Nevada West Petroleum, LLC v. BP West Coast Products, LLC

          ORDER

          PEGGY A. LEEN, UNITED STATES MAGISTRATE JUDGE

         This matter is before the court on defendants' Application for Attorney's Fees and Costs (ECF No. 63). The court has considered the application, Supporting Memorandum (ECF No. 64), plaintiff's response (ECF No. 68), defendant's Reply (ECF No. 71) and the arguments of counsel at the hearing held January 31, 2017.

         BACKGROUND

         The Complaint (ECF No. 1) was filed September 1, 2015. It is a lawsuit for damages arising out of alleged bad faith practices by and on behalf of petroleum franchisors/refiners defendants BP West Coast Products, LLC, Tesoro Refining & Marketing, and Treasure Franchise Company. Plaintiffs assert claims for violations of the Petroleum Marketing Practices Act, 15 U.S.C. § 2801 et. seq.; breach of contract; breach of the covenant of good faith and fair dealing; and civil conspiracy.

         The court entered a Discovery Plan and Scheduling Order (ECF No. 30) which initially established an August 25, 2016 discovery cutoff, and other case management deadlines consistent with LR 26-1. On August 8, 2016, defendants filed a Motion to Strike Plaintiff's Expert Report (ECF No. 37), and Motion to Compel Discovery (ECF No. 39). The court set the matters for hearing on September 30, 2016. After hearing arguments of counsel, the court granted in part and denied in part defendants' motion to compel. Plaintiffs' boiler plate objections were overruled and stricken, and supplemental responses fully compliant with Rule 34(b)(2)(B) & (C) were compelled. The court also required that the supplemental response indicate whether any responsive documents were being withheld on the grounds of privilege, and required plaintiffs to produce a privileged document log for any withheld documents. The court overruled plaintiffs' work product objections.

         With respect to the motion to strike plaintiffs expert, the court gave the plaintiffs two weeks in which to serve a fully compliant Rule 26(a)(2)(B) report. The court continued the hearing, reserving decision on whether the expert report should be stricken, and what, if any, additional sanctions should be imposed. However, the court's oral ruling made it clear that at a minimum, if the plaintiffs produced a completely compliant expert report, plaintiffs' counsel would be responsible for the costs of opposing counsel deposing the expert as well as reasonable costs and attorney's fees incurred in filing the motion to compel.

         A status conference was set for October 18, 2016, to address plaintiffs' compliance with the court's order. The parties filed a Joint Status Report (ECF No. 58) on October 13, 2016, as directed. The supplemental status report advised the court that plaintiffs had served a supplemental expert disclosure; supplemental responses to defendants' first request for production of documents; a ninth supplemental Rule 26(a) witness and document disclosure, along with corresponding documents as part of plaintiffs' responses to defendants' document requests.

         Defendants continued to complain about deficiencies with plaintiffs' supplemental expert report prepared by Mr. Santicola on several grounds, and argued that the supplemental report should also be stricken for various reasons. Defendants also complained about the adequacy of defendants' supplemental responses to requests for production the court compelled plaintiffs to produce.

         Plaintiffs responded to defendants' objections arguing that the objections about Mr. Santicola's opinions went to the weight and credibility of his opinions rather than to the admissibility of his report. With respect to the supplemental responses to requests for production of documents, plaintiffs stated that they had identified documents in their care, custody and control they intended to rely upon to support their damages claim, including more than 1, 000 pages of detailed records regarding the financial operation of their stations which came from the defendants' own system. Plaintiffs also produced financial statements from the plaintiff entities, including revenue and expense information which Mr. Santicola used to develop a detailed calculation of the plaintiffs' damages. In addition, plaintiffs provided copies of their monthly bank statements, cancelled checks, and offered to produce their electronic bookkeeping file for the defendants' inspection if requested. Counsel for plaintiffs also represented that any other responsive tax returns that had not been produced or filed after plaintiffs initially produced previous returns would be obtained and produced immediately.

         At the October 18, 2016 hearing, the court required the parties to meet and confer in an effort to agree upon reasonable costs and attorneys' fees as sanctions for the necessity of filing the motion to compel. The court indicated that if the par tie s were able to reach an agreement regarding the amount of reasonable costs and attorneys' fees, they should file a stipulation reflecting the agreed-upon amount. The court set a deadline to file an application for fees and costs and plaintiffs' response.

         As a sanction for plaintiffs' failure to timely serve a Rule 26(a)(2)(B) compliant expert report the court ordered that plaintiffs would be responsible for the costs of making Mr. Santicola available for a deposition. Specifically, the court ordered that plaintiffs would incur Mr. Santicola's expert fees for appearing for and preparing for his deposition, court reporter fees, and the cost of an original and one copy of the transcript. The court required the deposition to be scheduled within 30 days of the hearing.

         Finally, because plaintiffs' expert report's damages opinions were at odds with testimony of plaintiffs' Rule 30(b)(6) designee the court also required counsel for plaintiffs to supplement their damages calculation to clarify the damages position of their client, and gave defendants 30 days after the date of plaintiffs' expert deposition to disclose a rebuttal expert. The Motion to Strike (ECF No. 37) was denied without prejudice to filing a motion in limine before trial challenging the admissibility of plaintiffs' expert's opinions.

         The parties were unable to agree on reasonable costs and attorneys' fees incurred for filing the motion to compel. Counsel for defendants filed an Application for Attorneys' Fees and Costs (ECF No. 63) seeking to recover attorneys' fees and costs incurred for filing the motion to compel and motion to strike. The application for attorneys' fees and costs requested $48, 617.98 in total fees and costs. Plaintiffs filed a response requesting that the court significantly reduce the amount sought. The response indicated that plaintiffs did not dispute the reasonableness of the hourly rate charged by the lawyers who performed the work for which reimbursement was sought, or that defendants obtained a favorable result. Rather, plaintiffs disputed the reasonableness of defense counsel's expenditure of hours arguing that the legal issues presented in the two discovery motions were not particularly novel or difficult, and that defendants' request for in excess of 170 hours of combined work performed by 2 partners, 2 associates, and a paralegal was excessive.

         The response asked the court to significantly reduce the amount sought as sanctions on several grounds. First, the response argued that some of the claimed charges related to routine evaluation of documents or inter-office discussion regarding case strategies rather than work on the two motions at issue. Additionally, some of the charges included multiple tasks blocked into a single entry, making it difficult to evaluate the reasonableness of the specific charges. Plaintiffs contend the approximately 57 hours were charged for preparing the motions, and approximately 48 hours for reading plaintiffs' opposition and preparing replies was excessive. Finally, plaintiffs object to the award of any charges associated with work performed after the first hearing, which totaled approximately 35 hours. The response noted that the court declined to strike plaintiffs' supplemental expert report finding it complied with Rule 26 and that any additional ...