Paskenta Band of Nomlaki Indians et al v. Crosby et al

Filing 433

MEMORANDUM AND ORDER signed by District Judge Morrison C. England, Jr. on 7/26/2017 DENYING 382 , 388 Motions for Attorney's Fees; GRANTING 384 Motion for Attorney's Fees; FINDING that Cornerstone Community Bank is entitled to $1, 049,559.16 in attorney's fees and costs; OVERRULING 404 Objections to Bill of Costs; FINDING that Umpqua Bank, Umpqua Holdings Corporation, Cornerstone Community Bancorp, Cornerstone Community Bank, Garth Moore Insurance and Financial Services, Inc., Garth Moore, Associated Pension Consultants, Inc. are entitled to the full amounts provided in 383 , 385 , 386 , 387 Bills of Costs. (Michel, G.)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 12 PASKENTA BAND OF NOMLAKI INDIANS; and PASKENTA ENTERPRISES CORPORATION, 13 Plaintiffs, 14 15 No. 2:15-cv-00538-MCE-CMK MEMORANDUM AND ORDER v. INES CROSBY; et al., 16 Defendants. 17 On February 21, 2017, the Court entered final judgment in favor of eight 18 19 Defendants in this suit after all claims against them had been dismissed pursuant to 20 various prior motions. See Mem. & Order, ECF No. 378; Final J., ECF No. 379. 21 Umpqua Bank; Umpqua Holdings Corp. (collectively, “Umpqua”); Cornerstone 22 Community Bank; and Associated Pension Consultants, Inc. (“APC”) subsequently filed 23 motions for attorney’s fees. ECF Nos. 382, 384, 388. These Defendants, as well as 24 Garth Moore and Garth Moore Insurance and Financial Services, Inc. (collectively, 25 “Moore”), also filed bills of costs, ECF No. 383, 385–87, to which Plaintiffs Paskenta 26 Band of Nomlaki Indians (“the Tribe”) and Paskenta Enterprises Corp. (“PEC”) filed 27 objections, ECF No. 403. For the reasons that follow, the Umpqua Defendants’ and 28 /// 1 1 APC’s motions for attorney’s fees are DENIED, and Cornerstone’s motion is GRANTED. 2 Furthermore, the Court OVERRULES Plaintiffs’ objections to the bills of costs.1 3 4 BACKGROUND 5 6 As this Court has recounted in prior orders, Plaintiffs allege that Ines Crosby, 7 John Crosby, Leslie Lohse, and Larry Lohse (collectively, the “Employee Defendants”)— 8 all employed by the Tribe in executive positions for more than a decade—used their 9 positions to embezzle millions of dollars from the Tribe and its principal business entity, 10 PEC. According to Plaintiffs, the Employee Defendants stole these funds from Plaintiffs’ 11 bank accounts—including accounts at Umpqua Bank and Cornerstone Community 12 Bank—by withdrawing large sums for their personal use. Plaintiffs further allege that the 13 Employee Defendants caused the Tribe to invest in two unauthorized retirement plans 14 for the Employee Defendants’ personal benefit: a defined benefit plan and a 401(k) 15 (collectively, “Tribal Retirement Plans”). The Employee Defendants allegedly kept their 16 activities hidden from Plaintiffs by various means including harassment, intimidation, and 17 cyber-attacks on the Tribe’s computers. 18 Plaintiffs go on to assert that Cornerstone, Umpqua, APC, and Moore knowingly 19 assisted the Employee Defendants in aspects of their scheme. They contend that 20 Umpqua and Cornerstone controlled banks where Plaintiffs maintained accounts and, 21 despite knowing the Employee Defendants were withdrawing money from these 22 accounts for their personal benefit, permitted the Employee Defendants to continue 23 making withdrawals, and failed to notify Plaintiffs of the Employee Defendants’ actions. 24 According to Plaintiffs, APC and Moore—as the third-party administrator for the Tribal 25 Retirement Plans and financial advisor, respectively—assisted the Employee 26 Defendants in setting up and administering the unauthorized Tribal Retirement Plans. 27 28 1 Because oral argument would not have been of material assistance, the Court ordered this matter submitted on the briefs. See E.D. Cal. Local R. 230(g). 