State of Ariz. v. MARICOPA CTY. MEDICAL SOC.
| Decision Date | 20 January 1984 |
| Docket Number | No. CIV 78-800 PHX EHC.,CIV 78-800 PHX EHC. |
| Parties | STATE OF ARIZONA, Plaintiff, v. MARICOPA COUNTY MEDICAL SOCIETY, an Arizona non-profit corporation; Maricopa Foundation for Medical Care, an Arizona non-profit corporation; and Pima Foundation for Medical Care, an Arizona non-profit corporation, Defendants. |
| Court | U.S. District Court — District of Arizona |
Kenneth R. Reed, Alison B. Swan, Asst. Atty. Gen., Phoenix, Ariz., for plaintiff.
D.J. McAuliffe, Snell & Wilmer, Phoenix, Ariz., for Maricopa County Medical Soc.
Paul F. Eckstein and Jennifer B. Beaver, Brown & Bain, Phoenix, Ariz., for Maricopa Foundation for Medical Care.
Plaintiff State of Arizona, as the prevailing party in this action, has moved for an award of attorneys' fees and expenses, pursuant to Section 16 of the Clayton Act, 15 U.S.C. § 26 (as amended 1976). The State's Petition is in two parts, one submitted on behalf of the Attorney General's Office and the other by Kenneth R. Reed (Reed), Special Counsel for the State.
Defendants Maricopa County Medical Society (Society) and Maricopa Foundation for Medical Care (Foundation), object to the amount of fees and expenses sought, as well as a requested multiplier of four (4).1 Defendants contend that the requested award of more than $1,000,000 would be "outrageous and shock the conscience." For reasons which appear in this Memorandum, I agree. Fees allowed in cases such as this should be adequate to attract competent counsel; they should not produce windfalls to attorneys.
Defendants acknowledge that plaintiff is entitled to receive "reasonable" attorney fees and costs as the prevailing party in this antitrust injunction proceeding. The plaintiff has the burden of proof with respect to its claim. This burden is met by filing an application with detailed supporting documentation to substantiate the claim. The party opposing the application must then submit specific and detailed objections. As Circuit Judge Tamn stated in his concurring opinion in Nat. Ass'n of Concerned Vets v. Sec. of Defense, 675 F.2d 1319, 1338 (D.C.Cir.1982):
... Just as the applicant cannot submit a conclusory application, an opposing party does not meet his burden merely by asserting broad challenges to the application. It is not enough for an opposing party simply to state, for example, that the hours claimed are excessive and the rates submitted too high.
Here, the parties are in an adversarial status. Accordingly, the Court's consideration of the application is different than it might be if a similar claim was asserted against a governmental entity (an infinite ability to pay), Copeland v. Marshall, 641 F.2d 880 (D.C.Cir.1980), or the award was to come from a common fund (the losing party no longer continues to have an interest in the fund and the contest is between the successful plaintiffs and their attorneys over sharing the "harvest of the lawsuit"), Boeing v. Van Gemert, 444 U.S. 472, 100 S.Ct. 745, 750, 62 L.Ed.2d 676 (1980). My conclusion that excessive time was logged both by Staff and Special Counsel will be considered in arriving at the final awards.
Both parties agree that this Court in determining an award should follow the procedures outlined in Moore v. James H. Matthews & Co., 682 F.2d 830 (9th Cir. 1982). There, the Circuit Court articulated a so-called "blended" use of the lodestar analysis (hours expended multiplied by the hourly rate) and the several factors or guidelines adopted by the Ninth Circuit in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir.1975), cert. denied, 425 U.S. 951, 96 S.Ct. 1726, 48 L.Ed.2d 195 (1976).
A brief history of this proceeding will assist in understanding the issues to be resolved by the Court.
This action was filed October 17, 1978, on behalf of the State of Arizona by the State Attorney General's Office, Antitrust Division. The defendants were the Maricopa County Medical Society, Maricopa Foundation for Medical Care, Pima County Medical Society and Pima Foundation for Medical Care.
The complaint charged a § 1 Sherman Act conspiracy to illegally fix maximum fees which could be charged by member doctors of the foundations for health services provided to policy holders of specified insurance plans. The State sought to enjoin a continuation of this practice. The complaint did not seek to recover damages.
Soon after commencement of the action, plaintiff filed a motion for partial summary judgment on the liability issue, arguing that the agreement to adhere to the maximum fee schedules was illegal per se. Discovery consisted of comprehensive requests for admissions, interrogatories and two depositions.
The district court denied the motion without prejudice pending receipt of further evidence, holding "that the Rule of Reason approach should be used in analyzing the challenged conduct."
The district court certified its order denying partial summary judgment for interlocutory appeal. The Ninth Circuit affirmed, State of Ariz. v. Maricopa Cty. Medical Soc., 643 F.2d 553 (9th Cir.1980) (2-1 decision).
The United States Supreme Court granted certiorari. That Court, in a plurality opinion, held that the fee practice at issue was a per se violation under § 1 of the Sherman Act. Arizona v. Maricopa County Medical Soc., 457 U.S. 332, 102 S.Ct. 2466, 73 L.Ed.2d 48 (1982).
After remand, the parties stipulated to a form of permanent injunction by which maximum fee schedules would be fixed by an independent group including insurance company representatives.
This Memorandum will first consider the hours to be allowed, second, the hourly rates for counsel, and last, whether a multiplier is appropriate and, if so, what multiplier will be utilized.
The U.S. Supreme Court took occasion in Hensley v. Eckerhart, ___ U.S. ___, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1983) to outline how a court should review a fee application of prevailing counsel:
These procedures will be followed in this case.
The hours claimed for the Attorney General's Staff will be considered separately from those claimed by Special Counsel.
Attorney General—The Antitrust Division of the Arizona Attorney General's Office investigated and filed the complaint. Patricia A. Metzger, an Assistant Attorney General, essentially handled the case through the Ninth Circuit and the filing of the Petition for Writ of Certiorari.
Staff members continued to assist in the case after Special Counsel was retained on December 12, 1982, and certain of their time is questioned by defendants.
Excluding time related to preparing and arguing the fee petition,2 the Attorney General in its Reply Memorandum sought compensation for the following hours:
HOURS
Total
ATTY. 1978 1979 1980 1981 1982 All Years
Reed 100 115.9 27.2 243.1
Swan .7 25.9 26.6
Metzger 220.9 526.7 125.1 6.0 878.7
Goldstein .5 .5 1.0
Eger 64.4 139.7 204.1
Paralegal
Crowley .1 .1
Sirota 420 147.5 .4 567.9
_______
1921.5
The time summary submitted with the Petition filed November 19, 1982, totalled approximately 1945 hours. The difference of approximately 23 hours reflects less time for Eger (18.6) and eliminates 5.5 hours for Paralegal David Armour.
Defendant Maricopa Foundation's specific objections relate to the following:
ITEM HOURS (approx.)
Pre-complaint investigation 18
by Attorney General's Staff
1978
Paralegal Sirota, 1979 420
" " 1980 148
Amicus Brief, Gray Panthers, 15
1980-1
The prefiling investigative time is reasonable and will be allowed.
The Court in a telephone conference with counsel on October 7, 1983, requested additional information related to Paralegal Sirota's time. Thereafter, the parties submitted a stipulation that 284 hours of Sirota's time were compensable. The stipulated hours for Sirota appear reasonable and will be used in calculating the State's fee.
The Foundation's objections to State time for amici curiae purposes are limited to preparation of an amicus brief in the Ninth Circuit on behalf of the Gray Panthers. This time totals approximately 15 hours, of which 4.8 hours for Sirota...
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