Hullinger v. Anand
Hullinger v. Anand
2017 WL 11670140 (C.D. Cal. 2017)
March 31, 2017
Mumm, Frederick F., United States Magistrate Judge
Summary
The Court found that Defendants had failed to comply with Court orders regarding Electronically Stored Information, and ordered Plaintiffs to be reimbursed for all fees and expenses incurred as a result. This included reimbursement for time spent preparing for the evidentiary hearing, the hearing itself, and post-hearing written summations, as well as expenses such as transcripts and graphics consultants.
Additional Decisions
JASON HULLINGER, an individual, et al., Plaintiffs,
v.
KUNAL ANAND, an individual, et al., Defendants
v.
KUNAL ANAND, an individual, et al., Defendants
No. CV 15-7185 SJO (FFMx)
United States District Court, C.D. California
Filed March 31, 2017
Counsel
Bassil George Madanat, Guy Ruttenberg, Ruttenberg IP Law APC, Los Angeles, CA, for Plaintiffs Jason Hullinger, Benjamin de Bont, Agora Systems, LLC.Jean Young Rhee, Marc A. Fenster, Brian D. Ledahl, Paul A. Kroeger, Matthew Alan Rips, Russ August and Kabat LLP, Douglas Eugene Hewlett, Jr., Arent Fox LLP, Los Angeles, CA, for Defendants Kunal Anand, Julien Bellanger, Jamie McNeil.
Allan E. Anderson, Jerrold E. Abeles, Arent Fox LLP, Jean Young Rhee, Marc A. Fenster, Brian D. Ledahl, Paul A. Kroeger, Matthew Alan Rips, Russ August and Kabat LLP, Los Angeles, CA, for Defendant Prevoty, Inc.
Franjo M. Dolenac, Jerrold E. Abeles, Douglas Eugene Hewlett, Jr., Arent Fox LLP, Los Angeles, CA, for Defendants Michael Stern, Adam Lilling, LP Plus Capital, Plus Ventures TMG I, LLC, GP Plus Ventures Gee, Launchpad LA, LLC, Launchpad LA Fund II, LP, Sam Teller.
Franjo M. Dolenac, Jerrold E. Abeles, Arent Fox LLP, Los Angeles, CA, for Defendant Dan Kaminsky.
Charles E. Tillage, Stephen A. Scott, Hayes Scott Bonino Ellingson and McLay LLP, Redwood Shores, CA, Dara M. Tang, Hayes Scott Bonino Ellingson Guslani Simonson & Clause, LLP, San Carlos, CA, for Defendants US Venture Partners, XI, LP, U.S. Venture Partners.
Talya Goldfinger, Susan Allison, Jeffer Mangels Butler and Mitchell LLP, Los Angeles, CA, for Defendant Karlin Ventures, LLC.
Mumm, Frederick F., United States Magistrate Judge
ORDER RE AMOUNT OF MONETARY SANCTIONS AWARDED AGAINST DEFENDANTS KUNAL ANAND, JULIEN BELLANGER AND PREVOTY, INC. FOR DISOBEYING DISCOVERY ORDERS
*1 On June 1, 2016, the Court held an evidentiary hearing on the request of plaintiffs Jason Hullinger, Benjamin De Bont, and Agora Systems, LLC (“Plaintiffs”) for sanctions against defendants Kunal Anand, Julien Bellanger, and Prevoty, Inc. (“Defendants”) for alleged disobedience of three Court orders. After considering the testimony and other evidence presented at the hearing and the subsequent submissions of the parties, the Court found that Defendants had failed to comply with the Court's orders dated January 25, 2016 and March 16, 2016 and that such failure was without substantial justification.
The Court further concluded that Plaintiffs should be reimbursed for all the fees and expenses they incurred in trying to enforce such orders. In addition, the Court concluded that Plaintiffs should be reimbursed for any fees and expenses they incurred after the entry of the order that resulted from Defendants' inadequate responses (e.g., vendor fees incurred in trying to fix the load files produced by Defendants, etc.).
Thereafter, Plaintiffs filed their statement of fees and expenses; Defendants filed a response to Plaintiffs' statement. On November 3, 2016, Plaintiffs filed a supplement to their fee statement; Defendants filed their response on November 16, 2016. After reviewing the documents filed by the parties, the Court ordered Plaintiffs to submit a declaration verifying the accuracy of the hourly rates and amount of time charged for each activity identified in Plaintiffs' itemizations. The Court also ordered Plaintiffs to submit authenticated copies of the invoices provided by counsel to Plaintiffs to the extent any such invoices have been provided to Plaintiffs. To the extent counsel had not provided invoices to Plaintiffs, counsel were directed to submit to the Court, in camera, an explanation of their compensation agreement with Plaintiffs. Plaintiffs provided their response to the Court's order on January 23, 2017. Defendants filed their response on January 30, 2017.
