Smith v. Bradley Pizza, Inc. et al
Filing
159
ORDER denying 138 Motion to Compel; granting in part and denying in part 144 Motion to Compel. See Order for details. (Written Opinion) Signed by Magistrate Judge Katherine M. Menendez on 11/13/2018. (BJP)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Scott Smith,
Case No. 0:17-cv-2032-ECT-KMM
Plaintiff,
v.
ORDER
Bradley Pizza, Inc., Pamela M. Dahl,
Defendants.
This is an action by Scott Smith seeking injunctive relief under Title III of the
Americans with Disabilities Act. The lawsuit involves Mr. Smith’s allegations that
there are several architectural barriers to access at the public accommodation owned
and operated by the Defendants, Bradley Pizza, Inc., and Pamela Dahl. Generally
speaking, Mr. Smith’s position is that the Defendants have failed to bring the parking
lot and entryway into compliance with the applicable legal requirements under the
ADA and the ADAAG. The Defendants assert that Mr. Smith lacks standing to bring
his claim, that the remediation he requests is not readily achievable, and that he comes
to the suit with unclean hands, among other defenses.
The litigation is now before the Court on the parties’ competing motions to
compel discovery (Pl.’s Mot., ECF No. 138; Defs.’ Mot., ECF No. 144). The Court
held a hearing on the parties’ motions on October 30, 2018. Based on the briefing, the
declarations and exhibits submitted by the parties, oral argument, and the Court’s
familiarity with this lengthy and contentious litigation, Mr. Smith’s motion is denied,
and the Defendants’ motion is granted in part and denied in part.
I.
Relevant Procedural History and Rule 37
As with all civil matters on the Court’s docket, the Court has attempted to
manage this case to ensure its “just, speedy, and inexpensive” resolution. Fed. R. Civ.
P. 1. In an effort to keep costs for both sides under control, the Court encouraged the
parties to use an informal process to help resolve discovery and other pretrial
disputes. However, the parties used the informal process with such a combination of
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frequency and acrimony that it appeared the informal dispute process may have been
worsening rather than alleviating the contentiousness of the litigation. This ultimately
led the Court to advise counsel in an October 3, 2018 letter that because this case
generated an unreasonable number of disputes, the Court would require all future
discovery disagreements to be raised by formal motion. (ECF No. 137 at 1.) The
Court further instructed counsel that it would “seriously consider requiring a payment
of expenses by the non-prevailing party pursuant to Rule 37(a)(5)” if they were unable
to work matters out on their own without the need for formal motion practice. (Id.
at 3.)
Rule 37 provides that if a party fails to answer an interrogatory submitted under
Rule 33 or to produce documents pursuant to a request under Rule 34, the party
seeking discovery may move for an order compelling an answer or production. Fed.
R. Civ. P. 37(a)(3)(B)(iii)–(iv). The Rule further provides that if a motion to compel is
denied, a court “must, after giving an opportunity to be heard, require the movant, the
attorney filing the motion, or both to pay the party … who opposed the motion its
reasonable expenses incurred in opposing the motion, including attorney’s fees”
unless the “motion was substantially justified or other circumstances make an award
of expenses unjust.” Fed. R. Civ. P. 37(a)(5)(B). In deciding whether a motion was
substantially justified, the Court considers whether a party’s “‘position was justified in
substance or in the main—that is, justified to a degree that could satisfy a reasonable
person. To warrant such a characterization, the position must have reasonable basis
both in law and fact.” In Re Nat’l Hockey League Players’ Concussion Injury Litig., MDL
No. 14-cv-2551 (SRN/BRT), 2017 WL 3276873, at *2 (D. Minn. July 31, 2017)
(discussing substantial justification issue under Rule 37 and quoting Conklin v. Astrue,
282 Fed. App’x. 488 (8th Cir. 2008)).
II.
Plaintiff’s Motion
Mr. Smith’s motion addresses two issues. First, he argues that Ms. Dahl failed
to sign the initial set of answers to his interrogatories. Second, Mr. Smith seeks to
compel the production of financial information from both Ms. Dahl and Bradley
Pizza. Both requests are denied.
A. Signed Interrogatory Answers
Mr. Smith’s motion to compel Ms. Dahl to sign answers to the initial set of
answers to interrogatories served in this matter is meritless. The parties’ briefing and
2
the discussion at the hearing confirmed that Ms. Dahl has signed supplemented and
amended answers to interrogatories, which effectively supersede any earlier answers.
Moreover, those earlier interrogatories were propounded before Ms. Dahl was even
served with this lawsuit.1 Under these circumstances, Mr. Smith has not shown that
Ms. Dahl failed to comply with a discovery obligation, and he is not entitled to an
order compelling her to sign the initial interrogatory responses.
As to this issue, the Court finds that the fee shifting contemplated by
Rule 37(a)(5) is appropriate. Mr. Smith articulated no reason why a signature for the
now-superseded initial answers is required. The Court finds that this portion of the
motion to compel lacks any basis in law or fact and is unnecessary and frivolous.
Therefore, as explained at Part I.C. below, the plaintiff, plaintiff’s counsel, or both are
required to pay the expenses incurred by the Defendants in responding to the motion.
