Regions Bank v. Kaplan et al

Filing 451

ORDER granting 435 Motion to defer payment of expert witness fees and expenses; denying without prejudice Motion to determine reasonableness of expert charges; denying without prejudice 436 Motion for approval of expert witness fees and expenses. The Kaplan Parties shall produce the expert witness Jason D. Koontz at the scheduled deposition on August 28, 2015. See Order for details. Signed by Judge Elizabeth A. Kovachevich on 8/18/2015. (JM)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
REGIONS BANK, etc.,
Plaintiff,
v.

CASE NO. 8:12-CV-1837-T-17MAP

MARVIN I. KAPLAN, etc.,
et al.,
Defendants.
___________________________/

ORDER

This cause is before the Court on:
Dkt. 435
Dkt. 436
Dkt. 437
Dkt. 442
Dkt. 443

Motion to Defer Payments to Experts or to Determine
Reasonableness of Expert Charges
Motion for Approval of Expert Witness Fees and Expenses
Response (Kaplan)
Response (Regions Bank)
Notice of Joinder (Bridgeview)

Jason D. Koontz, banking expert witness for the Kaplan Parties (Marvin Kaplan
and Kaplan Entities), is scheduled to be deposed on August 28, 2015. Defendants
Kaplan Parties have requested that Regions Bank and Bridgeview Bank Group pay an
invoice from TASA Group, Inc. in the amount of $10,325.29 (Dkt. 435-2) in advance, or
Witness Koontz will not appear for the deposition.

Regions Bank has moved for an order deferring reimbursement obligations
pending the outcome of this case and judicial determination of the reasonableness of
the charges, or in the alternative for a determination of the reasonableness of the
charges following submission of data reflecting that the charges are reasonable for

Case No. 8:12-CV-1837-T-17MAP
banking experts by the Kaplan Parties. Regions Bank requests that the Court order
prompt submission of supporting information not already provided, and the Court should
order the Kaplan Parties to produce their expert on the scheduled date even if the Court
has not yet ruled on the reasonableness of the charges by that time, failing which the
Kaplan Parties would be precluded from using that expert witness at trial.

Bridgeview Bank Group joins in the Motion to Defer Payment or to Determine
Reasonableness.

The Kaplan Parties oppose the Motion to Defer, and have moved for approval of
the expert witness fees and expenses pursuant to Fed. R. Civ. P. 26(b)(4)(c). The
Kaplan Parties seek an order requiring Regions Bank and other parties to compensate
the Kaplan Parties’ banking expert at his prevailing hourly rate, plus reasonable
traveling expenses and all time spent preparing or attending the deposition, and
requiring Regions Bank and other parties make said payment no later than forty-eight
hours prior to the scheduled deposition.

Regions Bank opposes the Kaplan Parties’ Motion for Approval of Expert Witness
Fees and Expenses. Regions Bank disputes the reasonableness of the charges.

I. Discussion

The Court notes that efforts were made to secure a reciprocal agreement as to
treatment of expert costs, but the parties were unable to reach an agreement.

A. Request to Defer Payment to Experts

Fed. R. Civ. P. 26(b)(4)(E) provides:

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(E) Payment. Unless manifest injustice would result, the court must
require that the party seeking discovery:
(i) pay the expert a reasonable fee for time spent in responding to
discovery under Rule 26(b)(4)(A) or (D)......
Regions Bank argues that the Court should defer its reimbursement obligation
pending the outcome of the case, and pending submission of data as to commissions
charged by TASA, the expert’s standard rates when TASA is not involved, and
reasonable charges for qualified comparable banking experts in this district. Regions
Bank relies on the Committee Notes to the 1970 amendments to Rule 26, which state
that “[t]he court may issue [an order to pay fees] as a condition of discovery, or it may
delay the order until after discovery is completed.” The order to pay fees refers to an
order to pay the party whose expert is made subject to discovery a fair portion of the
fees and expenses the party incurred in obtaining information from the expert.

Regions Bank further argues that the Kaplan Parties should be required to
produce to produce supporting information on the reasonableness of the charges, in the
event that the Court denies the Motion to Defer and determines the reasonableness of
the charges.

