Before the Court for disposition is Defendant's Motion for Attorneys' Fees and Costs from Plaintiff's Counsel (Docket No. 45). In this motion, Defendant, Echosphere Corporation t/d/b/a Echostar Communications Corporation, Echostar, Echo Communications (“Echosphere”), moves under 28 U.S.C. § 1927 and Federal Rule of Civil Procedure 54(d) to recover from Plaintiff's counsel, Charles A. Lamberton, the reasonable attorneys' fees and costs that it incurred from the date that it filed a Supplement to Motion for Sanctions (March 25, 2004) through the date that Lamberton admitted that his client had intentionally used two different Social Security Numbers on his application materials and agreed to voluntarily dismiss this case with prejudice (December 6, 2004). For the reasons that follow, the Court should conclude that Defendant cannot recover attorneys' fees pursuant to Rule 54(d)(2) and that it has failed to demonstrate that it is a “prevailing party” for purposes of Rule 54(d)(1). Defendant has demonstrated that Lamberton vexatiously and unreasonably multiplied the proceedings for purposes of § 1927 and that it incurred excess expenses in the amount of $696.74. However, Defendant has not supported its request for attorneys' fees and it should therefore be given ten days in which to supply the affidavits and evidence necessary to support its request for reasonable attorneys' fees that it incurred pursuant to § 1927.
Lamberton commenced this action on behalf of Plaintiff, Thomas R. Rousseau, on July 10, 2003, by filing a praecipe for a writ of summons in the Court of Common Pleas of Allegheny County. On July 30, 2003, Lamberton filed a complaint, in which he alleged that Echosphere's termination of Rousseau's employment on May 8, 2002 constituted retaliation in violation of Pennsylvania public policy for Rousseau's having filed a workers' compensation claim and retaliation under the Americans With Disabilities Act, 42 U.S.C. § 12203(a) (“ADA”), and the Pennsylvania Human Relations Act, 43 P.S. § 955(d) (“PHRA”), for his having requested an accommodation in the workplace. The complaint alleged that Defendant's proffered reason for Rousseau's termination-“knowingly falsifying company documents”-was merely a pretext for unlawful retaliation discrimination.
On August 18, 2003, Defendant removed the action to this Court on the basis of the federal question presented by Plaintiff's ADA retaliation claim. Discovery commenced and the parties came to the Court for various status and discovery conferences.
*2 On March 23, 2004, Defendant filed a motion for Rule 37 sanctions, which it supplemented on March 25, 2004. In this motion, Defendant requested that the case be dismissed for Plaintiff's acts of “abusing the discovery process, perpetrating a fraud on this Court and attempting to conceal the one document that would expose Plaintiff's fraudulent conduct.” (Docket No. 16 at 1.) Defendant argued in particular that an April 14, 2002 e-mail message Lamberton had produced after the close of discovery undermined the position taken by Rousseau and Lamberton throughout the case, namely that Rousseau's use of two Social Security Numbers on his employment application materials had been a “simple mistake” attributable to his mild form of adult dyslexia.
On April 19, 2004, Lamberton filed a brief in opposition to Defendant's motion and a cross-motion for sanctions under Rule 11 (Docket No. 24). On April 21, 2004, Defendant filed a motion to strike this opposition brief and Rule 11 motion on the grounds that: (1) it was 51 pages long, far in excess of the 25-page limitation indicated in the Court's order on motion practice; (2) it contained scandalous, irrelevant and outrageous allegations against Defendant and Defendant's counsel that had nothing to do with the Rule 37 motion; (3) it contained many unsubstantiated allegations that had no record cite, or that were based upon mischaracterizations of record cites or that were simply Lamberton testifying; and (4) Lamberton did not file a motion or comply with Rule 11 or Local Rule 37.1 procedures. Defendant also filed two motions for extension of time to file summary judgment motions (Docket Nos. 19, 28), which Lamberton opposed (Docket Nos. 20, 21, 22, 29).
