837 N.W.2d 7
Mich. Ct. App.2013Background
- This is a Fourth Remand in an original action enforcing the Headlee Amendment (Const 1963, art 9, § 32) relating to recovery of attorney fees for Phase II (the recordkeeping claim). The Court was ordered by the Michigan Supreme Court to articulate factual findings and enter a fee award.
- Plaintiffs (school districts/taxpayers) prevailed on 1 of 21 claims (the recordkeeping claim) and seek reasonable attorneys’ fees; plaintiffs had a preexisting fee agreement charging $175/hr for attorneys in this matter.
- Plaintiffs presented expert testimony (retired Judge Fred M. Mester) relying on State Bar survey data (2003, 2007, 2010) and proposed a $250 baseline and $450 for lead counsel; the special master found some hours unreasonable and made specified reductions.
- The Court rejects Mester’s methodology and some plaintiff testimony as inconsistent with Smith v Khouri’s market-rate requirement and instead relies on State Bar survey data categorized by years in practice and on the contract/actual billing rates.
- Court finds reasonable hourly rates: $210 for lead counsel Pollard and Kroopnick; $175 for Schindler, Villaire, and Drake (contract rate); $140 for Costanza (actual billing rate); disallows fees for some attorneys where no market evidence was presented.
- The Court adopts the special master’s reductions to compensable hours for time unrelated to the recordkeeping claim (reconsideration motions, disqualification motions, unfiled petitions, preparation for unscheduled Supreme Court argument, certain broadcast emails) and applies a 20% reduction to challenged hours of lead counsel for excessive time; it declines any upward fee enhancement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper method to determine reasonable hourly rates | Use State Bar practice-area survey (appellate) and Mester’s averaging to justify $250 baseline and $450 for lead counsel | Mester’s approach treats differently experienced attorneys as equivalent and is unreliable; market must be shown per Smith | Reject Mester; use State Bar surveys by years-in-practice plus actual/contract billing; set rates: $210 (Pollard, Kroopnick), $175 (Schindler, Villaire, Drake), $140 (Costanza) |
| Are hours billed for Phase II reasonable and compensable? | Most hours were necessary; expert did not assess hours, plaintiffs defended hours billed | Many entries relate to motions/efforts not tied to recordkeeping claim or were duplicative/excessive; lead counsel billed unreasonably high hours | Adopt special master reductions: exclude time on unrelated motions/unscheduled work/broadcast emails/unfiled petitions; reduce challenged lead-counsel hours by 20% |
| Whether fee enhancement (upward adjustment) is warranted | Complexity, favorable result (legislative appropriation), lengthy experience justify upward adjustment | Only 1 of 21 claims succeeded; long attorney-client relationship did not produce efficiencies; excessive hours and delays weigh against enhancement | Decline enhancement: no upward adjustment to baseline rates; fee enhancement would produce windfall and contradict Headlee policy and Smith guidance |
| Recovery for attorneys lacking market-rate proof | Plaintiffs sought fees for additional attorneys (e.g., Klinger, Zaremba) | Defendants contended insufficient evidence of market rate | Disallow recovery for attorneys where plaintiffs failed to present market-rate evidence |
Key Cases Cited
- Smith v Khouri, 481 Mich 519 (sets Smith framework for market-rate reasonable fees)
- Macomb Co Taxpayers Ass’n v L’Anse Creuse Pub Sch, 455 Mich 1 (Headlee fee-reimbursement purpose)
- Durant v Michigan, 456 Mich 175 (balance reimbursement to taxpayer vs burden on state)
- Wood v DAIIE, 413 Mich 573 (fee adjustment factors under MRPC 1.5(a))
- Van Elslander v Thomas Sebold & Assoc, Inc, 297 Mich App 204 (actual fees and anecdotal proof considered but not dispositive)
- Augustine v Allstate Ins Co, 292 Mich App 408 (experience-efficiency expectations in fee review)
- Blum v Stenson, 465 US 886 (applicant must submit credible evidence of market rates)
- Eddleman v Switchcraft, Inc, 965 F2d 422 (market rate defined by comparable lawyers’ charges)
- Adair v Michigan, 494 Mich 852 (Supreme Court remand ordering articulation of fee findings)