Curry v. Revolution Laboratoires, LLC et al

Filing 319

MEMORANDUM OPINION AND ORDER signed by the Honorable Matthew F. Kennelly on 1/23/2023: For the reasons described in the accompanying Memorandum Opinion and Order, the Court grants plaintiff's motion(s) for sanctions and imposes a monetary sanct ion of $82,770 in favor of plaintiff against defendants, jointly and severally. The monetary sanction must be paid in full by no later than February 13, 2023, and defendants are to file a notice of compliance by no later than February 14, 2023. In addition, plaintiff is directed to file by January 27, 2023 a submission of not more than five pages identifying any remaining documents covered by the Court's production orders that plaintiff believes defendants still have not produced. Defe ndants are directed to file by February 3, 2023 a response of not more than five pages. Attorney Timothy Novell's motion to withdraw is taken under advisement. Mr. Novell may file a response to his former law firm's December 29, 2022 submission by no later than January 30, 2023. Finally, the Court's order to show cause relating to contempt has been adequately dealt with by the present order and other previous orders and is therefore withdrawn without prejudice. (mk)

Case: 1:17-cv-02283 Document #: 319 Filed: 01/23/23 Page 1 of 15 PageID #:10115

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CHARLES CURRY,

)
)
Plaintiff,
)
)
vs.
)
)
REVOLUTION LABORATORIES, LLC, )
REV LABS MANAGEMENT, INC.,
)
JOSHUA NUSSBAUM, and
)
BARRY NUSSBAUM,
)
)
Defendants.
)

Case No. 17 C 2283

MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
This case is set for trial in mid-May 2023. There are sanctions-related matters
pending before the Court regarding defendants' delayed production and non-production
of financial information of various types. The Court rules on those matters via this
opinion and also addresses the motion to withdraw filed by one of defendants'
attorneys.
This is a lawsuit against an entity and two individual defendants, the Nussbaums,
for trademark infringement and related claims. Plaintiff Charles Curry seeks to recover,
among other things, the profits the defendants made from infringement. Plaintiff also
seeks punitive damages on his state-law claim and statutory damages under the
Lanham Act. On these latter points, the defendants' financial condition is a factor that is
considered.
Starting about a year ago, plaintiff sought financial records that would assist in

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showing the profits the defendants made from infringing sales and their financial status
generally. The information plaintiff requested is relevant on, if nothing ese, the points
just discussed relating to damages. Plaintiff's discovery requests led to the sanctions
issues that are now before the Court.
The Court's involvement in disputes regarding plaintiff's financial discovery
requests extends back to early March 2022. By September 2022, most of the
information plaintiff sought had been produced but, perhaps, not all of it. And what
defendants did produce essentially had to be dragged out of them bit by bit. Plaintiff
had to invoke the Court's authority repeatedly, in ways that would not have been
necessary had the defendants and their counsel not engaged in dilatory and, in some
instances, obstructive tactics.
The Court starts with a brief history of the relevant events. On March 1, 2022,
the Court granted plaintiff's motion to compel, which covered plaintiff's request for
information within the Nussbaums' possession, custody, or control regarding their
assets, net worth, income, and compensation. The Court ordered production in full by
March 15. The Court also authorized and directed time-limited depositions of both
Nussbaums regarding financial issues, to be completed by the end of March.
Following the Court's order, defendants produced some of the information
ordered but not all of it. Among other things, they did not produce a significant quantity
of bank records and tax returns. In addition, they produced no information regarding a
trust established by Barry Nussbaum—into which, it appears, significant revenues from
the defendant corporation have been funneled, and which apparently pays at least
some of Barry Nussbaum's living expenses. And in late March, without any advance

