Deerpoint Group, Inc. v. Agrigenix, LLC ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 DEERPOINT GROUP, INC., an Illinois Case No. 1:18-cv-00536-AWI-BAM corporation, 12 ORDER GRANTING PLAINTIFF’S Plaintiff, REQUEST FOR EXPERT FEES AND 13 DENYING THE REQUEST FOR v. ADDITIONAL ATTORNEY FEES 14 AGRIGENIX, LLC, a Delaware limited (Doc. 220) 15 liability company, et al., 16 Defendants. 17 AND RELATED COUNTERCLAIMS. 18 19 On October 31, 2022, this Court granted Plaintiff’s Motion for Sanctions against 20 Defendants Agrigenix, LLC and Sean Mahoney (“Defendants”) for failure to preserve 21 Electronically Stored Information (“ESI”) in violation of Federal Rule of Civil Procedure 37(e). 22 (Doc. 218.) The Court awarded monetary sanctions and granted the request that a curative 23 instruction be given at trial. (Id.) In its Motion for Sanctions, Plaintiff also requested an award of 24 expert fees expended in uncovering the spoliated ESI. (Doc. 168, pp. 25–26.)1 The Court found 25 that it could not rule on the request for expert fees without additional evidence. (Doc. 218, p. 37.) 26 The Court required Plaintiff to provide supplemental evidence as to the expert costs which 27 28 1 Page numbers refer to the Court’s CM/ECF pagination. 1 Plaintiff incurred in its attempt to recover spoliated evidence. (Id.) 2 On November 10, 2022, Plaintiff filed its supplemental briefing. (Doc. 220.) On 3 November 23, 2022, Defendants filed a response to Plaintiff’s supplement. (Doc. 221.) Plaintiff 4 filed its reply on November 28, 2022. (Doc. 222.) Having considered the supplemental briefing 5 by the parties, the Court GRANTS IN PART and DENIES IN PART Plaintiff’s request. 6 SUMMARY OF THE PARTIES’ ARGUMENTS IN THE SUPPLEMENTAL BRIEFS 7 The factual background and arguments giving rise to Plaintiff’s sanctions request are set 8 forth in detail in the Court’s Order Granting Plaintiff’s Motion for Sanctions and need not be 9 repeated here. (Doc. 218.) 10 A. Plaintiff’s Supplemental Briefing 11 Plaintiff retained Digital Mountain, Inc. and its forensic examiner Chris Beeson for expert 12 assistance in the spoliation investigation. Mr. Beeson performed approximately 60 hours of 13 work, billed at $350 per hour, except for travel time. Digital Mountain also billed for the cost of 14 shipping laptops and disk drives. Plaintiff previously submitted evidence of Mr. Beeson’s 15 expertise, qualifications, and complexity of his work in the previous briefing and supporting 16 declarations. (See Doc. 168-39.) Mr. Beeson’s and Digital Mountain’s rates are reasonable and 17 fair, and they have been used by Plaintiff’s counsel in other cases. Their services are reputable, 18 reliable, trusted, and fairly priced. Plaintiff had contacted a potential alternative source, and the 19 quotes turned out to be similar. However, the potential alternative source did not include 20 reviewing and assessing the content of recovered ESI and at one time, had hosted email services 21 for Agrigenix, which may have posed a conflict. 22 Plaintiff asks for expert fees in the amount of $24,033.91 (see invoices at Doc. 220-1): 23 Date Vendor / Invoice No. Amount February 28, 2022 Digital Mountain / Invoice 7099 $10,618.85 24 March 31, 2022 Digital Mountain / Invoice 7121 $12,452.56 25 April 30, 2022 Digital Mountain / Invoice 7296 $962.50 TOTAL $24,033.91 26 27 Plaintiff also asks for additional attorney fees for one hour of partner time and three hours 28 of senior associate time, for additional fees of $1,450.00. (Doc. 220, p. 4.) Therefore, the total 1 additional amount requested is $25,483.91. 2 B. Defendants’ Response 3 Defendants oppose the expert costs because: (1) the expert costs are based in inflated 4 hourly rates; and (2) the request for additional attorney fees is not fair or equitable because the 5 evidentiary support should have been provided with the claimed expert fees in the initial motion. 6 Defendants argue that the expert hourly rates are inflated for the Fresno market. 7 Defendants submit evidence of Digital Mountain’s government contracts rates from 2012–2017, 8 which reflect an hourly rate of $220 per hour. (Doc. 221, p. 24.) Digital Mountain now is 9 charging a 60% markup in Fresno as compared to its government rates. In addition, a $350 10 hourly rate for data analysis is facially unreasonable considering that the Fresno District Court 11 has a de facto $400 per hour cap on experienced attorney hourly rates. 12 The requested additional attorney fees are not fair or equitable. Deerpoint failed to offer 13 admissible evidence for its claimed expert costs in its motion for sanctions. The Court did not 14 grant leave to seek more attorney fees than the already awarded $32,500.00 in attorney fees. 15 Deerpoint failed to support its original request and should not be awarded additional fees for 16 failing to do so. (Doc. 221, p. 3.) 