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Chen v. Huang

Superior Court of Massachusetts, Suffolk, Business Litigation Session

September 2, 2016

Juan Juan Chen et al. [1]
Wen Jing Huang No. 134629

         Filed September 7, 2016


          Kenneth W. Salinger, Justice

         The fifteen plaintiffs are owed wages totaling $51, 390.54 for work they did as employees of Millennium Daycare, Inc. By law, Plaintiffs are entitled to recover treble damages totaling $154, 171.62, plus reasonable attorneys fees and litigation costs. Defendant Wen Jing Huang is personally liable for these amounts because she was Millennium's president and managed the corporation's business. See G.L.c. 149, § 148. Final judgments allowing Plaintiffs to recover their individual treble damages have already entered in each Plaintiff's favor against Ms. Huang.

         Plaintiffs have requested an additional $2, 245, 932.61 in attorneys fees and litigation costs, which is almost fifteen times the treble damage award they obtained against Ms. Huang. They seek fees and costs incurred primarily in bankruptcy court to establish Plaintiffs' damages and to defeat efforts by Ms. Huang and Millennium to have these debts discharged. Plaintiffs' lead counsel worked for Greater Boston Legal Services (" GBLS"), which seeks $232, 715 in attorneys fees (claiming 664.9 hours of work at $350 per hour) plus $13, 089.55 in expenses. She was assisted by successive New York City law firms that assigned eight bankruptcy lawyers to the case. These firms seek $1.95 million in attorneys fees (claiming 3, 027.8 hours of work at rates ranging from $360 to $1, 085 per hour) plus $54, 134.56 in expenses.

         The Court finds that the amount requested by Plaintiffs is excessive, and that Plaintiffs are entitled to recover attorneys fees in the amount of $321, 580 plus expenses in the amount of $10, 709.91, for a total additional recovery of $332, 289.91. Although this amount is still twice the treble damages awarded under the Wage Act, the Court finds that it is reasonable under the circumstances of this case.

         1. Plaintiffs' Burden and Court's Obligation

          By statute, Plaintiffs are entitled to recover " the costs of the litigation and reasonable attorneys fees, " in addition to " liquidated damages" equal to three times their unpaid wages. G.L.c. 149, § 150. Where attorneys fees and costs are awarded pursuant to a fee-shifting statute, " postjudgment interest on [the] award shall accrue from the date of entry" of the fee award. Haddad v. Wal-Mart Stores, Inc. (No. 2), 455 Mass. 1024, 1028, 920 N.E.2d 278 (2010) (rescript) (citing G.L.c. 235, § 8); accord, Craft v. Kane, 65 Mass.App.Ct. 322, 328, 839 N.E.2d 854 (2005) (under G.L.c. 231, § 6C, statutory award of interest on claim for attorneys fees begins to run upon order establishing amount of reasonable legal fees).

          Plaintiffs have the burden of proving that their request for attorneys fees and costs is reasonable. See, e.g., Stowe v. Bologna, 417 Mass. 199, 204, 629 N.E.2d 304 (1994) (" Stowe II "). " In applying for judicial approval of a fee award, it is the plaintiff's burden to furnish the evidence required, not the court's burden to seek it out." Weinberger v. Great N. Nekoosa Corp., 925 F.2d 518, 527 n.11 (1st Cir. 1991).

         In turn, the Court has an affirmative obligation to determine whether and to what extent Plaintiffs have met that burden, even though Defendant has not opposed the pending motion for attorneys fees and costs. The Court is not required to accept Plaintiffs' request for fees and costs merely because it has not been challenged by the defendant. Id. ; WHTR Real Estate Ltd. Partnership v. Venture Distributing, Inc., 63 Mass.App.Ct. 229, 237, 825 N.E.2d 105, rev. denied, 444 Mass. 1105, 829 N.E.2d 225 (2005).

         Ms. Huang was defaulted, and judgments awarding damages to each Plaintiff were entered, after Ms. Huang failed to respond to the complaint. No damage assessment hearing was required because the treble damage amounts owed to each Plaintiff had already been determined by the bankruptcy court, as explained below, and thus were all for a " sum certain" within the meaning of Mass.R.Civ.P. 55(b)(1). Plaintiffs then served and filed their pending motion for an award of attorneys fees and litigation costs.

