Lateral Link Group, LLC v. Micah Springut, et al Case No. LA CV14-05695 JAK (JEMx) United States District Court, C.D. California Filed February 14, 2017 Counsel Alexa L. Lewis, Monster Energy Company, Corona, CA, Elaine K. Kim, Karin G. Pagnanelli, Mitchell Silberberg and Knupp LLP, Robert Tauler, Gil Nathan Peles, Tauler Smith LLP, Los Angeles, CA, for Lateral Link Group LLC. Milton Springut, Pro Hac Vice, Tal S. Benschar, Pro Hac Vice, Springut Law PC, New York, NY, Sarah A. Silbert, Sarah Silbert, Studio City, CA, for Defendant Micah Springut. Tal S. Benschar, Springut Law PC, New York, NY, for Defendant Sheldon Baker, Audrey Barron, Yiming Liu, Habeas Corp. Kronstadt, John A., United States District Judge Proceedings: (IN CHAMBERS) ORDER RE DEFENDANTS' APPLICATION FOR FEES IN CONNECTION WITH MOTION FOR CONTEMPT OR SANCTIONS – DISCOVERY REFEREE PORTION (DKT. 252); REPORT AND RECOMMENDATION OF DISCOVERY REFEREE (DKT. 267). I. Introduction *1 On July 22, 2014, Lateral Link Group, LLC (“Plaintiff”) brought this trademark infringement action against Habeas Corp. doing business as Lateral.ly (“Habeas”), and Micah Springut. Complaint, Dkt. 1. The parties offer recruiting services to attorneys seeking new positions. Id. The Plaintiff alleges that the use of “Lateral.ly” infringes its trademark in “Lateral Link.” Id. The operative Second Amended Complaint (“SAC” (Dkt. 239)), names these defendants as well as Spencer Schack, Sheldon Baker, Yiming Liu and Audrey Barron. The SAC advances the following causes of action: (1) infringement of a federally registered trademark, 15 U.S.C. § 1114; (2) federal unfair competition, 15 U.S.C. § 1125(a); (3) common law trademark infringement; (4) common law unfair competition; (5) unfair competition, Cal. Bus. & Prof. Code § 17200; and (6) contributory infringement. On April 11, 2016, Defendants filed a Motion for Contempt and Preclusive Sanctions pursuant to Fed. R. Civ. P. 37. Dkt. 212. The Motion related to certain prior orders. One had been issued by Magistrate Judge McDermott that granted Defendants' motion to compel documents relating to Plaintiff's online database for use in its legal recruiting business. Dkt. 90. The others were orders by Discovery Referee Title relating to Defendants' efforts to conduct discovery regarding Plaintiff's quality control of its trademark. The portion of the Motion for Contempt and Preclusive Sanctions relating to the orders by Referee Title was referred to her for the preparation of a report and recommendation (“First R&R”). Dkt. 216. After Referee Title issued the First R&R (Dkt. 221), Defendants filed objections. Dkt. 224. After reviewing and considering the First R&R and the objections, the Court adopted the First R&R without change. The accompanying Order: (1) denied Defendants' Motion for Contempt and Preclusive Sanctions; (2) required compliance with Referee Title's orders by producing another Rule 30(b)(6) witness for deposition; and (3) permited Defendants to file a request for an award of attorney's fees, that would be referred to Referee Title for the preparation of a Report and Recommendation. Dkt. 234. Defendants filed an application for an award of $14,733.75 in fees in connection with the Motion for Contempt (“Application”). Dkt. 252. The Application was based on work performed by Tal Benschar (“Benschar”) and Milton Springut (“Springut”). Id. Plaintiff objected. See Dkt. 267 at 3. Defendants replied. Dkt. 258. As noted, the Application was referred to Referee Title for the preparation of a Report and Recommendation (“Second R&R”). Dkt. 253. The Second R&R recommended that fees of $13,788.75 be awarded to Defendants. Dkt. 267. For the reasons stated in this Order, that recommendation is adopted in part. II. Background A. The Motion for Contempt The Motion for Contempt concerned discovery related to quality control. Dkt. 212 at 13. Defendants argued that the testimony of Michael Allen, whom Plaintiff identified as the 30(b)(6) expert on quality control, was “totally evasive and uncooperative; including a feigned lack of understanding of basic questions that tracked virtually verbatim the 30(b)(6) topics.” Id. at 14. Following that deposition, Referee Title ordered Defendants to identify specific questions for which they claimed the answers were inadequate. Id. at 16. Plaintiff then provided written responses, which Referee Title found inadequate. Id. Thus, Plaintiff was required to produce another 30(b)(6) deponent on the subject of quality control. Id. at 17. Plaintiff produced Michael Wood, whom Defendants characterized as “totally unprepared.” Id. *2 The First R&R, which the Court adopted in full, concluded that Defendants had mischaracterized Wood's deposition testimony. Dkt. 221 at 3. It further concluded: That said, Mr. Wood's testimony was not thorough. He testified that he did not know what was discussed or entailed in a periodic review, or whether any records were kept of such reviews. He also did not know what external reviews really were or what Lateral Link