Deerpoint Group, Inc. v. Agrigenix, LLC et al

Filing 223

ORDER GRANTING Plaintiff's Request for Expert Fees and Denying the Request for Additional Attorney Fees signed by Magistrate Judge Barbara A. McAuliffe on 12/14/2022. (Sant Agata, S)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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DEERPOINT GROUP, INC., an Illinois
corporation,

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Plaintiff,

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v.

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AGRIGENIX, LLC, a Delaware limited
liability company, et al.,

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Case No. 1:18-cv-00536-AWI-BAM
ORDER GRANTING PLAINTIFF’S
REQUEST FOR EXPERT FEES AND
DENYING THE REQUEST FOR
ADDITIONAL ATTORNEY FEES
(Doc. 220)

Defendants.

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AND RELATED COUNTERCLAIMS.

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On October 31, 2022, this Court granted Plaintiff’s Motion for Sanctions against

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Defendants Agrigenix, LLC and Sean Mahoney (“Defendants”) for failure to preserve

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Electronically Stored Information (“ESI”) in violation of Federal Rule of Civil Procedure 37(e).

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(Doc. 218.) The Court awarded monetary sanctions and granted the request that a curative

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instruction be given at trial. (Id.) In its Motion for Sanctions, Plaintiff also requested an award of

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expert fees expended in uncovering the spoliated ESI. (Doc. 168, pp. 25–26.)1 The Court found

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that it could not rule on the request for expert fees without additional evidence. (Doc. 218, p. 37.)

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The Court required Plaintiff to provide supplemental evidence as to the expert costs which

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Page numbers refer to the Court’s CM/ECF pagination.
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Plaintiff incurred in its attempt to recover spoliated evidence. (Id.)

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On November 10, 2022, Plaintiff filed its supplemental briefing. (Doc. 220.) On

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November 23, 2022, Defendants filed a response to Plaintiff’s supplement. (Doc. 221.) Plaintiff

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filed its reply on November 28, 2022. (Doc. 222.) Having considered the supplemental briefing

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by the parties, the Court GRANTS IN PART and DENIES IN PART Plaintiff’s request.

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SUMMARY OF THE PARTIES’ ARGUMENTS IN THE SUPPLEMENTAL BRIEFS

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The factual background and arguments giving rise to Plaintiff’s sanctions request are set

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forth in detail in the Court’s Order Granting Plaintiff’s Motion for Sanctions and need not be

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repeated here. (Doc. 218.)
Plaintiff’s Supplemental Briefing

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A.

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Plaintiff retained Digital Mountain, Inc. and its forensic examiner Chris Beeson for expert

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assistance in the spoliation investigation. Mr. Beeson performed approximately 60 hours of

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work, billed at $350 per hour, except for travel time. Digital Mountain also billed for the cost of

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shipping laptops and disk drives. Plaintiff previously submitted evidence of Mr. Beeson’s

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expertise, qualifications, and complexity of his work in the previous briefing and supporting

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declarations. (See Doc. 168-39.) Mr. Beeson’s and Digital Mountain’s rates are reasonable and

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fair, and they have been used by Plaintiff’s counsel in other cases. Their services are reputable,

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reliable, trusted, and fairly priced. Plaintiff had contacted a potential alternative source, and the

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quotes turned out to be similar. However, the potential alternative source did not include

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reviewing and assessing the content of recovered ESI and at one time, had hosted email services

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for Agrigenix, which may have posed a conflict.

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Plaintiff asks for expert fees in the amount of $24,033.91 (see invoices at Doc. 220-1):
Date
February 28, 2022
March 31, 2022
April 30, 2022

Vendor / Invoice No.
Digital Mountain / Invoice 7099
Digital Mountain / Invoice 7121
Digital Mountain / Invoice 7296
TOTAL

Amount
$10,618.85
$12,452.56
$962.50
$24,033.91

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Plaintiff also asks for additional attorney fees for one hour of partner time and three hours
of senior associate time, for additional fees of $1,450.00. (Doc. 220, p. 4.) Therefore, the total
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additional amount requested is $25,483.91.
Defendants’ Response

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B.

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Defendants oppose the expert costs because: (1) the expert costs are based in inflated

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hourly rates; and (2) the request for additional attorney fees is not fair or equitable because the

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evidentiary support should have been provided with the claimed expert fees in the initial motion.

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Defendants argue that the expert hourly rates are inflated for the Fresno market.

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Defendants submit evidence of Digital Mountain’s government contracts rates from 2012–2017,

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which reflect an hourly rate of $220 per hour. (Doc. 221, p. 24.) Digital Mountain now is

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charging a 60% markup in Fresno as compared to its government rates. In addition, a $350

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hourly rate for data analysis is facially unreasonable considering that the Fresno District Court

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has a de facto $400 per hour cap on experienced attorney hourly rates.

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The requested additional attorney fees are not fair or equitable. Deerpoint failed to offer

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admissible evidence for its claimed expert costs in its motion for sanctions. The Court did not

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grant leave to seek more attorney fees than the already awarded $32,500.00 in attorney fees.

