McKesson Corp. v. Islamic Republic of Iran

• Citation: 935 F.Supp.2d 34
• Decision Date: 02 August 2013
• Docket Number: Civil Case No. 82–220(RJL).
• Court: U.S. District Court — District of Columbia
• Parties: McKESSON CORPORATION, et al., Plaintiffs, v. ISLAMIC REPUBLIC OF IRAN, et al., Defendants.

935 F.Supp.2d 34

McKESSON CORPORATION, et al., Plaintiffs,

v.ISLAMIC REPUBLIC OF IRAN, et al., Defendants.

Civil Case No. 82–220(RJL).

United States District Court,

District of Columbia.

March 27, 2013.

Opinion Supplementing Aug. 2, 2013.

Mark N. Bravin, Winston & Strawn LLP, Mark Rene Joelson, Washington, DC, for Plaintiffs.

Henry M. Lloyd, Cadeaux, Taglieri & Notarius, PC, Washington, DC, Thomas G. Corcoran, Jr., Jason Aaron McClurg, Laina Catherine Lopez, Berliner, Corcoran & Rowe LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION

RICHARD J. LEON, District Judge.

The Court welcomes the opportunity to conclude this protracted litigation, which has resulted in two lengthy bench trials and a dozen Circuit and District Court opinions on dispositive issues.¹ After almostthirty years, the end of this “Sisyphean labor” is finally in sight. McKesson Corp. v. Islamic Republic of Iran, 672 F.3d 1066, 1072 (D.C.Cir.2012) (“ McKesson VI ”).

BACKGROUND

In 1982, plaintiffs McKesson Corporation, et. al., (“McKesson” or plaintiffs) sued defendants Islamic Republic of Iran, et. al., (“Iran” or defendants), claiming that, after the Iranian Revolution, Iran expropriated McKesson's equity interest in an Iranian dairy and withheld McKesson's dividend payments. On November 19, 2010, this Court entered judgment in favor of McKesson, awarding $43,980,205.58 in damages and compound prejudgment interest. McKesson 2010, 752 F.Supp.2d at 14. Iran appealed.

On February 29, 2012, McKesson prevailed over Iran when our Circuit affirmed that “(1) the act of state doctrine does not preclude adjudication of this case; (2) McKesson has a private right of action against Iran under the Treaty of Amity as construed under Iranian law; and (3) Iran is liable for the expropriation of McKesson's interest in [Pak D]airy and the withholding of McKesson's dividends.” McKesson Corp. v. Islamic Republic of Iran, 672 F.3d 1066, 1072 (D.C.Cir.2012) (“ McKesson VI ”). This Court's award of compound interest was, however, reversed, and the action remanded “for the calculation of an award based on the value of McKesson's expropriated equity interest and withheld dividends, plus simple interest calculated at 9 percent from August 12, 1981 to the present day.” Id.

Now before the Court is plaintiffs' Motion for Entry of Final Judgment awarding: (1) damages for expropriated equity and dividends, including simple prejudgment interest; and (2) attorneys' fees and expenses. [Dkts. 961, 969]. The Court GRANTS in part and DENIES in part plaintiffs' Motion for Entry of Final Judgement.

ANALYSIS

I. Damages and Prejudgment Interest

Pursuant to our Circuit Court's directive, see McKesson VI, 672 F.3d at 1072, plaintiffs request $7,619,205.29 in damages for expropriated equity and dividends plus prejudgment simple interest calculated at 9 percent from August 12, 1981 to the date of entry of final judgment, Pls.' Corrected Mot., Aug. 3, 2012, pp. 1–2 [Dkt. # 969]. Using the online simple interest calculator relied upon by the parties in their joint stipulation on July 23, 2012, [Dkt. # 959], to calculate prejudgment simple interest from August 12, 1981 to the present day, March 27, 2013, the Court calculates the appropriate amount of interest to be $21,699,079.18. Thus, the Court now enters final judgment for the plaintiffs, for damages and prejudgment interest, in the amount of $29,318,284.47.

II. Attorneys' Fees

Plaintiffs also seek a total of $11,144,550.00 in compensation for attorneys' fees and expenses they already paid to Morgan, Lewis & Bockius LLP (“Morgan Lewis”) and Winston & Strawn LLP (“Winston & Strawn”) for work performed between July 2000 and June 30, 2012. SeePls.' Reply, Aug. 22, 2012, p. 2 [Dkt. # 976]. This amount is comprised of attorneys' fees actually incurred and paid by McKesson ² during the relevant period, as well as an enhancement ³ to compensate for delay in recovery. Id. at 10, 18–20; Pls.' Reply Ex. 13 (“Summary of McKesson's Revised Fee Claim”).

Predictably, defendants oppose plaintiffs' request for attorneys' fees, expenses, and enhancement. Iran's Opp'n to Pls.' Mot. for Entry of Final J. (“Defs.' Opp'n”), Aug. 14, 2012, pp. 4–20 [Dkt. # 973]. For the following reasons, I disagree with the defendants and will award all three.

A. McKesson's Entitlement to Recover Attorneys' Fees

Plaintiffs argue that Iranian law authorizes the Court to award attorneys' fees and expenses to McKesson as the prevailing party on a Treaty of Amity (“Treaty”) claim as construed under Iranian law. Pls.' Corrected Mem. 4–5 [Dkt. # 970]; Pls.' Reply 4–7. Defendants dispute that Iranian law permits this Court to award McKesson the attorneys' fees and expenses that it requests. Defs.' Opp'n 4–8. Plaintiffs are correct.

