DAVID L. HORAN, Magistrate Judge.
Plaintiff KeyCorp ("KeyCorp" or "Key") filed a Motion for Sanctions Against Defendant Martin Mbeteni [Dkt. No. 91] (the "Sanctions Motion" or "Motion for Sanctions") under Federal Rule of Civil Procedure 37(b). United States District Judge Sidney A. Fitzwater referred the Sanctions Motion to the undersigned United States magistrate judge for hearing, if necessary, and recommendation or determination pursuant to 28 U.S.C. § 636(b). See Dkt. No. 92.
In a November 10, 2016 Memorandum Opinion and Order, the Court granted Plaintiff KeyCorp's Motion for Sanctions Against Defendant Martin Mbeteni [Dkt. No. 91]. See Dkt. No. 103. The Court, finding that no other circumstances make an award of expenses unjust, ordered that, under Federal Rule of Civil Procedure 37(b)(2)(C), Defendant Martin Mbeteni's counsel must pay the reasonable expenses, including attorneys' fees, that Plaintiff KeyCorp incurred in preparing and filing the Sanctions Motion. See Dkt. No. 103 at 18.
Mbeteni's counsel and KeyCorp's counsel were ordered to confer, but were unable to reach an agreement, as to the amount of attorneys' fees and costs to be awarded to KeyCorp. See Dkt. No. 125. KeyCorp therefore filed an Application for Attorneys' Fees, see Dkt. No. 131 (the "Application"), as the Court directed, see Dkt. No. 103 at 18-19. Mbeteni filed a response, see Dkt. No. 152, and KeyCorp has filed a reply, see Dkt. No. 153.
For the reasons and to the extent explained below, the Court GRANTS in part and DENIES in part Plaintiff's Application.
As the Court previously explained, the Sanctions Motion ultimately arises out of the Court's ruling on KeyCorp's August 24, 2016 Motion for Expedited Discovery and Rule 34 Examination of Computer Systems [Dkt. No. 30] (the "Expedited Discovery Motion") but, more particularly, KeyCorp contended that Mbeteni violated the Court's October 26, 2016 Memorandum Opinion and Order [Dkt. No. 87], which granted in part and denied in part KeyCorp's Motion to Compel Defendant Mbeteni's Responses to Plaintiff's Discovery Requests [Dkt. No. 77] (the "Mbeteni MTC").
Judge Fitzwater ruled on the Expedited Discovery Motion separately as to Defendant Allison Holland, who had agreed to a consent order that Judge Fitzwater entered, see Dkt. No. 57; see also Dkt. No. 56 at 1 n.1 ("Plaintiff and defendant Allison Holland [] have agreed to a schedule governing expedited discovery and a Rule 34 examination of computer systems. The court will enter an order that applies to Holland after plaintiff and Holland comply with the court's September 6, 2016 order."), and as to Mbeteni, as to whom Judge Fitzwater granted the Expedited Discovery Motion "based on [KeyCorp's] showing of good cause," Dkt. No. 56 at 1.
In the September 14, 2016 Order as to Defendant Martin Mbeteni, the Court ordered that "Mbeteni has 15 days from the date of this order to respond to plaintiff's written discovery requests already served" and that "Plaintiff may conduct Rule 34 forensic inspections of Mbeteni's computer networks, workstations, devices, and email accounts on notice of seven business days" and that "Mbeteni shall facilitate plaintiff's forensic expert to do the following: A. Image the home computers of Mbeteni; B. Capture all webmail accounts of Mbeteni; and C. Capture all mobile and personal devices of Mbeteni." Id. at 1-2.
The Court also previously entered a Stipulated Protective Order (the "SPO") that provides, among other things, that "[i]t governs any document, information, or other thing furnished by any party to any other party"; that "[t]he protections conferred by this Stipulation and Order cover not only Protected Material (as defined above), but also (1) any information copied or extracted from Protected Material; (2) all copies, excerpts, summaries, or compilations of Protected Material; and (3) any testimony, conversations, or presentations by Parties or their Counsel that might reveal Protected Material"; that "[t]he failure to designate any document or information as confidential will not be deemed to waive a later claim as to its confidential nature, or to stop the producing party from designating such information as confidential at a later date in writing and with particularity"; that "[i]nformation designated as Confidential Information or Highly Confidential Attorneys' Eyes Only Information may only be used for purposes of preparation, trial, and appeal of this action"; that "[t]he existence of this Protective Order must be disclosed to any person producing documents, tangible things, or testimony in this action who may reasonably be expected to desire confidential treatment for such documents, tangible things or testimony"; that "[a]ny such person may designate documents, tangible things, or testimony confidential pursuant to this Protective Order"; that "[t]he terms of this Order are applicable to information produced by a Non-Party in this action and designated as "CONFIDENTIAL" or "HIGHLY CONFIDENTIAL — ATTORNEYS' EYES ONLY"; that "[s]uch information produced by Non-Parties in connection with this litigation is protected by the remedies and relief provided by this Order"; and that "[n]othing in these provisions should be construed as prohibiting a Non-Party from seeking additional protections." Dkt. No. 13 at 4, 5, 7, 9-10.
