Caplin & Drysdale Chartered v. Babcock & Wilcox Co.

526 F.3d 824, 59 Collier Bankr. Cas. 2d 963, 2008 U.S. App. LEXIS 9402, 49 Bankr. Ct. Dec. (CRR) 256, 2008 WL 1902216
CourtCourt of Appeals for the Fifth Circuit
DecidedMay 1, 2008
Docket07-30377
StatusPublished
Cited by39 cases

This text of 526 F.3d 824 (Caplin & Drysdale Chartered v. Babcock & Wilcox Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Caplin & Drysdale Chartered v. Babcock & Wilcox Co., 526 F.3d 824, 59 Collier Bankr. Cas. 2d 963, 2008 U.S. App. LEXIS 9402, 49 Bankr. Ct. Dec. (CRR) 256, 2008 WL 1902216 (5th Cir. 2008).

Opinion

PER CURIAM:

This appeal stems from a Chapter 11 bankruptcy filed in the Eastern District of Louisiana. The sole issue on appeal is whether the bankruptcy judge abused its discretion in awarding attorney’s fees at half the hourly rate for time spent traveling but not working. Finding no abuse of discretion, we AFFIRM.

I. BACKGROUND

During the Chapter 11 bankruptcy proceeding involving The Babcock & Wilcox Company, the bankruptcy court approved the appointment of the law firm of Caplin & Drysdale as national counsel for the Asbestos Claimants’ Committee pursuant to 11 U.S.C. § 1103(a). Ultimately, Caplin & Drysdale filed a fee application seeking $5,642,218.75 in attorney’s fees and $745,303.35 in expenses. The United States Trustee objected to paying the full hourly rate for travel time not spent working. The bankruptcy court held a hearing in which Elihu Inselbuch (Inselbuch), a partner of Caplin & Drysdale, testified. Inselbuch testified that it was the practice of Caplin & Drysdale to bill travel time “the way we bill for any other time.” He also testified that, from 1969 to 1986, he was a partner at the firm Gilbert, Siegel & Young, which had the same practice as Caplin & Drysdale of billing the full rate for travel time. Inselbuch’s “general understanding based upon conversations” he had with other lawyers in New York was that “law firms create their billing rates on the assumption that they will bill clients for travel time at full rates and be paid for them.” He stated that if this was not the practice, firms would have to change their billing rates, resulting in discrimination between the clients who require travel time and those who do not.

At the conclusion of the hearing, the bankruptcy judge denied “those portions of the fee application that seek payment at the full hourly rate for travel time.” The court awarded attorney’s fees at 50% of the full hourly rate for travel time not spent working. The disallowed portion of travel time compensation at issue is $135,685.80. Caplin & Drysdale filed a motion to reconsider, which the bankruptcy court denied. Caplin & Drysdale then filed an appeal of those orders to the district court. The district court affirmed the bankruptcy court’s orders, finding that Caplin & Drysdale had failed to carry its burden of demonstrating that the customary compensation for nonproductive travel time in the New York and Washington, D.C. markets was for the full hourly rate. In re Babcock & Wilcox Co., Slip Copy, 2007 WL 854304 (E.D.La. March 15, 2007). This appeal followed.

II. STANDARD OF REVIEW

“We review the district court’s decision by applying the same standard of review to the bankruptcy court’s conclusions of law and findings of fact that the district court applied.” In re Cahill, 428 F.3d 536, 539 (5th Cir.2005). Accordingly, this Court reviews the bankruptcy court’s award of attorney’s fees for abuse of discretion. A bankruptcy court abuses its discretion when it “(1) applies an improper legal standard or follows improper procedures in calculating the fee award or (2) rests its decision on findings of fact that are clearly erroneous.” Id. (citing In re Evangeline Refining Co., 890 F.2d 1312, 1325 (5th Cir.1989)). This Court reviews the bankruptcy court’s findings of fact for clear error and its legal conclusions de novo. Id.

*827 III. ATTORNEY’S FEES

The bankruptcy court awarded attorney’s fees pursuant to 11 U.S.C. § 330. The statute provides that the court may award “reasonable compensation for actual, necessary services, rendered by the ... attorney.” § 330(a)(1)(A). The statute also provides as follows:

In determining the amount of reasonable compensation to be awarded, the court shall consider the nature, the extent, and the value of such services, taking into account all relevant factors, including—
(A) the time spent on such services;
(B) the rates charged for such services;
(C) whether the services were necessary to the administration of, or beneficial at the time at which the service was rendered toward completion of, a case under this title;
(D) whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problem, issue, or task addressed; and
(E) whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title.

§ 330(a)(3).

Prior to being amended in 1978, this statute “favored economy of the estate over competitive compensation” to attorneys for the debtors. In re Busy Beaver Bldg. Ctrs., Inc., 19 F.3d 833, 850 (3rd Cir.1994). “Congress determined, it appears, that on average the gain to the estate of employing able, experienced, expert counsel would outweigh the expense to the estate of doing so, and that unless the estate paid competitive sums it could not retain such counsel on a regular basis.” Id.; accord In re Hillsborough Holdings, 127 F.3d 1398, 1403 (11th Cir.1997) (citing 124 Cong. Rec. 33,994 (daily ed. Oct. 6, 1978) (statement of Sen. DeConcini), reprinted in 1978 U.S.C.C.A.N. 6505, 6511).

In the case at bar, Caplin & Drys-dale argues that the bankruptcy court erred in awarding only half of the hourly rate because the evidence was undisputed that its usual custom and practice was to bill clients full hourly rates for its nonworking travel time. “The burden of proving the reasonableness of compensation and reimbursement pursuant to 11 U.S.C. § 330 is on the fee applicant.” In re WNS, Inc., 150 B.R. 663, 664 (Bankr. S.D.Tex.1993).

Here, the district court found that during the hearing Caplin & Drysdale “did not even identify any other comparable firms, much less produce evidence of what they billed for nonproductive travel time.” We agree that Caplin & Drysdale did not make a sufficient showing with respect to how other comparable firms billed nonworking travel time. Although Inselbuch did testify that his previous law firm, Gilbert, Siegel & Young, had the same practice as Caplin & Drysdale of billing the full rate for travel time, he left that firm in 1986 and provided no evidence with respect to that particular firm’s current practice.

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526 F.3d 824, 59 Collier Bankr. Cas. 2d 963, 2008 U.S. App. LEXIS 9402, 49 Bankr. Ct. Dec. (CRR) 256, 2008 WL 1902216, Counsel Stack Legal Research, https://law.counselstack.com/opinion/caplin-drysdale-chartered-v-babcock-wilcox-co-ca5-2008.