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Tallman v. CPS Security (USA), Inc.

United States District Court, D. Nevada

June 3, 2014

DENNIS TALLMAN, et al., Plaintiffs,
v.
CPS SECURITY (USA), INC. and CPS CONSTRUCTION SECURITY PLUS, INC., Defendants

Page 1250

For Dennis Tallman, Plaintiff: Leon Marc Greenberg, LEAD ATTORNEY, Leon Greenberg Professional Corporation, Las Vegas, NV; Mark R. Thierman, LEAD ATTORNEY, Thierman Law Firm, Reno, NV; Christian James Gabroy, Gabroy Law Offices, Henderson, NV; Dana Sniegocki, Leon Greenberg, Las Vegas, NV.

For Paul Dreiblatt, Rafael Vera, John Whittington, Donald Mika, Clifford Nagy, Plaintiffs: Leon Marc Greenberg, LEAD ATTORNEY, Leon Greenberg Professional Corporation, Las Vegas, NV; Christian James Gabroy, Gabroy Law Offices, Henderson, NV; Dana Sniegocki, Leon Greenberg, Las Vegas, NV.

For Michael Minor, William Monks, Plaintiffs: Leon Marc Greenberg, LEAD ATTORNEY, Leon Greenberg Professional Corporation, Las Vegas, NV; Dana Sniegocki, Leon Greenberg, Las Vegas, NV.

For CPS Security (USA), Inc., Defendant: Jim D Newman, LEAD ATTORNEY, CPS Security Solutions, Inc., Los Angeles, CA; Tazamisha H. Imara, PRO HAC VICE, CPS Security Solutions, Inc., Gardena, CA; Timothy Roehrs, Carol Davis Zucker, Kamer Zucker & Abbott, Las Vegas, NV.

For CPS Construction Security Plus, Inc., Defendant: Tazamisha H. Imara, PRO HAC VICE, CPS Security Solutions, Inc., Gardena, CA; Timothy Roehrs, Carol Davis Zucker, Kamer Zucker & Abbott, Las Vegas, NV.

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ORDER

PHILIP M. PRO, United States District Judge.

Presently before the Court is Plaintiff's Motion for an Award of Attorney's Fees and Costs (Doc. #256), filed on December 4, 2013. Defendants filed an Opposition (Doc. #260) on January 22, 2014. Plaintiffs filed a Reply (Doc. #267) on March 3, 2014.

Also before the Court is Defendants' Renewed Motion for Sanctions Against Plaintiffs' Counsel (Doc. #259), filed on January 6, 2014. Plaintiffs filed an Opposition (Doc. #263) on January 30, 2014. Defendants filed a Reply (Doc. #265) on February 18, 2014.

Also before the Court is Plaintiffs' Motion to Strike Declaration of Jim D. Newman (Doc. #264), filed on February 11, 2014. Defendants filed an Opposition (Doc. #266) on February 28, 2014. Plaintiffs filed a Reply (Doc. #268) on March 5, 2014.

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I. BACKGROUND

The parties are familiar with the facts of this case, and the Court will not repeat them here except where necessary. Defendants CPS Security (USA), Inc. and CPS Construction Security Plus, Inc. move for sanctions under 28 U.S.C. § 1927 because Plaintiffs' counsel presented an exhibit and elicited testimony about settlements in unrelated cases on the first day of trial even though the Court previously had ruled this type of evidence was inadmissible. Plaintiffs' counsel's conduct resulted in the Court declaring a mistrial.

Defendants contend that to support a sanctions award under § 1927, they need not show Plaintiffs' counsel acted in bad faith, they need to show only recklessness. Defendants contend Plaintiffs' counsel was indifferent to the risk that his questioning of witness Christopher Coffey (" Coffey" ), Defendant CPS Security (USA), Inc.'s president and chief executive officer, would cause a mistrial because the Court had excluded evidence of prior litigation and settlements in multiple pretrial orders. Defendants thus argue Plaintiffs' counsel's conduct was at least reckless, if not intentional. Defendants request sanctions in the form of Defendants' costs for trial preparation, costs related to trial, and post-mistrial costs associated with preparing for a second trial. Defendants argue the Court could sanction Plaintiffs by denying or reducing their request for attorney's fees. Defendants contend sanctions are particularly appropriate because Plaintiffs previously unreasonably multiplied the proceedings by filing summary judgment motions after the dispositive motion deadline.

