Cramton v. Grabbagreen Franchising LLC et al

Filing 518

ORDER: IT IS ORDERED that: 1. Defendants' Rule 52 and Rule 59 motion pertaining to Count Four (Doc. 467 ) is denied. 2. Defendants' Rule 59 motion pertaining to Count Five (Doc. 473 ) is denied. 3. Defendants' Rule 59 motion p ertaining to spoliation sanctions (Doc. 475 ) is denied. 4. Defendants' motion for attorneys' fees and costs (Doc. 481 ) is denied. 5. Defendants' motion for sanctions pursuant to 28 U.S.C. § 1927 and inherent authority (D oc. 487 ) is denied. 6. Cramton's amended motion for attorneys' fees and costs (Doc. 483 ) is granted in part and denied in part. Cramton is awarded $210,820 in attorneys' fees payable by Defendant Keely Newman and is awarded $10,256 in attorneys' fees payable by Defendant Eat Clean Operations LLC. 7. Cramton is also authorized to file a supplemental application for the fees she incurred when responding to Defendants' reconsideration motions (Docs. [46 7], 473 , and 475 ) and when responding to the order soliciting supplemental briefing on one of those motions (Doc. 508 ). Such application must be filed within 14 days of the issuance of this order [see attached Order for details]. Signed by Judge Dominic W Lanza on 5/27/22. (MAW)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Kim Cramton,

No. CV-17-04663-PHX-DWL

Plaintiff,

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ORDER

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v.

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Grabbagreen Franchising LLC, et al.,

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Defendants.

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INTRODUCTION

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Between September 2014 and September 2017, Plaintiff Kim Cramton (“Cramton”)

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worked in various capacities for entities associated with the Grabbagreen healthy fast-food

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franchise. In December 2017, Cramton initiated this action by filing a complaint in which

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she asserted tort, contract, and statutory employment claims against entities and individuals

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associated with Grabbagreen (together, “Defendants”). Defendants, in turn, asserted an

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array of counterclaims against Cramton. Finally, in November 2021, after four years of

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hard-fought litigation—which included a motion for terminating sanctions based on the

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destruction of electronically stored information (“ESI”), a finding that Cramton had

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partially waived the attorney-client privilege by producing a hard drive containing

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privileged documents to Defendants, litigation over the enforceability of two contractual

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jury waivers, two rounds of summary judgment briefing, a stay occasioned by a corporate

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bankruptcy, and a bench trial conducted during the heart of the pandemic in which a former

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defendant served simultaneously as trial counsel and as a witness—the Court entered

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judgment in Cramton’s favor on two of her claims, awarding her just over $73,000.

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Alas, the entry of judgment did not bring an end to this case but simply served as

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the impetus for a blizzard of new motions. Now pending before the Court are: (1) three

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motions for reconsideration (or similar relief) filed by Defendants (Docs. 467, 473, 475),

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which effectively seek to relitigate most of the key adverse rulings against Defendants over

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the last four years; (2) the parties’ dueling motions to be considered the prevailing party

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and recover their attorneys’ fees and costs, with Defendants seeking an award of nearly

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$1.1 million (Doc. 481) and Cramton seeking an award of nearly $400,000 (Doc. 483); and

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(3) Defendants’ motion for an award of over $850,000 in sanctions against Cramton and

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her counsel for pursuing frivolous claims (Doc. 487).

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For the reasons that follow, all of Defendants’ motions are denied and Cramton’s

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motion for attorneys’ fees and costs is granted in part. Specifically, Cramton is awarded

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$10,236 in attorneys’ fees against Defendant Eat Clean Operations LLC (“ECO”), which

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are the fees that Cramton reasonably expended in pursuit of her successful claim in Count

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Five against ECO for breach of contract, and $210,820 in attorneys’ fees against Defendant

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Keely Newman (“Keely”), which are the fees that Cramton reasonably expended in pursuit

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of her successful claim in Count Four against Keely under the Arizona Minimum Wage

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Act (“AMWA”). Additionally, Cramton is authorized to file a supplemental application

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for the fees she incurred when responding to Defendants’ three reconsideration motions.

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DISCUSSION
I.

First Motion For Reconsideration—AMWA Claim (Doc. 467)

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A.

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In Count Four of the operative complaint, Cramton asserted a claim against “All

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Defendants” for violating AMWA by failing to pay her “for any of her employment

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services from December 1, 2016 until her [resignation] in September of 2017.” (Doc. 88

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¶¶ 111-18.)

Relevant Background

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In a December 2019 order, the Court concluded that three Defendants—ECO, Eat

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Clean Holdings, LLC (“ECH”), and Kelli Newman (“Kelli”)—were entitled to summary

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judgment on Cramton’s AMWA claim because none of them qualified as Cramton’s

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“employer” but that Cramton and the remaining two Defendants—Keely and Grabbagreen

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Franchising, LLC (“GFL”)—were not entitled to summary judgment because triable issues

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of fact existed as to whether GFL and Keely paid any wages to Cramton during the period

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in question. (Doc. 247 at 41-46.)
In June 2020, Defendants filed a motion to strike Cramton’s jury demand. (Doc.

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322.)

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In an October 2020 order, the Court granted Defendants’ motion in part. (Doc. 345

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at 21-39.) On the one hand, the Court found that Cramton had knowingly and voluntarily

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signed a pair of contractual jury waivers, that Defendants had not forfeited their ability to

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enforce the jury waivers, and that the waivers were broad enough to encompass Cramton’s

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AMWA claim in Count Four against Keely as well as several of her other remaining claims.

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(Id.) On the other hand, the Court held that the waivers were not broad enough to

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encompass Cramton’s AMWA claim in Count Four against GFL. (Id.) Given these

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determinations, the Court severed Cramton’s AMWA claim against GFL from the

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remaining claims and set those claims for a bench trial. (Id.)

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The scheduling of the bench trial proved difficult in light of the COVID-19

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pandemic. (Docs. 347, 348, 356, 369, 377, 378.) Finally, in a minute entry issued on

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December 7, 2020, the Court stated that the bench trial would be held in 2021, ordered the

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parties to meet-and-confer about an agreeable date, and informed the parties that “[t]he

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Court’s intent is to hold trial in one calendar week, so the parties should attempt to identify

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three weeks in which they are both available.” (Doc. 378.)

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On December 16, 2020, the parties filed a “Joint Notice Regarding Trial Dates.”

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(Doc. 382.) In this filing, neither side raised any objection to the Court’s plan to complete

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trial in one week. (Id.) Using the dates proposed by the parties, the Court set the bench

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trial for May 24-28, 2021. (Doc. 383.)

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Between December 2020 and May 2021, Defendants filed various motions and

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other documents related to witness matters and trial logistics. (Docs. 384, 387, 390.) In

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none of those filings did Defendants object to the one-week trial schedule. (Id.)

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At the outset of trial on May 24, 2021, the Court “cover[ed] a few housekeeping

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matters.” (Doc. 421 at 20.) One of those matters related to “timing.” (Id. 20-21.) On that

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issue, the Court explained: “[W]e have allocated the entire week for the trial. My general

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schedule when I’m in trial is we’ll go from 9:00 to 10:30, take a morning break, go from

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10:45 to noon. We’ll start up again in the afternoon at 1:30, go until 3:00, take our

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afternoon break and go from 3:15 until 4:30. If . . . we have legal matters we need to

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address, we can address [them] from 1:00 until 1:30, or we can do it in the morning before

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we start at 9:00. So following that schedule we will have about 27.5 hours of trial time

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during the week. So we had previously discussed allocating that time evenly between the

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two parties, so I’ll be keeping track up here.” (Id.) Neither side objected to this approach

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or to the time allocations. (Id.)

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Throughout the remainder of the bench trial, the Court provided frequent updates to

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the parties concerning how much time they had used. (Doc. 422 at 126; Doc. 424 at 117-

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18; Doc. 426 at 189; Doc. 427 at 99-100, 221; Doc. 428 at 6, 95, 123, 142, 212, 220.)

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Neither side ever suggested, in response to any of these reminders, that the time allocations

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were insufficient.

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On May 28, 2021, the parties gave their closing arguments. (Doc. 428.) Notably,

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although Defendants urged the Court to find that Cramton had exaggerated when

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describing the number of hours she had worked for GFL, Defendants did not identify a

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lower, alternative figure. (Id. at 1098-1101.)

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On June 23, 2021, the Court issued its findings of fact and conclusions of law arising

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from the bench trial. (Doc. 429.) With respect to Cramton’s AMWA claim in Count Four

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against Keely, the Court made factual findings that (1) Keely exercised various modes of

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control over Cramton’s employment with GFL, including serving as Cramton’s boss,

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possessing authority to set Cramton’s salary and the salary of other GFL employees,

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controlling Cramton’s schedule, and possessing authority to reduce Cramton’s salary; (2)

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Cramton’s testimony as to the amount of hours she worked for GFL in December 2016

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(140 hours) and between January 2017 and September 2017 (1,583 hours) was credible;

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and (3) “the periodic payments Cramton received throughout 2017 were loan repayments

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on the ECO promissory note, not wage payments from GFL,” and thus “Cramton stopped

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receiving wages from GFL in early December 2016 and did not receive any such wages

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afterward.” (Id. at 19-21, 26.)1 Based on these factual findings, the Court stated in the

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“Conclusions of Law” section of the order that Keely qualified as Cramton’s employer for

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purposes of Cramton’s work for GFL; that Cramton was entitled to a minimum wage of at

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least $16,957 under AMWA for the hours she worked for GFL between December 2016

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and September 2017; and that Keely was liable for violating AMWA because Cramton did

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not receive any wages for her work for GFL during the period in question. (Id. at 25-27.)

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With respect to the last point, the Court clarified that the health insurance premiums and

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car payments paid by GFL on Cramton’s behalf during the period in question did not

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qualify as “wages.” (Id.) Because trebling is statutorily required under AMWA, the Court

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concluded that Keely was liable to Cramton in the amount of $50,871 on Count Four. (Id.)

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On June 28, 2021, the Court solicited the parties’ views as to how to proceed on

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Cramton’s remaining AMWA claim in Count Four against GFL. (Doc. 430.)

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reviewing the parties’ joint statement (Doc. 432), the Court initially stated that it was

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inclined to schedule a jury trial on that claim. (Id. at 434 at 3-5.) However, at Cramton’s

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request (Doc. 436), the Court then authorized Cramton to file a successive motion for

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summary judgment as to her AMWA claim against GFL. (Doc. 437.)

After

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On October 14, 2021, after considering the parties’ briefing (Docs. 440, 442, 443),

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the Court issued an order denying Cramton’s motion for summary judgment as to her

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AMWA claim against GFL. (Doc. 444 at 6-11.)

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On October 26, 2021, Cramton filed a motion to dismiss, with prejudice, her

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AMWA claim in Count Four against GFL. (Doc. 447.) GFL later filed an opposition to

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The Court also noted that, “[t]o the extent it is not moot in light of the above
findings, . . . [Cramton] was not required to record or otherwise keep track of her GFLrelated time. This, in turn, triggers a rebuttable presumption that GFL did not pay the
required minimum wage. See A.R.S. § 23-364(D). The Court finds that Keely did not
rebut this presumption.” (Doc. 429 at 20.)
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this motion and a sur-reply further opposing this motion. (Docs. 449, 453.)

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On November 23, 2021, the Court issued an order granting Cramton’s motion to

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dismiss her AMWA claim in Count Four against GFL. (Doc. 454.) The order explained:

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“The Court is confronted with an unusual situation—a plaintiff wishes to dismiss all of her

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claims against a particular defendant with prejudice, but that defendant refuses to accept

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this unqualified victory and seeks to force the plaintiff to litigate her claims to completion

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via jury trial. Tellingly, GFL fails to identify any case denying a dismissal request under

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analogous circumstances.” (Id. at 3.)

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On November 30, 2021, the Court entered judgment in Cramton’s favor. (Doc.

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461.) Among other things, the judgment ordered that Cramton “recover $50,871 from

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Defendant Keely Newman” but “recover nothing on her claim(s) against . . . GFL.” (Id.)

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On December 27, 2021, Keely filed the first motion now pending before the Court—

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a motion to alter and amend the Court’s findings and judgment with respect to the AMWA

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claim in Count Four and/or for a new trial on that claim. (Doc. 467.)

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On February 14, 2022, Cramton filed an opposition. (Doc. 498.)

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On February 22, 2022, Keely filed a reply. (Doc. 505.)

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B.

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Keely raises an array of challenges to the Court’s factual findings and legal

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conclusions pertaining to Cramton’s AMWA claim in Count Four. (Doc. 467.) First,

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Keely argues that the Court violated “standard statutory construction principles” when

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concluding that the payments Cramton received in 2017 were ECO loan repayments rather

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than GFL wage payments. (Id. at 3-5.) Second, Keely argues that the Court’s decision to

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characterize the payments as ECO loan repayments was the product of an “unalleged

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contract claim.” (Id. at 5-9.) Keely further argues that the implied contractual analysis

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was faulty because GFL had no incentive to mischaracterize the wage payments as loan

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repayments; because any decision to mischaracterize the payments in this fashion was

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subject to the “condition precedent of approval from GFL’s tax advisors,” who

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subsequently declined to provide such approval; because the GFL board resolution did not

The Parties’ Arguments

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exist in December 2016 and does not represent “what the parties actually did”; and because

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any decision to mischaracterize the wage payments as loan repayments was illegal and thus

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“clearly void ab initio.” (Id.) Third, Keely argues that Cramton’s testimony concerning

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the number of hours she worked was inaccurate (and, thus, the Court’s reliance on that

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testimony was misplaced) because Cramton included on-call time that is not compensable

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under Arizona law. (Id. at 9.) Fourth, Keely argues that the Court erred by failing to

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characterize the $548.10 in monthly car payments as wages. (Id. at 9-10.) Fifth, Keely

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argues that she should not be held liable for any AMWA violation in 2016 for two reasons:

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(a) AMWA liability must be calculated on an annual basis, and because Cramton received

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over $180,000 in wages from GFL during the first eleven months of 2016, she cannot assert

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an AMWA claim for unpaid wages in December 2016; and/or (b) Cramton’s testimony as

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to the number of hours she worked in December 2016 is undermined by evidence that

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Cramton was performing various “non-work activities” (including recovering from

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shoulder surgery and working for GGS) during the period in question. (Id. at 10-11.) Sixth,

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Keely argues that because “Cramton failed to notify Keely of Cramton’s purported work

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during every waking hour for GFL,” the purported “suffer or permit to work” requirement

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was not satisfied. (Id. at 11-12.) Seventh, Keely argues that she introduced various pieces

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of evidence at trial that the Court should have viewed as discrediting Cramton’s testimony

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as to the number of hours worked. (Id. at 12.) Eighth, in a related vein, Keely argues that,

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because she instructed Cramton to focus her work on GGS-related matters, “it was

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impossible for Cramton to work 1,723 hours for GFL” and “Cramton was untruthful with

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this Court at trial.” (Id. at 12-13.) Ninth, Keely argues that the Court erred in concluding

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that the final $20,000 payment to Cramton was an ECO loan repayment that followed the

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same pattern as previous payments. (Id. at 13-14.) Tenth, Keely argues that “[t]he trial

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limitations imposed on the Defendants deprived Keely of procedural due process and the

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opportunity to present sufficient evidence on which to base a reliable judgment under

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Count IV.” (Id. at 14-16.) Eleventh, Keely argues that the Court erred in finding that

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Cramton was entitled to a rebuttable presumption under A.R.S. § 23-364(D). (Id. at 16-

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17.) Based on these challenges, Keely seeks either an amendment of the court’s findings

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and conclusions or a new trial. (Id. at 17.)