The SPO further provides that "[t]he disclosure of privileged or work-product protected documents, electronically stored information or information is not a waiver of the privilege or protection from discovery in this case or in any other federal or state proceeding" and that "[t]his Order shall be interpreted to provide the maximum protection allowed by Federal Rule of Evidence 502(d)." Id. at 8.
In the Mbeteni MTC, KeyCorp sought an order compelling Mbeteni "to provide complete responses to Key's First Set of Requests for Admission and Interrogatories and First Set of Requests for Production of Documents within seven days of the filing of this Motion in furtherance of the expedited discovery already ordered by the Court" and "to produce all responsive documents and amend his formal responses" and awarding KeyCorp "all expenses, including attorneys' fees and costs, incurred in connection with this Motion and the related discovery dispute." Dkt. No. 77 at 1. KeyCorp reported that on July 29, 2016, it "propounded the following on Mbeteni: 1) Plaintiff's First Set of Requests for Admission and Interrogatories and 2) Plaintiff's First Set of Requests for Production of Documents." Id. at 3-4.
In the Mbeteni MTC, KeyCorp contended that "Mbeteni failed to produce any documents in response to Key's Requests for Production, failed to properly admit or deny a Request for Admission, and failed to verify Answers to Interrogatories. Key's attempts to resolve the dispute with Mbeteni were unsuccessful." Id. at 1. More specifically, KeyCorp reported that "Mbeteni produced not a single document to [KeyCorp] and may be improperly withholding documents" and that "Mbeteni failed to admit or deny Request for Admission No. 23, and did not produce a verification of his Answers to Interrogatories." Id. at 4. KeyCorp requested that the "Court compel Mbeteni to immediately produce responsive documents, clarify if he is withholding documents from production, admit or deny Request for Admission No. 23, and produce Mbeteni's verification of his Answers to Interrogatories." Id. at 3.
Following oral argument on the Mbeteni MTC, the Court ordered, in relevant part, as follows:
Dkt. No. 87 at 20-24.
According to the Sanctions Motion, "[d]espite Key's numerous good faith attempts to complete discovery in this case, Mbeteni ha[d] refused to comply with his discovery obligations"; "[h]e failed to comply with this Court's Order of October 25, 2016 (Doc. No. 87) which, among other things, compelled Mbeteni's production of documents by no later than October 31, 2016"; "Mbeteni's failure to comply with the Order prevent[ed] Key from moving forward with this case, prevents Key from conducting a meaningful deposition of Mbeteni, and prevent[ed] Key from conducting a meaningful deposition of Defendant Allison Holland"; and "Mbeteni's foot-dragging has increased the cost of this litigation in both dollars and time." Dkt. No. 91 at 3. KeyCorp requested "that this Court impose sanctions against Mbeteni, order appropriate compliance, and order Mbeteni to pay costs incurred by his noncompliance." Id.
According to KeyCorp, the October 26, 2016 Memorandum Opinion and Order [Dkt. No. 87] "provides that, to facilitate his production of documents, Mbeteni would — at his request — complete a review of documents generated through [KeyCorp's] forensic inspection of his computers, electronic devices, and webmail"; "[KeyCorp's] forensic consultant, [Business Intelligence Associates, Inc. ("BIA")], had already made about 14,000 documents available to Mbeteni through a web-based review platform"; "Mbeteni agreed — and the Court ordered — that Mbeteni would finish reviewing the documents by October 31, coding the documents that are responsive and not privileged"; but "Mbeteni did not produce any documents to [KeyCorp] by the October 31, 2016 deadline." Id. at 4.
KeyCorp further explained that, "[o]n October 31, 2016, [KeyCorp's] forensic expert, BIA, reported that as of that afternoon Mbeteni had reviewed just 735 of the 14,000 documents hosted in BIA's database"; that, "[l]ater that day, at 8:25 p.m. Eastern Time, Mbeteni communicated to BIA that Mbeteni had located 175 documents to produce and wanted to start making a rolling production"; that, "[l]ater that night, [KeyCorp] advised Mbeteni that Mbeteni had produced no documents in violation of the Court's Order, which was not surprising since Mbeteni had reviewed fewer than 1,000 documents out the 14,000 documents in the database"; and that KeyCorp "advised that it could not and would not depose Mbeteni on Friday, November 4, and had already agreed with Holland to reschedule her deposition (due to Mbeteni's discovery delay)." Id. at 5 (emphasis removed).
According to KeyCorp, "[o]n November 1, 2016, Mbeteni produced Martin Mbeteni's First Rolling Production To [KeyCorp's] Requests For Production (`First Rolling Production'), supplementing his response to Key's Document Request No. 8 only, but produced no documents to Key," and, "[a]ccording to the First Rolling Production, `The specific documents with their control numbers as listed below shall be turned over to counsel for KeyCorp through KeyCorp's expert, BIA, as soon as BIA can produce them electronically through Relativity. Any future information that is responsive, shall be produced in the next rolling production on the 7th day from this production. . . .'" Id. (emphasis removed).