17 C. Plaintiff’s Reply 18 Plaintiff argues that an expert rate higher than the de facto cap on attorney rates is 19 irrelevant. Defendants do not cite to any authority that expert rates cannot be higher than attorney 20 rates. The expert rate requested is fully supported. 21 The second argument by Defendants of “inflated rates” is an expired GSA rate sheet. 22 (Doc. 221, p. 6.) The price list reflects a 10-year old government rate through “Modification # 23 30, dated February 13, 2012.” (Id.) It also reflects an unidentified discount provided to 24 government customers. (Id. at 11.) The GSA schedule expired in July 2017. Digital Mountain 25 chose not to renew because it was not “a prudent decision for our company due to economic 26 factors.” (Doc. 222-1, Supp. Lewis Decl. ¶2.) 27 For the additional attorney fees requested, the Court awarded attorney fees, and the 28 additional fees are for the expert fees request still pending. 1 SUPPLEMENTAL AWARD OF FEES 2 A. Award of Expert Fees 3 As a reminder, federal courts have the discretion “to impose a wide range of sanctions 4 when a party fails to comply with the rules of discovery or with court orders enforcing those 5 rules.” Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir. 1983). 6 In the Court’s Order Granting Plaintiff’s Motion for Sanctions, the Court explained how 7 and why it relied upon Plaintiff’s expert and that an award of expert fees is warranted in this case. 8 (See e.g., Doc. 218, pp. 20, 24, 28, 30.) The only issue was the amount of expert fees to be 9 awarded. 10 The Court will award the requested expert fees of $24,033.91. The Court has considered 11 the evidence in support of and in opposition to the award. As stated in the Court’s Order 12 Granting the Motion for Sanctions, the forensic work performed by Mr. Beeson was critical to the 13 Court granting the motion. 14 The Court rejects Defendants’ challenge to the expert’s rate of $350 per hour. As to this 15 hourly rate, the Court considers the evidence submitted by Julie Lewis (President of Digital 16 Mountain), both in the supplemental brief and reply brief, and concludes that $350 per hour is the 17 market rate for the type of services provided with Mr. Beeson’s expertise. In her declaration, Ms. 18 Lewis explains how she competitively prices the services. (Doc. 220-2, Lewis Decl. ¶¶4–5; Doc. 19 222-1, Supp. Lewis Decl. ¶2.) The Court does not find persuasive the evidence submitted by 20 Defendants of the GSA rate sheet from 2012–2017 for Digital Mountain. The Court agrees with 21 Plaintiff that the GSA rates were provided at some unspecified discount, and the contract was not 22 renewed because it was not a prudent business decision due to economic factors. (Doc. 222-1, 23 Supp. Lewis Decl. ¶2.) Further, the GSA rate sheet expired some five years ago, and rates 24 undoubtedly have increased. (Doc. 221, p. 6.) 25 In addition, the Court disagrees with Defendants’ argument that expert rates should 26 approximate attorney hourly rates. The Court can envision expertise which outpaces attorney 27 rates, such as in medical cases or here, where uncovering spoliated ESI is no easy task. Indeed, 28 for unique technical expertise as that provided by Mr. Beeson, it is reasonable that a premium rate 1 must be paid for such expertise. The Court also considers that Plaintiff contacted a local forensic 2 expert, but declined to hire that expert to avoid the potential conflict based on the expert’s past 3 business relationship with Agrigenix and that expert did not provide the analytical services 4 needed in this case. 5 B. Additional Attorney Fees 6 Plaintiff requests an additional award of $1,450.00 for time spent “for one hour of partner 7 time and three hours of senior associate time for identifying and engaging the services of Digital 8 Mountain and Mr. Beeson, as set forth in ECF No. 168-38.” (Doc. 220, p. 4.) 9 The Court declines to award any additional attorney fees. The Court agrees with 10 Defendants’ arguments that the evidentiary support should have been provided in the original 11 motion. 12 CONCLUSION AND ORDER 13 For the reasons stated, the Court HEREBY ORDERS: 14 1. Plaintiff’s supplemental request for fees, (Doc. 220), is GRANTED IN PART and 15 DENIED IN PART as follows: 16 a. The Court GRANTS Plaintiff’s request for expert fees; and 17 b. The Court DENIES Plaintiff’s request for additional attorney fees; and 18 2. Therefore, considering the Court’s prior Order, (Doc. 218), Plaintiff is awarded the total 19 monetary sanction of FIFTY-SIX THOUSAND FIVE HUNDRED THIRTY-THREE 20 DOLLARS AND NINETY-ONE CENTS ($56,533.91), against Defendants Agrigenix 21 and Mahoney, joint and several, which consists of $32,500.00 in attorney fees and 22 $24,033.91 in expert fees. 23 IT IS SO ORDERED. 24 25 Dated: December 14, 2022 /s/ Barbara A. McAuliffe _ UNITED STATES MAGISTRATE JUDGE 26 27 28