On May 12, 2004, the undersigned filed a Memorandum and Order that denied Defendant's motion for sanctions, granted Defendant's motion to strike Plaintiff's opposition brief and Rule 11 motion, denied Plaintiff's motion for Rule 11 sanctions, granted Defendant's second motion for extension of time and afforded Defendant an additional 60 days in which to conduct discovery related to Plaintiff's belated production of the April 14, 2002 e-mail. The Memorandum Opinion noted that Defendant made “a compelling argument for dismissal,” but also observed that dismissal with prejudice is a harsh sanction to be resorted to only in extreme cases. “Here the balance favors allowing the case to proceed to a conclusion on the merits, but not before the defendant is afforded an opportunity to conduct additional discovery during the next sixty (60) days, if it so chooses, relative to the belated production of the April 13[sic], 2002 e-mail and Plaintiff's explanations therefor.” (Docket No. 30 at 4.)
On May 21, 2004, Lamberton filed a notice of appeal (Docket No. 31) to Judge McVerry of the May 12, 2004 Memorandum and Order. The appeal argued that Plaintiff had been “sanctioned” when the Court allowed Defendant an additional 60 days to conduct discovery. On June 1, 2004, Defendant filed a motion to strike the appeal on the grounds that: (1) it contained many unsubstantiated allegations that had no record cite, that were based upon mischaracterizations of record cites or that were simply Lamberton testifying; (2) it contained immaterial and unsubstantiated allegations about Defendant and Defendant's counsel and their conduct during the case; (3) it incorporated by reference numerous excerpts and exhibits from the 51-page opposition brief that had been stricken; and (4) it contained allegations of errors by the Magistrate Judge that were not relevant to the proper standard of review (Docket No. 32).
*3 On September 17, 2004, the Court entered a Memorandum Order denying Plaintiff's appeal. The Court first noted that the appeal contained numerous allegations that either had no record cite or constituted Lamberton's unsworn testimony and numerous excerpts and exhibits from Plaintiff's opposition brief that had already been stricken from the record. The Court struck all of these items from the record. (Docket No. 37 at 2-3.) The Court then found and ruled that:
Plaintiff has completely misconstrued the nature of the Magistrate Judge's allowance of additional discovery. The allowance of additional discovery is not one of the possible sanctions listed in Rule 37 nor did the Magistrate Judge refer to the allowance of additional discovery as a sanction.... Rather, the Court finds and rules that Magistrate Judge Hay appropriately exercised her discretion in allowing the Defendant an additional sixty (60) days for discovery.
(Docket No. 37 at 3, 4.)
The Court also concluded that Plaintiff was not prejudiced when his opposition brief was stricken because the Defendant's motion for Rule 37 sanctions was not granted. The Court noted that Plaintiff's Rule 11 motion did not comport with the safe harbor provisions of that rule and held that it had properly been stricken from the record. Finally, the Court rejected Plaintiff's argument that the Memorandum and Order was clearly erroneous and contrary to law because Defendant had judicially admitted Plaintiff made a mistake in misrecording his Social Security Number, stating that “Defendant has steadfastly argued that Plaintiff was terminated for falsifying company documents, i.e., intentionally using two different Social Security numbers when completing his employment documents.” (Docket No. 37 at 4.)
On November 1, 2004, Lamberton filed a motion for protective order, requesting that the Court prevent Defendant from taking a second deposition of Rousseau because he suffered from mental illnesses and because a second deposition was unnecessary (Docket No. 40). Defendant filed an opposition to this motion on November 10, 2004 (Docket No. 42). On November 24, 2004, the undersigned entered a Memorandum and Order that denied Lamberton's motion for a protective order but adopted certain limitations that Defendant had voluntarily agreed to employ to protect Rousseau during the deposition, namely taking it at the courthouse in two-hour increments at such time as the undersigned was generally available to determine whether the deposition should be adjourned, whether the questions were abusive or oppressive and whether counsel for the parties were conducting themselves pursuant to the applicable rules of procedure and professional conduct. (Docket No. 43.)