Dkt. No. 103 at 15-18; see generally Brown v. Bridges, No. 3:12-cv-4947-P, 2015 WL 410062, at *1-*4 (N.D. Tex. Jan. 30, 2015) (explaining that, when a district judge refers a motion for sanctions to a magistrate judge, the sanction chosen by the magistrate judge, rather than the sanction sought by the party, governs the determination of whether Federal Rule of Civil Procedure 72(a) or 72(b) applies and that, when the magistrate judge finds that dismissal or another sanction disposing of a claim or defense in unwarranted, the motions should be characterized as non-dispositive and may be ruled on by the magistrate judge) (followed in Green Hills Dev. Co., LLC v. Credit Union Liquidity Servs., LLC, No. 3:11-cv-1885-L-BN, Dkt. No. 373 at 2 (N.D. Tex. Dec. 1, 2016)).
The undersigned has authority to enter a nondispositive order granting attorneys' fees as a sanction under Federal Rule of Civil Procedure 37. See Dkt. No. 92; 28 U.S.C. § 636(b); Merritt v. Int'l Bhd. of Boilermakers, 649 F.2d 1013, 1016-17 (5th Cir. Unit A 1981) (per curiam).
Federal Rule of Civil Procedure 37(b)(2)(A) provides that, "[i]f a party . . . fails to obey an order to provide or permit discovery, . . . the court where the action is pending may issue further just orders. They may include the following: (i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims; (ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence; (iii) striking pleadings in whole or in part; (iv) staying further proceedings until the order is obeyed; (v) dismissing the action or proceeding in whole or in part; [or] (vi) rendering a default judgment against the disobedient party." FED. R. CIV. P. 37(b)(2)(A)(i)-(vi). Rule 37(b)(2)(C) further requires that, "[i]nstead of or in addition to the orders [described under Rule 37(b)(2)(A)], the court must order the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust." FED. R. CIV. P. 37(b)(2)(C).
"This Court uses the `lodestar' method to calculate attorney's fees." Heidtman v. Cnty. of El Paso, 171 F.3d 1038, 1043 (5th Cir. 1999) (citing Fender v. Zapata Partnership, Ltd., 12 F.3d 480, 487 (5th Cir.1994); Saizan v. Delta Concrete Prods., Inc., 448 F.3d 795, 800 (5th Cir. 2006). That includes attorneys' fees awarded as discovery sanctions under Rule 37. See Tollett v. City of Kemah, 285 F.3d 357, 367 (5th Cir. 2002).
The lodestar is calculated by multiplying the number of hours an attorney reasonably spent on the case by an appropriate hourly rate, which is the market rate in the community for this work. See Smith & Fuller, P.A. v. Cooper Tire & Rubber Co., 685 F.3d 486, 490 (5th Cir. 2012).
"A reasonable hourly rate is the prevailing market rate in the relevant legal community for similar services by lawyers of reasonably comparable skills, experience, and reputation." Norman v. Hous. Auth. of City of Montgomery, 836 F.2d 1292, 1299 (11th Cir. 1988) (citing Blum v. Stenson, 465 U.S. 886, 895-96 n.11 (1984)). The relevant legal community is the community in which the district court sits. See Tollett, 285 F.3d at 368. Generally, the reasonable hourly rate for a community is established through affidavits of other attorneys practicing there. See id. But the Court also may use its own expertise and judgment to make an appropriate independent assessment of the hourly rates charged for the attorneys' services. See Primrose Operating Co. v. Nat'l Am. Ins. Co., 382 F.3d 546, 562 (5th Cir. 2004); Davis v. Bd. of Sch. Comm'rs of Mobile Cnty., 526 F.2d 865, 868 (5th Cir. 1976); Vanliner Ins. Co. v. DerMargosian, No. 3:12-cv-5074-D, 2014 WL 1632181, at *2 (N.D. Tex. Apr. 24, 2014) (noting that the Court is an expert on the reasonableness of attorneys' fees).
The party seeking reimbursement of attorneys' fees bears the burden to "produce satisfactory evidence — in addition to the attorney's own affidavits — that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation," Blum, 465 U.S. at 896 n.11, as well as to establish the number of hours expended through the presentation of adequately recorded time records as evidence, see Watkins v. Fordice, 7 F.3d 453, 457 (5th Cir. 1993). A movant seeking attorneys' fees is also "charged with the burden of showing the reasonableness of the hours billed and, therefore, are also charged with proving that they exercised billing judgment," which "requires documentation of the hours charged and of the hours written off as unproductive, excessive, or redundant." Saizan, 448 F.3d at 799 (footnotes omitted).
The Court should use this reported time as a benchmark and then exclude any time that is excessive, duplicative, unnecessary, or inadequately documented. See Watkins, 7 F.3d at 457. The hours remaining are those reasonably expended. See id.
