For the reasons explained below, as well as the statements made on the record by the Court at the hearing, Parker’s motion (Dkt. 54) is GRANTED. Parker is also entitled to recover a portion of its reasonable expenses in bringing the motion, and may submit additional evidence of the amount of such expenses.

A. Background.

The current, operative complaint is the initial complaint filed by Valcor on May 18, 2016, which brings claims for breach of contract, negligence, and declaratory relief. (Dkt. 1.) Parker brings counterclaims for breach of contract and declaratory relief. (Dkt. 19.) The discovery cut-off is May 29, 2017, and trial is set for September 12, 2017. (Dkt. 23-1.)

In a motion currently pending before District Judge James V. Selna, Valcor has moved for leave to file a First Amended Complaint, which would add new causes of action for fraudulent concealment and breach of the implied covenant of good faith and fair dealing. (Dkt. 42.)

In 2004, Parker and Electroid, a division of Valcor, entered a Strategic Procurement Agreement (“SPA”) whereby Electroid agreed to supply air separation modules (“ASMs”) to Parker for use in Boeing 737 fuel tank inerting systems. (JS at 1.) The ASMs are designed to remove oxygen from a compressed air stream (referred to as “bleed air”) and generate nitrogen-enriched air, in order to reduce the risk of combustion and flammability in the airplane’s fuel tanks. (Id.) Valcor subcontracted with non-party MEDAL to supply core fiber bundle components for the ASMs. (Dkt. 69 at 3 [parties’ agreed-upon neutral summary of case for letter rogatory].)

Parker contends that Valcor breached the SPA by supplying defective ASMs, which began to fail prematurely; Parker therefore began to seek ASMs from a “second source” supplier. (Id.) Parker’s Counterclaim cites a 2012 Root Cause Report—created by Parker, Electroid, MEDAL, and Boeing—indicating that the failures were caused by a structural failure of the fiber inlet tube sheets and fiber degradation. (Dkt. 49-1 at 3 [citing Counterclaim at ¶¶ 42-45].)

Valcor, in contrast, contends that the ASM problems were caused by contaminates in the compressed air stream. (Dkt. 69 at 3.) Valcor blames another part of the fuel tank inerting system, a filter supplied by non-party Porvair, for this. (Id.) Valcor contends that Parker knew this, failed to disclose it, and sought ASMs from a new supplier anyway. (Id. at 3-4.)

B. Analysis.

*2 Parker’s motion raises seven areas in which it believes Valcor’s document production remains incomplete. Valcor responds that Parker failed to meet-and-confer as required by the Local Rules. Valcor also asserts that no Court action is required, because it made a supplemental document production on May 1, 2017 (the day before the hearing on Parker’s motion to compel) and will make an additional production in approximately three weeks (just prior to the May 29, 2017 discovery cut-off).

1. Parker did not fail to meet and confer.

a. Communications between the parties.

Parker and Valcor exchanged document requests in August 2016. (Villar Decl. at ¶ 3 and Ex. B [Parker’s document requests].) In November, they entered an Agreed Discovery Protocol regarding electronically stored information (“ESI”). (Villar Decl., Ex. D.) The Agreed Discovery Protocol provided that the parties would exchange responsive documents on December 16, 2016. (Id.) Valcor timely made an initial production. (Villar Decl., Ex. C.)

In January 2017, Parker initiated a meet-and-confer over gaps in Valcor’s production. (Villar Decl., Ex. G.) After the meet-and-confer, and multiple emails between counsel, Valcor made a supplemental production on February 16, 2017. (Villar Decl., Ex. I, J, K, L, M, N; Thomas Decl. at ¶ 11.)

Parker remained dissatisfied with this production, and served Valcor with Parker’s portion of the JS in support of the present motion to compel on March 30, 2017. (Thomas Decl. at ¶¶ 12-13.) Valcor tried to initiate another formal meet-and-confer on the issues raised in Parker’s motion to compel, but Parker declined. (Thomas Decl. at ¶¶ 18-20, Ex. B, C.)

