Tvia, Inc.

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For The Northern District Of California
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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
In re 	Case No. 08-55860-RLE
TVIA, INC., 	Chapter 11
Debtor. Date: 	August 26, 2009
Time: 	1:00 p.m.
__________________________________/ 	Place: 	Courtroom 3099
MEMORANDUM DECISION RE FIRST INTERIM FEE APPLICATION OF
SHEPPARD, MULLIN, RICHTER & HAMPTON, LLP FOR
ALLOWANCE OF COMPENSATION AND REIMBURSEMENT
OF EXPENSES INCURRED AS COUNSEL FOR THE
OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS
I. 	INTRODUCTION
On August 26, 2009, the Court held a hearing on the First Interim Fee Application of
Sheppard, Mullin, Richter & Hampton, LLP for Allowance of Compensation and Reimbursement of
Expense Incurred as Counsel for the Official Committee of Equity Security Holders (the “Fee
Application”). Prior to the hearing, the Court issued a Tentative Ruling, indicating its intent to
disallow $87,713.50 in fees for various reasons, all described in detail. At the hearing, Ori Katz,
counsel for the Committee, appeared and argued various aspects of the Tentative Ruling. Other
appearances were as noted on the record. The Court, having considered the argument of the parties
The following constitutes the
Memorandum Decision of the Court.
Signed September 11, 2009
________________________________________
Roger L. Efremsky
U.S. Bankruptcy Judge	________________________________________
Entered on Docket
September 11, 2009
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
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1In March 2009, Mr. Katz was elevated to Partner and his billing rate increased from $470 per
hour, to $495 per hour. In response to the objections filed by various parties and at the request of the
Committee, Sheppard Mullin agreed to bill the estate at Mr. Katz’s associate rate of $470 per hour. The
voluntary reduction is the result of the recalculation.
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and, for the reasons stated below, disallows $52,047.50 in fees with prejudice, and $12,137.00
without prejudice to supplementation in a later fee application.
II. 	FACTUAL BACKGROUND
This bankruptcy case was filed on October 15, 2008. The Official Committee of Equity
Security Holders was appointed by the United States Trustee on January 6, 2009 (the “Committee”).
On January 26, 2009, Sheppard, Mullin, Richter & Hampton, LLP (“Sheppard Mullin”) filed an
Employment Application, seeking to be employed to represent the Committee. On February 5,
2009, the Court entered an Order approving Sheppard Mullin’s employment, effective January 9,
2009.
On May 21, 2009, Sheppard Mullin filed its Fee Application, seeking $276,472 in fees and
$4,082.32 in expenses for the period from January 9, 2009, through April 30, 2009. Subsequently,
on July 13, 2009, Sheppard Mullin filed a Supplement to the Fee Application, voluntarily reducing
the fees sought by $3,410.1 Thus, Sheppard Mullin now seeks $273,062 in fees and $4,082.32 in
expenses.
III. 	DISCUSSION
Section 330(a) of the Bankruptcy Code provides that the Court may award to a professional
person employed under § 327 or 1103 reasonable compensation for actual, necessary services
rendered and reimbursement of actual, necessary expenses. 11 U.S.C. § 330(a)(1). In determining
what compensation is reasonable, the court considers the nature, extent and value of the
professional’s services, taking into account all relevant factors, including whether the services were
necessary to the administration of the estate, whether they were beneficial to the estate, and whether
the services were performed within a reasonable amount of time commensurate with the complexity,
importance, and nature of the problem, issue or task addressed. 11 U.S.C. § 330(a)(3). 	The
applicant bears the burden of establishing entitlement to an award and demonstrating the fees are
reasonable. Hensley v. Eckerhart, 461 U.S. 424, 437 (1983).
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28 2“Page” refers to the page number in the Statement of Services (Exhibit B to the Fee
Application) where each entry is found.