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notice, the Nussbaums failed to appear for their court-ordered depositions.
Plaintiff filed two motions for sanctions, one concerning the missing records and
one concerning the depositions. On April 15, 2022, the Court ordered defendants to
produce the missing financial discovery by April 29, ordered the Nussbaums to appear
for their depositions by May 6, and continued the motions for sanctions.
No new documents were produced by the April 29 deadline despite the plain
deficiencies in defendants' compliance with the Court's March 1 order. And at the May
6 depositions, Barry Nussbaum refused to answer questions regarding the assets in or
value of the trust, and Joshua Nussbaum (claimed at the time to be a beneficiary of the
trust and its "managing trustee") disclaimed any knowledge about the trust or its assets.
At a video hearing on May 24, 2022, at which the Court ordered the Nussbaums
to appear personally, the Court admonished them—not the first time defendants (via
counsel) had been admonished regarding discovery non-compliance—and ordered
them to produce copies of the trust agreement and resume their depositions on June 13
under the Court's direct supervision.
On June 10, the Court noted defendants' continued noncompliance with the
Court's production orders in various respects and ordered them and their counsel to
show cause why they should not be held in contempt. During this hearing, defendant's
counsel represented that the records of a particular bank account had been produced in
their entirety—so the Court did not include that in its show cause order—but it later
turned out this was false. In addition, the defendants did not produce until two days
later complete records from Barry Nussbaum's Central Pacific Bank account, despite
having told the Court on June 10 that they had produced those records in their entirety.

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Also at the June 10 hearing, the Court ordered the Nussbaums to pay the
attorney's fees and costs associated with their resumed deposition. The Nussbaums
complied with this in July 2022, paying a little over $20,000. See Dkt. nos. 265, 266.
As of June 24, 2022, all of the relevant tax returns had been produced, but
defendants had not yet produced the following records covered by the Court's earlier
production orders: complete records of Barry Nussbaum's First Hawaiian Bank
account, or any records for his California Bank and Trust account, the existence of
which had not even been disclosed until his June 13 continued deposition. In addition,
defendants and their counsel had continued to misrepresent information regarding the
trust and their access to information about it. More information about the trust came out
at the June 13 deposition. Based on the testimony, it appears that Barry Nussbaum,
despite claiming not to have access to information about the trust (which he set up in
the Cook Islands) or even the ability to obtain such information, regularly received
money from the trust based partly on his "personal needs." It also appears that the trust
owns Barry Nussbaum's home in Hawaii as well as significant other real estate. All of
this had taken months, and repeated motions and court directives, to be disclosed.
Even then, the Nussbaums continued to resist producing further information or
documents concerning the trust. There also remained other relevant financial
information either belatedly disclosed or not yet disclosed at all. See Dkt. no. 252 (Pl.'s
Mem. in Further Support of Mot. for Sanctions) at 12-13.
Plaintiff sought in his June 24 submission the following relief:
•

an instruction to the jury that the Nussbaums disobeyed multiple court orders to
produce documents and information regarding their finances and allowing the

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jury can infer that the information they failed to produce was unfavorable to them
and favorable to plaintiff;
•

an instruction to the jury that the net worth of each Nussbaum may be presumed
significant for purposes of punitive and statutory damages;

•

an order barring the Nussbaums from testifying about their finances;

•

an order precluding the Nussbaums from relying on the trust to minimize their net
worth or their compensation from the corporate defendant; and

•

attorney's fees and costs incurred by plaintiff relating to the financial discovery
and compliance efforts.

