Joshua David Mellberg LLC et al v. Will et al

Filing 597

ORDERED JDM's Motion to Strike (Doc. 583 ) is GRANTED. Statement included in the declarations of William P. Eiselstein and Stephen W. Odom, Jr., related to settlement discussions between the parties are stricken and will not be considered by th e Court. JDM's Motion for Attorneys' Fees (Doc. 565 ) is DENIED. Individual Defendants' Motion For Award of Attorneys' Fees And Non-Taxable Expenses (Doc. 568 ) is GRANTED IN PART. Impact's Motion for Attorneys' Fees and Related Non-Taxable Expenses (Doc. 570 ) is GRANTED IN PART. Signed by Senior Judge Cindy K Jorgenson on 3/24/21. (See attached Order for complete details.) (MYE)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9
10
11
12
13

Joshua David Mellberg, LLC, et al.,
Plaintiffs,
vs.
Jovan Will, et al.,
Defendants.

)
)
)
)
)
)
)
)
)
)

No. CIV 14-2025-TUC-CKJ
ORDER

14

Plaintiffs (collectively “JDM”), Defendants Jovan Will, Tree Fine, Fernando

15

Godinez and Carly Uretz (collectively, “Individual Defendants”) and The Impact Partnership

16

(“Impact”) have each filed Motions for Attorneys’ Fees (Docs. 565, 568, 570). Responses

17

(Docs. 580, 581, 584, 585) and Replies (Doc. 586, 587, 594) have been filed. Additionally,

18

the JDM has filed a Motion to Strike (Doc. 583), to which Impact has filed a Response (Doc.

19

592) and JDM has filed a Reply (Doc. 595). Supplemental documents have also been filed.

20

The Court declines to schedule this matter for oral argument. See LRCiv 7.2(f); 27A

21

Fed.Proc., L. Ed. § 62:361 (March 2021) ("A district court generally is not required to hold

22

a hearing or oral argument before ruling on a motion.").

23
24

Motion to Strike (Doc. 583)

25

JDM requests the Court to strike certain statements from the Declarations of William

26

P. Eiselstein and Stephen W. Odom, Jr. that were offered in support of Impact’s fee motion

27

because the statements disclose settlement discussions between the parties. Indeed, the

28

applicable rule states:

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

(a) Prohibited Uses. Evidence of the following is not admissible — on behalf of any
party — either to prove or disprove the validity or amount of a disputed claim or to
impeach by a prior inconsistent statement or a contradiction:
*****
(2) conduct or a statement made during compromise negotiations about the
claim — except when offered in a criminal case and when the negotiations
related to a claim by a public office in the exercise of its regulatory,
investigative, or enforcement authority.
Fed.R.Evid. 408(a). However, the rule also states:
(b) Exceptions. The court may admit this evidence for another purpose, such as
proving a witness’s bias or prejudice, negating a contention of undue delay, or
proving an effort to obstruct a criminal investigation or prosecution.
Fed.R.Evid. 408(b).
While this evidence is offered for another purpose, this is not a delineated purpose of
the rule. Although the exceptions are not exhaustive, the Court considers this in determining
that Arizona’s public policy interests of protecting the confidentiality of settlement
negotiations, Grubaugh v. Blomo ex rel. Cty. of Maricopa, 238 Ariz. 264, 268 (App. 2015)
(recognizing Arizona has a “robust policy of confidentiality of the mediation process”);
Miller v. Kelly, 212 Ariz. 283, 287 (App. 2006) (recognizing that “[Arizona’s] strong public
policy encouraging settlement of lawsuits . . . would be thwarted by disclosure of information
intended to remain confidential”), outweighs any relevance of this evidence. The Court will
grant the Motion to Strike.

Attorneys’ Fees and Non-Taxable Costs
An award of reasonable attorneys’ fees to the prevailing party may be made in
“exceptional cases” pursuant to the Lanham Act 15 U.S.C. § 1117(a). The Supreme Court
has stated that an “‘exceptional’ case is simply one that stands out from others with respect
to the substantive strength of a party’s litigating position (considering both the governing law
and the facts of the case) or the unreasonable manner in which the case was litigated.”
Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014) (emphasis
added). “[D]istrict courts analyzing a request for fees under the Lanham Act should examine
the ‘totality of the circumstances’ [under a preponderance of the evidence standard] to
-2-

1

determine if the case was exceptional.” SunEarth, Inc. v. Sun Earth Solar Power Co. Ltd.,

2

839 F.3d 1179, 1181 (9th Cir. 2016), en banc. Nonexclusive factors to consider include

3

“frivolousness, motivation, objective unreasonableness (both in the factual and legal

4

components of the case) and the need in particular circumstances to advance considerations

5

of compensation and deterrence.” Id., internal citations and quotations omitted.

6

The prevailing party “is the party who prevails as to the substantial part of the

7

litigation.” Testa v. Village of Mundelein, Ill., 89 F.3d 443, 447 (9th Cir.1996); see also

8

Slane v. Mariah Boats, Inc., 164 F.3d 1065, 1068 (7th Cir.1999) (“[W]hen one party gets

9

substantial relief it ‘prevails' even if it doesn't win on every claim.”). Indeed, as pointed out

10

by Impact, an award of costs to a defendant that loses on a counterclaim but succeeds in

11

warding off a predominant claim is appropriate. See Hashimoto v. Dalton, 118 F.3d 671,

12

677 (9th Cir. 1997) (“It is enough that [the party] succeeds “on any significant claim

13

affording some of the relief sought.”); Ira Green, Inc. v. Military Sales & Service Co., 775

14

F.3d 12, 29 (1st Cir. 2014) (“Compared to the amount of time, effort, and resources devoted

15

to the [Plaintiffs’] claims. . . the counterclaims. . . were a sideshow.”).

16

Impact and Individual Defendants prevailed in the initial litigation. Although JDM

17

prevailed in the countersuit, the Court cannot say the issues of the countersuit were close and

18

difficult. Further, while the Court declines to conclude any party litigated in bad faith for the

19

purposes of determining the prevailing party, see e.g. Christiansburg Garment Co. v. Equal

20

Emp't Opportunity Comm'n, 434 U.S. 412, 421-22 (1978) (“It is important that a district

21

court resist the understandable temptation to engage in post hoc reasoning by concluding that,

22

because a plaintiff did not ultimately prevail, his action must have been unreasonable or

23

without foundation. This kind of hindsight bias could discourage all but the most airtight

24

claims, for seldom can a prospective plaintiff be sure of ultimate success.”), the Court does

25

not find that an award would chill future litigation.

26

Arizona law provides that the Court may award the successful party in a contested

27

action arising out of a contract reasonable attorneys’ fees. A.R.S. § 12-341.01(A). Indeed,

28

-3-

1

“[t]he intent of this statute is for the successful party to recover under ordinary

2

circumstances." Velarde v. Pace Membership Warehouse, Inc., 105 F.3d 1313, 1318 (9th

3

Cir. 1997), n. 5, quoting G & S Investments v. Belman, 145 Ariz. 258, 268, 700 P.2d 1358,

4

1368 (App. 1984). The Court has the discretion to determine the circumstances appropriate

5

for the award of fees. Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570, 694 P.2d

6

1181, 1184 (1985). However, “there is no presumption that a successful party should be

7

awarded attorney fees under § 12-341.01.” Motzer v. Escalante, 265 P.3d 1094, 1095 (Ariz.

8

Ct. App. 2011); see also Manicom v. CitiMortgage, Inc., 336 P.3d 1274, 1283 (Ariz. Ct. App.