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Cramton opposes Keely’s motion and argues that she is entitled to the attorneys’

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fees incurred in preparing her response. (Doc. 498.) As an initial matter, Cramton notes

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that because “Keely has not cited any newly discovered evidence, and there has not been

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any intervening change in law, Keely’s motion will succeed only if this Court committed

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a clear or manifest error of law.” (Id. at 4.) Cramton contends that Keely cannot meet this

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standard because all of the arguments raised in her motion are either recycled arguments

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she unsuccessfully raised during earlier stages of the case or new arguments she is

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improperly attempting to raise for the first time. (Id. at 4-5.) More specifically, Cramton

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argues that the Court properly concluded that the ECO payments on the promissory note

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were not “wages” under AMWA and instead were paid “by reason of” her status as an ECO

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noteholder (id. at 5-7); that Keely’s “contract analysis” arguments are irrelevant because

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the Court did not apply contract law (id. at 6); that the Court did not clearly error in

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determining that her hours-related testimony was credible (id. at 7-8); that Keely’s “on-call

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hours” arguments miss the mark because she already excluded those hours from her

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summary (id. at 8); that Keely’s due process challenge to the allocation of time at trial “is

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a seminal example of an unreasonable and vexatious use of these legal proceedings in bad

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faith” (id. at 9); that the Court properly applied the facts to the law in concluding that Keely

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qualified as her employer (id. at 9-10); that the Court properly determined that the car

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payments did not qualify as “wages” (id. at 10); that the Court properly determined that the

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$20,000 payment was an ECO loan repayment, not a GFL wage payment (id. at 10-11);

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that all employees in Arizona are entitled to receive a minimum wage for each two-week

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pay period worked (id. at 11); and that the Court properly applied the rebuttable

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presumption under A.R.S. § 23-364(d) (id. at 11-12).

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In reply, Keely begins by arguing that the purported payments on the ECO note

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must be characterized as GFL wage payments because the money came from GFL, GFL

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had no obligation to make payments on ECO’s behalf, and the payments were therefore

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made “by reason of” Cramton’s employment with GFL and/or were gratuities that qualify

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as wage payments. (Doc. 505 at 1-4.) Next, as for the monthly car payments, Keely

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contends the only way they could escape characterization as wages is if they were

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reimbursement for business expenses, but there is no evidence they served this purpose.

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(Id. at 4-5.) Next, Keely argues that because Cramton’s note with ECO was itself invalid,

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this provides an additional reason why the purported ECO note payments must qualify as

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GFL wage payments. (Id. at 5.) Next, Keely seems to argue that the Court erred by

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considering Trial Exhibit 32—which was admitted by joint stipulation at trial (Doc. 421 at

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24)—in the findings of fact because that exhibit was not mentioned in the complaint or in

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the relevant portions of the Joint Final Pretrial Order. (Doc. 505 at 6.) Next, Keely

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advances various arguments why the GFL board resolution should not be construed as

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evidence that Cramton stopped receiving GFL wages. (Id. at 6-7.) Next, Keely reiterates

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her various challenges to Cramton’s credibility and Cramton’s testimony regarding the

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number of hours worked for GFL. (Id. at 7-10.) Next, with respect to due process, Keely

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reiterates her position that the allocation of time at trial violated her constitutional rights

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and also contends that “AMWA is unconstitutionally vague as applied in the unusually

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harsh manner that it was applied in this case to GFL and Keely.” (Id. at 10.) Next, Keely

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argues that the $20,000 payment to Cramton in September 2017 should be considered

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wages because it “directly ties to Cramton’s work for GFL for closing” a franchise sale.

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(Id. at 11-12.) Next, Keely argues that she shouldn’t be held liable for any AMWA

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violation in December 2016 in light of the $4,615.39 wage payment at the start of that

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month. (Id. at 12.) Finally, Keely argues that Cramton’s request for fees is procedurally

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improper and substantively meritless. (Id. at 12.)

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C.

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Keely seeks relief under Rules 52(b) and 59(e) of the Federal Rules of Civil

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Legal Standard

Procedure. (Doc. 467 at 1.)

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Rule 52(b) is implicated here because the challenge arises from the Court’s issuance

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of findings of fact following a bench trial. Rule 52(b) provides that, “[o]n a party’s motion

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filed no later than 28 days after the entry of judgment, the court may amend its findings—

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or make additional findings—and may amend the judgment accordingly.” Id. Although

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the text of Rule 52(b) does not identify the standard for evaluating such a motion, the

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consensus is that “[p]arties should not use a Rule 52(b) motion to relitigate issues

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previously decided or introduce new theories, but rather to correct ‘manifest legal or factual

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errors’ or to present newly discovered evidence.” 2 Gensler, Federal Rules of Civil

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Procedure, Rules and Commentary, Rule 52, at 51 (2022). See generally Nat. Metal

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Finishing Co., Inc. v. BarclaysAmerican/Commercial, Inc., 899 F.2d 119, 122 (1st Cir.

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1990) (“Rule 52(b) is not intended to allow parties to rehash old arguments already

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considered and rejected by the trial court.”); Crane-McNab v. County of Merced, 773 F.

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Supp. 2d 861, 873 (E.D. Cal. 2011) (“[T]he Rule is not intended to serve as a vehicle for a

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rehearing.”).

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Meanwhile, Rule 59(e) is implicated here because the Court incorporated its

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findings and conclusions from the bench trial into a final judgment from which Keely seeks

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relief. Rule 59(e) provides that “[a] motion to alter or amend a judgment must be filed no

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later than 28 days after the entry of the judgment.” Id. Similar to Rule 52(b), although the

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text of Rule 59(e) does not identify the standard for evaluating such a motion, “the view

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prevailing in the circuits is that motions to alter or amend the judgment are generally

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appropriate only in four situations: (1) to correct a manifest error of fact or law; (2) to

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incorporate newly discovered and previously unavailable evidence; (3) to prevent manifest

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injustice; and (4) to address an intervening change in controlling law.” 2 Gensler, supra,

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Rule 59, at 250. See generally Allstate Ins. Co. v. Herron, 634 F.3d 1101, 1111-12 (9th

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Cir. 2011) (agreeing that these are the “four basic grounds upon which a Rule 59(e) motion

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may be granted”). The Ninth Circuit has elaborated that “amending a judgment after its

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entry remains an extraordinary remedy which should be used sparingly” and that it is an

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“abuse[]” of Rule 59(e) to “raise arguments or present evidence for the first time when they

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could reasonably have been raised earlier in the litigation.” Allstate Ins. Co., 634 F.3d at

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1111-12 (cleaned up). Thus, Keely’s requests for relief under Rules 52(b) and Rule 59(e)

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are functionally quite similar. National Metal Finishing Co., 899 F.2d at 122 (noting “the

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close relationship between Rule 59(e) and Rule 52(b)” and characterizing the relief

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available under those rules as “so similar”).

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Finally, to the extent Keely’s motion seeks a new trial as an alternative remedy, that

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request is governed by Rule 59(a), which provides in relevant part that “[t]he court may,

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on motion, grant a new trial on all or some of the issues . . . after a nonjury trial, for any

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reason for which a rehearing has heretofore been granted in a suit in equity in federal court”

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and “may, on motion for a new trial, open the judgment if one has been entered, take

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additional testimony, amend findings of fact and conclusions of law or make new ones,

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and direct the entry of a new judgment.” Id.

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D.

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The Court declines to amend its factual findings under Rule 52(b), alter or amend

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the judgment under Rule 59(e), or grant a new trial under Rule 59(a). In large part, Keely’s

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motion consists of attempting to relitigate the bench trial based on evidence and legal

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arguments that have always been available to her. For example, the motion repeatedly

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attacks the credibility of Cramton as a trial witness,2 which was also a focus of Keely’s

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presentation at trial. This is not, in general, an appropriate way to seek relief under Rules

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52(b) and 59(e). See, e.g., National Metal Finishing Co., 899 F.2d at 122 (“Rule 52(b) is

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not intended to allow parties to rehash old arguments already considered and rejected by

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the trial court.”); Allstate Ins. Co., 634 F.3d at 1111-12 (it is an “abuse[]” of Rule 59(e) to

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“raise arguments or present evidence for the first time when they could reasonably have

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been raised earlier in the litigation”). Nor is the Court persuaded that the ruling in

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Cramton’s favor on the AMWA claim resulted in manifest injustice or that the ruling is

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against the weight of the evidence.

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arguments raised in Keely’s motion is unnecessary here. As one court stated under

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analogous circumstances: “The court is satisfied that the decision as written is the

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Analysis

Thus, a point-by-point refutation of the many

See, e.g., Doc. 467 at 6 (“The story Cramton told the Court makes no sense . . . .”);
id. at 12 (“[I]t was impossible for Cramton to work 1,723 hours for GFL – Cramton was
untruthful with this Court at trial.”).
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appropriate expression of its reasoning. The court gave much thought to its opinion, and

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while the parties may have written the decision differently, for better or worse, the court

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will deny the parties’ motions to the extent that they seek amendments to the findings of

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fact.” Crane-McNab, 773 F. Supp. 2d at 876.

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With that said, a few of Keely’s arguments warrant a specific response. As for the

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attribution of certain testimony to Teresa Mills rather than Dana Mavros (Doc. 467 at 5-6),

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the Court clarifies that its findings and conclusions did not turn on this attribution and

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would remain the same even if the testimony were attributed to Mavros.

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As for the contention that the Court erred by applying the rebuttable presumption

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under A.R.S. § 23-364(D) (Doc. 467 at 16), Keely overlooks that the post-trial order

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specifically found that Cramton’s hours-related testimony was credible and accurate before

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addressing the applicability of the presumption and noted that issues related to the

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presumption were therefore potentially “moot.” (Doc. 429 at 19-20.) At any rate, the Court

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now clarifies that it would have reached the same findings and conclusions related to the

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number of hours that Cramton worked even if the presumption were inapplicable in this

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circumstance.

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applicability.

Accordingly, there is no need to delve further into presumption’s

18

As for Keely’s surprising contention that her state and federal constitutional due

19

process rights were violated by the manner in which the Court structured trial, this is a new

20

argument that Keely failed to raise at any point during the five-month period after the Court

21

announced that the bench trial was scheduled for one week or at any point during the bench

22

trial itself, despite the Court’s repeated discussions with the parties during trial about time-

23

allocation issues. At most, Keely can point to the fact that, during a pre-trial conference in

24

May 2020, the Court rejected the defense’s request to be allocated a disproportionate share

25

of the overall time allocated to the parties for trial. (Doc. 323 at 12-21.) During this

26

discussion, Keely never asserted that the Court’s trial-allocation decisions would violate

27

her due process or other constitutional rights. Moreover, at the time this discussion took

28

place, the trial was scheduled to be a jury trial on a variety of claims. It was only after

- 12 -

1

Defendants subsequently filed a motion to strike Cramton’s jury demand (which the Court

2

largely granted despite its late timing) that the trial was converted to a bench trial and the

3

scope of the trial was narrowed through the severance of the AMWA claim against GFL.

4

It was those developments that subsequently led the Court to reduce the overall length of

5

trial to one week (Doc. 378), which again did not trigger an objection by either side. Under

6

these circumstances, the Court finds that Keely has forfeited any due process or other

7

challenge to the time constraints imposed at trial.

8

Alternatively, the challenge fails on the merits. Keely was allocated ample time to

9

present a defense to the AMWA charge. The Court also observes that the defense spent

10

portions of its time at trial pursuing issues of questionable relevance. Cf. Carbajal v.

11

Keefer, 2018 WL 10246987, *2 (D. Colo. 2018) (“Mr. Carbajal’s inability to present all of

12

the testimony he wanted to is a function of decisions that he made during the hearing. As

13

a result, the Court rejects the argument that the time limitations were unfair or

14

unconstitutional.”). See generally Amarel v. Connell, 102 F.3d 1494, 1513 (9th Cir. 1996)

15

(“A district court is generally free to impose reasonable time limits on a trial. Time limits

16

may be used to prevent undue delay, waste of time, or needless presentation of cumulative

17

evidence.”) (citations and internal quotation marks omitted).

18

During oral argument, Keely also asserted that “it’s clear [she] acted in good faith

19

and with reasonable grounds to believe that she did not violate the law.” This argument

20

fails because good faith is not a defense to AMWA liability.
Finally, as for Cramton’s request for the fees and costs associated with drafting her

21
22

response, it is addressed in Part IV infra.

23

II.

Second Motion For Reconsideration—ECO Promissory Note (Doc. 473)

24

A.

25

In Count Five of the operative complaint, Cramton asserted a claim against ECO for

26

breach of a $66,527 promissory note. (Doc. 88 ¶¶ 119-23.) The complaint acknowledged

27

that Cramton had received partial payment on the note but alleged that a balance of

28

approximately $23,000, plus interest, remained outstanding. (Id.)

Relevant Background

- 13 -

1

On March 1, 2019, Cramton moved for summary judgment on Count Five, but only

2

as to liability. (Doc. 142 at 10-11.) In a nutshell, Cramton argued that the undisputed

3

evidence showed that the promissory note was valid and that the full $66,527 balance had

4

not been repaid. (Id.)

5

On April 1, 2019, Defendants filed their response to Cramton’s summary judgment

6

motion. (Doc. 158.) With respect to Count Five, ECO seemed to acknowledge that the

7

note was backed by adequate consideration. (Doc. 158 at 12 [“ECO issued two promissory

8

notes as consideration for the acquisition [of Krowne, a Grabbagreen franchise co-owned

9

by Keely and Cramton], one in favor of Keely and another in favor of Cramton.”].) ECO

10

also conceded that it had failed to fully repay the note. (Id. [acknowledging “ECO’s

11

nonpayment”].) Nevertheless, ECO argued that summary judgment should be denied on

12

Count Five because “Cramton and Keely agreed that ECO would only make payments on

13

the notes if and only if the store ever generated sufficient cash flow to do so (a circumstance

14

that never transpired),” and thus “under the express terms of the note, no payment has come

15

due.” (Id.)

16

On April 16, 2019, Cramton filed a reply in support of her summary judgment

17

motion. (Doc. 171.) As for ECO’s contention that the repayment obligation never arose

18

because it was contingent on the certain events that never transpired, Cramton argued this

19

defense failed for three reasons: (1) the repayment obligation was not, in fact, contingent;

20

(2) alternatively, the contingency was met; and (3) further alternatively, the note itself

21

provided that the note would become immediately due upon insolvency or bankruptcy. (Id.

22

at 7.) Cramton also stated, in a footnote, that she had provided a demand for payment in a

23

post-resignation letter. (Id. at 7 n.5.)

24

On December 10, 2019, the Court issued a lengthy tentative ruling addressing

25

Cramton’s summary judgment motion and several other then-pending motions. (Doc.