Counsel continued to communicate about discovery issues, including issues Valcor has raised with Parker’s own document productions. On May 1, 2017, the day before the hearing on Parker’s motion to compel, Valcor made a second supplemental production of approximately 5,000 documents (according to Valcor’s counsel). At the May 2, 2017 hearing, Valcor’s counsel could not state with certainty that Valcor had produced all documents responsive to Parker’s August 2016 requests.

b. Analysis.

Based on this history, Valcor contends that Parker’s motion should be denied and sanctions imposed against Parker, because Parker failed to meet-and-confer adequately under Local Rule 37-1. (JS at 4-6.) Valcor argues that, because only one of the seven issues raised in Parker’s present motion was raised at the January meet-and-confer, Parker should have initiated an additional, formal meet-and-confer regarding Valcor’s February supplemental production. (Id.)

The Court disagrees. The parties’ many email communications reveal that Parker attempted in good faith to resolve the gaps in Valcor’s production. The discovery cut-off is May 29, 2017, and, by its own admission, Valcor still has not identified and produced all its documents responsive to Parker’s discovery requests. Those requests were served in August 2016 and Valcor previously agreed to respond by December 2016. Under these circumstances, it was reasonable for Parker to serve Valcor with the present motion to compel, so as to secure a hearing prior to the discovery cut-off date. Parker has, at the very least, complied with the spirit of Local Rule 37-1.

Valcor also contends, based on a January 25, 2017 email from Parker’s counsel, that Parker “led Valcor to believe that the discovery issues raised in the January Meet and Confer Letter had all been resolved.” (JS at 4.) This is not a reasonable interpretation of the email, which explicitly refers to previous discussions between the parties and correspondence memorializing those discussions. (Villar Decl., Ex. K.)

*3 The Court therefore declines to deny Parker’s motion to compel based on the alleged failure to meet-and-confer. Valcor’s request for monetary sanctions under Local Rule 37-4 is likewise denied.

2. Valcor shall make a supplemental production consistent with this Order.

At the hearing, Valcor admitted that its production remains incomplete and stated that it plans to make a final document production in three weeks, shortly before the May 29, 2017 discovery cut-off.

IT IS THEREFORE ORDERED that Parker’s motion to compel (Dkt. 54) is GRANTED and Valcor shall make a supplemental production on or before May 23, 2017.

This Order briefly discusses each of the seven issues raised in Parker’s motion, to ensure that Valcor’s May 23 production cures the defects discussed at the May 2 hearing, to the extent this is possible, and because the discussion is relevant to whether Parker is entitled to an award of reasonable expenses under FRCP 37(a)(5)(A).

a. Failure to Preserve Emails Due to October 2013 Server Change.

In the parties’ JS, Valcor revealed, “Due to an email server system change in October 2013, only a limited number of emails were retained from 2004 to 2013. ... This would have been made known to Parker’s counsel had they agreed to a meet and confer.” (JS at 39.) The loss of emails due to the server change was not disclosed to Parker prior to its disclosure in the JS. It affects the completeness of Valcor’s production in various ways, as discussed further below.

b. Issue No. 1: Documents Sent to/from Stephen Etter, President of Electroid.

In the JS, Parker argued that Valcor produced a suspiciously small number of emails to and from Etter: approximately 2,000 over a 15-year period. (JS at 7.) Valcor responded that it was working with its e-discovery consultant “to determine why certain emails may not have been captured in Valcor’s original searches.” (Dkt. 65 at 3.)

At the hearing, Valcor’s counsel explained that, apparently due to an oversight, its initial search had not included certain email metadata. Counsel represented that Valcor’s May 1 production included approximately 350 additional emails to or from Etter, but that Valcor is continuing to search for responsive emails. Based on discussions at the hearing, the Court understands that the 2013 email server change did not affected Etter’s emails because he was employed by Valcor both before and after the change.

