CALIFORNIA ATTORNEY'S FEES

Discovery/Referee Costs: Attorney Cannot Be Ordered To Pay Discovery Referee Costs Unless Discovery Abuse Procedures Followed

 

Referee Cost Shifting Provisions Does Not Mention Counsel Involvement.

     Lupien v. Vons Market, Case No. B228896 (2d Dist., Div. 5 Dec. 6, 2011) (unpublished) involved a situation where plaintiff’s counsel was held jointly and severally liable along with their client for one half of a discovery referee’s costs totaling $7,800. Plaintiff appealed, arguing among other things that her counsel should not be responsible for these costs.

     This argument was successful. An award for discovery abuse sanctions must follow certain procedures, and an order that an attorney pay an amount without any finding of discovery abuse did not cut the cake correctly. Beyond that, nothing in the referee cost-shifting scheme suggests that counsel was responsible for costs, actually quite the opposite. (Code Civ. Proc., § 639(d)(6)(B) [in determining financial inability to pay a referee’s fees, court only considers the ability of the party, not counsel, to pay fees].) Referee costs award reversed as to counsel.

E-Discovery: U.S. District Judge Scheindlin Withdraws National Day Laborer Decision

National Day Laborer Decision Not To Be Cited For Precedential Value.

     In our February 12, 2011 post, we discussed U.S. District Judge Scheindlin’s National Day Laborer decision, involving whether metadata had to be provided in response to an FOA case request. We now report that Judge Scheindlin recently has withdrawn the opinion and indicated that it should not be cited for precedential value.

Discovery Sanctions: Blocking Deposition Questions On Prior Stress Events Justified Discovery Sanctions Against Plaintiff And His Attorney

 

Vinson Allows Such Inquiries During Discovery.

     Where a plaintiff in a wrongful termination suit puts his/her medical condition into controversy, Vinson v. Superior Court, 43 Cal.3d 833 (1987) held that an IME/psychological exam was fair game because this condition was at issue in the suit.

     In like vein, Acting Justice Rylaarsdam on behalf of a 3-0 panel in Cashman v. SWH Corp., Case No. G044531 (4th Dist., Div. 3 May 26, 2011) (unpublished) sustained discovery sanctions of a little over $6,500 against plaintiff and his attorney when plaintiff refused to answer questions about prior stressors in an employment case. Vinson was found on point so as to uphold the sanctions award.

     Plaintiff challenged the sanctions award against his attorney. Although there were standing problems with this attack, the appellate court found that seeking these sanctions through the memorandum of points and authorities was adequate notice that they were being sought against the attorney. (Contrast In re Marriage of Fuller, 163 Cal.App.3d 1070, 1077 (1985) [nothing in notice, pleading, declaration, or memorandum indicated that sanctions targeted against a particular litigant].)

     BLOG OBSERVATION--Although this was an appeal from a sanctions grant, co-contributor Mike remembers his days of practicing in Los Angeles County Superior Court where many judges would deny sanctions request outright against an attorney or other litigant unless the sanctions request was made in the Notice of Motion as well as highlighted in the caption of the Motion request (even if the request was contained elsewhere, such as in a supporting memorandum).

E-Discovery: U.S. Magistrate Andrew J. Peck And Attorney David J. Lender Write “E-Discovery” Article Worth Reading

They List Their 10 Key E-Discovery Issues for 2011.

     Available for reading in the Metropolitan Corporate Counsel (April 3, 2011 release) is an article “10 Key E-Discovery Issues in 2011: Expert Insight to Manage Successfully” written by U.S. Magistrate Judge Andrew J. Peck (S.D.N.Y.) and attorney David J. Lender (a partner at Weil, Gotshal & Manges LLP).

     They list the following as the key issues in this area for 2011:

1. Cooperation

2. Proportionality

3. When To Collect?

4. Search

5. Rule 502

6. Privilege and Privilege Logs

7. Social Networking

8. Cloud Computing

9. Foreign Discovery

10. Sanctions

     The writers predicted that 2011 would continue to be dominated by motions for sanctions for alleged preservation failures (with most of these motions asking for awards of substantial attorney’s fees). In line with cooperation, the writers suggest that litigants should try to get together and invoke “proportionality”--trying to determine what is really important depending on the complexity of the case and attempting to agree on searching techniques. The writers report that keyword searching will produce less than 50% of responsive ESI, but that clustering and concept searching techniques (sometimes in tandem with keyword searches) will frequently prove more helpful. Cooperation between litigants/counsel was a focal topic of the article. (See also William A. Gross Construction Assoc. v. American Manufacturers Mutual Ins. Co., 256 F.R.D. 134, 136 (S.D.N.Y. 2009) (Peck, M.J.) [stressing importance of cooperation].)

     According to the Socha-Gelbmann Electronic Discovery Survey, e-discovery costs were expected to top $4.6 billion in 2010 (up from over $2.7 billion in 2007).

     BLOG UNDERVIEW--When co-contributor Mike was clerking for a New York City law firm in the summer after his second year of law school, he met (now) Magistrate Judge Peck, who was a practicing attorney at the time, through his law school colleague and friend, George W. Lewis, a trademark/copyright attorney now practicing with Jacobson Holman PLLC in Washington, D.C. Thanks to Judge Peck for co-authoring this e-discovery article.

Sanctions: Discovery Sanctions And Order Noncompliance Award Totaling $5,870 Against Attorney Appealed

 

You Gotta Read On To See What Happens.

     This one started out badly for attorney. A trial judge imposed three types of awards against plaintiff”s attorney: (1) a $2,035 award for partial discovery referee expenses; (2) a $2,335 award for plaintiff’s deposition nonappearance; and (3) a CCP § 177.5 award of $1,500 for failing to comply with the two prior orders. However, attorney appealed these awards in Fletcher v. Bantan, Case No. B222418 (2d Dist., Div 7 Apr. 19 , 2011) (unpublished).

     Things seemed to be going better for attorney, because the appellate court determined that (1) the discovery referee order against him was erroneous because CCP § 645.1 only orders these costs to be paid by parties (not their counsel); and (2) the discovery referee was assigned without adequate due process.

     However, the real rub was that the discovery referee order was only voidable, not void in nature. Earlier, the appellate court had dismissed appeals of these orders as time-barred, an order holding up because these orders were not void.

     The § 177.5 order was no abuse of discretion and the lower court had jurisidiction to impose further orders even though attorney substituted out. 

     The voidability versus void distinction came home to roost in this one.    

 

E-Discovery Sanctions: State Appellate Court Affirms $13,500 Sanction Against Plaintiff And Her Attorney For Being Evasive In E-Discovery Cell Phone Dispute

 

First District, Division 4 Finds Sanctions Proper Under CCP § 2023.030(a).

     We do not see that many e-discovery sanction cases at the state level, with most of the law being decided by federal courts--notwithstanding that the Evidence Code definition of “writing” does include electronic information. Here is one where a $13,500 discovery sanction was affirmed in an e-discovery dispute.

     In Moreno v. Ostly, Case No. A127780 (1st Dist., Div. 4 Feb. 22, 2011) (unpublished), a trial court awarded a $13,500 discovery sanction under CCP § 2023.030(a) (a nonexclusive listing of the types of misconduct that are considered to be a misue of the discovery process) against plaintiff and her attorney in a sexual harassment/retaliation/back wages case. The basis for the sanctions was that both were evasive with respect to the existence of cell phones containing potentially discoverable information, first saying no emails were on the phones and then indicating that the cell phones did not exist at all. The trial court was not amused, and neither was the appellate court under the abuse of discretion standard. “Like the trial court, we are mystified, at the very least, that counsel did not disclose to opposing counsel and the court that at least the cell phones used by [plaintiff] during the relevant period were no any longer in her possession.” (Slip Opn., p. 11.) Lesson from this one: don’t waffle on the existence or non-existence of electronic information.

