Newman Declaration in Support

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

JAMES S. GORDON, Jr., a married
individual, d/b/a ‘GORDONWORKS.COM';
OMNI INNOVATIONS, LLC., a
Washington limited liability company,
Plaintiffs,

v.

VIRTUMUNDO, INC, a Delaware
corporation d/b/a
ADNOWLEDGEMAIL.COM;
ADKNOWLEDGE, INC., a Delaware
corporation, d/b/a
ADKNOWLEDGEMAIL.COM; SCOTT
LYNN, an individual; and JOHN DOES,
1-X,
Defendants.

DECLARATION OF DEREK A. NEWMAN IN SUPPORT OF DEFENDANTS’ MOTION FOR ATTORNEYS’ FEES AND COSTS

I, Derek A. Newman, swear under penalty of perjury under the laws of the United States to the following:

1. I am counsel of record for defendants Virtumundo, Inc. (“Virtumundo”) and Adknowledge, Inc. (“Adknowledge”), am over age 18, and competent to be a witness. I am making this Declaration based on facts within my own personal knowledge.

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2. In this case, James Gordon and Omni Innovations, LLC (“Plaintiffs”) raised novel questions of law which had no precedent in the Ninth Circuit Court of Appeals or this judicial district. The allegations were based on highly technical facts and could only have been addressed by counsel familiar with high-technology disputes and Internet-related litigation.

3. Defendants were principally represented by Roger Townsend and myself, Derek Newman. Combined, Mr. Townsend and I devoted a total of 552 hours to defending this case. We made efforts to delegate work to less expensive, junior attorneys where appropriate. The junior attorneys devoted a total of 890.7 hours defending this case.

4. The document analysis attorneys devoted 533.1 hours to the creation of our necessary extensive log of Plaintiffs’ emails.

5. Defendants’ counsel was actively involved in dispositive motion briefing in this case.

6. Defendants’ counsel also filed various discovery motions, including a motion to compel Plaintiffs to produce and segregate their emails and a motion to permit Defendants to depose Plaintiffs’ witnesses disclosed after the discovery cutoff. Each of these discovery motions was either required by court order or was a reasonable expenditure of legal effort in defending the lawsuit.

7. Defendants’ counsel traveled to Chicago, Illinois to take the deposition of Plaintiffs’ expert witness, Pete Resnick and to Kansas City, Missouri to defend Plaintiffs’ depositions of Defendants.

8. Attached hereto as Exhibit A are true and accurate copies of Defendants’ counsel’s invoices for legal services incurred defending Defendants in the above captioned case.

9. Exhibit A also includes summaries of the reasonable and necessary costs billed to Defendants in defending this lawsuit.

10. Attached hereto as Exhibit B is a true and accurate copy of the invoice provided by Defendants’ expert witness, Dr. Neal Krawetz, for his expert services in this case.

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I certify and declare under the penalty of perjury under the laws of the State of
Washington and the United States that to my knowledge the foregoing is true and correct.

Executed on this 19th day of June, 2007, at Seattle, Washington.

Derek A. Newman

Blank Declaration in Support

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

JAMES S. GORDON, Jr., a married
individual, d/b/a ‘GORDONWORKS.COM';
OMNI INNOVATIONS, LLC., a
Washington limited liability company,
Plaintiffs,

v.

VIRTUMUNDO, INC, a Delaware
corporation d/b/a
ADNOWLEDGEMAIL.COM;
ADKNOWLEDGE, INC., a Delaware
corporation, d/b/a
ADKNOWLEDGEMAIL.COM; SCOTT
LYNN, an individual; and JOHN DOES,
1-X,
Defendants.

DECLARATION OF ERIC P. BLANK IN SUPPORT OF DEFENDANTS’ MOTION FOR ATTORNEYS’ FEES AND COSTS

I, Eric P. Blank, declare and testify as follows:

1. I am over eighteen years of age, competent to testify to the matters stated in this declaration, and make this declaration based upon personal knowledge.

2. Since 1996, I have been an attorney licensed to practice in Washington State. I am admitted to practice in the Western District of Washington and regularly have cases in this district.

3. I am the principal at Blank Law & Technology P.S. My practice focuses on technology, intellectual property and Internet-related litigation, and I
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routinely represent clients in federal district court on technology matters similar to those at issue in the above-captioned action.

4. I have reviewed the rate sheet from Newman & Newman, LLP attached hereto as Exhibit A and find it to be reasonable and consistent with the prevailing rates for attorneys in this legal community for matters of similar complexity, novelty and legal exposure.

5. The rates charged by Newman & Newman, LLP are consistent with or less than the hourly rates at my law firm, to my understanding, and other comparable attorneys who practice in the same area of law.

6. I am familiar with the skill, expertise, and reputation of the attorneys at Newman & Newman, LLP and believe that they are particularly well qualified to represent parties in complex Internet-related litigation.

7. Furthermore, I recognize that Newman & Newman is well-known in the local legal community for its expertise and skill in representing clients in complex CAN-SPAM, RCW 19.190 et seq. and email-related litigation, and based on that expertise and reputation, it is reasonable that they charge hourly rates of greater than $350 for senior attorneys and $200 per hour for junior attorneys.

I certify and declare under the penalty of perjury under the laws of the State of Washington and the United States that to my knowledge the foregoing is true and correct.

Executed on this 19th day of June, 2007, at Seattle, Washington.

Eric P. Blank

RESPONSE to Motion to Award Fees and Costs

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON, SEATTLE

JAMES S. GORDON, Jr., a married
individual; OMNI INNOVATIONS,
LLC., a Washington limited
liability company;
Plaintiffs,

v.

VIRTUMUNDO, INC, a Delaware
corporation, d/b/a
ADNOWLEDGEMAIL.COM;
ADKNOWLEDGE, INC., a Delaware
corporation, d/b/a
ADKNOWLEDGEMAIL.COM;
SCOTT LYNN, an individual; and
JOHN DOES, I-X,
Defendants.

PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANTS’ MOTION FOR ATTORNEY FEES

Plaintiff James S. Gordon, Jr., by and through his attorney of record, responds to Defendants’ Motion For Attorney Fees as follows:
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At the outset, the Court should note the deep irony and manifest injustice that would result if the Court grants the Defendants’ motion for attorney fees.

In the Court’s May 15 ruling, the Court explicitly stated that the Court never considered the merits of Plaintiff’s claims (hereafter Gordon).1 Rather, the Court held that Gordon did not have standing to bring Gordon’s complaint. The Court included an extensive analysis of Gordon’s standing under the CAN-SPAM Act of 2003, Pub. L. No. 108-187, 117 Stat. 2699 (2003), 15 U.S.C. §§ 7701-7713 (hereafter “CAN SPAM” or the “Act”). The Court allowed that Gordon qualified as an “Internet Access Service” which is specifically authorized to bring claims under the Act.2 However, the Court held that Gordon had not suffered a sufficient “adverse impact” which is also required for standing. The Court’s finding that Gordon had not suffered a sufficient adverse impact thus formed the sole and exclusive basis given by the Court for finding that Gordon lacked standing, and in turn dismissing Gordon’s complaint, under CAN SPAM. As a result, the Defendants are now asking the Court to award them over a half a million dollars, also under CAN SPAM, for the sole reason that the Court previously held Gordon had not endured sufficient adverse impact to bring his claims.

[1 “Because Plaintiffs have no standing, their CAN-SPAM claims must be DISMISSED and the Court has no occasion to reach the parties’ arguments on the merits of those claims.” (Court’s May 15, 2007 Order, Dkt. 121, pg. 15, lines 18-19)

2 “Nevertheless, it is fairly clear that Plaintiffs are, in the most general terms, a “service that enables users to access” Internet content and e-mail, and accordingly, they qualify as an IAS under the statute’s capacious definition.” (Court’s May 15, 2007 Order, Dkt. 121, pg. 13, lines 10-12)]

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If the Court grants the Defendants’ motion, Gordon will be financially ruined. Gordon possesses nowhere near the resources necessary to satisfy such an award. If the Court grants the Defendants’ motion, the Court will thus have ruled in rapid succession that Gordon had not suffered a sufficient adverse impact to bring his claims under CAN SPAM, yet for the mere act of trying, Gordon will have been ordered to pay over a half million dollars and forced into bankruptcy. One can only wonder, if the Court grants the Defendants’ motion and forces Gordon into financial ruin, will the Court then change its mind and agree that Gordon has indeed suffered a sufficient adverse impact to have his claims considered on the merits?

If the Court did, it is clear that Gordon would prevail. There is no question that Gordon has made it crystal clear to the Defendants that he wants them to stop sending him commercial email. Even if the Court ignores Gordon’s repeated requests as set forth in his sworn declarations, this entire lawsuit is irrefutable evidence that the Defendants are on notice that Gordon has made such a request. The Defendants are highly sophisticated multi-million dollar corporations. In the face of this litigation, it is simply inconceivable that the Defendants could have failed to note that Gordon doesn’t want their commercial email. Thus, there is no question whatsoever that the Defendants have both actual and constructive notice that Gordon doesn’t want their spam.

