EXHIBITORS'SERVICE, INC. v. American Multi-Cinema

• Decision Date: 28 February 1984
• Docket Number: No. CV 81-3700-ER.,CV 81-3700-ER.
• Citation: 583 F. Supp. 1186
• Court: U.S. District Court — Central District of California
• Parties: EXHIBITORS' SERVICE, INC., Plaintiff, v. AMERICAN MULTI-CINEMA, INC., American Multi-Cinema Management, Inc., American Multi-Cinema Film Marketing, Inc., American Multi-Cinema Exhibition, Inc., Durwood, Inc., Defendants.

583 F. Supp. 1186

EXHIBITORS' SERVICE, INC., Plaintiff, v. AMERICAN MULTI-CINEMA, INC., American Multi-Cinema Management, Inc., American Multi-Cinema Film Marketing, Inc., American Multi-Cinema Exhibition, Inc., Durwood, Inc., Defendants.

No. CV 81-3700-ER.

United States District Court, C.D. California.

February 28, 1984.

COPYRIGHT MATERIAL OMITTED

Maxwell Blecher, Blecher, Collins & Weinstein, Los Angeles, Cal., for plaintiff.

Barger & Wolen, Los Angeles, Cal., Robert C. Hackett, William C. Blakley, Mohr, Hackett, Pederson & Blakley, Phoenix, Ariz., for defendants.

MEMORANDUM OPINION AND ORDER

RAFEEDIE, District Judge.

This is an action for damages and injunctive relief under federal antitrust laws and state tort law brought by plaintiff Exhibitors' Service, Inc. ("ESI"), against defendants American Multi-Cinema, Inc. and its related entities ("AMC") and Durwood, Inc. On September 26, 1983, the Court directed a verdict in favor of Durwood, AMC Film Exhibition, and AMC Management. At the conclusion of the evidence, the Court directed a verdict in favor of AMC on ESI's state tort claims that AMC tortiously interfered with contractual relations or prospective advantage. The jury returned a verdict in favor of ESI on the one remaining Sherman Act, § 1 claim in the amount of $70,408.00 (before trebling). ESI now comes before the Court seeking $214,431.25 in attorney's fees and $21,941.79 for expert fees. For the reasons set forth below, the Court finds the plaintiff is entitled to a reasonable fee award of $105,612.00 and $7,160.83 in costs.

I

Section 4 of the Clayton Act, 15 U.S.C. § 15, permits the successful plaintiff in a private antitrust action to recover reasonable attorney's fees as part of his costs of suit:

"Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefore in any district court of the United States in the district in which the defendant resides ... and shall recover threefold the damages by him sustained, and the cost of suit, including reasonable attorney's fee."

The purpose of the attorney's fee provision is to insulate treble damage recovery from expenditures for legal fees, consonant with § 4's general purpose of encouraging private individuals to undertake enforcement of the antitrust laws. Twin City Sportservice v. Charles O. Finley & Co., 676 F.2d 1291, 1312 (9th Cir.), cert. denied, 459 U.S. 1009, 103 S.Ct. 364, 74 L.Ed.2d 400 (1982); Perkins v. Standard Oil Co., 474 F.2d 549, 553 (9th Cir.1973). A reasonable award of attorney's fees is a mandatory part of the successful § 4 claimant's recovery. Twin City Sportservice, 676 F.2d 1291.

The Ninth Circuit has sanctioned the use of a "blend" of two overlapping analyses — the Lindy approach and the Kerr approach — to determine "reasonable" fees under the Clayton Act. Moore v. James H. Mathews & Co., 682 F.2d 830, 830-41 (9th Cir.1982). Under this blend of analyses, the Court first must determine for each of plaintiff's attorneys a "lodestar" figure, based on the number of hours legitimately expended and adequately documented by counsel in preparation for the suit, multiplied by a reasonable hourly billing rate. See Lindy Brothers Builders of Philadelphia v. American Radiator & Standard Sanitary Corp., 487 F.2d 161, 167-69 (3d Cir.1973), following remand, 540 F.2d 102, 112-18 (1976). Next, the Court must consider enhancing or decreasing the lodestar figure in light of the particular case. See Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir.1975) (adopting twelve factors set forth in Johnson v. Georgia Statistics Express, Inc., 488 F.2d 714 (5th Cir.1974)).

Factors to consider at the second level of analysis include (1) the time and labor required; (2) the novelty and difficulty of the questions involved; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

II

Before analyzing the motion for attorneys' fees in this traditional manner, however, this Court must address AMC's argument that the contingent fee contract between ESI and its counsel prevents this Court from awarding more than $105,612.00 in attorneys' fees.

