Kosmicki Inv. Servs. LLC v. Duran
Kosmicki Inv. Servs. LLC v. Duran
2024 WL 5326385 (D. Colo. 2024)
December 30, 2024
Prose, Susan, United States Magistrate Judge
Summary
The plaintiff sought to recover reasonable attorney's fees and costs incurred due to the defendant's sanctionable conduct involving ESI. After a hearing, the court determined the amount of fees and costs to be awarded, taking into account the reasonableness of the hours billed and rates charged. The court conducted a line-by-line review of the billing entries and excluded fees for unnecessary or unrelated work, resulting in a reduced amount of fees awarded.
Additional Decisions
KOSMICKI INVESTMENT SERVICES LLC, Plaintiff,
v.
JOSEPH DURAN, Defendant
v.
JOSEPH DURAN, Defendant
Civil Action No. 1:21-cv-03488-DDD-SBP
United States District Court, D. Colorado
filed December 30, 2024
Prose, Susan, United States Magistrate Judge
ORDER AWARDING ATTORNEY'S FEES AND COSTS
*1 This matter is before the court to determine the amount of reasonable attorney's fees and costs to be awarded to plaintiff Kosmicki Investment Services LLC (“KIS”) for the sanctionable conduct of defendant Joseph Duran and his attorney Randall Paulsen.[1] The court has previously determined that KIS is entitled to its reasonable fees and costs incurred due to Mr. Duran's conduct. ECF No. 96 (“Sanctions Order”) at 17-21.
BACKGROUND
The court assumes the reader's familiarity with the tortuous history of this case and incorporates herein the Background Sections of its Sanction Order and order granting KIS's motion to compel. Sanctions Order at 2-6; see also ECF No. 66 (“Order on Motion to Compel”) at 1-8.
On June 12, 2024, KIS submitted a declaration setting forth the amount of fees and costs it seeks pursuant to the Sanctions Order. ECF No. 97-1 (“Initial Fee Application”). Mr. Duran filed an objection to the Initial Fee Application, ECF No. 98, in which he disputes the scope of what is recoverable. Id. at 2-4. Generally, Mr. Duran maintains that this court awarded sanctions only for his failure to comply with the court's order dated October 12, 2023, ECF No. 73 (“October 2023 Order”), and not for conduct before or after that date. ECF No. 98 at 2-4.
The court held a hearing on October 8, 2024, to discuss the Initial Fee Application and Mr. Duran's objections. ECF No. 105. At that hearing, the court rejected Mr. Duran's contention that the scope of the Sanctions Order was limited to an award of fees and costs relating to the October 2023 Order. ECF No. 106 (“Hearing Transcript”) 24:14-27:17. The court also directed KIS to supplement its billing records to include “the date of service; the name of the provider; the billable hours, stated in ten-minute increments; the billing rate for the provider; the total amount billed for the task; description of the work performed; and—per the representation of counsel for Plaintiff at the hearing—a brief explanation as to why the fee/cost is being sought.” ECF No. 105.
KIS filed its supplement on November 8, 2024. ECF No. 107 (“Supplement”). As part of its Supplement, KIS supplied a chart of its fees and expenses with the information noted above. ECF No. 107-1 (“Billing Entries”). Additionally, KIS submitted an affidavit from Frank Visciano, ECF No. 107-8 (“Visciano Affidavit”), an attorney who has practiced in Colorado nearly 50 years, who attested to the reasonableness of the rates charged and hours worked by KIS's attorneys in this case. See generally id. In total, KIS seeks $202,427.12 in fees and costs. See Supplement at 2.[2] Broken down, this amount reflects attorney's fees of $101,419.30, costs associated with its forensic computer expert (“Crowe”) of $78,642.12, court reporter costs of $565.70, Special Master costs of $11,800.00, and Mr. Visciano's costs of $10,000.00. Id.