Plaintiffs respond that the standard for awarding sanctions under § 1927 requires a finding of subjective bad faith, and there is no evidence that Plaintiff's counsel acted in bad faith. Rather, Plaintiffs contend counsel reacted in the heat of trial to testimony which he believed opened the door to the improper questioning, even though the Court previously ruled it inadmissible. Plaintiffs also contend Defendants have not incurred any additional reasonable expenses, and Defendants are the ones who needlessly have protracted this litigation. As to the untimely motions for summary judgment, Plaintiffs argue the Court should not revisit that issue as it is unrelated to the mistrial.

Plaintiffs separately move for an award of attorney's fees under the Fair Labor Standards Act (" FLSA" ). Plaintiffs contend they are the prevailing party entitled to a fee award, and that the hours expended are reasonable. Plaintiffs state they already have reduced the hours requested by excluding work on unsuccessful motions and certain work on non-FLSA claims, and by further discounting the time spent by the lawyers and paralegals by varying percentages. Plaintiffs argue Defendants' litigation conduct increased the hours Plaintiffs reasonably needed to expend to pursue their case. Plaintiffs also contend the requested hourly rates are reasonable, as demonstrated by counsel's affidavit and by the Court's approval of similar rates in prior cases. Plaintiffs request a total attorney's fee award of $379,828. Plaintiffs also request costs in the amount of $16,522.75.

Defendants respond that Plaintiffs are entitled only to a reasonable fee, and Plaintiffs have engaged in litigation tactics which have prolonged the case unnecessarily, such as refusing to negotiate settlement on an individual basis as opposed to a class-wide settlement. Defendants also argue Plaintiffs recovered far less than what they sought, and Plaintiffs achieved no other benefits or change in company policy. Defendants identify seven categories in Plaintiffs' billing entries for which they

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contend Plaintiffs request unreasonable hours. Additionally, Defendants argue the rates charged are unreasonable, and Defendants present an expert opinion on what rates would be reasonable. Defendants contend the lodestar amount should be further reduced based on the limited success Plaintiffs achieved, work performed on non-FLSA claims, and Plaintiffs' counsel's conduct of the litigation, including the conduct which resulted in the mistrial.

Plaintiffs move to strike the declaration of Jim D. Newman (" Newman" ) offered in support of Defendants' Opposition to Plaintiffs' Motion for Attorney's Fees. Plaintiffs argue the Newman declaration improperly discloses settlement negotiations and incorrectly characterizes Plaintiffs' settlement positions, yet Defendants have declined to allow Plaintiffs to disclose what happened during a mediation and other settlement talks to rebut Defendants' characterizations. Defendants respond that while Federal Rule of Evidence 408 prohibits the use of settlement evidence to prove liability or the amount of a claim, there is no bar to admitting this type of evidence in a post-judgment fee dispute. Defendants also argue the Newman Declaration does not reveal any confidential communications made during the mediation.

II. DEFENDANTS' RENEWED MOTION FOR SANCTIONS (Doc. #259)

At a pretrial hearing, this Court ruled that evidence that Defendants entered into settlement agreements in other wage and hour lawsuits would be inadmissible at trial in this case. (Renewed Mot. Sanctions (Doc. #259), Ex. 1 at 35.) In response to Plaintiffs' counsel's request for clarification, the Court indicated that " reference to . . . the filing of any litigation and the settlement of the litigation" was excluded. (Id. at 35-36.) The Court reiterated this ruling at a later hearing. (Renewed Mot. Sanctions, Ex. 3 at 21-23.)

On the first day of the jury trial, Plaintiffs' counsel again raised the issue of whether Plaintiffs could admit evidence of prior litigation against Defendants on their wage and hour policies as evidence of willfulness. (Renewed Mot. Sanctions, Ex. 4 at 5-9.) The Court indicated it would not change its ruling. (Id. at 9.)

Later that same day, Plaintiffs' counsel, Leon Greenberg (" Greenberg" ), asked Coffey on direct examination whether he was aware of any other lawsuits brought against CPS Security (USA), Inc., or any other company Coffey owned, claiming a failure to pay overtime or minimum wage. (Tr. (Doc. #208) at 15.) Defendants objected on the basis that the Court already had ruled evidence of other lawsuits was inadmissible. (Id.) The Court sustained the objection. (Id. at 15-16.) Greenberg then asked for a sidebar, but the Court denied the request, indicating that any issue could be raised at a later opportunity outside the presence of the jury. (Id. at 16.) At the end of his direct examination of Coffey, Greenberg made an offer of proof on this same topic, arguing that Coffey's knowledge of allegations in other lawsuits was relevant to willfulness. (Id. at 89-92.) The Court indicated it would not change its ruling. (Id. at 91-92.)

