Johnson v. Oak Creek Investments ( 2019 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 SCOTT JOHNSON, 8 Case No. 5:18-cv-04645-EJD Plaintiff, 9 ORDER GRANTING DEFENDANT’S v. MOTION FOR ADMINISTRATIVE 10 RELIEF; DENYING PLAINTIFF’S OAK CREEK INVESTMENTS, MOTION TO STRIKE 11 Defendant. Re: Dkt. Nos. 22, 23 12 13 On November 22, 2019, Defendant Oak Creek Investments filed a motion for 14 administrative relief requesting that the Court order Plaintiff to provide documentation of 15 attorneys’ fees and costs pursuant to General Order 56. Motion for Administrative Relief and for 16 Monetary Sanctions (“Mot.”), Dkt. 22. The motion also seeks monetary sanctions (reimbursement 17 for the costs associated with bringing this motion) for Plaintiff’s refusal to comply with General 18 Order 56. Plaintiff filed a motion to strike Defendant’s motion for administrative relief, which 19 seeks an order striking Defendant’s motion and opposes the merits of Defendant’s motion. 20 Request to Strike Defendant’s Motion for Administrative Relief and Response in Opposition 21 (“Mot. to Strike/Opp.”), Dkt. 23. Defendant filed an opposition to Plaintiff’s motion to strike. 22 Opposition to Plaintiff’s Motion to Strike Defendant’s Motion for Administrative Relief (“Opp. to 23 Mot. to Strike”), Dkt. 25. The Court GRANTS Defendant’s Motion for Administrative Relief and 24 DENIES Plaintiff’s Motion to Strike. 25 I. BACKGROUND 26 On April 15, 2019, this Court granted the Parties’ Joint Consent Decree for Injunctive 27 Case No.: 5:18-cv-04645-EJD 1 Relief, which requires Defendant to remediate the subject-property by December 31, 2019. See 2 Dkt. 14. Pursuant to the Joint Decree, the Parties jointly inspected the subject property. After this 3 inspection, Plaintiff “made a demand in excess of $20,000 to settle the matter in its entirety, 4 without providing any fee or costs support.” Mot. at 2. Pursuant to General Order 56, Defendant 5 requested (on multiple occasions) that any demand for settlement be supported by documents 6 demonstrating attorney’s fees and costs. Id. Around September 27, 2019, Plaintiff responded to 7 Defendant’s demands for documentation. Id. Plaintiff provided a reduced demand but failed to 8 accompany its counteroffer with “any accompanying fee support documents.” Id. 9 On August 26, 2019, Plaintiff filed a notice of need for mediation. This Court referred the 10 case to mediation and set November 25, 2019 as the deadline to complete mediation. 11 In preparation of that mediation, and before submitting their administrative motion, 12 Defendant contacted Plaintiff on November 6, 2019 to “again demand[] fee and cost documents 13 under General Order 56” to allow the parties ample time in advance of the mediation deadline of 14 November 25, 2019 to review the document and attempt good-faith, reasonable settlement. Id., 15 Ex. A. Plaintiff’s counsel responded only after Defendant filed its administrative motion and after 16 the deadline to complete mediation had passed. Mot. to Strike/Opp., Ex. 1. Defendant agreed to 17 withdraw its administrative motion if Plaintiff provided it documentation. Id. Plaintiff seemingly 18 refused to do this as it filed the motion to strike instead. Accordingly, as of the date of this Order, 19 Plaintiff has failed to provide Defendant any documentation (even a cursory overview of 20 Plaintiff’s counsels’ billing rates) and has only provided Defendant a settlement number. 21 II. PLAINTIFF’S MOTION TO STRIKE 22 Plaintiff first argues that this Court should strike Defendant’s motion because it contains 23 information about confidential settlement negotiations. Mot. to Strike/Opp. at 1–2. Plaintiff fails 24 to provide any rule supporting its motion to strike. Based on the briefing, the Court infers that 25 Federal Rule of Evidence 408 underlies Plaintiff’s motion. As a preliminary matter, Plaintiff’s 26 citation to Johnson v. Holden, No. 50 5:18-cv-01624-EJD (N.D. Cal. May 9, 2019) as support for 27 Case No.: 5:18-cv-04645-EJD 1 its proposition that the inclusion of confidential information warrants striking an entire motion is 2 misplaced. Johnson v. Holden, only struck the “portion of Defendants’ statements that describe 3 the settlement negotiations.” Hence, Johnson v. Holden lacks the expansive application advocated 4 by Plaintiff. 