j

. COUNSELORS AT LAW

BLANK_~_'.~~ROMEP
Pl~o~te: Fnx: Entail: (609) 750-2646 (609) 897-7286 orlofsky@bla~ikrome.conz

November 5, 2013 VIA E-MAIL AND FEDERAL EXPRESS Michael B. Himmel,Esq. Michael T.G. Long, Esq. Lowenstein Sandler LLP 65 Livingston Avenue Roseland, NJ 07068 Alan M. Lebensfeld, Esq. David M. Arroyo, Esq. Lebensfeld Sharon &Schwartz P.C. 140 Broad Street Red Bank, NJ 07701 Price O. Gielen, Esq. Cynthia A. Leppert, Esq. Neuberger, Quinn, Gielen, Rubin &Gibber,P.A. One South Street, 27th Floor Baltimore, MD 21202 Sheppard A. Guryan, Esq. Bruce H. Snyder, Esq. Lasser Hochman,LLC 75 Eisenhower Parkway Roseland, NJ 07068

Re:

Jarwick Developments,Inc., et al. v. Joseph Wilf, et ai., Superior Court of New Jersey, Chancery Division, Morris County, Docket No. MRS-C-184-92

Dear Counsel: Pursuant to paragraph 5 ofthe Order of Reference to Special Master, dated September 4, 2013, attached is a copy ofthe Report and Recommendation of Special Master, Stephen M. Orlofsky, Regarding the Award of Attorneys' Fees and Costs of Investigation and Litigation Pursuant to N.J.S.A.2C:41-4c. The original ofthis Report and Recommendation has been filed with the Clerk in a separate letter, with copies to you and Judge Wilson. Sincerely yours,
~ ~, ,~ ~ ~ "": ~ ~~

STL~PHEN M. ORLOF

SMO/ds Enclosure Hon. Deanne M. Wilson, J.S.C.(w/enc.)(via e-mail only and Federal Express) cc: John F. Calkin, Esq.(w/enc.)(via e-mail and Federal Express)
301 Carnegie Center 3rd Floor Princeton, NJ 08540 A Pennsylvania LLP Stephen M. Orlofsky, NewlerseyAdministrative Partner www.BlankRome.com Hong Kong 141737R00601/50~36195v.1 Houston Los Angeles New York Philadelphia Princeton Shanghai Washington ~ Wilmington

BLANK
Phone: Tax: Entnil: (609) 750-2646 (609) 897-7286 or[ofsky@blankronte.com

~~.~` ROMEP
COUNSELORS AT LAW

November 5, 2013 VIA FEDERAL EXPRESS Clerk ofthe Court Superior Court of New Jersey Morris County Courthouse Washington and Court Streets Morristown, NJ 07963-0910 Re: Jarwick Developments,Inc., et al. v. Joseph Wilf, et al., Superior Court of New Jersey, Chancery Division, Morris County, Docket No. MRS-C-184-92

Dear Clerk: Pursuant to paragraph 5 ofthe Order of Reference to Special Master, dated September 4, 2013, enclosed for filing in the above matter are an original and two copies ofthe Report and Recommendation of Special Master, Stephen M. Orlofsky, Regarding the Award of Attorneys' Fees and Costs of Investigation and Litigation Pursuant to N.J.S.A.2C:41-4c. Please file the enclosed original Report and Recommendation ofthe Special Master and return adate-stamped "Filed" copy to me in the stamped, self-addressed envelope enclosed for your convenience. By separate letter, all Counsel of Record have been served with a copy ofthis Report and Recommendation via electronic mail. I have also provided Judge Wilson and her law clerk, Mr. Callon, with courtesy copies. Should you have any questions, please do not hesitate to contact me. Thank you for your assistance and cooperation. F Si~~e ely yours, "
~,~ ~' r

ti

ST'~;PHEN M. ORLOF~Y SMO/ds Enclosure Hon. Deanne M. Wilson, J.S.C.(w/enc.)(via e-mail and Federal Express) cc: John F. Callon, Esq.(w/enc.)(via e-mail and Federal Express) All Counsel of Record (via e-mail and Federal Express)
301 Carnegie Center 3rd Floor Princeton, NJ 08540 A Pennrylvania LLP Stephen M. Orlofsky, NewlerseyAdministrative Partner www.BlankRome.com Boca Raton ~ Cincinnati Hong Kong Houston Los Angeles New York Philadelphia Princeton Shanghai Washington Wilmington

141737.00601/50536197v.1

JARWICK DEVELOPMENTS,INC., ADA REICHMANN and JOSEF HALPERN,and the JOSEF HALPERN IRREVOCABLE TRUST, Plaintiffs,

SUPERIOR COURT OF NEW JERSEY CHANCERY DIVISION: MORRIS COUNTY DOCKET NO. MRS-C-184-92

JOSEPH WILF and ESTATE OF HARRY WILF, deceased, individually and as partners in the partnership known as J.H.W. ASSOCIATES,LEONARD A. WILF, ZYGMUNT WILF, MARK WILF, SIDNEY WILF,RACHEL AFFORDABLE HOUSING,HALWILL ASSOCIATES,a partnership, PERNWIL ASSOCIATES,a partnership, MARVIN L. COHEN CPA and MIRONOV,SLOAN & PARZIALE,LLC f/k/a BECK WEISS &COMPANY,P.A., Defendants.

REPORT AND RECOMMENDATION OF SPECIAL MASTER,STEPHEN M. ORLOFSKY,ESQ.,REGARDING THE AWARD OF ATTORNEYS'FEES AND COSTS OF INVESTIGATION AND LITIGATION PURSUANT TO N.J.S.A. 2C:41-4c

141737.00601/22251319v.4

TABLE OF CONTENTS Page I INTRODUCTION ...............................................................................................................2 BACKGROtTND .............................................................:...................................................3 Uniform Partnership Act/Breach of Fiduciary Duty..................................................................9 Breach of Contract.....................................................................................................................9 Breach ofthe Covenant of Good Faith and Fair Dealing........................................................10 Fraud........................................................................................................................................10 Conversion.......................................................................................................................:.......11 NJRICO....................................................................................................................................11 Punitive Damages....................................................................................................................13 III. IV. OVERVIEW OF THE FEE APPLICATIONS..................................................................13 PLAINTIFFS SHOULD RECOVER THE ATTORNEYS'FEES AND COSTS INCURRED IN LITIGATING THEIR NON-RICO CLAIMS,THEIR "UNSUCCESSFUL"NJRICO CLAIMS, AND THEIR CLAIMS AGAINST THE ACCOUNTANT DEFENDANTS.....................................................................................17 A. B. Governing Legal Standards....................................................................................17 Plaintiffs Should Recover the Attorneys' Fees and Costs Incurred In Litigating Their Non-RICO Claims .......................................................................19 1. 2. 3. 4. 5. 6. 7. C.. D. All of Plaintiffs' Claims Were Based Upon the Same Facts .....................19 The Fact that NJRICO Was Not Alleged Until October of2009 Is Irrelevant ....................................................................................................25 The Forensic Accounting Investigation Was Related to Plaintiffs' NJRICO Claims .........................................................................................25 All ofthe Motions that the Wilf Defendants Challenge Were Related to Plaintiffs' NJRICO Claims ....................................................................26 All of Plaintiffs' Witnesses' Testimony Was Related to Plaintiffs' NJRICO Claims .........................................................................................28 The Time Plaintiffs' Counsel Spent Attempting to Settle or Mediate this Case Was Related to Plaintiffs' NJRICO Claims ...............................30 Plaintiffs' NJRICO and Punitive Damage Claims Are Related.................30
. .

II

Plaintiffs Should Recover the Attorneys' Fees and Costs Incurred In Litigating Their "Unsuccessful" NJRICO Claims.................................................31 Plaintiffs Should Recover the Attorneys' Fees and Costs Incurred In Litigating Against the Settling Accountant Defendants ........................................34
i

141737.00601/22251319v.4

V. VI. VII.

THE WILF DEFENDANTS'"ELECTION OF REMEDIES" ARGUMENT DOES NOT PREVENT AN AWARD OF ATTORNEYS'FEES AND COSTS........................37 THE"REASONABLENESS"STANDARD ....................................................................40 THE JARWICK FEE APPLICATION..............................................................................43 Rule 4:42-9(c)........................................................................................................43 A
.

B. C.

Request for Attorneys' Fees...................................................................................44 Review of Reasonableness Factors Pursuant to RPC 1.5(a)..................................46 1. Factor One: The time and labor required, the novelty and difficulty ofthe questions involved, and the skill requisite to perform the legal services properly ........................................................................................46 Factor Two: The likelihood, if apparent to the client, that the acceptance ofthe particular employment will preclude other employment by the lawyer.........................................................................48 Factor Three: The fee customarily charged in the locality for similar legal services ..............................................................................................50 Factor Four: The amount involved and the results obtained.....................53 Factor Five: The time limitations imposed by the client or the circumstances .............................................................................................53 Factor Six: The nature and length ofthe professional relationship with the client.............................................................................................55 Factor Seven: The experience, reputation, and ability of the lawyer or lawyers performing the services ............................................................56 Factor Eight: Whether the fee is fixed or contingent................................56

2.

3. 4. 5. 6. 7. 8. D
.

Reasonableness of Rates ........................................................................................57 Reasonableness of HoLus Expended ......................................................................63 1 Block Billing ..............................................................................................65 Internal Strategizing and Conferencing .....................................................66 Reviewing/Digesting Transcripts, Research, Etc.......................................68 Punitive Damages/Dissolution Wor1c.........................................................70 Vague Entries.............................................................................................71 Lowenstein Trial Attendance .....................................................................74 Neuberger Travel Time ..............................................................................78
. .

E.

2. 3. 4. 5

6. 7. F. G.

Recommended Revised Lodestar Calculation for Fees .........................................81 Requests for Costs/Disbursements.........................................................................83 1 Disbursements............................................................................................83 ii
.

141737.00601/22251319v.4

2 .

Costs...........................................................................................................86 i. ii. iii. Expert Accounting Costs ...............................................................~6 Magna Legal Services Costs ..........................................................90 Other Costs.....................................................................................91

VIII. THE HALPERN FEE APPLICATION .............................................................................94 Halpern's Request for Attorneys' Fees..................................................................94 A. B. Review of Reasonableness Factors Pursuant to RPC 1.5(a)..................................96 1. Factor One: The time and labor required, the novelty and difficulty ofthe questions involved, and the skill requisite to perform the legal services properly ........................................................................................96 Factor Two: The likelihood, if apparent to the client, that the acceptance ofthe particular employment will preclude other employment by the lawyer.......................................................................103 Factor Three: The fee customarily charged in the locality for similar legal services............................................................................................103 Factor Four: The Amount Involved and the Results Obtained ...............104 Factor Five: Time Limitations Imposed by Client or the Circumstances ..........................................................................................104 Factor Six: Nature and Length of Relationship with Client ...................105 Factor Seven: Experience ofthe Lawyers Performing Services..........,.106 Factor Eight: Whether Fee Is Fixed or Contingent.................................107

2.

3. 4. 5. 6. 7. 8. C. D.

Reasonableness of Rates ......................................................................................107 Reasonableness of Hours Expended ....................................................................108 1. 2. 3. 4. 5. Redacted Billing Entries ..........................................................................110 Block Billing ............................................................................................110 Punitive Damages/Dissolution Work.......................................................1 l 1 Internal Strategizing and Conferencing ...................................................112

E. F. G. IX. X.

Mr. Lebensfeld's Billing Entry for February 9,2013..............................113 Recommended Revised Lodestar Calculation for Fees .......................................113 Halpern Should Receive a 25%Contingency Fee Enhancement ofthe Lodestar Amount .................................................................................................115 Halpern's Requests for Cost and Expenses .........................................................118

REALLOCATION OF THE SPECIAL MASTER'S FEES AND EXPENSES.............123 EXECUTIVE SUMMARY .............................................................................................126 iii

141737.00601/22251319v.4

APPEARANCES: Price O, Gielen, Esq. Cynthia L. Leppert, Esq. Neuberger Quinn Gielen Rubin &Gibber,P.A. One South Street Baltimore, MD 21202 Attorneysfor Plaintiffs Jarwick Developments, Inc. and Ada Reichmann Alan M. Lebensfeld, Esq. David M. Arroyo, Esq. Lebensfeld, Sharon &Schwartz,P.C. 140 Broad Street Red Bank,NJ 07701 Attorneysfor Plaintiffs JosefHalpern and the JosefHalpern Irrevocable Trust

Michael B. Himmel,Esq. Michael T.G. Long, Esq. Lowenstein Sandler, LLP 65 Livingston Ave. Roseland, NJ 07068 Atto~~neysfoi~ Plaintiffs Jarwick Developments, Inc. and Ada Reichmann

Sheppard A. Guryan, Esq. Bruce H. Snyder, Esq. Lasser Hochman,LLC 75 Eisenhower Parkway Roseland, NJ 07068 Attorneysfor Defendants, Joseph Wilfand the Estate ofHarpy Wilf, deceased, individually and as partners in the partnership known as J.H. W. Associates, Leonard A. Wilf, Zygmunt Wilf, Mark Wilf, Sidney Wilf, Rachel Affordable Housing, Halwil Associates, a partneNship, and Pernwil Associates, a partnership; and the witness, FNances Cohen

ORLOFSKY,SPECIAL MASTER Pursuant to paragraph 5 of the Order of Reference to Special Master, dated September 4, 2013 (the "Order of Reference"), I issue this Report and Recommendation addressing the applications for attorneys' fees and costs, pursuant to N.J.S.A. 2C:41-4c, filed by: (i) Plaintiffs, Jarwick Developments, Inc. and Ada Reichmann; and (ii) Plaintiffs, Josef Halpern and the Josef Halpern Irrevocable Trust.

141737.00601/22251319v.4

I. INTRODUCTION This highly contentious matter was litigated ferociously by the parties for over 21 years. The case involved a very complicated accounting scheme designed to divert money away from the Plaintiffs and into the hands of the Wilf Defendants.1 Plaintiffs prevailed on their claims of fraud, conversion, breach of fiduciary duty, violation of the New Jersey Uniform Partnership Act ("NJUPA"), breach of contract, breach of the implied covenant of good faith and fair dealing, civil conspiracy, and violation of N.J.S.A. 2C:41-2c ("NJRICO"). On September 23, 2013, Judge Wilson entered an Order awarding Plaintiffs damages, as follows: Damages Type Non-RICO Pre-Judgment Interest Punitives NJRICO (before trebling) TOTAL
$

Jarwick Developments,Inc. and Ada Reichmann 12,624,516 18,804,806 20,370,868 5,911,647 51,800.190

Josef Halpern 6,559,213 9,773,326 16,396,895 5,335,787 32,729,434

$ $ $ $ $

Plaintiffs are seeking over $15 million in attorneys' fees and costs from the Wilf Defendants under N.J.S.A. 2C:41-4c. I was appointed as Special Master, pursuant to R. 4:41-1 et seq., by the Order of Reference, for the purpose of making a Report and Recommendation addressing the Plaintiffs' motions for an award of attorneys' fees, and costs of investigation and litigation incurred in the

The "Wilf Defendants" include all Defendants listed in the caption of this matter except for Marvin L. Cohen, CPA and the accounting firm of Mironov, Sloan & Parziale, LLCf/k/a Beck, Weiss &Company, P.A. (together referred to as the "Accountant Defendants"). The Accountant Defendants settled with Plaintiffs prior to the conclusion ofthe trial,
I 2

The totals do not include the NJRICO damages. While Judge Wilson ordered that these NJRICO damages be trebled pursuant to N.J.S.A. 2C-41-4c, she ruled that "[t]he amount of the RICO damages as trebled shall not be collectible or payable because they are exceeded by the Punitive Damages set forth in this Order."

141737.00601/22251319v.4

successful prosecution of their respective claims pursuant to NJRICO. (Order of Reference, 1). I was also tasked with making a recommendation as to the possible reallocation among the parties regarding payment of my fees and costs in making this Report, (Order of Reference, 2). Currently, that obligation is entirely that of Defendant Halwil. (Id.). Pursuant to the Order of Reference and R. 4:41-1 et seq., I have reviewed the transcripts of Judge Wilson's Opinion, the fee applications submitted by Plaintiffs, the opposition papers from the Wilf Defendants, Plaintiffs' reply briefs, and the Wilf Defendants' sur-reply brief. I also reviewed the other documents and lists of documents supplied to me by the parties. I have considered all of the legal arguments made by the parties, reviewed the facts, and analyzed the applicable law in malting the recommendations contained in this Report. On October 30, 2013, I heard oral argument from counsel for all parties, and have considered the arguments presented by counsel during oral argument. II. BACKGROUND At its core, this was a dispute between partners that arose out of the development and management of a 764-unit garden apartment complex in Montville, New Jersey, called Rachel Gardens. In 1985, brothers Abe Halpern and Josef Halpern each became 25%partners in Halwil Associates ("Halwil"); the other 50% was controlled by the Wilf Defendants.3 Halwil was formed in order to purchase property and obtain approvals for what eventually became Rachel Gardens. In June, 1988, another partnership called Pernwil Associates ("Pernwil") was formed in which Josef Halpern ("Halpern") had a 25%interest. The remaining 75%interest in Pernwil was

Initially, that 50% interest was held by J.H.W. Associates, a partnership between Harry Wilf and Joseph Wilf. A year or so later, that 50% interest was divided as follows: J.H.W. 25%,Leonard Wilf12.5%, and 12.5% shared equally by Zygmunt Wilf and Sidney Wilf.

.c3
141737.0060112225 1319v.4

in the hands of the Wilfs.4 Abe Halpern was not included in Pernwil. Halwil assigned its entire interest in Rachel Gardens to Pernwil for no consideration. Around that same time, Abe Halpern was experiencing financial difficulties and was receiving assistance from his sister, Ada Reichmann, and her husband Ralph. In return, Abe Halpern assigned his 25%interest in Halwil to Jarwick Developments, Inc.("Jarwick"), an entity formed by Ralph Reichmann for that purpose. Ada Reichmann is Jarwick's sole shareholder. At the time of the assignment to Jarwick, the Reichmanns were aware that Abe Halpern had been excluded from Pernwil. Shortly thereafter, on August 3, 1989, intermediaries for the Reichmanns met with Hany, Joseph, and Zygmunt Wil After the meeting, Harry Wilf wrote a letter to Ralph Reichmann recognizing Abe Halpern's interest in "the Halwil and Pernwil project" and welcoming Ralph Reichmann's involvement. The letter further set forth the terms of any future capital investments should the need arise, to which Ralph Reichmann expressed his agreement in a letter, dated August 4, 1989. Neither the Reichmanns, nor Jarwick, was ever asked to make any capital contributions to Halwil or Pernwil. Then, in early 1992, the Reichmanns learned that Zygmunt Wilf had determined they would no longer be involved in the Rachel Gardens project. On September 11, 1992, Jarwick and Ada Reichmann (collectively referred to as "Jarwick") filed a complaint against the Defendants seeking: (i) damages for diversion of a valuable business opportunity and fraud; (ii)judgment declaring that Jarwicic had a 25% interest in the partnerships known as Halwil, Pernwil and Rachel Affordable Housing; (iii) specific performance to treat Jarwick as a partner;(iv) an accounting;(v) damages for fraud and (vi) the

J.H.W. had a 50% interest, Leonard Wilf had a 12.5% interest, and Zygmunt, Mark and Sidney Wilf took equal shares of the remainder.

141737.00601/22251319v.4

appointment of a receiver to manage Pernwil's affairs. Jarwick was represented by Cole Schotz at this time. A trial was conducted in October 1999 as to liability. On January 11, 2000,the trial court found that the August 1989 correspondence between Harry Wilf and Ralph Reichmann gave rise to a new and separate partnership, and that Zygmunt Wilf had improperly excluded Jarwick from the Rachel Gardens project. The court further determined that a trial on damages was necessary. On June 14, 2002, the trial court ruled that the August 1989 agreement was breached on January 8, 1992, and determined that Jarwick's 25% interest in the Rachel Gardens project was terminated at that time. After the damages trial, on March 22, 2004, the court found that Jarwick's 25% interest on January 8, 1992 had a negative value. Accordingly, the court concluded that Jarwick was not entitled to any damages. On appeal, the Appellate Division issued a decision, dated December 15, 2006, finding that Abe Halpern was improperly excluded from the Pernwil partnership, and his interest in Rachel Gardens (which had been developed and was operational by that time) remained viable and continuing. Jarwick Devs., Inc. v. Wilf, 2006 N.J. Super. Unpub. LEXIS 2221 (App. Div. Dec. 15, 2006). Thus, it held that the valuation of his interest at a fixed moment in time was inadequate as an appropriate remedy. The count also concluded that Abe Halpern's assignment of his partnership interest to Jarwicic was valid, and remanded the matter for an accounting of Jarwick's 25%interest in Rachel Gardens. In October 2007, Jarwick retained Neuberger, Quinn, Gielen, Rubin &Gibber,P.A. as its counsel, replacing Cole Schotz. (Certification of Price O. Gielen, Esq., dated August 22, 2013 (("Gielen Cert."), 15 & 86). Shortly thereafter, the Lowenstein Sandler firm was retained as local counsel because no Neuberger attorneys are admitted to the bar of New Jersey. 5
141737.00601/2225 1319v.4

(Declaration of Michael B. Himmel, dated August 21, 2013 ("Himmel Decl."), 7). Price Gielen, Esq., and other Neuberger firm attorneys were then admitted pro hac vice. (Id.). In April 2008, Jeffrey D. Barsky, CPA, a forensic accountant, was retained on behalf of Jarwick. (Certification of Jeffrey D. Barsky, dated August 19, 2013 ("Barsky Cert."), at 5). Barsky replaced William Morrison, CPA, who had issued reports concerning the operations of Rachel Gardens, and the financial affairs of Halwil through 1999. (Gielen Cert., 18). Through July 2009, counsel for Jarwick reviewed the discovery obtained prior to their retention, tools the depositions of 19 witnesses, defended the depositions of the Reichmanns, pursued the production of documents, assisted Barsky with his initial accounting report, and prepared for the trial scheduled for October 2009. (Gielen Cert., 25-29). In July 2009, the Wilf Defendants moved to join Halpern as a Defendant, which Jarwick opposed. Shortly thereafter, Halpern retained the firm of Lebensfeld Borker Sussman &Sharon LLPS (the "Lebensfeld Firm"), and became a party to the case as a co-plaintiff instead. The Josef Halpern Irrevocable Trust, which received an assignment of Halpern's interests in the partnerships, was also named as a co-plaintiff. On October 1, 2009, Jarwick filed an amended complaint and Halpern filed his initial 6 complaint containing claims for breach of fiduciary duty, conversion, fraud and NJRIC0. Additionally, Marvin Cohen, CPA and his accounting firm were added as Defendants.

5 Now Lebensfeld, Sharon &Schwartz, P.C. 6 Specifically, Jarwick's Amended Complaint alleged: (1) Breach of Fiduciary Duty against the V~ilf Defendants and the Accountant Defendants; (2) Breach of Cont~act against the Wilf Defendants; (3) Breach of the Implied Covenant of Good Faith and Fair Dealing against the Wilf Defendants:(4) Unjust Enrichment against the Wilf Defendants; (5) Common Law and Equitable Fraud against the Wilf Defendants and the Accountant Defendants;(6) Conversion against the Wilf Defendants;(7)Professional Malpractice against the Accountant Defendants;(8)Civil Conspiracy against the Wilf Defendants and the Accountant Defendants;(9) Violations of the Uniform Partnership Law against the Wilf Defendants;(10) Violation of NJRICO, N.J.S.A. 2C41-2C, against the Wilf Defendants; (11) Violation of NJRICO, 6
141737.00601/22251319v.4

Subsequently, there were over 40 more days of depositions and extensive paper discovery was exchanged. (Gielen Cert., 34-40, and Ex. 5). In addition, there were at least 30 separate motions/applications filed between October 2009 and commencement of the trial in May 2011. (Lebensfeld e-mail submission of September 18, 2013, entitled "List of Motions/Applications Filed"). Many of these motions were related to discovery disputes. (Id.). There were also quite voluminous motions to dismiss and for summary judgment, among others. (Id.). In the meantime, Plaintiffs' forensic accountant, Jeffrey Barsky, reviewed and analyzed financial statements, general ledgers, and tax returns starting from 1989. (Barsky Cert., 6-8). Mr. Barsky also created a computer database with all this information, and organized the paper documents into 20 large notebooks, which were used to create his expert reports and certifications. (Barsky Cert., 9-40). Trial commenced on May 9, 2011, and did not conclude until March 6, 2013 207 trial days later. (Gielen Cert., 62). There were 40 witnesses who testified at trial, and 1,485

exhibits admitted into evidence. (Certification of Alan M. Lebensfeld, Esq,, dated August 19, 2013 ("Lebensfeld Cert."), 46). Half of the testimony presented at trial was from the accounting experts. (Transcript of Judge Wilson's Decision ("Tr."), Aug. 5, 2013, p. 26). Moreover, the Wilf Defendants produced a cache of over 21,000 e-mails almost 9 months into the trial. (Lebensfeld Cert., 51). At the conclusion of this epic trial, there were over 25,000 pages of trial transcripts, and 18 days of closing arguments. (Tr., Aug. 5, 2013, p. 27). Finally,

N.J.S.A. 2A:41-2A, against the Wilf Defendants and the Accountant Defendants; (12) Violation of NJRICO, N.J.S.A. 2C:41-2B, against the Wilf Defendants and the Accountant Defendants;(13) Violation of NJRICO, N.J.S,A. 2C:41-2D, against the Wilf Defendants and the Accountant Defendants; (14) Toi~tious Interference with Contract against the Accountant Defendants; and (15) Tortious Interference with Prospective Economic Advantage against the Accountant Defendants. Halpern's Complaint contained all of the same causes of action except for the civil conspiracy claim. 7
141737.00601f22251319v.4

Judge Wilson rendered her oral bench opinion on the record over the course of 14 days, consisting of approximately 1,500 pages of transcript. Judge Wilson ruled that the Wilf Defendants violated the Uniform Partnership Act, breached their fiduciary duty to Plaintiffs, breached their contracts with Plaintiffs, breached their duty of good faith and fair dealing, committed fraud, were liable for conversion and civil conspiracy, and violated the New Jersey RICO Act. (Id. at 31-76). The improper conduct by the Wilf Defendants underlying Judge Wilson's findings in favor of the Plaintiffs included, inter alia, unjustifiable overcharges to the partnership for insurance, cable services, repairs and maintenance, management fees, and computer services; charges for rent on property not owned by Halwil or Pernwil; "distributions" to Wilf employees who had no connection to Rachel Gardens; advertising kickbacks; and retention of rebates from Home Depot and General Electric from large purchases of appliances. (Id. at 88-103). Judge Wilson opined regarding these improper charges, that it was Zygi Wilf's "obvious opinion that he is entitled to charge whatever he wants to charge." (Tr., Aug. 23, 2013, p. 87). Judge Wilson's findings regarding each of the Plaintiff's claims are summarized, as follows:

Judge Wilson rejected all of the Wilf Defendants' affirmative defenses. The claim that the Wilf Defendants should be paid because they performed valuable services for the partnership, characterized as "theoretical" and "hypothetical" fees, was denied because the Wilf Defendants failed to quantify any such fees, there was no agreement regarding management fees, nor were they ever discussed. Moreover, Josef Halpern ran the day-to-day operation of Rachel Gardens, not the Wilfs. (Tr., Aug. 5, 2013, pp. 88-90). The claim for interest on related-party ~ loans was denied because there was no agreement, no loan document, and "interest was taken on related-party loans that weren't really related-party loans." (Id. at 92-93).

141737.00601/22251319v.4

Uniform Partnership ActBreach of Fiduciary Duty. Judge Wilson opined that "the number of breaches of fiduciary duty in this case are really quite unprecedented ...." (Tr., Aug. 6, 2013, p. 8). The Wilf Defendants were in control of the partnership funds, and they had a fiduciary "duty to use the assets of Rachel Gardens solely for the benefit of the partnership and its partners ...." (Id. at 10). However, the Wilfs "took funds from Rachel Gardens without authorization, without rationale, at least without an accounting rationale or a financial rationale, or disclosure." (Id.). Regarding the violations of the Uniform Partnership Act, which requires that partners receive certain information about the business and affairs of the partnership, Judge Wilson found that financial statements were never provided to Jarwick, and Halpern stopped receiving them in 1989. (Tr., Aug. 5, 2013, p. 35). Moreover, Judge Wilson opined that she had "not seen one single financial statement that reflected the true and accurate position of the partnership ....and that is a serious breach of fiduciary duty." (Id. at 34-35). Breach of Contract.$ There were several valid and enforceable contracts between Plaintiffs and the Wilf Defendants, and "the Wilfs breached all of those agreements."9 (Tr., Aug. 5, 2013, pp. 39-40). Judge Wilson found that: At no time did Jarwicic receive anything with respect to its 25% share, and I could not find a year after 1990 in which, I believe
g Judge Wilson ruled that Plaintiffs' unjust enrichment claim did not apply because the parties entered into binding contracts, (Tr., Aug. 5, 2013, at 46:11-20).
9

First, there was a valid handshake agreement" in 1984 "where each Halpern was to receive 25 percent of the profits from the [Halwil] partnership." (Tr., Aug. 5, 2013, p. 39). Two years later, that agreement was committed to writing. (Id., p. 40). Three years after that, the Pernwil partnership agreement came into effect, which did not include Abe Halpern, Halwil then transferred its assets to Pernwil. (Id.). Jarwick later entered into a letter agreement with the Wilfs, which in effect reinstated Abe Halpern's 25 percent interest in Rachel Gardens. (Id.).

