In re Globe Distributors, Inc.
| Decision Date | 06 August 1992 |
| Docket Number | Bankruptcy No. 88-807,Adv. No. 88-97. |
| Parties | In re GLOBE DISTRIBUTORS, INC., Debtor. GLOBE DISTRIBUTORS, INC., and Dennis Bezanson, Trustee, Plaintiffs, v. ADOLPH COORS COMPANY, Defendant. |
| Court | United States Bankruptcy Courts. First Circuit. U.S. Bankruptcy Court — District of New Hampshire |
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William S. Gannon, Wadleigh, Starr, Peters, Dunn & Chiesa, Manchester, N.H., for Globe Distributors, Inc.
Peter Mosseau, Orr and Reno, Concord, N.H., for Adolph Coors Co.
Dennis Bezanson, South Portland, Me., for plaintiff.
This adversary proceeding came on for trial before the Court for the week of October 15 to October 19, 1990, and oral argument on October 25, 1990, resulting in a final judgment for plaintiffs, entered on May 13, 1991. In the final judgment, damages were awarded to plaintiffs in the amount of $5,166,188, and they were doubled to $10,332,376 pursuant to the New Hampshire Consumer Protection Act.1 Defendant was awarded $289,000 in counterclaim damages, thereby reducing plaintiffs' total damage award to $10,043,376, plus interest from October 18, 1988. This Court also allowed "reasonable attorneys' fees" and "costs" pursuant to the New Hampshire Consumer Protection Act. Presently before the Court is the amount of such attorneys' fees and costs that should be allowed and paid to plaintiffs' counsel by defendant.
The plaintiffs, Globe Distributors, Inc. (Globe) and Dennis Bezanson, Trustee (Trustee)2, request a fee of $4,208,141.07, plus one-third (33 1/3%) of the interest that accrued and that will accrue since the final judgment was entered on May 13, 1991. 129 B.R. 304. Plaintiffs also request reimbursement of $2,536.11 in out-of-pocket costs and expenses incurred by plaintiffs' counsel, the law firm of Wadleigh, Starr, Peters, Dunn & Chiesa, plus any further costs incurred by the firm defending the final judgment on appeal. In support of their request, plaintiffs submitted a statement for legal services rendered in this adversary proceeding and a memorandum of law in support of their motion for attorneys' fees. Defendant Adolph Coors Company (Coors) objects to the fee requested by plaintiffs, as more fully detailed below.
Plaintiffs' application recites 1,376 hours of attorney and paralegal time in handling the litigation in this adversary proceeding, which at their counsel's regular hourly rates3 would indicate a fee of $148,174. As more fully described below, plaintiffs request the higher fee allowance of $4.2 million on the basis that such an amount is justified in consideration of the services rendered by their counsel in this particular proceeding. The higher fee request is one-third (33 1/3%) of the damage award to Globe, and presents a "fee multiplier" of 28.4, i.e., in excess of 28 times the base lodestar amount of $148,174.
Defendant Coors objects to plaintiffs' fee request on several bases. Initially, Coors objects that, because some of the counts of plaintiffs' original Complaint were stricken, because plaintiffs only prevailed on three of the nine counts in their Complaint, and because plaintiffs were unsuccessful in their defense of Coors' counterclaims, plaintiffs should not recover attorneys' fees for time spent on those matters.4
In my judgment, the hours expended by plaintiffs' counsel on the litigation involved in this adversary proceeding clearly were not excessive, nor were the hourly rates anything but reasonable in terms of the complexity and toughness that the lawsuit presented. Plaintiffs' counsel were matched against the law firm of Orr & Reno, which is a very competent and aggressive law firm, and they were also matched against a very tough defendant. Further, I find that the matters upon which plaintiffs were unsuccessful were relatively minor and were subsumed into the entire litigation. Accordingly, plaintiffs' failure to prevail on certain claims, for one reason or another, should not result in a reduction of their counsel's hours in the context of this "reasonable fee" determination.
Coors' primarily objects to plaintiffs' fee request on the basis that the "fee multiplier" of 28.4 is excessive under any analysis or determination of a reasonable fee award in this proceeding. As noted above, plaintiffs' request for attorneys' fees in excess of 4 million dollars is premised upon a contingent fee agreement between plaintiff Globe and their counsel entered into privately and without approval of this Court or any participation by the defendant.