2 1 On October 19, 2016, the Court dismissed all the claims against Umpqua and 2 APC with prejudice for failure to state a claim pursuant to Federal Rule of Civil 3 Procedure 12(b)(6). ECF No. 299. In that same Memorandum and Order, the Court 4 also granted Moore’s Motion for Judgment on the Pleadings pursuant to Rule 12(c), 5 resolving all claims against it. Id. On January 24, 2017, the Court granted the 6 Cornerstone Defendants’ Motions for Summary Judgment, similarly resolving all claims 7 against them. ECF No. 358. 8 9 ANALYSIS 10 11 12 13 A. Motions for Attorney’s Fees 1. APC APC claims that it is entitled to attorney’s fees based on the contract APC and the 14 Tribe entered into when APC was hired to design, structure, and administer the Tribal 15 Retirement Plans. Mem. of P. & A. in Supp. of APC’s Mot. for Attorney’s Fees (“APC’s 16 Mot.”), ECF No. 389, at 2. The relevant language in that contract states: 17 18 19 20 21 22 23 24 Employer and Trustee agree to indemnify and hold APC harmless from and against all claims, losses, damages, liabilities, costs, and other expenses (including all attorneys’ fees, collection fees or court costs) arising from or in connection with the operation of the Plan or the rendering of plan-related services by Employer, Plan Administrator, or any third party. This indemnification does not include claims, losses, damages, liabilities, costs, and expenses attributable solely to any gross negligence or willful misconduct by APC in the performance of services under this Agreement. Decl. of Marc Roberts, ECF No. 391, Ex. 1, at 7. In its moving papers, APC appears to give two different, conflicting interpretations 25 of this language. In its Memorandum of Points and Authorities in support of its motion, 26 APC claims that the agreement provides attorney’s fees for all claims made “by the 27 Employer (i.e., the Tribe), Plan Administrator (i.e., the Tribe), or third parties” against 28 APC. APC’s Mot., at 5. However, in its Reply, APC claims instead that the 3 1 indemnification clause identifies two separate instances in which it is triggered: (1) when 2 claims “aris[e] from . . . the operation of the Plan,” or (2) when claims “aris[e] from ‘the 3 rendering of plan-related services by Employer, Plan Administrator or any third party.’” 4 See APC’s Reply, ECF No. 420, at 3. 5 Plaintiffs advance yet a third reading of the contract. They read the provision to 6 indemnify APC from liability only when claims arise from actions taken “by Employer, 7 Plan Administrator or any third party.” See Pls.’ Opp’n to APC’s Mot., ECF No. 416, at 4. 8 That is, they read the provision to indemnify APC for actions taken by anyone beside 9 APC. They bolster this interpretation by pointing to the specific carve out for “willful 10 conduct by APC.” See id. at 5. Accordingly, they argue that the attorney’s fees clause 11 does not apply to this action because APC’s actions were the basis of its alleged liability. 12 See id. 13 The Court agrees that Plaintiffs’ reading of the contract is the most natural one. It 14 makes little sense to artificially sever the phrase “by the Employer, Plan Administrator or 15 any third party” from the rest of the relevant sentence as APC urges. Plaintiffs’ reading 16 also more closely tracks standard indemnification provisions. At the very least, the 17 contract is ambiguous, and under California law, ambiguities are “resolved against the 18 drafter” of the contract. Winters v. Costco Wholesale Corp., 49 F.3d 550, 554 (9th Cir. 19 1995) (quoting Kunin v. Benefit Tr. Life Ins. Co., 910 F.2d 534, 539 (9th Cir. 1990)). As 20 APC drafted the contract at issue, this rule also counsels adopting the narrower reading 21 advocated by Plaintiffs. Accordingly, APC’s motion is DENIED.2 22 2. Umpqua 23 Similar to APC, Umpqua claims it is entitled to attorney’s fees based on the 24 contract defining its relationship with Plaintiffs vis-à-vis the bank accounts