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KLLM Transport Services, LLC v. JBS Carriers, Inc.

United States District Court, S.D. Mississippi, Northern Division

February 28, 2018




         BEFORE THIS COURT is the plaintiff KLLM Transport Services, LLC9');">9');">9');">9;s Motion for Attorney Fees and Litigation Costs [Docket no. 232]. This motion stems from a years-long, extremely contentious litigation between the parties. After a careful review of the submissions of the parties, the relevant legal precedent, and the oral arguments of the parties, this court is convinced that KLLM Transport Services, LLC9');">9');">9');">9;s Motion for Attorney Fees and Litigation Costs [Docket no. 232], should be granted, but with reductions. Below, this court sets out the facts and law upon which this court bases its rulings.

         I. BACKGROUND

         This case revolves around the termination of a “dedicated” hauling contract[1] and the breach of a settlement agreement. The salient background facts are as follows.

         In 2008, KLLM Transport Services, LLC (hereinafter referred to as “KLLM”), an over-the-road trucking company based in Mississippi, entered into a dedicated hauling contract with Pilgrim9');">9');">9');">9;s Pride Corporation (hereinafter referred to as “PPC”), a chicken processing company. In 2010, PPC allowed its sister company, JBS Carriers Inc. (hereinafter referred to as “JBS”), to perform the dedicated hauling services for the PPC/KLLM contract. JBS, though, also began poaching some of the KLLM employees who had worked on the PPC dedicated hauling contract. Afterwards, an aggrieved KLLM sued JBS. KLLM contended that JBS had tortuously interfered with KLLM9');">9');">9');">9;s business relationships, converted its proprietary trade secrets, and converted its customers. KLLM filed this lawsuit in this court, the United States District Court for the Southern District of Mississippi in case number 3:10-CV-546-HTW-LRA.

         With the court9');">9');">9');">9;s help and encouragement, the two parties ultimately settled their differences out of court on December 1, 2010. [Docket no. 1-2]. In the settlement agreement, JBS agreed as follows:

The current contract between KLLM and Pilgrim9');">9');">9');">9;s Pride shall be honored and continued for its stated duration and no early opt-out or termination of such contract will occur. KLLM will continue to provide services and pricing levels as stated in such contract.

[Docket no. 1-2, ¶ 5]. JBS further agreed that “JBS Carriers will not circumvent this Agreement or its obligations as set forth herein through any of its parent or affiliated companies.” [Docket no. 1-2, ¶ 8].

         Despite this settlement agreement, on December 13, 2011, PPC informed KLLM that it was terminating its dedicated hauling contract with KLLM. On February 17, 2012, KLLM filed this lawsuit in this federal court against JBS, contending that JBS had breached the settlement agreement in permitting PPC to terminate the dedicating hauling contract. [Docket no. 1]. In addition to compensatory damages, KLLM also requested punitive damages.

         This matter was brought to trial on August 19');">9');">9');">9, 2015, before a jury of eight persons. After nine (9');">9');">9');">9) days of trial, on September 1, 2015, the jury began its deliberation and returned a verdict in favor of KLLM. The jury awarded KLLM $36, 9');">9');">9');">950.00 in contractual damages for JBS Carrier9');">9');">9');">9;s breach of the settlement agreement. [Docket no. 216].

         The next day, on September 2, 2015, that same jury heard the punitive damages phase of trial. During its closing argument in the punitive damages phase of the trial, KLLM argued that JBS had violated the settlement agreement that it had entered into voluntarily just eleven months prior. KLLM also reiterated to the jury that JBS9');">9');">9');">9;s counsel who penned the settlement agreement was the same attorney who terminated the KLLM-JBS contract less than a year later. JBS, said KLLM, terminated the contract to benefit itself because JBS9');">9');">9');">9;s business was suffering and the PPC contract JBS took from KLLM doubled JBS9');">9');">9');">9;s business. Just as KLLM had emphasized during the trial, KLLM characterized JBS9');">9');">9');">9; conduct as “reckless disregard for KLLM9');">9');">9');">9;s rights.” [Docket no. 223, P. 7].