141737.00601/22251319v.4

1990 was the last year or it could have been 1989 in which Joe Halpern received his 25% share. The clear terms of those valid contracts were broken. They were not honored. (Id. at 40-41). Not only did the Wilf Defendants not distribute partnership earnings to the Plaintiffs, they engaged in numerous accounting schemes to hide those monies by "reclassifying" and "obfuscat[ing] the nature of what they were" to make it appear the partnership "simply had more expenses in the way of construction fees, interest on loans, repayment of loans, etc." (Tr., Aug. 6, 2013, pp. 22-23). Essentially, "Zygi and his father decided, his father Joseph Wilf, decided that the Reichmann's had gotten too good a deal. And so they were simply not going to honor it." (Tr., Aug. 5, 2013, p. 36). Breach of the Covenant of Good Faith and Fair Dealing. Judge Wilson held that the bad faith requirement of Plaintiffs' breach of the covenant of good faith and fair dealing claim was "evidenced by [the] deliberate and irresponsible attitude that your partner with whom you have a contract is not entitled to the benefit of their bargain and you are entitled to more." (Tr., Aug. 5, 2013, p. 44). It was further demonstrated by the Wilf Defendants' "subterfuge in the obfuscation and reclassifications [of partnership accounting entries], and evasion in the continuing financial statements that failed to disclose reality." (Id. at 46). Fraud.lo Judge Wilson held that the promises made to the Plaintiffs were not kept by the Wilf Defendants. (Id. at 48). And not giving Plaintiffs "their due" as partners was the way "the Wilfs always intended to run the partnership...." (Id. at 49).
to The Court did not address the equitable fraud claims because that "is simply fraud without the scienter." (Tr., Aug. 5, 2013, p. 50). S17
141737.00601122251319v.4

Specifically, Judge Wilson found the required scienter based upon testimony of the Wilf Defendants showing that: Nobody seemed to find it surprising that much higher grossly disproportionate management fees were charged to Pernwil than any other partnership ever in the history of the Wilf's organization. Nobody seemed to find it surprising that unreasonable interest was charged on related-pa~~ty loans.... The Wilfs didn't seem to find it strange that there was no standard for allocating salary of Short Hills personnel [to Rachel Gardens]. (Id. at 49). In conclusion, Judge Wilson opined that: it is pretty hard to defraud somebody when you have a contract because it is all there in writing. But it was done in this case. There were assurances given all ofthe way through. None of them were fulfilled. (Tr., Aug. 6,2013, p. 50). Conversion. Judge Wilson found that "[c]onversion is obvious in this case" because: There were millions of dollars that were removed from Pernwil that should have either been kept in Pernwil as a reserve for expenses, which didn't appear to have been necessary, certainly not in the later years, or distributed according to the ownership in Pernwil. (Tr., Aug. 6,2013, p. 50). 11 NJRICO, As an initial matter, Judge Wilson held that Plaintiffs had standing under NJRICO because "Jarwick and Joe Halpern were clearly the targets of the misappropriation of funds from the partnership." (Tr., Aug. 5, 2013, p. 56).

1 The Count considered Plaintiffs' civil conspiracy claims within the context of the RICO claims. (Tr,, Aug. 5, 2013, at pp. 51, 54). 11
141737.00601/222513 1 9v.4

Next, Judge Wilson listed the criminal statutes violated by the Wilf Defendants, which constituted "predicate acts" under NJRICO, as follows: N.J.S.A. 2C:20-3 -Theft by unlawful taking or disposition; N.J.S.A. 2C:20-9 - Theft by failure to make required disposition of property; N.J.S.A. 2C:21-15 -Misapplication of entrusted property; N.J.S.A. 2C:20-4 - Theft by deception; N.J.S.A. 2C:21-4 - Falsifying or tampering with records; and 18 U.S.C. 1341 & 1343 mail and wire fraud. (Id. at 57). Judge Wilson then held that Pernwil "fit within the statutory description of enterprise" pursuant to N.J.S.A. 2C:41-lc, finding: [t]here was a high level of coordination with regard to Pernwil, Halwil, Rachel Gardens. Decisions, as I said, were made by consensus. And it appears to be a very well-oiled machine that, despite the presence of a loes-income housing aspect to it and a lousy real estate market, it is continuing to make money and almost runs by itself, because it has been running under the direction of the Wilfs and their accountants, I might add. Their accountants are no longer parties to the case, but they were part ofthe enterprise ... (Tr., Aug. 5, 2013, p. 60). With respect to the "pattern of racketeering activity" requirement under NJRICO, Judge Wilson found the Wilf Defendants' activity "was a consistent, pervasive method of removing funds from this entity so that they would not reach the partners." (Id. at 62). Finally, Judge Wilson applied the five-year statute of limitations such that the NJRICO claims for all Plaintiffs only reached back to January 1, 2000. (Tr., Aug. 5, 2013, pp. 65-75; Tr., Aug. 20, 2013, A.M. session). With respect to Jarwick, Judge Wilson carved out the period of time between the trial court's decision that it was not a partner and the Appellate Division's 12
141737.00601/22251319v.4

reversal of that decision from any award of NJRICO damages, i.e., June 14, 2002 to December 16, 2006. (Id.). Punitive Damages. Judge Wilson found that punitive damages were warranted against Defendants Zygmunt Wilf, Mark Wilf, and Sydney Wilf based upon their conduct, which was: not with a reckless, but a willful disregard of the rights of the partners, Jarwick and Josef Halpern, And it was clearly not negligent. It was not even grossly negligent. It was grossly willful. And it was done repeatedly.... And if compensatory damages are to be the only damages awarded in this case, then there is absolutely no motivation for any managing partner to run a partnership equitably because, if somebody catches him or her, they will just bring them to court and then they will have to compensate with no additional damage. So there is a deterrent of theft that is attendant to punitive damages. (Tr,, Aug. 5, 2013, pp. 77-78). Judge Wilson concluded by opining that the extent to which the Wilfs "have so clearly violated ... [their] obligation of trust to ... [their] partners, to me was simply extraordinary." (Tr., Aug. 26, 2013, p. 70). Perhaps the finding of Judge Wilson that best captures the essence of this case is that "Zygi was simply using Pernwil as his own personal piggy bank, or the piggy bank of the Wilf organization." (Tr., Aug. 23, 2013, p. 88). III. OVERVIEW OF THE FEE APPLICATIONS On August 19, 2013, counsel for Halpern filed an application for attorneys' fees and costs, pursuant to N.J.S.A. 2C:41-4c and R. 4:42-9(a)(8). Counsel for Jarwick followed with its own application for fees and costs on August 23, 2013. Although this matter began with the filing of a complaint by Plaintiffs Jarwick Developments, Inc., and Ada Reichmann 21 years ago this past September, their fee request only goes back to October 2007, when they retained their current attorneys. Jarwick is represented by 13
141737.00601/22251319v.4

two law firms: Neuberger, Quinn, Gielen, Rubin &Gibber, P.A. ("Neuberger"), located in Baltimore, Maryland, and Lowenstein Sandler LLP ("Lowenstein"), their local New Jersey counsel. Jarwick seeks the total amount of $8,462,803.01 in attorneys' fees and costs, as follows: Firm Neuberger Lowenstein Fees $5,174,351.55 $2,740,252.12 Disbursements $418,989.36 $129,209.98 Attorney Hrs. 14,247.50 4,898.60 Paralegal Hrs. 3,855.70 615.10

Jarwick did not include certain charges that it determined were unrelated to the case, as well as the fees and costs of Cole Schotz, the law firm that represented it in this matter from 1992 to 1997.12 Moreover, the fees charged by Lowenstein attorneys who billed less than $6,000, and the fees charged by Neuberger attorneys who billed less than $6,500 were eliminated. Finally, the fees charged by Michael Long, Esq., a partner at Lowenstein, when he attended trial in tandem with his partner, Michael Himmel, Esq., were also excluded. Jarwick is seeking recovery of its costs of investigation and litigation in the total amount of $1,586,475.22, as follows: Jeffrey Barsky Accountant Magna Legal Services Electronic Evidence Presentation Company Court-appointed accountant, 25% of Bederson $228,000.00 paid by Partnership
&

1,218,590.09 176,324.68 57,000.00 10,850.00 1,750.00

Hon. Harriet Derman Partnership

Mediator, 25% of $43,400.00 paid by

Hon. Robert Margulies Mediator, 25% of $7,000.00 paid by

Although Cole Schotz represented Jarwick on a contingent fee basis, it still maintained hourly billing records showing that the total of its fees and costs devoted to this matter amounted to approximately $564,000. (Gielen Cert., 90). Jarwick does not seek to recover any fees or costs for the work performed by Cole Schotz.

12

14
141737.00601/22251319v.4

Partnership Laurie Engemann Court Reporter For Final Transcripts 25% of $63,263.87 paid by Partnership For Real-Time and Rough Transcripts 15,815.97 49,609.12
$ $

Patricia Niemiec Court Reporter For Final Transcripts, 25% of $52,938.28 paid by Partnership For Real-Time and Rough Transcripts 13,234.57 43,300.79
$ $

TOTAL COSTS OF INVESTIGATION AND LITIGATION

$1,586,475.22

Jarwick specifically excluded from its costs of investigation and litigation, monies it spent on: (i) expert witnesses it retained, but did not call to testify at trial; and (ii) its first forensic accountant, as follows: Thomas Albert Potential expert witness re: Theoretical Fees Richard Chaiken Appraiser William Morrison Accountant for first trial Dennis Roberts Potential rebuttal expert re: valuation Doris Topel Potential rebuttal expert re; management fees and insurance charges TOTAL COSTS OF INVESTIGATION AND LITIGATION NOT INCLUDED IN THIS FEE APPLICATION 6,800.00 45,000.00 177,793.58 25,000.00 5,000.00
$ $ $ $ $

259,593.58

Plaintiffs Joseph Halpern and the Josef Halpern Irrevocable Trust are represented by the Lebensfeld Firm. Halpern incurred a total amount of $5,201,081 in attorneys' fees

($4,765,360.25)13 and costs ($435,720.75)14 in this matter, as the Lebensfeld Firm worked more

13 This total is $36.15 less than the amount set forth in Mr. Lebensfeld's Certification, which was evidently mis-calculated. (Lebensfeld Cert., 54).

15
141737.00601/22251319v.4

than 11,700 hours. Halpern deducted $100,000 from this total in his fee request to account for "matters not directly related to the litigation against the Wilf defendants." (Lebensfeld Cert., 56). In or about October 2010, Halpern was apparently no longer in a position to continue to pay the Lebensfeld Firm on an hourly basis. In order to move forward with the case, the Lebensfeld Firm agreed to change the terms of its representation to a contingent fee engagement, incurring more than $3.4 million in fees thereafter. Halpern is seeking a 25% contingency fee enhancement in light of the risks the Lebensfeld Firm took in continuing to represent him after he could no longer afford its fees on an hourly basis. (Id. at 11-13). The Wilf Defendants oppose these fee applications on a number of grounds. Their main objection is that Plaintiffs did not cull billing entries that do not specifically relate to their NJRICO claims from their applications. The Wilf Defendants also oppose the fee applications as unreasonable based upon Plaintiffs' attorneys' use of block-billing, and they point to examples of billing entries that they deem to be excessive and duplicative. As far as the reasonableness of Plaintiffs' attorneys' billing rates, the Wilf Defendants raise various objections to the Certification of Edward Dauber, Esq., but only directly challenge the hourly rates of Michael Himmel, Esq., and his paralegal, Elizabeth Esposito. (Wilf Opp. Br. at 42-43; Wilf Sur-Reply Br. at 3-4). The Wilf Defendants also seek the exclusion of "[a]ny and all excess expense incurred as a result of Jarwick's decision to use Baltimore counsel and a Baltimore forensic accountant, including the costs incurred in hiring Lowenstein as local counsel." (Wilf Opp. Br., p. 38). Finally, the Wilf Defendants argue that: (i) the "election" of a punitive damages remedy
la In his moving papers, Halpern sought $448,838.24 in costs. In his reply brief, however, Halpern acknowledged that two cost items (hockey tickets - $355;"bank service charges" 12,762.49) should not have been included in its fee application.

16
141737.00601/22251319v.4

precludes any award of attorneys' fees under NJRICO; and (ii) Halpern is not entitled to a fee enhancement because this was not the type of case that warrants such a "windfall" and the punitive damages awarded to Halpern should be deemed as "enough." (Id. 47).

IV. PLAINTIFFS SHOULD RECOVER THE ATTORNEYS'FEES AND COSTS INCURRED IN LITIGATING THEIR NON-RICO CLAIMS,THEIR "UNSUCCESSFUL" NJRICO CLAIMS,AND THEIR CLAIMS AGAINST THE ACCOUNTANT DEFENDANTS Before turning to the specific fee applications, I will address the Wilf Defendants' arguments that Jarwick and Halpern must exclude from their lodestar calculations the attorneys' fees and costs that they incurred in litigating: (i) Plaintiffs' non-RICO claims; (ii) Plaintiffs' "unsuccessful" NJRICO claimsnamely, all NJRICO claims accruing before January 1, 2000 and Jarwick's NJRICO claims accruing between June 14, 2002 and December 15, 2006; and (iii) Plaintiffs' claims against the settling Accountant Defendants. It is appropriate to address these arguments at the outset because they apply to the fee applications of both Jarwick and Halpern. For the reasons set forth below, I recommend that none of these categories of fees be excluded from Plaintiffs' lodestar calculations. A. Governing-Legal Standards The law is well settled that when a plaintiff presents "distinctly different claims for relief that are based on different facts and legal theories ... no fee should be awarded for services on the unsuccessful claims." Hensley v. Eckerhart, 461 U.S. 424, 434-35 (1983); Lerman v. Joyce Intl, Inc., 10 F.3d 106, 114 (3d Cir. 1993). However, as here, when a plaintiff prevails on a claim that provides for fee shifting, he or she can also recover the attorneys' fees and costs incurred in litigating all related claims that involved a "common core of facts" or were based on "related legal theories." Hensley, 461 U.S. at 435; Northeast Women's Ctr. v. McMonagle, 889 F.2d 466, 476-77(3d Cir. 1989). 17
141737.00601/22251319x.4

The United States Supreme Court has ruled that, when a plaintiff asserts multiple, related claims in a single lawsuit: Much of counsel's time will be devoted generally to the litigation as a whole, making it difficult to divide the hours expended on a claim-by-claim basis. Such a lawsuit cannot be viewed as a series of discrete claims. Instead the district court should focus on the significance ofthe overall relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation. Where a plaintiff has obt~rinecl excellent results, his attorney should recover c~ fully compensatory fee. Normnclly this tivill encomp~rss all hours reasonably expended on tlae litigation, and indeed in some cases of exceptional success an enhanced award may be justified. In these circumstances, the fee award should not be reduced simply because the plaintiff failed to prevail on every contention raised in the lawsuit. Hensley, 461 U.S. at 435 (emphasis added). New Jersey courts have adoptedand routinely applythe Hensley analysis. In Silva v. Autos ofAmboy, Inc., 267 N.J. Super. 546, 558 (App. Div. 1993), plaintiff asserted a New Jersey Consumer Fraud Act ("NJCFA") claim, and six related common law and statutory claims, against defendants based upon their allegedly deceptive practices in connection with plaintiff's purchase and financing of a car. At trial, the plaintiff prevailed on only her NJCFA claim. The trial court awarded plaintiff attorneys' fees and costs pursuant to the NJCFA, but divided the lodestar amount by seven because plaintiff prevailed on only one of her seven claims. The Appellate Division reversed and ruled that plaintiff could recover for time spent litigating her unsuccessful claims because they were sufficiently related to her NJCFA claim: [T]he trial judge erred in dividing the "lodestar" figure by seven, representing the number of counts in plaintiff's complaint. The counts shared a common cope of operative facts and were bottomed on related legal t/teories. ... Our review of counsel's certification satisfied us that much, if not all, of the pretrial time expended by counsel involved the consumer fraud and overlapping claims. 18
141'737.00601l22251319v.4

267 N.J. Super. at 559 (emphasis added). See also Singer v. State, 95 N.J. 487, 500 (1984) (relying on Hensley and ruling that a prevailing plaintiff can recover fees incurred in litigating unsuccessful claims that are "related to the successful claims, either by a `common core of facts' or `related legal theories,"' so long as "the results obtained are fully effective in vindicating plaintiff's rights" (citation omitted)); DePalma v. Bldg. Inspection Underwriters, 350 N.J. Super. 195, 218-19 (App. Div. 2002) (ruling that trial court properly awarded fees for time spent litigating successful and unsuccessful claims because "all of the claims presented to the jury .. . were based on a common set offacts and common proofs"). As explained below, based upon these standards, I recommend that Plaintiffs be permitted to recover the attorneys' fees and costs that they incurred in litigating: (i) their nonRICO claims; (ii) their "unsuccessful" NJRICO claims; and (iii) their claims against the settling Accountant Defendants. All of these claims were inextricably intertwined with Plaintiffs' successful NJRICO claims, and Plaintiffs were overwhelmingly successful at trial. B. Plaintiffs Should Recover the Attorneys'. Fees and Costs Incurred In Litigating Their Non-RICO Claims 1. All of Plaintiffs' Claims Were Based Upon the Same Facts

The Wilf Defendants argue that "many if not most of the issues and claims in this lawsuit were separate and distinct from the RICO claims." (Wilf Opp. Br. at 35). According to the Wilf Defendants, Plaintiffs' NJRICO and non-RICO claims were clearly unrelated because Plaintiffs "addressed all of these claims separately in their respective closings, and the Court addressed all of these claims separately in its decision." (Id. at 35-36). However, Plaintiffs' NJRICO claims, and their non-RICO claims (breach of fiduciary duty, violation of the Uniform Partnership Act, breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, conversion, and civil conspiracy), were all based upon the same underlying facts: the Wilf 19
141737.00601/22251319x.4

Defendants' misappropriation of partnership funds and issuance of false financial documents to conceal their wrongdoing. Prior to opposing the Plaintiffs' fee applications, throughout this litigation, the Wilf Defendants acknowledged that all of Plaintiffs' claims are based upon the same underlying facts. In the Wilf Defendants' brief in support of their motion for partial summary judgment, dated November 19, 2010,the Wilf Defendants stated: The claims of "fraud," violation of New Jersey Civil RICO, and civil conspiracy which plaintiffs have sought to insert into this case tore ill based upon the premise that the Wilf defendants "fraudulently" maintained Pernwil's books and records, and "fraudulently" issued financial statements, which in various ways fails to accurately reflect moneys which were being paid to the Wilfs whether in the form of management fees, distributions, or supposedly inflated payments for insurance, payroll, or other items. (Reply Certification of Alan M. Lebensfeld, Esq., dated October 21, 2013 ("Lebensfeld Reply Cert."), Ex. 19)(emphasis added). Almost three years later, in their brief addressing the amount of punitive damages to be awarded, the Wilf Defendants again recognized that Plaintiffs' claims are all based upon the same underlying facts: [E]very bad act of which the Wilfs are accused is alleged to constitute a RICO predicate act. However the Wilfs' supposed misconduct is clzaracterize~l, it ultimately consists of cc single set of actions -- making payments to themselves or ~el~cted entities out of the partnership which should taave remained to be distributed to the partners. ~Yo m~ctter Izo3v many different labels aye placed on tlae identical conduct, the Court leas found such conduct to constitute RICO predicate acts. (Memorandum of Law on Behalf of Wilf Defendants with Respect to Quantum of Punitive Damage Award, at p. 32)(emphasis added).

20
141737.00601/22251319v.4

At trial, Plaintiffs relied upon the same evidence to prove their non-RICO claims as they used to prove their NJRICO claims. Judge Wilson made the following factual findings in ruling that the Wilf Defendants were liable to Plaintiffs under NJRICO: "The Wilfs were entrusted with the partnership funds pursuant to the agreements that ...Harry Wilf made with Joe Halpern and with Jarwick. And though that agreement should have been followed by [the Wilfs), they had to know that it was their legal obligation to do so. And they simply failed to do it. ... [T]he Wilfs used the partnership property as their own." (Tr., Aug. 6, 2013, at 82:4-21); The Wilf Defendants improperly characterized distributions as "management fees" on Pernwil's books and records (id. at 73:14-15); made "rental payments" to entities that had no connection to Pernwil (id. at 76:8-21); made "interest payments" on loans to "entities from whom no loan had been taken" (id. at 77:3-22); made a "completely inaccurate" claim that Pernwil owed the Wilfs millions of dollars in interest on a loan (id, at 77:3-14); removed funds from the partnership to pay salaries and bonuses to personnel "who did little, and in many instances, no work for Rachel Gardens" (id. at 79:12-16); and pocketed advertising discounts that the partnership received from newspapers and magazines (id. at 80:2-22); While cheating the Plaintiffs out of millions of dollars, Zygi Wilf .and the other Wilfs were "reinforce[d] a false impression that he trustworthy." (Id. at 87:6-8). In fact, "[m]any of the checks written to Joe Halpern indicated that he was receiving 25% of the distributions. ... That notation was obviously meant to reinforce Joe Halpern's false impression that he was, in fact, receiving 25 percent of the distributions, profits." (Id. at 87;916); and The Wilf Defendants concealed their fraudulent and deceptive practices from Plaintiffs by issuing false financial statements, income tax returns, and state payroll forms. (Id. at 74:5-7, 92:7-15). These same factual findings formed the basis for Judge Wilson's determination that the Wilf Defendants were liable on each of Plaintiffs' nonRICO claims: Breach of Fiduciary Duty: "I do not believe that I have seen one single financial statement that reflected the true and accurate position of the partnership, Pernwil or Halwil in this case. And that is a serious breach of fiduciary duty. I'm also finding that the financial statements were not given after 1989 to Josef Halpern, and of course it is undisputed that they were 21
141737.00601122251319v.4

never given to Ralph and Ada Reichmann." (Tr., Aug. 5, 2013, at 34:2435:7); Violation of the Uniform Partnership Act: "In this case, the Wilfs used the partnership property as their own. ... [Zygi claimed] that he never thought that he would have to account for anything until the Appellate Division opinion. ... Now I don't know how he could possibly have realistically thought that, because the Uniform Partnership Act says that the managing partner has to account to the partnership for funds. And if he didn't think he was going to have to account, then it causes me to wonder why these transactions were made so difficult to understand by reclassification after reclassification in some instances. At any rate, Zygi knew and the Wilfs knew, after December of 2006, that they were going to have to account and that the Appellate Division did consider Jarwick to be a partner. Joe Halpern continued to be partner. And the Wilfs continued to take the money as they had before." (Tr., Aug. 6,2013, at 82:20-84:23); Breach of Contract: The Wilf Defendants "breached all of [their] agreements [with Plaintiffs]. At no time did Jarwick receive anything with respect to its 25 percent share, and I could not find a year after 1990 in which ...Joe Halpern received his 25 percent share. The clear terms of those valid contracts were broken." (Tr., Aug. 5, 2013, at 39:18-41:4); Breach of the Covenant of Good Faith and Fair Dealing: "I have never seen a forensic accounting such as I have seen in this case. ... These things were not disclosed, period. And that subterfuge and evasion in the performance of a contract, subterfuge in the obfuscation and reclassifications, and evasion in the continuing financial statements that failed to disclose reality." (Id. at 45:3-46:10); Fraud: The Wilf Defendants continued to promise Plaintiffs that they would honor their agreements, even though they had no intention of doing so. "The Wilfs continued to run the partnership the way they always had, ignoring Jarwick. ... And I am finding that ...the Wilfs always intended to run the partnership this way. Nobody seemed to find it surprising that much higher grossly disproportionate management fees were charged to Pernwil than any other partnership ever in the history of the Wilfs' organization. Nobody seemed to find it surprising that unreasonable interest was charged on relatedparty loans. Neither of these, interest on related-panty loans or management fees having been mentioned at all in the formation of the partnership." (Id. at 48:1-50:9); Conversion: "[T]he chattel that we are talking about here is money. The benefits that should be derived from a 25 percent partnership in Rachel Gardens, and the acts of the defendants clearly interfered with that right." (Id. at 51:14-17); and 22
141737.00601/22251319v.4
is a

Civil ConspiracX: The Wilf Defendants committed the unlawful acts "together by consent," and "when the entity is engaging in improper conduct, the liability for the improper conduct spreads to all of those who consent to it ls under the civil conspiracy theory." (Id. at 53:18-54:7), Indeed, Judge Wilson expressly stated, during oral argument on the Wilf Defendants' motion to dismiss, that Plaintiffs' NJRICO claims and non-RICO claims were based upon the same proofs: [E]ven if RICO were not pant of this case and never had been a part of this case, never was going to be a part of this case, we still have the same proofs. ... I'm saying t/iat, once the Appellate Division decided that we had to have an accounti~zg, it really didn't muter tivhc~t the causes ofaction were. The proofs were the same. (Tr., Oct. 25, 2012, at 71:13-75:07)(emphasis added). This case is similar to the Third Circuit Court of Appeals' decision in Northeast Women's Ctr. v, McMonagle, 889 F,2d 466(3d Cir. 1989). In that case, plaintiff Women's Center asserted a Federal RICO claim, and related state law claims, against defendant anti-abortion protestors, based on multiple instances in which defendants unlawfully entered plaintiff's premises to stage protests and harass patients. Before trial, several of plaintiff's non-RICO claims were dismissed on summary judgment, or voluntarily withdrawn. After trial, the jury found many of the defendants liable under RICO iri the amount of $887 (trebled to $2,661), and on plaintiff's state law trespass claim in the amount of $42,087.95. The District Court awarded plaintiff $64,946.11

15 Plaintiffs also asserted unjust emichment and equitable fraud claims against the Wilf Defendants. Judge Wilson ruled that Plaintiffs' unjust enrichment claim did not apply because the parties entered into binding contracts (Tr., Aug. 5, 2013, at 46:11-20), and declined to address Plaintiffs' equitable fraud claim because she found in Plaintiffs' favor on their legal fraud claim (id. at 50:21-25). Plaintiffs' fee award should not be reduced based upon these claims, See Hensley, 461 U.S. at 435 ("Litigants in good faith may raise alternative grounds for a desired outcome, and the court's rejection of or failure to reach certain grounds is not a sufficient reason for reducing a fee. The result is what matters,"). 23
141737.00601/22251319v.4

in attorneys' fees and costs under RICO, after excluding $22,264.35 for fees that were "related exclusively" to plaintiff's non-RICO claims. Id. at 469-70, On appeal, defendants argued that the District Court improperly failed to exclude all of the time that plaintiff spent litigating its non-RICO claims. 889 F.2d at 470-71. The Third Circuit Court of Appeals rejected that argument and held that "the interrelatedness of the plaintiff's claims made further deductions unwarranted": The [district] court found that the RICO claims and the pendent trespass ...claims made up the "bulk of the litigation"; that the trespass and RICO claims were prove~z by the same evidence; and that much of counsel's time was devoted to the development of the evidence and the litigation as a whole. ... In cases in which the plaintiff's successful and unsuccessful claims involve a common core of facts or related legal theories, or where much of counsel's time is dedicated to the litigation as a whole, it is often impossible to divide counsel's time on a precise claim-byclaim basis. Here, after making substantial deductions in the hours claimed relating to non-RICO claims and determining that the interrelatedness of the plaintiff's claims made further deductions unwarranted, the court found that the remaining hours were reasonable in light of the nature and complexity of the plaintiff's RICO claim. Our review of the record provides no basis for setting aside the findings ofthe trial court. Id. at 476-77 (internal quotations and citations omitted)(emphasis added). In this caseas in Northeast Women's CenterPlaintiffs' non-RICO claims plainly shared a "common core of facts" with their RICO claims, and were based on "related legal theories." Hensley, 461 U.S. at 435; Northeast Women's Ctr., 889 F.2d at 476-77. I agree with Halpern's contention that "[v]irtually every issue presented at trial, regardless of its underlying legal theory, required the Court to consider and analyze the identical facts and the identical documents." (Halpern Moving Br. at 18). Moreover, the record demonstrates that much of Plaintiffs' counsel's time was "devoted to the development of the evidence and the litigation as a

24
141737.00601/2225 1 31 9v.4

whole," Northeast Women's Ctr., 889 F.2d at 477, and that Plaintiffs achieved overwhelming success at trialan award of approximately $34 million on their NJRICO claims. See Hensley, 461 U.S. at 435 ("Where a plaintiff has obtained excellent results, his attorney should recover a fully compensatory fee."). 2. The Fact that NJRICO Was Not Alleged Until October of 2009 Is Irrelevant

The Wilf Defendants argue that Jarwick should not be permitted to recover the fees incurred by the Lowenstein Firm,the Neuberger Firm, or Mr. Barsky before October 2009(when the first RICO claims were alleged). (Wilf Opp. Br. at 30; Wilf Sur-Reply Br. at 5-6). According to the Wilf Defendants, "the very first reference to RICO [in the Neuberger Firm's bills] was September 29, 2009," thus, "[i]t is difficult to take seriously any contention that RICO claims were being pursued before that." (Id. at 30-31). But between October 200716 and October 2009, Jarwick's counsel was investigating the conduct that ultimately formed the basis of its NJRICO claims, and litigating its common law claims, which were inextricably intertwined with its NJRICO claims. See Hensley, 461 U.S. at 435; Northeast Women's Ctr., 889 F.2d at 476-77. Thus, I reject the Wilf Defendants' argument that Jarwick cannot recover the fees that it incurred before it asserted its NJRICO claims. 3. The Forensic Accounting Investigation Was Related to Plaintiffs' NJRICO Claims

The Wilf Defendants argue that "all of the work that Mr. Barsky did, like the work which Mr. Morrison did, was simply accounting related." (Wilf Opp. Br. at 31). However, although Jarwick retained Mr. Barsky before it asserted its NJRICO claims, his work was essential to proving Jarwick's NJRICO claims. Indeed, Judge Wilson has stated that the accounting had "everything to do with RICO":
16

Jarwick's fee request only goes back to October 2007. 25

141737.00601/22251319v.4

MR, GURYAN: The conduct, some of the conduct, may be related to RICO. But the accounting generally has nothing to do with RICO.

THE COURT: Please, stop. Stop. The accounting has everything to tlo with RICO. Because without an accounting of what happened to the money, the RICO cl~cime~l causes ofaction could not be proven. So the accounting was kind ofthe sine qu~c non, the tlt~esliold issue /sere....

THE COURT:[TJlie conduct cannot be proven without an account of the monies that were taken, because the monies that were taken was tlae essence of the misconduct. I mean, I don't know laow to say it. It is so obvious. It isjust obvious. (Tr., Aug. 29, 2013, at 15:11-16:14)(emphasis added). 4. All of the Motions that the Wilf Defendants Challenge Were Related to Plaintiffs' NJRICO Claims

The Wilf Defendants argue that many of the motions that Plaintiffs filed were wholly unrelated to their NJRICO claims. (Wilf Opp. Br. at 31-32; Wilf Sur-Reply Br. at 6-7). I respectfully disagree. Halpern's motion for equitable and statutory relief to require the partnership to resume payments to him: The Wilf Defendants argue that this motion was unrelated to Halpern's NJRICO claims because "the Court made no mention of RICO in granting the relief" (Wilf Opp. Br, at 31). But this motion, and Halpern's NJRICO claims, were both based upon the same underlying conduct: the Wilf Defendants' theft of partnership assets and failure to pay Halpern the distributions to which he was entitled. (See Lebensfeld Cert., 29 ("The Wilf Defendants' precipitous and unlawful actions ...including their theft of Partnership's assets and funds in violation of NJRICO which incidentally continued after Joe Halpern's joinder in the case ... required my preparation and filing of an emergent motion for statutory and equitable relief in December 2009."); Jarwick Reply Br. at 30-31 (stating that Jarwick participated in this motion "to protect the record with respect to the proof of the Wilfs' thefts, and as an integral part of the process of informing the Court about the Wilfs' actions, in the face of false representations that the Wilfs were making to mislead and confuse the Court")).

