CALIFORNIA ATTORNEY'S FEES

Discovery, Family Law: $2,500 Discovery Sanctions Order Reversed In Favor Of Responding, Prevailing Party Because No Competent Declaration Of Incurred Expenses Was Presented

CCP § 2023.040 Was The Key Statutory Provision.

            Just to show you that technicalities can matter in the discovery area, the First District, Division 2 reversed a $2,500 discovery sanction against ex-wife in Marriage of Stupp v. Schilders, Case No. A154396 (1^st Dist., Div. 2 July 10, 2019) (unpublished).  What happened is that a party moving to compel discovery responses lost, and the lower court awarded the successful responding party with $2,500 in discovery sanctions.  This one had to be reversed because the trial judge, earlier, had stricken a declaration filed by the responding party because it was not signed by the actual declarant and that was the only proof of what was expended in responding to the motion to compel.  Given the lack of evidence on expenses incurred in responding to the discovery motion, the sanction award had no support at all.  (Code Civ. Proc., § 2023.040.) 

Discovery, Family Law: Family Law Judges, On Discovery Matters Rather Than OSC Matters, Can Issue Sanctions Based On Declaration Testimony

No Oral Testimony Required Under The Circumstances.

            We found Marriage of Clarke and Akel, Case No. A151888 (1^st Dist., Div. 5 Dec. 11, 2018) (unpublished) to be an interesting case given that it involved an intersection between family law and civil discovery procedures.

            The essence of the matter was a discovery dispute between parties to a marital dissolution proceeding. Eventually, ex-wife was ordered to pay to ex-husband $15,000 on a discovery motion to compel under CCP §§ 2023.030(a), 2031.310(h). The principal challenge was that the family law judge erred in deciding the discovery dispute based on declarations, rather than admitting oral testimony.

            The appellate court affirmed. Nothing exempts family law cases from application of discovery principles, which routinely allow these disputes to be resolved through declaration testimony. This is contrasted with substantive order to show cause matters, which usually require oral testimony unless the parties stipulate otherwise. Beyond that, ex-wife did not object to the declarations such that any argument otherwise was waived.

Discovery, Reasonableness Of Fees: 6 DCA Remands Determination For Prevailing Party Under Subpoena To Look Again At Amount Of Fees To Be Awarded

CCP § 1987.2 Prevailing Party Fees In Subpoena Context Might Depend On Who Met Litigation Objectives, Although The Test Is Not Crystal Clear.

            John/Jane Roe v. Halbig, Case No. H043248 (6^th Dist. Nov. 20, 2018) (published) is an interesting, but somewhat perplexing, opinion on the fees to be awarded to a party which ultimately prevailed because the other side withdrew a subpoena, which did allow for a prevailing party award under Code of Civil Procedure section 1987.2(c). Although adopting a “did you achieve your litigation objectives test,” it was only done under an abuse of discretion standard such that the test is not crystal clear at all as far as providing a benchmark guidance for future litigants. We are not complaining about the result, but benchmarks are good.

            What happened was that plaintiff sued certain doe defendants in Florida about alleged comments made by them on websites/social medical websites. Plaintiff served a subpoena on Google, who coughed up the account holders—including the doe defendants.   One account holder filed a motion to quash the subpoena under CCP § 1987.2(c), which includes a fee-shifting provision in the prevailing party’s favor. Plaintiff withdrew the subpoena, with the doe defendant found to be the prevailing party although the trial judge only awarding $22,000 out of a requested $42,581 in fees.

            The appellate court remanded for a “re-do” of the fee determination.

            It did determine that a challenging subpoenaed party could be the prevailing party under circumstances where a subpoena was withdrawn, although did not articulate a clear-cut test. Rather, it found no abuse of discretion with the trial judge adopting a “prevailing party” test where the party achieved its litigation objectives, although discussing under tests under the anti-SLAPP statute (although a catalyst test was rejected) but only deciding that the “litigation objective” standard was a reasonable one to use.  

            The challenging party did prevail, but the reviewing court was flummoxed about the amount of the fee award. There were some hourly fees which likely should have been honored, but the trial judge cut them down drastically. So, the fee award was sent back down for a “relook.”

Discovery/Sanctions: Plaintiff In Pro Per Attorney Properly Imposed With Discovery Sanctions Of $5,510 (Inclusive Of Attorney’s Fees) Under CCP § 2030.300(d)

Appellate Court Rejects In Pro Per’s Due Process Argument And Challenge To Temporary Judge’s Initial Assignment To Motion Matter.

            DeWitt v. HSBC Bank USA, N.A., Case No. A151545 (1^st Dist., Div. 2 June 22, 2018) (unpublished) is a situation where an in pro per attorney, representing himself as plaintiff, sued several defendants in a California Anti-Spam Act case. A superior court judge granted a motion to compel further responses against plaintiff and imposed monetary discovery sanctions of $5,510 against plaintiff/in Bank’s favor under CCP § 2030.300(d). Earlier, plaintiff had nixed having the motion matter heard by a temporary judge, which in hindsight was a mistake.

Plaintiff appealed the motion to compel and discovery sanctions, although only the sanctions award was appealable. (CCP § 904.1(a)(12); Doe v. U.S. Swimming, Inc., 200 Cal.App.4^th 1424, 1432 (2011).)

            Plaintiff’s two challenges on appeal did not succeed.

            First, plaintiff argued there were due process/equal protection violations in allowing discovery sanctions, inclusive of fees, to be awarded against an in pro per attorney, who could not gain fees as sanctions based on the attorney’s self-representation. The First District, Division 2 rejected this argument based upon the reasoning in Kravitz v. Superior Court, 91 Cal.App.4^th 1015, 1020 (2001). Kravitz first of all recognized that an in pro per plaintiff winning discovery sanctions can obtain reasonably identifiable expenses incurred such as computer-assisted legal research, photocopying, or transportation to/from court, just like lawyers representing parties can recover out-of-pocket costs. However, by definition, self-represented have incurred no attorney’s fees such that they are not similarly situated for due process/equal protection purposes. As far as the asymmetry argument made by plaintiff, the fact in pro per plaintiffs can recover out-of-pocket expenses is not that far askew because most lawyers representing parties ordinarily include such expenses in their hourly rates.

            Second, the record showed that the temporary judge did not hear the motion matter after plaintiff objected, with the matter going to a superior court judge who made an independent review. Plaintiff should have stuck with the temporary judge, whose tentative was to issue sanctions of only about 1/5^th of the amount eventually awarded by the superior court judge. Ouch! – this case reinforces the old adage “Be careful what you ask for.”

Discovery, Family Law, Sanctions: $5,500 Discovery Sanctions Award Against Ex-Client Attorney Reversed Where Attorney Not Given Notice She Was A “Sanctions Target”

Due Process Violation Was Reason For Reversal.

             In Marriage of Mehta & Grover, Case No. A146919 (1^st Dist., Div. 4 June 19, 2018) (unpublished), a $5,500 discovery sanction against an ex-attorney for wife was reversed on due process grounds. What happened was that before the discovery sanctions motion was decided, attorney was relieved as wife’s attorney, with nothing in the papers indicating she was the target of a discovery sanctions request (with only her client wife indicated as a target). The subsequent $5,500 sanctions order against ex-attorney was reversed on due process grounds, given the attorney had no notice that she was personally the subject of the sanctions request. Here is what the appellate court had to say on a broader basis with respect to sanctions request in moving or opposing papers: “To interpret [Code of Civil Procedure] section 2023.040 as imposing a notice obligation only on those who elect to include a sanctions motion in moving papers (i.e., in a discovery motion or in a separate sanctions motion), and not on those who include a sanctions motion in opposition papers, would defeat the obvious purpose of the statute and would lead to absurd consequences.” (Slip Op., p. 9.)