At the hearing, Valcor’s counsel indicated that Etter provides reports to the Valcor board, and that Valcor would produce these reports after redacting irrelevant information. No explanation was provided as to why the redaction process was not completed prior to the agreed-upon December 2016 production date.

c. Issue No. 2: Additional Custodians.

In the JS, Parker argued Valcor should have collected documents from the following additional custodians: (1) Gary Witts, (2) Larry Wismer, (3) Jazz Sihdu, (4) Marcos Simon, and (5) Marc Messina. (JS at 18-20.) Four of these five (all but Messina) were listed in Valcor’s initial disclosures as individuals likely to have discoverable information. (Villar Decl., Ex. O.)

Regarding Wismer and Messina, Valcor’s counsel stated at the hearing that it will produce relevant documents from these two additional custodians in its supplemental production.

*4 Regarding Witts, Simon, and Sihdu, Valcor stated in the JS: “[A]s we explained in our letter dated January 16, 2017, none of these three (3) individuals ... are custodians of any email files.” (JS at 23.) At the hearing, Parker objected that these individuals did have email accounts, because Parker itself had some emails from them. In response to this, Valcor clarified that these individuals did have email accounts with Valcor prior to the October 2013 email system server change, but their email accounts were not retained in the transition. This explanation was not included in the JS, or in the January 16, 2017 letter from Valcor to Parker. In fact, the letter represented that Simon’s and Witts’ emails “were collected.” (Villar Decl., Ex. I.) As discussed above, Valcor did not inform Parker of the documents lost due to the October 2013 email system server change until it served Parker with its portion of the JS.

In making its upcoming supplemental production, Valcor shall ensure that its keyword searches are sufficient to capture any responsive emails sent to or from Witts, Simon, and Sihdu that were retained by custodians whose email files were migrated to the new email system in October 2013.

d. Issue No. 3: Documents Relating to Third-Party MEDAL.

In the JS, Parker argued that it had “not received the most basic documents relating to Valcor’s/Electroid’s relationship with MEDAL, including the supply agreement, any negotiations and drafts relating to that agreement, and any other agreements entered into since 2007 including any potential indemnification, cooperation or settlement agreement relating to this dispute.” (JS at 24.) Parker also seeks documents related to Engineering Coordination Memos (“ECMs”) that were prepared by MEDAL, sent to Electroid, and then forwarded by Electroid to Parker. (Id. at 25.)

At the hearing, Valcor’s counsel represented that the May 1st production included an additional 1,203 documents related to MEDAL. Counsel indicated that these documents were obtained from Air Liquide, which has acquired MEDAL. Valcor’s counsel stated that it had performed ESI searches for documents related to the ECMs, and was currently reviewing those for any further relevant documents. Counsel indicated that he expected to find few email communications related to the ECMs.

In the JS, Valcor argued that it had already provided Parker with the Strategic Procurement Agreement between Electroid and MEDAL, citing a specific bates number. (JS at 30.) At the hearing, Parker’s counsel objected that the document at this bates number was an unsigned, incomplete draft with missing attachments. To the extent Valcor has other versions of the agreement, these should be provided.

In conjunction with its upcoming supplemental production, Valcor’s counsel shall provide a written declaration to Parker’s counsel specifically stating whether the above-described documents: (1) have already been produced and, if so, provide their bates numbers; (2) do not exist; (3) exist but have not been produced for some stated reason (for example, they could not be located, have been destroyed, are privileged, etc.).

e. Issue No. 4: Documents Sent to/from Electroid Consultants Tuan Cao, Ben Bikson, and Mike Costen.

Regarding Costen, Valcor’s counsel represented at the hearing that additional documents had been produced on May 1st, but that Valcor was still doing “clean up” searches and/or review.

Regarding Bikson, Valcor states that he has no responsive documents because he did not work on the Boeing 737 program. (JS at 33.) At the hearing, Valcor’s counsel explained that Bikson was mistakenly designated as an individual with relevant information in Valcor’s initial disclosures.

