I. INTRODUCTION

Plaintiff and counter-claim defendant Blumenthal Distributing, Inc., also known as Office Star (“OS”), and defendant and counter-claim plaintiff Herman Miller, Inc. (“HM”) are both designers and distributors of furniture, including office chairs. Docket no. 13 ¶¶ 5-6; docket no. 40 ¶ 13. This case arose out of a dispute between the parties as to whether OS chairs infringe the registered and unregistered trade dress rights to the EAMES and AERON chair designs, which are owned by HM.

On May 16, 2016, HM filed a Motion for Default Judgment or Sanctions in the Alternative against OS. The motion was the culmination of a number of long-standing discovery disputes, discussions, and orders in this case. After the motion was fully briefed, the court issued a Report and Recommendation on July 12, 2016, recommending that the District Court grant in part and deny in part HM's motion (“7/12/16 R&R”). Among other things, the court found: OS unjustifiably failed to comply with the court's September 25, 2015 order when it failed to search its employees' individual hard drives and all other relevant network drives; OS failed to institute a litigation hold so as to preserve electronically stored information (“ESI”), which resulted in the spoliation of evidence after OS's duty to preserve attached; and OS failed to adequately search for ESI, and subsequently made misrepresentations to the court and HM regarding the search, which delayed the production of discovery such that HM was deprived of documents during depositions. 7/12/16 R&R at 22-37, 53-55. The court recommended the jury be given an adverse inference instruction, discovery be reopened, and HM be awarded monetary sanctions.

In a September 2, 2016 order, the District Court adopted the Report and Recommendation to the extent specified in that order. With respect to monetary sanctions, the District Court ordered that OS shall pay HM's “reasonable attorney's fees and costs associated with” the following:

1. HM's November 21, 2015 Ex Parte Application to enforce prior discovery orders (“Application to Enforce Discovery”) (docket no. 102);

2. HM's May 16, 2016 Motion for Default Judgment or Sanctions (“Sanctions Motion”) (docket no. 204);

3. Engaging experts to analyze OS's computers; and

4. Taking past depositions and reviewing portions of certain deposition testimony with respect to the reasons ESI was not maintained and promptly produced.

The court directed the parties to submit supplemental briefing to allow the court to determine the amount of fees and costs to be awarded, which the parties did in September and October 2016. Docket nos. 295, 350, 352. On September 12, 2017, the District Court referred the matter to the Magistrate Judge for a recommended ruling, and the court now issues that recommendation, as follows.

II. DISCUSSION

*2 As updated and stated in its Reply, HM seeks a total of $271,093 in fees and $1,541.96 in costs.[1] See Declaration of Jean-Paul Ciardullo in Support of Defendant's Supplemental Brief on Attorney's Fees and Costs (“Ciardullo Decl.”) ¶¶ 39, 41, Ex. 16; Supplemental Declaration of Jean-Paul Ciardullo in Support of Herman Miller's Brief on Attorneys' Fees and Costs (“Supp. Ciardullo Decl.”) ¶¶ 3, 16, Ex. B. The fees and costs sought with respect to each of the categories set forth above are as follows.

First, for time spent preparing the Application to Enforce Discovery, HM seeks the following fees:

Second, for time spent preparing the Sanctions Motion (which apparently included reviewing deposition testimony regarding the reasons ESI was not maintained and promptly produced), including time spent on the instant supplemental fee and costs briefing and estimated time spent on its Reply in support, HM seeks the following fees:

Fourth, for time spent taking depositions regarding the spoliation of ESI – namely, depositions of Juan Monsivais, Austin Engel, and EMC Corporation's designee – HM seeks the following fees:

OS opposes the amounts of requested fees and costs on a number of grounds, including: HM's billing records do not provide sufficient information to tell whether time on work not covered by the September 2, 2016 order has been subtracted; some of the fees sought are for work falling outside the scope of the order; the time spent on some tasks was unreasonable; and the billing records submitted were so heavily redacted it is not possible to assess the reasonableness of the time spent. The court addresses these issues below.