B. Production of Financial Information
Mr. Smith also moved to compel financial information from both Ms. Dahl
and Bradley Pizza, arguing that their financial positions are relevant to their
contention that certain remediation sought at the property is not “readily achievable”
within the meaning of the ADA. The Court discusses the Defendants separately.
1. Pamela Dahl’s Financial Information
With respect to Ms. Dahl, the motion is denied and an award of expenses is
warranted pursuant to Rule 37(a)(5). In their response to the motion, the Defendants
have shown that the requests for production of financial information from Ms. Dahl
were not served until October 9, 2018, and an agreement had been reached that the
responses to the requests were not due until October 31, 2018. Because this
information was not due until well after the motion to compel was filed on October
12, 2018, Mr. Smith’s motion was premature and unnecessary. Plaintiff’s decision to
request court intervention on this issue when the discovery responses were not
At the hearing, plaintiff’s counsel raised, for the first time, that Ms. Dahl has
not provided the supplemental and amended answers to interrogatories that are
signed under oath. This issue is not properly before the Court because plaintiff did
not base its motion on the oath requirement or raise this issue prior to the hearing.
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overdue suggests an improper motivation in filing the motion. The plaintiff presents
no substantial justification for raising this issue prematurely.
2. Bradley Pizza’s Financial Information
Bradley Pizza argues that its financial information is irrelevant because it is
merely a tenant of the building owned by Ms. Dahl; pursuant to the terms of its lease,
Bradley Pizza does not have responsibility for the repair or maintenance of the
parking lot, the exterior doorway, and other common areas outside its pizza
restaurant. Therefore, it asserts that its financial condition is not relevant to any issue
involved in the litigation. After careful review, the Court agrees.
Addressing the relevance objection at the hearing, counsel for Mr. Smith cited
Botosan v. Paul McNally Realty, 216 F.3d 827 (9th Cir. 2000), and Kreisler v. Second Ave.
Diner Corp., et al., No. 10-cv-7592 (RJS), 2012 WL 3961304 (S.D.N.Y. Sept. 11, 2012).
Mr. Smith argues that these cases stand for the proposition that a party is not
permitted, via contract, to escape its responsibilities for compliance with the ADA. It
follows, plaintiff contends, that Bradley Pizza can still be held responsible for
achieving ADA compliance even though its lease allocates the obligation for exterior
and parking-lot issues to Ms. Dahl. Therefore, Mr. Smith asserts that Bradley Pizza’s
financial condition is discoverable because the resources of a defendant inform the
court’s calculus for whether certain remediation is readily achievable. Unfortunately
for Mr. Smith, the Court is not persuaded that either case supports his position.
The issue in Botosan was whether the owner or landlord of a facility could avoid
liability under the ADA by shifting the responsibility for maintenance or repairs to its
tenant pursuant to the terms of a lease. 216 F.3d at 832–34. The Botosan court held
that the lease agreement between the owner and the tenant “did not transfer all
liability for ADA compliance to the lessee.” Id. at 834. It did not hold that a lease
could never determine whether a landlord or tenant has responsibility for ADA
compliance. Here, Bradley Pizza is the tenant and the question is whether it has
responsibility for ADA compliance in common areas over which it contractually has
no control, namely the parking lot and exterior. Botosan does not even suggest that the
ADA prevents such an allocation of responsibilities for ADA compliance between a
landlord and a tenant. Cf id. at 833 (citing Independent Living Resources v. Oregon Arena
Corp., 982 F. Supp. 698, 767 (D. Or. 1997), supplemented by, 1 F. Supp. 2d 1159 (D. Or.
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1998) (holding that the landlord, rather than the tenant, is responsible for ADA
compliance in common areas)).
The Kreisler decision does not support Mr. Smith’s position either. Not only was
this issue nowhere addressed in the order, but unlike this case, Kreisler involved claims
regarding compliance within the restaurant operated by the tenant of the building. See
2012 WL 3961304, at *1 (summarizing access issues involving both the exterior and
interior of the restaurant). In contrast, this case is limited to issues with the parking lot
and entry area of the building, areas controlled by the landlord alone. Kreisler is
inapplicable.
Mr. Smith also cites Heinzl v. Starbucks Corp., No. 2:14-cv-1316, 2015 WL
2371436 (W.D. Pa. May 18, 2015), in support of his argument that Bradley Pizza’s
financial information is relevant. He suggests that the Heinzl court held “that
Starbucks could not escape ADA liability with respect to parking spaces it leased from
its landlord.” (Pl.’s Letter at 1.) A close reading of Heinzl illustrates why the case is not
helpful to Mr. Smith. The Heinzl court addressed Starbucks’ motions for
reconsideration of the rejection of its earlier requests for protective orders to limit
discovery. Starbucks was the tenant at the locations in dispute. It had asked the court
to issue protective orders “on grounds that Starbucks did not control or occupy the
parking lots where the alleged ADA violations existed….” 2015 WL 2371436, at *1–2.
That argument also formed the basis for Starbucks’ motion to dismiss, but the court
denied the motion to dismiss, reasoning that the Starbucks lease with its landlord
could not be considered on a motion to dismiss because it was beyond the pleadings.