Appealability/Discovery/Sanctions: Separate Discovery Sanctions Cannot Be Aggregated For Purposes Of Meeting $5,000 Appealability Threshold

Two Separate Sanctions Below $5,000 Cannot Be Aggregated For Appealability Purposes.

            In Mitchell Anthony Productions, LLC v. Baron, Case No. B282974 (2d Dist., Div. 5 Mar. 28, 2018) (unpublished), the trial judge awarded $4,860 in discovery sanctions on separate motions to compel further discovery responses to the interrogatories and requests for production.  The sanctioned party appealed because the total sanctions came to $9,720, claiming that the $5,000 jurisdictional threshold for an appeal of monetary sanctions over $5,000 was met.  (CCP § 904.1(a)(11), (a)(12).) 

            The appellate court dismissed the appeal.  The reason?  A party cannot aggregate monetary sanctions for purposes of appealability purposes, fully endorsing the reasoning to the same effect in Calhoun v. Vallejo City Unified School Dist., 20 Cal.App.4^th 39, 44-45 (1993) [1^st Dist., Div. 5]), but indicating this did not foreclose an extraordinary writ petition if a true wrong was done through a sanctions order below. 

Costs/Discovery: Expenses For Activities Associated With Production Of Electronically Stored Documents Properly Awarded As Discretionary Costs Under CCP § 1033.5(c)

$150,449.49 Was Costs Award To The Successful Defendant.

            Litigators at both the federal and state levels are fully aware of the expense which has been added to litigation based on having to produce electronically documents/information in cases (also known as “ESI”).  The next opinion demonstrates that ESI expenses can be recouped by a successful party as being “reasonable and necessary” to the litigation under the discretionary costs provision contained in CCP § 1033.5(c).

            In Dremak v. Urban Outfitters, Inc., Case No. D071308 (4^th Dist., Div. 1 Mar. 23, 2018) (unpublished), three plaintiff consumers, on behalf of a certified class, lost a consumer ZIP code sales information case against Urban Outfitters, with the trial judge awarding the defense $150,449.49 in defense costs—a lot of which were associated with expenses incurred to produce electronically stored documents in response to plaintiffs’ discovery requests.

            The 4/1 DCA found this award was no abuse of discretion.  Given that activities associated with e-discovery analytics and database searches are “reasonable and necessary” to the conduct of the litigation under CCP § 1033.5(c), the defense correctly was allowed to recoup these costs against the unsuccessful plaintiffs. 

Costs, Discovery, Private Attorney General, Special Fee Shifting Statutes: Multi-Million Dollar Costs, Discovery Violation Sanctions, And Fee Recoveries Reversed And Remanded Based On Reversals And Necessity To Revisit Fee Entitlement Bases

            

Moonlight Fire.  2007.  Wikipedia.  Author:  kkmontandon.

                 Dept. of Forestry & Fire Protection v. Howell, Case Nos. C074879/C076008 (3d Dist. Dec. 8, 2017) (fully published; first posted on Dec. 6, 2017 with costs/fee discussions not published) is a case arising from the 2007 Moonlight Fires which burned 65,000 acres in Plumas County.  Plaintiffs, mainly governmental agencies or affiliates, sought to recover fire suppression costs, investigation costs, and damages from defendants, mainly landowners, alleged to violate fire suppression statutes.  The defense won, with the trial judge awarding multiple millions of dollars for routine costs, discovery violations, and attorney’s fees to the various prevailing defendants. 

            Lots of things happened on appeal, but a revisit was necessary on most of these postjudgment orders.  However, the multi-millions in attorney’s fees award against Department of Forestry (Cal Fire) evaporated on appeal.

            With respect to routine costs, the appellate court had to remand to apportion costs given that it found only the judgment against Cal Fire was justified on appeal.  The costs award was not allocated, requiring a remand to determine the costs to be awarded against Cal Fire.

            The discovery violations of over $20 million also had to be remanded because the trial judge’s award was overbroad in nature—it awarded costs and fees for work prior to the discovery violations and failed to apportion out expenses not related to the violations.  Federal court broader discovery sanctioning authorities were different, and did not require a different result given the more narrow sanctions mandate under Code of Civil Procedure section 2033.

            That brought the appellate court to the attorney’s fees award against Cal Fire (somewhere in the $28 million area), which fell as a matter of law.  The first basis was Health and Safety Code sections 13009 and 13009.1, which provide in relevant part that the charge for fire suppression costs, rescue or emergency medical service costs constitute “a debt of that person [found liable under sections 13009 or 13009.1], and is collectible by the person, or by the federal, state, county, public, or private agency, incurring those costs in the same manner as in the case of an obligation under a contract, expressed or implied ” combined with Code of Civil Procedure section 1021.8, which provides that when the Attorney General prevails in a civil action based on sections 13009 and 13009.1, the Attorney General is to be awarded his or her “ costs of investigating and prosecuting the action, including expert fees, reasonable attorney [] fees, and costs.”  From this, the trial judge concluded fees were awardable pursuant to Civil Code section 1717; however, the appellate court found that the first scheme only talked about a mechanism for collection (not a fee entitlement basis) and the second statute only related to the Attorney General (not private persons).  The second basis was California’s private attorney general statute, but the Third District perceived that the defense had significant financial stakes given the potential personal exposure such that the financial burden element of Code of Civil Procedure section 1021.5 could not be met under the circumstances.

Costs, Discovery, Private Attorney General, Special Fee Shifting Statutes: Multi-Million Dollar Costs, Discovery Violation Sanctions, And Fee Recoveries Reversed And Remanded Based On Reversals And Necessity To Revisit Fee Entitlement Bases

            Dept. of Forestry & Fire Protection v. Howell, Case Nos. C074879/C076008 (3d Dist. Dec. 8, 2017) (fully published; first posted on Dec. 6, 2017 with costs/fee discussions not published) is a case arising from the 2007 Moonlight Fires which burned 65,000 acres in Plumas County.  Plaintiffs, mainly governmental agencies or affiliates, sought to recover fire suppression costs, investigation costs, and damages from defendants, mainly landowners, alleged to violate fire suppression statutes.  The defense won, with the trial judge awarding multiple millions of dollars for routine costs, discovery violations, and attorney’s fees to the various prevailing defendants. 

            Lots of things happened on appeal, but a revisit was necessary on most of these postjudgment orders.  However, the multi-millions in attorney’s fees award against Department of Forestry (Cal Fire) evaporated on appeal.

            With respect to routine costs, the appellate court had to remand to apportion costs given that it found only the judgment against Cal Fire was justified on appeal.  The costs award was not allocated, requiring a remand to determine the costs to be awarded against Cal Fire.

            The discovery violations of over $20 million also had to be remanded because the trial judge’s award was overbroad in nature—it awarded costs and fees for work prior to the discovery violations and failed to apportion out expenses not related to the violations.  Federal court broader discovery sanctioning authorities were different, and did not require a different result given the more narrow sanctions mandate under Code of Civil Procedure section 2033.

            That brought the appellate court to the attorney’s fees award against Cal Fire (somewhere in the $28 million area), which fell as a matter of law.  The first basis was Health and Safety Code sections 13009 and 13009.1, which provide in relevant part that the charge for fire suppression costs, rescue or emergency medical service costs constitute “a debt of that person [found liable under sections 13009 or 13009.1], and is collectible by the person, or by the federal, state, county, public, or private agency, incurring those costs in the same manner as in the case of an obligation under a contract, expressed or implied ” combined with Code of Civil Procedure section 1021.8, which provides that when the Attorney General prevails in a civil action based on sections 13009 and 13009.1, the Attorney General is to be awarded his or her “ costs of investigating and prosecuting the action, including expert fees, reasonable attorney [] fees, and costs.”  From this, the trial judge concluded fees were awardable pursuant to Civil Code section 1717; however, the appellate court found that the first scheme only talked about a mechanism for collection (not a fee entitlement basis) and the second statute only related to the Attorney General (not private persons).  The second basis was California’s private attorney general statute, but the Third District perceived that the defense had significant financial stakes given the potential personal exposure such that the financial burden element of Code of Civil Procedure section 1021.5 could not be met under the circumstances.