9

2014) (holding that an award of attorneys' fees under A.R.S. § 12-341.01(A) “is permissive”

10

and “not mandatory”). Indeed, the Court of Appeals of Arizona has stated, “when enforcing

11

a contract that provides for reasonable attorney fees and costs, a trial court retains broad

12

discretion to evaluate the reasonableness of requested attorney fees and costs . . .” Tucson

13

Ests. Prop. Owners Ass'n v. Jenkins, 247 Ariz. 475, 480 (App. 2019), review denied (Mar.

14

31, 2020).

15

An award of attorneys’ fees may also be appropriate for a claim of misappropriation

16

pursuant to A.R.S. § 44-404(1).1 A showing that the trade secret claim was made in bad faith

17

or the opposing party was guilty of willful and malicious misappropriation must be made.

18

True Ctr. Gate Leasing, Inc. v. Sonoran Gate, L.L.C., 427 F. Supp. 2d 946, 951 (D. Ariz.

19

2006).

20

The Ninth Circuit allows prevailing parties to recover non-taxable costs where a

21

statute authorizes a fees award. See, e.g. Grove v. Wells Fargo Fin. Cal., Inc., 606 F.3d 577,

22

580 (9th Cir. 2010). As summarized by another court:

23
24
25
26
27
28

1

Individual Defendants also argue for an award of attorneys’ fees pursuant to A.R.S. §
29-388(b). The statute in effect in the filing year of 2014 provided that where a derivative action
“was brought without reasonable cause” defendants may be awarded “reasonable expenses,
including attorney fees, incurred by them in the defense of such action.” “‘Reasonable cause’
to bring an action is an objective standard that asks whether any reasonable attorney would have
thought the claim was tenable.” Cal X–Tra v. W.V.S.V. Holdings, L.L.C., 229 Ariz. 377, 412
(App. 2012). However, such an award of fees is discretionary. KCI Rest. Mgmt. LLC v. Holm
Wright Hyde & Hays PLC, 236 Ariz. 485, 490, 341 P.3d 1156, 1161 (App. 2014).

-4-

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

In Arizona, “a victim of a breach of contract may recover damages from the breaching
party to compensate for the attorneys’ fees and costs it incurred in defending a
separate action initiated against it as a foreseeable result of the breach.” State Bar of
Arizona, Arizona Attorneys’ Fees Manual, § 7.3.1 (6th ed. 2017); see Desert
Mountain Properties Ltd. P'ship v. Liberty Mut. Fire Ins. Co., 236 P.3d 421, 436
(Ariz. Ct. App. 2010), aff'd, 250 P.3d 196 (Ariz. 2011) (“[W]hen one party's breach
of contract places the other in a situation that ‘makes it necessary to incur expense to
protect his interest, such costs and expenses, including attorneys’ fees, should be
treated as the legal consequences of the original wrongful act and may be recovered
as damages.’ ”) (quoting Fairway Builders, Inc. v. Malouf Towers Rental Co., 603
P.2d 513, 529 (Ariz. Ct. App. 1979)). Plaintiffs have incurred attorneys’ fees and
costs defending against Defendant [] in related cases . . .
In addition, Plaintiffs, as the successful party in a “contested action arising out of a
contract, express or implied,” are entitled to recover the attorneys’ fees and taxable
costs incurred in litigating this matter. A.R.S. §§ 12-341, 12-341.01. . .
Dishon v. Gorham, No. CV-16-04069-PHX-ROS, 2020 WL 1244415, at *2 (D. Ariz. Mar.
16, 2020).

JDM’s Motion for Attorneys’ Fees (Doc. 565)
JDM seeks attorneys’ fees from Impact for JDM having to defend the baseless
Lanham Act false advertising counterclaim and the unreasonable and vexatious manner in
which Impact pursued the claim. JDM asserts Impact knew, when it filed the counterclaim,
the claim was baseless, the press release it was suing on was never distributed beyond six of
Impact’s employees, it had no evidence of anyone having read the challenged statements, and
had no evidence of being damaged.
In support of this argument, JDM points out that Impact did not seek preliminary
injunctive relief although, if meritorious, Impact should have had sufficient evidence from
the two year litigation in Georgia. JDM asserts Impact’s actions were taken to drive up
JDM’s litigation costs, create leverage in the case, and distract the Court’s attention from
Impact’s willful and malicious misappropriation. Impact, asserts, however, that this claim
was not so exceptional as to warrant an award of attorneys’ fees.
In examining the totality of the circumstances, the Court considers that Impact had a
basis to believe JDM had disseminated a press release that included disparaging information.
This belies JDM’s claim that Impact acted with an intent to increase litigation costs, create
-5-

1

leverage, or distract the Court’s attention. The Court also considers that the interactions

2

between the parties were at the heart of both JDM’s claims and Impact’s counterclaim. In

3

such circumstances, it was reasonable for Impact to act to advance considerations of

4

compensation and deterrence in a countersuit in this case. That Impact failed to persuade this

5

Court of the merits of the counterclaim does not make Impact’s positions unreasonable. See,

6

e.g., Reserve Media, Inc. v. Efficient Frontierts, Inc., No. 2-15-cv-05072-DDP (AGRx), 2017

7

WL 2562098, at *2 (C.D. Cal. June 12, 2017) (“[T]he fact of prevailing at summary

8

judgment alone is insufficient to entitle [a] party to fees under the Lanham Act.”), citation

9

omitted. In light of this, the Court cannot say Impact acted frivolously or unreasonably in

10

bringing the counterclaim.

See e.g. Sarieddine v. Allen Visions E-Juice, Inc., No. CV

11

18-3658 PA (MAAx), 2019 WL 4316245, at *5 (C.D. Cal. June 14, 2019) (“[a] party's failure

12

to successfully persuade the court on the merits of its position does not render that party's

13

motivations suspect[ or] its claims frivolous ...”), citation omitted.

14

The Court finds JDM has failed to establish by a preponderance of the evidence that

15

Impact pursued unreasonable claims, engaged in fraudulent conduct, or conducted this

16

litigation in an unreasonable manner.

17

circumstances, the Court finds this case is not exceptional and an award of attorneys' fees is

18

not appropriate. The Court will deny JDM’s Motion for Attorneys' Fees (Doc. 565).

In its discretion and considering all of the

19
20
21
22
23
24
25
26
27
28

Individual Defendants’ Motion For Award of Attorneys’ Fees And Non-Taxable Expenses
(Doc. 568)
Individual Defendants assert they are entitled to attorneys’ fees based on Count 4, the
Breach of Contract Claim, as to Defendants Fine and Godinez. This claim addressed whether
Fine and Godinez breached confidentiality agreements with JDM. Individual Defendants
also argue they should be awarded attorneys’ fees as to Count 6, which alleged Defendant
Will breached duties he owed to Mellberg as members of AAA.
For purposes of the attorney fees statute, the “meaning of ‘arises out of contract’ is
broad[.]” ML Servicing Co. v. Coles, 235 Ariz. 562, 560 (App. 2014). An action arises out
-6-

1

of contract when a “plaintiff asserted a contract and the defendant successfully proved that

2

no contract existed[,]” when the claim would not exist absent the contract or when “the tort

3

could not exist ‘but for’ the breach or avoidance of contract.” SK Builders, Inc. v. Smith, 246

4

Ariz. 196, 204–05 (App. 2019), superseded by statute on other grounds, citations omitted.

5

In determining whether an action arises out of contract the Court considers whether the

6

plaintiff would have a claim even when a contract does not exist.” Ramsey Air Meds, L.L.C.

7

v. Cutter Aviation, Inc., 198 Ariz. 10, 15–16 (App.2000). A “tort claim will ‘arise out of a

8

contract’ only when the tort could not exist ‘but for’ the breach or avoidance of contract.”