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A. 	Administrative/Clerical Entries
Services that are clerical in nature are properly chargeable to the firm as an overhead expense
and not to the bankruptcy estate. Fees for services that are purely clerical, ministerial, or
administrative should be disallowed regardless of who performs them. Missouri v. Jenkins, 491
U.S. 274, 288 fn 10 (1989); Sousa v. Miguel, 32 F.3d 1370, 1374 (9th Cir. 1994); see also Court’s
Guidelines for Compensation and Expense Reimbursement, ¶ 18.
In its Fee Application, Sheppard Mullin included time incurred for reviewing the docket,
forwarding documents, retrieving documents, calendaring matters, supervising the service of
documents, coordinating the filing of documents and preparing binders. These tasks are not in the
nature of professional services and must be absorbed by Sheppard Mullin as overhead expenses.
Therefore, as detailed below, fees in the amount of $6,234.00 are disallowed with prejudice on the
basis that they are clerical in nature.
Page 	Date 	Description 	Time-
keeper Rate 	Time
Billed Total
Billed
8 2 4/15/09 	Forwarded documents to ch 11
trustee counsel RKS 	$320.00 	.20 	$ 64.00
8 	4/16/09 	Follow up on items requested by
YC and Mr. Stuppi during
meeting of prior day
OK 	$470.00 	1.80 	$846.00
9 	4/28/09 	Research re compensation of
trustee and retrieved documents
re same
RKS 	$320.00 	1.10 	$352.00
13 	4/23/09 	Reviewed docket and claims
register and retrieved documents
for O. Katz re preparation of
settlement (.7); e-mail to
committee chair forwarding
same (.1)
RKS 	$320.00 	.80 	$256.00
14 	2/9/09 	Reviewed docket regarding and
calendared deadlines to file POC RKS 	$320.00 	.50 	$160.00
15 	2/11/09 	Reviewed docket and retrieved
documents to O. Katz RKS 	$320.00 	.30 	$ 96.00
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16 	2/15/09 	Retrieved documents and
exhibits for O.Katz re same RKS 	$320.00 	1.40 	$448.00
17 	2/17/09 	Reviewed and prepared e-mails
exhibits and documents RKS 	$320.00 	1.20 	$384.00
18 	2/23/09 	Reviewed rules re service (.7);
reviewed and revised service
lists and supervised filing and
service (1.3)
RKS 	$320.00 	2.00 	$640.00
18 	2/24/09 	Reviewed hearing notice on
trustee motion, called court, and
follow up e-mails re same.
RKS 	$320.00 	.50 	$160.00
22 	3/24/09 	Reviewed response to reply and
prepared hearing binders re the
motion to appoint ch 11 trustee
RKS 	$320.00 	2.30 	$736.00
23 	1/13/09 	Reviewed docket and compiled
requests for notice (.4); prepared
and revised a notice of
appearance and request for
special notice (1.1); revised
service list, reviewed COS and
completed filing (.4)
RKS 	$320.00 	1.90 	$608.00
24 	2/26/09 	Reviewed documents and
assisted in preparing binders for
meeting with debtor
RKS 	$320.00 	.90 	$288.00
24 	4/2/09 	Reviewed docket and retrieved
documents for M. Ahrens;
prepared report summarizing
status re appointment of trustee
RKS 	$320.00 	1.90 	$608.00
24 	4/10/09 	Reviewed docket in case and
NBG matter (.2); Responded to
inquiry re same (.3)
RKS 	$320.00 	.50 	$160.00
38 	2/13/09 	Finalized employment app for
financial advisor and forward for
signature
RKS 	$320.00 	.60 	$192.00
38 	3/6/09 	Reviewed dockets for filings by
other professionals RKS 	$320.00 	.30 	$ 96.00
39 	1/23/09 	Coordinated filing of
employment application with
Mr. Katz
ML 	$350.00 	.40 	$140.00
TOTAL: 	$6,234.00
B. 	Committee’s Motion to Appoint Trustee
On February 19, 2009, the Committee filed a Motion to Appoint Trustee. The Motion
consisted of a twenty-eight page motion, a Request for Judicial Notice and moving papers for an
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Order Shortening Time. Review of the time records reveals that two partners and one associate
spent 94.9 hours and billed $38,169.50 to prepare the motion. The length of the Motion
notwithstanding, the facts and law were not difficult, nor were they novel. Despite this, Sheppard
Mullin billed approximately 16 hours for research regarding a legal issue that is well-settled; i.e., the
standards for appointment of a chapter 11 trustee.
