Cite as: Vitamin C Antitrust Litigation, 06-MD-1738 (BMC) (JO), NYLJ 1202635941133, at *1 (EDNY, Decided December 30, 2013)

06-MD-1738 (BMC) (JO)

District Judge Brian Cogan

Decided: December 30, 2013

This document relates to: Animal Science Products, Inc., et al., Plaintiffs v. Hebei Welcome Pharmaceutical Co. Ltd., et al., Defendants; 05-CV-453





Plaintiffs prevailed before a jury in this multi-district, seven year-long antitrust action, obtaining a judgment in the amount of $54,100,000.00 against Hebei Welcome Pharmaceutical Co., Ltd. and North China Pharmaceutical Group Corp. ("defendants"), which was trebled pursuant to the Clayton Act, 15 U.S.C. §15(a), and then reduced by $9,000,000 following deduction of a settling defendant's contribution, for a total of $153,300,000. Plaintiffs now seek attorneys' fees and costs as prevailing parties under the Clayton Act, having already received substantial sums of attorneys' fees and costs from settlements with other defendants. Plaintiffs have modestly reduced the amounts sought after reviewing defendants' objections to their initial request and their final request is $13,724,641.75 in fees and $1,363,307.68 in costs. They also




seek interest on the amount awarded from the date of the judgment. Having reviewed the parties' submissions, I award fees of $4,093,163.35 and no costs. Defendants do not oppose plaintiffs' request for post-judgment interest, and that request is granted.

I. Standard for Awarding Fees

Courts within the Second Circuit generally employ the "presumptively reasonable fee" method when analyzing attorneys' fees motions. See Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany & Albany Cnty. Bd. of Elections, 522 F.3d 182, 190 (2d Cir. 2008). Under this method, courts multiply the "amount of time reasonably spent by counsel" by a reasonable hourly rate to derive a presumptively reasonable overall fee. Cover v. Potter, No. 05 Civ. 7039, 2008 WL 4093043, at *5 (S.D.N.Y. Aug. 29, 2008). A court must then determine whether this presumptively reasonable fee is subject to an upward or downward departure. Id. at *6. Especially in awarding statutory attorneys' fees, "[t]he product of reasonable hours times a reasonable rate does not end the inquiry. There remain other considerations that may lead the district court to adjust the fee upward or downward." Hensley v. Eckerhart, 461 U.S. 424, 434, 103 S. Ct. 1933, 1940 (1983); see also, e.g., Arbor Hill, 522 F.3d at 186 ("[T]he lodestar method involved two steps: (1) the lodestar calculation; and (2) adjustment of the lodestar based on case-specific considerations.").

II. Hourly Rate

The hourly rate that plaintiffs assert ranges from a low of $375 per hour for junior associates to $980 per hour for senior partners. Plaintiffs' counsel does not dispute that these rates are much higher than those customarily charged in the Eastern District of New York by lawyers with offices within this district. Defendants assert that the "forum rule" requires me to charge the rates that prevail in this district, which, based on my own knowledge, range roughly




from $200-$450 per hour for routine civil and consumer rights litigation to $650 per hour for more complex cases.1

In Simmons v. N.Y. City Transit Auth., 575 F.3d 170 (2d Cir. 2009), the Second Circuit defined how prevailing rates in the district should be considered in determining the rates to award counsel from outside the district. The Court held that:

[W]hen faced with a request for an award of higher out-of-district rates, a district court must first apply a presumption in favor of application of the forum rule. In order to overcome the presumption a litigant must persuasively establish that a reasonable client would have selected out-of-district counsel because doing so would likely (not just possibly) produce a substantially better net result. In determining whether a litigant has established such a likelihood, the district court must consider experience-based, objective factors. Among the objective factors that may be pertinent is counsel's special expertise in litigating the particular type of case, if the case is of such nature as to benefit from special expertise.

Id. at 175-76.

