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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA CASE NO. 07-61542-CIV-UNGARO
IN RE BANKATLANTIC BANCORP, INC. SECURITIES LITIGATION _______________________________________/
ORDER ON FEE PETITION
THIS CAUSE is before the Court upon Defendants’ Brief and Verified Fee
Petition in Response to Order on Motion for Sanctions. (D.E. 737.) Class Counsel
filed their Opposition to Defendants’ Fee and Costs Petition and their Response
Concerning Individual Sanctions. (D.E. 739 & 740.) The Petition is fully briefed
and is ripe for disposition.
THE COURT has considered the Fee Petition and the pertinent portions of
the record and is otherwise fully advised in the premises.
I
On August 2, 2011, the Court granted in part Defendant’s Motion for
Sanctions. The Court found that Class Counsel’s inclusion in the Consolidated
Amended Complaint and the First Amended Consolidated Complaint of assertions
attributed to one confidential witness, Donna Loverin, violated Rule 11(b)(3); these
assertions lacked adequate evidentiary support, and a reasonable inquiry by
counsel would have revealed as much. (D.E. 734.)
The Court ordered that Class Counsel pay Defendants the reasonable
attorneys’ fees and other expenses incurred in deposing Loverin and one-tenth of
the reasonable attorneys’ fees and costs incurred in the preparing and filing of the
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Motion for Sanctions. (Id.) The Court ordered Defendants to submit a verified fee
petition detailing the fees and expenses claimed, as required by Local Rule
7.3(a)(3)–(7). The Court also ordered the parties to submit brief memoranda
detailing which individual attorneys among Class Counsel should be held jointly
and severally liable for this sanction.
In their Fee Petition, Defendants seek a total of $60,647.62 in fees and costs,
and argue that five attorneys among Class Counsel should be held jointly and
severally liable for the sanctions award. In Response, Class Counsel argue that
various of the claimed expenses and fees should not be awarded because they are
beyond the scope of the Court’s order or because they are not properly documented
and that no individual attorneys should be held responsible for the sanctions award.
The Court first addresses the amount to which Defendants are entitled pursuant to
the Order on Motion for Sanctions and then addresses which, if any, individual
attorneys among Class Counsel shall be held liable for the sanctions award.
II
A. Fees and Expenses Incurred in Deposing Loverin
1. Attorney Fees
Defendants seek $34,794.00 in attorney fees incurred in connection with their
deposition of a single witness, Donna Loverin. 1 In support of their Fee Petition,
1 Loverin was one of six confidential witnesses whose statements and factual
allegations Plaintiffs incorporated into the Consolidated Amended Complaint and
one of the five confidential witnesses whose allegations Plaintiffs incorporated in
the First Amended Consolidated Complaint. For a thorough treatment of the role
these witnesses played in the litigation of this cause, see the undersigned’s Order
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Defendants present a table setting forth the hours expended by each attorney who
worked on the matter, a description of the work performed, the number of hours on
the date performed, and each attorney’s billing rate. (D.E. 737, pp. 4–7.)
Defendants note in their Fee Petition that Loverin was the first of the
confidential witnesses deposed and “thus the work leading up to her deposition was
both substantively complex and time consuming.” (D.E. 737, p. 3.) The attorney
fees Defendants request in connection with Loverin’s deposition include fees for
time spent reviewing the pleadings, documents related to Loverin, and relevant
public filings. Defendants request fees for time spent traveling to New Jersey to
meet with Loverin’s counsel the week before her deposition and for the travel and
time associated with the deposition itself. Defendants also request fees for time
spent researching “a number of legal issues that arose in connection with the
deposition of Donna Loverin, particularly with respect to Class Counsel’s initial
assertion of work-product over the transcripts of the secretly recorded phone
conversations, that had to be analyzed in advance of the deposition.” (D.E. 737, pp.
3–4.)
In response to the Fee Petition, Class Counsel argue that the number of
hours defense counsel spent preparing for Loverin’s deposition is “unreasonable on
its face.” (D.E. 739, p. 1.) Class Counsel contend that the time records may reflect
time spent preparing for the depositions of witnesses other than Loverin and object
to the award of fees for time defense counsel spent researching “issues relating to
on Motion for Sanctions. (D.E. 734.)
