In The News

New York Law Journal - October 22, 2009

Judge Follows 2nd Circuit in Fee Award but Expresses Dissatisfaction With 'Geographic Lodestar' Model

By Mark Fass

A Brooklyn judge has followed a recent appellate precedent requiring him to consider only the average hourly rates in the Eastern District of New York when assessing attorney fees, rather than those of the broader metropolitan area, including Manhattan, where the plaintiffs' firm is located.

But in a lengthy footnote, the judge set forth the reasons he believes he should not have had to make that decision.

"[T]he border between the Eastern and Southern Districts of New York is uniquely permeable," Judge Brian M. Cogan wrote in Gutman v. Klein, 03 Civ. 1570. "Imposing the Simmons burden on litigants ignores the 'geographic reality and its economic consequences in New York City.'"

Imagining a day when such geographic tests may be wholly obsolete, the judge added, "It may be that the concept of geographically-based as opposed to case complexity-based lodestar will someday have as much relevance to the selection of an attorney as dinosaurs have to birds."

The "Simmons burden," as Cogan called it, is the 2009 2nd U.S. Circuit Court of Appeals decision in Simmons v. New York City Transit Authority, 575 F.3d 170, which created a strong presumption in favor of using the rates in the district where a case is litigated in determining fees. To overcome this presumption, a party must show that using counsel from the district would have led to a "substantially inferior result."

A litigant "should not be required to pay for a limousine," Judge John M. Walker Jr. wrote for the circuit panel in Simmons, "when a sedan could have done the job."

That decision has come under criticism from a variety of sources, including a coalition of 30 public interest organizations and private law firms.

In an amicus brief supporting a reversal of Simmons, attorneys from the Brennan Center for Justice and Paul, Weiss, Rifkind, Wharton & Garrison wrote that the rule will "rob some civil rights plaintiffs of the only representation they can find."

Now, Cogan has joined the anti-Simmons chorus.

In the present matter, Cogan granted a default judgment against a Brooklyn real-estate developer as a sanction for the extreme measures he took to destroy and falsify electronic documents in a fraud action.

The decision marked the first time a judge within the circuit awarded a default judgment on the basis of tampering with electronic evidence. The plaintiff is seeking more than $70 million in damages.

Cogan returned the case to Magistrate Judge Robert M. Levy to conduct an inquest to determine damages, including costs and attorney fees associated with the spoliation of evidence on the defendant's laptop computer.

In his recommendation, the magistrate judge considered rates in both the Eastern District and the Southern District, where the plaintiff's firm, Oved & Oved, is located. He awarded the firm $261,567, instead of the requested $392,418.

"In a normal lawsuit, spending over one thousand hours on a spoliation dispute might be excessive," Magistrate Judge Levy wrote, "but in this case, defendants have raised pettifogging objections at nearly every stage of the litigation, trying the court's patience and forcing plaintiffs to expend otherwise unnecessary resources."

Soon after the magistrate judge issued his recommendation, the 2nd Circuit handed down Simmons.

Despite the holding in Simmons, Cogan adopted Magistrate Judge Levy's recommendation, holding that the proposed hourly fees, including $300 to $400 for partners and $200 to $300 for senior associates, fell "within the Eastern District range."

Nonetheless, in his three-paragraph footnote, Cogan laid out the case against Simmons.

He noted that one can easily walk from the Eastern District courthouse to the Southern District courthouse (though not from Riverhead, Long Island, to Brooklyn), and that more than 70 percent of the attorneys currently appearing before the court maintain Manhattan offices.

"A purely geographic lodestar ... ignores the practical reality of practicing law in New York," Cogan wrote. "[L]aw is now practiced in an environment where law firms maintain multiple offices nationwide, attorneys maintain multiple federal bar admissions and have national practices, and modern telecommunications permit court appearances by video and telephone."

Darren Oved, Edward Wipper and Brian Tretter represent the plaintiff, Aryeh Gutman.

Abraham Hoschander of Brooklyn represents the defendant, Zalman Klein.

 

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