Id. at *1. The court found that, at the motion to dismiss phase, it was “premature to
examine the leases and determine the amount of control Starbucks has over the
parking lots.” Id. at *3. Contrary to Mr. Smith’s contention, the Heitzl court did not
reach the question at that time regarding whether Starbucks’ lease in fact precluded its
liability for ADA compliance in the parking lot.
In marked contrast, this Court is not being asked to decide a motion to dismiss,
but to determine whether Bradley Pizza’s financial position is relevant to the claims or
defenses in this action. Here, we are well past the pleadings stage and the lease is fair
game for the Court to consider in deciding this discovery dispute. The relevant
portion of the Heinzl decision is simply inapposite.
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Instead, an examination of the lease resolves the discovery dispute before the
Court. The lease provides that Bradley Pizza leases approximately 1600 square feet of
commercial space to operate a pizza restaurant “together with not less than 10
unassigned … spaces of the parking lot adjoining the premises for” Bradley Pizza’s
use. (Lease Agreement, Article 1, ECF No. 154.) The lease also clearly requires the
landlord to ensure that construction of improvements “to the premises or the
building and site which contain the premises” comply with “all laws, ordinances,
regulations, statutes or other governmental regulatory schemes, no matter how
designed.” (Lease Agreement, Article 2.b.) That duty specifically includes the
landlord’s agreement that it “has the specific obligation to comply with the Americans
with Disabilities Act and all regulations promulgated thereto at its own expense.” (Id.)
Further, the lease clearly provides that the landlord has the responsibility for keeping
and maintaining all common areas, including the parking lot. (Id., Article 8.f.)
Moreover, the lease assigns responsibility for maintenance and repairs to the exterior
of the premises exclusively to the landlord, not Bradley Pizza. (Id., Article 8.a.)
These provisions of the lease clearly show that Bradley Pizza has neither
control over nor responsibility for any maintenance or improvements relating to the
parking lot and exterior spaces at issue, including the sidewalk, the access aisle, and
the exterior door. Even if documents showing Bradley Pizza’s financial information
revealed that Bradley Pizza could afford to make the improvements Mr. Smith
requests, because Bradley Pizza does not control the exterior areas and parking lot, its
financial health has no bearing on the readily-achievable defenses in the circumstances
of this case. Mr. Smith has pointed to nothing in the record that would suggest
Bradley Pizza has responsibility for the exterior and common areas that are at issue in
this litigation notwithstanding these provisions in the lease. Nor has he offered any
relevant authority to suggest that Bradley Pizza’s financial condition is relevant under
these circumstances.
Mr. Smith suggests that finding this information is irrelevant based on the
terms of the lease intrudes on merits decisions that are the ultimate province of the
District Court on a dispositive motion. (Pl.’s Letter at 1–2 (“Smith is not asking the
Court to make a dispositive determination regarding Bradley Pizza’s liability on
Smith’s ADA claim in this case. That is an issue that [is] properly reserved for the
district court’s order on a dispositive motion.”).) Here the Court does not determine
the merits of the readily-achievable affirmative defense asserted by the Defendants in
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this litigation. Rather the Court has concluded, based on the specific facts of this case
and the clear language of the lease, that Bradley Pizza’s financial condition has no
bearing on the outcome of the readily-achievable defense.
In sum, the Court finds that Bradley Pizza’s financial information is not
relevant and Mr. Smith’s motion to compel is denied. However, the Court finds that
the motion to compel financial information from Bradley Pizza was substantially
justified within the meaning of Rule 37(a)(5), so no award of expenses incurred by the
Defendants in responding to this portion of the motion is appropriate.
C. Award of Expenses and Fees
Because Mr. Smith’s motion to compel is denied and the Court finds that his
motion was not substantially justified in all but one respect, Mr. Smith, his counsel, or
both are required to pay the Defendants’ expenses, including attorney’s fees, incurred
in responding to the motion. Within 14 days of the date of this Order, the Defendants
must file a short letter memorandum (not to exceed 5 pages) and any affidavits,
declarations, and exhibits to establish the expenses and fees incurred in responding to
Mr. Smith’s motion. However, these submissions should not include a request for
reimbursement of the fees and expenses reasonably attributable to the request for
Bradley Pizza’s financial information. Within 7 days after the Defendants file such a
declaration and letter memorandum, Mr. Smith may file a written response.
II.
Defendants’ Motion
Defendants’ motion to compel raises three separate issues. First, Defendants
ask the Court to require Mr. Smith to disclose settlement agreements he has entered
in other ADA litigation as well as the full amount of financial compensation he has
received from those settlements. Second, Defendants seek an order requiring
Mr. Smith’s expert witness, Peter Hansmeier, to refund the expert-witness fees
Defendants were required to pre-pay to cover the cost of his deposition. Finally,
Defendants seek an order compelling Mr. Smith to remit the remaining unpaid
balance for the deposition expenses incurred by the defense expert, Julee QuarvePeterson. The Defendants’ motion is granted in part and denied in part as discussed
below.
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A. Discovery Related to Other Settlements
Defendants’ request for an order compelling production of Mr. Smith’s prior
settlement agreements in ADA cases and information related to those prior
settlements2 is granted in part. Defendants argue that the information they seek is
relevant to their defenses, including their argument that Mr. Smith lacks standing to
pursue his claims and that he is not entitled to injunctive relief because he has unclean
hands. Mr. Smith contends that this information is irrelevant. He also asserts that
many of the settlement agreements are confidential, so production will require
notifying defendants from other ADA cases so that they may object to the disclosure,
a process he describes as unduly burdensome.