The Kaplan Parties oppose the Motion to Defer, and have separately moved for
approval of expert witness fees and expenses.

The Court notes that the charges included in the TASA Group, Inc.’s invoice of
$10,325.29 are estimates, not actual charges. As to the request of the Kaplan Parties
that Regions Bank and other parties pay the expert fee in advance of the deposition,
other courts have denied requests for advance payment because Rule 26(b)(4)(E) does
not require it. See Parkland Venture, LLC v. City of Muskego, 2010 WL 4723411 (E.D.
Wis. 2011)(unreported); Harris v. Costco Wholesale Corp., 226 F.R.D. 675 (S.D. Cal.
2005)(unlike ordinary witness fees, no rule requires that an opposing expert’s deposition

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fees be tendered to the witness in advance).

After consideration, the Court grants the Motion to Defer Payments to Experts.
Fed. R. Civ. P. 26(b)(4)(E) does not require payment in advance of the deposition of the
expert. Once the deposition has been concluded, and an invoice for actual charges is
issued, the Court will determine the reasonableness of the actual charges that Regions
Bank and other parties will be required to pay. The Court notes that Regions Bank and
Bridgeview Bank Group as well as the Kaplan Parties have retained expert witnesses
who will testify at trial, and who may be deposed prior to trial. Since Regions Bank and
other parties will not be required to make advance payment prior to deposition of the
Kaplan Parties’ expert, in the event that the Kaplan Parties seek to depose the expert
witnesses of other parties, advance payment will not be required.

The Kaplan Parties shall produce their expert on the scheduled date. As noted
above, the Court expects that reasonableness of expert witness fees and costs will be
determined after expert depositions are concluded.

B. Reasonableness

Regions Bank does not contest that the Kaplan Parties’ expert should be paid a
reasonable amount of the expert’s charges for testifying at deposition. Regions Bank
contests the reasonableness of the charges Regions Bank has been asked to pay as a
condition precedent to the appearance of Kaplan Parties’ expert for the scheduled
deposition.

Rule 26(b)(4)(C) seeks to calibrate the fee so that plaintiffs will not be hampered
in efforts to hire quality experts, while defendants will not be burdened by unfairly high
fees preventing feasible discovery and resulting in windfalls to the expert. See Anthony
v. Abbott Laboratories, 106 F.R.D. 461, 465 (D.R.I. 1985). The Kaplan Parties argue
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that the Court should consider the following factors:

1. the witness’s area of expertise;
2. the education and training that is required to provide the expert insight
sought;
3. the prevailing rates for other comparable respected experts;
4. the nature, quality and complexity of the discovery sought;
5. the cost of living in the particular geographic area;
6. the fee being charged by the expert to the retaining party;
7. the fee traditionally charged by the expert on related matters;
8. any other factor likely to be of assistance to the court in balancing the
parties’ respective interests.
Tomlinson v. Landers, 2009 WL 2499006 (M.D. Fla. Aug. 14, 2009).
The Kaplan Parties argue that the expert’s hourly rates are consistent with
comparable experts, including Regions Bank’s experts, that this case is a complex case
involving a complicated set of transactions that will be illuminated by appropriate expert
testimony, and that the expert’s fee is consistent with fees he traditionally charges on
related matters.

The Kaplan Parties observe that “courts have been inconsistent in addressing
the question of what constitutes a “reasonable fee” under Rule 26(b)(4)(E).” (Dkt. 437,
p. 3).

The Kaplan Parties argue that the Kaplan Parties are entitled to the award of

reasonable costs, including travel expenses, preparation time and deposition time
incurred by the expert in connection with the scheduled deposition. The Kaplan Parties
argue that travel time is also compensable. New York v. Solvent Chemical Co., 210
F.R.D. 462, 472 (W.D.N.Y. 2002).

Regions Bank contests the reasonableness of the expert’s hourly rates, in light of
the nature of the expert’s training and experience, the uncomplicated subject matter of
the expert’s testimony, and in comparison with other expert witnesses involved in this
case who are more qualified and charge substantially less than the Kaplan Parties’
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Case No. 8:12-CV-1837-T-17MAP
banking expert. Regions Bank further argues that the Court should not rule on
reasonableness in a vacuum, and that requests for court determination of the
reasonableness of an expert’s fees are typically handled at the end of a case, not
before an expert testifies.