3
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discovery regarding confidential witnesses” and “research regarding
indemnification” as outside the scope of the Court’s award. (D.E. 739, p. 2.) Class
Counsel argue that hours billed by defense counsel Richard Jackson should not be
included in the award because Jackson did not attend Loverin’s deposition and
because Jackson’s time entries do not specifically reference Loverin. ( Id. , pp. 1–2.)
And Class Counsel object to the award of fees for time defense counsel spent
traveling to New Jersey to confer with Loverin’s counsel a week in advance of her
deposition. (Id. )
The starting point in any determination of the value of an attorney’s services
is to multiply hours reasonably expended by a reasonable hourly rate. Norman v.
Housing Auth. of Montgomery , 836 F.2d 1292, 1299 (11th Cir. 1988). A reasonable
hourly rate is the prevailing market rate in the relevant legal community for
similar services by lawyers of reasonably comparable skills, experience, and
reputation. Id. Here, while Class Counsel object generally to the amount of
Defendants’ requested award, they have not specifically challenged the hourly fee
rate sought by Defendants. Based upon a review of the record of this case and
similar cases; the undersigned’s familiarity with the prevailing market rate in the
relevant legal community for similar services by lawyers of reasonably comparable
skills, experience, and reputation, and Class Counsel’s lack of objection thereto, the
undersigned concludes that the hourly rates sought for the work of defense counsel
are reasonable.
With respect to the total award sought, the fee applicant bears the initial
4
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burden of submitting evidence sufficient to allow the court to confirm that the
requested fees are not excessive. ACLU v. Barnes , 168 F.3d 423, 428 (11th Cir.
1999). When a district court finds the number of hours claimed is unreasonably
high, the court has two choices; it may conduct an hour-by-hour analysis or it may
reduce the requested hours with an across-the-board cut. Bivins v. Wrap It Up, Inc. ,
548 F.3d 1348, 1350 (11th Cir. 2008). When a fee applicant engages in block
billing, or submits a single billing entry for compensable and non-compensable
work, a fee reduction is warranted. Barnes, 168 F.3d at 427; Williams v. R.W.
Cannon, Inc. , 657 F. Supp. 2d 1302, 1310 n.4 (S.D. Fla. 2009).
First, the Court finds that, though some discussion with Loverin’s counsel in
advance of her deposition may have been necessary, Defendants have not
established that it was necessary for defense counsel to travel to New Jersey to
meet with Loverin’s counsel the week prior to her deposition. Defendants have not
provided the Court with any reason that a meeting in person was required.
Accordingly, the Court declines to award fees for counsel Adam Schachter’s travel
time from Miami to New Jersey and from New Jersey to Miami on February 2, 2010
and February 3, 2010, respectively. Thus, fees for four hours of Schachter’s time on
each of these dates, totaling $2,400, will not be awarded.
The other specific objection Class Counsel raise concerns the time defense
counsel Richard Jackson spent preparing for Loverin’s deposition. Class Counsel
seem to object to any award of fees for Jackson’s time, on the basis that he did not
personally participate in Loverin’s deposition. The Court is not persuaded that
5
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none of these fees should be awarded simply because Jackson did not attend
Loverin’s deposition. As addressed below, however, the Court finds that some
reduction of the claimed fee award is warranted.
Class Counsel generally object that the number of hours Defendants spent
preparing for Loverin’s deposition is unreasonable. The Court concurs and finds
that the number of hours for which Defendants seek fees is unreasonable and
warrants an across-the-board reduction. After subtracting the eight non-
compensable travel hours, as provided above, Defendants seek compensation for a
total of 114.4 hours, at a total cost of $32,394. These hours were spent performing
“research regarding work product,” “prepar[ing] for depositions of confidential
witnesses,” reviewing documents concerning Loverin, traveling to the deposition,
and taking the deposition. ( See D.E. 737, pp. 4–7.) The deposition itself lasted
approximately 4 hours. (See D.E. 737-1, pp. 5, 6.)
The Court finds that the hours defense counsel Schachter and Andrea
Nathan spent traveling to and from Loverin’s deposition in New Jersey and the
hours spent actually deposing Loverin are fully compensable. Thus, for each of
those attorneys, fees for eight hours for round-trip travel and four hours for
Loverin’s deposition will be awarded. This amounts to $6,120.
