Federal Trade Commission v. Consumer Health Benefits Association et al, No. 1:2010cv03551 - Document 260 (E.D.N.Y. 2011)
Court Description: ORDER granting 36 Motion for Disbursement of Funds. For the reasons set forth above, the applications for fees and reimbursement of expenses are hereby GRANTED as follows:(1)Tese & Milner is allowed fees of $121,997.00 and reimbursement of ex penses of $6,870.24; and (2)EisnerAmper is allowed fees of $116,120.00 and reimbursement of expenses of $9,763.00. The Receiver's application for compensation pursuant to the Escrow Agent is hereby DENIED without prejudice to renewal. Ordered by Senior Judge I. Leo Glasser on 11/10/2011.
Download PDF
<![CDATA[
Federal Trade Commission v. Consumer Health Benefits Association et al Doc. 260 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ------------------------------------------------------x FEDERAL TRADE COMMISSION, Plaintiff, - against - MEMORANDUM AND ORDER 10 Civ. 3551 (ILG) (RLM) CONSUMER HEALTH BENEFITS ASSOCIATION, et al., Defendants. ------------------------------------------------------x GLASSER, Senior United States District J udge: Currently before the Court are the applications for fees and expenses of (1) Tese & Milner, the attorneys for the receiver and escrow agent in this action, Angela TeseMilner (the “Receiver”); and (2) EisnerAm per LLP (“EisnerAm per”), the Receiver’ s accountants.1 Tese & Milner’s applications cover the period from August 3, 20 10 through Novem ber 10 , 20 10 and seek $ 121,997.0 0 in fees and $ 6,870 .24 in expenses. EisnerAm per’s applications cover the period from August 3, 20 10 through February 18, 20 11 and seek $ 116,120 .0 0 in fees and $ 9,763.0 0 in expenses. Also before the Court is an application from the Receiver seeking $ 5,0 0 0 .0 0 in com pensation pursuant to a provision of the escrow agreem ent am ong the Receiver and the parties in this action dated Decem ber 16, 20 10 (the “Escrow Agreem ent”).2 1 See Tese & Milner Application for Interim Com pensation dated Septem ber 17, 20 10 (Dkt. No. 36); Tese & Milner Am ended Application for Final Com pensation dated March 25, 20 11 (“Am. App.”) (Dkt. No. 144); Application of EisnerAm per LLP for Interim Allowance of Fees as Accountants for the Receiver dated Septem ber 22, 20 10 (Dkt. No. 37); Application of EisnerAm per LLP for Final Allowance of Fees as Accountants for the Receiver dated February 22, 20 11 (“EisnerAm per Final App.”) (Dkt. No. 132). 2 See Letter dated Novem ber 2, 20 11 from Robert Schatzm an, Nur-ul-Haq, and Angela Tese-Milner to the Court at 2 (“Nov. 2 Letter”) (Dkt. No. 258). The Receiver, the Federal Trade Com m ission, and the defendants on Decem ber 22, 20 10 entered into the Escrow Agreem ent after the expiration of the receivership on Novem ber 10 , 20 10 . Id. at 2. Dockets.Justia.com For the reasons set forth below, the applications are hereby GRANTED in part and DENIED in part. D ISCU SSSION I. Re ce ive rs h ip Co m p e n s atio n The am ount of com pensation to be awarded court-appointed receivers and the professionals that assist them is within the court’s discretion. Sec. & Exch. Com m’n v. Byers, 590 F. Supp. 2d 637, 644 (S.D.N.Y. 20 0 8); see also Gaskill v. Gordon, 27 F.3d 248, 253 (7th Cir. 1994) (citing Crites, Inc. v. Prudential Ins. Co., 322 U.S. 40 8, 418, 64 S. Ct. 10 75, 10 81, 88 L. Ed. 1356 (1944)); United States v. Code Prods. Corp., 362 F.2d 669, 673 (3d Cir. 1966). The court m ay “consider all of the factors involved in a particular receivership,” Gaskill, 27 F.3d at 253 (citation om itted), including “the ‘ com plexity of problem s faced, the benefits to the receivership estate, the quality of the work perform ed, and the tim e records presented.’ Sec. & Exch. Com m’n v. Northshore ” Asset Mgm t., No. 0 5 Civ. 2192 (WHP), 20 0 9 WL 312260 8, at *3 (S.D.N.Y. Sept. 29, 20 0 9) (quoting Sec & Exch. Com m’n v. Fifth Ave. Coach Lines, Inc., 364 F. Supp. 1220 , 1222 (S.D.N.Y. 1973)); see also Code Prods. Corp., 362 F.2d at 673 (relevant considerations are “time, labor and skill required, but not necessarily that actually expended, in the proper perform ance of the duties im posed by the court upon the receivers, the fair value of such tim e, labor and skill m easured by conservative business standards, the degree of activity, integrity and dispatch with which the work is conducted and the result obtained.”). The court m ay also consider the opposition or acquiescence by the FTC to the com pensation applications. Cf. Northshore, 20 0 9 WL 2 312260 8, at *3 (“Opposition or acquiescence by the SEC to the fee application will be ‘ given great weight.’ (quoting Byers, 590 F. Supp. 2d at 644)). ” Both the Second Circuit and the Suprem e Court have concluded that the standard for establishing a presum ptively reasonable attorney’s fee is “the lodestar the product of a — reasonable hourly rate and the reasonable num ber of hours required by the case.” See Millea v. Metro-N.R.R. Co.,— —Nos. 10 -40 9, 10 -564, 20 11 WL 3437513, at *2 (2d Cir. F.3d , Aug. 8, 20 11) (citing Perdue v. Kenny A. ex rel. Winn,—.S. , 130 S. Ct. 1662, 1673, 176 L. U — Ed. 2d 494 (20 10 ) and Arbor Hill Concerned Citizens v. Cnty. of Albany, 522 F.3d 182, 183 (2d Cir. 20 0 8)). The lodestar is “not ‘conclusive in all circum stances,’ and “[a] district ” court m ay adjust the lodestar when it ‘does not adequately take into account a factor that m ay properly be considered in determ ining a reasonable fee.’ Id. (quoting Perdue, 130 S. ” Ct. at 1673). But “such adjustm ents are appropriate only in ‘rare circum stances,’because the “lodestar figure already includes m ost, if not all, of the relevant factors constituting a ‘ reasonable attorney’s fee.’ Id. (quoting Perdue, 130 S. Ct. at 1673) (alterations om itted). ” The reasonable hourly rate is “the rate a paying client would be willing to pay.” Arbor Hill, 522 F.3d at 190 . In determ ining the reasonable hourly rates to be applied, the court should look to the m arket rates prevailing in the relevant legal “comm unity;” specifically, “the district where the district court sits.” Arbor Hill, 522 F.3d at 190 ; accord Sim m ons v. N.Y. City Transit Auth., 575 F.3d 170 , 174 (2d Cir. 20 0 9) (“According to the forum rule, courts should generally use the hourly rates em ployed in the district in which the reviewing court sits in calculating the presum ptively reasonable fee.” After ). determ ining the appropriate hourly billing rate, the court calculates the hours reasonably expended. See Gierlinger v. Gleason, 160 F.3d 858, 876 (2d Cir. 1998). The 3 court does so by exam ining contem poraneous tim e records that identify, for each attorney, the hours expended on a task, “with a view to the value of the work product of the specific expenditures to the client’s case.” Luciano v. Olsten Corp., 10 9 F.3d 111, 116 (2d Cir. 1997); see also Scott v. City of New York, 643 F.3d 56, 57 (2d Cir. 20 11) (per curiam ). If the court finds that any expenditure of tim e was excessive, redundant, or otherwise unnecessary, it should exclude these hours from the lodestar calculation. See Hensley v. Eckerhart, 461 U.S. 424, 434, 10 3 S. Ct. 1933, 76 L. Ed. 2d 40 (1983). Applying all of the foregoing principles, the Court concludes that the fees sought by Tese & Milner and EisnerAm per are reasonable. Tese & Milner seeks $ 121,997.0 0 in attorney’s fees, based on hourly rates of $ 30 0 for partners Angela Tese-Milner and Michael M. Milner; $ 250 for senior attorney Lindsay Weber; $ 