Aviva USA Corporation et al v. Vazirani et al

Filing 201

ORDER granting 113 Plaintiff's Motion for Attorney Fees and Related Expenses in the amount of $126,169.20. Signed by Judge James A Teilborg on 6/28/12. (DMT)

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WO

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Aviva USA Corporation, an Iowa)
corporation; Aviva Brands Limited, a)
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United Kingdom limited company,
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Plaintiffs,
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vs.
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Anil Vazirani, an individual; Vazirani &)
Associates Financial, LLC, an Arizona)
limited liability company; Secured)
Financial Solutions, LLC, an Arizona)
limited liability company; James Regan, an)
individual; Regan & Associates, LLC, an)
)
Arizona limited liability company,
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Defendants.
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Anil Vazirani, an individual; Vazirani &)
Associates Financial, LLC, an Arizona)
limited liability company; and Secured)
Financial Solutions, LLC, an Arizona)
limited liability company,
)
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Counterclaimants,
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Aviva USA Corporation, an Iowa)
Corporation; and Aviva Brands Limited, a)
United Kingdom limited company,
)
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Counterdefendants.
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No. CV-11-0369-PHX-JAT
ORDER

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Pending before the Court is Plaintiffs’ Motion for Attorneys’ Fees and Related
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Expenses (Doc. 113). In a previous order, this Court found that Plaintiffs Aviva USA
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Corporation and Aviva Brands Limited (“Aviva”) are entitled to sanctions against

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Defendants Anil Vazarani, Vazirani & Associates Financial LLC, Secured Financial

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Solutions, LLC (the “Vazirani Defendants”), James Regan, and Regan and Associates, LLC

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(the “Regan Defendants”) for bad faith spoliation of evidence. The Court found that Aviva

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is entitled to “reasonable attorneys’ fees incurred in connection with [the motion for

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sanctions] and seeking spoliated evidence.” (Doc. 101 at 14). The Court ordered the Parties

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to confer in good faith and, if no agreement as to reasonable attorneys’ fees could be reached,

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directed Plaintiffs to file a motion for attorneys’ fees in compliance with the Local Rules of

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Civil Procedure. Plaintiffs now move this Court for an award of those fees and related

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expenses. (Doc. 113 and Doc. 114).

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I.

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Having found that sanctions are appropriate, the Court must determine whether the

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REASONABLENESS OF FEE AWARD

amount of fees requested is reasonable.
A.

Legal Standard

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In assessing the reasonableness of a sanctions award based upon attorneys’ fees and

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costs, a court must inquire into the reasonableness of the attorneys’ fees and the costs.

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Brown v. Baden (In re Yagman), 796 F.2d 1165, 1184–85 (9th Cir. 1986); see also Mirch v.

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Frank, 266 F. App’x 586, 588, 2008 WL 341429, at *2 (9th Cir. 2008) (“[r]easonableness

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is the benchmark for sanctions based on attorneys’ fees”). The Court has broad discretion

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in determining what fees and costs are reasonable. See Leon v. IDX Sys. Corp., 464 F.3d

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951, 961 (9th Cir. 2006).

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Local Rule of Civil Procedure 54.2 requires that motions for attorneys’ fees must (1)

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specify the amount of fees and costs sought; (2) discuss the moving party’s eligibility and

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entitlement for the requested expenses; (3) discuss the reasonableness of the requested award;

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(4) provide supporting documentation; and (5) give an itemized account of the time expended

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and expenses incurred. LRCiv. 54.2.

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Once a party submits an itemized list of fees with sufficient detail and establishes

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entitlement to fees, the burden then shifts to the party challenging the fees to show that they
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are unreasonable. The response must separately identify each and every disputed time entry

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or expense item. LRCiv 54.2(f).

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B.

Aviva’s Claimed Fees

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Aviva claims they are entitled to attorneys’ fees and related expenses in the amount

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of $249,254.42. (Doc. 113 at 1). This is broadly divided into three categories: attorney and

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paralegal fees for preparing the Spoliation Motion and the fees motion ($151,847.45);

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expenses for a computer expert to aid in preparing the motions ($41,274.30); and attorney

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and paralegal fees for discovery related to seeking spoliated evidence ($56,132.67). (Doc.

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114 at 2). This third category has been determined by dividing Aviva’s overall litigation fees

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by the fees incurred regarding the spoliation motion, and then applying this ratio to the fees

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incurred by Aviva in conducting discovery after evidence of spoliation first came to light on

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May 17, 2011. (Doc. 114 at 2-3). Aviva’s attorneys have provided an itemized list of fees

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and related expenses for the case, and an explanation of why they are reasonable as required

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under LRCiv 54.2(d)(2). Thus, the burden shifts to Defendants to demonstrate why the

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claimed fees and expenses are unreasonable.

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C.

Defendants’ Response

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Defendants challenge several of the claimed expenses. Specifically, they challenge

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the inclusion of fees spent working on Aviva’s application for fees, the inclusion of fees

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incurred by eleven hours spent working on motions to exceed page limitations, and a lack of

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detail in the entries regarding the expert expenses. (Doc. 144 at 6-7, 9). More generally,

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Defendants challenge excessive review and revision entries, duplication of attorney effort,

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a lack of specificity regarding individual tasks, block billing and the lumping of time entries,

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and the way at which Aviva arrived at their discovery fees. (Doc. 144 at 6, 8-9, 10-12).

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D.

Reasonableness

The Court will first examine Defendants’ challenges to the presumptive amount of
$249,254.42.
i.