9

Id.; see also Sparks v. Republic Nat'l Life Ins. Co., 132 Ariz. 529, 542–44 (1982) (“The fact

10

that the two legal theories are intertwined does not preclude recovery of attorney's fees under

11

§ 12–341.01(A) as long as the cause of action in tort could not exist but for the breach of the

12

contract.”).

13

The Court finds Individual Defendants were the successful parties under A.R.S. §

14

12-341.01.

In making such a determination, the Court considers the totality of the

15

circumstances and the relative success of the litigants is considered. Med. Protective Co. v.

16

Pang, 740 F.3d 1279, 1283 (9th Cir. 2013). Considering the “totality of the litigation”

17

between JDM and Individual Defendants, it is clear Individual Defendant achieved complete

18

success as to these claims. See e.g. Murphy Farrell Dev., LLLP v. Sourant, 272 P.3d 355,

19

365 (Ariz.App. 2012). Under A.R.S. § 12–341.01 the Court has discretion to award

20

Individual Defendants, the successful parties, reasonable attorneys' fees. Associated Indem.

21

Corp. v. Warner, 143 Ariz. 567, 570 (1985). Factors to consider in exercising its discretion

22

to award reasonable fees include:

25

(1) the merits of the unsuccessful party's defense, (2) whether “[t]he lawsuit could
have been avoided or settled,” (3) whether a fee award would be “an extreme
hardship,” (4) whether the successful party prevailed completely, (5) the novelty of
the legal questions, and (6) whether a fee award would discourage others with
legitimate claims.

26

Freeport Mins. Corp. v. Corbell, No. 2 CA-CV 2016-0226, 2017 WL 3623257, at *5 (Ariz.

27

Ct. App. Aug. 23, 2017), citing id.; see also Orfaly v. Tucson Symphony Society, 209 Ariz.

23
24

28

-7-

1

260, 265-55 (App. 2004), citing Associated Indem. Corp., 143 Ariz. at 570. An award need

2

not equal or relate to the fees actually paid. A.R.S. § 12-341.01.B.

3

Although JDM’s Count 4 ultimately proved unsuccessful, the Court does not find it

4

was unmeritorious. Rather, there were confidentiality agreements between JDM, Fine, and

5

Godinez. It was not unreasonable for JDM to pursue that claim. However, as to Count 6,

6

JDM’s claim lacked evidentiary support or a sound legal basis; this claim was without merit.

7

Additionally, the actions of JDM and counsel resulted in unclear theories being presented and

8

delayed/denied discovery.

9

The Court disagrees with JDM’s argument that Individual Defendants’ action were

10

superfluous to the litigation. Rather, although the claims against Individual Defendants were

11

intertwined with the claims against Impact, counsel for Individual Defendants had to

12

determine where they could rely upon the arguments of Impact and where specific issues as

13

to Individual Defendants needed to be addressed by Individual Defendants themselves.

14

Additionally, because JDM has been willing to expend significant sums to pursue this

15

litigation, it does not appear an award would be an extreme hardship to JDM. However, the

16

Court does not place significant weight on this factor as there is no evidence before the Court

17

to confirm this supposition.

18

defending against these claims. Although JDM argues Individual Defendants only won

19

because of a procedural issue, this fails to acknowledge that the failure to establish damages

20

was an element JDM failed to adequately plead and support with evidence. In light of the

21

facts of this case, an award of fees would not discourage others with legitimate claims.

Additionally, Individual Defendants were successful in

22

Lastly, the claims against Individual Defendants were based on agreements with JDM.

23

Although JDM asserts Defendant Uretz was not sued for breach of contract and, indeed,

24

Uretz did not sign an agreement with JDM, the claims against Uretz were premised on Uretz

25

conspiring and aiding and abetting other Defendants for the alleged breach of their

26

agreements. The Court also considers the nature of the claims and that the different claims

27

against different Defendants are interwoven. See Skydive Arizona, Inc. v. Hogue, 238 Ariz.

28

-8-

1

357, 369 (App. 2015) (Fee award is appropriate where contract and tort claims are

2

interwoven. “Claims are interwoven when they are based on the same set of facts and

3

involve common allegations, which require the same factual and legal development.”). The

4

Court finds Individual Defendants are entitled to an award of attorneys’ fees pursuant to

5

A.R.S. §12-341.01.

6

Individual Defendants also argue an award of attorneys’ fees as to Counts 4 and 6

7

pursuant to A.R.S. § 44-404(1) is appropriate. Further, they request an award of attorneys’

8

fees as to Count 6 pursuant to A.R.S. § 29-833(B).2 Because the Court has found an award

9

of attorneys’ fees pursuant to A.R.S. § 12-341.01, the Court declines to consider the

10

arguments on the alternate theories for a basis for an award of attorneys’ fees. Modular

11

Mining Sys., Inc. v. Jigsaw Techs., Inc., 221 Ariz. 515, 523, 212 P.3d 853, 861 (Ct. App.

12

2009), citation omitted.

13

Factors to consider in determining whether attorneys’ fees are reasonable include:

14

(A) The time and labor required of counsel;

15

(B) The novelty and difficulty of the questions presented;

16

(C) The skill requisite to perform the legal service properly;

17

(D) The preclusion of other employment by counsel because of the acceptance of the
action;

18
19

(E) The customary fee charged in matters of the type involved;

20

(F) Whether the fee contracted between the attorney and the client is fixed or
contingent;

21

(G) Any time limitations imposed by the client or the circumstances;

22

(H) The amount of money, or the value of the rights, involved, and the results
obtained;

23
24
25

(I) The experience, reputation and ability of counsel;
(J) The "undesirability" of the case;

26
27
28

2

A repeal of this statute was effective September 1, 2020. As the Court declines to
address whether an award of attorneys’ fees is appropriate pursuant to this theory, the Court need
not determine the effect of the repeal in this case.

-9-

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

(K) The nature and length of the professional relationship between the attorney and
the client;
(L) Awards in similar actions; and
(M) Any other matters deemed appropriate under the circumstances.
LRCiv 54.2(c). This case involved protracted discovery and extensive motion practice. This
required a significant expenditure of time by counsel. The claims addressed in this case were
not novel, but JDM’s attempts to modify the claims and the continued denial and delay of
discovery reasonably required defense counsel to expend significant efforts to defend against
the claims. Because of the contentious nature of this litigation, the Court finds the skill
required to properly defend the case was substantial. The lengthy nature of the litigation
necessarily precluded possible other employment by counsel. Additionally, although the
amount of damages sought by JDM repeatedly changed, the sums were significant.
While a “successful party in a contract action is entitled to recover fees for ‘every item
of service which, at the time rendered, would have been undertaken by a reasonable and
prudent lawyer to advance or protect his client's interest[,]’” Schweiger v. China Doll Rest.,
Inc., 138 Ariz. 183, 188, 673 P.2d 927, 932 (App.1983) (quoting Twin City Sportservice v.
Charles O. Finley & Co., 676 F.2d 1291, 1313 (9th Cir.1982)), the Court considers that the
level of success is also relevant in determining whether attorneys’ fees are reasonable under
the circumstances of a case. SWC Baseline & Crismon Inv'rs, L.L.C. v. Augusta Ranch Ltd.
P'ship, 228 Ariz. 271, 287, 265 P.3d 1070, 1086 (Ct. App. 2011). Individual Defendants
were completely successful in defending the claims against them.
The Court has reviewed the itemized objections to Individual Defendants’ requested
fees. The Court agrees with Individual Defendants that a “block bill” need not necessarily
be denied. Advanced Reimbursement Sols. V. Spring Excellence Surgical Hosp., LLC, No.
CV-17-01688-PHX-DWL, 2020 WL 2768699, at *6 (D. Ariz. May 28, 2020) (“Courts tend
to award fees despite the presence of block-billing where the billing is for ‘closely related
tasks, each covering no more than a few hours.’”). However, the Court finds the following
entries constitute block billing and, as such, the Court, in its discretion, finds these fees are
- 10 -

1
2

unreasonable:
4/25/2014

MC2

Correspondence with Billy Eiselstein
regarding timing of defamation
lawsuit; directions to assistants
regarding motion practice and
additional engagement and joint
defense agreements

1.80

$365.00

$657.00

9/25/2017

MSW

Review drafts of Joint Status Report
provided by Mellberg's counsel;
communications with B. Eiselstein
re: same; work on defendants'
portions of Joint Report; review
additional insertions proposed by B.
Eiselstein, and incorporate same into
draft of Joint Report; telephone
conferences with B. Eiselstein and
Mellberg's counsel re: same; forward
revisions to Mellberg's counsel;
telephone conference with Court staff
and other counsel re: additional time
needed to complete Joint Report;
telephone conference with all counsel
re: Plaintiffs' response to defendants'
portions of Joint Report; review
updated draft from Mellberg's
counsel, and send final comments
prior to filing Joint Report with the
Court.