After accounting for those hours, Defendants seek an award of attorneys’ fees
in the amount of $26,274 for 90.4 hours spent by various attorneys preparing for
Loverin’s deposition. The Court finds this number of hours to be unreasonably
high. As noted above, Loverin’s deposition lasted a mere four hours. The facts
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surrounding Loverin’s deposition, including the recording of her interviews by Class
Counsel’s investigator, may have made her deposition a slightly more complicated
affair than those of the other confidential witnesses. Nonetheless, Loverin was a
lay fact witness. Her deposition consisted of simple fact questions regarding her
communications with Class Counsel’s investigator and questions regarding her
former position at BankAtlantic. (See D.E. 257.) Defendants have failed to
establish that more than ninety hours of preparation by several seasoned attorneys
were necessary or reasonable in advance of the relatively brief and straightforward
exercise that was Loverin’s deposition.
Moreover, defense counsel’s descriptions of the work performed reflect time
spent preparing “for confidential witness depositions,” and researching “issues
relating to discovery regarding confidential witnesses.” (D.E. 737, pp. 4–7.)
Defendants represent that, when time entries “included work unrelated to the
deposition of Donna Loverin, [they] made reasonable adjustments in determining
the amount sought here and have removed unrelated narrative.” (D.E. 737, p. 4
n.6.) Defendants do not provide the original records, though, or describe the
manner in which they made such adjustments.
From Defendants’ submission, the Court has no way to discern how the time
records were adjusted and whether they were, indeed, adjusted reasonably to
include only the time spent preparing for Loverin’s deposition. And due to the
unusually high number of hours expended in preparation for a single four hour
deposition of a lay witness, the Court has reason to believe that these time entries
7
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may reflect hours spent researching issues relevant to and preparing for the
depositions of the other confidential witnesses. Fees for such time are not within
the scope of the Court’s Order on Motion for Sanctions.
For these reasons, the Court finds that an across-the-board reduction is
warranted with respect to the remaining hours for which Defendants seek fees in
connection with Loverin’s deposition. The Court acknowledges the bluntness of this
tool; however, the Court has only general descriptions of the work performed by
defense counsel. A more precise determination of the number of hours defense
counsel reasonably spent preparing for and taking Loverin’s deposition, thus, is not
possible.
Accordingly, the Court will reduce by 30 percent the total remaining fees
sought. As noted, Loverin was one of six confidential witnesses Defendants
deposed. However, preparation for Loverin’s deposition was complicated by the
existence of recorded telephone interviews conducted by Class Counsel’s
investigator. While a significant reduction in awardable fees is warranted due to
the high number of hours defense counsel spent preparing for Loverin’s deposition,
the 50 percent reduction Class Counsel seek is excessive.
In sum, the Court declines to include in the sanctions award eight hours for
Schachter’s time spent traveling to meet Loverin’s counsel in the week before her
deposition. The full amount of fees requested for twelve hours of Schachter’s time
and twelve hours of Nathan’s time spent traveling to and taking Loverin’s
deposition are included in the sanctions award; this amounts to $6,120. And, the
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Court awards $18,391.80 in fees for the time defense counsel spent preparing for
Loverin’s deposition. 2 Thus, the total award of attorney fees in connection with
Loverin’s deposition is $24,511.80.
2. Expenses
Defendants seek a total of $5,146.97 in expenses associated with Loverin’s
deposition. Class Counsel object to a number of these expenses. The Court
addresses below those expenses to which Class Counsel object.
Defendants seek reimbursement of $195.00 in process server fees for the
service of subpoenas on Loverin. Defendants incurred a total of $250.00 in process
server fees in connection with Loverin’s deposition, of which $55.00 was already
awarded in the Bill of Costs in this case. (D.E. 735, 737, p. 7.) Class Counsel argue
that the remainder of these expenses are not compensable, because recoverable
costs for the service of subpoenas are limited by 28 U.S.C. § 1921 to $55.00, the fee
charged for service by the United States Marshal Service. See Magali v. Safesco
Ins. Co. , 2009 WL 1851102, at *6 (S.D. Fla. June 29, 2009); 28 C.F. R. § 0.114.
