The Sherwin-Williams Company v. JB Collision Services, Inc. et al

Filing 117

ORDER Imposing Sanctions Against Defendants for Failure to Produce Discovery Documents. The Court hereby AWARDS Plaintiff the amount of $6,824.50 in attorney's fees pursuant to Federal Rule of Civil Procedure 37, in accordance with Appendix A. Defendants are to coordinate with Plaintiff's counsel regarding the payment of this sanction no later than January 14, 2015, and to effect payment no later than January 31, 2015. Signed by Magistrate Judge William V. Gallo on 1/7/15.(kas)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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THE SHERWIN-WILLIAMS
COMPANY,

)
)
)
Plaintiff,
)
v.
)
)
JB COLLISION SERVICES, INC., et. )
al.,
)
)
Defendants,
)
)
and
)
)
THE SHERWIN-WILLIAMS
)
COMPANY,
)
)
Plaintiff,
)
)
v.
)
)
JTT, INC., et. al.,
)
)
Defendants.
)
)

Civil No. 13-CV-1946-LAB(WVG)
13-CV-1947-LAB(WVG)
ORDER IMPOSING SANCTIONS
AGAINST DEFENDANTS FOR
FAILURE TO PRODUCE
DISCOVERY DOCUMENTS

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I. INTRODUCTION

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A. BACKGROUND

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Plaintiff Sherwin-Williams (“Plaintiff”) makes paints and coatings for cars.

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(Doc. No. 31 at 1.) Defendants JB Collision Services, Inc. (“Defendant JB Collision”)

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and JJT, Inc. (“Defendant JJT”) are auto body shops. Id. On or about September 10,
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2008, Defendant JB Collision entered into a Supply Agreement with Plaintiff. (Doc.

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No. 1 at 2.) Pursuant to the Supply Agreement, Defendant JB Collision agreed to

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exclusively use Plaintiff’s automotive paint and coating products from September 10,

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2008, until the date upon which net sales, as defined by the Supply Agreement, totaled

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$1,300,000.

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exclusively purchase all of its requirements for automotive paints, coatings, and related

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products for the duration of the contract term, Plaintiff agreed to provide products to

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JB Collision at a discount. Id. at 3.

Id.

In consideration for Defendant JB Collision’s agreement to

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On or about May 29, 2011, Defendant JJT entered into a Supply Agreement

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with Plaintiff. (Doc. No. 17 at 2.) Pursuant to the Supply Agreement, Defendant JJT

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agreed to exclusively use Plaintiff’s automotive paint and coating products from May

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29, 2011, until the date upon which net sales, as defined by the Supply Agreement,

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totaled $250,000. Id. In addition, Defendant John Tyczki (“Defendant Tyczki”) signed

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a guaranty on May 10, 2011, personally guaranteeing Defendant JJT’s performance

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under the Supply Agreement. Id.

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From September of 2008 until January of 2013, Defendants purchased

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automotive paint, coatings, and related products pursuant to the Supply Agreements

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with Plaintiff. (Doc. No. 1 at 3; Doc. No. 17 at 2-3.) In January of 2013, Plaintiff

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alleges that Defendants breached the parties’ Supply Agreements by discontinuing all

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of their requirements for automotive paints, coatings, and related products exclusively

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from Plaintiff. Id. By letter dated February 28, 2013, Plaintiff notified Defendants of

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their breach of contract. Id.

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On August 20, 2013, Plaintiff filed two complaints asserting breach of contract

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claims against Defendants JB Collision, JJT, and Tyczki, and Defendants filed

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counterclaims for breach of contract, breach of implied warranties of merchantability

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and fitness, concealment and fraud, intentional misrepresentation, negligent misrepre-

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sentation, breach of covenant of good faith and fair dealing, and unjust enrichment.

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(Doc. No. 31 at 2.) The crux of Defendants’ counterclaims is that Plaintiff’s products

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were not satisfactory. Id.