Motions to Exceed Page Limits

The Defendants challenge the entries regarding motions to exceed page limitations.
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Specifically, Defendants argue that such motions are typically written from templates, and

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should not take as long as the 11 hours claimed. (Doc. 144 at 7). The Court agrees that the

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time spent was excessive. Additionally, the motions are only tangentially related to the

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motion for sanctions. As such, the Court reduces Aviva’s award by $1,949.70, the amount

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listed for work on these motions.

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ii.

Costs For Fee Application

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Defendants broadly challenge the inclusion of the fees Aviva incurred in preparing

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their motion for fees. The Court will not approve of Aviva’s request for fees incurred in

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preparing the motion for fees and expenses. In its January 10, 2012 Order (Doc. 43), the

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Court did not state that Aviva would be entitled to the recovery of such fees. Local Rule

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54.2(c)(2) states that “[i]f the moving party claims entitlement to fees for preparing the

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motion and memorandum for award of attorneys’ fees and related non-taxable expenses, such

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party also must cite the applicable legal authority supporting such specific request.” LRCiv

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54.2(c)(2). Although Aviva does cite to authority for awarding such fees under other fee-

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shifting rules, they have failed to do so for sanctions under the Court’s inherent power. (Doc.

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114 at 10) (citing Anderson v. Director, Office of Workers Compensation Programs, 91 F.3d

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1322, 1325 (9th Cir. 1996) (holding that time spent preparing the fee application must be

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included in reasonable fees under federal fee-shifting statutes)). Defendants submit that the

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amount claimed for this preparation is $15,921.95. (Doc. 144-3 at 2). Accordingly, the Court

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reduces Aviva’s claimed entitlement by $15,921.95.

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iii.

The Expert’s Time

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Defendants also challenge the entries regarding the computer expert retained by

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Aviva. Defendants argue that nothing in Aviva’s motion reveals what this expert time was

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spent on, and hence, whether it was reasonable cannot be determined. (Doc. 144 at 9). The

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Court agrees. It is possible that the Court could have found that the expense of retaining Mr.

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Reinmuth was reasonable if more detail had been provided. However, the Court will not

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allow expenses to be claimed without such detail. LRCiv 54.2(e)(3) (“Failure to itemize and

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verify costs may result in their disallowance by the court”). Consequently, the Court reduces
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Aviva’s claimed entitlement by $49,080.90, including the attorneys’ fees incurred in

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corresponding with Mr. Reinmuth.

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iv.

Plaintiffs’ Discovery Costs

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Defendants broadly challenge the way at which Aviva arrived at the figure of

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$56,132.67 for its discovery fees related to the spoliated evidence. They argue that using the

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percentage of total fees expended on the spoliation motion and applying it to the discovery

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costs is arbitrary and speculative. (Doc. 144 at 11). Aviva acknowledges that arriving at the

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correct figure is “more complicated,” but then fails to actually attempt to link any discovery

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fees to the spoliated evidence itself. (Doc. 114 at 2). Although some percentage of the total

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discovery is certainly related to the spoliated evidence, it is not the Court’s role to guess at

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an adequate number without further guidance from Aviva. Nor must Defendants challenge

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each individual discovery item, when the detail for the amount claimed is deficient. The

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Court thus awards nothing for discovery fees and will reduce Aviva’s claimed entitlement

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by $56,132.67.

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v.

Billing In General

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The Defendants broadly challenge all of the claimed fees as wasteful and not specific

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enough. For example, they argue that Aviva improperly included all time spent preparing

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for oral argument on the spoliation motion, when the argument included two other motions.

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(Doc. 144 at 6, 14-15). However, they fail to point to more than a few highlighted entries,

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and thus do not meet their burden to oppose with specificity each disputed time entry. LRCiv

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54.2(f). The Defendants also cite to a 1984 case in this district as authority for denying all

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aggregate fees requested. (Doc. 144. at 8) (citing Metro Data Sys., Inc. v. Durango Sys., Inc.,

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597 F. Supp. 244 (D. Ariz. 1984)). That decision points to specific examples of the kinds of

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aggregate fees Defendants requested in that case. But the Court is not required to analyze

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all 98 pages of line entries to determine which are duplicate efforts. Nor is it required to look

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at every entry to determine which are excessive. It is Defendants’ burden to challenge fees

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with specificity.

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Defendants suggest an across-the-board reduction to account for these problems, and
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cite to Welch v. Metro. Life Ins. Co., 480 F.3d 942 (9th Cir. 2009), to support such a

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reduction. However, the holding in that case remanded the block billing issue because the

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reduction applied by the district court failed to identify which hours were actually block

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billed. Id. at 948. Defendants have failed to identify which hours were actually duplicative,

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merely labeling the duplicate billing “pervasive.” (Doc. 144 at 9). As such, the Court will

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not apply a reduction for allegedly duplicative billing.

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II.

AMOUNT OF SANCTIONS

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As described above, the proper amount of sanctions is the claimed amount

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($249,254.42), less the discovery-related fees ($56,132.67), the motion for page limit fees

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($1,949.70), the fee application fees ($15,921.95), and the expert’s expenses ($41,274.30)

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and related fees ($7,806.60). The amount Aviva is entitled to is thus $126,169.20. The Court

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is satisfied that this amount represents a sufficient sanction in attorneys’ fees for Defendants’

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misconduct in spoliating evidence, and shall serve as an adequate deterrent to future

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misconduct.

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III.

ALLOCATION OF SANCTIONS

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The Court finds the Vazirani Defendants and Regan Defendants equally culpable for

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the spoliation of evidence, and further finds that they should bear the sanction jointly and

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severally.

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IV.

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Accordingly,

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IT IS ORDERED that Plaintiffs’ Motion for Attorneys’ Fees and Related Expenses

CONCLUSION

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(Doc. 113) is granted in the amount of $126,169.20.

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DATED this 28th day of June, 2012.

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