There is a strong presumption of the reasonableness of the lodestar amount. See Perdue v. Kenny A., 559 U.S. 542, 552 (2010); Saizan, 448 F.3d at 800. Further, "[i]f a party does not object to particular billing entries as inadequately documented, the court is not obligated sua sponte to sift through fee records searching for vague entries or block billing. It is a common practice for courts to address only those potentially inadequate entries brought to the court's attention." Hoffman v. L & M Arts, No. 3:10-cv-953-D, 2015 WL 3999171, at *5 (N.D. Tex. July 1, 2015).
And the Court should not "eliminate wholesale the services of attorneys without identifying the particular services which are regarded as duplicative." Tasby v. Estes, 651 F.2d 287, 289-90 (5th Cir. Unit A July 1981) (internal quotation marks omitted). "Percentage reductions are appropriate when attorneys impermissibly engage in block billing or fail to exercise billing judgment" — including by failing to write off time spent on work that was redundant and in hindsight may have been unnecessary — or "when a court reduces excessive time spent on particular legal services" or for particular services that are "duplicative." Fralick v. Plumbers & Pipefitters Nat'l Pension Fund, No. 3:09-cv-752-D, 2011 WL 487754, at *13 (N.D. Tex. Feb. 11, 2011); Shepherd v. Dallas Cty., Tex., No. 3:05-cv-1442-D, 2009 WL 977294, at *2 n.3 (N.D. Tex. Apr. 10, 2009); accord Saizan, 448 F.3d at 799 ("The proper remedy for omitting evidence of billing judgment does not include a denial of fees but, rather, a reduction of the award by a percentage intended to substitute for the exercise of billing judgment." (footnote omitted)); Cookston v. Freeman, Inc., No. 3:98-cv-2106-D, 1999 WL 714760, at *5 (N.D. Tex. Sept. 14, 1999).
After calculating the lodestar, the Court may either (1) accept the lodestar figure or (2) decrease or enhance it based on the circumstances of the case, taking into account what are referred to as the Johnson factors. See La. Power & Light Co. v. Kellstrom, 50 F.3d 319, 324, 329 (5th Cir. 1995); Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974), overruled on other grounds by Blanchard v. Bergeron, 489 U.S. 87, 90 (1989). The Johnson factors are: (1) the time and labor required; (2) the novelty and difficulty of the legal issues; (3) the skill required to perform the legal service properly; (4) the preclusion of other employment by the attorney as a result of taking the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or other circumstances; (8) the monetary amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) whether the case is undesirable; (11) the nature and duration of the professional relationship with the client; and (12) awards in similar cases. See Johnson, 448 F.2d at 717-19; see also Saizan, 448 F.3d at 800. Because the lodestar is presumed to be reasonable, it should be modified only in exceptional cases. See Watkins, 7 F.3d at 457.
The Court recognizes that the analysis set forth above, and particularly the interplay of the lodestar analysis and the Johnson factors, may have been called into question by the Supreme Court's decision in Perdue v. Kenny A., 559 U.S. 542 (2010). See Perdue, 559 U.S. at 552-53; S&H Indus., Inc. v. Selander, No. 3:11-cv-2988-M-BH, 2013 WL 6332993, at *2-*3 (N.D. Tex. Dec. 5, 2013). But, the United States Court of Appeals for the Fifth Circuit, without comment or reference to the Perdue decision, has continued to utilize the approach laid out by this Court. See Black v. Settle Pou, P.C., 732 F.3d 492, 502-03 (5th Cir. 2013). But see In re Pilgrim's Pride Corp., 690 F.3d 650, 663-64 (5th Cir. 2012) (analyzing whether any changes brought about by Perdue apply to bankruptcy attorneys' fees calculations); but see also In re ASARCO, L.L.C., 751 F.3d 291, 296 (5th Cir. 2014) (following Pilgrim's Pride).
And the Fifth Circuit, in a recent published opinion, has rejected the argument "that Perdue clearly disfavors applying the Johnson factors to determine a fee award and instead requires the use of only the lodestar." Combs v. City of Huntington, Tex., 829 F.3d 388, 393 (5th Cir. 2016). The Court of Appeals explained that
Id. at 393-95.
Perdue, then, did not change the proper method for calculating attorneys' fees awards in the Fifth Circuit. Accordingly, the analysis below will take into account the necessary factors when determining the appropriate amount of attorneys' fees to be awarded under Federal Rule of Civil Procedure 37(b)(2)(C).
As a threshold matter, Mbeteni's response to the Application asks the Court to reconsider the November 10, 2016 Memorandum Opinion and Order [Dkt. No. 103] because "there was substantial justification for the inability to complete the review in accordance with the Order of Court due to the overwhelming pressure of trial preparation and prescheduled deadlines in other cases as noted by the Magistrate Judge in December 2016 when counsel for Martin Mbeteni was conducting a trial in the District Court." Dkt. No. 152 at 2. According to Mbeteni's latest filing
Id. at 2-3.
