BlueRadios, Inc. v. Kopin Corp.
BlueRadios, Inc. v. Kopin Corp.
2022 WL 17976672 (D. Colo. 2022)
September 16, 2022

Kane, John L.,  Senior United States District Judge

General Objections
Third Party Subpoena
Sanctions
Proportionality
Cost-shifting
Possession Custody Control
Search Terms
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Summary
The court found that HBSR had incurred significant expenses in responding to the Second Subpoena and shifted half the requested attorney fees and all other costs of production to BlueRadios. BlueRadios also agreed to pay the vendor costs associated with searching for, collecting, and producing responsive documents, making HBSR's burden from compliance with the Second Subpoena relatively insignificant.
Additional Decisions
BLUERADIOS, INC., a Colorado corporation, Plaintiff,
v.
KOPIN CORPORATION, INC., a Delaware corporation, Defendant
Civil Action No. 1:16-cv-02052-JLK
United States District Court, D. Colorado
Signed September 16, 2022

Counsel

David Brian Seserman, Seserman Law, LLC, Joseph E. Kovarik, Sheridan Ross, P.C., Denver, CO, Lena Streisand, Jeffer Mangels Butler & Mitchell LLP, Stanley Martin Gibson, Jeffer Mangels Butler & Marmaro LLP, Los Angeles, CA, for Plaintiff.
Ehsun Forghany, Morgan Lewis & Bockius LLP, Palo Alto, CA, Joshua M. Dalton, Morgan Lewis & Bockius LLP, Boston, MA, Julie Sarah Goldemberg, Morgan Lewis & Bockius LLP, Philadelphia, PA, Kandis C. Gibson, Morgan Lewis & Bockius LLP, Washington, DC, Kathryn Ann Feiereisel, Faegre Drinker Biddle & Reath LLP, Chicago, IL, Mark Stephen Peloquin, Peloquin, PLLC, Seattle, WA, Stephen B. Rotter, Denver, CO, for Defendant.
Kane, John L., Senior United States District Judge

ORDER GRANTING IN PART HAMILTON, BROOK, SMITH & REYNOLDS, P.C.’S MOTION FOR ATTORNEY'S FEES AND COSTS (ECF NO. 323)

*1 Nonparty Hamilton, Brook, Smith & Reynolds, P.C. (“HBSR”) filed the present Motion for Attorney's[1] Fees and Costs (ECF No. 323) seeking expenses incurred in responding to Plaintiff BlueRadios Inc.’s (“BlueRadios”) second subpoena duces tecum. BlueRadios has filed a response and a sur-response (ECF Nos. 348, 381). HBSR has replied (ECF No. 357).[2] For the reasons stated below, HBSR's motion is granted in part.
BACKGROUND
HBSR entered its appearance in this matter as counsel for Defendant Kopin Corporation, Inc. (“Kopin”). In early 2017, I disqualified HBSR after finding it conflicted due to its relationship with BlueRadios pursuant to the parties’ collaborative agreement, embodied by the Contract and Addendum. See Order Granting Pl.’s Mot. to Disqualify Def.’s Counsel at 8, ECF No. 38.[3]
BlueRadios first served HBSR with a subpoena duces tecum in March 2018. See 3/21/18 Subpoena Duces Tecum, ECF No. 153-2. The first subpoena requested “all documents and communications regarding Golden-i Technology or BlueRadios Technology,” and specifically identifies three patents and eleven patent applications. Id. at 5-6, 14. HBSR objected, stating “BlueRadios’ requests were overbroad, vague, ambiguous, and/or unduly burdensome.” HBSR's Opp. to Pl.s’ Mot. for Order to Show Cause (“Response to Show Cause Motion”) at 4, ECF No. 153. Nevertheless, HBSR did not move to quash or modify the subpoena.