CAN SPAM contains a clear prohibition against sending commercial email to a party who has asked to be left alone. 15 USC 7704(a)(4). Yet the Defendants continue to send Gordon commercial email to this day, on a daily basis. (See Gordon Declaration)

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Since the Court has ruled that Gordon’s receipt of this commercial email is an insufficient “adverse impact” to give Gordon standing to do anything about the Defendants’ ongoing conduct under the Act, Gordon is effectively powerless to stop these ongoing commercial emails. Gordon can only imagine the howls of laughter the Defendants enjoy each and every day at Gordon’s expense, as they send Gordon additional commercial email knowing that their conduct, while plainly contrary to CAN SPAM, is nevertheless completely insulated from any redress by Gordon as a result of this Court’s May 15 ruling.

The awarding of attorney's fees is a matter for the District Court's discretion. To guide that discretion, the Supreme Court endorsed the non-exclusive list employed by the Third Circuit in Lieb v. Topstone Industries, Inc., 788 F.2d 151, 156 (1986) (the so-called "Lieb factors"). Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, n.19, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). The list includes "frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." Id. Examining these factors in order plainly indicates that it would be an abuse of the Court’s discretion to grant the Defendants attorney fees.

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Frivolousness

As stated by the Court, it never reached the merits of Gordon’s CAN SPAM complaint. Accordingly, Gordon’s claims cannot possibly be termed “frivolous.” Further, it is plain that if the Court had examined Gordon’s CAN SPAM claims on the merits, Gordon would have prevailed. In addition to the other substantive claims, including, but not limited to the “From” name argument asserted in Gordon’s motion for partial summary judgment, and deceptive subject line claims, Gordon has repeatedly asked the Defendants to stop sending Gordon commercial email. The Defendants were and are on actual notice that Gordon wanted them to stop sending Gordon commercial email. CAN SPAM contains a clear prohibition against sending commercial email to a party who has asked to be left alone 15 USC 7704(a)(4). Despite Gordon’s repeated requests, and the Defendants actual notice of those requests, the Defendants continue to send Gordon commercial email on a daily basis (See Gordon Declaration herewith). For Gordon to bring this suit under these conditions cannot be considered “frivolous.”

Nor was it frivolous for Gordon to assume he had standing to bring this suit based on his status as an “Internet Access Service.” As discussed above, the Court itself agreed that Gordon was an “Internet Access Service” under a plain reading of the definition at 15 USC 7702(11) and 47 USC 231(e)(4). The Court also agreed that Gordon had suffered an “adverse impact.” The Court’s rationale for denying standing thus required the Court to reach into the legislative history to make a determination that Congress intended something more than an “adverse impact.” The Court then concluded that
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Gordon was required to show “ISP- or IAS-specific burdens,” that these be burdens be “significant” and held that Gordon had not done so. (Court’s May 15, 2007 Order, Dkt. 121, pg. 13, lines 12-13). However, had Gordon known in advance that the Court would apply this more stringent standard, Gordon easily could have established that he had experienced “ISP- or IAS-specific burdens” and that the cost of these burdens were “significant.” (See Gordon Declaration herewith) For example, the record plainly reflects that due to a continually escalating avalanche of spam, Gordon was forced to migrate his service from a shared server to a dedicated server. Had Gordon known that the Court would apply this standard in advance, all Gordon would have had to do to meet it is to point out to the Court that this forced migration entailed additional costs. However, the point is not to re-litigate the Court’s prior ruling. The point is simply that Gordon’s assumption that he had standing to bring his suit was based on a good faith, and reasonable interpretation of the statutory language. The Court ultimately interpreted that language to be more stringent. Gordon’s complaint cannot be considered “frivolous” merely because he lacked the omniscience to know in advance that the Court would adopt this more stringent standard, and thus an award of attorney fees is unwarranted based upon frivolousness.

Moreover, as the Court has noted, and as Gordon readily acknowledges, Gordon has brought numerous other lawsuits attempting to enforce both Federal and State antispam statutes. In each and every case in which Gordon’s standing as an IAS under Can-Spam was challenged, other courts have found in Gordon’s favor, confirming his status, on the facts as pled, as an IAS. In its decision herein the Court specifically
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noted one such decision by the Eastern District Court of Washington Gordon v Impulse Marketing, et al. where that Court, ruling on a challenge to Gordon’s status as an IAS ruled in Gordon’s favor. Thus, there was certainly nothing frivolous, or otherwise unreasonable in Gordon’s belief that he did have standing as an IAS to bring this action.

Motivation

Gordon’s motivation was to stop the Defendants from sending him spam. He filed his lawsuit after a long and extended effort to stop the spam without resorting to litigation. Unfortunately, that effort failed. The reasons that effort failed are best illustrated by the fact that the Defendants are still sending spam to Gordon. (See Gordon Declaration herewith) Unless the Court is willing to say that Gordon’s simple desire to be left alone is an insufficient basis to bring an action when all else has failed, Gordon’s motivation for bringing the suit does not support an award of attorney fees.

Objective Unreasonableness

In both the factual and the legal components of the case, Gordon’s position is entirely reasonable. Factually, the Defendants were sending spam to Gordon despite his requests that they stop. As noted above, they are legally required to do so under the Act. The questions of standing are, at best, very close questions of first impression that required the Court to review the legislative history to make a determination of Congressional intent. Thus, in no sense was Gordon’s lawsuit “objectively
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unreasonable” either factually or legally, and Gordon’s reasonableness in bringing the suit does not support an award of attorney fees.

The Need to Advance Considerations of Compensation and Deterrence

As with the analysis of Gordon’s motivation, considerations of compensation and deterrence do not support an award of attorney’s fees. Gordon’s intent was to stop the Defendants from sending him spam. He filed his lawsuit only after a long and extended effort to stop the spam without resorting to litigation. Sadly, the Defendants are still sending spam to Gordon. Unless the Court is willing to say that it is the Court’s job to deter Gordon from seeking redress in the Courts against a party who refuses to leave Gordon alone, considerations of compensation and deterrence do not support an award of attorney’s fees.

Conclusion

In light of the foregoing an award of attorney fees to Defendants is not warranted and would create a manifest injustice. Consequently, Defendants’ Motion should be denied.

RESPECTFULLY SUBMITTED this 2nd day of July, 2007.

DOUGLAS E. MCKINLEY, JR
Attorney at Law

/ S/ Douglas E. McKinley, Jr.
Douglas E. McKinley, Jr., WSBA #20806
Attorney for Plaintiffs

/ S/ Robert J. Siegel
Robert J. Siegel, WSBA #17312
Attorney for Plaintiffs

REPLY to Response to Motion to Award Fees and Costs

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

JAMES S. GORDON, Jr., a married individual,
d/b/a ‘GORDONWORKS.COM’; OMNI
INNOVATIONS, LLC., a Washington limited
liability company,
Plaintiffs,

v.

VIRTUMUNDO, INC, a Delaware corporation
d/b/a ADNOWLEDGEMAIL.COM;
ADKNOWLEDGE, INC., a Delaware
corporation, d/b/a
ADKNOWLEDGEMAIL.COM; SCOTT
LYNN, an individual; and JOHN DOES, 1-X,
Defendants.

DEFENDANTS’ REPLY IN SUPPORT OF MOTION FOR ATTORNEYS’ FEES AND COSTS

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I. INTRODUCTION
In his Response in Opposition to Defendants’ Motion for Attorney Fees (Dkt, #135, the “Response”), James Gordon (“Gordon”) did not address the following arguments in Defendants’ Motion for Attorneys’ Fees and Costs (Dkt. #127, the “Motion”): the rate and hours of Defendants’ attorneys’ fees were reasonable, the fees expended were reasonable, and Defendants’ costs were reasonable. Accordingly, Gordon concedes all of those points.1

[1 Plaintiff Omni Innovations, LLC (“Omni”) failed to file any opposition whatsoever – consequently, Omni concedes an award of fees and costs is appropriate.]

Instead of addressing Defendants’ arguments, Gordon misrepresents both law and fact. He mischaracterizes this Court’s May 15, 2007 order (Dkt. #121 (the “Order”) by claiming, falsely, that the Court “never considered the merits of Plaintiff’s claims”. (Response at 2:4-5.) To the contrary, while the Court dismissed Plaintiffs’ CAN-SPAM claim for lack of standing, the Court rejected Plaintiffs’ frivolous “from line” theory, determined they suffered no actual damages, and emphasized their history of litigation for profit. Gordon also claims, falsely, that “Defendants continue to send Gordon commercial email to this day.” (Response at 3:22-23.) Defendants take this allegation seriously, and have provided supplemental declarations explaining in detail why they did not send (and in fact cannot have sent) the email about which Gordon complains.

Plaintiffs filed a frivolous lawsuit motivated by greed, then caused Defendants’ legal costs to skyrocket by refusing to explain their legal theories until the last minute. Now, they must face the consequences of their own actions. Defendants respectfully request this Court grant their Motion for Attorneys’ Fees and Costs.