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Deerpoint failed to support its original request and should not be awarded additional fees for

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failing to do so. (Doc. 221, p. 3.)
Plaintiff’s Reply

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C.

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Plaintiff argues that an expert rate higher than the de facto cap on attorney rates is

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irrelevant. Defendants do not cite to any authority that expert rates cannot be higher than attorney

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rates. The expert rate requested is fully supported.

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The second argument by Defendants of “inflated rates” is an expired GSA rate sheet.

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(Doc. 221, p. 6.) The price list reflects a 10-year old government rate through “Modification #

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30, dated February 13, 2012.” (Id.) It also reflects an unidentified discount provided to

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government customers. (Id. at 11.) The GSA schedule expired in July 2017. Digital Mountain

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chose not to renew because it was not “a prudent decision for our company due to economic

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factors.” (Doc. 222-1, Supp. Lewis Decl. ¶2.)

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For the additional attorney fees requested, the Court awarded attorney fees, and the
additional fees are for the expert fees request still pending.
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SUPPLEMENTAL AWARD OF FEES

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A.

Award of Expert Fees

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As a reminder, federal courts have the discretion “to impose a wide range of sanctions

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when a party fails to comply with the rules of discovery or with court orders enforcing those

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rules.” Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir. 1983).

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In the Court’s Order Granting Plaintiff’s Motion for Sanctions, the Court explained how

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and why it relied upon Plaintiff’s expert and that an award of expert fees is warranted in this case.

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(See e.g., Doc. 218, pp. 20, 24, 28, 30.) The only issue was the amount of expert fees to be

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awarded.

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The Court will award the requested expert fees of $24,033.91. The Court has considered

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the evidence in support of and in opposition to the award. As stated in the Court’s Order

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Granting the Motion for Sanctions, the forensic work performed by Mr. Beeson was critical to the

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Court granting the motion.

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The Court rejects Defendants’ challenge to the expert’s rate of $350 per hour. As to this

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hourly rate, the Court considers the evidence submitted by Julie Lewis (President of Digital

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Mountain), both in the supplemental brief and reply brief, and concludes that $350 per hour is the

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market rate for the type of services provided with Mr. Beeson’s expertise. In her declaration, Ms.

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Lewis explains how she competitively prices the services. (Doc. 220-2, Lewis Decl. ¶¶4–5; Doc.

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222-1, Supp. Lewis Decl. ¶2.) The Court does not find persuasive the evidence submitted by

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Defendants of the GSA rate sheet from 2012–2017 for Digital Mountain. The Court agrees with

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Plaintiff that the GSA rates were provided at some unspecified discount, and the contract was not

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renewed because it was not a prudent business decision due to economic factors. (Doc. 222-1,

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Supp. Lewis Decl. ¶2.) Further, the GSA rate sheet expired some five years ago, and rates

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undoubtedly have increased. (Doc. 221, p. 6.)

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In addition, the Court disagrees with Defendants’ argument that expert rates should

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approximate attorney hourly rates. The Court can envision expertise which outpaces attorney

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rates, such as in medical cases or here, where uncovering spoliated ESI is no easy task. Indeed,

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for unique technical expertise as that provided by Mr. Beeson, it is reasonable that a premium rate
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must be paid for such expertise. The Court also considers that Plaintiff contacted a local forensic

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expert, but declined to hire that expert to avoid the potential conflict based on the expert’s past

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business relationship with Agrigenix and that expert did not provide the analytical services

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needed in this case.

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B.

Additional Attorney Fees

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Plaintiff requests an additional award of $1,450.00 for time spent “for one hour of partner

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time and three hours of senior associate time for identifying and engaging the services of Digital

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Mountain and Mr. Beeson, as set forth in ECF No. 168-38.” (Doc. 220, p. 4.)

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The Court declines to award any additional attorney fees. The Court agrees with

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Defendants’ arguments that the evidentiary support should have been provided in the original

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motion.

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CONCLUSION AND ORDER
For the reasons stated, the Court HEREBY ORDERS:
1. Plaintiff’s supplemental request for fees, (Doc. 220), is GRANTED IN PART and
DENIED IN PART as follows:

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a. The Court GRANTS Plaintiff’s request for expert fees; and

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b. The Court DENIES Plaintiff’s request for additional attorney fees; and

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2. Therefore, considering the Court’s prior Order, (Doc. 218), Plaintiff is awarded the total

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monetary sanction of FIFTY-SIX THOUSAND FIVE HUNDRED THIRTY-THREE

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DOLLARS AND NINETY-ONE CENTS ($56,533.91), against Defendants Agrigenix

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and Mahoney, joint and several, which consists of $32,500.00 in attorney fees and

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$24,033.91 in expert fees.

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IT IS SO ORDERED.
Dated:

/s/ Barbara

December 14, 2022

A. McAuliffe

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UNITED STATES MAGISTRATE JUDGE

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