Opinion
No. CIV 14-2025-TUC-CKJ
03-24-2021
Joshua David Mellberg, LLC, et al., Plaintiffs, v. Jovan Will, et al., Defendants.
ORDER
Plaintiffs (collectively "JDM"), Defendants Jovan Will, Tree Fine, Fernando Godinez and Carly Uretz (collectively, "Individual Defendants") and The Impact Partnership ("Impact") have each filed Motions for Attorneys' Fees (Docs. 565, 568, 570). Responses (Docs. 580, 581, 584, 585) and Replies (Doc. 586, 587, 594) have been filed. Additionally, the JDM has filed a Motion to Strike (Doc. 583), to which Impact has filed a Response (Doc. 592) and JDM has filed a Reply (Doc. 595). Supplemental documents have also been filed. The Court declines to schedule this matter for oral argument. See LRCiv 7.2(f); 27A Fed.Proc., L. Ed. § 62:361 (March 2021) ("A district court generally is not required to hold a hearing or oral argument before ruling on a motion."). Motion to Strike (Doc. 583)
JDM requests the Court to strike certain statements from the Declarations of William P. Eiselstein and Stephen W. Odom, Jr. that were offered in support of Impact's fee motion because the statements disclose settlement discussions between the parties. Indeed, the applicable rule states:
(a) Prohibited Uses. Evidence of the following is not admissible — on behalf of any party — either to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or a contradiction:
Fed.R.Evid. 408(a). However, the rule also states:* * * * *
(2) conduct or a statement made during compromise negotiations about the claim — except when offered in a criminal case and when the negotiations related to a claim by a public office in the exercise of its regulatory, investigative, or enforcement authority.
(b) Exceptions. The court may admit this evidence for another purpose, such as proving a witness's bias or prejudice, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.Fed.R.Evid. 408(b).
While this evidence is offered for another purpose, this is not a delineated purpose of the rule. Although the exceptions are not exhaustive, the Court considers this in determining that Arizona's public policy interests of protecting the confidentiality of settlement negotiations, Grubaugh v. Blomo ex rel. Cty. of Maricopa, 238 Ariz. 264, 268 (App. 2015) (recognizing Arizona has a "robust policy of confidentiality of the mediation process"); Miller v. Kelly, 212 Ariz. 283, 287 (App. 2006) (recognizing that "[Arizona's] strong public policy encouraging settlement of lawsuits . . . would be thwarted by disclosure of information intended to remain confidential"), outweighs any relevance of this evidence. The Court will grant the Motion to Strike.
Attorneys' Fees and Non-Taxable Costs
An award of reasonable attorneys' fees to the prevailing party may be made in "exceptional cases" pursuant to the Lanham Act 15 U.S.C. § 1117(a). The Supreme Court has stated that an "'exceptional' case is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated." Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014) (emphasis added). "[D]istrict courts analyzing a request for fees under the Lanham Act should examine the 'totality of the circumstances' [under a preponderance of the evidence standard] to determine if the case was exceptional." SunEarth, Inc. v. Sun Earth Solar Power Co. Ltd., 839 F.3d 1179, 1181 (9th Cir. 2016), en banc. Nonexclusive factors to consider include "frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." Id., internal citations and quotations omitted.
The prevailing party "is the party who prevails as to the substantial part of the litigation." Testa v. Village of Mundelein, Ill., 89 F.3d 443, 447 (9th Cir.1996); see also Slane v. Mariah Boats, Inc., 164 F.3d 1065, 1068 (7th Cir.1999) ("[W]hen one party gets substantial relief it 'prevails' even if it doesn't win on every claim."). Indeed, as pointed out by Impact, an award of costs to a defendant that loses on a counterclaim but succeeds in warding off a predominant claim is appropriate. See Hashimoto v. Dalton, 118 F.3d 671, 677 (9th Cir. 1997) ("It is enough that [the party] succeeds "on any significant claim affording some of the relief sought."); Ira Green, Inc. v. Military Sales & Service Co., 775 F.3d 12, 29 (1st Cir. 2014) ("Compared to the amount of time, effort, and resources devoted to the [Plaintiffs'] claims. . . the counterclaims. . . were a sideshow.").
Impact and Individual Defendants prevailed in the initial litigation. Although JDM prevailed in the countersuit, the Court cannot say the issues of the countersuit were close and difficult. Further, while the Court declines to conclude any party litigated in bad faith for the purposes of determining the prevailing party, see e.g. Christiansburg Garment Co. v. Equal Emp't Opportunity Comm'n, 434 U.S. 412, 421-22 (1978) ("It is important that a district court resist the understandable temptation to engage in post hoc reasoning by concluding that, because a plaintiff did not ultimately prevail, his action must have been unreasonable or without foundation. This kind of hindsight bias could discourage all but the most airtight claims, for seldom can a prospective plaintiff be sure of ultimate success."), the Court does not find that an award would chill future litigation.
Arizona law provides that the Court may award the successful party in a contested action arising out of a contract reasonable attorneys' fees. A.R.S. § 12-341.01(A). Indeed, "[t]he intent of this statute is for the successful party to recover under ordinary circumstances." Velarde v. Pace Membership Warehouse, Inc., 105 F.3d 1313, 1318 (9th Cir. 1997), n. 5, quoting G & S Investments v. Belman, 145 Ariz. 258, 268, 700 P.2d 1358, 1368 (App. 1984). The Court has the discretion to determine the circumstances appropriate for the award of fees. Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570, 694 P.2d 1181, 1184 (1985). However, "there is no presumption that a successful party should be awarded attorney fees under § 12-341.01." Motzer v. Escalante, 265 P.3d 1094, 1095 (Ariz. Ct. App. 2011); see also Manicom v. CitiMortgage, Inc., 336 P.3d 1274, 1283 (Ariz. Ct. App. 2014) (holding that an award of attorneys' fees under A.R.S. § 12-341.01(A) "is permissive" and "not mandatory"). Indeed, the Court of Appeals of Arizona has stated, "when enforcing a contract that provides for reasonable attorney fees and costs, a trial court retains broad discretion to evaluate the reasonableness of requested attorney fees and costs . . ." Tucson Ests. Prop. Owners Ass'n v. Jenkins, 247 Ariz. 475, 480 (App. 2019), review denied (Mar. 31, 2020).
An award of attorneys' fees may also be appropriate for a claim of misappropriation pursuant to A.R.S. § 44-404(1). A showing that the trade secret claim was made in bad faith or the opposing party was guilty of willful and malicious misappropriation must be made. True Ctr. Gate Leasing, Inc. v. Sonoran Gate, L.L.C., 427 F. Supp. 2d 946, 951 (D. Ariz. 2006).