26

238.) The tentative ruling explained that “[t]he point” of providing the ruling before oral

27

argument was “to allow the parties to focus their argument on the issues that seem salient

28

to the Court and to maximize their ability to address any perceived errors in the Court’s

- 14 -

1

logic.” (Id. at 1.) With respect to Count Five, the tentative ruling stated that Cramton’s

2

motion should be granted. (Id. at 43-44.) After stating that the parties’ arguments

3

concerning when the repayment obligation arose “somewhat miss the mark,” the tentative

4

ruling stated that, under A.R.S. § 47-3108(B), the note was “payable on demand.” (Id.)

5

The tentative ruling further stated that, because Cramton had submitted undisputed

6

evidence showing that she made a demand for payment in her September 2017 resignation

7

letter, the repayment obligation had arisen and ECO had breached this obligation by failing

8

to pay. (Id.)

9

On December 16, 2019, the Court heard oral argument. (Doc. 256.) During the

10

portion of the hearing addressing Count Five, the Court asked both sides if they wished to

11

be heard with respect to the analysis in the tentative ruling. (Id. at 69-70.) Both sides

12

declined this invitation. (Id.)

13

On December 23, 2019, the Court issued its final order on Cramton’s summary

14

judgment motion. (Doc. 247.) With respect to Count Five, the order adopted the analysis

15

in the tentative ruling. (Id. at 46-47.)

16

On January 31, 2020, Defendants’ counsel filed a notice that “Defendant Eat Clean

17

Operations, LLC (‘ECO, LLC’) . . . [had] filed a petition for bankruptcy with the United

18

States Bankruptcy Court, Southern District of Florida.” (Doc. 254.)

19
20

On February 3, 2020, based on this notice, the Court entered an automatic stay as to
ECO. (Doc. 255.)

21

On June 28, 2021, following the bench trial, the Court ordered the parties to file a

22

joint notice concerning several matters, including the status of the bankruptcy proceeding.

23

(Doc. 430.)

24
25

On July 12, 2021, the parties filed the joint notice. (Doc. 432.) Among other things,
it reported that the bankruptcy case had closed on June 15, 2021. (Id. at 2.)

26

On July 26, 2021, the Court issued an order lifting the stay as to ECO and

27

authorizing Cramton to file a summary judgment motion as to the issue of damages on

28

Count Five. (Doc. 434.) In response, Cramton filed a motion seeking an award of

- 15 -

1

$23,017.12. (Doc. 440.) The motion later became fully briefed. (Docs. 442, 443.)

2

On October 14, 2021, the Court issued an order granting Cramton’s motion for

3

summary judgment as to damages on Count Five. (Doc. 444 at 12-16.) The Court noted

4

that ECO made no effort to dispute Cramton’s proffered evidence, which suggested that

5

the outstanding balance of the note was $23,017.12, and only sought to raise meritless

6

arguments related to bankruptcy law and Cramton’s ultimate ability to recover on any

7

judgment entered against ECO. (Id.)

8

On November 30, 2021, the Court entered judgment in Cramton’s favor. (Doc.

9

461.) Among other things, the judgment ordered that Cramton “recover . . . $23,017.12

10

from [ECO], including post-judgment interest at the rate of 0.21% from the date of this

11

Judgment until paid.” (Id.)

12

On December 28, 2021, ECO filed the second motion now pending before the

13

Court—a motion to alter and amend the judgment on Count Five. (Doc. 473.)

14

On February 14, 2022, Cramton filed an opposition. (Doc. 499.)

15

On February 22, 2022, ECO filed a reply. (Doc. 504.)

16

On April 1, 2022, the Court issued an order requiring supplemental briefing with

17

respect to ECO’s motion. (Doc. 508.)

18

On April 15, 2022, ECO filed its initial supplemental brief. (Doc. 509.)

19

On April 29, 2022, Cramton filed her responsive supplemental brief. (Doc. 510.)

20

On May 6, 2022, ECO filed its reply supplemental brief. (Doc. 511.)

21

B.

22

ECO’s motion identifies four reasons why the Court should alter or amend the

23

adverse judgment against it on Count Five. (Doc. 473.) First, ECO argues that the

24

promissory note underlying Count Five “is unenforceable” for several reasons, including

25

that the complaint mischaracterizes it as an agreement to repay Cramton for a $66,527 loan

26

she made to ECO (when, in fact, there was no loan) and that “to be lawfully payable at all,

27

ECO had to have sufficient profits from its cash flows . . . to pay Cramton under Count V”

28

but ECO’s board of managers never agreed to make such a payment. (Id. at 2-4.) Second,

The Parties’ Arguments

- 16 -

1

ECO accuses the Court of committing a due process violation by concluding, in the

2

December 2019 summary judgment order, that A.R.S. § 47-3108 was the applicable statute

3

for evaluating when ECO’s repayment obligation arose because Cramton did not cite that

4

statute in her complaint or moving papers. (Id. at 4-5.) Third, in a related vein, ECO argues

5

that the evidence proffered by Cramton in her initial summary judgment motion showed

6

that the promissory note was an “exchange agreement,” not a “negotiable instrument,” and

7

thus Cramton’s evidence was insufficient to meet her initial burden of production that a

8

breach had occurred. (Id. at 5-7.) Fourth, ECO argues that Cramton’s testimony at trial

9

regarding the genesis of the ECO promissory note qualifies as new evidence and also shows

10

she “will say anything to this Court regardless of the number of different versions of

11

purported ‘facts’ or how contradictory and convoluted her testimony in this case has

12

become.” (Id. at 7.)

13

Cramton opposes ECO’s motion. (Doc. 499.) As for ECO’s first argument,

14

Cramton argues that it is irrelevant whether the consideration for the note was an actual

15

loan of $66,527 or an equity contribution to Krowne—“all that matters is [that] Eat Clean

16

Operations promised to repay Cramton and did not.” (Id. at 4-5.) Cramton also notes that

17

ECO seemed to concede the adequacy of the consideration in its summary judgment

18

response. (Id.) As for ECO’s second argument, Cramton contends that ECO “tellingly

19

fail[s] to present any argument that” the Court’s reliance on A.R.S. § 47-3108 in the

20

December 2019 summary judgment ruling “was wrong” and only raises a claim of unfair

21

surprise. (Id. at 5-9.) Cramton further contends that any claim of unfair surprise fails for

22

two reasons: first, because the Court gave adequate notice by issuing a tentative ruling

23

before oral argument that cited § 47-3108 and then giving ECO a chance to address the

24

statute at oral argument (which ECO declined to do); and second, because any notice issue

25

was harmless in light of the undisputed fact that ECO has since declared bankruptcy and

26

the promissory note expressly provides that the balance becomes due upon insolvency or

27

bankruptcy. (Id.) As for ECO’s third and fourth arguments, Cramton contends that “other

28

than the apparent subjective belief of counsel, there is no documented legal term of art

- 17 -

1

under Arizona law for an ‘exchange agreement’”; that, accordingly, “[t]here is no way to

2

legally apply the nonexistent concept of an ‘exchange agreement’ to the failure to pay a

3

promissory note”; that to the extent ECO’s argument is an argument over the adequacy of

4

consideration, it fails for various reasons; and that there is no evidence that repayment of

5

the note was contingent on the store being profitable. (Id. at 9-12.) Cramton concludes by

6

arguing that, because ECO’s motion was only filed to harass and delay, the Court should

7

award her the fees incurred when drafting her response and order ECO’s counsel to show

8

cause why they should not be sanctioned under Rule 11 or 28 U.S.C. § 1927. (Id. at 12.)

9

In reply, Cramton first argues that the promissory note does not qualify as a

10

“negotiable instrument” under Arizona law—and, thus, A.R.S. § 47-3108 is inapplicable—

11

because it contains a clause barring Cramton from assigning it to third parties without

12

ECO’s consent. (Doc. 504 at 2-3.) Next, ECO argues that the issuance of the tentative

13

ruling before oral argument was insufficient to avoid unfair surprise because the analysis

14

of Count Five was “buried” in the tentative ruling, the ruling was not issued at least 30 days

15

before oral argument, and ECO was not afforded an opportunity to submit supplemental

16

briefing or discover new facts that might support its position. (Id. at 3-5.) Next, ECO

17

reiterates its position that, because Cramton admitted at trial that she did not directly loan

18

$66,527 to ECO, the “note is obviously not enforceable.” (Id. at 5-6.) Next, ECO argues

19

that “the ECO note facially lacks essential terms for the requisite mutual assent and contract

20

formation in order for it even to be possible for this Court to enforce it.” (Id. at 6-7.)

21

Finally, ECO disputes Cramton’s contention that it has taken inconsistent positions during

22

this litigation and argues that Cramton’s request for sanctions is procedurally improper in

23

addition to being substantively meritless. (Id. at 7-8.)

24

In the April 1, 2022 order soliciting supplemental briefing, the Court ordered the

25

parties to address, in more detail, ECO’s arguments concerning the inapplicability of

26

A.R.S. § 47-3108 and Cramton’s arguments regarding harmless error. (Doc. 508.)

27

In its supplemental brief, ECO does not limit itself to the issues raised in the April

28

1, 2022 order. Instead, ECO argues that: (1) Cramton’s summary judgment motion as to

- 18 -

1

Count Five was invalid on its face, and thus no response was required, because the motion

2

was “completely devoid of any statement or argument that the ECO note is a ‘valid’ or

3

‘enforceable’ contract or evidence establishing Cramton’s false allegations underlying

4

Count V” (Doc. 509 at 3-5); (2) a “facial review of the ECO note” reveals that it is not

5

signed by Cramton, does not impose any obligations on Cramton, and lacks various other

6

details, meaning there are “missing essential terms [that] render the ECO note

7

unenforceable” (id. at 5-6); (3) the Court “trampled on the party presentation rule” by

8

“affirmatively set[ting] out to help Cramton by creating the negotiable instrument

9

argument” (id. at 6-7); (4) the theory of consideration that Cramton advanced in her

10

summary judgment papers (i.e., the note represents contributions that Cramton made to

11

Krowne) is unsupported by the record and differs from the theory alleged in the complaint

12

(i.e., the note represents funds that Cramton loaned to ECO) (id. at 7-9); (5) Cramton’s trial

13

testimony further contradicts the allegations pertaining to Count Five set forth in the

14

complaint (id. at 9); (6) various pieces of evidence show that Krowne’s obligation to repay

15

Cramton was never assumed by ECO (id. at 10); (7) the new evidence at trial shows that

16

the ECO note was invalid based on fraud in the inducement (id. at 10-11); (8) the ECO

17

note does not qualify as a negotiable instrument, and thus A.R.S. § 47-3108 is inapplicable,

18

because Cramton had no right to transfer or negotiate the note (id. at 11-13); and (9)

19

Cramton is not entitled to relief under the alternative theory that ECO’s repayment

20

obligation was triggered by insolvency or bankruptcy because (a) Cramton previously

21

argued that the entity that declared bankruptcy was not the same entity as ECO; and (b) the

22

note’s provisions regarding insolvency are too ambiguous to be resolved at summary

23

judgment (id. at 13-15).

24

In her responsive supplemental brief, Cramton makes two arguments: (1) the ECO

25

note qualifies as a negotiable instrument under A.R.S. § 47-3104 because it was payable to

26

order, payable on demand, and did not obligate ECO to do anything other than pay money

27

(Doc. 510 at 3-5); and (2) alternatively, any error in applying A.R.S. § 47-3104 was

28

harmless because the note specified that ECO would be considered in default (and thus

- 19 -

1

obligated to repay the note) if it became insolvent or the subject of a bankruptcy

2

proceeding, the insolvency condition is met because ECO conceded as much in its

3

summary judgment response and disclosed no assets in the January 2020 bankruptcy filing,

4

and the bankruptcy condition is met because, regardless of the precise identity of the entity

5

that filed for bankruptcy, ECO was a subject of the bankruptcy proceeding (id. at 5-7).

6

In reply, ECO accuses Cramton of conceding and/or not addressing various

7

arguments (Doc. 511 at 1-4); reiterates its position that the note does not qualify as a

8

negotiable instrument (id. at 4-6); argues the Court must authorize unspecified additional

9

discovery if Cramton is allowed to pursue a negotiable-instrument argument (id. at 6); and

10

asserts that the insolvency/bankruptcy argument does not provide an alternative basis for

11

upholding the summary judgment ruling because there are disputed issues of fact about

12

which entity filed for bankruptcy and the meaning of the insolvency condition (id. at 6-7).

13

C.

14

As noted in Part I.C above, the “four basic grounds on which a Rule 59(e) motion

15

may be granted” are: (1) to correct a manifest error of fact or law; (2) to incorporate newly

16

discovered and previously unavailable evidence; (3) to prevent manifest injustice; and (4)

17

to address an intervening change in controlling law. Allstate Insurance Co., 634 F.3d at

18

1111-12. “[A]mending a judgment after its entry remains an extraordinary remedy which

19

should be used sparingly.” Id. It is an “abuse[]” of Rule 59(e) to “raise arguments or

20

present evidence for the first time when they could reasonably have been raised earlier in

21

the litigation.” Id.

Standard Of Review

22

D.

23

The Court declines to alter or amend the judgment against ECO on Count Five.

24

One of ECO’s contentions, which it emphasized during oral argument, is that

25

Cramton failed to meet her initial burden of production as to the existence of an enforceable

26

contract when moving for partial summary judgment on Count Five in March 2019. (Doc.

27

509 at 3 [“Having failed to carry her burden of producing evidence, ECO had no obligation

28

to come forward to produce evidence to controvert Cramton’s bald, unsupported and

Discussion

- 20 -

1

baseless allegations. . . . Cramton moved for summary judgment on Count V arguing only

2

that the ECO note was unpaid. [Her motion] is completely devoid of any statement or

3

argument that the ECO note is a ‘valid’ or ‘enforceable’ contract or evidence establishing

4

Cramton’s false allegations underlying Count V was proffered to this Court.”].)

5

This argument is unavailing. To be sure, because Cramton moved for summary

6

judgment on a claim on which she would bear the burden of proof at trial, she was required

7

to “affirmatively demonstrate that no reasonable trier of fact could find other than for” her.

8

Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). But Cramton met

9

that burden by supporting her summary judgment motion with a copy of the promissory

10

note (Doc. 142-6 at 2-3); a declaration in which she authenticated the note, explained its

11

genesis, and explained why it was backed by consideration (Doc. 142-2 at 3 ¶¶ 4-7

12

[explaining that Cramton and Keely “partnered together to purchase a new Grabbagreen

13

store,” that Cramton “invested time and money into the store,” that the store was later

14

acquired by ECO, and that “ECO executed a promissory note in favor of me to repay me

15

for the funds I had invested in opening and operating the store”]); and deposition testimony

16

from Kelli, who acknowledged signing the note on behalf of ECO and stated that the note

17

“was consideration for the acquisition of assets of” Krowne (Doc. 142-2 at 44-45). This

18

evidence was sufficient to meet Cramton’s initial burden of demonstrating the existence of

19

an enforceable contract. See generally Savoca Masonry Co. v. Homes & Son Const. Co.,

20

542 P.2d 817, 819 (Ariz. 1975) (“It is elementary that for an enforceable contract to exist

21

there must be an offer, an acceptance, consideration, and sufficient specification of terms

22

so that the obligations involved can be ascertained.”).