     Queen Victoria:  “We are not amused.”

     BLOG BONUS--Use our search function and enter “E-Discovery” to get federal decisions in this area.

 

E-Discovery: District Judge Sheindlin Issues New Opinion About Metadata Fields

Opinion Arose From FOIA Productions by Federal Government; Cost Shifting Is Indicated As the Usual Rule in Production “Do-Overs.”

     U.S. District Judge Shira A. Scheindlin, on February 7, 2011, issued yet another important opinion in the e-discovery area. (She is truly a pioneering jurist in this regard, authoring several of the groundbreaking electronic discovery decisions.)

     In National Day Laborer Organizing Network v. U.S. Immigration and Customs Enf. Agency, 10 Civ. 3488 (SAS) (S.D.N.Y. Feb. 7, 2011), District Judge Sheindlin decided that the federal government must include metadata in Freedom of Information Act products, because certain key metadata fields are an integral part of public records. This is the first federal ruling in the FOIA area, although some state court decisions under sunshine laws had earlier acknowledged that metadata is part of an electronic document.

     Judge Scheindlin again stressed the need for cooperation on federal electronic discovery issues, indicating that it is no longer acceptable for any party to produce a significant collection of static images of ESI (electronically stored information) without accompanying load files. She also identified the metadata fields that should accompany any production of a collection of text-based ESI and that should accompany production of email messages, although these fields do not necessarily have to be used in every case (although apparently likely in large production cases).

     Finally, in a topic of interest to our blog, Judge Scheindlin noted that “[g]eneral;ly, when a court orders a ‘do-over’ [reproduction of previously produced hard copies in electronic format] it gives serious consideration to cost shifting or cost sharing” (Slip Opn., p. 17, n. 36), which usually entails an award of attorney’s fees among the costs.

Inside Univac I.

Discovery/Sanctions: $1,750 Sanction Against Losing Party Seeking Protective Order Sustained

 

Losing Party Unsuccessfully Sought to Regulate Deposition Conduct of Opposing Counsel.

     Civil litigators have seen it often--an opposing attorney who overuses privilege objections, instructs deponents not to answer based on nonprivileged grounds, coaches the witness through speaking objections or interruptive conferences outside of the deposition, or insults counsel taking the depositions. Apparently, plaintiff got fed up with opposing counsel’s conduct at a deposition, bringing a protective order to control the future conduct of opposing counsel at upcoming depositions. The trial court felt the request was tantamount to a prior restraint on counsel’s speech to lodge objections at future objections, with the correct remedy being to move to compel responses to specific questions that were not answered or obstructed by counsel. A discovery sanction of $1,750 was imposed for filing a frivolous motion under Code of Civil Procedure section 2025.420(d).

     Plaintiff appealed in Aceves v. Catellus Development Corp., Case No. B212903 (2d Dist., Div. 2 Feb. 8, 2011) (unpublished).

     Plaintiff could not beat the deferential abuse of discretion standard applicable to the lower court’s discovery ruling. The appellate court did observe that it is generally improper to instruct a witness not to answer a question unless a privilege is involved or deposing counsel’s conduct is egregious in nature, with Los Angeles County Superior Court Local Rules 7.12(e)(8) & (9) so holding (including a guideline for counsel not to coach a deponent). The problem was that opposing counsel’s conduct, while labeled as “juvenile at times,” was not really coaching, simply telling the witness not to speculate (although perhaps doing it once too often). Nothing was wrong with telling an employee deponent to refuse to answer questions about attorney notes made during an interview when they were clearly work product protected. The heated exchanges about deposition scheduling did not implicate any suppression of relevant evidence.

      Example of colorful deposition behavior involving different parties in another case, as shown on Youtube:

     BLOG OBSERVATION--In federal court, district judges may have more leeway to dictate deposition protocol guidelines as standing orders in civil matters. (See Hall v. Clifton Precision, 150 F.R.D. 525, 531-532 (E.D. Pa. 1993) [9 guidelines for deposition protocol often used as standing orders by many district judges].) However, there is nothing expressly akin to these rules in the California Code of Civil Procedure, although a party can certainly seek to compel answers to unanswered questions, although it is infrequently done. (Code Civ. Proc., § 2025.480.) With respect to the Los Angeles local rules, they unfortunately have been clarified in a 1999 ethics opinion as only being directory in nature and ordinarily not giving rise to sanctions, unless a lower court enters the guidelines as a mandatory standing order in civil matters. (See L.A. County Bar Assn. Professional Responsibility & Ethics Comm. Formal Ethics Opinion No. 497 (March 8, 1999).)

      BONUS:  Link to Wikipedia entry on Catellus Development Corp.

E-Discovery: Defendants Ordered To Pay $1.049,850.04 In Fees And Costs For Electronic Spoliation

U.S. Magistrate Judge Grimm Had Earlier Ordered Imprisonment If Payment Ducked, But Defense Did Remit Partial Payment Of What Was Ordered.

     In our September 21, 2010 post, we discussed Victor Stanley, Inc. v. Creative Pipe, Inc., 269 F.R.D. 497 (D. Md. 2010), in which U.S. Magistrate Judge Grimm determined that defendants repeatedly failed to comply with multiple court orders compelling the preservation and production of ESI in response to Plaintiff's discovery requests. He ordered monetary sanctions, including costs and legal fees allocable to spoliation under penalty that an individual defendant be imprisoned for two years if not promptly paying the monetary sanctions.

     Well, the final tally of the fee/costs spoliation sanctions is now in.

     On January 24, 2011, Magistrate Judge Grimm, in Victor Stanley, Inc. v. Creative Pipe, Inc., Civil No. MJG-06-2662 (D. Md. Jan. 24, 2011, Doc. No. 448), decided defendants should pay $1,049,850.04 for fees and costs, which left $712,053.67 to be paid within 30 days because defendants had already remitted an earlier payment of $337,796.37.

     In determining the lodestar, Magistrate Judge Grimm did not feel he was bound to the district court's guidelines for determining attorneys' fees in certain cases, labeling them "guidelines, not holy writ." He also credited the American Intellectual Property Law Association's report of the economic survey showing the mean average billing for partners in the Washington, D.C. CMSA. (See Leviton Mfg. Co. v. Universal Sec. Instr., Inc., 613 F.Supp.2d 670, 732-733 (D. Md. 2008) [citing report], vacated on other grounds, 606 F.3d 1353 (Fed. Cir. 2010).) In most instances, he found it was not improper to have multiple attorneys at hearings and it was acceptable for attorneys to bill for conferences among themselves.

E-Discovery: N.D. Illinois Court Clarifies Cost Shifting Factors In Non-Party E-Discovery Context

 

Degeer v. Gillis Examines Factors to be Weighted For Shifting Costs in Third Party Electronic Discovery Disputes.

     In Degeer v. Gillis, 2010 U.S. Dist. LEXIS 129745 (N.D. Ill. Dec. 8, 2010), U.S. District Judge Nan R. Nolan examines the obligations of parties and non-parties under Federal Rule of Civil Procedure 45 as it relates to cost-shifting in the e-discovery context.

E-Discovery 2010: Sanctions Are Down For The First Time Since The 2006 F.R.Civ.P Amendments

Level of Culpability and Prejudice Are Still Key Factors Driving Sanctions Awards.