Review of the billing records also reveals that on any given day, up to three attorneys were
all working on the motion at the same time; drafting, reviewing and revising each other’s work. The
Court understands that it may be appropriate to have someone review a draft or finished product of a
given motion, or to have different people work on discrete projects related to the motion. However,
the simultaneous drafting of the Motion by three different lawyers, combined with the constant and
daily review and revision of the Motion by at least two and sometimes all three, was excessive,
especially in light of the fact that the UST filed a perfectly sufficient eight-page motion that served
the exact same purpose and achieved the exact same result.
The Court understands and appreciates Mr. Katz’s argument on this matter. Unfortunately,
however, the Court remains unconvinced that the 95 hours spent on this task were necessary or
appropriate. Therefore, for the foregoing reasons, the Court will reduce the fees charged in this
category by 50%. The Court will allow fees in the amount of $19,084.75. Fees in the amount of
$19,084.75 are disallowed with prejudice on the basis that they are excessive and not reasonable.
Page 	Date 	Description 	Time-
keeper Rate 	Time
Billed Total
Billed
14 	2/9/09 	Performed research re
appointment of chapter 11
trustee and reviewed and
revised memorandum re same
RKS 	$320.00 	4.20 	$1,344.00
15 	2/10/09 	Commenced preparing motion
to appoint chapter 11 trustee RKS 	$320.00 	3.60 	$1,152.00
15 	2/11/09 	Continued preparing motion to
appoint trustee (2.5) RKS 	$320.00 	2.50 	$ 800.00
15 	2/12/09 	Research re grounds for
appointment of a chapter 11
trustee
OK 	$470.00 	3.90 	$1,833.00
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15 	2/12/09 	Performed legal research with
respect to facts sufficient to
appoint a trustee (2.3);
discussion with M. Ahrens and
O. Katz re strategy to prepare
the motion (.4); continue
working on the motion (1.9)
RKS 	$320.00 	4.60 	$1,472.00
15 	2/13/09 	Draft introduction and factual
background portions of motion
for appointment of ch 11 trustee
OK 	$470.00 	5.30 	$2,491.00
15 	2/13/09 	Performed research re facts
relevant to conduct by
management of debtor (2.2);
continued working on the
motion to appoint trustee (3.5)
RKS 	$320.00 	5.70 	$1,824.00
16 	2/14/09 	Review of key cases to be cited
in motion to appoint chapter 11
trustee and revise brief based
on same
OK 	$470.00 	2.30 	$1,081.00
16 	2/14/09 	Continued reviewing
documents and pleadings and
working on motion to appoint
trustee
RKS 	$320.00 	6.10 	$1,952.00
16 	2/15/09 	Extensive drafting and
revisions to motion to appoint a
chapter 11 trustee
OK 	$470.00 	7.70 	$3,619.00
16 	2/15/09 	Researched case law re motion
to appoint a trustee (.9); worked
on inserts for the motion (1.8)
RKS 	$320.00 	2.70 	$ 864.00
16 	2/16/09 	Review and revise motion to
appoint trustee and send e-
mails re proof
MHA 	$755.00 	1.30 	$ 981.50
16 	2/16/09 	Continue drafting memorandum
of points and authorities in
support of motion to appoint
trustee (4.8); draft ex parte
application and supporting
papers re hearing on shortened