Individual Defendants also argue for an award of attorneys' fees pursuant to A.R.S. § 29-388(b). The statute in effect in the filing year of 2014 provided that where a derivative action "was brought without reasonable cause" defendants may be awarded "reasonable expenses, including attorney fees, incurred by them in the defense of such action." "'Reasonable cause' to bring an action is an objective standard that asks whether any reasonable attorney would have thought the claim was tenable." Cal X-Tra v. W.V.S.V. Holdings, L.L.C., 229 Ariz. 377, 412 (App. 2012). However, such an award of fees is discretionary. KCI Rest. Mgmt. LLC v. Holm Wright Hyde & Hays PLC, 236 Ariz. 485, 490, 341 P.3d 1156, 1161 (App. 2014).
The Ninth Circuit allows prevailing parties to recover non-taxable costs where a statute authorizes a fees award. See, e.g. Grove v. Wells Fargo Fin. Cal., Inc., 606 F.3d 577, 580 (9th Cir. 2010). As summarized by another court:
In Arizona, "a victim of a breach of contract may recover damages from the breaching party to compensate for the attorneys' fees and costs it incurred in defending a separate action initiated against it as a foreseeable result of the breach." State Bar of Arizona, Arizona Attorneys' Fees Manual, § 7.3.1 (6th ed. 2017); see Desert Mountain Properties Ltd. P'ship v. Liberty Mut. Fire Ins. Co., 236 P.3d 421, 436 (Ariz. Ct. App. 2010), aff'd, 250 P.3d 196 (Ariz. 2011) ("[W]hen one party's breach of contract places the other in a situation that 'makes it necessary to incur expense to protect his interest, such costs and expenses, including attorneys' fees, should be treated as the legal consequences of the original wrongful act and may be recovered as damages.' ") (quoting Fairway Builders, Inc. v. Malouf Towers Rental Co., 603 P.2d 513, 529 (Ariz. Ct. App. 1979)). Plaintiffs have incurred attorneys' fees and costs defending against Defendant [] in related cases . . .Dishon v. Gorham, No. CV-16-04069-PHX-ROS, 2020 WL 1244415, at *2 (D. Ariz. Mar. 16, 2020). JDM's Motion for Attorneys' Fees (Doc. 565)
In addition, Plaintiffs, as the successful party in a "contested action arising out of a contract, express or implied," are entitled to recover the attorneys' fees and taxable costs incurred in litigating this matter. A.R.S. §§ 12-341, 12-341.01. . .
JDM seeks attorneys' fees from Impact for JDM having to defend the baseless Lanham Act false advertising counterclaim and the unreasonable and vexatious manner in which Impact pursued the claim. JDM asserts Impact knew, when it filed the counterclaim, the claim was baseless, the press release it was suing on was never distributed beyond six of Impact's employees, it had no evidence of anyone having read the challenged statements, and had no evidence of being damaged.
In support of this argument, JDM points out that Impact did not seek preliminary injunctive relief although, if meritorious, Impact should have had sufficient evidence from the two year litigation in Georgia. JDM asserts Impact's actions were taken to drive up JDM's litigation costs, create leverage in the case, and distract the Court's attention from Impact's willful and malicious misappropriation. Impact, asserts, however, that this claim was not so exceptional as to warrant an award of attorneys' fees.
In examining the totality of the circumstances, the Court considers that Impact had a basis to believe JDM had disseminated a press release that included disparaging information. This belies JDM's claim that Impact acted with an intent to increase litigation costs, create leverage, or distract the Court's attention. The Court also considers that the interactions between the parties were at the heart of both JDM's claims and Impact's counterclaim. In such circumstances, it was reasonable for Impact to act to advance considerations of compensation and deterrence in a countersuit in this case. That Impact failed to persuade this Court of the merits of the counterclaim does not make Impact's positions unreasonable. See, e.g., Reserve Media, Inc. v. Efficient Frontierts, Inc., No. 2-15-cv-05072-DDP (AGRx), 2017 WL 2562098, at *2 (C.D. Cal. June 12, 2017) ("[T]he fact of prevailing at summary judgment alone is insufficient to entitle [a] party to fees under the Lanham Act."), citation omitted. In light of this, the Court cannot say Impact acted frivolously or unreasonably in bringing the counterclaim. See e.g. Sarieddine v. Allen Visions E-Juice, Inc., No. CV 18-3658 PA (MAAx), 2019 WL 4316245, at *5 (C.D. Cal. June 14, 2019) ("[a] party's failure to successfully persuade the court on the merits of its position does not render that party's motivations suspect[ or] its claims frivolous ..."), citation omitted.
The Court finds JDM has failed to establish by a preponderance of the evidence that Impact pursued unreasonable claims, engaged in fraudulent conduct, or conducted this litigation in an unreasonable manner. In its discretion and considering all of the circumstances, the Court finds this case is not exceptional and an award of attorneys' fees is not appropriate. The Court will deny JDM's Motion for Attorneys' Fees (Doc. 565). Individual Defendants' Motion For Award of Attorneys' Fees And Non-Taxable Expenses (Doc. 568)
Individual Defendants assert they are entitled to attorneys' fees based on Count 4, the Breach of Contract Claim, as to Defendants Fine and Godinez. This claim addressed whether Fine and Godinez breached confidentiality agreements with JDM. Individual Defendants also argue they should be awarded attorneys' fees as to Count 6, which alleged Defendant Will breached duties he owed to Mellberg as members of AAA.
For purposes of the attorney fees statute, the "meaning of 'arises out of contract' is broad[.]" ML Servicing Co. v. Coles, 235 Ariz. 562, 560 (App. 2014). An action arises out of contract when a "plaintiff asserted a contract and the defendant successfully proved that no contract existed[,]" when the claim would not exist absent the contract or when "the tort could not exist 'but for' the breach or avoidance of contract." SK Builders, Inc. v. Smith, 246 Ariz. 196, 204-05 (App. 2019), superseded by statute on other grounds, citations omitted. In determining whether an action arises out of contract the Court considers whether the plaintiff would have a claim even when a contract does not exist." Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, 15-16 (App.2000). A "tort claim will 'arise out of a contract' only when the tort could not exist 'but for' the breach or avoidance of contract." Id.; see also Sparks v. Republic Nat'l Life Ins. Co., 132 Ariz. 529, 542-44 (1982) ("The fact that the two legal theories are intertwined does not preclude recovery of attorney's fees under § 12-341.01(A) as long as the cause of action in tort could not exist but for the breach of the contract.").