Discovery/Sanctions: Yelp Properly Ordered To Disclose Documents Relating To Anonymous Reviewer Making Alleged Slanderous Comments

However, Sanctions Order Relating To Discovery Order Reversed As A Matter Of Law Based On Evolving, Unsettled Area Of The Law.

            In Yelp Inc. v. Superior Court, Case Nos. G054358/G054422 (4^th Dist., Div. 3 Nov. 13, 2017) (published), plaintiffs successfully obtained a discovery order against Yelp compelling it to disclose documents that might reveal the identity of an anonymous reviewer allegedly making slanderous statements (with plaintiffs proving a prima facie case of slander).  The lower court also imposed $4,962.59 in discovery monetary sanctions against Yelp.

            Although losing a standing argument, plaintiffs did obtain affirmance of the discovery order.  However, with respect to the sanctions order, the 4/3 DCA—in a 3-0 opinion authored by Presiding Justice O’Leary—reversed as a matter of the law given that this area of the law was evolving and unsettled such that Yelp’s challenge of the discovery order was substantially justified. 

            BLOG OBSERVATION—We noticed that Steve Krongold, who both contributors know, won the merits on behalf of plaintiffs.  Congratulation, Steve.

Discovery: Superior Court Justified In Awarding $4,000 Daily Sanctions For Litigant’s Refusal To Comply With Discovery Orders

Sanctions Justified, In Part, Based On Prior Inconsistent Position By Challenging Litigant.

            In Padron v. Watchtower Bible and Tract Society of New York, Inc., Case No. D070723 (4^th Dist., Div. 1 Nov. 9, 2017) (published), the appellate court faced the answer to this question:  Can a superior court impose a hefty daily, continuing monetary sanction against a party who steadfastly refuses to comply with a discovery order?  Answer:  You betcha, to the tune of $4,000 a daily under the right circumstances.   Those circumstances were the right ones here, especially where the challenging party had argued earlier in favor of a monetary sanction versus a more severe terminating sanction. 

Discovery: Few Opinions Discuss Cost-Shifting Under The 2015 Amendments To Federal Rule Of Civil Procedure 26

Charles S. Fax Discusses This In A Fall 2017 Article in ABA’s Section of Litigation News Magazine.

            In an article in the Fall 2017 edition of the ABA’s Litigation News magazine, Charles S. Fax, Litigation News Associate Editor, observes that at the time his article went to press only four cases had discussed costs-shifting after 2015 amendments to Federal Rule of Civil Procedure 26 expressly allowed for the court to order allocation of expenses against a discovery-requesting party.  The reported decisions, with varying results, are In re Buccaneer Resources, LLC, 2015 Bankr. LEXIS 4203 (Bankr. S.D. Tex. Dec. 10, 2015); Gaudet v. GE Industrial Services, 2015 U.S Dist. LEXIS 59902 (E.D. La. May 5, 2016); U.S. ex rel. Bibby and Donnelly v. Wells Fargo Bank, N.A., 2016 U.S. Dist. LEXIS 178458 (N.D. Ga. May 26, 2016); and Lopez v. United States, 2017 U.S. Dist. LEXIS 40739 (S.D. Cal. Mar. 21, 2017).  In trying to determine why there were so few reported decisions, Mr. Fax suggests that the answer may lie in the intersection of other amendments in 2015, such as the proportionality rule, narrowing the scope of discovery to information “relevant to a claim or defense,” elimination of the language “reasonably calculated to lead to the discovery of admissible evidence” in Rule 26(b), and the in terrorem effect of Rule 37(e) sanctions for willful e-discovery violations. 

Appealability/Discovery: Separate Discovery Sanctions Below $5,000 Threshold Cannot Be Aggregated To Make Them Appealable

 

4/3 DCA Choose Calhoun Over Dicta In Champion/L.B.S.

Boyd Jones doing his arithmetic lesson at the blackboard in the Alexander Community School in Greene County, Georgia.  Nov. 1941.  Jack Delano, photographer.  Library of Congress.

     In Stueve v. Berger Kahn, Case No. G052689 (4th Dist., Div. 3 Nov. 22, 2016) (unpublished), a plaintiff party was assessed three separate discovery sanctions totaling $7,335, but not exceeding the $5,000 appealability threshold for each individual sanctions order contained in Code of Civil Procedure section 904.1(a)(12) [sanctions exceeding $5,000 are appealable].) 

    Plaintiff’s appeal was dismissed for failure to satisfy the $5,000 appealability threshold.

    In this regard, the 4/3 DCA panel agreed with the “non-aggregation” analysis of Calhoun v. Vallejo City Unified School Dist., 20 Cal.App.4th 39, 45 (1993), which rejected contrary dicta in Champion/L.B.S. Associates Development Co. v. E-Z Serve Petroleum Mktg., Inc., 15 Cal.App.4th 56, 59-60 (1993). 

    Acting Presiding Justice Moore authored the 3-0 opinion.

Discovery: Discovery Into Amount And Source of Attorney’s Fees Not Privileged On Punitive Aspect Of Mining Claim Jumping Case

 

Requested Discovery Was Relevant To Discovery On Punitive Damages Financial Condition Where Trial Court Allowed Civil Code Section 3295 Discovery.

    In Johnson v. Superior Court (Parker), Case No. C070028 (3d Dist. Sept. 28, 2016) (unpublished), the Third District denied the defendants’ mandate petition to prevent discovery of the amount and source of attorney’s fees paid and owed to the defense after the trial judge allowed punitive damages financial condition discovery under Civil Code section 3295.  The defense claimed the information was protected by the attorney-client privilege, with plaintiffs challenging this because they did not want the retainer agreement but only information regarding the amount of attorney’s fees paid by defendants.  The Third District sided with plaintiffs, citing In re Michaelson, 511 F.2d 882, 888 (9th Cir. 1975) for the proposition that the fact of a retainer, the identity of a client, the conditions of employment, and the amount of the fees and who paid do not come within the scope of the privilege and the information was relevant as to defendants’ financial condition.

Discovery: ESI Discovery Sanctions Are Going Downward In Federal Courts

 

First Half Of 2016 Saw A Large Decline.

     Gibson Dunn has published a mid-year 2016 review of electronically stored information (ESI) decisions in federal courts involving requests for sanctions.

     There has been a large decline. In the first half of 2016, there were only 32 reported decisions, 13 granting sanctions and 19 denying them for ESI violations. This compares to 150 reported decisions in 2011 and 120 in 2012 (federal courts). The authors of the review believe that some of the decline is related to the federal rule amendments requiring both relevancy and proportionality.

     Some of the most volatile decisions involve how to deal with text messages and mobile data.

Arbitration/Discovery/Sanctions: Discovery Sanctions A Little Shy Of $6,500 Affirmed Against Plaintiff For Discovery Disputes Not Arising Out Of An Arbitration

 

Substantive Claims Were To Be Arbitrated, But Prior Discovery Disputes Before Motion To Compel Granted Remained In Superior Court.

