Hasbrouck v. Texaco, Inc., C-76-027-JLQ.

• Decision Date: 21 March 1986
• Docket Number: No. C-76-027-JLQ.,C-76-027-JLQ.
• Citation: 631 F. Supp. 258
• Court: U.S. District Court — District of Washington
• Parties: HASBROUCK, et al., d/b/a Rick's Texaco, Plaintiffs, v. TEXACO, INC., a foreign corporation, Defendant.

631 F. Supp. 258

HASBROUCK, et al., d/b/a Rick's Texaco, Plaintiffs, v. TEXACO, INC., a foreign corporation, Defendant.

No. C-76-027-JLQ.

United States District Court, E.D. Washington.

March 21, 1986.

Robert H. Whaley and Lucinda S. Whaley, Spokane, Wash., John S. Ebel, Seattle, Wash., for plaintiffs.

Wm. Fremming Neilsen, Mark Litvack & Randall Robinson, Spokane, Wash., Inhouse counsel for Texaco, Inc.

MEMORANDUM OPINION AND ORDER RE: PLAINTIFFS' MOTION FOR ATTORNEY FEES

QUACKENBUSH, District Judge.

BEFORE THE COURT is the Petition for Judgment of Attorney Fees and Costs Pursuant to 15 U.S.C. § 15 filed by plaintiffs on August 28, 1985. Testimony thereon and final argument were heard by the court on January 3, 1986. Plaintiffs appeared by attorneys Robert H. Whaley and Lucinda S. Whaley of Winston & Cashatt and John S. Ebel of Culp, Dwyer, Guterson & Grader. Texaco, Inc., appeared by Mark Litvack and Randall Robinson, in-house counsel, and Wm. Fremming Nielsen of Paine, Hamblin, Coffin & Brooke.

FACTUAL BACKGROUND

This now ten year old case was filed on January 30, 1976. Twelve plaintiffs, the operators of Texaco service stations, alleged that Texaco had discriminated against them in the sale of gasoline products in violation of Section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13(a). Thereafter, and for a period of some three and one-half years, extensive and voluminous discovery took place along with the filing and hearing of commensurate pre-trial motions.

The first trial of this matter took place from August 2, 1979 until August 31, 1979 before Judge Marion J. Callister of the District of Idaho, sitting by designation due to the illness of Judge Marshall A. Neill.¹ At that trial Judge Callister precluded Texaco from interposing its "cost justification" defense due to the failure of Texaco to timely produce supporting discovery materials. Judge Callister instructed the jury on proof of damages based upon Fowler Mfg. Co. v. Gorlick, 415 F.2d 1248 (9th Cir.1969). Fowler adopted the automatic damages rule which allowed, but did not require, the jury to infer minimum damages based upon the illegal price differential times the quantity of the retailer's purchases.

The jury returned a verdict which when trebled totaled $2,551,450.92. Thereafter, on March 26, 1980, Judge Callister granted the defendant's Motion for Judgment N.O.V. on the basis, inter alia, that plaintiffs had failed to prove the fact of damage other than under the Fowler automatic damage rule. Plaintiffs timely filed a notice of appeal from this ruling to the Ninth Circuit Court of Appeals. On October 6, 1980, while the appeal to the Ninth Circuit was pending, the Supreme Court granted certiorari in the case of J. Truett Payne Co. v. Chrysler Motors Corp., 607 F.2d 1133 (5th Cir.1979) a case partially relied upon by Judge Callister in his post-trial ruling. Mr. Whaley filed an amici curiae brief in the Supreme Court urging reversal of the Fifth Circuit decision and in support of the automatic damages rule. The Supreme Court decided J. Truett Payne on May 18, 1981 and remanded the case to the Fifth Circuit. 451 U.S. 557, 101 S.Ct. 1923, 68 L.Ed.2d 442 (1981).

The instant case was then argued to the Ninth Circuit on September 10, 1981. On December 14, 1981, the Ninth Circuit panel reversed Judge Callister's Order which granted judgment n.o.v. and dismissal in favor of Texaco. Hasbrouck v. Texaco, 663 F.2d 930 (1981). The Ninth Circuit held that at the time of trial, Fowler was the law of this circuit and Judge Callister incorrectly determined otherwise. The Circuit remanded the matter for a new trial both on liability and damages. Texaco petitioned the Ninth Circuit for rehearing or rehearing en banc and upon denial petitioned the Supreme Court for certiorari, which petition was opposed by plaintiffs. That petition was denied on October 4, 1982.

Upon reversal of this case by the Ninth Circuit in 1981 this matter was assigned to the undersigned. Thereafter, Texaco moved this court to allow it to interpose the cost justification defense which Judge Callister had stricken. This court granted that request over the strong objections of plaintiffs. A new Scheduling Order then was entered by this court which allowed the parties some two years to prepare for the second trial and to complete discovery including the additional and substantial discovery related to the cost justification defense. The files reflect the extensive discovery which was conducted and the numerous motions, both substantive and discovery, which were presented by the parties.

