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Linglong Americas, Inc. v. Horizon Tire, Inc.

United States District Court, N.D. Ohio, Eastern Division

April 4, 2018

LINGLONG AMERICAS INC., et al., Plaintiffs,
v.
HORIZON TIRE, INC., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          DONALD C. NUGENT, UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court upon GCR Tire & Service's Motion for Assessment of Fees and Expenses. (ECF #90). The motion results from a dispute over how much non-party GCR should be reimbursed for fees the company incurred as a result of complying with a subpoena served by Horizon Tire, Inc. ("Horizon"). Horizon filed a brief in opposition to GCR's Motion for Assessment of Fees and Expenses. (ECF #92). GCR filed a reply in support of its motion. (ECF #93). Having considered all of the submissions, and having reviewed the applicable law, this Court finds that GCR's Motion for Assessment of Fees and Expenses should be GRANTED. GCR is awarded an amount of $39, 905.

         Background

         The case stems from a situation regarding a discovery dispute over the amount of costs . and fees owed to non-party GCR for compliance with a subpoena. On February 16, 2016, Horizon issued a subpoena to GCR for information relevant to Linglong and Flagship, parties litigating in opposition to Horizon. (ECF #92-2). The subpoena sought documents in GCR's possession or custody or documents in the control or possession of GCR's corporate affiliates. (ECF # 92-2). GCR retained the law firm Hanna, Campbell & Powell, LLP to investigate and respond to the subpoena. (ECF #90-1 at p. 2).

         When initially served with the subpoena, GCR believed Horizon's document requests to be to be overbroad and burdensome because of the broad range of documents Horizon requested. (ECF #90-1 at p. 2). GCR communicated to Horizon the company did not have the proper tools to efficiently identify, review, or produce such broad range of documents. (Id.) GCR stated that in order to fully comply with the request, GCR would have to conduct interviews with GCR employees across the country to determine which custodians may have information relevant to Horizon's the subpoena. (Id.) GCR estimated that without narrowing the scope of the subpoena, the cost of compliance would be over $150, 000. (Id.)

         In order to make compliance with the subpoena manageable and less costly, GCR attorneys contacted a Horizon attorney shortly after service of the subpoena seeking to narrow the scope of requested documents. (Id.) In August 2016, after several months of discussions between attorneys from GCR and Horizon, Horizon provided GCR with a list of seven GCR custodians with records to be searched. (Id. at 3). Search terms initially provided by Horizon resulted in 7, 000 hits for potential documents for these seven custodians. After continued discussions between GCR and Horizon, new search terms were formulated resulting in a collection of 1, 316 potentially relevant documents. (Id. at 4). After working extensively to narrow the scope of the search, GCR worked to review documents for relevant information and to ensure there was no privileged or confidential information in the documents. (ECF 90-1, p.4).

         In October 2016, Horizon served GCR with another subpoena in a related lawsuit filed in Texas state court. The second subpoena was similar to Horizon's subpoena to GCR in this case and Horizon told that GCR that it could produce the same documents in response to both subpoenas. (ECF #92, p.3). Consequently, the second subpoena was characterized as placing no additional burden on GCR.

         In February 2017, GCR attempted to be reimbursed for costs related to its work complying with the subpoena and sent Horizon a bill for costs incurred from the time of service of the subpoena in February 2016 up to that point. (ECF #92 at p. 4). The bill included $6, 555 for data processing as well as about $20, 000 for document review and other work related to narrowing the scope of the subpoena. (Id.) Horizon disputed the amount and stated it would consider paying GCR's IT-related expense, but not legal expenses incurred as a result from the subpoena. GCR then notified this Court of a discovery dispute and sought assurance of reimbursement before further production of documents. (ECF #76).

         As a result of the fee dispute, this Court held a status conference with the parties on May 12, 2017. At the status conference, this Court ordered GCR to comply with the subpoena and ruled that GCR is entitled to "reasonable fees and expenses" incurred as a result of compliance with the subpoena. (ECF #81). This Court also stated that if GCR and Horizon could not agree on an amount "GCR may submit a final bill to the Court for resolution." (Id.)