In response to the subpoena, HBSR only conducted a search of its traditional case files and, consequently, approximately 80% of its production consisted of publicly available patent filings. See Motion Requesting the Court Issue an Order to Show Cause to Nonparty HBSR Why it Should Not be Held in Contempt of Court and For Contempt Sanctions Pursuant to Rule 45(d)(2)(B)(i) and 45(g) (“Show Cause Motion”) at 2-3, ECF No. 137. HBSR and BlueRadios could not agree on the proper scope of a “case file,” or whether BlueRadios had limited its request to HBSR's case files in the first place. Resp. to Show Cause Mot. at 5. BlueRadios maintained that the purpose of the subpoena was to seek production of email correspondence and other electronically stored information (“ESI”) related to HBSR's patent prosecution. See Show Cause Mot. at 2-5. It insisted the ESI was “highly relevant” and HBSR's intentional exclusion of the information from production “defie[d] common sense.” Id. at 4.
*2 In a renewed effort to obtain relevant ESI, BlueRadios served HBSR with a second subpoena on October 25, 2018. See 10/25/18 Subpoena Duces Tecum (“Second Subpoena”), ECF No. 306-1. The Second Subpoena sought “all documents and communications within HBSR's hard and electronic files” related to 30 patent applications by using 81 search terms in a search of laptops and all current and archived system folders, drives, and email accounts associated with 11 custodians. Second Subpoena at 12-13. HBSR objected on the grounds that the requests were overly broad, unduly burdensome, and called for disclosure of proprietary or confidential information. Obj. to Second Subpoena at 5, ECF No. 153-11.
In early 2019, BlueRadios filed a Show Cause Motion relating to the Second Subpoena. HBSR responded by informing the court of the substantial costs associated with BlueRadios’ request. An initial search pursuant to BlueRadios’ proposed ESI search protocol resulted in approximately 160,000 potentially responsive documents. See Resp. to Show Cause Motion at 6. According to HBSR, it was not capable of reviewing a production of that size for responsiveness and privilege in-house and would therefore need to contract with “outside counsel, contract attorneys, or both.” Id. HBSR solicited estimates for these services from outside service providers and was informed the cost would range from $225,000 to over $400,000. See id. at 9-10.
After the Show Cause Motion was fully briefed—including a supplemental reply and a response to the supplemental reply—I ordered the parties to confer and attempt to resolve their remaining discovery disputes, and to submit a joint status report reflecting the results of the conferral. See 4/10/19 Order Re Show Cause Mot. at 3, ECF No. 181. At some point in their negotiations, BlueRadios suggested a revised ESI search protocol that reduced the number of custodians to seven and replaced the 81 separate search terms with four conjunctive search phrases. See 6/11/19 Joint Status Rep. at 2, ECF No. 210. Shortly after HBSR and BlueRadios submitted their fourth status report, I issued an order resolving three remaining disputes. See 6/17/19 Order Re Show Cause Mot. (“Discovery Order”), ECF No. 211.
The third discovery dispute addressed in the Discovery Order concerned the costs associated with the Second Subpoena. As with its prior production, BlueRadios agreed to pay “the vendor costs associated with searching for, collecting, and producing responsive documents,” but asserted it should not have to pay the cost associated with attorney review because it was not a reasonable expense. 6/11/19 Joint Status Rep. at 4, 14. For a second time, I explained it was “unreasonable to expect HBSR to turn over documents containing potentially irrelevant or privileged information without first conducting its own review.” Discovery Order at 4. I acknowledged the fee-shifting provision found in Federal Rule of Civil Procedure 45(d)(2)(B)(ii) and indicated I was inclined to split any reasonable expenses upon a determination that neither party “is significantly more able to bear the expense,” and upon the assumption that doing so would render the costs to HBSR “relatively insignificant.” Discovery Order at 6 (quoting New Mexico Oncology & Hematology Consultants, Ltd. v. Presbyterian Healthcare Servs., No. CV 12-526 MV/GBW, 2016 WL 10296569, at *2 (D.N.M. May 11, 2016)). I also advised HBSR to “be prudent in establishing its review process and conduct its review as efficiently as possible to keep the total expense reasonable.” Id.
Pursuant to the Discovery Order, HBSR produced an electronic file of over 19,000 documents (more than 100,000 pages) in February 2020 and supplemented the production with approximately 290 more documents (nearly 10,000 pages) in April 2020. Following two additional court-ordered joint status reports, BlueRadios filed a Motion to Compel HBSR to Produce Documents (ECF No. 305). HBSR filed the present motion before BlueRadios’ Motion to Compel was fully briefed. It relates only to attorney fees and costs incurred by HBSR “in responding to and complying with BlueRadios’ second subpoena and the Court's order modifying it.” Mot. for Atty. Fees at 1.[4] HBSR seeks $217,097.65 in attorney fees and $1,824.57 in costs. Id.