from which the 25 Employee Defendants allegedly stole money. Umpqua’s alleged conduct concerning 26 27 28 2 Plaintiffs filed an Ex Parte Motion to Strike evidence provided in APC’s Reply. ECF No. 423. That evidence consisted of billing records supporting the amount of attorney’s fees sought by APC. See Decl. of William A. Muñoz, ECF No. 420-1, Ex. A. Because the APC is not entitled to attorney’s fees, the Court does not address the reasonableness of the fees sought and Plaintiffs’ ex parte motion is DENIED as moot. 4 1 these accounts formed the basis of Plaintiffs’ claims against it. The relevant contract 2 language, found under the heading “Liability for Overdrafts,” states: 3 4 5 6 7 You will also be liable for our costs to collect the deficit [resulting from an overdraft] as well as for our reasonable attorney’s fees, to the extent permitted by law, whether incurred as a result of collection or in any other dispute involving your account including, but not limited to, disputes between you and another joint owner; you and an authorized signer or similar party; or a third party claiming an interest in your account. 8 Decl. of Shirley Schrumpf, ECF No. 382-2, Ex. E, at 1. Umpqua relies on the language, 9 “any other dispute,” to argue that the contract is broad and intended to encompass any 10 dispute concerning the accounts. See Umpqua’s Mot. for Attorney’s Fees (“Umpqua’s 11 Mot.”), at 6. Plaintiffs, conversely, argue that the clause must be read in context, and 12 that the “any other dispute” language’s location in the contract shows that it only applies 13 to overdrafts. See Pls.’ Opp’n to Umpqua’s Mot., ECF No. 417, at 6. 14 The Court again finds Plaintiffs’ reading to be the correct one. It is incongruous to 15 place a broad fee-shifting clause in a section specifically about overdrafts and buried in 16 the middle of a sentence that specifically addresses overdrafts. Instead, as one would 17 expect in a section labeled “Liability for Overdrafts,” the sentence at issue addresses 18 liability for overdrafts. The contract states that Plaintiffs are responsible for shortages 19 (“Each of you also agrees to be jointly and severally (individually) liable for any account 20 shortage resulting from fees or overdrafts . . . .”), and that Plaintiffs are also liable for the 21 costs to collect those shortages (“You will also be liable for our costs to collect the 22 deficit.”). It includes attorney’s fees among those potential costs, and then goes on to 23 describe potential disputes that might be attendant to any deficits. Read in context, the 24 contract envisions, for example, “disputes between you and another joint owner” that 25 arise from a shortage. The Court can imagine, for example, joint owner A causing an 26 overdraft and the bank attempting to recover that shortage from joint owner B, who then 27 claims A had no right to make the withdrawal that caused the overdraft in the first place. 28 The bank, however, did not limit shortage-related disputes to specifically enumerated 5 1 ones, and instead the contract provides that Plaintiffs were liable for costs associated 2 with “any other dispute involving [Plaintiffs’] account.” This language, however, does not 3 untether itself from the context in which it is written. 4 At the very least, the contract is ambiguous as to whether it applies only to 5 disputes associated with account shortages. And as noted above, such ambiguities are 6 “resolved against the drafter” of the contract. Winters, 49 F.3d at 554 (9th Cir. 1995). 7 Accordingly, the Court finds the attorney’s fee provision only applies to attorney’s fees 8 incurred in recovering account shortages and related disputes. 