Offshore Marine Contractors, Inc. v. Palm Energy Offshore, LLC, CIVIL ACTION NO: 10-4151 SECTION: R(3)
| Decision Date | 25 September 2014 |
| Docket Number | CIVIL ACTION NO: 10-4151 SECTION: R(3) |
| Parties | OFFSHORE MARINE CONTRACTORS, INC. v. PALM ENERGY OFFSHORE, LLC AND CHET MORRISON WELL SERVICES, LLC |
| Court | U.S. District Court — Eastern District of Louisiana |
Before the Court is the Motion of Palm Energy Offshore, LLC (PEO) to Set Attorney's Fees and Costs,1 the Magistrate Judge's Report and Recommendation (R&R),2 the objections of Chet Morrison Well Services, LLC (CMWS) to the R&R,3 and PEO's response to CMWS's objections.4 The Magistrate Judge recommends granting PEO's motion in part and awarding PEO attorneys' fees in the amount of $220,202.57 and costs in the amount of $7,635.56.5 The Magistrate Judge's recommended attorneys' fees award of $220,202.57 reflects a reduction from the fees award of $257,789.73 originally requested by PEO.6 This reduction resultsfrom the Magistrate Judge's recommended reduction in the hourly rates charged by the main attorneys on the case.
This consolidated action involves two cases. The Court begins by briefly summarizing the claims involved in each case and identifying those claims for which CMWS owes PEO attorneys' fees and costs.
First, Offshore Marine Contractors, Inc. (OMC) brought suit against PEO and CMWS for charter hire and alleged breach of an oral agreement for repair costs and lost charter hire arising out of damage to the leg of a vessel owned by OMC (OMC suit).7 In the course of the OMC suit, (1) CMWS filed a counterclaim against OMC;8 (2) PEO and CMWS brought cross-claims against one another for indemnity for the charter fees sought by OMC;9 and (3) CMWS brought a third-party claim against H.C. Resources, LLC (HRC).10 HRC was represented by the same counsel as PEO. The Courtdismissed CMWS's third-party claim against HCR on December 11, 2012.11
Second, CMWS filed a separate suit against PEO and HCR on December 12, 2012 for charter fees and breach of contract in connection with same incident (CMWS suit).12 The Court consolidated the CMWS suit with the OMC suit on February 6, 2013.13
Following a bench trial, the Court found CMWS liable for PEO's attorney fees and costs incurred in defending against OMC's original claims in the OMC suit on the basis of an indemnity provision in a Master Service Agreement between PEO and CMWS.14 On the same basis, the Court found CMWS liable for PEO's attorney fees and costs incurred in pursuing its cross-claim for indemnity against CMWS.15 PEO is not entitled to attorneys' fees in connection with the CMWS suit. The Court referred the matter of attorneys' fees and costs to Magistrate Judge Knowles on October 7, 2013.16
PEO seeks $257,789.73 in attorney fees and $7,635.56 in costs, for a total of $265,425.29.17 To support its fees request, PEO filed into the record a spreadsheet with attorney names, hours, and hourly rates broken down by month, and submitted unredacted copies of its invoices to the Magistrate Judge and the Court for in camera review.18 PEO asserts that its invoices contain attorney-client communications and legal strategy, and that the invoices are particularly sensitive because CMWS is in the process of appealing the Court's decision in the consolidated action to the Fifth Circuit Court of Appeals.19 To arrive at its requested fees figure, PEO began by multiplying the number of hours worked by each attorney by his or her hourly rate.20 PEO then adjusted its hours downward to account for work completed for parties (i.e. HRC) or in connection with claims (i.e. any work on the CMWS suit) not covered by the Court's fees award order.
Counsel for PEO also represented HCR. PEO asserts that it eliminated all time entries for work conducted solely on HCR'sbehalf, as well as time spent monitoring sanctions disputes between OMC and CMWS and time spent on PEO's motion to dismiss OMC's complaint on procedural grounds.21 PEO asserts that this work comprised 11 percent of its total billing.22 After these adjustments, the fees for this period come to $114,502.18.
CMWS filed its separate complaint against PEO on December 14, 2012. Attorneys' fees and costs incurred by PEO in connection with the CMWS suit are not covered by the fees award. First, PEO suggests that all or almost all of the services billed after December 14, 2012 relate to the original OMC suit, rather than to the CMWS suit, because PEO did not dispute the Working Charter Fees sought by CMWS in the CMWS suit.23 Second, PEO asserts that it is difficult to segregate the legal services performed during this time period.24 Therefore, PEO made an across-the-board percentage reduction of 4.1 percent to all of its fees billed after December 14, 2012.25 After applying the percentage reduction to its fees billed after December 14, 2012, PEO arrived at a figure for the post-December 14, 2012 period of $143,287.55.