     In Vlahopouliotis v. Vallarta Properties, LLC, Case No. G069832 (5^th Dist. Feb. 1, 2016) (unpublished), plaintiff did win a motion to compel arbitration of substantive claims under a settlement agreement, but lost preexisting discovery motions to compel brought by his opponent because the discovery disputes arose before arbitration was ordered and had been pending in the trial court for some time. The trial judge also awarded a little shy of $6,500 in discovery abuse sanctions (CCP § 2023.030(a)) against plaintiff and his counsel, jointly and severally.

     The appeal of this sanctions order was unsuccessful. The Fifth District agreed that the arbitration agreement was narrow, only applying to substantive claims. The discovery disputes producing the sanctions award occurred before arbitration was ordered such that it did not arise out of discovery disputes relating to the arbitration.

     BLOG POINTER—For you out-of-town practitioners litigating in Fresno County Superior Court, be aware that there is a local rule by which a litigant can ask for a pretrial discovery conference on disputed discovery issues which has the effect of tolling certain deadlines.

Probate, Private Attorney General, Civil Rights, Costs, Discovery Sanctions: Lots Of Topics Covered In Four Unpublished Decisions For September 29, 2015

 

Chang v. Chang, Case No. G049309 (4th Dist., Div. 3 Sept. 29, 2015) (Unpublished; Ikola, J.).—Probate.

    In this and a companion appeal, the appellate court cut some surcharges to the trustee of about $345,000.  Because of this companion ruling, the appellate court sent back a $187,900 fee award against trustee and in favor of beneficiary (his brother) under Probate Code section 17211(b).  The surcharge cut might impact the lower court’s view of whether fees should be the same or different.

L.A. County Regional Park and Open Space Dist. v. City of Whittier, Case No. B257541 (2d Dist., Div. 1 Sept. 29, 2015) (Unpublished)—Private Attorney General.

    Petitioner won mandate based on a contract-based claim under a project agreement with Whittier, but not claims based on Proposition A violations, the public trust doctrine, and CEQA.  Petitioner moved to obtain fees of $1,105,651.20 under CCP § 1021.5, but the trial and appellate said “no.”  The reason was that vindication of contractual rights alone was not equivalent to vindication of a significant public right under 1021.5.

Cooter v. Angeles National Golf Club, Case No. B245137 (2d Dist., Div. 7 Sept. 29, 2015) (Unpublished)—Civil Rights/Costs.

    Here, the appellate court reversed an order denying in part a FEHA losing plaintiff’s motion to strike certain routine costs incurred after a CCP § 998 offer.  In doing so, the appellate court determined that the expert fees awarded under 998 were proper because they do not have to survive the frivolous/unreasonable standard.  (Holman v. Altana Pharma U.S., Inc., 186 Cal.App.4th 262, 282 (2010).)  However, the award of other routine costs had to be reexamined to see if the action was frivolous/unreasonable/without basis after the state supreme court’s ruling in Williams v. Chino Valley Independent Fire Dist., 61 Cal.4th 97 (2015). 

Gray1CPB, LLC v. Gulfstream Finance, Case No. G047966 (4th Dist., Div. 3 Sept. 29, 2015) (Unpublished) (Moore, J.)—Discovery Sanctions.

    Last but not least, the court of appeal affirmed more than $159,000 in monetary sanctions against a party for discovery abuse, based on 30 reports from a discovery referee, but reversed as to another party not given adequate due process notice of the sanctions until a too-late point in one discovery referee proceeding.

Discovery/Family Law: 271 Sanctions Remanded For Reconsideration, But Bulk Of $123,087.50 Award Likely To Stand

 

Playing Racial/Religion Discrimination Card And Attacking Opposing Counsel/The Court Did Not “Play” Well For Ex-Husband In Bitter Custody Dispute.

    Well, this next case – Marriage of Salas and Farraj, Case No. B252053 (2d Dist., Div. 7 Sept. 1, 2015) (unpublished) – is a good lesson for family law practitioners to not play the discrimination card or to attack opposing counsel/the court even if the client insists on it.  The upshot may well be client exposure for Family Code section 271 sanctions which frustrate efforts to settle or to informally resolve normally contentious dissolution matters.

    In this one, ex-husband got in a bitter custody/visitation dispute after his ex-wife and child moved to India.  Emotions obviously raged, but ex-husband apparently played the racial/religious discrimination card, engaged in lots of discovery disputes, and attacked ex-wife’s counsel/the court. 

    The lower court eventually awarded postjudgment discovery sanctions against ex-husband as well as substantial 217 sanctions of $123,087.50. 

    Most of it got affirmed on appeal, or will be after a remand.

    Even though a litigant cannot aggregate discovery sanctions to meet the $5,000 appealability threshold, the nuance here was that this was a postjudgment award which is expressly appealable.

    On the 271 sanctions, there was a remand because the lower court did draw a “time demarcation” line, finding efforts on attacking a psychiatric report and initially challenging the move-away order were not sanctionable in nature.  However, because the time demarcation was not firmly taken into account, the sanctions had to be revisited in a post-remand proceeding.

Discovery, Sanctions, Substantiation Of Fees: $2.7 Million In Discovery Sanctions Against Goodyear And Its Attorneys In Tire Failure Case Affirmed On Appeal

 

No Precise Linkage Between Harm and Compensatory Sanctions Required, Where Discovery Abuse Was Frequent Or Severe.

    This next case is a reminder of how one must be candid in discovery, with contrary positions and obstructionist litigation tactics possibly leading to large monetary sanctions against both client and client’s attorneys (as well as non-monetary sanctions).

    In Haeger v. The Goodyear Tire & Rubber Co., No. 12-17718 (9th Cir. July 20, 2015) (published), a district court found that Goodyear and two of its attorneys had engaged in egregious discovery abuses in a tire failure case, taking contrary positions to positions they had taken in other cases where sanctions were not involved—in essence, a “fraud on the court.”  The district judge levied large monetary sanctions under “the inherent power of the court,” finding that traditional FRCP 37 remedies were not well applied because the discovery fraud was discovered after the case the settled.  The district judge assessed compensatory, monetary sanctions of $548,246 against one Goodyear attorney and the same type of sanctions of a little shy of $2.2 million against Goodyear and another Goodyear attorney on a joint and several basis.  The district judge also ordered that the sanctions order be filed in other tire failure cases to alert plaintiffs’ attorneys to what happened in this one.

    The monetary and non-monetary sanctions were affirmed by the Ninth Circuit, in a 2-1 published decision.

    The majority decision, authored by Circuit Judge Milan Smith and concurred with by Circuit Judge Wallace, decided the sanctions were appropriate and that no precise linkage was required between the harm and compensatory sanctions awarded where the sanctionable conduct was frequent and severe.  They found that Chambers v. NASCO, Inc., 501 U.S. 32, 57 (1991) so found under “inherent power of the court” situations, with this authority “trumping” contrary Ninth Circuit authority (Miller).  The district judge also properly reduced the lodestar fee requests as follows:  20% for recreation of time entries; $32,470 for vague time entries; $4,880.73 for lack of proper substantiation; $50,721 for clerical tasks; and $25,827.50 for excessive billing.

    In a dissent, Circuit Judge Watford believed that such substantial compensatory sanctions had to satisfy heightened procedural protections relating to penal sanctions (which were not utilized and should lead to a reversal), although the majority found his supporting authorities distinguishable in nature.

Civil Rights, Discovery, Prevailing Party: Disabled Plaintiff Dismissing Suit, Where Defendant Eliminated Architectural Barrier After Filing Suit, Was Properly Not Exposed To Fee Recovery Under California Disabled Persons Act Fee-Shifting Provision

 

No One Prevailed in This Case, Both Trial and Appellate Courts Agreed, Under The Facts—But Prior Discovery Sanctions Award Did Survive.