190 for attorneys awaiting adm ission Elan Mendel and J essica Milner; and $ 150 for assistant counsel Esther Miller. These hourly rates are within the general range of rates for law firm partners and m ore junior attorneys in this district: between $ 30 0 and $ 40 0 for law firm partners and between $ 10 0 and $ 30 0 for law firm associates. See, e.g., Concrete Flotation Sys., Inc. v. Tadco Construction Corp., No. 0 7 Civ. 319 (ARR) (VVP), 20 10 WL 2539771, at *4 (E.D.N.Y. Mar. 15, 20 10 ) (collecting cases). Further, the hourly rates for the attorneys have been discounted; Angela Tese-Milner’s hourly rate is usually $ 650 .0 0 , while the hourly rate of the other attorneys is typically $ 450 .0 0 . These discounts bespeak recognition by the Receiver that “receivers and attorneys engaged in ‘ the adm inistration of estates in the courts of the United States . . . should be awarded only m oderate com pensation.’ Byers, 590 F. Supp. 2d at 645 (quoting In re New York ” Investors, Inc., 79 F.2d 182, 185 (2d Cir. 1935)) (noting that the SEC ordinarily requests 4 that its receivers and their law firm s grant som e type of public service discount for their services typically 10 %).3 The total tim e spent by the Receiver and her colleagues — perform ing her considerable m andate under the August 3, 20 10 tem porary restraining order, 528.10 hours, is reasonable as well and has been adequately substantiated with contem poraneous tim e records in accordance with New York State Association for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1148 (2d Cir. 1983). The sam e is true of EisnerAm per’ fee request. EisnerAm per seeks a total of s $ 116,120 .0 0 in fees based on discounted hourly rates of $ 30 0 for partners, directors, and senior m anagers; $ 20 0 for staff accountants and paraprofessionals; and $ 10 0 for adm inistrative assistants. 4 These hourly rates are reasonable as well. See Byers, 590 F. Supp. 2d at 648 (discounted and blended hourly rate of $ 350 for accountants to receiver reasonable). Further, the total tim e spent by EisnerAm per assisting the Receiver in this m atter, 429.8 hours, is also reasonable particularly in light of the m atter’s complexity and — — EisnerAm per has substantiated the num ber of hours with detailed contem poraneous tim e records. The reasonableness of the fee applications of Tese & Milner and EisnerAm per is supported by the fact that the FTC has asked the Court to grant them , a factor to be given great weight. See id. at 644 (view of SEC regarding reasonableness of requested fees of receiver’s attorneys and accountants entitled to deference). Indeed, in support of 3 So too does the fact that Tese & Milner also voluntarily reduced its final attorney’s fees application by $ 4,783.0 0 . Am . App. at 2. 4 In addition to discounting its hourly rates, EisnerAm per voluntarily reduced the total am ount of its requested fees by $ 4,0 10 .0 0 . EisnerAm per Final App. at 3. 5 the applications, the FTC states that is in a “unique position to consider the reasonableness of the hours expended” because “it has conducted its own investigation and received periodic reports regarding the Receiver’s and her accountants’ investigation,” and is “familiar with the challenges associated with this investigation, as well as the m any hours that the Receiver and EisnerAm per expended in connection with this m atter.” Response to Defendant Leo’s Opposition dated October 21, 20 10 at 9 (Dkt. No. 73). J ust recently, the FTC again reiterated that it does not oppose the fee applications. Nov. 2 Letter at 2-3. Also notable is that Ronald and Rita Werner, two of the other defendants in this action, did not oppose paym ent of the interim fee applications,5 and have not opposed the final