PEO also sought $7,635.56 in costs.26 PEO reduced its initial amount by 13 percent to reflect that its invoices segregated costs not by claim, but by task.27
After reviewing PEO's Motion for Fees and the memoranda filed in support and in opposition, the Magistrate Judge issued his R&R on May 27, 2014.28
The Magistrate Judge reviewed the invoices that PEO tendered for in camera review "line-by-line."29 He found that PEO exercised billing judgment in eliminating duplicative or redundant work and in striking any time entry that did not fall within the Court's order.30 He accepted the 4.1 percent reduction proffered by PEO for all hours billed after December 14, 2012.
The Magistrate Judge compared the rates requested by PEO's attorneys with prevailing local rates and recommended adjustingPEO's rates downward.31 He examined the rates of the three attorneys who did the vast majority of the work on the case and suggested reducing Paul Goodwine's rate by 18.75 percent, reducing Addie Arvidson's rate by 10 percent, and leaving Holly Thompson's rate the same.32 Rather than apply the reduction attorney-by-attorney, the Magistrate Judge averaged the two reductions (18.75 percent and 10 percent), to arrive at a midpoint of 14.38 percent.33 He then reduced the entirety of the attorney fees figure by 14.38 percent. He also adjusted the rate for the one paralegal on the case downward. After applying these downward adjustments, he arrived at a recommended attorneys' fees award of $220,202.57.34
The Magistrate Judge recommends awarding the full amount requested for costs, $7,635.56.35
Judge Knowles recommends awarding a total of $227,833.13, to be offset by PEO's liability to CMWS. After the offset, the final award to PEO would be $75,350.13.
CMWS objects to the R&R.36 First, CMWS objects that PEO did not carry its burden of proof because it produced the full invoices only to the Magistrate Judge for in camera review.37CMWS contends that it was prejudiced by its inability to examine the invoices itself. CMWS asks the Court to either reject the R&R on this ground or to order PEO to produce its invoices and grant CMWS an opportunity to evaluate the reasonableness of the hours expended itself and brief its specific objections.38 Second, CMWS contends that a more equitable reduction of PEO's fees post-December 14, 2012 is 23 percent, not 4.1 percent. Third, CMWS argues that all of PEO's fees should be reduced by 50 percent to reflect PEO's counsels' joint representation of PEO and HCR.39
Federal Rule of Civil Procedure 54(d)(2)(D) authorizes referral of "a motion for attorney's fees to a magistrate judge under Rule 72(b) as if it were a dispositive pretrial matter." A Magistrate Judge addressing a referred dispositive motion under Rule 72(b) must prepare a "recommended disposition," to which theparties can object. Then, the district judge "must determine de novo any part of the magistrate judge's disposition that has been properly objected to." F.R.C.P. 72(b)(3).
Here, the Court referred the post-trial question of the amount of fees and costs to the Magistrate Judge to prepare a report and recommendation. Therefore, de novo review applies to the portions of the report and recommendation properly objected to. See also Blair v. Sealift, Inc., 848 F. Supp. 670, 674-79 (E.D. La. 1994) (). After de novo review, the Court "may accept, reject, or modify the recommended disposition, receive further evidence, or recommit the matter to the magistrate judge with instructions." Id.
The lodestar method is routinely used to determine attorney's fee awards. Under the lodestar method, a court begins by calculating the "'lodestar[,]' which is equal to the number of hours reasonably expended multiplied by the prevailing hourly rate in the community for similar work." Jimenez v. Wood Cnty., 621 F.3d 372, 379 (5th Cir. 2010) (citing Rutherford v. Harris County, 197 F.3d 173, 192 (5th Cir. 1999)). The court shouldexclude all time that is excessive, duplicative, or inadequately documented. Id. (citing Watkins v. Fordice, 7 F.3d 453, 457 (5th Cir. 1993)). Once the lodestar amount is calculated, the court may adjust it based on the twelve factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974), abrogated on other grounds by Blanchard v. Bergeron, 489 U.S. 87 (1989). Heidtman v. County of El Paso, 171 F.3d 1038, 1043 (5th Cir. 1999). Moreover, there may be no need to do additional Johnson...
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