author: AUBREY E. ROBINSON, Jr., Chief Judge.

text:
    Freda C. CLARK, Plaintiff, v. John O. MARSH, et al., Defendants.
    Civ. A. No. 77-1001.
    United States District Court, District of Columbia.
    March 12, 1985.

      Conrad D. Philos, Vienna, Va., for defendants.
    Sheila Lieber, Civ. Div., U.S. Dept, of Justice, Washington, D.C., for plaintiff.
   • MEMORANDUM AND ORDER

AUBREY E. ROBINSON, Jr., Chief Judge.

Before the Court are five (5) motions related to an ongoing dispute for attorneys’ fees and costs. These motions arise out of an action brought pursuant to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq., for sex discrimination and retaliation against a former employee of the Department of the Army. The case properly passed through the administrative stages and through this Court. Plaintiff received a favorable judgment from this Court and an affirmance on appeal, 665 F.2d 1168. As the “prevailing party,” there is no issue as to this Plaintiffs right to receive attorneys’ fees and costs; there remains for the Court’s resolution a determination of which of the several attorneys who have been involved in Plaintiff’s action shall receive fees and costs and a determination of the reasonable amount.

The pending motions are:

(1) a petition for fees brought by Patricia J. Barry, Plaintiff’s trial and appellate counsel,

(2) a petition for fees brought by the widow of Plaintiff’s counsel, John L. Tully, for work done at the administrative stage,

(3) a motion to intervene and receive the fees of another attorney, Craig Sawyer, also deceased, who participated with Mr.. Tully at the administrative stage and with Ms. Barry at trial,

(4) a petition brought by Plaintiff herself for reimbursement of monies paid as retainers to her various attorneys, and

(5) a motion made by the Defendants for consolidation of all pending claims for fees. With the exception of Freda Clark’s petition for reimbursement, the government opposes all motions.

Before considering the merits of the various claims for fees, the Court must consider the government’s motion to consolidate all claims into a single claim by Plaintiff. Under the statute, 42 U.S.C. § 2000e-5(k), the entitlement to attorneys’ fees and costs is in Plaintiff, not her attorneys. The legislative scheme for attorney fee awards in civil rights cases was created in order to assure that aggrieved persons are in a position to advance the public interest and policy against discrimination. Newman v. Piggie Park Enterprises, 390 U.S. 400, 402, 88 S.Ct. 964, 966, 19 L.Ed.2d 1263 (1968). In order to protect the policy behind the provision for fee awards it must be the party, not the attorney, who makes the claim to the court. Brown v. General Motors Corp., 722 F.2d 1009, 1012 (2d Cir. 1983); Oguachuba v. I.N.S., 706 F.2d 93, 97 (2d Cir.1983); Richard v. Reed, 611 F.2d 545, 546 (5th Cir.1980) (per curiam). Title VII does not create a separate right of action in the attorney; instead, fees may be awarded to the “prevailing party ... as part of costs” in the underlying ease. Therefore, “counsel has no standing to apply to the public fisc for payment.” Oguachuba v. I.N.S., 706 F.2d at 98.

There is no opposition to the government’s motion to consolidate these claims. Since it is Plaintiff’s right to petition for fees and costs, these claims could be quite properly consolidated under her petition for reimbursement. However, upon considering all pending claims for fees, the Court concludes that only the claim of Ms. Patricia J. Barry should be consolidated with Plaintiff’s claim for reimbursement. Therefore, Ms. Barry’s petition for attorney’s fees and costs will be consolidated with Plaintiff’s petition for reimbursement; her petition for fees and costs will be granted. The remaining claims will not be consolidated and for the reasons set forth in this Memorandum, will be denied. Plaintiffs Petition for Reimbursement

Plaintiff’s right to reimbursement is unassailable. In fact, the government makes no opposition to her request for reimbursement of legal expenses totalling $5,020.00. Through her present counsel, Plaintiff requests reimbursement of $2,000.00, paid as a retainer, and $500.00, advanced as costs, to her first and now deceased attorneys, Mr. John L. Tully and Mr. Craig T. Sawyer. Mr. Tully and Mr. Sawyer initiated the administrative proceedings which led to Plaintiff’s later success before this Court. She also requests reimbursement for $2,520.00 paid to Ms. Patricia J. Barry for attorney’s fees and for the costs of prosecuting her case.

The petition for reimbursement includes sufficient documentation. Plaintiff has submitted a copy of the retainer agreement between herself and Mr. Tully and Mr. Sawyer. She has also submitted copies of her cancelled checks demonstrating that the $2,000.00 retainer fee was paid in four monthly installments between February and May 1976. The amount of $500.00 was paid in June 1977 to defray anticipated expenses for proceeding further with her case. There is no contest regarding these amounts; the petition for reimbursement of fees and costs paid to Mr. Tully and Mr. Sawyer for services rendered during the administrative stage of this case shall be granted.

Similarly, the request for reimbursement of monies paid to Ms. Patricia J. Barry also shall be granted. Plaintiff has satisfactorily demonstrated that she paid her trial and appellate counsel $2,520.00 for fees and costs. Indeed, in her response to Plaintiffs request, Ms. Barry admits having received approximately $2,500.00 from Plaintiff. There being no question that the amount was paid for legal services rendered in achieving Plaintiffs success, the further request for $2,520.00 is granted. Since the Court must assume that Ms. Barry has submitted in her petition for fees and costs all hours and expenses for which she is entitled to receive compensation, the amount of $2,520.00 will be deducted as an amount already paid toward the fee for her services from the award which she shall receive.

Claim for Services Rendered by Mr. John L. Tully

The claim for attorney’s fees allegedly due Mr. John L. Tully is brought by his widow, Francis K. Tully. Mrs. Tully makes a claim for 112.5 hours at a proposed rate of $100.00 per hour, for a total of $11,250.00. However, the petition filed by Mrs. Francis K. Tully contains a fatal defect: there are no contemporaneous records of the time expended on Plaintiff’s behalf.

For this reason, it is simply impossible for petitioner to meet the requisites for documentation of her claim set forth in National Association of Concerned Veterans v. Secretary of Defense, 675 F.2d 1319 (D.C.Cir.1982). In that case, the Circuit Court of Appeals stated:

Casual after-the-fact estimates of time expended on a case are insufficient to support an award of attorneys’ fees. Attorneys who anticipate making a fee application must maintain contemporaneous, complete and standardized time records which accurately reflect the work done by each attorney.

675 F.2d at 1327. This petition, prepared for services allegedly rendered during the two years while Mr. Tully represented Plaintiff, is certainly “after-the-fact.” Mrs. Tully has enlisted the help of her attorney, who had no connection with Plaintiff’s case, her husband’s correspondence and memoranda, Plaintiff’s memory and a review of the docket entries in the case. No matter how well-intentioned and scrupulous her efforts may have been, at best, the construction of hours presented to the Court in place of Mr. Tully’s contemporaneous time records constitute a guess at his efforts on Plaintiff’s behalf. Such estimates cannot possibly serve as the proper basis for a fee award.

The Court’s task to determine the reasonable number of hours expended on a particular matter is difficult already; without certainty regarding the actual number of hours expended, there is no point from which to begin. If Mr. Tully had lost the records himself and sought to reconstruct the time he had spent on the case, the Court would have some basis upon which to accept the number of hours claimed and then for assessing reasonableness. While the petitioner’s “best guess” at the time expended by her husband may or may not be reasonable, there is no sound basis for determining an award for hours which may or may not have been expended.

Moreover, the scheme for fee awards contemplates appraisal and challenge to the request by the opponent. The government cannot challenge this request. Nor can the Court meet its obligation to set forth reasoned bases for the exercise of its discretion; derivative estimates such as this one cannot serve to support an award. Therefore, while it is regrettable that the necessary time records could not be located, assuming Mr. Tully kept them at all, this petition for fees cannot be consolidated under Plaintiff’s claim and Defendants must be denied.

Motion to Intervene in Order to Petition for Fees Due Mr. Craig T. Sawyer

Mr. Riley Pointer presents the Court with a motion to intervene in this action in order to petition for fees allegedly due Mr. Craig T. Sawyer. Like Mr. Tully, Mr. Sawyer participated in Plaintiff’s action at the administrative stage. Mr. Sawyer also assisted Plaintiff’s subsequent counsel, Ms. Patricia Barry at a trial on the merits of Plaintiff’s claims before this Court. In a fashion similar to that of Mrs. Tully, this petitioner has created estimations of the time spent by Mr. Sawyer on Plaintiff’s ease. For the same reasons expressed for the denial of Mrs. Tully’s petition on her husband’s behalf, the Court would deny Mr. Pointer’s request.