LEGAL STANDARD
*3 Federal Rule of Civil Procedure 45 governs subpoenas for the production of documents, known as subpoenas duces tecum. When a court orders a nonparty to comply with a subpoena duces tecum over their objection, it “must protect” that party “from significant expense resulting from compliance.” Fed. R. Civ. P. 45(d)(2)(B)(ii). To do so, the court must determine which expenses were incurred in response to the subpoena and whether those expenses are significant. See Linder v. Calero-Portocarrero, 251 F.3d 178, 182 (D.C. Cir. 2001). If the expenses are significant, the court must order the requesting party to bear enough of the expense to render the remainder insignificant. Id. “Application of the rule is mandatory.” Rhea v. Apache Corp., 833 F. App'x 186, 190 (10th Cir. 2020) (unpublished).
“Protection from significant expense does not mean that the requesting party necessarily must bear the entire cost of compliance,” however. Linder v. Calero-Portocarrero, 180 F.R.D. 168, 177 (D.D.C. 1998) (alteration and citation omitted). “A non[ ]party can be required to bear some or all of its expense where the equities of a particular case demand it.” In re Honeywell Int'l, Inc. Sec. Litig., 230 F.R.D. 293, 303 (S.D.N.Y. 2003) (alteration and citation omitted). In balancing the equities to determine whether the cost of compliance with a subpoena is significant, courts generally consider three factors: “(1) whether the nonparty has an interest in the outcome of the case; (2) whether the nonparty can more readily bear its costs than the requesting party; and (3) whether the litigation is of public importance.” Crandall v. City & Cnty. of Denver, Colorado, No. 05-cv-00242-MSK-MEH, 2007 WL 162743, at *1 (D. Colo. Jan. 17, 2007) (citing Linder, 251 F.3d at 182); see also Simon v. United States, No. 15-cv-00538-REB-KMT, 2017 WL 10541425, at *2 (D. Colo. Mar. 8, 2017). The party seeking reimbursement “ha[s] the burden of establishing the existence and reasonableness of the costs or fees incurred.” In re Application of Michael Wilson & Partners, Ltd., No. 06-cv-02575-MSK-KMT, 2012 WL 1901217, at *4 (D. Colo. May 24, 2012), aff'd 520 F. App'x 736 (10th Cir. 2013).
DISCUSSION
As an initial matter, I find that HBSR's claimed costs and fees were incurred pursuant to its review for irrelevant or privileged information in response to the Second Subpoena. See Ex. C to Mot. for Atty. Fees, ECF No. 323-3. The expenses include attorney document review, conferrals between counsel, client consultation, preparation of six status reports, and preparation of a privilege log. Expenses such as these “are often the most significant burdens of subpoena compliance” and they are recoverable though a Rule 45 motion. New Mexico Oncology, 2016 WL 10296569, at *1.
I further find there was “significant expense resulting from compliance.” Fed. R. Civ. P. 45(d)(2)(B)(ii). The attorney fees at issue exceed $200,000. This amount is significant. It is therefore incumbent upon me to order BlueRadios to shoulder enough of the expense as to render the remainder “relatively insignificant” within the context of this case. New Mexico Oncology, 2016 WL 10296569, at *2.
I first balance three factors to determine the extent to which nonparty HBSR must be protected under Rule 45: (1) whether HBSR has an interest in the outcome of this case; (2) whether HBSR can more readily bear the costs than BlueRadios; and (3) the public importance of the underlying lawsuit. I then address a fourth factor: (4) whether HBSR has met its burden of establishing that the requested fees and costs are reasonable. I consider the factors seriatim below and conclude half the requested attorney fees and all other costs of production must be shifted to BlueRadios to render HBSR's portion relatively insignificant.
