FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT August 23, 2017
_________________________________
Elisabeth A. Shumaker
Clerk of Court
TEAM SYSTEMS INTERNATIONAL,
LLC,
Plaintiff - Appellant,
v. No. 16-6277
(D.C. No. 5:14-CV-01018-D)
JEFF HAOZOUS, a/k/a Jeff Houser, (W.D. Okla.)
individually and as President of Fort Sill
Apache Industries and Chief Executive
Officer of Fort Sill Apache Industries
Board of Directors; FORT SILL APACHE
INDUSTRIES; FORT SILL APACHE
INDUSTRIES BOARD OF DIRECTORS,
as Managers of Fort Sill Apache Industries,
Defendants - Appellees.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before MATHESON, PHILLIPS, and McHUGH, Circuit Judges.
_________________________________
Plaintiff Team Systems International, LLC (TSI), sued Fort Sill Apache
Industries (FSAI), the FSAI Board of Directors, and its President and CEO, Jeff
Haozous (the Defendants) for breach of contract and related claims. The district
*
After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
submitted without oral argument. This order and judgment is not binding precedent,
except under the doctrines of law of the case, res judicata, and collateral estoppel. It
may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1
and 10th Cir. R. 32.1.
court dismissed its complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a
claim (the Dismissal), and we affirmed. Team Sys. Int’l, LLC v. Haozous,
656 F. App’x 907, 913 (10th Cir. 2016). The district court awarded attorney fees in
favor of the Defendants, and TSI now appeals that award.1
I. BACKGROUND
TSI sued the Defendants alleging they breached the parties’ Engagement
Agreement. Under the Agreement, FSAI promised to compensate TSI if it obtained
“financing” or a “strategic partner” for FSAI’s construction contracts with the federal
government. Id. at 909 (internal quotation marks omitted). TSI arranged for
payment and performance bonds relating to an FSAI construction project and
introduced FSAI to a company that became the primary subcontractor for the project.
When FSAI refused to compensate TSI, TSI filed this suit. The district court ruled
that TSI failed to state a breach of contract claim against FSAI or Mr. Haozous
because the performance bond did not constitute “financing” and the subcontractor
was not a “strategic partner,” and because the FSAI Board was not subject to suit. Id.
The Defendants then moved for an attorney fees award of $32,530.25 under
Okla. Stat. tit. 12, § 936(A), which permits an award of reasonable attorney fees for
the prevailing party in a civil suit for “services rendered.” In support of their motion,
1
In affirming the dismissal of TSI’s complaint, we granted the defendants’
motion for attorney fees on appeal, and remanded to the district court for a
determination of the amount to award. The district court entered its award of
attorney fees for the appeal, and TSI is appealing that award in a separate pending
appeal, Team Sys. Int’l, LLC v. Haozous, No. 17-6139 (10th Cir. Appeal docketed
June 13, 2017).
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they submitted affidavits and partially-redacted billing records from the two law
firms that represented them on the Dismissal. The Defendants stated the billing
records were redacted to preserve attorney-client and work-product privilege and
offered to provide unredacted records to the court for in camera review.
TSI conceded that the Defendants were entitled to an award under § 936. But
it argued the Defendants’ submissions were insufficient to enable the district court to
determine if the fee request was reasonable because their redacted billing statements
omitted detailed descriptions of tasks and used block-billing entries, which show only
an attorney’s total daily time rather than itemizing each task. TSI also objected that
Defendants’ offer to provide unredacted records for in camera review would deprive
it of “the opportunity to formulate a reasoned response to the un-redacted billing
records.” Aplt. App. at 126. TSI requested copies of the unredacted copies and an
opportunity to respond to the reasonableness of the request.
The district court concluded it was unable to assess the reasonableness of the
requested award because of the redactions in the attorneys’ billing records and the
use of block-billing entries. It directed the Defendants to submit to the court for in
camera review unredacted billing statements and contemporaneous time records
showing the services rendered and the time spent on specific tasks. TSI did not
object to this order. Several months later, after this court affirmed the Dismissal, the
district court granted the Defendants’ fee award.
The district court stated it reviewed the unredacted billing statements and
contemporaneous time records of most of the Defendants’ attorneys, though some
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attorneys did not have contemporaneous time-records other than the billing
statements. It found “that, for the most part, the amount of attorney fees requested by
the [Defendants] represents a reasonable sum for the legal services provided by their
counsel in the successful defense of [the] action.” Id. at 248. The court noted that
not all time spent on the Dismissal was billed to TSI or was included in the fee
request. It found that the time billed was reasonable and appropriate, and that the
billing statements reflected a proper exercise of billing judgment. It concluded there
were some unsupported block-billing entries and some duplication of services by
multiple attorneys. After performing a lodestar calculation, it ruled that a ten percent
reduction in the requested award would yield a reasonable fee award of $29,234.47.
On appeal, TSI argues the district court abused its discretion by conducting the
in camera review of the unredacted records.
II. DISCUSSION
“We review the district court’s award of attorney fees for abuse of discretion.”