         The pending motion for fees and costs is not a request for an assessment of compensatory damages that would be subject to the procedures required under Mass.R.Civ.P. 55(b)(2). Cf. Plasko v. Orser, 373 Mass. 40, 44, 364 N.E.2d 1220 (1977) (where attorneys fees were sought from defaulted defendant as part of request for damages, pursuant to terms of promissory note, Rule 55(b)(2) damage assessment hearing was required); see generally Hermanson v. Szafarowicz, 457 Mass. 39, 50, 927 N.E.2d 982 (2010) (compensatory damages cannot be awarded against defaulted defendant under Rule 55(b)(2) without " [s]ome type of hearing" and " factual findings"). Since Plaintiffs are seeking the award of reasonable attorneys fees and costs pursuant to the statutory mandate of the Wage Act, their request is not for " damages" within the meaning of Rule 55(b)(2). Cf. Trust Ins. Co. v. Bruce at Park Chiropractic Clinic, 430 Mass. 607, 608 n.3, 722 N.E.2d 438 (2000) (attorneys fees " allowable by statute . . . 'are more analogous to costs' than to damages, " and thus " there is no right to a jury trial for attorneys fees") (quoting Patry v. Liberty Mobilehome Sales, Inc., 394 Mass. 270, 272, 475 N.E.2d 392 (1985), which provides that attorneys fees awarded pursuant to statute " are not part of the damages suffered, " and thus interest on such fees may not assessed under G.L.c. 231, § 6B).

          The Court nonetheless has an affirmative obligation to determine whether and to what extent Plaintiffs have met their burden of proving what amount of fees and costs is reasonable in the circumstances of this case. By analogy, when a judge assesses damages after a defendant has been defaulted, the judge " has an obligation to assure that there is a legitimate basis for any damage award it enters, and to assure that damages are not awarded solely as the result of [a] . . . defendant's failure to respond[.]" Johnny's Oil Co. v. Eldayha, 82 Mass.App.Ct. 705, 710, 978 N.E.2d 86 (2012), quoting Anheuser-Busch, Inc. v. Philpot, 317 F.3d 1264, 1266 (11th Cir. 2003). " This obligation is important to protect the integrity of the litigation process and to advance the goal of fair treatment to all parties." Jones v. Boykan, 464 Mass. 285, 294, 982 N.E.2d 1093 (2013). These principles apply even where the defaulting defendant never appears and does not object to a request for an award of damages, and even where damages are assessed after a trial rather than pursuant to Rule 55(b)(2). See Shafnacker v. Raymond James & Assocs., Inc., 425 Mass. 724, 737, 683 N.E.2d 662 (1997). The same principles apply to an unopposed request for reasonable attorneys fees and costs under a statute, such as the Wage Act, that is not part of a claim for compensatory damages. Stowe II, 417 Mass. at 204 (judge must " exercise[ ] independent judgment" as to whether attorney fee request under fee-shifting statute is reasonable, even where request is not challenged by opposing party); see also Stowe v. Bologna, 415 Mass. 20, 21-23, 610 N.E.2d 961 (1993) (fees at issue in Stowe were awarded pursuant to Cambridge Rent Control Act, which provided that prevailing tenants were entitled to award of reasonable attorneys fees and costs). " Courts are not authorized to be generous with the money of others, and it is as much the duty of courts to see that excessive fees and expenses are not awarded as it is to see that an adequate amount is awarded." American Civil Liberties Union of Georgia v. Barnes, 168 F.3d 423, 428 (11th Cir. 1999); accord Smith v. Consalvo, 37 Mass.App.Ct. 192, 196, 638 N.E.2d 501 (1994) (" When legal expenses are collected from a party other than the one who received the legal services, a degree of conservatism in fee determination is in order").

         However, Ms. Huang waived any right to an evidentiary hearing by not responding to the pending motion. If Plaintiffs were seeking attorneys fees as part of their compensatory damages, then an assessment of damages hearing would have to be conducted pursuant to Rule 55(b)(2) before any fees were awarded. See Shawmut Bank, N.A. v. Chase, 34 Mass.App.Ct. 266, 269, 609 N.E.2d 479 (1993). But, as noted above, Plaintiffs are seeking attorneys fees pursuant to a fee-shifting statute, not as part of their compensatory damages. Under these circumstances, Huang would have been entitled to an evidentiary hearing if she had asked for one, but her failure to do so constitutes a waiver of that right. See Manganaro Drywall, Inc. v. White Constr. Co., Inc., 372 Mass. 661, 666-67, 363 N.E.2d 669 (1977); J.P. Constr. Co., Inc. v. Stateside Builders, Inc., 45 Mass.App.Ct. 920, 699 N.E.2d 358 (1998) (rescript).