141737.00601/22251319v.4

Jarwick's and Halpern's joint application to require the partnership to "pav ~~roximately $660 000 to them in order to match~avments of legal fees and costs previously made by Pernwil" for the defense of this case: This motion was related to Plaintiffs' NJRICO claims because Plaintiffs sought to recover the funds that the Wilf Defendants had improperly taken from the partnership to defend against Plaintiffs' NJRICO (and intertwined non-RICO) claims. (See Gielen Cert., ~ 45). As Jarwick argued, this motion allowed Plaintiffs to "recover[] a relatively small amount of the funds taken by the Wilfs' RICO enterprise," because the $660,000 at issue "constitute[d] a portion of the RICO damages found by the Court." (Jarwicic Reply Br. at 32). Jarwick's motion for partial summar~jud~ment declaring that the Wilfs were not entitled to a management fee or theoretical fees: This motion was related to Plaintiffs' NJRICO claims because they could not prove their NJRICO claims without debunking the Wilf Defendants' claim to "management" and "theoretical" fees. Mr. Lebensfeld certified that: "The significance to the case of the Wilfs' claimed `entitlement' to millions of dollars in theoretical or hypothetical fees could not be overstated in terms of Joe Halpern's ability to establish his NJRICO claims and particularly, the predicate acts of theft and embezzlement," (Lebensfeld Cert., 34). Indeed, Mr. Lebensfeld explained that he (and Jarwick's counsel) were required to prove that the Wilf Defendants' claimed entitlement to those fees "were purely fabricated claims with respect to which Zygi did not possess an `honest belief' or claim of right." (Id.),I~ (See also Jarwick Reply Br. at 33 ("If the Wilf Defendants had been successful with their claim for `Theoretical Fees,' the RICO damages would have been virtually eliminated.")). Jarwick should recover the fees incurred on this motion even though it was not successful. Judge Wilson ruled that, at the time she denied pretrial motions for summary judgment, she "really did not understand what this case was about despite counsel's valiant attempts to give me a flavor of what was going on." (Tr., Aug. 5, 2013; at 23:20-22). After the trial, Judge Wilson agreed that the Wilf Defendants were not entitled to management fees or theoretical fees, finding that: "These agreements had no provisions for any of these payments. None. Theoretical fees, management fees, hypothetical fees . ... I mean, I don't know where the language in the financial statements came from." (Tr., Aug. 5, 2013, at 87:16-20). Jarwick's motion to include Jarwicic as a pro rata recipient of all future distributions bX the partnership: This motion was directly related to Jarwick's NJRICO claims: both were based on the Wilf Defendants' improper 17 For the same reasons, Jarwick's motion "to preclude the Wilfs from taking management fees or incurring certain expenses on behalf of Pernwil,"(Wilf Opp, Br. at 32), was also related to its NJRICO claims. 27
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exclusion of Jarwick from the partnership, and failure to pay Jarwick its proper distributions. I agree with Jarwick's argument that this motion "was an effort to stop the Wilfs from committing RICO predicate acts in the form of stealing Jarwick's share of the excess cash flow generated by the Partnership." (Jarwick Reply Br. at 32). Jarwick's motion for partial suinmar~iudgment that Jarwick was a partner, that the Halwil Agreement controlled and that Zy~i Wilf, Leonard Wilf and Mark Wilf were not partners: This motion was necessitated by the Wilf Defendants' improper attempts to exclude Jarwick from the partnership and to deny it the distributions to which it was entitled. Indeed, Mr. Gielen explained that Jarwicic filed this motion for partial summary judgment "in order to eliminate frivolous arguments repeatedly made by the Wilf Defendants that despite the Appellate Division's rulings, Jarwick only held an economic interest in the Partnership, and the Halwil Associates Agreement was not the operative partnership agreement." (Gielen Cert., 56). Thus, this motion was also related to Plaintiffs' NJRICO claims. The Wilf Defendants' motion to recuse Jude Wilson and to disqualify the court-anointed accountant, Bederson & Co.: The Wilf Defendants moved to recuse Judge Wilson and disqualify Bederson & Co, arguing that "an accountant with the Bederson firm[] disclosed at depositions that Bederson had engaged in ex parte discussions with the Judge concerning their draft report." (Gielen Cert., 27). However, I agree with Mr. Gielen's assertion that "Bederson &Co.'s efforts were directly related to the Accounting, and were deemed necessary by the Court in large measure due to the intentional[] misrepresentations by the Wilf Defendants and the unintentionally misleading statements by their forensic accounting expert, Mr. Hoberman." (Second Gielen Cert., 24). Thus, the fees that Plaintiffs incurred in defending the Wilf Defendants' attempt to remove Bederson & Co.(and Judge Wilson) were also related to their NJRICO claims. Accordingly, I recommend that Plaintiffs should recover the fees incurred in litigating the motions that the Wilf Defendants challenge because each motion was related to Plaintiffs' NJRICO claims. 5. All of Plaintiffs' Witnesses' Testimony Was Related to Plaintiffs' NJRICO Claims

The Wilf Defendants argue that many of Plaintiffs' witnesses testified about topics that had nothing to do with their NJRICO claims. I respectfully disagree.

28
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 Linda White Thomas Collins, Esq., and Dr. John Crow: The Wilf Defendants argue that these witnesses testified "as to Josef Halpern's involvement in the Project, much of which related to the period of time prior to January 2000, the cut-off date set by the Court for any RICO claims." (Wilf Opp. Br. at 32). But Halpern's role in constructing and managing Rachel Gardens was critical to his NJRICO claims. Indeed, Mr. Lebensfeld explained that he deposed Ms. White (Township Land Use Administrator), Mr. Collins (the partnership's land use counsel) and Dr, Crow (the partnership's environmental expert) "to rebut the Wilf Defendants' willfully false claims that they, and not Joe Halpern, were responsible for the development, construction and management of Rachel Gardens and thus were entitled to be paid theoretical and hypothetical management fees." (Lebensfeld Cert,, 33). Judge Wilson agreed that this testimony related to Plaintiffs' NJRICO claims because it was "presented to show that this theory of theoretical fees and hypothetical fees was unfounded." (Tr., Aug. 29, 2013, at 18:05-20). Plaintiffs should not be precluded from recovering the fees that they incurred in taking testimony from these witnesses simply because some of their testimony touched upon Halpern's involvement in Rachel Gardens before 2000. Joseph Schochet and Michael Rottenber~: The Wilf Defendants argue that Plaintiffs should not recover the fees incurred in reading in the deposition testimony of Mr. Schochet (from 1994), or taking the trial testimony of Mr. Rottenberg because both witnesses "testified with respect to the original dealings between the Reichmanns and Harry Wilf ...which certainly had nothing to do with RICO." (Wilf Opp. Br. at 32-33). However, I agree with Jarwick's argument that testimony regarding the "original dealings" between the Reichmanns and Harry Wilf "set the stage for the Court['s] findings that the Wilf Defendants ...did not have a[n~ `honest claim of right' to the funds they took." (Jarwick Reply Br. at 63). (See also Tr., Aug. 14, 2013, at 27:714; Tr., Sept. 23,2013, at 170:20-25). ZY~WiIf: The Wilf Defendants claim that "a substantial portion of [Plaintiffs'] examination of Zygi Wilf' related to "the events which led up to Abe Halpern's exclusion and Jarwick's exclusion," which had nothing to do with Plaintiffs' NJRICO claims. (Wilf Opp. Br. at 34). However, Zygi Wilf testified for 33 days about a myriad of topics, and his testimony was critically important to Plaintiffs' NJRICO claims. The Wilf Defendants make no attempt to highlight portions of his testimony that they contend were unrelated to Plaintiffs' NJRICO claims. Jerry Direnzo and Dan Landsman: The Wilf Defendants argue that these witnesses testified "as to the services provided by the Wilfs in terms of construction management and property management," which "had nothing to do with RICO." (Wilf Opp. Br. at 33). But, as explained above, to prevail on their NJRICO claims, Plaintiffs were required to "rebut the Wilf Defendants' willfully false claims that they, and not Joe Halpern, were responsible for the 29
141737.00601/22251319v.4

development, construction and management of Rachel Gardens." (Lebensfeld Cert., 33). Mr. Barsky, Mr. Hoberman, and Mr. Tarlowe: The Wilf Defendants argue that the testimony of Mr. Barsky, Mr. Hoberman (the Wilf Defendants' forensic accountant), and Mr. Tarlowe (the Wilf Defendants' personal accountant),"was related to accounting issues, not RICO issues." (Wilf Opp. Br. at 33). I disagree. As Judge Wilson stated: "The accounting has everything to do with RICO. Because without an accounting of what happened to the money, the RICO claimed causes of action could not be proven. So the accounting was kind of the sine qua non, the threshold issue here." (Tr,, Aug. 29, 2013, at 15:11-16). Accordingly, I recommend that Plaintiffs recover the fees incurred in preparing for, and taking testimony from, Ms. White, Mr. Collins, Dr. Crow, Mr. Schochet, Mr. Rottenberg, Mr. Direnzo, Mr. Landsman, Mr. Barsky, Mr. Hoberman, and Mr. Tarlowe. 6. The Time Plaintiffs' Counsel Spent Attempting to Settle or Mediate this Case Was Related to Plaintiffs' NJRICO Claims

The Wilf Defendants argue that "any entries which relate to potential settlement or mediation of the case do not relate to the RICO claims" and should be excluded. (Guryan Cert., 75-76). I respectfully disagree, The hours that Plaintiffs incurred preparing for and attending mediation, or otherwise attempting to settle their NJRICO and intertwined common-law claims, were clearly related to their NJRICO claims. 7. Plaintiffs' NJRICO and Punitive Damage Claims Are Related

The Wilf Defendants argue that Plaintiffs should not recover the fees incurred in pursuing their punitive damages claims because they were "based upon common law torts and not RICO claims." (Wilf Opp. Br. at 33-34; Wilf Sur-Reply Br. at 8). I disagree. To establish their entitlement to punitive damages, Plaintiffs were required to prove the identical facts that supported their NJRICO and intertwined common-law claims. Moreover, I agree with Jarwick's contention that Plaintiffs' NJRICO and punitive damage claims were "parallel claims," which both sought to "punish the Wilfs for the same wrongdoing." (Jarwick Reply Br. at 15). See, e.g., 30
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Bruno v. Western Elec. Co., 618 F. Supp. 398, 403-04(D. Colo. 1985)(ruling that plaintiff who prevailed on ADEA claim could recover fees incurred pursuing his punitive damages claim (which was rejected) because "whether [plaintiff] could recover punitive damages turned on the same `common core of facts' as the issue of whether [plaintiffs could recover lost wages or liquidated damages [under ADEA]") I am not persuaded by the Wilf Defendants' reliance on Brokerage Concepts, Inc. v. U.S. Healthcare, Inc,, 1996 U.S. Dist. LEXIS 18519 (E.D. Pa. Dec. 10, 1996)an unpublished decision from the Eastern District of Pennsylvania. The Brokerage Concepts court declined to award plaintiff the attorneys' fees incurred in pursuing its punitive damages claim, ruling that that claim was "distinct" from plaintiff's RICO claims. Id, at *17. However, Brokerage Concepts is not controlling in this case and, in any event, the Third Circuit reversed and remanded, with instructions to grant judgment for defendants on plaintiff's RICO claim. Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 535(3d Cir. 1998). For these reasons, I recommend that Plaintiffs be permitted to recover the attorneys' fees and costs that they incurred in litigating their non-RICO claims. C. Plaintiffs Should Recover the Attorneys' Fees and Costs Incurred In Litigating Their "Unsuccessful" NJRICO Claims Judge Wilson limited Plaintiffs' NJRICO claims by ruling that. (i) the statute of limitations barred all NJRICO claims accruing before January 1, 2000; and (ii) Jarwick could not pursue NJRICO claims accruing between June 14, 2002 and December 15, 2006 because, during that time period, the Wilf Defendants were entitled to rely on the trial court's ruling that Jarwick had no viable partnership interest in the Rachel Gardens project. (Tr., Aug. 5, 2013, at 67:2275:9).

31
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The Wilf Defendants argue that Plaintiffs cannot recover the fees incurred in litigating these "unsuccessful" NJRICO claims. (See Certification of Frank C. Razzano, Esq. dated October 3, 2013 (the "Razzano Cert."), at 8 (""[T]he plaintiffs were unsuccessful on a substantial portion of their RICO claims, and their fee application should have accordingly allocated fees and expenses between fees attributable to successful and unsuccessful RICO claims.")). I respectfully disagree. The so-called "unsuccessful" NJRICO claims were not "distinctly different claims for relief," Lerman, 10 F.3d at 114, but rather narrow limitations placed on the time periods during which Plaintiffs could recover NJRICO damages. Indeed, all of Plaintiffs' NJRICO claims were based upon the same underlying conduct: the Wilf

Defendants' "consistent, pervasive method of removing funds from [the partnership]" over the course of many years, (Tr., Aug. 5, 2013, at 62:5-7), and issuing false financial documents to conceal their wrongdoing. The Third Circuit Court of Appeals' decision in Lerman is directly on point. In that case, defendant company asserted a RICO counterclaim against plaintiff, a former salesman of defendant, alleging that plaintiff bribed customers and sold goods from defendant's inventory for cash without defendant's knowledge. The District Court found plaintiff liable on defendant's RICO counterclaim in the amount of $1,445,987.77 (after trebling and interest), and awarded attorneys' fees and expenses under RICO in the amount of $1,133,863.68. Id. at 109. On appeal, plaintiff argued that the District Court's attorneys' fee award was excessive because defendant's RICO claim was based upon "three, distinct racketeering schemes," but it prevailed on only one of those schemes. 10 F.3d at 113. The Third Circuit Court of Appeals rejected that argument and ruled that defendant could recover the fees incurred in litigating its

32
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"unsuccessful" RICO claims because they were "based on overlapping facts" and did not involve "distinctly different claims for relief': [T]he district court concluded that [defenclant'sJ RICO counterclaims had not presented "distinctly different claimsfor relief," but rather related legal theories based on overlapping fiats. The court stated that it would be artificial to sever the factual allegations when each of the three scenarios aided in the development of[defendant's] successful case. Moreover, the court found that when [defendant's] RICO counterclaims are viewed in terms of the litigation as a whole, their results must be judged as very successful. In awarding fees in this case, the district court applied the correct legal standards, and the court's application of those standards was not an abuse of discretion. Id. at 114 (internal quotations, citations, and alterations omitted) (emphasis added); see also Northeast Women's Ctf., 889 F.2d at 476-77 ("In cases in which the plaintiff's,successful and unsuccessful claims involve a common core of facts or related legal theories, or where much of counsel's time is dedicated to the litigation as a whole, it is often impossible to divide counsel's time on a precise claim-by-claim basis."); Blakey v. Continental Airlines, Inc., 2 F. Supp. 2d 598, 606 (D.N.J. 1998)("[W]here the claims are interrelated, a court should not attempt to identify specific hours spent on related, but unsuccessful claims and exclude them from the lodestar."). As in Lerman, this is simply not a case which Plaintiffs presented "distinctly different
in

claims for relief," and obtained only limited success at trial. Lerman, 10 F.3d at 114. Plaintiffs' "unsuccessful" NJRICO claims were based upon the same facts and legal theories as their successful NJRICO claims, and were proven at trial using the same evidence. Importantly, as explained above, Plaintiffs achieved overwhelming success on their NJRICO claims. See Hensley, 461 U.S. at 435 ("Where a plaintiff has obtained excellent results, his attorney should recover a fully compensatory fee."). 33
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Moreover, I agree with Jarwick's argument that "[w]here certain predicate acts are outside the statute of limitations,. although those predicate acts cannot be used as a basis for awarding damages,those acts can be considered for the purpose of finding that there was a RICO violation, i.e., that there was an enterprise and that the defendants' actions were predicate acts committed by the conspirators." (Jarwick Reply Br. at 65). Indeed, Judge Wilson ruled that: You have an act, a predicate act within the limitations period, and you may base your cause of action on it. It does not vitiate that predicate act if another occurred outside the limitations period, and you can use the act occurring autsicle the limitations period to demonstrate ~n enterprise. But you will not receive damages, you cannot claim damages, or you will not be awarded damages on that act outside the limitations period. (Tr., Aug. 13, 2013, at 76:25-77:5)(emphasis added). Thus, the Wilf Defendants' conduct prior to 2000, and between June 14, 2002 and December 15, 2006 (as to Jarwick), was relevant to Plaintiffs' NJRICO claims. For these reasons, I recommend that Plaintiffs be permitted to recover the attorneys' fees and costs incurred in litigating their "unsuccessful" NJRICO claims. D. Plaintiffs Should Recover the Attorneys' Fees and Costs Incurred In Litigating Against the Settling Accountant Defendants The Wilf Defendants argue that Plaintiffs cannot recover the attorneys' fees and costs incurred in litigating their claims against the Accountant Defendants, who settled before trial. (Wilf Opp. Br. at 32). However, Plaintiffs' claims against the Accountant Defendants were based on the same facts and legal theories as their NJRICO claims against the Wilf Defendants. Indeed, Judge Wilson ruled that the Accountant Defendants "were p~crt of the [RICOJ enterprise,[andJ It~r~l to be in order to mtcke it all work." (Tr., Aug. 5, 2013, at 60:24-61:1) (emphasis added). As Halpern explained in his reply brief:

34
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Cohen's role as a co-conspirator in the effectuation and cover-up of the Wilf Defendants' racketeering scheme and conspiracy was pivotal to its success. Indeed, without Cohen's full cooperation and collaboration in the Wilfs' unlawful scheme ...the Wilfs' scheme would have failed. (Halpern Reply Br. at 40). Thus, Plaintiffs could not possibly segregate the fees incurred in litigating their claims against the Accountant Defendants from the fees incurred in litigating their NJRICO claims against the Wilf Defendants. See, e.g., Rode v. Dellarciprete, 892 F.2d 1177, 1185 (3d Cir. 1990) ("[A]ttorney hours fairly devoted to one defendant that also support the claims against other defendants are compensable. ... Thus, hours chargeable to the claims against defendants who are found not liable are chargeable to defendants against whom plaintiff prevailed if plaintiff can establish that such hours also were fairly devoted to the prosecution of the claims against the defendants over whom plaintiff prevailed." (internal quotations, citations and alterations omitted)). The United States District Court for the Northern District of Illinois' decision in Phoenix Bond & Indem. Co. v. Bridge, 2012 U.S. Dist. LEXIS 173721 (N.D. Ill. Dec. 7, 2012), is instructive. In that case, plaintiffs asserted Federal RICO claims against several groups of defendants, alleging that they rigged the sale of liens for past due property taxes. Plaintiffs settled with many defendants before and during trial. After trial, the jury found in plaintiffs' favor on their RICO claims against tvvo groups of defendants (the "Sass and BG defendants"), and awarded plaintiffs $2,767,000 in RICO damages(before trebling). Plaintiffs subsequently moved for attorneys' fees and costs from the Sass and BG defendants pursuant to RICO. The Sass and BG defendants argued, inter alia, that plaintiffs could not recover the fees that they incurred in pursuing "other defendants in their same RICO enterprise[], including defendants found not liable or dropped from the case." Id. at *14. The 35
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District Court rejected that argument, ruling that plaintiffs' claims against the Sass and BG defendants were "inextricably intertwined" with their claims against the settling defendants within the same enterprise: [P]laintiffs' RICO claims against the Sass and BG defendants required them to prove the existence and nature of the enterprises in whose conduct these defendants were claimed to have participated. In addition, their RICO conspiracy claims required them to prove the existence and scope of the conspiracies involving these defendants. This necessarily required them to discover and marshn~l, anti eventually offer, evidence concerning p~crticipants other than tlae defendants wlio went to trial. ... ~TJlie fi~ct that tlae defendants c/nose to risk going to trial, antl lost, does not mean that they cc~n now pretend as though they were notpart of the Enterprise or that Plaintiffs dial not have to spend time proving its existence and their participation in it. Id. at *18 (internal quotations and alterations omitted)(emphasis added). See also Vanderbilt Mortg. &Fin., Inc, v. Flores, 2011 U.S. Dist. LEXIS 57284, at *7 (S.D. Tex. May 27, 2011) (ruling that prevailing party could recover "fees claimed for time spent [litigating against] dismissed parties" because the claims against the dismissed parties, and the claim on which the party prevailed,"involved a common core offacts"). Furthermore, I disagree with the Wilf Defendants' argument that Jarwick has "implicitly concede[d]" that its accounting malpractice claims were "separate and distinct from any RICO claims" by excluding expert fees paid to its accounting malpractice expert. (Wilf Opp. Br. at 32). Jarwick excluded the fees it paid to its accounting malpractice expert, William Morrison, because "[h]is work addressed events through the end of 1999, but it wt~s completely redone by Mr. Barsky. With all due respect to Mr. Morrison, as pointed out at the trial when he testified . . . he had failed to recognize significant improper expenses taken by the Wilf Defendants." (Gielen Cert., 89)(emphasis added). Thus, Jarwick excluded Mr. Morrison's fees because the

36
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work he performed was not usefulnot because it was somehow distinct from Jarwick's RICO claims. For these reasons, I recommend that Jarwick and Halpern be permitted to recover the attorneys' fees and costs that they incurred in litigating their claims against the settling Accountant Defendants. V. THE WILF DEFENDANTS'"ELECTION OF REMEDIES" ARGUMENT DOES NOT PREVENT AN AWARD OF ATTORNEYS'FEES AND COSTS In an effort to dismiss both the Jarwick and Halpern fee applications in their entirety, the Wilf Defendants argue that Jarwick and Halpern "elected" their common law punitive damages remedies and, consequently, have forfeited their right to attorney's fees in connection with NJRICO. (See Wilf Opp. Br. at 45-46). This argument is not persuasive and I recommend that the Court reject it. The Wilf Defendants note that the Courtpursuant to its analysis of St. James v. Future
Finance, 342 N.J. Super. 310(App. Div. 2001)held that Plaintiffs' NJRICO trebled award was

not collectable because these damages were exceeded by the final punitive damages figure. (Wilf Opp. Br. at 45). The Wilf Defendants take the Court's molded judgment analysis from St.
James and leap to the conclusion that "Plaintiffs have elected a remedy of punitive damages

rather than RICO recovery, and, therefore, cannot now add the remedy of legal fees pursuant to RICO." (Id.). This conclusion is unsupported by both the law and the record before me. As an initial matter, nothing in the St. James decision compels the result that the Wilf Defendants are seeking. More importantly, Judge Wilson did not hold that Plaintiffs had to choose to forego their punitive damages award in order to obtain attorneys' fees pursuant to their NJRICO award. Judge Wilson simply deemed the NJRICO trebled award as uncollectable to prevent a double recovery, and preserved Plaintiffs' entitlement to seek attorneys' fees. Indeed, 37
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Judge Wilson's September 23, 2013 Order expressly states that "[t]he award of compensatory, punitive and treble damages, . , .shall be without prejudice to Plaintiffs' separate and pending applications, pursuant to N.J.S.A. 2C:41-4c, for an award of reasonable attorney's fees, costs of investigation and litigation, which applications hereafter shall be separately determined in accordance with this Court's prior Order of Reference to Special Master." (Sept. 23, 2013 Order at 9). Judge Wilson stated that the primary reason she was including a figure for NJRICO trebled damages in the September 23, 2013 Order, was "for informational purposes ...for the special master to use in calculating attorneys' fees as to the amount, as to the degree of success." (Tr., Sept. 23, 2013, at 222:9-13). I agree with Jarwick's common sense conclusion that "[i]t would be exceedingly peculiar for the Court to have made such a holding and to have made this referral to the Special Master if the Plaintiffs were not entitled to an award of legal fees and expenses pursuant to NJ RICO." (Jarwick Reply Br, at 41). Similarly unpersuasive is the Wilf Defendants' position that "litigation expenses" "can be" considered as a "component of a punitive damage award." (Wilf Opp. Br. at 45). In awarding 2.5 times compensatory damages for punitive damages, there is no statement in the record by Judge Wilson that she was considering legal fees as part of the punitive damages award. (See Gielen Second Cent., 52; see also generally Tr., Sept. 23, 2013). Thus, I do not believe there is any basis to reject Plaintiffs' attorneys' fees award because they were allegedly subsumed into the calculation of punitive damages as the Wilf Defendants suggest. Lastly, I do not agree with the Wilf Defendants' contention that Plaintiffs are not "prevailing parties" on their NJRICO claims. (See Wilf Opp. Br. at 46). In the statutory feeshifting context, "[c]ourts will generally consider a party to be the prevailing party if there has 38
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been an order or a consent decree so specifying." Rivera v. Office

of the County Prosecutor of

the County ofBergen, 2012 N.J. Super. Unpub. LEXIS 2752, at *6 (Law Div. Dec. 11, 2012). Here, the Court's September 23, 2013 Order clearly states that the Wilf Defendants were "jointly and severally liable to Plaintiffs" for "compensatory damages (with respect to Plaintiffs' Causes of Action sounding in breach of contract, breach of the implied covenant of good faith and fair dealing, violation of the New Jersey Uniform Partnership Act ...breach of fiduciary duty,fraud, conversion, civil conspiracy and violation ofN.J.S.A. 2C-41-2c. and cl.)." (Sept. 23, 2013 Order at 1-2 (emphasis added)). Simply because the Court deemed the NJRICO damages to be uncollectable as molded into the punitive damages award does not somehow make Plaintiffs "non-prevailing" parties on their NJRICO claims. By analogy, applying the Wilf Defendants' logic to the criminal context, if the State successfully convicted a defendant of two related criminal counts and the sentencing judge decided to run the sentences concurrently, then that would mean that the defendant would be deemed not guilty of the crime carrying the shorter sentence. Of course, that is not how it works in the criminal context, nor is there any reason for it to be any different in a civil matter. The Wilf Defendants' citation to Singer v. State, 95 N.J. 487, 494 (1984), is contrary to their position. (See Wilf Opp. Br. at 46). In Singer, the New Jersey Supreme Court held that plaintiffs who did not obtain a judgment on their federal Section 1983 civil rights claim were still "prevailing parties" for purposes of the federal Civil Rights Attorney's Fees Awards Act. See id. at 496. The Court found that because the plaintiffs prevailed under similar federal constitutional theories, where "[t]he relief they sought under each of the[] claims was virtually identical," they were prevailing parties under the federal civil rights statutory fee-shifting framework. Id. Certainly, Singer does not support the proposition that when a plaintiff's damages for one cause 39
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of action are molded into the total award that plaintiff is no longer a "prevailing party" for that cause of action. VI. THE `REASONABLENESS" STANDARD Pursuant to the New Jersey RICO statute, a prevailing plaintiff "shall recover threefold any damages he sustains and the cost of the suit, including a reasonable attorney's fee, costs of investigation and litigation." N.J.S.A. 2C:41-4(c). The statute does not further elaborate on what specifically encompasses "reasonable attorney's fees" and "costs of investigation and litigation." But the Legislature gave a clear command to reviewing courts to interpret the feeshifting provision in a liberal fashion to effectuate the remedial purpose of the statute. See N.J.S.A. 2C:41-6 ("2C:41-4 shall be liberally construed to effectuate the remedial purpose ofthis chapter."). Under New Jersey law, attorneys' "fees awarded by courts, regardless of their basis, are governed by principles of reasonableness." Walker v. Giuffre, 209 N.J. 124, 128 (2012). In other words, the "overarching principles of reasonableness" guide the consideration of "fee applications brought pursuant to fee-shifting statutes." Id. And "[t]he manner in which a reasonable counsel fee is to be determined is well-settled." R.M. v. Supreme Court of New
Jersey District XIII Ethics Committee, 190 N.J. 1, 9 (2007). This is commonly known as the

"lodestar" analysis. Id. at 10. The lodestar "equals the `number of hours reasonably expended multiplied by a reasonable hourly rate."' Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 21 (2004)(quoting Rendine v. Pantzer, 141 N.J. 292, 335 (1995)). Counsel for the prevailing party is to set forth its proposed lodestar calculation "supported by affidavit addressing pertinent factors, including those in RPC 1.5(a)." Id. at 22. The reasonableness factors ofRPC 1.S(a) are:

141737.00601/22251319v.4

(1)

the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; the fee customarily charged in the locality for similar legal services; the amount involved and the results obtained; the time limitations imposed by the client or by the circumstances; the nature and length of the professional relationship with the client; the experience, reputation, and ability of the lawyer or lawyers performing the services; whether the fee is fixed or contingent.

(2)

(3) (4) (5) (6)

(7)

(8)

The New Jersey Supreme Court has declared that these factors "must inform the calculation of the reasonableness of a fee award in ...every case." Furst, 182 N.J. at 22. But this "list is not exhaustive and all factors will not be relevant in every case." Triffin v. Automatic
Data Processing, Inc., 411 N.J. Super. 292, 312 (App. Div. 2010). In addition, although not

controlling, New Jersey courts have looked to federal fee-shifting jurisprudence to provide guidance in making the reasonableness determination. See Rendine, 141 N.J. at 333 ("[W]e referred to federal fee shifting statutes to provide guidance ...."). Under federal jurisprudence, "`the most critical factor' in determining the reasonableness of a fee award `is the degree of success obtained."' Farrar v. Hobby, 506 U.S. 103, 114 (1992)(quoting Hensley v. Eckerhart, 461 U.S. 424, 436 (1983)). After reviewing counsel's submissions, the reviewing court "first must determine the reasonableness ofthe rates proposed," which should be consistent with "rates for similar services 41
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by lawyers of reasonably comparable skill, experience, and reputation in the community." Furst, 182 N.J. at 22 (citation and internal quotation marks omitted). The reasonable rate standard also "incorporates equitable considerations." R.M., 190 N.J, at 10; see also Rendine, 141 N.J. at 337 (holding that "the trial court should satisfy itself that the assigned hourly rates are fair, realistic, and accurate, or should make appropriate adjustments"). Next, the court "must determine whether the time expended in pursuit of the `interests to be vindicated,' the `underlying statutory objectives,' and recoverable damages [are] equivalent to the time `competent counsel reasonably would have expended to achieve a comparable result."'
Furst, 182 N.J. at 22. Unreasonably excessive or unnecessarily duplicative time entries should

be excluded from the lodestar calculation. Id. This is ultimately an equitable and case-specific inquiry. See, e.g., R.M., 190 N.J. at 10 ("The standard for determining whether the number of hours of work claimed is reasonable has been phrased in equitable tones . , .."); Furst, 182 N.J. at 22-23 ("Whether the hours the prevailing attorney devoted to any part of a case are excessive ultimately requires a consideration of what is reasonable under the circumstances."). A court is not required to "accept passively the submissions of counsel to support the lodestar amount."
Rendine, 141 N.J. at 335. On the other hand, a court is not required to sua sponte reduce a fee

request, but instead should act only in response to a specific objection from the opposing party.
See, e.g., Bell v. United Princeton Properties, Inc., 884 F.2d 713, 719(3d Cir. 1989).