     The California Disabled Persons Act (Civ. Code, § 54 et seq.) [DPA] does have a reciprocal fee-shifting provision in favor of a “prevailing party.” (Unlike the American with Disabilities Act [ADA], which requires a showing of frivolousness or unreasonableness in order to fee shift against a disabled person, the California statutory equivalent does not have a similar requirement.) With that in mind, Pineda v. Bekhor, Case No. B255583 (2d Dist., Div. 1 Mar. 13, 2015) (unpublished) focused on a lower court’s determination that neither plaintiff nor defendant prevailed after plaintiff voluntarily dismissed a case after architectural barrier corrections were made.

     Plaintiff sued because a towel dispenser was mounted too high above a floor in defendant’s coin-operated laundry facility, based on both the ADA and DPA. Within 30 days after service of the complaint, defendant lowered the towel dispenser so as to be disability compliant. Defendant did win $2,160 in discovery sanctions along the way. Then, one week later, plaintiff dismissed with prejudice, but never paid the sanctions order.

     Defendant then moved to recover $11,300 in attorney’s fees under the DPA statutory provision, inclusive of the $2,160 discovery sanctions. The trial court denied the fee request, finding neither side “prevailed.”

     The Second District, Division 1 affirmed, but with one clarification. Although the lower court found the action was not frivolous (introducing some confusion as to ADA and DPA claims), defendant moved under the DPA such that the pragmatic definition of who really “prevailed” was at issue. The lower court did not abuse its discretion in determining that neither side really won, given that the plaintiff voluntarily dismissed due to health issues and that the defendant did lower the towel dispenser. However, nothing in what the lower court did disturbed the earlier discovery sanctions order, given that plaintiff could not “alter a court order by his or her fiat, to wit, merely by including the discovery sanctions awarded in the total amount of fees requested in a subsequent motion.” So, the $2,160 sanctions award was separately enforceable, notwithstanding the fee denial. (Newland v. Superior Court, 40 Cal.App.4^th 608, 615 (1995).)

     Los Angeles County Superior Court Judge Helen Bendix, sitting by assignment, authored the 3-0 opinion.

Discovery/Sanctions: Vasquez v. Calif. School of Culinary Arts Now Published

 

Deals With Third-Party Subpoena Compliance Sanctions.

     In our August 27, 2014 post, we discussed Vasquez v. Calif. School of Culinary Arts (an unpublished decision at the time), involving sanctions against a non-party for failing to prevail in opposing a subpoena compliance motion. We can report that this opinion was certified for publication on September 26, 2014.

Discovery/Sanctions/SLAPP: Round-Up Of Three Unpublished Decisions On Fee/Sanctions Issues For September 18, 2014

 

Estate of Johnson, Case Nos. A134733 et al. (1^st Dist., Div. 3 Sept. 18, 2014) (unpublished).

     An attorney was sanctioned for $7,290 (representing fees incurred by another litigant) for making a false allegation in a probate Third Amended Petition. The basis for the award was under CCP § 128.7. The award was reversed because the appellate court determined that the germane allegation was not without evidentiary basis.

T.R. & B Property, LLC v. Lincoln Best Hotel, Inc., Case No. B249168 (2d Dist., Div. 4 Sept. 18, 2014) (unpublished).

     Plaintiff bringing a losing SLAPP motion was hit with $5,122.50 in attorney’s fees because the lower court decided the motion was frivolous. No change on appeal, because a contractual dispute over nonpayment of money is not protected activity, with many cases establishing this so that the motion was indeed frivolous.

Marriage of Smith, Case No. E056872 (4^th Dist., Div. 2 Sept. 18, 2014) (unpublished).

     Ex-wife was sanctioned $3,309 in actual fees incurred by the other side and $32,500 in sanctions for disobeying a prior court order prohibiting dissemination of third party, with ex-husband’s current wife being the third party and beneficiary of the sanctions order. Only the $3,309 component of the order held up, because it constituted actual reasonable fees incurred by the third party. However, the $32,500 component was pure “punishment,” not countenanced under the discovery statutes. (Welgoss v. End, 252 Cal.App.2d 982, 992 (1967).) No other bases justified the award, not the inherent authority of the court, Family Code section 271 (no proper notice provided), or CCP § 128.7 (which does not encompass discovery disputes).

Discovery/Sanctions: Party Seeking E-Discovery Entitled To $11,487 In Attorney’s Fees For Successfully Resisting Opposition to Motion To Compel Business Record Subpoena Compliance

 

Federal Decisions Looked to in E-Discovery Area.

     Vasquez v. Calif. School of Culinary Arts, Case No. B250600 (2d Dist., Div. 2 Aug. 27, 2014) (unpublished) is an example of how a litigant seeking documents from non-party Sallie Mae really set up a discovery battle very well. The litigant sent a first subpoena, drawing an objection to which the litigant responded by narrowing the requests via a second subpoena to target a very selective subset of documents, even offering to pay non-party reasonable costs of compliance. Sallie Mae once again objected to the second business document subpoena, moved to quash, and lost—and with the lower court awarding successful litigant $11,487 in attorney’s fees for having to deal with Sallie Mae’s unsuccessful opposition.

     Sallie Mae’s appeal did not overturn the result. CCP § 1985.8 was the operative statute, with the appellate court looking to federal decisions because of the absence of California opinions on the topic. The fact that a non-party had to compile and produce information for a search index was not unreasonable in response to a subpoena, such that litigant’s win was no abuse of discretion under the circumstances where the opposing litigant had tried to be reasonable and “work it out.” (Gonzalez v. Google, Inc., 234 F.R.D. 674, 683 (N.D. Cal. 2006).)

Discovery/Sanctions: If Motion To Compel Was Untimely, Any Sanctions Awarded Related Thereto Had To Be Reversed

 

Court Also Discusses Response Time When Leave Is Granted To Amend After Demurrer Hearing.

     Carlton v. Dr. Pepper Snapple Group, Inc., Case No. E056566 (4^th Dist., Div. 2 Aug. 14, 2014) (partially published; discovery sanctions reversal unpublished) has two nice takeaways for litigators.

     First, although discussed in the unpublished portion, this opinion addresses the question: what happens to a discovery sanctions award for fees when the appellate court determines the underlying motion to compel was untimely filed? Answer: the discovery sanctions award falls too, because the motion to compel accomplished nothing and was unreasonable (meaning the sanctions award was also unreasonable).

     Second, in the published section (and a blog bonus for readers), the appellate court discussed the vexing issue of when a litigant has to respond to an amended pleading after a demurrer hearing is sustained with leave—reconciling CRC 3.1320(j) and CCP § 471.5. This is how they were reconciled: if a party elects not to amend within the time set by the court or else by statute (10 days) to amend, the other side has 10 days to respond to the residual pleading; however, if the party elects to file an amended pleading, then the other side has 30 days to respond.

Discovery/Sanctions: Quinn Emanuel Firm And Client Samsung Ordered To Pay More Than $2 Million In Discovery Sanctions For Disclosing Confidential License Terms Between Apple And Nokia To Samsung

 

Nokia Receives $1.5 Million And Apple About $894,000.

     U.S. Magistrate Judge Paul Grewal of the Northern District of California, on June 20, 2014, ordered Quinn Emanuel Urquhart & Sullivan LLP and its client Samsung Electronics Co. Ltd. to pay more than $2 million in sanctions for disclosing confidential terms of a patent license between Apple Inc. and Nokia Corp. to Samsung. What happened was that a junior associate failed to redact confidential license terms (which were “attorneys’ eyes only” designated and safeguarded by a protective order) from an expert report. These terms were distributed to Samsung in violation of the protective order, with Samsung trying to exploit the terms in negotiations with Nokia.