However, there are policy justifications against this motion to intervene. Fed.R. Civ.P. 24 which provides for intervention, is not applicable to Mr. Pointer’s claim. The rule allows for intervention when the would-be intervenor can demonstrate an interest in property which is the subject of the action. Mr. Pointer, having no interest in Plaintiff’s case, seeks to utilize this litigation to obtain partial satisfaction of a judgment against Mr. Sawyer in the amount of $105,765.00. Since the Title VII provision allowing an award for fees and costs is not meant for the attorney’s benefit, it is certainly not for his creditors. Mr. Sawyer could not make such a claim; Mr. Pointer, although a judgment creditor, certainly cannot. The motion to intervene must be denied.

The Court also notes that Mr. Sawyer’s widow has renounced any claims to outstanding receivables owed to Mr. Sawyer. In addition, there being no estate, there is no one who may later pursue claim for fees against Plaintiff personally. Therefore, there is no reason for the Court to consider a petition for fees owed Mr. Sawyer in order to protect Plaintiff. Mr. Pointer’s motion to intervene is improper and purely speculative.

Petition for Fees and Costs of Patricia J. Barry

The Court has determined that Patricia Barry presents the only petition for fees and costs which should be consolidated with Plaintiff’s request for reimbursement. She makes a request for an attorney’s fee of $39,275.00 and costs of $223.97. Since Plaintiff prevailed on the merits, counsel having achieved excellent results for her client following a trial on the merits and a decision in Plaintiff’s favor upon the government’s appeal, the government does not contest Plaintiff’s entitlement to an award of fees for counsel’s services, only the amount of that award.

Ms. Barry submitted a thoroughly documented petition, now consolidated under Plaintiff’s claim, from which the Court may comfortably determine the “reasonable” amount of attorney’s fees due. She requests $100.00 per hour for a total of 323.8 hours of work on Plaintiff’s case. In addition, Ms. Barry requests that the Court award an upward adjustment of 25% to reflect the contingent nature of the suit, the complexity of the legal issues involved and to compensate for the nine-year litigation and delay in payment. It is the government’s position that Ms. Barry should be compensated at no more than $65.00 per hour. Further, the government urges the Court to reduce the hours for (1) the lost issue concerning pre- and post-judgment interest on the backpay award, (2) “undemanding legal activities” and (3) the “almost illegible nature” of the time records submitted.

The “Lodestar” Calculation

The initial task for the Court in calculation an appropriate fee award is to establish the “lodestar”: the number of hours reasonably expended multiplied by a reasonable hourly rate. Copeland v. Marshall, 641 F.2d 880, 891 (D.C.Cir.1980). While the “lodestar” is presumed to produce a reasonable and fully compensatory award, the Court’s inquiry does not end here. Once a lodestar figure is reached the Court may consider an upward adjustment enhancing the award to reflect such factors as the contingent nature of success and the risk of non-payment, Blum v. Stenson, 465 U.S. 886,. 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984), the level of skill necessary and the quality of counsel’s representation, and any delay in payment. Copeland v. Marshall, at 892-894. The Court is also obligated to consider the level of success achieved in relation to the amount of the fee award. Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). Reasonable Hourly Rate

The standard for determining a reasonable hourly rate is found in the often-cited statement: “[t]he reasonable hourly rate is that prevailing in the community for similar work.” Copeland, 641 F.2d at 892. This approach was arrived at for the simplicity of its administration and because a “market approach” complies with the legislative mandate to assure competent counsel to persons seeking to vindicate civil rights, thereby providing an “incentive to ferret our discrimination” without “windfall profits” to attorneys. National Association of Concerned Veterans v. Secretary of Defense, 675 F.2d 1319, 1326 (D.C.Cir.1982). Most recently, the regular or “customary” billing rate has replaced the “prevailing market rate” as presumptively reasonable. Laffey v. Northwest Airlines, Inc., 746 F.2d 4 (D.C.Cir.1984).

However, the new presumption of reasonableness of an attorney’s regular, customary billing rate can only apply to those attorneys who have a well-established billing practice. For attorneys associated with public interest groups or single practitioners who specialize in Title VII cases and who receive most of their remuneration from fee awards, resort to the rate prevailing in the community for similar services continues to offer the most efficient and fair method for assessing a proper hourly rate. E.g., Blum v. Stenson, supra. Ms. Barry has declared and supported her contention that she is a solo practitioner specializing in Title VII cases and that she receives most of her remuneration from fee awards. In this instance, the Court is therefore in a position to refer to the prevailing market rate as the most sensible approach to determining her reasonable rate of compensation.

There is ample evidence which supports $100.00 per hour as Ms. Barry’s reasonable rate of compensation. For instance, Plaintiff proved unlawful discrimination and received a backpay award of $129,545.20, before setoffs, largely through the efforts of this attorney. Further, the affidavits of Lawrence Speiser and Eduard Pena, Jr. support her contention that $100.00 is a reasonable hourly rate for attorneys having a regular billing practice in the area of civil rights litigation. As such, this figure could serve as the base figure for the lodestar calculation.

However, there are a variety of factors to support a lesser rate of compensation for counsel’s services. The Court has determined that an award of $85.00 per hour is the most reasonable rate of compensation for Ms. Barry’s services in this case. First of all, while $100.00 per hour is a reasonable hourly rate for attorneys performing civil rights litigation, in this case, the Court would nonetheless be forced to discount this rate to account for the fact that, as a single practitioner with little other help available, Ms. Barry necessarily performed certain tasks which did not require the level of skill meriting $100.00 per hour. The Court must consider all of the circumstances in setting an appropriate hourly rate. The rate chosen must take into account the fact that different kinds of work were performed, requiring different levels of skill. Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717 (5th Cir.1974).

More importantly, $85.00 per hour is the rate agreed upon by counsel and client for work performed at the appeals level and thereafter. It is clear that the agreed upon rate was intended to apply specifically from the time Plaintiff was forced to defend her victory in this Court; nonetheless, the hourly amount does provide the Court with evidence of the value of Ms. Barry’s services to herself and to her client. While counsel may not have an established billing practice, she and Plaintiff arrived at a rate which the Court presumes to be in reasonable relation to that which counsel’s services might command in the marketplace. Moreover, the Court is concerned with providing a fully compensatory fee in this case; if this is the rate which the parties have determined to be adequate, then $85.00 per hour is the rate at which this attorney is willing to accept civil rights cases from fee-paying claimants. This figure is therefore a basis from which the Court may set an award sufficient to fulfill the purpose of fee-shifting in Title VII cases.

Of course, it is possible that Plaintiff and Ms. Barry would arrive at a greater or lesser figure as the hourly rate for counsel’s services at the trial level. The Court has no objective basis for assuming the $85.00 per hour figure would be changed at all nor for determining what any change would be. Rather than ponder this unanswerable question in an attempt to arrive at a second hourly rate for services performed at the trial level, the Court finds that $85.00 per hour is a reasonable and fair rate of compensation for Ms. Barry’s services at all stages of the litigation; this amount will serve as the base of the “lodestar.”

Reasonable Number of Hours Expended

Attorneys’ fees may only be awarded for time reasonably expended. Having determined the reasonable hourly rate, the Court must now turn to consider the number of hours expended in the pursuit of Plaintiff’s success. “The number of hours spent on behalf of the prevailing party is determined by evaluating the total number of hours expended and disallowing unproductive time or time spent on successful claims .'.. must be excluded from the lodestar calculation.” Murray v. Weinberger, 741 F.2d 1423, 1427 (D.C.Cir.1984). Ms. Barry requests compensation for 323.8 hours of work performed on Plaintiff’s behalf. In considering whether this request is reasonable, the Court must scrutinize the time records provided as evidence of and support for the number of hours expended. These records must be sufficiently detailed to allow this Court to make an independent determination of whether the hours spent are justified. Concerned Veterans, 675 F.2d at 1327.

Contrary to the characterization of her petition as “patently deficient,” Ms. Barry has submitted ample documentation of her claim. In fact, the petition is so candidly and thoroughly documented that the government has been able to use it to make several persuasive arguments in favor of reductions. After considering those arguments, and upon independently reviewing the hours spent on this case, the Court finds that there are categories of activity for which the number of hours must be reduced.

While the overall number of hours claimed by counsel is not excessive, approximately 200 telephone calls and conferences with Plaintiff are not justified. Counsel should have exercised “billing judgment.” The many telephone conversations between attorney and client total 38.8 hours or almost one full work week. The Court finds it unlikely that Ms. Barry would expect a fee-paying client to pay her $85.00 per hour for one week’s worth of conversation. Then, the conferences between attorney and client make for an additional claim of 26.4 hours. Together, Ms. Barry requests 65.2 hours of largely unexplained conference and telephone time with her client.