5.00

$350.00

$1750.00

9/29/2017

MSW

Review Plaintiffs' supplemental Brief
re: spoliation/J.Will's JFI laptop,
costsharing, etc.; communications
with B. Eiselstein re: same; review
Plaintiffs' proposed search terms;
prepare for Telephonic Status
Conference; attend Telephonic Status
Conference; telephone conference
with B. Eiselstein re: same,
additional discovery, scope of search
terms, etc.; retrieve message and
return call to J. Will re: producing
emails and other documents.

4.20

$350.00

$1470.00

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

- 11 -

1

10/11/2017

MSW

Communications with Mellberg's
counsel re: Joint Report, files to be
searched, estimated data size,
forensic examination protocol, etc.;
follow-up on production of load files
for Will/Fine personal emails;
telephone conference with B.
Eiselstein re: search parameters and
protocol, estimated expense for
third-party vendors, etc.; review
proposed lists of search terms from
Plaintiffs and Impact;
communications with J. Corso (D4)
re: estimated volume of data to be
searched after extraction, culling, etc.
of imaged drives, and cost for
preliminary extraction of selected file
types; email to all counsel re: same;
communications with counsel re:
keywords for searching imaged
drives, additional services by ESI
vendors, and costs for standard and
additional services.

3.40

$350.00

$1190.00

10/13/2017

MSW

Read email from B. Eiselstein re:
proposals for keyword searching;
review filed version of Joint Status
Report; communications with D4 re:
scope of forensic examination
proposed by Plaintiffs; draft
Supplement to Joint Status Report;
communications with B. Eiselstein
re: scope of forensic examination,
final list of keyword search terms,
etc.; communications with Plaintiffs'
counsel re: proposed instructions and
information to potential ESI vendors;
review initial draft of scope of work/
instructions to vendors; revisions to
scope of work/instructions to
vendors, and forward same to
Plaintiffs' counsel; further
communications with counsel re:
same; communications with D4 re:
Intake Report for J. Will's laptop, and
collection methods used for forensic
image; finalize Scope of Work and
related terms re: disclosure, inquiries
from vendors, etc.; forward Scope of
Work with additional instructions to
D4.

3.00

$350.00

$1050.00

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

- 12 -

1

11/8/2017

MSW

Work on Submission of Additional
Information re: apportioning costs of
ESI discovery and forensics;
communications with IT Department
re: same; email to B. Eiselstein re:
third-party hosting, load files, etc.;
review and revise Plaintiffs' draft of
proposed Order re: appointment of
D4; review B. Eiselstein's comments
on Submission of Additional
Information, and revisions to same;
forward revisions to proposed Order
to Plaintiffs' counsel;
communications with Plaintiffs'
counsel re: final draft of proposed
Order, and copies of Exhibits to
proposed Order.

2.30

$350.00

$805.00

2/12/2018

MSW

Read various emails re: ESI
discovery, keyword searches of
"jdmellberg" email accounts,
documents produced by Advisors
Excel, etc.; review prior emails in
preparation, and participate in
telephone conference with A.
Burgett, L. Archibald and L. Jones re:
instructions to D4 re: production
protocol, natives v. images with
metadata, metadata fields, etc.; read
email re: JDM's claim of privilege for
communications with J. Rowe;
preliminary review of documents
produced by Advisors Excel;
telephone conference with B.
Eiselstein re: document production
and protocol, depositions of Mellberg
witnesses, additional discovery
needs, etc.; review D4's list of
proposed metadata fields for ESI
production files; communications
with A. Burgett and L. Jones re:
same.

1.80

$350.00

$630.00

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

- 13 -

1

3/19/2018

MSW

Continue review of prior document
productions, Liquidfiles links and
receipts, forensic exam notes, etc.;
communications with Mellberg's
counsel re: same, additional
productions with metadata and
images for delivery via Liquidfiles;
communications with Mellberg's
counsel re: follow-up questions to D4
re: forensic examination reports and
additional examination of particular
devices, stipulation to designate
results of forensic exams as
"Attorneys' Eyes Only" and updates
to Aug. 2017 production files;
participate in lengthy Status
Conference with Court and all
counsel.

4.00

$350.00

$1400.00

4/26/2018

MSW

Conference with L. Jones and K.
Fitzpatrick re: technical issues with
previous document productions;
communications with Mellberg's
counsel re: conference call to address
technical issues; review proposed
additional search terms for D4;
review list of documents from D4
production that Mellberg's counsel
requests be reduced from "Attorney's
Eyes Only" designation to
"Confidential" for review by parties.

2.00

$350.00

$700.00

6/6/2018

MSW

Read emails re: searching of Josh
Mellberg's email accounts; prepare
for Telephonic Status Conference;
telephone conference with other
counsel re: depositions of Impact and
individual defendants;
communications with clients
re: same; participate in Telephonic
Status Conference re: pending
E-Discovery issues, depositions,
production of Arceo's computer
image, etc.

4.00

$350.00

$1400.00

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

- 14 -

1

6/11/2018

MSW

Conference with L. M. Jones re:
Court-Ordered logs from D4
production #2; review email from
Ricoh re: initial results from search
of Josh Mellberg's email accounts;
review D4 second search results and
work on preparing logs of documents
not produced (non-responsive and
"tech issue"); communications with
D4 re: exporting logs as required by
recent Court Order; communications
with Mellberg's counsel re: logs from
D4's second set of keyword searches;
review exhibit to deposition of L.
Chiagouris (Mellberg's digital
marketing expert) re: "inaccuracies"
in Spyfu data; communications with
Impact's counsel re: depositions of
individual defendants and Impact
officers; review documents produced
by M. Pulido in response to subpoena
re: computer forensics licenses and
training; continue research for
motions for summary judgment as to
"trade secrets" and related claims;
review Impact's Supplement to
Motion to Compel Testimony and
Documents re: Jeff Rowe.

2.80

$350.00

$980.00

8/7/2018

MSW

Communications with Impact's
counsel and S. Carroll re: response to
Motion for Spoliation sanctions in
GA Case; research re: response to
objections to Magistrate's Order on
non-dispositive matters; telephone
conference with Impact's counsel re:
contact by former Mellberg employee
seeking legal assistance for wrongful
termination claim; telephone calls to
District Court law clerks re:
procedure for responding to
objections to Magistrate Judge's
Order; read email from Impact's
counsel re: Joint Motion related to
Mellberg's communications with T.
Fine and C. Uretz; preliminary
review of draft of Motion.

1.40

$350.00

$490.00

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

- 15 -

1

10/29/2018

MSW

Communications with Impact's
counsel re: coordination of efforts for
upcoming Joint Motions for
Summary Judgment;
communications with Plaintiffs'
counsel re: deficiencies in
supplemental production of emails
and updated privilege log;
communications with Impact's
counsel re: deposition of Dr.
Moine (in Los Angeles); work on
outlines/summaries for upcoming
motions for summary judgment.

