Beyond Systems, Inc. v. World Avenue USA, LLC et al
Filing
680
ORDER granting 478 Motion for Attorney Fees ; awarding Plaintiffs fees in the total of $5,580.00. Signed by Magistrate Judge Charles B. Day on 5/18/2011. (rank, Deputy Clerk)
UNITED STATES DISTRICT COURT
DISTRICT OF MARYLAND
CHAMBERS OF
CHARLES B. DAY
UNITED STATES MAGISTRATE JUDGE
U.S. COURTHOUSE
6500 CHERRYWOOD LANE
GREENBELT, MD 20770
(301) 344-0393
FAX (301) 344-0394
May 18, 2011
VIA ELECTRONIC FILING
Stephen Howard Ring, Esq.
Stephen H. Ring, PC
506 Main Street, Suite 215
Gaithersburg, MD 20878
Sanford M. Saunders, Jr., Esq.
Nicoleta Burlacu, Esq.
Greenberg Traurig, LLP
2101 L Street, NW, Suite 1000
Washington, DC 20037
Michael Stephen Rothman, Esq.
Law Office of Michael S. Rothman
401 East Jefferson Street, Suite 201
Rockville, MD 20850
John L. McManus, Esq.
Kenneth A. Horky, Esq.
Greenberg Traurig, PA
401 East Las Olas Blvd, Suite 2000
Fort Lauderdale, FL 33301
Re: Beyond Systems, Inc. v. World Avenue USA, LLC, et al.
Civil Action No.: PJM-08-921
Dear Counsel:
The Court has received Petitioner’s World Avenue USA, LLC’s Application As to
Amount of Attorney’s Fees (ECF No. 478) (“Defendant’s Request”). The Court has reviewed
Defendant’s Request and all related briefings. No hearing is deemed necessary. Local Rule
105.6 (D. Md.). For the reasons stated below, the Court GRANTS Defendant’s Request in the
amount of $5,580.00.
Defendant seeks $12,334.68 in attorneys’ fees and costs in connection with the Motion to
Compel Complete Answers to Third Set of Interrogatories.1 The award to Defendant was
specifically for attorney’s fees and costs “incurred in connection with its Motion.” (ECF No.
444). Defendant’s Request arises under Fed. R. Civ. P. 37(a)(5)(A). This rule regarding
discovery abuses states that: “[i]f the motion is granted . . . the court must, after giving an
opportunity to be heard, require the party . . . whose conduct necessitated the motion . . . to pay
the movant’s reasonable expenses incurred in making the motion, including the attorney’s fees.”
1
Defendant discusses other rulings issuing sanctions against Plaintiff in this case and a case in another jurisdiction.
For the purpose of the instant award, the Court will confine the focus to Defendant’s efforts related to Defendant’s
Third Motion to Compel Complete Answers to Third Set of Interrogatories.
Beyond Systems, Inc. v. World Avenue USA, LLC
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May 18, 2011
Plaintiff, Beyond Systems, Inc., (“BSI”), attempts to position itself under two of the three
exceptions mentioned in Rule 37. The relevant portions state that the court shall not order
payment if: “the opposing party’s nondisclosure, response, or objection was substantially
justified,” or “other circumstances make an award of expenses unjust.” Fed. R. Civ. P.
37(a)(5)(A)(ii)-(iii). Plaintiff claims that it was substantially justified “in that the response
included the production of the documents described above, which substantially satisfied the
requests.”