Neither party has pointed to any authority addressing the discoverability of
settlement agreements and related information in ADA litigation,3 and the Court’s
own research has not identified any particularly instructive decisions. Nevertheless,
the Court finds that the information requested by the Defendants may well be
relevant to the claims and defenses in this litigation. Assuming without deciding that a
defense of unclean hands is available in a case like this, the Court finds that the
requested information concerning the compensation Mr. Smith has received from
prior settlements could form the factual basis for the defendants’ position that
Mr. Smith should not receive injunctive relief because his motivation in bringing this
lawsuit is for financial gain rather than to obtain ADA compliance. The settlement
agreements themselves may also support a defense that injunctive relief is not
required because Mr. Smith has not demanded strict compliance with the ADA in
previous cases he has resolved. This information could support the Defendants’
position that Mr. Smith cannot satisfy the injury-in-fact requirement for standing
Defendants’ counsel suggested that production of information from the twoyear period prior to the hearing would be sufficient. The Court agrees that this is a
reasonable period and the production required by this Order shall be limited to the
two-year period preceding the October 30, 2018 hearing.
2
Defendants have cited cases that stand for the proposition that settlement
agreements from prior litigation are not immune from discovery and that their
confidentiality does not necessarily make disclosure unwarranted, and the Court finds
this authority compelling. (Defs.’ Mem. at 4–7, ECF No. 146.)
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because they may reveal that he does not need strict compliance with the ADAAG
regulations.
However, the Court also finds that production of confidential settlement
agreements is not proportional to the needs of this case. There are legitimate reasons
that non-parties may have insisted on confidentiality when they resolved ADAcompliance claims brought by Mr. Smith in prior cases, such as avoiding becoming a
target for other litigants. And Mr. Smith clamis that he would have to notify each
defendant separately before disclosure, a very burdensome process.4 This process has
obvious inefficiencies that will delay resolution of this case, and require the
expenditure of significant resources by the Plaintiff. The Court finds that the burden
and expense associated with production of confidential settlement agreements
outweighs their benefit to resolving the issues in this case. Accordingly, the Court
finds that production of confidential settlement agreements is not required by this
Order. The Defendants’ motion to compel is denied in this respect.
The same proportionality concerns are not present with respect to any nonconfidential settlement agreements, which must be disclosed. The Court also finds
that there is no significant burden for Mr. Smith to produce documents that reflect
the total compensation he has received in settled ADA litigation within the two-year
period preceding the October 30, 2018 hearing on the Defendants’ motion.5 This
information is within Mr. Smith’s possession, custody, or control and he has
presented no reason why it could not easily be produced.
Defendants argue that the form agreement Mr. Smith uses does not include an
express provision requiring Mr. Smith to provide pre-disclosure notice to a defendant
if he is required by a court order to produce the agreements. However, even if some
of the confidential agreements lack such language, the Court finds that the interests of
outside parties would be best protected by such a practice, and the Court would adopt
that notice obligation if it were to order disclosure.
4
At the hearing, Mr. Smith argued that the Defendants failed to submit any
document request seeking such information, but the Court disagrees. Defendants
specifically asked the Plaintiff to produce “each settlement agreement, and any
documents related to settlement or the compliance or breach thereof” for Mr. Smith’s prior
litigation. (ECF No. 148-1 at 6.)
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Consistent with the foregoing, the Defendants’ motion is granted in part as
follows. Mr. Smith must disclose any non-confidential settlement agreements he has
entered in prior ADA cases during the two-year period preceding the October 30,
2018 hearing. Confidential settlement agreements need not be produced. Further,
Mr. Smith is required to produce documents showing the total compensation he has
received from settlements in prior ADA cases over the same two-year period. Finally,
the Court finds that both sides’ positions on this issue were substantially justified, so
no award of expenses is appropriate with respect to this issue.
B. Refund of Expenses Paid to Plaintiff’s Expert
Defendants seek an order compelling plaintiff to refund the expert-witness fees
they were required to pre-pay for the deposition of Mr. Smith’s purported expert,
Peter Hansmeier. For the reasons set forth below, the Court agrees with the
Defendants’ position on this matter and grants the motion.
The Federal Rules of Civil Procedure shift certain discovery-related expenses
for experts. In relevant part, Rule 26 provides that “[u]nless manifest justice would
result, the court must require that the party seeking discovery: (1) pay the expert a
reasonable fee for time spent in responding to discovery under Rule 26(b)(f)(A),”
which concerns the deposition of another party’s expert. Fed. R. Civ. P. 26(b)(4)(E).6
Courts consider several non-exclusive factors in determining whether a fee is
reasonable under the rule, including:
(1) the witness’s area of expertise; (2) the education and training that is
required to provide the expert insight that is sought; (3) the prevailing
rates for other comparably respected available experts; (4) the nature,
quality and complexity of the discovery responses provided; (5) the cost
of living in the particular geographical area; (6) any other factor likely to
be of assistance to the court in balancing the interests implicated by
Rule 26; (7) the fee being charged by the expert to the party who
retained him; and (8) fees traditionally charged by the expert on related
matters.