See Dkt. no. 252 at 14; see also Dkt. no. 284.
At a hearing on July 13, 2022, plaintiff's counsel reported that certain documents
within the scope of the Court's production order(s) remained unproduced by defendants.
These included certain records relating to assets of the trust; documents relating to a
supposed amendment of the trust that purportedly removed Barry Nussbaum as "trust
protector"; documents relating to Joshua Nussbaum's claimed resignation (post-lawsuit,
in November 2020) as the trust's managing trustee; documents relating to a claimed
restructuring of the trust—which was contended to have the effect of putting the trust's
assets out of reach; documents relating to the value of certain real estate holdings;
documents regarding certain business ventures reflected in the defendants' tax returns;
and complete documents relating to two other trusts disclosed for the first time during
Barry Nussbaum's continued deposition on June 13. During the July 13 hearing,
defendants' counsel denied that any further documents existed. The Court ordered the
parties to confer further on the document production issues.
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On June 29, 2022, the Nussbaums filed affidavits stating that they had produced
what amounted to the remaining records ordered by the Court that were in their
possession, custody, or control. See Dkt. nos. 255, 256. The defendants then filed a
memorandum stating that they had complied in full and that no preclusive or inferencetype sanctions should be imposed. See Dkt. no. 264.
The Court also stated, during the July 13 hearing, that the preclusive and
inferential sanctions sought by plaintiff should be addressed in a motion in limine to be
filed later. Plaintiff subsequently filed a motion in limine on this topic. At a hearing on
September 7, 2022, the Court overruled one aspect of plaintiff's requested relief,
denying his to request bar defendants from testifying or making arguments about their
assets. The Court tabled until closer to trial plaintiff's request for preclusive and
inferential sanctions. The Court took under advisement plaintiff's request for monetary
relief. The parties then filed further briefs regarding the amount of monetary sanctions
the Court should award.
What remains for the Court's determination, aside from the remaining
preclusive/inferential sanctions sought by plaintiff, is plaintiff's request for an award of
attorney's fees and costs. Plaintiff requests fees in the amount of $238,005 and
expenses of $1,460.45. Defendants argue that the request is overblown and unjustified
and should be overruled in its entirety on that basis. They also challenge certain
specifics of the requested fees.
More recently, Timothy Novell, one of the attorneys for defendants (and the one
who had carried the laboring oar with respect to the financial discovery and related
issues), moved to withdraw. In December 2022, just before Mr. Novell filed his motion

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to withdraw, another attorney from the same firm advised the Court during a hearing
that Mr. Novell had made erroneous statements to the Court. The Court told counsel to
put this in writing. Defense counsel's submission, filed on December 29, 2022, reported
that Mr. Novell had falsely stated to the Court (in a May 23, 2022 filing and a May 24,
2022 hearing) that the reason certain Nussbaum tax returns had not been produced
was that counsel had not received readable electronic versions. Defense counsel
reported that in fact, Mr. Novell had received fully readable copies of the tax returns as
early as March 15, 2022. See Dkt. no. 312.
Discussion
A.

Monetary sanctions
The Court begins with plaintiff's request for monetary sanctions. Plaintiff seeks

sanctions under Federal Rule of Civil Procedure 37(b)(2)(C), which states that a court
"must order the disobedient party, the attorney advising that party, or both to pay the
reasonable expenses, including attorney's fees, caused by the failure [to comply with a
court order]c, unless the failure was substantially justified or other circumstances make
an award of expenses unjust." Fed. R. Civ. P. 37(b)(2)(C); see Pl.'s Submission in
Further Support of Monetary Sanction at 2 (citing the Rule).
The defendants violated the orders of the Court in several respects, as detailed
earlier. In particular, they failed to produce documents responsive to plaintiff's
document requests that the Court enforced, which required further enforcement efforts
by plaintiff and by the Court. In addition, they failed to appear for their March 31
depositions without justification. There is no question that plaintiff is entitled to an
award of fees and costs under Rule 37.