Lastly, after the final lodestar is determined, a court should analyze whether the lodestar is subject to a fee enhancement or reduction. A lodestar can be reduced "if the prevailing party achieved limited success in relation to the relief he had sought." Furst, 182 N.J. at 23. As for a fee enhancement, one may be awarded in certain circumstances when the prevailing party's

42
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attorney performed services based on a contingent fee arrangement (as discussed more below in the analysis of the Halpern Application). See id. VII. THE JARWICK FEE APPLICATION A. Rule 4:42-9(c) The Wilf Defendants seek a dismissal of Jarwick's entire fee application because Jarwick did not include a Rule 4:42-9(c) statement in its opening papers. (Wilf Opp. Br. at 38-39). Rule 4:42-9(c) requires a statement of "how much has been paid to the attorney . .and what

provision, if any, has been made for the payment of fees to the attorney in the future." The VJilf Defendants point to no case mandating that a fee application be rejected solely based on an omission of the statement required by Rule 4:42-9(c), and my independent research did not reveal any such case. To the contrary, there is support for the proposition that fees may be awarded even if the plaintiff's attorneys fail to submit the Rule 4:42-9(c) information. See Morrison v. Morison, 93 N.J. Super. 96, 105 (Ch. Div. 1966)(awarding attorney's fees despite fact counsel did not state "what arrangements, if any, have been made for the payment of a fee to him in the future" as required by predecessor rule to Rule 4:42-9(c)). In any event, the Wilf Defendants' argument is moot because Jarwick provided a Rule 4:42-9(c) statement in its reply papers. (See Jarwick Reply Br, at 84-85; see also Himmel Third Cert., 4; Gielen Second Cert., ~ 54-55). According to Jarwick's statement, Lowenstein has been paid in full and Neuberger has been paid $4,615,224.70, with the remainder due to be paid by December 2014 at the latest. (See id.). I discern no prejudice from Jarwick providing this information in its Reply Brief. Accordingly, I recommend that the Court reject the Wilf Defendants' contention that Jarwick's fee application be dismissed based on its omission of the Rule 4:42-9(c) statement in its Principal Brief.

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B.

Request for Attorneys' Fees Jarwick seeks an award of attorneys' fees and costs in connection with the work of two

firms: (1) Neuberger, Quinn, Gielen, Rubin &Gibber, P.A. ("Neuberger"); and (2) Lowenstein Sandler, LLP ("Lowenstein"). Neuberger, which is based in Baltimore, Maryland, acted as primary litigation counsel for Jarwick from October 2007 to the present. (See Gielen Cert., 15). Lowenstein was engaged to act as local counsel from 2008 to the present. (See Himmel Decl., ~ 7). According to Jarwick, Lowenstein's role grew considerably "beginning with the major motions practice starting at the end of 2009." (Jarwick Br. at 8 (citing Gielen Cent., 183)). Jarwick's suggested lodestar for attorneys' fees is: (1) $5,174,351.55 for Neuberger's services; and (2)$2,740,252.12 for Lowenstein's services. Both firms provided a specific per-attorney lodestar. (See Gielen Cert., Ex. 1; Himmel Decl., Ex. A). Neuberger's requested lodestar calculation is as follows:

NAME Neuberger Nathan Adler (Principal) Price Gielen (Principal) Cynthia Leppert (Principal Isaac Neuberger (Principal) Ryan Dietrich (Associate) Elliot Engel (Associate)

HOURS

AVERAGE RATE

AMOUNT

103.60 7710.70 2495.60 141.90 379.60 212.80

$275.10 $394.09 $303.43 $532.28 $196.23 $203.42

$28,500.00 $3,038,711.50 $757,235.73 $75,530.00 $74,488.00 $43,288.14

' g Because the case spanned years with corresponding changes in billable rates, Neuberger and Lowenstein divided the total amount billed by each professional and divided that by the hours charged to calculate an "average rate" that was billed.

141737.00601/22251319v.4

Brian Flank (Associate) Jonathan Goldberg (Associate) Jessica Iturriaga (Associate) Jennifer Karangelen (Associate) Kimberly Swanson (Paralegal)

31.30 1901.00 114.10 1156.90 3855.70

$212.83 $216.93 $91.87 $211.51 $123.17

$6,704.00 $412,392.93 $17,895.91 $244,695.89 $474,909.45

Neuberger's Re uested Total

18,103.20

$5,174.351.55

Lowenstein's requested lodestar calculation consists of: NAME Lowenstein Michael Himmel (Partner) Michael Long (Partner) Christopher Porrino (Partner) Carl Greenfield (Counsel) Melissa Lozner (Counsel) Sean Collier (Associate) Jennifer Delgado (Associate) Joseph Fischetti (Associate) Jamie Gottlieb (Associate) Elizabeth Esposito (Paralegal) 1454.10 1620.60 1090.30 187.70 14.30 63.10 36.30 93.80 338.40 615.10 $791.24 $382.56 $553.37 $380.36 $440.00 $281.61 $252.03 $290.58 $321,99 $204.15 $1,150,542.08 $619,976.74 $603,339.31 $71,393.50 $6,292.00 $17,769.50 $9,148.50 $27,256.40 $108,961.42 $125,572.67 HOURS AVERAGE RATE AMOUNT

45
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Lowenstein's Re nested Total

5,513.70

$2,740,252.12

All Neuberger and Lowenstein attorneys and paraprofessionals were billed at their standard rates charged to clients with two exceptions. (See Jarwick Br. at 4). Both Cynthia Leppert (Neuberger principal) and Michael Long (Lowenstein partner) were billed at reduced rates. (Id.). Jarwick represents that these reductions resulted in a total fee savings of

$455,967.47--$84,635.27 in savings for Ms. Leppert and $371,332.20 in savings for Mr, Long. (See id. at 5-6). In addition, Jarwick has voluntarily excluded approximately $800,000 in fees from its application, including fees for unrelated services, such as refinancing, fees for Jarwick's first law firm (Cole Schotz), and fees for attorneys that billed less than a total of $6,000.00. (Id, at 5-6, 32; see also Gielen Cert., 8). C. Review of Reasonableness Factors Pursuant to RPC 1.5(a) Considering the duration and complexity of this case and other factors, such as the Wilf Defendants' duplicitous accounting practices and dilatory discovery tactics, I conclude that Jarwick's fee request, on the whole, is reasonable. However, I also conclude that some reductions must be made to the lodestar, most notably to the hourly rates charged by the Lowenstein attorneys in their role as local counsel. These reductions will be discussed in greater detail below. Before doing so, I will analyze the Jarwick application through the prism of the RPC 1.5(a) reasonableness factors, which are set forth above. 1. Factor One: The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal services properly

This factor weighs heavily in Jarwick's favor. This case may be one of the longest, most complex, and grueling lawsuits in New Jersey state court history. In rendering her decision, Judge Wilson commented on multiple occasions about the exhausting and complicated nature of 46
141737.0060 U22251319v.4

this matter. To the Court's knowledge, "there has never been a case like this in New Jersey jurisprudence," and Judge Wilson went so far as to invoke the fictional chancery dispute of Jarndyce v. Jarndyce from Dickens' BleakHouse.19 (Tr., Aug. 5, 2013, at 29:1-5). This case has been on the docket for over 20 years. Since the Appellate Division remand in 2006, this matter has been an arduous grind. There were more than 50 depositions, over 50 motions, thousands of pages of documents exchanged, approximately 1,500 exhibits admitted into evidence at trial, and 207 trial days since May 9, 2011 (including over 20 days of closing arguments). (See Jarwick Br. at 23; Gielen Cert., Ex. 5; Lebensfeld Cert., ~ 46). The trial featured several marathon-length witness examinations, including the examination of Zygi Wilf, which lasted over 30 days, and the examination of Jeff Barsky, which lasted over 25 days. (See Gielen Cert., Ex. 7). At three different junctures, there were motions to dismiss and for summary judgment that required extensive briefing and argument over novel and complex NJRICO issues, among others. Jarwick, primarily through the assistance of its expert, Jeff Barsky, also had to decipher years of the Wilf Defendants' creative and deceptive accounting practices that were used to funnel monies from the partnership to other Wilf ventures. As Judge Wilson observed, this required excruciatingly detailed forensic accountant work because the Wilf Defendants' scheme had been "hidden so deeply" through their deceptive accounting practices. (Tr., Sept. 3, 2013, at 45:19-25; 46:1; see also Tr., Sept. 23, 2013, at 17:11-15 ("And I also ruled that the
19 Dickens' memorable introductory passage describing Jarndyce v..Iarndyce is particularly appropriate: Jarndyce v. Jarndyce drones on, This scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means. The parties to it understand it least, but it has been observed that no two Chancery lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises. Innumerable children have been born into the cause; innumerable old people have died out of it. Scores of persons have deliriously found themselves made parties in Jarndyce v. Jarndyce without knowing how or why; whole families have inherited legendary hatreds with the suit.

47
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obfuscation of what the Wilfs took was represented by various and sundry reclassifications that occurred that made it difficult for the accountants to ascertain the damages, and made it nearly impossible for anybody else to.")). The sheer enormity and complexity of this matter is most plainly demonstrated by the fact that Judge Wilson needed fourteen days to record her decision on the record, which equaled approximately 1,500 pages of transcript. This was the lengthiest opinion of Judge Wilson's career. (Tr., Sept. 3, 2013, at 16:7-8). New Jersey courts have found factor one ofRPC 1.5(a) to weigh in favor of a fee applicant in situations that are dwarfed by this matter. Accordingly, this factor clearly weighs in favor of reasonableness for Jarwick. See, e.g., Pena v. Drive-Masters Co., 2010 N.J. Super. Unpub. LEXIS 1806, at *8(App. Div. July 29, 2010)(finding factor one to weigh in favor offee applicant where there were 23 fact witness depositions and 45 motions). Simply put, this matter was neither for the faint of heart, nor the novice lawyer. This case required extensive skill, energy and experience, which Jarwick's counsel provided. 2. Factor Two: The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer

As a result of the all-encompassing nature of this matter, Jarwick's lead counsel, Mr. Gielen, certified that he was "largely precluded from accepting other work during more than two years, beginning during the trial preparations in 2011 and continuing to the end of the trial in March 2013." (Gielen Cert., 102). He also certified that the same was true, "albeit to a lesser extent, with respect to other of Jarwick's counsel, such as Cynthia Leppert." (Id.). Such preclusion, according to Mr. Gielen,"results in an erosion of a client base." (Id.). Mr. Himmel's declaration (or subsequent certification) did not contain a similar averment to the effect that he or the Lowenstein Firm in general were precluded from assisting other clients because of this matter.

141737.00601/22251319v.4

Based upon my review of the record, I accept Mr. Gielen's representations.

His

employment in this case precluded him from working on other matters. He worked nearly 8,000 hours on this case through the date of Jarwick's fee application. (See Gielen Cert., Ex. 1). He was Jarwick's lead counsel in the courtroom for a11207 trial days, and he was the only Jarwick attorney to engage in the questioning of witnesses. (See Gielen Cert., Ex. 7). He certifies that trying this case "placed an incredible mental and physical toll" on him. (Gielen Second Cert., ~ 50). The singular focus that this matter required for over two years certainly detracted from his other client relationships and potentially threatened the maintenance of a client base. Thus, I conclude that this factor' weighs in favor of reasonableness as to Jarwick's fee request for Neuberger's work. I am not persuaded, however, that this factor weighs in favor of Jarwick's fee request for Lowenstein's work. Mr. Himmel's declaration and subsequent certification lack any details establishing that he or the Lowenstein Firm were precluded from accepting other employment opportunities as a result of this engagement. Since Lowenstein's engagement in 2008, Mr. Himmel and Mr. Long billed the most hours to the matter, with Mr. Himmel billing approximately 1500 hours and Mr. Long billing just under 2000 hours. Spread out over five years, that averages to approximately 300 hours per year and 400 hours per year, respectively. That leaves time to attend to other client matters. Further, Mr. Himmel admits in his declaration that during the trial, "Lowenstein attorneys purposefully did not attend every day, but rather attempted to focus its efforts on supporting Jarwick's RICO claims." (Himmel Decl., 15). Thus, I conclude that Lowenstein's local counsel role although important and certainly an active local counsel role did not materially preclude the Lowenstein Firm or its individual attorneys from working on other matters.

141737.00601/22251319v.4

3.

Factor Three: The fee customarily charged in the locality for similar legal services

For this factor, Jarwick primarily relies on the representation from its own counsel that its average blended rate for all its counsel -- $382.01 -- "is within the average hourly rate for the type of legal services rendered in this case in Baltimore, Maryland and northern New Jersey." (Jarwick Br. at 37). Both the Gielen Certification and the Himmel Declaration contain

statements attesting that their rates (and those of their firm professionals) are consistent with the rates charged in the relevant legal market. (See Gielen Cert., 103 ("These blended rates are well within the average hourly rate for the type of legal services rendered in this case, in both Baltimore, Maryland and northern New Jersey."); Himmel Decl., 6 ("The fees charged to Jarwick by Lowenstein were billed in accordance with the firm's ...hourly billing rates, which I believe to have been reasonable on the basis of the factors delineated in New Jersey's Rules of Professional Conduct 1.5(a)."); see also Himmel Decl, ~ 18-27)). Jarwick also incorporates the factual and legal arguments contained in Halpern's fee application. (See Jarwicic Br. at 2). Halpern's brief references a 2005 New Jersey Law Journal Billing Survey to support rates for Halpern's lodestar hourly rates. (See Lebensfeld Cert., ~ 60). This survey revealed that the "average mean rate for partners in New Jersey firms is $394." Id, And this survey has been relied upon both by fee applicants and state and federal New Jersey courts as evidence of fees in the New Jersey legal marketplace. See, e.g., T.B. v. Mount Laurel Bd. of Educ., 2012 U.S. Dist. LEXIS 44848, at *10 (D.N.J. Mar. 30, 2012); Sypniewski v. Warren Hills Reg. Bd. ofEduc., 2006 U.S. Dist. LEXIS 39285, at *28-29 (D.N.J. June 14, 2006); Rivera v. Office of the County Prosecutor of the County of Bergen, 2012 N.J. Super. Unpub. LEXIS 2752, at *19(Law Div. Dec. 11, 2012).

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Decisional law within the Third Circuit suggests that affidavit testimony from another witness besides a plaintiff's own attorneys) is required in support of a fee application. See, e.g., Apple Corps Ltd. v, Intl CollectoNs Society, 25 F. Supp. 2d 480, 485 (D.N.J. 1998)("Plaintiffs' counsel `must produce satisfactory evidence in addition to [their] own affidavits that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation."' (citation omitted)). And the Wilf Defendants argue in their opposition and sur-reply papers that such non-party expert evidence is required here. (See Wilf Opp. Br. at 43; Wilf Sur-Reply Br. at 2). New Jersey state courts, however, routinely accept hourly rates set forth by plaintiffs based solely on certifications from their own counsel. See, e.g., Pena, 2010 N.J. Super. Unpub. LEXIS 1806, at *4-7 (noting that plaintiffs fee application was supported by certifications from plaintiff's out-of-state counsel and local counsel); 212 Ma~~in Blvd, LLC v. Chicago Title Ins. Co., 2013 N.J. Super. Unpub. LEXIS 26, at *16 (Law Div. Jan, 8, 2013) ("[F]ee awards are routinely granted without any expert testimony."); Robb v. Ridgewood Bd. of Edzrc., 269 N.J. Super. 394, 405-07 (Ch. Div. 1993)(accepting reasonableness of rates based on certifications from plaintiff's two attorneys). Accordingly, I disagree with the Wilf Defendants' contention that Jarwick's initial application was procedurally defective. In its opening papers, Jarwick submitted evidence from its counsel to attempt to meet its primafacie burden to establish that the rates it seeks to recover are consistent with those charged in the relevant legal community, i.e., their own attorneys' certifications (along with the citation to the 2005 New Jersey Law Journal Billing Survey). As part of Jarwick's Reply Brief, it supplied a supporting certification from anon-party attorney to support the rates sought most

51
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particularly the Lowenstein charged rates. (See Certification of Edward J. Dauber, Esq. ("Dauber Cert.")). Putting aside the issue of whether I can rely on the Dauber Certification because it was not included as part of Jarwick's initial application, I do not find it helpful or probative in the context of this case. That is because none of Jarwick's evidence supporting its rates addresses the issue of Jarwicic seeking significantly higher hourly rates for its local counsel, Lowenstein, as compared to that of its primary litigation counsel, Neuberger, who tried the case. The burden is on the plaintiff to provide evidence of"the rates prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Rendine, 141 N.J. at 337 (emphasis added)(citation and internal quotation marks omitted). Jarwick fails to explain, or provide any evidence to demonstrate, why some of the Lowenstein attorneys should be compensated at nearly double the hourly rate of their Neuberger counterparts, especially considering that Mr. Gielen of Neuberger conducted all of the trial examinations (and opening and closing statements) for Jarwick over the course of the 207-day trial, and Lowenstein served in a local counsel role, albeit an active and supportive role. In other words, Jarwick does not provide any evidence whatsoever to establish that it is customary in the Northern Jersey legal marketplace for a North Jersey local counseleven an active local counsel such as Lowenstein in this caseto charge its maximum rates (upwards of $800 per hour in one case) for local counsel services, especially where the primary counsel charged significantly lower rates.20

20 Mr. Dauber relies on two main pieces of evidence to support Lowenstein's hourly rates: (1) a recent order entered by the United States District Court for the Dishict of New Jersey in b~ re Schering Plough Corporation/Enhance Securities Litigation; and (2) recent national law surveys that reflect maximum partner rates for McCater &English and Gibbons at $825 per hour. (See Dauber Cert., 12-13). Neither of these is persuasive evidence in this case. First, as to Schering Plough, I was already familiar with the Special Master Report issued in that matter, as I reviewed it prior to its citation in the Dauber Cert. As for attorneys' fees, Schering Plough was a class action settlement "common fund" case, not a traditional lodestar analysis case, such as the case here. The only review of the lodestar conducted in 52
141737.00601/22251319x.4

4.

Factor Four: The amount involved and the results obtained

This is another factor that weighs heavily in Jarwick's favor. Defendants, in their opening statement at trial, contended that Jarwick owed them $500,000. (See Jarwick Br. at 37). Not only did Jarwicic's counsel completely defeat that claim, it prevailed on essentially every claim it brought against the Wilf Defendants (with the exception ofsome damages limitations for pre-2000 NJRICO claims and the carve-out period from 2002-2006). Judge Wilson awarded compensatory and punitive damages to Jarwick for a total liability judgment of approximately $50 million (and a NJRICO trebled award of nearly $18 million that was molded into the judgment). To say this was a major victory for Jarwicic would be an understatement. This is a once-in-a-lifetime type result for a plaintiff's attorney. 5. Factor Five: The time limitations imposed by the client or the circumstances

Jarwick contends that its attorneys "had no choice but to work very long hours" to meet the time demands imposed by this matter. (Jarwick Br. at 38). I agree. The scope of this matter was enormous. After Jarwick filed its Amended Complaint in October 2009 (and Halpern filed his Complaint), this case progressed at a non-stop pace. (See, e.g., Himmel Third Cert., 7 ("[A]s the Action progressed over several years, the record grew exponentially.")). Based upon an independent review of the record, the amount of discovery practice, motion practice, and trial work appears to have been unrelenting and did not allow for much breathing room for counsel on

Schering Ploa~gh was a rough "lodestar crosscheck," When reviewing the rates of counsel there, the Special Masters admittedly conducted a "limited unscientific review." See Schering Plough Special Master's Report at 52-53 n.27. The rates that Mr. Dauber cites to in the Schering Plough matter for support were for the "Co-lead" counsel, not local counsel, Indeed, the U.S. District Court's order gave the "Co-Lead" counsel the discretion to allocate the fee fund "amongst Plaintiffs' Counsel in a manner which they, in good faith, believe reflects the contributions of such counsel to the institution, prosecution and settlement of the action." (Dauber Cert., Ex. B 4). This is an acknowledgment that local counsel or liason counsel (those with lesser roles) should recover less. Second, as for the national law surveys cited by Mr. Dauber, again, those do not reflect the supportive local counsel role that Lowenstein undertook here and whether thatjustifies receiving its top hourly rates as pant of a statutory fee award. 53
141737.00601/22251319v.4

either side. At three separate stages, Jarwick had to oppose extensive and complex motions to dismiss and for summary judgment. (See Jarwick Br. at 35; see also Gielen Cert., Ex. 6 (listing chronology of 13 "major motions" filed)). The last of these motions wasfiled during tlae trial. The Wilf Defendants filed this motion to dismiss on March 26, 2012, while Zygi Wilf perhaps the most critical witness in this case was testifying. (See Gielen Cert., Exs. 6-7). Zygi Wilf's testimony continued almost daily until early June 2012. (See Gielen Cert., Ex. 7). While still preparing for the remainder of trial, including participating in the Zygi Wilf examinations, Jarwick's counsel filed a 292-page opposition brief in June of 2012. (See Gielen Second Cert., Ex. 1). Such demands upon trial counsel would stretch the resources of even the country's largest law firms, and are a tribute to the skill, zeal and energy of Jarwick's counsel. I agree with Jarwick's contention that the trial was made even more difficult because of the Wilf Defendants' manipulative accounting practices and dilatory discovery tactics. (See Jarwick Br. at 38). Judge Wilson repeatedly stated during her decision that the depth of the Wilf Defendants' accounting deception was astounding. (See, e.g., Tr., Aug. 6, 2013, at 8:14-15 ("[T]he number of breaches of fiduciary duty in this case are really quite unprecedented from anything that I had seen short of a major securities fraud case

.")).

Even the Wilf

Defendants' own accounting expert, Mr. Hoberman, could not explicate a valid accounting reason for some of the fee reclassifications that the Wilf Defendants perpetrated with the assistance of the Accountant Defendants. (See, e.g., Tr., Aug. 12, 2013. at 63: 9-17). This required extraordinary forensic accounting efforts on the part of Mr. Barsky to navigate the maze created by the Wilf Defendants and the Accountant Defendants. (See, e.g., Tr., Aug. 6, 2013, at 74:11-14 ("It made it almost impossible, without a competent forensic accountant, to go through and track the paths ofthese fees."); Barsky Cert., 15). 54
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As for discovery abuses, the Wilf Defendants delayed the production of numerous critical documents. For instance, Mr. Barsky attested that while he was inspecting documents located at Marvin Cohen's office during Cohen's deposition, Mr. Barsky found significant quantities of relevant financial documents that had not been produced. (See Barsky Cert., 12). Zygi Wilf even admitted that he withheld documents relating to party loans that were requested in 2008. (See Lebensfeld Cert., 48). These tactics continued until after the trial commenced in 2011. After it .was revealed that the Wilf Defendants still had relevant documents that had been withheld months into the trial, the Wilf Defendants produced over 20,000 pages of documents for Plaintiffs to review. (See id. 51; see also Gielen Second Cert., 29 (detailing the "substantial and significant documents [that] were not produced by the Wilfs until well into the trial"(emphasis omitted))). The circumstances presented by this case clearly necessitated labor-intensive efforts by multiple attorneys and other professionals to grapple with the decades of accounting and other improprieties to present a cogent case before the Court. (See, e.g., Gielen Second Cert., ~ 30, 49). Thus,this factor also favors a finding that Jarwick's fee application is reasonable. 6. Factor Six: The nature and length of the professional relationship with the client

This factor tips against Jarwick. Neither Neuberger nor Lowenstein had any prior relationship with Jarwick before this matter. (See Jarwicic Br. at 38). Jarwick fails to explain why it felt compelled to hire a Baltimore firm, which thereby necessitated incurring the extra cost of hiring local counsel. It appears that Neuberger was hired based on the coincidence that its partner, Isaac Neuberger, met Ralph Reichman through "his many business contacts." (Gielen Second Cert., 45). Obviously, the extra costs for local counsel would have been avoided if Jarwick had hired a New Jersey firm to prosecute its case. 55
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7.

Factor Seven: The experience, reputation, and ability of the lawyer or lawyers performing the services

Jarwick's attorneys have strong and impressive credentials. Only skilled and experienced legal counsel could have tried this case. Jarwicic's lead trial counsel, Mr. Gielen, has 37 years of litigation experience, including a stint as an Assistant U.S. Attorney. (See Gielen Cert,, 111). He has "handled many complex commercial cases, including many civil and criminal cases involving fraud and RICO claims." (Id.). He has also been listed in 1999-2013 Best Lawyers in America for the areas of commercial litigation and white collar criminal defense. (See Gielen Cert., Ex. 2). Ms. Leppert Jarwick's primary "behind the scenes" attorney is a principal of Neuberger, who has been practicing for 31 years. (See Gielen Cert., 112). She practices in a wide array of business litigation areas. (See Gielen Cert., Ex. 2). She too is listed in Best La~~yeNs in America and is the current President ofthe Bar Association of Baltimore City. (Id.). Jarwick's primary local counselMr. Himmelalso has an impressive resume. Mr. Himmel has been practicing law for approximately 39 years. (See Himmel Decl., Ex. C). He has extensive white collar crime, fraud, and RICO litigation experience. (Id.). As an Assistant U.S. Attorney in the late 1970s, Mr. Himmel oversaw the first federal RICO prosecution in the District of New Jersey. (See Himmel Decl., 16). He has been listed in Best Lawyers in America from 2001-2013. (See id. at Ex. C). 8. Factor Eight: Whether the fee is fixed or contingent

Both Neuberger and Lowenstein had hourly billing ai7angements with Jarwick. (See Jarwick Br. at 40). They charged their standard hourly rates, except that Ms. Leppert

56
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(Neuberger) and Mr. Long (Lowenstein) were charged at a reduced rate. (See id.). This factor is mostly irrelevant to the Jarwick application because Jarwick is not seeking a fee enhancement. D. Reasonableness of Rates In light of the factors addressed above and Jarwick's decisive trial victory, I find that Neuberger's hourly rates are reasonable. Neuberger charged its standard hourly rates to Jarwick (excepting the reduced rate for Ms. Leppert). This is the typical starting point to analyze the reasonableness of the hourly rates sought, and I see no reason to deviate from those standard hourly rates in the case of Neuberger's work. See Gulfstream III Assocs. v. Gulfstream Aerospace Corp., 995 F.2d 414, 421-22 (3d Cir. 1993)("[T]he prevailing market rate can often be calculated based on a firm's normal billing rate because, in most cases, billing rates reflect market rates, and they provide an efficient and fair short cut for determining the market rate."); Sypniewski, 2006 U.S. Dist. LEXIS 39285, at *24 ("The Third Circuit, as well as other courts, has held that an attorney's customary billing rate is the proper starting point for calculating fees."). By far the most hours charged was for Mr. Gielen's work. I view Mr. Gielen's average hourly rate of $394.09 to be a bargain for his herculean and successful efforts conducting the trial on behalf of Jarwick. Mr. Gielen has practiced for nearly 40 years and has broad litigation experience. His rate is surely consistent with, if not lower than, that charged for an attorney with similar experience in the relevant legal marketplace at issue, i.e., Northern New Jersey. See Furst, 182 N.J. at 22 ("[T]he court should evaluate the rate of the prevailing attorney in comparison to rates `for similar services by lawyers of reasonably comparable skill, experience,
21

However, as discussed below, Halpern is seeking a 25% enhancement based upon the contingency fee agreement he entered into with the Lebensfeld Firth in October 2010, several years after it had been retained on an hourly basis.
21

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and reputation' in the community."). This is confirmed by the New Jersey Law Journal Survey upon which the parties rely, which states that the average mean partner rate was $394 per hour back in 2005. And New Jersey state courts have also found rates in this range to be reasonable for fee-shifting purposes. See, e.g., Crespo v. City ofNewark, 2010 N.J. Super. Unpub. LEXIS 968, at *13 (App. Div. May 4, 2010) (discussing evidence presented in fee shifting case that states "the hourly rate charged .generally by attorneys in the northeastern counties of the state varies from $250 to $400 per hour"). Ms. Leppert spent the next highest amount of time for Neuberger. Her time was billed at an average rate of $303.43. (See Gielen Cert., Ex. 1). Ms. Leppert's average hourly rate of $303.43 which reflected a voluntary reduction from her standard ratewas also a bargain for a seasoned attorney with over 30 years' experience and falls within the range of rates accepted by New Jersey courts. For all these reasons, and in light of the magnitude of Jarwicic's overwhelming victory in this matter, I recommend that all Neuberger rates be deemed reasonable. See Farrar, 506 U.S. at 114 (holding that "degree of success" is "most critical factor" in determining reasonableness of award). As for Lowenstein's hourly rates, I recommend a reduction in rates for most of their timekeepers, reflecting their supportive role to Neuberger. As an initial observation, the Third Circuit has held that a plaintiff must establish that it was unable to obtain a forum law firm as primary counsel before allowing fees for local counsel to be recovered. Interfaith Community
Org, v. Hellef-Jersey City, L.L.C., 426 F.3d 694, 710 (3d Cir. 2005) (noting that defendant

challenged plaintiff's recovery of "fees for its local counsel" and holding that:. "We agree that, under normal circumstances, a party that hires counsel from outside the forum of the litigation may not be compensated for travel time, travel costs, or the costs of local counsel"). In my view, 58
141737.00601/22251319v.4

however, that does not preclude an award of fees for local counsel in this case. New Jersey state courts have allowed the recovery oflocal counsel fees without requiring the plaintiff to show that it was unable to obtain a forum law firm as primary counsel. See, e.g., Pena, 2010 N.J. Super. Unpub. LEXIS 1806, at *1, 14 (affirming approximately $4 million fee award that was then split between out-of-state and local counsel per agreement); Delaney v. Enterprise Leasing Co. of Phila., 2006 N.J. Super. Unpub. LEXIS 1049, at *13-14 (App. Div. May 4, 2006)(noting that trial court awarded fees for local counsel). Even New Jersey federal courts have awarded local counsel fees post-Interfaith. See Aerogroup Intl, Inc, v. Ozbu~n-Hessey Logistics, LLC, 2010 U.S. Dist. LEXIS 120931, at *26-27 (D.N.J. Nov. 15, 2010)(granting fee application (at reduced amount)that included local counsel fees for Lowenstein Firm). Moreover, Lowenstein did progressively become more involved in this case over time, and did participate in tasks above and beyond those typically associated with local counsel, as established both by Mr. Himmel's and Mr. Gielen's certifications and their representations at the October 30, 2013 oral argument. (See Transcript of Oral Argument on Plaintiffs' Fee Applications, dated October 30, 2013 ("Fee App. Tr."), at 45:20-64:21). Lowenstein became heavily involved with researching and briefing the complex and novel NJRICO issues presented in this case. (See Himmel Decl., ~~ 8-10; see also Himmel Third Cert., 5-14). Indeed, the NJRICO claim is the underlying basis for this attorneys' fee application. Lowenstein also acted as the main client liason during the 207-day trial, which Mr. Gielen, Jarwick's lead counsel, acknowledged was a "great assistance" to him, allowing him to focus on the trial itself. (See Gielen Second Cert., 50; Himmel Third Cert., 14). Thus, Lowenstein certainly added value to the Jarwick legal team and Jarwick deserves to recover an appropriate portion of Lowenstein's

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fees. Mr. Gielen went so far as to characterize Lowenstein's role as an "essential contribution . . [to] the prosecution of Jarwick's claims." (Gielen Second Cert., 48). But, ultimately, the reasonableness of the hourly rate for a fee award is tempered by equitable considerations and the exercise of billing judgment. R.M., 190 N.J. at 10 (holding that "the reasonableness of the hourly rate sought ... [is] a standard that also incorporates equitable considerations"). I believe that it would be unfair and unreasonable to make the Wilf Defendants bear the full cost for Lowenstein's services that were billed at significantly higher hourly rates than Neuberger when Lowenstein was acting in a secondary supportive local counsel role. See generally Microsoft Corp, v. United Computer Resources ofNew Jersey, Inc., 216 F. Supp. 2d 383, 386 (D.N.J. 2002)("Excessive legal fees, if not checked by the exercise of billing judgment or ... [the] Court's inherent powers, will be borne unjustly by someone, be that a losing adversary, a client, or a client's unsuspecting customers or shareholders."). This is especially so when Jarwick has submitted no evidence to support an award of Lowenstein's premium rates even though it was engaged in a complementary role. At oral argument, Mr. Himmel's main argument to justify recovering Lowenstein's full hourly rates was that Lowenstein acted more in the nature of "co-counsel" as opposed to a traditional local counsel role. (Fee App. Tr. at 62:14-25; 63:1-13). While I do agree, as noted above, that Lowenstein certainly was an active local counsel, doing far more than simply signing pleadings and submitting pro hac vice motions, I also believe that Lowenstein cannot fairly be said to have acted as a "co-lead" or "co-counsel." It is not the label that one uses to describe the work performed by Lowenstein that is dispositive. It is the substance of that work that is controlling. Indeed, Lowenstein did not participate in any of the dozens of witness

examinations, either at the deposition or trial stage, all of which were conducted by Neuberger.