         JBS presented to the jury that PPC decided to terminate KLLM9');">9');">9');">9;s contract before they knew about the prior settlement agreement and that no JBS employees were involved in the decision to terminate KLLM9');">9');">9');">9;s contract with PPC. The jury was not persuaded by JBS9');">9');">9');">9;s arguments.

         JBS also presented what it purported to be its balance sheet. According to this balance sheet, JBS had only $38, 019');">9');">9');">9.00 in cash-on-hand and a negative net worth of $71, 702, 835.00. [Docket no. 9');">9');">9');">9');">229');">9');">9');">9, P. 27');">P. 27]. KLLM did not object to this document being admitted into evidence. KLLM, though, did question the veracity of this balance sheet, noting that JBS was “working for these other companies in the family that are huge companies. They9');">9');">9');">9;ve got money coming in. I submit that if you make the award, which I trust you to do with proper and sound judgment as the court instructed you, they will find a way pretty easily to pay it.” [Docket no. 223].

         The jury, after due deliberation, awarded KLLM $9');">9');">9');">900, 000.00 in punitive damages. [Docket no. 218].


         This court earlier confirmed that it possesses diversity of citizenship subject-matter jurisdiction over this dispute in its orders dated July 26, 2013 [Docket no. 137], and August 17, 2015 [Docket no. 204]. Inasmuch as this court is exercising diversity of citizenship subject-matter jurisdiction, this court, sitting in Mississippi, will apply Mississippi law to the substantive issues in accordance with the Erie Doctrine. Erie v. Tompkins, 304 U.S. 64, 78-79');">9');">9');">9, 58 S.Ct. 817, 82 L.Ed. 1188 (19');">9');">9');">938). Under the Erie Doctrine, federal courts sitting in diversity must apply state substantive law and federal procedural law. Foradori v. Harris, 523 F.3d 477, 486 (5th Cir. 2008) (citing Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 426-427 (19');">9');">9');">99');">9');">9');">96)).


         KLLM asks this court to award it attorney fees and litigation costs in accordance with the settlement agreement which was the central issue in this case. The settlement agreement between the parties reads:

10. If a court of competent jurisdiction determines that JBS has breached or violated any aspect of this Agreement, JBS will reimburse and pay all [attorney fees] and litigation costs incurred by KLLM in connection with the investigation, preparation and filing of a complaint, together with any additional [attorney fees] and litigation costs which may be incurred in connection with legal proceedings brought by KLLM for breach of this Agreement entered into between KLLM and JBS. The claimed amount of such [attorney fees] and litigation costs will be submitted to the applicable court for assessment and approval.

[Docket no. 1-2, ¶ 10]. Thus, KLLM has submitted its Motion for Attorney Fees and Litigation Costs [Docket no. 232] along with exhibits that purport to itemize its attorney fees and litigation costs.[2]

         KLLM seeks an award of $1, 232, 701.50 in attorney fees, $84, 560.23 in expenses, and $350.00 in litigation costs. JBS, on the other hand, argues for an award of either $634, 265.9');">9');">9');">92 at the maximum or $62, 766.00 at a minimum in attorney fees, $17, 780.61 in expenses, and $350.00 in litigation costs. This court is persuaded for the reasons set forth below that various reductions of KLLM9');">9');">9');">9;s requested attorney fees are warranted. This court, however, is also persuaded that KLLM has shown its expenses are reasonable - with the exception of two (2) expert witnesses9');">9');">9');">9; fees. This court is finally persuaded that KLLM is entitled to its costs of court.

         a. Attorney Fees

         The settlement agreement between the parties expressly states that JBS will “pay all attorney fees… incurred by KLLM in connection with the investigation, preparation and filing of a complaint, together with any additional attorney fees … which may be incurred in connection with legal proceedings brought by KLLM for breach of this Agreement.” This agreement is particularly impactful where the parties and the court engaged in a nine (9');">9');">9');">9) day jury trial to resolve this litigation.