1.50

$350.00

$525.00

1/9/2018

MSW

Review Orders re: filing exhibits
under seal in support of Defendant's
MSJ, and Mellberg's MSJ re:
counterclaim; attempt to retrieve
sealed exhibits from Court online;
communications with Impact's
counsel re: same; review Impact's
Notice of errata re: request for oral
argument; review Order setting oral
argument on Motion to Exclude
Untimely Damage Opinions; review
statute and local rules on duties of
Magistrate Judge; communications
with Impact's counsel re: Judge
Jorgenson hearing Motion to
Exclude.

1.40

$360.00

$504.00

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

The parties also disagree to what extent defense counsel’s actions regarding the

18

Georgia case should be reimbursed in this case.

19

Defendants that some cross-knowledge between the cases is appropriate. This also applies

20

to the litigation initiated by B. Matthew. However, the Court finds the following entries to

21

be excessive:

22
23

3/9/2017

MSW

Review Impact's Motion to Compel
in Georgia lawsuit, including
attached emails between counsel and
"responses" by Mellberg.

.40

$350.00

$140.00

7/25/2017

MSW

Review 30(b)(6) Notice to Mellberg
in Georgia case (0.2). (modified)

.2

$350.00

$70.00

24
25

The Court agrees with Individual

26
27
28

- 16 -

1

11/2/2017

MSW

Meeting with T. Loehrs (M. Pulido's
former employer) re: forensic images,
company licenses, etc.; conference
with B. Eiselstein re: same,
depositions of additional fact
witnesses, additional discovery, etc.;
communications with C. Uretz re:
potential deposition in Georgia
defamation case; review Order re:
joint submission of proposed Order
appointing D4 to provide e-discovery
services, and additional submissions
re: apportionment of costs between
parties; email to B. Eiselstein re:
same.

.80

$350.00

$280.00

2/9/2018

LMJ

Review of emails from Atlanta firm
regarding production.

.40

$205.00

$82.00

2
3
4
5
6
7
8
9
10
11
12

Additionally, the Court finds the following entries are not reasonable:
5/15/2014

MC2

Correspondence with Carly regarding
FBI agents and follow-up call to
Agent Callimanis (0.6)
(modified)

.60

$365.00

$219.00

15

10/13/2014

MC2

Conference with Carly Uretz’s Dad.

.30

$365.00

109.50

16

10/19/2016

RBH

Review email from M. S. Woodlock
and review proposed stipulated
protective order (.6); review for
comments (.7); preparation of email to
M. S. Woodlock (.4).

1.70

$405.00

$688.50

5/11/2018

LMJ

Prepare document re-production.

7.60

$205.00

$1558

13
14

17
18
19
20

Individual Defendants also seek an award for computerized legal research. The Court

21

finds these fees are reasonable and should be reimbursed. See Ahwatukee Custom Estates

22

Management Ass’n v. Bach, 193 Ariz. 401 10 (1999). Additionally, the Court finds out-of-

23

pocket expenses are also appropriately ordered. Chalmers v. City of Los Angeles, 796 F.2d

24

1205, 1216 n. 7 (9th Cir. 1986). The affidavit of counsel Michael S. Woodlock adequately

25

documents and supports the request for fees and expenses.

26

The Court finds Individual Defendants are entitled to an award of attorneys’ fees and

27

non-taxable costs. Individual Defendants seek an award of $619,889.40 for attorneys’ fees,

28

- 17 -

1

which includes attorneys’ fees for preparation of the request for attorneys’ fees and costs, and

2

an award of $25,012.00 for costs. However, the Court finds the requested amount of

3

$619,889.40 to not be reasonable. The Court finds it appropriate to reduce this amount by

4

$16,698.00 as delineated herein for an amount of $603,191.40. Additionally, an award of

5

attorneys’ fees need not equal or relate to the fees actually paid. A.R.S. § 12-341.01.B. The

6

Court considers the Local Rule factors, along with the facts that counsel did not work well

7

together, which contributed to the protracted litigation, there was a factual and legal basis for

8

JDM to pursue the claims despite the fact they ultimately did not survive summary judgment,

9

and that this litigation necessarily overlapped somewhat with the Georgia litigation. These

10

factors provide a “reasonable basis” to reduce the attorneys’ fees amount. See generally

11

Associated Indem. Corp. v. Warner, 143 Ariz. 567, 571 (1985); see also Worden v. Klee

12

Bethel, M.D., P.C., No. 1 CA-CV 08-0490, 2009 WL 2003321, at *5 (Ariz. App. July 9,

13

2009) (reduced fee award affirmed).

14

In light of this, the Court will reduce the amount of attorneys’ fees by 30% for a

15

reasonable attorneys’ fees award of $422,233.98. Additionally, the Court will award

16

Individual Defendants an award for costs in the amount of $29,874.49. The Court finds a

17

total award for attorneys’ fees and costs in the amount of $452,108.47 to be appropriate and

18

will grant in part Individual Defendants' Motion For Award of Attorneys' Fees And

19

Non-Taxable Expenses (Doc. 568) to award Individual Defendants this amount.

20
21

Impact’s Motion for Attorneys’ Fees and Related Non-Taxable Expenses (Doc. 570)

22

Impact requests this Court award it attorneys’ fees because JDM’s claim were made

23

in bad faith, A.R.S. § 44-404, and because the claims arose out of contract or were so

24

intertwined with the contract claims, A.R.S. § 12-341.01.

25

The parties disagree whether the claims arise out of contract. JDM argues that only

26

one claim (which was not alleged against Impact) was for breach of contract and that

27

“attorneys’ fees are not appropriate based on the mere existence of a contract somewhere in

28

- 18 -

1

the transaction.” See Morris v. Achen Const. Co., Inc., 155 Ariz. 512, 514 (1987). The

2

Arizona Supreme Court stated:

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Where, however, the duty breached is not imposed by law, but is a duty created by the
contractual relationship, and would not exist “but for” the contract, then breach of
either express covenants or those necessarily implied from them sounds in contract.
Sparks, supra; Lewin, [v. Miller Wagner & Co., 151 Ariz. 29, 725 P.2d 736
(App.1986) ], supra. The essence of such actions arises “out of a contract,” eligible
for an award of fees under the statute.
Id. Additionally, citing Morris and Buxton Arlington Pet, LLC v. Butler, No. 1 CA-CV
16-0260, 2017 WL 4897456 (Ariz. App. Oct. 31, 2017), JDM asserts that a tort claim does
not arise out of contract where “the parties to the litigation are not the parties to the contract,
and there is no contention, as between them, that any contract is invalid.” Buxton Arlington
Pet, at *2. However, that bright line rule applies to “awards of attorney fees in fraud in the
inducement cases.” Id. Indeed, the same year in which the Buxton Arlington Pet case was
issued, the Arizona Supreme Court stated in another case that “[s]ection 12–341.01(A) does
not have a privity requirement for claims ‘arising out of’ a contract.” Sirrah Enterprises,
LLC v. Wunderlich, 242 Ariz. 542, 547, 399 P.3d 89, 94 (2017).
In this case, agreements central to claims against Individual Defendants was at issue.
Further, the allegations of conspiracy and aiding and abetting against all Defendants are
based on those agreements. Moreover, the misappropriation claims against Impact were
based on a contractual relationship between Impact and a competing venture, JFI, LLC
(“Annuity Angel”). The Second Amended Complaint alleged that the agreement between
Impact and Annuity Angel and the actions taken pursuant to that agreement (i.e., Cashflow
College sales presentation) were virtually identical to JDM’s training program. In support
of their claims, JDM attached the Cashflow College Subscriber Agreement to the SAC.
Arizona courts have recognized that, “when the contract in question is central to the issues
of the case, it will suffice as a basis for a fee award.” Hiatt v. Shah, 238 Ariz. 579, 584 (App.
2015), quoting In re Larry's Apartment, L.L.C., 249 F.3d 832, 836–37 (9th Cir.2001); see
also Ajman Stud v. Cains, No. CV-15-01045-PHX-DJH, 2020 WL 5034219, at *2 (D. Ariz.
July 21, 2020) . Moreover, Arizona courts have “broadly interpreted which types of actions
- 19 -

1

arise from a contract.” Hiatt, 238 Ariz. at 584, citing Marcus v. Fox, 150 Ariz. 333, 335

2

(1986). The Court finds the action arose out of contract.

