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Novoselsky v. Zvunca

United States District Court, E.D. Wisconsin

February 16, 2018

DAVID ALAN NOVOSELSKY, Plaintiff,
v.
CRISTINA ZVUNCA, as Supervised Administrator of the Estate of Claudia Zvunca, JEANINE L. STEVENS, and F. JOHN CUSHING, III, Defendants, and MARSHALL SPIEGEL, JOHN S. XYDAKIS, and NEIL R. MECCIA, Movants.

          ORDER

          J.P. Stadtmueller U.S. District Judge.

         On July 17, 2017, the Court issued an order dismissing this action for lack of subject-matter jurisdiction. Novoselsky v. Zvunca, Case No. 17-CV-427-JPS, 2017 WL 3025870, at *1 (E.D. Wis. July 17, 2017). Defendants Jeanine L. Stevens and F. John Cushing, III (collectively, “Defendants”) then filed a motion for sanctions against Plaintiff David Alan Novoselsky (“Novoselsky”). (Docket #35). The Court granted that motion in an order dated December 29, 2017, finding that Novoselsky's filings in this case were frivolous and deserving of sanctions pursuant to Federal Rule of Civil Procedure 11. (Docket #42).

         The Court awarded Defendants their reasonable attorney's fees and expenses incurred in this case-excluding any fees or expenses incurred in connection with the sanctions request itself-and directed the parties to submit supplemental briefing on the appropriate amount of the award. Id. at 20-22. That briefing has been submitted, and the Court now arrives at the final fee award for Defendants.

         1. DEFENDANTS' FEE PETITION

         As the Court noted in its prior order, a district court enjoys broad discretion in arriving at a sanctions award that it believes will deter future violations of Rule 11 by the violator and others like him. See Divane v. Krull Elec. Co., 319 F.3d 307, 314 (7th Cir. 2003); Fries v. Helsper, 146 F.3d 452, 459 (7th Cir. 1998); Brandt v. Schal Assoc, Inc., 960 F.2d 640, 645 (7th Cir. 1992). When attorney's fees are awarded under Rule 11, the Seventh Circuit applies the teachings of Hensley v. Eckerhart, 461 U.S. 424 (1983), to this determination, Divane, 319 F.3d at 317. “Under Hensley, the starting point in a district court's evaluation of a fee petition is a lodestar analysis; that is, a computation of the reasonable hours expended multiplied by a reasonable hourly rate.” Id. (citing Hensley, 461 U.S. at 434). While the lodestar figure can be adjusted where the circumstances warrant it, “[t]here is a strong presumption that the lodestar calculation yields a reasonable attorneys' fee award.” Pickett v. Sheridan Health Ctr., 664 F.3d 632, 639 (7th Cir. 2011).[1]

         On the matter of reasonable rate, courts normally use the attorney's actual billing rate for similar litigation as a representation of the market rate for the services. Id. The fee applicant bears the burden of proving that his rate is reasonable. Id. While fights often arise over a comparison between the counsel's rate and comparable rates charged by others in the community, Novoselsky does not dispute the $300 per hour rate of Defendants' counsel. (Docket #45 at 1).

         The parties' dispute instead focuses on the reasonableness of the claimed hours. In determining the reasonable number of hours expended, a court should exclude hours that are “excessive, redundant or otherwise unnecessary.” Hensley, 461 U.S. at 434. In this vein, counsel for the fee applicant is expected to exercise “billing judgment” when presenting their bill to the court, by “winnowing the hours actually expended down to the hours reasonably expended.” Spegon v. Catholic Bishop of Chicago, 175 F.3d 544, 552 (7th Cir. 1999) (quotation omitted). The “winnowing” process involves excluding not only hours “that would normally not be billed to a paying client, but also those hours expended by counsel on tasks that are easily delegable to non-professional assistance.” Id. at 553. This principle is sometimes characterized as an antecedent duty to mitigate fee expenditures. Dubisky v. Owens, 849 F.2d 1034, 1037 (7th Cir. 1988). This means that “[c]ounsel must mitigate [his] damages by correlating his response, in terms of hours and funds expended, to the merit of the claims.” Id. (quotations omitted).