     Just as we are giving you our top 20 attorney’s fees decisional redux for 2010, Williams Mullen, a 300-attorney firm with offices in Virginia, North Carolina, D.C. and London, has posted a December 17, 2010 Alert that provides a nice summary of trends for 2010 in the area of e-discovery law and practice. We cherry pick some interesting trends that were traced by this firm in the Alert with respect to sanctions, which typically include reimbursement of attorney’s fees relating to e-discovery battles.

     E-discovery sanctions were sought and awarded in slightly fewer cases in 2010, the first dip since the 2006 e-discovery amendments to the Federal Rules of Civil Procedure. Of the 209 e-discovery opinions issued in 2010, sanctions were sought in 79 (35%) and awarded in 49 (62% of the cases in which sanctions were requested, or 23% of all e-discovery cases). This represents a decrease from 2009, where sanctions were sought in 42% of all e-discovery cases and were awarded in 70% of the cases in which they were requested (30% of all e-discovery cases). Fees and costs were the most common sanction, awarded in 60% of the cases involving sanctions. Terminating sanctions, adverse inferences, and counsel sanctioning decreased significantly in 2010, according to a chart presented by Williams Mullen in its Alert.

      The spoliator’s level of culpability resulting in a loss is an important factor in the sanctions area, although this is where sharp conflicts arise among different jurisdictions. (See discussions in Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of America Securities, 2010 U.S. Dist. LEXIS 4546 (S.D.N.Y. Jan. 15, 2010) [District Judge Schiendlin]; Rimkus Consulting Grp. v. Cammarata, 2010 U.S. Dist. LEXIS 14573 (S.D. Tex. Feb. 19, 2010) [District Judge Rosenthal]; Victor Stanley, Inc. v. Creative Pipe, Inc., 250 F.R.D. 251, 2010 WL 3703696 (D. Md. Sept. 9, 2010) (Victor Stanley II) [District Judge Grimm].) However, the factor driving the outcome in most of the 2010 failure-to-preserve cases was the prejudice or harm to the aggrieved party.

     The Alert also has some other interesting discussions on e-discovery topics. We thank Williams Mullen for such a nice year end survey in this important area.

"Silent E" by Tom Lehrer

 

“Silent E” by Tom Lehrer

Discovery Sanctions: $52,600 In Discovery Sanctions Reversed On Appeal

 

Third District Finds Substantial Justification for Sanctioned Parties’ Position, Many of Which Involved Attorney-Client Privilege Concerns.

      Although involving a convoluted set of facts for which we will only give you the “Reader’s Digest” version, Truckee Carson Irrig. Dist. v. Sierra Pacific Power Co., Case No. C061004 (3d Dist. Nov. 9, 2010) (unpublished) does reinforce that appellate courts--even under the abuse of discretion standard--will reverse discovery sanctions when they feel they were unfair or there was “substantial justification” for the sanctioned parties’ positions.

     There, around $52,600 in total discovery sanctions were imposed on utility and water companies for not producing certain documents, although many were claimed as attorney-client privileged even after an asset sale resulted in a transfer of documents from one company to another. Beyond that, the rulings and recommendations of the trial court and discovery referee were incongruous in certain material respects. The upshot was that the appellate court could not sustain the discovery sanctions, even under the deferential abuse of discretion standard, given the convoluted state of the discovery proceeding and given the overall reasonableness of appellants’ positions throughout. Sanctions reversed.

Family Law/Discovery Sanctions: Attorney Sanctioned To Pay $1,650 In Discovery Sanctions Still Must Pay Them

Court of Appeal Did Not Condone Keeping OSC Contempt Hearing On Calendar With No Intent to Proceed.

     The next one is an object lesson, likely reinforcing that sanctions can follow from not showing professional courtesy--at the least.

     In Marriage of Booth, Case No. A127140 (1st Dist., Div. 1 Nov. 4, 2010) (unpublished), wife’s attorney in a child custody proceeding was sanctioned a total of $1,650 (some payable to an expert and some payable to the court) as a discovery sanction for keeping an OSC contempt hearing on calendar against an expert when there was no intent to go forward. Sanctioned attorney appealed, to no avail.

     The appellate court likely felt the lower court’s award was charitable, since a total of $8,330 in sanctions was requested. However, it found no justification for taking up calendar space and inconveniencing the court by not serving the contempt OSC or not taking the matter off calendar. Under the circumstances, the lower court was fully justified in sanctioning the attorney for “wasting everyone’s time.”

Discovery Sanctions: Over $1.9 Million In Fee Sanctions Reversed With Overturning of Terminating Sanctions Award

Second District, Division 3 Finds No Prior Predicate Discovery Order to Underpin Large Sanctions Award.

     This one is a whopper of a reversal . . . demonstrating that appellate courts will insist that large sanctions awards for discovery abuses be based strictly on predicate rulings required under the Discovery Act.

     Callan v. CRC Ins. Services, Inc., Case Nos. B206505 et al. (2d Dist., Div. 3 Nov. 2, 2010) (unpublished) involved a situation where a plaintiff was hit with hard sanctions for alleged misuse of the discovery process: defendant was awarded over $2.3 million in damages under a cross-complaint and plaintiff was hit with over $1.9 million in attorney’s fees as a result of the terminating sanctions ruling. Although a convoluted procedural and discovery history was involved, the nub of the lower court’s ruling was its perception that plaintiff failed to appear for depositions under certain stipulated discovery schedules filed with the court. However, no formal order was ever entered compelling plaintiff’s deposition attendance and testimony. Plaintiff appealed the substantial sanctions assessed against her. 

     Whopper.

Discovery Sanctions: Sanctions Against Attorney For Evasive RFA Response Affirmed On Appeal

Fourth District, Division 3 Reminds Us That Prior Motion to Compel Is No Precondition to Sanctions Request.

     This next case is not so much remarkable for the result, but for reminders on what should be done by litigators when responding to discovery requests.

     In Mallard v. Progressive Choice Ins. Co. (Kent), Case No. G042778 (4th Dist., Div. 3 Oct. 26, 2010) (unpublished), attorney was imposed with $1,090 in monetary sanctions for making an evasive RFA response on behalf of his client. Basically, attorney responded having no knowledge to respond to the request despite filing a verified complaint saying the request was indeed what happened. During the discovery hearing, attorney admitted he made a mistake, but the trial court was not persuaded because attorney did not try to correct the error during the meet and confer process. Attorney appealed the sanctions award.

     Justice Fybel, on behalf of a 3-0 panel of the Fourth District, Division 3, affirmed.

     Granting the motion to compel further responses was no abuse of discretion, much like the sanctions award. Trial judges have a range of penalties that they can impose for discovery abuses, especially making evasive responses to discovery under Code of Civil Procedure section 2023.030. In fact, an order upon a motion to compel further responses is not a necessary predicate to a sanctions motion under section 2023.030. (Tucker v. Pacific Bell Mobile Services, 186 Cal.App.4th 1548, 1561 (2010).) This case showed no misuse of sanctioning power, since the attorney did not even provide the factual basis for responding to the RFA as he did on behalf of the client.

E-Discovery Sanctions: Holy Smokes! Pay Attorney’s Fees For Spoliation Or Go To Jail!

Federal Magistrate Judge Issues Such An Order, Finding It To Be Within the Ambit of Civil Contempt Discovery Sanctions.

     Here is a very interesting e-discovery sanctions order fashioned by a federal magistrate who did more than enter a default judgment as to a liability on a copyright infringement count against corporate defendant and its president Mark Pappas, who was found to have pervasively and willfully violated several court orders to preserve and produce electronically stored information.