*2 Mr. Duran filed a response objecting to the Supplement. ECF No. 108 (“Objections”). Rather than assessing the appropriateness of individual fees or identifying billing entries that are not reasonable, Mr. Duran raises general objections to the overall amounts sought in this case. See generally id. Further, despite noting the court's reticence to discuss the merits of the case or relitigating the decision that sanctions were appropriate, Mr. Duran proceeds to go on at length regarding arguments already raised as to why the court should not have awarded fees and costs in the first place, asserting that these arguments are relevant to the reasonableness of any fee award. See id. at 1-19.
LEGAL STANDARDS
“To determine the reasonableness of a fee request, a court must begin by calculating the so-called ‘lodestar amount’ of a fee, and a claimant is entitled to the presumption that this lodestar amount reflects a ‘reasonable’ fee. The lodestar calculation is the product of a number of attorney hours ‘reasonably expended’ and a ‘reasonable hourly rate.’ ” Robinson v. City of Edmond, 160 F.3d 1275, 1281 (10th Cir. 1998). The party seeking an award of fees bears the burden of demonstrating the reasonableness of the hours billed and rates charged. Malloy v. Monahan, 73 F.3d 1012, 1018 (10th Cir. 1996). To carry this burden, the party must “submit[ ] meticulous, contemporaneous time records that reveal, for each lawyer for whom fees are sought, all hours for which compensation is requested and how those hours were allotted to specific tasks.” Case v. Unified Sch. Dist. No. 233, Johnson Cnty., Kan., 157 F.3d 1243, 1250 (10th Cir. 1998). Ultimately, a court has considerable flexibility in determining what is a reasonable amount of any fee award, and such determinations are reviewed under the deferential abuse-of-discretion standard. See, e.g., Kerner v. City & Cnty. of Denver, 733 F. App'x 934, 935-39 (10th Cir. 2018).
ANALYSIS
At the outset, the court notes that its objective with this Order is to determine the amount of fees and costs to be awarded to KIS for Mr. Duran's conduct. The court made clear before, and reiterates again, that it will not entertain attempts to relitigate its prior decision that fees and costs are an appropriate sanction. See Hearing Transcript at 8:22, 12:21, 24:16-27:17. Notably, Mr. Duran did not object to the Sanctions Order and the court's determination that fees and costs are the appropriate sanction for Mr. Duran's conduct. Turning to the matter at hand, the court begins with KIS's application for attorney's fees and then assesses its request for expert and other costs.
I. Attorney's Fees
KIS seeks attorney's fees totaling $101,419.30. To evaluate whether this amount is appropriate, the first step in the lodestar analysis is to assess whether the work performed was necessary and if the hours expended on that work were reasonable. See Malloy, 73 F.3d at 1017. The next step is to determine whether the hourly rates charged by a party's attorneys were reasonable. Id. at 1018.
The court undertakes its analysis in this sequence. In doing so, the court considers factors deemed relevant to the lodestar analysis, which include:
(1) Whether the tasks being billed would normally be billed to a paying client, (2) the number of hours spent on each task, (3) the complexity of the case, (4) the number of reasonable strategies pursued, (5) the responses necessitated by the maneuvering of the other side and (6) potential duplication of services by multiple lawyers.
Robinson v. City of Edmond, 160 F.3d 1275, 1281 (10th Cir. 1998) (cleaned up).
A. Necessity and Reasonableness of Hours Billed
In total, KIS represents that its attorneys have spent 341.4 hours on work directed to responding to Mr. Duran's conduct. As a general matter, the court finds 341.4 hours—while admittedly high—is reasonable given the protracted nature of the sanctionable conduct. For the period in which KIS seeks attorney's fees,[3] the court held five hearings, ECF Nos. 62, 65, 72, 90, 105, and KIS made dozens of filings related to Mr. Duran's conduct, including the Motion for Sanctions, ECF No. 75, and its application for attorney's fees. Further, the court finds persuasive Mr. Visciano's opinion that the hours worked were reasonable. See Visciano Affidavit at 7-13.