Chieftain Royalty Co. v. Enervest Energy Institutional Fund XIII-A, L.P., 861 F.3d
1182, 1187 (10th Cir. 2017). “A district court abuses its discretion where it commits
a legal error or relies on clearly erroneous factual findings, or where there is no
rational basis in the evidence for its ruling.” Clark v. State Farm Mut. Auto. Ins. Co.,
433 F.3d 703, 709 (10th Cir. 2005) (internal quotation marks omitted). A district
court’s decision to review certain documents in camera or ex parte is reviewed for
abuse of discretion.” Estate of Trentadue ex rel. Aguilar v. United States, 397 F.3d
840, 860 (10th Cir. 2005) (emphasis added).
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In this diversity case, the law of the forum state, Oklahoma, controls the award
of attorney fees. Chieftain Royalty Co., 861 F.3d at 1188. Under Oklahoma law, an
award of fees under § 936 is mandatory, but “[t]he determination of reasonableness
and the amount of the fee award are generally left to the sound discretion of the
district court.” JLEE Co. v. Reneau Seed Co., 332 P.3d 297, 300 (Okla. Civ. App.
2014) (internal quotation marks omitted).
TSI asserts three reasons why the district court abused its discretion in
conducting an in camera review of the unredacted billing records: (1) courts may
only review a document in camera for the limited purpose of determining whether a
privilege was validly asserted; (2) FSAI waived any attorney-client privilege by
virtue of requesting attorney fees—thus, there was legal no basis for Defendants to
redact any portion of their records; and (3) the in camera review violated its due
process rights. TSI did not present these arguments to the district court—neither in
response to the Defendants’ original fee request, in response to the district court’s
ruling that it would review the unredacted records in camera, nor even in a post-
judgment motion.
TSI’s failure to raise these arguments in district court resulted in a forfeiture.
See Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1128 (10th Cir. 2011) (“[I]f [a]
theory . . . wasn’t raised before the district court, we usually hold it forfeited.”).
Forfeited arguments are ordinarily reviewable under the plain-error standard. Id. But
TSI did not argue for the application of plain error on appeal in its opening brief. Its
arguments are, therefore, waived. See McKissick v. Yuen, 618 F.3d 1177, 1189
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(10th Cir. 2010) (“[E]ven if [the appellant’s] arguments were merely forfeited before
the district court, [its] failure to explain in [its] opening appellate brief why this is so
and how they survive the plain error standard waives the arguments in this court.”).2
We are left with TSI’s broad assertion that the district court abused its
discretion in conducting an in camera review of the unredacted records because TSI
could not meaningfully challenge the reasonableness of the fee request. Because
billing records and time sheets might reveal attorney-client communications, aspects
of these records may be protected by privilege. E.g., United States v. Anderson (In re
Grand Jury Subpoenas), 906 F.2d 1485, 1492-93 (10th Cir. 1990) (holding that fee
contracts could reveal attorney-client privilege and noting that in camera review of
any of possibly privileged documents would be appropriate); Chaudhry v. Gallerizzo,
174 F.3d 394, 403 (4th Cir. 1999) (holding billing records constituted attorney-client
and work-product privileged communications because they revealed legal research,
including the identity of the federal statutes researched, which would divulge
confidential information regarding legal advice).
In camera review enables protection of privileged material, see, e.g., Kerr v.
U.S. Dist. Court, 426 U.S. 394, 405 (1976), and courts have reviewed unredacted
billing records and time sheets in camera to protect privilege in making attorney fee
2
TSI argues in its reply brief that we should apply plain error review to its due
process arguments, but “[t]he general rule in this circuit is that a party waives issues
and arguments raised for the first time in a reply brief,” Reedy v. Werholtz, 660 F.3d
1270, 1274 (10th Cir. 2011) (brackets and internal quotation marks omitted), and
McKissick makes clear a party must argue for plain-error review in its opening brief,
618 F.3d at 1189.
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awards. E.g., Fry v. AOK Energy Servs., LLC, No. 14–CIV–508–RAW, 2015 WL
13388434, at *1 (E.D. Okla. Oct. 2, 2015) (denying respondent’s objection to an
award of any fees based on redacted billing entries and conducting in camera review
of the unredacted records); see also Almeida v. Amazon.com, Inc., 456 F.3d 1316,
1328 (11th Cir. 2006) (upholding fee award notwithstanding trial court’s failure to
explain how it calculated an attorney fee award because it conducted an in camera
review of the unredacted billing statements and could rely on its own knowledge to
determine a reasonable attorney fee award); Nat’l Fitness Co. v. ProCore Labs., LLC,
No. 3:11–CV–1352–L, 2013 WL 4546860, at *3 (N.D. Tex. Aug. 28, 2013) (stating
plaintiffs seeking attorney fees may submit attorney billing records ex parte to the
court for in camera review if they are concerned about “divulging privileged or
confidential matters”).
This court has held that a court reviewing a fee request did not abuse its
discretion in denying the responding party access to the itemized time records and
conducting in camera review of those records. Garcia v. Tyson Foods, Inc. 770 F.3d
1300, 1309 (10th Cir. 2014) (ruling court acted within its discretion to conduct an ex
parte, in camera review of billing records where it allowed the responding party to
obtain summaries and depose someone familiar with the billing practices). Here, TSI
did not pursue other avenues of discovery or contend on appeal that alternative
discovery would have been inadequate. Moreover, TSI has not shown that the
district court’s reasons for its ruling were inadequate. Accordingly, we are not
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persuaded the district court abused its discretion when it conducted its in camera
review of the billing statements and time records.
Judgment affirmed.
Entered for the Court
Scott M. Matheson, Jr.
Circuit Judge
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