A. Attorney's Fees

*3 The court's September 2, 2016 order provided that HM be awarded its “reasonable attorney's fees” associated with the Application to Enforce Discovery, Sanctions Motion, analyzing OS's computers, and taking depositions about the reasons ESI was not maintained and promptly produced. The amount of a reasonable fee is generally determined according to the lodestar method, that is, “the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.” Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983). A reasonable rate is generally demonstrated based on the submission of evidence that the requested rates are reflective of the prevailing rate in the community based on comparable skill, experience, and reputation. Blum v. Stenson, 465 U.S. 886, 895 n.11, 104 S. Ct. 1541, 79 L. Ed. 2d 891 (1984). “[T]he fee applicant bears the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates.” Hensley, 461 U.S. at 437.

Here, HM submitted tables setting forth the hours worked by each attorney, paralegal, and litigation support manager on each of the four categories of work for which monetary sanctions were ordered, and their hourly rates for those hours. Ciardullo Decl. ¶ 41, Ex. 16; Supp. Ciardullo Decl. ¶ 3, Ex. B. It also submitted billing records reflecting those hours worked. Ciardullo Decl. ¶¶ 2-12, Exs. 1-11; Supp. Ciardullo Decl. ¶¶ 4-16, Exs. 1-12. Additionally, it submitted information describing the experience and expertise of the attorneys and staff who worked on these matters, and an article to support its assertion that the hourly rates charged for work done by these individuals are consistent with the rates charged in Los Angeles by other top-tier national law firms. Ciardullo Decl. ¶¶ 16-20, 23-27, 30-34, 37-38, 42, Exs. 13-15, 17.

The court finds HM has adequately demonstrated the reasonableness of the hourly rates requested here, and OS has not challenged those rates. Thus, the court should accept the rates as requested.

OS does challenge the reasonableness of the hours requested by HM. As indicated above, OS makes four general objections that the billing records were overly redacted, that the billing records were insufficient, that HM seeks fees for work outside the scope of the order, and that the hours submitted are unreasonable. OS also specifically disputes 41 particular billing entries, the first 39 of which concern fees, and the last two of which concern costs.[2] Declaration of David A. Dillard in Support of Blumenthal Distributing, Inc.'s Response to Defendant's Supplement Brief on Attorneys' Fees and Costs (“Dillard Decl.”) ¶ 2, Ex. A. The court will consider each of OS's challenges.

1. Redaction of the Billing Records

OS argues HM's heavy redaction to the billing records submitted as Exhibits 1-11 to the Ciardullo Declaration makes it impossible for OS or the court to assess the reasonableness of the time requested, or whether reductions for non-covered tasks were reasonable. HM largely addressed this objection by submitting more lightly redacted versions of these same records with its Reply. See Supp. Ciardullo Decl., Exs. 1-11. Because OS did not have the benefit of these unredacted records when preparing its response, however, the court will scrutinize the records more carefully.

*4 Although the redactions factor into many of OS's specific billing entry disputes, the redactions appear to form the chief basis for only Disputes 3-7. OS argues the redactions of the date, timekeeper, hours, and/or fees from these entries makes it impossible to tell whether these entries were included on HM's summary charts of its requested fees. See Ciardullo Decl., Ex. 16. In its Reply, HM states the redaction of such information was inadvertent. See Supp. Ciardullo Decl., Ex. A. The unredacted records show such information, and it appears these hours and fees are included in HM's summary of its requested fees. For example, HM seeks fees of $13,650 for 18.2 hours of work by Jonathan Moskin prior to February 1, 2016, when his hourly rate increased. The billing records submitted for the months of October 2015 through January 2016 show a total of 18.2 hours worked by Moskin for which HM requests fees here, including those worked on October 12 and 16, 2015 (Disputes 4 and 7). See Supp. Ciardullo Decl., Exs. 1-4. Thus, the removal of the redactions has revealed these entries are included in the summary of requested fees.