The Court finds no basis for reconsideration of its previous determinations in the November 10, 2016 Memorandum Opinion and Order. These grounds were not previously raised but could have been and therefore provide no appropriate basis for reconsideration. And, regardless, the fact that the deposition that the Court was required to order Mbeteni to sit for had to be rescheduled because Mbeteni's counsel was in trial before United States District Judge Sam Lindsay on December 14, 2016 — and, more generally, counsel's protestations regarding her workload — do not change the Court's determination that the ordered sanctions are appropriate under Rule 37(b)(2)(C) or any of the findings and conclusions supporting that determination. Neither does Mbeteni's again repeating the rejected position that KeyCorp had agreed during the October 24, 2016 hearing to a rolling production, which, again, in any event, the Court did not order. Accord Dkt. No. 103 at 15-16; Dkt. No. 153 at 1-5.
Turning then to the merits of KeyCorp's Application, KeyCorp requests an order requiring Mbeteni's counsel to pay its reasonably incurred fees and expenses in the amount of $10,385.00. See Dkt. No. 131; Dkt. No. 153. This includes "legal fees incurred by Kaufman & Company and forensic consulting expenses incurred by BIA." Dkt. No. 131 at 3.
The fees sought consist of work performed by Steven S. Kaufman, a partner in Cleveland, Ohio with Kaufman & Company who has been a practicing trial lawyer and litigator for approximately 40 years with extensive trial and injunction proceeding experience in trade secret lawsuits; Chad D. Cooper, a partner in Cleveland with Kaufman & Company who has been a practicing trial lawyer and litigator for approximately 20 years with significant litigation experience in trade secret lawsuits; Sara Smoter, a junior associate in Cleveland who undertook initial research and drafting of the Sanctions Motion; and Ashtyn Saltz, the principle associate on the matter in Cleveland who engaged in subsequent analysis and drafting. See id. at 3-4; Dkt. No. 131-1 at 1-2. According to the Application, "Kaufman & Company's overall staffing of the project directed to obtaining the Court's Order was divided and assigned according to level of experience," where "Chad Cooper directed the drafting and revising, and Steve Kaufman provided the overall direction and guidance." Dkt. No. 131 at 4; Dkt. No. 131-1 at 2.
The reported time is attributable to preparing the Sanctions Motion, reviewing Mbeteni's Opposition to the Motion for Sanctions, preparing the Reply, and reviewing the Court's resulting order. See id.; Dkt. No. 131-1 at 2. KeyCorp seeks 2.8 hours at $175.00 an hour ($490.00) for the work performed by Smoter; 18.4 hours at $205.00 an hour ($3,772.00) for the work performed by Saltz; 11.7 hours at $385.00 an hour ($4,504.50) for the work performed by Cooper; and 1.3 hours at $385.00 an hour ($500.50) for the work performed by Kaufman, for a total of $9,267.00. See Dkt. No. 131-1 at 3-5.
KeyCorp's Application is supported by the Declaration of Chad D. Cooper and, as proof of the reasonableness of the requested hourly rates, the Declaration of Jacqueline C. Johnson, a shareholder in Dallas at Littler Mendelson, P.C. and KeyCorp's local counsel. See Dkt. Nos. 131-1 & 131-2. Johnson opines that the requested rates of $385 for partners and $175 and $205 for associates "are reasonable and within the market range for comparably qualified attorneys practicing in Dallas." Dkt. No. 131-2 at 1-2.
Cooper explains that "KeyCorp's costs and expenses related to the Motion for Sanctions and Mbeteni's violation of the Court's Order (Doc. No. 87) include costs incurred by [BIA], a Computer Forensics, Electronic Discovery and Information Management consulting firm retained by KeyCorp for this lawsuit." Dkt. No. 131-1 at 3. "By way of background, BIA collected electronically-stored information (`ESI') from Mbeteni and Defendant, Allison Holland," and, "[t]o facilitate Mbeteni's production of documents (after they were overdue), BIA agreed to provide hosting and a document review platform for Mbeteni's use." Id. "BIA also provided training for Mbeteni's counsel." Id.
Cooper asserts that "Mbeteni's failure to complete the BIA-hosted document review by October 31 (see Doc. No. 87), however, both necessitated KeyCorp's filing of the Motion for Sanctions and caused BIA to incur further cahrges in November related to Mbeteni's tardy document review." Id. at 3 (emphasis removed). KeyCorp therefore seeks to recover expenses based on 1.3 hours expended by BIA's Joseph Mosely and Richard Ford at $250.00 an hour ($325.00); 14.1 hours of Relativity document hosting at $35.00 an hour ($493.50); and 3 hours of Relativity user access at $100 an hour ($300.00), for a total of $1,118.50 in expenses incurred by BIA as forensic costs associated with the Sanctions Motion. See id. at 5; Dkt. No. 131 at 6.
Cooper's declaration includes a narrative description of the work done by the attorneys and by BIA and the number of hours that it took to complete the work. See Dkt. No. 131-1 at 3-5.
