Youngevity International, Corp. v. Smith et al

Filing 617

ORDER GRANTING IN PART PLAINTIFFS MOTION FOR ATTORNEYS FEES re 532 Motion for Attorney Fees. Signed by Judge Barry Ted Moskowitz on 3/5/2019. (sjm)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 Youngevity International, et al., Plaintiff, 12 13 v. 14 Todd Smith, et al., 15 Case No.: 16-CV-704-BTM-JLB ORDER GRANTING IN PART PLAINTIFFS’ MOTION FOR ATTORNEYS’ FEES [ECF No. 532] Defendant. 16 17 Pending before the Court is Plaintiffs’ motion for attorneys’ fees and costs. 18 (ECF No. 532). For the reasons discussed below, the Court grants in part 19 Plaintiffs’ motion for attorneys’ fees. 20 21 I. BACKGROUND On February 6, 2018, the Court denied in part and granted in part 22 Plaintiffs’ motion for sanctions for witness tampering and found by clear and 23 convincing evidence that Defendant Todd Smith acted in bad faith and intended 24 to influence Rick Anson’s, CEO and founder of LiveWell, LLC, testimony. (ECF 25 No. 517, 4.) The Court awarded Plaintiffs “reasonable attorney’s fees for the 26 work performed in bringing [the sanctions] motion.” (Id. at 5.) The Court 27 calendared this motion for April 13, 2018. 28 Plaintiffs now request the following award: (1) $8,706.00 for attorneys’ fees 1 16-CV-704-BTM-JLB 1 incurred in submitting the motion for sanctions; (2) $8,798.75 for attorneys’ fees 2 incurred in submitting the reply brief; (3) $ 1,549.00 for attorneys’ fees incurred 3 for work related to Plaintiffs’ application to file the motion for sanctions under 4 seal; (4) $2,730.00 for attorneys’ fees incurred in responding to Defendant’s 5 emergency ex-parte motion for reconsideration; (5) $5,730.00 for attorneys’ fees 6 incurred in submitting this motion; (6) $901.67 for costs of legal research and 7 courtesy copy costs Plaintiffs incurred in submitting the motion for sanctions; and 8 (7) $5,007.50 for attorneys’ fees incurred in submitting the reply brief for this 9 motion. Thus, Plaintiffs request a total of $33,422.92. 10 II. DISCUSSION 11 Defendants oppose Plaintiffs’ motion on several grounds. The Court 12 addresses each argument below. 13 A. Fees Related to Plaintiffs’ Motion to File Under Seal 14 Defendants take issue with the fees related to Plaintiffs’ applications to file 15 under seal (ECF Nos. 162, 170). They argue that the applications were not 16 necessary because Plaintiffs could have met and conferred with Defendants over 17 de-designating material prior to filing their motion for sanctions. The failure to do 18 so, Defendants argue, should not penalize them. 19 Defendants’ designated materials included Rick Anson’s entire deposition 20 transcript, and Todd Smith’s text messages to Anson and David Smith. This 21 case has been contentious from its inception, resulting in very little agreement 22 between the parties. The Court does not believe that even if Plaintiffs and 23 Defendants would have met and conferred, they would have reached an 24 agreement regarding such prejudicial material. Therefore, the Court finds that 25 the applications and related hearing were necessary and properly fall within the 26 Court’s award to Plaintiffs. 27 B. Fees Related to Plaintiffs’ Response to Defendants’ Emergency Motion 28 Defendants oppose an award that includes the fees Plaintiffs incurred in 2 16-CV-704-BTM-JLB 1 responding to their Emergency Motion for Reconsideration and/or Clarification of 2 this Court’s February 6, 2018 order (ECF No. 522). In addition to awarding 3 Plaintiffs attorneys’ fees, the Court also issued an injunction prohibiting Todd 4 Smith and Wakaya, and related parties from harassing, threatening, intimidating 5 or influencing, or attempting to do so, any of Plaintiffs’ and Counterclaim 6 Defendants’ witnesses, and from communicating with those witnesses except 7 when counsel for Smith or Wakaya are participating in the communication. (ECF 8 No. 517, 6.) Defendants petitioned the Court to reconsider and/or clarify the 9 scope of the injunction. 