time (1.3); review of documents
to be attached to RJN and
review of all factual matters
asserted in motion (2.5)
OK 	$470.00 	8.60 	$4,042.00
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16 	2/16/09 	Continue working on and
revising motion to appoint a
trustee and supporting
declaration (3.9); reviewed
exhibits, documents and
pleadings and prepared RJN
and the list of documents (2.2);
prepared XP for OST (1.5)
RKS 	$320.00 	7.60 	$2,432.00
16 	2/17/09 	Review revised motion to
appoint trustee and make
comments thereto
MHA 	$755.00 	1.60 	$1,208.00
17 	2/17/09 	Complete review and revisions
to all papers to be filed in
connection with motion to
appoint a chapter 11 trustee
OK 	$470.00 	6.40 	$3,008.00
17 	2/17/09 	Performed research re case law
on conflicts of interests and
appointment of trustee (.9);
review brief and discussion
with M.Ahrens and O.Katz re
motion to appoint trustee (.8);
made changes to motions,
declaration and OST papers
(1.1); prepared additional
declarations in support of both
motions (.9)
RKS 	$320.00 	3.70 	$1,184.00
17 	2/18/09 	Revisions to motions based on
same and finalize motion
papers
OK 	$470.00 	5.60 	$2,632.00
17 	2/18/09 	Made revisions to the Motion
to appoint trustee, declarations
and related pleadings (1.9);
reviewed and revised RJN and
prepared the exhibits (1.3)
RKS 	$320.00 	3.20 	$1,024.00
17 	2/19/09 	Finalize motion to appoint ch
11 trustee, including all
supporting papers and review
of key cases
OK 	$470.00 	3.80 	$1,786.00
17 	2/19/09 	Revised and finalized motion to
appoint trustee documents and
completed the service of the
motion pleadings and exhibits
RKS 	$320.00 	3.60 	$1,152.00
18 	2/23/09 	Prepared and revised notice re
hearing on trustee motion (.9) RKS 	$320.00 	.90 	$ 288.00
TOTAL: 	94.9 	$38,169.50
/ / / /
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C. 	Committee’s Reply to Debtor’s Opposition to Motion to Appoint Trustee
On March 11, 2009, Debtor filed an Opposition to the Committee’s Motion to Appoint
Trustee. On March 18, 2009, the Committee filed a Reply to Debtor’s Opposition. The Reply
consisted of twenty-three pages of argument and six pages of declarations. Review of the time
records reveals that two partners and one associate spent 60.8 hours and billed $27,851.50 to prepare
the Reply. While a Reply was necessary, review of the billing records reveals that Sheppard Mullin
employed the same staffing strategy as they did when they prepared the Motion. Specifically, on
any given day, up to three lawyers were all working on the motion at the same time; drafting,
reviewing and revising each other’s work. 	For the reasons stated previously, the Court finds that
the simultaneous drafting of the Reply by three different lawyers, combined with the constant and
daily review and revision of the Reply by all three, for a total of 61 hours, was excessive. Therefore,
for the foregoing reasons, the Court will also reduce the fees charged in this category by 50%. The
Court will allow fees in the amount of $13,925.75. Fees in the amount of $13,925.75 are
disallowed with prejudice on the basis that they are excessive and not reasonable.