Regarding Cao, Valcor stated that he did minimal work on the Boeing 737 project because of a terminal illness, which has since claimed his life. As with Costen, Valcor’s counsel represented that Valcor is running additional searches to ascertain whether everything has been produced.

f. Issue No. 5: Documents Relating to Damages.

*5 Parker’s Request for Production No. 52 asks for “all documents reflecting, referring or relating to any alleged damages [Valcor] suffered as a result of any conduct of Parker[.]” (Villar Decl., Ex. C.) In the JS, Parker argued that Valcor had not produced “a single document” to support Valcor’s claimed $10 million in damages. (JS at 35.)

Valcor responded that it has hired a forensic consultant to create a damages model based on documents from both Parker and Valcor, and that “Valcor ha[d] produced the historical Valcor financial information from which the model was created.” (JS at 36.) Valcor argued, “To the extent Parker is seeking early discovery of Valcor’s damages consultant’s work product, ... Parker’s motion is premature....” (Id.)

At the hearing, Valcor’s counsel indicated that it would produce additional documents relevant to damages in its upcoming supplemental production. In conjunction with that production, Valcor’s counsel shall provide Parker’s counsel with a declaration certifying that it has produced all documents on which its damages expert will rely.

g. Issue No. 6: Documents Relating to the Negotiation of the Parties’ SPA and Amendments Thereto.

At the hearing, Valcor’s counsel stated that all documents relevant to this issue have been produced, with the exception of emails lost as a result of the October 2013 email server change. Parker argued that it will be prejudiced by this loss (because the lost emails likely included communications regarding the most recent amendment to the SPA), particularly if the District Judge allows Valcor to amend its complaint to state claims for fraudulent concealment and breach of the implied covenant of good faith and fair dealing.

h. Issue No. 7: Documents Relating to Parker’s Second Source Supplier.

In the JS, Parker argued that Valcor had produced virtually no documents in response to Request for Production No. 42, which sought documents relating to Parker’s “second source” supplier of ASMs. (JS at 40-41.) Valcor initially objected to this request (Villar Decl, Ex. C.), but now contends it has produced any non-privileged documents responsive to this request.

At the hearing, Valcor’s counsel stated that Valcor had virtually no documents responsive to this request, except for letters from Parker notifying Valcor of its plans to seek ASMs from a second source. Valcor’s counsel stated that any internal communications regarding these letters were privileged, but that neither party had exchanged a privilege log yet.

In conjunction with its upcoming supplemental production, Valcor’s counsel shall provide a declaration stating that it has produced all documents relevant to this issue that are not privileged.

The parties shall meet-and-confer and agree to a deadline for exchanging privilege logs, pursuant to the procedure described in the Agreed Discovery Protocol (Villar Decl., Ex. D at ¶ 6) or another procedure agreed to by the parties.

3. Parker is not entitled to sanctions under FRCP 37(e) based on Valcor’s 2013 failure to preserve emails.

In its supplemental briefing, Parker seeks sanctions under FRCP 37(e)based on Valcor’s failure to preserve certain emails as a result of the October 2013 email server system change. (Dkt. 66 at 4-5.) Parker argues that Valcor violated its “contractual, legal and ethical duties to preserve documents,” citing the parties’ SPA and Agreed Discovery Protocol. (Id. at 2-3.)

*6 FRCP 37(e) “lists three requirements for spoliation: (1) the [ESI] at issue ‘should have been preserved in the anticipation or conduct of litigation’; (2) that information ‘is lost because a party failed to take reasonable steps to preserve it’ and (3) ‘it cannot be restored or replaced through additional discovery.’ ” Matthew Enter., Inc. v. Chrysler Grp. LLC, 2016 WL 2957133, at *3 (N.D. Cal. May 23, 2016). If these requirements are satisfied, and if another party is prejudiced by the loss, the Court “may order measures no greater than necessary to cure the prejudice.” FRCP 37(e)(1).

