing that the district court has the benefit of first-
hand contact with the litigation and the lawyers involved, we
review a district court’s award of fees deferentially. See Hens-
ley, 461 U.S. at 437 (according deference to district court “in
view of the district court’s superior understanding of the liti-
gation and the desirability of avoiding frequent appellate
review of what essentially are factual matters”).

                I.   Reasonable Hourly Rate

  The district court denied Welch’s fee request for reimburse-
ment at the rates of $375 and $400 per hour, instead finding
2502      WELCH v. METROPOLITAN LIFE INSURANCE CO.
$250 to be a reasonable rate. This reduced rate was based on
the district court’s finding that “[t]here is no evidence that
Plaintiff’s counsel ever collects $375 or $400 per hour from
paying clients except as part of an award of attorneys’ fees
issued by a court”; the court’s belief that Kantor & Kantor’s
hourly rates “have been inflated to include a contingency mul-
tiplier”; and the court’s consideration of “the relevant market
rates in the community for this type of matter.” We conclude
that the district court clearly erred.

   [1] First, the district court erred in reducing Welch’s
requested rate because Kantor & Kantor does not collect $375
and $400 from its paying clients. We have repeatedly held
that the determination of a reasonable hourly rate “is not made
by reference to the rates actually charged the prevailing
party.” See, e.g., Mendenhall v. Nat’l Transp. Safety Bd., 213
F.3d 464, 471 (9th Cir. 2000) (quoting Chalmers, 796 F.2d at
1210). Rather, billing rates “should be established by refer-
ence to the fees that private attorneys of an ability and reputa-
tion comparable to that of prevailing counsel charge their
paying clients for legal work of similar complexity.” Davis,
976 F.2d at 1545; see also Carson v. Billings Police Dep’t,
470 F.3d 889, 892 (9th Cir. 2006) (holding that the prevailing
market rate — not the individual contract between the appli-
cant attorney and the client — “provides the standard for
lodestar calculations”).

   [2] Second, reduction may have been improper because
there was insufficient evidence that Kantor & Kantor inflated
its hourly rates above the prevailing market rate due to the
contingent nature of its practice. In support of its reduction,
the district court relied on a fee motion the Kantor & Kantor
firm had submitted in an unrelated case, in which the firm jus-
tified its hourly rate by stating:

    [A]lthough the market requires defense counsel to
    offer competitive rates apparently below what he
    thinks he is truly worth, defense counsel is paid at
          WELCH v. METROPOLITAN LIFE INSURANCE CO.            2503
    the time or immediately following, the time his ser-
    vices are rendered. He further gets paid even if he
    loses the case. This is not so for Plaintiff’s counsel,
    who, because an ERISA claimant cannot afford to
    pay by the hour, is forced to await until completion
    of a litigation in order to obtain a contingency fee,
    which may, or may not be paid — if the case is lost.

    The district court correctly observed that contingency can-
not be used to justify a fee enhancement, see Cann v. Carpen-
ters’ Pension Trust Fund, 989 F.2d 313, 318 (9th Cir. 1993),
or an inflated hourly rate, see Davis v. City and County of San
Francisco, 976 F.2d 1536, 1549 (9th Cir. 1992), vacated in
part on other grounds, 984 F.2d 345 (1993). But as we read
Kantor & Kantor’s motion, the firm was at least in part
explaining that its hourly rate in the prior case took into
account the delay in payment that results from the firm’s
contingency-based system of representation — regardless of
whether the case is won or lost. See Missouri v. Jenkins, 491
U.S. 274, 282-83 (1989) (“Although delay and the risk of
nonpayment are often mentioned in the same breath, adjusting
for the former is a distinct issue.”) (quotation omitted). Thus
it is unclear to what extent, if any, the requested $375 to $400
rates included a “contingency multiplier.”

   [3] To the extent Kantor & Kantor’s motion was addressing
delay in payment, that is a factor properly considered in arriv-
ing at a reasonable hourly rate. District courts have the discre-
tion to compensate plaintiff’s attorneys for a delay in payment
by either applying the attorneys’ current rates to all hours
billed during the course of the litigation or using the attor-
neys’ historical rates and adding a prime rate enhancement.
See In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d
1291, 1305 (9th Cir. 1994).