23

As for ECO’s remaining reconsideration arguments, most are purported defenses to

24

Count Five that ECO failed to raise in response to Cramton’s March 2019 summary

25

judgment motion. In fact, some of ECO’s new theories are inconsistent with the positions

26

it previously took. In its April 2019 summary judgment response, ECO offered an

27

extensive discussion of why it agreed to execute the note, even using the term

28

“consideration” to describe what Cramton provided in exchange for the note. (Doc. 158 at

- 21 -

1

12 & n.6.) Similarly, when the Court allowed a second round of summary judgment

2

briefing related to Count Five, ECO failed to raise any arguments concerning the validity

3

or enforceability of the underlying note or the adequacy of the consideration supporting the

4

note. (Doc. 442 at 16-17.) Given this backdrop, ECO cannot raise such theories now, for

5

the first time, through the guise of a Rule 59(e) motion. Allstate Insurance Co., 634 F.3d

6

at 1111-12 (noting that is an “abuse[]” of Rule 59(e) to “raise arguments or present

7

evidence for the first time when they could reasonably have been raised earlier in the

8

litigation”) (citations and internal quotations marks omitted).

9

Nor does Cramton’s trial testimony about the genesis of the ECO note qualify as

10

new evidence that might support a Rule 59(e) challenge. As Cramton correctly notes in

11

her response, although “[t]here may be a nuanced . . . difference in what constitutes

12

Cramton’s consideration . . . what is clear is that Eat Clean Operations owed Cramton

13

money.” (Doc. 499 at 10.) Additionally, Cramton’s trial testimony on this point was

14

consistent with the declaration she submitted in support of her March 2019 summary

15

judgment motion.

16

As for ECO’s contention that the Court erred by relying on A.R.S. § 47-3108, the

17

parties’ submissions in response to the call for supplemental briefing demonstrate that any

18

error was harmless. The bottom line is that ECO executed and then failed to repay a

19

promissory note. One defense ECO raised during the summary judgment process was

20

whether its obligation to repay the promissory note was ever triggered, such that its

21

undisputed failure to make payments could be characterized as a default. Although the

22

Court looked to A.R.S. § 47-3108 for purposes of evaluating whether the repayment

23

obligation was triggered, Cramton argued in her summary judgment papers that a different

24

provision gave rise to the repayment obligation—specifically, the third paragraph of the

25

note, which provided that “[i]f the Borrower becomes insolvent or the subject of a

26

voluntary or involuntary proceeding in bankruptcy . . . , then the Lender, upon occurrence

27

of this event (a ‘Default’), may at its option and without further notice to the Borrower . . .

28

declare any or all of the Indebtedness to be immediately due and payable.” (Doc. 142-6 at

- 22 -

1

2.) If Cramton’s initial argument on this point was correct, any error in looking to § 47-

2

3108 was harmless and would not implicate the principle of party presentation.

3

Cramton’s initial argument on this point was, in fact, correct. In January 2020,

4

counsel for Defendants filed a notice that “Defendant Eat Clean Operations, LLC (‘ECO,

5

LLC’)” had filed a bankruptcy petition in the United States Bankruptcy Court for the

6

Southern District of Florida. (Doc. 254.) Based on this filing, the Court entered an

7

automatic stay as to ECO. (Doc. 255.) And in a later filing, ECO clarified that it was the

8

entity that had filed for bankruptcy—there had simply been a minor name change. (Doc.

9

432 at 4 [“There is only one Eat Clean Operations, LLC (‘ECO’) . . . . Under the Kahala

10

asset purchase agreement, ECO was required to change its name, and it did so. . . . The

11

bankruptcy petition identifies this entity on the first page . . . .”). Given this backdrop,

12

ECO’s attempt to question whether it was the entity that filed the bankruptcy petition rings

13

hollow—it went out of its way to notify the Court of ECO, LLC’s bankruptcy filing (which

14

it had no reason to do if it was unaffected by the proceedings), declined to object when the

15

Court entered an automatic stay as to ECO based on the filing of the bankruptcy notice,

16

and then reiterated that it was the entity that had filed the bankruptcy petition.

17

At any rate, ECO was, at a minimum, a subject of the bankruptcy proceeding that

18

arose after ECO, LLC filed the bankruptcy petition, and being the subject of such a

19

proceeding was alone enough to qualify as a default (and thus trigger an immediate

20

repayment obligation) under the ECO note. (Doc. 142-6 at 2.) Under these circumstances,

21

there is no reason to alter or amend the judgment—ECO remains liable to Cramton for

22

$23,017.12, albeit for potentially different reasons than set forth in the December 2019

23

summary judgment order on liability.
Finally, as for Cramton’s request for the fees and costs associated with drafting her

24
25

response, it is addressed in Part IV infra.

26

III.

Third Motion For Reconsideration—Spoliation Sanctions (Doc. 475)

27

A.

28

As discussed in prior orders (Docs. 247, 345, 429), Cramton’s central claim in this

Relevant Background

- 23 -

1

case was that Keely duped her into resigning by falsely telling her, during a telephone call

2

on September 18, 2017, that a planned sale of Grabbagreen to Kahala had fallen through

3

and that the Kahala deal was dead. Cramton resigned shortly after this telephone call. By

4

resigning, Cramton essentially forfeited an 18.6% ownership interest she held in

5

Grabbagreen. As it turns out, the Kahala deal wasn’t dead—Kahala later purchased the

6

Grabbagreen brand for $2.6 million. In the complaint, Cramton asserted a variety of tort

7

and contract claims against Defendants in an effort to obtain a share of the sale proceeds.

8

Those claims were set forth in Counts 6-10. Cramton ultimately lost on all of those

9

claims—some were dismissed at summary judgment and the Court ruled in Defendants’

10
11

favor on the others following the bench trial.
During the discovery process, Defendants sought to defend against Cramton’s

12

resignation-related claims in various ways.

In addition to “disputing Cramton’s

13

characterization of what Keely said during the fateful phone call on September 18, 2017,”

14

Defendants also took the position “that Cramton had friends within Grabbagreen and

15

Kahala who were secretly feeding her information about Kahala’s plans”—a theory that,

16

“if true, would undermine Cramton’s suggestion that she detrimentally relied on Keely’s

17

purported statement.” (Doc. 247 at 3.) Defendants further believed that “the evidence of

18

these communications should have been found on Cramton’s company-issued computer

19

and cell phone.” (Id.) “Unfortunately, around the time of her departure, Cramton brought

20

both devices to a third-party data vendor in an attempt to have them ‘wiped.’” (Id.)

21

On January 4, 2019, the parties informed the Court of an unresolved discovery

22

dispute concerning these issues. (Doc. 111.) As relief, Defendants requested that Cramton

23

be ordered to (1) “produce a hard drive containing the data from the Company Phone as it

24

was backed up to the iCloud around September 24, 2017” and (2) “submit Ms. Cramton’s

25

current cell phone to a forensics expert to be searched for only the relevant communications

26

Defendants requested from September 25, 2017, through the end of 2017.” (Id. at 3.)

27

On January 8, 2019, the Court held a hearing to resolve this discovery dispute. (Doc.

28

115.) The Court granted Defendants’ request in part, ordering Cramton’s “counsel to

- 24 -

1

attempt to access [Cramton’s] old iCloud account. [Cramton’s] counsel shall document all

2

steps taken in seeking to access the account and provide that information to Defense

3

counsel. If the iCloud account cannot be accessed, and Defense counsel is satisfied that

4

[Cramton’s] counsel has made a good-faith attempt to obtain access, the Court will not

5

require any further relief. If the account can be accessed, [Cramton’s] counsel shall review

6

its contents to determine whether it contains any additional texts and emails that were not

7

previously produced and that are responsive to Defendant’s previous discovery requests.

8

If so, [Cramton’s] counsel shall produce those materials to Defense counsel in order to

9

resolve this issue.” (Id.)

10

On June 14, 2019, the parties informed the Court of further unresolved discovery

11

disputes concerning Cramton’s alleged spoliation of evidence. (Docs. 188, 193, 194.) As

12

a remedy, Defendants requested “leave to file a Motion for Sanctions.” (Doc. 188 at 1.)

13

On June 21, 2019, the Court held a hearing to resolve this discovery dispute. (Doc.

14

195.) The Court ultimately granted Defendants’ request for leave to file a sanctions

15

motion. (Id.)

16
17

On July 22, 2019, Defendants filed the operative version of their sanctions motion.
(Doc. 206.) The motion later became fully briefed. (Docs. 216, 221.)

18

In the December 23, 2019 order that resolved the parties’ cross-motions for

19

summary judgment, the Court also denied Defendants’ motion for sanctions. (Doc. 247.)

20

As an initial matter, the Court noted that “[a]lthough Defendants place heavy emphasis on

21

the fact that Cramton arranged to have her company-issued computer and cell phone

22

‘wiped’ before returning them,” “the computer technician from P.C. Guru . . . made a

23

backup of Cramton’s hard drive, even though she hadn’t requested one, and Cramton

24

produced that hard drive to Defendants after it was discovered midway through this case.

25

Moreover, the evidence shows that Cramton attempted to transfer the complete contents of

26

her company-issued cell phone onto her new cell phone, and Cramton stated in her

27

declaration that she has produced all of the texts with [four specified individuals] that were

28

saved onto her new phone.” (Id. at 13-14.) Given this background, the Court stated that

- 25 -

1

“unless Defendants can show that some text messages were lost during the hard drive

2

backup process and/or that Cramton’s claims about her efforts to retrieve and produce text

3

messages from her phone are inaccurate, Rule 37(e) sanctions are unavailable.” (Id. at 14.)

4

On that issue, the Court began by observing that “[t]he process of assessing how

5

much (if any) ESI is missing has been complicated by the fact that Defendants’ theories

6

and allegations on this issue have changed over time” and that Defendants “ultimately

7

focused on Cramton’s communications with four witnesses—Wuycheck, Farnell, Cable,

8

and Savone—and purported to identify a specific number of missing ESI communications

9

pertaining to each witness.” (Id.) The Court also noted that Defendants attempted to raise

10

several new arguments and requests in their reply but declined to consider those arguments

11

and requests because they came too late. (Id. at 14-15.) The Court acknowledged that this

12

was, “in some respects, an unsatisfying outcome because it remains possible that key ESI

13

may be missing” and further noted that “Cramton is not blameless in this affair because her

14

decision to attempt to wipe her company-issued devices was the catalyst for all of the

15

spoliation-related litigation that has ensued,” but the Court concluded that it did “not have

16

the time or resources to allow Defendants to keep advancing new claims and theories in

17

successive briefs and hearings until one eventually prevails.” (Id. at 16.)

18

Turning to the four individuals at issue, the Court first addressed whether

19

Defendants had proved that any of Cramton’s electronic communications with those

20

individuals were, in fact, missing. (Id. at 16-20.) The Court concluded “that Defendants

21

have not proved the existence of any lost Wuycheck text messages but have proved the

22

existence of one lost Farnell text message, three lost Farnell voicemails, and nine lost Cable

23

text messages” and further “assume[d] that 187 Savone text messages are missing.” (Id. at

24

20.) Next, the Court addressed whether Cramton had a duty to preserve the missing

25

communications. (Id. at 20-23.) The Court concluded that it was only reasonably

26

foreseeable that “one Farnell text message and three Farnell voicemail messages” might be

27

relevant to future litigation. (Id. at 23.) Next, the Court addressed whether Cramton had

28

taken reasonable steps to preserve those pieces of missing ESI (no) and whether those

- 26 -

1

pieces of missing ESI were replaceable (no). (Id. at 23-24.) Next, the Court addressed

2

whether Defendants suffered prejudice from the loss of those pieces of ESI and concluded

3

they had not. (Id. at 24-26.) Finally, the Court addressed whether Cramton had acted with

4

the intent to deprive Defendants of the missing ESI and concluded she had not:

5
6
7
8
9
10
11
12

Although Defendants initially accused Cramton of purposefully destroying
large volumes of ESI—conduct that might support a finding of intent to
deprive—most of the purportedly missing ESI still exists and has now been
produced (if belatedly). Additionally, Cramton told the employee at the
Verizon store to transfer all of the text messages from her old phone onto her
new phone. Such conduct is inconsistent with an intent to deprive. Finally,
although Cramton hasn’t provided a particularly good explanation for why
she failed to preserve and produce the one Farnell text message and the three
Farnell voicemails, it’s unlikely (for the reasons . . . above) that any of these
particular materials contained relevant information, and the Court will not
infer malicious intent from the loss of a handful of likely-irrelevant bits of
ESI in a case where a massive amount of ESI has been produced.

13

(Id. at 26.) Thus, even though “Cramton’s decision to wipe her company-issued cell phone

14

and computer before returning them to Defendants was unfortunate” and it was

15

“understandable why Defendants would view her conduct with deep skepticism,” the Court

16

concluded that sanctions under Rule 37(e) were not warranted. (Id. at 26-27.)

17

The December 2019 order did not mark the end of the parties’ litigation concerning

18

the hard drive onto which the contents of Cramton’s company-issued computer had been

19
20
21
22
23
24
25
26

copied. Before trial, Defendants issued a subpoena to an attorney who had represented
Cramton around the time of her resignation in 2017. That attorney, in turn, moved to quash
the subpoena on the ground that any testimony she might provide at trial would be protected
by the attorney-client privilege.

(Doc. 370.)

During the ensuing briefing process,

Defendants argued, inter alia, that because Cramton had voluntarily produced the hard
drive to them during the discovery process, and the hard drive contained an array of email
communications between Cramton and her attorney, Cramton had waived the privilege
with respect to those communications. (Doc. 384.)

27

On March 9, 2021, the Court issued an order denying the attorney’s motion to quash,

28

concluding that “any privilege was lost when Cramton voluntarily produced the emails to
- 27 -

1

Defendants during the discovery process in this case.” (Doc. 386 at 6.)

2

During the bench trial, Cramton and the former attorney were both questioned about

3

some of the emails that were extracted from Cramton’s hard drive. (See, e.g., Doc. 422 at

4

215-17; Doc. 423 at 51-55, 80; Doc. 427 at 809-15.)
On November 30, 2021, the Court entered judgment in Cramton’s favor. (Doc.

5
6

461.)

7

On December 28, 2021, three Defendants (Keely, ECH, and GFL) filed the third

8

motion now pending before the Court—a “Rule 59 motion to alter or amend judgment on

9

Defendants’ motion for spoliation sanctions.” (Doc. 475.)

10

On February 14, 2022, Cramton filed an opposition. (Doc. 500.)

11

On February 22, 2022, the movants filed a reply. (Doc. 506.)

12

B.

13

Defendants fault the Court to failing to “address the prejudice to the defense of

14

Count IV” in the December 2019 order denying their request for spoliation sanctions.

15

(Doc. 475 at 1-2.) According to Defendants, the texts and emails that Cramton destroyed

16

were relevant to the AMWA claim because they would have been useful in undermining

17

Cramton’s testimony as to the number of hours she worked for GFL. (Id.) Defendants

18

further contend that the analysis in the December 2019 order was flawed because it was

19

“materially and substantively inconsistent” with the Ninth Circuit’s decision in Leon v.