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B. PLAINTIFF’S MOTION FOR SANCTIONS

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On October 10, 2014, Plaintiff filed a Discovery Motion and argued that

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Defendants should be held in contempt and sanctioned for withholding discovery and

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lying to the Court. (Doc. No. 61-1 at 5, 10-11.) Plaintiff argued that, for months, it

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sought to obtain Defendants’ records reflecting any purchases of paint and associated

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products from sellers other than Plaintiff between September of 2008 and March of

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2013, and that Defendants repeatedly swore under oath that no documents existed

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because during those years they exclusively purchased and used Plaintiff’s paint and

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associated products. Id. at 5. Plaintiff asserted that Defendants told this Court the same

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thing in discovery dispute briefing and oral argument. Id. However, Plaintiff claimed

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that Defendants had recently disclosed documents which demonstrate that they did

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purchase thousands of dollars of paint and associated products from Keystone and

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Spies-Hecker (an Axalta/DuPont paint line) from September of 2008 through March

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of 2013. Id. In its Discovery Motion, Plaintiff sought reasonable attorney’s fees for

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bringing its Discovery Motion. Id.

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In their Opposition to Plaintiff’s Discovery Motion, filed on October 17, 2014,

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Defendants denied lying to the Court, and stated they did not purchase any paint

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products or coatings from any supplier other than Plaintiff during the terms of the

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Agreements. (Doc. No. 70 at 2.) Defendants noted that they did purchase after-market

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or used vehicle parts from a competitor, which were “indisputably unrelated products.”

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Id. Defendants claimed that they reasonably believed that these parts and other

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non-paint products purchased from Plaintiff’s competitor did not fall within the scope

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of Plaintiff's discovery request, as the term “related products” was vague, ambiguous,

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overbroad, and undefined in the request, as stated in Defendants’ objections. Id.

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Defendants also claimed that they “did purchase products from Keystone/LKQ

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during the terms of the Agreements; however, these, at least under Defendants’
understanding, were not paint ‘or related products.’” (Doc. No. 70 at 6.) They asserted
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that the products they did purchase from Plaintiff’s competitors were after-market parts,

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used parts, and waste disposal products, which were not part of Defendants’

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Agreements with Plaintiff. Id. Defendants claimed that they used their subjective

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understanding when responding to these requests. Id. at 7.

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During a Discovery Hearing on October 29, 2014, Plaintiff showed the Court

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several sample Keystone invoices that had recently been produced by Defendants. In

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response, Defendants claimed that any products that they purchased from Keystone that

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were covered by the Supply Agreement with Plaintiff, were purchased during the time

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period that the parties first entered into the Supply Agreement, and therefore these

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purchases were justified and excusable. Defendants also represented that they only

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recently discovered the existence of these Keystone documents.

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The Court reviewed all of the briefing related to this discovery dispute, as well

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as the corresponding exhibits and other relevant documents filed in the consolidated

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cases. With the fact discovery deadline set for November 7, 2014, a mere nine days

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after the Discovery Hearing, the Court deemed it advisable to issue its final rulings

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from the bench at the conclusion of the Discovery Hearing. On October 30, 2014, the

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Court issued a Discovery Order memorializing its rulings, and took Plaintiff’s request

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for a contempt Order and sanctions under advisement. (Doc. No. 85 at 7.) The Court

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ordered Plaintiff to lodge with the Court copies of the Keystone documents for an in

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camera review, and to highlight the products that it believed Defendants purchased in

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violation of their contracts with Plaintiff. Id. The Court instructed that an Order would

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issue after conducting an in camera review of the Keystone documents. Id.

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After conducting an in camera review of the Keystone documents that

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Plaintiff provided to the Court on November 3, 2014, the Court issued an Order

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Granting Plaintiff’s Request for Imposition of Sanctions Against Defendants for Failure

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to Produce Discovery Documents; Denying Plaintiff’s Request for an Order of

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Contempt Against Defendants on November 14, 2014. (Doc. No. 100.) The Court

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determined that sanctions were appropriate and would be imposed against Defendants
for their failure to produce the Keystone invoices in response to Plaintiff’s discovery
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request, and in violation of this Court’s August 15, 2014, Discovery Order (Doc. No.

