Opinion
CV-22-02150-PHX-SPL
07-15-2024
TAC Holdings LLC, Plaintiff, v. Atlatl Group LLC, et al., Defendants.
ORDER
Steven P. Logan United States District Judge
Before the Court is Plaintiff TAC Holdings, LLC's Motion for Attorney Fees and Costs (Doc. 155). Defendants The Atlatl Group, LLC, Bravada Yachts LLC, Aaron Browning, Robert Gutierrez, and Cindy Johnson (collectively, the “Bravada Defendants”) filed a Response (Doc. 164), and Plaintiff filed a Reply (Doc. 167).
I. BACKGROUND
October 31, 2023, the Court held an oral argument to address the parties' Joint Motion for Discovery Dispute Resolution (Doc. 39). Because the parties failed to clearly explain the issues in dispute, the Court ordered the parties to file a supplemental “joint notice of issues detailing the specific discovery requests at issue and why that information is being requested.” (Doc. 47). On November 7, 2023, the parties filed a Joint Notice of Issues which outlined all the parties' issues and arguments. (Doc. 49). On November 22, 2023, the Court resolved each of these issues and ordered the Bravada Defendants to produce all bank statements dated June 2020 to present. (Doc. 54). On February 26, 2024, Plaintiff filed a Motion for Order to Show Cause and for Sanctions alleging that the Bravada Defendants defied the Court's Order by failing to produce most of their bank statements and documents related to the acquisition of Destination Yachts, Inc. (“Destination”). (Doc. 64 at 3). On April 3, 2024, the Court held an oral argument and ordered the Bravada Defendants to disclose any missing bank statements pursuant to the Court's November Order. (Doc. 72). The Court also ordered the Bravada Defendants to produce the information requested in Plaintiff's Request for Production No. 13 which includes disclosing documents relating to the acquisition of Destination. (Id.). On May 7, 2024, the Court issued a written Order denying Plaintiff's Motion for Order to Show Cause and for Sanctions. (Doc. 82 at 6). The Court also cautioned the Bravada Defendants that it will no longer tolerate any non-compliance with respect to the discovery issues that have been addressed. (Id.). On May 31, 2024, Plaintiff filed the pending Motion for Attorney Fees and Costs seeking to recover attorneys' fees and costs because the Bravada Defendants failed to follow the Court's previous Orders (see Docs. 54 and 82) regarding discovery. (Doc. 155 at 2). Plaintiff's attorneys are all from the law firm Strong & Hanni, PC (“Strong & Hanni”). Plaintiff seeks an award of $48,176.78 in attorney fees and costs for the cost it has incurred from Strong & Hanni. (Doc. 155 at 7).
II. LEGAL STANDARD
Federal Rule of Civil Procedure (“Rule”) 37(b)(2)(A) provides courts with broad discretion to impose a variety of sanctions for not obeying a discovery order. When a party fails to obey an order to provide or permit discovery, “the court must order the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.” Fed.R.Civ.P. 37(b)(2)(C); see Rother v. Lupenko, 515 Fed.Appx. 672, 674 (9th Cir. 2013) (“A district court has broad discretion to impose sanctions where a party flouts its discovery obligations.” (citations omitted)).
III. DISCUSSION
a. Missing Bank Statements
In the instant case, Plaintiff alleges that the Bravada Defendants violated the Court's orders because some of the bank statements were not timely produced. (Doc. 155 at 6). On November 22, 2023, the Court ordered the Bravada Defendants to produce all “bank statements dated June 2020 to present” by December 6, 2023. (Doc. 54 at 8). The Bravada Defendants produced some of the statements but there were several statements missing. On April 3, 2024, the Court once again ordered the Bravada Defendants to produce the remaining bank statements by April 10, 2024. (Doc. 72). Plaintiff argues that these statements were not fully produced until May 3, 2024. (Doc. 155 at 6). The Bravada Defendants do not contest this statement. (Doc. 164 at 4). Instead, the Bravada Defendants argue that they “immediately contacted their banking institutions and promptly provided missing statements to Plaintiff.” (Doc. 164 at 4). The exhibit the Bravada Defendants cite to support that the missing bank statements were promptly produced reflect that the statements were not produced any earlier than April 17, 2024. (See Doc. 164-2 at 12). The Bravada Defendants offered no explanation for why they failed to follow another one of this Court's orders. This Court will not continue to allow repeated discovery misconduct. Therefore, the Court finds that a sanction in the form of attorneys' fees is appropriate and not unjust. See Rother, 515 Fed.Appx. at 674 (“Because the record in this case makes perfectly clear that the court imposed sanctions as a result of Defendants having twice failed to honor discovery deadlines, to remand to the district court for further explanation would unnecessarily ‘elevate form over substance.'”) (quoting Optyl Eyewear Fashion Int'l Corp. v. Style Cos., 760 F.2d 1045, 1051 (9th Cir.1985)). Accordingly, this Court orders the Bravada Defendants to pay the legal fees Plaintiff incurred in attempt to gather the bank statements beginning on December 6, 2023, the date the Bravada Defendants were ordered to produce the documents.