Because the Court awarded the expenses reasonably incurred in connection
with Loverin’s deposition as a sanction, and is not now considering Defendants’
entitlement to costs pursuant to 28 U.S.C. §§ 1920 and 1921, the Court is not
constrained by the limits imposed by those statutes and the subsequent cases
interpreting them. See Sheila’s Shine Prods., Inc. v. Sheila Shine Inc. , 486 F.2d 114
(5 th Cir. 1973) (award for discovery expenses pursuant to order on motion for
2 $26,274 x .70 = $18,391.80. 9
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3
for the private service of subpoenas on Loverin may not have been necessarily
incurred, the Court finds that they were reasonably incurred in connection with
Loverin’s deposition, and, thus, includes that amount in the award.
Defendants seek reimbursement of $55.00 for a mileage fee paid to Loverin.
As Magistrate Judge Bandstra found in connection with Defendants’ Motion for a
Bill of Costs, this mileage expense is not sufficiently documented, because
Defendants do not provide documents or receipts detailing the expense. ( See D.E.
735, p. 10.) Accordingly, the undersigned also declines to award the claimed $55.00
mileage fee.
Defendants seek reimbursement of $667.47 in travel expenses for defense
counsel Schachter to travel from Miami to New Jersey and back to meet with
Loverin’s counsel during the week prior to her deposition. As discussed above, the
Court finds that Defendants have failed to establish that such travel was
necessarily or reasonably undertaken. Accordingly, the Court declines to award
this amount.
Defendants seek reimbursement of $2,650.50 in round-trip travel expenses,
including hotel rooms and airfare for defense counsel Schachter and Nathan to
travel from Miami to New Jersey for the deposition of Loverin. The undersigned
finds that the better part of these expenses was reasonably incurred in connection
3 In Bonner v. City of Prichard , 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the
Eleventh Circuit adopted as binding precedent the decisions of the former Fifth Circuit
handed down prior to October 1, 1981.
10
sanctions not limited by 28 U.S.C. § 1920). Though the fees defense counsel paid
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with Loverin’s deposition. Of this amount, however, the Court declines to award
$789.00, the difference between Nathan’s round-trip economy-class airfare and the
amount paid for Schachter’s first-class airfare. ( See D.E. 737-1.) Accordingly, of the
$2,650.50 requested in travel expenses, $1,771.50 were reasonably incurred and are
included in the award to Defendants.
Defendants seek $100.00 for court reporter fees and transcripts and $810.00
for the videotaping of Loverin’s deposition. Defendants previously sought the
reimbursement of such expenditures in their Motion for Bill of Costs. Magistrate
Judge Bandstra concluded that such costs were not compensable pursuant to 28
U.S.C. § 1920. The Court affirmed that conclusion and the Magistrate Judge’s
Report as a whole. (D.E. 736.) Class Counsel object to the award of such expenses
here on the same grounds.
The Court recognizes that these expenses may not have been necessarily
incurred and were not recoverable as part of Defendants’ Motion for Bill of Costs
and pursuant to 28 U.S.C. § 1920. As noted above, though, the Court’s award of
reasonable expenses pursuant to the Order on Motion for Sanctions is not limited to
those costs that may be recovered under § 1920. Though these expenses may not
have been necessarily incurred, the Court finds that they were reasonably incurred,
and, thus, includes them in the award of expenses.
Defendants seek reimbursement of $759.00 for the transcription of recordings
made by Class Counsel’s investigator of telephone interviews with Loverin. The
receipt for this expense, however, indicates that the transcription was performed
11
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April 22, 2010, approximately two months after defense counsel deposed Loverin.
(D.E. 737-1, p. 7.) Accordingly, the Court finds that this expense was not
reasonably incurred in deposing Loverin and declines to award this amount to
Defendants.
For these reasons, the Court awards Defendants a total of $ 2,876.50 for
expenses reasonably incurred in connection with Loverin’s deposition.