At this time, as stated by Mr. Whaley in argument, counsel for the plaintiffs seriously questioned whether counsel could afford to devote the time required to prosecute the action and meet Texaco's defenses, including the newly allowed defense of cost justification, without any ongoing compensation. Counsel also recognized the plaintiffs' questionable ability to provide for the out-of-pocket costs including the hiring of additional experts. Thereafter, counsel for the plaintiffs made every reasonable attempt to settle this action with Texaco to no avail. The record reflects that Texaco rejected plaintiffs' offer to settle the entire case, including attorney fees, for $600,000. Despite the size of the first verdict and this court's favorable recommendation to Texaco of such a settlement, Texaco refused.

To the credit of counsel for the plaintiffs they proceeded with the second wave of discovery, pre-trial preparation, and trial. This consumed over five thousand hours of counsel's time in addition to the six thousand five hundred fifty hours expended by counsel during the period of 1975 through 1979. The plaintiffs were unable to pay for the costs involved in the preparation for and trial of this case the second time. Counsel for plaintiffs expended the sum of $124,245.25 of their own funds for these purposes, which, as of January 16, 1986, had not been reimbursed by plaintiffs (Ct. Rec. 877). There is no evidence to support a finding that plaintiffs will ever be able to reimburse these costs if they are ultimately unsuccessful in this action. The fee agreement between the plaintiffs and their counsel was amended prior to the second trial to provide that counsel would receive the fee set by the court or a specified percent of the recovery, whichever might be larger.

The second trial of this matter commenced on June 4, 1985. Robert H. Whaley, Lucinda S. Whaley and John Ebel again represented the plaintiffs. Randall Robinson and Mark Litvack, Texaco inhouse counsel, represented Texaco along with Wm. Fremming Nielsen of Paine, Hamblin, Coffin & Brooke. Ira S. Sacks of Kaye, Scholer, Fierman, Hays & Handler also appeared, briefed, and argued the principal legal issues. On June 25, 1985, the jury returned a verdict in favor of the plaintiffs which, when trebled, totaled $1,349,700. Numerous post-trial motions were then filed and upon denial, the court scheduled hearing on plaintiffs' request for attorney fees and costs of suit. At Texaco's request the court allowed discovery of the records of the plaintiffs' attorneys, but also allowed reciprocal discovery of Texaco's expenses. The court cautioned counsel, however, that the issue of attorney fees should not, in the words of Justice Powell, "become a second trial." Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 1941, 76 L.Ed.2d 40 (1983).

To the credit of all counsel, that admonition was apparently heeded. After Texaco completed its inspection of the records of plaintiffs' counsel, the parties entered into a stipulation concerning the request for attorney fees. (Ct.Rec. 832). That stipulation provides that Texaco agreed to the following:

1. Counsel for plaintiffs actually spent the time claimed and expended the costs as set forth in the affidavit of Robert H. Whaley (Ct.Rec. 773).

2. The attorneys' time spent and costs incurred by plaintiffs' counsel were reasonably and necessarily incurred in the representation of plaintiffs in this action.

3. The hourly rates set forth in Mr. Whaley's affidavit were reasonable at the time they were incurred.

4. Texaco reserved the right to challenge the following aspects of plaintiffs' fee petition:

(a) The application of a multiplier.

(b) Texaco's contention that the fee award should be limited to that which would arise under the Contingent Fee Agreement.

(c) That the fee to be awarded should be proportionate to the damage award.

(d) The right to recover fees and costs expended upon uncalled experts.

(e) The right to recover fees and costs of unsuccessful state claims.

(f) The necessity of two trials.

ANALYSIS

As recognized by counsel, the landmark case in this circuit in setting attorney fees is Kerr v. Screen Extras Guild, Inc., 526 F.2d 67 (1975). However, this circuit has also cautioned against the result which might occur from the "wooden" approach suggested by Kerr. In Moore v. Jos. H. Matthews & Co., 682 F.2d 830 (1982) at 840, the court suggested a "blended" approach where the hours spent is equated with the "time and labor required" of Kerr, with the result applied to the hourly rate determined by consideration of the other Kerr factors. The final determination is whether to increase or decrease the award based upon quality or contingency considerations.

In making this decision I have kept in mind the twelve Kerr factors. The court's decision has been made less burdensome by the stipulation entered into by counsel. The matters to be resolved, having the Kerr factors in mind, are those left open in the stipulation.

In the stipulation Texaco reserved the right to challenge the "necessity of two trials." (Ct.Rec. 832 at 4). Texaco does not pursue that matter in its brief (Ct.Rec. 876) filed after the stipulation. Even had that challenge been made, the court concludes that two trials were in fact necessary. The second trial was in fact ordered by the Ninth...