Full Tilt Boogie, LLC v. Kep Fortune, LLC
Full Tilt Boogie, LLC v. Kep Fortune, LLC
2021 WL 4527735 (C.D. Cal. 2021)
September 14, 2021

Scott, Karen E.,  United States Magistrate Judge

Cost Recovery
Sanctions
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Summary
The Magistrate Judge granted the Plaintiff's ex parte application to shorten time to hear a motion to compel Defendants to provide further responses to discovery. The District Court adopted the recommendation and granted the Motion to Compel, imposing certain evidentiary sanctions on KEP and awarding Plaintiff its reasonable costs incurred in connection with the Motion to Compel. The Court awarded Plaintiff $23,962 in attorney's fees, assessed only against KEP Fortune LLC.
Additional Decisions
FULL TILT BOOGIE LLC
v.
KEP FORTUNE LLC, et al
Case No. 2:19-cv-09090 ODW (KESx)
United States District Court, C.D. California
Filed September 14, 2021

Counsel

Ryan Andrew Ellis, Ryan Ellis Law, San Diego, CA, Jennifer Renee Lloyd, Howard and Howard Attorneys PLLC, Las Vegas, NV, Steven Edman Kish, III, Howard and Howard Attorneys PLLC, Beverly Hills, CA, for Full Tilt Boogie, LLC.
Ann Anooshian, Al Mohajerian, Mohajerian APC, Los Angeles, CA, for Kep Fortune, LLC, Jeroen BikToggle, Miray Bik.
Scott, Karen E., United States Magistrate Judge

PROCEEDINGS (IN CHAMBERS): Order GRANTING Plaintiff's Motion for Determination of Fees (Dkt. 97)