6
Current Rule 26(b)(4)(E) is substantially similar to former Rule 26(b)(4)(C).
10
Broushet v. Target Corp., 274 F.R.D. 432, 433 (E.D.N.Y. 2011) (quoting Magee v. The Paul
Revere Life Ins. Co., 172 F.R.D. 627, 645 (E.D.N.Y. 1997) (internal citations omitted)).
“The party seeking to be reimbursed bears the burden to of demonstrating that the
fee is reasonable.” Id. (citing New York v. Solvent Chem. Co., 210 F.R.D. 23, 24–25
(W.D.N.Y. 2002)).7
The Defendants raise two arguments in support of their demand. First, they
argue that they should receive a refund because Mr. Hansmeier is not a qualified
expert, but simply a paralegal. The Defendants point to prior concerns raised by other
judges of this Court regarding Mr. Hansmeier’s qualifications. See Smith v. Bradley
Pizza, 314 F. Supp. 3d 1017, 1024 (D. Minn. 2018) (noting that Mr. Hansmeier’s
statement in response to a motion to dismiss on mootness grounds was presented
“without any credentials or other indicia of expertise that qualify Hansmeier to make
accessibility determinations”); (Def.’s Mem. in Supp. of Mot. to Compel at 9–10
(arguing that Judge Michael Davis found Mr. Hansmeier lacked sufficient expertise to
be permitted to perform a site inspection).) The Court is not persuaded by this
argument at this stage: it would be premature to opine on Mr. Hansmeier’s
qualifications in the context of a motion to compel. A decision regarding an expert’s
qualifications is an evidentiary matter typically left to the trial judge pursuant to
Federal Rule of Evidence 702. Therefore, this Court will not weigh in on the issue of
Mr. Hansmeier’s qualifications at this stage of the litigation. Cf. New York v. Solvent
Chem. Co., 210 F.R.D. 462, 470 (W.D.N.Y. 2002) (rejecting argument that a fee was
unreasonable because the expert witness “lacks knowledge on the issue at hand”).
The Court observes that plaintiff’s counsel refused to allow Mr. Hansmeier to
be deposed without prepayment of a fee pursuant to Rule 26(b)(4)(E). (Sheu Decl.,
Ex. H, ECF No. 148-8.) Such a demand was unnecessary and the deposition could
have gone forward with a payment request to come later, as is common in civil
litigation. Indeed, pre-payment of fees pursuant to Rule 26(b)(4)(E) is not required
unless the parties have agreed to advance payment and a party may seek
reimbursement of such fees after trial. See Harris v. Costco Wholesale Corp., 226 F.R.D.
675, 676–77 (S.D. Cal. 2005) (finding that a plaintiff’s counsel should not have
terminated deposition of an expert for failure to pay witness fees in advance). Such a
demand for prepayment is indicative of the antipathy that has plagued nearly every
step of this litigation.
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The real focus of the parties’ dispute, however, is whether Mr. Hansmeier is
entitled to payment pursuant to Rule 26(b)(4)(E) based on his employment
arrangement with plaintiff’s counsel’s law firm. Having closely reviewed the record
provided by the parties, the Court concludes that Mr. Hansmeier is not entitled to
payment by the Defendants for his deposition.
Plaintiff’s counsel, Padraigin Browne, states that her firm charges Mr. Smith
$200 per hour for Mr. Hansmeier’s expert services. (Browne Decl. ¶ 9, ECF No. 151.)
Mr. Hansmeier’s own “Statement of Compensation” says that his work “is billed to
[Browne Law LLC’s] clients at $200/hr.” (Hansmeier Statement of Compensation,
ECF No. 148-7.) However, Mr. Smith testified that he has not paid anything up front
for legal fees and costs. (Smith Dep. at 25:14–16 (“Q. Okay. But you don’t advance
any money to Ms. Browne?/A. No.”), ECF No. 148-3.) More importantly, there is no
evidence before the Court that Mr. Hansmeier actually required Ms. Browne’s firm or
Mr. Smith to pay him anything in addition to his ordinary monthly paralegal salary.
Instead, Mr. Hansmeier testified that he receives a monthly salary that does not
change regardless of what is happening in a case. (Hansmeier Dep. at 27:5–20, ECF
No. 148-6.) He also agreed that he requested compensation for his deposition, but
this request was not “above and beyond what [he is] being paid for anyway as an
employee….” (Id. at 27:21–24.)
The clear import of Mr. Smith’s and Mr. Hansmeier’s testimony is that neither
Mr. Smith nor Ms. Browne’s law firm have incurred any additional expenses in
connection with Hansmeier’s deposition. Even if Ms. Browne’s firm and Mr. Smith
have an arrangement in which the amounts payable to Mr. Smith from any financial
settlement are ultimately reduced by expenses incurred in prosecuting the litigation,
Mr. Hansmeier’s services did not cause Ms. Browne’s firm to incur any actual
expenses. This case is plainly different from the common arrangement where a law
firm fronts the money to retain an expert witness and agrees with the client that the
firm will later be reimbursed from the proceeds of any favorable financial outcome.