9 Umpqua also contends California Civil Code § 1717(a) requires that the attorney 10 fee clause be applied to the entire contract, regardless of whether the contract itself 11 limits its applicability to specific types of actions. See Umpqua’s Reply, ECF No. 419, at 12 4–5. “[S]ection 1717 makes an attorney fee provision reciprocal even if it would 13 otherwise be unilateral either by its terms or in its effect.” Brown Bark III, L.P. v. Haver, 14 219 Cal. App. 4th 809, 818 (2013). Section 1717(a) also states that such attorney’s fee 15 provisions “shall be construed as applying to the entire contract.” Cal. Civ. Code 16 § 1717(a). Umpqua relies on this language to argue that the attorney’s fee provision 17 applies to this action, regardless of any language restricting it to certain types of 18 actions.3 19 However, § 1717 (a) only applies to provisions that provide “attorney’s fees and 20 costs, which are incurred to enforce the contract.” Cal. Civ. Code § 1717(a); see also 21 Myers Bldg. Indus., Ltd. v. Interface Tech., Inc., 13 Cal. App. 4th 949, 968 (1993). The 22 provision at issue here, however, only applies to attorney’s fees associated with the 23 recovery of account deficits and attendant disputes, not in actions for breach of the 24 contract. Thus, § 1717(a) has no effect on the present action—the attorney’s fees 25 26 27 28 3 Without making any decision on the matter, the Court notes that it is odd for Umpqua to attempt to use a statute intended to make unilateral fee shifting provisions reciprocal, see Brown Bark III, 219 Cal. App. 4th at 820 (“[Section 1717’s] only effect is to make an otherwise unilateral right to attorney fees reciprocally binding upon all parties to actions to enforce the contract.” (alteration in original) (citation omitted)), to expand its ability to collect attorney’s fees. Section 1717 was intended, as applied here, to benefit Plaintiffs, not Umpqua. 6 1 provision does not apply to the entirety of the contract because it is not a fee-shifting 2 provision for breach of contract actions. Umpqua’s motion is DENIED. 3 3. 4 Cornerstone Community Bank Cornerstone, too, contends it is entitled to attorney’s fees based on a contract. 5 The Court entered summary judgment in favor of Cornerstone based on a release 6 signed between Cornerstone and the Tribe. See Mem. & Order, ECF No. 358. That 7 release contains the following clause: “If any party to this Agreement brings any action 8 to enforce or interpret the terms of this Agreement, the prevailing party in such dispute 9 shall be entitled to its reasonable attorneys’ fees and costs of suit.” Decl. of Jeffrey 10 Finck, ECF No. 384-2, Ex. A, at 5. Though the release was dispositive of the claims 11 against Cornerstone, Plaintiffs contend that the attorney’s fee clause does not apply 12 because they did not “bring[] an action to enforce or interpret . . . the Agreement”—the 13 contract was instead raised as an affirmative defense. See Pls.’ Opp’n to Cornerstone’s 14 Mot., ECF No. 418, at 3–6. 15 California courts are split over the import of this distinction. In Exxess 16 Electronixx v. Heger Realty Corp., 64 Cal. App. 4th 698 (1998), the court analyzed a 17 similar provision and found attorney’s fees unavailable because “[u]nder any reasonable 18 interpretation of the attorneys’ fee provision, we cannot equate raising a ‘defense’ with 19 bringing an ‘action’ or ‘proceeding,’” id. at 712. In Gil v. Mansano, 121 Cal. App. 4th 739 20 (2004), the court reached a similar conclusion, distinguishing attorney’s fee provisions 21 that applied to “any dispute under the agreement,” id. at 743–45. However, that case 22 included a dissent, which argued that the word “‘action’ includes both an answer and an 23 affirmative defense.” Id. at 747 (Armstrong, J., dissenting). 