Page 	Date 	Description 	Time-
keeper Rate 	Time
Billed Total
Billed
19 	3/9/09 	Work on reply to trustee motion 	MHA 	$755.00 	1.20 	$ 906.00
20 	3/11/09 	Review and analysis of opposition
brief of debtor re motion to
appoint ch 11 trustee
OK 	$470.00 	1.00 	$ 470.00
20 	3/12/09 	review declarations and exhibits in
support of opposition brief OK 	$470.00 	1.80 	$ 846.00
20 	3/12/09 	Reviewed opposition briefs and
related documents RKS 	$320.00 	1.70 	$ 544.00
20 	3/13/09 	prepare outline re matters to be
raised in reply brief of committee OK 	$470.00 	1.30 	$ 611.00
20 	3/14/09 	continue working on reply to
debtor’s opposition to motion to
appoint ch 11 trustee
OK 	$470.00 	2.30 	$1,081.00
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20 	3/14/09 	Reviewed opposition to motion to
appoint ch 11 trustee and related
documents, reviewed e-mails,
pleadings and exhibits (2.2);
commenced preparing reply brief
(3.5)
RKS 	$320.00 	5.70 	$1,824.00
21 	3/15/09 	Continue working on declarations
in support of reply brief OK 	$470.00 	2.60 	$1,222.00
21 	3/15/09 	Continue working on reply brief,
prepared declarations and
prepared for deposition
RKS 	$320.00 	5.30 	$1,696.00
21 	3/16/09 	Continue drafting reply brief and
declarations in response to
debtor’s opposition to motion to
appoint trustee
OK 	$470.00 	4.60 	$2,162.00
21 	3/16/09 	prepared for and attended meeting
with M. Ahrens and O. Katz re
preparation of reply (2.6);
reviewed and revised reply (.8)
RKS 	$320.00 	3.40 	$1,088.00
36 	3/16/09 	Review documents produced by
Debtor in connection with Motion
re trustee (1.3); Review response
by Debtor to motion (1.0); prepare
reply brief (1.50)
MHA 	$755.00 	3.80 	$2,869.00
21 	3/17/09 	Revise reply brief to motion to
appoint trustee MHA 	$755.00 	1.50 	$1,132.50
21 	3/17/09 	Extensive revisions and drafting
of briefs and declarations in
support of reply brief re
appointment of ch 11 trustee
OK 	$470.00 	5.50 	$2,585.00
21 	3/17/09 	Research and revisions re reply 	RKS 	$320.00 	1.50 	$ 480.00
21 	3/18/09 	Prepare revisions for reply brief
(1.2); Revise Azevedo decl (1.0);
Conference with Azevedo and
Katz re reply and declaration (.8);
Review docs produced in
connection with reply (.80)
MHA 	$755.00 	3.80 	$2,869.00
22 	3/18/09 	Finalize and filed reply brief and
all supporting papers in
connection with motion to appoint
ch 11 trustee
OK 	$470.00 	3.40 	$1,598.00
22 	3/18/09 	Worked on and assisted in
preparation and filing of reply
brief, supporting declarations and
related exhibits
RKS 	$320.00 	6.80 	$2,176.00
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22 	3/24/09 	Review of all papers filed in
connection with motions to
appoint chapter 11 trustee in
connection with prep for hearing
OK 	$470.00 	3.60 	$1,692.00
TOTAL: 	60.8 	$27,851.50
D. 	Chapter 11 Trustee Issues
On March 25, 2009, the Court ordered the appointment of a chapter 11 trustee. Review of
Sheppard Mullin’s billing records reveals that well before the filing of the Motion to Appoint
Trustee, the Committee was considering YC Yuchen Zhu as either Court Restructuring Officer, or as
a Trustee candidate. Review of the billing records also reveals that following the Court’s grant of
the Motion to Appoint a Trustee and prior to the actual trustee appointment, Sheppard Mullin spent
at least 22.5 hours and billed at least $11,443.50 in an apparent attempt to influence the UST’s
choice of trustee. Specifically, Sheppard Mullin called and wrote to the UST on numerous
occasions, researched courses of action in the event that the UST did not choose a trustee that was
acceptable to the Committee, and even went so far as to prepare a demand for a trustee election.
Pursuant to 11 U.S.C. § 1104(c), the appointment authority in cases where a chapter 11
trustee is appointed is vested in the UST. While Bankruptcy Rule 2007.1(c) contemplates that the
UST will consult with creditors and parties in interest prior to selecting a trustee, once the Court
orders the appointment of a trustee, it is the sole duty of the UST to select a qualified candidate to
serve that role. In re Schneider, 2007 WL 2688812 *6 (Bankr. N.D. Cal. 2007); In re Stoecker, 128
B.R. 205, 213 (Bankr. N.D. Ill. 1991).