5 Moreover, as Defendant notes, Federal Rule of Evidence 408, protects compromise 6 negotiations only if they are “offered to prove liability for, invalidity of, or amount of a claim that 7 was disputed as to validity or amount, or to impeach through a prior inconsistent statement or 8 contradiction.” Indeed, “at least some communications made in furtherance of [settlement] 9 negotiations are discoverable, as Rule 408 permits their use in some aspects of trial.” Phoenix 10 Solutions Inc. v. Wells Fargo Bank, N.A., 254 F.R.D. 568, 584 (N.D. Cal. Oct. 22, 2008). As the 11 Advisory Committee Notes to Rule 408 explain, “evidence, such as documents, is not rendered 12 inadmissible merely because it is presented in the course of compromise negotiations.” Therefore, 13 mere reference to settlement discussions does not automatically support a motion to strike. 14 Here, Defendant’s reference to settlement discussions and its inclusion of a letter 15 discussing settlement negotiations in its administrative motion is permissible. The purpose of 16 referencing the discussions was not to prove liability or apportion fault (as forbidden by Rule 17 408). Rather, the purpose was to show noncompliance with General Order 56. This purpose is 18 not forbidden by Rule 408. Plaintiff presents no alternative grounds supporting its Motion to 19 Strike. Accordingly, Plaintiff’s Motion to Strike is DENIED. 20 III. DEFENDANT’S ADMINSTRATIVE MOTION 21 Defendant argues that, pursuant to General Order 56(6), it is entitled to a detailed statement 22 of costs and attorney’s fees. Mot. at 4. 23 General Order 56(6) provides: 24 If the parties reach a tentative agreement on injunctive relief, plaintiff shall forthwith provide defendant with a statement of costs and 25 attorney’s fees incurred to date, and make a demand for settlement of the case in its entirety (including any additional damages not included 26 in the Rule 26(a) disclosures). Plaintiff should not require execution of a formal agreement regarding injunctive relief as a precondition to 27 Case No.: 5:18-cv-04645-EJD providing defendant with the statement of costs and attorney’s fees, 1 and additional damages. If requested by defendant, plaintiff should provide documentation and support for its attorney’s fees similar to 2 what an attorney would provide in a billing statement to a client. 3 (emphasis added). 4 As noted, on April 15, 2019, this Court granted the Parties’ Joint Consent Decree for 5 Injunctive Relief. See Dkt. 14. Hence, a “tentative agreement on injunctive relief” exists between 6 the parties and entitles Defendant to the disclosures discussed in General Order 56(6). Plaintiff 7 does not dispute this. Plaintiff instead argues that General Order 56 does not require him to 8 submit a detailed statement and that attorney-client privilege protects him from submitting such a 9 statement. See generally Mot. to Strike/Opp. Specifically, Plaintiff argues that General Order 56 10 use of “should” means he is not required to provide documentation to Defendant. Id. at 4. 11 Additionally, he contends that Los Angeles County Board of Supervisors v. Superior Court, 386 12 P.3d 773 (Cal. 2016) protects such documentation under attorney-client privilege. Mot. to 13 Strike/Opp. at 2. 14 This case is almost identical to Johnson v. Maple Tree Investors, No. 47 5:17-cv-06762- 15 LHK (N.D. Cal. Oct. 28, 2019). There Judge Koh ordered Plaintiff to provide the defendant with 16 a “line-item invoice that identifies the date, the biller, the hourly rate, justification for the hourly 17 rate, the task, and the amount billed per task.” Maple Tree, No. 47 5:17-cv-06762-LHK at 4. 18 Judge Koh rejected both Plaintiff’s scope and privilege arguments. Id. at 2; see also supra. The 19 Court agrees with Judge Koh’s reasoning and rejects Plaintiff’s scope and privilege arguments. 20 General Order 56’s Requirements. The Court agrees with Judge Koh that General Order 21 56 requires the plaintiff to provide the defendant with “documentation and support” for attorneys’ 22 fees and costs. Plaintiff interprets the “should” in General Order 56 as placing discretion in the 23 plaintiff to decide whether or not to provide the defendant with detailed documentation. The 24 Court reads General Order 56 differently and holds that once parties reach a tentative agreement 25 on injunctive relief; General Order 56 requires the plaintiff to provide the defendant detailed 26 documentation if the defendant requests it. Here, Defendant has requested documentation and so 27 Case No.: 5:18-cv-04645-EJD 1 Plaintiff is obligated to provide detailed information about costs and attorney’s fees, much like 2 what would be provided to a client. See Cal. Bar Rules of Prof’l Conduct r. 1.5. 