The Court notes that under the rule, late production is not a recognized exception. The
underpinnings of the “substantially justified” prong involve a genuine discovery dispute. See
Fed. R. Civ. P. 37 advisory committee’s note (1970) (stating that “Rule 37 provides generally for
sanctions against parties or persons unjustifiably resisting discovery.” It goes on to state that in
“many occasions, to be sure, the dispute over discovery between the parties is genuine . . . [i]n
such cases, the losing party is substantially justified in carrying the matter to court.”); See also
Bank of Mong. v. M&P Global Fin. Servs., Inc., 258 F.R.D. 514, 522 (S.D. Fla. 2009) (where
the Court awarded fees and noted that counsel conceded its failure to comply with discovery
requests was not substantially justified.) Plaintiff raises no legitimate basis for resisting
discovery. Rather Plaintiff seeks mercy from the Court for the burden imposed in trying to
comply with the discovery requested by Defendant. In this instance, this is not a reasonable
argument and is therefore outside the scope of what is contemplated by the Rule. The Court
finds that Plaintiff is not excused from paying expenses associated with Defendant’s motion on
the basis Plaintiff’s conduct was “substantially justified.”
Plaintiff also claims “other circumstances” existed “in the form of rapid succession of
discovery motions and other motions as reflected in the docket entries, creating time demands
that impaired the drafting of more elaborate written responses.” Both parties have engaged in a
prolific flurry of filings in this case. Plaintiff cannot cloak itself in the mantel of being a victim
of something it shared equally in creating. Finally Plaintiff notes that the “bulk of the
information sought had been obtained prior to the filing of the Motion.”
The Court fails to see how these “other circumstances” in anyway factor in to make an
award here unjust. The Court also finds unpersuasive Plaintiff’s argument that the substance of
the production was largely responsive to Defendant’s request.
Plaintiff next suggests that this Court should apply the principle of proportionality that it
applied in another case. In EEOC v. Bardon, Inc., 2010 WL 989051 (D. Md. 2010) (Slip Copy),
the Court’s award was based on a finding that the defendant prevailed upon 52% of its motion to
compel. In the instant matter, the Court makes no such finding of partial victory and finds no
reason to reduce the award. In awarding fees, the Court said: “Plaintiff shall provide full and
factual responses to all interrogatories, signed under oath, within seven (7) days. Plaintiff’s
failure to do so before the serving of Defendant’s Motion is unacceptable and is singularly
sufficient for the award of sanctions.” Therefore, the Court rejects Plaintiff’s proportionality
argument.
Beyond Systems, Inc. v. World Avenue USA, LLC
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May 18, 2011
I. Calculation of Fees
This Court uses a lodestar analysis to determine attorneys’ fees awards, an analysis which
involves multiplying a reasonably hourly rate by the number of reasonable hours expended.
Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th Cir. 2009), citing Grissom v.
Mills Corp., 549 F.3d 313, 320 (4th Cir. 2008). Reasonableness is key in the analysis and the
twelve Johnson factors guide the Court in determining what are “reasonable” hours and rates.
The twelve Johnson factors are:
(1) time and labor expended; (2) the novelty and difficulty of the questions raised; (3) the
skill required to properly perform the legal services rendered; (4) the attorney’s
opportunity costs in pressing the instant litigation; (5) the customary fee for like work: (6)
the attorney’s expectation at the out-set of the litigation; (7) the time limitations imposed
by the client or circumstances; (8) the amount in controversy and the results obtained; (9)
the experience, reputation and ability of the attorney; (10) the undesirability of the case
within the legal community in which the suit arose; (11) the nature and length of the
professional relationship between attorney and client; (12) attorneys’ fees awards in
similar cases.
See Robinson, 560 F.3d at 243; Barber v. Kimbrell’s Inc., 577 F.2d 216, 226, n.28 (4th Cir.
1978) (where the court adopted the factors established in Johnson v. Ga. Highway Express, Inc.,
488 F.2d 714 (5th Cir. 1974), abrogated on other grounds by Blanchard v. Bergeron, 489 U.S. 87
(1989)). In determining the reasonableness of the fees requested, the Court also relies upon the
Guidelines in Appendix B, of the Local Rules (D. Md.) (the “Guidelines”), which will be
discussed in greater detail below.