Here, a substantial portion of the fees requested in this category appear to have been driven
by the Committee’s self-interest in hand-picking the trustee. Further, the large amount of fees and
the related descriptions suggest that Sheppard Mullin exerted its leverage in the selection process
based on the ability to elect a trustee under Bankruptcy Rule 2007.1(b). While it is understandable
that the Committee would want a trustee that is acceptable to the Committee, there has been no
showing that the more than 22 hours spent by Sheppard Mullin benefitted anyone other than the
Committee. Just because fees are incurred, it doesn’t necessary make those fees compensable if the
services were performed purely out of self interest and did not benefit the estate as a whole. While
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the Court expects to see time billed for consultation with the UST per Rule 2007.1(c), 22.5 hours is
excessive. A reasonable fee for Sheppard Mullin’s contribution to the trustee selection process is
$2,000. The balance of the fees sought in connection with the Trustee appointment in the amount of
$9,443.50, are disallowed with prejudice as excessive and not reasonable.
Page 	Date 	Description 	Time-
keeper Rate 	Time
Billed Total
Billed
19 	3/9/09 	Prepare letter to UST re
appointment of trustee MHA 	$755.00 	1.30 	$ 981.50
5 	3/19/09 	Review emails re selection of
trustee and calls re same MHA 	$755.00 	.80 	$ 604.00
5 	3/24/09 	Prepare letter to Mr. Wesolowski
re selection of trustee MHA 	$755.00 	1.0 	$ 755.00
5 	3/26/09 	follow up with call to Office of
the UST to express committee
position (.2); draft letter to Office
of UST in order to set forth
committee position (.8); further
analysis of committee options in
connection with selection of
chapter 11 trustee and course of
the case going forward (1.6)
OK 	$470.00 	2.60 	$1,222.00
5 	3/30/09 	conference with client re
alternatives on selection of
trustee
MHA 	$755.00 	.50 	$ 377.50
5 	3/30/09 	conference calls, emails and
research re issue raised by
committee in connection with
selection of chapter 11 trustee
and course of debtor’s case
following such selection
OK 	$470.00 	2.30 	$1,081.00
5 	3/31/09 	conference re selection process of
trustee with Mr. Katz MHA 	$755.00 	.50 	$ 377.50
5 	4/1/09 	send emails re selection of trustee
and conference with Mr. Katz. MHA 	$755.00 	.50 	$ 377.50
6 	4/2/09 	Review email to UST re selection
of trustee (.50); Revise letter to
UST (.40); conference with Mr.
Katz re alternatives (.30)
MHA 	$755.00 	1.20 	$ 906.00
24 	4/2/09 	discussion with Mr. Wesolowski
re process for selection of ch 11
trustee (.3); draft and revise letter
to UST re same (2.5)
OK 	$470.00 	2.80 	$1,316.00
Case: 08-55860 Doc# 498 Filed: 09/11/09 Entered: 09/11/09 18:30:03 Page 11 of
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6 	4/3/09 	Review status of letters to UST
(.5); Conversation with UST re
selection of trustee (.5) Send
email to Mr. Katz (.30)
MHA 	$755.00 	1.30 	$ 981.50
6 	4/5/09 	Reviewed emails from committee
and documents re objection to
appointing a ch 11 trustee
candidate not acceptable to
committee
RKS 	$320.00 	1.10 	$ 352.00
6 	4/6/09 	Performed research re
appointment of ch 11 trustee by
UST (1.4); reviewed letter and
emails re same (.9); prepared
demand for election (2.5)
RKS 	$320.00 	4.80 	$1,536.00
6 	4/7/09 	Researched case law re objection
to appointment of chapter 11
trustee candidates
RKS 	$320.00 	1.80 	$ 576.00
TOTAL: 	22.5 	$11,443.50
E. 	Settlement of State Court and Bankruptcy Litigation
Sheppard Mullin billed 28.0 hours and $12,137.00 for preparation of the global settlement
agreement and Rule 9019 motion that settled the outstanding bankruptcy and state court litigation.