   [4] Third, although the district court appropriately consid-
ered relevant market rates, it did not explain how evidence in
the record supported the hourly award of $250. This omission
2504       WELCH v. METROPOLITAN LIFE INSURANCE CO.
is significant because the evidence submitted by both parties
suggests that $250 is well below the prevailing market rate for
ERISA plaintiffs’ lawyers of comparable skill. Welch satis-
factorily bore her burden of demonstrating that $375 to $400
per hour is in line with the prevailing market rate by submit-
ting two pieces of evidence: (1) rate determinations in other
cases litigated by the Kantor & Kantor firm awarding fees at
rates between $300 and $375 per hour; and (2) declarations
from comparable ERISA lawyers attesting that the market
sustains a rate above $400 per hour.3 See United Steelworkers
of Am. v. Phelps Dodge Corp., 896 F.2d 403, 407 (9th Cir.
1990) (“Affidavits of the plaintiffs’ attorney and other attor-
neys regarding prevailing fees in the community, and rate
determinations in other cases, particularly those setting a rate
for the plaintiffs’ attorney, are satisfactory evidence of the
prevailing market rate.”). The only evidence provided by
MetLife — four complaints that Kantor & Kantor had filed in
unrelated cases requesting fees at $375 per hour — bolstered
Welch’s argument that Kantor & Kantor’s hourly rate was not
unreasonably high. In the absence of contrary evidence, we
conclude that the requested fees of $375 and $400 per hour
were established as being in line with prevailing community
rates, and on remand the district court must presume those
rates are reasonable. See id.

   On remand, the district court may reduce Welch’s
requested rates despite the presumption of reasonableness, but
any reduction must be based either on a determination that
Welch’s attorneys performed below the level of expertise that
would command those rates or on evidence that undermines
the reasonableness of the rate requested. See id. In addition,
the court may clarify the extent to which Kantor & Kantor’s
proferred rates of $375 and $400 do in fact include a contin-
gency factor and reduce the hourly rate accordingly.
  3
   One attorney expressly clarified that his hourly rate $475 does not
include a contingency multiplier.
          WELCH v. METROPOLITAN LIFE INSURANCE CO.        2505
                  II.   Reasonable Hours

  A.   Across-the-Board Reduction for Block Billing

   The district court imposed an across-the-board reduction of
20 percent on Welch’s requested total hours because Kantor
& Kantor chose to block bill some of its time rather than item-
ize each task individually. The court arrived at its 20 percent
reduction based on a report by the California State Bar’s
Committee on Mandatory Fee Arbitration, which concluded
that block billing “may increase time by 10% to 30%.” See
The State Bar of California Committee on Mandatory Fee
Arbitration, Arbitration Advisory 03-01 (2003) (“Fee
Report”). The court adopted the 20 percent as within the Fee
Report’s “middle range.”

   [5] We do not quarrel with the district court’s authority to
reduce hours that are billed in block format. The fee applicant
bears the burden of documenting the appropriate hours
expended in the litigation and must submit evidence in sup-
port of those hours worked. See Gates v. Deukmejian, 987
F.2d 1392, 1397 (9th Cir. 1992). It was reasonable for the dis-
trict court to conclude that Welch failed to carry her burden,
because block billing makes it more difficult to determine
how much time was spent on particular activities. See, e.g.,
Role Models Am., Inc. v. Brownlee, 353 F.3d 962, 971 (D.C.
Cir. 2004) (reducing requested hours because counsel’s prac-
tice of block billing “lump[ed] together multiple tasks, mak-
ing it impossible to evaluate their reasonableness”); see also
Hensley, 461 U.S. at 437 (holding that applicant should
“maintain billing time records in a manner that will enable a
reviewing court to identify distinct claims”); Fischer v. SJB-
P.D. Inc., 214 F.3d 1115, 1121 (9th Cir. 2000) (holding that
a district court may reduce hours to offset “poorly document-
ed” billing).

  [6] Nonetheless, the district court clearly erred in applying
a 20 percent reduction to all of Welch’s requested hours. In
2506      WELCH v. METROPOLITAN LIFE INSURANCE CO.
fact, barely more than half of all hours submitted by Welch’s
counsel were block billed. Reducing the total hours by 20 per-
cent thereby effectively served as a 40 percent penalty on
those hours actually block billed, well above the range justi-
fied by the Fee Report.

   [7] Accordingly, we vacate the district court’s 20 percent
across-the-board reduction for block billing. On remand, the
district court may properly impose a reduction for block bill-
ing, but it should “explain how or why . . . the reduction . . .
fairly balance[s]” those hours that were actually billed in
block format. Sorenson v. Mink, 239 F.3d 1140, 1146 (9th
Cir. 2001).

  B.   Across-the-Board     Reduction     for   Billing   by   the
       Quarter-Hour

   [8] The district court also imposed a 20 percent across-the-
board reduction on Welch’s requested hours because Kantor
& Kantor billed in quarter-hour increments. The district court
was in the best position to determine in the first instance
whether counsel’s practice of billing by the quarter-hour
resulted in a request for compensation for hours not reason-
ably expended on the litigation. See Chalmers, 796 F.2d at
1211. We accord considerable deference to that finding, Van
Gerwen, 214 F.3d at 1047, and will not disturb it where, as
here, the applicant has failed to bear her burden of submitting
detailed time records justifying the hours claimed to have
been expended. See In re Wash. Pub. Power Supply Sys. Sec.
Litig., 19 F.3d 1291, 1305 (9th Cir. 1994).