Here there is no evidence that either the plaintiff or the plaintiff’s law firm would ever
be on the hook for any payment to Mr. Hansmeier. In other words, any “charges” to
Mr. Smith for Mr. Hansmeier’s expert services are essentially illusory. Therefore, the
Court finds that it is not reasonable for Mr. Smith to have demanded that
Mr. Hansmeier’s “expenses” be pre-paid for his deposition.
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The Court’s decision here finds substantial support in the policy behind the
cost-shifting provided for in Rule 26(b)(4)(E). The current version of the Rule
requiring a party that takes the deposition of another party’s retained expert to pay
that expert’s fees has its roots in the 1993 amendments to the Federal Rules of Civil
Procedure. The advisory committee for the 1993 amendments noted that Rule 26(b)
was changed to explicitly authorize the deposition of an opponent’s expert to
conform the Rule to standard practice. By making expert depositions the norm, the
committee acknowledged that expert costs for a party would increase because that
party’s opponent would ordinarily take the expert’s deposition. In discussing this, the
committee notes state:
[Rule 26(b)(4)(A)] is revised to provide that experts who are expected to
be witnesses will be subject to deposition prior to trial, conforming the
norm stated in the rule to the actual practice followed in most courts, in
which depositions of experts have become standard. Concerns regarding
the expense of such depositions should be mitigated by the fact that the
expert’s fees for the deposition will ordinarily be borne by the party
taking the deposition.
Rule 26(b), advisory committee notes for 1993 amendments. As acknowledged by
other courts, “[t]he purpose of the rule is to avoid the unfairness of requiring one
party to provide expensive discovery for another party’s benefit without
reimbursement.” Jochims v. Isuzu Motors, Ltd., 141 F.R.D. 493, 494 (S.D. Iowa 1992)
(internal quotation marks omitted).
Here, there is no expense incurred by Mr. Smith or Ms. Browne’s firm that
needs to be reimbursed. In a situation where the expert’s time in the deposition costs
the party nothing, payment of expenses under the rule is not required. Cf. Krepps v.
NIIT (USA), Inc., 297 F.R.D. 579, 581 (N.D. Ill. 2013) (denying the plaintiff’s motion
for reimbursement of expert-witness fees where plaintiff was a practicing economist,
identified himself as his own expert witness, and claimed to be owed fees under the
rule despite having paid nothing for his own expert-witness services). Mr. Hansmeier
testified that he receives nothing other than his ordinary salary, and there is no
evidence that he actually charges the plaintiff or Ms. Browne’s firm anything extra for
his expert-witness services. Under these circumstances, requiring the Defendants to
pay Mr. Hansmeier would simply turn Rule 26(b)(4)(E) into a means of generating
revenue. Krepps, 297 F.R.D. at 581 (rejecting the plaintiff’s interpretation that he was
entitled to payment of expert witness fees even though he incurred no costs and there
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was nothing to be reimbursed and concluding that interpreting the rule to require
payment of expenses under those circumstances would result in “manifest injustice”
under the rule).
For these reasons, the Defendants’ motion to compel a refund of the expenses
pre-paid for Mr. Hansmeier’s deposition is granted. Within 14 days of the date of this
Order, Mr. Smith shall reimburse the Defendants.
C. Payment of Defendants’ Expert
Finally, the Defendants seek an Order compelling Mr. Smith to pay the
reasonable deposition expenses incurred by their expert witness, Julee QuarvePeterson. Ms. Quarve-Peterson’s company, JQP, Inc., sent an invoice for her time
associated with the deposition in this matter. (JQP, Inc. Invoice, ECF No. 148-5.)
Mr. Smith’s counsel also deposed Ms. Quarve-Peterson in two similar ADA cases
brought against other restaurants in Red Wing, MN. (Id. (noting that the Sept. 26,
2018 depositions were for this case and other cases involving Golden China and
Bierstube).) The deposition lasted a total of 6.25 hours for which Ms. QuarvePeterson charged $250 per hour ($1,562.50). (Id.) She also charged $250 per hour for
2.25 hours of preparation and review time ($562.50), and $135 per hour for one hour
of travel time ($135.00). (Id.) Mr. Smith paid only $780 on September 26, 2018, which
represents a rate of $125 per hour for the 6.25 hours of deposition testimony
Ms. Quarve-Peterson provided. (Id.) Defendants argue that Mr. Smith should be
required to compensate Ms. Quarve-Peterson for the remaining time she spent related
to the deposition.
The first question before the Court is whether Ms. Quarve-Peterson is entitled
to compensation for time she spent preparing for the deposition. Courts have reached
mixed conclusions in deciding whether an expert is entitled to compensation for such
preparation under Rule 26(b)(4)(E). The majority view appears to be that preparation
time is a reasonable expense that is compensable under the rule. Compare Waters v. City
of Chicago, 526 F. Supp. 2d 899, 900 (N.D. Ill. 2007) (noting that the authority is not
uniform and citing 8 Charles A. Wright & Arthur R. Miller, et al., Federal Practice &
Procedure: Civil 2d § 2034 (2d ed. 1994), and Moore’s Federal Practice § 26.80[3] (3d ed.