3

Even if the Court did not find the action arose out of contract, an award of attorneys’

4

fees pursuant to A.R.S. § 12-341.01 would be appropriate because the nature of the claims

5

and the different claims against different Defendants are interwoven. See Skydive Arizona,

6

Inc. v. Hogue, 238 Ariz. 357, 369 (App. 2015) (Fee award is appropriate where contract and

7

tort claims are interwoven. “Claims are interwoven when they are based on the same set of

8

facts and involve common allegations, which require the same factual and legal

9

development.”). The Court of Appeals of Arizona stated in a similar case:

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

It is undisputed that the central claims in this litigation were the trade secrets claim
and the breach of employment contract claims. The record demonstrates these claims
were based on the same set of facts, involving the common allegation that Jigsaw had
misappropriated and made use of Modular's trade secrets. Accordingly, as Jigsaw
asserts, these claims “required the same factual development and research work,” and
“all depositions and all other work related to discovery and disclosure w[ere]
necessary in connection with both claims.”
The legal issues concerning these claims were also intertwined and overlapping.
First, the trade secrets claim was premised on the asserted misappropriation of
Modular's trade secrets, which was allegedly committed primarily by the individual
defendants' breaching the confidentiality provisions of their employment agreements
and using Modular's “inside information.” Similarly, whether the commands
Modular claimed as trade secrets were in fact “trade secrets” for purposes of the
Uniform Trade Secrets Act was likewise substantially dependent on the
confidentiality provisions of the employment agreements. Finally, Modular's unfair
competition and tortious interference claims were based on the same set of facts as its
trade secrets claim. As Jigsaw explains, those claims “were completely dependent
upon Modular's ability to prevail on its misappropriation claims” and “required no
separate legal services.”
Modular Mining Sys., Inc. v. Jigsaw Techs., Inc., 221 Ariz. 515, 522–23 (App. 2009),
footnotes omitted. Similarly, in this case, the central claims addressed allegations regarding
trade secrets and breaching confidentiality agreements. These claims were based on the same
set of facts, which required the same factual development and research work. Further,
discovery as to the claims and damages related to both these central claims. Additionally,
the legal issues concerning these claims were intertwined and overlapping.
Ultimately, JDM’s claims were not meritorious. This conclusion is supported by
JDM’s presentation of unclear legal theories and the delay and denial of complete discovery
- 20 -

1

throughout the case. In light of this, this lawsuit could have been avoided or settled.

2

Additionally, this case did not present novel legal issues and a fee award would not

3

discourage others with legitimate claims. The Court also considers that the nature of the

4

claims and the different claims against different Defendants are interwoven. See Skydive

5

Arizona, Inc., 238 Ariz. at 369 (Fee award is appropriate where contract and tort claims are

6

interwoven.). The Court finds Impact is entitled to an award of attorneys’ fees pursuant to

7

A.R.S. §12-341.01.

8

Because the Court has found an award of attorneys’ fees pursuant to A.R.S. § 12-

9

341.01, the Court declines to consider the argument on the alternate theories for a basis for

10

an award of attorneys’ fees. Modular Mining Sys., Inc., 221 Ariz. 515 at 523.

11

In determining whether attorneys’ fees are reasonable, the Court considers that this

12

case involved protracted discovery and extensive motion practice, which required a

13

significant expenditure of time by counsel. The claims addressed in this case were not novel,

14

but JDM’s attempts to modify the claims and the continued denial and delay of discovery

15

reasonably required defense counsel to expend significant efforts to defend against the

16

claims. The skill required to properly defend the case was substantial because of the

17

contentious nature of the litigation. Further, the protracted nature of the litigation necessarily

18

precluded possible other employment by counsel. Additionally, although the amount of

19

damages sought by JDM repeatedly changed, the sums were significant. See LRCiv 54.2(c).

20

The Court also considers that the level of success is also relevant in determining

21

whether attorneys’ fees are reasonable under the circumstances of a case. SWC Baseline &

22

Crismon Inv'rs, L.L.C., 228 Ariz. at 287. Although Impact was successful in defending

23

against JDM’s claims, it was not successful in the prosecution of its counterclaim.

24

Weighing all factors, the Court finds Impact is entitled to an award of attorneys’ fees

25

pursuant to A.R.S. §12-341.01. However, the Court does consider that there necessarily

26

would have been some overlap between the litigation in this case and Georgia litigation,

27

which affects the hours reasonably expended in representing Impact. LRCiv 54.2(c)(3)(A);

28

- 21 -

1

Jenkins, 247 Ariz. at 480.

2

JDM has not provided itemized objections to Impact’s requested fees. 3 JDM generally

3

object to entries, however, based on block billing, actions taken in furtherance of the

4

counterclaim, multiple interoffice conferences, and actions taken on behalf of Individual

5

Defendants.

6

Additionally, in light of the joint defense, the Court finds cross-actions between defense

7

attorneys are reasonable.

The Court finds the multiple interoffice conferences to be reasonable.

8

As to the block billing, a block bill need not necessarily be denied. Advanced

9

Reimbursement Sols., 2020 WL 2768699 at *6. The Court has reviewed the entries,

10

considering whether the tasks are related and the total amount of time to complete the

11

delineated tasks. The Court finds the following entries constitute block billing and, as such,

12

the Court finds these fees are not reasonable:

13

3/31/2014

WE

1.8

$425.00

$765.00

14
15
16
17
18
19

Telephone call with AZ counsel
regarding strategy, possible AZ counsel
for individual defendants; discussions
with M. Kohler regarding same and
regarding plans for removal and possible
claims; reviewing outline of possible
arguments on motion to dismiss from M.
Visan; telephone call and follow-up
email with Attorney Collins regarding
representation of individual defendants;
reviewing motion for injunction and
emails to AZ counsel regarding same.

20
21
22
23
24
25
26
27
28

3

Impact’s Reply refers to specific objections made by JDM. However, comparing JDM’s
Opposition to Individual Defendants’ Motion for Award of Attorneys’ Fees And Non-taxable
Expenses (Doc. 581) to Opposition to Defendant the Impact Partnership’s Motion for Attorneys’
Fees and Related Non-taxable Expenses (Doc. 580), the Court notes the Individual Defendants
Objection includes a declaration that refers to an exhibit that specifically objects to entries. The
declaration attached to the Impact Objection does not include such a reference. A review of
other entries on the docket sheet fails to include specific objections.

- 22 -

1

4/16/2014

GK

2.6

$485.00

$1261.00

Analyze state court purported First
Amended Complaint and compare to
original complaint; review research
regarding standards for injunctive relief
in federal court; telephone conference
with B. Eislestein and M. Collins
regarding status and strategy; telephone
call to Plaintiff's' counsel D. Bray and T.
Thomason; review materials regarding
Judge C. Pyle in connection with issue of
consent to Magistrate; read Plaintiffs'
Demand for Jury Trial.