I. PROCEDURAL BACKGROUND.
*1 Full Tilt Boogie, LLC (“Plaintiff”) entered into a franchise agreement with KEP Fortune, LLC (“KEP”) and its principals, Jeroen and Miray Bik (collectively, “Defendants”) to operate a Klein, Epstein & Parker store selling made-to-order suits. In October 2019, Plaintiff sued Defendants, alleging that they failed to provide complete and truthful disclosures about the financial obligations of franchisees and breached the parties' franchise agreement. (Dkt 1.) After setting aside Defendants' default, Defendants counterclaimed alleging breach of the franchise agreement. (Dkt. 25, 28.)
On April 14, 2021, Plaintiff filed an ex parte application to shorten time to hear a motion to compel Defendants to provide further responses to discovery. (Dkt. 44, 45 [proposed motion].) On April 28, the Magistrate Judge conducted a telephonic hearing and suggested strategies for pausing case management deadlines, exchanging additional discovery, and pursuing mediation. (Dkt. 53.) The parties conferred again with the Magistrate Judge on May 10, 2021. (Dkt. 60.) Observing no substantial progress, the Magistrate Judge granted the ex parte application to shorten time and set a briefing schedule for Plaintiff's motion. (Id.)
As directed, Plaintiff filed an updated motion on May 14 (Dkt. 62 [the “Motion to Compel”]), which Defendants opposed (Dkt. 66 [the “Opposition”]). Plaintiff filed a reply on May 26 (Dkt. 70 [the “Reply”]). The Motion to Compel sought to compel KEP to (1) supplement its interrogatory (“ROG”) responses and (2) produce additional documents. (Dkt. 62 at 2.) The Motion to Compel also sought sanctions in the form of entering a default judgment against Defendants and striking their crossclaims and counterclaims. (Id. at 25–26.) Alternatively, the Motion to Compel sought an adverse inference jury instruction, which would presume that “any missing documents would prove Full Tilt's claims” and/or an order prohibiting Defendants “from relying on any evidence they have not produced in discovery.” (Id. at 26.) The Motion to Compel also sought recovery of the fees and costs Plaintiff reasonably incurred to bring the Motion to Compel and ex parte application. (Dkt. 62-16 [proposed order].)
On June 9, 2021, the Magistrate Judge issued a Report and Recommendation “R&R”), recommending inter alia that the District Court issue an order (1) granting Plaintiff's Motion to Compel further discovery; (2) imposing certain evidentiary sanctions on KEP; and (3) awarding Plaintiff its reasonable costs incurred in connection with the Motion to Compel. (Dkt. 72.) Specifically, the Court found that because “KEP's position in resisting discovery was not substantially justified, Plaintiff may recover the reasonable costs Plaintiff incurred in connection with the ex parte application, stipulated protective order, and the instant motion.” (Id. at 24.) Further, if the parties “cannot agree on the reasonable amount of Plaintiff's fees and costs, then Plaintiff may file its letter brief with the Court and include time spent drafting the letter brief and conferring with counsel.” (Id. at 24–25.)
*2 On July 1, 2021, after reviewing the parties' papers, the R&R, and Defendants' objections, the District Court adopted the R&R, granted Plaintiff's Motion to Compel, imposed certain evidentiary sanctions on KEP, and directed the parties to meet and confer regarding Plaintiff's reasonable fees and costs. (Dkt. 80.)
On July 22, 2021, after the parties were unable to agree on Plaintiff's reasonable fees and costs, Plaintiff filed its Motion for Determination of Fees. (Dkt. 97 [“Fee Motion”].) On August 12, 2021, Defendants filed their Opposition. (Dkt. 125.) On August 19, 2021, Plaintiff filed a Reply.[1] (Dkt. 138.) A telephonic hearing was held on September 2, 2021. (Dkt. 156.) For the reasons stated herein, the Fee Motion is GRANTED.
II. LEGAL STANDARD.
Rule 37(a)(5)(A) provides as follows:
If the motion is granted, ... the court must, after giving an opportunity to be heard, require the party or deponent whose conduct necessitated the motion, the party or attorney advising that conduct, or both to pay the movant's reasonable expenses incurred in making the motion, including attorney's fees.
As set forth above, the Court determined in its June 9, 2021 R&R that Defendants' “position in resisting discovery was not substantially justified.” (Dkt. 72 at 24; accord Dkt. 80.)
Accordingly, having given Defendants the opportunity to be heard at telephonic hearings on the Motion to Compel and the Fee Motion on April 28, May 10, and September 2, 2021, an expense award, “including attorney's fees,” is appropriate. Fed. R. Civ. P. 37(a)(5)(A). Reasonable attorneys' fees are based on the “lodestar” calculation set forth in Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). See Fischer v. SJB.P.D., Inc., 214 F.3d 1115, 1119 (9th Cir. 2000); Bird v. Wells Fargo Bank, 16-cv-01130, 2017 U.S. Dist. LEXIS 151629, at *3, 2017 WL 4123715, at *1 (E.D. Cal. Sep. 18, 2017) (“[D]istrict courts have applied lodestar when sanctions are appropriate under Rule 37.”). The Court must first determine a reasonable fee by multiplying “the number of hours reasonably expended on the litigation” by “a reasonable hourly rate.” Hensley, 461 U.S. at 433. “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 434). “The lodestar amount is presumptively the reasonable fee amount, and thus a multiplier may be used to adjust the lodestar amount upward or downward only in ‘rare’ and ‘exceptional’ cases, supported by both ‘specific evidence’ on the record and detailed findings by the lower courts that the lodestar amount is unreasonably low or unreasonably high.” Id. (citations omitted).
III. DISCUSSION.