*4 First, HBSR is readily distinguished from the classic disinterested party with no relationship to the underlying dispute. HBSR first entered its appearance on behalf of Kopin, BlueRadios’ adversary in this litigation. In a 2018 hearing, Kopin testified that HBSR had been its attorney since 1989 and had “earned Kopin's trust that [it] will give zealous and loyal representation and counsel.” 4/6/18 Hr'g Tr. at 7:18-19, 10:1-3, ECF No. 109. As of the filing of the fee motion, one of HBSR's named partners, David Brook, was Secretary of Kopin's Board of Directors and one of Kopin's largest shareholders. See Resp. to Mot. for Atty. Fees at 10-11.
BlueRadios’ claims have inculpated HBSR from the start. In its Complaint, BlueRadios alleges “Kopin has failed to handle prosecution of various patent applications covered by the Contract, including failing to properly identify the true inventors of such patent applications and/or improperly identifying Kopin as the assignee of all right, title and interest thereto.” Complaint ¶ 45, ECF No. 1. HBSR is the law firm representing Kopin “in preparing, filing, procuring and maintaining U.S. and international patent applications related to the Golden-i project.” Rader Rep. ¶ 62, ECF No. 234-12. Kopin confirmed as much when it stated that “[f]or patents related to this litigation, [HBSR's] lawyers determined inventorship.” Resp. to Interrog. No. 21, ECF No. 148-4.
Moreover, HBSR is now involved in litigation with BlueRadios related to the facts underlying this lawsuit. BlueRadios initiated a malpractice action against HBSR on March 22, 2021, after the filing of HBSR's Motion for Attorney Fees, see BlueRadios’ Notice of Filing of Legal Malpractice Case, ECF No. 371, but HBSR was aware of the likelihood of litigation well before October 2018, when the second subpoena was served. In December 2017, BlueRadios and HBSR entered into the first of seven tolling agreements through which they agreed to toll the statute of limitations or any other time bar to BlueRadios’ claims “arising out of acts and omissions in filing and prosecuting certain patent applications” as well as HBSR's conduct in this case. 12/5/17 Tolling Agreement at 1, ECF No. 348-5; see also Seserman Decl. ¶ 4, ECF No. 348-3. “[W]here a non[ ]party is involved in litigation arising out of the same facts of a case, the non[ ]party is not a truly disinterested party for purposes of awarding costs.” Sun Cap. Partners, Inc. v. Twin City Fire Ins. Co., No. 12-CIV-81397, 2016 WL 1658765, at *7 (S.D. Fla. Apr. 26, 2016).
In its Sur-Response, BlueRadios urges me to deny HBSR's motion on the grounds that the same discovery at issue here was produced as part of HBSR's discovery in the malpractice action. BlueRadios contends “the costs and attorney[ ] fees incurred by counsel for HBSR in this lawsuit would have been incurred in the [other lawsuit] if they had not previously been collected and produced for this lawsuit.” Sur-Resp. to Mot. for Atty. Fees at 3. I am not persuaded. The fact that HBSR opted not to “reinvent[ ] that particular wheel,” does not negate the significant expense incurred as a result of the Second Subpoena. Id. I do find, however, that the obvious overlap between the subpoena response and the discovery is additional evidence that HBSR is an interested party.
In sum, HBSR's interest in the outcome of this litigation is substantial. Consequently, I find HBSR can absorb half the reasonable attorney fees incurred in response to the Second Subpoena without incurring a significant expense for purposes of Rule 45(d)(2)(B)(ii)’s fee-shifting provision.
*5 The second factor marginally favors BlueRadios. HBSR, as the party seeking to shift attorney fees and costs, has the burden of demonstrating that it cannot more readily bear the expense than the requesting party. See In re Application of Michael Wilson & Partners, Ltd., 2012 WL 1901217, at *5. HBSR offers no evidence as to whether it is better able to bear the expense of production, but rather attempts to shift the burden to BlueRadios. See Reply to Mot. for Atty. Fees at 7. For its part, BlueRadios identifies itself as a small company with only two full time employees. Kramer Decl. ¶ 3, ECF No. 348-13. But instead of addressing HBSR's relative ability to shoulder the burden of the expansive Second Subpoena, BlueRadios references the size of HBSR's malpractice insurance policy and compares itself to Kopin. Id. ¶ 4; Resp. to Mot. for Atty. Fees at 22. Neither argument is convincing. HBSR's insurance deductible exceeds the amount of fees and costs at issue here. Also, Kopin's size is immaterial to the cost of this nonparty subpoena. Because the burden of proof is on HBSR, this factor weighs slightly in BlueRadios’ favor. It does not, however, weigh heavily enough to justify shifting less than half the cost of reasonable attorney fees to BlueRadios.