20

IDX Systems Corp., 464 F.3d 951 (9th Cir. 2006), this Court’s subsequent ruling in Burris

21

v. JPMorgan Chase & Co., 2021 WL 4627312 (D. Ariz. 2021), and the decision in

22

Williams v. American College of Education, 2019 WL 4412801 (N.D. Ill. 2019). (Id. at 2-

23

5.) Next, Defendants argue that Cramton violated the discovery rules and withheld

24

evidence during earlier stages of this case (id. at 5-6) and that the Court improperly shifted

25

the burden onto them when making the challenged rulings (id. at 7). Finally, Defendants

26

dispute that they ever presented evolving theories and ask the Court to either “vacate the

27

ruling on Count IV against Keely” or order an evidentiary hearing. (Id. at 8.)

28

The Parties’ Arguments

Cramton opposes Defendants’ motion. (Doc. 500.) According to Cramton, the

- 28 -

1

motion simply amounts to “rehashing arguments [Defendants] were unhappy were rejected

2

the first time they were raised.” (Id. at 3-4.) Cramton also contends that the Court correctly

3

found, in the December 2019 order, that “there was largely no identified missing data or

4

ESI in this matter,” that Defendants suffered no prejudice from any missing material, and

5

that “Defendants’ argument that there might be destroyed evidence is nothing more than

6

an extension of the conspiratorial arguments they have made throughout this litigation.”

7

(Id. at 4-5.) As for Defendants’ complaints about the lack of a forensic examination,

8

Cramton contends those complaints are “mystifying” because Defendants completed their

9

own forensic analysis and didn’t request an evidentiary hearing or forensic examination in

10

their sanctions motion. (Id. at 5.) Next, Cramton contends that Defendants cannot

11

demonstrate prejudice, let alone manifest injustice, with respect to the two counts on which

12

they lost (Counts Four and Five) because “it is difficult to imagine how a missing text,

13

voicemail, or email could somehow prove that Plaintiff did not work all of the hours she

14

claimed to work, or that she did not have a remaining balance on her promissory note.”

15

(Id. at 6.) Next, as for Leon, Burris, and Williams, Cramton contends that they are

16

consistent with the analysis in the challenged orders. (Id. at 6-7.) Finally, Cramton argues

17

that because Defendants’ motion is frivolous and vexatious, she should be awarded the fees

18

and costs she incurred when preparing her response. (Id. at 7-8.)

19

In reply, Defendants accuse Cramton of committing a felony by attempting to wipe

20

her company-owned devices (Doc. 506 at 2); accuse Cramton of perjuring herself at

21

various points during this case (id. at 2-3); reiterate their position that Leon and Williams

22

support the imposition of sanctions (id. at 3); argue that Cramton should have reasonably

23

foreseen that her text messages with Savone since mid-2016 would be relevant to her

24

AMWA claim (id. at 3-5); argue that Cramton’s spoliation efforts were not limited in the

25

manner described in the December 2019 order (id. at 4-5); argue that they never obtained

26

a forensic examination of Cramton’s personal phone and accuse Cramton of “procedural

27

gimmickry” in attempting to suggest otherwise (id. at 6); argue that any “personal”

28

information of Cramton was necessarily relevant to her claims in this action (id. at 6-7);

- 29 -

1

argue that Burris constitutes an intervening change in controlling law (id. at 7-8); accuse

2

Cramton’s counsel of making false statements (id. at 8); and argue that Cramton’s

3

“retaliatory request for sanctions” should be denied (id. at 8-9).

4

C.

5

As noted in Parts I.C and II.C above, the “four basic grounds on which a Rule 59(e)

6

motion may be granted” are: (1) to correct a manifest error of fact or law; (2) to incorporate

7

newly discovered and previously unavailable evidence; (3) to prevent manifest injustice;

8

and (4) to address an intervening change in controlling law. Allstate Insurance Co., 634

9

F.3d at 1111-12. “[A]mending a judgment after its entry remains an extraordinary remedy

10

which should be used sparingly.” Id. It is an “abuse[]” of Rule 59(e) to “raise arguments

11

or present evidence for the first time when they could reasonably have been raised earlier

12

in the litigation.” Id.

Standard Of Review

13

D.

14

Defendants’ motion consists, in large part, of repeating spoliation-related arguments

15

(or variants thereof) the Court previously rejected or making new arguments they did not,

16

for whatever reason, raise at the appropriate time. But “[m]otions that simply ‘rehash’ the

17

losing party’s failed arguments or that attempt to rescue failed positions by introducing

18

new arguments are routinely and summarily rejected as being outside the proper scope of

19

the limited relief available under Rule 59(e).” 2 Gensler, supra, Rule 59, at 251.

Analysis

20

Defendants have not, at any rate, demonstrated that the Court’s previous spoliation-

21

related rulings were manifestly erroneous, would result in manifest injustice, or are

22

undermined by newly discovered and previously unavailable evidence or an intervening

23

change in controlling law.

24

Cramton’s character and accuse her of various crimes, Defendants never come to grips with

25

the fact that Cramton’s efforts to wipe her company-issued computer were unsuccessful—

26

the computer technician made a backup copy that was timely produced to Defendants as

27

part of this litigation. Indeed, that production resulted in a partial waiver of Cramton’s

28

attorney-client privilege that Defendants exploited to their benefit at trial.

Although Defendants waste no opportunity to denigrate

- 30 -

It is an

1

understatement to say that these facts are dissimilar from the facts of Burris (which does

2

not, at any rate, qualify as an intervening controlling authority), Leon (which is not an

3

intervening authority), and Williams (which is neither intervening nor controlling).

4

As for Cramton’s iPhone, not only does the Court stand by the analysis set out in

5

the earlier rulings,3 but Defendants have not demonstrated that the allegedly missing ESI

6

would have had any significant impact on the sole claim as to which Defendants now seek

7

relief—the AMWA claim in Count Four.4 At bottom, Defendants’ theory seems to be that

8

Cramton should have saved and produced every text message she sent to anyone during

9

the eight-month period covering her AMWA claim (i.e., December 2016 through

10

September 2017), no matter how personal the subject matter, because they could have used

11

those text messages to poke holes in Cramton’s testimony as to the number of hours she

12

was working for GFL during the period in question. With the unique vantage point as the

13

trier of fact during the bench trial, the Court can say with confidence that such evidence

14

would not have been successful in impeaching Cramton’s hours-related testimony. (Doc.

15

429 at 20 [“[T]he Court accepts that Cramton was a hard-working employee who often

16

worked on mornings, nights, and weekends and concludes that her estimate of hours

17

worked for GFL is credible and, if anything, conservative.”].)
Finally, as for Cramton’s request for the fees and costs associated with drafting her

18
19

response, it is addressed in Part IV infra.
…

20
21
3

22
23
24
25
26
27
28

The December 2019 order mistakenly identified Kelli as the author of a declaration
submitted by Keely. (Doc. 247 at 15, citing Doc. 221-1 at 56-63.) Although Defendants
characterize this misattribution as a reversible error (Doc. 475 at 5), the December 2019
order made clear that the Court was also disregarding the declaration for reasons unrelated
to the qualifications of its author—because it was being offered as part of an improper
attempt to raise a new argument for the first time in a reply.
4
Tellingly, in their sanctions motion, Defendants excluded Count Four from the list
of claims they sought to have dismissed as a sanction under Rule 37(e)(1), which is the
provision that authorizes dismissal when the loss of ESI is prejudicial to the movant. (Doc.
206 at i [“Defendants hereby jointly seek sanctions against [Cramton] in the form of
dismissal of Counts I, II, III, V, VI, VII, VIII, and X of [Cramton’s] Amended
Complaint.”]; id. at 19 [same].) Instead, Defendants largely focused on why the missing
ESI was prejudicial to their defense of Cramton’s resignation-related claims (which they
subsequently prevailed on at summary judgment or trial).
- 31 -

1
2
3

IV.

Cross-Motions For Attorneys’ Fees And Costs (Docs. 481, 483)
A.

Background
1.

Cramton’s Claims

4

In her original complaint, Cramton asserted a variety of claims, including a claim

5

under the Family Medical and Leave Act (“FMLA”). (Doc. 1 ¶¶ 78-90.) However,

6

Cramton later agreed to voluntarily dismiss her FMLA claim with prejudice. (Doc. 80.)

7

In her operative complaint, Cramton asserted 10 claims and named five Defendants

8

(Keely, Kelli, GFL, ECO, and ECH). (Doc. 88.) Those claims fell into four categories.

9

First, in Counts One, Two, and Three, Cramton asserted claims under the Americans with

10

Disabilities Act (“ADA”) against GFL, ECO, and ECH. (Id. ¶¶ 85-110.) It is not clear

11

from the record how Cramton valued those claims. Second, in Count Four, Cramton

12

asserted an AMWA claim against all five Defendants. (Id. ¶¶ 111-18.) As reflected in the

13

judgment, that claim was ultimately worth $50,871. (Doc. 461.) Third, in Count Five,

14

Cramton asserted a claim for breach of the promissory note against ECO. (Doc. 88 ¶¶ 119-

15

123.) As reflected in the judgment, that claim was ultimately worth $23,017.12 (Doc.

16

461.) Fourth, in Counts Six, Seven, Eight, Nine, and Ten, Cramton asserted retaliation-

17

related tort and contract claims against Keely and ECH. (Doc. 88 ¶¶ 124-62.) During the

18

bench trial, Cramton argued that she should receive $483,600 in economic damages based

19

on those claims, as well as up to $250,000 in emotional distress damages and

20

approximately $700,000 in punitive damages. (Doc. 428 at 191.)

21

Cramton ultimately prevailed on only two of her claims, the AMWA claim in Count

22

Four against Keely and the contract claim in Count Five against ECO. (Doc. 461.) Those

23

two claims were worth $73,888.12 in the aggregate. (Id.) As for the remaining claims, the

24

FMLA claim in the original complaint was dismissed during the early stages of the case

25

(Doc. 80); the 2019 summary judgment order disposed of the ADA claims in Counts One,

26

Two, and Three, the AMWA claim in Count Four as to Kelli, ECO, and ECH, and two

27

(Counts Six and Eight) of the resignation-related claims (Doc. 247); the remaining three

28

resignation-related claims (Counts Seven, Nine, and Ten) were resolved against Cramton

- 32 -

1

following the bench trial (Doc. 429 at 27-28); and Cramton voluntarily dismissed her

2

AMWA claim against GFL following the bench trial (Doc. 454).

3

2.

Defendants’ Counterclaims

4

All five Defendants, as well as an additional Grabbagreen-related entity called Gulf

5

Girl Squared (“GGS”), asserted counterclaims against Cramton and Cramton’s spouse.

6

(Doc. 95 at 21-29.) In Counterclaim One, GFL, ECO, and ECH asserted a claim for breach

7

of various contracts (confidentiality, non-compete, and operating agreements). (Id. at 24.)

8

In Counterclaim Two, GFL, ECO, and ECH asserted a tort claim for unfair competition.

9

(Id. at 25.) In Counterclaim Three, GFL, ECO, ECH, Keely, and Kelli asserted a claim for

10

breach of contract (GGS release). (Id. at 25-26.) In Counterclaim Four, GFL, ECO, and

11

ECH asserted a tort claim for wrongful interference with business expectations. (Id. at 26-

12

27.) This counterclaim was valued at more than $1 million. (Id. [“As a result of Kim

13

Crampton’s wrongful interference, GFL, ECO, and ECH assets sold for at least

14

$1,000,000.00 less than the price Counterclaimants GFL, ECO, and ECH would have

15

obtained for the assets but for Kim Crampton’s wrongful interference.”].) In Counterclaim

16

Five, GGS asserted a claim for breach of contract (GGS release). (Id.)

17
18

In the December 2019 order, the Court granted summary judgment in favor of
Cramton and Cramton’s spouse as to all of the counterclaims. (Doc. 247 at 61-72.)
The Parties’ Arguments

19

B.

20

Each side has filed an affirmative motion for costs and attorneys’ fees, a response

21

to the other side’s motion, and a reply. To avoid duplication, the Court will not describe

22

all six briefs in sequential order but instead summarize each side’s position.

23

Keely, GFL, ECH, and ECO (“the moving Defendants”) seek to recover nearly $1.1

24

million in costs and attorneys’ fees. (Docs. 481, 497, 501.) The moving Defendants

25

contend they should be considered the prevailing/successful parties in this action because

26

(1) they wholly prevailed on the most valuable set of Cramton’s claims (the resignation-

27

related claims for which Cramton sought over $1.2 million); (2) they largely prevailed on

28

the FMLA, AMWA, and ADA claims—Cramton sued an array of different entities and

- 33 -

1

individuals but ultimately recovered only against Keely and only on the AMWA claim;

2

and (3) although Cramton secured a $23,017.12 judgment on her contract claim in Count

3

Five against ECO, she was not the prevailing party as to that claim because she rejected a

4

pair of written settlement offers to pay the full requested amount. Given this backdrop, the

5

moving Defendants contend they “prevailed on 97% of Cramton’s claims,” or “88% with

6

the four counterclaims involving certain Defendants.” (Doc. 481 at 6 & n.4.) The moving

7

Defendants also accuse Cramton of needlessly running up the cost of litigation in various

8

ways, including by making extortionate settlement demands, engaging in discovery

9

misconduct, pursuing certain claims in bad faith, and failing to participate in contractually

10

required mediation. (Doc. 481 at 6-12; Doc. 497 at 3.) As for the statutory basis for their

11

fee request, the moving Defendants identify the ADA, the FMLA, the Arizona Civil Rights

12

Act (“ACRA”), and Arizona’s fee-shifting statute for contract claims, A.R.S. § 12-

13

341.01(A). (Doc. 481 at 4-5, 8-11.) The moving Defendants also defend the size of their

14

fee request (Doc. 481 at 13-17) and contend that Cramton’s fee request is inflated (Doc.

15

497 at 7-17). Finally, the moving Defendants argue that, to the extent Cramton obtains any

16

recovery, it should be limited to the fees and costs “determined reasonable and necessary

17

for Count IV against Keely.” (Doc. 497 at 6.) According to the moving Defendants, those

18

costs and fees should be limited to either $1,731.50, or about $18,000, or no more than

19

$45,509.42. (Id. at 18.)

20

Cramton and her spouse seek to recover nearly $400,000 in costs and attorneys’

21

fees. (Docs. 483, 492, 503.) As an initial matter, Cramton contends that AMWA’s cost-

22

shifting provision is one-sided, such that she is entitled to recover her fees to the extent she

23

prevailed on her AMWA claim against Keely but cannot be required to pay fees to the

24

remaining Defendants she unsuccessfully sued under AMWA. (Doc. 483 at 2-5.) More

25

broadly, Cramton contends that she should be considered the prevailing party for purposes

26

of the entire litigation because she was the “net winner,” having prevailed on her AMWA

27

claim in Count Four against Keely, on her contract claim in Count Five against ECO, and

28

on all of the counterclaims asserted against her (for which Defendants “asserted more in

- 34 -

1

damages . . . than Plaintiff did on her affirmative claims”). (Doc. 483 at 5-6, 15; Doc. 492

2

at 2-5.) As for the purported settlement offers concerning Count Five, Cramton argues

3

they do not change the prevailing-party calculus because they (1) were not for a sum

4

certain, (3) were subject to certain contingencies, (3) were made before Defendants

5

appeared in this action, (4) did not provide for Cramton’s attorneys’ fees, and (5) “were

6

conditioned upon Plaintiff proving a release of all claims, which would have included [the]

7

minimum wage claim.” (Doc. 492 at 4-7 & n.2.) Cramton also defends the size of her fee

8

request, noting that she has already reduced it by over $340,000 via the “removal of time

9

associated with Plaintiff’s unsuccessful claims, time for multiple attorneys attending

10

meetings or conferences, time spent briefing the issue of GFL’s joint and several liability

11

under [AMWA], time spent on the defense of the jury trial waiver (and therefore time

12

already spent preparing for aspects unique to a jury trial such as voir dire, statement of the

13

case and instructions), time related to Defendants’ separate claims against case witnesses

14

Jeff Farnell, Juliet Peters and Catherine Peterson, and other time determined to be

15

unnecessary or duplicative.” (Doc. 483 at 7, 15.) In contrast, Cramton characterizes the

16

moving Defendants’ fee request as “grossly excessive.” (Doc. 492 at 14-15, 18.)