The Court finds Individual Defendants were the successful parties under A.R.S. § 12-341.01. In making such a determination, the Court considers the totality of the circumstances and the relative success of the litigants is considered. Med. Protective Co. v. Pang, 740 F.3d 1279, 1283 (9th Cir. 2013). Considering the "totality of the litigation" between JDM and Individual Defendants, it is clear Individual Defendant achieved complete success as to these claims. See e.g. Murphy Farrell Dev., LLLP v. Sourant, 272 P.3d 355, 365 (Ariz.App. 2012). Under A.R.S. § 12-341.01 the Court has discretion to award Individual Defendants, the successful parties, reasonable attorneys' fees. Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570 (1985). Factors to consider in exercising its discretion to award reasonable fees include:
(1) the merits of the unsuccessful party's defense, (2) whether "[t]he lawsuit could have been avoided or settled," (3) whether a fee award would be "an extreme hardship," (4) whether the successful party prevailed completely, (5) the novelty of the legal questions, and (6) whether a fee award would discourage others with legitimate claims.Freeport Mins. Corp. v. Corbell, No. 2 CA-CV 2016-0226, 2017 WL 3623257, at *5 (Ariz. Ct. App. Aug. 23, 2017), citing id.; see also Orfaly v. Tucson Symphony Society, 209 Ariz. 260, 265-55 (App. 2004), citing Associated Indem. Corp., 143 Ariz. at 570. An award need not equal or relate to the fees actually paid. A.R.S. § 12-341.01.B.
Although JDM's Count 4 ultimately proved unsuccessful, the Court does not find it was unmeritorious. Rather, there were confidentiality agreements between JDM, Fine, and Godinez. It was not unreasonable for JDM to pursue that claim. However, as to Count 6, JDM's claim lacked evidentiary support or a sound legal basis; this claim was without merit. Additionally, the actions of JDM and counsel resulted in unclear theories being presented and delayed/denied discovery.
The Court disagrees with JDM's argument that Individual Defendants' action were superfluous to the litigation. Rather, although the claims against Individual Defendants were intertwined with the claims against Impact, counsel for Individual Defendants had to determine where they could rely upon the arguments of Impact and where specific issues as to Individual Defendants needed to be addressed by Individual Defendants themselves. Additionally, because JDM has been willing to expend significant sums to pursue this litigation, it does not appear an award would be an extreme hardship to JDM. However, the Court does not place significant weight on this factor as there is no evidence before the Court to confirm this supposition. Additionally, Individual Defendants were successful in defending against these claims. Although JDM argues Individual Defendants only won because of a procedural issue, this fails to acknowledge that the failure to establish damages was an element JDM failed to adequately plead and support with evidence. In light of the facts of this case, an award of fees would not discourage others with legitimate claims.
Lastly, the claims against Individual Defendants were based on agreements with JDM. Although JDM asserts Defendant Uretz was not sued for breach of contract and, indeed, Uretz did not sign an agreement with JDM, the claims against Uretz were premised on Uretz conspiring and aiding and abetting other Defendants for the alleged breach of their agreements. The Court also considers the nature of the claims and that the different claims against different Defendants are interwoven. See Skydive Arizona, Inc. v. Hogue, 238 Ariz. 357, 369 (App. 2015) (Fee award is appropriate where contract and tort claims are interwoven. "Claims are interwoven when they are based on the same set of facts and involve common allegations, which require the same factual and legal development."). The Court finds Individual Defendants are entitled to an award of attorneys' fees pursuant to A.R.S. §12-341.01.
Individual Defendants also argue an award of attorneys' fees as to Counts 4 and 6 pursuant to A.R.S. § 44-404(1) is appropriate. Further, they request an award of attorneys' fees as to Count 6 pursuant to A.R.S. § 29-833(B). Because the Court has found an award of attorneys' fees pursuant to A.R.S. § 12-341.01, the Court declines to consider the arguments on the alternate theories for a basis for an award of attorneys' fees. Modular Mining Sys., Inc. v. Jigsaw Techs., Inc., 221 Ariz. 515, 523, 212 P.3d 853, 861 (Ct. App. 2009), citation omitted.
A repeal of this statute was effective September 1, 2020. As the Court declines to address whether an award of attorneys' fees is appropriate pursuant to this theory, the Court need not determine the effect of the repeal in this case.
Factors to consider in determining whether attorneys' fees are reasonable include:
(A) The time and labor required of counsel;
(B) The novelty and difficulty of the questions presented;
(C) The skill requisite to perform the legal service properly;
(D) The preclusion of other employment by counsel because of the acceptance of the action;
(E) The customary fee charged in matters of the type involved;
(F) Whether the fee contracted between the attorney and the client is fixed or contingent;
(G) Any time limitations imposed by the client or the circumstances;
(H) The amount of money, or the value of the rights, involved, and the results obtained;
(I) The experience, reputation and ability of counsel;
(J) The "undesirability" of the case;
(K) The nature and length of the professional relationship between the attorney and the client;LRCiv 54.2(c). This case involved protracted discovery and extensive motion practice. This required a significant expenditure of time by counsel. The claims addressed in this case were not novel, but JDM's attempts to modify the claims and the continued denial and delay of discovery reasonably required defense counsel to expend significant efforts to defend against the claims. Because of the contentious nature of this litigation, the Court finds the skill required to properly defend the case was substantial. The lengthy nature of the litigation necessarily precluded possible other employment by counsel. Additionally, although the amount of damages sought by JDM repeatedly changed, the sums were significant.
(L) Awards in similar actions; and
(M) Any other matters deemed appropriate under the circumstances.
While a "successful party in a contract action is entitled to recover fees for 'every item of service which, at the time rendered, would have been undertaken by a reasonable and prudent lawyer to advance or protect his client's interest[,]'" Schweiger v. China Doll Rest., Inc., 138 Ariz. 183, 188, 673 P.2d 927, 932 (App.1983) (quoting Twin City Sportservice v. Charles O. Finley & Co., 676 F.2d 1291, 1313 (9th Cir.1982)), the Court considers that the level of success is also relevant in determining whether attorneys' fees are reasonable under the circumstances of a case. SWC Baseline & Crismon Inv'rs, L.L.C. v. Augusta Ranch Ltd. P'ship, 228 Ariz. 271, 287, 265 P.3d 1070, 1086 (Ct. App. 2011). Individual Defendants were completely successful in defending the claims against them.