5/7/2014

WE

1.9

$425.00

$807.00

Interview with C. Uretz regarding
background and response to allegations
in complaint; telephone call with M.
Collins regarding AZ case issues;
reviewing revisions to joint defense
agreement; report to M. Kohler regarding
Uretz interview, case status; telephone
call with S. Odom regarding case status;
consideration of possible counterclaim4

4/29/2015

TK

5.6

$240.00

$1344.00

Conferences with B. Eiselstein for
purposes of identifying issues related to
Second Amended Complaint and
developing arguments for use in support
of motion to dismiss on behalf of
Defendant Impact; research regarding
whether knowledge of employees may be
imputed to corporation for possible use
in support of motion to dismiss;
conference with M. Kohler regarding
deficiencies in Second Amended
Complaint and arguments that could be
used in support of motion to dismiss on
behalf of Impact; review and analyze
allegations in Second Amended
Complaint for use in support of motion
to dismiss on behalf of Impact; research
in support of Impact motion to dismiss.

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

4

This entry also combines actions related to the defense against JDM’s claims with the
actions related to the prosecution of the counterclaim.

- 23 -

1

8/10/2015

TK

4.5

$240.00

$1080.00

Telephone conference with B. Eiselstein
revisions to draft of Joint Report;
follow-up email to B. Eiselstein; multiple
emails and conferences with M.
Woodlock and G. Krauja concerning
status of Joint Report; review and
analyze Plaintiff's final draft of joint
report; conference with E. Rumfelt to
assist with drafting section of Joint
Report addressing ESI; Telephone call to
opposing counsel, M. Patel, for purposes
of addressing issues related to Joint
Report; supplement, edit, revise, and
finalize Joint Report in preparation for
filing; draft email to opposing counsel
and individual defendants attaching
Impact's proposed changes and additions
to Plaintiffs' draft of Joint Report

7/20/2016

GK

2.9

$485.00

$1406.50

Telephone conference with Mr.
Eiselstein regarding status and strategy
for Scheduling Conference; review Joint
Scheduling Memorandum and briefing
on pending motion to prepare to address
possible questions from Judge Kimmins;
attend scheduling conference in court
before Judge Kimmins.

3/8/2017

JC

2.8

$225.00

$630.00

Analysis of case law on secrecy of trade
secrets in order to draft questions for
corporate depositions; preparation of
motion for filing; analysis of deposition
questions; analysis of various lawsuits
Mellberg is also involved in; review of
discovery responses.

3/29/2017

JC

4.9

$225.00

$102.50

Drafted communication with expert
concerning information for rebuttal
report; analysis of retention contract,
analysis of further documents needed for
expert; analysis of documents produced
by clients and need for production of
certain documents.

5/3/2017

JC

2.3

$225.00

$517.50

Communication with Impact personnel
concerning certain files and email
address issues; analysis of certain
witnesses with information and contact
information; analysis of Mellberg
lawsuits and various other issues.

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

- 24 -

1

2/8/2018

WE

2.9

$480.00

$1392.00

Telephone call with L. Archibald
regarding search terms to propose for
search of JDM emails; discussion
regarding additional discovery issues;
meet with M. Kohler and R. Kurtz to
prepare for depositions; emails regarding
forensic reports of individual defendants'
devices; telephone call with M.
Woodlock; review of AE documents.

4/12/2018

WE

2.7

$480.00

$1296.00

Telephone call with M. Kohler regarding
follow-up from Rowe deposition, case
strategy; telephone call with M.
Woodlock regarding discovery and ESI
issues; multiple emails regarding same;
review search terms requested of JDM
and JDM information on search terms
allegedly used; reviewing D. Morgan
deposition regarding efforts to search for
documents; draft email to opposing
counsel regarding JDM documents and
search terms.

4/30/2018

WE

2.4

$480.00

$1152.00

Review discovery requests and email
opposing counsel regarding need to
produce documents regarding
"whistleblower" packet; telephone call
with M. Kohler regarding same; review
court filing on discussions between JDM
and individual defendants regarding
metadata; prepare case status update and
reviewing court orders regarding
deadlines; telephone call with M.
Woodlock regarding communications
with opposing counsel; email L.
Archibald regarding motion to compel
JDM email search; emails regarding
attempts to serve S. Hilger with
deposition subpoena.

5/8/2018

WE

9.6

$480.00

$4608.00

Prepare for and take deposition of J. Tye,
plaintiff's expert; discussion with M.
Woodlock in preparation for 5/9 status
conference; prepare for deposition of P.
Russo; planning for Chiagouris
deposition.

5/9/2018

WE

6.8

$480.00

$3264.00

Preparing for and taking deposition of P.
Russo; discussions with M. Woodlock in
preparation for status conference;
participate and status conference.

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

- 25 -

1

5/31/2018

WE

7.2

$480.00

$3456.00

Email with A. Pringle regarding JDM
email search; reviewing court order and
search terms in connection with same;
email with litigation support and L.
Archibald; preparing for deposition of L.
Chiagouris; reviewing expert reports and
deposition transcripts in connection with
same; discuss strategy and upcoming
events with M. Kohler; travel
Atlanta/New York for Chiagouris
deposition.

6/13/2018

WE

5.2

$480.00

$2496.00

Planning for Impact depositions with M.
Kohler, review and consider topics on
30(b)(6) notice; telephone calls with S.
Craig and E. Williams regarding same;
followup email to E. Williams;
reviewing Mellberg supplemental
disclosure regarding damages; discussion
with M. Woodlock and M. Kohler
regarding same; reviewing court order on
Rowe communications; telephone calls
with M. Woodlock regarding discovery
issues; emails regarding deposition
scheduling; emails regarding Ricoh
search of Mellberg emails; review hit-list
and consider limitations.

7/2/2018

WE

2.7

$480.00

$1296.00

Check on deadlines for JDM email
review; reviewing JDM motion to
reconsider ruling on individual
defendants' documents; review local
rules on motions to reconsider and email
with M. Woodlock; review notice of
subpoena to F. Stokes; discuss status
with M. Kohler, discuss possible forensic
review of J. Marshall computer; review
information regarding F. Stokes; emails
with co-counsel regarding depositions;
research possible use of special master
for JDM discovery issues; multiple
emails with opposing counsel regarding
sample set review, non-compliance with
court deadlines; discuss sample review
issues with R. Musumeci.

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

- 26 -

1

7/13/2018

LA

3.6

$260.00

$936.00

Prepare for and attend conference call
with RICOH and opposing counsel
regarding preparation of sample sets for
review by opposing counsel; confer with
B. Eiselstein regarding results of same;
draft summary of results of same and
next steps; confer with co-counsel,
RICOH, and opposing counsel regarding
same; review Court order related to
discovery disputes and status conference;
confer with R. Musumeci regarding
document review status, preparation of
additional document batches, and
status of additional production sets.

7/13/2018

LA

2.6

$260.00

$676.00

Confer with B. Eiselstein and R.
Musumeci regarding document review
status and completion time frame; confer
with reviewers regarding same; confer
with B. Eiselstein regarding opposing
counsel's response to status report; begin
review of potentially privileged
documents.

7/17/2018

RM

2.4

$215.00

$516.00

Assist with deposition prep review;
review supplemental Will production,
modify load file to ensure update of
database records; review all other
instances of produced, non-redacted tax
returns to delete records and images to
accomplish the intent of the
supplemental production.

7/17/2018

LA

3.5

$260.00

$918.00

Assist with deposition prep review;
review supplemental Will production,
modify load file to ensure update of
database records; review all other
instances of produced, non-redacted tax
returns to delete records and images to
accomplish the intent of the
supplemental production.