B. Fees Related to Motion for Sanctions
In the Order on Motion for Sanctions, the Court ordered an award of one-
tenth of the reasonable attorneys’ fees and costs Defendants incurred in the
preparation and filing of the Motion for Sanctions. Defendants claim that this sum
amounts to $20,856.65, as the total attorneys’ fees incurred in preparing the
sanctions motion was $208,566.50; Defendants do not seek a separate amount here
for costs incurred in connection with the Motion. (D.E. 737.) Class Counsel object
that the time records Defendants have submitted demonstrate that a large portion
of those fees, $140,326.50 were incurred in connection with Defendants’ earlier
motion for sanctions. Because the Court limited the sanctions award to one-tenth of
those fees incurred in connection with Defendants’ second sanctions motion, Class
Counsel argue the fee awarded should be reduced by $14,032.65, as that amount is
outside the scope of the Court’s award.
The Court is unpersuaded by Class Counsel’s argument. The Court denied
without prejudice Defendants’ first Motion for Sanctions, specifically allowing
Defendants to refile the Motion following trial and the resolution of the post-trial
12
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motions. (D.E. 676.) At the appropriate time, Defendants then renewed their
Motion for Sanctions, filing a motion substantially the same as the first. ( See D.E.
254, 698.) The time expended on the Defendants’ first sanctions motion, was, thus,
clearly integral to the second. Accordingly, the Court does not find it appropriate to
deny Defendants the award of one-tenth of the fees incurred in preparing the first
sanctions motion on that basis alone.
The Court finds, however, that the number of hours Defendants now claim
were expended in drafting the renewed sanctions motion is unreasonable. As noted,
the renewed sanctions motion was, in large measure, the same as the first-filed
motion. In fact, thirteen of its twenty pages are taken substantially verbatim from
Defendants’ first Motion for Sanctions. ( See D.E. 254, 698.) Defendants represent,
however, that defense counsel expended 71.4 hours, at a total cost of $32,821.50,
preparing the renewed motion. The Court finds this expenditure of time
unreasonable given the substantial identity of the second motion to the first, and
therefore reduces by 50 percent the amount in attorneys’ fees Defendants request
for the preparation of the renewed sanctions motion. 4 The Court, thus, awards a
total of $19,065.57 in attorney fees in connection with the Motion for Sanctions.
III
In the Order on Motion for Sanctions, the Court ordered Defendants to
submit a brief memorandum as to which individual attorneys among Class Counsel
4 Defendants claim to have incurred a total of $32,821.50 in attorneys’ fees for the
preparation of the second Motion, one-tenth of which, $3,282.15, would be compensable
pursuant to the Court’s Order on Motion for Sanctions. A 50 percent reduction of that
amount is $1,641.08. 13
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should be held jointly and severally liable for the sanctions award. Defendants
argue that five attorneys, the partners at Class Counsel’s firms who had principal
responsibility for prosecuting this case and one whose name appears on the
signature block of the Consolidate Amended Complaint and the First Amended
Consolidated Complaint, should be held jointly and severally liable for sanctions,
along with their law firms. (D.E. 737, p. 2.) 5
Class Counsel object to the imposition of sanctions against any individual
attorney, arguing that, “if sanctions are to be imposed, they should be imposed at
the firm level only,” because no individual attorney acted sanctionably. (D.E. 740,
p. 1.) Class Counsel also argue that the individual attorneys were not put on notice
of the possibility of individual sanctions, because Defendants’ Motion sought only
sanctions against Class Counsel’s firms, not against individual attorneys. Class
Counsel next argue that attorneys at Barroway “neither drafted, added, nor
commented on the allegations regarding Loverin’s position that were included in
the [Consolidated Amended Complaint] or [First Amended Consolidated
Complaint]. As a result, no lawyers at [Barroway] should be sanctioned, nor should
the law firm itself....” (D.E. 740.) Class Counsel represent in their Response that
the fault for the sanctionable conduct, if any, was the result of several attorneys at
Labaton each working on different parts of this action and that “the process failed.”