does to review any problems uncovered by an internal or external review. This information is pertinent to the issue of quality control. Id. at 5 (internal citation omitted). Referee Title concluded, “that there was substantial compliance, but not full compliance,” with her Orders. Id. As noted above, the Court adopted that conclusion and gave Defendants permission to file a request for attorney's fees. B. The Application Defendants' fee Application requests an award of $14,733.75 for 22.875 hours of work on the Motion for Contempt, Reply, objections and fee request. Dkt. 232. In a declaration attached to the Application, Springut noted that the original Motion for Contempt sought sanctions for violations of two different orders. Id. at 3. The Court referred part of the motion to Referee Title; the Application seeks an award of attorney's fees only for the related work. Id. However, Springut stated that most of Defendants' time entries did not differentiate between the parts of the original Motion for Contempt that were referred to Judge McDermott and the parts that were referred to Referee Title. Id. Springut estimated that approximately half of the time recorded was spent on the parts of the contempt motion referred to Judge McDermott. Id. The Application attached a table of fees sought. The table divided the time among five categories, which are as follows: Id. at 8-9. The first three categories included all time spent on the original Motion for Contempt, including matters that had been referred to Judge McDermott. Thus, Defendants requested fees for half of the time billed. Id. at 3. The last two categories included only the time spent on the parts of the motion that had been referred to Referee Title. Id. C. The Second R&R The Second R&R concluded that an award of attorney's fees was reasonable based on the earlier finding that Plaintiff had failed to comply with the referee's orders. Dkt. 267 at 4. It also addressed Plaintiff's objections as follows: Duplication of Effort: Plaintiff contends that a majority of the hours claimed by Defendants should be excluded because the motion combined requests for fees from both the Magistrate Judge and the Discovery Referee. The Referee disagrees. Defendants properly and reasonably allocated the fees requested between the overlapping and common portions of the motion in order to circumvent duplicate fees. *3 Objections to Referee's Report: Plaintiff argues that $3,900 related to “objections to Discovery Referee's report” is unreasonable because those objections were overruled by the District Court Judge, who adopted the Referee's report. The Referee disagrees. Objections are part of the process in litigating motions. Plaintiff filed its own objections. Under federal fee-shifting statutes, the prevailing party is entitled to recover a fully compensatory fee. (Hensley v. Eck[er]hart (1983) 461 U.S. 424, 434.) Plaintiff has cited no authority to support the separating out specific phases of a fee request. Original Briefing: Plaintiff argues that $6,292.50 in connection with Defendants' “original briefing filed as Joint Stipulation” is unreasonable because the briefing was stricken and they were required to file revised papers. Plaintiff's argument is meritless, as it would exclude the bulk of the work done on the motion. The Referee recommends, however, that the fees requested for reformatting the Application ($945) be DENIED. Plaintiff should not have to pay for Defendants' failure to properly file the Application. This Application: Plaintiff contends that the $1,260 sought in connection with the present Application is improper and unreasonable. However, fees on fees are routinely granted and nothing has been provided to show that this case should be an exception. (Maitlink, Inc. v. Home Depot USA, Inc. (S.D. Cal. 2008) 2008 WL 8504767 at *6; Sure Safe Industries, Inc. v. C & R Pier Mfg. (S.D. Cal. 1993) 152 F.R.D. 625, 627.) Id. at 4-5. The Second R&R also rejected Plaintiffs' argument that Defendants' requested rates are unreasonably high. Id. at 5. III. ANALYSIS A. Legal Standard 1. Review of R&R A discovery referee is a type of special master. “The court must decide de novo all objections to findings of fact made or recommended by a master.” Fed. R. Civ. P. 53(3). It must also “decide de novo all objections to conclusions of law made or recommended by a master.” Fed. R. Civ. P. 53(4). 2. Award of Attorney's Fees Fed. R. Civ. P. 30(b)(6) permits a party to subpoena an organization by describing “with reasonable particularity the matters for examination.” “[C]ompanies ‘have a duty to make a conscientious, good-faith effort to designate knowledgeable persons for Rule 30(b)(6) depositions and to prepare them to fully and unevasively answer questions about the designated subject matter.’ ” Bd. of Trustees of Leland Stanford Junior Univ. v. Tyco Int'l Ltd., 253 F.R.D. 524, 526 (C.D. Cal. 2008) (quoting Sprint Commc'n Co., L.P. v. Theglobe.com, 236 F.R.D. 524, 527 (D.Kan. 2006)). Pursuant to Fed. R. Civ. P. (37)(a)(5)(A), a party whose conduct necessitates a motion to compel discovery may be required to pay reasonable expenses, including attorney's fees. The reasonableness of a request for an award of attorney's fees is determined by the lodestar approach: The ‘lodestar’ is calculated by multiplying the number of hours the prevailing party reasonably expended on the litigation by a reasonable hourly rate. Although in most cases, the lodestar figure is presumptively a reasonable fee award, the district court may, if circumstances warrant, adjust the lodestar to account for other factors which are not subsumed within it. Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 978 (9th Cir. 2008) (internal citations and quotation marks omitted); see also Jordan v. Multnomah Cty., 815 F.2d 1258, 1262 (9th Cir. 1987) (“The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.”). In determining the number of hours reasonably expended on the litigation, those that are “excessive, redundant, or otherwise unnecessary” should be excluded. Welch v. Metro. Life Ins. Co., 480 F.3d 942, 946 (9th Cir. 2007). Further, the *4 calculation of the amount of a “reasonable attorney's fee” is not a precise science. It involves analysis of numerous factors, including, but not limited to: the number of hours “reasonably expended” by counsel; the propriety of the hourly rate requested by counsel, given the skill and experience of counsel and the level of sophistication required for the legal services at issue; whether counsel has made a “good faith effort to exclude from [the] fee request hours that are excessive, redundant, or otherwise unnecessary”; and the “level of success” obtained through counsel's efforts. Green v. Baca, 225 F.R.D. 612, 614 (C.D. Cal. 2005) (citing Hensley, 461 U.S. at 433-35). B. Analysis Most of the conclusions in the Second R&R are adopted. Defendants' method for allocating time between the issues presented to Judge McDermott and Referee Title is reasonable. Dkt. 267 at 4. The time spent on objections to Referee Title's report and on the original briefing filed as a joint stipulation is recoverable pursuant to Hensley, 461 U.S. at 434. Id. at 4-5. The time spent reformatting the joint stipulation is not recoverable. Id. Fees on fees are appropriate and Defendants' hourly rates, although substantial, are not unreasonable. Id. at 5. However, Defendants have not shown that all of their hours were “reasonably expended” on the Motion for Contempt. Defendants' time sheets for Part I, which is time spent on preparation of the Motion for Contempt as a joint stipulation, are as follows: These records show that Defendants spent approximately 20 hours preparing a 17-page discovery motion that was supported by 11 exhibits. Dkt. 232 at 8. This includes 15 hours on legal research and drafting. All of this time was billed by Benschar and Springut, both of whom are senior partners at their firm. It included work such as organizing exhibits. That task is one that can be completed by a legal assistant. Given the expertise of the attorneys, which is reflected in their substantial hourly rates, the time charges are excessive. In addition, certain of the work, including the review of the plaintiff's portion of the joint stipulation, was necessary only because the Motion for Contempt was originally improperly filed as a joint stipulation. This warrants a reduction of the lodestar for Part I by approximately one-third, with $4,000 recoverable as attorney's fees here. *5 Defendants' time sheets for Part II, which is time spent reformatting the joint stipulation as a motion, are as follows: As noted above, the Court adopts the conclusion in the Second R&R that these time charges are not recoverable. They were the result of an error by Defendants' counsel. Defendants' time sheets for Part III, which is the time spent on the reply brief in support of the Motion, are as follows: Defendants recorded more than seven hours of time to prepare a nine-page reply brief. This is excessive given that the reply brief repeated arguments previously made in support of the Motion. Moreover, as noted above, Defendants billed time for reviewing Plaintiff's arguments in the improperly-filed joint stipulation. This shows that Defendants already knew how Plaintiff would respond to the arguments in the Motion. For these reasons, the lodestar amount is reduced by approximately one-third to $3000, with $1500 recoverable as attorney's fees. Defendants' time sheets for Part IV, which is time spent on the referral to Referee Title, including drafting objections to the First R&R, are as follows: These hours are reasonable. Defendants' time sheets for Part V, which is the time spent preparing the fee application, are as follows: These hours are reasonable. IV. Conclusion For the reasons stated in this Order, the Report and Recommendation of Referee Title (Dkt. 267) is adopted in part. Defendants are awarded attorney's fees in the amount of $10,660, payable within 30 days from the issuance of this Order IT IS SO ORDERED.