3 Attorney-Client Privilege. Plaintiff next argues that they need not provide documentation 4 to Defendant because this information is protected by attorney-client privilege. The California 5 Supreme Court has held that “[w]hen a legal matter remains pending and active, the privilege 6 encompasses everything in an invoice, including the amount of aggregate 7 fees . . . . because . . . [the invoice] might very well reveal . . . investigative efforts and trial 8 strategy.” L.A. Cty. Bd. of Supervisors, 386 P.3d at 781 (quotation marks and citation omitted). 9 Even during active litigation, however, “there may come a point when this very same information 10 no longer communicates anything privileged, because it no longer provides any insight into 11 litigation strategy or legal consultation.” Id. at 782. 12 Here, the request for billing invoices comes long after the Parties have settled the 13 injunctive relief aspect of this case. See Mot. at 3; L.A. Cty. Bd. of Supervisors, 386 P.3d at 781 14 (“The same may not be true for fee totals in legal matters that concluded long ago.”). The only 15 issue remaining between the Parties is the amount of damages owed to Plaintiff, which the Parties 16 plan to engage in mediation to resolve. As the docket shows, outside the Joint Consent Decree, 17 Plaintiff has not filed any motions or documents litigating the merits of this case. Thus, as 18 Defendant notes, no significant work has been done by Plaintiff’s counsel since the joint 19 agreement regarding injunctive relief. Hence, there should not be any invoices that reveal 20 “investigative efforts and trial strategy.” Rather, the invoices at hand ought to pertain to billing for 21 work on the settlement, which is “moot” as Defendant has already remedied the subject property. 22 Accordingly, fee information may be disclosed without “provid[ing] any insight into litigation 23 strategy or legal consultation.” L.A. Cty. Bd. of Supervisors, 386 P.3d at 782. 24 A contrary interpretation of General Order 56 would allow attorneys to improperly inflate 25 attorney’s fees and hinder the Parties ability to engage in meaningful mediation discussions. 26 Without detailed billing information, Defendant cannot determine if any hours were “excessive, 27 Case No.: 5:18-cv-04645-EJD 1 redundant, or otherwise unnecessary.” Blackwell v. Foley, 724 F. Supp. 2d 1068, 1079 (N.D. Cal. 2 || 2010). Plaintiffs refusal to provide any documentation only bolsters this concern. 3 IV. CONCLUSION 4 The Court ORDERS Plaintiff to provide Defendant a line-item fee invoice that identifies 5 the date, the biller, the hourly rate, justification for the hourly rate, the task, and the amount of 6 || time billed per task. Plaintiff shall provide this information to Defendant and to the Mediator 7 (Katherine Clark) by December 31, 2019. Because the November 25, 2019 mediation deadline 8 || has passed, the Parties ae ORDERED to complete mediation by January 28, 2020. See Dkt. 26. 9 Plaintiff may describe each task to avoid revealing “the type of research” or other matters directly 10 || relevant to “litigation strategy or legal consultation.” L.A. Cty. Bd. of Supervisors, 386 P.3d at 11 781-82. For instance, Plaintiff may frame the task descriptions at a high level (e.g., “legal 12 || research,” “drafting complaint,” etc.) to mitigate any risk of revealing privileged information. 13 Maple Tree, No. 47 5:17-cv-06762-LHK at 4-5. 14 Defense counsel seeks $3,380.00 for reimbursement of fees and costs related to preparing 3 15 || the motion regarding Plaintiff’s noncompliance and submits a declaration supporting A 16 || reimbursement. Declaration of Richard D. Schramm {| 9-12. The Court finds defense counsel 2 17 billed: (1) a reasonable number of hours, (2) at a reasonable hourly rate, (3) and asks for an 18 || appropriate amount in fees. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); United Steelworkers 19 of Am. v. Phelps Dodge Corp., 896 F.2d 403, 407 (9th Cir. 1990). The request for fees is 20 || GRANTED and Defendant shall receive $3,380.00 in fees associated with bringing this motion. 21 See also Mot., Ex. C (Judge Koh ordering Plaintiff’s to pay fees and costs). 22 IT IS SO ORDERED. 23 Dated: December 19, 2019 24 ep. EDWARD J. DAVILA 25 United States District Judge 26 Case No.: 5:18-cv-04645-EJD 28 || ORDER GRANTING DEFENDANT’S MOTION FOR ADMINISTRATIVE RELIEF; DENYING PLAINTIFF’S MOTION TO STRIKE