Plaintiff's fee agreement with its counsel provides as follows:

2. The attorneys' compensation will be one-third of the total amount recovered by trial or by settlement, which amount shall include any attorneys' fees ordered to be paid by defendants under § 4 of the Clayton Act in the event plaintiff prevails at trial.

This provision means that the attorneys' portion is computed by adding the trebled judgment and the Court's award of attorneys' fees and then dividing the total amount by three. If the Court would award the entire amount requested, the arithmetic would be as follows:

$211,224 (trebled judgment) plus $214,431.25 (attorney's fees) = $425,655.25. Two-thirds of this is $283,770.17 (ESI's), one-third of this is $141,885.08 (attorneys').

AMC complains that if this Court awards any amount more than $105,612.00 in attorneys' fees, the Court will be awarding plaintiff more than plaintiff is legally required to pay its lawyers. This, AMC contends, violates California Business and Professions' Code § 6076, Rule 3-102 which prohibits a member of the California Bar from directly or indirectly sharing legal fees and results in ESI recovering more money than that to which the jury verdicts entitles it.

Courts have taken into consideration the plaintiff's fee arrangement in determining fee awards when a party has directed the court's attention to the arrangement. See, e.g., Farmington Dowel Products, Co. v. Forster Manufacturing Co., 436 F.2d 699 (1st Cir.1970); Computer Statistics, Inc., v. Blair, 418 F.Supp. 1339 (S.D.Tex.1976). Generally, when courts examine the fee arrangement, the courts have been concerned that an attorney would receive too high a fee — unreasonable in an ethical sense. (Farmington Dowel Products, Co. v. Forster Manufacturing Co., for example, dealt with a fee arrangement in which the attorney was to receive both one-third of the trebled jury verdict and all of the attorney's fee.) Plaintiff admits that courts have considered the fee arrangements in such situations, but wants to limit court consideration of fee arrangement to the danger of unethical fees to attorneys. ESI, however, gives no rationale for so limiting consideration of fee arrangements and at least one court has considered the fee arrangement so as to avoid an attorney fee award that would result in the plaintiff receiving too much. See Computer Statistics, 418 F.Supp. 1339.

Plaintiff argues that the attorney's fee award belongs to the successful antitrust plaintiff, and if plaintiff passes on some of this money to its lawyer, this is only the plaintiff's concern. While this is a correct statement of law, see e.g., Farmington Dowel, 421 F.2d 61 at 88 (1st Cir. 1969), this does not determine the separate question whether it is "reasonable" for a court to award in attorneys' fees more than the plaintiff is contractually obligated to pay its attorneys.

The Ninth Circuit has not addressed the question whether the amount that plaintiff is contractually obligated to pay its attorneys serves as a cap as to what constitutes a reasonable attorney's fee under § 4. Such a limitation does, however, comport with the purpose that the Ninth Circuit ascribes to the award: It insulates the treble damages, preventing the jury verdict from being depleted by payment of attorney's fees. By insulating the award in this way, the attorney's fees encourages plaintiffs to bring private suits.¹

Section 4 of the Clayton Act, 15 USC 15, allows a successful treble damage plaintiff to recover reasonable attorney's fees as costs. An award of attorney's fees as part of the cost of a successful antitrust suit is mandatory ... and the purpose of the attorney's fees provision is to insulate treble damage recovery from expenditures for legal fees, consistent with § 4's purpose to encourage private persons to undertake enforcement of antitrust laws.

Twin Sportservice v. Charles O. Finley & Co., 676 F.2d 1291, 1292, 1312 (9th Cir. 1982).

Defendants cite two cases that address the propriety of limiting attorney's fees to the amount that plaintiffs are obligated to pay their attorneys. Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974),² introduced the twelve factors mentioned above that are used to determine attorney's fee awards. These twelve factors were adopted by the Ninth Circuit in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 67-70 (9th Cir.1975). The sixth factor listed by Johnson is:

(6) Whether the fee is fixed or contingent. The fee quoted to the client or the percentage of the recovery agreed to is helpful in demonstrating the attorney's fee expectations when he accepted the case. But as pointed out in Clark v. American Marine 320 F.Supp. 709 (1970) , supra,

the statute does not prescribe the payment of fees to the lawyers. It allows the award to be made to the prevailing party. Whether or not he agreed to pay a fee and in what amount is not decisive. Conceivably, a litigant might agree to pay his counsel a fixed dollar fee. This might be even more than the fee eventually allowed by the court. Or he might agree to pay his lawyer a percentage contingent fee that would be greater than the fee the court might ultimately set. Such arrangements should not determine the court's decision. The criterion for the court is not what the parties agreed but what is reasonable.

...