Third, there is no evidence that this litigation is of any particular importance to the public. When litigation involves a matter of public importance, that fact can weigh against shifting the costs of discovery to the propounding party. See In re First Am. Corp., 184 F.R.D. 234, 242 (S.D.N.Y. 1998). BlueRadios argues that “issues such as inventorship and ownership of intellectual property, including patents, [are] of public importance.” Resp. to Mot. for Atty Fees at 24. I disagree. This litigation is confined to a dispute between two private parties. When a case “involves the purely private business interests of the litigating parties” it is not of public importance. In re Application of Michael Wilson & Partners, Ltd., 2012 WL 1901217, at *5. Consequently, this factor favors HBSR but not enough to justify shifting more than half the cost of production on to BlueRadios.
HBSR must establish that the attorney fees and costs it seeks are reasonable. See id. at *4. I find it has done so. HBSR has documented that the hours spent in responding to the Second Subpoena were reasonable given the scope of the subpoena and the large number of responsive documents that were either irrelevant or privileged. It has also demonstrated that the attorneys charged a reasonable rate for their services. See Case v. Unified Sch. Dist. No. 233, Johnson Cnty., Kan., 157 F.3d 1243, 1249 (10th Cir. 1998) (describing the “lodestar” method for calculating attorney fees, by which a court “multipl[ies] the hours [ ] counsel reasonably spent ... by a reasonable hourly rate”).
Wheeler Trigg O'Donnell LLP (“WTO”) represents HBSR in connection with this lawsuit, including but not limited to HBSR's response to the Second Subpoena. The WTO attorneys who assisted HBSR with the subpoena response were highly qualified, justifying a higher-than-average hourly rate. Nevertheless, WTO relied heavily on associate-level attorneys and paralegals while relegating partners to a supervisory role. See Reply to Mot. for Atty. Fees at 10 (noting partners did not bill time for document review). The partners billed between $450 and $495 per hour while the two associate attorneys primarily responsible for the review billed $395 per hour. I find these rates comparable with other similarly sized law firms located in the Denver area. Indeed, BlueRadios never asserts the attorney rates were above “the prevailing market rates in the relevant community.” Case, 157 F.3d at 1256 (quoting Blum v. Stenson, 465 U.S. 886, 895 (1984)). Instead, it relies on a single survey that provides the mean and median rates across the state of Colorado. Resp. to Mot. for Atty. Fees at 15. The survey has little probative value under the facts of this case.
BlueRadios contests the reasonableness of HBSR's attorney fees for several other reasons. It argues (1) the document review was unnecessary, (2) HBSR had less expensive options, and (3) Kopin could have produced the requested documents because HBSR is within its control. The first two arguments are not compelling. The third argument works against BlueRadios.
*6 First, BlueRadios asserts HBSR's document review “could have been avoided and was for the sole benefit of HBSR and Kopin.” Id. at 16. This argument ignores the fact that “[a]ttorney document review, meet-and-confers with counsel for [the] requesting party, and client consultation are often the most significant burdens of subpoena compliance.” New Mexico Oncology, 2016 WL 10296569, at *1. Next, BlueRadios argues that lower cost options were available to HBSR. It also suggests HBSR could have simply signed the protective order and avoided a manual review altogether. Resp. to Mot. for Atty. Fees at 17. But HBSR was not required to opt for the lowest cost option available. And as I have repeatedly stated, it would be “unreasonable to expect HBSR to turn over documents containing potentially irrelevant or privileged information without first conducting its own review.” Discovery Order at 4. In any case, HBSR has demonstrated that it did make an effort to look for more affordable options. When HBSR solicited estimates for assistance with the Second Subpoena response, it was informed the cost could range from $225,000 to over $400,000.
BlueRadios’ third argument is that HBSR should shoulder the full cost of compliance with the Second Subpoena because HBSR is within Kopin's control as that term is used in Federal Rule of Civil Procedure 34(a). See Resp. to Mot. for Atty Fees at 10-11. Under that Rule, a party may serve another party with a request for discovery that is “in the responding party's possession, custody, or control.” Fed. R. Civ. P. 34(a). The rule deals only with parties, however, and therefore has no relevance to the Second Subpoena, which was issued to a nonparty.