Review of the docket and the related papers, however, indicates that the settlement and Rule 9019
motion were prepared and filed by the Trustee’s counsel (“Stuppi”), on Stuppi’s letterhead. Thus, it
appears to the Court that it is Stuppi, not Sheppard Mullin, that should be seeking compensation for
these activities.
As of the date of this hearing, Stuppi has not filed a fee application, thus the Court does not
know whether Stuppi intends to bill for these activities. In order to avoid compensating both
Sheppard Mullin and Stuppi for the same services, the $12,137 billed for preparation of the global
settlement and Rule 9019 motion is disallowed without prejudice to reconsideration when Stuppi
files its fee application.
/ / / /
/ / / /
/ / / /
/ / / /
/ / / /
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Page 	Date 	Description 	Time-
keeper Rate 	Time
Billed Total
Billed
12 	4/16/09 	Begin work on potential global
resolution of pending litigation
matters
OK 	$470.00 	1.90 	$ 893.00
12 	4/17/09 	Continue working on global
resolution of all pending
litigation
OK 	$470.00 	5.70 	$2,679.00
12 	4/20/09 	continue working on proposed
form of settlement agreement OK 	$470.00 	.70 	$ 329.00
12 	4/21/09 	continue drafting global
settlement agreement (1.9);
revisions to same per comments
and based on discussions with
Mr. Stuppi (.7); revisions based
on committee input (.4); emails
with Mr. Stuppi and committee
re general settlement deal
points (.2)
OK 	$470.00 	3.20 	$1,504.00
12 	4/21/09 	Discussion with O.Katz re
preparing global settlement
agreement (.3); reviewed
documents and researched
filings re information for
preparation of settlement
RKS 	$320.00 	1.40 	$ 448.00
12 	4/22/09 	Finalize initial draft of
proposed global settlement
agreement (2.3);
OK 	$470.00 	2.30 	$1,081.00
13 	4/22/09 	Reviewed pleadings related to
insurance motion, adversary
proceedings, state court
complaint, and claims docket
and prepared draft of global
settlement agreement
RKS 	$320.00 	5.30 	$1,696.00
13 	4/23/09 	Finalize settlement agreement
and begin preparation of
motion under Rule 9019 for
approval of same
OK 	$470.00 	2.80 	$1,316.00
13 	4/28/09 	Review and revise agreement re
litigation (.50). Review and
revise settlement agreement on
major litigation (.70)
MHA 	$755.00 	1.20 	$ 906.00
14 	4/29/09 	Work on Rule 9019 motion re
settlement of litigation OK 	$470.00 	1.10 	$ 517.00
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14 	4/29/09 	Reviewed settlement agreement
and commenced preparing draft
for motion to approve
agreement.
RKS 	$320.00 	2.40 	$ 768.00
TOTAL: 	28.0 	$12,137.00
F. 	Miscellaneous Reductions
1. 	Unnecessary Duplication of Services: On April 17, 2009, (p. 8), Mr. Ahrens
conferred with Mr. Katz regarding status for .5 hours and then billed .3 hours to send an e-mail
regarding status to Mr. Stuppi. The total billed was $604.00. Mr. Ahren’s services were
unnecessarily duplicative as Mr. Katz could have sent the e-mail regarding the status and copied Mr.
Ahrens. Thus, the Court will allow $141.00 (i.e., .3 hours for sending the e-mail at Mr. Katz’s rate
of $470 an hour) and disallows $463 with prejudice.
2. 	Multiple Professionals: The Court’s Guidelines for Compensation and
Expense Reimbursement provide that “Professionals should be prepared to explain the need for
more than one professional . . . from the same firm at the same court hearing, deposition or meeting.