It is admirable that counsel maintained close contact with her client; a certain amount of consultation time is necessary and justifiably compensated. However, the Court finds that here the number of hours is excessive. Moreover, “[c]ounsel for the prevailing party should make a good faith effort to exclude from a fee request hours that are excessive, redundant or otherwise unnecessary, just as a lawyer in private practice ethically is obligated to exclude such hours from his fee submission.” Hensley v. Eckerhart, 461 U.S. at 434, 103 S.Ct. at 1939. The Court finds that since justification for the high number of calls and conferences is not found in the petition and since the Court must exclude unproductive time from the lodestar calculation, the number of hours spent on calls- and conferences with Plaintiff shall be reduced by 50% to reflect a reasonable amount of time for these activities. Therefore, the claimed hours shall be reduced by 32.6 hours to reflect the time not “reasonably expended” on the telephone and in conference with Plaintiff.

Secondly, the Court must reduce the claim by 9.6 hours in order to reflect the time spent on “lost” issue of pre- and post-judgment interest on the backpay award. Hours spent on issues on which Plaintiff did not prevail are not compensable. The only such issue identified is that regarding the availability of interest. However, in addition to these hours, Plaintiff apparently agreed not to pursue a claim for compensation for 8.1 hours spent on a motion for clarification in exchange for a promise from the Defendants not to oppose the motion. These hours are also not compensable. Having made the agreement, Plaintiff must now abide by it. Therefore, the claimed hours will be reduced by 17.7 hours to account for the time spent on the “lost” issues and time for which compensation has been waived.

Therefore, the Court has determined that a reduction of hours in the amount of 50.3 is necessary to achieve the “reasonable number of hours expended” in this litigation. The claim for 323.8 hours is reduced, first, by 32.6 to account for an absence of “billing judgment” regarding excessive and unexplained calls and conferences. The hours are further reduced for time spent on the “lost” issue of pre- and post-judgment interest on the backpay award. The total number of compensable hours is therefore 273.5.

For the reasons set forth above, the Court awards the following lodestar figures:

PATRICIA J. BARRY
Hours............................273.5
Rate............................. $85
Lodestar....................$23,247.50

The Court’s inquiry does not end with the determination of the appropriate lodestar figures. Plaintiff requests a 25% enhancement of the award to reflect the level of complexity, the excellent results obtains, and the delay in payment. However, an upward adjustment may be awarded only in the rarest of cases. The Court does not find that this case presents such a situation and declines to award any upward adjustment.

Since the Court declines to award an enhancement to the lodestar figure, the remaining task is to deduct the amount already paid toward attorney’s fee from the lodestar. The Court has already determined that Plaintiff paid her counsel $2,520.00 for legal services. When this amount is deducted from the lodestar figure, the Court finds that the reasonable and full compensatory attorney’s fee due Ms. Barry is $20,727.50.

Reasonable Costs

Fed.R.Civ.P. 54(d) provides that “costs shall be allowed as of course to the prevailing party unless the court otherwise directs,” Inherent in Rule 54(d) is a heavy presumption favoring the award of costs. Sun Ship v. Lehman, 655 F.2d 1311 (D.C. Cir.1981). Plaintiff has petitioned the Court for $223.97 in reasonable costs incurred during the pendency of this litigation. Of the items sought as costs, $168.40 are for long distance telephone charges, $40.90 are for duplication and $14.37 are for postage.

Allowable costs are listed at 28 U.S.C. § 1920. However, the Court is not limited to the statute, instead, the inclusion of various items within an award of costs is within the discretion of the Court. Hodge v. Seiler, 558 F.2d 284, 287 (5th Cir.1977). In considering the costs requested by Plaintiff, the Court finds the amounts to be both reasonably incurred and reasonable in amount, given the progress of the case before this Court. Northcross v. Board of Education of Memphis City Schools, 611 F.2d 624 (6th Cir.1979), cert, denied, 447 U.S. 911, 100 S.Ct. 2999, 64 L.Ed.2d 862 (1980).

While Defendants complain that the bulk of Plaintiffs claim is for long distance charges, the Court finds it commendable that upon moving to California, Ms. Barry continued with the case, as the attorney most familiar with the litigation. It would have been costlier for yet another attorney to have entered the ease at that late stage. In addition, given the progress of the case before the Court, there is nothing unreasonable in Plaintiffs request for postage and duplication charges. Therefore, in addition to an attorney’s fee of $23,247.50, Plaintiff shall receive the requested amount of $223.97 as reasonable costs.


source: Caselaw Access Project

license: Public Domain

text:
    Dorothy M. COOK, et al., Plaintiffs, v. John R. BLOCK, et al., Defendants.
    Civ. A. No. 82-2659.
    United States District Court, District of Columbia.
    March 15, 1985.

      Ann S. DuRoss, Asst. U.S. Atty., Washington, D.C., for defendants.
    David J. Lloyd, Washington, D.C., for plaintiffs.
   MEMORANDUM AND ORDER

AUBREY E. ROBINSON, Jr., Chief Judge.

I. INTRODUCTION

Before the Court is the application of plaintiffs for attorney’s fees incurred in connection with their successful employment discrimination suit. The parties settled this suit, as reflected in this Court’s order of December 9, 1983. The terms of this settlement provided that plaintiff Cook receive a retroactive promotion to a GS-12 level with grade increases and full back pay, and that plaintiff Lewis receive a retroactive promotion to a GS-12 level and a cash payment. The Court now must determine what attorney’s fees are due plaintiffs.

The attorney’s fee provision of Title VII, under which plaintiffs sued for relief, permits a district court, in its discretion, to award attorney’s fees and costs to a prevailing party. The statute provides in pertinent part:

In any action or proceeding under ... [Title VII] the court, in its discretion, may allow the prevailing party ... a reasonable attorney’s fee as part of the costs...'.”

The purpose of awarding fees in civil rights litigation is “to encourage individuals injured by ... discrimination to seek judicial relief by enabling them to obtain adequate counsel for their meritorious claims.” Where, as is the case here, plaintiffs have achieved relief by virtue of a negotiated settlement, rather than by a trial on the merits, the requirement that the recipient of the fees be a “prevailing party” is satisfied. Therefore, plaintiffs in this action are eligible for, an award of attorney’s fees pursuant to the provisions of Title VII and the applicable case law.

The most useful starting point for determining the amount of a reasonable fee “is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.” This method of calculation, .commonly termed the “lodestar” method, provides the district court with a lodestar figure that presumptively represents the amount of a reasonable fee award. Although the amount is presumed reasonable, the fee in some cases may be adjusted to reflect various factors.

II. CALCULATION OF THE LODESTAR

A. Hours Reasonably Expended

An applicant for attorney’s fees is entitled only to an award for time reasonably expended. “It does not follow that the amount of time actually expended is the amount of time reasonably expended. Consequently, a court may not award fees where time was spent on unsuccessful claims, where an attorney engaged in nonproductive work, or where extraneous time was billed because a case was overstaffed. Applicants preparing an attorney’s fee petition must use their professional “billing judgment” in arriving at the lodestar figure and must be prepared to document their claim with “contemporaneous, complete and standardized time records which accurately reflect the work done____” The application need not present “the exact number of minutes spent,” but should enable the court to make “an independent determination whether or not the hours claimed are justified.”

The Court in this case, after review of the time statements prepared by plaintiffs’ counsel, finds that, with minor exceptions, the hours claimed were reasonably expended. Plaintiffs have requested compensation for 90 hours for Sheila Albright, who represented plaintiffs during the administrative phase of the litigation, and for 220 hours for David Lloyd, who represented plaintiffs during the trial preparation and settlement phases of the litigation. Defendants have objected only to 5.7 hours claimed by plaintiffs for Mr. Lloyd, urging that these hours were spent nonproductively or inefficiently. Based on these objections and the Court’s independent review of the hours claimed, the Court finds that the hours claimed by Albright and Lloyd are reasonable, subject to the following reductions.

1. Eliminated Hours

a. Plaintiffs have requested 0.3 hours expended on December 5, 1982 on drafting a praecipe of counsel’s address change. This item is not properly charged to the defendants. Maintaining proper records and informing those with whom one has a business relationship of an address change are incidental to engaging in a law practice and are costs which must be borne by the attorney. Therefore, the amount of the award will be reduced by 0.3 hours.

b. Plaintiffs also have requested a total of 9.0 hours expended between Septembér 14, 1983 and March 16, 1984 on preparation of time documentation. The Court believes that, as with the address change notification, this item is incidental to orderly maintenance of records and is not chargeable to the defendants. The Court has been careful not to eliminate hours spent on attorney’s fee research or editing of the documents, but the Court is not prepared to permit plaintiffs to charge defendants nine hours for their lawyer keeping records of his time. The Court also takes judicial notice of the fact that many private law firms do not bill clients for the time expended in keeping daily log sheets of their hours. While not dispositive, this practice suggests that it is part and parcel of the business of engaging in the practice of law to maintain orderly office records.