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47). Id. at 8. The Court found that the Keystone documents were clearly requested by

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Plaintiff in its RFP No. 10, and the Court had unequivocally ordered Defendants to

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respond to this request. (Doc. No. 100 at 9; citing Doc. No. 47 at 9.) The Court also

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found that Defendants made false representations to Plaintiff and to the Court regarding

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the existence of these Keystone documents. Id.

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In its Order Imposing Sanctions, the Court Ordered Plaintiff to submit to the

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Court detailed time calculations and descriptions of activities in attempting to obtain

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the Keystone documents, and in filing its Motion to Compel and corresponding

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briefing. (Doc. No. 100 at 10.) On November 21, 2014, Plaintiff lodged its time

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calculations in response to the Court’s Order, along with affidavits of Plaintiff’s

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counsel. On November 24, 2014, Defense counsel contacted the Court to inquire as to

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whether Defendants would be given the opportunity to respond to Plaintiff’s time

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calculations. On December 1, 2014, the Court issued an Order allowing Defendant to

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lodge with the Court a Response to Plaintiff’s time calculations by December 8, 2014.

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(Doc. No. 106.)

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II. RULING

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On November 21, 2014, Plaintiff lodged with the Court an Affidavit of

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Plaintiff’s counsel, Mr. Ed Woodworth, along with a corresponding time sheet

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containing billing entries for Mr. Woodworth, Mr. Jeff Wilson, Mr. Nicholas Kurk, Mr.

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Michael Jacob, Ms. Heather Kleinhardt, Ms. Christine David, Ms. Andrea Arndt, and

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Mr. Andrew Kotwicki. Plaintiff also lodged a Affidavit of Plaintiff’s local counsel, Mr.

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Michael Murray, along with a corresponding time sheet containing billing entries for

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Mr. Murray.

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Plaintiff seeks $16,951.00 in attorneys’ fees incurred in attempting to obtain

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certain Keystone documents and in filing its Discovery Motion and corresponding

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briefing. Defendant opposes the requested amount, asserting that Plaintiff’s time

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calculations are excessive, duplicative, and not sufficiently stated with particularity as
they are block-billed, vague, and not sufficiently itemized, as well as unnecessary
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and/or unrelated to obtaining the Keystone documents. (Defendants’ Opposition at 2.)

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The Court has reviewed Plaintiff’s Affidavits and time sheets, as well as Defendants’

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Opposition, and issues the rulings set forth below.

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A. MR. MURRAY’S AFFIDAVIT AND TIME SHEET

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The Court strikes all billing entries listed on Mr. Murray’s time sheet. The

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Court finds all of these billing entries to be duplicative and excessive, and/or unrelated

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to attempts to obtain the Keystone documents.

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On December 15, 2014, the Court held a telephonic Discovery Conference to

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discuss Defendants’ disputes with some of Plaintiff’s discovery responses. See Doc.

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No. 116. Mr. Woodworth and Mr. Murray participated in the Discovery Conference

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on behalf of Plaintiff. During a discussion about an accelerated deadline by which

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Plaintiff had to respond to Defendants’ discovery requests, Mr. Murray acknowledged

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that he was not well-versed in the particular discovery dispute. Faced with the

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scheduling conflicts of Mr. Wilson and Mr. Woodworth, and Mr. Murray’s acknowl-

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edgment that he was not able to complete the discovery himself due to his limited

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involvement with the issues, the Court set a later deadline for Plaintiff to produce the

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discovery. While the Court is aware that the disputes discussed on December 15, 2014,

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were unrelated to the Keystone documents, this instance and Mr. Murray’s acknowl-

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edgment lend support to the Court’s prior observations that Mr. Murray and his firm

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of Lanak & Hanna, PC, were not as intimately involved in the discovery in this case as

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Mr. Wilson and Mr. Woodworth and their firm of Young Basile Hanlon & MacFarlane,

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PC.