7/19/2018

WE

2.7

$480.00

$1296.00

Planning for depositions; reviewing T.
Fine documents in preparation for
deposition; reviewing prior Fine
testimony; telephone call with M.
Woodlock regarding deposition
preparation and discovery issues; email
with D. Bray regarding 30b6 scheduling;
confer with M. Kohler regarding same;
draft potential response to D. Bray;
communications regarding JDM
settlement overture to C. Uretz.

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

- 27 -

1

7/30/2018

WE

6.3

$480.00

$3024.00

Reviewing court-ordered deadlines;
submit status report to court; emails with
opposing counsel regarding information
required under court order; reviewing
documents produced in response to
Mellberg email search; discussion of
damages issues with R. Kurtz and M.
Kohler; multiple communications
regarding Wenk deposition; telephone
call with M. Woodlock; communications
with L. Archibald regarding preparation
for depositions, document review, email
searches.

8/1/2018

WE

5.2

$480.00

$2496.00

Preparing for J. Simonds deposition;
reviewing document regarding Simonds;
communications with L. Archibald
regarding email searches, planning for
depositions and possible motion for
Mellberg rule violations; reviewing J.
Will documents and select documents for
deposition preparation; emails regarding
same; participate in deposition
preparation of F. Godinez and J. Will.

8/9/2018

LA

6.1

$260.00

$1586.00

Draft summary of status and arguments
in preparation for telephonic hearing;
review and revise correspondence to
opposing party regarding errors in
production sets; confer with B. Eiselstein
regarding same; attend telephonic
hearing; confer with opposing counsel
regarding revised sample search export
instructions; draft Uretz declaration in
support of motion related to Russo
communications with represented
parties.

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

- 28 -

1

9/24/2018

GK

2.5

$520.00

$1300.00

Read individual defendants' summary of
anticipated motions for summary
judgment; update review of Ninth Circuit
law supporting dismissal of the
Computer Fraud and Abuse Act claim as
a matter of law, and send correspondence
to Mr. Woodlock; review The Impact
Partnership's Lanham Act counterclaim
as basis for federal court jurisdiction if
Computer Fraud and Abuse Act claim is
dismissed; read Order regarding motion
for protective order and additional
deposition of Mr. Russo; read
correspondence regarding Defendants'
respective statements of areas they intend
to address in motions for summary
judgment.5

11/16/2018

WE

8.8

$480.00

$4800.00

Prepare for Moine deposition; telephone
call with opposing counsel regarding
possible mediation, schedule; travel
Atlanta/Los Angeles for Moine
deposition; reviewing Evans deposition
for facts to use in summary judgment
motions.

5/9/2019

WE

2.2

$525.00

$1155.00

Review and edit motion regarding M.
Bush expert witness; discuss changes
with R. Kurtz; email with R. Parekh
regarding motion for summary judgment
on damages; email and telephone call
with M. Woodlock regarding same;
email to H. McIntyre regarding
settlement conference with magistrate
judge; discuss same with M. Kohler.

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

The Court finds the following entry does not clearly indicate the actions were taken
in defense of JDM’s claims against Impact, as opposed to in furtherance of the counterclaim,
and therefore, cannot be said to be reasonable:
3/26/2014

WE

.8

$425.00

$340.00

24
25

Email with T. Thompson regarding draft
complaint against JD Mellberg; review
and comment on AZ counsel proposed
engagement letter; emails with M.
Kohler and T. Thompson regarding next
steps.

26
27
28

5

This entry includes actions related to both the defense against JDM’s claims and the
prosecution of the counterclaim.

- 29 -

1

Additionally, the Court finds there necessarily would have been additional overlap in

2

the actions between the claims Impact was defending against and prosecuting the claim

3

against JDM (e.g., document requests, deposition questions). Lastly, the Court recognizes

4

that some entries have been reduced. See e.g., Itemization: Fennemore Craig, P.C. (Doc.

5

570-2), Entries 344, 353.

6

Impact also seeks an award of non-taxable costs in the amount of $102,857.99. JDM

7

argues, however, that because both parties prevailed on their Summary Judgment motions,

8

neither party should be considered the prevailing party. While it is within the discretion of

9

a district court to require each party to bear its own costs in a mixed judgment case, Amarel

10

v. Connell, 102 F.3d 1494, 1523 (9th Cir. 1996), as amended (Jan. 15, 1997), JDM’s claims

11

were the significant focus of this case and JDM failed to succeed on any of their claims.

12

Under a totality of litigation review, Impact achieved far greater success than JDM. Carl

13

Karcher Enterprises, Inc. v. Stine Enterprises, Inc., No. 1 CA-CV 09-0078, 2010 WL

14

3571535, at *2 (Ariz.App. Sept. 14, 2010); compare Gen. Cable Corp. v. Citizens Utilities

15

Co., 27 Ariz.App. 381, 385 (1976). The Court finds, in its discretion, an award of non-

16

taxable costs is appropriate.

17

The Court finds Impact is entitled to an award of attorneys’ fees and non-taxable

18

costs. Impact seeks an award of $1,891,003.40 ($1,754,635.40 for Miller Martin, PLLC, and

19

$136.368.00 for Fennemore Craig, P.C.) for attorneys’ fees and an award of $102,857.99 for

20

costs. However, the Court finds the requested amount of $1,891,003.40 to not be reasonable.

21

The Court finds it appropriate to reduce this amount by $45,916.50 as delineated herein for

22

an amount of $1,845,086.90. Additionally, an award of attorneys’ fees need not equal or

23

relate to the fees actually paid. A.R.S. § 12-341.01.B. The Court considers the Local Rule

24

factors, along with the facts that counsel did not work well together, which contributed to the

25

protracted litigation, there was a factual and legal basis for JDM to pursue the claims despite

26

the fact they ultimately did not survive summary judgment, and that this litigation necessarily

27

overlapped somewhat with the Georgia litigation. Although Impact excluded and reduced

28

- 30 -

1

entries, see Motion, (Doc. 570, p. 17), the Court finds the factors provide a “reasonable

2

basis” to reduce the attorneys’ fees amount. See generally Associated Indem. Corp. v.

3

Warner, 143 Ariz. 567, 571 (1985); see also Worden v. Klee Bethel, M.D., P.C., No. 1

4

CA-CV 08-0490, 2009 WL 2003321, at *5 (Ariz. App. July 9, 2009) (reduced fee award

5

affirmed).

6

In light of this, the Court will reduce the amount of attorneys’ fees by 30% for a

7

reasonable attorneys’ fees award of $1,291,560.83. Additionally, the Court will award

8

Impact an award for non-taxable costs in the amount of $102,857.99. The Court finds a total

9

award for attorneys’ fees and non-taxable costs in the amount of $1,394,418.82 to be

10

appropriate and will grant in part Impacts’ Motion for Attorneys’ Fees and Related

11

Non-taxable Expenses (Doc. 570) to award Impact this amount.

12
13

Accordingly, IT IS ORDERED:

14

1.

JDM’s Motion to Strike (Doc. 583) is GRANTED. Statement included in the

15

declarations of William P. Eiselstein and Stephen W. Odom, Jr., related to settlement

16

discussions between the parties are stricken and will not be considered by the Court.

17

2.

JDM’s Motion for Attorneys’ Fees (Doc. 565) is DENIED.

18

3.

Individual Defendants’ Motion For Award of Attorneys’ Fees And

19

Non-Taxable Expenses (Doc. 568) is GRANTED IN PART. Individual Defendants are

20

awarded attorneys’ fees and non-taxable costs from JDM in the amount of $452,108.47.

21

4.

Impact’s Motion for Attorneys’ Fees and Related Non-Taxable Expenses (Doc.

22

570) is GRANTED IN PART. Impact is awarded attorneys’ fees and costs from JDM in the

23

amount of $1,394,418.82.

24

DATED this 24th day of March, 2021.

25
26
27
28

- 31 -