141737.00601/22251319v.4

For instance, Mr. Himmel was billing Jarwick at nearly double the hourly rate that Mr. Gielen was billing. (Compare Himmel Decl. at Ex. A, with, Gielen Cert. at Ex. 1). As noted above, Mr. Himmel has impressive experience and credentials, which no doubt were an asset to Jarwick. A review of the trial chronology, however, demonstrates that Mr. Himmel did not participate in any witness examinations. Nor did he conduct any of the numerous depositions.
(See Himmel Third Cert., 6). Mr. Gielen was the only Jarwick attorney to participate in the

examinations and arguments at trial. (See Gielen Decl. at Ex. 7; see also Wilf Opp. Br. at 41). Thus, while Mr. Himmel surely added value to Jarwick's legal strategy and trial preparation, he effectively acted as second chair during trial days. No doubt the efforts of Mr. Himmel and Mr. Long in their supportive role as local counsel contributed to the excellent result obtained by Jarwick. However, as the Third Circuit has colorfully stated: "Routine tasks, if performed by senior partners in large firms, should not be billed at their usual rates. A Michelangelo should not charge Sistine Chapel rates for painting a farmer's barn." Ursic v. Bethlehem Mines, 719 F.2d 670, 677 (3d Cir. 1983); see also Port DNivers Fed. 18, Inc. v. All Saints, 2011 U.S. Dist. LEXIS 93700, at *6-15 (D.N.J. Aug. 16, 2011)(reducing recoverable hourly rate for former NJ State Bar Association President William McGuire from $595/hour to $475/hour based in part because he was acting in role oflocal counsel). As a result, I recommend that Lowenstein's requested hourly rates, with the exception of Mr. Long, be reduced by 25% to reflect Lowenstein's supportive role.22 I believe that this is a fair result and that the Court has the discretion to do so under New Jersey state fee-shifting jurisprudence, which encourages flexibility to arrive at a reasonable award. See Rendine, 141

Lowenstein has already voluntarily reduced Mr. Longs billable rate from his standard rate of $575/hour to $382.56/hour. (See Himmel Decl., Ex. A). That already represents an approximate reduction of 33 percent. Thus,I recommend that N1r. Longs lodestar rate remain the same.

22

61
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N.J. at 337("[T]he trial court should satisfy itself that the assigned hourly rates are fair, realistic, and accurate, or should make appropriate adjustments."); see also R.M., 190 N.J. at 10 (noting that determination of reasonable hourly rate "incorporates equitable considerations"). As the Appellate Division recently observed, "`there is no precise formula [to afee-shifting analysis] . . .the ultimate goal is to approve a reasonable attorney's fee that is not excessive."' GNow Co., Inc. v, Chokshi, 424 N.J. Super. 357, 368-69(App. Div. 2012)(quoting Litton Indus. Inc. v, IMO Indus., Inc., 200 N.J. 372, 388 (2009)). Based on that recommendation, Mr. Himmel's recoverable hourly rate would be reduced to $593.43. This would bring Mr. Himmel's rate closer in line with Mr. Gielen's rate. Both Mr. Gielen and Mr. Himmel have very similar resumes. See supra. Furthermore, courts in New Jersey recently have awarded comparable partner rates. See, e.g., Alliance for Disabled in Action, Inc, v. Renaissance Enters., Inc., 2010 N.J. Super. Unpub. LEXIS 1825, at *22, 38-39 (affirming trial court's reduction of recoverable hourly rate for 34-year practicing attorney from $450/hour to $350/hour); see also Gensch v. Hudson County Register, 2012 N.J. Super. Unpub. LEXIS 1630, at *8 (App. Div. July 9, 2012)(affirming reasonableness of $350 hourly rate for partners); Port Drivers, 2011 U.S. Dist. LEXIS 93700, at *6-15; Aerogroup, 2010 U.S. Dist. LEXIS 120931, at *19-22 & n.l (finding rates for Lowenstein attorneys acting in local counsel role ranging between $625-$340 to be reasonable (although opposing counsel did not challenge the reasonableness ofthe rates)). Applying the 25 percent reduction to Lowenstein Partner Christopher Porrino, who has been practicing for approximately 20 years, produces a rate of $415.03 per hour, which is closer in line to the average rate of $303.43 charged by Neuberger's Cynthia Leppert. Mr. Longs average rate of $382.46, which was already voluntarily reduced by more than 25 percent from 62
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$575 per hour, will remain the same. The rest of Lowenstein's time keepers' hourly rates will be reduced by 25%and their recommended revised rates are reflected in the chart below. The touchstone for my recommendation that the Lowenstein hourly rates be reduced by 25% in this case relates exclusively to the supportive role that they performed as local counsel. Had the Lowenstein Firm acted as lead trial counsel, rather than local counsel, I may well have reached a different conclusion regarding the reasonableness oftheir hourly rates. E. Reasonableness of Hours Expended In addition to determining the reasonableness of the proposed rates, the lodestar requires a determination of the reasonableness of the hours expended. Time that is not "reasonably expended" should be reduced from the lodestar. See Rode, 892 F.2d at 1183. Thus, "[i]t does not follow that the amount of time actually expended is the amount of time reasonably expended." Rendine, 141 N.J. at 335 (emphasis and citation omitted). "Hours are not reasonably expended if they are excessive, redundant, or otherwise unnecessary." Rode, 892 F.2d at 1183. Time entries may also be reduced from the lodestar if they are vague or "inadequately document[ed]." Id. This inquiry must be conducted against the factual backdrop ofthe case, and hours that might be unreasonably spent on a straightforward case might be reasonably spent on a complex and novel case. See, e.g., Furst, 182 N.J. at 22-23; Fagas v. Scott, 251 N.J. Super. 169, 205 (Law Div. 1991)(finding that "time spent was reasonable and necessary" in light of "the complexity and contentiousness of the matter"). "Further, the court must consider tlae degree of
success in determining tl:e reasonableness

of the time expended."

Litton Indus. Inc. v. IMO

Indus., Inc., 200 N.J. 372, 387(2009)(emphasis added).

The Wilf Defendants have raised a multitude of objections to'both Neuberger's and Lowenstein's time entries. Specifically, the Wilf Defendants argue that Jarwick's attorneys 63
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impermissibly engaged in: (i) block-billing;(ii) excessive internal strategizing and conferencing; (iii) excessive time conducting tasks such as reviewing and digesting transcripts and conducting research; (iv) excessive work related to punitive damages and dissolution issues; (v) impermissibly vague entries, most specifically for Mr. Himmel and Ms. Esposito of Lowenstein and Mr. Neuberger of the Neuberger Firm; (vi) unnecessary trial attendance by Lowenstein attorneys; and (vii) unreasonable billing for Neuberger attorneys' frequent travel to and from Baltimore. (See Guryan Cert., 66-71, 85-93). Because of these alleged deficiencies, the Wilf Defendants seek to have Jarwick's fee application dismissed in its entirety. (See id. 93). I disagree with the Wilf Defendants' contention that Jarwick's application should be dismissed. For the most part, considering the complexity, duration, and contentiousness of this case, as well as Jarwick's significant victory on the merits, I conclude that the time expended is reasonable. This is also bolstered by the fact the record reveals that the Wilf Defendants engaged in dilatory discovery tactics that surely forced Jarwick to expend many extra hours. See Walker, 209 N.J. at 132 ("Courts should consider the extent to which a defendant's discovery posture ...has caused any excess expenses to be incurred."); see also Lebensfeld Cert,, at Ex. A & C (trial transcripts demonstrating discovery abuses); Gielen Second Cert., 29 (detailing "substantial and significant" documents that were not produced until commencement of trial). But I do agree with the Wilf Defendants that there are certain categories of time entries that, at the very least, require a reduction. Primarily, I recommend that substantial reductions in time should be made for Neuberger's travel time where no work was performed. I also recommend that certain entries by both Lowenstein and Neuberger be reduced due to vagueness. I will address each category of the Wilf Defendants' objections individually below.

141737.00601/22251319v.4

1.

Block Billing

An overarching theme contained in the Wilf Defendants' opposition papers is that Plaintiffs' attorneys' block billing prevents any meaningful review of the firms' invoices, which necessitates either a dismissal of the fee applications or a substantial reduction. (See Wilf Opp. Br. at 1, 5-6, 22, 24, 27-30, 39, 44). I do not agree. Both New Jersey state and federal courts have held that block billing is permissible and, as long as the entries are specific enough to determine reasonableness, block billing itself does not necessitate a reduction in the lodestar amount. See, e.g., Wade v. Colaner, 2010 U.S. Dist. LEXIS 138518, at *17-19 (D.N.J. Dec. 28, 2010) ("[T]he Third Circuit does not find block billing inappropriate when determining the reasonableness of fees."); 212 Marin Blvd., 2013 N.J. Super. Unpub. LEXIS 26, at *28-29("The Court finds that the entries identified ... as block billing are sufficiently descriptive for the Court to assess their reasonableness, and does not disallow them."). Other than the vague entries discussed below, I believe that the entries contained in both the Lowenstein and Neuberger invoices are sufficiently specific to make a reasonableness determination. Furthermore, the Wilf Defendants argue that Plaintiffs' counsel's use of block billing is detrimental to their fee applications because it does not allow for precise segregation of work related to the NJRICO claims from work related to the other common law claims. (See Wilf Opp. Br. at 27). However, this argument is moot because I recommend that Plaintiffs should recover reasonable fees performed in pursuit of all claims against all Defendants, including the settling Accountant Defendants.
See supra, section IV.

That being the case, the Wilf

Defendants concede that block billing is a sufficient method for determining whether there was a reasonable expenditure of time. (See Wilf Opp. Br. at 6("While such block billing might not be fatal if all of the time included within the block entries were compensable, and the only concern

65
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was whether the combined time spent for the tasks was reasonable

.")). Therefore, I

recommend that Lowenstein's and Neuberger's use of block billing in their invoices does not provide a reason to reduce Jarwick's fee request. 2. Internal Strategizing and Conferencing

The Wilf Defendants argue that Lowenstein and Neuberger attorneys expended unreasonable amounts of time strategizing and conferencing both with each other and with Halpern's counsel. (See Wilf Opp. Br. at 22 (objecting to Plaintiffs' attorneys "charging for nearly two dozen attorneys to review each other's work, confer with each other, [and] talk with each other")). According to the Wilf Defendants, the Neuberger time entries (most of which were block entries) that contain the word "conference" total $2,250,779, while the total fees for Lowenstein's entries that contain the word "conference" equals $1,490,790. (See Guryan Cert., 89). The Wilf Defendants contend that they should not be charged for "[s]uch non-productive and duplicative time[]" entries. (Guryan Cert., ~ 92). If this were a simple and straightforward case with boilerplate legal issues, I might agree with the Wilf Defendants that a reduction of time is necessary for the extensive strategizing between attorneys. But this was anything but a simple and straightforward case.23 "A reduction for duplication `is warranted only if the attorneys are unreasonably doing the same work."' Rode, 892 F,2d at 1187. "[P]roductive attorney discussions and strategy
23 As noted above, Judge Wilson opined that "there has never been a case like this in New Jersey jurisprudence." (Tr., Aug. 5, 2013, at 29:1-2), This case has been on the docket for more than twenty years, with the last four years being a continual and contentious grind for all parties and counsel involved. The last four years of this case required a monumental effort to prosecute. (See Tr., Sept. 3, 2013, at 54:2-13 (closing liability decision by quoting Roosevelt's "Man in the Arena")). The Wilf Defendants' accounting scheme was creative and ever-evolving, requiring significant investigating and strategizing for Jarwick to establish liability. (See Tr., Sept. 3, 2013, at 30:19-22 ("And it also goes to show that just because you know what the Wilfs had done, you cannot fathom what they will do, because they keep coming up with something new")).

141737.0060 1/22251319v.4

sessions" are "[c]ompensable activities" under afee-shifting analysis. DirectTV, Inc. v. Clark, 2007 U.S. Dist. LEXIS 55023, at *10 (D.N.J. July 27, 2007). This is especially so in complex matters, such as this one. 212 Marin Blvd., 2013. N.J. Super. Unpub. LEXIS 26, at *30 ("The fact that multiple attorneys attended meetings with one another in a complicated matter ... is nat a surprise, and is certainly not inherently unreasonable."); see also Himmel Third Cert., 16(e) ("[I]t should come as no surprise that attorneys conferred] about strategic considerations in the midst of this enormous matter, with aday-to-day trial and with routine evening and weekend work."). Each lawyer's thoughts cannot live in a vacuum in a case of this scale. Theories need to be brainstormed and arguments need to be coordinated. This requires conferencing and strategy sessions, which, as many courts recognize, ultimately increase efficiency. See, e.g., Apple
Corps, 25 F. Supp. 2d at 488 (rejecting defendants request to strike time entries containing

conferences between co-counsel and observing: "Conferences between attorneys

.are

necessary, valuable, and often result in greater efficiency and less duplication of effort, thus requiring fewer hours overall"(citation and internal quotation marks omitted)). Also, it is clear from reviewing the challenged entries, that the typical billings entry would list multiple other activities, such as preparing for a deposition or briefing motions, not just internal conferences. (See Guryan Cert., Ex. BB1). Therefore, the Wilf Defendants' totaling the entire time of each billing entry that merely contains the word "conference" strikes me as exaggerating the amount of compensation actually sought for internal conferring and strategy sessions. (Cf. Himmel Third Cent., 16(e) ("[M]any times the Wilfs have simply identified entries that contain the word "strategy," without giving any consideration to the extensive detail

67
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contained in these entries or in nearby billing narratives ....")). As a result, I recommend that 24 the hours spent by Jarwick's counsel strategizing and conferencing should not be reduced. 3. Reviewing/Digesting Transcripts, Research,Etc.

I recommend that the challenged time spent on tasks such as reviewing transcripts (and other trial preparation) should be upheld. The Wilf Defendants challenge entries of this kind for both Neuberger and Lowenstein. Again, considering the uniqueness of this case and the

magnitude of Jarwicic's victory, I find that the trial preparation hours and hours spent researching in connection with the extensive motion practice to be reasonable. As for Neuberger's work, the Wilf Defendants make a series of specific objections. For instance, the Wilf Defendants challenge 45,5 hours Neuberger billed ($7,280 in fees) for reviewing/abstracting Zygi Wilf's April 2, 2010 deposition, as well as 35 hours billed ($5,600 in fees) for reviewing/abstracting Zygi Wilfs April 16, 2010 deposition. (See Guryan Cert., 69). These entries do not strike me as unreasonable. Zygi Wilf was acritical perhaps the most critical fact witness during the trial. Neuberger would have been doing a disservice to its client had its attorneys not engaged in a meticulous review of prior Zygi Wilf deposition testimony to prepare for trial. The Wilf Defendants also challenge a total of 31.7 hours spent ($6,872 in fees) reviewing/abstracting Frank Razzano's November 18, 2008 deposition testimony. (See id.). I
24 The Wilf Defendants also argue that Lowenstein's billing entries that describe the primacy task performed as "strategy" are too vague. (See Guryan Cert., 71 & Ex. S). After reviewing the questioned entries, I recommend that this argument be rejected. The standard for sufficient documentation of time is not overly-exacting. See, e.g., Washington v. Phila. County Court ofCommon Pleas, 89 F.3d 1031, 103738(3d Cir. 1996). I believe that these entries contained in E~ibit S to Mr. Guryan's Certification are not so vague as to make a reviewing court unable to make a reasonableness determination. Cf. L.J. v. Audobon Bd. ofEduc., 2009 U.S. Dist. LEXIS 31473, at *47-48 n.16 (D.N.J. Apr. 13, 2009)("The Court is not persuaded by Defendant's argument that certain entries such as `office conference' or `review letter from attorney' are so vague that it cannot evaluate the reasonableness of the entry. [The plaintiff attorney's] records are sufficiently specific."). .:
141737,00601/2225 1319v.4

recommend awarding these fees as we11.25 This is not an unreasonable amount of time to spend reviewing an approximately 200 page deposition transcript over the span of four years. Moreover, Mr. Razzano's deposition transcript was read into the record at trial in lieu of trial testimony. (See Guryan Cert., at Ex. O (10/17/11 Witness List)). Plainly, a material amount of time was required for Neuberger attorneys to become familiar with the transcript when portions of it would be part of the trial record. Next, the Wilf Defendants object to Neuberger's 15.5 hours billed for

reviewing/abstracting of Lori Breitman Jacovsky's September 14, 1998 trial testimony. (See Guryan Cert., 69). They argue this charge should be stricken because "Ms. Jacovsky never testified during the 2011-2013 trial." (Id.). I do not agree with this position and believe this time is recoverable. Simply because a witness ultimately did not take the stand for the second trial does not mean that time spent reviewing that witness's prior testimony is inherently unreasonable. Cf. N.J. Primary Care Assn v. State Dept of Human Servs., 2013 U.S. Dist. LEXIS 91098, at *26 (D.N.J. June 28, 2013)(refusing to deduct time spent preparing for issues that ultimately were not raised during hearing, noting "the Court appreciates that counsel cannot always anticipate the Court's concerns and, as such, needs to be thoroughly prepared and well versed on all relevant issues of fact and law"). Last, the Wilf Defendants argue that 29.6 hours which Neuberger billed for preparing a research memorandum relating to recoverable interest is excessive. I disagree. With the large potential recovery at stake, the issue of interest calculation implicated a substantial amount of

The Wilf Defendants also challenge the use of junior/mid-level associates for preparing deposition abstracts instead of paralegals. (See Guryan Cert., 69). I do not find this objectionable, as this is a reasonable use of time for junior attorneys to assist in trial preparation. See Wade, 2010 U.S. Dist. LEXIS 138518, at *19-20 (upholding fees spent summarizing deposition transcripts by associate at rate of $250/hour).
141737.00601/22251319v.4

25

money. I do not find the approximately 30 hours spent researching and drafting a research memorandum to be unreasonable. Therefore, I recommend that these fees be recovered. See generally DirectTV, 2007 U.S. Dist. LEXIS 55023, at * 10 ("Compensable activities include the preparation offiling the lawsuit, background research ...."). As for similar Lowenstein entries, the Wilf Defendants object to 80.5 hours ($33,223.40 in fees) that three Lowenstein attorneys spent in researching and preparing a NJRICO file memorandum for Jarwick's review and analysis. (See Guryan Cert., 71). Analyzed against the circumstances of this case, I conclude that these charges are reasonable. The NJRICO claims were significant for Jarwick and they presented novel issues involving the application of NJRICO to a partnership context. According to Jarwick, this challenged research resulted in a 23-page memorandum containing "a thorough analysis of NJ RICO, which included an elementby-element review of the state of the law, relevant differences from Federal RICO, and case law applying the law in partnership and business settings." (Himmel Third Cert., 16(a)). In large, complex litigations, a certain amount of reviewing and revising other attorney work product is inevitable and reasonable. 212 Marin Blvd., 2013 N.J. Super. Unpub. 26, at *26 (holding fee entries to be reasonable, noting "[i]n any case, let alone ones as complicated as this, attorneys must `review' and `revise' on a regular basis"). I, therefore, recommend that these challenged fees be upheld. 4. Punitive Damages/Dissolution Worlc

The Wilf Defendants challenge the block billing entries that mention "punitive damages," which contain 312.7 hours for Lowenstein, totaling $155,204.50, and 256 hours for Neuberger, totaling $74,443.50. (See Guryan Cert., 85-87). After reviewing the specific billing entries, I conclude that these totals are reasonable. These legal services were performed over a span of

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approximately four years and included multiple facets, such as research/analysis, briefing punitive damages issues in connection with the Wilf Defendants' extensive motions to dismiss and for summary judgment, engaging in punitive damages discovery, and briefing the interplay between punitive damages and NJRICO treble damages. (See id. at Ex. Z1,Z3). Similarly, I conclude that the fees charged for work performed in connection with dissolution are reasonable. The Wilf Defendants challenge block entries containing the word "dissolution," which total 88.9 hours for Lowenstein ($39,274.63) and 85.9 hours for Neuberger ($26,362.07). (See id. 88). This work also spanned multiple years and these issues were argued in rounds of dispositive motions. (See id. at Ex. AA1, AA3). Judge Wilson herself noted that "dissolution is a harsh and extreme remedy" that is "it's not very often done." (Tr., Sept. 3, 2013, at 5:19-22). Indeed, this was the first case in which Judge Wilson ordered dissolution as a remedy. (Tr., Sept. 3, 2013, at 5:22-23). As such, it is to be expected that Jarwick's counsel would have to spend considerable time to persuasively argue for dissolution to be applied here. 5. Vague Entries

Besides challenging various time entries as excessive, the Wilf Defendants also object to time entries they contend are too vague to be reimbursed. (See, e.g., Guryan Cert., 71). I agree that there are entries contained in both the Lowenstein and Neuberger invoices that are too vague to allow for recovery. Most notably, Lowenstein's paralegal, Elizabeth Esposito, billed hundreds of hours under the label "[a]ttend to case management issues." (See id. at Ex. P1). The Wilf Defendants cited a U.S. District of New Jersey decision in which Chief Judge Garrett Brown disallowed the identical billing entries for Ms. Esposito in another fee-shifting matter, (See Wilf Opp. Br. at 2223 (citing Illinois Nat'l Ins. Co. v. Wyndham Wo~ld~~ide Op., Inc., 2011 U.S. Dist. LEXIS 65018

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(D.N.J. June 7, 2011)). Chief Judge Brown held "that a number of entries billed by Lowenstein paralegal Elizabeth Esposito provide only the vague description `[a]ttend to case management issues ....These vague entries do not permit the Court to ascertain whether these services were reasonably expended in the furtherance of this litigation." Illinois Nat'l, 2011 U.S. Dist. LEXIS 65018, at *21. Accordingly, I recommend that all entries that Ms. Esposito recorded that solely contain the description "attend to case management issues" should not be included in the fee award. My review of Exhibit P 1 appended to Mr. Guryan's Certification reveals that Ms. Esposito recorded 162 such entries for a total time of 257.3 hours. I recommend that those hours be subtracted from Ms. Esposito's lodestar. The Wilf Defendants also point to entries recorded by Ms. Esposito between March 24, 2010 and Apri17, 2010, which they allege do not appear to be related to this matter. (See Guryan Cert., 71). These entries contain descriptions such as "[r]eview and retrieve pleadings

requested by Mr. Himmel in connection with upcoming district court hearing." (See, e.g., 3/24 /10 Lowenstein Invoice Entry for E. Esposito). From the face of these entries (3/24/10,. 3/25/10, 3/30/10, 3/31/10, 4/05/10, 4/06/10, 4/07/10) they seem to be erroneously billed to the wrong matter. However, Jarwick certifies that the work was in fact performed in connection with this matter; specifically for "a lengthy hearing before the Court on April 8, 2010 concerning multiple motions to dismiss, and an application to appoint a receiver and for other equitable relief." (Himmel Third Cent. 16(b)). Ms. Esposito's references to a "district court hearing" were a simple "typographical error." (Id.). I accept Jarwick's representation and recommend that the Court not strike those challenged entries (which total 18.6 hours). As for other Lowenstein timekeepers, the Wilf Defendants challenge multiple entries submitted by Mr. Himmel as vague. (See Guryan Cei-t., 71). They argue that 18 of Mr. 72
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Himmel's entries that contain the phrase "attend to" are vague and insufficiently documented to be given credit. (See id. at Ex. P2). After reviewing Exhibit P2 to Mr. Guryan's Certification, I agree that five of the challenged entries should be omitted from the lodestar calculation: (1) 7/19110 ("Attend to deposition issues");(2) 11/17/10 ("Attend to punitive damages issues");(3) 4/18/11 ("Attend to RICO and punitive damages issues"); (4) 11/06/12 ("Attend to statute of limitations issues"); and (5) 7/16 /13 ("Attend to post-decision issues"). (See id.). These entries total seven (7) hours that should be deducted. See Tenafly E~uv Assn, Inc. v, Borough of Tenafly, 195 Fed. Appx. 93, 100 (3d Cir. 2006)(striking as impermissibly vague billing entries stating "attn to papers" and "attn to status"). I also found an entry by Mr. Himmel for 0.5 hours dated June 23, 2010, which simply states "[r]eview and exchange emails." I recommend that this entry also be stricken for vagueness. In addition, at oral argument, Mr. Himmel conceded that a billing entry for 1.8 hours listed on August 30, 2012, was erroneously billed to the Jarwick matter, and it should be stricken. (Fee. App. Tr. at 57:19-25). Thus, I recommend a total reduction of 9.3 hours from Mr. Himmel's lodestar for vague entries. In addition, an independent review of Lowenstein's invoices revealed a number of impermissibly vague entries from Lowenstein Partner Christopher Porrino. Between October 15, 2009 and January 1, 2012, Mr. Porrino submitted 23 one-sentence entries with vague descriptions like "[r]eview and respond to emails," "review and respond to correspondence," or "review and respond to e-mails and attend to follow up." (See 10/15/09, 12/2/09, 1/21/10,3/7/10, 4/23/10, 4/30/10, 6/15/10, 6/23/10, 6/28/10, 8/23/10, 8/31/10, 9/1/10, 9/7/10, 9/15/10, 12/16/10, 12/29/10, 3/2/11, 4/6/11, 9/8/11, 10/2/11, 12/26/11, 12/27/11, and 1/8/12 Lowenstein Invoice Entries for C. Porrino). These billing entries contained no description as to who the

73
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correspondence was with or the subject matter. Without at least such minimal detail, it is impossible to determine whether the time was reasonably spent. See Washington v. Phila. County Court of Common Pleas, 89 F.3d 1031, 1037 (3d Cir. 1996)(holding that "specificity should only be required to the extent necessary for the district court `to determine if the hours claimed are unreasonable for the work performed"' (citation omitted)). Accordingly, I

recommend the 11.9 hours that comprise these 23 time entries be deducted from Mr. Porrino's hour total. Turning to Neuberger's invoices, I agree with the Wilf Defendants that certain entries by Principal Isaac Neuberger are too vague and should be subtracted from the lodestar. (See Guryan Cert., 69 & Ex. N). Mr. Neuberger recorded many time entries that have no descriptive detail whatsoever. Some common examples are "[e]xchange of emails," "[e]mails," or "[m]ultiple calls and emails." (See id. at Ex. N). I found 48 such entries that I recommend are not recoverable for a sum of 14.2 hours. (See 12/11/07, 5/17/08, 9/1/08, 9/3/08, 10/12108, 10/20/08, 1/3/09, 1/25/09, 2/7/09, 3/6/09, 3/23/09, 3/31/09, 4/8/09, 5/2/09, 5/28/09, 6/12/09, 6/16/09, 23/09, 7/10/09, 7/11/09, 7/12/09, 7/24/09, 7/30/09, 8/6/09, 9/5/09, 10/8/09, 10/25/09, 11/1/09, 11/ 12/11/09, 1/5/10, 2/16/10, 2/18/10, 3/7/10, 3/8/10, 3/13/10, 3/28/10, 4/10/10, 4/11/10, 4/23/10, 4/28/10, 5/21/10, 5/29/10, 6/11/10, 6/28/10, 10/14/10, 11/26/10, 1/9/11, 1/25/11, and 7/13/11 Neuberger Invoice Entries for I. Neuberger). 6. Lowenstein Trial Attendance