OS also questions the entry in Dispute 4, reflecting that Jonathan Moskin conferred with Jean-Paul Ciardullo, as the records reflect no corresponding time entry for Ciardullo. HM acknowledges this, but states Mr. Ciardullo's corresponding time was omitted as a courtesy.

As the entries in Disputes 3-7 appear otherwise properly included in HM's fees request, the court should not reduce any of the fees requested in these entries.

2. Sufficiency of the Billing Records

OS challenges some of the entries as too vague for it to tell whether the work concerns the discovery matters at issue in the Sanctions Motion, specifically in Disputes 1, 2, and 17. HM responds: the entry in Dispute 1 concerns correspondence with opposing counsel on the October 1, 2015 certification of a complete production and the 101,000 emails; the entry in Dispute 2 concerns correspondence with opposing counsel to set up the Eddie Mora deposition and collect unproduced financial data; and the entry in Dispute 17 was an office conference regarding a discovery dispute, specifically, the forensic document collection. Supp. Ciardullo Decl., Ex. A. The court finds HM has addressed OS's vagueness challenge to the entries in Disputes 1 and 2, and they appear properly included in the request for the most part. But the fee award should be reduced by half the fees sought with the entry in Dispute 2 (that is, by $83.25), because the collection of unproduced financial data is not covered by the September 2, 2016 order, as discussed below. Additionally, HM did not address OS's concern that the entry in Dispute 17 does not indicate who participated in the office conference, and the information remains vague. As such, the $252 sought with this entry should be subtracted from the requested fee award.

OS also argues that in those instances where a single billing entry reflects multiple tasks, HM does not sufficiently indicate whether the fees were reasonably adjusted. This argument is one of the bases for Disputes 8, 19, and 38. The removal of redactions addresses this concern in part, as, for example, it is now possible to tell what all the tasks were in the entry for Dispute 8, and that HM is seeking only $999 of the total $3,718.50 it was billed for all the work in that entry. But OS also questions the accuracy of the reductions, since HM made them in connection with the instant briefing months after the tasks in many instances.

In his first declaration in connection with this briefing, Mr. Ciardullo states that since he was intimately familiar with the work performed, he “was able to conservatively divide certain of the entries that included unrelated work,” and that where an estimate was required, he “made a conservative low-end estimate, or simply discounted the time altogether.” Ciardullo Decl. ¶ 14. Certainly it was not possible for Mr. Ciardullo to be sure of the precise time spent on covered versus non-covered tasks many months after the fact. But based on the court's review of the disputed and other entries, it appears Mr. Ciardullo did indeed reasonably and conservatively reduce the fees requested so as to exclude non-covered tasks where the entries reflected multiple tasks. Thus, the court should not eliminate requested fees simply because there are multiple tasks in certain entries.

3. Work Falling Within the Scope of the Order

*5 OS argues that many of the hours requested were spent on work not covered by the September 2, 2016 order. This contention is the basis or one of the bases for Disputes 9-16, 20-24, 26, 28-32, and 34.

HM has adequately addressed some of OS's concerns. For example, where OS questioned whether certain entries actually related to the computer forensic issues, in some instances HM was able to explain that they did, and in others HM explained that the time had actually been reduced to exclude the non-forensic work. See Supp. Ciardullo Decl., Ex. A. Further, internal conferences and reports by counsel regarding the forensic work are reasonably covered by the order. Additionally, time spent subpoenaing the three witnesses whose depositions were necessitated by the spoliation is properly covered by the order, as the order explicitly provides for such deposition costs. As such, the court should not subtract the fees sought for the entries in Disputes 9, 10, 15, 20-24, 26, 28-32, and 34 as falling outside the scope of the September 2, 2016 order.