         Once a lodestar figure is calculated, the court may “adjust that figure to reflect various factors including the complexity of the legal issues involved, the degree of success obtained, and the public interest advanced by the litigation.” Schlacher v. Law Office of Phillip J. Rotche & Assoc., P.C., 574 F.3d 852, 856-57 (7th Cir. 2009). In doing so, the court must “provide a clear and concise explanation for its award, and may not ‘eyeball' and decrease the fee by an arbitrary percentage because of a visceral reaction that the request is excessive.” Id. at 857.

         Defendants have submitted a request for $16, 050 in attorney's fees. (Docket #44). They report that this amount represents substantial self-editing of their counsel's timesheets, including seeking recompense for only one of their two lawyers and declining to seek fees for work performed that was not ultimately presented to the Court. See Id. at 2-4. The sought-after amount includes, primarily, review of Novoselsky's complaint, legal research, telephone calls with other co-counsel regarding litigation strategy, and preparation of the motion to dismiss and the reply brief relating thereto. See (Docket #44-1 at 2-4). In total, Defendants seek payment for 53.5 hours of work (at counsel's above-stated, unchallenged rate of $300 per hour). Id. at 5. They believe that their counsel's fee, which approximates a week's worth of work over a four-month period and a little over a tenth of the $100, 000 amount in controversy stated in the complaint, is reasonable. Id. at 4-5.

         Novoselsky does not seek to nitpick counsel's time records. (Docket #45 at 1). Instead, he relies upon an order of the Seventh Circuit, previously referenced in the Court's order on the motion for sanctions, in which the appellate court substantially cut Defendants' lawyer's time in awarding fees for Novoselsky's frivolous appeal in MB Financial, N.A. v. Stevens, No. 11-2603. See Id. at 2-3. The court stated that because the appeal was frivolous, it should not have cost over $40, 000, the amount requested, to defend it. (Docket #39-2 at 2). That was well above the fee award in the district court. Id. Moreover, counsel claimed to have spent nearly three billable days preparing for a 15-minute appellate argument, which the court found indicative of “padding.” Id. In the end, the Seventh Circuit awarded as an appellate fee half the underlying fee award in the district court. Id. For Defendants' counsel in this case, that came to $5, 000. Id.

         As in that appeal, Novoselsky alleges that here that counsel's claimed time is disproportionate to the needs of the case. (Docket #45 at 3). First, conceding the frivolousness of this action, he says that it should have taken less time to defend against his frivolous complaint as opposed to one that might have had merit. Id. Thus, Novoselsky believes that an award of three times the amount awarded to this lawyer in the Seventh Circuit appeal is too much.

         His second argument is that certain time entries belie the same padding that the Seventh Circuit detected in Stevens. For instance, counsel purports to have spent over twenty-five hours on legal research, drafting, and conferences with co-counsel in preparing Defendants' motion to dismiss and the accompanying Rule 11 safe-harbor letter. Id. at 4-5. (Defendants' counsel did not seek compensation for the time expended actually preparing that letter.) Novoselsky points out that if twenty-six hours were needed to carefully research and determine that the complaint was frivolous, the remaining twenty-seven hours of time were cumulative and unnecessary. Id. As such, Novoselsky contends that the Court should use the Seventh Circuit's fee award of $5, 000 in Stevens as a ceiling for its award in this case. Id.

         Defendants reply that the Seventh Circuit's Stevens decision reflects the principle that a frivolous appeal is easier to defeat than a frivolous action in the district court. (Docket #49 at 1). Because counsel was engaged in trial court litigation in this instance, the appellate fee award is not comparable. Id. Next, Defendants argue that their time expenditures after the motion to dismiss were reasonably related to Novoselsky's numerous post-complaint filings, which required research, conference, and response. Id.

         The Court, having carefully reviewed counsel's time records and the relevant authorities, finds that a reasonable fee award in this case is $12, 000. As to Novoselsky's first challenge-that the Stevens case should be a guiding light here-the Court finds both parties' positions to miss the mark. True, as Defendants contend, the Seventh Circuit was primarily concerned with appellate fees exceeding those expended in the district court. But at least part of the Seventh Circuit's point in Stevens was also that defending against frivolous cases should be easier and less time-consuming than defending against those with a modicum of merit. Other Seventh Circuit decisions buttress this view. See Kathrein v. Monar, 218 F. ...


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