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Additionally, the Court has observed that Mr. Murray, although present in the

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undersigned’s courtroom for several of the Discovery Hearings, has never argued

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before the Court in this litigation, and the Court has had little to no interaction with him

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throughout the duration of discovery.

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arguments and the Court’s determination that Mr. Murray’s time calculations lodged

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with the Court are duplicative and excessive. Plaintiff will not be reimbursed for Mr.

These observations support Defendants’

Murray’s time calculations.
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B. MR. WOODWORTH’S AFFIDAVIT AND TIME SHEET

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The Court strikes several billing entries listed on Mr. Woodworth’s time sheet

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because the Court finds some of the entries to be duplicative and excessive, and/or

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unrelated to attempts to obtain the Keystone documents. Further, Plaintiff failed to

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comply with the Court’s Order to provide “detailed time calculations and descriptions

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of activities in attempting to obtain these documents, and in filing its Motion to Compel

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and corresponding briefing.” (Doc. No. 100 at 10.) Many of Plaintiff’s billing entries

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reflect vague, ambiguous, and skeletal descriptions of activities, and the Court was

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unable to determine whether the entries were related to Plaintiff’s attempts to obtain the

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Keystone documents. The Court should not be tasked with a meticulous review of each

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billing entry and required to guess as to whether the entries relate to the Keystone

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documents. While counsel did provide signed affidavits, as noted in Defendants’

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Opposition, some of the billing entries clearly do not relate to the Keystone

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documents.1/

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Despite the Court’s explicit Order that Plaintiff shall provide detailed time

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calculations and descriptions, the Court examined the case docket and the billing entries

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one by one in an effort to match each billing entry with a corresponding docket entry.

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As the party requesting the monetary sanctions, Plaintiff should have done, and was

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ordered to, complete all of this work for the Court. In part as a sanction for failure to

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comply with the Court’s Order to provide detailed time calculations and descriptions,

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and for squandering the Court’s time as a result, and in part because the Court finds

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many of the billing entries to be duplicative, excessive, or unrelated to the Keystone

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documents, the Court will not Order Defendants to pay the full amount of Plaintiff’s

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request for monetary sanctions. The Court does, however, find many of Plaintiff’s

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For example, Mr. Woodworth’s time sheet lists billing entries to prepare for and
attend an October 3, 2014, Discovery Conference before the Court. However, as
Defendants’ note in their Opposition, and the Court has affirmed after a review of the
case docket and corresponding notes, the October 3, 2014, Discovery Conference was
not related to the Keystone documents.
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billing entries to be related to the Keystone documents, and therefore awards Plaintiff

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those specific amounts in attorney’s fees. The Court finds as to the entries itemized in

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Appendix A, that Plaintiff’s billing entries are reasonable for the work performed, and

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that Plaintiff’s attorney’s hourly rates are likewise reasonable.

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C. IMPOSITION OF SANCTIONS

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After a meticulous review of the record, Plaintiff’s time calculations, and

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Defendants’ Opposition, the Court hereby AWARDS Plaintiff the amount of $6,824.50

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in attorney’s fees pursuant to Federal Rule of Civil Procedure 37, in accordance with

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Appendix A. Defendants are to coordinate with Plaintiff’s counsel regarding the

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payment of this sanction no later than January 14, 2015, and to effect payment no later

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than January 31, 2015.

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IT IS SO ORDERED.