     In fashioning his award, Magistrate Judge Grewal did strike some first class air/travel expenses to Korea and reduced 19 specific billing entries by 20% due to lack of sufficient detail. His opinion was issued in Apple Inc. v. Samsung Electronics Co., Ltd., Case No. 5:111-cv-01846 LHK (PSG), and can be found for viewing in a post at “Patently Apple.”

Discovery/Sanctions: Appeal By Plaintiff’s Attorney From Adverse Discovery Monetary Sanctions Award Dismissed As Moot

 

Parties Agreed to Settlement Where Neither Plaintiff Nor His Attorneys Liable for Discovery Sanctions, Mooting the Appeal.

     Ya know, sometimes you should simply throw in the towel once a dispute has been resolved, aiding the appellate court in saving some resources so that they can dismiss an appeal without the need for an opinion, published or unpublished.

     Perez v. Back Flip Software, Inc., Case No. H038426 (6^th Dist. June 24, 2014) (unpublished) involved just this sort of situation.

     Both sides in a case filed dueling motions to compel, with the lower court sanctioning both sides (including attorneys for plaintiff) to the tune of $5,320 in discovery sanctions of a monetary nature. One side appealed but had the appeal dismissed after failing to file an appellant’s opening brief. Then, a settlement agreement was reached between the parties by which the remaining side and his attorneys were absolved from liability for the sanctions award. The remaining side’s appeal was dismissed based on the settlement.

     However, the attorneys persisted in the appeal, but the appellate court dismissed their appeal. The reason is pretty simple—the settlement agreement resolved the sanctions exposure with respect to the attorneys, so the appeal was moot.

Discovery/Sanctions: $6,000 In Sanctions For “Walking Away” From Deposition Affirmed On Appeal

 

“Walking Out and Not Coming Back” Is Not a Legitimate Option.

     The defense in Fletcher v. HPN Holdings, Case No. F064864 (5^th Dist. Apr. 8, 2014) (unpublished) was sanctioned $6,000 under CCP §2023.030(a), inclusive of attorney’s fees for bringing the motion to compel and arguing it, for failing to honor an agreement to take PMK depositions past the discovery cut-off. (This agreement was memorialized through renewed deposition notices and a trial court continuance stipulation.) However, at the time of the PMK depositions, defense counsel was bothered by the scope of the deposition and both he/deponent walked out of the deposition. Both the lower and appellate courts were not impressed with this conduct, determining that “walking out and not coming back, and not appearing at the other scheduled depositions, were not among [the defense’s] legitimate options.” Also, defense counsel failed to properly suspend the deposition to move for a protective order.

     Besides affirming the sanctions order, the appellate court denied the defense effort to dismiss the appeal after oral argument—determining the opinion should be issued for the education of the bench and the bar. So, if you are going to seek a dismissal, do it earlier and do it much earlier than after oral argument!

     BLAWG BONUS:  Eddie Kendricks – Keep on Truckin’.

Appealability/Discovery/Sanctions: Ninth Circuit Decides That Non-Party’s Appeal Of Interlocutory Orders After Date Of Final Judgment Is Timely

 

Appeals Court Affirms Denial of Sanctions But Remands for Cost-Shifting in Favor of Non-Party in FRCP 45 Subpoena Dispute.

     The Ninth Circuit has ended the year with a “bang” as far as clarifying non-party appeal rights and the circumstances under which subpoena compliance cost shifting is mandatory under F.R.Civ.P. 45.

     The opinion in which this occurred is Legal Voice v. Stormans Inc., Case No. 12-35224 (9^th Cir. Dec. 31, 2013) (published), authored by Circuit Judge Tashima for a 3-0 panel.

     In this one, plaintiffs served a subpoena duces tecum on Law Center, a non-party that had participated in the FDA’s rule-making process regarding emergency contraception dispersals by pharmacists in the State of Washington. Law Center objected to the subpoena and argued that the costs of complying with it should be borne by plaintiffs. The district court denied Law Center’s motion for sanctions under FRCP 45 and its motion for costs shifting under the same federal procedural rule.

     The Ninth Circuit affirmed in part and reversed in part, remanding for a cost allocation consideration in favor of non-party.

     At the outset, the appeals court decided an issue of first impression about appealability. The Ninth Circuit decided that a non-party may appeal an interlocutory order within 30 days from entry of final judgment to the same extent a party could appeal such interlocutory order. So, the appeal was timely even though the non-party appealed from the final judgment rather than prior interlocutory orders.

     Following Linder v. Calero-Portocarrero, 251 F.3d 178 (D.C. Cir. 2001), the Ninth Circuit then decided that the district judge erred in not entertaining Law Center’s cost-shifting request under Rule 45 based on a flawed “undue burden” test. The correct test was whether the non-party faced a significant expense in complying with the subpoena, with the proof below showing it did—evidence demonstrated it had spent $20,000 so far in complying with the subpoena, a significant cost for purposes of cost-shifting analysis.

     However, the denial of sanctions to the non-party Law Center was no abuse of discretion. The subpoena was not facially overbroad, and there was no evidence of bad faith/improper motive by Plaintiffs, especially given some ambiguity in two prior discovery orders issued by the district judge.

     The matter was remanded for consideration of cost allocation in non-party’s favor under Rule 45.

Discovery/Sanctions: To Aggregate Or Not, That Is The Question

 

$6,000 Aggregate Sanctions for Three Separate Discovery Motions Did Not Meet $5,000 Minimum Appellate Threshold.

     In order to be appealable, an order imposing a monetary sanction must exceed $5,000. (Code Civ. Proc., § 904.1(a)(12).) However, what happens when a litigant appeals a $6,000 reduced sanctions award where the opponent filed three separate discovery motions to compel/sanctions requesting separate sanctions which would way exceed the $5,000 threshold amount?

     Bayati v. Town Square M. Properties LLC, Case No. B245695 (2d Dist., Div. 3 Oct. 7, 2013) (unpublished) considered that circumstance and decided that the $6,000 sanctions should be allocated $2k/$2k/$2k for purposes of appealability, dismissing the appeal because the sanctions were below the $5,000 threshold.

     What happened specifically was this: moving party brought three separate motions to compel relating to distinct discovery requests, seeking respective sanctions of $3,667.50, $4,772.50, and $4,805 for noncompliant discovery responses. In the end, the lower court granted all three motions, ordering service of discovery responses and imposing sanctions on the eventually-appealing party “in the reduced sum of $6,000.”

     Appealing party argued an aggregation theory based on the $6,000 total sanctions award, while the opponent argued that basically the trial court granted sanctions of only $2,000 per motion so the $5,000 appealability threshold was not satisfied.

     Opponent got the better side of the argument. Although indicating it was not necessarily fond of “aggregation” dicta in Champion/L.B.S. Associates Development Co. v. E-Z Serve Petroleum Marketing, Inc., 15 Cal.App.4th 56, 59-60 (1993), the Bayati court found that the sanctions before it were based on distinct misconduct rather than unified conduct found persuasive in Champion. Because the amount of sanctions per motion did not reach the $5,000 appeal threshold, appeal dismissed.

Discovery: Discovery Sanctions Imposed After Voluntary Dismissal Were Vacated

 

Trial Court Lacked Jurisdiction to Impose Discovery Sanctions.

     In Ayala v. Gutierrez, Case No. B243006 (2d Dist., Div. 2 Sept. 3, 2013) (unpublished), defendants filed a motion for leave to file a cross-complaint and a motion to compel discovery (including a request for sanctions) against plaintiff. Before the motions were heard, plaintiff dismissed her action with prejudice. However, the lower court entertained the motions anyway, granting all of the motions and ordering plaintiff to pay defendants $760.50 in discovery sanctions.

     Plaintiff’s appeal was treated as an extraordinary writ, and the writ was issued by the appellate court.