10 Defendants argue that Plaintiffs should not recover fees related to their 11 response because: (1) they were not required to respond; and (2) Defendants 12 eventually prevailed on the motion. The Court is not persuaded by these 13 arguments. First, Plaintiffs had to respond to preserve their objections to 14 Defendants’ request that they produce a limited list of witnesses they considered 15 to fall within the Court’s injunction. Second, though Defendants prevailed in part 16 on their Emergency Motion, the need for clarification arose from Todd Smith’s 17 misconduct. Thus, the Court finds that these fees fall within the scope of the 18 Court’s award. 19 C. Fees Related to Motion for Fees 20 Defendants also challenge Plaintiffs’ request for fees related to the instant 21 motion. Without citing to any case law, Defendants argue that it is excessive to 22 request fees related to a motion for attorneys’ fees. However, courts routinely 23 grant a party fees for time spent litigating fee applications. Anderson v. Director, 24 Office of Workers Compensation Programs, 91 F.3d 1322, 1325 (9th Cir. 1996) 25 (holding that time spent in preparing fee applications is compensable under 42 26 U.S.C. § 1988); Sure Safe Indus. Inc. v. C & R Pier Mfg., 152 F.R.D. 625, 627 27 (S.D. Cal. 1993) (“Attorneys’ fees in preparation of requests for attorneys’ fees 28 sanctions are recoverable under Rule 37.”); Matlink, Inc. v. Home Depot U.S.A., 3 16-CV-704-BTM-JLB 1 Inc., No. 07cv1994-DMS-BLM, 2008 WL 8504767, at *6 (S.D. Cal. Oct. 27, 2008) 2 (awarding fees after finding a Rule 37 violation for time spent litigating fee 3 application and related reply). 4 Having found that Todd Smith acted in bad faith, the Court has broad 5 discretion to fashion an award that it sees appropriate. See Chambers v. 6 NASCO, Inc., 501 U.S. 32, 44–46 (1991). Thus the Court finds that the fees 7 Plaintiffs incurred in preparing the application for attorneys’ fees are 8 compensable. 9 D. Fees Related to Motion for Sanctions Briefs 10 11 12 Lastly, Defendants challenge the fees Plaintiffs incurred in preparing the motion for sanctions and reply brief. In determining an appropriate award of attorneys’ fees the Ninth Circuit has 13 suggested twelve factors which should be considered: (1) the time and labor 14 required; (2) the novelty and difficulty of the questions involved; (3) the skill 15 requisite to perform the legal service properly; (4) the preclusion of other 16 employment by the attorney due to the acceptance of the case; (5) the customary 17 fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the 18 client or the circumstances; (8) the amount involved and the results obtained; (9) 19 the experience, reputation, and ability of the attorneys; (10) the “undesirability” of 20 the case; (11) the nature and length of the professional relationship with the 21 client; and (12) awards in similar cases. Kerr v. Screen Extras Guild, 526 F.2d 22 67, 70 (9th Cir. 1975). 23 “[A]n award of attorney’s fees may be based on the affidavits of counsel, so 24 long as they are ‘sufficiently detailed to enable the court to consider all the 25 factors necessary in setting the fees.’” Henry v. Gill Indus., Inc. 983 F.2d 943, 26 946 (9th Cir. 1993) (quoting Williams v. Alioto, 625 F..2d 845, 849 (9th Cir. 27 1980)). “The most useful starting point for determining the amount of a 28 reasonable fee is the number of hours reasonably expended on the litigation 4 16-CV-704-BTM-JLB 1 multiplied by the hourly rate.” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). 2 This method, known as the lodestar method, is presumed to be a reasonable fee. 3 Hiken v. DOD, 836 F.3d 1037, 1044 (9th Cir. 2016). Counsel for the prevailing 4 party should “make a good-faith effort to exclude from a fee request hours that 5 are excessive, redundant, or otherwise unnecessary. . . .” Hensley, 461 U.S. at 6 434. Fee applicants also bear the “burden of producing evidence that their 7 requested fees are in line with those prevailing in the community for similar 8 services by lawyers of reasonably comparable skill, experience and reputation.” 9 Chaudry v. City of Los Angeles, 751 F.3d 1096, 1110–11 (9th Cir. 2014). Courts 10 may rely on attorney affidavits and rate determinations in other cases to 11 determine whether a requested rate is in line with the prevailing market rate. 12 Hiken v. DOD, 836 F.3d at 1044. 