StoneX Group Inc. v. shipman

Background

StoneX Group Inc. and StoneX Financial Inc. sought attorney’s fees for their successful motion for sanctions against Howard Shipman. The sanctions motion alleged that Shipman failed to preserve electronically stored information and intentionally destroyed evidence relating to StoneX’s proprietary and confidential computer source code. Shipman proceeded without a lawyer and opposed the sanctions motion.

On February 5, 2024, Magistrate Judge Valerie Figueredo recommended granting sanctions, striking Shipman’s cross-claims, entering default judgment against him, and awarding StoneX its attorney’s fees and costs incurred in litigating the sanctions motion. On July 10, 2024, Judge John G. Koeltl adopted that recommendation in its entirety and referred the matter back to Judge Figueredo to determine the appropriate fee award.

StoneX initially sought $458,357.14 and later voluntarily reduced its request to $436,047.57. Shipman disputed time entries and argued that StoneX was seeking fees for work unrelated to the sanctions motion.

Legal standard

The court used the lodestar method, which calculates fees by multiplying a reasonable hourly rate by the number of hours reasonably spent. The party requesting fees must provide contemporaneous time records showing the date, hours, and nature of each attorney’s work. Courts may reduce claimed hours when they are excessive, duplicative, vague, unrelated, or otherwise unnecessary.

Court’s analysis

The court found the requested rates for lead attorney Lloyd B. Chinn, senior associate Daryl G. Leon, and senior associate Jonathan R. Gartner reasonable. It reduced the requested rates for junior associates Sydney E. Cone and Alexander J. Blutman to $275 per hour. It also reduced the rates for paralegals and support staff to $150 per hour.

The court found that StoneX’s counsel had claimed 595.5 hours for the sanctions motion and that the amount was excessive. The billing records included block-billed entries combining related and unrelated work, redundant work, clerical tasks, vague descriptions, time for a deposition for which StoneX had already received fees, and work by more attorneys and support staff than necessary. The records also included work concerning matters such as Department of Labor and Financial Industry Regulatory Authority communications, communications with Shipman’s employer, redactions to a letter, and Shipman’s bankruptcy filing, which the court found unrelated or insufficiently related to the sanctions motion.

Because of these problems, the court applied a 65% across-the-board reduction to the claimed hours. The resulting award covered 208.425 hours at the modified rates and totaled $152,812.19.

Disposition

Magistrate Judge Valerie Figueredo granted StoneX’s motion for attorney’s fees in the amount of $152,812.19. The Clerk of Court was directed to terminate the motion at ECF No. 151.