In other instances, although the entries reflect work that is somewhat related to the computer forensic issues, the connection is too tangential to be fairly covered by the September 2, 2016 order. Thus, for example, where a stipulation was necessary to allow more time for the forensic work and covered its terms but also other matters, it goes beyond fees spent towards engaging experts to analyze OS's computers. Moreover, although the July 12, 2016 Report and Recommendation discussed OS's delays in producing certain information due to failure to adequately search for ESI, the court did not order monetary sanction for time spent collecting this delayed financial data and other discovery. The court should therefore subtract from the requested fee award the fees sought for the entries in Disputes 11 ($1,831.50), 12 ($225), 13 ($721.50), 14 ($1,054.50), and 16 ($198.45).

4. Reasonableness of the Time Spent on Tasks

OS argues the billing entries reflect an excessive and unreasonable amount of time spent on the tasks in question. OS makes this challenge in particular to the entries in Disputes 8, 18, 19, 25, 27-31, 33, and 35-39.

As a general matter, the court notes HM is requesting fees for a total of 29.7 hours of work on the Application to Enforce Discovery, 319.3 hours of work on the Sanctions Motion, 118.1 hours of work to analyze OS's computers, and 18.6 hours of work to take three depositions regarding spoliation of ESI. Without knowledge of the nature and scope of the Sanctions Motion and computer forensic work in particular, such requested hours would appear facially unreasonable. But both constituted monumental undertakings in this case. As reflected in the July 12, 2016 Report and Recommendation, the discovery obstacles HM faced, particularly with respect to the spoliation of ESI and efforts to find responsive information on OS's computers, were tremendous. The Magistrate Judge was closely monitoring aspects of the process at times, and is thus aware of the huge time and effort invested. The hours spent on the Sanctions Motion also reflect the substantial time needed to discover and explain the problems and failures. Consequently, the court finds nothing inherently unreasonable in the large numbers of hours submitted for these matters.

*6 The court further finds the time requested for the tasks in Disputes 8, 19, 25, 28, 33, and 37-39 is not unreasonable. In particular, HM has adequately explained why certain hours that might otherwise appear excessive are not under the circumstances, and why certain entries that appeared erroneous or otherwise unwarranted are not. See Supp. Ciardullo Decl., Ex. A.

As for Dispute 18, HM has not adequately addressed OS's stated concern. The court does not doubt the necessity of the work, but as the need for a conference of this length is unclear, the court should reduce the time in this entry by half, and thus subtract $187.50 from the requested fee award.

HM has explained the hours in Dispute 27, but they nonetheless appear excessive as explained. The court should award fees for only 2 hours for this entry, and thus subtract $777 from the requested fee award.

Disputes 29-31 concern a combined 4 hours requested for work serving third party subpoenas. Although the court appreciates HM's explanation of the problems encountered, the court should reduce hours by 25%, or one hour, to reflect a more reasonable amount of time. As such, the court should subtract $555 from the requested fee award.

HM agrees to waive the fee in Dispute 35. Accordingly, $88.50 should be subtracted from the requested fee award.

OS expresses concern that the entries in Disputes 36, 37, and 38 (like Dispute 35) relate to HM's decision to change forensic experts. The court agrees hours spent making that decision should not be included. But based on HM's explanation and the entries themselves, it appears Disputes 37 and 38 relate only to the forensic work done by the second vendor, not the change, and the same is at least partly true for the entry in Dispute 36. But as the entry in Dispute 36 also mentions vendor relocation, the time there should be reduced by half, and thus $189 should be subtracted from the requested fee order.

Finally, the court has taken a careful look at the fees HM requested in its Reply, as OS did not have a chance to review these fees. These fees consist of: (1) a previously unsubmitted entry from August 5, 2016 for $2,242 for 3.8 hours spent by Jean-Paul Ciardullo on the opposition to objections to the July 12, 2016 Report and Recommendation, which HM states was inadvertently omitted previously; (2) billing records from August 31 through September 16, 2016 for work done by Eion Connolly (22.2 hours)[3] and Mr. Ciardullo (4.1 hours) on the instant fee and costs briefing, totaling $9,634; and (3) estimated fees from October 2016 for work done on the instant fee and costs briefing by Mr. Connolly (1.3 hours) and Mr. Ciardullo (6.9 hours), totaling $4,491. See Supp. Ciardullo Decl. ¶¶ 14-16, Exs. 11-12.