24 /// 25 /// 26 /// 27 /// 28 /// 7 1 In Mountain Air Enterprises, LLC v. Sundowner Towers, LLC, 231 Cal. App. 4th 2 805 (2014), cert. granted, 185 Cal. Rptr. 3d 6 (2015),4 the court found the Gil dissent 3 more persuasive and granted attorney’s fees when a contract was raised as an 4 affirmative defense: 5 We agree with Justice Armstrong that “[r]aising . . . an affirmative defense is legally the same as bringing an ‘action’” and that parties who actually intended to adopt a fees clause that would allow a prevailing party to obtain fees only if the party were a plaintiff and not if the party were a defendant would have gone to greater lengths to document it. 6 7 8 9 Id. at 853 (alterations in original) (quoting Gil, 121 Cal. App. 4th at 747 (Armstrong, J., 10 dissenting)). The court also noted that Gil and Exxess’s reasoning “would lead to absurd 11 results” because different outcomes would result from merely the procedural posture of a 12 case. Id. Other courts have come to similar conclusions. See, e.g., In re Villas, Case 13 No. CV 12-7282-JFW, 2017 WL 57767, at *4 (C.D. Cal. Jan. 4, 2017); State 14 Compensation Ins. Fund v. Khan, Case No. SACV 12-01072-CJC(JCG), 2016 WL 15 6440138, at *4 (C.D. Cal. Jan. 4, 2016). 16 This Court agrees that Mountain Air and the Gil dissent are more persuasive. 17 Making the outcome turn simply on who filed suit is illogically putting form above 18 substance. Plaintiffs signed a contract that included an attorney’s fee provision, and 19 they are subject to that provision when they bring suit based on the liability released in 20 that contract. 21 Plaintiffs also argue that sovereign immunity bars Cornerstone from recovering 22 attorney’s fees from them. See Pls.’ Opp’n to Cornerstone’s Mot., at 8–9. In support, 23 they rely mainly on the “strong presumption against waiver of tribal sovereign immunity,” 24 25 26 27 28 4 Plaintiffs claim that California Rule of Court 8.1115(e) renders Mountain Air without “”binding or precedential effect, and . . . not even citable,” since the California Supreme Court has granted review of the case. Pls.’ Opp’n to Cornerstone’s Mot., at 5. Without resolving the effect of that rule on this Court, the Court notes that the cited rule states such cases “may be cited for potentially persuasive value.” Cal. Rule of Court 8.1115(e)(1). The Court finds Mountain Air persuasive in anticipating how the California Supreme Court will resolve the contract issue now before the Court. See Air-Sea Forwarders, Inc. v. Air Asia Co., 880 F.2d 176, 186 (9th Cir. 1989) (“[T]he task of the federal courts is to predict how the state high court would resolve [issues of state law].”). 8 1 Demontiney v. United States ex rel. Dep’t of Interior, Bureau of Indian Affairs, 255 F.3d 2 801, 811 (9th Cir. 2001), and that waivers of sovereign immunity “be strictly construed,” 3 United States v. Nordic Village Inc., 503 U.S. 30, 42 (1992). 4 However, the contract provides an explicit waiver of Plaintiffs’ sovereign immunity: 5 “The Band and the Tribal Entities expressly and irrevocably waive their sovereign 6 immunity, if any, from suit or other action by the Bank Parties for the purpose of the 7 exercise or enforcement of the Bank Parties’ rights and remedies under this 8 Agreement . . . .” Decl. of Jeffrey Finck, Ex. A, at 5. Additionally, Plaintiffs agreed to 9 submit to the jurisdiction of both this Court and the Superior Court of California. Id. This 10 is a clear waiver of sovereign immunity. Furthermore, as described above, the contract 11 at issue provides the prevailing party the right to “reasonable attorneys’ fees and costs of 12 suit” associated with actions to enforce or interpret the contract. Id. Because Plaintiffs 13 have waived sovereign immunity to allow Cornerstone to exercise or enforce its rights 14 under the contract, Plaintiffs have also waived that immunity for purposes of attorney’s 15 fees. Cf. Sokaogon Gaming Enter. Corp. v. Tushie-Montgomery Assocs., Inc., 86 F.3d 16 656, 660 (7th Cir. 1996) (finding a waiver of sovereign immunity where “[n]o one reading 17 th[e] clause [at issue] could doubt that the effect was to make the tribe suable”). 