II. ARGUMENT

A. Plaintiffs Have Made Deliberate Misrepresentations to This Court

1. Defendants Are Not Sending Email to Plaintiffs.

Gordon’s declaration attaches an email which he claims is a Virtumundo promotion for Charter Communications and calls “spam”. (Dkt. #136 ¶ 4 Ex. B.) In
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truth, none of the Defendants sent the email in question, and for at least one year, both Virtumundo and Adknowledge have directed their email systems not to send any messages to the domain .2

[2 See the Declarations of Scott Moore and Michael Fitzgerald in Support of Defendants’ Motion for
Attorneys’ Fees and Costs which accompany this reply brief.]

2. There Is No Support for the Claim That An Award of Fees and Costs Will “Bankrupt” Gordon”.

The rhetoric about bankruptcy (Response at 3:1; “Gordon will be financially ruined”) is not supported by Gordon’s own declaration (Dkt. #136), and should be disregarded as irrelevant and unauthenticated.

B. The Factors Cited by Plaintiffs Weigh Heavily in Favor of Granting Defendants’ Motion

The only case Plaintiffs cite is Lieb v. Topstone Industries, Inc., 788 F.2d 151, 156 (3rd Cir. 1986) (cited in Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n. 19, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994)). That case indicates courts should consider “frivolousness, motivation, objective unreasonableness... and ... considerations of compensation and deterrence” when determining whether to award attorneys’ fees and costs. Id. In this case, all Lieb factors favor Defendants. Plaintiffs’ claims were frivolous, Plaintiffs unreasonably drove up costs, were motivated by profit, and an award of fees and costs will deter a continuing waste of judicial resources.

1. This Court Considered and Rejected Plaintiffs’ Frivolous Claims.

Plaintiffs argue, incorrectly, that the Court “never considered the merits of Plaintiff’s claims.” (Response at 2:4-5.) To the contrary, after Plaintiffs filed a summary judgment motion based on the premise that the “from” lines in Defendants’ emails were misleading (Dkt. #53), the Court considered and rejected Plaintiffs’ meritless theory as a matter of law.3 The Court adopted the reasoning of Omega World Travel v.
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Mummagraphics, Inc., 469 F.3d 348, 353 (5th Cir. 2006) and held as follows:

...the Court cannot find that “from addresses” ending with a domain that facilitates an accurate identification of Defendants could in any sense be found “false” or “descriptive”. Accordingly... Plaintiffs’ claims here – for, at best, “incomplete” or less than comprehensive information – are for immaterial errors that may not be litigated under state law.

(Order at 20:2-6.) The Court also dismissed Plaintiffs’ Washington Consumer Protection Act claim, noting “there is no genuine issue of material fact as to the injury element of Plaintiffs’ CPA claim.” (Id. at 21:3-4.) The Court’s Order repeatedly discusses the absence of any real harm to Plaintiffs and further notes, “Plaintiffs admit to benefitting from spam by way of their research endeavors and prolific litigation and settlements.” (Order at 15:9-10; emphasis original.) The Court found that Plaintiffs “collect spam and... generat[e] lawsuit-fueled revenue.” (Order at 15:12-13.) In sum, the Court rejected all of Plaintiffs’ claims, determined their damages were negligible and found Defendants’ errors (if any) were immaterial. The Court also noted Plaintiffs’ status as professional litigants. This is a classic example of a frivolous lawsuit.

[3 Gordon also admitted he did not read the “from” lines and could not have been misled, which
underscores the meritlessness of Plaintiffs’ arguments. (Declaration of Derek Newman (Dkt. #93) ¶ 2 Ex. A at 377:21 - 378:2.)]

Recently, this Court awarded attorneys’ fees and costs to the prevailing party in a dispute which turned on the losing party’s lack of standing. Sanai v. Sanai, 2007 U.S. Dist. LEXIS 20428, *9-11 (W.D.Wash. Mar. 21, 2007) (awarding attorneys’ fees after dismissing claims based on lack of standing, after finding plaintiffs’ arguments “were inventive, but wholly lacking in merit”). The Court should award them to the Defendants in this case as well. In this case, as in Sanai, Plaintiffs lost – but only after they imposed substantial and unnecessary costs on Defendants. Gordon spends considerable time speculating about what might have been had he prevailed. (Response at 5:4-6.) But as this Court expressly determined, Gordon did not prevail. “As the prevailing parties, Defendants may file a motion for attorneys fees...” (Order at 24:23-24.)

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2. Plaintiffs Unreasonably Increased Plaintiffs’ Attorneys’ Fees and Costs.

Now that Defendants are the prevailing parties, Gordon attempts to re-brand his aggressive opportunism as “the mere act of trying” to “bring his claims under CAN SPAM.” (Response at 3:4-5.) However, Plaintiffs did more than “try”. They made vague claims which they refused to clarify, and dumped massive overproductions of documents on Defendants, forcing Defendants to sift through and analyze them. Had Defendants known about Plaintiffs’ frivolous “from line” theory at the beginning, they could have filed a motion to dismiss pursuant to FED. R. CIV. P. 12(b)(6) and incurred significantly lower expenses.

Defendants’ Motion provided details concerning Plaintiffs’ unfair litigation tactics, specifically their long-term refusal “to commit to any statutory provision which was allegedly violated.” (Motion at 3:10-11.) Plaintiffs waited until the last possible day – the deadline for their filing summary judgment motion – before revealing their case was based on a frivolous “from line” theory. Until that date, Plaintiffs refused to explain why they believed Defendants’ alleged emails generated liability. As a result, Defendants were forced to hire a team of lawyers to analyze thousands of emails in light of many different legal theories, in preparation for whichever claims Plaintiffs might later make. (Motion at 3:6-18.) Plaintiffs also failed to make reasonable efforts to comply with Defendants’ discovery requests, and Gordon admitted the files he did not search might have contained emails confirming he subscribed to Defendants’ mailing lists. (Newman Decl. ¶ 2 Ex. A at 405:7-25.) Plaintiffs’ business model was to file a lawsuit seeking millions in damages, then pass through their own costs of discovery and legal analysis to Defendants. Plaintiffs’ tactics were unreasonable and increased Defendants’ legal costs tremendously.

3. Plaintiffs’ Motivation Was To Profit from Litigating Their Frivolous Claims.

Gordon admitted he profits handsomely from the business of litigating, which confirms Plaintiffs’ improper motive in filing this lawsuit:

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Q. During these years when you were unemployed, how did you pay your bills?
A. ...During the course of the last maybe two and a half years, the lawsuits that I have been involved with yielded settlements.

*****

Q. Have you obtained any income or revenue in the year 2006 or 2007 other than from settlements and disputes?
A. No.

(Declaration of Derek Newman (Dkt. #93) ¶ 2 Ex. A at 32:16-21; 46:20-22.)

4. Granting Defendants’ Motion Will Deter Plaintiffs From Further Improper Actions.

As Gordon admits, Plaintiffs are in the litigation business. (Newman Decl. ¶ 2 Ex. A at 32:16-21; 46:20-22; see also Motion at 5:2-7.) In this lawsuit alone, Plaintiffs have wasted hundreds of hours of time forcing Defendants’ counsel to interpret their vague claims. They have required Defendants to respond to a summary judgment motion based on allegedly misleading emails which, Plaintiffs concede, did not mislead them. They have made every effort to keep their own costs down, which included neglecting their discovery obligations to Defendants.

Plaintiffs threaten to repeat their improper behavior in numerous other lawsuits. Accordingly, Defendants request this Court give thought to “considerations of compensation and deterrence” as discussed in Lieb, supra, 788 F.2d at 156. An award of attorneys’ fees and costs to Defendants will compensate for the needless expenses Plaintiffs repeatedly imposed on them. It will also deter Plaintiffs from viewing this Court as a profit center rather than a public tribunal addressing legitimate grievances.

C. Plaintiffs Concede Defendants’ Attorneys’ Fees and Costs Were Reasonable

Omni and Gordon conceded the reasonableness of Plaintiffs’ attorneys’ fees and costs by neglecting to address that issue. LR 7(b)(2); see also Lexington Ins. Co. v. Swanson, 2007 U.S. Dist. LEXIS 37620, *29 n. 9 (W.D.Wash. May 23, 2007) (“The Court may consider Lexington’s failure to respond to Swanson’s argument on these two issues as an admission that Swanson's argument has merit” (citing LR 7(b)(2)).

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III. CONCLUSION

Plaintiffs’ claims were frivolous. This Court’s Order rejected all of Plaintiffs’ claims and held their damages were negligible and their claims were based on “immaterial errors.” Further, Plaintiffs inflated Defendants’ legal costs considerably by unreasonably refusing to explain their legal theories until the last minute, were motivated by pure profit, and threaten to repeat the process over and over again until this Court deters them from doing so. Omni did not oppose Defendants’ Motion, thereby conceding Defendants are entitled to an award of attorneys’ fees and costs against Omni pursuant to LR 7(b)(2), and Gordon is equally responsible. Defendants respectfully request this Court put an end to Plaintiffs’ blatant waste of resources by granting their Motion for Attorneys’ Fees and Costs.