Among other things, Defendants objected to the in camera submission, contending that a party's fee arrangement is not protected by the attorney/client privilege and that the submission creates a secret proceeding to which Defendants were not privy. Given Defendants' objection, the Court directed Plaintiffs to either serve a copy of their in camera submission on Defendants or file a written response to Defendants' objection. Plaintiffs thereafter served a copy of their in camera submission on Defendants. Defendants thereafter filed a response to Plaintiffs' submission.
After reviewing all the documents filed by the parties, the Court concludes that a fee in the amount of $134,106.98 will reasonably compensate Plaintiffs for the additional expenses they incurred as a result of Defendants' failure to comply with the Court's discovery orders, for the reasons stated below.
I. DEFENDANTS' GENERAL OBJECTIONS
Defendants have generally objected that Plaintiffs did not timely submit evidence of their fees and that they have not provided sufficient authentication of the fees they are requesting. Both of these objections are overruled. Defendants' contention that Plaintiffs should have submitted evidence of their fees at the June 1, 2016 hearing is misplaced. The Court directed the parties to address at the hearing (or in the post hearing summations) “what sanctions” would be appropriate, i.e., issue, evidence, monetary or other sanctions, not the amount of monetary sanctions. The Court also concludes that Plaintiffs have sufficiently authenticated their time records, expense records, and billing rates.
*2 Defendants also object that because Plaintiffs' counsel has a contingency agreement with Plaintiffs, Plaintiffs have not actually incurred any additional fees because of Defendants' discovery abuse. Sanctions pursuant to Rule 37 of the Federal Rules of Civil Procedure may be imposed regardless of the fee arrangement between counsel and his client. See, e.g., Haeger v. Goodyear Tire and Rubber Co., 906 F.Supp.2d 938, 972 n.23 (D.Arix. 2012); Monaghan v. SZS 33 Assoc., L.P., 154 F.R.D. 78 (S.D.N.Y. 1994); Jenkins v. Toyota, Japan, 106 F.R.D. 185, 186 (WD.N.Y.); see also Gotro v. R&B Realty Group, 69 F.3d 1485, 1487-88 (9th Cir. 1995) (statute permitting recovery of “actual expenses ... incurred” does not preclude recovery by contingency fee litigant not otherwise obligated to pay). Therefore, Defendants' objection is overruled.
II. CALCULATION OF AN APPROPRIATE FEE
Plaintiffs have divided their request into eight categories in their August 29, 2016 submission. They also added an additional category in their November 3, 2016 supplemental submission. The Court will address the categories requested by Plaintiffs seriatim.
1. First Motion to Enforce Briefing Round
The Court deducts from the entry for February 17, 2016, $400 for time spent to “try to locate service address for investors Stern, Daher and others for whom S. Scott will not accept service.” The Court finds that this time is not recoverable as fees incurred in obtaining compliance with the Court's orders.
The Court deducts from the entry for March 28, 2016, $450 for time spent by DM in reviewing procedures for filing documents under seal and $250 for time spent by WS doing the same.
The Court finds the remainder of the time requested to be appropriate.
CATEGORY ONE - $11,730.90 requested; $10,630.90 allowed.
2. Second Motion to Enforce Briefing Round
The Court finds the allocations made by Plaintiffs to be reasonable.
CATEGORY TWO - $17,155.00 requested; $17,155.00 allowed.
3. May 10, 2016 Hearing
This hearing was scheduled for argument on a motion for protective order. Although the Court briefly discussed the setting of the evidentiary hearing on the sanctions motions, the Court finds that no portion of the fees requested for this category is recoverable as fees incurred in obtaining compliance with the Court's orders.
CATEGORY THREE - $7,766.17 requested; $0.00 allowed.
4. Pre-June 1, 2016 Evidentiary Hearing Document Exchanges and Preparations
Plaintiffs seek reimbursement for 70.4 hours of Mr. Ma's time; 19.8 hours of Mr. Ruttenberg's time; and 28.7 hours of paralegal time. Defendants argue that this amount of time is excessive for preparation for a one day evidentiary hearing that lasted just over five hours. The Court agrees that essentially 20 hours of lawyer time for preparation for each hour of testimony or argument should not all be charged to Defendants. The Court will allow recovery of 35 hours for Mr. Ma's time ($15,750); 10 hours of Mr. Ruttenberg's time ($5,500) and all of the paralegal's time (28.7 hours or $5,596.50).
With respect to expenses, Defendants object that Plaintiffs' May 22, 2016 entry for transcripts includes the transcript for the March 8, 2016 hearing on Plaintiffs' motions to compel. Defendants contend that the matters discussed at those hearings were not included in the subjects of the evidentiary hearing. The Court finds, to the contrary, that the second motion for sanctions addressed at the evidentiary hearing concerned Defendants' failure to provide Plaintiffs with the metadata required by the order granting one of the motions heard on March 8, 2016. As such, the Court finds the expense for the transcript of the hearing to be reimbursable.
*3 Defendants also contend that an invoice for delivery of documents to Judge Otero should not be reimbursed. The Court agrees and deducts $57 from the expense request submitted by Plaintiffs. Defendants other objections to the expense request for this category are overruled.