Plaintiffs state that the contingent fee arrangement was necessary and appropriate, because neither Globe, Globe's equity security holders, or the subsequently-appointed chapter 7 trustee could afford to hire counsel on an hourly-fee basis. Plaintiffs also note that contingent fee agreements are customary and usual in New Hampshire, and that their counsel incurred an extremely large risk of nonpayment in agreeing to represent plaintiffs on a contingent fee basis.
Plaintiffs contend that, in addition to the foregoing reasons, fairness and equity require implementation of the contingent fee arrangement by this Court, because plaintiffs' counsel underwent long and difficult litigation in this matter, because the firm presented effective, vigorous, and successful representation herein, and because the firm achieved an exceptional result such that Globe's creditors will all be paid in full with interest.
I agree with the points made by plaintiffs to the effect that counsel was faced with difficult issues and they did risk nonpayment of their fees. However, the fee agreement between plaintiff Globe and their counsel is a contract between those parties, and it has no binding effect upon this Court's determination of a "reasonable fee" to be paid by the losing defendant in this litigation.5
This case is completely different from cases such as bankruptcy estate administration cases where a fee is awarded to counsel to be paid by counsel's own client, whether that be a bankruptcy trustee or a debtor-in-possession, and where the fee to be allowed is determined pursuant to section 330 of the Bankruptcy Code. In this case, due to the award of "reasonable attorneys' fees" in the final judgment as authorized by state law covering the transactions involved, there has been a "shifting" of fees, whereby the defendant is ordered to pay fees to the plaintiffs' counsel. My prior opinions on fee enhancement issues were primarily non-fee-shifting decisions, and accordingly have no direct relevance to the award of reasonable attorneys' fees in this "fee-shifting" case.6 It is obvious that fee-shifting cases raise the unique factor in which the defendant ordered to pay the fee had no part, or any procedural mechanism, for affecting the agreement as to fees or the standards for determining an appropriate fee award. See Venegas v. Mitchell, 495 U.S. 82, 89-90, 110 S.Ct. 1679, 1684, 109 L.Ed.2d 74 (1990).
The award of attorneys' fees in the final judgment is derived from New Hampshire state statutes that shift the obligation of fee payment to the losing party.7 This fee award is contrary to the general "American rule" that each party to a lawsuit bears its own costs (and fees). See Alyeska Pipeline Service v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). Where, as here, an exception to the general rule is allowed, such exception should be implemented in a conservative fashion. Consequently, any agreement between parties other than the party ordered to pay the attorneys' fees will not be determinative of what should constitute a reasonable fee. However, the situation that such an agreement placed plaintiffs' counsel in, namely an all-or-nothing gamble on the recoupment of any attorneys' fees, deserves some consideration.
In considering an award of "reasonable attorneys' fees" in this case, I am guided by the "lodestar" analysis and the various criteria discussed by the First Circuit Court of Appeals in fee-shifting cases such as Furtado v. Bishop, 635 F.2d 915 (1st Cir.1980) (section 1983 case), citing King v. Greenblatt, 560 F.2d 1024 (1st Cir.1977) (section 1983 case) and Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974) (Title VII case).8 "The starting point is to calculate the `lodestar': `The number of hours reasonably expended multiplied by a reasonable hourly rate.'" Furtado, at 920, quoting Copeland v. Marshall, 641 F.2d 880, 891 (D.C.Cir.1980) (en banc).
This lodestar can then be adjusted up or down to reflect several factors, such as the contingent nature of any fee, delay in payment, exceptional (and unexpected) results obtained, and quality of representation, if such factors have not already been taken into account in computing the lodestar. See Furtado at 920, 924 () Specifically, the additional factors are as follows:
See S.Rep. No. 1011, 94th Cong., 2d Sess. 6 reprinted in 1976 U.S.Code Cong. & Admin.News 5908, 5913; H.Rep. No. 1558, 94th Cong., 2d Sess. 8 (1976) (); Furtado v. Bishop, 635 F.2d 915 (1st Cir. 1980); King v. Greenblatt, 560 F.2d 1024 (1st Cir.1977); Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974). These criteria are...
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