For the analysis in the instant case, the Court finds Johnson factors one, two, three and
nine most persuasive. Turning to factor one, it is clear that the amount of time and effort
invested by Defendant’s attorneys was significant. Factor two is applicable because this case
involves some unique challenges, especially those that stem from the underlying controversy:
whether certain emails were sent by a particular corporate entity or received by a particular email
address. Factor three is relevant because of the various parent and subsidiary corporate identities
implicated. Finally, the experience, reputation and ability of the attorney will be a relevant factor
in virtually every case. The more experienced an attorney, the more efficiently he or she is
expected to perform. Likewise, one would expect the more experienced attorney to charge
higher fees when compared to an inexperienced attorney.
Defendant’s primary support of the reasonableness of the billing rates of counsel is
offered by the declarations of two attorneys: Sanford M. Saunders, Jr. and John L. McManus.2
Standing alone, the Court finds these declarations are insufficient. Parties seeking fee awards
generally must submit affidavits from non-trial counsel attesting to the reasonableness of their
rates. In addition, Defendant provides an article from The National Law Journal. This document
2
An affidavit is also provided by Dr. Neal A. Krawetz, who is presented as an ESI expert. This will be covered in
Section V Costs.
Beyond Systems, Inc. v. World Avenue USA, LLC
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May 18, 2011
provides a list of law firms and the rates charged by partners therein. This is offered as support
for the general fees charged in the geographic market. However, it does not speak to the issue of
what is customary in the particular area of law involved here. Defendant also provides a
summary chart, stating the date, the name of the attorney, a description of the task being
performed, the amount of hours to complete said task or tasks, and the total being charged, which
synthesizes the redacted copies of time records kept. Ultimately the appropriate amount for an
award of attorney’s fees is a matter that is left to the discretion of the Court. Both the
reasonableness of the hourly billing rates and the reasonableness of the hours incurred are
discussed in turn.
II. Reasonable Billing Rate
When submitting a fee petition, a party should submit affidavits from other attorneys
attesting to the reasonableness of the hourly rates. Robinson, 560 F.3d at 245; Grissom, 549
F.3d at 323. In both cases, the Fourth Circuit found that the moving party had not provided
sufficient evidence of the reasonableness of the hourly rates proposed and both cite the use of
affidavits as the preferred method of doing so. The Grissom court stated that the affidavits were
necessary because they ensured that the hourly rates requested by the party “coincided with the
then prevailing market rates of attorneys in the Eastern District of Virginia of similar skill and
for similar work, which our case law required him to do.” Grissom, 549 F.3d at 323. See also
Robinson, 560 F.3d at 245.
While affidavits are the preferred evidence of understanding reasonableness in the
context of prevailing market rates, “in the absence of sufficient documentation, the court may
rely on its own knowledge of the market.” Costar Grp. v. Loopnet, Inc., 106 F. Supp. 2d 780,
788 (D. Md. 2000). See also Hensley v. Eckerhart, 461 U.S. 424, 433 (inadequate information is
not necessarily fatal; a court may instead adjust fees accordingly). The Court may supplement
with its own knowledge because it “is itself an expert on the question of reasonableness and . . .
may form an independent judgment either with or without the aid of witnesses as to value.” Id.,
at 788 (quoting Campbell v. Green, 112 F.2d 143, 144 (5th Cir. 1940)). In the District of
Maryland, this market knowledge is embedded in the Rules and Guidelines for Determining
Attorneys’ Fees in Certain Cases, Appendix B, Local Rules (D. Md.) (the “Guidelines”). This
Court’s Local Rules are instructive on the range of reasonable hourly rates based on counsel’s
years of experience. While the Guidelines are not binding, generally this Court presumes that a
rate is reasonable if it falls within these ranges.3 In light of this, Defendant has provided
3
Footnote 6 in Appendix B, Local Rules (3) provides important insight regarding the purpose and use of the fee
ranges in the Local Rules:
These rates are intended solely to provide practical guidance to lawyers and judges when requesting,
challenging and awarding fees. The factors established by case law obviously govern over them. One
factor that might support an adjustment to the applicable range is an increase in the cost of legal services
since the adoption of the guidelines. The guidelines, however, may serve to make the fee petition less
onerous by narrowing the debate over the range of a reasonable hourly rate in many cases.