17

C.

Analysis

18

In 279 B.C., a king named Pyrrhus led his army into battle against the Romans at

19

Asculum. Although King Pyrrhus prevailed in this battle, his army suffered devastating

20

losses. Such a result has since become known as a Pyrrhic victory, which is defined as “a

21

victory that is not worth winning because so much is lost to achieve it.” Phyrric Victory,

22

Merriam-Webster, https://www.merriam-webster.com/dictionary/Pyrrhic%20victory (last

23

visited May 27, 2022).

24

King Pyrrhus has nothing on the parties in this case. After four years of bitter

25

litigation in which each side sought more than $1 million in damages, made six-figure

26

settlement demands, and spent hundreds of thousands (if not millions) of dollars on legal

27

fees, Cramton ultimately obtained a recovery of less than $75,000. Although, as explained

28

below, Cramton is entitled to recover some of her attorneys’ fees, nobody truly prevailed.

- 35 -

1

1.

A.R.S. § 12-341.01(A)

2

The analysis begins with A.R.S. § 12-341.01(A), which both sides cite in support of

3

their respective fee requests. That statute provides in relevant part that “[i]n any contested

4

action arising out of a contract, express or implied, the court may award the successful

5

party reasonable attorney fees.” It is undisputed that this action arose out of a contract—

6

Cramton’s claim against ECO in Count Five and several of Cramton’s resignation-related

7

claims against Keely and GFL were contract claims, as were several of the moving

8

Defendants’ counterclaims against Cramton and Cramton’s spouse. Thus, the first step

9

under § 12-341.01(A) is determining who was “successful.”

10

Under Arizona law, “the trial court has substantial discretion to determine who is a

11

‘successful party’” for purposes of § 12-341.01. Fulton Homes Corp. v. BBP Concrete,

12

155 P.3d 1090, 1096 (Ariz. Ct. App. 2007).

13

party for purposes of awarding attorneys’ fees is within the sole discretion of the trial court,

14

and will not be disturbed on appeal if any reasonable basis exists for it.” Sanborn v.

15

Brooker & Wake Property Mgmt., Inc., 874 P.2d 982, 987 (Ariz. Ct. App. 1994).

“The decision as to who is the successful

16

The “successful party” analysis here is complicated by the fact that Cramton sued

17

five different Defendants under an array of different contract, tort, and employment

18

theories but did not sue each Defendant in each count. Additionally, those defendants (as

19

well as another entity) asserted contract-based and tort-based counterclaims against

20

Cramton and her spouse. Under the circumstances, the Court concludes that the most

21

logical approach is to individually evaluate whether Cramton was successful in relation to

22

each Defendant (i.e., Cramton-ECO, Cramton-GFL, Cramton-ECH, Cramton-Keely,

23

Cramton-Kelli). The Court possesses particularly broad discretion when deciding how to

24

determine the “successful party” in cases involving multiple parties and multiple claims.

25

See, e.g., Aspen Biotech Corp. v. Wakefield, 2021 WL 3503399, *18 (Ariz. Ct. App. 2021)

26

(“This court has long held that the superior court is not bound to the net judgment rule in a

27

multi-party, multi-claim case in the exercise of its discretion. Instead, it may use other

28

tests to determine the parties’ relative success concerning the various claims.”); Schwartz

- 36 -

1

v. Farmers Ins. Co. of Ariz., 800 P.2d 20, 25 (Ariz. Ct. App. 1990) (“The trial court

2

possesses discretion to determine who is the successful party in multiple-party litigation

3

and in cases where there are multiple-parties as well as multiple-claims.”); Pioneer Roofing

4

Co. v. Mardian Constr. Co., 733 P.2d 652, 664 (Ariz. Ct. App. 1986) (“Given the third-

5

party posture of this litigation and its multiple claims and parties, we hold that the trial

6

court’s method of determining who was the ‘successful party’ as to each claim was not an

7

abuse of discretion.”).

8

With that backdrop in mind, to the extent Cramton and a particular Defendant each

9

pursued affirmative claims for relief against each other, one approach for deciding which

10

side was successful would be to apply the “net winner” test. Ayala v. Olaiz, 776 P.2d 807,

11

809 (Ariz. Ct. App. 1989) (“In cases involving various competing claims, counterclaims

12

and setoffs all tried together, the successful party is the net winner.”).5 Additionally, “in a

13

case involving multiple claims and varied success,” the court may “apply a ‘percentage of

14

the success’ or a ‘totality of the litigation’ test.” Berry v. 352 E. Virginia, L.L.C., 228 Ariz.

15

9, 261 P.3d 784, 788 (Ariz. Ct. App. 2011) (citation omitted). “Under the totality of the

16

litigation rule, . . . [t]here are no strict factors, rather the trial court is afforded discretion in

17

reviewing the totality of the litigation.” Medical Protective Co. v. Pang, 25 F. Supp. 3d

18

1232, 1240 (D. Ariz. 2014).

19

Starting with the “net winner” test, the only contract claim on which Cramton

20

prevailed was her claim in Count Five against ECO, which resulted in a judgment in her

21

favor of $23,017.12.

22

counterclaims against Cramton, it follows that Cramton was a net winner in relation to

Because ECO did not prevail on any of its contract-based

23
24
25
26
27
28

See also Vortex Corp. v. Denkewicz, 334 P.3d 734, 745 (Ariz. Ct. App. 2014) (“Both
sides in this litigation brought claims arising from their contractual relationships, and both
prevailed on some of their claims, with damages awarded. In fact, both sides sought large
sums of money from the other and both fell significantly short of their financial goals in
the litigation. For cases involving claims and counterclaims in which both sides receive a
favorable judgment in part, our supreme court has applied the ‘net judgment’ approach, by
which the ‘prevailing party’ for attorneys’ fees purposes is the party that, when both sides
are awarded judgments, is awarded a greater amount than the other party. Because each
side recovered less than the amounts sought, we conclude the net judgment rule is
applicable.”) (citations omitted).
5

- 37 -

1

ECO.

2

This is true despite Cramton’s rejection of the settlement offers concerning Count

3

Five. Under A.R.S. § 12-341.01(A), “[i]f a written settlement offer is rejected and the

4

judgment finally obtained is equal to or more favorable to the offeror than an offer made

5

in writing to settle any contested action arising out of a contract, the offeror is deemed to

6

be the successful party from the date of the offer and the court may award the successful

7

party reasonable attorney fee.” The first settlement offer, made in September 2017, was

8

for ECO to “agree to a 24-month repayment schedule for the remaining balance of the ECO

9

Note in exchange for” various items of consideration, including “a full release” of all of

10

Cramton’s other claims. (Doc. 481-6 at 14.) This offer was insufficient to undermine

11

Cramton’s successful-party status. Not only did not fail to specify the amount that ECO

12

would actually pay (it only offered to satisfy “the remaining balance” on the ECO note,

13

which the parties disputed), but the $73,888.12 “judgment finally obtained” by Cramton

14

was more favorable than what Cramton would have received under the offer (i.e., only the

15

disputed balance owed on the ECO note, which Cramton valued at $23,017.12 and which

16

Defendants valued at $66,527, with no additional recovery against Keely due to the “full

17

release”). Similarly, the second settlement offer, made in January 2018, potentially called

18

for “ECO to repay Ms. Cramton’s outstanding loan,” but only if Cramton “release[d]” all

19

other claims and dismissed the complaint with prejudice. (Doc. 481-6 at 28.) Once again,

20

this was insufficiently specific as to the actual amount being offered and less favorable to

21

Cramton than the “judgment finally obtained.”

22

As for three of the remaining Defendants (GFL, ECH, and Kelli), there was no net

23

winner—Cramton lost on all of her contract-based claims against those Defendants, who

24

in turn lost on all of their contract-based counterclaims against Cramton.

25

As for the remaining Defendant (Keely), the analysis is complicated by the fact that

26

Cramton’s AMWA claim in Count Four was not a contract claim. Accordingly, there is a

27

strong argument that Cramton’s award of $50,871 on Count Four does not count for

28

purposes of the “successful party” analysis under § 12-341.01. Ramsey Air Meds, L.L.C.

- 38 -

1

v. Cutter Aviation, Inc., 6 P.3d 315, 318 (Ariz. Ct. App. 2000) (“A tort claim does not come

2

within the attorneys’ fee statute by being interwoven with an unsuccessful contract

3

claim.”). Additionally, because the Court is separately analyzing Cramton’s entitlement to

4

fees under the fee-shifting provisions of AMWA, it would be anomalous to allow the

5

AMWA claim to separately drive the fee-entitlement analysis under § 12-341.01. Cf.

6

Modular Mining Sys., Inc. v. Jigsaw Techs., Inc., 212 P.3d 853, 861 (Ariz. Ct. App. 2009)

7

(citing other Arizona cases for the proposition that “where attorney fees award [are]

8

affirmed under one theory, [there is] no need to reach arguments pertaining to [an]

9

alternative theory”). If Count Four were excluded for either of these reasons, there would

10

be no net winner between Cramton and Keely because each lost on all of her contract-based

11

affirmative claims. General Cable Corp. v. Citizens Utilities Co., 555 P.2d 350, 354 (Ariz.

12

Ct. App. 1976) (“[W]here . . . the trial court has denied relief to both parties, we find that

13

neither party is the ‘successful party’ under the provisions of § 12-341.”).6

14

The “percentage of the success” and “totality of the litigation” tests produce similar

15

outcomes. Cramton obtained 100% of what she sought from ECO. Thus, in relation to

16

ECO, Cramton was a successful party no matter which test is used. As for the remaining

17

Defendants, Cramton sought more than $1 million in damages from them while they sought

18

more than $1 million in damages on their counterclaims. The parties’ settlement demands

19

were consistent with these large requests. Cramton made pre-lawsuit settlement demand

20

of $850,000 (Doc. 481-6 at 18) and, according to Kelli, “the demand [was] unwaveringly

21

at or about $750,000 for the entire 4 years” that followed (Doc. 481-2 ¶ 21). Meanwhile,

22

in a November 2018 letter, Defendants agreed to enter into a mutual release of claims with

23

Cramton, but only if Cramton made a $150,000 settlement payment to them. (Doc. 492-1

24

at 73.)

25

$250,000 to Defendants . . . in exchange for a mutual release of all claims between the

Later, in August 2020, Defendants increased their demand: “Cramton pays

26
27
28

Although Cramton’s spouse avoided liability as to the contract-based counterclaims
asserted against her, she did not assert any contract claims that might lend themselves to a
“net winner” analysis. Additionally, it is unclear whether Cramton’s spouse expended any
funds on her defense that would not have been independently spent defending Cramton.
6

- 39 -

1

parties, inclusive of fees and costs.” (Id. at 81.) It there were ever a case to find that the

2

“totality of the litigation” test failed to produce a successful party (apart from Cramton in

3

relation to ECO), this would be it. Any victory was Phyrric.

4

Because Cramton was the successful party in relation to ECO (no matter what test

5

is used), she may be entitled to the attorneys’ fees she incurred when pursuing her claim in

6

Count Five. However, “there is no presumption that a successful party should be awarded

7

attorney fees under § 12-341.01.” Motzer v. Escalante, 265 P.3d 1094, 1095 (Ariz. Ct.

8

App. 2011). “The legislature used the phrase ‘may award’ in authorizing the trial judge to

9

award a successful contract litigant reasonable attorney’s fees. The natural import of this

10

phrase is to vest discretion in the trial court to determine the circumstances appropriate for

11

the award of fees.” Associated Indem. Corp. v. Warner, 694 P.2d 1181, 1184 (Ariz. 1985).

12

The factors Arizona courts have identified as “useful” in determining whether to award

13

fees pursuant to § 12-341.01 include (1) the merits of the claim or defense of the

14

unsuccessful party; (2) whether the litigation could have been avoided or settled; (3)

15

whether assessing fees would cause extreme hardship; (4) whether the successful party

16

prevailed with respect to all relief sought; (5) whether the legal question was novel or had

17

been previously adjudicated; and (6) whether an award would discourage other parties with

18

tenable claims or defenses from litigating them. Id.

19

Having carefully considered those factors, the Court concludes than an award of

20

fees and costs would be appropriate here with respect to Cramton’s pursuit of her contract

21

claim in Count Five against ECO.7 Notably, Cramton only seeks to recover the $10,256 in

22

attorneys’ fees related to Count Five that she incurred during the final stages of the case

23

following the bench trial. (Doc. 483 at 16; Doc. 483-2 ¶ 14.) Particularly when viewed

24

7

25
26
27
28

In the tentative order issued before oral argument, the Court concluded that Cramton
should not be awarded any attorneys’ fees under § 12-341.01. However, during oral
argument, Cramton’s counsel identified reasons why Cramton should be deemed a
successful party in relation to ECO and be awarded the fees associated with Count Five.
Upon further consideration, and after re-reviewing the Wakefield, Schwartz, and Pioneer
Roofing decisions cited above (which address the broad discretion of trial courts to
determine which parties were successful in relation to each other during multi-party, multiclaim litigation), the Court concludes that Cramton’s arguments on these points have merit
and has changed the tentative order accordingly.
- 40 -

1

through this lens, ECO’s defenses to the claim were not meritorious, litigation could not

2

have been avoided, there has been no suggestion that assessing fees against ECO would

3

cause extreme hardship (indeed, it is unclear whether Cramton will be able to recover on

4

any fee award against ECO given the bankruptcy proceedings), Cramton received 100% of

5

what she sought, the legal questions were not particularly novel, and an award would not

6

have an impermissible deterrent effect. The Court also agrees that Cramton should be

7

allowed under § 12-341.01(A) to recover the costs and fees associated with responding to

8

ECO’s motion for reconsideration as to Count Five and the Court’s call for supplemental

9

briefing as to Count Five, because such fees were necessary to preserve Cramton’s

10

success.8 Accordingly, within 14 days of the issuance of this order, Cramton may file a

11

request for those additional fees and costs.

12

In contrast, even if Cramton and her spouse could be considered “successful parties”

13

in relation to the remaining Defendants for purposes of § 12-341.01(A) (or even if those

14

Defendants could somehow be considered be considered “successful parties” in relation to

15

Cramton), the Court would decline in its discretion to award any attorneys’ fees and costs

16

pursuant to § 12-341.01(A). Cramton’s large settlement demands contributed to the

17

parties’ inability to avoid litigation and any success Cramton achieved was quite modest

18

with respect to the overall relief sought (at least as to the non-ECO and -AMWA claims).