Although Lowenstein attorneys did not examine any witness at trial or present any direct or closing arguments, Lowenstein charged Jarwick for its trial attendance, and Jarwick is seeking reimbursement for the majority of those fees from the Wilf Defendants. The trial court did not require Lowenstein to attend the trial. (See Wilf Opp. Br. at 37). Lowenstein did not attend trial

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26 for a11207 days, but there was at least one lawyer from the firm at more than 100 days of tria1. (See Guryan Cert., at Ex. O). The Wilf Defendants vociferously object to Lowenstein's trial attendance as excessive and duplicative in light of the fact that Mr. Gielen handled all witness examinations and arguments for Jarwicic, (See, e.g., Wilf Opp. Br. at 40 ("Particularly glaring is the truly outrageous over-billing by the Lowenstein firm in charging for the attendance of members of its firm at trial without any participation in the proceedings ....")). Again, as with the issue of internal strategizing/conferencing, if this were a routine case, the Wilf Defendants might have a persuasive argument on this point. However, given the complexity of this case, I believe this is one of those rare instances where awarding fees for two attorneys to attend trial is not unreasonable. Additionally, as noted above, I already recommended an across-the-board reduction of the recoverable hourly rates for the Lowenstein attorneys (with the exception of Mr. Long, who already had a voluntary reduction of 33 percent from his standard rate). I believe that hourly rate reduction safeguards against foisting unreasonable fees onto the Wilf Defendants for Lowenstein's local counsel role, Courts in fee-shifting cases have held that seeking recovery for the attendance of multiple attorneys at hearings is unreasonable when some of those attorneys are not actively participating. Microsoft Corp., 216 F. Supp. 2d at 393 ("Furthermore, `the attendance of additional counsel representing the same interests as the attorney actually participating in a hearing is wasteful and should not be included in a request for counsel fees from an adversary."' (citation omitted)). Even if a plaintiff's client is willing to pay for the additional cost, it is not necessarily reasonable to pass those costs onto a defendant pursuant to a statutory fee-shifting provision. E.g,, Aerospace Intl, 2010 U.S. Dist. LEXIS 120931, at *41 ("Although a private client may wish to 26 Jarwick has voluntarily elected only to seek recovery of one Lowenstein attorney on days when two Lowenstein attorneys assisted IVI~, Gielen with trial. (See Himmel Decl., 28). 75
141737.00601/22251319x.4

pay for multiple attorneys to merely attend hearings on that client's behalf, `this practice is not necessarily reasonable when the extra expense will be borne by the other party to the proceedings."'); Apple Corps., 25 F. Supp. 2d at 489(same). But in complex cases, courts have recognized that trial attendance by more than one attorney is reasonable and recoverable pursuant to afee-shifting statute. Ganes v. Willingboro, 1995 U.S. Dist. LEXIS 3699, at *14 (D.N.J. Mar. 20, 1995)(declining to exclude hours of local counsel spent at trial because "[i]t is common, perhaps even advisable, for lead trial counsel to utilize the assistance of other counsel"); Reyes Canada v. Hernandez, 411 F. Supp. 2d 53, 57-58 (D.P.R. 2006)(rejecting "defendants' argument that having three attorneys participate in the trial and re-trial phases of this case was unwarranted" because "the Court's schedule was non-stop and fast-tracked"); cf. 212 Marin Blvd., 2013 N.J. Super. Unpub. LEXIS 26, at *30 ("The fact that multiple attorneys attended meetings with one another in a complicate matter ... is not a surprise, and is certainly not inherently unreasonable.... Again, the Court notes the novelty of the legal questions presented, and the scope ofthe underlying litigation."). Moreover, as Jarwicic correctly observes, the primary case that the Wilf Defendants rely on to argue against recovery for multiple attorney attendance Lipsett v. Blanco, 975 F.2d 934 (lst Cir. 1992) actually supports recovery of Lowenstein's trial-attendance hours. The First Circuit in Lipsett affirmed the district court's refusal to exclude hours for multiple attorney attendance at trial. See id. at 938-39. The court noted that the case was "bitterly contested" and that the defendants resisted the plaintiff "at every turn and forced] her to win her hard-earned victory from rock to rock and from tree to tree." Id. at 939. The court also considered the plaintiff's multiple staffing to be reasonable in light of "the complexity of the litigation, the considerable burdens it placed upon plaintiff's counsel, the number of defendants, and the 76
141737,00601/22251319v.4

defense's formidable staffing patterns." Id. The court's reasoning in Lipsett squarely applies here, in Jarwick's favor. As I have noted on multiple occasions already, this was litigation on a grand scale. I believe Mr. Gielen's representations that Lowenstein's attendance during the most critical witnesses' testimony provided vital assistance to his trial efforts and that Lowenstein did not merely enjoy the show as suggested by the Wilf Defendants. (See Gielen Second Cert., 50). Indeed, the Wilf Defendants always had two attorneys attending every trial day on their behalf even when only one attorney was actively participating that day. (See id. 11). During the testimony of critical witnesses relating to NJRICO, the presence of a Lowenstein attorney provided an extra set of eyes and ears "to confer with Mr. Gielen [and] enable[] Jarwick to develop and execute on up-to-the minute strategic decisions and new lines of questioning and/or argument." (Himmel Third Cert., 13). In addition, Lowenstein was able to act "as the main client liaison" and could relay the day's trial events to the client and formulate strategy, thereby freeing Mr. Gielen to focus on the next day's examinations. (See id. 14). In their Sur-Reply, the Wilf Defendants also argue that on multiple days on which Mr. Himmel attended, Mr. Lebensfeld not Mr. Gielen was examining the witness. (See Wilf SurReply Br. at 5 ("It is nothing short of preposterous for Mr. Himmel to contend that he or another Lowenstein attorney had to be in Court on those days to watch Mr. Gielen watch Mr. Lebensfeld examine those witnesses.)). Although this argument has some superficial appeal, I conclude that in a litigation of this magnitude, having Mr. Himmel attend was not unreasonable. Mr. Himmel could still add value while Mr. Lebensfeld was questioning witnesses by, among other things, assisting Mr. Gielen with contemporaneous strategy advice, as well as communicating with lawyers back at the office for "behind the scenes" work that was being performed. (See Himmel 77
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Third Cert., 13). Had a Lowenstein attorney attended trial every day, even for minor witnesses, perhaps I would have concluded that to be overkill, warranting a reduction in hours. But based upon the record, it appears that Lowenstein strategically chose its spots to provide extra assistance to Mr. Gielen for the most critical witnesses relating to the NJRICO issues. The Wilf Defendants also heavily rely on my opinion in Microsoft Corp, v. United Computer Resources of New Jersey, Inc., 216 F. Supp. 2d 383 (DN.J. 2002), which I issued while sitting as a United States District Court Judge. (Wilf Opp. Br. at 40-41). However, Microsoft is clearly distinguishable from this case. In Microsoft, I struck duplicative trial attendance time in connection with aone-~l~cy contempt hearing that presented no "complex or novel" issues. See Microsoft, 216 F. Supp. 2d at 386, 391, That case was vastly different from this case in terms of complexity and appropriate legal staffing. For these reasons, I find Lowenstein's limited trial attendance to be reasonable. Therefore, I recommend that the Court hold that Jarwicic is able to recover for the trial attendance time of one Lowenstein attorney per trial day attended. 7. Neuberger Travel Time

The last major objection from the Wilf Defendants is to attorneys' fees incurred because of Neuberger's travel time to and from Baltimore. The Wilf Defendants note that Jarwick's initial application papers fail to indicate why Jarwick employed an out-of-state firm. (See Wilf Opp. Br. at 35). They argue that it is unfair to "foist upon defendants all of the travel time, and all of the travel expenses, resulting from the decision to utilize the services of Mr. Gielen's firm." (Id. at 36). I am persuaded that it is unreasonable to saddle the Wilf Defendants with all of the extra attorneys' fees incurred as a result of Neuberger's inter-state travel time and I

78
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recommend that a reduction be made to Neuberger's total lodestar to exclude time spent for interstate travel during which no substantive work was performed. The Third Circuit has held that unless forum counsel lacked the expertise or was -forum unwilling to prosecute the matter at hand, the defendant should not be charged for out-of counsel's travel time. Interfaith, 426 F.3d at 705; see also H.I.P. v. K. Hovnanian at MahN~ah VI, Inc., 291 N.J. Super. 144, 164 (Law Div. 1996) (striking "some of the travel time" entries from lodestar). Interfaith is not binding on this Court and I recommend that this Court not follow that decision insofar as it would exclude Lowenstein's local counsel fees/costs in their entirety. However, I do find Interfaith's holding to be persuasive as to travel time for out-ofstate counsel, and I conclude that excluding time for non-working interstate travel is warranted. Although Jarwick had the right to choose the law firm it wanted as its primary law firm and incur the additional fees for Neuberger's travel time, it strikes me as unfair that the Wilf Defendants should bear the entire burden of that decision in a statutory fee-shifting case. Cf. Apple Cops., 25 F. Supp. 2d at 489 (noting that fees that client may be willing to pay are not necessarily appropriate to pass on to defendant pursuant to afee-shifting provision). See generally R.M., 190 N.J. at 10 (holding that determining reasonable expenditure of hours is a
determination steeped in "equitable tones").

I am not persuaded by Jarwick's attempt to distinguish Interfaith regarding this issue. (See Jarwick Reply Br. at 71-72). In essence, Jarwick contends that Interfaith's logic is inapplicable because having out-of-town counsel actually saved Jarwick costs and fees. (See id. at 71). This is simply an unsupported, conclusory argument. Indeed, Jarwick has presented no definitive evidence demonstrating that it could not have obtained a New Jersey law firm to prosecute this case which charged hourly rates similar to Neuberger's rates. 79
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In his Second Certification, Mr. Gielen estimated his interstate travel time, which predominantly consisted of trips between Baltimore and Northern New Jersey. (See Gielen Second Cert., 37-40). He certified that he typically traveled by train, but was sometimes forced to travel by car because he had too many exhibits and witness examination materials to bring on the train. (See id. 39). He estimated that a round trip via train was typically six hours while a round trip via automobile was typically seven hours. (See id. 38). He certified that he "always worked on the case during train trips" and that he would conduct various case-related calls during car trips. (See id. 39). Of the estimated total 791 hours of Mr. Gielen's interstate travel, he certified that "a total of 560 hours were spent traveling without working on the case." Accordingly,I recommend that 560 hours be deducted from Mr. Gielen's lodestar.27 In addition, according to Exhibit L to Mr. Guryan's Certification, Neuberger attorneys Nathan Adler (2!14/08) and Cynthia Leppert (12/23/08) each had one roundtrip interstate travel entry. Neither Mr. Adler, nor Ms. Leppert has provided evidence indicating whether they worked during the travel portion of these respective work days. Accordingly, I recommend that six hours be subtracted from each of their individual lodestars, which represent the estimated round-trip time from Baltimore to Northern New Jersey by train. I also recommend.asix-hour deduction for Mr. Neuberger's roundtrip for attending depositions in New Jersey on July 7-8, 2009. (See Guryan Cert., Ex. L). Likewise, Neuberger associate Jennifer Karangelen had a solo round trip to and from Baltimore for a deposition (4/19/10, 4/20/10), which results in a recommended deduction of six hours. In addition, Ms. Karangelen joined Mr. Adler for the February 14, 2008 meeting with
27

Mr. Gielen seems to argue that if his 560 hours travel time is deducted, then his average billing rate should increase to $424.95 per hour. (See Gielen Second Cert., 41). I recommend that this argument be rejected because Mr. Gielen's calculation is faultyit reduced the total hours worked by 560 hours, but used the same total amount billed. (See id.).
:1 141737.00601/22251319v.4

Cole Schotz in New Jersey to review documents. I believe this entire entry of 10.9 hours should be stricken as duplicative. This would result in a total of 16.9 hours to be subtracted from Ms. Karangelen's lodestar. Neuberger associate Ryan Dietrich has three entries that represent solo interstate round trips (8/5!08, 8/26/08, 10!23/08), which I recommend be reduced by six hours each since there is no indication whether Mr. Dietrich performed work during his travels. Mr. Dietrich also has two entries that indicate he traveled with Mr. Gielen to assist with a conference and a deposition (2/26/08, 9/17/08). I believe both of those entries, totaling 21.9 hours should be excluded in their entirety as unnecessarily duplicative. That would result in a total reduction of 39.9 hours from Mr. Dietrich's lodestar. F. Recommended Revised Lodestar Calculation for Fees Based on my recommendations above, the lodestars for both Neuberger's legal fees and Lowenstein's legal fees should be reduced. My recommended revised lodestar for Neuberger reflecting the reductions for vague entries and excessive travel time described aboveis as follows: NAME Neuberger Nathan Adler (Principal) Price Gielen (Principal) Cynthia Leppert (Principal) Isaac Neuberger (Principal) Ryan Dietrich (Associate) Elliot Engel (Associate) HOURS Requested/ Recommended 103.60/ 97.60 7710.70/ 7150.70 2495.60/ 2489.60 141.90/ 121.70 379.60/ 339.70 212.80/ 212.80 AVERAGE RATE AMOUNT Requested/ Recommended $28,500.00/ $26,849.76 $3,038,711.50/ $2,818,019.36 $757,235.73/ $755,419.33 $75,530.00/ $64,778.48 $74,488.00/ $66,659.33 $43,288.14/ $43,288.14

$275.10 $394.09 $303.43 $532.28 $196.23 $203.42 81

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Brian Flank (Associate) Jonathan Goldberg (Associate) Jessica Iturriaga (Associate) Jennifer Karangelen (Associate) Kimberly Swanson (Paralegal)

31.30/ 31.30 1901.00/ 1901.00 114.10/ 114.10 1156.90/ 1140.00 3855.70/ 3855.70

$212.83 $216.93 $91.87 $211.51 $123.17

$6,704.00/ $6,704.00 $412,392.93/ $412,392.93 $17,895.91/ $17,895.91 $244,695.89/ $241,121.40 $474,909.45/ $474,909.45

Neuberger Total

18,103.20/ 17,454.20

$5,174,351.55/ $4,928,038.09

My recommended revised lodestar for Lowenstein -reflecting reduced hourly rates and reductions for duplicative trial attendance and vague entries -is as follows: NAME Lowenstein Michael Himmel (Partner) Michael Long (Partner) Christopher Porrino (Partner) Carl Greenfield (Counsel) Melissa Lozner (Counsel) Sean Collier (Associate) Jennifer Delgado (Associate) Joseph Fischetti (Associate) Jamie Gottlieb (Associate) Elizabeth Esposito (Paralegal) HOURS Requested/ Recommended 1454.10/ 1444.80 1620.60/ 1620.60 1090.30/ 1078.40 187.70/ 187.70 14.30/ 14.30 63.10 63.10 36.30/ 36.30 93.80/ 93.80 338.40/ 338.40 615.10/ 357.80 AVERAGE RATE Requested/ Recommended $791.24/ $593.43 $382.56/ $382.56 $553.37/ $415.03 $380.36/ $285.27 $440.00/ $330.00 $281.61 $211.21 $252.03 $189.02 $290.58/ $217.94 $321.99/ $241:49 $204.15/ $153.11 82
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AMOUNT Requested/ Recommended $1,105,542.08/ $857,387.66 $619,976.74/ $619,976.74 $603,339.31/ $447,568.35 $71,393.50/ $53,545.18 $6,292.00/ $4,719.00 $17,769.50/ $13,327.35 $9,148.50/ $6,861.43 $27,256.40/ $20,442.77 $108,961.42/ $81,720.22 $125,572.67/ $54,782.76

Lowenstein Total

5,513.70/ 5,235.20

$2,740,252.12/ $2,160,331.46

G.

Requests for Costs/Disbursements Jarwicic has included in its application a request to recover $129,209.98 in Lowenstein

disbursements and $418,989.36 in Neuberger disbursements. (See Jarwick Br. at 3). Jarwick is also seeking to recover $1,586,475.22 in what it labels "costs of investigation and litigation." (Id, at 6), These costs are predominantly comprised of the costs for their expert accountant, Mr. Barsky and trial presentation assistance from Magna Legal Services. (See id.). Jarwick has excluded from its application approximately $26,000 for Neuberger disbursements and $259,593.58 in costs. (See id. at 5, 7). The primary cost excluded is the cost for Jarwick's accounting expert for the first trial William Morrison. (See id. at 7). As part of a fee

application, the costs and expenses incurred are also subject to a reasonableness analysis. See Apple Corps, 25 F. Supp. 2d at 497("The costs and expenses incurred by counsel ...are subject to the Court's determination that they are reasonable and necessary."). With that in mind, I will analyze the requested costs and disbursements. 1. Disbursements

I conclude that Lowenstein's request for disbursements of $129,209.98 are reasonable for the most part and are largely recoverable subject to some minor suggested reductions discussed below. (See Himmel Decl., Ex. A). More than half the costs are for legal research, which is compensable. U.S. ex rel. Evergreen Pipeline Constr. Co. v. ~Ierrit Meridian Const. Corp,, 95 F,3d 153, 173 (2d Cir. 1996). Considering the volume and complexity of the motions in this

83
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matter, and Lowenstein's active role in Jarwick's motion practice, the approximately $80,000 in Westlaw and Lexis charges are reasonable. As for Lowenstein's other listed expenses, they consist of local travel, telephone charges, filing fees, copying charges, and postage/Federal Express payments. (See Himmel Decl., Ex. A). These expenses are recoverable by a plaintiff where there is afee-shifting provision. Sypniewski, 2006 U.S. Dist. LEXIS 39285, at *36-37 (awarding approximately $50,000 in "photocopying expenses, telephone expenses, travel time and expense and postage"); Fagas v. Scott, 251 N.J. Super. at 207 (holding that term "litigation costs" in NJ frivolous litigation. statute includes "[s]uch costs as photocopying, messenger charges, filing fees, postage"). There are a handful of Lowenstein's costs that I find are impermissibly vague and I cannot glean the nature of these charges from an independent review of Lowenstein's contemporaneous time records. These expenses are labeled: (1)"Outside Legal Counsel/Local Counsel" ($3,938.05); (2) "Other Office Costs" ($2,200.05); (3) "Professional Services" ($1,200.00); (4) "Reference Materials" ($242.51); and (5) "Searches" ($450.72). They total $8,031.33. I recommend that these expenses be subtracted from Lowenstein's recoverable disbursements, for a total recovery to Jarwick of $121,178.65. As for Neuberger's requested disbursements, I recommend that Jarwick be reimbursed in full for: (1) computerized legal research -- $46,085.79;(2) delivery expenses -- $7,607.26; (3) deposition transcripts -- $29,855.94; (4) photocopies -- $70,720.10; (5) postage expenses -$262,68;(6)telephone expenses -- $724.38; and (7)fees paid to Special Discovery Master Keefe -- $2,405.00.28 (See Gielen Cert. at Ex. 3). This totals $157,661.15.

As for the fees paid to Special Master Keefe, the analysis tracks that performed for reallocation of the fees incurred in connection with this Special Master Report. See infra Section IX.
28

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However, I recommend that Jarwick's request for reimbursement for Neuberger's secretarial overtime expenses and Neuberger's travel and lodging expenses be excluded. (See id.). Jarwick seeks $64,122.80 for Neuberger's secretarial overtime expenses. Courts have held that overtime for non-legal staff is only recoverable when the plaintiff "demonstrate[s] the necessity for such services." Apple Corps, 25 F. Supp. 2d at 500. The plaintiff must demonstrate "an extraordinary need for supplemental services has arisen, either as a result of the complexity of the litigation, unusual time constraints for the preparation and filing of courts papers, or other unusual causes." Id. Although this case was complex and litigated under time pressures, Jarwick has not provided any specific evidence demonstrating why secretarial overtime expenses were necessarily incurred. Thus, they should not be recouped here. Id. (rejecting request for payment of overtime expenses because plaintiff's firm "has not submitted any evidence showing an extraordinary need for supplemental services"). Regarding Neuberger's travel costs, I believe it is unreasonable to allow Jarwick to recover those expensestotaling close to $200,000=from the Wilf Defendants simply because Jarwicic chose to hire a Baltimore law firm. Jarwick admits that it had no prior relationship with. Neuberger. (See Jarwick Br. at 38). And Jarwicic has produced no evidence to suggest that a New Jersey firm could not have acted as Jarwicic's primary counsel to prosecute this matter. For this issue of travel costslike the travel fees discussed aboveI find the holding of Interfaith persuasive. Interfaith, 426 F.3d at 710 (holding that travel costs for out-of-state firm should not be included in recoverable costs where plaintiff fails to demonstrate that forum counsel was unwilling or unable to be engaged).

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2.

Costs i. Expert Accounting Costs

Jarwick is seeking to recover $1,218,590.09 in fees and costs expended for the services of Mr. Barsky. (See Jarwick Br. at 6). This total is comprised of $1,187,313.75 in fees and $31,276.34 in expenses. (See Gielen Cert., 19). I recommend that all of Mr. Barsky's fees be awarded to Jarwick, but I recommend that substantially all of the expenses, which are mostly travel-related expenses, not be awarded. A preliminary issue is whether expert costs are recoverable as part of the NJRICO feeshifting provision. I was unable to locate a New Jersey state case extensively discussing the issue, but a review of other fee-shifting cases leads to the conclusion that such costs are recoverable here. Some New Jersey courts have held that expert fees are prohibited under a statutory fee-shifting provision "in the absence of manifest statutory authority." Maintainco, Inc. v. Mitsubishi Cater-Pillar Forklift Am., Inc., 408 N.J. Super. 461, 482(App. Div. 2009). Thus, the Appellate Division in Maintainco found that the fee-shifting provision in the Franchise Practices Actwhich provided for recovery of "the costs of the action"--ciid not allow for the recovery of expert fees. Id. at 483. The Appellate Division, however, has noted that more broadly worded fee-shifting provisions, such as one allowing for recovery of "all reasonable litigation costs," could support an award of expert fees. Josantos Const. v. Bohrer, 326 N.J. Super. 42, 48 (App. Div. 1999). The NJRICO fee-shifting provision is more broadly worded than other similar statutes in that it allows for the recovery of "costs of the suit,, including a reasonable attorney's fee, costs of

:.
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investigation and litigation." N.J.S.A. 2C:41-4(c).29 Moreover, the NJRICO statute is to be "liberally construed to effectuate the remedial purposes of the act. N.J.S.A. 2C:41-6; St. James, 342 N.J. Super. at 351 (awarding expert fees in NJRICO case). Furthermore, New Jersey "courts have ruled that a trial court, in its discretion, may award to a prevailing party tlae fees of experts tivltose participation was crucial to success." Fagas, 251 N.J. Super. at 199 (emphasis added). In Fagas, the trial court awarded expert fees, findingdue to the complexity of the casethat "if there ever were a case that justifies an award of [expert] witness fees and costs, this case is it." Id. at 200. That sentiment is equally applicable here. Judge Wilson, on numerous occasions, commented about the crucial role played by Mr. Barsky in both Jarwick's and Halpern's case. Indicative of the importance of Mr. Barsky's services is the fact that his forensic accounting assisted with Judge Wilson's determination of her final damages figure contained in her September 23, 2013 Order. (See Judge Wilson's Order, Sept. 23, 2013, at 2). Therefore, Mr. Barsky's expert fees should be recoverable. I also conclude that Mr. Barsky's total fees are reasonable and there is no basis for reduction. Mr. Barsky has been a certified public accountant for 40 years and he has been a forensic accountant for approximately ~27 years. (See Barsky Cert., 1). Despite this wealth of experience, Mr. Barsky only charged Jarwick between $325-$350 per hour. (See Jarwick Br. at 11). On average, this is actually less than his billing rate charged in 2004 when he worked for a

29 Federal courts have construed the federal RICO counterpart to include expert fees as pant of the feeshifting provision. E.g., Zlniroyal Goodrich Tire Co, v. Mutual Trading Corp., 1994 U.S. Dist. LEXIS 15757, at *8 n.l (N.D. Ill. Nov. 3, 1994). 87
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national accounting firm. (See Barsky Second Cert., 6). These rates are unquestionably 3o reasonable for the complexity and duration of the tasks that Mr. Barsky performed. Mr. Barsky, among other things, had to review thousands of pages of "doctored" financial records, draft multiple reports and certifications, assist Jarwick's counsel in rebutting the Wilf Defendants' expert testimony, and testify at trial for approximately 30 days. On these trial days, Mr. Barsky would typically begin the day at 6:30 a.m. preparing for that day's testimony and then work for hours after the trial day with Mr. Gielen to prepare for the next day's testimony. (See Gielen Second Cert. 33). As Judge Wilson observed, it was "almost impossible, without a forensic accountant, to go through and track the path of the Wilf Defendants' various accounting deceptions. (See Tr., Aug. 6, 2013, at 74:11-14; see also Tr., Aug. 26, 2013, at 68:7-10 (Judge Wilson stating that Mr. Barsky was "not only an excellent forensic accountant, he was able to explain to me in nearly lay person's terms what was going on")). A review of Mr. Barsky's fee documentation does not reveal any unduly excessive or unnecessary work, especially considering his indispensable nature in proving the Plaintiffs' case. The New Jersey Supreme Court's decision in Litton Industries v. IMO Industries, 200 N.J. 372 (2009), provides additional support to conclude that Mr. Barsky's fees are reasonable. In Litton, the Supreme Court affirmed, as reasonable, an award for approximately $900,000 in expert fees pursuant to a contractual fee-shifting clause. See id. at 378, 389. The total damages award that plaintiff received was $2.3 million. Undoubtedly, if $900,000 expended for expert fees to obtain a $2.3 liability judgment is reasonable, then expending $1.2 million for Mr. Barsky's expert fees to obtain a total judgment of over $84 million can be nothing less than 3o In fact, IvI~~. Barslcy's rates were lower than the several New York City forensic accountants Mr. Gielen researched before settling on working with IvI~. Barsky. (See Gielen Cert., 22; Jarwick Reply Br. at 60).

141737.00601/22251319v.4

reasonable. Moreover, I agree with Jarwick's observation that the Wilf Defendants do not make specific objections to the reasonableness of Mr. Barsky's rate or hours expended. (See Jarwick Reply Br. at 61-62). This further supports a finding that Mr. Barsky's fees are reasonable. The Wilf Defendants primarily argue that Mr. Barsky's fees should be significantly reduced because the vast majority of Mr. Barsky's work was "simply accounting related" and not related to RICO. (See Wilf Opp. Br, at 31). Indeed, the entire focus of Mr. Hoberman's Certification in support of the Wilf Defendants' Opposition was to opine that Mr. Barsky's analysis was, for the most part, not necessarily connected to Plaintiffs' NJRICO claims. (See,
e.g., Hoberman Cert., 2, 8, 19-21). I am not persuaded by this argument.

First, as I explained above, under the dictates of Hensley, which New Jersey state courts have followed, where a plaintiff has achieved an "excellent result," such as in this case, then reasonable fees/costs incurred in connection with all other claims that share a "common core of facts" are recoverable. See supra Section IV. Thus, even if the majority of Mr. Barsky's work could be classified as strictly related to the "accounting," they are still recoverable. Second, I do not agree with the Wilf Defendants' premise that work done towards the accounting is strictly unrelated to the NJRICO claims. At its core, this case involved a massive accounting fraud. The fraudulent scheme could not have been exposed without Mr. Barsky's forensic accounting services to unravel the maze of deception. In other words, I agree with Judge Wilson's observation on the record that "[t]he accounting has everything to do with RICO. Because without an accounting of what happened to the money, the RICO claimed causes of action could not be proven. So the accounting was .. ,the sine qua non." (Tr., Aug. 29, 2013, at 15:11-15); (see also id. at .16:24-25, 17:1-2 ("And I don't know how I could make findings of

l 41737.00601/22251319v.4

fact and rulings of law with regard to what was a [NJRICO] predicate act and what wasn't a predicate act, without the assistance of the accountants")). I do, however, agree with the Wilf Defendants' position that Mr. Barsky's travel fees and costs should be excluded from Jarwick's award. (See Wilf Opp. Br. at 36). Mr. Barsky is located in Washington D.C. While it makes sense that Mr. Gielen wanted to use an expert he was familiar with and could vouch for (See Gielen Cert., ~ 7-8), that does not mean that the Wilf Defendants should be made to bear the extra travel costs associated with that decision. Similar to my recommendation to exclude Neuberger's travel fee and costs, I also recommend that a consistent position be taken with Mr. Barsky's travel fees and costs. See supra at Section VII.E.7. Therefore, I recommend that $27,610.46 be excluded, and Jarwick's reimbursement for Mr. Barslcy's services should equal $1,190,979.63.31 ii. Mama Leal Services Costs

I recommend that all of Magna's fees be awarded, a total of $176,324.68. This total is reasonable in light of the scope of Magna's services for Plaintiffs. Magna was retained shortly before the trial began in May 2011. (See Certification of Gary Calzaretta, dated August 9, 2013 ("Calzaretta Cert."), 1). Magna had to load hundreds of exhibits into a database to be readily accessible for presentation, which benefitted enormously to the efficiency with which Plaintiffs could present their case. (See Calzaretta Cert., 4; Jarwick Br. at 22-23). Magna also created more than 1,000 video clips from deposition testimony, with several hundred that ended up being

31 The Wilf Defendants also challenged Mr. Barslcy's time entries that mentioned travel, which block entries accounted for eight billable hours and $2,600 in fees. (See Guiyan Cert., ~ 68). As with Neuberger's travel enn~ies, I recommend that three hours be deducted for this entry. At Mr. Barsky's rate of $325/hour, that results in $975 in travel fees to be deducted from the June 16, 2009 entry, which also reflected a client meeting with Mr. Reichmann. ~
141737.00601/2225 1319v.4

projected at trial. (See Calzaretta Cert., 7). These clips were critical to the presentation of Plaintiffs' case. (See Jarwick Br. at 22-23). Overall, Magna representatives attended 113 days of the trial. (See Calzaretta Cert., 8). That is a substantial time commitment for a litigation services vendor. Magna billed its trial time at $180 per hour. (See id. at Ex. 2). This is eminently reasonable in light of the enhanced value Magna provided at the trial. Furthermore, the Wilf Defendants raised no specific objections to Magna's services other than one cursory line in their Sur-Reply that Magna's costs should be allocated by claims. (See Wilf Sur-Reply Br. at 7). But, as I opined on multiple occasions, that is not warranted here in light of the excellent result and the "common core of facts" that pervade the whole case. Accordingly, I recommend that the entire amount of $176,324.68 be recovered. iii. Other Costs

Jarwick seeks reimbursement for monies it spent on real-time and rough transcripts, which totals $92,909.91. These costs are reasonable considering the volume of transcripts and should be fully reimbursed. Moreover, given the complexity of the trial, there is no dispute that having real time trial transcripts was a reasonably necessary expense. In fact, Judge Wilson acknowledged the necessity of real time transcripts, and also requested that Neuberger keep a detailed summary of Mr. Barsky's testimony during the trial. (See Gielen Cert., 92, 250). Jarwick is also seeking to recoup its quarter share of certain litigation costs that were paid for by the partnership. These include costs for: (1) court-appointed accountant Bederson & Company ("Bederson") ($57,000); (2) mediator Hon. Harriet Derman ($10,850); (3) mediator Hon. Robert Margulies ($1,750); (4) final transcripts from court reporter Laurie Engemann ($15,815.97); and (5)final transcripts from court reporter Patricia Niemiec ($13,234.57).