The Court has reviewed the itemized objections to Individual Defendants' requested fees. The Court agrees with Individual Defendants that a "block bill" need not necessarily be denied. Advanced Reimbursement Sols. V. Spring Excellence Surgical Hosp., LLC, No. CV-17-01688-PHX-DWL, 2020 WL 2768699, at *6 (D. Ariz. May 28, 2020) ("Courts tend to award fees despite the presence of block-billing where the billing is for 'closely related tasks, each covering no more than a few hours.'"). However, the Court finds the following entries constitute block billing and, as such, the Court, in its discretion, finds these fees are unreasonable:
| 4/25/2014 | MC2 | Correspondence with Billy Eiselsteinregarding timing of defamationlawsuit; directions to assistantsregarding motion practice andadditional engagement and jointdefense agreements | 1.80 | $365.00 | $657.00 |
| 9/25/2017 | MSW | Review drafts of Joint Status Reportprovided by Mellberg's counsel;communications with B. Eiselsteinre: same; work on defendants'portions of Joint Report; reviewadditional insertions proposed by B.Eiselstein, and incorporate same intodraft of Joint Report; telephoneconferences with B. Eiselstein andMellberg's counsel re: same; forwardrevisions to Mellberg's counsel;telephone conference with Court staffand other counsel re: additional timeneeded to complete Joint Report;telephone conference with all counselre: Plaintiffs' response to defendants'portions of Joint Report; reviewupdated draft from Mellberg'scounsel, and send final commentsprior to filing Joint Report with theCourt. | 5.00 | $350.00 | $1750.00 |
| 9/29/2017 | MSW | Review Plaintiffs' supplemental Briefre: spoliation/J.Will's JFI laptop,costsharing, etc.; communicationswith B. Eiselstein re: same; reviewPlaintiffs' proposed search terms;prepare for Telephonic StatusConference; attend Telephonic StatusConference; telephone conferencewith B. Eiselstein re: same,additional discovery, scope of searchterms, etc.; retrieve message andreturn call to J. Will re: producingemails and other documents. | 4.20 | $350.00 | $1470.00 |
| 10/11/2017 | MSW | Communications with Mellberg'scounsel re: Joint Report, files to besearched, estimated data size,forensic examination protocol, etc.;follow-up on production of load filesfor Will/Fine personal emails;telephone conference with B.Eiselstein re: search parameters andprotocol, estimated expense forthird-party vendors, etc.; reviewproposed lists of search terms fromPlaintiffs and Impact;communications with J. Corso (D4)re: estimated volume of data to besearched after extraction, culling, etc.of imaged drives, and cost forpreliminary extraction of selected filetypes; email to all counsel re: same;communications with counsel re:keywords for searching imageddrives, additional services by ESIvendors, and costs for standard andadditional services. | 3.40 | $350.00 | $1190.00 |
| 10/13/2017 | MSW | Read email from B. Eiselstein re:proposals for keyword searching;review filed version of Joint StatusReport; communications with D4 re:scope of forensic examinationproposed by Plaintiffs; draftSupplement to Joint Status Report;communications with B. Eiselsteinre: scope of forensic examination,final list of keyword search terms,etc.; communications with Plaintiffs'counsel re: proposed instructions andinformation to potential ESI vendors;review initial draft of scope of work/instructions to vendors; revisions toscope of work/instructions tovendors, and forward same toPlaintiffs' counsel; furthercommunications with counsel re:same; communications with D4 re:Intake Report for J. Will's laptop, andcollection methods used for forensicimage; finalize Scope of Work andrelated terms re: disclosure, inquiriesfrom vendors, etc.; forward Scope ofWork with additional instructions toD4. | 3.00 | $350.00 | $1050.00 |
| 11/8/2017 | MSW | Work on Submission of AdditionalInformation re: apportioning costs ofESI discovery and forensics;communications with IT Departmentre: same; email to B. Eiselstein re:third-party hosting, load files, etc.;review and revise Plaintiffs' draft ofproposed Order re: appointment ofD4; review B. Eiselstein's commentson Submission of AdditionalInformation, and revisions to same;forward revisions to proposed Orderto Plaintiffs' counsel;communications with Plaintiffs'counsel re: final draft of proposedOrder, and copies of Exhibits toproposed Order. | 2.30 | $350.00 | $805.00 |
| 2/12/2018 | MSW | Read various emails re: ESIdiscovery, keyword searches of"jdmellberg" email accounts,documents produced by AdvisorsExcel, etc.; review prior emails inpreparation, and participate intelephone conference with A.Burgett, L. Archibald and L. Jones re:instructions to D4 re: productionprotocol, natives v. images withmetadata, metadata fields, etc.; reademail re: JDM's claim of privilege forcommunications with J. Rowe;preliminary review of documentsproduced by Advisors Excel;telephone conference with B.Eiselstein re: document productionand protocol, depositions of Mellbergwitnesses, additional discoveryneeds, etc.; review D4's list ofproposed metadata fields for ESIproduction files; communicationswith A. Burgett and L. Jones re:same. | 1.80 | $350.00 | $630.00 |
| 3/19/2018 | MSW | Continue review of prior documentproductions, Liquidfiles links andreceipts, forensic exam notes, etc.;communications with Mellberg'scounsel re: same, additionalproductions with metadata andimages for delivery via Liquidfiles;communications with Mellberg'scounsel re: follow-up questions to D4re: forensic examination reports andadditional examination of particulardevices, stipulation to designateresults of forensic exams as"Attorneys' Eyes Only" and updatesto Aug. 2017 production files;participate in lengthy StatusConference with Court and allcounsel. | 4.00 | $350.00 | $1400.00 |
| 4/26/2018 | MSW | Conference with L. Jones and K.Fitzpatrick re: technical issues withprevious document productions;communications with Mellberg'scounsel re: conference call to addresstechnical issues; review proposedadditional search terms for D4;review list of documents from D4production that Mellberg's counselrequests be reduced from "Attorney'sEyes Only" designation to"Confidential" for review by parties. | 2.00 | $350.00 | $700.00 |
| 6/6/2018 | MSW | Read emails re: searching of JoshMellberg's email accounts; preparefor Telephonic Status Conference;telephone conference with othercounsel re: depositions of Impact andindividual defendants;communications with clientsre: same; participate in TelephonicStatus Conference re: pendingE-Discovery issues, depositions,production of Arceo's computerimage, etc. | 4.00 | $350.00 | $1400.00 |
| 6/11/2018 | MSW | Conference with L. M. Jones re:Court-Ordered logs from D4production #2; review email fromRicoh re: initial results from searchof Josh Mellberg's email accounts;review D4 second search results andwork on preparing logs of documentsnot produced (non-responsive and"tech issue"); communications withD4 re: exporting logs as required byrecent Court Order; communicationswith Mellberg's counsel re: logs fromD4's second set of keyword searches;review exhibit to deposition of L.Chiagouris (Mellberg's digitalmarketing expert) re: "inaccuracies"in Spyfu data; communications withImpact's counsel re: depositions ofindividual defendants and Impactofficers; review documents producedby M. Pulido in response to subpoenare: computer forensics licenses andtraining; continue research formotions for summary judgment as to"trade secrets" and related claims;review Impact's Supplement toMotion to Compel Testimony andDocuments re: Jeff Rowe. | 2.80 | $350.00 | $980.00 |