         After the judgment from this Court, GCR continued to review over 1, 300 documents and ultimately produced about 870 pages of documents. (ECF #90-1 at p. 4). GCR now seeks to have a total of $39, 905[1] in costs and attorney's fees reimbursed as a result of complying with Horizon's subpoena. (ECF #92 at p. 9). Horizon claims that GCR's claimed expenses are not reasonable because the costs are exaggerated, poorly documented, or incurred as a result of its own efforts to resist complying with the subpoena. (Id.) Further, Horizon asserts that GCR is entitled to none of the attorney's fees incurred while litigating the fee dispute. (Id.) Horizon does not dispute the reasonableness of GCR's attorneys' hourly rates and does not believe the rates were unusually high. (Id. at 6). Horizon only argues the amount GCR seeks is not reasonable because the work pace was slow, unnecessary, or incurred from types fees not reimbursable under Rule 45. Horizon suggests a total amount of $9, 993 to be reimbursed to GCR for its work responding to Horizon's subpoena. (Id. at 15). Horizon also argues that only half of this total should be reimbursed through this Court and the other half should be reimbursed through the case pending in Texas state court. (Id. at 11).

         Analysis

         Federal Rule of Civil Procedure 45 provides that when a court orders compliance with a subpoena over an objection, “the order must protect a person who is neither a party nor a party's officer from significant expense resulting from compliance." Fed.R.Civ.P. 45(d)(2)(B)(ii). This provision has been deemed to "make cost shifting mandatory in all instances which a non-party incurs significant expense from compliance with a subpoena." Legal Voice v. Stormans, Inc., 738 F.3d 1178, 1184 (9th Cir. 2013); Linder v. Calero-Portocarrero, 251 F.3d 178 (D.C. Cir. 2001). Consequently, if a subpoena imposes expenses on a non-party and those expenses are deemed "significant, " a district court is required to "protect the non-party by requiring the party seeking discovery to bear at least enough of the expense to render the remainder non-significant." Linder, 251 F.3d at 182. The determination of what costs are significant is within the sound discretion of the trial court. Sound Sec, Inc. v. Sonitrol Corp., No. 3:08-cv-05359-RBL, 2009 WL 1835653, at *1 (W.D. Wash. June 6, 2009). Expenses incurred complying with a subpoena must also be reasonable, and the determination of reasonableness is also within the trial court's discretion. In re Aggrenox Antitrust Litigation, No. 3:14-md-02516 (SRU), 2017 WL 4679228, at *2 (D. Conn. Oct 18, 2017). Rule 45 (d)(1) also provides that a party serving a subpoena "must take reasonable steps to avoid imposing undue burden or expense on a person subject to the subpoena. The court for the district where compliance is required must enforce this duty and impose an appropriate sanction-which may include lost earnings and reasonable attorney's fees-on a party or attorney who fails to comply." F.R.C.P 45 (d)(1). This provision therefore permits district courts to award a party with reasonable attorney's fees incurred litigating a fee dispute related to a subpoena. In re Aggrenox Antitrust Litigation, 2017 WL 4679228. at *3.

         When addressing the question of what constitutes reasonable attorney's fees, courts use the Lodestar method. The Lodestar method identifies reasonable attorney's fees by multiplying “the number of hours reasonably expended on the litigation by a reasonable hourly rate." Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); Northeast Ohio Coalition for the Homeless v. Husted, 831 F.3d 686, 702 (6th Cir. 2016). The reasonable hourly rate is the amount that "a paying client would be willing to pay." Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182, 190 (2d Cir. 2008). Reasonableness of legal fee expenses is therefore demonstrated if the incurred fees have already been paid by the client, since this indicates the market value of legal services. Balcor Real Estate Holdings, Inc. v. Walentas-Phoenix Corp., 72 F.3d 150, 153 (7th Cir. 1996).

         A. Costs of Compliance with ...


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