Automated Management Systems, Inc. v. Rappaport Hertz Cherson Rosenthal, P.C.

Background

An earlier order directed the defendants to provide operational versions of software, access to a server, and additional communications. After AMSI alleged that the defendants failed to comply, it sought discovery sanctions under Federal Rule of Civil Procedure 37. Judge Fox granted that request in part and denied it in part, finding the defendants jointly and severally liable for specified attorneys’ fees and costs, including fees connected to obtaining the server and software, opposing a protective-order motion, preparing a discovery letter motion, and bringing the sanctions motion.

AMSI later requested $24,700 in attorneys’ fees for work performed by Paul Hoffman, a paralegal with approximately 30 years of experience, at a requested rate of $200 per hour. AMSI also sought permission to file a supplemental request for the fees and costs incurred in preparing the present fee application. The defendants opposed the request. They argued that AMSI had not shown that it paid its former counsel, that Hoffman’s work was not recoverable, that his hourly rate should be no more than $150, and that his time records included excessive, vague, and block-billed entries. Defendant Branko Rakamaric separately argued that he should not be responsible for sanctions because he did not possess the server.

Court’s Analysis

The court concluded that AMSI’s proof of payments to prior counsel resolved the defendants’ payment objection. It also rejected the argument that AMSI could not recover for Hoffman’s work. Attorney Bruce D. Katz reviewed Hoffman’s work, and the court found no evidence that Hoffman billed AMSI for legal advice. The court therefore found Hoffman’s fees recoverable when performed under attorney supervision.

The court found the $200 hourly rate reasonable based on rates approved for paralegals in the Southern District of New York. It also found that the case-specific factors cited by the defendants did not require reducing that rate, noting Hoffman’s experience, professional relationship with AMSI, and the successful result of the discovery efforts.

The court accepted several challenged billing entries, including block-billed entries, because the overall context allowed it to evaluate their reasonableness. But it found some work excessive. Examples included ten hours to review a three-page portion of a larger protective-order motion, 29.5 hours to prepare an 11-page opposition without case citations, and 36 hours to prepare approximately 23 pages of a sanctions motion. The court also found two hours of billing insufficiently explained. Rather than adjust individual entries, it reduced Hoffman’s hours by 20 percent, resulting in 98.8 hours.

As to Rakamaric, the court stated that Judge Fox had previously found sanctions appropriate and that Chief Judge Swain had previously ruled that the sanctions order was neither clearly erroneous nor contrary to law. The court therefore concluded that Rakamaric was jointly and severally liable for AMSI’s attorneys’ fees and costs.

Disposition

The court granted in part and denied in part AMSI’s motion for attorneys’ fees. It ordered the defendants to pay $19,760 to AMSI and allowed AMSI to submit a supplemental application for the total reasonable legal fees and costs incurred in making the present fee application.