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A party entitled to fees and costs under Rule 37 "should be made whole—should
be as well off as if the opponent had respected his legal rights in the first place."
Rickels v. City of S. Bend, 33 F.3d 785, 787 (7th Cir. 1994). But a court may impose
only the attorney's fees and costs that the party would not have paid for but for the
wrongdoing. See Goodyear Tire & Rubber Co. v. Haeger, 581 U.S. 101, 108 (2017).
And, equally significantly, Rule 37 by its terms permits recovery only of reasonable fees
and expenses.
As indicated, plaintiff seeks to recover $238,005 in attorney's fees and $1,460.05
in expenses. From a 30,000-foot level, this appears quite excessive. At rates of $750
for plaintiff's lead counsel and $570-$588 for plaintiff's other counsel, the total
represents around 400 hours of attorney time. 1 The fee request covers a period of
about four months, from mid-March through mid-July 2022. That's about seventeen
weeks, or a little over eighty workdays if holidays aren't included. The attorney time
claimed thus averages out to something like five hours per day for every day during the
relevant period.
To be sure, plaintiff was put to significant extra work due to defendants'
noncompliance and unjustified delays in compliance. He had to file repeated requests
and participate in several court hearings to secure compliance. And as materials
trickled in, plaintiff kept finding out about previously-undisclosed responsive materials,
requiring further efforts to obtain production—which was hardly ever forthcoming without
some coercion. But, in the Court's view, the amount of fees claimed is significantly

The Court cannot find in plaintiff's submission a total of the hours claimed for each
attorney, or even the total number of hours claimed, and it did not do a detailed
calculation on its own. Thus the approximation in the text.

1

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beyond the reasonable fees occasioned by defendants' noncompliance with court
orders. It is worth noting that although plaintiff's counsel had to prepare a number of
separate filings and participate in several hearings, these all involved a common or
overlapping set of points. The wheel didn't have to be reinvited with each filing; most of
what was required for court filings and hearings involved building on previous
submissions and discussions.
Plaintiff has broken down his fee request into a series of topics. The Court
addresses each in turn.
1.

Plaintiff claims 20.9 hours of attorney time—$12,452—for the twelve-page

motion for sanctions he filed on March 25, 2022. The filing of the motion was caused by
defendants' noncompliance with the Court's March 1 order, but the total time claimed
(translating to $1,000 per page) is not reasonably shifted to defendants given the
subject matter involved. The Court reduces this amount by one-half, to $6,226.
Plaintiff's reply brief on this same motion, which is nine pages long, results in a request
for $15,965 in attorney's fees (about $1,700 per page), representing over twenty-seven
hours in attorney time. This, too, is unreasonably excessive. The Court reduces this
amount by two-thirds, to $5,321.
2.

Plaintiff claims $36,552 (seventy-two attorney hours) for preparation for

the Nussbaums' March 31 depositions, for which they did not appear. The Court
disagrees with defendants' contention that this should not be compensated at all. The
depositions were ordered by the Court, and the time plaintiff reasonably spent on
preparation was almost entirely wasted due to defendants' failure to appear. But the
time claimed for preparation is excessive by quite a bit. For two one-hour depositions,

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plaintiff seeks a total of seventy-two hours of preparation time. The Court understands
that time would be needed to hone the questioning given the court-imposed time
limitation, but seventy-two hours is absurdly excessive. The Court will allow ten hours
of this time, at attorney Hailey's $588 rate, for a total of $5,880.
3.

A total of 14.6 hours of time, or $8,575, is claimed for plaintiff's April 1

sanctions motion regarding the defendants' non-appearance for their depositions.
That's outlandish; this was a simple matter to describe and bring to the Court's attention
(and the motion was filed just one day after the non-appearance). The Court reduces
this amount by three-fourths, to $2,143.
4.

Plaintiff unreasonably seeks $3,874 in fees—which translates to 6.4 hours

of attorney time—for a May 2, 2022 two-page notice updating the Court on discovery.
That's excessive; nothing anywhere close to that was reasonably required. The Court
reduces this by two-thirds, to $1,291. The Court also reduces by two-thirds the amount
claimed ($2,278) for a two-page filing on May 16 regarding the non-production of the
trust documents. The reduced amount is $759.
5.

