Stein v. 1-800-Flowers.com, Inc.

• Decision Date: 07 March 2019
• Docket Number: 16-CV-6252-RRM-SJB
• Parties: SHIVA STEIN, Plaintiff, v. 1-800-FLOWERS.COM, INC., Defendant.
• Court: U.S. District Court — Eastern District of New York

SHIVA STEIN, Plaintiff, v. 1-800-FLOWERS.COM, INC., Defendant.

16-CV-6252-RRM-SJB

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

March 7, 2019

MEMORANDUM AND ORDER

BULSARA, United States Magistrate Judge:

On November 10, 2016, Plaintiff Shiva Stein ("Stein") brought this action seeking to enjoin a proxy vote on certain proposals in connection with Defendant 1-800-Flowers.com, Inc.'s ("Flowers") annual shareholder meeting. (Complaint ("Compl.") dated Nov. 10, 2016, Dkt. No. 1). On December 1, 2016, the Honorable Roslynn R. Mauskopf denied Stein's motion for a preliminary injunction. (Minute Entry dated Dec. 1, 2016). On February 24, 2017, Stein informed the Court that she intended to voluntarily dismiss the action and file a motion for attorney's fees and expenses "based on the common benefit doctrine." (Letter dated Feb. 24, 2017 ("February Letter"), Dkt. No. 23). Stein filed that motion on March 22, 2018. (Mot. for Attorney Fees ("Mot."), dated Mar. 22, 2018, Dkt. No. 27). For the reasons stated below, the motion for attorney's fees is denied without prejudice to renewal.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Stein filed this direct stockholder action on November 10, 2016, alleging that Flowers had violated Section 14(a) of the Securities Exchange Act, 15 U.S.C. § 78n(a), and Securities and Exchange Commission ("SEC") Rule 14a-9, 17 C.F.R. § 240.14a-9, which prohibits false or misleading statements or omissions in proxy materials. (Compl. ¶¶ 1, 11, 19). Stein's claims involved two proposals for shareholder approval set forth in the proxy statement; one of these proposals sought to amend Flowers's certificate of incorporation. (Id. ¶¶ 3, 13). Judge Mauskopf denied Stein's motion for a preliminary injunction to enjoin the proxy vote and issued a Memorandum & Order that stated the reasons for her ruling, including that Stein had failed to demonstrate irreparable harm. (Mem. & Order dated Dec. 2, 2016, Dkt. No. 19, at 1).

After Judge Mauskopf's ruling, Stein told Flowers she intended to amend her complaint; Flowers contemplated filing a motion to dismiss. (See Letter and Stipulation dated Jan. 26, 2017; Dkt. No. 22). On February 24, 2017, however, Stein informed Judge Mauskopf that she intended to voluntarily dismiss the action pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i) because Flowers had taken measures that, according to Stein, mooted her claims. (February Letter at 1). The measures included the filing of a corrected version of Flowers's certificate of incorporation in its quarterly report (Form 10-Q). (Id. at 3). Stein claimed that the filing of the correct certificate not only resolved her claims—which were based on the inaccurate certificate Flowers had previously filed with the SEC—but also conferred a common benefit on Flowers and its stockholders, a benefit Stein had helped bring about by discovering the correct certificate. (Id. at 2-3). Stein argued that by conferring this common benefit, she was entitled to attorney's fees. (Id. at 3). Flowers filed a response, arguing that the Court should not award Stein any attorney's fees. (Letter in Response dated Feb. 27, 2017, Dkt. No. 24).

After almost a year of inactivity, Judge Mauskopf ordered Stein to advise the Court whether she still wished to pursue her motion for attorney's fees. (Order dated Jan. 11, 2018). In response, the parties proposed a briefing schedule, (ProposedScheduling Order dated Jan. 25, 2018), and the motion was filed, along with Flowers's opposition and Stein's reply, on March 22, 2018, (Mot.). Stein, whose attorneys took her case on a contingency basis, asks for $145,650 in attorney's fees and $12,809.66 in unreimbursed expenses. (See Pl.'s Mem. in Supp. ("Pl.'s Mem."), attached as Ex. 1 to Mot., at 16; Decl. of A. Arnold Gershon ("Gershon Decl."), attached as Ex. 2 to Mot., ¶¶ 3-4). In computing the total lodestar amount, Stein used an hourly partner rate of $770 and an associate rate of $460. (Gershon Decl. ¶ 3). Stein's motion did not include any contemporaneous records or invoices of the time spent, the work done, or the expenses incurred.

DISCUSSION

Stein's motion for attorney's fees is deficient because it lacks necessary submissions regarding fees and costs and uses an unreasonable hourly rate to compute the fees sought.

