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Flowserve U.S. Inc. v. Optimux Controls, LLC

United States District Court, D. Utah, Central Division

March 30, 2017



          Clark Waddoups, United States District Court Judge


         Before the court are motions of Defendants TrimTeck, LLC, and Optimux Controls, LLC, for attorney fees and costs. (Dkt. No. 138 & 148.) On December 7, 2015, the court granted Plaintiff Flowserve's request for additional discovery pertaining to the theory of alter ego. (Dkt. No. 108.) The court required, however, that Flowserve bear the reasonable expense of any such discovery. The instant motions ask the court to award fees and costs totaling $47, 322.09 to be paid to TrimTeck and $23, 947.50 to be paid to Optimux Controls. On January 12, 2017, the court heard oral argument on those motions. (Dkt. No. 197.) After careful consideration of the parties' arguments, the court now GRANTS Defendants' motions.


         Having granted Flowserve additional discovery on the alter ego issue in December 2015, the court issued an Order and Protective Order (“the Protective Order”) defining the scope of the alter ego discovery on March 14, 2016. (Dkt. No. 120.) The Protective Order required Defendants to produce the following documents, dating from 2004 to the present: (1) all bank statements, in unredacted form; (2) all income statements; (3) all balance sheets; and (4) all communications with the accounting firm of Chick & Karo. It also required Defendants to allow Flowserve and its computer expert to copy all information from the Sage accounting system, dating from 2004 to the present, including existing backup data and information. But it permitted Defendants, their counsel, and their computer experts to be present for the copying of the Sage system. The protection order also required Optimux to produce all documents in its possession, custody, or control regarding the original purchase price of all tools, equipment, furniture, and office supplies transferred from Optimux to TrimTeck between 2004 and the present. All documents were to be designated CONFIDENTIAL-ATTORNEYS' EYES ONLY. Defendants produced the pertinent documents and granted Flowserve access to the Sage accounting system in May 2016. (Dkt. Nos. 138 & 148.)

         In light of the court's discovery and protection orders, TrimTeck delivered documents to Flowserve on May 11, 2016. (Dkt. No. 138, p. 2.) Then on May 16, 2016, TrimTeck and Optimux provided Flowserve access to the Sage accounting system in Coral Springs, Florida. TrimTeck's counsel traveled from Utah to Florida to oversee this process along with an expert for TrimTeck, as contemplated in the Protective Order. TrimTeck argues this oversight was necessary because the Sage system houses confidential accounting and proprietary data. TrimTeck's motion and supporting documents represent that its employees spent 84.75 hours locating, obtaining, and reviewing files in order to identify all responsive documents; its attorneys spent 169.5 hours reviewing documents and overseeing the copying of the Sage system; and a paralegal spent 28.4 hours reviewing and sorting documents. (Dkt. Nos. 139 & 140.) The paralegal conducted the initial review of the documents as a cost mitigation measure. Additionally, at least one of TrimTeck's lawyers worked at a rate discounted from his typical billing rate. (Dkt. No. 140.) TrimTeck requests $4, 720.83 for TrimTeck's employees' time; $36, 375.40 in attorney fees and $2, 685.86 in attorney expenses, including travel to and from Florida; and $3, 550.00 for the paralegal's time.

         TrimTeck supports its request with the Declaration of Christian Conesa regarding the efforts of TrimTeck employees, the Declaration of Glenn R. Bronson regarding the hourly rates and time spent by attorneys at Prince, Yeates & Geldzahler on behalf of TrimTeck, and billing statements showing the work of each attorney, paralegal, and TrimTeck employee involved. The billing statements detail the tasks performed, the time spent, and the hourly rate charged for each billed task. (Dkt. Nos. 139 & 140.) Finally, TrimTeck's counsel represented to the court at oral argument that none of the tasks included in the billing statements would have been performed but for the discovery obligation and that he thoroughly reviewed the billing statements before filing the motion in ensure the only expenses requested were related to discovery production.