CATEGORY FOUR - $55,627.45 requested; $28,309 ($26,846.50 attorneys' fees and $7,678.95 expenses) allowed.
5. June 1, 2016 Evidentiary Hearing
Plaintiffs' two primary attorneys charged 9.1 hours each for the day of the evidentiary hearing. Plaintiffs' paralegal also charged 9 hours. Defendants complain that that time probably includes two hours of delay (which included the lunch break) created by Plaintiffs' decision to submit a lengthy exhibit, a hard copy of which had been provided neither to Defendants nor the Court. Presumably, Plaintiffs counsel were reviewing materials in preparation for the afternoon session during any portion of this time that they billed. The Court finds it reasonable for Plaintiffs to have two attorneys and a paralegal working on the case during the hearing. The Court further finds that 9.1 hours per attorney is reasonable.
Defendants also contend that an expense requested by Plaintiffs for a graphics consultant for the hearing ($4,124.50) is unreasonable. Plaintiffs effectively used graphics at the hearing to facilitate their presentation. The Court finds the expense to have been incurred reasonably.
CATEGORY FIVE - $18,812.73 requested; $18,812.73 allowed.
6. Evidentiary Objections after the June 1, 2016 Hearing
Defendants object to the amount of time spent by Plaintiffs in preparing objections and responding to Defendants' objections. Defendants also object to the preparation of a declaration in response to a post hearing declaration filed by Defendants, claiming that the Court did not authorize the declaration. Finally, Defendants contend that Plaintiffs should not be reimbursed for time seeking an extension of time to file their response to Defendants' objections. The objections are overruled.
First, Defendants filed objections and a new declaration containing matter that Defendants had not raised at the hearing that altogether encompased 79 pages. Plaintiffs replied in detail to each of the objections and submitted a declaration that put in context some of the factual assertions made by Defendants in their declaration. Given the intricate nature of some of the objections and responses it was not unreasonable for Plaintiffs to have incurred the time they did.
Second, the Court had offered Plaintiffs the opportunity to respond to Defendants objections and finds Plaintiffs' response to be within the Court's authorization.
Third, Plaintiffs requested two extra days to file their response because the Court's website was malfunctioning, which prevented Plaintiffs from downloading Defendants' objections for two days. The Court finds this time to be reimbursable.
CATEGORY SIX - $22,667.30 requested; $22,667.30 allowed.
7. Post-hearing Written Summations
Defendants contend that Plaintiffs' request is inconsistent with an earlier declaration by Mr. Ma that demonstrated that Mr. Ma had spent more time preparing the summations than Plaintiffs are requesting herein. This objection is overruled. Plaintiffs did not seek reimbursement for all of the time Mr. Ma spent on the written summations.
*4 Defendants also contend that Plaintiffs simply spent too much time working on the summations. The Court finds the time spent to be reasonable, except for two duplicate entries for Mr. Ma on July 27 and July 28. The Court deducts $4,371 for the duplicate entries.
CATEGORY SEVEN - $35,395.80 requested; $31,024.80 allowed.
8. Other Fees and Expenses
Defendants object that Plaintiffs are seeking reimbursement for items not contemplated by the Court's order. These items include time spent in attempting to serve process and time spent reviewing new document productions. The Court sustains these objections, except as to the entries on April 5 ( $487.50) and April 6 ($1,963.50), which document additional time that counsel had to spend on the document productions in attempting to obtain Defendants' compliance with the Court's orders.
With respect to the expenses requested, Defendants object that they include fees for service of process fees and consultant fees that are not shown to be for services occasioned by Defendants' failure to comply with the Court's orders. The objection to the service of process fees is sustained; the objections to the consultant fees is sustained as to the entries for May 12, 2016; May 17, 2016; May 18, 2016; May 20, 2016; and May 23, 2016. These entries appear to relate to productions by third parties.
CATEGORY EIGHT - $12,938,88 requested; $5,994.75 approved.
9. Plaintiffs' Supplemental Request
Plaintiffs seek reimbursement for costs incurred post filing of their fee statement related to their reviewing and processing metadata and their opposing Defendants' motion for review of the sanctions order. Defendants argue that processing their document production is simply a cost of litigation and not an expense occasioned by their failure to comply with the Court's orders. Defendants also argue that costs incurred in opposing a motion for review are outside the ambit of the sanctions order.
The Court finds it inappropriate to award fees pursuant to the supplemental request. The September fees incurred in handling Defendants' post hearing production relate primarily to reviewing and processing that Plaintiffs have not shown resulted from Defendants' misbehavior. With respect to the opposition of the motion for review, Judge Otero found Defendants' tactics to be abusive, but did not order the recovery of any fees. Therefore, the Court finds it inappropriate to order fees now.
CATEGORY NINE - $24,181.50 requested; $0 approved.
III. CONCLUSION
Defendants Kunal Anand, Julien Bellanger, and Prevoty, Inc., and each of them, are ordered to pay to Plaintiffs $134,594.48 within 30 days of the entry of this order.