     Reason? The trial court was without jurisdiction to award sanctions after plaintiff’s voluntary dismissal of the action. (Gogri v. Jack in the Box Inc., 166 Cal.App.4th 255, 261 (2008).) Here, there was no dispositive tentative ruling on the merits of plaintiff’s action. Although defendants tried to argue that the sanctions were awardable as in the SLAPP context (where a voluntary dismissal does not mean the trial court cannot in its discretion award fees and costs to the defense), the appellate court “[found] no similar authority for a postdismissal award of fees on a routine discovery motion.”

Discovery/Sanctions: Attorney Not Complying With Court Order On Letter Sent to Defense Customers Was Properly Hit With Discovery Sanctions

 

     In Leeyer v. Pro Circuit Products, Inc., Case No. D059660 (4th Dist., Div. 1 Mar. 19, 2013) (unpublished), an attorney was hit with $6,400 in discovery sanctions under CCP § 2030.030 for not abiding with the terms of a court order regarding the form of a letter sent to defendant’s customers buying a certain motorcycle part involved in the underlying action. Attorney, on appeal, argued that this noncompliance was not expressly enumerated within the list of “misuse of the discovery process” violations, which only dealt with formal discovery requests. That argument was not persuasive to the appellate court, because the misuse “menu list” is only illustrative, not exclusive in nature, and attorney’s noncompliance with a court order in this situation certainly fell within the parameters of conduct which could give rise to sanctions.

Discovery/Sanctions: In Pro Per Litigants Cannot Obtain Attorney’s Fees As Discovery Sanctions And Cannot Obtain CCP § 128.7 Sanctions

 

     We thank reader Kurt Yap for educating us on these two issues.

     What happens if you are an in pro per litigant and want to obtain discovery sanctions for the work you did (based on them being akin to attorney’s fees as if the work had been done by a retained outside attorney)? Answer: you can’t based on Argaman v. Ratan, 73 Cal.App.4th 1173, 1175 (1999), where the appellate court held that a party in pro per (although an attorney) cannot be awarded attorney’s fees as a discovery sanction.

     What happens if you are an in pro per litigant, defeat an action, and win a CCP section 128.7 motion? Can you get attorney’s fees for winning the sanctions motion? Answer: No, that too was foreclosed in Musaelin v. Adams, 45 Cal.App.4th 512, 514-515, 521 (2009).

Discovery/Special Fee Shifting Statute/Trade Secrets: Losing Plaintiffs In Patent/Trade Secret Dispute Hit With $12.46 Million For Attorney’s Fees And Electronic Discovery Expenses

 

Only $1 Million Reduction From Fees Requested.

     Patent/trade secrets are usually vigorously and heavily litigated, and the losers can get hit with substantial fees/expenses as Gabriel Techs., Corp. v. Qualcomm, Inc., Case No. 08CV1992 AJB (MDD), 2013 WL 410103 (S.D.Cal. Feb. 1, 2013) demonstrates.

     There, plaintiffs lost a patent infringement/trade secrets case. But that was hardly the finish of the story. The district judge then awarded winning defendants $12,465,331.01 in attorney’s fees and electronic discovery expenses because the patent and misappropriation claims were objectively baseless and pursued in bad faith. (35 U.S.C. § 285 [patent] and California Civil Code § 3426.4 [trade secret misappropriation] are statutes allowing for fee shifting in these situations.) No apportionment was necessary because each of Plaintiffs’ claims were within the ambit of one of the statutes.

     The district judge assessed $64,316.50 in fees against local counsel, finding that sanctions were warranted under Fed.R.Civ.P. 11 for counsel’s failure to conduct a sufficient inquiry into the merits of Plaintiffs’ case after the judge warned about substantial deficiencies in the case and ordered posting of an $800,000 bond.

     The fee request was only reduced by $1 million, based on the district judge’s view that it was proper to limit the imposition of fees to those incurred after entry of the bond order.

     Yikes!

Discovery: RAND Discovery Shows eDiscovery Is Expensive And ABA Journal Article Offers Tips To Reduce eDiscovery Costs For Legal Departments

 

     A February 19, 2013 post on the on-line version of the ABA Journal has some interesting tidbits and suggestions in the eDiscovery area.

     In line with results from a Compliance, Governance and Oversight Counsel (CGOC) survey, the average legal department spends approximately $3 million per discovery to gather and prepare information for opposing counsel in litigation. The RAND Institute for Civil Justice has published a 2012 study that points out the cost of legal review for privilege and responsiveness costs an average of $0.73 for every dollar spent on eDiscovery. The average civil eDiscovery matter can include between 3 and 5 GB of potentially responsive ESI per employee. 1 GB of data can contain between 10,000 and 75,000 pages of content; and, multiplying that by 3 means you are conservatively looking at between 30,000 and 50,000 pages of content that should be reviewed for relevancy and privilege per employee. The task and expense gets daunting when one also considers litigation and eDiscovery usually includes more than one employer, ranging anywhere from two to hundreds of employees. This review process is the largest single expense in the eDiscovery process.

     According to the ABA Journal post, the top four cost reduction strategies being considered by legal departments are:

1. Bring more evidence collection and analysis in-house to do more Electronically Stored Information (ESI) processing internally;

2. Keep more of the review of ESI in-house rather that utilize outside law firms;

3. Explore off-shore review; and

4. Pressure external law firms for lower rates.

     The post also discusses the traditional “linear review” process, where documents are divvied up and distributed to individual reviewers, which may lead to inefficiencies due to inconsistencies in review (unless very precise guidelines have been put in place).

     Traditional linear review is usually accomplished in the following manner (simplified somewhat for at least conceptual understanding):

1. Data is collected from affected custodians;

2. Data is collected from enterprise repositories;

3. Keyword searches are run on collected data to build a “potentially responsive data set;”

4. The potentially responsive data set of 112 GB (1.12 million documents) is sent to outside counsel for review and tagging;

5. Outside counsel assigns a team(s) of attorneys to review 1.12 million documents for privilege and relevance; and, for a hypothetical “end result,”

6. At $70/hour and a review rate of 55 documents per hour, total document review costs $1.425 million

Discovery/Sanctions: Substantial Monetary Discovery Abuse Sanctions Affirmed

 

Our Tally Shows Over $1.66 Million In Sanctions Sustained On Appeal.

     If our readers want to read a truly wild case on discovery abuse (especially regarding electronic discovery, deposition noncandidness, and third-party witness tampering), you gotta read Robin Singh Ed. Services v. Blueprint Test Preparation, Case No. B204775 et al. (2d Dist., Div. 7 Jan. 23, 2013) (unpublished). To pique your curiosity, here is one quote from a principal of the sanctioned side: “I thought I should tell you that that worthless fuck’s Robin’s Boston thugs lawyers are coming to ass-rape depose me in a couple of weeks. . . . They’ll have better luck getting sperm from a cow [or] blood from a stone than they will getting any more info out of me.”

     Russell Lee, photographer.  May 1940.  Library of Congress.

     What then happened in two convoluted discovery abuse proceedings is that the lower court issues monetary sanctions in terms of attorney’s fees exceeding $1.66 million, monetary sanctions for a court-appointed computer expert and future costs related to the expert/court reporters/videographers, and eventually imposed issue and evidentiary sanction that impeded the defense and helped plaintiffs greatly at a 25-day trial producing a verdict against the defense.

     The defense appealed the discovery abuse sanctions, but to no avail. Substantial evidence supported the lower court’s sanctions, given extremely detailed rulings of a lengthy nature. Unlike some federal decisions, California does not require an evidentiary hearing with live testimony, with only a nonevidentiary hearing allowing an opportunity to be heard required--something accomplished here. Finally, the monetary sanctions were compensatory rather than punitive in nature.