DATED this 6th day of July, 2007.

NEWMAN & NEWMAN,
ATTORNEYS AT LAW, LLP

By:

Derek A. Newman, WSBA No. 26967
Roger M. Townsend, WSBA No. 25525
Attorneys for Defendants

ORDER on Motion to Award Fees and Costs

Here's a practice note for the attorneys out there that I know are reading this site: When you win and think you're going to get fees and costs, don't get greedy and double-check your math.

Why? Because there are some things that you don't really want a judge to say about you in a decision. Among those are these gems all of which are found in this Order granting the Defendants $111,440.00 in attorneys' fees and costs of court:

"the Court begins by expressing serious doubts about the accuracy with which Defendants’ attorneys recorded and billed both costs and fees in this litigation."

"Furthermore, the prospect that ... well over 1,000 hours—was spent on the Linke Log is absurd."

"Having seen the results of this project, the Court finds that spending the equivalent of over thirteen 40-hour weeks on this process is far more than was reasonable."

"Moreover, the inaccurate documentation presented with the instant motion reinforces the Court’s separate conclusion that the hours requested exceed the reasonable time spent on this case. Given that in making the instant motion Defendants have inexplicably inflated the total hours for which they request compensation by almost 27% beyond what was even recorded in their own billing records, the Court finds it entirely appropriate to cut their requested senior attorney hours by at least that much to account for other inflation that likely occurred in daily billing and overcharges to their clients, which may or may not have been partially balanced out by bill cuts and discounts."

"it appears to the Court that Defendants have deliberately doubled the requested compensation"

"It is unclear how Defendants arrived at the total of $26,338.01 requested in their motion. Moreover, as discussed, the individual expense requests that total $28,839.36 here also are inexplicably inflated when compared with the actual billing records submitted to the Court."

There are, in fact, more of those sprinkled through the Order. It's ironic that Gordon is getting ripped for being greedy, and now here are the attorneys for Virtumundo and Adknowledge apparently trying to show him how it's really done.

===============================

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

JAMES S. GORDON, Jr., a married individual,
d/b/a ‘GORDONWORKS.COM’; OMNI
INNOVATIONS, LLC., a Washington limited
liability company,
Plaintiffs,

v.

VIRTUMUNDO, INC., a Delaware Corporation,
d/b/a ADNOWLEDGEMAIL.COM;
ADKNOWLEDGE, INC., a Delaware
Corporation, d/b/a
ADKNOWLEDGEMAIL.COM; SCOTT LYNN,
an individual; and JOHN DOES, 1-X,
Defendants.

ORDER

This matter comes before the Court on Defendants’ Motion for Attorneys’ Fees and Costs (Dkt.
No. 127), Plaintiff Gordon’s Opposition1 (Dkt. No. 135), and Defendants’ Reply (Dkt. No. 137). This
Court, having reviewed the materials submitted by the parties, as well as the complete record, and
determined that oral argument is not necessary, hereby finds and rules as follows.

[1 Plaintiff Omni did not file an opposition or join in the brief filed by Plaintiff Gordon.]

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I. BACKGROUND

Plaintiffs James S. Gordon (“Gordon”) and Omni Innovations, LLC (“Omni”) brought this action for alleged violations of the Federal CAN-SPAM Act of 2003, 15 U.S.C. §§ 7701–7713 (First Cause of Action); the Washington Commercial Electronic Mail Act (“CEMA”), WASH. REV. CODE §§ 19.190.010–.110 (Second Cause of Action); the Washington Consumer Protection Act (“CPA”), WASH. REV. CODE §§ 19.86.010–.920 (Third Cause of Action); and the Washington “Prize Statute,” WASH. REV. CODE §§ 19.170.010–.900 (Fourth Cause of Action). (Am. Compl. (Dkt. No. 15).)

As the Court has previously noted, (May 15, 2007 Order (Dkt. No. 121)), Gordon is a Washington resident and registrant of the internet domain gordonworks.com (“Gordonworks”). Omni is Gordon’s business, which involves (1) software development and other endeavors and (2) a “spam business,” which entails “[n]otifying spammers that they’re violating the law” and filing lawsuits if they do not stop sending e-mails to the Gordonworks domain. Defendants Virtumundo, Inc. (“Virtumundo”) and Adknowledge, Inc. (“Adknowledge”) are non-Washington resident businesses that provide online marketing services to third-party clients. Virtumundo is a Delaware corporation with its principal place of business in Kansas. Adknowledge is also a Delaware corporation with its principal place of business in Missouri. Virtumundo and Adknowledge market products for their clients by transmitting e-mails to interested consumers. Defendant Scott Lynn (“Lynn”) is a Missouri citizen and serves as Chief Executive Officer of Adknowledge. He is also the sole shareholder of both companies. (See id. at 2–3.)

On May 24, 2006, this Court denied Defendants’ motion to dismiss for lack of personal jurisdiction (Order (Dkt. No. 24)) and on December 8, 2006, this Court granted in part and denied in part Defendants’ motion to dismiss various claims for pleading deficiencies (Order (Dkt. No. 51)), granting leave to Plaintiffs to further amend their Amended Complaint to cure the identified defects. Plaintiffs never did so. Accordingly, the Prize Statute claims (Fourth Cause of Action) were never revived, and the parts of the Second and Third Causes of Action corresponding with Plaintiffs’ “personally identifying information” CEMA claim, WASH. REV. CODE § 19.190.080, also remained dismissed. Defendants then
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moved for summary judgment on all of Plaintiffs’ remaining claims—which included CAN-SPAM claims (First Cause of Action), CEMA claims (Second Cause of Action), and CPA claims (Third Cause of Action) as they related to surviving CEMA claims—and Plaintiffs moved for partial summary judgment on the merits of some of their CAN-SPAM claims. On May 15, 2007, the Court granted Defendants’ motion for summary judgment, denied Plaintiffs’ motion for partial summary judgment, and disposed of a number of other motions. (May 15, 2007 Order (Dkt. No. 121).) Specifically, the Court dismissed Plaintiffs’ CAN-SPAM claims (First Cause of Action) for lack of statutory standing (id. at 4–15), dismissed Plaintiffs’ Washington CEMA claims (Second Cause of Action) as preempted by CAN-SPAM (id. at 15–20), and dismissed Plaintiffs’ Washington CPA claims (Third Cause of Action) for lack of a viable CEMA foundational claim and alternatively for failure to allege injury to business or property (id. at 20–21). Defendants now move for attorneys’ fees and costs as the prevailing parties.

II. ANALYSIS

Federal Rule of Civil Procedure 54(d) governs motions for attorneys’ fees and costs. Defendants have made a timely motion for attorneys’ fees pursuant to Rule 54(d)(2). Defendants request attorneys’ fees and costs pursuant to 15 U.S.C. § 7706(g)(4) (CAN-SPAM) as well as Washington Revised Code section 19.190.090(3) (CEMA). Because this Court’s May 15, 2007 Order disposing of the remainder of Plaintiffs’ claims turned on application of CAN-SPAM, and because federal law governed both the standing and preemption analyses, the Court will not separately consider the issue of fees and costs under Washington state law.

CAN-SPAM provides that in a private CAN-SPAM action, “the court may, in its discretion, require an undertaking for the payment of the costs of such action, and assess reasonable costs, including reasonable attorneys’ fees, against any party.” 15 U.S.C. § 7706(g)(4). Because CAN-SPAM authorizes costs and attorneys’ fees “against any party,” the Court must determine (1) the correct standard to be applied in deciding whether to award attorneys’ fees to a prevailing CAN-SPAM defendant and (2) if fees and costs are warranted, what constitutes a reasonable award in this case.

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A. Legal Standard Governing Whether to Award Attorneys’ Fees to Prevailing CAN-SPAM Defendants

As an initial matter, Gordon argues that the Court “never reached the merits” of Plaintiffs’ CAN-SPAM claims. (Opp’n 5.) Accordingly, though he does not frame the question as such, he appears to be objecting to a characterization of Defendants as “prevailing” in this litigation. In light of the fact that the Court dismissed all of Plaintiffs’ claims and entered judgment in Defendants’ favor (Dkt. No. 122), any suggestion that Defendants have not prevailed is meritless. More to the point, the statute provides that the Court may award attorneys’ fees and costs against any party in any private action. Congress made no mention of any requirement that the Court also reach the merits of particular claims.