13 Here, Plaintiffs spent a total of 29.8 hours on the motion for sanctions and 14 45.8 hours on the reply brief. In considering the complexity of the motion, the 15 Court agrees with Plaintiffs that a request for sanctions for witness tampering is 16 not common in federal civil litigation. Moreover, in an effort to avoid a duplication 17 of fees, Plaintiffs only seek reimbursement for 50% of billable time that their law 18 clerk spent preparing the reply. Thus, given the remedies sought by Plaintiffs 19 and the difficulty of the motion, the Court finds that 75.6 hours (minus the time 20 spent researching a referral to the U.S. Attorney’s Office and drafting those 21 sections of the motion and reply brief) is a reasonable amount of time to spend in 22 bringing the motion. 23 As to Plaintiffs’ fee rate, the Court finds that they have produced 24 satisfactory evidence that the hourly rates for their associates and partners are 25 reasonable. Plaintiffs have submitted detailed attorney affidavits and have cited 26 to comparable rates in the Southern District of California. In light of the rates 27 treated as reasonable in this district, Plaintiffs’ rates fall within a reasonable 28 range. See Makaeff v. Trump Univ., LLC, No. 10cv0940–GPC-WVG, 2015 WL 5 16-CV-704-BTM-JLB 1 1579000, at *4–5 (S.D. Cal. April 9, 2015). Additionally, Defendants bear “the 2 burden of rebuttal that requires submission of evidence to the district court 3 challenging the accuracy and reasonableness of the hours charged or the facts 4 asserted by the prevailing party in its submitted affidavits.” Hiken, 836 F.3d at 5 1045. Defendants have not met this burden. Todd Smith and Wakaya argue that Youngevity’s fee should be reduced by 6 7 its lack of success as to sanctions for alleged tampering with the testimony of 8 David Smith and the unsuccessful pursuit of a referral to the U.S. Attorney’s 9 Office. A court can reduce the fee based on partial success. See Dunlap v. 10 Liberty Natural Prods., Inc., 878 F.3d 794, 800 (9th Cir. 2017) (affirming a 50% 11 reduction in attorney’s fees where the plaintiff succeeded on only one of her five 12 claims); Potter v. Blue Shield of CA Life & Health Insurance Co., Nos. 17-56018, 13 17-56020, 17-56023, 2019 WL 719136, at *1 (9th Cir., Feb. 20, 2019) (affirming a 14 70% reduction in attorney’s fees in light of the plaintiff achieving limited success 15 on the merits). However, here, the actions of Todd Smith towards David Smith, 16 while not meriting sanctions, were relevant to the issue of Todd Smith's intent as 17 to Rick Anson. See Fed. R. Evid. 404(b). Thus, the time spent was related to 18 the issue of sanctions overall. However, as to the argument for referral to the 19 U.S. Attorney’s Office, Youngevity clearly did not prevail, and the hours spent on 20 researching that issue and drafting those sections in the motion and reply brief 21 will be deducted. Thus, $2,166.16 will be deducted.1 22 Accordingly, Plaintiffs are awarded $15,338.59 for their work in preparing 23 24 1 25 26 27 28 The Court calculates this number based on the cost of researching this issue ($931.50) plus the cost of preparing these sections in the motion and the reply brief. To calculate the cost of drafting the referral section in the motion, the Court determined the cost of drafting the motion and divided by 12, because out of the 12 pages in the motion, only 1 was spent on the issue of the referral. To calculate the cost of drafting the referral section in the reply, the Court determined the cost of drafting the reply and divided by 10, because out of the 10 pages in the reply, only 1 was spent on the issue of the referral. Thus, the Court determines that drafting the referral section in the motion cost $537.46 and that drafting the referral section in the reply cost $689.73. In addition, the Court deducts an additional $7.47, the cost of using Westlaw on September 5, 2017 for research related to the referral issue. 6 16-CV-704-BTM-JLB 1 the motion and reply brief. The Court does not find a need for any additional 2 reductions. 3 4 III. CONCLUSION For the reasons discussed above, the Court hereby awards Plaintiffs the 5 amount of $31,256.76 pursuant to this Court’s inherent authority and in 6 accordance with its February 6, 2018 order. Todd Smith and Wakaya must pay 7 $31,256.76 to Youngevity by April 3, 2019. 8 IT IS SO ORDERED. 9 Dated: 3/5/19 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 16-CV-704-BTM-JLB

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