Lloyd avers that he exercised billing judgment in his petition for fees by excluding nonproductive hours from his request. The preferred practice for an attorney who has excluded non-productive or excessive hours is to indicate “the nature of the work and the number of hours involved----” Lloyd has not supplied this information, but merely has stated:

Plaintiffs would note Mr. Lloyd has already exercised independant [sic] billing judgment in this case. Nonproductive time has been excluded from this petition. The exact amount of time involved is not known. No records are kept to indicate nonbillable time, but adjustments have been made.

Despite this deficiency in the fee application, the Court is able to discern in this case that the time claimed was necessary and reasonable and that any nonproductive time was excluded from the request. The same is true with respect to Albright’s request, which also fails to note what, if any, hours were excluded. Therefore, the failure to include nonbillable time in this case is not a basis upon which to reduce the number of hours claimed. That counsel in this case exercised professional billing judgment is further evidenced by the fact that defendants take issue only with 5.7 of the hours claimed (although the Court has reduced the hours expended beyond this figure) and by the fact that the total number of hours claimed is relatively low.

c. In addition, the Court has decided that 4.3 hours expended by plaintiffs’ counsel Lloyd should not be allowed. These are hours which were expended by Lloyd either in attempting to reach parties on the telephone or in filing documents with the Court.

Lloyd has billed repeatedly hours spent attempting to contact witnesses or parties at $110.00 an hour. This is an excessive rate for these calls and Lloyd has not offered any evidence which would suggest an appropriate rate. Unpersuaded that Lloyd has exercised professional billing judgment regarding this matter, the Court denies the request for these hours.

Lloyd also has billed hours expended by him for personal filing of documents. Although Lloyd has represented that it was in fact more economical for him to file the papers at $110.00 an hour than it would have been to hire a messenger, he has provided the Court with no documentation or elaboration to support this astounding proposition. The Court therefore also denies the request for these hours. Therefore, plaintiffs are entitled to attorney’s fees in the amount of 90 hours for Sheila Albright and 206.4 hours for David Lloyd.

B. Reasonable Hourly Rate

The reasonable hourly rate is “that prevailing in the community for similar work.” In determining the reasonable hourly rate, relevant factors include the time and labor required, the novelty, and difficulty of the issues, the amount involved and results obtained, and the experience, reputation and ability of the attorneys. In Concerned Veterans, the District of Columbia Circuit stated that “the best evidence [of the prevailing hourly rate] would be the hourly rate customarily charged by the affiant himself or by his law firm.”

Plaintiffs have requested $100.00 an hour for Ms. Albright and $110.00 an hour for Mr. Lloyd. According to the fee arrangements entered into by plaintiffs and counsel Lloyd, the latter has already received exactly one-half of his total fees directly from plaintiffs. Lloyd explains that he altered his usual rate to permit the privaté individuals involved to afford legal services, but that it was at all times understood that his charge for services was $110.00 an hour.

Defendants counter that “Mr. Lloyd’s fee here should be $55.00 an hour.” Relying on Concerned Veterans, defendants stress that the rate customarily charged by the lawyer is the best evidence of the prevailing hourly rate. Lloyd charged Cook and Lewis $55.00 an hour, so the argument goes, therefore, he is entitled only to $55.00 an hour in fees.

In reconciling these two arguments, the Court begins with the premise that the hourly rate customarily charged by the party seeking compensation, if within the range of rates charged by other lawyers for similar work in the same community, presumptively constitutes the market rate for purposes of calculating the lodestar. The Court concludes that the rate charged by Albright was $100.00 an hour. The parties do not dispute this amount. The Court also concludes that the rate charged by Lloyd was $110.00 an hour — his usual billing rate for civil rights cases. Although plaintiffs paid only $55.00 an hour, this fee arrangement was entered into as an accommodation to plaintiffs to permit them to pursue their meritorious claims. Although the parties’ fee arrangement is not binding on the Court, the Court is satisfied that Lloyd actually charged $110.00 an hour. As the rates are well within the range of acceptable rates charged by other lawyers for similar work in Washington, D.C., $100.00 an hour for Albright and $110.00 an hour for Lloyd are the reasonable hourly rates for purposes of calculating the lodestar.

Therefore, plaintiffs are entitled to attorney’s fees in the following amounts:

1. Sheila Albright

90.0 hours at $100.00 an hour = $ 9,000.00 Total $ 9,000.00

2. David Lloyd

206.4 hours at $110.00 an hour = $22,704.00 Total $22,704.00

In addition, plaintiffs request compensation for $534.35 for costs incurred by Mr. Lloyd, as follows:

Filing Fee $ 10.00
Service Fee 60.00
Expert Witness 250.00
Photocopying 187.10
Telephone Calls 19.25
Travel 8.00
Total $534.35

The Court finds that these costs were reasonably expended by plaintiffs in pursuing their claims, therefore, the Court allows them in their entirety, as follows:

1. Sheila Albright None claimed
2. David Lloyd $534.35

Plaintiffs thus are entitled to a total of $32,238.35.

III. ADJUSTMENTS TO THE LODESTAR

The lodestar generally compensates lawyers adequately for their services, however, the lodestar amount may be adjusted upwards or downwards to reflect factors peculiar to the litigation. In Copeland v. Marshall, the District of Columbia Circuit explained that such an adjustment may be appropriate “to compensate for the risk that the lawsuit would be unsuccessful and that no fee at all would be obtained,” “[to incorporate] [t]he delay in receipt of payment for services rendered,” and “to reflect the quality of representation.” However, the District of Columbia Circuit recently has reiterated that “ ‘an upward fee adjustment to compensate for the risk of losing — if ever appropriate (and Blum did not decide that it ever would be appropriate) — is permissible only in an exceptional case.’ ”

In this case, plaintiffs have argued that “the delays they experienced, the financial difficulties and uncertainties involved in this case and the complexity of the issues raised justify an upward adjustment of ... 30%.” Defendants counter that “no adjustment should be made to [the fee].” Defendants support this contention by noting, first, that plaintiffs’ counsel was in fact paid (at $55.00 an hour) and, second, that the award of present day rates cornpensate counsel adequately for any delay in receipt of payment for services. Each basis for adjustment to the lodestar is discussed below.

1. The Risk That No Fee Would Be Obtained

The risk that no fee would be obtained simply was not present in this case. Plaintiffs paid counsel at a reduced rate as the litigation progressed. There was, of course, the risk that counsel would not receive the remainder of the full fee — an additional $55.00 an hour — but this does not negate the fact that there was no risk, other than the risk of noncollection incurred by any creditor, that counsel would “receive no significant remuneration unless the lawsuit is successful____” Thus, there was no “actual possibility” that the fee applicant would have lost the case and recovered no fee, because, even if the litigation had proven unsuccessful, counsel still would have collected $55.00 an hour. As recently stated by the District of Columbia Circuit, “[t]he upward adjustment [in the lodestar] is not proper when ... the applicant bore little or no risk of nonpayment because of a fee arrangement with the client....”

2. The Delay in Receipt of Payment

Plaintiffs’ argument here is plagued by the same problem addressed above, that counsel was paid for one-half of his full fees as the litigation progressed. Therefore, the adverse impact on the delay in receipt of fees is much mitigated by the payments already made to Mr. Lloyd. Although counsel bemoans the “significant cash-flow problems” he has incurred, he has throughout the litigation had the advantage of prompt partial payment.

3. The Quality of Representation

This issue is not briefed by the parties. The Court is satisfied that counsel performed at a level not exceeding what one would expect from counsel earning $100.00 an hour or more. Therefore, the quality of representation is fully accounted for in the lodestar.

The Supreme Court has required a district court in every case in which an adjustment to the lodestar has been requested to “make it clear that it has considered the relationship between the amount of the fee awarded and the results obtained.” Recognizing that the amount of fees to be awarded bears a direct relationship to the success of the plaintiffs, the Court in this case finds that the total attorney’s fees of $32,238.35 represent a fair and adequate award in light of the successful settlement obtained by the plaintiffs.

      . This Court’s order of settlement does not reflect plaintiff Lewis’ increase to a grade GS-12 level. It appears to the Court, however, that this increase, though not a formal element of the negotiated settlement, was at least induced by the lawsuit.