A more pressing question is whether, in deciding whether to award attorneys’ fees and costs to
the prevailing defendant in a CAN-SPAM action, the Court should apply the “dual standard” typically
applied in civil rights cases and articulated in Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 422 (1978) (holding that “a [Title VII] plaintiff should not be assessed his opponent’s attorney’s fees unless a court finds that his claim was frivolous, unreasonable, or groundless, or that the plaintiff continued to litigate after it clearly became so”); see also Davis v. City and County of San Francisco, 976 F.2d 1536, 1541 n.1 (9th Cir. 1992) (noting that the same body of United States Supreme Court and Ninth Circuit caselaw governs the reasonableness of attorneys’ fees in Title VII cases as well as actions brought pursuant to 42 U.S.C. §§ 1981–1986 and Titles VI and IX of the Civil Rights Act of 1964), vacated in part on other grounds by 984 F.2d 345. Under Christiansburg, a Court may only award fees and costs to a prevailing defendant if it finds that the plaintiff’s case demonstrated frivolousness, unreasonableness, or groundlessness. Thus, this dual standard tips the scale in favor of plaintiffs both when they win and when they lose.

The alternative to the dual standard is the “evenhanded” approach applied in Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994). In contrast to the threshold requirement under the dual standard—that a losing plaintiff may be assessed fees and costs only if the original suit was “frivolous or brought in bad
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faith”—the evenhanded approach treats prevailing defendants and prevailing plaintiffs alike. Id. at 520–21. In Fogerty, an action brought under the Copyright Act,2 the Supreme Court rejected the dual standard and held that the discretionary question of whether to award fees to a prevailing defendant must be evaluated no differently than the question of whether to award fees to a prevailing plaintiff. Id. at 534.

[2 As here, the Copyright Act provides that a court may award fees but does not require such an award under any circumstance. Id. at 519; see also 17 U.S.C. § 505.]

The Supreme Court concluded by noting “several nonexclusive factors to guide courts’ discretion” in making that decision. Id. As enumerated in Lieb v. Topstone Industries, Inc., 788 F.2d 151, 156 (3d Cir. 1986), such factors include “frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Fogerty, 510 U.S. at 534 n.19. The Supreme Court endorsed application of these factors, so long as they remained “faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs and defendants in an evenhanded manner.” Id.

Neither the Supreme Court nor the Ninth Circuit has determined which of the foregoing tests should govern in CAN-SPAM cases. Both Defendants and Gordon, in briefing the instant motion, have applied the Fogerty–Lieb test, which is more favorable to Defendants. Thus, it appears that Gordon agrees that this is the proper standard. The Court also finds Fogerty’s standard more appropriate in this case, for the following reasons.

The Fogerty Court discussed at length the reasons for the Christiansburg standard in civil rights cases. Among these are the “important policy objectives of the Civil Rights statutes, and the intent of Congress to achieve such objectives through the use of plaintiffs as private attorneys general.” Fogerty, 510 U.S. at 523 (internal quotations and alterations omitted). In Christiansburg, the United States Supreme Court had found that those important policy objectives were “not at work in the case of a prevailing civil rights defendant.” Fogerty, 510 U.S. at 523 (also discussing Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400 (1968)). Accordingly, prevailing defendants could be treated less
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favorably than prevailing plaintiffs. However, the factors compelling the Christiansburg dual standard were “absent in the case of the Copyright Act.” Id. The Fogerty Court carefully considered the goals of the Copyright Act in reaching its conclusion. Id. at 523–33. This Court will do the same.

The purpose of the CAN-SPAM Act, as stated in the statute itself, as well as in the Senate Report, is to curb false or misleading unsolicited commercial e-mail. 15 U.S.C. § 7701 (“Congressional findings and policy”); S. REP. NO. 108-102, at 1 (2003) (Comm. Rep. on CAN-SPAM Act of 2003 (S. 877)) (“Purpose of the Bill”). Specifically, Congress intended to prohibit deception as to the source or subject matter of e-mail messages, to require an opt-out provision regarding continued receipt of e-mails, to enforce consumers’ choices to opt out, to require inclusion of valid physical addresses in messages and notice of advertising or solicitation content, and to prohibit knowingly false and misleading advertising.

See 15 U.S.C. § 7701; S. REP. NO. 108-102, at 1. While Congress intended to protect consumers and to promote honest advertising, Congress clearly did not intend to obliterate all commercial e-mail, to ban email marketing, or to thwart legitimate business practices. For example, Congress acknowledged the legitimacy of a significant segment of e-mail marketing traffic in its commentary on economic impact in the Senate Report. Id. at 12. Thus, in enforcement, businesses which are likely CAN-SPAM defendants have an interest in establishing that their practices are legitimate, just as potential plaintiffs have an interest in challenging particular practices. The twin purposes of protecting consumers and imposing a regulatory structure on businesses with which they reasonably can comply lend themselves well to the Fogerty–Lieb test. Moreover, as in Fogerty, this Court finds that the weighty considerations in civil rights cases—which led to the formulation of the Christiansburg dual standard favoring both prevailing and losing plaintiffs—are not present in CAN-SPAM cases.

The available means of CAN-SPAM enforcement underscore this conclusion. This Court has already extensively considered Congressional intent with respect to the private right of action conferred by CAN-SPAM. (May 15, 2007 Order.) For instance, it is clear that the CAN-SPAM Act’s primary enforcement provisions empower the Federal Trade Commission and other federal agencies to pursue
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violators of the Act. 15 U.S.C. § 7706(a), (b). State attorneys general may bring civil enforcement
actions. Id. § 7706(f). A limited private right of action also exists for a provider of Internet access service adversely affected by various violations. (See May 15, 2007 Order 4–5, 11–15.) In moving for summary judgment, Defendants argued that Plaintiffs lacked standing to bring this private right of action because (1) they are not “Internet access service” (“IAS”) providers as defined by the Act and (2) they have not been “adversely affected” by the violations they have alleged, as required by § 7706(g)(1). This Court found that, regardless of Plaintiffs’ ability to establish the former, they could not establish the latter. (May 15, 2007 Order 13–15.)

This Court’s determination that Plaintiffs had no statutory standing relied on the fact that the most significant harms enumerated by Congress were “ISP- or IAS-specific, going well beyond the consumer-specific burden of sorting through an inbox full of spam.” (Id. at 12.) This Court found that “even if an entity could meet the ill-defined and broad definition of an IAS, the ‘adverse effect’ to that entity must be both real and of the type uniquely experienced by IASs for standing to exist. Any other reading would expand the private right of action beyond what Congress intended.” (Id.) The Court then found that the “only harm Plaintiffs have alleged is the type of harm typically experienced by most e-mail users” and that the “fact that Congress did not confer a private right of action on consumers at large means that ‘adverse effect’ as a type of harm must rise beyond the level typically experienced by consumers—i.e., beyond the annoyance of spam.” (Id. at 14.) The Court also concluded that because “adverse effect” is a textual prerequisite to claiming statutory damages, Congress clearly intended that harm be significant. (Id. at 14–15.) Thus, “permitting private parties with no harm to invoke CAN-SPAM to collect millions of dollars surely is not what Congress intended when it crafted this ‘limited’ private right of action.” (Id. at 15.)

The foregoing findings are not only relevant to the actual standing analysis in which they were made, but also to the question of fee-shifting now before the Court. Where, as here, a private right of action is so much more limited than, for example, the expansive private right of action in civil rights
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cases, it follows that protecting plaintiffs’ role as “private attorneys general” does not weigh as heavily into the decision about which standard to apply.3 Promotion of prolific private CAN-SPAM litigation is not what Congress intended. Instead, Congress conferred only a limited private right of action, unavailable to parties with no (or very little) harm. Moreover, Congress’s acknowledgment of legitimate e-mail traffic suggests that preventing abuse of this limited private right of action is entirely appropriate.

[3 The Court notes that the Christiansburg standard has also been held to apply in environmental cases. Marbled Murrelet v. Babbitt, 182 F.3d 1091 (9th Cir. 1999). The contrast between environmental cases and CAN-SPAM cases is similar to the contrast between civil rights cases and CAN-SPAM cases. Thus, such application of Christiansburg beyond the civil rights context does not change the analysis here.]

Accordingly, the Court finds that plaintiffs and defendants in CAN-SPAM cases should be treated alike, and therefore Fogerty should govern this Court’s determination of whether to grant attorneys’ fees.

B. Whether to Award Attorneys’ Fees to Defendants in this Case

Again, the Fogerty Court endorsed consideration of the Lieb factors, including “frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Fogerty, 510 U.S. at 534 n.19. Here, the balance of these factors tips in favor of awarding attorneys’ fees to Defendants, for the following reasons.

