Nelson-Ricks Cheese Company, Inc. v. Lakeview Cheese Company LLC

Filing 87

MEMORANDUM DECISION AND ORDER Lakeview's Motion for Sanctions (Dkt. 83 ) is GRANTED IN PART AND DENIED IN PART. All fees and costs will be awarded EXCEPT those requested by H1 Law Group. The Court hereby awards Lakeview attorney fees in the am ount of $12,279.50 and costs in the amount of $232.25 for a total award of $12,511.75. NRCC has 30 days to comply with this order. Signed by Judge David C. Nye. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jp)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
NELSON-RICKS CHEESE COMPANY,
INC., an Idaho corporation,

Case No. 4:16-cv-00427-DCN
MEMORANDUM DECISION AND
ORDER

Plaintiff,
v.
LAKEVIEW CHEESE COMPANY,
LLC, a Nevada limited liability company,
Defendant.

I. INTRODUCTION
Pending before the Court is Defendant Lakeview Cheese Company LLC’s
(“Lakeview”) Motion for Sanctions. Dkt. 83. Upon review, the Court will GRANT IN
PART and DENY IN PART Lakeview’s Motion as outlined below.
II. BACKGROUND
On September 29, 2017, Nelson-Ricks Cheese Company, LLC (“NRCC”) notified
Lakeview that it had served subpoenas on fifteen Lakeview customers seeking financial
information related to Lakeview’s sales over a five-year period. On October 20, 2017,
Lakeview filed an Emergency Motion to Quash the Subpoenas. Dkt. 47. The Court
granted the Motion to Quash and issued a Protective Order on October 26, 2017. Dkt. 57.
MEMORANDUM DECISION AND ORDER - 1

In its decision on the Motion to Quash, the Court found that the subpoenas were
improper, that NRCC issued them in violation of the protective order in place at the time
(by not including a copy of the protective order), and that the subpoenas directed the
customers to tender their responses to Greenberg Cheese Company—a non-party to this
lawsuit, a direct competitor of Lakeview’s, and the principle place of business of
NRCC’s CEO, Michael Greenberg. Id. The Court concluded that Lakeview, not the
fifteen non-party customers, was the correct party from which to get this information and
that the customers might have inadvertently disclosed sensitive financial information as a
result of the subpoenas.
In light of the Court’s decision, Lakeview filed a Motion to Amend Answer (Dkt.
66), seeking to add a counterclaim against NRCC for abuse of process. In its discretion,
the Court denied the Motion (Dkt. 81), but ruled that it would entertain a motion for
sanctions. Relying on Rule 1 and the Court’s duty to “secure the just, speedy, and
inexpensive determination of every action and proceeding,” Fed. R. Civ. P. 1, the Court
reasoned the additional time and expense of a counterclaim outweighed any possible
benefit. However, the Court recognized Lakeview’s need for appropriate recovery and
granted it leave to file the instant Motion for Sanctions. Id.

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II. LEGAL STANDARD
A. Sanctions
Under Rule 26 of the Federal Rules of Civil Procedure, a Court can impose Rule
37 sanctions in order to financially compensate, or make whole, an aggrieved party who
had to defend against improper tactics used by another party during discovery.
Federal Rule of Procedure 26(c)(3) provides that Rule 37(a)(5) applies to the
award of expenses in regards to protective orders. Rule 37(a)(5), in turn, outlines that,
when a Court grants a protective order, “the Court . . . must require the party . . . whose
conduct necessitated the motion . . . to pay the movant’s reasonable expenses incurred in
making the motion, including attorney fees.” Fed. R. Civ. P. 37(a)(5)(A).
Rule 45 also allows for recovery when a party issuing a subpoena fails to “take
reasonable steps to avoid imposing undue burden or expense on a person subject to the
subpoena.” Fed. R. Civ. P. 45(d)(1). When a violation occurs, the court can “impose an
appropriate sanction—which may include lost earnings and reasonable attorney's fees—
on a party or attorney who fails to comply.” Id.
B. Attorney Fees
After determining that a basis exists for a proper award of attorney fees, the Court
must calculate a reasonable fee award. Hensley v. Eckerhart, 461 U.S. 424, (1983).
Generally, the Court utilizes the “lodestar figure,” which multiplies the number of hours
reasonably expended on the litigation by a reasonable hourly rate. Id. The Court can then
adjust the lodestar figure if necessary, based upon the factors set forth in Kerr v. Screen

MEMORANDUM DECISION AND ORDER - 3

Extras Guild, Inc., 526 F.2d 67 (9th Cir.1975), that have not been subsumed in the
lodestar calculation. See Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 982 (9th Cir.
2008).
III. ANALYSIS
The Court has already explained in multiple decisions how NRCC’s subpoenas
were improper and will not repeat that discussion here. In short, Lakeview had to defend
itself, quash the subpoenas, and obtain an additional protective order based upon NRCC’s
tactics. An award of attorney fees and costs under Rules 26, 37, and 45 is, therefore,
appropriate.
Lakeview estimates that it incurred $16,011.75 in fees and costs in relation to the
quashing of the subpoenas and obtaining the protective order as follows:
1. Attorney fees for Teague Donahey at $435/hour for 5.2 hours totaling $2,262.00.
2. Attorney fees for Christopher McCurdy at $225/hour for 44.1 hours totaling
$9,922.50.
3. Paralegal fees at $190/hour for .5 hours totaling $95.00.
4. Lexis computerized research charges in the amount of $232.50.1

1

A careful reading of Greg Gaglio’s Declaration (Dkt. 83-2, at 3), and the attached Holland and
Hart invoice (Dkt. 83-2, at 13), shows that this total should be $232.25 not $232.50.