If there was ever a case that overcame the presumption in favor of local rates, this is it. The case speaks for itself. There were factual and legal issues in this case that have never been considered in this district and very possibly would be unique anywhere. The resources that had to be brought to bear to prosecute the case were extraordinary. Just a few words and phrases with which the parties are intimately familiar will be sufficient to demonstrate the singular nature of this case: seven years of litigation; a substantive brief by the People's Republic of China which defendants sought to elevate to near-evidentiary weight; the act of state doctrine as applied to a foreign regulated industry; sovereign immunity of private actors asserting their control by a foreign governmental agency; extensive Chinese documents that had to be translated with concomitant disputes over the accuracy of the translations; the last-minute designation of a key




former Chinese employee whose retirement suddenly released him from his previously asserted sovereign immunity in order to testify; depositions in China; analysis of Chinese law. The list could go on and on.

I mean no disrespect to the excellent lawyers whose offices are within this district when I say that to my knowledge, there is no plaintiffs' class action firm with the capacity to deal with a case of this magnitude resident within this district. Defendants have certainly not pointed to one. The point is driven home by the representation of plaintiffs' attorney during a fairness hearing with certain of the settling defendants, in which he advised me that his firm has self-financed this case. That means no litigation funder and no bank line of credit. It requires the resources to not only carry a burgeoning receivable that ultimately rose to nearly $14 million, but to sustain out-of-pocket costs of over $4 million. I simply know of no plaintiffs' class action firm in this district with the ability to do that.

Defendants must realize this. I take their primary objection to be more technical, i.e., one of proof. Their main point seems to be that plaintiffs were obligated to produce independent evidence to establish that their national rates are reasonable, and having failed to do so, plaintiffs are required to revert to the forum rate. Although that may be a valid point in cases where it is a close question as to whether to apply the forum rule, here, where it is not, the inquiry as to whether the rates plaintiffs are seeking are reasonable is rather straightforward and easily ascertainable. As defendants themselves have acknowledged, a court "may also rely on its own knowledge of hourly rates in private firms to determine what is reasonable in the relevant community." Bobrow Palumbo Sales, Inc. v. Broan-Nutone, LLC, 549 F. Supp. 2d 274, 280 (E.D.N.Y. 2008).




Although the "relevant community" refers to the forum in which the Court sits, both I and other judges of this Court I have previously noted the unique permeability of the border between the Southern District of New York and the Eastern District of New York. See, e.g., Gutman v. Klein, No. 03 Civ. 1570, 2009 WL 3296072 at *2 n.1 (E.D.N.Y. Oct. 13, 2009). Over half the attorneys who appear before me have their offices not in this district but in the Southern District of New York; only about one-quarter have their offices in this district, and the rest are from districts around the country. What this means, as a practical matter, is that I have constant exposure to the higher rates being charged in the adjoining district, and I do not need plaintiffs to give me, as defendants argue I should require, a "National Law Journal Directory of the Legal Profession providing hourly rate information for firms across the country, and surveys containing data on national rates published by a management consulting organization."

Sitting in the Eastern District of New York and ascertaining national rates is not like sitting in a rural area in which high-priced lawyers appear once every ten years. A judge in this district would need blinders to avoid knowing what the going rate is for various kinds of litigation that occur in the Court, especially given the plethora of fee-shifting statutes. Once defendants concede, as they must, that I can draw on my own experience in ascertaining reasonable rates, there is no reason to require plaintiffs to run up additional fees with research into surveys and the like (which fees, presumably, defendants would also have to pay, as plaintiffs are entitled to reasonable compensation for preparing their fee application) to tell me what I already know. Indeed, it often strikes me as ironic that when I get vehement opposition to hourly rates in a fee application, the substantial law firms representing defendants never tell me the rates that they have been charging their own clients, and this case is no different. I cannot help but consider the possibility that the comparison would not aid their argument.




In addition to my own knowledge concerning market rates, plaintiffs have submitted evidence that defendants ignore and which is more relevant than market surveys. First, the record establishes that the rates charged here are the same rates that plaintiffs' counsel charges other clients who pay on an hourly basis. This is strong confirmation that there is no effort afoot to gouge defendants through the fee-shifting mechanism of the Clayton Act. Clients are willing to pay at these rates for the level of service that these law firms provide. Second, both these attorneys and others have received comparable and higher court-approved rates in other complex class action litigation. See, e.g., In re Processed Egg Products Antitrust Litig., No. 08-md-2002, 2012 WL 5467530 (E.D. Pa. Nov. 9, 2012). I see no reason why I cannot rely on this precedent in determining the reasonable rates here.