First, it is obvious that Plaintiffs are testing their luck at making their “spam business” extraordinarily lucrative by seeking statutory damages through a strategy of spam collection and serial litigation. Plaintiffs are parties to ten additional cases similar to the instant case in the Western District of Washington alone, see Case Nos. C06-1118-MJP, C06-1129-JCC, C06-1210-TSZ, C06-1284-TSZ, C06-1348-MJP, C06-1350-JCC, C06-1469-MJP, C06-1537-JCC, C07-222-RSM, and C07-386-MJP, as well as at least one “spam” case in the Eastern District of Washington, see Case No. C05-5079-FVS. The Court is not merely speculating on Plaintiffs’ motives or assessment of potential profits. In analyzing Plaintiffs’ CAN-SPAM standing, this Court noted that Gordon testified that the “benefits” of receiving
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spam can be quantified in terms of his dissertation research, as well as “settlement agreements for people who have said that they wouldn’t spam me any longer.” (May 15, 2007 Order 7.) The Court recounted the lists of Gordon and Omni “clients,” more than half of whom share the “Gordon” surname. (Id. at 6–7.) The Court recognized that Gordon took over control of e-mail accounts for “gordonworks” clients in order to continue collecting spam. (Id. at 7.) The Court noted that none of the Omni or Gordon clients has paid Plaintiffs for their services. (Id.) Gordon testified that all of Plaintiffs’ income or revenue for 2006 and 2007 has been from settlements and disputes. (Id. at 7–8.) Gordon also testified regarding the “time-consuming process” of collecting, sorting, and compiling spam regarding these and other defendants. (Id. at 8.) Clearly, Plaintiffs are assembling a litigation factory, which, if successful, could net millions of dollars in profit, at least theoretically.

Moreover, after assessing the utter lack of evidence going to any technical impact or financial harm due to the alleged illegal spam, this Court found it significant that Gordon did not seek actual damages in the instant litigation, because none exist, and that he is instead seeking solely statutory damages for each e-mail sent. (Id. at 8.) Plaintiffs admitted that they benefit from receiving spam, and this Court concluded that “Plaintiffs’ continued use of other people’s e-mail addresses to collect spam and their undisputed ability to separate spam from other e-mails for generating lawsuit-fueled revenue directly contradicts any hint of adverse effect that otherwise might exist.” (Id. at 15.) Not only are Plaintiffs “not the type of entity that Congress intended to possess the limited private right of action it conferred on adversely affected bona fide Internet access service providers” (id. at 15), they are not the type of plaintiff that should be allowed to pursue the strategy outlined above without financial cost.

The Court finds that Plaintiffs’ instant lawsuit is an excellent example of the ill-motivated,
unreasonable, and frivolous type of lawsuit that justifies an award of attorneys’ fees to Defendants under Fogerty. The context of this litigation and the context of Plaintiffs’ overall litigation strategy, involving at least a dozen federal actions, indicate that Plaintiffs are motivated by the prospect of multi-milliondollar statutory damages awards in exchange for their relatively paltry spam-collection and spam
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litigation costs. Plaintiffs have alleged no actual damages in this action. Under these circumstances, compensation to Defendants for defending this lawsuit is warranted. Similarly, the Court finds that the goal of deterrence is particularly relevant here. Plaintiffs should be deterred from further litigating their numerous other CAN-SPAM lawsuits now that they are aware their lack of CAN-SPAM standing.

Further, while the Court did not reach the merits of Plaintiffs’ CAN-SPAM claims, the Court did
have occasion to consider the substance of Plaintiffs’ CEMA claims. The results of that inquiry confirm that Plaintiffs did not present a viable theory of recovery. Specifically, Plaintiffs alleged that Defendants’ headers violate both CAN-SPAM and CEMA because the “from line” does not include Defendants’ company names or the names of company personnel. However, this Court held that “from addresses” ending with a domain that facilitates an accurate identification of Defendants could not “in any sense be found ‘false’ or ‘deceptive.’” (May 15, 2007 Order 20.) The Court therefore concluded that “while claims actually alleging falsity or deception under CEMA would not be preempted, Plaintiffs’ claims here—for, at best, ‘incomplete’ or less than comprehensive information—are for immaterial errors that may not be litigated under state law.” (Id.) Because Plaintiffs did not raise any issues of material fact that could prove Defendants’ e-mails were materially “false or deceptive” as those terms are used in the CAN-SPAM Act, their CEMA claims were held to be preempted by CAN-SPAM. (Id.) While this analysis went to the preemption holding, it also indicates that the merits of Plaintiffs’ CAN-SPAM “from line” theory are lacking. Thus, contrary to Gordon’s conclusory assertion that this case involved meritorious claims brought in good faith, the evidence suggests otherwise.

C. Reasonable Hourly Attorneys’ Fees4

[4 While Gordon generally objected to an award of fees, Plaintiffs have not objected to Defendants’ calculations or to specific attorneys’ fees requested here, either by challenging the hours claimed or the rates requested. Though Plaintiffs’ failure to object may be construed as a waiver of any objection to the actual amount awarded, the Court has an independent duty to assess the reasonableness of any award of fees.]

While varying standards may govern the determination of whether to award attorneys’ fees in
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different types of cases, once the Court has established that fees should be awarded, a single standard governs how the Court arrives at a reasonable fee award. Blum v. Stenson, 465 U.S. 886, 893 (1984) (holding that the amount of fees awarded in a civil rights case is “governed by the same standards which prevail in other types of equally complex Federal litigation”). The initial determination of a reasonable amount of attorneys’ fees is the “number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). Regarding the reasonable number of hours worked, the party seeking fees

should submit evidence supporting the hours worked and rates claimed. Where the documentation of hours is inadequate, the district court may reduce the award accordingly.

. . . . Cases may be overstaffed, and the skill and experience of lawyers vary
widely. Counsel for the prevailing party should make a good faith effort to exclude from a
fee request hours that are excessive, redundant, or otherwise unnecessary.

Hensley, 461 at 433–34; see also Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986).

After the reasonable number of hours expended is established, the Court must determine a “reasonable hourly rate considering the experience, skill, and reputation of the attorney requesting fees.” Chalmers, 796 F.2d at 1210. The “lodestar” amount—the reasonable hours multiplied by the reasonable hourly rate—is only a “starting point,” however. Hensley, 461 at 433; Benton v. Oregon Student Assistance Comm’n, 421 F.3d 901, 904 (9th Cir. 2005).

In Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1976), the Ninth Circuit adopted
the twelve-factor test found in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), to guide determining both the number of hours reasonably spent and a reasonable hourly rate. Chalmers, 796 F.2d at 1211. The twelve factors are:

(1) the time and labor required, (2) the novelty and difficulty of the questions involved, (3)
the skill requisite to perform the legal service properly, (4) the preclusion of other
employment by the attorney due to acceptance of the case, (5) the customary fee, (6)
whether the fee is fixed or contingent, (7) time limitations imposed by the client or the
circumstances, (8) the amount involved and the results obtained, (9) the experience,
reputation, and ability of the attorneys, (10) the ‘undesirability’ of the case, (11) the nature
and length of the professional relationship with the client, and (12) awards in similar cases.

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Kerr, 526 F.2d at 70. Not all Kerr factors must be separately analyzed, as long as the Court discusses the factors most germane to the particular case and explains how it reached the fee awarded. Quesada v. Thomason, 850 F.2d 537, 539 (9th Cir. 1988) (citing Kessler v. Associates Fin. Servs. Co. of Hawaii, Inc., 639 F.2d 498, 500 (9th Cir. 1981)). The Kerr factors may also justify increasing or decreasing the “lodestar” amount. Benton, 421 F.3d at 904. However, in Hensley, the Supreme Court noted that most of these factors are “subsumed within the initial calculation of reasonable hours expended at a reasonable hourly rate, rather than the subsequent determination of whether to adjust the fee upward or downward.” Chalmers, 796 F.2d at 1212 (citing Hensley, 461 U.S. at 434 n.9). Thus, because the initial lodestar amount is presumptively reasonable, Blum, 465 U.S. at 897, particular justification is required where the Court finds “exceptional circumstance[s]” warranting adjustment of the lodestar either up or down, Quesada, 850 F.2d at 539.

1. Lodestar

a. Hours Reasonably Expended

Defendants have requested compensation for a total of 1,975.8 hours of attorney time. Defendants have broken this time down into three categories: 533.1 hours spent reviewing documents and making the “Linke Log,” 552 hours spent by senior attorneys on the case, and 890.7 hours spent by junior attorneys on the case. Defendants have submitted raw billing records involving entries for eight different attorneys with varied billing rates. (Defs.’ Mot., Newman Decl. (Dkt. No. 128) Ex. A.) The time billed starts in February 2006 and continues through May 2007. No paralegal or administrative time is billed; all time is attorney time. Monthly bills range from fewer than one hour (May 2006) to over 250 hours (January 2007). According to the billing records, the total hours actually logged as worked totals 1,444, prior to cuts and discounts.5 Remarkably, it appears that Defendants’ total request for
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compensation for 1,975.8 hours overstates the hours worked by 531.8 hours, which amounts to about
27% of the total hours requested. This troubling discrepancy is discussed in further detail below.
Combined with a similar inexplicable inflation of the requested costs, also discussed in further detail below, the Court begins by expressing serious doubts about the accuracy with which Defendants’ attorneys recorded and billed both costs and fees in this litigation. Given such large discrepancies in the materials submitted to this Court—over which Defendants’ counsel had complete control and responsibility—the Court begins the reasonableness analysis by finding that substantial cuts to the claimed hours are justified. While the Court has already found that attorneys’ fees and costs should be assessed against Plaintiffs in this matter, equally important is avoiding overcompensation. Congress surely could not have intended for CAN-SPAM defendants (or their attorneys) to collect a windfall via the attorneys’ fees provision. More importantly, while Defendants did give discounts and cut both time and dollar amounts from various bills, the Court finds that the 1,444 hours reflected in the billing records far exceeds the reasonable amount of time spent on this litigation, as follows.