On December 6, 2004, the parties entered into a stipulation for dismissal with prejudice, which was signed by Judge McVerry on December 9, 2004 (Docket No. 44). Defendant filed its motion for attorneys' fees and costs on January 31, 2005 (Docket No. 45).
Defendant moves, pursuant to 28 U.S.C. § 1927, to recover attorneys' fees and costs from Lamberton for the period between March 25, 2004 and December 6, 2004. Section 1927 provides as follows:
*6 Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.
28 U.S.C. § 1927.
The Court of Appeals has stated that:
The statute thus limits attorney sanctions imposed thereunder to those situations where an attorney has: (1) multiplied proceedings; (2) unreasonably and vexatiously; (3) thereby increasing the cost of the proceedings; (4) with bad faith or with intentional misconduct. The sanctions that may be imposed under § 1927 are also limited to excess costs and expenses that are incurred “because of such conduct.”
LaSalle Nat'l Bank v. First Conn. Holding Group, LLC, 287 F.3d 279, 288 (3d Cir.2002) (citing In re Prudential Ins. Co. Am. Sales Practice Litig., 278 F.3d 175, 188 (3d Cir.2002)).
The court has further stated that:
“Indications of this bad faith are findings that the claims advanced were meritless, that counsel knew or should have known this, and that the motive for filing the suit was for an improper purpose such as harassment.” Inasmuch as § 1927 addresses the impact conduct has on the proceedings, sanctions that are imposed under § 1927 must only impose costs and expenses that result from the particular misconduct. Moreover, these costs and expenses are limited to those that could be taxed under 28 U.S.C. § 1920.
In re Prudential, 278 F.3d at 188 (quoting Smith v. Detroit Fed'n of Teachers Local 231, 829 F.2d 1370, 1375 (6th Cir.1987)) (other citations omitted). “Under § 1927, even if a lawsuit was initially filed in good faith, sanctions may be imposed on an attorney for all costs and fees incurred after the continuation of the suit which is deemed to be in bad faith.” Boykin v. Bloomsburg University of Pa., 905 F.Supp. 1335, 1347 (M.D.Pa.1995) (citation omitted). See
Hall v. Cole, 412 U.S. 1, 15, 93 S.Ct. 1943, 36 L.Ed.2d 702 (1973) (“ ‘bad faith’ may be found, not only in the actions that led to the lawsuit, but also in the conduct of the litigation.”)
Lamberton again argues that Defendant is not a prevailing party. However, in this instance, the argument is irrelevant because § 1927 does not require that a movant be a “prevailing party” in order to recover thereunder. Indeed, the Supreme Court has noted that the statute “does not distinguish between winners and losers, or between plaintiffs and defendants. The statute is indifferent to the equities of a dispute and to the values advanced by the substantive law. It is concerned only with limiting the abuse of court processes .” Roadway Express. Inc. v. Piper, 447 U.S. 752, 762, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980).
Rousseau completed an employment application on March 29, 2002 and began working for Echosphere on April 28, 2002. (Compl. 9; Answer 9.) On April 29, 2002, he completed an Employment Eligibility Verification INS Form I-9. On the application, Rousseau put down a number that was not his true Social Security Number, and on the I-9 he wrote two different Social Security Numbers. (Compl. 12-13, 21; Answer 12-13, 21.) The complaint alleged that Rousseau suffers from a mild form of adult dyslexia and that his use of multiple Social Security Numbers on his application materials was a simple mistake, attributable to this condition. (Compl. 8, 25.)
*7 On May 8, 2002, Human Resources Manager Jill Harmon called Rousseau into her office and told him that Echosphere was terminating his employment for “knowingly falsifying company documents.” (Compl. 42-43; Answer 42-43.) Thereafter, he filed for unemployment compensation benefits, which Echosphere opposed. The application was initially denied, but following a hearing, a referee granted his request. (Compl. 47-50; Answer 47-50.)