*3 While Mr. Duran argues that this number is unconscionably high, he fails to lodge any specific objections as to particular billing entries. Neither has he explained how the court should reduce that figure in a principled manner. See generally Objections. The court has taken it upon itself—without the help of Mr. Duran—to conduct a line-by-line review of the Billing Entries in order to assess the validity of each entry. After doing so, the court concludes that KIS's request for attorney's fees must be reduced for several reasons.
First, the court's review uncovered multiple entries for work that was not necessary or was unrelated to the sanctioned conduct. These entries, totaling $4,689.08, are not recoverable under the Sanctions Order. See Appendix, Chart #1. Second, several entries reflect work done by two or more attorneys that, in the court's view, could have been performed by a single attorney. Thus, the court excludes these entries—totaling $1,593.75—from the fee award. See Appendix, Chart #2. Finally, KIS seeks recovery for work done to prepare the Initial Fee Application. The court determined that the Initial Fee Application did not allow for an accurate assessment of whether the fees and costs requested were compensable or not. See ECF No. 105; Hearing Transcript at 27:12-42:14. The Supplement, by contrast, allows the court to make this determination. The court finds that KIS should not recover for its initial effort to support its request for fees and costs, which the court found insufficient to make a complete assessment of the issue. Therefore, the court will not permit recovery of any fees incurred in preparing the Initial Fee Application, and reduces the fee award by $8,531.01.
B. Hourly Rates
The rates charged by KIS's attorneys are as follows:
Tabular or graphical material not displayable at this time.
Mr. Visciano—whom the court accepts as qualified to provide an opinion—attests to the reasonableness of these hourly rates. See Visciano Affidavit at 14-16. Mr. Duran does not contest Mr. Visciano's opinion on this particular issue, nor does he argue that the above rates are unreasonable. See generally Objections. Finally, the court notes that the rates here are comfortably within the range that other courts in this District have found to be reasonable. See, e.g., Peace Officers’ Annuity & Benefit Fund of Ga. v. DaVita Inc., No. 17-cv-00304-WJM-NRN, 2021 WL 2981970, at *3 (D. Colo. July 15, 2021) (collecting cases and noting that “hourly rates—ranging from $365 to $895 for attorneys, and $250 to $275 for support staff—are lower than hourly rates previously approved by this Court and others within the District”).
Accounting for the deduction of $14,813.84 for the reasons above, the court awards KIS reasonable attorney's fees in the amount of $86,605.46.
II. Costs
KIS seeks costs totaling $101,474.07 for expenses incurred for the Special Master, Crowe, court reporting, and Mr. Visciano.
A. Special Master
Originally, the court allocated the costs of the Special Master evenly between the parties. ECF No. 30 at 2. Federal Rule of Civil Procedure 53(g)(3) permits the court to amend its initial allocation “after considering the nature and amount of the controversy, the parties’ means, and the extent to which any party is more responsible than other parties for the reference to a master.” The court finds that the Rule 53(g) factors weigh in favor of reallocating the costs of the Special Master entirely to Mr. Duran. With this, KIS is entitled to recover its portion of the Special Master's costs.
*4 As part of his efforts, the Special Master provided billing entries reflecting his work. Upon review of those entries, the court has no reason to question the reasonableness of the Special Master's total fees. Therefore, the court awards KIS $11,800.00 for its half of the Special Master's costs.
B. Forensic Expert
KIS asks that the court award costs of $78,642.12 for Crowe's forensic analysis. For several reasons, the court finds that the amount of this request must be reduced.