[5 The Court notes that, of the chronological bills submitted as part of the Newman Declaration (Dkt. No. 128), several pages are duplicate submittals. Specifically, the bill dated September 30, 2006 (49.9 hours) was submitted twice (compare Ex. A at 31–34, with id. at 35–38), and the bill dated February 28, 2007 (91.05 hours) was submitted twice (compare Ex. A at 65–68, with id. at 69–72). The Court STRIKES the duplicates and has not considered them in the calculations herein.]

i. “Linke Log” Hours

The “Linke Log” request is for 533.1 hours. The Court finds that 533.1 hours of document review and data entry, essentially to the end of creating a lengthy spreadsheet, is excessive. From the billing records, it is apparent that the primary person working on the Linke Log was Derek Linke. Derek Linke billed a total of 590.5 hours in October 2006, November 2006, December 2006, January 2007, and February 2007. While a few of these hours were cut or spent on other matters, it appears from his daily time entries that the vast majority of his time was spent on the Linke Log and therefore that the 533.1 Linke Log hours may be attributed to him. Though the billing records contain references to “contract attorneys” and indicate that a $40,000 flat fee was billed to the client for “seven lawyers” who “reviewed and created a log” (Defs.’ Mot., Newman Decl. Ex. A at 50, 56), Defendants have not submitted any
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billing records that actually reflect the purported hours worked by these contract attorneys. Nor have Defendants identified these attorneys or substantiated the 533.1 hours claimed for this project as exclusive of Derek Linke’s time. If the 533.1 hours requested for document review and creation of the Linke Log does not account for almost all of Derek Linke’s time, the Court is hard pressed to figure out what does, given that most of his time entries reference that project. Conversely, if Derek Linke did not expend almost all of his recorded time on the Linke Log, it is unclear how Defendants arrived at their 533.1 figure, as there is no documentation anywhere in the billing records reflecting an additional 533.1 hours contracted out to any “team of newly admitted lawyers.” (Defs.’ Mot. 3.) Furthermore, the prospect that almost all of Derek Linke’s time plus 533.1 hours spent by unidentified attorneys—totaling well over 1,000 hours—was spent on the Linke Log is absurd. Accordingly, the Court finds that Derek Linke’s time records are the only viable source for the 533.1 hours claimed for the Linke Log.

Having seen the results of this project, the Court finds that spending the equivalent of over thirteen 40-hour weeks on this process is far more than was reasonable. Having carefully considered the Kerr factors, particularly factor 1 (time and labor required), the Court will allow a total of 40 hours in this category as a reasonable number of hours expended on document review and creation of the Linke Log.

ii. Senior Attorney Hours

Defendants request 552 hours for senior attorney compensation. Defendants request that the time spent by Derek Newman and Roger Townsend be considered “senior attorney” time. The billing records reflect that Derek Newman spent 258.9 hours and Roger Townsend spent 294.4 hours, which totals 553.3 hours. The Court presumes that the 552 hours requested approximates this total. The Court finds that, considering the Kerr factors, particularly factors 1 (time and labor required), 2 (novelty and difficulty of the questions involved), 3 (skill requisite to perform the service), 8 (the amount involved and the results obtained), and 9 (experience, reputation, and ability of the attorneys), this request is quite high. 552 hours represents approximately 20% of the time spent by a single lawyer billing around 2050
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hours per year in the time period for which billing records were submitted (16 months). Split roughly between two lawyers, it would amount to about 10% of one caseload. It is true that this case presented relatively novel legal issues, which required the Court to consider issues of first impression. However, as a consequence, while these issues required creativity to address, the body of legal authority with which the attorneys had to be familiar was relatively limited. The amount of discovery and the motions practice were moderate, and at least some discovery motions practice was unnecessary. It is well documented that the statutory damages demanded in this action were significant and the stakes were potentially high for Defendants. Given the disposition of the case, the results obtained by Defendants’ counsel were excellent. Nevertheless, the Court finds that on the whole, this case was not all that complex and should not have required 552 senior attorney hours.

While Defendants have submitted declarations in support of the rate requested to compensate senior attorney time, little support is offered to justify the total hours spent. Moreover, the inaccurate documentation presented with the instant motion reinforces the Court’s separate conclusion that the hours requested exceed the reasonable time spent on this case. Given that in making the instant motion Defendants have inexplicably inflated the total hours for which they request compensation by almost 27% beyond what was even recorded in their own billing records, the Court finds it entirely appropriate to cut their requested senior attorney hours by at least that much to account for other inflation that likely occurred in daily billing and overcharges to their clients, which may or may not have been partially balanced out by bill cuts and discounts.

Accordingly, considering the circumstances of this case and the record before the Court in light of
the Kerr analytical structure, the Court finds that 225 hours of senior attorney time was reasonably expended on this matter. This number of hours is in sync with the moderate complexity and novelty of the case, the level of skill of the lawyers involved, and the relatively constrained universe of factual data and legal authority in play. While not overcompensating, this number of hours also acknowledges that the case required substantial effort and thought.

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iii. Junior Attorney Hours

Defendants have requested compensation for a total of 890.7 hours of time spent by junior attorneys on this matter. In reviewing the billing records, however, it appears that this amount accounts for all 590.5 hours logged by Derek Linke, as well as the hours of five additional junior attorneys. After subtracting from the 1,444 total hours reflected in the billing records both the 553.3 senior attorney hours logged and the 590.5 hours logged by Derek Linke, the leftover number of junior attorney hours logged in the billing records is 300.2. These 300.2 hours may be broken down between five attorneys: Tara Borelli (12.5), John Du Wors (62.8), Randall Moeller (50.8), S. Christopher Winter (169.1), and Michael Spain (5).

The 590.5 hours billed by Derek Linke present a problem as they are included in the 890.7 junior
attorney hours request. Because no other obvious source of the “Linke Log” hours exists in the billing records, the Court already considered almost all of these hours supra subsection II.C.1.a.i. Thus, in comparing the billing records to the instant motion, and in light of the lack of any documentation whatsoever showing that attorneys other than Derek Linke contributed 533.1 Linke Log hours, it appears to the Court that Defendants have deliberately doubled the requested compensation for the lion’s share of Derek Linke’s time. Moreover, as the Court has already noted, the discrepancy between the 1,444 recorded hours and the 1,975.8 hours claimed in the instant motion is 531.8. This number coincides almost exactly with the 533.1 hours requested for the “Linke Log.” Therefore, the Court has little choice but to conclude that 533.1 (or possibly 531.8) of the 590.5 hours worked by Derek Linke have been requested both as “Linke Log” hours and as “junior associate” hours.

Accordingly, the Court must begin by subtracting those 533.1 hours from the requested 890.7 junior attorney hours. This leaves 357.6 hours billed by junior associates that have not been accounted for elsewhere. In addition to the five junior attorneys’ hours listed supra, the additional 57.4 hours reflected in this new total correspond to the only non-Linke Log hours worked by Derek Linke.

Beginning with 357.6 hours of junior attorney time, and considering the Kerr factors, particularly
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factors 1 (time and labor required), 2 (novelty and difficulty of the questions involved), 3 (skill requisite to perform the service), 8 (the amount involved and the results obtained), and 9 (experience, reputation, and ability of the attorneys), the Court finds that this request is unreasonably high. For the same reasons the Court cut the senior attorney hours, the Court finds it appropriate to cut junior attorney time. Accordingly, the Court finds that a reasonable number of junior attorney hours spent on this litigation is 150.

b. Reasonable Hourly Rates

In determining a reasonable rate, the Court “should be guided by the rate prevailing in the community for similar work performed by attorneys of comparable skill, experience, and reputation.” Chalmers, 796 F.2d at 1210–11 (citing Blum, 465 U.S. at 895 n.11). The rate actually billed does not necessarily govern, particularly in cases litigated by public interest lawyers or where hourly rates in accordance with the market have not been established by the attorneys. Blum, 465 U.S. at 895.

However, such circumstances are not present in the instant case. On the contrary, Defendants’ attorneys have very established billing rates and different rates for almost all of the eight lawyers who worked on this case. Defendants’ attorneys are not operating out of a fledgling, nonprofit, or hybrid law firm and they have not represented that they charged other than their normal billing rates to Defendants in this litigation, hours cuts and discounts notwithstanding. Defendants’ attorneys’ actual rates are presumptively reasonable market rates, because nothing here indicates that the actual legal market would sustain higher rates by this firm, even if other firms may charge more for the same or similar work.

Accordingly, Defendants’ regular billing rates, as billed in the instant case, will be presumed to be in line with the going market rates in Seattle for this type of legal work performed by attorneys with the range of experience levels employed here. Defendants have requested compensation at various rates, depending on the attorneys who expended the hours. As with the hours requested, Defendants have requested that the Court order attorneys’ fees at three different rates.