     U.S. Chief Magistrate Judge Paul W. Grimm , in Stanley v. Creative Pipe, Inc., 2010 WL 3530097 (D.Md. Sept. 9, 2010), took the unusual additional step of ordering that Mr. Pappas be imprisoned for 2 years unless he paid to Plaintiff the attorney’s fees and costs awarded as a result of ESI spoliation. Magistrate Judge Grimm found basis to levy this as a civil contempt sanction under Federal Rule of Civil Procedure 37(b)(2)(C).

     The opinion has a very scholarly discussion of the different states of mind relating to ESI spoliation, the success of different sanctions in various courts, and the bases for spoliation sanctions.

     BLOG FAVORITE QUOTE—In describing the paperwork that resulted from Plaintiff’s request to file the sanctions motion, the magistrate judge put it this way . . . “[it] resulted in filings and exhibits exceeding the Manhattan telephone directory in girth . . .”

Family Law And Discovery: $9,000 Joint/Several Sanctions Award Against Ex-Wife and Her Attorney Reversed On Appeal

Fourth District, Division 2 Finds Substantial Justification for Motion to Quash Subpoenas

     Code of Civil Procedure section 1987.2 provides for an award of reasonable expenses and attorney’s fees to a party making or opposing a motion to quash a subpoena if his/her actions were made in bad faith or undertaken without substantial justification. Usually, the “substantial justification” part of the equation is key because it is very rare to have sufficient proof of bad faith.

     In Marriage of Nelson, Case No. E048975 (4^th Dist., Div. 2 Aug. 30, 2010) (unpublished), ex-wife and her attorney were jointly and severally sanctioned $9,000 by the lower court for bringing certain motions to quash subpoenas addressed to institutions holding the divorced parties’ accounts, motions which followed earlier rulings by which wife was ordered to reimburse $53,034 in community property funds used to fight a Marvin v. Marvin oral contract battle against husband (notwithstanding the absence of any fee shifting mechanism to reallocate fees).

Lee Marvin in Cat Ballou

     The appellate court reversed the $9,000 in subpoena sanctions because it found there was “substantial justification” in bringing the motions to quash. Specifically, the subpoenas were untimely and issued after the applicable discovery cutoff. Given the correctness of this timeliness challenge, it was error to assess sanctions against ex-wife and her attorney.

Discovery Sanctions: $2,500 Sanctions Award Reversed Because Nothing Showed Attorney Advised Client’s Failure To Appear At Deposition

Second District, Division 8 Believes Attorney Was Blameless Under the Circumstances.

     In Scarola v. Dedicated Talent Agency (Pettigrew), Case No. B220482 (2d Dist., Div. 8 August 13, 2010) (unpublished), attorney for an apparently uncooperative cross-complainant was sanctioned $2,500 after her client failed to appear for a deposition in New York (even though defense counsel asked for $18,000, with the sanctions also jointly imposed against cross-complainant). Attorney appealed, and won a reversal.

     The basis for sanctions was misuse of the discovery process under Code of Civil Procedure section 2023.030(a). However, under this ground, an attorney may only be penalized for advising disobedience, with the burden of proving that no such advice was given resting with the attorney. (Corns v. Miller, 181 Cal.App.3d 195, 200-201 (1986).) In fact, sanctions have been reversed in other cases where the facts demonstrated that the attorney tried to convince the client to submit to a particular discovery process. (See, e.g., Ghanooni v. Super Shuttle, 20 Cal.App.4^th 256, 261 (1993).) If the evidence shows an attorney is blameless, it is an abuse of discretion to impose sanctions against counsel. (Weinkauf v. Superior Court, 64 Cal.2d 662, 665 (1966).)

     The circumstances in Scarola showed that cross-complainant’s counsel did try to get her client to appear for the deposition in New York, and that defense counsel appeared to travel out for the deposition even though being warned that the client would not be present for a deposition. Obviously, the appellate panel believed that attorney was blameless, expressing the view that defense counsel should have promptly sought a protective order that the deposition be held in Los Angeles (where defense counsel practiced) or that cross-complainant pay defense counsel’s fees and expenses for traveling to New York. (Code Civ. Proc., § 2019.030(a), (b); Snyder v. Superior Court, 9 Cal.App.3d 579, 586 (1970) [statutory predecessor to § 2010(b)].) Also, the reviewing panel did not believe that attorney had to inform opposing counsel of any client control problems (although it was obvious that there were problems), because to do so would likely breach a lawyer’s ethical duty to keep confidential any communications with a client. (Slip Op., p. 10.)

     The end result was a reversal of the sanctions against attorney, although the sanctions remained against cross-complainant (who apparently did not appeal the order).

Sanctions: Coaching at a Deposition Leads to Monetary Sanctions . . .

But First District, Div. 5 Rules That Sanctions For Expenses Incurred Cannot Include Expenses of Taking Another Deposition.

     In a proposed class action, defendant deposed one of the plaintiffs.  Plaintiff’s counsel, J. David Franklin, wrote on a legal pad and showed it to his client, the deponent.  Counsel also instructed the deponent not to answer questions related to her standing to bring the action, and refused to permit defense counsel to question the deponent about the notes on the legal bad.  After the deposition, Mr. Franklin threw away the notes.  Defendants moved for sanctions against plaintiffs and Mr. Franklin.

     The trial court accepted the defense version of what occurred at the deposition, explaining:  “putting a note in front of a witness during a deposition and then telling the witness not to say what it is, it certainly has the objective appearance of being improper coaching.”  The trial court imposed sanctions in the amount of $7,500 pursuant to CCP section 2030.030.  (Note:  An order directing payment of monetary sanctions by a party or an attorney may be appealed if the amount exceeds $5,000).  Plaintiffs appealed.  Tucker v. Pacific Bell Mobile Services, A126077 (1st Dist., Div. 5 July 29, 2010) (certified for publication).    

Above:  Children playing in sandbox.  Tulare migrant labor camp.  March 1940.  Photographer:  Arthur Rothstein, 1915-1985.  Library of Congress.

E-Discovery: New York Law Journal Dissects U.S. District Judge Scheindlin’s Pension Committee Decision

     In our February 27, 2010 post, we provided some highlights from The Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, which was amended some in a January 15, 2010 order. This decision can now be found at 2010 U.S. Dist. LEXIS 4546 (S.D.N.Y. Jan. 15, 2010). Pension Committee revisited U.S. District Judge Scheindlin’s prior Zubulake decisions and defined the standards of preservation for e-discovery since those opinions were issued.

     Now, Michael Hoenig has written a February 23, 2010 article “’Pension Committee’ Clarifies E-Discovery Requirements” for the New York Law Journal. The article contains a good synopsis of the decision in a question-and-answer format.

E-Discovery: U.S. District Judge Scheindlin Comes Out With New E-Discovery Decision

Decision Revisits State of E-Discovery Six Years After Zubulake.

     At both the federal and state levels of litigation, e-discovery is an expensive process fraught with onerous obligations by the responding litigants and their attorneys. Obviously, failure to preserve, collect and store documents can harm the integrity of the judicial process. As a result, the judiciary has indicated that a broad range of remedies, including orders granting further discovery, cost-shifting (usually awards of substantial attorney’s fees and forensic document expert costs), fines, special jury instructions, evidentiary preclusion, and the entry of a default judgment/dismissal, may be in order depending on the circumstances.

     Must reading for all litigators and in-house counsel is U.S. District Judge Shira A. Scheindlin’s recent decision in The Pension Comm. of the University of Montreal Pension Plan v. Banc of America Securities, LLC, Case No. 05 Civ. 9016 (SAS) (S.D.N.Y.), Opinion and Order filed January 11, 2010. District Judge Scheindlin is the author of prior groundbreaking e-discovery decisions in Zubulake. In her recent decision, District Judge Scheindlin revisits Zubulake and provides a detailed methodology for adjudication of culpability and imposing appropriate remedies for e-discovery transgressions.