First, although it is KIS's burden to support the reasonableness of the costs incurred, see Fiber Optic Designs, Inc., v. New England Pottery, LLC, 262 F.R.D. 586, 589 (D. Colo. 2009), it has not provided the court with evidence regarding the reasonableness of Crowe's rates. For instance, it has not provided evidence showing that the rates here are comparable to the prevailing market rate or similar to those found reasonable in other cases. Nevertheless, “if the parties provide little evidence to support their interpretation of a reasonable rate, the court may use its discretion in setting the reasonable rate.” Se-Kure Controls, Inc. v. Vanguard Prods. Grp., Inc., 873 F. Supp. 2d 939, 955 (N.D. Ill. 2012).[4]
The hourly rates charged by Crowe in this case vary between $185 and $775; however, the vast majority of entries were billed at hourly rates between $200 and $400. See generally Billing Entries. On the record before the court, hourly rates above $400 cannot be sustained. The court arrives at this figure by noting that Crowe originally charged $375 an hour in 2021. See ECF No. 1-3 at 17. The court exercises its discretion to select a slightly higher rate here and has recalculated the entries charged at an hourly rate in excess of $400 using a $400 rate, resulting in a reduction of $3,351.25.[5]
Second, KIS asks for Crowe's costs incurred before any discovery issues arose. A discovery issue first came before the court on August 16, 2022, ECF No. 25, and Crowe's analysis of the Seagate Drive did not begin until August 19, 2022. See Billing Entries at 4. By seeking expert costs incurred before any court order on any discovery issue, KIS strays beyond the purpose of the Sanction Order's award of fees and costs under Rule 37. As a result, the court denies recovery for any expert costs incurred before KIS obtained the Seagate Drive, the sum of which is $19,931.25.
Third, the majority of Crowe's work would have been incurred with or without Mr. Duran's conduct. KIS looks to recover the costs of Crowe's analysis of the Seagate Drive, Mr. Duran's laptop, and the Memorex hard drive. See Billing Entries at 4-12. But KIS's underlying claims in this case allege that Mr. Duran misappropriated its confidential information and client data. Specifically, KIS brings claims for violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (“CFAA”), and state law conversion and civil theft. ECF No. 1 (“Complaint”) ¶¶ 18-37. KIS's CFAA claim alleges that Mr. Duran accessed its computers and computer systems to obtain confidential data belonging to KIS and its clients after he was terminated from the company. Id. ¶¶ 20-23. And as part of its conversion claim, KIS has also alleged that Mr. Duran refused to return any confidential data. Id. ¶ 29.
*5 Tellingly, KIS retained Pathway Forensics—which was later acquired by Crowe—before any discovery dispute arose and even attached a report from Pathway Forensics to its Complaint. See ECF No. 1-3. Early in the litigation, KIS identified the Seagate Drive as a potential location of the purportedly stolen data. Consequently, it appears that the analysis of the Seagate Drive was always necessary as it was central to KIS's claims. See ECF No. 25-1 at 4 (“Defendant has refused to cooperate with KIS to establish an ESI protocol and to produce the Seagate Drive. Defendant's failure to comply with his discovery obligations has prejudiced KIS, and has hindered KIS's ability to discover information directly relevant to its CFAA claim.”). Further, the Sanctions Order noted that
[t]he contents of Mr. Duran's laptop, like the contents of the Seagate Drive, go to the very essence of a dispute that hinges on allegations that Mr. Duran “engaged in unauthorized access to KIS's computer systems[;]” has “breach[ed] ... KIS's protected computers[;]” has improperly “accessed protected computers and downloaded highly confidential financial information[;]” and has stored “Company files and information ... on his various computer devices that the Plaintiff will seek disclosure of in this litigation.”
Sanctions Order at 6 (quoting Complaint ¶¶ 12, 14, 15) (emphasis deleted)).
At the same time, Mr. Duran's refusal to comply with this court's orders likely complicated Crowe's work. This is most evident with the Seagate Drive, which Mr. Duran delayed turning over and accessed despite the court's explicit instructions to refrain from using. These actions meant that, at least for forensic data purposes, the Seagate Drive was altered. Thus, it is reasonable to infer that Mr. Duran's actions made Crowe's analysis of the Seagate Drive more difficult and time-consuming. The extent of that added difficulty, however, cannot be readily calculated with any appreciable level of precision. When confronted with a similar situation, United States District Judge John L. Kane awarded a percentage of fees for the “appreciable level of added difficulty” caused by a defendant's conduct. Blueradios, Inc. v. Kopin Corp., No. 16-cv-02052-JLK, 2024 WL 3251944, at *6 (D. Colo. Apr. 25, 2024). The court finds a similar approach is warranted here. Exercising its judgment, the court concludes that KIS is entitled to 20 percent of Crowe's costs. Therefore, the court subtracts $44,287.70 from KIS's request incurred by its forensic expert.