19

Cf. Motzer, 265 P.3d at 1096 (“[T]he court could find Motzer was the successful party and

20

still deny fees under the Associated Indemnity factors.”). Additionally, because Cramton

21

is receiving a fee award pursuant to AMWA, this provides another reason to decline to

22

award fees under § 12-341.01 apart from the fee award against ECO. Meanwhile, the

23

moving Defendants’ counterclaims uniformly lacked merit, their conduct also contributed

24

to the parties’ inability to avoid litigation, and they ended up losing on all of their

25

counterclaims.
…

26
27

This makes it unnecessary to resolve Cramton’s alternative claim (Doc. 499 at 12)
that she is entitled to recover her post-trial briefing fees related to Count Five under 28
U.S.C. § 1927 and Rule 11.
8

28

- 41 -

1

2.

Civil Rights Statutes

2

Some of Cramton’s claims arose under civil rights statutes that have their own fee-

3

shifting provisions. As noted, Cramton voluntarily dismissed an FMLA claim and then

4

had three ADA claims—which were pleaded in the complaint, in the alternative, as ACRA

5

claims (Doc. 88 at 10-12)—rejected at summary judgment. The moving Defendants point

6

to their uniform success in defending against those claims as one reason why they should

7

receive a fee award. (Doc. 481 at 8-10.)

8

As an initial matter, and as Cramton correctly notes in her response (Doc. 492 at 9),

9

the moving Defendants may not seek fees based on their successful defense of Cramton’s

10

FMLA claim because the fee-shifting provision of that statute operates in a one-sided

11

fashion—it only authorizes an award of fees to a successful plaintiff.

12

§ 2617(a)(3) (“The court in such an action shall, in addition to any judgment awarded to

13

the plaintiff, allow a reasonable attorney’s fee, reasonable expert witness fees, and other

14

costs of the action to be paid by the defendant.”). See, e.g., Rains v. Newmont USA Ltd.,

15

2015 WL 5665599, *2 (D. Nev. 2015) (“[T]he FMLA’s counsel-fee provision provides for

16

fees only for a plaintiff who prevails against a defendant . . . [and] does not carry over to a

17

prevailing defendant in an action brought under the FMLA.”); Peak v. Forever Living

18

Prods. Int’l, Inc., 2011 WL 13174334, *8 (D. Ariz. 2011) (“FMLA and FLSA . . . have

19

mandatory one-way fee-shifting provisions, requiring that a defendant pay a reasonable

20

attorney’s fee to a prevailing plaintiff, but not the other way around.”).

29 U.S.C.

21

In contrast, the moving Defendants may potentially recover fees based on their

22

successful defense of the Cramton’s ADA/ACRA claims. However, ”it is much more

23

difficult for prevailing defendants to recover fees in civil rights cases than it is for

24

prevailing plaintiffs. Defendants may recover attorneys’ fees only ‘upon a finding that the

25

plaintiff’s action was frivolous, unreasonable, or without foundation, even though not

26

brought in subjective bad faith.’” Advocates for Individuals with Disabilities, LLC v.

27

MidFirst Bank, 2018 WL 3545291, *4 (D. Ariz. 2018) (quoting Christianburg Garment

28

Co. v. EEOC, 434 U.S. 412, 421 (1978)). “In considering what constitutes a claim that is

- 42 -

1

frivolous, unreasonable or groundless, it is important that a district court resist the

2

understandable temptation to engage in post hoc reasoning by concluding that, because a

3

plaintiff did not ultimately prevail, his action must have been unreasonable or without

4

foundation.” C.W. v. Capistrano Unified Sch. Dist., 784 F.3d 1237, 1245 (9th Cir. 2015)

5

(citation omitted).

6

The moving Defendants are not entitled to fees under this standard because

7

Cramton’s ADA/ACRA claims were not frivolous, unreasonable, or without foundation.

8

Although the Court ultimately ruled against Cramton on those claims at summary

9

judgment, the adverse ruling presented a fairly close call that required extensive analysis

10

(Doc. 247 at 33-41) and was reached only after the Court solicited supplemental briefing

11

from Cramton following oral argument (Docs. 242, 243).

12

3.

AMWA

13

AMWA provides that “[a] prevailing plaintiff shall be entitled to reasonable

14

attorney’s fees and costs of suit.” A.R.S. § 23-364(G). This provision is similar to the

15

FMLA’s fee-shifting provision in that it operates in a one-sided fashion. Thus, because

16

Cramton prevailed on her AMWA claim in Count Four against Keely, she is entitled to

17

recover her reasonable attorneys’ fees and costs associated with that claim, even though

18

she did not prevail on her AMWA claim against the remaining Defendants or on most of

19

her non-AMWA claims. Cf. Mesa Airlines, Inc. v. Davis, 2021 WL 710191, *2 (Ariz. Ct.

20

App. 2021) (unpub.) (“AMWA’s fee provision does not . . . refer[] to prevailing in the

21

‘action’ as a whole, potentially including other claims unrelated to the asserted minimum

22

wage violations. Instead, it simply requires a fee award in favor of the ‘prevailing plaintiff’

23

in the context of enforcing the provisions of the AMWA itself. That is, ‘prevailing’ on the

24

AMWA claim alone (regardless of the employee’s success on other claims) constitutes

25

‘prevailing’ for purposes of § 23-364(G).”).

26

Because the fee-shifting provision of AMWA uses the word “shall” (as contrasted

27

with § 12-341.01(A)’s use “may”), a fee award is mandatory rather than discretionary.

28

With that said, Cramton’s recovery must be limited to the “reasonable” fees and costs

- 43 -

1

incurred in pursuing her AMWA claim against Keely. Determining what is reasonable in

2

this case is challenging because the evidence bearing on Cramton’s AMWA claim was

3

intertwined with the evidence bearing on her other claims. For example, the evidence

4

bearing on the number of hours that Cramton worked for GFL, which was relevant to her

5

AMWA claim, was also relevant to her unsuccessful resignation-related claims because

6

one of her theories as to those claims was that Keely forced her to work under such

7

grueling, inhumane conditions that she had no choice but to resign once she was led to

8

believe the Kahala deal was dead. (See, e.g., Doc. 428 at 181 [Cramton’s closing argument:

9

“[T]hey made the conditions so intolerable for Kim Cramton that she really had no choice

10

but to leave once it was clear that [the Kahala deal was dead]—no pay, no sale, cruel work

11

environment.”]; id. at 190 [“The evidence is overwhelming that Miss Cramton was lied to

12

about there not being a sale, and that she relied on that fraudulent statement to her

13

detriment. The Newmans made Miss Cramton work for them for no pay. They . . . just

14

ma[de] the conditions so unbearable so that all it took was one lie that a sale was not going

15

to happen for them . . . .”].) As another example, the parties’ extensive litigation over

16

allegations of discovery misconduct implicated all of Cramton’s claims, not just her

17

AMWA claim.

18

For these reasons, the Court concludes that Cramton’s request for $222,792.40 in

19

attorneys’ fees associated with her AMWA claim against Keely (Doc. 483 at 16)9 must be

20

9

21
22
23
24
25
26
27
28

Cramton’s motion also includes a request to recover non-taxable costs of
$32,030.82. (Doc. 483 at 16-17; Doc. 503 at 9.) This request is denied. First, although
the motion asserts that Cramton “has included, in an abundance of caution, a
comprehensive summary of all costs incurred in the action as part of this Motion” (Doc.
483 at 17 n.8), no such summary was enclosed as an attachment to the motion or provided
in either of the accompanying declarations from counsel. The Court thus does not know
how the requested sum of $32,030.82 was computed. (Although a few of the documents
attached to counsel’s declarations appear to relate to cost disbursements (Doc. 483-1 at 16,
38, 44), those costs do not come close to $32,030.82.) This approach violates LRCiv
54.1(e)(3), which provides that a party moving for attorneys’ fees and non-taxable
expenses must include an “itemized account of the time expended and expenses incurred”
and must identify, “[i[n a separate portion of the itemized statement, . . . each related nontaxable expense with particularity. . . . Failure to itemize and verify costs may result in
their disallowance by the court.” Second, in a related vein, Cramton has not explained
which of the unspecified $32,030.82 in non-taxable costs are attributable to her successful
claims in Counts Four and Five (and, thus, might be recoverable under AMWA or § 12341.01). During oral argument, Cramton argued that any imprecision in this area should
be excused in light of the Clerk of Court’s failure to timely resolve the parties’ dueling
- 44 -

1

reduced. Although the Court appreciates Cramton’s efforts to exclude litigation activities

2

that were related wholly to non-AMWA claims (Doc. 483-1 ¶ 20; Doc. 483-2 ¶ 13-21), the

3

request still includes, to an unreasonable degree, entries for time spent on tasks attributable

4

both to the AMWA claim and to other unsuccessful claims. Although some of the time

5

spent on these tasks is properly recoverable under § 23-364(G), not all of it is necessarily

6

recoverable—the overlay of the non-AMWA claims resulted in the tasks taking longer than

7

they otherwise would have taken.10

8

In the tentative ruling issued before oral argument, the Court stated that, “[i]n the

9

absence of a proposal from either party on how to account for this duplication,” a reduction

10

from $222,792.40 to $150,000 would be sufficient to account for the duplication.

11

However, during oral argument, Cramton’s counsel identified a better and more tailored

12

solution. Counsel suggested that, because two of Cramton’s attorneys (Ms. Matheson and

13

Ms. Armstrong) worked nearly exclusively on Cramton’s statutory employment claims,

14

while Cramton’s remaining attorney (Mr. Feltus) focused most of his efforts on Cramton’s

15

commercial and contractual claims, any reduction for duplication should be confined to

16

Mr. Feltus’s portion of the AMWA-related fee request.

17

The Court agrees that this approach makes sense. Ms. Matheson’s declaration

18

explains that her firm “jointly represented Ms. Cramton along with attorneys from” Mr.

19

Feltus’s firm and, “[a]lthough not subject to black and white precision, the firms’

20

representation was roughly divided between Plaintiff’s statutory employment claims under

21

the Arizona Minimum Wage Act, the Americans with Disabilities Act and the Family

22
23
24
25
26
27
28

requests to recover their taxable costs and objections thereto (Docs. 464, 465, 472, 474),
but it is unclear how this delay could have interfered with Cramton’s ability to properly
itemize and seek reimbursement for her non-taxable costs, as she was required to do.
10
For purposes of a fee request under A.R.S. § 12-341.01, trial courts have “significant
discretion to award fees in a matter intertwined with another matter for which it may not
grant attorney’s fees,” with the caveat that “[a]ttorney’s fees should not be allowed on
unsuccessful separate and distinct claims that could have been litigated separately.” City
of Cotttonwood v. James K. Fann Contracting, Inc., 877 P.2d 284, 294 (Ariz. Ct. App.
1994). It is unclear whether the same rule governs fee requests under A.R.S. § 23-364(G).
But even if it does, having discretion to award fees for intertwined work is not the same
thing as being required to award fees for intertwined work and the Court concludes that
some reduction is necessary here.
- 45 -

1

Medical Leave Act . . . and Plaintiff’s commercial and contractual claims and Defendants’

2

commercial and contractual counterclaims.” (Doc. 483-1 ¶ 2.) Ms. Matheson’s declaration

3

further establishes that, due to the manner in which she reduced or eliminated various time

4

entries (including all “entries involving Ms. Cramton’s unsuccessful claims under the

5

Family Medical Leave Act and the Americans with Disabilities Act”), her firm’s request

6

for a total in $144,838 in AMWA-related fees reflects only the subset of fees that “were

7

reasonable and necessary under the circumstances in this case” to prevail on the AMWA

8

claim. (Id. ¶¶ 20-21.) In light of this showing, the Court agrees that the $144,838 portion

9

of Cramton’s AMWA-related fee request attributable to Ms. Matheson’s firm need not be

10

further reduced.

11

As for the remaining portion of the fee request—the $77,954.50 in AMWA-related

12

fees attributable to Mr. Feltus’s firm (Doc. 483-2 ¶ 21)—the associated billing entries

13

indicate that this figure is composed of $17,954.50 in fees for work on “Exclusively

14

Minimum Wage” tasks and $60,000 in fees for work on “Intertwined” tasks (Doc. 483-2

15

at 91). The Court concludes that the $17,954.50 sum need not be further reduced but the

16

$60,000 figure remains too high—although it has already been reduced by Mr. Feltus in

17

various ways (Doc. 483-2 ¶¶ 16-21), the Court remains concerned that the overlay of the

18

non-AMWA claims resulted in these tasks taking longer than they otherwise would have

19

taken. Again, it must be recalled that Cramton sought over $1 million based on the

20

commercial and contractual claims on which Mr. Feltus’s firm focused and only $50,871

21

on the AMWA claim that was intertwined in certain ways with those other claims. The

22

Court concludes that a reduction from $60,000 to $30,000 would be sufficient to account

23

for this variable. Cf. Lexington Ins. Co. v. Scott Homes Multifamily Inc., 2016 WL

24

5118316, *17 (D. Ariz. 2016) (“The Court is free to exercise this discretion as there is no

25

precise rule or formula for determining how to reduce an award for time spent on

26

unsuccessful claims under Arizona law.”) (cleaned up). All told, this means that Cramton

27

reasonably incurred $192,792.50 in attorneys’ fees in pursuit of her AMWA claim.

28

Given this reduction, Defendants’ remaining objections to the AMWA-related

- 46 -

1

portions of Cramton’s fee request are unavailing. For example, although Defendants note

2

that Cramton’s recovery on her AMWA claim represented only a small fraction of the

3

overall recovery she sought in this case (Doc. 497 at 4, 7-8), Defendants fail to explain why

4

this sort of comparison would be relevant in assessing the reasonableness of the fees that

5

Cramton incurred when pursuing her AMWA claim. Cramton fully prevailed on that

6

claim—she sought $50,871 at trial and received 100% of that amount in the final judgment.

7

The analysis might be different if Cramton were seeking fees incurred for litigating all of

8

her claims, but the $192,792.50 figure avoids such overlap.

9

Defendants also suggest that “[l]itigation on Count[] IV . . . was superfluous and

10

easily could have been avoided.” (Doc. 497 at 7.) This is a puzzling assertion that is belied

11

by the record. As discussed above, Defendants’ initial settlement offers to Cramton only

12

pertained to Count Five (the ECO claim) and would have required Cramton to release all

13

other claims, including the AMWA claim, without recovery. Later, Defendants’ settlement

14

posture became even more aggressive—they eventually demanded that Cramton write

15

them a check for $250,000 in order to resolve all claims and counterclaims. And even now,

16

more than four years after the case began, Defendants continue to attack the legal and

17

factual sufficiency of the AMWA claim through voluminous Rule 59(e) motions. Given

18

this backdrop, the litigation over the AMWA claim could not have been easily avoided—

19

Cramton was forced to litigate the claim and is thus statutorily entitled to the reasonable

20

fees she incurred in the process. True, Cramton did not make a targeted effort to settle the

21

AMWA claim without regard to her other, bigger-ticket claims, but nothing about how

22

Defendants litigated this case suggests that such a targeted settlement effort would have

23

been successful.