The Court finds sanctions under FRCP 37(e) inappropriate in this case because the first and third requirements are not met. Regarding the first requirement, it is undisputed that the email system server change occurred in October 2013. The instant lawsuit was not filed until May 2016. (Dkt. 1.) Although the parties allege that there were problems with the ASMs prior to October 2013, the Court cannot say that litigation was reasonably anticipated at that point. (Dkt. 1 at ¶¶ 17-34; Dkt. 19 at ¶¶ 41-51 [Valcor’s Complaint and Parker’s Counterclaim, alleging that ASMs began to fail in either 2008 or 2011; that the parties attempted to diagnose the cause of the failures in 2012; and that Parker sent Electroid a letter requesting reasonable assurances of performance in October 2015].)

Regarding the third requirement, it is not clear how many of the relevant emails can be produced via discovery from other custodians. At the hearing, Valcor explained that some emails were not imported to the new system if the custodians of those emails no longer worked at Electroid/Valcor. To the extent the emails were sent to or from another employee of Electroid/Valcor that continued to work at the company, however, the emails might be available in another custodian’s files. To the extent the emails were sent to or from a non-party—such as MEDAL, on whom Parker has served subpoenas—the emails might also be recoverable in that manner. Because these two criteria are not met, sanctions under Rule 37(e) are not appropriate.

Nevertheless, the Court agrees with Parker that Valcor’s counsel did not act reasonably under the parties’ Agreed Discovery Protocol, which provides in relevant part:

(Villar Decl., Ex. D at ¶ 4.1.)

At the May 2 hearing, the Court asked whether Valcor’s counsel was aware of the email server issue when entering into the Agreed Discovery Protocol. Valcor’s counsel appeared to admit that he was aware of the issue at that time, but believed he had no duty to disclose the issue to Parker because the loss of ESI was not a “preservation issue,” having occurred before litigation was anticipated. He argued that the language quoted above addressed only 2015 onward.

This is not a reasonable interpretation of the above-quoted language. Moreover, even if Valcor did not become aware of the lost emails until later in the discovery process, the above-quoted language imposed an ongoing duty to inform opposing counsel of the issue. At the very least, Valcor should have disclosed the server issue in January 2017, when Parker complained that Valcor’s production was much smaller than Parker had expected. (Villar Decl., Ex. G.) Valcor did not disclose the issue until it responded in writing to Parker’s motion to compel. Although FRCP 37(e)sanctions are not appropriate, the Court considers Valcor’s behavior regarding this issue in determining whether to award Parker reasonable expenses under FRCP 37(a)(5)(A), as discussed below.[1]

4. Parker is entitled to reasonable expenses under FRCP 37(a)(5)(A).

a. Entitlement to Fees.

*7 Parker seeks an award of $50,000 under FRCP 37(a)(5)(A), representing expenses Parker incurred in bringing the instant motion to compel. (JS at 43.) That rule provides:

FRCP 37(a)(5)(A).

As discussed above, the Court finds that Parker attempted in good faith to obtain the discovery sought in its motion to compel without court action. The remaining questions are therefore whether Valcor’s nondisclosures (or delayed disclosures) were “substantially justified” or whether “other circumstances make an award of expenses unjust.”

An award of reasonable expenses does not require a finding of willfulness, fault, or bad faith, but merely a finding that a party’s actions were not “substantially justified.” See Varney v. Cal. Highway Patrol, 2013 WL 2299544, at *2 (N.D. Cal. May 24, 2013); L. Tarango Trucking v. Cnty of Contra Costa, 202 F.R.D. 614, 623 (N.D. Cal. 2001). The party against whom an award of attorney’s fees is sought bears the burden of showing that its failure to comply with a discovery order was “substantially justified” or that “other circumstances make an award of expenses unjust.” SeeFalstaff Brewing Corp. v. Miller Brewing Co., 702 F.2d 770, 784 (9th Cir. 1983); Raygoza v. City of Fresno, 297 F.R.D. 603, 608 (E.D. Cal. Mar. 5, 2014).