In light of the opposition HM filed to the objections, and considering the additional 3.8 hours submitted along with the other billing records reflecting work on the opposition in July and August 2016, the court does not find the additional 3.8 hours to be excessive or unreasonable. The instant fee and costs briefing is an extension of the Sanctions Motion, and as HM could not reasonably have submitted most of these additional fees with its initial fee briefing, the court finds it appropriate to include these fees as well. But given the nature of the fee briefing and the uncertainty of the estimated time, the court should reduce Mr. Ciardullo's estimated time by half for reasonableness, and thus reduce the requested fee award by $2,035.50.

*7 Accordingly, the $271,093 in total requested fees by HM should be reduced by $8,198.70. Thus, monetary sanctions of $262,894.30 in fees should fairly be awarded to HM.

B. Costs

The only costs sought by HM are the $1,541.96 it paid to Setec Investigations for computer forensic work. See Ciardullo Decl. ¶ 39. HM also states it had an unresolved disagreement with Maryman & Associates – the first computer forensics vendor HM used – regarding Maryman's invoice, and asks that the award of forensic expenses be deferred until that dispute is resolved. Yet more than a year has passed since HM made that request, and the court is aware of no supplemental submission in this regard. OS objects to HM's request to defer the award of expenses, and argues it should not have to pay for expenses related to HM's decision to switch vendors. The court agrees with OS that the time to submit expenses has long passed, so the court should limit its costs award to costs incurred in retaining Setec.

Since HM should not be awarded its costs incurred in connection with Maryman's services, OS's objection to paying for the courier from Maryman to Setec makes no sense (see Dispute 41). Although as discussed above the court agrees as a general matter that OS should not have to pay for HM's decision to switch vendors, the $114.40 spent to have a courier ferry Maryman's work to Setec was presumably much less than HM paid Maryman for that work, and thus a bargain that should fairly be paid by OS. See Ciardullo Decl., Ex. 12 at 2.

In Dispute 40, OS objects to paying HM's half of a bill the parties agreed to split for additional load file creation. Although the parties agreed to split the bill at the time, this is certainly a part of the computer forensic work. As such, OS should be ordered to pay it.

Accordingly, the court should award HM the full costs it requests, $1,541.96.

III. RECOMMENDATION

IT IS THEREFORE RECOMMENDED that the District Court issue an Order approving and accepting this Report and Recommendation, and ordering that OS be ordered to pay monetary sanctions to HM in the total amount of $264,436.26, consisting of $262,895.30 in fees and $1,541.96 in costs.

Although HM states it seeks $271,115.70 in fees, this figure appears to be based on two arithmetical errors, namely, (1) understating Eoin Connolly's estimated fees for work on the instant Reply by $2.50, and (2) including an extra $25.20 in fees sought for Richard McKenna's work on the forensic collection. The court has corrected both these errors in the corresponding tables below.

Although the entries OS disputes are not numbered, the court refers to them by number in the order made. For example, the first disputed entry in Exhibit A to the Dillard Declaration is dated October 2, 2015 and is referenced below as Dispute 1. For correlation purposes, the court notes: the entry of Dispute 10 is dated October 21, 2015; the entry of Dispute 20 is the second entry in Exhibit A dated November 16, 2015 and has timekeeper RJMC; the entry of Dispute 30 is dated January 22, 2016; and the entry of Dispute 40 is the first cost dispute, and is to an Invoice from Setec for $150.

The court notes the hours requested as set forth in the tables submitted with HM's reply indicate only 21 hours for Mr. Connolly, apparently excluding the 1.2 hours he billed on August 31, 2016. See Supp. Ciardullo Decl., Ex. B. The court does not know if this was intended by HM, but conservatively defers to its submission and thus has left this time (and the corresponding $390 in fees) out of its fee calculations and tables set forth above.