Failure to justify this time may result in compensation for only the person with the lowest billing
rate.” Guidelines at ¶ 16.
On two occasions, both Mr. Ahrens and Mr. Katz appeared at, and billed for, a meeting with
Debtor. See, 1/12/09 at p. 30, wherein Mr. Ahrens billed 5.5 hours ($4,152.50) and Mr. Katz billed
4.8 hours ($2,256.00). See also 2/26/09 at p. 28, wherein Mr. Ahrens and Mr. Katz both billed 6.0
hours ($4,530.00 and $2,820, respectively). Sheppard Mullin did not provide an explanation
regarding the necessity for both attorneys to attend these meetings in its fee application. At the
hearing, however, Mr. Katz did provide an acceptable explanation. Therefore, the Court will allow
6.0 hours for both Mr. Ahrens and Mr. Katz on 2/26/09. As to the 1/12/09 meeting, the Court notes
that Mr. Ahrens billed 5.5 hours while Mr. Katz only billed 4.8 hours. Because there is no
explanation as to why Mr. Ahrens billed more time for the same meeting, the Court will only allow
the lesser time. Thus, the Court will allow 4.8 hours for both Mr. Ahrens and Mr. Katz on 1/12/09.
The Court will disallow .7 hours at Mr. Ahrens’ rate of $770 per hour. Thus, $539 is disallowed
with prejudice.
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3. 	Pre-Employment Fees: On January 8, 2009, Mr. Ahrens billed 1.5 hours
($1,132.50) for attendance at the first meeting of creditors and for a conference with debtor’s
counsel. See, p. 30. Pursuant to Sheppard Mullin’s employment order, however, its employment
was not effective until January 9, 2009. As this activity was outside of the scope and time of
Sheppard Mullin’s employment, the related fees in the amount of $1,132.50 is disallowed with
prejudice.
4. 	Fees Billed for Conflicts Checks: The Court does not allow fees for
performance of conflicts checks so that counsel can be employed. On 1/20/09 (p.39), Mr. Lauter
billed 3.4 hours ($1,190) for “draft[ing] Application to Employ Sheppard Mullin, and confer[ring]
with Mr. Katz and billing and records staff regarding same.” The conference with billing and
records staff portion of the entry appears to be related to performing a conflicts check, which is not
compensable. While the actual drafting of the employment application is generally compensable,
the entire entry is clumped, thus the Court is unable to break the compensable portions out. As a
result, $1,190.00 is disallowed with prejudice.
Similarly, on 1/26/09 (p. 39), Mr. Lauter billed .10 hours ($35) for “Correspond[ing] with
Mr. Katz regarding conflict searches for employment application. As this entry is also related to a
conflicts check, $35.00 is disallowed with prejudice.
IV. 	CONCLUSION
For all of the above reasons, the Court disallows $52,047.50 in fees with prejudice. The
Court disallows $12,137.00 in fees without prejudice to further supplementation in a subsequent fee
application. The Court approves fees in the amount of $208,877.50 and expenses in the amount of
$4,082.32. A separate order shall issue.
*** END OF MEMORANDUM DECISION ***
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Court Service List (via ECF and/or US Mail)
Tvia, Inc.
4880 Great America Parkway #300
Santa Clara, CA 95054
John Walshe Murray
Law Offices of Murray and Murray
19400 Stevens Creek Blvd. #200
Cupertino, CA 95014-2548
YC Yuchen Zhu
13540 Ashworth Place
Cerritos, CA 90703
Sarah M. Stuppi
Law Offices of Stuppi and Stuppi
1630 North Main St. #332
Walnut Creek, CA 94596
Ori Katz
Sheppard, Mullin, Richter & Hampton, LLP
Four Embarcadero Center, 17 th Floor
San Francisco, CA 94111-4106
John S. Wesolowski
Office of the United States Trustee
280 S 1st St. #268
San Jose, CA 95113-0002
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