      . 42 U.S.C. § 2000e-5(k) (1982).

      . Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402, 88 S.Ct. 964, 966, 19 L.Ed.2d 1263 (1968).

      . See Firebird Society v. Members of the Board of Fire Commissioners, 433 F.Supp. 752 (D.Conn. 1976), aff’d, 556 F.2d 642 (2d Cir.1977). In Commissioners Court of Medina County, Texas v. United States, 683 F.2d 435 (D.C.Cir.1982), the D.C. Circuit noted that, in the absence of a merits adjudication, a party is a "prevailing party" if “first, the party ... substantially received the relief sought, and, second, the lawsuit [was] a catalytic, necessary or substantial factor in attaining the relief." Id. at 440. The Court finds in this case both that plaintiffs have received the relief they sought and that the institution of the lawsuit was a necessary antecedent to achieving such relief. Therefore, both plaintiffs are prevailing parties in this litigation.

      . Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983); see also Copeland v. Marshall, 641 F.2d 880, 890-91 (D.C.Cir.1980) (en banc) ("Copeland ").

      . Blum v. Stenson, 465 U.S. 886, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984); Laffey v. Northwest Airlines, Inc., 746 F.2d 4 (D.C.Cir.1984) ("Laffey II").

      . An adjustment to the lodestar is appropriate where, for example, a risk exists that counsel will receive no fee, where a delay exists in receipt of payment, or where the representation received is unusually good or bad. See Copeland, 641 F.2d at 892. See also National Association of Concerned Veterans v. Secretary of Defense, 675 F.2d 1319 (D.C.Cir.1982) (per curiam) (“Concerned Veterans ”).

      . Copeland, 641 F.2d at 891.

      . "Hours that are not properly billed to one’s client also are not properly billed to one’s adversary pursuant to statutory authority." Id.

      . Hensley v. Eckerhart, 461 U.S. at 434, 103 S.Ct. at 1940; Veteran’s Education Project v. Secretary of the Air Force, 515 F.Supp. 993 (D.D. C.1981), aff’d mem., 679 F.2d 263 (D.C.Cir.1982).

      . Laffey v. Northwest Airlines, Inc., 572 F.Supp. 354, 361 (D.D.C.1983) ("Laffey I") aff’d in part and remanded in part, 746 F.2d 4 (D.C.Cir.1984).

      . Concerned Veterans, 675 F.2d at 1327.

      . Lindy Brothers Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161, 167 (3rd Cir.1973).

      . Concerned Veterans, 675 F.2d at 1327.

      . Id. at 1327-28.

      . Plaintiffs’ Petition at 12 (emphasis added).

      . See Arrington v. National Broadcasting Corp., No. 81-2019, slip op. (D.D.C. Jan. 23, 1984).

      . The Court notes that the approximately 300 hours spent by the two attorneys in this case does not appear to be excessive in light of the circumstances of the case. This case progressed through an administrative and a litigation stage, involved two plaintiffs, and presented complex legal questions. Cf. Hensley v. Eckerhart, 461 U.S. at 436, 103 S.Ct. at 1941. (Court hypothesizes that expenditure of 2,557 hours in a case in which plaintiff prevails only on one of six claims would be "clearly excessive").

      . Plaintiffs’ petition for attorney fees includes a request for time expended in preparing the petition itself. It is beyond question that "time spent litigating a fee request is itself compensable.” Copeland, 641 F.2d at 896. See also Arrington v. National Broadcasting Corp., No. 81-2019, slip op. (D.D.C. Jan. 23, 1984). So long as the hours requested are reasonable, are not duplicative, Turgeon v. Howard University, No. 81-2973, slip op. (D.D.C. Nov. 16, 1983), and do not "result in a second major litigation,” Hensley v. Eckerhart, 461 U.S. at 437, 103 S.Ct. at 1941, as is the case here, the hours expended in preparing the fee petition are compensable..

      . Concerned Veterans, 675 F.2d at 1324-27; Copeland, 641 F.2d at 892.

      . Concerned Veterans, 675 F.2d 1319; Copeland, 641 F.2d 880; Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974); Laffey I, 572 F.Supp. 354.

      . 675 F.2d at 1325.

      . Plaintiffs’ Petition at 13.

      . Defendants' Response at 6.

      . Laffey II, 746 F.2d 4; see also Concerned Veterans, 675 F.2d 1319; Copeland, 641 F.2d 880.

      . Although a fee arrangement between the attorney and his client is not binding on a court, Clark v. American Marine Corp., 320 F.Supp. 709, 711 (E.D.La.1970), aff'd, 437 F.2d 959 (5th Cir.1971), in this case the Court is satisfied that Lloyd actually charged $110.00 an hour.

      . The Court has indicated that certain charges must be eliminated from plaintiffs’ petition. The Court does so in fulfilling its duty to oversee orderly and fair charging of attorney’s fees in civil rights cases. The Court wishes to emphasize that it is not making a statement on the propriety of any fees or rates negotiated by plaintiffs and their counsel.

      . 641 F.2d at 892-94. See also Concerned Veterans, 675 F.2d at 1328; Laffey I, 572 F.Supp. at 376.

      . Laffey II, 746 F.2d at 29 (D.C.Cir.1984) (quoting Murray v. Weinberger, 741 F.2d 1423, at 1432 (D.C.Cir.1984)).

      . Plaintiffs’ Petition at 14.

      . Defendants' Response at 8-9.

      . Laffey I, 572 F.Supp. at 377.

      . Donnell v. United States, 682 F.2d 240, 254 n. 43, (D.C.Cir.1982), cert, denied, 459 U.S. 1204, 103 S.Ct. 1190, 75 L.Ed.2d 436 (1983).

      . Murray v. Weinberger, 741 F.2d 1423, 1431 (D.C.Cir.1984).

      . Plaintiffs' Petition at 8.

      . The delay in receipt of payment in this case is, at the most, slightly over two years. In light of the fact that counsel has been paid for one-half of his services, the effect of any delay is further minimized. Cf. Laffey v. Northwest Airlines, 572 F.Supp. at 380 ("This action was filed in 1970 and has been litigated vigorously and almost continuously ever since. Plaintiffs’ counsel have yet to receive one penny of compensation for over 13,300 hours of work”) (citations omitted).

      . Hensley v. Eckerhart, 461 U.S. at 437, 103 S.Ct. at 1941.


author: BATTISTI, Chief Judge.

text:
    David J. MIDDLETON and June C. Middleton, Petitioners, v. UNITED STATES of America, and Albert Yandek, Revenue Agent, Internal Revenue Service, Respondent. LIFE SCIENCE CHURCH, Petitioner, v. UNITED STATES of America, and Albert Yandek, Revenue Agent, Internal Revenue Service, Respondent.
    Nos. C83-2419, C83-2439.
    United States District Court, N.D. Ohio, E.D.
    March 22, 1985.
   MEMORANDUM OPINION AND ORDER

BATTISTI, Chief Judge.

Petitioners David J. Middleton and June C. Middleton filed on June 9,1983 a petition to quash summonses issued by Respondent Internal Revenue Service. Petitioner Life Science Church, through David Middleton, its trustee, filed a similar petition to quash on June 10, 1983. The summonses at issue are third-party recordkeeper summonses issued pursuant to 26 U.S.C. § 7609; the summonses were issued on May 20, 1983. Notice was given to petitioners on May 23, 1983. For the reasons outlined below, petitioners’ petition to quash summons is denied.

I.

Neither petitioners nor the respondents have in any of their papers before the Court clearly set out the facts of this case. The following facts have therefore been pieced together: Petitioner, residents of Rocky River, Ohio, are either in their individual or corporate capacities, officers or financial agents of the Life Science Church, Order of Almighty God, Chapter 1476. Petitioners, on behalf of the Life Science Church, had financial transactions with Ameritrust Company, Cardinal Federal Savings & Loan, Continental Federal Savings & Loan, Huntington National Bank and National City Bank. Internal Revenue Agent Albert Yandek directed in the summonses that each of the financial institutions named above produce “books, records, papers and other data relating to the tax liabilit[ies]” of petitioners for the periods 1978-1982 inclusive. The financial institutions were summoned to appear before Yandek at 10 a.m. on June 16, 1983. In its “Response to Verified Petition to Quash Summonses,” the Internal Revenue Service states that the summoned parties failed to appear on June 16, 1983.

II.