"Mbeteni opposes the application for award of attorney's fees because plaintiff padded the bill with duplicated efforts by multiple attorneys for the same task, included services that were wholly unrelated to the motion for sanctions and would have been incurred in the ordinary course of reviewing documents, as well as failure to comply with other requirements under the lodestar method of calculation." Dkt. No. 152 at 1. According to Mbeteni, "KeyCorp requests that the court approve $10,385.00 in fees for the overstaffed services of four (4) lawyers who allegedly spent varied and increasing time periods either in the passive role of an observer or drafting/preparing the same 11-page Motion for Sanctions, proposed order or Reply, including for internal conferences, phone calls and emails and even for services that took place after the Order for Sanctions was granted." Id. at 4; see also id. at 4-7.
Mbeteni further asserts that "KeyCorp has only provided evidence to support the hourly rate but has failed to produce any evidence in support of reasonableness of the hours billed for the services as required by lode-star." Id. at 1. According to Mbeteni, "KeyCorp has failed to exercise any billing judgment in this case and the affidavits of counsel are inadequate, by themselves to meet the evidentiary burden to show billing judgment. There is no evidence of any write off for unproductive, excessive or redundant hours even though KeyCorp bears the burden of proof. As a result, after excluding all duplicated efforts, reducing all block billed hours and striking all unrelated, vague and passive role hours, the court should reduce the hours remaining by 10 to 30 percent as approved by the Fifth Circuit." Id. at 16.
And Mbeteni contends that the expenses that BIA incurred were all "Unrelated Post Order `Expenses' that would have been incurred notwithstanding the Order." Id. at 7.
Mbeteni requests that the Court "limit the hours to those actually spent on the Motion for Sanctions and exclude all block billed time periods, duplicative, excessive, passive observer, inadequately documented time records and bills that show lack of billing judgment" and "strike all expenses as naturally occurring from the review and arising after the Order for sanctions was granted because these do not constitute `costs,'" where "[t]hese expenses would have been incurred notwithstanding the Motion for Sanctions being filed." Id. at 8. And, "[i]f the court is inclined to grant an award of any amount of attorneys' fees, Mbeteni humbly requests that the court grant a structured payment plan of $200 per month until paid off as neither he nor his attorney have the bulk cash to pay more than $200 per month." Id. at 17.
KeyCorp replies that it
Dkt. No. 153 at 2 (emphasis removed).
Mbeteni does not challenge the reasonableness of KeyCorp's attorneys' requested hourly rates, and the Court finds that the hourly rates of $385.00 for Kaufman and Cooper, $205.00 for Saltz, and $175 for Smoter are reasonable and within the market rate for similar services by attorneys of reasonably comparable skills, experience, and reputation handling this type of litigation in the Dallas area.
The Court now turns to the other lodestar-related matters raised by KeyCorp's Application to which Mbeteni objects.
Mbeteni is correct that Cooper and Johnson did not aver, as KeyCorp asserts in its Application, that "the hours charged by Kaufman & Company to prepare the [Sanctions] Motion, review the Opposition to the Motion, draft the Reply, and review the Court's Order granting the Motion were fair and reasonable under the circumstances." Dkt. No. 131 at 6; accord Dkt. Nos. 131-1 & 131-2.
And, in response to Mbeteni's assertion that KeyCorp presents no evidence of exercising billing judgment, KeyCorp responds only that it "reviewed its bills and identified only those entries pertaining to Key's Motion for Sanctions" and that it "explained in its Application how it reasonably staffed and managed the work relating to the Motion for Sanctions." Dkt. No. 153.
Judge Fitzwater has rejected a similar reply to a similar argument, albeit in a different context:
Altec Capital Servs., LLC v. Weir Bros., No. 3:11-CV-3409-D, 2013 WL 866193, at *6-*7 (N.D. Tex. Mar. 8, 2013).
To some extent, provided with adequate narrative descriptions, the Court can judge for itself the reasonableness of hours expended and attorney work undertaken and whether the fees were reasonably incurred in preparing and filing the Sanctions Motion — which is the specific universe of fees caused by Mbeteni's failure to comply with the Court's October 26, 2016 Memorandum Opinion and Order [Dkt. No. 87] that the Court, in its discretion, determined should be awarded under Rule 37(b)(2)(c).
But the Court cannot assess whether KeyCorp's attorneys exercised billing judgment without some evidence, and KeyCorp has not provided any, even in reply. Contrast Hancock v. Chicago Title Ins. Co., No. 3:07-cv-1441-D, 2013 WL 2391500, at *9 (N.D. Tex. June 3, 2013). As courts have in prior cases, the Court determines that 10% reduction in the attorneys' fees requested — after any reductions to specific time entries based on Mbeteni's other objections — is appropriate to account for this omission. See Saizan, 448 F.3d at 800; SCA Promotions, Inc. v. Yahoo! Inc., No. 3:14-cv-957-O, 2016 WL 8223206, at *9-*12 (N.D. Tex. Nov. 21, 2016), rec. accepted, 2017 WL 514545 (N.D. Tex. Feb. 8, 2017); Hoffman, 2015 WL 3999171, at *5.