The complaint alleges that Defendant's proffered reason for Rousseau's termination was a pretext for unlawful retaliation discrimination because he was terminated the day after he notified his supervisor, Alex Wagner, that he had been cleared for modified duty with a temporary lifting restriction of up to twenty pounds (Rousseau had reported on May 2 that he injured his back the day before while lifting a computer monitor). Rousseau suggested that other employees could help him with heavy lifting and he proposed that Echosphere purchase a hoisting device to help him lift the monitors. The complaint alleges that Wagner was displeased by the statement that Rousseau would be on modified duty, ignored his request for accommodation and told Rousseau that his job description required him to lift 65 pounds and there were times when he would be on shift alone. (Compl. 27, 39-41; Answer 27, 39.)
After filing the complaint, Plaintiff continued to assert in discovery that Rousseau's use of multiple Social Security Numbers on his application materials had been a “simple mistake” resulting from his adult dyslexia. See
Rousseau Dep. at 180 (Docket No. 16 Ex. F); Pl.'s Resp. Def.'s Interrog. No. 9(c) ( Docket No. 16 Ex. C); Pl.'s Supp. Resp. Def.'s Interrog. No. 5 (Docket No. 16 Ex. G). However, in more recent filings, Lamberton has also argued to Defendant and this Court that Rousseau suffers from a number of mental illnesses that impair his memory (Docket No. 40 Exs. 2-6, 8) and that he “has a tendency to ‘gap fill’ with inaccurate or incomplete facts when his memory fails him” (Docket No. 16 Ex. Q).
Defendant contends that, no later than March 25, 2004, Lamberton had evidence that refuted the position he had advanced on Rousseau's behalf throughout this case. The evidence consists of an e-mail message that Rousseau had sent to Wagner on April 14, 2002 and it stated as follows:
Thanks, Alex, by the way last year someone used my old SSN and bagged my refund, so I was issued a temp SSN, I guess all of my existing personal stuff will still be on my old ssn? credit, FBI, etc.? If [Defendant] has any problems let me know so I can let them use my old ssn. As for tax stuff the new number will be used. Thanks, Tom.
(Docket No. 16, Ex. O.)
Lamberton indicates that, when he discussed the substance of this message with Rousseau, Rousseau was “genuinely perplexed” and that Lamberton doubted that Rousseau's identity had been stolen as he stated in this message. (Lamberton Decl. 60.)
*8 Defendant argues that, once he was aware of this damaging evidence, Lamberton not only refused to dismiss the case but he vexatiously and unreasonably multiplied the proceedings thereafter by: (1) opposing Defendant's simple requests for extension of time in which to file a motion for summary judgment until after it could take Rousseau's deposition to inquire about the e-mail message; (2) filing a 51-page opposition brief (which was stricken from the record by the Court) in which he proposed unsupported medical theories to excuse Rousseau's “simple mistake”; (3) filing a motion for Rule 11 sanctions (which was also stricken from the record by the Court) in which he asserted that Defendant knew that the so-called “damning email” did not prove that Rousseau's actions were intentional and not a simple mistake but filed its motion for Rule 37 sanctions anyway; (4) filing an appeal (portions of which were stricken from the record by the Court) from the May 12, 2004 Memorandum and Order that had denied
Defendant's motion for sanctions, in which he asserted that the Court's decision to allow Defendant sixty additional days to conduct discovery related to the belatedly produced e-mail message constituted a “sanction”; (5) filing a motion for protective order to prevent Defendant from deposing Rousseau; and (6) voluntarily dismissing the case when Rousseau finally told him that he had purposely written two Social Security Numbers.