In the process of making this contorted argument, BlueRadios admits that it sought discovery from HBSR precisely because “Kopin did not seek documents and data for production in this case from parties or entities under its control.” Resp. to Mot. for Atty. Fees at 2. Its admission supports the reasonableness of HBSR's attorney fees: instead of seeking the documents in HBSR's possession (but allegedly in Kopin's control) by means of a motion to compel pursuant to Rule 34, BlueRadios served nonparty HBSR with two sweeping subpoenas duces tecum. The scope of the Second Subpoena was unquestionably broad and BlueRadios had every reason to anticipate that HBSR would conduct a careful review of the material before responding to the subpoena—particularly given BlueRadios’ repeated threats to file a malpractice complaint against HBSR. Thus, I find that the attorney fees generated by this extensive review are reasonable, and I conclude it would be a substantial burden for HBSR to bear the entire cost of production.
Likewise, HBSR's itemized costs are reasonable given the size of the review and production. See Nero v. Am. Family Mut. Ins. Co., No. 11-cv-02717-PAB-MJW, 2013 WL 5323262, at *2-3 (D. Colo. Sept. 23, 2013) (awarding costs for “amount spent on loading data into an electronic database and converting files to TIFF or PDF format”). The bulk of the costs were “associated with uploading and processing documents for attorney review,” and were necessary for those purposes. Fairless Decl. ¶ 9, ECF No. 323-5. Additionally, BlueRadios has agreed to pay “the vendor costs associated with searching for, collecting, and producing responsive documents.” 6/11/19 Joint Status Rep. at 4. Because I find all of the costs reasonable, BlueRadios shall reimburse HBSR for the full amount incurred.
By shifting all of the costs and half of the reasonable attorney fees to BlueRadios, I conclude HBSR's burden from compliance with the Second Subpoena is relatively insignificant for purposes of Rule 45(d)(2)(B)(ii).
CONCLUSION
*7 HBSR has established that the fees and expenses it incurred in response to the Second Subpoena were significant and reasonable. In balancing the equities, however, I conclude HBSR has an interest in the outcome of this litigation that justifies shifting half the requested attorney fees to BlueRadios. Nonparty HBSR's Motion for Attorney's Fees and Costs (ECF No. 323) is therefore GRANTED IN PART. It is hereby ORDERED that on or before October 14, 2022, Plaintiff BlueRadios shall pay to HBSR, through their counsel of record, the amount of $1,824.57 in costs and $108,548.83 in attorney fees, for a total of $110,373.40.

Footnotes

Both HBSR and BlueRadios err by referring to “attorney's fees,” rather than “attorney fees.” When in the phrase “attorney fees,” the word “attorney” appears as an adjective modifying the word “fees.” The ubiquitous misuse of the possessive noun “attorney's” reflects a serious cognitive error because the fee and the claim belong to the litigant and not to the litigator. If the opposite were true, then a denial of a motion for attorney fees would mean the attorney is entitled to nothing—a result neither intended nor one lawyers would wish.
BlueRadios also filed an Initial Response to the Motion for Attorneys’ Fees and Costs (ECF No. 333) in which it moved the court to strike the fee motion on account of HBSR's insufficient conferral efforts. Not only was the filing improper, see D.C.Colo.LCivR 7.1(d), but I disagree with BlueRadios that HBSR's conferral efforts were inadequate.
In my order disqualifying HBSR, I limited use of any factual findings to the motion to disqualify counsel. See Joint Mot. to Correct Inventorship at 2, ECF No. 124. I later expanded my determination of conflict outside the scope of that motion. See Order Granting in Part Mot. Challenging Privilege Logs at 7, ECF No. 379.
BlueRadios requests an evidentiary hearing on HBSR's fee motion pursuant to Federal Rule of Civil Procedure 54(d)(2)(c). I do not find a hearing necessary given the ample record before me. A hearing on this matter would not assist in “secur[ing] the just, speedy, and inexpensive determination” of this action. Fed. R. Civ. P. 1.