Plaintiff seeks $23,962 in attorney's fees, calculated as follows. Steven E. Kish III, an associate with Howard & Howard, spent 44.1 hours preparing the initial drafts of the ex parte application, redlining the protective order,[2] and updating the motion to compel. (Dkt. 97-1 at 3.) In addition, Mr. Kish spent 3.5 hours preparing the letter brief. His rate is $295 per hour, resulting in a total of $14,042. (Dkt. 97 at 4–5.) Jennifer R. Lloyd, a partner with Howard & Howard, spent 23.5 hours with motion-related tasks, including reviewing, revising, finalizing, and approving Mr. Kish's work, along with preparing for and attending the hearings on the motion to compel. (Dkt. 97-1 at 3.) In addition, Ms. Lloyd spent 1.3 hours reviewing, revising, finalizing, and approving the letter brief; discussing the fee letter with Mr. Kish and directing his research; and meeting and conferring with Defendants' counsel. (Dkt. 97 at 5.) Her rate is $400 per hour, resulting in a total of $9,920.
*3 In opposing the Fee Motion, Defendants spend considerable time arguing again the merits of Plaintiff's motion to compel. (Dkt. 125 at 2–4.) But the Court has already considered Defendants' arguments and found that Defendants' position in resisting discovery was “not substantially justified.” (Dkt. 72 at 24.) Further, the Court found that “KEP's failure to provide required discovery in support of its counter-and cross-claims was neither justified nor harmless” and recommended several evidentiary sanctions. (Id.) Defendants made the same arguments in their objections to the R&R (Dkt. 79), which the District Court considered but ultimately rejected. (Dkt. 80.) Raising these same arguments is simply not relevant to the Fees Motion and the Court will not consider them again.
Defendants also vaguely contend that the amount of fees requested is “unreasonable.” (Dkt. 125 at 4–8.) While Defendants do not dispute the hourly rate charged by either Mr. Kish or Ms. Lloyd,[3] they argue that “an associate is not required to spend 44 hours ... composing a brief ex parte application and motion to compel, which did not require extensive consideration other than the single document demand at issue ... [and] the additional 10 hours spent by counsel Jennifer Lloyd, is also unnecessary and not reasonable.” (Id. at 6.) But Defendants provide no further analysis to support their mere opinion on how long it should take to prepare the ex parte application, stipulated protective order, the motion to compel, and the letter brief.
The Court finds that the time spent on the motion to compel and related filings was reasonable. Courts “should defer to the winning lawyer's professional judgment as to how much time [she] was required to spend on the case; after all, [she] won, and might not have, had [she] been more of a slacker.” Moreno v. City of Sacramento, 534 F.3d 1106, 1112 (9th Cir. 2008). “An attorney's sworn testimony that, in fact, it took the time claimed is evidence of considerable weight on the issue of the time required.” Blackwell v. Foley, 724 F. Supp. 2d 1068, 1081 (N.D. Cal. 2010) (citation omitted). Indeed, to reduce the number of hours submitted, “it must appear that the time claimed is obviously and convincingly excessive under the circumstances.” Id. (citation omitted). Here, the number of hours submitted by Plaintiff is not obviously or convincingly excessive. Other California federal courts have found similar fees reasonable for Rule 37 sanctions. See, e.g., Abraxis Bioscience, LLC v. Sabyent, Inc., No. CV 10-2255-GW (SHX), 2011 WL 13214013, at *2, 2011 U.S. Dist. LEXIS 162990, at *6 (C.D. Cal. July 26, 2011) (awarding $50,608 in sanctions for a Rule 37 violation); Prasad v. Cty. of Sutter, No. 2:12-CV-00592, 2013 WL 3773894, at *4, 2013 U.S. Dist. LEXIS 100085, at *11 (E.D. Cal. July 17, 2013) (awarding $18,022.50 in sanctions for a Rule 37 violation); Youngevity Int'l, Corp. v. Smith, No. 16-CV-00704, 2018 WL 2113238, at *9, 2018 U.S. Dist. LEXIS 77659, at *31 (S.D. Cal. May 7, 2018) (awarding $17,698.03 in sanctions for a Rule 37 violation).
The Fee Motion requests the Court to assess the fees only against KEP Fortune LLC. (Dkt. 97 at 2; Dkt. 97-4 at 3.) However, for the first time in its Reply and at the hearing, Plaintiff requests the Court to assess the fees “jointly and severally against KEP and Mr. Mohajerian,” Defendants' counsel. (Dkt. 138 at 9–10.) Since parties are prohibited from making new arguments in a reply brief, the Court declines to consider whether counsel should be jointly and severally liable because counsel did not have an opportunity to respond in his Opposition. See Youngevity Int'l, Corp. v. Smith, No. 3:16-CV-704, 2021 WL 2559699, at *4, 2021 U.S. Dist. LEXIS 118555, at *16–17 (S.D. Cal. Apr. 27, 2021) (declining to assess fees jointly and severally where argument first raised in reply brief); see also Cedano-Viera v. Ashcroft, 324 F.3d 1062, 1066 n.5 (9th Cir. 2003) (“we decline to consider new issues raised for the first time in a reply brief”).
IV. ORDER.
*4 Based on the above, KEP Fortune LLC is ORDERED to pay Plaintiff a sanctions award of $23,962 pursuant to Rule 37. Payment shall be made within 30 days of this Order.


Footnotes

On July 30, 2021, Plaintiff filed a Motion to Further Compel, arguing that Defendants failed to provide the discovery as ordered on July 1, 2021. (Dkt. 104.)
While generally courts do not award fees to a party for editing the opposing party's proposed protective order, here Defendants did not work with Plaintiff in good faith to timely submit a proposed stipulated protective order. Defendants failed to provide Plaintiff with a draft protective order despite refusing to produce documents until a protective order was in place. (Dkt. 44-1 ¶¶ 17–19.) At the April 28, 2021 discovery status conference, Defendants agreed to work with Plaintiff to file a proposed stipulated protective order by April 30. (Dkt. 62-13 at 33.) However, after exchanging drafts on April 28 and 29, Defendants' counsel stopped responding to Plaintiff's counsel. (Dkt. 62-1 ¶¶ 26–27.)
Courts in this district have found that a rate of $450 per hour “is reasonable.” Sandoval v. Yeter, No. CV180867CBMJPRX, 2019 WL 7905731, at *3, 2019 U.S. Dist. LEXIS 227406, at *8 (C.D. Cal. Oct. 31, 2019) (“the requested rate of $450, which has not specifically been challenged, is reasonable”) (collecting cases).