It is difficult to determine from a study of petitioners’ pro se complaint the basis for his petition to quash. It appears that Petitioners are mounting a jurisdictional challenge. Petitioners state:

[Tjhese summonses were issued unlawfully and should be quashed because the United States of America and the Internal revenue Service et al. have NO jurisdiction whatsoever over the PERSON, property, interests nor endeavors (subject matter) of the Petitioners and therefore there is NO subject matter to bring before this Court for several reasons.

Verified Petition to Quash Summons, item 4, at 2.

Petitioner appears to reach this conclusion that jurisdiction is lacking based on two reasons: (1). “Congress does not possess jurisdiction to investigate individuals in civil actions, therefore [since Congress cannot delegate powers it does not have itself] the administrative agencies do not have it either.” Items 5 & 6, at 2; (2) “The Secretary of the Treasury has unlawfully and prejudicially failed to refuse to follow his own government statutes, rules and regulations ... in which statutes and related common law on proof of jurisdiction, he is mandated to prove existence of jurisdiction.” Item 7, at 3. “Petitioners also assert that the United States and the Internal Revenue Service have no jurisdiction because Petitioner has timely filed an Administrative Complaint and Demand with supporting affidavits under Title 5 U.S.Code.” Item 7, at 2 (emphasis in original).

Petitioners’ use of the word “jurisdiction” is a misnomer; essentially the thrust of the petition is that the Internal Revenue does not have the authority to summon the financial institutions with which he allegedly deals. An examination of 26 U.S.C. § 7609 demonstrates that the summonses in this case are authorized and properly drawn.

First, this Court has jurisdiction to determine the instant petitions to quash. Since petitioners reside in Rocky River, Ohio which is in the Northern District of Ohio, the requirements of 26 U.S.C. § 7609(h)(1) are met. Petitioner has filed his petition to quash within the 20-day period from the date he received notice (May 23, 1984); hence, the proceeding to quash summons was properly initiated. 26 U.S.C. § 7609(b)(2)(A). The Secretary of the Treasury, through his delegates in the Internal Revenue Service is. authorized to examine books and witnesses to determine the correctness of any return or the tax liability of any person or transferee or fiduciary. 26 C.F.R. § 601.105(b)(1); 26 U.S.C. § 7602(b). The Supreme Court has held that the I.R.S’s investigatory authority is like that of other federal investigatory agencies who can investigate based on suspicion. U.S. v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964). There is no violation of either the First Amendment or the Fourth Amendment, when the I.R.S. uses its summons authority to investigate situations in which it believes probable cause exists to find a tax law violation. United States v. Bisceglia, 420 U.S. 141, 95 S.Ct. 915, 43 L.Ed.2d 88 (1975); United States v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964); United States v. Harrington, 388 F.2d 520 (2nd Cir.1968).

Pursuant to 26 U.S.C. § 7609, the Internal Revenue Service may summon any “third party recordkeeper” and the records in that party’s possession. A “third party recordkeeper” is defined to include “any mutual savings bank, cooperative bank, domestic building and loan association, or other [Federal or State chartered] savings and loan, any bank or any credit union.” 26 U.S.C. § 7609(a)(3). The institutions named in the instant summonses all fall within the statutory definition of third-party recordkeepers.

In all other respects, the summonses at issue appear sufficient. They properly identify the persons whose tax liability is at issue (petitioners David J. Middleton and June C. Middleton); this is not a “John Doe” summons. See 26 U.S.C. §§ 7609(a)(1), 7609(f). There is no allegation that the documents sought have not been identified with reasonable certainty. 26 U.S.C. § 7603; see also United States v. First National Bank, 173 F.Supp. 716, 720 (W.D.Ark.1959). A request for all documents in the third-party’s possession relating to the taxpayer is sufficient. United States v. First Pennsylvania Bank, 453 F.Supp. 457 (E.D.Pa.1978). Furthermore, there has been no claim that the instant summonses had been brought in anything less than good faith on the part of the I.R.S. United States v. LaSalle National Bank, 437 U.S. 298, 98 S.Ct. 2357, 57 L.Ed.2d 221 (1978).

None of the third-party recordkeepers who were summoned in this case have chosen to exercise their statutory right to intervene. 26 U.S.C. § 7609(b)(2)(C). However, the summonees are bound by the decision rendered in this petition to quash proceeding, whether or not they intervene. Id.

No reasons have been presented why the instant summonses should not be enforced. The IRS has the requisite statutory authority to summon and examine petitioners’ financial records, either in their possession or the possession of third party recordkeepers.

Petitioners claim that the summonses as they apply to the Life Science Church are overbroad. Petitioners cite United States v. Life Science Church, 636 F.2d 221 (8th Cir.1980) in support. However, petitioners misread that opinion. In that case, the Eighth Circuit found that 26 U.S.C. § 7605

expressly allows the finances of a church to be inspected for the purpose of a determination of the amount of tax the church may owe under the code. Further the statute allows an inspection of the religious activities ‘to the extent necessary to detrmine whether such organization is a church.’

Id. at 222-23.

However, the Court found that a summons (like the summonses in United States v. Holmes, 614 F.2d 985, 988 (5th Cir. 1980)), which sought all documents relating to the church’s organizational structure, all correspondence, minutes and literature was overbroad. Id. at 223-24.

This is not the situation in the instant case. The Internal Revenue Service’s attachment to its summonses requests only financial documents. It does not seek organizational charts, business records, or membership lists. Hence, this Court does not regard such a summons to be over-broad since the documents are narrowly identified and clearly relevant to determine the tax liability of the church. First Amendment associational freedoms are not infringed by this type of summons. Cf. United States v. Citizens State Bank, 612 F.2d 1091 (8th Cir.1980) (IRS request to see membership lists may raise conflict between IRS powers and First Amendment values).

Accordingly, it is ordered that:

1. Petitioners’ petitions to quash summons are denied;

2. The summonses against third-party recordkeepers Ameritrust Company, Cardinal Federal Savings & Loan, Contintental Federal Savings & Loan, Huntington National Bank and National City Bank with respect to petitioners David and June Middleton, and petitioner Life Science Church be enforced and that all records requested be produced to the Internal Revenue Service at a date and time specified by the Internal Revenue Service or its agent;

3. This decision denying the petition to quash shall be deemed a final order and an enforcement order be issued pursuant to 26 U.S.C. § 7609(h)(1);

4. Petitioner’s Complaint in C83-2419 is dismissed with prejudice.

IT IS SO ORDERED.

      . 26 U.S.C. § 7609(h)(1) reads:
      Jurisdiction — The United States district court for the district within which the person to be summoned resides or is found shall have jurisdiction to hear and determine any proceeding brought under subsection (b)(2), (f), or (g). An order denying the petition shall be deemed a final order which may be appealed.


author: TERRENCE WILLIAM BOYLE, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. Floyd Blane THOMAS, JR., Roger Taylor, Defendants.
    No. 84-64-CR-3.
    United States District Court, E.D. North Carolina, Fayetteville Division.
    March 25, 1985.

      Thomas P. Swaim, Asst. U.S. Atty., Raleigh, N.C., for plaintiff.
    Randy S. Gregory, Anthony Rand, Fayetteville, N.C., for defendants.
   ORDER

TERRENCE WILLIAM BOYLE, District Judge.

This action comes before the court on the ORDER AND RECOMMENDATION of the Honorable Alexander B. Denson, United States Magistrate concerning pretrial discovery and disclosure, filed in this action January 16, 1985. The court has considered all the filings in this action in a de novo review, and now enters this order.

The defendants in this case are charged with conspiracy to import a controlled substance and other related offenses. The magistrate ordered the United States to disclose to the defendants all Jencks Act Material within its possession no later than twenty-four (24) hours prior to the testimony at trial of that witness. The magistrate relied on United States v. Fine, 413 F.Supp. 740 (W.D.Wis.1976). A better line of authority holds that a court may not compel the Government to disclose statements of a witness before the conclusion of his direct testimony. United States v. Algie, 667 F.2d 569 (6th Cir.1982); United States v. Campagnuolo, 592 F.2d 852, 858 (5th Cir.1979); United States v. Callahan 534 F.2d 763, 765 (7th Cir.1976); United States v. Spagnuolo, 515 F.2d 818, 821 (9th Cir.1975); United States v. Sebastian, 497 F.2d 1267, 1270 (2d Cir.1974). This part of the magistrate’s ORDER AND RECOMMENDATION is REVERSED.

The magistrate also ordered the government to disclose three days before trial any inculpatory statements of co-conspirators who will not be government witnesses if the government plans to introduce the statements under Federal Rule of Evidence 801(d)(2)(E). Again the magistrate relied on Fine (supra) as well as United States v. Konefal 566 F.Supp. 698, 706 (N.D.N.Y. 1983) and United States v. Turkish 458 F.Supp. 874, 882 (S.D.N.Y.1978).