In a declaration filed in opposition to Defendant's motion, Lamberton states that, shortly after his motion for a protective order was denied (November 24, 2004):
I had a conversation with Mr. Rousseau on the telephone to explain the likely subject matter of his second deposition, and the conditions imposed in the Magistrate's order. During this conversation, Mr. Rousseau became upset and complained he was being treated unfairly. He said he did not understand why Defendant was making “such a big deal” out of his social security numbers. I briefly reminded him it was Defendant's position he had deliberately recorded two separate social security numbers on his hiring documents in an effort to deceive the company. In response, Mr. Rousseau said:
“To be honest, I knew one of those numbers was mine, but I just couldn't remember which.”
I was stunned. After spending more than $140,000.00 in attorney time pursuing Mr. Rousseau's case, he had now admitted he recorded two numbers on purpose (even though he had no fraudulent intent in doing so). I was also absolutely livid given how easy it would have been to explain this fact if it had been disclosed at the beginning of the case. I asked Mr. Rousseau why he had not told me the truth. He did not have an explanation. I told Mr. Rousseau that the Rules of Civil Procedure and Professional Conduct required that I disclose this fact to defense counsel.
(Docket No. 49, Lamberton Decl. 102-03.) Lamberton states that Rousseau's disclosure did not change his view of the merits of the case, but his professional relationship with Rousseau was permanently damaged and he determined that he would have to withdraw his appearance as counsel. (Lamberton Decl. 104-05.) Lamberton then telephoned Gregory A. Miller, one of the two primary lawyers working on the case for Echosphere, and revealed what Rousseau had told him. He indicated that he would withdraw as Rousseau's counsel and that he did not know what Rousseau would do. He suggested the possibility of Echosphere making a settlement offer, but Miller said no such offer would be forthcoming. When Lamberton informed Rousseau of these developments, Rousseau instructed him to end the litigation. (Lamberton Decl. 106-07 .)
*9 Lamberton has not explained why the verbal admission made to him by Rousseau at some point between November 24, 2004 and December 6, 2004 gave him sufficient cause to seek to withdraw his appearance and to voluntarily dismiss the case, but this same information as revealed to him by the e-mail message he was aware of no later than March 25, 2004 did not. In addition, as noted above, around the time Lamberton produced the e-mail message, he began to supplement the claim of Rousseau's dyslexia with the claim that Rousseau suffers from a number of mental illnesses that impair his memory and that he “has a tendency to ‘gap fill’ with inaccurate or incomplete facts when his memory fails him.” Lamberton has not explained why, given his own assessment of his client's mental state, Defendant should have been expected to rely on what Rousseau said.
Lamberton continues to argue the merits of this case in his declaration. However, as Defendant notes, the merits of the case are irrelevant at this point because it has been dismissed and Defendant's position is that Lamberton's actions between March 25, 2004 and December 6, 2004 were delaying tactics designed to prevent Defendant from examining Rousseau about the April 14, 2002 e-mail message. Lamberton also attaches as exhibits a Concise Statement of Material Facts and a Supporting Memorandum of Law that he intended to file
in connection with a motion for summary judgment on the affirmative defense of after-acquired evidence. (Docket No. 49 Exs. 2-3.) These exhibits should not be considered because they are not part of the record. Finally, Lamberton argues that the purpose of Defendant's current motion is to “distract” him from filing a response to a motion for summary judgment submitted by counsel in another case also involving an employee that he represents who was terminated by Echosphere. (Docket No. 49 137 & Ex. 7.) The motive behind Defendant's motion is irrelevant; either Defendant has met its burden of demonstrating that Lamberton vexatiously and unreasonably multiplied the proceedings or it has failed to do so.
Based upon the record, the Court should conclude that, no later than March 25, 2004, Lamberton had in his possession a document that undermined the argument he had been advocating since this case began-that Rousseau had made a simple mistake when he wrote two Social Security Numbers on his application materials. The actions Lamberton took between that date and December 6, 2004-filing oppositions to Defendant's requests for extension of time to file a summary judgment motion, filing a 51-page opposition brief and Rule 11 motion without requesting leave of Court to exceed the page limitation and without utilizing the safe harbor provisions of Rule 11, filing an appeal of Defendant's motion for sanctions that had been denied by contending that an extension of discovery to investigate the belatedly produced e-mail message was a sanction, and filing a motion for protective order to prevent Rousseau from being deposed about the e-mail message-constituted unreasonable and vexatious conduct that multiplied the proceedings. Thus, Defendant has demonstrated that Lamberton should be required to personally satisfy the excess costs, expenses and attorneys' fees it reasonably incurred because of his conduct.
