Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—W.D. Mich.: Attorney fee request “patently absurd” in Kraft, Starbucks suit, (Mar 10, 2015)

By Greg Hammond, J.D.

A Starbucks drinker who purchased a Kraft-Tassimo single serving coffee brewing system for approximately $100 was not entitled to recover nearly $175,000 in attorney fees for an individual claim worth $250, under the Michigan Consumer Protection Act. The federal district court in Grand Rapids, Michigan granted the consumer’s motion for attorney fees and costs, but reduced the award to $6,417 in fees and $350 in costs (Montgomery v. Kraft Foods Global, Inc., March 2, 2015, Quist, G.).

Background. Pamela Montgomery filed a class action complaint against Kraft Foods Global, Inc. and Starbucks Corp. in February 2012, claiming—in part—violations of the Michigan Consumer Protection Act (MCPA). Her allegations stem from the $100 purchase of a Kraft-Tassimo single serving coffee brewing system for the purpose of brewing Starbucks coffee. She alleged that Kraft and Starbucks disseminated false and misleading information designed to lead consumers to believe that Starbucks T-discs—the single-serve beverage component of the brewing system—would be available for a reasonable amount of time, but that the defendants knew that their business relationship would soon end.

The court denied class certification in October 2013, leaving Montgomery’s individual claim under the MCPA, which would provide a maximum recovery of $250 in statutory damages if she prevailed at trial. Montgomery accepted Kraft’s and Starbucks’ offer of judgment in October 2014. She subsequently filed a motion for attorney fees and costs, along with three ancillary motions to: (1) delay ruling on the motion for attorney fees and costs pending review of the defendants’ fee records; (2) compel attorney fee records; and (3) conduct an evidentiary hearing on defendants’ objections.

Ancillary motions. The court first denied all three of Montgomery’s ancillary motions, finding that: (1) Montgomery was not entitled to opposing counsel’s billing statements and fees because she failed to demonstrate how they could be relevant to specific objections defendants have raised, such as the sufficiency and accuracy of Montgomery’s counsel’s billing records, Montgomery’s request for fees related to class discovery and class certification that were dismissed, and reasonableness of Montgomery’s counsel’s proposed rate of $350 for a sole practitioner in his first year of practice; and (2) an evidentiary hearing is not warranted because the materials that the parties presented were sufficient for the court to determine a reasonable fee award.

Attorney fees, costs. Next, the court considered Montgomery’s motion for attorney fees and costs, in which she sought nearly $175,000 based on 499.39 hours of work performed at an hourly rate of $350, along with a supplemental fee request of over $8,000 for work completed after Montgomery accepted the offer of judgment. First, the court reduced the hourly rate to $155 per hour, which was approximately the mean rate for first year attorneys. Second, the number of hours was significantly reduced to a total of 41.4 hours. The court noted that over 330 hours, incurred during class discovery through the denial of class certification, should be excluded from the reasonable hours calculation, because class certification was denied. “Moreover, any suggestion that it would be reasonable to spend $174,786.50 (at $350 per hour), or even $79,902.40 (at $160 per hour) to recover $250 is patently absurd,” the court stated. Montgomery was therefore eligible to recover attorney fees in the amount of $6,417 for 41.1 hours of work.

Costs were also reduced from over $13,000 to a mere $350. The court found that Montgomery was entitled to $350 paid as a filing fee, but she failed to show that any other amounts were recoverable as costs.

The case number is 1:12-CV-00149.

Attorneys: Timothy H. McCarthy, Jr. (The McCarthy Law Group PC) for Pamela Montgomery. Christopher James Schneider (Miller Johnson PLC) for Kraft Foods Global, Inc. Aaron M. Panner (Kellogg Huber Hansen Todd Evans & Figel PLLC) for Starbucks Corp.

Companies: Kraft Foods Global, Inc.; Starbucks Corp.

Cases: StateUnfairTradePractices MichiganNews