Plaintiff requests a total of a bit over $42,000 in fees for the May 13, 2022

joint status report ($23,632) and his May 23, 2022 supplement to that report ($18,883).
These filings covered a significant amount of territory (the May 13 report was twenty
pages long and the May 23 report was seventeen), but they largely raked over old
ground and covered relatively straightforward points that had come up during the
ongoing proceedings. It appears that just short of thirty-six hours are charged for the
May 23 supplement and that thirty-seven hours are charged for the May 13 report. The
Court reduces the attorney's fees for these by two-thirds, to $14,171.

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Defendants contend that no fees should be imposed for these reports. The Court
disagrees. The May 13 status report amounted to a request to (again) compel
production of the financial records as ordered by the Court. As for the May 23 status
report, defendants argue the fees should not be shifted because the report involved
questions regarding production of trust-related records. But it is quite clear at this point
(and plainly was known to defendants all along, given their knowledge of the trust
arrangement) that documents involving the trust amount to financial records of the
defendants that were encompassed by the Court's March 2022 production order.
Among other things, the trust appears to have been funded at least to some extent by
payments from defendant Revolution (from which Barry Nussbaum apparently has
taken little or no salary or draw); the trust apparently finances some reasonably
significant part of Barry Nussbaum's living expenses; and Joshua Nussbaum is and has
been a beneficiary. One cannot with a straight face characterize records about the trust
as anything other than records regarding the defendants' assets and finances.
6.

The fees sought by plaintiff for preparation for and participation in several

court hearings during this period are unreasonably excessive. This includes $8,111
sought for the April 15, 2022 telephonic hearing (just under fourteen hours' worth),
which took just fifteen minutes; $9,927 for the May 18, 2022 telephonic hearing, which
lasted about thirty minutes; and $4,590 for the May 24, 2022 video hearing. The Court
cuts the fees for each of these by two-thirds, to $7,542.
7.

The Court declines to include in the sanctions award $5,814 in fees

claimed in relation to Barry Nussbaum's request to appear remotely for his deposition
due his health condition and $4,057 for the June 1, 2022 hearing on that motion. This

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time was not occasioned by the defendants' noncompliance with any court orders.
8.

Plaintiff seeks $3,293 (5.6 hours) for a June 8 status report—plaintiff's part

of the report was a little under six pages—and $4,677 for preparation for and
participation in a June 10 status hearing that took fifteen minutes. Reasonable time for
these matters is compensable because the report (and thus the hearing) amounted to a
further effort to compel production of documents sought by the Court. The amount
claimed for the report is reasonable, but the amounts claimed for the hearing is
unreasonably excessive. The Court reduces the latter amount by two-thirds (to $1,559).
The revised total is $4,852.
9.

Plaintiff filed on June 24, 2022 a memorandum in further support of his

sanctions motion that also addressed defendants' claims that, by then, they had
complied. The filing of this memorandum, which contained fifteen pages of text, was
reasonably caused by defendants' noncompliance with the Court's orders, but the
amount claimed, 49.6 hours for a total of $30,466, is unreasonably high. The Court
reduces this by two-thirds, to $10,155.
10.

For similar reasons, the Court reduces by two-thirds the amounts claimed

in connection with a relatively brief June 30, 2022 hearing ($2,587); a July 1, 2022
notice regarding ongoing noncompliance or delayed compliance ($1,125); and a July
13, 2022 telephonic hearing, which took about 20 minutes ($4,900). The reduced
amount is $2,870.
11.

For the period from mid-March through the end of June 2022, a total of

fifty-six hours of time ($32,402) is claimed for communication with defendants' counsel
regarding compliance issues and reviewing correspondence and submissions by

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defendants. Some of this actually amounts to deposition preparation time that
defendants elsewhere represented they were not seeking (Kane entry of 6.3 hours and
Hailey entry of 2.9 hours on 6/12/2022; Hailey entry of 3.9 hours and Kane entry of 0.4
hours on 6/13/2022); a lot of it actually relates date-wise to filings for which the Court
has already reduced the claimed amount to a reasonable sum for the preparation of
those filings; and some of it is occasioned by inter-attorney consultation among the
three attorneys representing Curry. Some of this consultation is reasonably necessary,
but it's not reasonable to shift all of it to defendants. This time is reduced by threefourths, to $8,100.
12.