     Although we cannot do justice to all aspects of this decision, here is a quick summary of nuggets distilled from reading this new opinion:

• Definitely after July 2004 (when the final relevant Zubulake opinion was issued), the failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information;
• After July 2004, the failure to collect records—either paper or electronic—from key players constitutes gross negligence or willfulness as does the destruction of email or backup tapes after the duty to preserve has attached (which arises when a party reasonably anticipates litigation);
• The innocent party in an e-discovery dispute must prove the following three elements: that the spoliating party (1) had control over the evidence and an obligation to preserve it at the time of destruction or loss; (2) acted with a culpable state of mind upon destroying or losing the evidence; and that (3) the missing evidence is relevant to the innocent party’s claim or defense;
• When the spoliating party’s conduct is sufficiently egregious to justify a court’s imposition of a presumption of relevance and prejudice, or when the spoliating party’s conduct warrants permitting the jury to make such a presumption, the burden then shifts to the spoliating party to rebut that presumption;
• A court should always impose the least harsh sanction that can provide an adequate remedy, with the selection of an appropriate remedy constituting a delicate matter that requires a great deal of time and attention by a court;
• Monetary sanctions are appropriate for punishment and for deterrence; and
• Counsel must direct employees to preserve all relevant records—both paper and electronic—after a duty to preserve attaches, as well as help create a mechanism for collecting the preserved records so that they can be searched by someone other than the employee preserving all relevant records.

     Many of the defendants in this recent decision were found to have been grossly negligent with respect to e-discovery, justifying an adverse jury instruction and monetary sanctions in the form of reasonable costs, including attorney’s fees, associated with reviewing the spoliating parties’ compliance declarations, deposing the declarants, and bringing the e-discovery sanctions motions before the court.

Time lapse tea cup

                   Spoliation.                        

Indemnity And Apportionment: $402,596.40 Fee Award Affirmed In Refusal To Defend Dispute

Sixth District Found Opposing Party Forfeited Challenge to Billing Record Objections When It Failed to Attack Omissions Through Discovery Motion.

     In the next case, the Sixth District—in UDC-Universal Development, L.P. v. CH2M Hill, Case No. H033862 (6^th Dist. Jan. 22, 2010) (unpublished)—affirmed a $402,596.40 fee award under a contractual provision when sustaining a trial court’s ruling that a cross-complainant obtained more relief by obtaining a judgment for breach of the contractual duty to defend even though cross-complainant lost on its indemnification claims.

     This decision does show the considerable discretion vested in lower courts to determine the “prevailing party” when neither side achieves a complete victory. It will not be disturbed in the absence of a clear abuse of discretion, something that did not happen in this particular case.(Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4^th 858, 894 (2008).)

     However, there is also an important discovery lesson that can be derived from this unpublished decision. Appellant challenged the lower court’s failure to apportion the fees, but made a critical error in proceedings below: it failed to move to compel further responses when it did not receive certain requested billing records from the fee claimant. Both the lower and appellate courts found that this forfeited any challenges that were targeted against the billing records. So, make your discovery motions if you are the fee objector attacking any of the claimant’s billing records.

Discovery Sanctions: $76,906.80 In Fees And Forensic Expert Expenses Awarded Jointly Against Ex-Employee And New Employer In Laptop Spoliation Case

Delaware Decision Shows How Substantial E-Discovery Monetary Sanctions Can Be Imposed In Failure to Preserve Evidence Case.

     Because California just recently passed e-discovery statutes, we continue to monitor cases of interest in fee and expense awards in computer spoliation cases. Here is one out of Delaware.

     In Beard Research, Inc. v. Kates (Kates II), 2009 Del. Ch. LEXIS 170 (Del. Ch. Oct. 1, 2009), an ex-employee and his new employers were held jointly responsible for spoliation of possible evidence on the employee’s laptop. Both were ordered to pay $76,906.80 to plaintiffs after they partially won a successful motion for sanctions, broken down as $56,546 in attorney’s fees and $20,360.80 in forensic expert expenses. This was based on a “failure to preserve” theory, after plaintiffs had repeatedly asked for production and the ex-employee reformatted and then replaced his laptop hard drive.

     Plaintiffs had asked for a total of $104,340.80, but the court made reductions based on finding that (1) only 2 of 4 lawyers needed to be involved in the battle, and (2) plaintiffs received a narrower sanction (an adverse inference sanction) than the original broader request (necessitating a 30% reduction off the original request).

    Spoliation.  Etymology: Middle English, from Anglo-French spoliacion, Latin spoliation-, spoliatio, from spoliare to plunder — more at spoil.

Sanctions: Less Drastic Sanctions Than Evidentiary And Issue Sanctions Are In Order For Failing To Produce Computer Embedded Information During Trial

Fourth District, Division 3 Reverses Sanctions, Ordering Reimbursement of Trial And Additional Discovery Costs.

     As indicated on prior posts on e-discovery, litigators must be attuned to both pretrial, trial, and post-appeal sanctions that can be awarded against parties failing to produce computer embedded information. Here is one where the offending party got a break, but not much of one—especially if we are right about the fees and costs that must be paid for a 10 week-plus trial and additional discovery ordered as the proper sanctions.

     The case is Jneid v. TriPole Corp., Case No. G039500 (4^th Dist., Div. 3 Dec. 17, 2009) (unpublished), emanating out of our own local Fourth District, Division 3.

     There, purchaser of a computer firm’s assets was hit with a multi-million jury verdict in favor of the asset seller and certain employees for not making certain payments as a result of the buy-out. Ten weeks into the jury trial, seller produced 17,000 pages of computer embedded documents that were within the ambit of prior discovery activities. Purchaser was granted its request for issue and evidentiary sanctions by which seller could not use the tardily produced documents at trial, buyer could use them without any authentication, and seller was precluded from arguing that buy-out milestones were not reached—sanctions that the appellate court later characterized as akin to a directed verdict against seller.

     On appeal, the Fourth District, Division 3, in a 3-0 decision authored by Justice Rylaarsdam, reversed.

     The appellate panel found that the ultimate disclosure of the documents militated against the “directed verdict” sanction, with even the parties agreeing that payment of the costs of the completed trial (on a mistrial basis) plus costs associated with additional discovery resulting from the late production were less drastic sanctions that accomplished their punitive goals. We bloggers would surmise that this result might get the case settled, because assessment of even these less draconian sanctions—costs for a long jury trial and additional discovery—is going to be a heavy financial burden for the selling parties to meet.

Discovery Sanctions: $25,607.03 In Sanctions Affirmed Where Attorney Interposed Too Many Deposition Objections

Fourth District, Division 1 Did Vacate “Future Deposition” Sanctions.

     The next post is a very pragmatic one for litigators involved in discovery battles. Cutting to the chase, an attorney was hit with substantial fees (sanctions) for interposing over 300 objections during the course of some depositions. The Fourth District, Division 1 affirmed, although they did “throw out” $10,000 in future anticipated deposition costs, because the pertinent discovery statutes only encompassed “incurred” expenses.

     In Hallam v. Johnson (Butler), Case No. D054852 (4^th Dist., Div. 1 Dec. 15, 2009) (unpublished), a discovery referee recommended that an attorney should be sanctioned $35,607.03 in fees and costs (out of a requested $100,307.53, which was voluntarily reduced from an initial request of $112,243.52) for interposing meritless objections—over 300—at some depositions. Attorney appealed, and most of the award was sustained.