         In determining attorney fees, this court must follow Fifth Circuit precedent by calculating a “lodestar” fee “by multiplying the reasonable number of hours expended on a case by the reasonable hourly rates for the participating lawyers.” Louisiana Power & Light Co. v. Kellstrom, 9');">9');">9');">9');">50 F.3d 319');">9');">9');">9, 324 (5th Cir. 19');">9');">9');">99');">9');">9');">95). The court then considers whether the lodestar figure should be adjusted upward or downward depending on the circumstances of the case. Id. In making a lodestar adjustment the court should look to twelve factors, known as the Johnson factors, after Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 19');">9');">9');">974).

         “When … the applicant for a fee has carried his burden of showing that the claimed rate and number of hours are reasonable, the resulting product is presumed to be the reasonable fee[.]” Blum v. Stenson, 465 U.S. 886, 89');">9');">9');">97, 104 S.Ct. 1541, 1548, 9');">9');">9');">9 L.Ed. 2D');">79');">9');">9');">9 L.Ed. 2D 89');">9');">9');">91 (19');">9');">9');">984). Indeed, the United States Supreme Court has held:

The “lodestar” figure has, as its name suggests, become the guiding light of our fee-shifting jurisprudence. We have established a “strong presumption” that the lodestar represents the “reasonable” fee, Delaware Valley I, supra, 478 U.S., at 565, 106 S.Ct., at 309');">9');">9');">98, and have placed upon the fee applicant who seeks more than that the burden of showing that “such an adjustment is necessary to the determination of a reasonable fee.” Blum v. Stenson, 465 U.S. 886, 89');">9');">9');">98, 104 S.Ct. 1541, 1548, 79');">9');">9');">9 L.Ed.2d 89');">9');">9');">91 (19');">9');">9');">984) (emphasis added).

City of Burlington v. Dague, 505 U.S. 557, 562, 112 S.Ct. 2638, 2641, 120 L.Ed.2d 449');">9');">9');">9 (19');">9');">9');">99');">9');">9');">92)

         KLLM asserts the hours it has claimed and the hourly rates it charged are reasonable and consistent with other cases in this region. JBS does not challenge the hourly rates as presented to this court by KLLM. JBS argues, instead, that the sheer number of attorneys and paralegals working on this litigation was unreasonable and that the hours allegedly expended and now claimed by the attorneys and paralegals for KLLM are excessive.

         JBS postulates an alternate lodestar figure for this court to contemplate, saying that $634, 265.9');">9');">9');">92 is the maximum lodestar that the court should award and $62, 766.00 is the minimum. JBS complains that KLLM9');">9');">9');">9;s lodestar of $1, 232, 701.50 is excessive because: time is accounted for in blocks; a dozen (12) attorneys and 10 paralegals worked on this matter; duplicative billing; the preparation of certain witnesses who were not called for trial; “extraordinary and unreasonable” amount of time spent in preparation of pleadings; electronically stored information preparation; and paralegal9');">9');">9');">9;s fees which are not “work traditionally done by an attorney.” [Docket no. 232-1, *SEALED*].

         KLLM answers JBS9');">9');">9');">9; contention, saying that it had good reasons to utilize the services of a dozen (12) attorneys during various phases of this litigation. The parties engaged in twenty-three (23) depositions in five (5) states requiring the services of multiple attorneys to prepare for and conduct said depositions. The parties also engaged in a significant volume of electronic discovery that required an attorney to manage an ESI[3] vendor to ensure the discovery process complied with the Federal Rules of Civil Procedure. KLLM says, on the other hand, it relied upon the services of only two (2) attorneys at trial. This approach was chosen, says KLLM, in an attempt to limit the litigation costs for its client and, potentially JBS.

         In addition to its attack on KLLM9');">9');">9');">9;s lodestar calculation, JBS next points to a ratio determination between the jury9');">9');">9');">9;s award and the attorney fees claimed by KLLM. JBS says that “KLLM should be reimbursed at most for only 5.1% of [KLLM9');">9');">9');">9;s requested attorney fees] to reflect its minimal ‘degree of success9');">9');">9');">9; in obtaining a $36, 9');">9');">9');">950.00 compensatory damage award.” [Docket no. 241, P. 4, *SEALED*].