Finally, the Court addresses the submissions plaintiff made in July and

August 2022 to quantify the requested monetary sanctions award. The Court has
reviewed those submissions extensively in connection with the present ruling. The
primary items are plaintiff's ten-page submission in further support of monetary
sanctions filed on June 22, 2022 and his fifteen-page reply brief filed on August 7, 2022.
These were significant submissions ordered by the Court and caused by defendants'
noncompliance with Court orders. But the Court can reasonably infer from its extensive
review of the billing already discussed that the total time and effort charged for these
would likely be in line with the amounts charged for earlier submissions, each of which
the Court has found unreasonably excessive and has reduced accordingly. The Court
sees no useful purpose in going through, or requiring counsel to go through, the time
and effort that would be required to brief the appropriate amount recoverable for these
submissions. The Court will allow a total of $12,000 for these filings. This amounts to
about twenty hours of attorney time at the rates of the lawyers who appear to be the

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principal drafters of plaintiff's written submissions.
13.

The total amount of attorney's fees the Court will award in favor of plaintiff

and against defendants is $81,310. Defendants have not challenged the requested outof-pocket costs, so the Court awards the requested costs in their entirety—$1,460. The
total monetary sanction is $82,770. These sanctions are imposed jointly and severally
against each of the defendants. On a couple of relatively discrete points, it appears that
some of the delay was due to attorney Novell, and it is at least possible that defendants'
non-production, delayed production, and failures to appear resulted from consultation
with counsel. On that, defendants and their counsel are free to address among
themselves who ultimately should be responsible for what. 2 That should not be
plaintiff's problem. The monetary sanctions are payable to plaintiff in full no later than
twenty-one days after the date this decision is issued.
B.

Preclusive and inferential sanctions
As the Court has previously indicated, it will address plaintiff's request for

preclusive and inferential sanctions at a point closer to trial. In this regard, plaintiff is
directed to file by January 27, 2023 a submission of not more than five pages describing
any remaining documents covered by the Court's production orders that plaintiff
believes defendants still have not produced. Defendants are directed to file by February
3, 2023 a response of not more than five pages.

The Court reserves the possibility, in connection with attorney Novell's motion to
withdraw, of making Mr. Novell jointly and severally liable for some part of the fee award
associated with his alleged misrepresentations to the Court or otherwise sanctioning
him.
2

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C.

Novell motion to withdraw
Before addressing Mr. Novell's motion to withdraw, the Court needs to consider

the contentions made by his (now former) law firm regarding certain representations Mr.
Novell made to the Court. Mr. Novell may file a response to the law firm's submission
by no later than January 20, 2023. The Court will deal with the motion to withdraw and
any sanctions or proceedings resulting from Mr. Novell's claimed misconduct after that.
Conclusion
For the reasons described above, the Court grants plaintiff's motion(s) for
sanctions and imposes a monetary sanction of $82,770 in favor of plaintiff against
defendants, jointly and severally. The monetary sanction must be paid in full by no later
than February 13, 2023, and defendants are to file a notice of compliance by no later
than February 14, 2023. In addition, plaintiff is directed to file by January 27, 2023 a
submission of not more than five pages identifying any remaining documents covered
by the Court's production orders that plaintiff believes defendants still have not
produced. Defendants are directed to file by February 3, 2023 a response of not more
than five pages. Attorney Timothy Novell's motion to withdraw is taken under
advisement. Mr. Novell may file a response to his former law firm's December 29, 2022
submission by no later than January 30, 2023. Finally, the Court's order to show cause
relating to contempt has been adequately dealt with by the present order and other
previous orders and is therefore withdrawn without prejudice.
Date: January 23, 2023
_______________________________
MATTHEW F. KENNELLY
United States District Judge

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