b. Missing Acquisition Documents
Plaintiff also argues that the Bravada Defendants violated the Court's orders because they failed to produce some documents relating to the acquisition of Destination. (Doc. 155 at 6). The Court ordered the Bravada Defendants to produce these documents by April 10, 2024. (Doc. 72). Plaintiff claims the Atlatl and Bravada LLC's 30(b)(6) representative revealed that “the Bravada Defendants have not disclosed all documents that relate to the due diligence materials they received from Sheldon Graber for the acquisition of Destination.” (Doc. 167 at 5; Doc. 155 at 4). In turn, the Bravada Defendants offered no explanation to justify their failure to include the due diligence materials related to the acquisition of Destination. Instead, the Bravada Defendants argue that they did not violate the Court's Order and stated that Plaintiff failed to cite specific testimony from their 30(b)(6) representative. (Doc. 164 at 2). In short, the parties dispute whether there are additional unproduced documents related to the acquisition. In fact, this very issue is an ongoing discovery dispute between the parties. (See Doc. 153). Because there is an unresolved discovery issue concerning whether there are additional documents that the Bravada Defendants have not disclosed, the Court is unable to determine whether sanction is appropriate. Accordingly, the Court denies Plaintiff's request for attorneys' fees for the time its counsel expended attempting to retrieve documents relating to the acquisition. Therefore, at this juncture, the Court finds that Plaintiff shall only recover the legal fees and costs it incurred for the Bravada Defendants' failure to produce their bank statements by December 6, 2023 as ordered by this Court.
c. Attorney Fees and Costs
Now that the Court has determined that sanctions are appropriate, it must now determine the reasonable amount of attorneys' fees and costs that should be awarded. “The starting point for determining reasonable attorneys' fees is the ‘lodestar,' which is calculated by multiplying the number of hours reasonably expended on litigation by a reasonable hourly rate.” Vieste, LLC v. Hill Redwood Dev., No. C-09-04024 JSW (DMR), 2011 WL 588145, at *4 (N.D. Cal. Feb. 10, 2011) (citing Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 978 (9th Cir. 2008)). “In determining reasonable hours, counsel bears the burden of submitting detailed time records justifying the hours claimed to have been expended. Those hours may be reduced by the court where documentation of the hours is inadequate; if the case was overstaffed and hours are duplicated; [or] if the hours expended are deemed excessive or otherwise unnecessary.” Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210-11 (9th Cir. 1986) (citation omitted).
“Block billing is the time-keeping method by which each lawyer and legal assistant enters the total daily time spent working on a case, rather than itemizing the time expended on specific tasks.” Welch v. Metro. Life Ins. Co., 480 F.3d 942, 945 n.2 (9th Cir. 2007). The Ninth Circuit has recognized that a district court has the authority to reduce hours that are billed in block format “because block billing makes it more difficult to determine how much time was spent on particular activities.” Id. (citations omitted). That said, where only some of the requested hours are block billed, a district court should not simply impose a blanket, across-the-board reduction. Id. Rather, the district court should ensure that the reduction imposed “fairly balances those hours that were actually billed in block format.” Id. (quotations omitted) (citing Sorenson v. Mink, 239 F.3d 1140, 1146 (9th Cir. 2001)).
In the instant case, the Bravada Defendants argue that Plaintiff should not be reimbursed for fees incurred in efforts to meet and confer and the fees and costs Plaintiff's counsel incurred when traveling to Phoenix to attend the discovery disputes hearings. (Doc. 164 at 6-7). The Court finds that reimbursement for fees and costs incurred related to travel and efforts to meet and confer are appropriate. See Grimsley v. Charles River Lab ys, No. 3:08-CV-00482-LRH, 2010 WL 4539383, at *2 (D. Nev. Nov. 3, 2010) (“As a result of these violations, the court awarded defendant attorney's fees and costs for the meet and confer process, preparation of defendant's opposition to the motion to compel (# 44), and attendance of defendant's counsel at the October 19, 2009 hearing.”); see United States for Use & Benefit of Asbestos Instant Response, Inc. v. Herman Constr. Grp., Inc., No. CV 13-8800-R (EX), 2015 WL 12780454, at *1 (C.D. Cal. May 19, 2015) (“[H]aving reviewed the attorneys' bills and costs submitted, the Court finds the hourly billable rates for traveling to and appearing at trial are reasonable.”).
The Bravada Defendants also argue that Plaintiff's request for fees should be reduced because the time record includes block billing and redacted entries. (Doc. 164 at 7). The Bravada Defendants request that the Court reduce the entries that are billed in block format and heavily redacted by thirty percent. (Doc. 164 at 7; see Doc. 164-5 at 1-8). However, the Bravada Defendants do not challenge whether the fee requests are reasonable. The Court will address whether the fees are reasonable before determining whether any reductions are necessary.