| 8/7/2018 | MSW | Communications with Impact'scounsel and S. Carroll re: response toMotion for Spoliation sanctions inGA Case; research re: response toobjections to Magistrate's Order onnon-dispositive matters; telephoneconference with Impact's counsel re:contact by former Mellberg employeeseeking legal assistance for wrongfultermination claim; telephone calls toDistrict Court law clerks re:procedure for responding toobjections to Magistrate Judge'sOrder; read email from Impact'scounsel re: Joint Motion related toMellberg's communications with T.Fine and C. Uretz; preliminaryreview of draft of Motion. | 1.40 | $350.00 | $490.00 |
| 10/29/2018 | MSW | Communications with Impact'scounsel re: coordination of efforts forupcoming Joint Motions forSummary Judgment;communications with Plaintiffs'counsel re: deficiencies insupplemental production of emailsand updated privilege log;communications with Impact'scounsel re: deposition of Dr.Moine (in Los Angeles); work onoutlines/summaries for upcomingmotions for summary judgment. | 1.50 | $350.00 | $525.00 |
| 1/9/2018 | MSW | Review Orders re: filing exhibitsunder seal in support of Defendant'sMSJ, and Mellberg's MSJ re:counterclaim; attempt to retrievesealed exhibits from Court online;communications with Impact'scounsel re: same; review Impact'sNotice of errata re: request for oralargument; review Order setting oralargument on Motion to ExcludeUntimely Damage Opinions; reviewstatute and local rules on duties ofMagistrate Judge; communicationswith Impact's counsel re: JudgeJorgenson hearing Motion toExclude. | 1.40 | $360.00 | $504.00 |
The parties also disagree to what extent defense counsel's actions regarding the Georgia case should be reimbursed in this case. The Court agrees with Individual Defendants that some cross-knowledge between the cases is appropriate. This also applies to the litigation initiated by B. Matthew. However, the Court finds the following entries to be excessive:
| 3/9/2017 | MSW | Review Impact's Motion to Compelin Georgia lawsuit, includingattached emails between counsel and"responses" by Mellberg. | .40 | $350.00 | $140.00 |
| 7/25/2017 | MSW | Review 30(b)(6) Notice to Mellbergin Georgia case (0.2). (modified) | .2 | $350.00 | $70.00 |
| 11/2/2017 | MSW | Meeting with T. Loehrs (M. Pulido'sformer employer) re: forensic images,company licenses, etc.; conferencewith B. Eiselstein re: same,depositions of additional factwitnesses, additional discovery, etc.;communications with C. Uretz re:potential deposition in Georgiadefamation case; review Order re:joint submission of proposed Orderappointing D4 to provide e-discoveryservices, and additional submissionsre: apportionment of costs betweenparties; email to B. Eiselstein re:same. | .80 | $350.00 | $280.00 |
| 2/9/2018 | LMJ | Review of emails from Atlanta firmregarding production. | .40 | $205.00 | $82.00 |
Additionally, the Court finds the following entries are not reasonable:
| 5/15/2014 | MC2 | Correspondence with Carly regardingFBI agents and follow-up call toAgent Callimanis (0.6)(modified) | .60 | $365.00 | $219.00 |
| 10/13/2014 | MC2 | Conference with Carly Uretz's Dad. | .30 | $365.00 | 109.50 |
| 10/19/2016 | RBH | Review email from M. S. Woodlockand review proposed stipulatedprotective order (.6); review forcomments (.7); preparation of email toM. S. Woodlock (.4). | 1.70 | $405.00 | $688.50 |
| 5/11/2018 | LMJ | Prepare document re-production. | 7.60 | $205.00 | $1558 |
Individual Defendants also seek an award for computerized legal research. The Court finds these fees are reasonable and should be reimbursed. See Ahwatukee Custom Estates Management Ass'n v. Bach, 193 Ariz. 401 10 (1999). Additionally, the Court finds out-of-pocket expenses are also appropriately ordered. Chalmers v. City of Los Angeles, 796 F.2d 1205, 1216 n. 7 (9th Cir. 1986). The affidavit of counsel Michael S. Woodlock adequately documents and supports the request for fees and expenses.
The Court finds Individual Defendants are entitled to an award of attorneys' fees and non-taxable costs. Individual Defendants seek an award of $619,889.40 for attorneys' fees, which includes attorneys' fees for preparation of the request for attorneys' fees and costs, and an award of $25,012.00 for costs. However, the Court finds the requested amount of $619,889.40 to not be reasonable. The Court finds it appropriate to reduce this amount by $16,698.00 as delineated herein for an amount of $603,191.40. Additionally, an award of attorneys' fees need not equal or relate to the fees actually paid. A.R.S. § 12-341.01.B. The Court considers the Local Rule factors, along with the facts that counsel did not work well together, which contributed to the protracted litigation, there was a factual and legal basis for JDM to pursue the claims despite the fact they ultimately did not survive summary judgment, and that this litigation necessarily overlapped somewhat with the Georgia litigation. These factors provide a "reasonable basis" to reduce the attorneys' fees amount. See generally Associated Indem. Corp. v. Warner, 143 Ariz. 567, 571 (1985); see also Worden v. Klee Bethel, M.D., P.C., No. 1 CA-CV 08-0490, 2009 WL 2003321, at *5 (Ariz. App. July 9, 2009) (reduced fee award affirmed).
In light of this, the Court will reduce the amount of attorneys' fees by 30% for a reasonable attorneys' fees award of $422,233.98. Additionally, the Court will award Individual Defendants an award for costs in the amount of $29,874.49. The Court finds a total award for attorneys' fees and costs in the amount of $452,108.47 to be appropriate and will grant in part Individual Defendants' Motion For Award of Attorneys' Fees And Non-Taxable Expenses (Doc. 568) to award Individual Defendants this amount. Impact's Motion for Attorneys' Fees and Related Non-Taxable Expenses (Doc. 570)
Impact requests this Court award it attorneys' fees because JDM's claim were made in bad faith, A.R.S. § 44-404, and because the claims arose out of contract or were so intertwined with the contract claims, A.R.S. § 12-341.01.
The parties disagree whether the claims arise out of contract. JDM argues that only one claim (which was not alleged against Impact) was for breach of contract and that "attorneys' fees are not appropriate based on the mere existence of a contract somewhere in the transaction." See Morris v. Achen Const. Co., Inc., 155 Ariz. 512, 514 (1987). The Arizona Supreme Court stated:
Where, however, the duty breached is not imposed by law, but is a duty created by the contractual relationship, and would not exist "but for" the contract, then breach of either express covenants or those necessarily implied from them sounds in contract. Sparks, supra; Lewin, [v. Miller Wagner & Co., 151 Ariz. 29, 725 P.2d 736 (App.1986) ], supra. The essence of such actions arises "out of a contract," eligible for an award of fees under the statute.Id. Additionally, citing Morris and Buxton Arlington Pet, LLC v. Butler, No. 1 CA-CV 16-0260, 2017 WL 4897456 (Ariz. App. Oct. 31, 2017), JDM asserts that a tort claim does not arise out of contract where "the parties to the litigation are not the parties to the contract, and there is no contention, as between them, that any contract is invalid." Buxton Arlington Pet, at *2. However, that bright line rule applies to "awards of attorney fees in fraud in the inducement cases." Id. Indeed, the same year in which the Buxton Arlington Pet case was issued, the Arizona Supreme Court stated in another case that "[s]ection 12-341.01(A) does not have a privity requirement for claims 'arising out of' a contract." Sirrah Enterprises, LLC v. Wunderlich, 242 Ariz. 542, 547, 399 P.3d 89, 94 (2017).