Because our Circuit held that Iran is liable to McKesson for expropriated equity and dividends under the Treaty as construed under Iranian law, the issue of whether attorneys' fees may be awarded to McKesson is also governed by Iranian law. McKesson VI, 672 F.3d at 1072;see Mem. Op., Nov. 30, 2000, p. 4 [Dkt. # 548] (“[W]here claims are governed by the law of a foreign state, courts have applied the law of that state to determine whether to award fees to the prevailing party.”). Both of the experts who testified in the trial before the Court agreed that Iranian law permits recovery of attorneys' fees and litigation expenses. Indeed, Iran's own expert, Dr. Sanaei, conceded that a prevailing party “could seek reimbursement of litigation costs including attorney fees.” Legal Op. of Dr. M.E. Sanaei (“Sanaei Op.”), May 14, 2010, p. 14 [Dkt. # 927–2], English Translation; see also id. at 8 (“... [T]he Treaty sufficiently provides McKesson with a cause of action and the remedy thereto. Furthermore, McKesson's sole remedy in this Case is the value of its property and interest and attorney fees.”).

This expert testimony, not surprisingly, comports with Judge Flannery's November 30, 2000 Judgment [Dkt. # 546] granting McKesson's request for an award of attorneys' fees and costs incurred from April 1986 to July 2000. Judge Flannery was clearly correct when he noted in his memorandum opinion that, “Iranian law provide[s] for the award of legal costs as part of the remedy for expropriation” and “[i]n Iranian courts, the losing party in civil litigation pays both the court costs and the attorneys' fees of the winning party.” Mem. Op., Nov. 30, 2000, pp. 14–15 [Dkt. # 548]. In addition, Judge Flannery held that the Treaty authorizes awarding legal costs to a party prevailing on an expropriation claim. See id., at 8. In particular, the Treaty expressly provides that a party whose property has been expropriated shall receive a remedy which is “in no case less than that required by international law.” Treaty of Amity, Economic Relations, and Consular Rights Between the United States and Iran (“Treaty”) art. IV, para. 2, Aug. 15, 1955, 8 U.S.T. 899. Not surprisingly, Judge Flannery, therefore, concluded that this provision of the Treaty authorized fee shifting because the “loser pays” principle is “so well-accepted that it may be viewed as a general principle of international law.” Mem. Op., Nov. 30, 2000, pp. 10–11 (quotations and citations omitted) [Dkt. # 548].

B. Reasonable Award of Attorneys' Fees

Thus, since this Court clearly has the authority to award attorneys' fees and expenses, it must determine what exactly constitutes a reasonable award of attorneys' fees. Copeland v. Marshall, 641 F.2d 880, 901 (D.C.Cir.1980) (en banc).⁴ In doing so, the Court must determine two variables: (1) a reasonable hourly rate; and (2) a reasonable number of hours expended on the litigation. Blum v. Stenson, 465 U.S. 886, 888, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984); Covington v. District of Columbia, 57 F.3d 1101, 1107 (D.C.Cir.1995). The product of these two variables is called the “lodestar” amount, which is presumed to represent a reasonable fee. Board of Trustees of the Hotel & Restaurant Employees Local 25 v. JPR Inc., 136 F.3d 794, 801 (D.C.Cir.1998); Miller v. Holzmann, 575 F.Supp.2d 2, 11 (D.D.C.2008), rev'd in part, aff'd in part by U.S. ex rel. Miller v. Bill Harbert Int'l Constr., Inc., 786 F.Supp.2d 110 (D.D.C.2011). Indeed, the Supreme Court itself has endorsed the “lodestar” approach to determining a reasonable award of attorneys' fees, see Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), and federal courts follow the approach in most cases where “fees [are] properly shifted to the los[ing party] in the litigation,” see Gisbrecht v. Barnhart, 535 U.S. 789, 801–802, 122 S.Ct. 1817, 152 L.Ed.2d 996 (2002). What then, are a reasonable hourly rate and a reasonable number of hours?

1. Reasonable Hourly Rate

McKesson contends that the standard billing rates charged by Morgan Lewis and Winston & Strawn should supply the rates used to calculate the lodestar. Pls.' Corrected Mem. 7; Pls.' Reply 7–14. Iran, not surprisingly, contends that the rates used to calculate the lodestar should be derived from the Laffey Matrix. Defs.' Opp'n 8–10. Moreover, McKesson argues that 2012 rates should be applied to work performed prior to 2012 as a means to compensate McKesson for delay in payment. Pls.' Reply 18–21. Iran, predictably, argues that McKesson is not entitled to any enhancement for delay. Defs.' Opp'n 17–19. For the following reasons, I agree with McKesson that the 2012 standard billing rates charged by Morgan Lewis and Winston & Strawn are the reasonable hourly rates the Court should use to calculate the lodestar.

The Supreme Court has endorsed a market-based approach to calculating attorneys' fees. See Missouri v. Jenkins, 491 U.S. 274, 285, 109 S.Ct. 2463, 105 L.Ed.2d 229 (1989) (“[W]e have consistently looked to the marketplace as our guide to what is ‘reasonable.’ ”) (citations and quotations omitted). Accordingly, our Circuit presumes “an attorney's usual billing rate” to be “the reasonable rate, provided that this rate is in line...