The Court is awarding Plaintiff for the fees and costs related to the missing bank statements that were incurred between December 6, 2023, and May 29, 2024. The Court has reviewed Plaintiff's attorneys' billing records and finds that the submitted hours of work are mostly reasonable. In particular, Plaintiff submitted that its counsel expended 80.4 hours between December 6, 2023 and May 29, 2024. (Doc. 155-2). This work entailed contacting the Bravada Defendants' counsel regarding discovery disputes, traveling to Phoenix for the discovery dispute hearing on April 3, 2024, and drafting motions to address the Bravada Defendants' non-compliance with the Court's orders. (See id.). The total amount of hours spent results in $23,879.00 in attorneys' fees. Plaintiff also incurred $1,261.03 in costs for his attorney's travel expenses to attend the discovery dispute hearing on April 3, 2024. After review, the Court concludes that the submitted hours were mostly reasonably expended on the matters subject to sanctions for Plaintiff's violation of the Court's prior orders.
The Court also reviewed whether the attorneys' hourly rates were reasonable. Plaintiff submits an affidavit by Spencer W. Young, one of the partners working on this case. (Doc. 155-1). Mr. Spencer's affidavit indicates that he charges Plaintiff fees between $275 and $295 per hour, his senior partner Brian Johnson charges fees at $525 per hour, and the associate attorneys assisting him on this matter charges fees between $215-$225 per hour. (Doc. 155-1 at 9). Having considered the professionals' experience and the nature of the work performed, the Court finds that the rates and amounts charged are reasonable and necessary. See, e.g., Sell v. Cabral, No. EDCV201008JGBSHKX, 2020 WL 3577874, at *5 (C.D. Cal. June 30, 2020) (noting that hourly rates for products liability civil litigators can range between $325.00 to $825.00 an hour).
Although the Court finds that Plaintiff's fees are mostly reasonable, the Court has some concern about the overall time record. The Court has identified that there are five entries that are unrelated to the discovery dispute regarding the Bravada Defendants' missing bank statements. The Bravada Defendants are not required to reimburse Plaintiff for these fees. This brings the total amount in fees to $23,328.00, however, the total amount in cost will remain at $1,261.03. (See Doc. 155-2). The Court also finds that Plaintiff failed to provide detailed accounting of its fees resulting from the missing bank statements. The time record reflects that the majority of the entries are either heavily redacted, billed in block format, or both. (See Doc. 155-2). Some of the entries are also so broad that it makes it difficult for the Court to discern whether the fees are related to the missing bank statements or a different discovery dispute in this case. Plaintiff contends that “the Court need not bother reducing any hours billed in block format because [its] counsel has already done so, and where it could not reduce a block-billed entry to just the time spent on the issues in the Motion, [Plaintiff's counsel] removed the entry altogether.” (Doc. 167 at 7). Such averments from Plaintiff's attorneys do little to ease this Court's concerns. The fact remains that the entries were originally block billed, and that specific times were not assigned to the individual tasks until Plaintiff prepared to file this Motion. (Doc. 155-1 at 10). Plaintiff's post hoc reduction of the time entries creates legitimate concerns about the time record's accuracy and reliability. See Malbco Holdings, LLC v. AMCO Ins. Co., No. CV-08-585-ST, 2010 WL 2572849, at *3 (D. Or. June 22, 2010) (“Although [the moving party]'s counsel has attempted after-the-fact to assign amounts of time for individual tasks in the block-billed entries, it is impossible to accurately recall how much time was spent on specific tasks so long after they were performed.”); MKB Constructors v. Am. Zurich Ins. Co., 83 F.Supp.3d 1078, 1088-89 (W.D. Wash. 2015) (“The court, however, is more concerned with the lack of contemporaneous recording and the after the fact reconstruction of [counsel's time records.”). Therefore, in its discretion, the Court will reduce counsel's fees by $2,000 to ensure reasonable time spent on the work. See Shalaby v. Bernzomatic, No. 311CV00068AJBDHB, 2021 WL 120898, at *2 (S.D. Cal. Jan. 13, 2021) (case history omitted) (reducing counsel's fees by $3,000). The Court will not adjust the costs for Plaintiff's counsel travel expenses to attend the discovery dispute hearing on April 3, 2024.
The respective dates and total amounts for the five entries are as follow: February 15, 2024, $45.00; February 15, 2024, $88.50; March 6, 2024, $29.50; May 6, 2024, $270.00; and May 8, 2024, $118.00. (Doc. 155-2 at 7, 8, 10).
The parties in this case have raised several discovery disputes. In fact, there were two additional discovery disputes filed three calendar days after this Motion. (Docs. 156 and 157).
Accordingly, IT IS THEREFORE ORDERED that is Plaintiff TAC Holdings, LLC's Motion for Attorney Fees and Costs (Doc. 155) is granted in part and denied in part.
IT IS FURTHER ORDERED that the Court awards Plaintiff $21,328.00 in reasonable attorneys' fees and $1,261.03 in costs.