18 Finally, Plaintiffs contend that the fees Cornerstone seeks to collect are 19 unreasonable because (1) they are significantly higher than those sought by their co- 20 defendants; (2) Cornerstone’s use of two firms led to redundant efforts; and (3) the hours 21 billed are excessive. See Pls.’ Opp’n to Cornerstone’s Mot., at 16–17. Plaintiffs’ 22 arguments are not persuasive. 23 First, Plaintiffs claim that “the only significant difference between the work 24 conducted by Cornerstone’s counsel and the work conducted by APC is that 25 Cornerstone’s counsel conservatively spent almost 200 hours[] engaging in an wholly 26 unnecessary discovery dispute.” Id. at 17. This is not so. The claims against APC and 27 Cornerstone were substantively different, so a direct comparison is of little value. The 28 claims against APC centered on its work in setting up the Tribal Retirement Plans, while 9 1 the claims against Cornerstone centered on the Employee Defendants’ use of Plaintiffs’ 2 bank accounts at Cornerstone. Additionally, the ultimate dispositions of the claims 3 against APC and of those against Cornerstone were procedurally different. The claims 4 against APC were resolved via three motions to dismiss. Cornerstone, on the other 5 hand, filed two motions to dismiss, an answer, a motion for judgment on the pleadings, 6 and ultimately resolved the claims against it on a motion for summary judgment. Finally, 7 Plaintiffs’ criticism of Cornerstone’s conduct is unfounded. That Cornerstone eventually 8 acquiesced to Plaintiffs’ discovery requests does not render their opposition to those 9 requests unreasonable. And indeed, discovery provides another point of divergence 10 between APC and Cornerstone; Cornerstone produced 441,575 pages of discovery in 11 response to Plaintiffs’ discovery requests, compared to 4,823 pages from APC. 12 Second, Plaintiffs have not shown that the use of two firms was unreasonable. 13 See Gates v. Deukmejian, 987 F.2d 1392, 1397–98 (9th Cir. 1992) (“The party opposing 14 the fee application has a burden of rebuttal that requires submission of evidence to the 15 district court challenging the accuracy and reasonableness of the hours charged or the 16 facts asserted by the prevailing party in its submitted affidavits.”). That two firms worked 17 on the same matter does not necessarily indicate that the two firms billed “for the same 18 work” as Plaintiffs contend. Pls.’ Opp’n to Cornerstone’s Mot., at 18. The only evidence 19 Plaintiffs cite in support of their claim of “numerous instances of redundant efforts” is the 20 conclusory declaration of Plaintiffs’ counsel. Id. at 19 (citing Decl. of Rachel Rivers, ECF 21 No. 418-3, ¶¶ 9–11). They point to no specific work that was redundant. This is 22 insufficient to rebut the accuracy or reasonableness of the hours provided by 23 Cornerstone. 24 Third and finally, Plaintiffs have not shown that the hours sought are excessive. 25 Their charges of excess largely repeat the same arguments underpinning their claim that 26 use of two firms was unreasonable and duplicative. Additionally, though, Plaintiffs argue 27 that “successive motions to dismiss and then a motion for judgment on the 28 pleading[s] . . . were necessitated by a mistake” and therefore the hours billed for those 10 1 motions were unnecessary. Pls.’ Opp’n to Cornerstone’s Mot., at 19. Aside from the 2 fact that Plaintiffs essentially argue that Cornerstone should have more easily and more 3 quickly disposed of Plaintiffs’ claims against them, Plaintiffs provide no support for their 4 apparent contention that attorney’s fees are only available for time spent on successful 5 motions. Instead, Plaintiffs cite two cases that address different situations. 