"The term `block billing' refers to the disfavored time-keeping method by which each lawyer and legal assistant enters the total daily time spent working on a case, rather than itemizing the time expended on specific tasks. Block billing is disfavored because it prevents the court from accurately determining the time spent on any particular task, thus impairing the court's evaluation of whether the hours were reasonably expended. For example, a person engaging in block billing would record the total amount of time spent on a case that day, and then group several tasks under that single entry, leaving the court unable to determine how much time was devoted to a given task." Hoffman, 2015 WL 3999171, at *4 n.5 (citations and internal quotation marks omitted). This can make it "impossible to conduct meaningful review and determine the precise number of hours that should be reduced in each time entry due to vague descriptions." Barrow v. Greenville Indep. Sch. Dist., No. 3:00-cv-913-D, 2005 WL 6789456, at *12 (N.D. Tex. Dec. 20, 2005).
Mbeteni objects to Saltz's time entries on November 7, 8, and 9, 2016 as improper block billing. Saltz billed .20 hours for "[c]orrespondence with Chad Cooper" and another 4.70 hours on November 7 for "[d]etailed review of Motion for Sanctions briefing, including exhibits in support thereof and related Court orders in preparation of Reply in Support of Motion for Sanctions; preparation of initial arguments in response to Mbeteni's Opposition; conference with Chad Cooper; receipt and review of historical correspondence re issues in response to Mbeteni's Opposition to Motion for Sanctions." Dkt. No. 131-1 at 4. Saltz billed 7.10 hours on November 8 for "[p]reparation of Reply in Support of Motion for Sanctions against Mbeteni; conferences with Chad Cooper." Id. Saltz then, on November 9, billed .40 hours for "[r]esearch re filing requirements re Motion for Sanctions; correspondence with Chad Cooper"; another 3.90 hours for "[f]urther preparation of Reply in Support of Motion for Sanctions against Mbeteni; conferences with Chad Cooper; preparation of Declaration of Chad Cooper in support of the same; preparation of revised proposed Order"; and another 1.60 hours to "[a]ttend to preparation of exhibits and proposed order in relation to Reply in Support of Motion for Sanctions against Mbeteni; correspondence and conference with Candise Gusman." Id. Saltz's block-billed time entries account for 17.70 hours of time at $205.00 an hour, or $3,628.50 of the total $9,267.00 in fees that KeyCorp seeks to recover.
Mbeteni notes that Saltz's block-billed time entry referring to Candise Gusman "does not indicate who she is or the subject matter of his discussion with her." Dkt. No. 152 at 13. In reply, KeyCorp explains that "Ms. Gusman is a paralegal at Kaufman & Company who was involved in the preparation of exhibits to the reply" and asserts that "[n]ot only does the involvement of a paralegal reduce costs, but Key also did not seek reimbursement for her time." Dkt. No. 153 at 7.
KeyCorp protests that the November 7 and November 9 time entries do not meet the definition of "block billing" because Saltz recorded multiple time entries on each of those days. This defense is not well taken — the difficulty is with an attorney's grouping several tasks under that single entry, leaving the Court unable to determine how much time was devoted to a given task. Saltz's November 7, 8, and 9 time entries — other than the first November 7 entry that is limited to a single task — potentially pose this difficulty even though there are multiple time entries for each day.
KeyCorp further replies that these entries do not prevent the Court from determining the reasonableness of the time expended because they "provide great detail as to the work that counsel performed and enable the Court to determine the reasonableness of the hours expended" and do not require the Court to guess how much time should be allocated to activities pertaining to the Sanctions Motion and how much should be allocated to unrelated tasks." Dkt. No. 153 at 6.
The Court agrees. This is not an instance in which the Court is precluded from determining what part of a block of billed time was spent on legal work related to the Sanctions Motion as opposed to unrelated work or purely administrative tasks, and Mbeteni does not complain about or challenge the amount of time spent to accomplish the listed tasks. Contrast Merrick v. Scott, No. 3:10-cv-2172-D, 2011 WL 1938188, at *4 (N.D. Tex. May 20, 2011).
Mbeteni also complains that many of KeyCorp's attorneys' time entries reflect duplicative services. The Court finds these objections are, in part, not well-taken for the reasons that KeyCorp explains in reply:
Dkt. No. 153 at 8.
But, "[a]s noted, the court should exclude all time that is duplicative," and "[i]f more than one attorney is involved, the possibility of duplication of effort along with the proper utilization of time should be scrutinized." Wherley v. Schellsmidt, No. 3:12-cv-0242-D, 2014 WL 3513028, at *3 (N.D. Tex. July 16, 2014). The Court is not persuaded that KeyCorp should recover the time involved in having multiple attorneys review the Court's order granting the Sanctions Motion, even allowing that "Mr. Kaufman, Mr. Cooper, and Mr. Saltz are all counsel of record on this matter who are charged with being knowledgeable of this Court's orders." Dkt. No. 153 at 8.