Regions Bank has argued that the Kaplan Parties have not provided sufficient
supporting information. The Court further notes the following provisions in the TASA
Group, Inc.’s offers of expert services (Dkt. 435-4):

Charges
...... “Each rate covers the services of both the Expert and TASA
Group.....Billings are for the Expert’s time and the Expert’s expenses
times a factor of 1.2, and a one-time administrative charge of $175.00
per expert per case.....Charges for certain circumstances, including
depositions, court appearances and out of town work, are usually
computed on a daily basis, and will be estimated and payable in
advance to The Tasa Group, Inc. Additionally, all outstanding bills
are payable in advance of court appearances. Time and/or expenses
greater than the estimate will result in additional billing, and
overpayments will be refunded. If a scheduled court appearance is
cancelled, a fee will be charged based on the hours that the Expert
lost because of the Expert’s commitment to appear.
Terms
All bills are payable to THE TASA GROUP, INC., upon presentation.
We do not operate on a contingent fee basis, nor should a bill go
unpaid until a matter is resolved. Monies due TASA Group are not
dependent upon your receipt of payment by your client. Bills will be
presented when the Expert invoices us. This is usually done
monthly.
Responsibility for Payment
By using the services of a TASA-referred expert, you affirm that you
are, and remain, primarily responsible for payment relative to the
TASA referred expert’s services. This includes, but is not limited to,
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services that may be required in some jurisdiction by opposing
counsel in a litigation context whether for deposition or otherwise.....
These provisions appear to be standard provisions in each contract. If the Kaplan
Parties have not produced the agreement supporting the Koontz invoice, the Kaplan
Parties will have a further opportunity to produce it.

The Court is not persuaded that the Court has all of the necessary information to
make a determination as to reasonableness at this time. The determination of
reasonableness of the expert witness fees and expenses will require the application of
the above factors, in light of the particular circumstances of this case. The Court notes
that the parties agreed that the experts will travel to the agreed deposition site, rather
than all lawyers traveling to the expert location to minimize the costs/fees to the parties.
(Dkt. 435, p. 4). In this case, the amount of travel time, along with four hours of
preparation time, exceeds the amount charged for actual deposition time. Courts in
other jurisdictions have awarded costs for expert travel time under various approaches.
See U.S. v. 1.604 Acres of Land, 275 F.R.D. 234, 236 (E.D. Va. 2011). Some courts
have included the availability of a local expert as a factor in determining a reasonable
amount awarded for travel time. The Court looked for but did not find information as to
the availability of experts in this district, and the fees that they customarily charge. As to
the amount of mark-up over and above an expert’s hourly rates, other courts have
accepted the amount of a third party referral fee as “part and parcel of modern
litigation.” New York v. Solvent Chemical Co., Inc., 210 F.R.D. 62 (W.D.N.Y. 2002).

After consideration, the Court denies the Motion for Approval of Expert Witness
Fees and Expenses without prejudice. Upon the conclusion of the deposition, the
Parties shall confer and attempt to reach an agreement as to the amount of
reasonable expert fees and expenses. If the Parties are unable to reach an
agreement, a motion to determine reasonable expert fees and expenses shall be filed.
Accordingly, it is
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Case No. 8:12-CV-1837-T-17MAP

ORDERED that the Motion to Defer Payments to Experts (Dkt. 435) is granted.
The Kaplan Parties shall produce their banking expert witness, Jason D. Koontz, at the
scheduled deposition on August 28, 2015 without advance payment by Regions Bank
and other parties; the alternative Motion to Determine Reasonableness is denied
without prejudice. It is further

ORDERED that the Motion for Approval of Expert Witness Fees and Expenses
(Dkt. 436) is denied without prejudice. At the conclusion of the deposition, the parties
shall confer and attempt to reach agreement as to the amount of reasonable
expert fees and expenses. If no agreement is reached, a motion to determine
reasonable expert fees and expenses shall be filed.

DONE and ORDERED in Chambers in Tampa, Florida on this 18th day of
August, 2015.

Copies to:
All parties and counsel of record

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