91
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As for the Bederson costs, I find that these costs should be reallocated. The Wilf Defendants argue that the Court ordered that these costs would be paid by the Partnership for the benefit of all the parties, so the shared payment should not be disturbed. (See Guryan Cert., 51, 54). Paragraph 9 of the Order appointing Bederson, however, explicitly provided that "[t]he Expert's fees shall be paid by the Partnership, although the Count reserves the right to allocate this expense ... in whatever proportion the Court deems appropriate at the conclusion of the lawsuit." (See May 26, 2010 Order '~ 9). I recommend that like Mr. Barsky's fees, Bederson's expert accounting fees are recoverable costs of litigation and investigation under NJRICO and Jarwicic should be reimbtused for its share of those fees, which total $57,000.00. Regarding the mediation fees paid to Judges Derman and Margulies, I recommend that those fees not be reallocated and remain a shared cost of the partnership. 32 Plaintiffs have provided me with the retainer agreements for both Judge Denman and Judge Margulies, Neither of the retainer agreements compels a reallocation of fees to the ultimate prevailing party. Judge Margulies's Retainer Agreement states that his fees "will be equally divided among the parties." (See Margulies Retainer, Ex. A). Judge Derman's Retainer Agreement states that her fees would be paid by Pernwil, "subject to any contrary order of the Court or any other agreement. of the parties, as set forth in writing." (Denman Retainer, 8). Jarwick has not provided any other contrary order or agreement. Based on my independent legal research, courts that confront this issue typically hold that fees paid to a mediator are not recoverable costs to a prevailing party under afee-shifting statue.
32 To be clear, I am not recommending that the fees incurred by Lowenstein and Neuberger professionals in connection with the mediations should be excluded, I believe that work was related to the NJRICO claims, as well as the common law claims that sprang from the same common core of facts. See szrpra section IV. I recommend only that that the fees that Jarwick paid to the mediators should not be reimbursed because there is no directive that those fees are to be allocated and case law holds that fees paid to mediators are not recoverable costs.

92
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See, e.g., D'Orazio v. Washington Twp., 2011 U.S. Dist. LEXIS 146973, at *32 n.15 (D.N.J. Oct.

18, 2011) ("This Court has already found that Plaintiff is entitled to his attorneys' fees in connection with the mediation. However, based on the panties['] agreement to `split the costs' of mediation, Plaintiff is not entitled to recover one half of the mediator's fee."); Atl, City Assoc.,
LLC v. Carter & BuNgess Consultants, Inc., 2010 U.S. Dist. LEXIS 32135, at *20 (D.N.J. Mar.

31, 2010)("Since [plaintiff] agreed that it would be responsible for its own attorney's fees and costs associated with the mediation, these amounts must be subtracted from [plaintiff's] fee application, To hold otherwise would be to render the Mediation Agreement meaningless."). I recommend that approach be followed here and that the fees paid to the mediators should not be reimbursed to Jarwick. As for Plaintiffs' share of the final transcripts, I did find evidence in the record suggesting that these costs, which were originally paid by the Partnership, could be reallocated after the trial. (See Gielen Cert., at Ex. 8, October 24, 11 Letter from Bruce Snyder to Dorothy Burnett ("Counsel have agreed that the formal transcripts will be ordered for the benefit of all parties at Pernwil's expense, subject to possible reallocation at the conclusion of this litigation.")). The Wilf Defendants raised no counterarguments in their opposition papers as to the reallocation ofthe final transcripts. Hence, I recommend that these costs, totaling $28,050.54 (Jarwick's 1/4 share of the costs for final transcripts), be recovered, which is consistent with awarding the costs ofthe rough and real time transcripts. To summarize, I recommend that Jarwick's costs/disbursements be awarded as follows: Cost/Disbursement Amount Requested/ Recommended $129,209.98/ $121,178.65 GIc3
141737.00601/22251319v.4

Lowenstein Disbursements

Neuberger Disbursements Mr. Barslcy's Expert Fees and Costs Magna Services Fees and Costs Real Time &Rough Transcripts Reallocated Share of Final Transcripts Paid by Partnership Reallocated Share of Bederson Expert Accounting Fees Reallocated Share of Hon. Harriet Derman Mediation Fees Reallocated Share of Hon. Robert Marguiles Mediation Fees

$418,989.36/ $157,661.15 $1,218,590.09/ $1,190,979.63 $176,324.68/ $176,324.68 $92,909.91 ($49,609.12 $43,300.79)/ $92,909.91 $28,050.54($15,815.97 13,234.57)/ $28,050.54 $57,000.00/ $57,000.00 $10,850.00/ $0.00 $1,750.00/ $0.00 Total Recoverable Jarwick Costs/Disbursements $2,133,674.56/ $1,824,104.56
+ +

VIII. THE HALPERN FEE APPLICATION A. Halpern's Request for Attorneys' Fees Halpern seeks to recover attorneys' fees and costs for the services performed by the Lebensfeld Firm, which he retained in June of 2009. Halpern argues that the lodestar amount of the Lebensfeld Firm's attorneys' fees should be set at $4,665,360.25. In calculating that amount, Halpern first multiplied the total number of hours that each Lebensfeld attorney or paralegal worked on this matter, by his or her reasonable hourly rate: NAME Lebensfeld Firm Alan M. Lebensfeld (Partner) Alan M,Lebensfeld (Partner) Lawrence J. Sharon (Partner) 208,5 5350.4 1.2 $395 $425 $350 $82,357.50 $2,273,920 $420 HOURS RATE AMOUNT

141737.00601/22251319v.4

Lawrence J. Sharon (Partner) Brett R. Schwartz (Associate) Brett R. Schwartz (Associate) David M. Arroyo (Associate) David M. Arroyo (Associate) David M. Arroyo (Associate) Christine Gioe (Paralegal) Christine Gioe (Paralegal) Christine Gioe (Paralegal) "DL" Lebensfeld Total

1.7 31.25 2.9 383.78 5565.96 203.3 52.25 4843.25 277.5 35.5

$375 $285 $350 $250 $275 $300 $125 $135 $175 $45

$637.50 $8,906.25 $1,015 $95,945 $1,530,639 $60,990 $6,531.25 $653,838.75 $48,562.50 $1,597.50 $4,765,360.25

(Lebensfeld Cert., ~ 54).33 Halpern then deducted $100,000 from that total (reducing the total to $4,665,360.25) for services that the Lebensfeld Firm performed on issues that were wholly unrelated to his NJRICO claims, including: (i) Halpern's settlement with the Accountant Defendants; (ii) partnership tax issues;(iii) the refinancing of a mortgage on Rachel Gardens;(iv)the Wilf Defendants' failure to reimburse Halpern for expenses incurred in the ordinary course of business;(v) estate planning; and (vi) a wrongful death action in which Halpern was wrongfully named as a Defendant. Mr. Lebensfeld explained that he estimated the cost of his firm's work on these "unrelated" matters

33 This total is $36.15 less than the amount set forth in Mr. Lebensfeld's Certification, which was evidently miscalculated. (Lebensfeld Cert., 54).

95
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because it would have been "difficult, if not impossible, [to] precisely separate out with mathematical precision the exact amount of hours expended." (Lebensfeld Cert., 56). Halpern argues that the Lebensfeld Firm should receive a 25% contingency fee enhancement in light of the risks it took in continuing to represent Halpern after he could no longer afford its fees on an hourly basis. (Lebensfeld Cent. at 11-13). B. Review of Reasonableness Factors Pursuant to RPC 1.5(a) Based upon my analysis of the eight "reasonableness" factors set forth in RPC 1.5(a), I conclude that Halpern's proposed lodestar amount is reasonable, subject to a few minor downward adjustments. 1. Factor One: The time and labor required, the novelty and difficulty of the questions involved, and the shill requisite to perform the legal services properly

The first factor weighs heavily in favor offinding Halpern's proposed lodestar amount to be reasonable. This was an extremely complex case, in which Halpern alleged (and subsequently proved) that the Wilf Defendants cheated him out of millions of dollars by engaging in widescale fraud and deception over the course, of many years. Halpern ultimately managed to untangle the Wilf Defendants' web of deceitprevailing on every one of his claims at trial and receiving an award of over $32 million34. But doing so required the Lebensfeld Firm to expend a tremendous amount of effort and time: the trial lasted 22 months (207 trial days),' during which time 40 witnesses testified and over 1,485 exhibits were admitted into evidence. (Lebensfeld Cert., 46, Appendix Vol. I, Summary Tab 7("List of Trial Dates")). Judge Wilson declared that "[t]o my knowledge there has never been a case like this in New Jersey jurisprudence, I hope not in the jurisprudence of any other state." (Tr., Aug. 5,
Judge Wilson ruled that Halpern cannot collect the "amount of RICO damages as trebled" because "they are exceeded by the Punitive Damages." (Judge Wilson's Order, Sept. 23, 2013, page 4,footnote).
34

141737.00601/22251319v.4

2013, at 29:1-3). She explained how onerous it was to navigate through the Wilf Defendants' fraudulent financial records: I do not believe that I have seen one single financial statement that reflected the true and accurate position of the partnership, Pernwil or Halwil in this case. ...

There is no treasure map in this case. There is simply no treasure map. I am a reasonably intelligent person. ... I have seen a lot of financial statements. I have gone through a lot of accountant seminars that are given so judges know what they are doing with financial statements. I have never seen a forensic ~cccounting saccJz as I have seen in this case. Wliy did it take me over 100 clays to tlo this opinion, I have to tell you, at least 75 of those days were spent in financial statements, general ledgers, adjusting journal entries, trial balances, I will show you as I go through my factual findings with regard to each portion of damages. (Tr., Aug. 5, 2013, at 34;24-35:2, 44:16-45:10)(emphasis added). Mr. Lebensfeld explained in painstaking detail the tasks that his firm performed from its retention in June 2009, until August 13, 2013. First, immediately after Halpern retained the Lebensfeld Firm, Mr. Lebensfeld "spent most of[his] professional time reviewing the elongated prior history of what was then a 17year old litigation," including: reviewing, analyzing and digesting certain discovery undertaken prior to, and the record of, the first trial in this matter, which was held in 1998 and 1999 (e.g., the early depositions of Zygmunt Wilf, Joseph Wilf, Joseph Schochet, Josef Halpern and Marvin Cohen, et al.; the available trial transcripts; the exhibits marked in evidence; Judge Stanton's [2000 and 2002], Judge McKenzie's [2004] and Judge Langlois' [2007] Orders and Decisions). I also reviewed the parties' respective trial briefs, as well as the briefs submitted in connection with Jarwick's appeal to the Appellate Division, and the December 206 decision of the Appellate Division My review of these materials was critical to the itself development and ultimate recitation of Joe Halpern's NJRICO claims. 97
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(Lebensfeld Cert., 23)(emphasis added). The Lebensfeld Firm was required to perform many additional tasks in preparation for filing Halpern's Complaint, including: Attending "numerous meetings and discussions" with Jarwick's attorneys and forensic accountant, Mr. Barsky (Id. at 24); Reviewing the reports of Mr. Barsky and Jarwick's prior forensic accountant (id.); Reviewing depositions and "thousands of pages of documents" that had already been produced in the case (zd, at ~ 25); Researching New Jersey RICO and case law interpreting the statute (id. at 27); and Drafting Halpern's Complaint (id. at 28). On October 1, 2009, the Lebensfeld Firm filed Halpern's Complaint. Thereafter, the Lebensfeld Firm litigated this case intensely during the discovery periodfiling and opposing motions, taping and defending depositions, reviewing thousands of pages of documents produced by the Wilf Defendants and non-parties, and appearing in court. For example, the Lebensfeld Firm: Filed approximately 30 motions, and defended approximately 15 motions, before Judge Wilson and Special Discovery Master Keefe, between December 23, 2009 and Apri125, 2013 (see Lebensfeld Cert., Appendix Vol. I, Summary Tab 3 ("List of Motions/Applications Filed")); Attended 46 days of depositions, and reviewed transcripts from 56 days of depositions that were taken before Halpern retained the Lebensfeld Firm (id. at Appendix Vol. I, Summary Tab 5 ("List of Depositions Attended and/or Reviewed and Digested for Trial")); Requested and reviewed over 143,000 pages of documents produced by Defendants and non-parties, and produced over 6,000 pages of documents (id. at 18; Appendix Vol. I, Summary Tab 6("List of Bates Stamped Documents Produced"));

141737.00601/22251319v.4

 Participated in 26 conferences with the Court (Judge Wilson or Special Discovery Master Keefe) between August 2009 and June 2011 (14 in person and 12 telephonic)(id. at Appendix Vol. I, Summary Tab 4("List of Pre-Trial Court Appearances/Telephonic Conferences")); and Worked in conjunction with Jarwick's counsel, and Plaintiffs' joint forensic accountant, to rebut the Wilf Defendants' defenses to Plaintiffs' NJRICO claims (id. at 33-35). Beginning in February 2011 (three months before trial), Mr. Lebensfeld, Mr. Arroyo, and Ms. Gioe worked every day, around the clock, preparing for trial. The trial began on May 9, 2011 and spanned 22 months (207 trial days), during which time 40 witnesses testified and over 1,485 exhibits were admitted into evidence. (Lebensfeld Cert., 46, Appendix Vol. I, Summary Tab 7 ("List of Trial Dates")). Mr. Lebensfeld explained the grueling road that he and his colleagues were forced to travel in the three months leading up to the trial, and then during the 22 months of trial: [D]uring the approximate three (3) month time ...preceding the commencement of trial, Mr. Arroyo, Ms. Gioe and I expended significant hours on literally aseven-day per week basis preparing for trial. Those activities included, but were not limited to: (i) rereading and digesting depositions for use during the examination and cross-examination of witnesses; (ii) reviewing tens of thousands of pages of documents produced in discovery in order to prepare trial exhibits; (iii) preparing demonstrative exhibits; (iv) preparing witness outlines;(v) meeting with prospective witnesses and preparing for their examinations;(vi) meeting with Mr. Barsky and reviewing his, as well as Mr. Hoberman's most recent forensic accounting reports; and (vii) working extensively with Magna Legal Services to prepare our audio/visual presentations at trial, including certain videotaped depositions. All of the aboveenumerated work continued during the 22-month course of the trial itself, during which time my staff and I continued to work most weeks on a seven-day per week basis, conducting or defending witness examinations and then preparing each night and on weekends for the following trial days. As required by the Court, for each witness which I intended to call or to cross-examine, I and my staff prepared in advance voluminous and numerous witness books, containing each

141737.00601/22251319v.4

document or deposition excerpt which I intended to utilize during the witness' examination. That, of course, required extensive preparation and coordination with Magna with regard to the audio/visual presentation of documents or deposition excerpts for each witness. (Lebensfeld Cert., 39-40). At the conclusion of Plaintiffs' case-in-chief, the Wilf Defendants moved to dismiss Halpern's claims, which required the Lebensfeld Firm to conduct "extensive research," file "voluminous briefs and exhibits," and prepare for and attend oral argument. (Id. at 40). Following the close of evidence, the Court required the Lebensfeld Firm to prepare "extensive closing arguments in the nature of detailed findings of fact and conclusions of law," as well as "closing books containing each of the documents, trial exhibits and demonstrative exhibits" that they intended to use during closing arguments. (Id. at 41). Closing arguments lasted approximately three weeks. (Id.). There can be no dispute that the 207 days of trial "pushed the limits of the mental, psychological and physical stamina of every attorney involved." (Lebensfeld Cert., ~ 62). However, the record demonstrates that the Wilf Defendants engaged in conductduring discovery and at trialthat unnecessarily delayed the resolution of this matter and increased Plaintiffs' attorneys' fees. For example, Judge Wilson found after trial that Zygi Wilfwlao testifiedfor 33 daysconstantly "switched" his testimony: [W]e will go through some of Zygi's testimony which I found to be extremely frustrating because I would get what he was saying in once instance, and then two or three or four pages later, or sometimes the next day, but usually the same day, he would switch. And when I'm looking at my notes and looking at the screen, I'm having counsel be quiet so you can tell, I'm going, wait a minute, wait a minute, I have to go back to that. And there was a constant switching back and fo~tli of wliy these fees, as managementfees or other types of m~cnagementfees, were taken out ofthe partne~sliip. 100
141737.00601l22251319v.4

(Tr., Aug. 5, 2013, at 11:5-17)(emphasis added). Judge Wilson also stated that she was "appalled" by the contradictory testimony of Jill Carl, an employee of the Wilf Defendants, with regard to advertising expenses: THE COURT: I am dumbfounded, because the only conclusion that I can possibly draw is that she has completely perjured herself. She clearly testified that she had no recollection of advertising expenses for Rachel Gardens ever having been around $100,000. ... And we went through every one of these checks. She had no recollection of ever, ever having issued an invoice like that to Rachel Gardens. MR. SNYDER: Okay. THE COURT: And then she comes on, on cross, and says, well, maybe I did. I mean, I don't know what you expect me to take away from that.

THE COURT: I'm appalled. (Lebensfeld Cert., Ex. A,Tr., Oct. 18, 2011, at 162:5-24, 164:5). Judge Wilson concluded that Ms. Carl's testimony, and the Wilf Defendants' failure to produce responsive invoices, wasted a day of trial: THE COURT:She doesn't recall ever having sent out invoices for those amounts. MR. GURYAN: She may not recall it, but the fact of the matter is there are invoices that indicate that amount. THE COURT: Have they been produced? MR. GURYAN: We don't know if they have been produced. MR. LEBENSFELD: They have not. MR. GURYAN: Let me finish. Alan has made a representation that the only thing he has received are invoices subsequent to 2007. 101
141737.00601/22251319v.4

MR. LEBENSFELD: 2007 and forward. MR. GURYAN: I accept that. Apparently these are invoices that we just received that predate 2007. THE COURT: These invoices that you just received? MR,GURYAN: Last week, apparently. THE COURT: Why didn't you give them to the plaintiffs, so that they could cross-examine her on these invoices? She had her dep, what,three years ago?

THE COURT: This was an issue at her dep. MR. GURYAN: Right. THE COURT: And you just produced the invoices last week? Who asked her to give these invoices forget it. Don't answer that question. ...

THE COURT: We are going to recall her. That is all. It was a wasted clay today, end we will Ia~zve another wasted day.

THE COURT: I have never seen anything like dais. Wlaen Isee people deliberately lie on the stand, I've never seen anything like dais. Idon't know wlic~t to say. Idon't know what to say. (Id. at 165:7-168:16)(emphasis added). Moreover, nearly nine months into the trial, the Wilf Defendants produced over 21,000 pages of documents to Plaintiffs. (Lebensfeld Cent., 51). The Wilf Defendants have not provided a satisfactory explanation as to why those documents could not have been produced in discovery.

102
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For these reasons, I find that the first factor weighs heavily in favor of finding Halpern's proposed lodestar amount to be reasonable. 2. Factor Two: The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer

The second factor also weighs heavily in favor of finding Halpern's proposed lodestar amount to be reasonable. There is simply no doubt that the Lebensfeld Firm's work on this case precluded it from pursuing other matters. Mr. Lebensfeld certified that his firm "devoted approximately 73% of their entire working hours to this case during the trial phase alone." (Lebensfeld Cert., 58). He further explained that "[t]he sheer volume of time required by this case necessarily precluded, and/or substantially inhibited, my and my firm's ability to devote significant time or attention to other long-existing firm clients, to prosecute other major litigations, and/or to seek out and take on new matters." (Id. at 57). Since the Lebensfeld

Firm became fully engrossed in this case, it lost one of its long-time clientsa "group of real estate investors" who generated approximately $250,000 in annual legal fees. (Id, at ~ 57, n. 9). 3. Factor Three: The fee customarily charged in the locality for similar legal services

The third factor also weighs in favor of finding Halpern's proposed lodestar amount to be reasonable. The Wilf Defendants do not contend that Mr. Lebensfeld's, Mr. Arroyo's, or Ms. Gioe's standard billing rates are unreasonable. Mr. Lebensfeld certified that his hourly rate (which ranged from $395 to $425), and Mr. Arroyo's hourly rate (which ranged from $250 to $300), were the firm's "prevailing rates to other clients." (Lebensfeld Cert., 59). An attorney's standard billing rate is the proper starting point in determining the reasonableness of a rate. Cunningham v. City ofMcKeesport, 753 F.2d 262, 268 (3d Cir. 1985); Wade v. Colaner, 2010 WL 5479625 (D.N.J. Dec. 28, 2010)("Plaintiff's customary billing rate of $410 per hour serves as an indicator for this Court to find the rate to be reasonable."). 103
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The reasonableness of Mr. Lebensfeld's hourly rate is bolstered by the 2005 New Jersey Law Journal Billing Survey, which revealed that the "average mean rate for partners in New Jersey firms [was] $394." (Id. at 60). When adjusted for inflation, "that amount would have

ranged from $432.81 in 2009, to $471.07 in 2013." (Id.). Mr. Lebensfeld's hourly rates never even reached those mean partner rates. See, e.g., T.B., 2012 U.S. Dist. LEXIS 44848, at *10 (relying on 2005 New Jersey Law Journal Billing Survey as evidence of the reasonableness of fees in the New Jersey legal marketplace); Rivera, 2012 N.J. Super. Unpub. LEXIS 2752, at *19 (same); see also Titan Stone, Tile &Masonry, Inc. v. Hunt Constr. Group, Inc., 2008 WL 687263, at *7 (D.N.J. Mar. 10, 2008)(finding reasonable partner rates ranging from $425-$510, associate rates ranging from $280-$370, and paralegal rates ranging from $90-220). 4. Factor Four: The Amount Involved and the Results Obtained

The fourth factor weighs heavily in favor of finding Halpern's proposed lodestar amount to be reasonable. The Wilf Defendants initially claimed that Halpern owed them over $12 million. (Certification in Lieu of Oath of Thomas J. Hoberman in Opposition to Motion of Josef Halpern for Statutory and Equitable Relief, dated January 20, 2010, at 12, Lebensfeld Reply Cert., Ex. 5). However, as discussed throughout this Report and Recommendation, Halpern ultimately obtained an overwhelming victory against the Wilf Defendants: he prevailed on every one of his claims at trial, and received a damages award of over $32 million. (Judge Wilson's Order, Sept. 23, 2013, at 3-4). The Lebensfeld Firm could not have obtained a more favorable result for Halpern. 5. Factor Five: Time Limitations Imposed by Client or the Circumstances

The fifth factor weighs heavily in favor offinding Halpern's proposed lodestar amount to be reasonable. This case was massive and required the Lebensfeld Firm's undivided attention for several years. Judge Wilson stated that she believed "there has never been a case like this in 104
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New Jersey jurisprudence." (Tr., Aug. 5, 2013, at 29:1-3). The Lebensfeld Firm was required to attend nearly 50 depositions, review over 150,000 pages of documents (produced before and during trial), participate in 26 court conferences, and attend 207 days of trial. (Lebensfeld Cert., 46, Appendix Vol. I, Summary Tab 7("List of Trial Dates")). Worse, the record demonstrates that the trial was prolonged by the Wilf Defendants' fraudulent accounting practices, failure to produce documents in discovery, and proffering of contradictory testimony at trial. 6. Factor Six: Nature and Length of Relationship with Client

The sixth factor also weighs in favor of finding Halpern's proposed lodestar amount to be reasonable. Although it appears that the Lebensfeld Firm had no prior relationship with Halpern before this matter, it had a different relationship with Halpern than any other client that the firm has ever represented. In 2009, the Lebensfeld Firm agreed to represent Halpern on an hourly basis, plus disbursements, in accordance with the firm's prevailing hourly rates. (Lebensfeld Cert., ~ 11). At that time, the Lebensfeld Firm turned down Halpern's request to represent him on a contingent fee basis, "principally because [the] firm is relatively small." (Id. at ~ 12). However, in October 2010, Halpern owed the Lebensfeld Firm $442,949,90, and could no longer pay its hourly rates. (Id. at 13), Thus, Mr. Lebensfeld agreed, `for the only time in [IaisJ professional career," to convert to a contingent fee arrangement because he was "determined not to allow the Wilf Defendants to get away with their rampant and egregious abuse and misuse of the trust ) which [Halpern] had placed in them, and in particular, Zygi Wilf, for many years." (Id. (emphasis added). In October 2010, the Lebensfeld Firm entered into the following partial contingent fee agreement with Halpern: (i) the Lebensfeld Firm agreed to continue representing Halpern

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through any appeals in this matter;(ii) the Lebensfeld Firm would receive 25% of Halpern's total monetary recovery; (iii) Halpern would be credited with the hourly fees that he paid to the Lebensfeld Firm through the date of the agreement; and (iv) Halpern would pay the Lebensfeld Firm $10,000 per month for expenses, out of the $20,000 per month distribution that Judge Wilson ordered that Pernwil pay to Halpern. (Id. at 14). In sum, the record demonstrates that the Lebensfeld Firm was so invested in Halpern's case that it agreed to enter into a contingent fee arrangement for the first time in the firm's history so that it could continue to represent him. After entering into that contingent fee agreement, the Lebensfeld Firm took a tremendous risk on Halpern's behalf, devoting "approximately 73% of their entire working hours to this case during the trial phase alone." (Id, at 58). 7. Factor Seven: Experience of the Lawyers Performing Services

The seventh factor weighs in favor of finding Halpern's proposed lodestar amount to be reasonable. The Lebensfeld Firm's attorneys have strong credentials, and, as explained above, high-caliber legal counsel was required to conduct this trial. Halpern's lead trial counsel, Mr. Lebensfeld, has 37 years of commercial litigation experience, and has handled antitrust litigations, multiple partnership disputes, shareholder oppression actions, and contract litigations. (Lebensfeld Cert., 4). Prior to this action, Mr. Lebensfeld represented: (i) the plaintiff in a five-month jury trial in New Jersey state court (alleging fraud, breach of contract and breach of fiduciary duty); (ii) the plaintiff in a two-month jury trial in New Jersey state court on a Consumer Fraud Act claim; (iii) the defendant in a four-month bench trial involving a will dispute in the New Jersey Chancery Division; (iv) the plaintiff in a six-month jury trial in New

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Jersey state count on federal and NJ RICO claims; and (v)the defendants in a trial in New Jersey state court involving the dissociation of a member from a limited liability company. (Id at 5). Mr, Arroyo, the primary associate assigned to this matter, has been in private practice for six years. (Arroyo Cert., 6). During that time, he has focused his practice on commercial litigation, including partnership/corporate disputes, antitrust litigation, land use litigation and commercial insurance litigation. (Id.). Ms. Gioe, the primary paralegal assigned to this matter, received a Bachelor's Degree from St. John's University, and has worked as a litigation paralegal with the Lebensfeld Firm for 17 years. (Gioe Cert., 3). Ms. Gioe has assisted Mr. Lebensfeld with six prior trials. (Id. at 4). 8. Factor Eight: Whether Fee Is Fixed or Contingent

Finally, the eighth factor weighs in favor of finding Halpern's proposed lodestar amount to be reasonable. As discussed above, the Lebensfeld Firm originally agreed to represent Halpern on an hourly basis, but was forced to switch to a contingent fee arrangement after Halpern could no longer afford the firm's hourly rates. The Lebensfeld Firm took a colossal risk in representing Halpern on a contingent fee basis, as it was forced to devote the majority of its working time to the case and could not pursue other matters. C. Reasonableness of Rates As I found above, in my discussion regarding the third "reasonableness" factor, the hourly rates charged by the Lebensfeld Firm were reasonable. Halpern based his lodestar calculation on the standard hourly rates that Mr. Lebensfeld, Mr. Arroyo, and Ms. Gioe charged to other clients. Mr, Lebensfeld's billing rate was less than the average partner billing rate in New Jersey, according to the 2005 New Jersey Law Journal Billing Survey. See also Titan
Stone, Tile &Masonry, Inc., 2008 WL 687263, at *7 (finding reasonable partner rates ranging 107
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from $425-$510, associate rates ranging from $280-$370, and paralegal rates ranging from $90220). Significantly, the New Jersey Supreme Court has ruled that "to account for the delay inherent in most litigation, the Izourly rt~te should be based eitlier on current rates or by adjusting thefee based on Izistorical rtctes to reflect its present value." R.M. v. Supreme Court ofNew Jersey, 190 N.J. 1, 10 (2007)(emphasis added). In calculating the lodestar, Halpern did not use the Lebensfeld Firm's current (increased) hourly rates, or increase the fees to reflect present value. Rather, Halpern used the actual rates that each attorney and paralegal of the Lebensfeld Firm charged throughout the litigation, which decreased his lodestar amount. (See Lebensfeld Cert., 10, 54). The Wilf Defendants have made no argument that the Lebensfeld Firm's rates were unreasonable. Thus, I conclude that the rates charged by the Lebensfeld Firm were reasonable. D. Reasonableness of Hours Expended The hours that the Lebensfeld Firm spent on this case were almost entirely reasonable. From June 2009, when Halpern retained the Lebensfeld Firm, through August 13, 2013, Mr. Lebensfeld, Mr. Arroyo, and Ms. Gioe spent a total of 16,884.94 hours working on this case. (Halpern Moving Br. at 19; Lebensfeld Cert., ~ 54). Those hours were reasonable given the extraordinarily complex nature of this case; the risk that the Lebensfeld Firm took in agreeing to represent Halpern on a contingent fee basis; the voluminous amount of discovery exchanged by the parties; the number of depositions taken; the number of court hearings conducted; the length of the trial; the Wilf Defendants' conduct during discovery and at trial; and the outstanding (and perhaps unprecedented) result achieved on Halpern's behalf.