6 In Carson v. Billings Police Department, 470 F.3d 889 (9th Cir. 2006), the court 7 held that the district court’s explanation for disallowing 21.5 hours was “sufficient, and 8 sufficiently explained”: “The time was spent on a motion to enforce the administrative 9 decision before the defendants’ time to seek judicial review had elapsed, and plaintiff 10 filed in in the wrong venue.” Id. at 893. Plaintiffs have identified no comparable error on 11 the part of Cornerstone. In Sorenson v. Mink, 239 F.3d 1140 (9th Cir. 2001), the court 12 stated that a district court may “in its discretion” reduce an attorney’s fee award based on 13 the “limited success” achieved by the prevailing party, id. at 1147. It also described the 14 two-step process for determining when such discretion should be used, the first step 15 being a determination of whether the party was unsuccessful “on claims that were 16 unrelated to the claims on which [it] succeeded.” Id. (quoting Hensley v. Eckerhart, 17 461 U.S. 424, 434 (1983)). In the instant case, Cornerstone prevailed on all claims 18 against it, so the “limited success” principle is inapplicable. 19 Because the contract between Plaintiffs and Cornerstone that formed the basis of 20 Cornerstone’s summary judgment motion provides attorney’s fees to the prevailing party, 21 Cornerstone’s motion is GRANTED.5 Furthermore, Plaintiffs have not established that 22 /// 23 /// 24 /// 25 26 27 28 5 Plaintiffs also filed an Ex Parte Motion for Leave to File a Declaration in Response to Cornerstone’s Reply. ECF No. 422. That declaration sets out facts concerning the circumstances of when Plaintiffs’ counsel learned of the contract that formed the basis of Cornerstone’s motion for summary judgment and whether Plaintiffs ever made a claim based on that contract. Because the Court’s analysis of the contract does not depend on whether Plaintiffs ever stated a cause of action under it, the ex parte motion is DENIED as moot. 11 1 any reduction of the fees Cornerstone incurred is warranted and Cornerstone is 2 accordingly entitled to the full $1,049,559.16 it seeks.6 3 B. 4 Plaintiffs object to certain items in Moore’s, APC’s, Cornerstone’s, and Umpqua’s 5 6 Bills of Cost bills of costs. The Court addresses each in turn. First, Plaintiffs object to Moore including video transcript and optical character 7 recognition (“OCR”) costs. Pls.’s Consolidated Objs., at 3–4. Plaintiffs’ video transcript 8 objection is based on a misreading of Moore’s bill of costs: “The ‘VID’ designation on 9 the . . . invoice denotes [the] presence of a videographer at the deposition,” not that the 10 transcript was a video transcript. Decl. of Kristin N. Blake, ECF No. 404-1, ¶ 4. The 11 OCR costs are also taxable because the electronically stored information (“ESI”) 12 agreement between the parties specifically required OCR to be performed on such 13 discovery and Moore incurred these OCR costs only because Moore received discovery 14 that did not conform to this agreement. Id. ¶ 6. Accordingly, they are recoverable. See 15 Ancora Techs., Inc. v. Apple, Inc., Case No. 11-CV-06357 YGR, 2013 WL 4532927, at 16 *2 (N.D. Cal. Aug. 26, 2013) (finding OCR costs taxable where they resulted from a 17 failure to comply with the ESI agreement). Plaintiffs’ objections to Moore’s bill of costs 18 are OVERRULED. 19 Second, Plaintiffs object to APC obtaining copies of the depositions of Shirley 20 Schrumpf and Sylvia Lopez, as well as costs associated with the production of 21 e-discovery. Pls.’s Consolidated Objs., at 4–5. As for the depositions, Plaintiffs again 22 misread the bill of costs—APC did not obtain video transcripts of the depositions, but 23 rather written transcripts. Decl. of William A. Muñoz, ECF No. 408, ¶ 2. It also is of no 24 25 26 27 28 6 The Court notes that Plaintiffs also object to costs incurred by Cornerstone, but these objections are accompanied only by conclusory, unsupported statements. Plaintiffs provide no support for their contention that computerized legal research costs are unrecoverable as overhead expenses. Similarly, Plaintiffs’ objection to data hosting charges related to e-discovery is based solely on the contention that “none of Cornerstone’s [co-]defendants incurred a similar charge.” Pls.’ Opp’n to Cornerstone’s Mot., at 20. The Court fails to see how that supports Plaintiffs’ objection, especially given the significantly greater amount of discovery Cornerstone produced. 12 1 matter that Schrumpf and Lopez “were deposed in relation to Umpqua.” Pls.’s 2 Consolidated Objs., at 4. It is not unreasonable for APC to obtain those transcripts to 3 determine what relevance, if any, they had to the claims against it. Plaintiffs’ e-discovery 4 objection claims that the costs of hiring an accounting firm are non-taxable, arguing that 5 the firm’s contribution was “intellectual effort.” Id. However, the accounting firm only 6 “oversaw the process of converting . . . data” for purposes of producing discovery. Decl. 7 of William A. Muñoz, ECF No. 408, ¶ 3. Such costs are taxable. See Jardin v. 8 Datallegro, Inc., No. 08-CV-1426-IEG (WVG), 2011 WL 4835742, at *7 (S.D. Cal. 2011) 9 (holding the costs of converting data to the proper format taxable). Plaintiffs’ objections 10 to APC’s bill of costs are OVERRULED. 11 Plaintiffs object to Cornerstone’s bill of costs on the basis that it includes $360.45 12 copies made only “for counsel’s convenience.” Pls.’s Consolidated Objs., at 6; see also 13 U.S. Ethernet Innovations, LLC v. Acer, Inc., 2015 WL 5187505, at *5 (N.D. Cal. Sept. 4, 14 2015) (“[C]opies made solely for counsel's convenience or the litigant’s own use are not 15 recoverable because they are not ‘necessarily’ obtained for use in the case.”). Plaintiffs’ 16 argument, however is based on 28 U.S.C. § 1920(4)—which only covers the costs of 17 copies “necessarily obtained”—not on the contract discussed above that forms the basis 18 of Cornerstone’s award of attorney’s fees. That contract also entitles Cornerstone to “its 19 reasonable . . . costs of suit.” Decl. of Jeffrey Finck, ECF No. 384-2, Ex. A, at 5. This 20 language is broader than § 1940(4)’s “necessarily obtained” language. Plaintiffs’ 21 objection to Cornerstone’s bill of costs is OVERRULED.7 22 Finally, Plaintiffs object to Umpqua’s bill of costs for including a video transcript, 23 as well as the fee paid by Defendants’ counsel, Kasey J. Curtis, for admission to the 24 U.S. District Court for the Eastern District of California. Pls.’s Consolidated Objs., at 6– 25 7. Once again, Plaintiffs have misread the bill of costs—like its co-defendants, Umpqua 26 did not obtain a video transcript of the depositions in question. See Umpqua’s Resp. to 27 28 7 The Court notes that it appears as though the disputed $360.45 is included in the $1,049,559.16 attorney’s fee award. See Decl. of Kyle M. Fisher, ECF No. 384-4, Ex. 6, at 272 (setting out $360.45 for “Photocopies January 2017”). Of course, Cornerstone can recover the $360.45 only once. 13 1 Objs., ECF No. 406, at 3. Plaintiffs are also incorrect in stating that the Ninth Circuit has 2 not ruled on whether permanent admission fees are taxable; the Ninth Circuit has ruled 3 that they are. See Kalitta Air L.L.C. v. Cent. Tex. Airborne Sys. Inc., 741 F.3d 955, 958 4 (9th Cir. 2013) (stating that fees for “permanent admission of attorneys to the district 5 court’s bar” are taxable). Plaintiff’s objections to Umpqua’s bill of costs are 6 OVERRULED. 7 8 CONCLUSION 9 10 As set out above, APC’s and Umpqua’s Motions for Attorney’s Fees, ECF 11 Nos. 382, 388, are DENIED and Cornerstone’s Motion for Attorney’s Fees, ECF No. 384, 12 is GRANTED. Cornerstone is entitled to $1,049,559.16 in attorney’s fees and costs. 13 Furthermore, Plaintiffs’ Objections to Bills of Costs Submitted, ECF No. 404, are 14 OVERRULED and APC, Umpqua, Cornerstone, and Moore are entitled to the full 15 amount provided in their bills of costs, ECF Nos. 383, 385, 386, and 387. 16 17 IT IS SO ORDERED. Dated: July 26, 2017 18 19 20 21 22 23 24 25 26 27 28 14

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