Indeed, none of that time amounts to "reasonable expenses, including attorneys' fees, that Plaintiff KeyCorp incurred in preparing and filing of its Motion for Sanctions Against Defendant Martin Mbeteni [Dkt. No. 91]." Dkt. No. 103 at 18. Accordingly, the Court will not award any fees for Cooper's time entries on November 10, 2016 ($77.00 for .20 hours at $385.00 an hour) and November 11, 2016 ($231.00 for .60 hours at $385.00 an hour) or Kaufman's time entry on November 10, 2016 ($77.00 for .20 hours at $385.00 an hour) or Saltz's time entry on November 10, 2016 ($102.50 for .50 hours at $205.00 an hour), resulting in a total reduction on this ground of $487.50 in fees.
Mbeteni also complains about internal conferences among counsel that do not specify the subject matter of the discussion. The Court credits KeyCorp's explanation, as borne out in context and by Cooper's declaration, that the billed conferences in the submitted time entries all related to the Sanctions Motion.
But the Court finds that, while perhaps reflecting great care, charging Mbeteni's counsel with Saltz's "[r]esearch re filing requirements re Motion for Sanctions" and "correspondence with Chad Cooper" on November 9, 2016, eight days after the Sanctions Motion was filed, is excessive in context. The Court will not award this $82.00 (.40 hours at $205.00 an hour) in fees.
Mbeteni contends that "Steve Kaufman plays the passive behind the scenes role and Mbeteni should not be billed for his passive observer roles as follows: (1) November 1, 2016 `Review of emails between Chad Cooper and Ms. Offoboche re Mbeteni discovery' when he played no part in the preparation of the motion for sanctions. (2) November 1, 2016 unexplained `Email exchange with Chad Cooper' (3) November 7, 2016 `Review of Mbeteni filings and conference with Chad Cooper' none of which explains the relationship between the conference and the Motion for Sanctions." Dkt. No. 152 at 15.
KeyCorp responds that "Kaufman is the managing partner of Kaufman & Company and has been a practicing trial lawyer and litigator for approximately 40 years"; that, "[c]ontrary to Mbeteni's conclusion that Mr. Kaufman was merely a `passive observer,' Mr. Kaufman guided strategy regarding the Motion for Sanctions and communicated his strategy input to Mr. Cooper"; and that "Mr. Kaufman's time was proper." Dkt. No. 153 at 9.
The detail in these three time entries is somewhat wanting, but the timing and context, combined with Cooper's declaration explaining that these, along with the other time entries, "related to the preparation and filing of Plaintiff's Motion for Sanctions," Dkt. No. 131-1 at 3, adequately address these concerns. The Court finds that these fees are properly awarded as "incurred in preparing and filing of its Motion for Sanctions Against Defendant Martin Mbeteni [Dkt. No. 91]." Dkt. No. 103 at 18.
The same cannot be said for the expenses, all post-dating the Court's November 10, 2016 Memorandum Opinion and Order [Dkt. No. 103], that KeyCorp seeks to recover for work that BIA did or charges it incurred as forensic consulting expenses. Again, in exercising its discretion in granting the Sanctions Motion and imposing "the least severe sanction adequate to achieve Rule 37(b)(2)'s purposes of reimbursing KeyCorp and deterring violations of the Court's discovery orders," the Court has limited the Rule 37(b)(2)(C) award to requiring that "Defendant Martin Mbeteni's counsel must pay the reasonable expenses, including attorneys' fees, that Plaintiff KeyCorp incurred in preparing and filing of its Motion for Sanctions Against Defendant Martin Mbeteni [Dkt. No. 91]." Dkt. No. 103 at 17-18.
That does not include the "further charges" that KeyCorp contends that Mbeteni's violation of the Court's October 26, 2016 Memorandum Opinion and Order [Dkt. No. 87] "caused BIA to incur . . . in November related to Mbeteni's tardy document review." Dkt. No. 131-1 at 3. Accordingly, the Court will not award the requested $1,118.50 in expenses that KeyCorp seeks.
In sum, the Court calculates the lodestar as follows. After disallowing .80 hours billed by Cooper, .20 hours billed by Kaufman, and .90 hours billed by Saltz, the lodestar amount for the services of KeyCorp's attorneys amount to 2.8 hours at $175.00 an hour ($490.00) for the work performed by Smoter; 17.5 hours at $205.00 an hour ($3,587.50) for the work performed by Saltz; 10.9 hours at $385.00 an hour ($4,196.50) for the work performed by Cooper; and 1.1 hours at $385.00 an hour ($423.50) for the work performed by Kaufman, for a total of $8,697.50. See Dkt. No. 131-1 at 3-5. As explained above, the Court will reduce this by 10% for KeyCorp's failure to present evidence of its exercise of billing judgment, for a total lodestar figure of $7,827.75. The Court has considered the Johnson factors but notes that the lodestar is presumed to be reasonable and should only be modified in exceptional cases and finds no basis to modify it here.
The Court GRANTS in part and DENIES in part Plaintiff KeyCorp's Application for Attorneys' Fees [Dkt. No. 131] and ORDERS that Defendant Martin Mbeteni's counsel is required to, by
SO ORDERED.