Finally, as noted above, once I determine the lodestar, I could consider the possibility of an enhancement of the fee award based on the unusual nature this case and the quality of the effort by plaintiffs' counsel. Plaintiffs wisely do not push too hard on this point (except in one instance in which they overdo it, described below), and I am not inclined to depart upwardly from the lodestar. But I must observe that if I were inclined to cut plaintiffs' rates by any substantial amount to reflect the market, I would see no alternative to an upward adjustment. As plaintiffs point out, this case is unlike the more typical antitrust class action where class action firms follow a road that has previously been cleared by prosecutors or regulators. This case had to be built from the ground up. The rates charged by plaintiffs' counsel are thoroughly reasonable based not only on the market, but on the uniqueness of the case and the high quality of their work. Significantly lower rates would be unreasonable.




III. Efficiency and record keeping objections

Defendants seek a reduction of just under $2 million for alleged inefficiencies, non-compensable items, and failure to keep adequate records. Plaintiffs concede that their fees should be reduced for some of these items in the approximate amount of $330,000. With some additional adjustments, I believe plaintiffs' reductions adequately accommodate defendants' objections. The more meritorious challenges are addressed below; to the extent any of defendants' less significant challenges are not addressed, it is because I have rejected them for the reasons stated in plaintiffs' reply memorandum.

A. Travel time

As plaintiffs concede, the general operating principle in this district is that travel time is compensated at one-half the amount of time billed, and plaintiffs are willing to accept a 50 percent reduction where a time entry exclusively reflects travel time. There are two significant points of dispute between the parties: (a) a trip to Hong Kong by Mr. Southwick for depositions, the travel time for which defendants believe should not be allowed at all; and (b) whether to allow any time for a block billing entry that includes, but does not separate from other tasks, travel time.

As to Mr. Southwick's trip, defendants flew a lawyer to Hong Kong as well so I do not see how they can complain. I also think that video depositions of non-English speaking witnesses can be quite difficult and travel to avoid that difficulty is justified. I will therefore reduce only by 50 percent the travel time charges for that trip, as with the remainder of the travel time set forth in defendants' Exhibit H.2




Defendants' objection to allowing any travel time that is included in a block billing entry is part of their general to objection block billing. For the reasons set forth below, I reject defendants' objection to block billing. However, plaintiffs should have known that both travel time and block billing are always issues in these cases, yet failed to separate out the travel time that occurred in block billing entries. I will reduce those block billed entries that include travel time by 10 percent, or $25,993.

B. Block billing

I have previously rejected categorical challenges to block billing, noting that a flat prohibition on the practice can lead to gross inefficiencies as attorneys spend inordinate amounts of time in record keeping rather than doing legal work. See U.S. v. Sixty-One Thousand Nine Hundred Dollars and No Cents ($61,900.00), 856 F. Supp. 2d 484, 490-92 (E.D.N.Y. 2012). Plaintiffs' lawyers take a risk when they engage in block billing that a court will disallow the practice categorically, or that a court will not be able to determine that the amount of time claimed was reasonable. But once a categorical approach to block billing is rejected, as I have rejected it, then the Court's inquiry needs to consider whether the time that appears in the block billing entries was reasonable. If it cannot tell, then plaintiffs have failed to meet their burden, and some reduction must be applied.

Each of the block billing entries here contains specific tasks and the total amount of time for each collection of tasks seems reasonable. The total amount of time spent on this difficult case also seems reasonable. I can find no infirmity in using block billing in the manner that plaintiffs' attorneys have used it here, and therefore reject defendants' challenge to it.




C. Partner hours

Defendants contend that high-rate partners did too much work instead of downstreaming it to lower-rate associates. The argument bucks a trend among many clients which have come to believe that although a junior lawyer may have lower rates, that junior lawyer's inexperience will cause the lawyer to spend far more time generating a work product than the experienced partner. These clients would rather pay the higher rate, not only because they believe their net cost will be lower as a result of the senior lawyer's increased efficiency and experience, but because they obtain the benefit of the partner's early input on particular issues. See, e.g., 'Entry' Fee: Surprise — Inexperienced Associates Cost More, ABA JOURNAL, (July 1 2012, 12:49 am) available at — inexperienced_associates_cost_more/.