2007)) and Halasa v. ITT Educ. Servs., Inc., 690 F.3d 844, 852 (7th Cir. 2012) (affirming
district court’s award of reimbursement for deposition preparation), with Rock River
Commc’ns Inc. v. Universal Music Gr., 276 F.R.D. 63, 636 (C.D. Cal. 2011) (declining to
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reimburse preparation time). Here, Defendants’ counsel acknowledged at the hearing
that, in his experience, expert preparation time for a deposition is not usually paid for
by the party taking the deposition. Based on that representation, the Court finds that
compensation for preparation time in this case would not be reasonable. Mr. Smith is
therefore not required to pay for the 2.25 hours spent by Ms. Quarve-Peterson in
preparing for her deposition.
The second issue is Ms. Quarve-Peterson’s rate itself. Mr. Smith contends that
Ms. Quarve-Peteron’s $250 per hour rate for testifying at a deposition is not
reasonable and conflicts with the rate she charges her clients for additional work
beyond a response report associated with an initial complaint. (Pl.’s Opp’n at 9.) He
cites to Ms. Quarve-Peterson’s November 7, 2017 declaration filed in support of the
Defendants’ motion to dismiss in this case in which she states that she charges $500
for “reviewing and responding to allegations in a civil complaint and preparing a
report,” and $125 per hour for “additional work beyond the initial complaint
response.” (Quarve-Peterson Decl. ¶ 3, ECF No. 35.) However, JQP, Inc.’s rate sheet
for the 2018 calendar year reflects a $250 per hour rate for depositions and other
testimony in ADA lawsuits, which is the rate the business invoiced to Ms. Browne’s
law firm. (JQP, Inc. Invoice at 2.) Mr. Smith essentially contends that a $250 per hour
rate is unreasonable when Ms. Quarve-Peterson charges less for other tasks she
completes for clients who retain her.
The Court finds that the $250 per hour rate Ms. Quarve-Peterson charges for
depositions is reasonable. Contrary to Mr. Smith’s contention that he is being gouged
for a higher rate than is being charged to the Defendants, JQP, Inc.’s rate sheet
reflects that the business charges the same rate for Ms. Quarve-Peterson’s time at a
deposition in an ADA case (which is charged to opponents of the litigants who retain
her) as for her time testifying at a trial (which is charged to the party that retains her).
The fact that JQP, Inc.’s rates are the same when testimony in an ADA suit is
involved regardless of who is footing the bill is indicative of the reasonableness of the
fee. A higher rate for time spent testifying in a court proceeding than for time
reviewing records or preparing a report reasonably reflects the greater demands
testimony places on an expert witness, particularly in a case such as this where her
time preparing to testify is not compensated. Mr. Smith provides no basis for this
Court to conclude that the $250 per hour rate is reasonable. Cf. Maasen v. Zwibelman,
2001 WL 309116, at *1 (D. Kan. Mar. 12, 2001) (concluding that it was reasonable for
15
a plaintiff’s expert to charge a higher rate for deposition preparation time than for
time spent reviewing records). Moreover, the Court finds that $250 per hour itself is
not, on its face, an unreasonable rate for an expert witness.
Mr. Smith also argues that he should not be required to pay JQP, Inc. $135 for
Ms. Quarve-Peterson’s one hour of travel time if Defendants are not similarly billed
for travel time. He cites an invoice submitted in support of the Defendants’ motion to
dismiss which does not include an hourly rate for travel time, but only charges for
mileage at a federal rate. (Pl.’s Letter at 10 (citing ECF No. 38).) Although courts have
generally found that an expert’s travel time is compensable under the applicable rule,
see, e.g., Magee, 172 F.R.D. at 646 (“Travel time has been held compensable.”), here, the
Court concludes that the Defendants—the party seeking reimbursement—have failed
to meet their burden to demonstrate that this $135 charge is reasonable. The evidence
submitted by the Defendants fails to show that the travel time rate is routinely
charged by JQP, Inc. Indeed, the rate sheet attached to the invoice for Ms. QuarvePeterson’s deposition does not include any $135-per-hour line item for “travel time”
associated with ADA cases. The only entry on the rate sheet that plainly relates to
travel is an expense item for “mileage,” which is billed “at standard rates.” (JQP, Inc.
Invoice at 2.) And the invoice cited by Mr. Smith certainly appears to reflect that JQP,
Inc. did not bill the Defendants for travel time associated with the site inspections
that preceded the Defendants’ motion to dismiss. (ECF No. 38.) For these reasons,
the Court will not require Mr. Smith to pay the $135 fee for Ms. Quarve-Peterson’s
travel time.
Finally, Mr. Smith contends that there is an “intractable” problem created by
the fact that Ms. Quarve-Peterson’s invoice is divided between three separate cases,
and he should not be required by any order resolving the Defendants’ current motion
to compel in this case to pay for portions of the deposition that are attributable to
other matters. (Pl.’s Opp’n at 12.) Given the Court’s findings in this Order that
Ms. Quarve-Peterson’s $250 per hour rate is reasonable, that Mr. Smith should not be
required to pay for Ms. Quarve-Peterson’s preparation time, and that the Defendants
failed to meet their burden to show that a fee for travel time is reasonable, there is an
easy solution to this problem. Ms. Quarve-Peterson was deposed for 6.25 hours, and
at a reasonable rate of $250 per hour for that deposition time, she should be paid a
total of $1,562.50. Split evenly between three cases (all of which involve the same
counsel on both sides), the relevant portion for each case is approximately $520.83.
