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Massage Envy Franchising LLC v. Doc Marketing LLC

United States District Court, D. Arizona

September 29, 2016

Massage Envy Franchising LLC, Plaintiff,
v.
Doc Marketing LLC, et al., Defendants. Date Attorney/Paralegal Time Expended Amount Billed

          ORDER

          DOUGLAS L. RAYES UNITED STATES DISTRICT JUDGE

         Before the Court is Plaintiff/Counter-Defendant Massage Envy Franchising, LLC's (MEF) Motion for Attorneys' Fees and Non-Taxable Costs. (Doc. 68.) The motion is fully briefed, and the Court heard oral argument on April 15, 2016. For the following reasons, MEF's motion is granted in part.

         BACKGROUND

         MEF is a franchisor of independently owned and operated massage therapy clinics. Defendants/Counterclaimants Doc Marketing, LLC and its managing member George Lohmann, Jr. (Defendants) are former MEF franchisees. In June 2014, MEF terminated Defendants' franchise agreements, leading Lohmann to file a wrongful termination complaint in the Western District of Texas. MEF and Lohmann resolved their dispute through a Settlement Agreement, which, as relevant here, created a process for appraising and selling Defendants' two Texas-based clinics.

         This case involved MEF's efforts to compel Defendants to cooperate with the sale of the clinics. MEF successfully obtained a temporary restraining order and preliminary injunction compelling Defendants to cooperate with MEF to ensure that the clinics were sold according to the terms and procedures of the Settlement Agreement. Defendants filed numerous counterclaims, but the parties eventually reached a global settlement resolving this matter. MEF now moves for $148, 224.44 in attorneys' fees and $1, 103.84 in non-taxable costs pursuant to a fee-shifting provision in the Settlement Agreement, which provides that the prevailing party in a dispute involving or relating to the Settlement Agreement shall be entitled to its reasonable attorneys' fees. (Docs. 68, 92.)

         LEGAL STANDARD

         When reasonable attorneys' fees are sought pursuant to a contractual provision, a fee award must be supported by proof of what is reasonable. Schweiger v. China Doll Rest., Inc., 673 P.2d 927, 931 (Ariz.Ct.App. 1983) (citing Crouch v. Pixler, 320 P.2d 943, 946 (Ariz. 1958)). “A fee award calculated by a lodestar method-multiplying a reasonable hourly rate by the number of hours expended-is presumptively reasonable.” Flood Control Dist. of Maricopa Cty v. Paloma Inv. Ltd. P'ship, 279 P.3d 1191, 1212 (Ariz.Ct.App. 2012).

Once the prevailing party makes a prima facie case that the fees requested are reasonable, the burden shifts to the party opposing the fee request to establish that the amount requested is clearly excessive. If that party fails to make such a showing of unreasonableness, the prevailing party is entitled to full payment of the fees. If, however, the party opposing the award shows that the otherwise prima facie reasonable fee request is excessive, the court has discretion to reduce the fees to a reasonable level.

Geller v. Lesk, 285 P.3d 972, 976 (Ariz.Ct.App. 2012) (internal citations omitted).

         DISCUSSION

         MEF is the prevailing party because it obtained all the relief it sought in this litigation through the temporary restraining order and preliminary injunction. See Watson v. Cty. of Riverside, 300 F.3d 1092, 1096 (9th Cir. 2002). Accordingly, MEF is entitled to its reasonable attorneys' fees pursuant to the Settlement Agreement's fee-shifting provision.

         When analyzing the reasonableness of a requested fee award, the Court begins by determining the billing rate charged by the attorneys who worked on the case. Schweiger, 673 P.2d at 931. “[I]n corporate and commercial litigation between fee-paying clients, there is no need to determine the reasonable hourly rate prevailing in the community for similar work because the rate charged by the lawyer to the client is the best indication of what is reasonable under the circumstances of the particular case.” Id. at 931-32. However, “upon the presentation of an opposing affidavit setting forth the reasons why the hourly billing rate is unreasonable, the court may utilize a lesser rate.” Id. at 932.

         Six attorneys and one paralegal performed work on behalf of MEF. Cynthia Ricketts, co-founding and named partner of Sacks, Ricketts & Case LLP (SRC) billed at an hourly rate of $495, which was discounted from her standard hourly rate of $550. (Doc. 69, ¶¶ 4-5.) Robert Bader, Of Counsel with SRC, billed at an hourly rate of $430, discounted from his standard hourly rate of $475. (Id., ¶ 7.) Amit Rana, a litigation associate with SRC, billed at an hourly rate of $225, discounted from his standard hourly rate of $250. (Id., ¶ 8.) Natalya Ter-Grigoryan, a litigation associate with SRC, billed at an hourly rate of $315, discounted from her standard hourly rate of $350. (Id., ¶ 9.) Claudia Barajas, a paralegal with SRC, billed at an hourly rate of $158, discounted from her standard hourly rate of $175. (Id., ¶10.) Barry Heller, a partner with DLA Piper LLP, billed at an hourly rate of $639.60, discounted from his standard hourly rate of $785. (Doc. 70, ¶¶ 4, 7.) Finally, Richard Greenstein, a partner with DLA Piper, billed at an hourly rate of $589, discounted from his standard hourly rate of $730. (Id., ¶¶ 5, 8.)

         These fees are presumptively reasonable because they are the fees that MEF agreed to pay. Although Defendants argue that these rates are too high, they do not specify the reasons why the rates are unreasonable. Indeed, Defendants' counsel Jeffrey Goldstein submitted a declaration challenging the reasonableness of the overall fee award while assuming that the hourly rates charged by MEF's attorneys are ...


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