I. Attorney's Fees

A. Contemporaneous Time Records

Stein's failure to submit contemporaneous time records is fatal to her motion. See U.S. ex rel. Karlin v. Noble Jewelry Holdings Ltd., No. 08-CV-7826, 2012 WL 1228199, at *4 (S.D.N.Y. Apr. 9, 2012) ("The Relator's motion [for attorney's fees and costs] is fatally deficient because he failed to submit any contemporaneous records when he filed his motion.") (report and recommendation); see also Tito v. Rubin & Rothman, LLC, No. 12-CV-3464, 2014 WL 1092845, at *2 (E.D.N.Y. Mar. 18, 2014) ("When submitting their fee request, the moving party is required to submit contemporaneous time records, affidavits, and other materials to support their fee request."). To recover fees, attorneys must submit contemporaneous time records that specify "the date, thehours expended, and the nature of the work done." N.Y. State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1148 (2d Cir. 1983); see Scott v. City of New York, 626 F.3d 130, 133 (2d Cir. 2010) ("Carey sets out unequivocally that absent unusual circumstances attorneys are required to submit contemporaneous records with their fee applications. . . . [E]xceptions are minimal and limited in scope.").

Stein's attorneys have provided limited information in their request for attorney's fees: a table with the names of the attorneys who worked on the case, their titles, the number of hours they worked, and their rates. (Gershon Decl. ¶ 3). The documents do not contain the hours attributable to each task and describe the nature of the work only in the most general sense. (E.g., id. ("The time was spent on researching the law, analyzing the facts, . . . drafting the complaint . . . [and] papers, and arguing before this Court the motion for a preliminary injunction; analyzing the Defendant corporation's certificates of incorporation, bylaws, and SEC filings while considering such options as filing an amended complaint or filing a complaint in . . . Delaware; negotiating with Defendant's counsel the filing of the Defendant corporation's correct certificate[.]")). Such general descriptions, without the dates and time for each task, do not satisfy Carey. Nor has Stein submitted contemporaneous time records. In his declaration, Arnold Gershon (one of Stein's attorneys) avers that "[t]he time spent and the work done is reflected in my firm's records and are based on accurate and contemporaneously entered data." (Id.). Gershon, however, does not include any of these records, and an attorney's declaration that he has such records is not sufficient to satisfy the Carey requirement that the records themselves be provided.

Stein's deficient fee application requires that the motion be denied. See, e.g., Karlin, 2012 WL 1228199, at *6 (denying fee application without prejudice for failure toprovide timesheets); Genn v. New Haven Bd. of Educ., No. 12-CV-704, 2017 WL 2079648, at *2 (D. Conn. May 15, 2017) ("'Carey establishes a strict rule from which attorneys may deviate only in the rarest of cases.' Plaintiff counsel has deviated from Carey . . . and has not provided any indication that hers is 'the rarest of cases' meriting such deviation.") (citation omitted) (quoting Scott, 626 F.3d at 133, and denying fee application based on attorney's "work log"); Jerolmon v. Astrue, No. 10-CV-267, 2013 WL 210898, at *2 (D. Conn. Jan. 18, 2013) ("The problem with Plaintiff's . . . application for an award of his attorney's fees is that the . . . Firm has not submitted contemporaneous time records in support of the application."); Cablevision Sys. N.Y.C. Corp. v. Diaz, No. 01-CV-4340, 2002 WL 31045855, at *5 (S.D.N.Y. July 10, 2002) (denying attorney's fees because the application only included attorney names, professional experience, and billing rate), report and recommendation adopted, Order dated Aug. 7, 2002, Dkt. No. 12.

This is not a minor requirement that the Court enforces to create bureaucratic hoops for attorneys to jump through. The Court cannot perform its proper review function—e.g., excluding duplicate entries, reducing unnecessary time, and ensuring hours were recorded contemporaneously—without the actual billing records. See Hensley v. Eckerhart, 461 U.S. 424, 433 (1983) ("It remains for the district court to determine what fee is 'reasonable.'"); Bogosian v. All Am. Concessions, No. 06-CV-1633, 2012 WL 1821406, at *3 (E.D.N.Y. May 18, 2012) ("[D]eterminations of reasonable attorneys' fees . . . require a review of reasonably detailed contemporaneous time records, as contemplated by [Carey, 711 F.2d at 1148]. In determining the reasonableness of the number of hours expended, the Court 'should exclude excessive, redundant or otherwise unnecessary hours, as well as hours dedicated to severableunsuccessful claims.'") (quoting Quaratino v. Tiffany & Co., 166 F.3d 422, 425 (2d Cir. 1999)) (citation omitted); Karlin, 2012 WL 1228199, at *4 ("[T]he Court is unable to assess the reasonableness of the attorneys' fees requested without the contemporaneous records."); Poulin v. Astrue, No. 10-CV-1930, 2012 WL 264579, at *3 (D. Conn. Jan. 27, 2012) ("This Court has a duty to review plaintiff's itemized statement to determine the reasonableness of the hours requested and to exclude hours that are excessive, redundant, or otherwise unnecessary.") (quotations omitted).

The Court also cannot conduct a substantive review of the fees to determine which hours are compensable under the exception to the American Rule—which normally prohibits the recovery of fees by the prevailing party—relied on by Stein. Stein asks the Court to award fees on the basis of a common benefit conferred on Flowers and its shareholders. (See...