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Atmosphere Hospitality Management, LLC v. Curtullo

United States District Court, D. South Dakota, Western Division

January 9, 2015

ATMOSPHERE HOSPITALITY MANAGEMENT, LLC, Plaintiff,
v.
ZELJKA CURTULLO, Defendant, SHIBA INVESTMENTS, INC., KARIM MERALI, and Defendants and Third-Party Plaintiffs,
v.
JAMES HENDERSON, Third-Party Defendant.

ORDER ON MOTION FOR ATTORNEY'S FEES AND MOTION FOR SANCTIONS

KAREN E. SCHREIER, District Judge.

Plaintiff, Atmosphere Hospitality Management, LLC, requests attorney's fees in connection with its first motion to compel discovery. Separately, Atmosphere moves for sanctions against defendants/third-party plaintiffs, Shiba Investments, Inc., and Karim Merali. The court grants in part and denies in part the motion for attorney's fees and orders further briefing on the motion for sanctions.

BACKGROUND

Atmosphere brought this action against Shiba and Merali to resolve issues related to a licensing contract and management contract between the parties that allowed Shiba to operate a hotel it owned under Atmosphere's brand, "Adoba." Following numerous discovery disputes, Atmosphere moved to compel certain items of discovery. Docket 98. The court held a hearing on that motion, and granted most, but not all, of the relief requested by Atmosphere. Docket 135. Subsequently, Atmosphere filed the pending motion for attorney's fees relating to the first motion to compel discovery. Docket 147. The same day, Atmosphere also filed a motion for sanctions pursuant to Federal Rule of Civil Procedure 37(b)(2)(A) based on a failure to comply with the court's order on the motion to compel responses to the first set of discovery. Docket 150.

DISCUSSION

I. Motion for Attorney's Fees

A. Standard

The court may award attorney's fees in connection with a motion to compel. See Fed.R.Civ.P. 37. In instances where the motion to compel is granted in part and denied in part, the court "may, after giving an opportunity to be heard, apportion the reasonable expenses for the motion." Fed.R.Civ.P. 37(a)(5)(C).

B. Discussion

At the hearing on September 29, 2014, the court found that Atmosphere was entitled to attorney's fees for the motion to compel and instructed Atmosphere to file a motion outlining the amount requested for that motion. See Docket 169 at 36 (transcript of hearing). Atmosphere requested a total of $22, 337 in attorney's fees for attorneys Sara Frankenstein and Jana Smoot White along with an intern and a paralegal. Atmosphere has also requested $5, 498.71 in expenses based on services provided by Computer Forensic Resources, Inc. (CFR) to obtain electronic discovery connected to several of the discovery requests subject to the first motion to compel. The court must evaluate those requests to determine whether they are reasonable. To do so, the court multiplies the number of hours reasonably expended by the reasonable hourly rates. See Finley v. Hartford Life & Accident Ins. Co., 249 F.R.D. 329, 332-33 (N.D. Cal. 2008). The burden is on the moving party to prove that the request for attorney's fees is reasonable. Tequila Centinela, S.A. de C.V. v. Bacardi & Co., 248 F.R.D. 64, 68 (D.D.C. 2008).

Attorney Frankenstein billed at an hourly rate of $250. Attorney Smoot White billed at $210 per hour. Atmosphere was billed at a rate of $100 per hour for the time of an intern and a paralegal. Recently, Magistrate Judge Duffy found that in the District of South Dakota, "the hourly rates of attorneys' fees have ranged from $145 per hour to $250 per hour." Anspach v. United of Omaha Life Ins. Co., Civ. No. 10-5080-JLV, 2011 WL 4832563, at *1 (D.S.D. Oct. 12, 2011). Defendants do not object to the rates in this instance.[1] Docket 159 at 3. The court finds that the hourly rates charged by plaintiff's counsel are reasonable.

Next, the court must determine whether the number of hours spent on the motion to compel was reasonable. Rule 37 requires a causal connection between the expenses incurred and the discovery violation. See Tequila Centinela, 248 F.R.D. at 69. Expenses that would be incurred as part of the ordinary and necessary course of litigation are not recoverable, even if they bear a relationship to the motion to compel. Id.

Atmosphere submitted affidavits detailing the time billed that Atmosphere believes is compensable. Defendants object that the amount of time is excessive for a run-of-the-mill motion to compel, that the billing entries are not specific enough, and that the charges dealing with the inspection of Merali's computer are not related to the motion to compel. Docket 159.[2]

The motion to compel in this instance was not routine or simple. Although the legal issues were not overly complicated, there were numerous discovery issues and those issues were fact intensive. The motion also entailed review of a substantial number of documents and discovery responses. Additionally, resolving the motion to compel required writing an initial brief and a reply brief and attending a hearing. This motion to compel is more complex and time-consuming than an average motion to compel. Atmosphere's request for fees is not unreasonable on that basis.

The billing entries do reflect instances where Atmosphere was billed for activity in the ordinary or necessary course of litigation, such as the exchange and review of discovery. Even though those activities are related to the motion to compel, Atmosphere would have needed to review the discovery in the ordinary course of litigation. See Tequila Centinela, 248 F.R.D. at 70 ("Here, time spent discussing ongoing issues such as the status of and adequacy of Bacardi's discovery responses do not necessarily constitute hours reasonably spent on filing the motion to compel nor do they directly arise from it."). Similarly, the fees billed by CFR to obtain the electronic discovery were not a direct result of defendants' conduct that resulted in the motion to compel because Atmosphere would have incurred similar expenses to review the electronic discovery in the ordinary course of litigation. After review of the billing entries submitted, [3] the court finds that Atmosphere is entitled to recover fees for 22.3 hours billed by Attorney Frankenstein, 22.2 hours billed by Attorney Smoot White, 20.5 hours billed by the intern, and 0.8 hours billed by the paralegal on the motion to compel.

Even when work is directly related to a motion to compel, a party is not entitled to be reimbursed for duplicative efforts. See id. at 71 (recognizing that parties should generally not be reimbursed for nonproductive or duplicative work). The determination of how much to reduce a claim for fees is committed to the court's discretion and need not be precisely computed. Id. ...


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