Rule 16 of the Federal Rules of Criminal Procedure does not compel this result. Rule 16 requires disclosure of “any relevant written or recorded statements of the defendant” that are within the knowing control of the government, “the substance of any oral statement which the government intends to offer in evidence at the trial made by the defendant” to a party that the defendant knew was a government agent, “and recorded testimony of the defendant before a grand jury which relates to the offense charged.”

Some courts have ordered pretrial disclosure of statements of co-conspirators who are not potential government witnesses if the government intends to offer the statement into evidence under 801(d)(2)(E). The courts have found authority to make such an order in their inherent power to control the process of litigation and by reading Rule 16 in pari materia with 801(d)(2)(E). See Fine (supra); Konefal (supra); Turkish (supra); United States v. McMillen 489 F.2d 229 (7th Cir.1972).

Admission of a co-conspirator’s statement under 801(d)(2)(E) does not make it a statement of the defendant under Rule 16 so as to require pretrial disclosure. Rule 801(d)(2)(E) concerns admission- of evidence at trial; Rule 16 concerns pretrial discovery. In criminal cases, the amount of evidence subject to pretrial discovery is much more limited than the amount of evidence which is admissible at trial. Reading an evidentiary rule in pari materia with Rule 16 cannot be the basis to compel pretrial discovery of the statements of co-conspirators not expected to be government witnesses.

The issue then becomes whether the court has the inherent power to order pretrial disclosure of the statements. Any written statement by a co-conspirator in the furtherance of a conspiracy, which may be admitted against these defendants under 801(d)(2)(E) may be discoverable under the provisions of Rule 16(a)(1)(C) of the Federal Rules of Criminal Procedure.

“Statements, made by government witnesses or prospective government witnesses” are not subject to disclosure “except as provided in 18 U.S.C. 3500,” the Jencks Act, which prohibits compelled disclosure before the witness has testified. Rule 16(a)(1)(A). United States v. Percevault 490 F.2d 126 (2nd Cir.1974). An oral statement to a government witness is part of that witness’s testimony and is discoverable only through the provisions of the Jencks Act. United States v. Callahan 534 F.2d 763 (7th Cir.) cert, denied 429 U.S. 830, 97 S.Ct. 91, 50 L.Ed.2d 94 (1976); United States v. Wilkerson 456 F.2d 57, 61 (6th Cir.) cert denied 408 U.S. 926, 92 S.Ct. 2506, 33 L.Ed.2d 337 (1972). That part of the magistrate’s ORDER AND RECOMMENDATION which requires the government to disclose oral statements of co-conspirators who are not prospective government witnesses is REVERSED.

Except as explicitly reversed in this order, the ORDER AND RECOMMENDATION of the Honorable Alexander B. Den-son entered in this action on January 16, 1985, is ADOPTED and made the order of this court.

AFFIRMED IN PART AND ' REVERSED IN PART this 25th day of March, 1985.


author: NESBITT, District Judge.

text:
    Sherman SIMON, B.B. Goldstein, William E. Benjamin, II, Arthur W. Engstrom, Jr., Harold G. Kolb, Joseph A. Maroon, James E. Morgan, Jr., Julius J. Shephard, Cromwell A. Anderson, and Joseph W. Armaly, Plaintiffs, v. Hugh F. CULVERHOUSE, Jr., Defendant.
    No. 85-0517-CIV-NESBITT.
    United States District Court, S.D. Florida, S.D.
    March 28, 1985.
    Lowell Garrett, Robert Brochin, Morgan, Lewis & Bockius, Miami, Fla., for plaintiffs.

      Michael R. Josephs, Haddad, Josephs & Jack, Coral Gables, Fla., for defendant.
   ORDER

NESBITT, District Judge.

THIS CASE is before the Court upon the Plaintiffs’ Emergency Motion for Preliminary Injunction. The Plaintiffs, shareholders of Florida Commercial Bank (hereinafter “FCB”), allege that the Defendant, Hugh Culverhouse, Sr., violated Section 14(d) and 14(e) of the Williams Act, 15 U.S.C. §§ 78n(d), 78n(e), by making material misrepresentations and omissions in the disclosure statement filed in connection with his tender offer for FCB. The Plaintiffs argue that the 14D-1 Tender Offer Statement failed to disclose certain financial information required by 15 U.S.C. §§ 78n(d), 78n(e); Rule 14d-6(e), 17 C.F.R. § 240.14d-6; and Item 9 of the Securities and Exchange Commission (SEC) Schedule 14d-l.

Prior to the Court granting a preliminary injunction, the Plaintiffs must establish four prerequisites. They must show: (1) a substantial likelihood of success on the merits; (2) a substantial threat of irreparable injury if the injunction is not granted; (3) that the threatened injury to the Plaintiffs outweighs the harm the injunction would do to the Defendant; and (4) that granting the preliminary injunction will not disserve the public interest. Canal Authority of the State of Florida v. Callaway, 489 F.2d 567, 572 (5th Cir.1974). The Court finds that the Plaintiffs have failed to sustain their burden as to each of these factors.

The first factor is whether the Plaintiffs face a substantial threat of irreparable injury if the injunction is not granted. The Plaintiffs stress that without a preliminary injunction, the tender offer will be consummated and it will be virtually impossible to subsequently undo the transaction. Sonesta International Hotels Corp. v. Wellington Associates, 483 F.2d 247, 250 (2d Cir. 1973). This fact alone does not amount to a showing of irreparable harm, Martin Marietta Corp. v. Bendix Corp., 547 F.Supp. 533, 539 (D.Md.1982), especially where the tender offer is in compliance with legal requirements and where the injunction could have devastating effects on the success of the offer. See Edgar v. MITE Corp., 457 U.S. 624, 102 S.Ct. 2629, 73 L.Ed.2d 269 (1982) (policy of Williams Act is to protect investors, but to also avoid delays that might harm the success of tender offers).

The Court further finds that the injunction threatens greater harm to the Defendant than not granting the injunction threatens to harm the Plaintiffs. Most importantly, the delay which of necessity accompanies a preliminary injunction ordering further disclosure could cause the Defendant to lose forever his opportunity to acquire the target company. Martin Marietta Corp. v. Bendix Corp., supra. (Citing Pargas, Inc. v. Empire Gas Corp., 423 F.Supp. 199, 209 (D.Md.), affd per curiam, 546 F.2d 25 (4th Cir.1976)).

The Plaintiffs must make a strong showing of likelihood of success on the merits to overcome the balance of hardships weighing in favor of the Defendant. See Blackwelder Furniture v. Seilig Manufacturing Co., 550 F.2d 189, 195-96 (4th Cir. 1977). The Court finds that the Plaintiffs are unable to satisfy this requirement. The information provided to FCB’s shareholders in the tender offer statement is sufficient to allow them to intelligently decide whether to tender or retain their stock. As well, the Federal Reserve Board has approved the Defendant as regards his finances and his ability to complete his tender offer. Finally, Item 9 of the SEC’s Schedule 14D-1 provides that “where the bidder is other than a natural person and the bidder’s financial condition is material to a decision by a security holder of the subject company whether to sell, tender or hold securities being sought in the tender offer current, adequate financial information concerning the bidder [must be supplied].” (Emphasis added.)

In order for the Defendant, a natural person, to be subject to the financial disclosure requirement of Item 9, the Plaintiffs would have to prove that this case involves special circumstances. See Riggs National Bank of Washington, D.C. v. Allbritton, 516 F.Supp. 164 (D.D.C.1981). The Plaintiffs have not made a sufficient showing of special circumstances such as was present in Riggs or otherwise, so as to warrant further financial disclosure. For all of the above reasons, the Court finds that the Plaintiffs have not met their burden of showing an enhanced likelihood of success on the merits.

The public interest is the final area of inquiry. The operative facts reflect that the Defendant has made an offer to purchase any and all shares tendered by FCB shareholders. The offer also expressly states that if the number of shares tendered exceeds the number which the Federal Reserve Board has approved for purchase, the Defendant will then purchase the tendered shares on a simple pro rata basis. Finally, the Court takes note of the fact that the Defendant’s offer constitutes the highest price ever offered for FCB stock, nearly twice its book value as of December 31, 1984.

In short, this tender offer presents the FCB shareholders with an opportunity to increase the value of their holdings. In this setting, the Court is mindful of the concerns expressed by the United States Supreme Court regarding judicial intervention hindering the potential success of tender offers:

Shareholders are deprived of the opportunity to sell their shares at a premium. The reallocation of economic resources to their highest valued use, a process which can improve efficiency and competition, is hindered. The incentive the tender offer mechanism provides incumbent management to perform well so that stock prices remain high is reduced.