   [9] The district court reasonably concluded that Kantor &
Kantor’s practice of billing by the quarter-hour resulted in a
request for excessive hours. Unlike its reduction for block
billing, the district court expressly correlated its reduction for
quarter hour billing to Kantor & Kantor’s actual over-billing.
Having reviewed the firm’s summary time sheet, the court
found the hours were inflated because counsel billed a mini-
          WELCH v. METROPOLITAN LIFE INSURANCE CO.            2507
mum of 15 minutes for numerous phone calls and e-mails that
likely took a fraction of the time. Our own review of the time
sheet confirms that it is replete with quarter-hour or half-hour
charges for the drafting of letters, telephone calls and intra-
office conferences. We therefore affirm the district court’s
reduction for quarter-hour billing.

  C.   Reduction for Intra-Office Conferences, Preparation of
       a Case Analysis Memorandum, Discovery and
       Preparation of the Motion for Attorney’s Fees

   [10] The district court reduced Welch’s requested hours by
5.75 hours for time spent in intra-office conferences, by 5
hours for preparation of a case analysis memorandum, by 4
hours for time spent conducting discovery-related activities,
and by 9 hours for preparation of Welch’s motion for attor-
ney’s fees. We affirm all of these reductions.

   First, the court reasonably reduced the hours billed for
intra-office conferences between Welch’s primary counsel at
Kantor & Kantor and her colleague. As Welch’s primary
counsel said in the fee request, she has assumed sole responsi-
bility for several hundred ERISA matters. Given her substan-
tial experience and Welch’s failure to provide a persuasive
justification for the intra-office meetings, the district court did
not err in finding the intra-office conferences to be unneces-
sary and duplicative. See Hope, 785 F.2d at 831.

   Second, the district court’s finding that 5 hours spent on
case analysis were unnecessary is precisely the kind of assess-
ment that is entitled to considerable deference because of “the
district court’s superior understanding of the litigation.” Van
Gerwen, 214 F.3d at 1047 (quoting Hensley, 461 U.S. at 437).
The district court, which oversaw preparation of the case for
trial, was in the best position to determine whether case analy-
sis by Welch’s counsel was or was not necessary. Welch has
offered no evidence that persuades us otherwise.
2508      WELCH v. METROPOLITAN LIFE INSURANCE CO.
   Similarly, because of the district court’s superior under-
standing of the litigation, the court’s conclusion that hours
spent propounding discovery were excessive or otherwise
unnecessary is entitled to considerable deference. See id. at
1047-48. Kantor & Kantor’s billing time sheet included an
8.75-hour block billed entry for time spent reviewing insur-
ance documents, preparing discovery and deposition notices,
e-mailing opposing counsel and conducting an intra-office
conference. The district court concluded that a 4-hour reduc-
tion was appropriate in light of its request to file the entire
administrative record, because “it [was] not at all clear . . .
that any discovery was appropriate.” Because an ERISA
plaintiff may be permitted to supplement the administrative
record with evidence of a conflict of interest on the part of the
defendant, see Tremain v. Bell Industries, Inc., 196 F.3d 970,
976-77 (9th Cir. 1999), we agree with Welch that some dis-
covery aimed at demonstrating a conflict of interest may have
been appropriate. But in order to grant Welch the relief she
seeks, we would have to override the district court’s conclu-
sion that 4 of the 8.75 hours claimed were unnecessary. We
decline Welch’s invitation to nitpick in this manner because
she has presented insufficient evidence to convince us that the
district court’s determination was a clear error of judgment.

    Finally, the district court did not err in reducing the
requested 13 hours for preparation of Welch’s motion for
attorney’s fees by 9 hours because the motion’s language was
“boilerplate.” A reduction in hours is appropriate if the court
reasonably concludes that preparation of a motion “demanded
little of counsel’s time.” Webb v. Sloan, 330 F.3d 1158, 1170
(9th Cir. 2003). The district court found that much of the lan-
guage in Welch’s motion for fees was recycled from submis-
sions to other courts. Welch has offered no evidence to
undermine the court’s reasonable conclusion that billing for a
total of 13 hours was excessive. See Hyland v. Indicator Lites,
Inc., 160 F. Supp. 2d 981, 986 (N.D. Ill. 2001) (holding that
reduction in hours billed by prevailing party’s attorney for
drafting complaint was warranted where complaint contained
          WELCH v. METROPOLITAN LIFE INSURANCE CO.          2509
standard formulations and was drafted using “cutting and
pasting”).

                       CONCLUSION

   We affirm the district court’s reduction of hours for billing
in quarter-hour increments and for time involved in intra-
office conferences, preparation of a case analysis memo,
discovery-related activities and preparation of the motion for
attorney’s fees. We hold that the district court erred in setting
Welch’s counsel’s hourly rates at $250 and in imposing a 20
percent across-the-board reduction for block billing. Although
we believe the record is sufficiently complete for the district
court to revise its fee award without additional evidence, we
leave it to the court’s discretion whether to entertain supple-
mental submissions or argument by the parties. The district
court’s fee award is VACATED and REMANDED for a
redetermination consistent with this opinion.

  The parties shall bear their own costs on appeal.