Valcor has not met its burden of demonstrating that its failure to fully respond to Parker’s document requests earlier was substantially justified, or that other circumstances make an award of expenses unjust. A party cannot delay its production until weeks before the discovery cut-off and then complain that its adversary had acted unreasonably by filing a motion to compel to secure court-ordered compliance prior to the cut-off.

As discussed above regarding each of the seven issues raised in Parker’s motion to compel, Valcor largely admits that its document productions have been incomplete. Rather than attempting to explain why, Valcor has focused on trying to shift the blame to Parker, arguing that Parker’s counsel failed to meet-and-confer properly and misled Valcor into believing there were no outstanding disputes.

At the May 2 hearing, Valcor’s counsel indicated that at least some of the gaps in production were due to a mistake in its initial search process, the result of which was that email metadata was not searched prior to the December 2016 initial production. While such a mistake theoretically might serve as substantial justification, it does not in light of Valcor’s behavior since that mistake was made.

b. Amount of Fees.

*8 If an award of fees is appropriate, courts generally use the “lodestar” method to determine what amount of fees is “reasonable.” See, e.g., Raygoza, 297 F.R.D. at 608; I.E.I Co. v. Advance Cultural Educ., 2011 WL 1335407, at *3 (N.D. Cal. Apr. 7, 2011). Under the lodestar method, the court determines “the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). “A district court should exclude from the lodestar amount hours that are not reasonably expended because they are ‘excessive, redundant, or otherwise unnecessary.’ ” Van Gerwen v. Guarantee Mut. Life Co., 214 F.3d 1041, 1045 (9th Cir. 2000) (quoting Hensley, 461 U.S. at 433).

In support of the requested $50,000 in expenses, Parker has submitted a sworn declaration from its counsel stating: “Since beginning the meet and confer process, more than three months ago, Parker has incurred well in excess of $50,000 in connection with this motion.” (Villar Decl. at ¶ 32.) Parker has included no information about how it reached the $50,000 number, making it impossible for this Court to undertake a lodestar analysis.

The Court is also skeptical that Parker would be entitled to recover the full $50,000 it seeks. First, Parker states that this represents fees incurred “[s]ince beginning the meet and confer process” in January 2017, and FRCP 37(a)(5)(A) authorizes recovery only of expenses “incurred in making the motion, including attorney’s fees.” Second, Valcor did provide some reasonable explanations for its failure to produce some of the documents earlier. For example, regarding documents sent to/from consultant Ben Bikson, Valcor explained that he should not have been named in the initial disclosures because he did not work on the Boeing 737 project.

C. Conclusion.

Based on the foregoing, IT IS ORDERED that Valcor shall provide a supplemental production consistent with the terms of this order on or before May 23, 2017. Concurrently with that production, Valcor’s counsel shall provide Parker’s counsel with a declaration consistent with the above discussion. If Parker reasonably believes that Valcor’s May 23rd production is inconsistent with this Order, or otherwise incomplete, Parker may file a supplemental motion with the Court after the May 29th discovery cut-off; the Court will consider such a motion as a continuation of the instant motion to compel.

Prior to the discovery cut-off, counsel shall also meet-and-confer and agree on a deadline for exchanging privilege logs prior, as discussed above.

IT IS FURTHER ORDERED that the parties shall meet-and-confer on what constitutes reasonable expenses incurred in bringing the motion to compel. If the parties are able to reach agreement, they shall file a notice with the Court indicating the agreed-upon amount on or before May 19, 2017.

If the parties are unable to reach agreement, Parker shall file evidence of its reasonable expenses with the Court on or before May 19, 2017. Parker may include its time compiling supporting evidence. Valcor may file objections to the amount of fees on or before June 2, 2017. Parker shall not file a response to the objections unless otherwise ordered by the Court.

The Court makes no ruling on whether Parker has a contractual remedy for the loss of the ESI under the parties’ SPA, which Parker argues imposed a duty to preserve documents.