Beyond Systems, Inc. v. World Avenue USA, LLC
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May 18, 2011
sufficient information for this Court to determine whether the proposed attorneys’ fees are
reasonable.
Defendant has not presented the Court with anything that persuades it to deviate from the
figures provided in the Guidelines. While Defendant notes cases decided in the Fourth Circuit
and in the District of Maryland that found the situation warranted going beyond the rates
published in the Local Rules, those cases are each distinguishable. These cases notwithstanding,
the result here would remain the same as Defendant has not demonstrated a satisfactory basis to
permit rates higher than the Guidelines under these circumstances. Further, even if the Court
were to conclude that said cases were binding, Defendant fails to show how the situation in those
cases is analogous to the circumstances here, thus warranting the fees it seeks to recover here.
Below, the three attorneys who participated in Defendant’s Request are discussed in turn.
Nicoleta Burlacu graduated from law school in 2000. She received her L.L.M. in 2006.
It appears from Mr. McManus’ Declaration that she then worked for Greenberg Traurig, LLP
from 2006 to 2008. She was admitted to the New York bar in 2008. While the Guidelines are
fashioned in terms of “years admitted to the bar,” the Court accepts Defendant’s representation
that she has ten years of experience and includes her international law experience for purposes of
determining her reasonable hourly billing rate. As such, the Court finds $290.00 per hour
reasonable as it is within the Guidelines.
Kenneth Horky has 24 years of experience. The Guidelines provide that $275-440 is
reasonable for an attorney with more than 15 years of experience. Defendant does not provide
the Court with any evidence or other information that persuades it to go beyond the range
provided by the Local Rules. Therefore the Court finds the reasonable rate for Mr. Horky is
$400.00 per hour for the work performed in connection with Defendant’s Request.
John McManus has 13 years of experience. The Guidelines provide that the reasonable
rate for an individual with his experience is between $225 – 300. As such the Court will apply a
rate of $300.00 per hour for the work performed in connection with Defendant’s Request.
III. Reasonable Hours
Defendant has the burden of demonstrating that the fees and hours requested are
reasonable. Costar Group, 106 F. Supp. 2d at 788. Contemporaneous time records are the
preferred method to account for the hours requested by a moving party. Costar Group, 106 F.
Supp. 2d at 788. However, summary charts can be sufficient. Id. (Noting a summary chart was
adequate, though contemporaneous time records are ideal). An adequate summary chart must
include enough information for the Court to rule on the reasonableness of the award; “the records
must specify, for each attorney, the date, the hours expended and the nature of the work done.”
Appendix B, Local Rules (3) n.6 (D. Md.).
Beyond Systems, Inc. v. World Avenue USA, LLC
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May 18, 2011
Id. Cf. Hensley v. Eckerhart, 461 U.S. 424, 437 n. 12 (1983) (a party “is not required to record
in great detail how each minute of his time was expended. But at least counsel should identify
the general subject matter of his time expenditures.”). Here, Defendant provides both
contemporaneous time records and a summary chart, which together provide an adequate
description of each task worked on, the attorney working on the task, the date, and the amount of
time spent on the specific task. The Court provides a summary of those invoice entries below.
NAME
Nicoleta Burlacu, Esq.
Kenneth Horky, Esq.
John McManus, Esq.
HOURS
2
2
14
TOTALS
RATE
$290.00/hr
$400.00/hr
$300.00/hr
28.5
AMOUNT
$580.00
$800.00
$4,200.00
$5,580.00
V. Costs
Defendant seeks $4,590.68 for costs associated with its motion. These include expert
fees of Dr. Neal A. Krawetz in the amount of $4,562.50 and $28.18 for a Federal Express
delivery. According to Dr. Krawetz’s declaration, he was “engaged by [Defendant] to provide
expert opinions in connection with this litigation.” In addition, he indicates that he “reviewed
the matter, communicated with counsel, reviewed documents, and worked on a responsive
Declaration in opposition to the Declaration of Paul A. Wagner.”