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Moreover, I accept as reasonable Halpern's proposed reduction of $100,000 for fees relating to non-RICO issues. The Wilf Defendants contend that this reduction fails to "state what methodology was used to reach this number," or "address the unsuccessful portion of the RICO claims or time expended exclusively on non-RICO causes of action." (Razzano Cert., 13). However, Mr. Lebensfeld itemized each service that he performed for Halpern that was wholly unrelated to his NJRICO claims, and certified that the $100,000 reduction represented his best estimate of the cost of those services, since it was "difficult, if not impossible, precisely to separate out with mathematical precision the exact amount of hours expended." (Lebensfeld Cert., 56). And, in his Reply Certification, Mr. Lebensfeld itemized each billing entry that he contends related exclusively to non-RICO issues (which totaled $69,685.00). (Lebensfeld Reply Cent., pp. 2-7). As explained above, Halpern was not required to segregate the fees related to his "unsuccessful" NJRICO claims, or his non-RICO claims, because they were inextricably intertwined with his successful NJRICO claims. I conclude that the hours Lawrence J. Sharon, Esq. (2.9 hours), and Brett R. Schwartz, Esq. (34.15 hours), spent on this case should be excluded from the lodestar amount. The Lebensfeld Firm has provided no details regarding: (i) the qualifications of these attorneys; (ii) the work that they performed on this case; or (iii) the reasonableness of their hourly rates. Mr. Lebensfeld also certified that someone with the initials "DL" worked on this matter for 35.5 hours, at a rate of $45 per hour. This time should be excluded from the lodestar amount because there has been no explanation as to who "DL" was or what type of services he or she performed on this case. Thus, I recommend that the Lebensfeld Firm's lodestar amount be reduced by $12,576.25.

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The Wilf Defendants make several specific challenges to the Lebensfeld Firm's billing entries. I recommend that each ofthem be rejected for the reasons set forth below. 1. Redacted Billing Entries

The Wilf Defendants argue that I should exclude from the lodestar calculation 98 entries (accounting for 571.3 billable hours and $155,918.31 in attorneys' fees), which contain partial redactions of attorney-client privileged information. (Guryan Cert., ~ 79). I disagree. I have reviewed each of those 98 challenged entries. Contrary to the Wilf Defendants' assertion, these redactions do not make it "impossible to tell whether any entries which contain these attorneyclient redactions relate to the RICO claims." (Guryan Cert.,'~ 80). In fact, the vast majority of these entries include far more detail than is required, and contain only insignificant redactions, For example: Drafted follow-up e-mail to J. Halpern [ATTORNEY-CLIENT PRIVILEGE]; telephone conference with N. Gold of J. Wilson chambers re: J, Wilf's deposition impasse. Drafted memo to file re: same. Reviewed deposition transcript from Jones case for testimony re: employment status of J. Jones, C. Minichini. Drafted portions of spreadsheets re: improper salary payments to Wilf employees. Revised, edited portions of arguments in support of interim relief motion. Drafted e-mail to P. Gielen re: payroll summaries for 2008-2009. (Guryan Cert., Ex. X,p. 1 of 15). Thus, I recommend rejecting the Wilf Defendants' argument that each of the Lebensfeld Firm's 98 billing entries that contains a single redaction should be excluded, in its entirety. 2. Block Billing

The Wilf Defendants argue that the Lebensfeld Firm's block billing prevents meaningful review of its invoices, which requires either a complete rejection of Halpern's application or a substantial reduction. (Wilf Opp. Br. at 1, 5-6, 22, 24, 27-30, 39, 44). I disagree. As I concluded with respect to Neuberger's and Lowenstein's invoices, the Lebensfeld Firm's 110
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invoices are sufficiently specific to allow me to make a reasonableness determination. Moreover, I have recommended that Plaintiffs should recover the reasonable fees that they incurred in litigating their non-RICO claims, their "unsuccessful" RICO claims, and their claims against the Accountant Defendants. 3. Punitive Damages/Dissolution Worlc

The Wilf Defendants challenge as excessive the work the Lebensfeld Firm performed relating to punitive damages, seeking to strike all billing entries that mention "punitive damages" (155.3 hours for the Lebensfeld Firm, totaling $48,337.50).35 (Guryan Cert., 86). After reviewing the specific billing entries, I do not find these totals to be unreasonable. These legal services included multiple facets, such as research/analysis, briefing punitive damages issues in connection with the Wilf Defendants' extensive motions to dismiss/summary judgment, and engaging in punitive damages discovery. (See id, at Ex. Z2). The recoverability. of punitive damages was a major issue and presented unique issues, such as the interplay between punitive damages and NJRICO treble damages. The Wilf Defendants also challenge as excessive the work the Lebensfeld Firm performed relating to the issue of"dissolution," seeking to strike all billing entries that mention "dissolution"(210.43 hours for the Lebensfeld Firm, totaling $64,938.50). (Guryan Cert., 88). I conclude that these fees are reasonable. This work also spanned multiple years and these issues were argued in connection with several dispositive motions. (See id. at Ex. AA2). Judge Wilson noted "dissolution is a harsh and extreme remedy" that is "not very often done." (Tr., Sept. 3, 2013, at 5:19-22). Indeed, this was the first case in which Judge Wilson-ordered dissolution as a

3s

Mr. Lebensfeld disputes this amount, certifying that his firm spent 62.4 hours ($21,322.50) performing services relating to punitive damages discovery. (Lebensfeld Reply Cert., 7). 111
4 141737.00601/22251319v,

remedy. (Tr., Sept. 3, 2013, at 5:22-23), Thus, the Lebensfeld Firm would be expected to spend considerable time arguing that the partnership should be dissolved in this case. 4. Internal Strategizing and Conferencing

The Wilf Defendants argue that the Lebensfeld Firm expended unreasonable amounts of time strategizing and conferencing with Jarwick's counsel. (Guryan Cert., ~ 89, 91-93). According to the Wilf Defendants, the Lebensfeld Firm's time entries that contain the word "conference" total $1,034,808.36 (Guryan Cert., 89). The Wilf Defendants contend that they should not be charged for "[s]uch non-productive and duplicative time[]" entries. (Guryan Cert., 92). As I explained above in ruling on Jarwick's fee application, I disagree with this argument. Judge Wilson observed that "there has never been a case like this in New Jersey jurisprudence." (Tr., Aug. 5, 2013, at 29:1-2). This case has been on the docket for more than twenty years, with the last four years being a continual and arduous grind for all parties and counsel involved. The Wilf Defendants' scheme was creative and ever-evolving, requiring significant investigating and strategizing by Halpern to establish liability. (See Tr., Sept. 3, 2013, at 30:19-22 ("And it also goes to show that just because you know what the Wilfs had done, you cannot fathom what they will do, because they keep coming up with something new.")). Thus, I recommend that the hours spent by Halpern's counsel strategizing and

conferencing should not be reduced. See, e.g., Rode, 892 F.2d at 1187 ("A reduction for duplication `is warranted only if the attorneys are unreasonably doing the same work." (emphasis added)); Di~ectTV, Inc,, 2007 U.S. Dist. LEXIS 55023, at *10 ("[P]roductive attorney

36 However, the Lebensfeld Firm's billing entries attached to the Guryan Cert. as E~chibit BB, which contain some variance ofthe word "conferencing," total only $99,749.02. 112
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discussions and strategy sessions" are "[c]ompensable activities" under afee-shifting analysis. ... This is especially so in complex matters, such as this one."). 5. Mr. Lebensfeld's Billing Entry for February 9,2013

The Wilf Defendants argue that Mr. Lebensfeld improperly billed 28.3 hours for work that he performed on February 9, 2013. However, in his reply brief, Halpern explained that Mr. Lebensfeld's time entry on that date actually covered all the time he spent on the case while on vacation through February 18, 2013: [O]n Saturday, February 9, 2013, Mr. Lebensfeld left on vacation with his family for the entire following week and through the President's Day holiday. The first entry on Saturday, February 9, 2013, for 3.3 hours, represented work actually performed in transit to, and at, Newark airport, on the flight to Florida and upon arrival, and was entered in the Lebensfeld Firm's time records that day. The second entry for February 9, for 25 hours, represented the cumulative time expended by Mr. Lebensfeld during his "vacation" between February 10 and February 18, 2013, during which time he worked on the proposed settlement agreement with the Wilf Defendants, attended to numerous telephone conferences with none other than Mr. Guryan and his partner, David Silver, Esq., re same; attended to a lengthy telephone conference with Judge Wilson and counsel on February 15, 2013 (as indicated in the time cumulative time entry [sic] for February 9); and responded to numerous e-mails from counsel all accounted for in one single entry as of February 9, as is Mr. Lebensfeld's habit when on vacation. (Halpern Reply Br. at 60). I accept this representation and conclude that Mr. Lebensfeld's billing entry, dated February 9, 2013, should not be reduced. E. Recommended Revised Lodestar Calculation for Fees For the reasons set forth above, I recommend that the lodestar amount for the Lebensfeld Firm's attorneys' feesexcluding the time that Mr. Sharon, Mr. Schwartz, and "DL" spent on

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this case ($12,576.25), and accepting Halpern's proposed $100,000 reduction for time spent on non-RICO issuesshould be set at $4,652,784, as follows: NAME Lebensfeld Firm Alan M. Lebensfeld (Partner) Alan M. Lebensfeld (Partner) Lawrence J. Sharon (Partner) Lawrence J. Sharon (Partner) Brett R. Schwartz (Associate) Brett R. Schwartz (Associate) David M. Arroyo (Associate) David M. Arroyo (Associate) David M. Arroyo (Associate) Christine Gioe (Paralegal) Cluistine Gioe (Paralegal) Christine Gioe (Paralegal) "DL" Lebensfeld Sub-total Reduction for Time Spent on Non-RICO Issues Lebensfeld Total HOURS Requested/ Recommended 208.5/ 208.5 5350.4/ 5350.4 1.2/ 0 1.7/ 0 31.25/ 0 2.9/ 0 383.78/ 383.78 5565.96/ 5565.96 203.3/ 203.3 52.25/ 52.25 4843.25/ 4843.25 277.5/ 277.5 35.5/ 0 RATE AMOUNT Requested/ Recommended $82,357.50/ $82,357.50 $2,273,920/ $2,273,920 $420/ $0 $637.50/ $0 $8,906.25/ $0 $1,015/ $0 $95,945/ $95,945 $1,530,639/ $1,530,639 $60,990/ $60,990 $6,531.25/ $6,531.25 $653,838.75/ $653,838.75 $48,562.50/ $48,562.50 $1,597.5/ $0 $4,752,784 $100,000

$395 $425 $350 $375 $285 $350 $250 $275 $300 $125 $135 $175 $45

$4,652,784

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F.

Halpern Should Receive a 25% Contingency Fee Enhancement of the Lodestar Amount The New Jersey Supreme Court has ruled that "[a]fter the lodestar has been established,

the trial count may increase the fee `to reflect the risk of nonpayment in all cases in which the attorney's compensation entirely or substantially is contingent on a successful outcome."'
Walker, 209 N.J. at 134 (quoting Rendine, 141 N.J. at 337). Contingent fee enhancements to the

lodestar are permitted in certain circumstances because "a fee award cannot be `reasonable' unless the lodestar is adjusted to reflect .the actual risk that the attorney would not receive payment if the suit did not succeed." Id. "[T]hese awards are only available in those cases that our Legislature has selected for statutory fee-shifting so as to achieve its broader public policy purposes of attracting counsel to socially beneficial litigation." Id. at 139. The New Jersey Supreme Court has "fixed the ordinary range for a contingency enhancement as being between five and fifty percent," with the "typical range...being between
twenty anal thirty-five percent." Id. at 138 (citing Rendzne, 141 N.J. at 343)(emphasis added).

In determining and calculating a contingency fee enhancement, courts must consider three factors: "the result achieved, the risks involved, and the relative likelihood of success in the undertaking." Furst, 182 N.J. at 23; accord Walker, 209 N.J. at 139. Applying these factors, I recommend that Halpern receive a 25% enhancement of the lodestar amount. First, as explained above, the Lebensfeld Firm obtained remarkable results on Halpern's behalf. Halpern prevailed on all of his claims after 207 days of trial, and he received an enormous award of compensatory and punitive damages. The Wilf Defendants do not disputenor could theythat the first factor weighs heavily in favor of a contingency enhancement.

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Second, the Lebensfeld Firm took a tremendous risk in agreeing to represent Mr. Lebensfeld on a contingent fee basis. Indeed, the Lebensfeld Firm "devoted approximately 73% of their entire working hours. to this case during the trial phase alone," which substantially inhibited its ability to pursue other matters. (Lebensfeld Cert., 57-58). Although Halpern paid the Lebensfeld Firm "the aggregate sum of $1,282,473, net of expenses" during the 51 months that it has represented him (id. at 16), the firm would have taken a substantial loss if Halpern had not prevailed at trial, given the time and effort that it put into this case. The Wilf Defendants argue that the Lebensfeld Firm's decision to represent Mr. Halpern on a contingent fee basis "was a business arrangement which plainly balanced the nominal risk of nonpayment against the potential benefits of a much larger fee than hourly rates would have justified." (Wilf Opp. Br. at 48; Wilf Sur-Reply Br. at 10). But the record contradicts
see also

this argument. Indeed, Mr. Lebensfeld certified that his firm agreed to represent Halpern on a contingent fee basis because Halpern owed the firm $442,949.90 and "could no longer afford to sustain the litigation effort." (Lebensfeld Cert., 13). Mr. Lebensfeld explained that Halpern's financial condition left him with only two choices: "I could have withdrawn from my representation of Mr. Halpern and his family, or convert to a contingent fee basis for the only time in my professional career." (Id.). The Wilf Defendants also argue that the risk taken by the Lebensfeld Firm was "mitigated" by the payments it has received from Pernwil: "Since January 2012, Halpern has received $57,500 in monthly distributions from Pernwil, which distributions, since January 2013, have been made directly to the Lebensfeld firm." (Id. at 49; Certification of Steven Lefkowitz, dated October 4, 2013, at 2-4). However, the Lebensfeld Firm agreed to represent Halpern on a contingent fee basis in October 2010more than one year before Halpern began receiving the 116
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$57,500 monthly distribution from Pernwil, and more than two years before those distributions were paid directly to the Lebensfeld Firm. In any event, the Pernwil distributions only slightly mitigated the Lebensfeld Firm's risk of nonpayment in this case because this case took up 73% of the firm's time, caused the firm to lose important clients, and precluded the firm from generating new clients. Moreover, Halpern explained, in his reply brief, that "[a]s of September 2013 billing, and after crediting all payments theretofore received from Joe Halpern, the Lebensfeld Firm would still be owed $3,655,176.59 on ern Itoatrly basis." (Halpern Reply Br. at 75)(emphasis added). If not for the Pernwil distributions, Halpern may have been entitled to a higher contingent fee enhancement. See, e.g,, Walker, 209 N.J. at 138 (ruling that the "ordinary range for a contingency enhancement [is] being between five and fifty percent," with the "typical range ...being between twenty and thirty-five percent"). Third, Halpern had a moderate to low likelihood of success on his claims, given the Wilf Defendants' efforts at obfuscation and deliberate mischaracterization of accounting entries, and the herculean effort that was required to prove his claims. As Judge Wilson declared,"there has never been a case like this in New Jersey jurisprudence." (Tr., Aug. 5, 2013, at 29:1-3). The Wilf Defendants contend that the Lebensfeld Firm faced only a "nominal risk of nonpayment." (Wilf Opp. Br. at 48). However, to expose the Wilf Defendants' unlawful conduct, the Lebensfeld Firm was required to unravel years of convoluted, fraudulent financial records. Judge Wilson ruled that: I do not believe that I have seen one single financial statement that reflected the true ~cnd accurate position of the partnership, Pernwil o~ Halwil in this case. ...

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There is no treasure map in this case. There is simply no treasure map. I am a reasonably intelligent person. ... I have seen a lot of financial statements. I have gone through a lot of accountant seminars that are given so judges know what they are doing with financial statements. I have never seen tc forensic accounting sasclz as I have seen in this case. Wliy did it take me over 100 days to rlo this opinion,I Izave to tell you, at least 75 of those days were spent in financitcl statements, general ledgers, ~c~ljusting journal entries, trial b~clances, I will show you as I go through my factual findings with regard to each portion of damages. (Tr., Aug. 5, 2013, at 34:24-35:2, 44:16-45:10)(emphasis added). For these reasons, I recommend that Halpern receive a 25% contingency enhancement of the lodestar in the amount of $1,163,196. See Walker, 209 N.J. at 155-56 (awarding 50% contingency enhancement because plaintiff's counsel was unlikely to recoup their attorneys' fees since plaintiff's requested relief was mostly equitable, and plaintiff was met with a "vigorous and wide-ranging defense"); Rendine, 141 N.J. at 344-45 (awarding 33% contingent fee enhancement, even though plaintiff had strong case and counsel had the "prospect of substantial compensation . in the event of a large recovery," because counsel's risk of nonpayment

"increased during the course of the litigation by virtue of defendant's vigorous resistance to each element of plaintiffs' claims"). Thus,I recommend that Halpern receive a total award of X5,815,980 in attorneys' fees. G. Halpern's Requests for Cost and Expenses Halpern seeks $435,720.75 for various litigation costs and expenses. I conclude that Halpern has provided insufficient explanation or back-up to recover the following expenses: (i) "Expert Fees" ($2,873.42); (ii) "Miscellaneous"37 ($6,452.30); (iii) "Investigator" ($1,205.28); 37 In his reply brief, Halpern concedes that his firm's purchase of New Jersey Devils hockey tickets for Mr. Barsky ($355), which was included as a "miscellaneous" expense,"should have been excluded" from his application. (Halpern Reply Br, at 62). 118
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(iv) "Reports" ($380.50); (v) "Reproduction" ($6,707.84); (vi) "Search Fees" ($1,166.74); (vii) 38. Mr. Lebensfeld simply "Surveyor" ($1,205.00); and (viii) "Arbitrators (Keefe)" ($456.59) lists these charges in his Certification without explaining what they represent. Moreover, the Lebensfeld Firm's invoices, which were annexed to Mr. Lebensfeld's Certification, do not shed any light on what these expenses represent, or whether they were reasonable. In his Certification, Halpern listed a charge of $12,762.49 for "Bank Services." However, in his reply brief, Halpern concedes that this expense "should have been excluded" from his application. (Halpern Reply Br. at 62). Halpern also seeks $16,687.25 in secretarial overtime expenses. As I observed in

considering Jarwick's fee application, overtime for non-legal staff is only recoverable when the plaintiff "demonstrate[s] the necessity for such services." -Apple Corps, 25 F. Supp. 2d at 500. The plaintiff must demonstrate "an extraordinary need for supplemental services has arisen, either as a result of the complexity of the litigation, unusual time constraints for the preparation and filing of courts papers, or other unusual causes." Id, Halpern should not recoup the

secretarial overtime expenses because he has not provided any specific evidence demonstrating why they were necessarily incurred. See id. (rejecting request for payment of overtime expenses because plaintiff's firm "has not submitted any evidence showing an extraordinary need for supplemental services"). Halpern's Westlaw charges ($26,020.31) should be compensable. Considering the length and complexity of this case, these charges were both expected and reasonable. See U.S. ex r~el. Evergreen Pipeline Constr. Co., 95 F.3d at 173.

38 This item is particularly confusing because this matter was never arbitrated, and Mr. Lebensfeld separately itemized Special Master Keefe's fees under "Professional Fees." (Lebensfeld Cert., pp. 18-19). 119
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The Lebensfeld Firm's expenses for messengers ($6,933.76); conference calls ($2,052.80); faxes ($1,072.50); Federal Express ($7,924.44); filing fees ($175); subpoena service ($1,589.15); "process SVC" -Guaranteed Subpoena ($135.90); process fee Verizon Legal Compliance ($75); photocopies ($138,008.51); postage ($742.93); telephone ($100); and transcripts ($59,116.42) are recoverable. (Lebensfeld Cert., 54). These expenses are expected in any complex commercial case--especially when that case results in a 207-day trial. None of these expenses appears to be unreasonable. See Sypniewski, 2006 U.S. Dist. LEXIS 39285, at *36-37(awarding approximately $50,000 in "photocopying expenses, telephone expenses, travel time and expense and postage"); Fagas, 251 N.J. Super. at 207 (holding that term "litigation costs" in NJ frivolous litigation statute includes "[s]uch costs as photocopying, messenger charges, filing fees,postage"). Halpern seeks $123,829.58 in travel and lodging expenses. The Wilf Defendants contend that $92,123.30 of those expenses represent limousine charges, for which they should not be responsible. (Guryan Cert., 82). However, Halpern explained that those "limousine" expenses actually represented a "sedan car service utilized by Christine Gioe, the Lebensfeld Firm's paralegal, primarily to travel from our office in Red Bank, New Jersey, to her home in Queens, New York, when Christine was compelled to work late into the evenings, and/or on weekends, from October 2009 through August 2013." (Halpern Reply Br. at 62). I conclude that these expenses are reasonable and should be recovered. The Wilf Defendants argue that Halpern should not recover $26,913.98 for "supplies." (Guryan Cert., '~ 84). However, Halpern has explained that those "supplies" "predominantly consisted of hundreds and hundreds ... of three-ring binders which cost between $13.95 and $34.95 per binder, depending on size." (Halpern Reply Br. at 63). Halpern further explained

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that "Judge Wilson required all counsel to supply to the Court and each adversary counsel, for each witness who was to testify at trial, a binder or binders containing all of the materials (e~ibits, deposition transcripts, video-clips, etc.) which counsel intended to utilize in connection with his examination of that witness." (Id.; Lebensfeld Reply Cert., Exs. 15 and 16). Accordingly, I conclude that Halpern's "supply" expenses should be recovered. Finally, Halpern seeks $4,250.55 for "Professional Services (Keefe)." (Lebensfeld Cert., 54). For the reasons set forth in section IX, infra, I recommend that Halpern be reimbursed for his share of Discovery Master Keefe's fees. However, the Lebensfeld Firm's invoices contain two entries for "Professional Services" that have nothing to do with Discovery Master Keefe's services: (i) August 15, 2011 "Santoro, Driggs, Walch Kearney, Holley, &Thomson" ($837.80); and (ii) September 1, 2011 "Santoro, Driggs, Walch Kearney, Holley, &Thomson" ($709.90). These expenses should not be recoverable because Mr. Lebensfeld's Certification contains no explanation as to what they represent. Thus, I recommend that Halpern recover $2,702.85 for Discovery Master Keefe's services ($4,250.55 ("Professional Services" fees requested by Halpern) - $1,547.70 ("Professional Services" fees unrelated to Judge Keefe's services)). To summarize;I conclude that Halpern should recover the following expenses: Ex ense Amount Requested/ Recommended $26,020.31/ $26,020.31 $6,933.76/ $6,933.76 $2,052.80/ $2,052.80 $1,072.50/ $1,072.50 121
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Westlaw charges Messengers Conference Calls Faxes

Federal Express Filing Fees Photocopies Postage Telephone Transcripts Travel and Lodging Subpoena Service Process SVC -Guaranteed Subpoena Process fee Supplies Discovery Master Keefe Expert Fees Miscellaneous Investigator Reports Reproduction Search Fees Surveyor Arbitrators TOTAL Verizon Legal Compliance

$7,924.44/ $7,924.44 $175.00/ $175.00 $138,008.51/ $138,008.51 $742.93/ $742.93 $100.00/ $100.00 $59,116.42/ $59,116.42 $123,829.58/ $123,829.58 $1,589.15/ $1,589.15 $135.90/ $135.90 $75.00/ $75.00 $26,913.98/ $26,913.98 ,$4,250.55/ $2,702.85 $2,873.42/ $0 $6,452.30/ $0 $1,205.28/ $0 $380.50/ $0 $6,707.84/ $0 $1,166.74/ $0 $1,205.00/ $0 $456.59/ $0 Total $397,393.13

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IX. REALLOCATION OF THE SPECIAL MASTER'S FEES AND EXPENSES Paragraph 2 ofthe Order of Reference provides, in pertinent part, that: The fees and expenses of the Special Master shall initially be paid by Halwil, subject to reallocation by the Court, as appropriate, with the Special Master including in his Report his recommendation as to the subject of reallocation. (Order of Reference, 2). Neither Plaintiffs, nor the Wilf Defendants, briefed the issue of whether my fees and expenses should be reallocated, or paid entirely by Halwil. By e-mail dated October 22, 2013, I requested that counsel for Plaintiffs and the Wilf Defendants be prepared to address this issue at oral argument on October 30, 2013. On October 29, 2013, Mr. Lebensfeld e-mailed me copies of four decisions, from outside of this jurisdiction, which he contended supported Halpern's position that my fees and expenses should be reallocated entirely to the Wilf Defendants. At oral argument, on October 30, 2013, Mr. Lebensfeld relied principally upon the four decisions that he had e-mailed to me, arguing that "the general rule is that the Special Master should allocate the fees to the non-prevailing panty." (Fee App. Tr. at 66:25-67:3). Mr. Snyder countered that my fees and expenses should not be reallocated entirely to the Wilf Defendants. (Id. at 149:11-159:6). Mr. Snyder did not cite any New Jersey authority that supported his position. He did, however, call to my attention the Law Division's decision in In re Quintana, 250 N.J. 419(Law Div. 1991), in which the court ordered an unsuccessful election challenger to pay the full amount of a Special Master's fees. (Id. at 149:11-150:10). Mr. Snyder argued that
In re Quintana was distinguishable from this case because the Special Master in In re Quintana

"was basically being asked to decide who wins and who loses the case." (Id. at 150:16-22). I conclude that my fees and expenses should be reallocated to the Wilf Defendants. Rule 4:41-2, which governs the compensation of Special Masters, provides little guidance, stating 123
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only that "[t]he master's compensation shall be fixed by the court and charged upon such ofthe
parties or paid out ofanyfund or property as the court directs." (emphasis added).

However, N.J.S.A. 22A:2-8 (`Bill of costs; disbursements included") expressly provides that a party "to whom costs are awarded or allowed by law"such as Plaintiffs in this caseis entitled to recover a special master's fee as part of its costs: A party to whom costs are awarded or allowed by law or otherwise in any action, motion or other proceeding, in the Law Division or Chancery Division of the Superior Court is entitled to include in his bill of costs his necessary disbursements, as follows ... [t]he legal fees of witnesses, including mileage for each attendance, masters, commissioners and other officers ... . (emphasis added). In re Quintana, 250 N.J. Super. 419(Law Div. 1991), is directly on point. In that case, Mr. Quintana, an unsuccessful candidate for councilman in Newark City, challenged the results of an election in which he was defeated. The parties consented to the appointment of a Special Master to report on factual issues and make recommendations as to legal issues. The order appointing the Special Master provided that "the compensation and expenses of the special master would be assessed against such party or parties as the court later determined." Id. at 42021. The Special Master concluded that the election results should stand, and the trial court upheld that conclusion. Mr. Quintana did not dispute that, as an unsuccessful election challenger, he was required to pay the costs incurred by the election officials.39 The sole issue was whether the special master's fees constituted a recoverable "cost." Id. at 421. The court ordered Mr. Quintana to

39

Indeed, N,J.S.A. 19:29-14 provides that "[i]f the election be confirmed, or the petition dismissed, or the prosecution fail,judgment shall be rendered against the contestant for costs."

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pay the Special Master's fees because "N.J.S.A. 22A:2-8 expressly provides that the legal fees of masters are costs." Id, at 422. I am not persuaded by the Wilf Defendants' argument that In re Quintana is distinguishable because the Special Master in that case was appointed to make factual findings and legal recommendations related to the merits of the case. (See Fee App. Tr, at 150:16-22). The statute on which the In ~e Quintana court relied, N.J.S.A. 22A:2-8, expressly provides that the legal fees of a special master are taxable as costsregardless of the specific role that the special master was appointed to perform. 250 N.J. Super, at 422. Federal courts routinely ruleas the In re Quintana court heldthat a special master's fees should be taxed as costs to the prevailing party. See, e.g., Baker Indus., Inc, v. Cerbe~~us, Ltd., 570 F. Supp. 1237, 1248 (D.N.J. 1983) (affirming the Special Master's recommendation that the unsuccessful party pay 85% of his costs); K-2 Ski Co. v. Head Ski Co., Inc., 506 F.2d 471, 476-77 (9th Cir. 1974)("[Plaintiff) was the prevailing panty in this action and the district court did not abuse its discretion in allowing the master's compensation to be taxed as costs."); Aird v. Ford Motor Co., 86 F.3d 216, 221 (D.D.C. 1996) (affirming the district court's order taxing as costs the prevailing party's share ofthe special master's fees). Plaintiffs prevailed on virtually every issue at trial, obtained an overwhelmingly favorable result, and should be awarded the vast majority of the attorneys' fees and costs that they seek through this application, Accordingly, I recommend that my fees and expenses be reallocated to the Wilf Defendants.

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X. EXECUTIVE SUMMARY For the reasons set forth above, I recommend that Jarwicic be awarded $8,912,474.11 in attorneys' fees, and costs ofinvestigation and litigation and disbursements, as follows: $4,928,038.09 Neuberger's Attorneys' Fees; $2,160,331.46 Lowenstein's Attorneys' Fees; and $1,824,104.56 Costs of Investigation and Litigation. For the reasons set forth above, I recommend that Halpern be awarded $6,213,373.13 in attorneys' fees, and costs of investigation and litigation and disbursements, as follows: $4,652,784 Lebensfeld's Attorneys' Fees; $1,163,196 Contingent Fee Enhancement (25%) to Lebensfeld's Attorneys' Fees; and $397,393.13 Costs ofInvestigation and Litigation.

Respectfully submitted,
~,, a ~-

S"1'~YHEN M. ORLOF 'KY~ SPECIAL MASTER Dated: November 5, 2013

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