fee applications. Only Defendant Louis Leo (“Leo”) objects to the applications, m aintaining that the Court should reject them entirely.6 But his objections pertain largely to the validity of the allegations in the com plaint and actions specifically authorized by the tem porary restraining order entered August 3, 20 10 issues unrelated to the com pensation issues — currently before the Court. Indeed, the Court stated as m uch during the October 28, 20 10 hearing regarding the interim applications for com pensation of Tese & Milner and EisnerAm per: [I]t is not the receiver’ function and it wasn’t to conduct an investigation s de novo to ascertain whether all of the allegations m ade by the Federal 5 See Transcript of Hearing before the Court on October 28, 20 10 (“ ”) at 17-18. Tr. 6 See Response in Opposition to the Prelim inary Report of Tem porary Receiver filed October 15, 20 10 at 35-36 (Dkt. No. 65); Response in Opposition to the Final Report of Tem porary Receiver dated March 1, 20 11 at 6 (Dkt. No. 133). 6 Trade Com m ission regarding your client did or did not have m erit. It was her function to preserve the assets of that business relying upon the allegations of the Federal Trade Com m ission. There are representations which you m ake which are clearly contrary or diam etrically opposed to every allegation m ade in the com plaint. As I have indicated, that is som ething that will be litigated at a later tim e and I am not dealing with that now. Tr. at 17-18. The sam e is true today, and Leo has failed to provide the Court with any basis to reduce the am ount of fees requested in the applications, let alone to reject them entirely. Accordingly, for all of these reasons, the Court will allow fees in the am ounts of (1) $ 121,997.0 0 for Tese & Milner; and (2) $ 116,120 .0 0 for EisnerAm per. The Court will also allow expenses in the am ount of (1) $ 6,870 .24 for Tese & Milner; and (2) $ 9,763.0 0 for EisnerAm per. The expenses sought here are of the type norm ally incurred and charged to clients, including travel, postage fees, and telephone calls, and are therefore recoverable. See LeBlanc –Sternberg v. Fletcher, 143 F.3d 748, 763 (2d Cir. 1998). II. Es cro w Age n t Co m p e n s atio n The Receiver also seeks com pensation for herself and “her professionals” pursuant to the Escrow Agreem ent. The Escrow Agreem ent provides, am ong other things, that the Receiver, as escrow agent, will hold the defendants’previously frozen funds in an escrow account pending the outcom e of this action subject to the instructions of the Court. Nov. 2 Letter Ex. A (Escrow Agreem ent dated Decem ber 16, 20 10 ). It also provides that she “shall be entitled to be paid for any reasonable and necessary fees arising from her duties as Escrow Agent pursuant to this agreem ent, not to exceed 7 $ 5,0 0 0 .0 0 .” Id. Ex. A. ¶ 6. The Receiver seeks com pensation under this provision of the Escrow Agreem ent. Id. at 2. This application is hereby denied without prejudice to renewal as the Receiver has provided the Court with no basis on which to determ ine the reasonableness of the requested fees. CON CLU SION For the reasons set forth above, the applications for fees and reim bursem ent of expenses are hereby GRANTED as follows: (1) Tese & Milner is allowed fees of $ 121,997.0 0 and reim bursem ent of expenses of $ 6,870 .24; and (2) EisnerAm per is allowed fees of $ 116,120 .0 0 and reim bursem ent of expenses of $ 9,763.0 0 . The Receiver’s application for com pensation pursuant to the Escrow Agent is hereby DENIED without prejudice to renewal. SO ORDERED. Dated: Brooklyn, New York Novem ber 10 , 20 11 / s/ I. Leo Glasser Senior United States District J udge 8
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