         2. Legal Standards for Awarding Fees

          " While the amount of a reasonable attorneys fee is largely discretionary, a judge 'should consider the nature of the case and the issues presented, the time and labor required, the amount of damages involved, the result obtained, the experience, reputation and ability of the attorney, the usual price charged for similar services by other attorneys in the same area, and the amount of awards in similar cases." Twin Fires Investment, LLC v. Morgan Stanley Dean Witter & Co., 445 Mass. 411, 429-30, 837 N.E.2d 1121 (2005) (reviewing award of attorneys fees under c. 93A), quoting Linthicum v. Archambault, 379 Mass. 381, 388-89, 398 N.E.2d 482 (1979). " No one factor is determinative, and a factor-by-factor analysis, although helpful, is not required." Id. at 430, quoting Berman v. Linnane, 434 Mass. 301, 303, 748 N.E.2d 466 (2001). " [T]rial courts need not, and indeed should not, become green-eyeshade accountants" in determining what amount of attorneys fees is reasonable in a particular case. Fox v. Vice, 563 U.S. 826, 838-45, 131 S.Ct. 2205, 180 L.Ed.2d 45 (2011). " The essential goal in shifting fees (to either party) is to do rough justice, not to achieve auditing perfection." Id.

         2.1. The " Lodestar" Method

          " The basic measure of reasonable attorneys fees is a 'fair market rate for the time reasonably spent preparing and litigating a case.'" Stowe II, 417 Mass. at 203, quoting Fontaine v. Ebtec Corp., 415 Mass. 309, 326, 613 N.E.2d 881 (1993); accord Killeen v. Westban Hotel Venture LP, 69 Mass.App.Ct. 784, 790, 872 N.E.2d 731 (2007) (applying this methodology to attorney fee award under the Wage Act). Plaintiffs have " the burden of showing that the claimed rate and number of hours are reasonable." Commonwealth v. Ennis, 441 Mass. 718, 722, 808 N.E.2d 783 (2004), quoting Society of Jesus of New England v. Boston Landmarks Comm'n, 411 Mass. 754, 759, 585 N.E.2d 326 (1992).

         This method for determining what amount of attorneys fees should be awarded where authorized by a statute was " [d]eveloped after the practice of hourly billing had become widespread" in markets for legal services. Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 551, 130 S.Ct. 1662, 176 L.Ed.2d 494 (2010). It has come to be known as the " lodestar" method and, " as its name suggests, [has] become the guiding light of our fee-shifting jurisprudence." [2] Id., quoting Gisbrecht v. Barnhart, 535 U.S. 789, 801, 122 S.Ct. 1817, 152 L.Ed.2d 996 (2002), and Burlington v. Dague, 505 U.S. 557, 562, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992); accord, e.g., Fontaine, supra, at 325.

          The lodestar method is intended to produce an " award that roughly approximates the fee that the prevailing attorney would have received if he or she had been representing a paying client who was billed by the hour in a comparable case" (emphasis in original). Kenny A., supra, quoting Blum v. Stenson, 465 U.S. 886, 895, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984); accord Stratos v. Department of Pub. Welfare, 387 Mass. 312, 322, 439 N.E.2d 778 (1982) (statutory fee award " should reflect an objective 'market' value for comparable legal services"). " [A] reasonable attorneys fee is one that is adequate to attract competent counsel, but that does not produce windfalls to attorneys." Kenny A., 559 U.S. at 552, quoting Blum, 465 U.S. at 897; accord Stratos, supra .

         The Court is aware that many lawyers who handle Wage Act claims do so on a contingent-fee basis. The lodestar method and its focus on hourly billable rates is nonetheless applicable. It governs attorney fee awards even where the prevailing party's lawyers were in fact retained under a contingent-fee agreement, and thus also applies to categories of cases that are typically accepted on the basis of such an agreement. See Fontaine, 415 Mass. at 326 n.14; Dague, 505 U.S. at 564-65; Blanchard v. Bergeron, 489 U.S. 87, 93-96, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989); see also Cambridge Trust Co. v. Hanify & King Professional Corp., 430 Mass. 472, 479, 721 N.E.2d 1 (1999) (dictum).

         2.2. ...

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