     Attorney initially argued that “defending” a deposition was not equivalent to “employing” a discovery method for sanction purposes under the Discovery Act. Wrong, said the appellate panel, analogizing to the reasoning of Pueblo v. Superior Court, 158 Cal.App.4^th 1242, 1248 (2008), which involved a supplemental discovery response dispute.

     Attorney then argued that the discovery referee/trial court erred in specifying the specific discovery statute utilized as a basis for the sanctions award. Wrong again, said the Court of Appeal, citing to Ghanooni v. Super Shuttle, 20 Cal.App.4^th 256, 261 (1993)—no such requirement exists in the discovery sanctions context.

     Attorney next complained that the sanctions motion was untimely because it occurred past the date for a timely motion to compel. Wrong yet again, because a discovery sanctions motion can be brought later. (London v. Dri-Honing Corp., 117 Cal.App.4^th 999, 1001 (2004).)

     However, Attorney did get a reprieve because the appellate court reversed the $10,000 component of the discovery sanctions award for future deposition costs, finding that Code of Civil Procedure section 2023.030 only authorizes recoupment of sanctions for incurred expenses.

     End result: appellate court reduced the sanctions award by $10,000, meaning that Attorney was still out $25,607.03 in sanctions. Moral of the story: Be careful how (and how often) you object during depositions!

Discovery Sanctions: Sanctions Against Litigants’ Attorneys Reversed Where Evidence Showed Client Was Responsible For Sanctionable Conduct

Second District, Division 2 Reverses $3,387.50 Sanctions Award Against Attorneys.

     Under various discovery statutes, the trial court has discretion to award discovery sanctions jointly and severally against losing litigant and/or their attorneys. However, attorneys have another defense in their quiver—the “my client made me do it” defense.

     The Court of Appeal is Manzanares v. Bertolino (Marcus, Watanabe, Snyder & Dave, LLP), Case No. B211652 (2d Dist., Div. 2 Nov. 24, 2009) (unpublished) reversed a $3,387.50 discovery sanction awarded against attorneys as well as their clients. Reason: under Ghanooni v. Super Shuttle, 20 Cal.App.4^th 256, 261 (1993), an attorney can avoid sanctions if he advised the client to not engage in the conduct resulting in the sanctions but the client persisted (making client solely responsible for the sanctionable conduct). Attorneys on appeal were successful, because they did submit evidence in the trial court—unrebutted evidence—demonstrating client was solely responsible.

     BLOG UNDERVIEW—Attorneys need to be careful on using this discovery sanctions “defense,” because it likely implicates privileged conversations and may create a conflict in interest with the client that may want to be avoided, depending on the circumstances of course.

Discovery Sanctions: $3,587.00 Deposition Sustained Because It Is Collateral And Not Independently Appealable Until Later

 

Sixth District Provides a Good Lesson in Properly Timing Appeal of Discovery Sanctions Under $5,000.

     This next unpublished case, in a 3-0 unpublished decision from the Sixth District, is a good reminder on when the appeal of smaller discovery sanctions orders—under $5,000—is properly made.

     In Stough v. Klure, Case No. H034000 (6^th Dist. Oct. 26, 2009) (unpublished), defendant/appellant was sanctioned a total of $3,587 for refusing to submit to questioning under oath at a deposition (a sanctions imposed in late February 2009 arising from a mid-January 2008 deposition). Four days prior to the sanctions order, the trial court denied defendant’s summary judgment motion. Unhappy about the sanctions, defendant appealed.

Discovery Sanctions: Monetary And Terminating Sanctions Affirmed For Repeated Discovery Disputes

Fourth District, Division 3 Finds Sanctions Were No Abuse of Discretion.

     The next case is one in which the Fourth District, Division 3 affirmed monetary and terminating sanctions against either plaintiff’s attorney or plaintiff based on failure to respond to requests or failing to be candid in electronic discovery matters. This shows how one needs to be diligent in discovery, responding once extensions have expired and investigating issues relating to e-discovery—and being candid to opposing counsel and the court in the process.

     Most of the monetary sanctions in Estrada v. Delhi Community Center, Case No. G040405 (Oct. 20, 2009) (unpublished) were sustained against plaintiff’s attorney Jim Toledano. Outside of the merits, he never appealed the sanctions assessed only against him as an attorney, but only appealed through plaintiff. However, plaintiff did not have standing to challenge sanctions against Mr. Toledano, who had a distinct right to appeal the sanctions orders. (Lachkar v. Lachkar, 182 Cal.App.3d 641, 645 n.1 (1986); 20^th Century Ins. Co. v. Choong, 79 Cal.App.4^th 1274, 1277 (2000); Calhoun v. Vallejo City Unified School Dist., 20 Cal.App.4^th 39, 42 (1993).) However, the monetary sanctions were justified on the merits, where the circumstances showed either (1) Mr. Toledano only provided responses on the eve of a motion to compel hearing after indicating that he was too busy or attending to his father’s estate, or (2) Mr. Toledano refused to produce certain photographs without showing the refusal was justified.

     With respect to terminating sanctions, plaintiff’s installation of a new operating system that damaged existing data was found to be prejudicial when her attorney was alerted by defense counsel that plaintiff’s home computer would be sought long before installation of the new operating system that did result in some data alteration. Spoliation of evidence only needs some showing that the documents were potentially relevant to the litigation, as the e-documents were to plaintiff’s emotional distress claims. (Leon v. IDX Systems Corp., 464 F.3d 951, 959 (9^th Cir. 2006).) [BLOG OBSERVATION—This shows the wisdom of sending a “duty to preserve” warning to the other side in cases involving e-discovery.]

Discovery Sanctions: California Court Of Appeal Affirms $6,632.50 In Discovery Sanctions Against Party Who Failed To Adequately Answer Special Interrogatories

Published Decision Is Must Reading For All Litigators Engaged in Discovery Disputes.

     We knew that we would enjoy the next decision, because it analogizes discovery disputes to the imagery of Hotspur (Henry Percy)—who is graphically depicted in Shakespeare's Henry IV as being blinded by a combative nature and incapable of informally resolving a disagreement with the King (a trait that ultimately cost him his life). The case is Clement v. Alegre, Case No. A123168 (1^st Dist., Div. 2 Sept. 23, 2009) (certified for publication).

     In Clement, defendant served some special interrogatories seeking to obtain information of plaintiffs' damages, causation, and the existence of a loan commitment. However, plaintiffs objected on the basis that "economic damages" was vague and the interrogatories violated the self-containment rule. Meet and confers were engaged in, but plaintiffs stood their ground (a la Hotspur). A discovery referee was not impressed, ordering further answers and sanctioning plaintiffs in the amount of $6,632.50. Plaintiffs (a la Hotspur) appealed.

     Plaintiffs (a la Hotspur) lost the appellate battle, too.

     Clement is must reading on several points:

     · Misuse of the discovery need not be willful in order to justify monetary sanctions—it must be without substantial justification or evasive in nature;

     · The self-containment rule is not so ironclad that it should be applied in the absence of its rationale to prevent exceeding the numerical limit for special interrogatories;

     · A compound objection should likely be sustained only where more than a single subject is covered by an interrogatory;

     · The meet and confer process is just that—both parties must make a serious effort to negotiate and reach an informal resolution, with mere argument and bickering not being tantamount to a good faith attempt at informal resolution.

     BLOG FAVORITE QUOTE—"More than 10 years ago, Townsend v. Superior Court (1998) 61 Cal.App.4^th 1431 lamented the all too often interjection of 'ego and emotions of counsel and clients' into discovery disputes, warning that '[l]ike Hotspur on the field of battle, counsel can become blinded by the combative nature of the proceeding and be rendered incapable of informally resolving a disagreement.' (Id. at p. 1436.)"

