Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—EDPa: AAMCO Awarded Attorney Fees as Prevailing Party in Suit Against Franchisee, (Jun 14, 2013)

By Peter Reap, J.D., LL.M.

Transmission shop franchisor AAMCO Transmissions, Inc., was entitled to an award of $7,500 pursuant to a contractual attorney fee provision in its agreement with a terminated franchisee because AAMCO was the prevailing party in litigating its action for a permanent injunction against the franchisee, the federal district court in Philadelphia has decided (AAMCO Transmissions, Inc. v. Singh, June 12, 2013, Kelly, R.).The $300 hourly rate requested by AAMCO was reasonable; however, the requested number of hours (70) was excessive, and was reduced to 25 hours, the court determined.

Background. On April 25, 2012, AAMCO filed a complaint against franchisee Paramvir Singh, alleging breach of the franchise agreement. Five days later, AAMCO filed a motion for preliminary injunction, seeking to enjoin Singh from operating a transmission business at the location of the former franchise. Singh did not appear at the hearing, and the court granted AAMCO’s motion for preliminary injunction on October 12, 2012.

Singh again failed to appear at a hearing on the franchisor’s motion for permanent injunction, and that motion was granted on February 26, 2013. The court also found that AAMCO was entitled to reasonable attorneys’ fees pursuant to a prevailing party attorney fee provision in the parties’ agreement, even though AAMCO was represented by in-house counsel.

Subsequently, AAMCO’s counsel submitted an affidavit and schedule of his hourly fee and his hours expended. To date, Singh has not contested the request for attorney fees, the court noted.

Attorney Fees

In the Third Circuit, courts calculate attorneys’ fees pursuant to the lodestar approach. The lodestar is calculated by multiplying the amount of time reasonably expended by reasonable hourly rates. Next, the court could adjust the lodestar based on various factors. The prevailing party bears the burden of establishing the reasonableness of both the time expended and the hourly rates.

Hourly rate. AAMCO sought fees of $300 per hour for the services of its in-house counsel, the court observed. A reasonable hourly rate is determined by prevailing market rates in the community. A prevailing market rate is the rate “in line with those [rates] prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation.” Missouri v. Jenkins, 491 U.S. 274, 286 (1989).

Here, counsel for AAMCO stated in his Affidavit that he is Associate General Counsel for AAMCO and has been practicing law for more than 22 years. Based on his years of experience, this hourly rate was reasonable, the court held.

Number of hours expended. Courts excluded from the determination of the lodestar any hours not reasonably expended. Hours subject to exclusion included those deemed excessive, redundant, or otherwise unnecessary.

The franchisor’s in-house counsel’s schedule of reasonable attorney fees incurred indicated total time expended to be 70 hours, which included: (1) preparation of complaint - 5.2 hours; (2) preparation of motion for preliminary injunction - 8.3 hours; (3) preparation of motion to expedite discovery and reply brief - 4.6 hours; (4) preparation of response to counsel’s motion to withdraw - 4.2 hours; (5) reply to defendant’s response to motion for preliminary injunction - 4.5 hours; (6) preparation for and attendance at hearing for motion for preliminary injunction - 16.3 hours; (7) preparation of proposed finding of facts and conclusions of law - 9.8 hours; and (8) preparation for and attendance at bench trial - 17.1 hours.

Even though the franchisee did not challenge the reasonableness of the fee schedule, the requested 70 hours was reduced to a more reasonable 25 hours, the court ruled. While the in-house counsel’s motions and briefs were certainly well-written and comprehensive, and his representation at the hearings more than competent, 70 hours spent on such efforts was excessive. The fee request was also reduced in light of the fact that AAMCO used in-house counsel rather than private counsel, the court explained. Accordingly, the franchisor was awarded attorney fees in the amount of $7,500.

The case is No. 12-2209.

Attorneys: William B. Jameson for Cottman Transmission Systems, LLC. Pavamvir Singh, Pro se.

Companies: AAMCO Transmissions, Inc.

Cases: FranchisingDistribution PennsylvaniaNews