It is also well known that plaintiffs' law firms frequently follow a different model than large mega-firms in terms of the allocation of work between partners and associates, placing much more responsibility at higher levels. I see no general infirmity in using this model. However, considering that a partner billed out at $800 per hour for very basic research tasks that could be performed by far less expensive lawyers, I am not confident that the level of increased efficiency that propels some clients to prefer more senior lawyers was realized here. Defendants' objections to the number of partner hours, as reflected in Exhibit J, is sustained to the extent of applying a 5 percent reduction to the time charges in that exhibit.

This results in a reduction of $30,485.40.




D. Offset for fees and costs previously received

Defendants raise one final, and most substantial, objection to plaintiffs' fee request: plaintiffs fail to account for the fees and costs they have received from previous settlements with other defendants. Given the potential size of this reduction, it is surprising how little attention the parties give to it. Nonetheless, defendants' objection is well-taken.

First, as for costs, plaintiffs do not even mention the substantial costs for which they have already been reimbursed in the two prior settlements, much less demonstrate that their fee request contains no double-counting. In their papers submitted in support of their request for fees and costs from defendants who settled just before the end of trial (the "Weisheng settlement"), plaintiffs stated that "[d]uring the eight years since filing the original complaint, Class Counsel spent $4,153,908.75 in cash to pay for case expenses, of which $1,591,358.94 has not been reimbursed." Plaintiffs received the costs they requested in connection with that settlement, and I understood them to represent that their costs had been fully reimbursed.

Indeed, it appears that there could be some double-counting at work. For example, though neither fee request sets out plaintiffs' costs with much specificity, plaintiffs' firm Susman Godfrey claimed (and recovered) $183,418.63 in travel costs in connection with the Weisheng settlement, and now requests an additional $241,449.10 in travel expenses. Moreover, the Southwick Declaration filed with plaintiffs' request for fees and expenses from the Weisheng settlement stated that the "expenses paid by Litigation Fund 1 were reimbursed through the settlement with defendant Aland in 2012." Yet in the instant request, plaintiffs have requested almost $250,000 in reimbursements for Litigation Fund 1. Perhaps there is a good reason for these apparent inconsistencies, but plaintiffs have certainly not provided one. Absent some




showing that these costs are not being double-counted, plaintiffs' request for further reimbursement of expenses is denied.

Similarly, plaintiffs seek recovery of the full amount of their fees in this case even though a substantial portion of those fees have been paid through the same settlements just discussed. Again, plaintiffs give only cursory attention to this point. Plaintiffs' justification for this is that in their view, they are entitled to an enhancement of their lodestar calculation and that in lieu of that, I should not apply a credit in favor of defendants to their fee recovery. I do not see the linkage between an enhancement and an offset for fee recoveries that have actually been received. Even if I did, because plaintiffs have already received well over half of their attorneys' fees through settlements, the enhancement which plaintiffs are seeking by eliminating any offset comes to over 100 percent, which would be quite an enhancement indeed. As noted above, I think allowing national hourly rates adequately provides an adequate reflection of that which plaintiffs are entitled to recover, and no further enhancement is necessary. The Clayton Act provides for "a reasonable attorney's fee." 15 U.S.C. §15(a). Failing to apply an offset amounts to a windfall, and allowing "an attorney to receive a windfall would be manifestly unreasonable." Corder v. Brown, 25 F.3d 833, 839 (9th Cir. 1994). Therefore, Class Counsel's attorneys' fees will be offset against the fees they have already received from settlements with other defendants. This results in a further reduction of $9,575,000.





Plaintiffs' request for fees and costs is granted in part, and attorneys' fees in the amount of $4,093,163.35 are awarded in favor of plaintiffs. The Clerk is directed to enter a Second Amended Judgment and Final Decree, adding this amount to plaintiffs' recovery, with interest nunc pro tunc to March 14, 2013.


Dated: Brooklyn, New York

December 30, 2013

1. I reject defendants' efforts to "merge" all types of litigation in order to ascertain a single reasonable hourly rate. The charges by solo practitioners and micro-firms in §1983 cases are based on a market for legal services that has little connection to the market for legal services in complex commercial litigation.

2. Because plaintiffs consented to a 50 percent reduction to all of the fees contained in defendants' Exhibit H, this holding does not result in a further reduction of their total award.