Accordingly, the court will award KIS $11,071.92 in costs for Crowe's forensic expenses.
C. Court Reporting
The court finds that the court-reporting costs of $565.70, for transcription of the hearings on September 30, 2023, and October 8, 2024, see ECF No. 71, are reasonable and recoverable in full. See Matter of Skanska USA Civ. Se. Inc., No. 3:20-cv-05980-LC/HTC, 2021 WL 5225476, at *5 (N.D. Fla. Oct. 1, 2021), aff'd sub nom. Skanska USA Civ. Se. Inc. v. Bagelheads, Inc., 75 F.4th 1290 (11th Cir. 2023) (awarding transcription costs under Rule 37); see also Long v. Howard Univ., 561 F. Supp. 2d 85, 97-99 (D.D.C. 2008) (awarding transcription costs under 28 U.S.C. § 1920(2)).
D. Mr. Visciano
Finally, KIS seeks to recover the costs associated with retaining Mr. Visciano to serve as its lodestar expert. As noted above, Mr. Visciano is well-qualified to opine on the market rates for attorneys in Colorado and, more specifically, the Denver-area market. Additionally, his review of the time spent by attorneys on various matters assisted the court in determining whether the work performed was reasonable. More to the point, Mr. Visciano's own hourly rate of $580 is reasonable, considering his qualifications and experience. Further, the court finds that the number of hours he expended reviewing KIS's fee application is appropriate as this court has spent even more time conducting its own review. Accordingly, the court awards in full KIS's request for $10,000 in costs for Mr. Visciano's services.
* * *
*6 In closing, the court emphasizes that it takes no pleasure in issuing this Order, which it imposes after much reflection. However, the court is under an obligation to enforce the Federal Rules of Civil Procedure and the Orders of this court so as to facilitate the fair and just administration of this case for all parties, including the plaintiff. Further, Mr. Duran's patent, and repeated, flouting of these standards compels the court to find that this Order must be issued.
Footnotes
For simplicity's sake, the court will use the term “Mr. Duran” to refer to both Messrs. Duran and Paulsen. The court will specifically refer to Mr. Paulsen individually when necessary.
The Supplement requests $202,893.37, however, when adding up the categories of fees and costs the court calculated the total to be $202,427.12.
The only reasonable alternative would be to engage in another round of supplemental briefing, thus requiring the parties to expend even more resources.
Cf. Compensation Rates for Experts and Other Service Providers, https://cand.uscourts.gov/about/court-programs/criminal-justice-act-cja/cja-compensation-rates/exper... rates under the Criminal Justice Act of up to $300 an hour for computer forensic experts) (last accessed Dec. 19, 2024). The court acknowledges that the CJA rate is paid by the government in criminal cases involving indigent defendants and likely represents the lower end of what a computer forensics expert might charge.
Rule 72 of the Federal Rules of Civil Procedure provides that within fourteen (14) days after service of a Magistrate Judge's order or recommendation, any party may serve and file written objections with the Clerk of the United States District Court for the District of Colorado. 28 U.S.C. §§ 636(b)(1)(A), (B); Fed. R. Civ. P. 72(a), (b). Failure to make any such objection will result in a waiver of the right to appeal the Magistrate Judge's order or recommendation. See Sinclair Wyo. Ref. Co. v. A & B Builders, Ltd., 989 F.3d 747, 783 (10th Cir. 2021) (firm waiver rule applies to non-dispositive orders); but see Morales-Fernandez v. INS, 418 F.3d 1116, 1119, 1122 (10th Cir. 2005) (firm waiver rule does not apply when the interests of justice require review, including when a “pro se litigant has not been informed of the time period for objecting and the consequences of failing to object”).