*10 The Court of Appeals has stated that:
In assessing the reasonableness of a claimed fee in cases like this, we use the “lodestar” formula, which requires multiplying the number of hours reasonably expended by a reasonable hourly rate. See
Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983); Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 106 S.Ct. 3088, 92 L.Ed.2d 439 (1986). “When the applicant for a fee has carried his burden of showing that the claimed rates and number of hours are reasonable, the resulting product is presumed to be the reasonable fee to which counsel is entitled.” Delaware Valley Citizens' Council, 478 U.S. at 564, 106 S.Ct. 3088, 92 L.Ed.2d 439 (internal quotation omitted).
In calculating the hours reasonably expended, a court should “review the time charged, decide whether the hours set out were reasonably expended for each of the particular purposes described and then exclude those that are ‘excessive, redundant, or otherwise unnecessary.” ’ Public Int. Research Group of N.J., Inc. v. Windall, 51 F.3d 1179, 1188 (3d Cir.1995) (internal citation omitted) “Hours that would not generally be billed to one's own client are not properly billed to an adversary.” Public Interest Group, 51 F.3d at 1188. Thus, we have a positive and affirmative function in the fee fixing process, not merely a passive role.
Maldonado v. Houstoun, 256 F.3d 181, 184 (3d Cir.2001) (some citations omitted). The burden is on the moving party to establish the prevailing market rate, which is the rate charged in the community by lawyers of reasonably comparable skill, experience and reputation for similar services. The fee applicant should “produce satisfactory evidence-in addition to the attorney's own affidavits-that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation.” Blum v. Stenson, 465 U.S. 886, 896 n. 11, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984).
Gregory Miller states in an affidavit that, from the date he filed the motion for sanctions until the date Lamberton agreed to dismiss the case, he spent 21.60 hours at an hourly rate of $300.00 and attorney John A. Goodman spent 83.80 hours at an hourly rate of $215.00, for a total of $24,497.00. (Miller Aff. 10-12.) He further states that they incurred the following necessary expenses: photocopies ($30.60), telecopies ($45.00) and on-line search services ($621.14), for a total of $696.74. (Miller Aff. 13.) The combined total of these amounts is $25,193.74. (Miller Aff. 14.)
Defendant has supported its request for $696.74 in excess expenses with documentation (Miller Aff. Ex. A) and Lamberton has not challenged it. However, Defense counsel has not submitted evidence other than Miller's own affidavit to substantiate that the requested attorneys' fees are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation.
*11 The Court cannot resolve this issue on the present record. Therefore, it is recommended that, if this Report and Recommendation is adopted by the Court, Defendant should be given ten days in which to supply the affidavits and evidence necessary to support its request for reasonable attorneys' fees that it incurred pursuant to § 1927.
For these reasons, it is recommended that Defendant's Motion for Attorneys' Fees and Costs from Plaintiff's Counsel (Docket No. 45) be granted with respect to its request pursuant to 28 U.S.C. § 1927 and denied with respect to its request pursuant to Federal Rule of Civil Procedure 54(d). It is further recommended that Defendant be reimbursed costs in the amount of $696.74 and that, if this Report and Recommendation is adopted by the Court, Defendant be given ten days in which to supply the affidavits and evidence necessary to support its request for reasonable attorneys' fees that it incurred pursuant to § 1927.
Within ten days after being served with a copy, any party may serve and file written objections to the report and recommendation. Any party opposing the objections shall have seven (7) days from the date of service of objections to respond thereto. Failure to file timely objections may constitute a waiver of any appellate rights.