MEMORANDUM DECISION AND ORDER - 4

5. A flat fee of $3,500 for H1 Law Group to prepare the instant Motion for
Sanctions.
In response to this Motion, NRCC has raised three objections: First, Teague
Donahey is not entitled to $435 an hour; second, the total number of hours is excessive;
and third, there is a calculation error wherein approximately 4 hours is unaccounted for.2
Normally, when attorney fees are at issue, it is most efficient to submit an affidavit
that outlines the applicable market rates and any individual attorney’s rates. The Court
understands that current counsel is not the counsel that incurred these bills. However, that
is of little consequence, as an affidavit would not have been difficult to obtain and would
have aided the Court in its determination today.
Nevertheless, this Court is very familiar with the market rates in the Boise area
and specifically with the rates charged by the Boise office of Holland and Hart. See Balla
v. Idaho State Bd. of Correction, No. CV-81-1165-S-BLW, 2016 WL 6762651, at *12
(D. Idaho Feb. 1, 2016) (noting that the Holland and Hart Boise office charges between
$195 and $495 for attorneys based upon their experience and between $180 and $205 for
paralegals). Furthermore, although NRCC contends that $435/hour for Teague Donahey
is “excessive for the Boise area” it provides no evidence for this proposition. Although at

2

In its reply, Lakeview noted that it had in fact erroneously redacted the details regarding these
four hours and submitted a new accounting for the hours. The Court has reviewed the
documents, and the hours logged now match the hours requested.

MEMORANDUM DECISION AND ORDER - 5

the higher end of the Boise legal market,3 a rate of $435/hour for Teague Donahey, based
upon his experience and expertise, is appropriate and the Court will award the requested
$2,262.00 for the work he performed.
NRCC does not object to the rate of $225/hour charged by Chris McCurdy, but
rather the amount of hours he expended. At the outset, the Court notes that $225/hour is
reasonable for the Boise market as outlined above.
NRCC’s objection here—again, with nothing more than the statement itself—is
that the hours requested by McCurdy are excessive. NRCC alleges that “McCurdy’s total
of 44.1 hours for preparing a 14 page brief on a single issue is manifestly
disproportionate to the dispute.” Dkt. 85, at 5. Not only does this statement completely
disregard other necessary materials Lakeview had to file, such as a reply brief and
modified protective order, but NRCC is well aware of the facts and circumstances
surrounding this issue. There were informal conferences between counsel and between
the Court and counsel that required preparation and research. The ordeal itself took place
over approximately a month’s time. To say that a single brief was all that was required
here is a misleading statement.
The Court has thoroughly (line by line) reviewed the accounting Lakeview
provided and agrees that all entries fall under the Court’s prior order that Lakeview be

3

See LaPeter v. Canada Life Ins. of Am., No. CV-06-121-S-BLW, 2007 WL 4287489, at *1 (D.
Idaho Dec. 4, 2007) (finding that “attorneys at regional firms, such as Holland & Hart, charge
hourly rates at or near, but not above, the high end of acceptable rates for the Boise area.”).

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made whole from having to defend against the subpoenas. Finally, it is not this Court’s
job to determine the exact amount of time it should take an attorney to accomplish any
given task. Such a system of oversight or expectation would undermine individual
attorney’s experience and abilities, law firm billing procedures, and set an improper
precedence and expectation for future attorney fee claims. In sum, the Court approves the
requested hourly rates and the number of hours billed.
NRCC has not objected to the $95 in paralegal costs, nor the $232.25 in research
costs. The paralegal costs are in line with applicable rates and the Court finds the research
costs appropriate and recoverable. See Bjornson v. Dave Smith Motors/Frontier Leasing
& Sales, 578 F. Supp. 2d 1269, 1289 (D. Idaho 2008).
Finally, the Court will not award H1 Law Group a flat $3,500 for the preparation
of the instant Motion. The Court understands why H1 made the request, however, (1) the
Court will not award a flat fee rather than an hourly accounting; and (2) while the instant
motion and memorandum would not have been necessary absent the improper tactics of
NRCC and the Court’s decision granting Lakeview leave to seek sanctions, these fees are
not properly raised at this time. The Court’s award today makes Lakeview whole for
having to quash NRCC’s improperly issued subpoenas and obtain an additional
protective order. Lakeview is free to raise the fees and costs incurred by H1 Law Group
regarding these issues upon completion of this case if it is the prevailing party.

MEMORANDUM DECISION AND ORDER - 7

IV. ORDER
IT IS ORDERED:
1.

Lakeview’s Motion for Sanctions (Dkt. 83) is GRANTED IN PART AND
DENIED IN PART. All fees and costs will be awarded EXCEPT those
requested by H1 Law Group.

2.

The Court hereby awards Lakeview attorney fees in the amount of
$12,279.50 and costs in the amount of $232.25 for a total award of
$12,511.75.

3.

NRCC has 30 days to comply with this order.

DATED: May 15, 2018
_________________________
David C. Nye
U.S. District Court Judge

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