         KLLM correctly counters that a “proportionality requirement between the amount of attorney fees and the amount of damages … was explicitly rejected by the [United States Supreme] Court in [City of Riverside v. Rivera, 477 U.S. 561 (19');">9');">9');">986)].” Cobb v. Miller et al, 818 F.2d 1227, 1235. (5th Cir. 19');">9');">9');">987). The City of Riverside holding proclaimed “[i]n the absence of any indication that Congress intended to adopt a strict rule that attorney9');">9');">9');">9;s fees under § 19');">9');">9');">988 be proportionate to damages recovered, we decline to adopt such a rule ourselves.” 477 U.S. 561, 581, 106 S.Ct. 2686, 269');">9');">9');">97, 9');">9');">9');">91 L.Ed.2d 466 (19');">9');">9');">986). And Cobb dutifully followed stating:

In the absence of other Johnson factors justifying a reduction in a fee award, a district court should not reduce the fee award solely because of a low damages award. Such an approach would lead to a proportionality requirement between the amount of attorney9');">9');">9');">9;s fees and the amount of damages and was explicitly rejected by the Court in Riverside.

Cobb v. Miller et al, 818 F.2d 1227, 1235. (5th Cir. 19');">9');">9');">987).

         In any event, this court notes, JBS9');">9');">9');">9;s assertion that the ratio between the attorney fees claimed by KLLM in this matter and the total damages awarded by the jury (a ratio of 1:1.3) is not disproportionate: JBS fails to account for the punitive damages award. The total award of the jury was $9');">9');">9');">936, 9');">9');">9');">950. The claimed attorney fees are $1, 244, 349');">9');">9');">9.50. This provides a ratio of 1:1.3, a figure not even remotely close to JBS9');">9');">9');">9;s calculated figure of 1:34. JBS9');">9');">9');">9;s figure would be correct in the absence of the jury9');">9');">9');">9;s punitive damage award, but is not when the total damages award is tallied.

         This court must now review the hours claimed by KLLM in its “Fee and Expense Detail”. [Docket no. 233-9');">9');">9');">9]. After a thorough review, contemplating the issues raised by JBS, this court finds the lodestar figure of $1, 232, 701.50 contains excessive and duplicative time entries. The court has prepared several charts, based on the submissions of KLLM, which indicate the figures upon which the court is relying. These charts are attached hereto as Exhibits A-C.

         As JBS correctly indicates, KLLM9');">9');">9');">9;s attorneys and paralegals engaged in “block billing” for many of its time entries. Fifth Circuit precedent, however, is clear that “block billing”, while disfavored, is not an automatic reason to deny an award of attorneys fees.

The ability to assess the reasonableness of a fee request is greatly undermined by the practice of billing multiple discrete tasks under a single time designation-so-called “block-billing.” This practice was heavily utilized by Plaintiffs9');">9');">9');">9; counsel in this case. We have held that a party seeking an attorneys9');">9');">9');">9; fee award must produce documentation that is “sufficient for the court to verify that the applicant has met its burden of establishing an entitlement to a specific award.” Gagnon v. United Technisource, Inc., 607 F.3d 1036, 1044 (5th Cir. 2010); La. Power & Light Co., 50 F.3d at 325 (supporting documentation must be “adequate to determine reasonable hours”). At first blush, block-billing appears to be in tension with this standard, as district courts must not only assess whether the total amount of time spent is reasonable, but also “whether the particular hours claimed were reasonably expended.” La. Power & Light Co., 50 F.3d at 325 (emphasis added). Nevertheless, we have stated that “failing to provide contemporaneous billing statements does not preclude an award of fees per se, as long as the evidence produced is adequate to determine reasonable hours.” Gagnon, 607 F.3d at 1044.
The upshot of this jurisprudence is that litigants take their chances in submitting fee requests containing block-billed entries and will have no cause to complain if a district court reduces the amount requested on this basis. See, e.g., Welch v. Metro. Life Ins. Co., 9');">9');">9');">942');">480 F.3d 9');">9');">9');">942, 9');">9');">9');">948 (9');">9');">9');">9th Cir. 2007) (“We do not quarrel with the district court&#39');">9');">9');">9;s authority to reduce hours that are billed in block format.”); Lahiri v. Univ. Music & ...

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