In this case, agreements central to claims against Individual Defendants was at issue. Further, the allegations of conspiracy and aiding and abetting against all Defendants are based on those agreements. Moreover, the misappropriation claims against Impact were based on a contractual relationship between Impact and a competing venture, JFI, LLC ("Annuity Angel"). The Second Amended Complaint alleged that the agreement between Impact and Annuity Angel and the actions taken pursuant to that agreement (i.e., Cashflow College sales presentation) were virtually identical to JDM's training program. In support of their claims, JDM attached the Cashflow College Subscriber Agreement to the SAC. Arizona courts have recognized that, "when the contract in question is central to the issues of the case, it will suffice as a basis for a fee award." Hiatt v. Shah, 238 Ariz. 579, 584 (App. 2015), quoting In re Larry's Apartment, L.L.C., 249 F.3d 832, 836-37 (9th Cir.2001); see also Ajman Stud v. Cains, No. CV-15-01045-PHX-DJH, 2020 WL 5034219, at *2 (D. Ariz. July 21, 2020) . Moreover, Arizona courts have "broadly interpreted which types of actions arise from a contract." Hiatt, 238 Ariz. at 584, citing Marcus v. Fox, 150 Ariz. 333, 335 (1986). The Court finds the action arose out of contract.
Even if the Court did not find the action arose out of contract, an award of attorneys' fees pursuant to A.R.S. § 12-341.01 would be appropriate because the nature of the claims and the different claims against different Defendants are interwoven. See Skydive Arizona, Inc. v. Hogue, 238 Ariz. 357, 369 (App. 2015) (Fee award is appropriate where contract and tort claims are interwoven. "Claims are interwoven when they are based on the same set of facts and involve common allegations, which require the same factual and legal development."). The Court of Appeals of Arizona stated in a similar case:
It is undisputed that the central claims in this litigation were the trade secrets claim and the breach of employment contract claims. The record demonstrates these claims were based on the same set of facts, involving the common allegation that Jigsaw had misappropriated and made use of Modular's trade secrets. Accordingly, as Jigsaw asserts, these claims "required the same factual development and research work," and "all depositions and all other work related to discovery and disclosure w[ere] necessary in connection with both claims."Modular Mining Sys., Inc. v. Jigsaw Techs., Inc., 221 Ariz. 515, 522-23 (App. 2009), footnotes omitted. Similarly, in this case, the central claims addressed allegations regarding trade secrets and breaching confidentiality agreements. These claims were based on the same set of facts, which required the same factual development and research work. Further, discovery as to the claims and damages related to both these central claims. Additionally, the legal issues concerning these claims were intertwined and overlapping.
The legal issues concerning these claims were also intertwined and overlapping. First, the trade secrets claim was premised on the asserted misappropriation of Modular's trade secrets, which was allegedly committed primarily by the individual defendants' breaching the confidentiality provisions of their employment agreements and using Modular's "inside information." Similarly, whether the commands Modular claimed as trade secrets were in fact "trade secrets" for purposes of the Uniform Trade Secrets Act was likewise substantially dependent on the confidentiality provisions of the employment agreements. Finally, Modular's unfair competition and tortious interference claims were based on the same set of facts as its trade secrets claim. As Jigsaw explains, those claims "were completely dependent upon Modular's ability to prevail on its misappropriation claims" and "required no separate legal services."
Ultimately, JDM's claims were not meritorious. This conclusion is supported by JDM's presentation of unclear legal theories and the delay and denial of complete discovery throughout the case. In light of this, this lawsuit could have been avoided or settled. Additionally, this case did not present novel legal issues and a fee award would not discourage others with legitimate claims. The Court also considers that the nature of the claims and the different claims against different Defendants are interwoven. See Skydive Arizona, Inc., 238 Ariz. at 369 (Fee award is appropriate where contract and tort claims are interwoven.). The Court finds Impact is entitled to an award of attorneys' fees pursuant to A.R.S. §12-341.01.
Because the Court has found an award of attorneys' fees pursuant to A.R.S. § 12-341.01, the Court declines to consider the argument on the alternate theories for a basis for an award of attorneys' fees. Modular Mining Sys., Inc., 221 Ariz. 515 at 523.
In determining whether attorneys' fees are reasonable, the Court considers that this case involved protracted discovery and extensive motion practice, which required a significant expenditure of time by counsel. The claims addressed in this case were not novel, but JDM's attempts to modify the claims and the continued denial and delay of discovery reasonably required defense counsel to expend significant efforts to defend against the claims. The skill required to properly defend the case was substantial because of the contentious nature of the litigation. Further, the protracted nature of the litigation necessarily precluded possible other employment by counsel. Additionally, although the amount of damages sought by JDM repeatedly changed, the sums were significant. See LRCiv 54.2(c).
The Court also considers that the level of success is also relevant in determining whether attorneys' fees are reasonable under the circumstances of a case. SWC Baseline & Crismon Inv'rs, L.L.C., 228 Ariz. at 287. Although Impact was successful in defending against JDM's claims, it was not successful in the prosecution of its counterclaim.
Weighing all factors, the Court finds Impact is entitled to an award of attorneys' fees pursuant to A.R.S. §12-341.01. However, the Court does consider that there necessarily would have been some overlap between the litigation in this case and Georgia litigation, which affects the hours reasonably expended in representing Impact. LRCiv 54.2(c)(3)(A); Jenkins, 247 Ariz. at 480.
JDM has not provided itemized objections to Impact's requested fees. JDM generally object to entries, however, based on block billing, actions taken in furtherance of the counterclaim, multiple interoffice conferences, and actions taken on behalf of Individual Defendants. The Court finds the multiple interoffice conferences to be reasonable. Additionally, in light of the joint defense, the Court finds cross-actions between defense attorneys are reasonable.
Impact's Reply refers to specific objections made by JDM. However, comparing JDM's Opposition to Individual Defendants' Motion for Award of Attorneys' Fees And Non-taxable Expenses (Doc. 581) to Opposition to Defendant the Impact Partnership's Motion for Attorneys' Fees and Related Non-taxable Expenses (Doc. 580), the Court notes the Individual Defendants Objection includes a declaration that refers to an exhibit that specifically objects to entries. The declaration attached to the Impact Objection does not include such a reference. A review of other entries on the docket sheet fails to include specific objections.