         Optimux also produced documents to Flowserve in May 2016. (Dkt. No. 148, p. 3.) It represents that its personnel and counsel reviewed fourteen boxes of documents as well as the SAGE accounting system's electronic data in preparation for the document production. (Dkt. No. 148, p. 2.) And like TrimTeck, Optimux's attorney was present while Flowserve accessed the Sage accounting system. Optimux asserts that its employees spent 39.08 hours, its attorney spent 47.6 hours, and a paralegal spent an additional 20.3 hours-totaling 106.98 hours-identifying and reviewing documents for production. (Dkt. No. 148, pp. 3-4.) Thus, Optimux requests $21, 339.50 in attorney and paralegal time and $2, 608.00 for Optimux employees' time.

         Optimux supports these sums by Declaration of Jaime Conesa regarding Optimux employee time, Declaration of Jeffrey A. Sarrow regarding attorney fees, and supporting billing statements that include a description, hour amount, and rate for each billed task. (Dkt. Nos. 148 & 149.) During oral argument on its motion, Optimux's counsel represented to the court that he only billed for phone calls with other counsel in three instances, which calls were with TrimTeck's counsel, and reviewed billing records removing any redundancies.

         Flowserve's total liability for fees and costs, according to the two Defendants' requests, is $71, 269.59. Flowserve objects to this sum, and instead argues the total award should not exceed $4, 402 for the 2, 212 documents that were actually produced and for the forty-minutes it took to copy the Sage accounting system.[1]


          Rule 26(c) of the Federal Rules of Civil Procedure permits the court to “specify[] terms, including . . . the allocation of expenses for disclosure or discovery” when good cause suggests a certain party needs protection “from annoyance, embarrassment, oppression, or undue burden or expense” resulting from the discovery process. Fed. R. Civ. Pro. 26(c)(1)(B). Pursuant to this rule, the court ordered Flowserve to pay “reasonable costs incurred by Defendants for their attorneys to respond to the discovery request.” (Dkt. No. 160.) Therefore, in assessing the amount Flowserve owes, the court must determine whether the expenses Defendants incurred were in fact reasonable. Cf. United Phosphorus, Ltd. v. Midland Fumigant, Inc., 205 F.3d 1219, 1233 (10th Cir. 2000) (discussing the Lanham Act, which gives “the trial court discretion to award reasonable attorney fees to the prevailing party in ‘exceptional' cases”). “When determining what is a reasonable award of attorney fees, the district court must calculate the ‘lodestar, ' which is the reasonable number of hours spent on the litigation multiplied by a reasonable hourly rate.” Id.

         It is the burden of the party requesting a fee award to demonstrate that the hours spent and rate charged were reasonable, and by extension the reasonableness of the amount requested. Id. at 1234-35; Parker v. CitiMortgage, Inc., 987 F.Supp.2d 1224, 1229 (D. Utah 2013). The party requesting fees should present the court with “meticulous, contemporaneous time records” that show the hours for which compensation is requested, which tasks were performed during that time, and who performed the work.[2] United Phosphorus, Ltd., 205 F.3d at 1234. The billing records should not reflect “block-billing, ” or “[t]he use of billing practices that camouflage the work a lawyer does.” Robinson v. City of Edmond, 160 P.3d 1275, 1284-85 (10th Cir. 1998). Billing statements that itemize the tasks performed with specific summaries of the tasks have been deemed adequate by the Tenth Circuit Court of Appeals. See Id . at 1285. The party requesting fees must also present the court with evidence that the rate charged is consistent with the prevailing market rate for similar work conducted by similarly experienced lawyers. Id. at 1234.

         Flowserve argues Defendants cannot meet their burden. It asserts the amount of fees requested should not be awarded for three reasons: (1) the Protective Order defined a narrow set of documents that should have been easily produced, requiring only the hours necessary to locate and deliver documents and the forty-two minutes to copy the Sage accounting system; (2) time spent reviewing documents and conferencing about them was for substantive review of the documents in preparation for Defendants' own cases, not for the purpose of discovery; and (3) even if all the billed activities were allowable, the billing records include misleading block billing. (Dkt. No. 160, p. v.) These arguments are unavailing as both Defendants ...

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