Edgar v. MITE Corp., 457 U.S. at 642-646, 102 S.Ct. at 2641-2642 (1982). Thus, the public interest is best served by allowing the Defendant to proceed with his tender offer.

is Based on the findings set forth above, it

ORDERED AND ADJUDGED that the Plaintiffs’ Motion for Preliminary Injunction be and the same is hereby DENIED.


author: THOMAS P. GRIESA, District Judge.

text:
    SIERRA CLUB et al., Plaintiffs, v. UNITED STATES ARMY CORPS OF ENGINEERS et al., Defendants.
    No. 81 Civ. 3000.
    United States District Court, S.D. New York.
    March 29, 1985.

      Butzel & Kass, New York City, for plaintiffs; Mitchell S. Bernard, Jean M. McCarroll, New York City, of counsel.
    Rudolph W. Giuliani, U.S. Atty., Southern District of New York, New York City, for U.S. Army Corps of Engineers and Federal Highway Admin.; Howard Wilson, Marc H. Rosenbaum, Randy Mastro, New York City, of counsel.
    Kaye, Scholer, Fierman, Hays & Handler, New York City, for State of New York, Department of Transportation; Paul J. Curran, Bruce Margolius, New York City, of counsel.
   THOMAS P. GRIESA, District Judge.

Defendant New York State Department of Transportation filed a motion on March 11, 1985 under Fed.R.Civ.P. 60(b)(5) for an order declaring the injunctions in this case dissolved. The State takes the position that all conditions of the injunctions have been fully satisfied, and that they are by their own terms now dissolved. The principal injunctions referred to are those of April 14, 1982 and July 23, 1982, which enjoined (with exceptions not here relevant) further federal funding and further activities by the State in regard to the Westway project, and ordered that the matter be remanded to the Corps of Engineers and the Federal Highway Administration. The injunctions contained certain detailed directions for the remands. The basic terms of the injunctions were affirmed by the Court of Appeals on February 25, 1983, although certain provisions were modified. Sierra Club v. Corps of Engineers, 701 F.2d 1011 (2d Cir.1983).

The State asserts that reconsideration by the Corps and the FHWA has taken place; that these agencies have issued a supplemental environmental impact statement, as required by the injunctions; and that the Corps has issued a landfill permit and the FHWA has issued its approval for federal funding. The State takes the position that these facts demonstrate compliance with the injunctions and that they are, by their own terms, automatically dissolved. The State urges that there is no reason for further proceedings before declaring the injunctions terminated.

Plaintiffs take a contrary view. They assert that an automatic dissolution of the injunctions without a hearing would be unwarranted and would violate their rights. They urge that there must be a hearing to determine whether the injunctions have been complied with, and that the present record, without more, does not demonstrate compliance. Plaintiffs argue that there are serious questions, raised by the administrative record itself, about whether the terms of the injunctions have been fulfilled. Plaintiffs’ position is that they are entitled to a hearing on these questions.

The State does not deny that plaintiffs are entitled to a hearing or trial on their claims of illegalities in respect to the remand process. However, the State asserts that the actions taken by the agencies on remand are entitled to a presumption of regularity. The State argues that the proceedings with regard to plaintiffs’ present allegations should be made in the context of new causes of action directed to seeking a new injunction.

It is my view that plaintiffs are correct on the procedural questions being dealt with here. The injunctions should not be declared automatically dissolved without a hearing. There should be a hearing to determine whether the terms of those injunctions have in fact been complied with. Environmental Defense Fund v. Hoffman, 566 F.2d 1060 (8th Cir.1977); Sierra Club v. Mason, 365 F.Supp. 47 (D.Conn. 1973); Environmental Defense Fund v. Corps of Engineers, 342 F.Supp. 1211 (E.D.Ark.1972).

If it appeared that plaintiffs’ allegations of noncompliance with the injunctions were frivolous or were presented for the purpose of delay, it might be another matter. However, plaintiffs are raising substantial issues which must be resolved before it can be determined whether the injunctions have been complied with and should be dissolved.

The hearing should be held at the earliest possible time, commensurate with the needs of the parties to develop the evidence.

So ordered.


text:
    Joseph GORMAN, Plaintiff, v. MERRILL, LYNCH, PIERCE, FENNER AND SMITH, INC., a foreign corporation, Defendant.
    No. 84-1299-CIV-NESBITT.
    United States District Court, S.D. Florida, S.D.
    April 1, 1985.
    Karen A. Gievers, Anderson, Moss, Russo, Gievers, & Cohen, P.A., Miami, Fla., for plaintiff.
    Bennett Falk, Keith Olin, Ruden, Barnett, McClosky, Schuster & Russel, P.A., Miami, Fla., for defendant.
   ORDER

NESBITT, District Judge.

THIS CAUSE came before the Court upon several motions of the parties. Plaintiff filed a four count amended complaint charging federal and state securities violations of laws arising out of the purchase and sale of securities through the Defendant brokerage company.

Count I seeks relief under Section 10b of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j(b) and Rule 10B-5, 17 C.F.R. § 240 10B-5 (1983). Count II charges Defendant with violating Chapter 517.301, Florida Statutes. Count III alleges common law fraud, and Count IV alleges a violation under the Florida civil theft statute, Chapter 812, Florida Statutes.

The Defendant has moved to dismiss the cause or in the alternative to compel arbitration of Plaintiff’s claims. Both parties presented legal memoranda in support of and in opposition to dismissal of the complaint, severing the state law claims from the non-arbitrable federal securities law claim, and compelling arbitration of the state law claims. The Defendant, relying on Brown v. Dean Witter Reynolds, Inc., 601 F.Supp. 641 (S.D.Fla.1985) and Viscomi v. Paine, Webber, Jackson, Curtis, Inc., 596 F.Supp. 1537 (S.D.Fla.1984), in support of their position, moves the Court to sever the state law claims, refer them to arbitration and stay the arbitration proceedings pending a trial on the federal securities law claims. On the other hand, Plaintiff suggests the Court follow the intertwining doctrine adopted by the Eleventh Circuit in Belke v. Merrill, Lynch, Pierce, Fenner & Smith, 693 F.2d 1023 (11th Cir.1982). That case, and others from the Eleventh and Fifth Circuits, held that when arbitrable and nonarbitrable claims arise out of the same transaction and are sufficiently intertwined factually and legally, a district court may deny severance of the state-arbitrable claims and try all the claims together. In a recent unanimous decision, the United States Supreme Court held that a district court must compel arbitration of pendent state arbitrable claims when one of the parties files a motion to compel and that a stay of arbitration proceedings is not necessary to protect the federal interest in the resolution of securities claims. Dean Witter Reynolds, Inc. v. Byrd, — U.S.—, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). The Court said:

We believe that the preclusive effect of arbitration proceedings is significantly less well settled than the lower court opinions might suggest, and that the consequence of this misconception has been the formulation of unnecessarily contorted procedures. We conclude that neither a stay of proceedings, nor joined proceedings, is necessary to protect the federal interest in the federal-court proceeding, and that the formulation of collateral-estoppel rules affords adequate protection to that interest.

Accordingly, it is

ORDERED AND ADJUDGED upon authority of Dean Witter Reynolds v. Byrd, supra, that the motion of the Defendant to sever the state claims and compel arbitration of Counts II, III and IV be and the same is hereby GRANTED. In compelling arbitration of Count II (Section 517.301 of the Florida Securities Act), the Court declines to follow Oppenheimer & Co. v. Young, 456 So.2d 1175 (Fla.1984) and follows the reasoning of Judge Gonzalez in Brown v. Dean Witter Reynolds, Inc., 601 F.Supp. 641 (S.D.Fla.1985). Federal courts need not adhere to state court decisions on matters of federal law. Sola Electric Co. v. Jefferson Electric Co., 317 U.S. 173, 176, 63 S.Ct. 172, 174, 87 L.Ed. 165 (1942); Standard Oil Co. v. Johnson, 316 U.S. 481, 483, 62 S.Ct. 1168, 1169, 86 L.Ed. 1611 (1942). It is further

ORDERED AND ADJUDGED that the Defendant’s Motion to Stay Arbitration Pending Trial of the Federal Securities Law Claim alleged in Count I is DENIED. It is further

ORDERED AND ADJUDGED that Motion to Dismiss Count I of the First Amended Complaint be and the same is hereby DENIED as sufficient facts are alleged to state a cause of action under Section 10(b) of the Securities and Exchange Act of 1934. Defendant shall answer Count I of the First Amended Complaint within twenty (20) days from date of entry of this Order.