5 The Court appointed Labaton Sucharow LLP (Labaton) and Barroway Topaz Kessler
Meltzer & Check, LLP (Barroway) as co-Class Counsel. (D.E. 153.) 14
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The Court is unpersuaded by Class Counsel’s argument that no individual
attorney was on notice that he was “personally at risk,” because Defendants’ Motion
sought sanctions only against Class Counsel’s firms. Though Defendants’ Motion
did not seek individual sanctions, the Court was obligated under the Private
Securities Litigation Reform Act (Reform Act), 15 U.S.C. § 78u, to make findings
regarding the compliance of each party and each attorney with each requirement of
Rule 11(b) as to any responsive pleading or dispositive motion. The Reform Act,
itself, thus, gives notice to counsel that, at the conclusion of the case, the court will
determine whether the parties and counsel complied with Rule 11. See ATSI
Commc’ns, Inc. v. Shaar Fund, Ltd. , 579 F.3d 143, 152 (2d Cir. 2009) (“By virtue of
this statutory notice, consideration of sanctions in the PSLRA context can never be
sua sponte and can never come as a surprise, because Congress, not the court, has
prompted and mandated a Rule 11 finding.”).
Nonetheless, the Court finds that, under these circumstances, the sanction
ordered in the Order on Motion for Sanctions shall be imposed on the Labaton and
Barroway firms, alone. 6 First, the Court finds it appropriate to hold the Barroway
firm jointly liable for the sanctions award, despite Class Counsel’s assertions that
the Barroway attorneys “neither drafted, added, nor commented on the allegations
regarding Loverin’s position that were included in the CAC or FACC.” (D.E. 740, p.
6 On May 23, 2011, the Class Representatives filed a Notice of Firm Name Change to
advise the Court that the name of the law firm Barroway Topaz Kessler Meltzer & Check,
LLP had been changed to Kessler Topaz Meltzer & Check. (D.E. 719.) For simplicity’s
sake and in the interest of continuity with prior orders, however, the Court will continue to
refer to that firm in this Order as “Barroway.” 15
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2.) The attorneys from Barroway were involved in the drafting of the consolidated
complaints, and, thus, bear responsibility for the assertions contained therein, even
if they did not personally draft the allegations here in issue. ( See D.E. 707, 710.)
Moreover, after the Barroway firm was officially named co-Class Counsel, they
advocated for the claims and assertions contained in the complaints, including those
pertaining to Loverin, which the Court has found violated Rule 11. On this basis,
Barroway will be held jointly and severally liable for the sanctions award.
Next, the Court finds it is not appropriate to sanction the attorney who
signed and filed the Consolidated Amended Complaint and First Amended
Consolidated Complaint, Jonathan Alpert, since he acted as local counsel for Class
Counsel and was not involved in the drafting of the pleadings; the parties are in
agreement as to this point.
Further, because of the limited finding of sanctionable conduct, the Court
finds it inappropriate to hold individually liable for the sanctions award the
partners at Class Counsel’s firms who were “principally responsible for prosecuting
this case,” as Defendants urge. There is no indication from the parties’ submissions
or the record as a whole that these attorneys were personally responsible for
including in the pleadings the baseless factual allegations attributed to Loverin.
Indeed, Mark Arisohn, one of the lead trial attorneys for Class Counsel, represents
to the Court that he was “not assigned to this case until well after the filing of the
CAC and FACC.” (D.E. 740, p. 2 n.5.)
16
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Finally, as noted by Defendants, many attorneys in Class Counsel’s firms
worked on this case; and as noted by Class Counsel, this was a complex case. To be
sure, the number of attorneys involved in this action and the complexity of the
issues are no excuse for the inclusion of factual assertions in the pleadings that
lacked evidentiary support and thereby violated Rule 11. These complicating
factors do, however, tend to obfuscate who among Class Counsel was individually
responsible for the sanctionable conduct. In this case, the Court finds that imposing
a sanctions award against any individual attorney is not appropriate; imposing the
sanctions award against Labaton and Barroway is sufficient but not more than
necessary to deter repetition of the sanctionable conduct by others similarly
situated. See Fed. R. Civ. P. 11(c)(4).
IV
For the reasons stated above, it is
ORDERED AND ADJUDGED that Defendants’ Fee Petition (D.E. 737) is
GRANTED IN PART. Pursuant to the Court’s Order on Motion for Sanctions,
Defendants are entitled to a total award of $46,453.87; Class Counsel’s law firms, 7
Labaton and Barroway are jointly and severally liable for this award.
7 $19,065.57 + 2,876.50 + 24,511.80 = $46,453.87. 17
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DONE AND ORDERED in Chambers at Miami, Florida, this 28thday of
September, 2011.
__________ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ URSULA UNGARO UNITED STATES DISTRICT JUDGE
copies provided: Counsel of record
18