     BLOG UNDERVIEW—Los Angeles County Superior Court Judge Terry Green actually requires attorneys to personally meet and confer when discovery disputes arise. He suggests that much gets done over a cup of coffee or a glass of Merlot. We tend to agree.

E-Discovery: Sanctions Result In 35% of Decisions Addressing These Issues

Mr. Segal So Reports in Recent California Lawyer Article.

     We would like to thank Mr. Perry L. Segal, an IT executive turned e-discovery attorney and consultant, for an interesting statistic he provided in his article “E-Discovery: New Rules, Big Headaches,” published in the September 2009 California Lawyer.

     Mr. Segal reports that it’s estimated that out of all case law that addresses e-discovery issues, more than 35% result in sanctions.

     Based on this statistic, Mr. Segal suggests that practitioners tackle e-discovery with the “W5+H” approach:

• Who should be involved?
• What data are you looking for?
• When are the due dates?
• Where is the data?
• Why is it relevant?
• And how will you comply?

E-Discovery Monetary Sanctions: Recent Maryland Federal Court Decision Nicely Summarizes Circumstances Justifying Monetary Cost/Fee Awards For Spoliation

Case Also Addresses Other E-Discovery Issues of Interest.

     Although we usually review only California decisions, a recent federal decision has a nice summary of the most typical situations justifying imposition of costs or attorney’s fees in instances where there was spoliation of potential evidence during the discovery phase of a case or after the litigant was on notice that the potential evidence should be preserved. Because California just enacted discovery amendments relating to electronic discovery, the next case is a good one to discuss with respect to the circumstances that normally will give rise to costs and fees as spoliation “sanctions.”

     U.S. Magistrate Judge Paul W. Grimm, in Goodman v. Praxair Services, Inc., __ F.Supp.2d __, 2009 WL 1955805 (D.Md. July 7, 2009), listed these situations as the typical ones when courts will grant an award of costs or attorney’s fees when ruling on a spoliation motion:

• First, courts will award legal fees in favor of the moving party as a less drastic alternative to dismissal or an adverse jury instruction;
• Second, courts will grant discovery costs to the moving party if additional discovery must be performed after a finding that evidence was spoliated;
• Third, in addition to a spoliation sanction, a court will award a prevailing litigant the litigant’s reasonable expenses incurred in making the motion (including attorney’s fees); and
• Fourth, in addition to a spoliation sanction, a court will award a prevailing litigant the reasonable costs associated with the motion plus any investigatory costs into the spoliator’s conduct. (Id. at *22.)

     Goodman also discussed these issues of importance in the electronic discovery area: (1) factors to be assessed in determining the timeliness of a spoliation motion; (2) whether the defense had a duty to preserve documents in the possession of third party consultants; (3) events that trigger the duty to preserve material evidence during a dispute; (4) delineation of “key players” and “control” for purposes of determining preservation of evidence duties; and (5) the different states of mind that demonstrate culpability for a spoliation determination, along with how those states of mind impact the severity of the sanction to be imposed by the federal judge.

Discovery Sanctions: Appearing And Arguing The Merits Forfeits Challenge To Inadequate Notice

 

First District, Division 5 Affirms Discovery Sanctions Award Against Husband and Husband’s Attorney.

     In In re Marriage of Moses and MacCallum, Case No. A121057 (1^st Dist., Div. 5 Aug. 13, 2009) (unpublished), the appellate court affirmed joint sanctions of $2,000 assessed against husband and his attorney in a dissolution proceeding involving discovery abuses related to a deposition notice sent to wife when the dissolution was effectively concluded, with husband and his attorney giving conflicting reasons for its relevance. Although affirming the result, the decision does have an important reminder to litigants challenging a decision based on inadequate notice. Husband/his attorney claimed that the sanctions order was erroneous based on inadequate notice although attorney appeared and argued the merits, not asking for a continuance or demonstrating prejudice. The Court of Appeal, in sustaining the order, pointed out that husband/his attorney forfeited the inadequate notice argument by appearing and arguing the merits of the motion without asking for a continuance. (Carlton v. Quint, 77 Cal.App.4^th 690.) So, if you are going to challenge notice, make sure that you request a continuance and don’t argue the merits to avoid the grim consequences of the waiver confronted by the appellants in the dissolution matter.

RFA Cost-Shifting: Court Of Appeal Affirms $165,724.65 Award For Plaintiff's Failure To Admit The Truth of RFAs Of Substantial Importance In Accounting Malpractice Case

Second District, Division 1 Finds Award Was No Abuse of Discretion.

     In our category "Requests for Admissions," we have discussed numerous cases where substantial fees and costs have been awarded or not awarded when a litigant (usually a defendant) challenged a plaintiff's refusal to admit the truth of certain requests for admissions. Code of Civil Procedure section 2033.420(a) imbues a trial court with discretion to shift costs unless it concludes that the other party had a reasonable ground to believe it would prevail on the matter not admitted (see subdivision (b) caveat). Here is another example of a case of where a substantial RFA cost-shifting award was sustained on appeal.

     Housing Authority of the City of Los Angeles v. KPMG LLP, Case No. B207313 (2d Dist., Div. 1 July 20, 2009) involved a situation where plaintiff lost an accounting malpractice case on summary judgment to KPMG based on the bar of applicable statutes of limitations. In addition, the trial court granted KPMG's motion for fees and costs of $165,724.65 because plaintiff denied RFAs of "substantial importance" tending to expose that plaintiff knew or should have known of the claims against the accounting firm more than two years before filing of the complaint.

     On appeal, the RFA costs award was affirmed. The record showed that subsequent declaration testimony by one of plaintiff's current higher-ups did confirm that he received and discussed a draft audit report, even though these facts were not admitted previously. Given the import of this draft audit report in the scheme of things, no abuse of discretion was committed in awarding the substantial fees and costs against plaintiff.

E-Discovery: Georgia Federal Court Orders Defendant To Reimburse Plaintiff $1,022,700 In Attorney's Fees And Costs As Discovery Sanction

District Court Opts for Sanctions Rather Than Entering Astronomical Default Judgment.

     This one certainly caught our eye and illustrates how e-discovery sanction can involve steep reimbursement of significant attorney's fees and costs.

     In Kipperman v. Onex Corp. (Kipperman II), 2009 U.S. Dist. LEXIS 44457 (N.D. Ga. May 26, 2009), a district judge found that defendants had engaged in a "textbook case of discovery abuse" by stonewalling its production of "hot" emails and leading the plaintiffs to believe that they were not relevant. Hardly the case, with the defense unilateral decisions being nixed by the district judge after finding that many of the emails "certainly are hot."

     The district judge then addressed the nature of the sanction to be imposed on the defense for discovery abuse. If he had struck the defendants' answer, it would have resulted in one of the largest default judgments in a case presenting novel issues. Instead of doing this, the district judge opted to order defendants to reimburse plaintiffs $1,022,700 in attorney's fees and costs as a discovery sanction. This lesser sanction was imposed because the defense did eventually produce the documents and supplemental discovery follow-up could cure any prejudice.

                              "Broadaxe".  From Wikipedia article.

Civil Code Section 1717: Bankruptcy Related Actions Were Recoverable By Successful Lender

Fourth District, Division 1 Finds No Basis To Assess Fees Against Nonsignatory Individual Principal In the Absence of an Alter Ego Finding.