On cross-examination, counsel for Defendants showed Coffey Exhibit 528 and moved for the Exhibit's admission. (Id. at 112.) Exhibit 528 is a letter from U.S. Department of Labor (" DOL" ) Regional Administrator Oliver Peebles, III to Defendants' counsel in response to counsel's request under the Freedom of Information Act. (Ex. List (Doc. #206), Trial Ex. 528.) Attached to the letter is an October 15, 2009, memorandum to file written by Tina

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Chan, Wage and Hour Investigator for the DOL, regarding Defendant CPS Security Solutions, Inc. (Id. at T-7.) The last paragraph on the first page of the memorandum states the following:

Research was conducted on [CPS Security Solutions, Inc.] to verify if there is any pending investigation on the firm with other agencies. It was uncovered that currently there are two class action lawsuits filed against the employer in the Los Angeles County Superior Court for issues relating to sleep time, break time, meal time and overtime. The attorney representing CPS has provided copies of the court filing for review (see copies provided). A number of class action lawsuits had been filed against CPS in different California courts and CPS successfully petitioned the California Judicial Council to have all the lawsuits coordinated before the Los Angeles County Superior Court (see copies provided).

(Id.) In response to questioning about Exhibit 528 by Defendants' counsel on cross-examination, Coffey testified that as a result of a 2008/2009 DOL investigation, CPS paid $389.04. (Tr. (Doc. #208) at 111.)

On redirect examination, Plaintiffs' counsel, Mark Thierman (" Thierman" ),[1] asked Coffey about Exhibit 528 and Coffey's related testimony on cross-examination that Defendants paid a fine of only a few hundred dollars in relation to a DOL investigation. (Id. at 123.) Thierman directed Coffey to the language in Exhibit 528 quoted above which referred to class action litigation. (Id.) Thierman then asked Coffey if he paid any money to settle the lawsuits referred to in Exhibit 528, and whether he signed a settlement document for $1.5 million in overtime pay, at which point Defendants objected. (Id. at 124.) The Court stated that the paragraph referred to in Exhibit 528 " opens the door on these lawsuits. There's no question about it. It's in evidence now; it addresses that." (Id. at 124-25.) However, the Court also noted that Plaintiffs' counsel needed to connect the lawsuits mentioned in Exhibit 528 with the $1.5 million settlement referred to in the question being put to the witness, and there was no basis to do that. (Id.) The Court thus sustained Defendants' objection. (Id. at 125.)

Thierman then asked whether Coffey recalled ever paying $1.5 million to settle an overtime and minimum wage lawsuit for trailer guards in California during the relevant time period. (Id. at 125-26.) Coffey indicated he could not recall. (Id. at 126.) Mr. Thierman then showed Coffey, and the jury, a signature page from a settlement agreement in an attempt to refresh the witness's recollection. (Id. at 126.) Defendants objected. (Id.) The Court indicated Thierman could show the document to Coffey, but not to show it to the jury. (Id. at 126-27.) Thierman then asked Coffey whether that was his signature on a settlement agreement in an overtime case in California, and whether that document refreshed his recollection as to the amount of money paid. (Id. at 127.)

Defendants objected and moved to strike, arguing the Court already ruled this evidence was inadmissible. (Id.) The Court noted that it had ruled this evidence was inadmissible, but that was before the introduction of Exhibit 528, which mentioned lawsuits. (Id.) Defendants then explained that the problem was that there was no connection between the lawsuits mentioned in Exhibit 528 and the $1.5 million settlement agreement being put before

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the witness. (Id. at 127-28.) The Court agreed and sustained the objection. (Id. at 128.)

The next morning, the parties and the Court again discussed the other lawsuits and Exhibit 528. (Tr. (Doc. #210).) In the course of this discussion, the Court stated that the " minute . . . defense counsel offered . . . the other document that contained that final paragraph, you know, my -- my antenna went up; I'm sure [Thierman's] did. I said okay, now we're gonna be talking about these same damn cases that, you know, before we weren't." (Id. at 10.) The Court nevertheless reiterated its position that delving into the other cases would be distracting and confusing to the jury. (Id. at 10-14.)

Defendants then moved for a mistrial based on the information about a $1.5 million settlement in an unrelated case being presented to the jury after the Court previously had ruled such evidence inadmissible. (Tr. (Doc. #211) at 15-49.) Defendants presented evidence that the litigation mentioned in Exhibit 528 was unrelated to the $1.5 million settlement. (Id. at 15-32.) The Court granted the motion for a mistrial and excused the jury. (Id. at 76-78, 84-85.)