The Court finds the declaration provided by Dr. Krawetz to be inadequate for the
purposes of an award of “costs.” With regards to the reasonableness of his hourly rate, Dr.
Krawetz states:
My hourly rate is $250.00 per hour, and that is the rate that I charge for all
litigation matters. Based on my knowledge, this is a reasonable hourly rate for
experts in this subject matter. Specifically, I have personal knowledge that one of
[Plaintiff’s] experts who submitted a report in this case stated that he bills at a rate
of $400 per hour.
In addition, Dr. Krawetz does not provide any information regarding his educational
background or his experience. See Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497
(D. Md. 2010) (finding that Defendant’s ESI expert left “much to be desired,” the court found
Plaintiff’s ESI expert’s testimony to be credible, noting that by contrast “Plaintiff’s ESI expert . .
. has passed Microsoft tests, teaches a college-level computer forensic course, and has worked on
computers professionally since 1993.”)
The Court recognizes that it may be difficult to provide support that a particular rate is
reasonable in the context of ESI experts. Costs can vary among geography and the various
vendors. However, until such time that reliable independent sources are produced, which afford
the courts with some basis for reasonableness within the industry, affidavits of ESI experts
Beyond Systems, Inc. v. World Avenue USA, LLC
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May 18, 2011
should include at a minimum the expert’s education, publications, and other relevant background
information . In addition, the expert should provide some indication of what other similarly
situated experts (i.e. same educational and experience) are charging. That said, it is not entirely
clear from the face of Dr. Krawetz’s declaration what his expertise is or why he was “engaged.”
From the record before the Court at best it appears he reviewed documents for Defendant.
Defendant sites ASIS Internet Services v. Optin Global, Inc., 2010 WL 2035327 (N.D.
Cal. 2010) as an example involving an award of attorney’s fees in a spam email case. The court
awarded attorneys’ fees in the amount of $806,978.84. The court concluded that “while ASIS
may not have acted out of bad faith in initiating litigation against Azoogle, it at least acted
unreasonably.” Id. at *4. So in reaching its award, the court reasoned that “an award of
attorneys’ fees here is necessary to deter ASIS and other plaintiffs hoping to profit under the
CAN-SPAM Act [of 2003, 15 U.S.C. §§ 7701 et seq.] from casting such a wide net.” Id. The
court found the rates charged were reasonable “based on its familiarity with the prevailing rates
in this district.” Id. at * 6.
Interestingly, Azoogle also asked the court to award fees for its expert. In accordance
with the “general rule,” the court noted that expert fees are not recoverable under the CANSPAM Act. Specifically the court declined to award “expert fees under the CAN-SPAM Act as
it has found nothing in the statute or the case law indicating a clear intent on the part of Congress
to override the general rule that expert fees are not available except as allowed under 28 U.S.C.
§ 1821.” Id. at *6. The Court notes that this statute permits witness fees of a “witness in
attendance at any court of the United States . . . or before any person authorized to take his
deposition pursuant to any rule or order of a court of the United States, shall be paid the fees and
allowances provided by this section.” 28 U.S.C. § 1821(a)(1). Here Dr. Krawetz did not testify
in any court of the United States or at a deposition. That is not to suggest that experts cannot be
compensated but that in these circumstances, such is not appropriate. Further, under Rule 37, the
point of the sanctions is to compensate attorneys for the effort of having to file an unnecessary
motion. While the declaration and supporting motion detail the expert’s efforts, presumably
such work would have been done in preparation for trial.
VI. Conclusion
For the reasons stated herein, the Court awards Plaintiffs fees in the total of $5,580.00.
Despite the informal nature of this letter, it should be flagged as an opinion and docketed as an
Order of the Court.
_________/s/_____________
Charles B. Day
United States Magistrate Judge
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