     In New Century Corporation v. Positive Investments, Inc., Case No. ECU03797 (4^th Dist., Div. 1 July 8, 2009) (unpublished), lender was awarded attorney's fees of $83,329 under an attorney's fees clause of a loan agreement (out of a requested $114,339.77 in fees) against a defaulting borrower who fraudulently quitclaimed to a new entity and then filed serial bankruptcies forcing lender to take bankruptcy actions that eventually resulted in dismissal of the bankruptcy cases. (The bankruptcy judge ordered sanctions against the fraudulent transferee, transferee's principal Mr. Lo, and transferee's bankruptcy counsel.) However, the trial court refused to award fees against Mr. Lo, who was not a signatory to the loan agreement (being only the principal of the borrower signatory). Borrower appealed, and lender cross-appealed.

Discovery Sanctions: Fifth District Reverses $1,190 Sanctions Award Against Plaintiff When Trial Court Granted Reconsideration On Tardy Expert Witness Augmentation

Fifth District Found That Absence of Sanctions Request in Motion for Reconsideration Meant the Award Violated Due Process.

     Frequently, we have discussed sanctions awards that are vacated because they do not comply with due process. Here is another one, occurring in connection with a successful defense reconsideration motion regarding a tardy expert witness augmentation.

     In Vargas v. Bakersfield Ranch Market, Case No. F055788 (5^th Dist. July 6, 2009) (unpublished), plaintiff moved to augment her expert witness designation to name a new expert. Defendant opposed the motion and requested sanctions in its opposition, with the trial court granting the motion and denying the sanctions request. Because of scheduling issues that prevented the newly designated expert from being available for a deposition before the deadline set forth in the augmentation order, the defendant moved for reconsideration (but made no request for sanctions). The lower court granted the reconsideration motion, striking the augmented expert designation and imposed sanctions of $1,190 against plaintiff and her counsel. (The $1,190 apparently was an award of attorney's fees to defense counsel.) Plaintiff moved for reconsideration of the sanctions award, which was denied. Plaintiff appealed, claiming the award was made without notice, in violation of due process.

     The Fifth District, in a 3-0 opinion authored by Justice Hill, agreed.

                                  Lack of Due Process

Discovery: Governor Schwarzenegger Signs New E-Discovery Rules Into Law

Rules Go Into Effect Immediately.

     Because discovery disputes can carry monetary sanctions (including attorney’s fees), we alert readers to the fact that effective June 29, 2009, California has new statutory provisions relating to electronic discovery. Assembly Bill No. 5 adds Code of Civil Procedure sections 1985.8 and 2031.285 as well as amends sections 2016.020, 2031.010, 2031.020, 2031.030, 2031.040, 2031.050, 2031.060, 2031.210, 2031.220, 2031.230, 2031.240, 2031.250, 2031.260 2031.270, 2031.280, 2031.290, 2031.300, 2031.310, and 2031.320.

Discovery Sanctions: $2,265 Sanctions For Nonparty’s Failure to Appear At Discovery “Records and Appearance” Deposition Affirmed On Appeal

First District, Division 3 Resolves Conflict Between CCP sections 1987.5 and 2020.510(b).

     A percipient nonparty witness was served with a deposition subpoena commanding him to give testimony and produce documents during the discovery process. However, the subpoena had no affidavit or declaration of good cause. Nonparty banked on the invalidity of the subpoena because Code of Civil Procedure section 1987.5 says that such a deposition subpoena is not valid unless a copy of the affidavit upon which the subpoena is based happens to be attached to the deposition notice. The lower court disagreed, sanctioning nonparty $2,265 for failure to appear at the scheduled deposition. Nonparty did not like the result (obviously), and appealed.

     The First District, Division 3, in Terry v. SLICO, Case No. A123310 (1^st Dist., Div. 3 June 25, 2009) (certified for publication), affirmed the sanctions order.

Discovery Sanctions: $6,477.86 Fee Award Against Attorney For Failure To Attend Deposition Sustained On Appeal

 

Second District, Division 8 Rejects Challenges to Fee Award.

     In Barba v. Anderson-Mota, Case No. B206213 (2d Dist., Div. 8 June 24, 2009) (unpublished), plaintiff's attorney was two hours late in attending a noticed deposition of his client, after leaving a message he would be an hour late and then being inaccessible for any follow-up conversations. Although plaintiff showed up, defense counsel terminated the deposition after an hour, causing inconvenience for attorneys representing other parties who also showed up for the deposition. Defense counsel asked for a voluntary reimbursement of $1,700 to cover some of his time and hard costs such as the court reporter and Spanish language interpreter, threatening a sanctions motion if this was not paid. No response. The trial court awarded combined sanctions of $6,477.86 against plaintiff's attorney, divided among four set of inconvenienced counsel.

     Plaintiff's attorney appealed, and did not fare well.

     The trial court did not abuse its discretion in sanctioning the attorney because "defense counsel was not obligated to wait around under [the] circumstances and continue to bill time to their clients."

     Aggrieved attorney argued a written statement of decision was required, but that contention was rejected when it came to discovery sanctions. (See California Shellfish, Inc. v. United Shellfish Co., 56 Cal.App.4^th 16, 25-26 (1997).)

     Sanctions are also appropriate on the motion of other parties attending the deposition, Code Civ. Proc., § 2025.450(c)(2), with formal or informal joinders in the motion adequately preserving the issue and avoiding unnecessary duplication.

     Moving party's request for voluntary compensation adequately satisfied the meet and confer requirement.

     So, in the end, plaintiff's attorney had to absorb the sanctions, with the defendants also winning their appellate costs for prevailing on appeal.

Lemon Law: Appellate Court Affirms $344,600 Fee Award, Adds Another $57,587 For Discovery Referee Fees, And Remands For More Postjudgment Fees

Fourth District, Division 3 Affirms and Augments Fee Awards, After Also Determining that Defense Tactics Required Terminating Sanctions For Bad Faith Discovery Abuses.

     Here is another wild one, dictated by the unusual set of facts at play. It is also a modern day parable reminding all litigators that they need to avoid “hiding the ball” during discovery. The decision also reinforces that, by and large, trial court reductions for inefficiencies and padding will be affirmed under the deferential abuse of discretion review standard.

     Doppes v. Bentley Motors, Inc., Case No. G038734 (c/w other cases) (4^th Dist., Div. 3 June 8, 2009) (certified for publication) was a 3-0 decision emanating from our local Santa Ana Court of Appeal, authored by Justice Fybel. The opinion is not only interesting reading, but reinforces that litigation attorneys will be punished for discovery abuses—with appellate jurists determining that punishment should be increase over and above recommendations by discovery referees and trial judges. However, the case also happens to be instructive in the attorney’s fees area.

     Briefly summarized, plaintiff won a lemon law vehicle case against a defendant based on the car having an obnoxious odor in the interior. Defendant engaged in numerous discovery tactics that led to numerous terminating sanctions requests (including behavior relating to defendant’s failure to produce responsive e-mails), but the discovery referee recommended giving--and ultimately the trial court only gave—an adverse jury instruction. The jury awarded plaintiff $214,300 as vehicle reimbursement and additional prejudgment interest (with the prejudgment interest determination affirmed in a separate opinion). Plaintiff moved to recover $586,844.63 in attorney’s fees under Civil Code section 1794(d), a mandatory, plaintiff-oriented, fee-shifting provision. The trial court actually awarded plaintiff $344,600 in fees based on its own detailed spreadsheet analyzing the specific fee substantiation. The lower court denied all paralegal time billed; disallowed $53,213 as time spent against another nonliable party and on unsuccessful claims; reduced the billing rate of the lead attorney from $400 to $300 per hour; allowed recovery for only one attorney at trial; disallowed all time billed for sanctions motions before the discovery referee; and reduced the amount billed by one attorney’s office by 25% “for general excessive time billing for items.” Plaintiff later moved for further postjudgment attorney’s fees of $72,789.80, but the trial court only awarded $4,427. Plaintiff appealed.