Following the mistrial, Defendants moved for sanctions. (Defs.' Mot. Sanctions (Doc. #218).) In ruling on this motion, the Court stated that the " history of this case does reveal instances whereby Plaintiffs' counsel have multiplied these proceedings by improvidently filing certain untimely motions without leave of the Court," and that Plaintiffs caused the mistrial. (Order (Doc. #246) at 2.) The Court nevertheless concluded that whether to sanction and if so, in what amount, were determinations best left until after retrial. (Id.) The parties thereafter settled this matter, except for Plaintiffs' attorney's fees and costs, and any sanctions arising from a renewed motion for sanctions by Defendants. (Order on Stip. & Jt. Mot. to Approve Settlement Agreement (Doc. #249).)

Title 28 U.S.C. § 1927 provides that a district court " may" require an attorney " who so multiplies the proceedings in any case unreasonably and vexatiously" to pay " the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." The United States Court of Appeals for the Ninth Circuit has acknowledged that its " cases have been less than a model of clarity regarding whether a finding of mere recklessness alone may suffice to impose sanctions" under § 1927. B.K.B. v. Maui Police Dep't, 276 F.3d 1091, 1107 (9th Cir. 2002). However, the standard appears to require recklessness plus " something more-such as an improper purpose." Fink v. Gomez, 239 F.3d 989, 993 (9th Cir. 2001); see also B.K.B., 276 F.3d at 1107 (stating recklessness plus knowledge of proper procedure and knowledge that witness's testimony would be inadmissible under applicable rule was sufficient to impose sanctions); [2] In re Keegan Mgmt. Co., Sec. Litig., 78 F.3d 431, 436 (9th Cir. 1996) (" For sanctions to apply, if a filing is submitted recklessly, it must be frivolous, while if it is not frivolous, it must be intended to harass. Thus, while it is true that reckless filings may be sanctioned, and nonfrivolous filings may also be sanctioned, reckless nonfrivolous filings, without

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more, may not be sanctioned." ). The Court has " substantial leeway . . . in determining whether and how much sanctions are appropriate." Haynes v. City & Cnty. of S.F., 688 F.3d 984, 987 (9th Cir. 2012) (quotation omitted).

The Court, in its discretion, declines to sanction Plaintiffs' counsel under § 1927. Although Plaintiffs' counsel caused the mistrial and thereby multiplied the proceedings, he did not do so unreasonably and vexatiously given the context of the trial. The Court had ruled multiple times that evidence of other litigation would not be admissible. However, at trial and on cross-examination of Coffey, Defendants presented an exhibit which referred to other litigation. As the Court stated at the time, the statements in Exhibit 528 opened the door to some questioning about prior litigation, and Thierman reasonably may have believed the Court's comments approved of inquiry in this area despite the Court's prior rulings.[3] The time between when Defendants presented Coffey with Exhibit 528 and when Thierman asked about the inadmissible settlement was less than thirty minutes. (Tr. (Doc. #208) at 110-11 (pause in proceedings at 4:06 p.m. just before Exhibit 528 is introduced); Mins. of Proceedings (Doc. #204) (court adjourns at 4:30 p.m.). Given the fast-paced, changing circumstances of the trial, Thierman's error regarding whether the litigation mentioned in Exhibit 528 was related to the litigation which resulted in the $1.5 million settlement does not rise to the level of recklessness plus something more to constitute sanctionable conduct under § 1927. As to the untimely summary judgment motions, the Court already declined to award sanctions and the Court will not revisit that decision. (Tr. (Doc. #175) at 98.) The Court therefore will deny Defendants' Renewed Motion for Sanctions.

II. MOTION FOR AN AWARD OF ATTORNEY'S FEES AND COSTS (Doc. #256)

The FLSA provides that " in addition to any judgment awarded to the plaintiff or plaintiffs," the Court " shall . . . allow a reasonable attorney's fee" and costs. 29 U.S.C. § 216(b). Case law regarding what constitutes a reasonable fee under other federal fee-shifting statutes applies to the FLSA. Haworth v. State of Nev., 56 F.3d 1048, 1051 (9th Cir. 1995) (citing City of Burlington v. Dague, 505 U.S. 557, 562, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992)).

To determine a reasonable attorney's fee, the Court multiplies the number of hours reasonably expended by a reasonable hourly rate. Mendez v. Cnty. of San Bernardino, 540 F.3d 1109, 1129 (9th Cir. 2008). The resulting figure is referred to as the " lodestar," and this amount is a presumptively reasonable fee. Id. Although presumptively reasonable, the court may adjust the lodestar " to account for factors not already subsumed within the initial lodestar calculation." Id. Those factors include:

(1) the time and labor required, (2) the novelty and difficulty of the questions involved, (3) the skill requisite to perform the legal service properly, (4) the preclusion of other employment by the attorney due to acceptance of the case, (5) the customary fee, (6) whether the fee is fixed or contingent, (7) time ...

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