24

The Court also disagrees with Defendants’ contention that the AMWA claim was a

25

“simple, limited and routine” claim that “one lawyer needed only months . . . to settle” and

26

that Cramton therefore acted unreasonably by “assign[ing] 4 lawyers” to pursue the claim.

27

(Doc. 497 at 4, 10-12.) It is an understatement to say that Defendants have aggressively

28

defended against all of Cramton’s claims in this action, including the AMWA claim.

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1

Defendants have also been represented by many more attorneys over the course of this case

2

than Cramton. (Doc. 481-2 ¶¶ 2, 5, 10, 13-14 [noting that, over the course of this case,

3

Defendants were represented by three attorneys from Bryan Cave, four attorneys from

4

Tiffany Bosco, three attorneys from Cronus Law, one attorney from Cohen Law, and one

5

attorney from Newman Law].) Under these circumstances, the Court will not penalize

6

Cramton for retaining a smaller team of skilled attorneys who were able to achieve success

7

on her behalf.

8

In a related vein, Defendants have not established that Cramton’s attorneys failed to

9

exercise billing judgment when litigating the AMWA claim, engaged in duplicative work,

10

are seeking reimbursement for tasks unrelated to the AMWA claim, or are seeking

11

reimbursement for clerical work. (Doc. 497 at 10-15.) Most of Defendants’ arguments on

12

these topics are conclusory—for example, Defendants assert that “Cramton’s billing

13

records contain numerous entries with secretarial tasks that should have been deducted by

14

Cramton’s counsel” (Doc. 497 at 15) but do not identify any of the purportedly offending

15

entries. Other arguments are internally inconsistent—although Defendants characterize all

16

of the spoliation-related litigation as relevant only to Cramton’s resignation-related claims

17

(Doc. 497 at 12-15), one of Defendants’ Rule 59(e) motions seeks the reversal of the

18

judgment in Cramton’s favor on Count Four based on purported errors in the Court’s

19

spoliation analysis (Doc. 475). At any rate, the Court is satisfied that a fee award of

20

$192,792.50 would result in compensation only for work on the AMWA claim that was

21

reasonable, non-duplicative, and consistent with billing judgment.

22

Defendants’ final set of objections concern the reasonableness of the hourly rates

23

charged by Cramton’s counsel and, relatedly, whether the fee request exceeds what

24

Cramton’s attorneys would have otherwise been entitled to receive under their fee

25

agreement with Cramton. (Doc. 497 at 4, 8-9.) Those objections lack merit. Cramton’s

26

fee agreement called for a blended hourly and contingent fee under which Cramton would

27

pay an hourly rate of $400 to partners, an hourly rate of $275 to associate and contract

28

attorneys, and an hourly rate of $160 to paralegals, with these hourly fees representing “a

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1

contingent fee which shall not become due unless and until the matter is resolved in

2

[Cramton’s] favor.” (Doc. 483-1 at 11.) Although Defendants assert that this matter was

3

not “resolved in [Cramton’s] favor” because she received far less than she originally

4

sought, Defendants fail to cite any authority in support of their position and the Court is

5

unpersuaded—Phyrric though the victory may have been, this action was resolved in

6

Cramton’s favor when the Court entered judgment in her favor on several of her claims

7

and on all of the counterclaims. Thus, Cramton’s fee request does not exceed what she

8

otherwise would be required to pay under the fee agreement. The agreed-to rates in the fee

9

agreement are also reasonable for the quality work that Cramton’s experienced attorneys

10

performed in this case. See, e.g., Orman v. Central Loan Admin. & Reporting, 2020 WL

11

919302, *2 (D. Ariz. 2020) (“Other courts within this district have determined that a

12

reasonable rate ‘for highly skilled, experienced, and regarded lawyers’ involved in

13

‘complex, high-dollar commercial litigation’ can range as high as $552 per hour. Similarly,

14

reasonable associate rates approved in this district have reached $280 per hour.”) (citations

15

omitted).

16

Finally, another touchstone of reasonableness that has guided the Court’s analysis

17

here is that an award of $192,792.50 for Cramton’s attorneys’ work on the successful

18

AMWA claim, which generated a recovery of just over $50,000, would resemble other fee

19

awards that have been upheld the Ninth Circuit in comparable cases. See, e.g., Avila v.

20

L.A. Police Dep’t, 758 F.3d 1096, 1105 (9th Cir. 2014) (upholding $579,400 fee award in

21

$50,000 FLSA action); Bonnette v. California Health & Welfare Agency,704 F.2d 1465,

22

1473 (9th Cir. 1983) (upholding $100,000 fee award in $18,455 FLSA action).

23

For these reasons, Cramton is entitled to a fee award of $192,792.50 based on her

24

successful pursuit of an AMWA claim against Keely. Additionally, Cramton is entitled to

25

the recover the $18,027.50 in fees she expended in support of her fee application. (Doc.

26

503 at 9.)11 This brings the total award to $210,820.

27

11

28

In the tentative ruling, the Court concluded this fee request should be reduced by
50% because it included unsuccessful briefing related to Cramton’s request for fees under
A.R.S. § 12-341.01. Because the Court has now concluded that Cramton’s request for fees
under § 12-341.01 should be granted in part, there is no need for a 50% reduction.
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1

Finally, Cramton is also entitled to recover the fees and costs she reasonably

2

incurred when responding to Defendants’ AMWA- and spoliation-related Rule 59 motions.

3

(Docs. 467, 475.) This is because both motions sought the reversal of the judgment in

4

Cramton’s favor on Count Four. Accordingly, within 14 days of the issuance of this order,

5

Cramton may file a request for those additional fees and costs.

6

V.

Defendants’ Motion For Sanctions (Doc. 487)
The Parties’ Arguments

7

A.

8

The final post-judgment motion is Defendants’ motion for sanctions against

9

Cramton and Cramton’s counsel.

(Doc. 487.)

Defendants argue that nearly all of

10

Cramton’s losing claims in this action—specifically, the FMLA claim in the original

11

complaint, the ADA claims in Counts One, Two, and Three, the AMWA claim in Count

12

Four as asserted against ECH, ECO, and Kelli, and several of the resignation-related claims

13

against ECH and Keely—“were based on legal or factual contentions so weak as to

14

constitute objective evidence of frivolousness, improper purpose and recklessness.” (Id. at

15

2.) Thus, Defendants seek sanctions under 28 U.S.C. § 1927 and the Court’s inherent

16

authority. (Id. at 2-4.) According to Defendants, the cost of defending against Cramton’s

17

groundless and frivolous claims was more than $850,000. (Id. at 16.)

18

Cramton opposes Defendants’ motion on a variety of grounds. (Doc. 493.) As an

19

initial matter, Cramton argues that the motion is untimely because the deadline for filing

20

post-trial fee motions was January 13, 2022 but Defendants did not file their motion until

21

January 26, 2022. (Id. at 2-3.) Separately, Cramton argues that the motion repeatedly

22

conflates the standard for liability under 28 U.S.C. § 1927 (which only authorizes an award

23

of sanctions against counsel) and pursuant to the Court’s inherent authority. (Id. at 3-4.)

24

Next, Cramton argues that, regardless of the applicable standard, sanctions are not

25

warranted because none of the challenged claims were frivolous or groundless or asserted

26

in subjective bad faith. (Id. at 4-8.) Finally, Cramton argues that the fee request may

27

amount to improper double-dipping because “Defendants provide no cognizable

28

explanation to the court of how their request in this motion for $864,223.81 in monetary

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1

sanctions can be aligned with the $1,033,041 in fees and $24,672.20 in costs separately

2

requested by Defendants in their [other] motion for fees and costs.” (Id. at 8-9.)

3

In reply, Defendants dispute that they have conflated the liability standards, dispute

4

that they are double-dipping, advance additional reasons why the challenged claims should

5

be considered groundless and frivolous and asserted in bad faith, and argue that their

6

motion was not untimely because “the Motion . . . is brought pursuant to 28 U.S.C. § 1927

7

and the Court’s inherent authority and not under Rule 54” and “[n]o local rule or case was

8

cited as holding that a motion brought pursuant to the Court’s inherent authority is subject

9

to the time limitations of Rule 54.” (Doc. 502.)

10

B.

11

Defendants’ sanctions motion is denied.

12

As an initial matter, the motion is likely untimely. The starting point for the analysis

13

is Rule 54 of the Federal Rules of Civil Procedure. Rule 54(d)(2) sets forth various

14

procedures governing motions for attorneys’ fees. Under subdivision (d)(2)(B), the general

15

rule is that, “[u]nless a statute or a court order provides otherwise,” a motion for attorneys’

16

fees must “be filed no later than 14 days after the entry of judgment” and must “specify the

17

judgment and the statute, rule, or other grounds entitling the movant to relief.” However,

18

subdivision (d)(2)(E) creates an exception to this general rule, explaining that the

19

aforementioned requirements “do not apply to a claim for fees and expenses as sanctions

20

for violating these rules or as sanctions under 28 U.S.C. § 1927.”

Discussion

21

Here, Defendants are seeking sanctions under two different sources of authority: (1)

22

the Court’s inherent authority; and (2) 28 U.S.C. § 1927. As for the former, there is a

23

strong argument that Defendant’s request is subject to the time limitations imposed by Rule

24

54(d)(2)(B). This is because a request for sanctions pursuant to the Court’s inherent

25

authority is a request based on “other grounds,” as specified in Rule 54(d)(2)(B), and does

26

not fall within either of the exceptions enumerated in Rule 54(b)(2)(E) (i.e., a request based

27

on a violation of the Federal Rules of Civil Procedure or under 28 U.S.C. § 1927). See,

28

e.g., Hill v. Clark, 2012 WL 13018385, *4 (N.D. Ga. 2012) (“The reference to ‘other

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1

grounds’ arguably encompasses the court’s inherent power. Moreover, the rule provides

2

only two exceptions to the 14-day deadline. . . . The fact that the rule contains an exclusion

3

from the 14-day deadline for a motion for attorney’s fees under § 1927 and under the

4

federal rules, but does not contain any other exclusionary language, strongly implies that

5

Rule 54 applies to a motion seeking attorney’s fees under the court's inherent power.”).

6

Accordingly, any request for sanctions pursuant to the Court’s inherent authority

7

was due within 14 days of entry of judgment “unless . . . a court order provides otherwise.”

8

See Fed. R. Civ. P. 54(b)(2)(B). Here, the 14-day deadline would have been December 13,

9

2021, because judgment was entered on November 30, 2021 (Doc. 461), but the Court

10

extended that deadline at the parties’ joint request to January 13, 2022. (Docs. 462, 463.)

11

Nevertheless, the current motion was not filed until January 26, 2022. (Doc. 487.) This

12

was untimely and Defendants do not offer any explanation for why they missed the

13

deadline. This alone provides a basis for denying Defendants’ request for inherent-

14

authority fees. In re Veritas Software Corp. Securities Litig., 496 F.3d 962, 972-73 (9th

15

Cir. 2007) (“Failure to comply with the time limit in Rule 54 is a sufficient reason to deny

16

a motion for fees absent some compelling showing of good cause.”).

17

To the extent Defendants are seeking fees under 28 U.S.C. § 1927, the procedural

18

requirements and deadlines created by Rule 54(d)(2)(B) do not apply. This is because, as

19

noted, subdivision (d)(2)(E) expressly exempts motions under § 1927 from subdivision

20

(d)(2)(B)’s requirements. Hill, 2012 WL 13018385 at *7 (“A motion for attorney’s fees

21

pursuant to § 1927 is specifically exempted from the Rule 54 deadline.”) (citations

22

omitted). But a finding that Rule 54(d)(2)(B) was inapplicable does not end the analysis—

23

it simply means the Court must find some other standard for evaluating the timeliness of

24

Defendants’ request for fees under § 1927.

25

On that score, although § 1927 itself does not create any deadlines, the Court finds

26

it notable that, in a joint motion filed on December 13, 2021, the parties requested “an order

27

to extend the deadlines for the parties to submit their respective Memoranda in Support of

28

their forthcoming motions for an award of attorney fees and non-taxable costs from

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1

December 14, 2021 to January 13, 2022 so that the parties have sufficient time to complete

2

the details of their respective submissions.” (Doc. 462.) The Court construed this as a

3

request to set a deadline for the submission of all requests for attorneys’ fees and costs—

4

including, by implication, any request for attorneys’ fees and costs under 28 U.S.C. § 1927.

5

(Doc. 463.) This was an eminently reasonable deadline for Defendants to file a sanctions

6

request under § 1927—it was six weeks after the entry of judgment—and Defendants’

7

failure without explanation to comply with the court-ordered deadline provides grounds

8

for denying their § 1927 sanctions request without regard to Rule 54(d)(2). Although such

9

a delay might not, in a different case, be viewed as unreasonable enough to justify the

10

denial of a § 1927 sanctions motion on untimeliness grounds, the unique chronology here—

11

where Defendants filed one voluminous sanctions motion on the January 13, 2022 deadline

12

(Doc. 481) but then delayed, without explanation, their filing of a separate sanctions motion

13

based on the Court’s inherent authority and § 1927 until about two weeks later—supports

14

a finding of unreasonable delay. Home Gambling Network, Inc. v. Piche, 2015 WL

15

1734928, *19 (D. Nev. 2015) (“Though the Ninth Circuit has not commented on the issue

16

of timeliness in the context of § 1927 sanctions, other courts have held that § 1927 motions

17

must be made within a ‘reasonable time’ or ‘as expeditiously as possible’ after the entry of

18

judgment, and should not be ‘unnecessarily or unreasonably delayed.’”) (citations

19

omitted).

20

Alternatively, even if Defendants’ motion were timely in whole or in part, the Court

21

would deny it on the merits for the reasons stated in Cramton’s response. Although

22

Cramton may have lost on the claims at issue, Defendants have not established an

23

entitlement to sanctions under the standards applicable under § 1927 and the Court’s

24

inherent authority.

25

…

26

…

27

…

28

…

- 53 -

1

Accordingly,

2

IT IS ORDERED that:

3

1.

4

Defendants’ Rule 52 and Rule 59 motion pertaining to Count Four (Doc. 467)

is denied.

5

2.

Defendants’ Rule 59 motion pertaining to Count Five (Doc. 473) is denied.

6

3.

Defendants’ Rule 59 motion pertaining to spoliation sanctions (Doc. 475) is

7

denied.

8

4.

Defendants’ motion for attorneys’ fees and costs (Doc. 481) is denied.

9

5.

Defendants’ motion for sanctions pursuant to 28 U.S.C. § 1927 and inherent

10

authority (Doc. 487) is denied.

11

6.

Cramton’s amended motion for attorneys’ fees and costs (Doc. 483) is

12

granted in part and denied in part. Cramton is awarded $210,820 in attorneys’ fees

13

payable by Defendant Keely Newman and is awarded $10,256 in attorneys’ fees payable

14

by Defendant Eat Clean Operations LLC.

15

7.

Cramton is also authorized to file a supplemental application for the fees she

16

incurred when responding to Defendants’ reconsideration motions (Docs. 467, 473, and

17

475) and when responding to the order soliciting supplemental briefing on one of those

18

motions (Doc. 508). Such application must be filed within 14 days of the issuance of this

19

order.

20

Dated this 27th day of May, 2022.

21
22
23
24
25
26
27
28

- 54 -