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DATED: January 7, 2015

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Hon. William V. Gallo
U.S. Magistrate Judge

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APPENDIX A
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Apportioned
Hours

Apportioned
Amount

Ed
Woodworth

7/02/2014

0.2

$40.00

Review Defendant's discovery responses

Jeff Wilson

7/16/2014

0.4

$100.00

Multiple conference calls
with client regarding discovery disputes and potential
third-party claims; preparation for meet and confer conference with opposing counsel regarding discovery dispute

7/17/2014

2

$500.00

Conference call with client
re: discovery disputes; prepare for discovery conference
with opposing counsel; draft
proposed resolution to discovery requests; conduct
meet and confer conference
per local rules

Jeff Wilson

7/24/2014

1

$250.00

Prepare for discovery dispute
motion/hearing on JB/JJT
objections and discovery responses

Ed
Woodworth

7/30/2014

1.2

$240.00

Draft/revise joint statement of
discovery disputes; correspond with opposing counsel
regarding the same;

Jeff Wilson

7/30/2014

1

$250.00

Revise and finalize discovery
motion; legal research regarding objections to discovery
raised by opposing party; prepare for discovery conference
with Judge

Jeff Wilson

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Accounting
Date

Jeff Wilson

2

Attorney
Name

Description

8/07/2014

0.75

$187.50

Preparation and research regarding discovery motion
hearing in San Diego; travel
to San Diego and review documents for production during
travel

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APPENDIX A
1

Apportioned
Hours

Apportioned
Amount

Jeff Wilson

8/08/2014

0.75

$187.50

Preparation for hearing; appearance at motion hearing
and work on issues arising
from the same

Ed
Woodworth

9/09/2014

2

$400.00

Analysis and review of Keystone documents, discovery
and analysis of missing Keystone PBE Documents

9/24/2014

1

$250.00

Attend deposition of Tyczki

Nicholas Kurk

9/25/2014

0.7

$168.00

Completed document subpoenas to Keystone Automotive
Industries Inc. and LKQ Corporation and served registered agent in Chicago.

Nicholas Kurk

9/26/2014

0.1

$24.00

Phone call to the registered
agents of Keystone Automotive Industries Inc. and LKQ
Corporation re service of
document subpoenas.

Heather
Kleinhardt

9/29/2014

0.4

$80.00

Strategized with Attorneys
Jacobs and Woodworth regarding Show Cause Motion;
Began review of John
Tyczki's Deposition for Show
Cause Motion

Jeff Wilson

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Accounting
Date

Jeff Wilson

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Attorney
Name

10/02/2014

1.75

$437.50

Prepare for depositions and
continued work on all pending discovery disputes; research re: sanctions for Keystone issues

Heather
Kleinhardt

10/03/2014

1

$200.00

Continued review of John
Tyczki deposition; Conferred
with Attorney Woodworth
regarding discovery disputes

Ed
Woodworth

10/08/2014

0.4

$80.00

Draft/revise discovery dispute motion

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Description

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APPENDIX A
1

Accounting
Date

Apportioned
Hours

Apportioned
Amount

Ed
Woodworth

10/08/2014

0.2

$40.00

Draft correspondence to opposing counsel regarding discovery issues

Ed
Woodworth

10/09/2014

0.2

$40.00

Draft/revise discovery dispute motion

Ed
Woodworth

10/09/2014

1

$200.00

Discovery dispute conference
and confer with Jeff Wilson
regarding same

Jeff Wilson

10/09/2014

2

$500.00

Work on all issues re deposition preparation. Conference
call with client; work on motion to compel discovery

Ed
Woodworth

10/10/2014

1.1

$220.00

Draft/revise discovery dispute motion

Ed
Woodworth

10/20/2014

0.5

$100.00

Review Defendants' Response in Opposition

Ed
Woodworth

10/20/2014

0.5

$100.00

Draft/revise reply brief

Ed
Woodworth

10/21/2014

2.5

$500.00

Draft/revise reply brief

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Ed
Woodworth

10/22/2014

0.4

$80.00

Draft/revise reply brief

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Jeff Wilson

10/09/2014

1

$250.00

Attend discovery dispute
hearing

Ed
Woodworth

11/03/2014

3

$600.00

Assembly of Keystone Documents to File with Court

Ed
Woodworth

11/21/2014

4

$800.00

Prepare Keystone Time Entries and supporting affidavit
(3.5); confer with local counsel regarding the same (0.5)

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3

Attorney
Name

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15
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Description

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TOTAL

$6,824.50

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