As to the block billing, a block bill need not necessarily be denied. Advanced Reimbursement Sols., 2020 WL 2768699 at *6. The Court has reviewed the entries, considering whether the tasks are related and the total amount of time to complete the delineated tasks. The Court finds the following entries constitute block billing and, as such, the Court finds these fees are not reasonable:
| 3/31/2014 | WE | 1.8 | $425.00 | $765.00 | Telephone call with AZ counselregarding strategy, possible AZ counselfor individual defendants; discussionswith M. Kohler regarding same andregarding plans for removal and possibleclaims; reviewing outline of possiblearguments on motion to dismiss from M.Visan; telephone call and follow-upemail with Attorney Collins regardingrepresentation of individual defendants;reviewing motion for injunction andemails to AZ counsel regarding same. |
| 8/10/2015 | TK | 4.5 | $240.00 | $1080.00 | Telephone conference with B. Eiselsteinrevisions to draft of Joint Report;follow-up email to B. Eiselstein; multipleemails and conferences with M.Woodlock and G. Krauja concerningstatus of Joint Report; review andanalyze Plaintiff's final draft of jointreport; conference with E. Rumfelt toassist with drafting section of JointReport addressing ESI; Telephone call toopposing counsel, M. Patel, for purposesof addressing issues related to JointReport; supplement, edit, revise, andfinalize Joint Report in preparation forfiling; draft email to opposing counseland individual defendants attachingImpact's proposed changes and additionsto Plaintiffs' draft of Joint Report |
| 7/20/2016 | GK | 2.9 | $485.00 | $1406.50 | Telephone conference with Mr.Eiselstein regarding status and strategyfor Scheduling Conference; review JointScheduling Memorandum and briefingon pending motion to prepare to addresspossible questions from Judge Kimmins;attend scheduling conference in courtbefore Judge Kimmins. |
| 3/8/2017 | JC | 2.8 | $225.00 | $630.00 | Analysis of case law on secrecy of tradesecrets in order to draft questions forcorporate depositions; preparation ofmotion for filing; analysis of depositionquestions; analysis of various lawsuitsMellberg is also involved in; review ofdiscovery responses. |
| 3/29/2017 | JC | 4.9 | $225.00 | $102.50 | Drafted communication with expertconcerning information for rebuttalreport; analysis of retention contract,analysis of further documents needed forexpert; analysis of documents producedby clients and need for production ofcertain documents. |
| 5/3/2017 | JC | 2.3 | $225.00 | $517.50 | Communication with Impact personnelconcerning certain files and emailaddress issues; analysis of certainwitnesses with information and contactinformation; analysis of Mellberglawsuits and various other issues. |
| 2/8/2018 | WE | 2.9 | $480.00 | $1392.00 | Telephone call with L. Archibaldregarding search terms to propose forsearch of JDM emails; discussionregarding additional discovery issues;meet with M. Kohler and R. Kurtz toprepare for depositions; emails regardingforensic reports of individual defendants'devices; telephone call with M.Woodlock; review of AE documents. |
| 4/12/2018 | WE | 2.7 | $480.00 | $1296.00 | Telephone call with M. Kohler regardingfollow-up from Rowe deposition, casestrategy; telephone call with M.Woodlock regarding discovery and ESIissues; multiple emails regarding same;review search terms requested of JDMand JDM information on search termsallegedly used; reviewing D. Morgandeposition regarding efforts to search fordocuments; draft email to opposingcounsel regarding JDM documents andsearch terms. |
| 4/30/2018 | WE | 2.4 | $480.00 | $1152.00 | Review discovery requests and emailopposing counsel regarding need toproduce documents regarding"whistleblower" packet; telephone callwith M. Kohler regarding same; reviewcourt filing on discussions between JDMand individual defendants regardingmetadata; prepare case status update andreviewing court orders regardingdeadlines; telephone call with M.Woodlock regarding communicationswith opposing counsel; email L.Archibald regarding motion to compelJDM email search; emails regardingattempts to serve S. Hilger withdeposition subpoena. |
| 5/8/2018 | WE | 9.6 | $480.00 | $4608.00 | Prepare for and take deposition of J. Tye,plaintiff's expert; discussion with M.Woodlock in preparation for 5/9 statusconference; prepare for deposition of P.Russo; planning for Chiagourisdeposition. |
| 5/9/2018 | WE | 6.8 | $480.00 | $3264.00 | Preparing for and taking deposition of P.Russo; discussions with M. Woodlock inpreparation for status conference;participate and status conference. |
| 5/31/2018 | WE | 7.2 | $480.00 | $3456.00 | Email with A. Pringle regarding JDMemail search; reviewing court order andsearch terms in connection with same;email with litigation support and L.Archibald; preparing for deposition of L.Chiagouris; reviewing expert reports anddeposition transcripts in connection withsame; discuss strategy and upcomingevents with M. Kohler; travelAtlanta/New York for Chiagourisdeposition. |
| 6/13/2018 | WE | 5.2 | $480.00 | $2496.00 | Planning for Impact depositions with M.Kohler, review and consider topics on30(b)(6) notice; telephone calls with S.Craig and E. Williams regarding same;followup email to E. Williams;reviewing Mellberg supplementaldisclosure regarding damages; discussionwith M. Woodlock and M. Kohlerregarding same; reviewing court order onRowe communications; telephone callswith M. Woodlock regarding discoveryissues; emails regarding depositionscheduling; emails regarding Ricohsearch of Mellberg emails; review hit-listand consider limitations. |
| 7/2/2018 | WE | 2.7 | $480.00 | $1296.00 | Check on deadlines for JDM emailreview; reviewing JDM motion toreconsider ruling on individualdefendants' documents; review localrules on motions to reconsider and emailwith M. Woodlock; review notice ofsubpoena to F. Stokes; discuss statuswith M. Kohler, discuss possible forensicreview of J. Marshall computer; reviewinformation regarding F. Stokes; emailswith co-counsel regarding depositions;research possible use of special masterfor JDM discovery issues; multipleemails with opposing counsel regardingsample set review, non-compliance withcourt deadlines; discuss sample reviewissues with R. Musumeci. |
| 7/13/2018 | LA | 3.6 | $260.00 | $936.00 | Prepare for and attend conference callwith RICOH and opposing counselregarding preparation of sample sets forreview by opposing counsel; confer withB. Eiselstein regarding results of same;draft summary of results of same andnext steps; confer with co-counsel,RICOH, and opposing counsel regardingsame; review Court order related todiscovery disputes and status conference;confer with R. Musumeci regardingdocument review status, preparation ofadditional document batches, andstatus of additional production sets. |
| 7/13/2018 | LA | 2.6 | $260.00 | $676.00 | Confer with B. Eiselstein and R.Musumeci regarding document reviewstatus and completion time frame; conferwith reviewers regarding same; conferwith B. Eiselstein regarding opposingcounsel's response to status report; beginreview of potentially privilegeddocuments. |