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Ms. Quarve-Peterson has already been paid $780, representing approximately $260
per case. The difference between the amount already paid that is attributable to this
case ($260) and the relevant portion of the overall reasonable fee attributable to this
case ($520.83) is $260.83. Accordingly, Mr. Smith is required to pay JQP, Inc. an
additional $260.83 for the reasonable expert fees attributable to this case.8
D. Award of Expenses
Here, the Defendants’ motion is granted in part and denied in part.
Rule 37(a)(5)(C) allows for apportionment of expenses where a court issues such a
ruling on a motion to compel. Both parties’ positions with respect to discovery of
prior settlement agreements and the compensation Mr. Smith has received were
substantially justified, so the Court will not apportion the reasonable expenses for the
motion with respect to that issue. The Court also finds that the parties’ positions were
substantially justified on issue of the fees paid for Mr. Hansmeier’s deposition, so no
apportionment of fees is appropriate for that part of the Defendants’ motion. With
respect to payment of Ms. Quarve-Peterson’s expert-witness fees, the Court finds that
Mr. Smith’s refusal to pay her full hourly rate was not substantially justified, and the
Defendants are entitled to a payment of the reasonable expenses incurred in bringing
the motion to compel on that issue. However, the Court declines to apportion the
reasonable expenses incurred by either side with respect to the Defendants’ motion
seeking reimbursement of Ms. Quarve-Peterson’s time spent preparing for her
deposition and for travel time.
In litigation where the parties behaved rationally, they would read the writing
on the wall and similarly resolve any lingering disputes with respect to Ms. QuarvePeterson’s bill for the other two cases. Plaintiff would agree to pay the remaining
portion of the $782.50 outstanding balance for Ms. Quarve-Peterson’s time spent
during the deposition that is attributable to the other two cases, and the Defendants
would agree to forego payment of deposition-preparation expenses and compensation
for travel time. The Court hopes that the parties are able to reach such an agreement
so that they do not burden the judges involved in the other two cases with additional
motion practice like that involved here. Of course, the parties have proven themselves
capable of reaching so few reasonable solutions on their own in this case that such
hopes seem naively optimistic.
8
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III.
ORDER
For the reasons stated above, the Court enters the following Order.
1. Plaintiff’s Motion to Compel Discovery (ECF No. 138) is DENIED.
a. Ms. Dahl is not required to sign initial interrogatory answers that have
been superseded.
b. Ms. Dahl is not required by this Order to produce financial information
because Plaintiff brought the motion before her discovery responses
were due.
c. Bradley Pizza is not required to produce financial information because it
is irrelevant.
2. Within 14 days of the date of this Order, the Defendants must file a short letter
memorandum (not to exceed 5 pages) and any affidavits, declarations, and
exhibits to establish the expenses and fees incurred in responding to Plaintiff’s
motion to compel. These submissions should not include a request for
reimbursement of the fees and expenses reasonably attributable to the request
for Bradley Pizza’s financial information. Within 7 days after the Defendants’
filing, Plaintiff may file a written response.
3. Defendants’ Motion to Compel (ECF No. 144) is GRANTED IN PART and
DENIED IN PART.
a. Plaintiff is required to produce any non-confidential settlement
agreements that he has entered in similar ADA lawsuits in the two-year
period preceding October 30, 2018.
b. Plaintiff is not required to provide confidential settlement agreements
for this same two-year period.
c. Plaintiff is required to produce documents sufficient to show the total
compensation he has received from settling ADA lawsuits in the twoyear period preceding October 30, 2018.
d. Plaintiff is required refund the amounts pre-paid for the deposition of
Peter Hansmeier because he is not entitled to payment of expenses
under Rule 26(b)(4)(E) under the circumstances of this case.
e. Plaintiff is required to pay JQP, Inc. an additional $260.83 for the
reasonable expert fees attributable to Ms. Quarve-Peterson’s time spent
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in connection with her deposition in this case. Plaintiff is not required to
pay for Ms. Quarve-Peterson’s time spent preparing for the deposition
or her travel time.
f. The Court declines to apportion expenses for all but one issue raised in
the Defendants’ motion pursuant to Fed. R. Civ. P. 37(a)(5)(C). No
award of expenses is appropriate with respect to the following issues:
(1) production of settlement agreements in prior ADA litigation by the
plaintiff; (2) production of documents showing Mr. Smith’s income from
prior ADA cases; (3) payment of Ms. Quarve-Peterson’s depositionpreparation time; and (4) payment of Ms. Quarve-Peterson’s travel time.
However, the Defendants are entitled to payment of the reasonable
expenses incurred in seeking payment of Ms. Quarve-Peterson’s full
$250 hourly rate for time spent during the deposition. When the
Defendants file the letter memorandum discussed in Paragraph 2 of this
Order, they may include a request for reimbursement of the fees and
expenses reasonably attributable to that issue.
IT IS SO ORDERED.
Date: November 13, 2018
s/Katherine Menendez
Katherine Menendez
United States Magistrate Judge
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