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i. “Linke Log” Rate

For the document review and “Linke Log,” Defendants request compensation at a rate of $125 per hour. However, it is clear from the billing records that Derek Linke’s time was billed out at $115 per hour. He is the only attorney at or below the $125 rate, and the Court presumes that the entire “Linke Log” sum is to be attributed to him. Defendants have not justified the bump in Derek Linke’s rate by anything more than a conclusory statement that a “reasonable hourly rate for the document analysis attorneys is $125 per hour.” (Defs.’ Mot. 3.) The Court finds that $115 is a reasonable rate, particularly because Defendants were able to and did bill that rate to regular clients. Accordingly, the lodestar for the Linke Log attorneys’ fees is 40 hours multiplied by $115 per hour, which totals $4,600.00 in reasonable attorneys’ fees for Linke Log time.

ii. Senior Attorney Rate

Defendants request that the hours spent by the two senior attorneys on this matter—Derek Newman and Roger Townsend—be compensated at a rate of $350 per hour. In support of this request, Defendants have submitted an assortment of attorney declarations (Dkt. Nos. 129, 130, 131, 132, and 133) stating that $350 for senior attorneys is reasonable in the market for the skill and experience level of senior attorneys at this law firm. However, Derek Newman’s actual billing rate is $300 per hour (with the exception of the last 5.5 hours billed in May 2007 at a rate of $325) and Roger Townsend’s actual billing rate is $250 (with the exception of the last 8.6 hours billed in May 2007 at a rate of $275). The Court finds that $300 is a reasonable rate for Derek Newman and that $250 is a reasonable rate for Roger Townsend, because those are the rates that these attorneys were actually able to draw in this market for all but a handful of the hours spent on this litigation.

Because the Court cut the total hours spent by these attorneys down to a reasonable number, the Court will prorate the lodestars for each. The billing records reflect that Derek Newman logged 258.9 hours and Roger Townsend logged 294.4 hours. This is approximately a 47%–53% split. The Court cut the senior attorney total to 225 hours as a reflection of the reasonable number of hours spent by these
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attorneys. Of that compensable total, 106 hours (47%) will be attributed to Derek Newman and compensated at a rate of $300 per hour, and 119 hours (53%) will be attributed to Roger Townsend and compensated at a rate of $250 per hour. Multiplying 106 hours by $300 per hour ($31,800.00), multiplying 119 hours by $250 per hour ($29,750.00), and adding the two together nets a lodestar for senior attorneys’ fees of $61,550.00.

iii. Junior Attorney Rate

Defendants request that the hours spent by the various junior attorneys on this matter be compensated at an across-the-board rate of $200 per hour. In support of this request, Defendants have submitted an assortment of attorney declarations (Dkt. Nos. 129, 130, 131, 132, and 133) stating that $200 for junior attorneys is reasonable in the market for the skill and experience level of such attorneys at this law firm. However, the actual billing rates for the junior attorneys vary both above and below this amount. Tara Borelli’s and John Du Wors’s time was billed out at $195 per hour, Randall Moeller’s time was billed out at $225 per hour (with the exception of the last .2 hours billed in May 2007 at $235 per hour), S. Christopher Winter’s time was also billed out at $225 per hour, Michael Spain’s time was billed out at $175 per hour, and as noted supra, Derek Linke’s time was billed out at $115 per hour. Given that these were the rates actually billed and supported by the market, the Court finds that the 150 hours that the Court found to be reasonably spent on this litigation by junior attorneys should be compensated at a combination of these rates, and in proportion to the time logged by the various junior attorneys.

As noted supra, the hours logged by junior attorneys broke down in the billing records as follows: Tara Borelli (12.5), John Du Wors (62.8), Randall Moeller (50.8), S. Christopher Winter (169.1), Michael Spain (5), and Derek Linke (57.4 hours beyond the Linke Log hours already compensated supra subsection II.C.1.b.i). The proportions, grouped by rate, are roughly as follows: Tara Borelli and John Du Wors (21%), Randall Moeller and S. Christopher Winter (62%), Michael Spain (1%), and Derek Linke (16%). Therefore, of the 150 hours approved as reasonably spent by these junior attorneys, 31.5 hours (21%) will be attributed to Tara Borelli and John Du Wors and compensated at a rate of $195 per
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hour, 93 hours (62%) will be attributed to Randall Moeller and S. Christopher Winter and compensated at a rate of $225 per hour,6 1.5 hours (1%) will be attributed to Michael Spain and compensated at a rate of $175 per hour, and 24 hours (16%) will be attributed to Derek Linke and compensated at a rate of $115 per hour. Multiplying 31.5 hours by $195 per hour ($6,142.50), multiplying 93 hours by $225 per hour ($20,925.00), multiplying 1.5 hours by $175 per hour ($262.50), multiplying 24 hours by $115 per hour ($2,760.00), and adding the four together nets a lodestar for junior attorneys’ fees of $30,090.00.

[6 The twelve minutes billed out at $235 per hour by Randall Moeller are not sufficient to change the $225 rate.]

* * *

Having calculated three separate lodestar amounts for the three separate categories of fees, the Court finds that the total of the lodestar amounts for Linke Log fees ($4,600.00), senior attorneys’ fees ($61,550.00), and junior attorneys’ fees ($30,090.00) amounts to a total lodestar hourly attorneys’ fees award in this matter of $96,240.00.

2. Multiplier

Defendants request that the Court apply a 20% multiplier to increase the lodestar. In support of
this request, Defendants cite their status as prevailing parties, the novelty and difficulty of the questions involved and the technical knowledge required to provide legal representation, and the circumstances of the litigation wherein Plaintiffs sought huge statutory damages. (Defs.’ Mot. 10–11.)

As noted supra, the initial lodestar amount determined by the Court is presumptively reasonable. Blum, 465 U.S. at 897. Moreover, while some of the Kerr factors may justify an upward or downward adjustment, the Supreme Court has held that the novelty and complexity of the issues (factor 2), the special skill and experience required (factors 1, 3, and 9), the quality of representation (factors 3 and 9), and the results obtained (factor 8) may not serve as independent bases for adjusting the lodestar. Blum, 465 U.S. at 898–901; see also Jordan v. Multnomah County, 815 F.2d 1258, 1262 n.6 (9th Cir. 1987). It is the fee-seeker who must carry the burden of justifying an upward departure from the lodestar. Blum,
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465 U.S. at 898. Where no upward adjustment is necessary to provide fair and reasonable compensation, none shall be given. Id. at 901.

Defendants have completely failed to carry their burden regarding application of a multiplier. Instead, the reasons they cite have been specifically held to be impermissible bases for increasing the lodestar. Accordingly, the Court will not adjust upward the lodestar amount of $96,240.00.

D. Costs

Defendants request a variety of costs, including deposition costs ($10,383.70), the deposition attendance fee for Plaintiffs’ expert witness ($1,350.00), a pro hac vice fee ($75.00), mediator fees ($2,759.37), telecommunications fees ($207.29), travel expenses for depositions ($2,343.32), photocopying expenses ($10,224.94), electronic legal research expenses ($1,010.20), and mailing and messenger expenses ($485.54).7 Defendants also seek reimbursement of their own expert fees ($5,875.00). Gordon has only generally objected to an award of attorneys’ fees and costs, but he has not objected to any particular costs requested by Defendants.

[7 The subtotal (without the additional $5,875.00 requested for Defendants’ expert fee) of these requests is $28,839.36. It is unclear how Defendants arrived at the total of $26,338.01 requested in their motion. (Defs.’ Mot. 7.) Moreover, as discussed infra, the individual expense requests that total $28,839.36 here also are inexplicably inflated when compared with the actual billing records submitted to the Court.]

Various sources exist for this Court’s authority to assess costs against Plaintiffs in this matter.
Federal Rule of Civil Procedure 54(d)(1) provides that “costs other than attorneys’ fees shall be allowed as of course to the prevailing party unless the court otherwise directs.” This rule creates a presumption in favor of awarding certain costs to the prevailing party, which can only be overcome when the Court exercises its discretion to disallow costs for specific reasons, which may include punishing misconduct by the prevailing party or nonpunitive but compelling equitable justifications. Ass’n of Mexican-Am. Educators v. Cal., 231 F.3d 572, 591–93 (9th Cir. 2000). Moreover, the Court’s Local Rules circumscribe standard allowable costs. Local Rules W.D. Wash. CR 54(d). In addition to the costs listed
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in Local Rule 54(d), the provisions of 28 U.S.C. §§ 1920 and 1923 are relevant to standard costs. Id. CR 54(d)(3)(D). In a civil case, taxation of fees and costs is provided for by federal statute, as follows:

A judge or clerk of any court of the United States may tax as costs the following:
(1) Fees of the clerk and marshal;
(2) Fees of the court reporter for all or any part of the stenographic transcript necessarily obtained for use in the case;
(3) Fees and disbursements for printing and witnesses;
(4) Fees for exemplification and copies of papers necessarily obtained for use in the case;
(5) Docket fees under section 1923 of this title;
(6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.

A bill of costs