| 7/17/2018 | RM | 2.4 | $215.00 | $516.00 | Assist with deposition prep review;review supplemental Will production,modify load file to ensure update ofdatabase records; review all otherinstances of produced, non-redacted taxreturns to delete records and images toaccomplish the intent of thesupplemental production. |
| 7/17/2018 | LA | 3.5 | $260.00 | $918.00 | Assist with deposition prep review;review supplemental Will production,modify load file to ensure update ofdatabase records; review all otherinstances of produced, non-redacted taxreturns to delete records and images toaccomplish the intent of thesupplemental production. |
| 7/19/2018 | WE | 2.7 | $480.00 | $1296.00 | Planning for depositions; reviewing T.Fine documents in preparation fordeposition; reviewing prior Finetestimony; telephone call with M.Woodlock regarding depositionpreparation and discovery issues; emailwith D. Bray regarding 30b6 scheduling;confer with M. Kohler regarding same;draft potential response to D. Bray;communications regarding JDMsettlement overture to C. Uretz. |
| 7/30/2018 | WE | 6.3 | $480.00 | $3024.00 | Reviewing court-ordered deadlines;submit status report to court; emails withopposing counsel regarding informationrequired under court order; reviewingdocuments produced in response toMellberg email search; discussion ofdamages issues with R. Kurtz and M.Kohler; multiple communicationsregarding Wenk deposition; telephonecall with M. Woodlock; communicationswith L. Archibald regarding preparationfor depositions, document review, emailsearches. |
| 8/1/2018 | WE | 5.2 | $480.00 | $2496.00 | Preparing for J. Simonds deposition;reviewing document regarding Simonds;communications with L. Archibaldregarding email searches, planning fordepositions and possible motion forMellberg rule violations; reviewing J.Will documents and select documents fordeposition preparation; emails regardingsame; participate in depositionpreparation of F. Godinez and J. Will. |
| 8/9/2018 | LA | 6.1 | $260.00 | $1586.00 | Draft summary of status and argumentsin preparation for telephonic hearing;review and revise correspondence toopposing party regarding errors inproduction sets; confer with B. Eiselsteinregarding same; attend telephonichearing; confer with opposing counselregarding revised sample search exportinstructions; draft Uretz declaration insupport of motion related to Russocommunications with representedparties. |
This entry also combines actions related to the defense against JDM's claims with the actions related to the prosecution of the counterclaim.
This entry includes actions related to both the defense against JDM's claims and the prosecution of the counterclaim.
The Court finds the following entry does not clearly indicate the actions were taken in defense of JDM's claims against Impact, as opposed to in furtherance of the counterclaim, and therefore, cannot be said to be reasonable:
| 3/26/2014 | WE | .8 | $425.00 | $340.00 | Email with T. Thompson regarding draftcomplaint against JD Mellberg; reviewand comment on AZ counsel proposedengagement letter; emails with M.Kohler and T. Thompson regarding nextsteps. |
Additionally, the Court finds there necessarily would have been additional overlap in the actions between the claims Impact was defending against and prosecuting the claim against JDM (e.g., document requests, deposition questions). Lastly, the Court recognizes that some entries have been reduced. See e.g., Itemization: Fennemore Craig, P.C. (Doc. 570-2), Entries 344, 353.
Impact also seeks an award of non-taxable costs in the amount of $102,857.99. JDM argues, however, that because both parties prevailed on their Summary Judgment motions, neither party should be considered the prevailing party. While it is within the discretion of a district court to require each party to bear its own costs in a mixed judgment case, Amarel v. Connell, 102 F.3d 1494, 1523 (9th Cir. 1996), as amended (Jan. 15, 1997), JDM's claims were the significant focus of this case and JDM failed to succeed on any of their claims. Under a totality of litigation review, Impact achieved far greater success than JDM. Carl Karcher Enterprises, Inc. v. Stine Enterprises, Inc., No. 1 CA-CV 09-0078, 2010 WL 3571535, at *2 (Ariz.App. Sept. 14, 2010); compare Gen. Cable Corp. v. Citizens Utilities Co., 27 Ariz.App. 381, 385 (1976). The Court finds, in its discretion, an award of non-taxable costs is appropriate.
The Court finds Impact is entitled to an award of attorneys' fees and non-taxable costs. Impact seeks an award of $1,891,003.40 ($1,754,635.40 for Miller Martin, PLLC, and $136.368.00 for Fennemore Craig, P.C.) for attorneys' fees and an award of $102,857.99 for costs. However, the Court finds the requested amount of $1,891,003.40 to not be reasonable. The Court finds it appropriate to reduce this amount by $45,916.50 as delineated herein for an amount of $1,845,086.90. Additionally, an award of attorneys' fees need not equal or relate to the fees actually paid. A.R.S. § 12-341.01.B. The Court considers the Local Rule factors, along with the facts that counsel did not work well together, which contributed to the protracted litigation, there was a factual and legal basis for JDM to pursue the claims despite the fact they ultimately did not survive summary judgment, and that this litigation necessarily overlapped somewhat with the Georgia litigation. Although Impact excluded and reduced entries, see Motion, (Doc. 570, p. 17), the Court finds the factors provide a "reasonable basis" to reduce the attorneys' fees amount. See generally Associated Indem. Corp. v. Warner, 143 Ariz. 567, 571 (1985); see also Worden v. Klee Bethel, M.D., P.C., No. 1 CA-CV 08-0490, 2009 WL 2003321, at *5 (Ariz. App. July 9, 2009) (reduced fee award affirmed).
In light of this, the Court will reduce the amount of attorneys' fees by 30% for a reasonable attorneys' fees award of $1,291,560.83. Additionally, the Court will award Impact an award for non-taxable costs in the amount of $102,857.99. The Court finds a total award for attorneys' fees and non-taxable costs in the amount of $1,394,418.82 to be appropriate and will grant in part Impacts' Motion for Attorneys' Fees and Related Non-taxable Expenses (Doc. 570) to award Impact this amount.
Accordingly, IT IS ORDERED:
1. JDM's Motion to Strike (Doc. 583) is GRANTED. Statement included in the declarations of William P. Eiselstein and Stephen W. Odom, Jr., related to settlement discussions between the parties are stricken and will not be considered by the Court.
2. JDM's Motion for Attorneys' Fees (Doc. 565) is DENIED.
3. Individual Defendants' Motion For Award of Attorneys' Fees And Non-Taxable Expenses (Doc. 568) is GRANTED IN PART. Individual Defendants are awarded attorneys' fees and non-taxable costs from JDM in the amount of $452,108.47.
4. Impact's Motion for Attorneys' Fees and Related Non-Taxable Expenses (Doc. 570) is GRANTED IN PART. Impact is awarded attorneys' fees and costs from JDM in the amount of $1,394,418.82.
DATED this 24th day of March, 2021.
/s/_________
Cindy K. Jorgenson
United States District Judge