Discovery/Sanctions: Trial Court Award Of Discovery Sanctions Against Suspended Corporation/Attorneys Reversed On Appeal

 

Opposite Side Did Not Raise Lack of Capacity by Answer or Demurrer, So No Dice On Sanctions.

     In V & P Trading Co., Inc. v. United Charter, LLC, Case No. C070571 (3d Dist. Dec. 19, 2012) (published), the trial court denied a motion to compel by a suspended corporation and awarded monetary sanctions to opponent/its attorneys based on the lack of capacity. Eventually, a summary judgment was granted against suspended corporation on theory that the statute of limitations ran against its claims while the corporation was suspended.

     The appellate court reversed the sanctions award.

     Although the summary judgment merits ruling was upheld, the sanctions award was overturned because the motion to compel was erroneously granted. After all, lack of capacity for a suspended corporation needs to be raised by answer and demurrer such that it should not have been a basis to deny the motion to compel under the circumstances.

Discovery/Requests For Admissions/Sanctions: Second District Court Of Appeal Affirms Sanctions Denials On Issues Litigators Encounter With Frequency

 

Discovery, Mediation, and RFA Sanctions Denied.

     Hi, folks. Although we are in the Holidays (busy at that), we do like to report on decisions that have issues of recurring interest to California litigators. The next one should be a case that peaks such an interest and provides resonant lessons to us all -- but no good night to all, too early for that.

     Resurrection v. Northeast Community Clinic, Case No. B239289 (2d Dist., Div. 5 Dec. 18, 2012) (unpublished) is a situation where an appealing plaintiff was denied monetary sanctions for claimed discovery violations, mediation noncompliance violations, and request for admissions costs-of-proof contentions. Plaintiff also was shut out on appeal. We now list why.

     First, on the discovery sanctions. They were properly denied because the defense did provide responses to written discovery requests more than a month before the motion to compel was to be heard and shortly returning from a July 4th vacation. (You got the sense that the meet and confer efforts were not good in this one.)

     Second, we come to the settlement/mediation requested sanctions. Plaintiff was upset that an insurance representative did not personally attend (yes, because this was an unusual “consent” policy), although the East Coast representative was available by phone. No abuse of discretion in denying sanctions given the nature of the policy and the representative’s willingness to be telephonically available.

     Third, the last request for costs-of-proof sanctions for not admitting requests for admissions which were supposedly proven at trial. (Code Civ. Proc., § 2033.420.) On this one, plaintiff did not prove RFA certification issues at trial and did not move for further RFA responses, so the trial court did not err in failing to grant sanctions.

     We hope all you practitioners enjoyed this one!

Discovery/Sanctions: Acacia Research Subsidiary Optimum Processing Solutions, L.L.C. Facing F.R.Civ. P. 37 Fees And Expenses From Atlanta Federal Court Discovery Dispute

 

Oops

     In Optimum Processing Solutions, L.L.C. v. Intel Corp., Civ. No. 1:09-cv-1098-TCB (N.D. Ga.) [Doc. 271 filed Sept. 14, 2012), District Judge Timothy C. Batten, Sr. has decided that Acacia Research subsidiary Optimum Processing Solutions, L.L.C. (OPS) will have to pay fees and expenses under F.R.Civ. P. 37 for Intel’s motion to compel respecting an inadequate document production in a patent prosecution case.

     The problem here was that OPS represented that there were no documents produced prior to a certain date relating to a particular licensing agreement, but these representations were not correct. The district judge found that there was no substantial justification for its actions, because it never explained why a folder by folder comparison was not made before production and why it made the representation without verifying from every employee that pertinent files were loaded in the repository. A further hearing was set on fees and expenses, if OPS and Intel cannot reach agreement on what is a reasonable amount to be awarded as discovery sanctions.

Discovery/Sanctions: Ninth Circuit Reverses $28,181.10 Sanctions Order Under F.R.Civ.P. Rule 45(c)(1)

Cost Of Complying With Subpoena By Third Party Was Minimal And Subpoena Was Not Issued In Bad Faith Or Was Not Facially Defective

     Federal Rule of Civil Procedure 45(c)(1) allows a district judge issuing a subpoena to award appropriate sanctions, including lost earnings and reasonable attorney’s fees, against a party or attorney responsible for issuing and serving a subpoena that imposes “undue burden or expense” on a person subject to the subpoena.

     In Mount Hope Church v. Bash Back!, Case No. 11-35632 (9th Cir. Nov. 26, 2012) (published), the Ninth Circuit reversed a $28,181.10 sanctions order comprised of fees and costs awarded to a third party under Rule 45(c)(1). It found that the “undue burden and expense” language was not satisfied where the costs of complying with the subpoena was minimal, it was not issued in bad faith, and it was not facially defective--engrafting the requirement that a violation of Rule 26(g) discovery principles is necessary in order to avoid chilling advocacy (punishing a litigant or attorney who ultimately lost the battle to sustain a subpoena on the merits, but otherwise demonstrated good faith in pursuing the litigant’s position).

“They’re saved!  They’re saved!” Sailor rescuing a woman and her child from the sea . The picture is a companion piece to John C. McRae's print "My child! My child!”  circa 1855.  Library of Congress.

Discovery: $105,492.25 In Discovery Sanctions Against Defendant And Its Attorney Sustained For Evasive Responses And Inordinate Meet And Confer Broken Promises

 

Trial Court Has Some Interesting Discussion of Trees Along the Way.

     DK Art Publishing, Inc. v. City Art, Inc., Case No. B229122 (2d Dist., Div. 5 Oct. 11, 2012) (unpublished) is a sober reminder that game playing in discovery proceedings can result in serious sanctions that will indeed be affirmed upon review by an appellate tribunal.

     In this one, a discovery referee made recommendations that were for the most part followed by a trial court after observing that plaintiff did not get requested information from defendant City Art after one year of meeting/conferring, inclusive of 55 meet/confer letters, two hours of in-person sessions, seven telephonic sessions lasting over 4 hours, and multiple withdrawn motions to compel by plaintiffs based on broken promises. In total, the trial court awarded $105,492.25 to plaintiff and against defendant City Art and its attorney, not surprisingly prompting an appeal.

     After dismissing challenges to the discovery referee’s disclosures and the appointment process, the appellate court affirmed the discovery sanctions. The discovery sanctions were justified under Code of Civil Procedure section 2023.030(a), which authorizes sanctions for evasive responses and counterproductive meet/confer activity. The appellate court found no substantial justification for the defense activities during discovery. Finally, defense counsel was liable for sanctions under Ghanooni v. Super Shuttle of L.A., 20 Cal.App.4th 256, 261 (1993) because he was an active participant in the discovery abuse and the case does not narrowly hold that he was only liable for advice given to the client in the discovery context.

     BLOG UNDERVIEW--We especially liked some of the trial court’s comments made during the discovery sanctions proceedings. Here you go. “Said the court: ‘There's an old saying that a friend of mine who lives down in the south, in Louisiana, said. “If you don't want my peaches, don't shake my tree.” [¶] You had a little tree-shaking going on here, and certainly in the early stages. And apparently it has become now a case that has well exceeded George Washington and any given cherry tree. [¶] It is most unfortunate. It is absolutely most unfortunate. However, I think the defendants brought it on. Not you, present counsel, but I believe the defendants and their counsel are all responsible for bringing us to the point. [¶] The evasiveness and the failures that were initiated back in 2008 and which have continued since the appointment of the referee were stunning.”

Design drawing for stained glass window showing George Washington in uniform, with rays of divine light, and icons: rifle, cherry tree, axe, Masonic pyramid/all-seeing-eye, Great Seal of the United States; with text "One was a soldier".  Library of Congress.