E. & J. Gallo Winery v. Strategic Materials, Inc.

District Court, E.D. California·Decided December 11, 2019·No. 1:17-cv-01709·Unknown

Opinion

4 5

6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 E. & J. GALLO WINERY, et al., Case No. 1:17-cv-01709-EPG 12 Plaintiff, ORDER GRANTING STRATEGIC MATERIALS, INCS’s MOTION FOR 13 v. ATTORNEY FEES AND COSTS IN PART

14 STRATEGIC MATERIALS, INC., et al., (ECF NO. 77.)

15 Defendants.

16 17 Plaintiffs E. & J. Gallo Winery and Gallo Glass Company (“Gallo”) filed this suit against 18 Defendant Strategic Materials, Inc. (“SMI”) alleging breaches of the parties’ Supply Agreement. 19 (ECF No. 1.) On August 8, 2019, the Court ruled on SMI’s “Motion to Strike Expert Opinions 20 Based on Undisclosed Damage Claims.” (ECF No. 71.) The Court found that Gallo failed to 21 adequately disclose certain categories of damages relating to energy costs and a 2019 furnace 22 shutdown. As part of its sanctions for the inadequate disclosure, it ordered that “Gallo shall pay 23 SMI’s reasonable attorney fees and costs related to this motion, as well as the supplemental 24 deposition related to batch costs.” (Id. at 13.) The Court ordered the parties to meet and confer 25 regarding the amount of attorney fees and costs to be awarded to SMI. 26 The parties were unable to stipulate to an amount of attorney fees and costs to be awarded 27 to SMI pursuant to the Court’s order; thus, SMI filed the instant “Motion for Attorneys’ Fees” 28 (referred to herein as “the motion”). For the following reasons, the motion is GRANTED IN PART. 1 I. BACKGROUND 2 According to the Complaint, SMI is a Texas-based corporation that supplies recycled 3 glass and plastic. Gallo is a wine producer and bottle manufacturer that purchases recycled glass 4 (also known as cullet) from SMI to produce wine bottles. 5 Gallo and SMI entered into a 10-year Supply Agreement in which SMI agreed to make 6 available certain volumes of cullet to Gallo each year at certain prices, subject to volume and 7 price adjustments. 8 Gallo filed this lawsuit in December 2017, alleging that SMI breached the Supply 9 Agreement. Gallo’s complaint sought “consequential damages.” More specifically, the breach of 10 contract allegations assert, in pertinent part that: (1) Gallo was forced to obtain alternative source 11 of cullet due to SMI’s breach of the supply agreement; (2) Gallo was forced to pay higher prices 12 for cullet from SMI’s Madera, Sacramento, San Leandro, Commerce, and Vernon glass 13 processing plants and incurred additional costs to make glass due to SMI’s failure to supply the 14 appropriate amount of cullet under the Supply Agreement; and (3) Gallo suffered damage due to 15 the failure of certain SMI cullet shipments to meet the specifications in the supply agreement. 16 On June 19, 2019, SMI filed a “Motion to Strike Expert Opinions Based on Undisclosed 17 Damages Claims” (ECF No. 53.), contending that Gallo’s damages theories related to batch costs, 18 energy costs, and the February 2019 furnace shutdown were not properly disclosed and seeking to 19 have all evidence of those categories of damages excluded. 20 On August 8, 2019, the Court ruled on SMI’s “Motion to Strike Expert Opinions Based on 21 Undisclosed Damage Claims.” (ECF No. 71.) The Court found that certain categories of damages 22 relating to energy costs and a 2019 furnace shutdown were inadequately disclosed and precluded 23 Gallo from offering evidence of same at trial. The Court also addressed whether Gallo adequately 24 disclosed its intention to seek batch costs as a category of damages. The Court refused to preclude 25 Gallo from offering evidence of batch costs altogether; however, the Court did order that “Gallo 26 shall pay SMI’s reasonable attorney fees and costs related to this motion.” The Court ordered the 27 1 A more complete recitation of the factual background underlying SMI’s “Motion to Strike Expert Opinions Based 28 on Undisclosed Damages Claims,” can be found in the Court’s Order on that motion. (ECF No. 71.) 1 parties to meet and confer regarding the amount of attorney fees and costs to be awarded to SMI. 2 The parties were unable to stipulate to an amount of attorney fees and costs to be awarded 3 to SMI pursuant to the Court’s order; thus, SMI filed this motion. Gallo filed an opposition to the 4 motion on September 27, 2019. (ECF No. 82.) SMI filed a reply on October 4, 2019. (ECF No. 5 85.) 6 II. LEGAL STANDARDS 7 Reasonable attorneys’ fees are recoverable under Federal Rule of Civil Procedure 8 37(c)(1)(A), which provides that, if a party fails to provide information as required by Rule 26(a) 9 or (e), the court “may order payment of the reasonable expenses, including attorney’s fees, caused 10 by the failure…” Courts apply the lodestar analysis to Rule 37 sanctions to determine the 11 reasonable value of the services performed. See Kraszewski v. State Farm General Ins. Co., 1984 12 WL 1027 at *5 (N.D. Cal. June 11, 1984) (applying a “lodestar” analysis to Rule 37 sanctions). 13 “The ‘lodestar’ amount is calculated by multiplying the number of hours the prevailing party 14 reasonably expended on the litigation by a reasonable hourly rate.” Ferland v. Conrad Credit 15 Corp., 244 F.3d 1145, 1149 n.4 (9th Cir. 2001) (citations omitted). “In determining reasonable 16 hours, counsel bears the burden of submitting detailed time records justifying the hours claimed 17 to have been expended.” Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986). 18 The Court “should also exclude from this initial fee calculation hours that were not ‘reasonably 19 expended.’” Hensley v. Eckerhart, 461 U.S. 424, 434 (1983) (citation omitted). “Counsel for the 20 prevailing party should make a good faith effort to exclude from a fee request hours that are 21 excessive, redundant, or otherwise unnecessary…” Id. 22 As to the reasonable hourly rate, reasonable hourly rates are calculated by reference to 23 “prevailing market rates in the relevant community,” with a special emphasis on fees charged by 24 lawyers of “comparable, skill, experience, and reputation.” Davis v. City of San Francisco, 976 25 F.2d 1536, 1546 (9th Cir. 1992), vacated on other grounds, 984 F.2d 345 (9th Cir. 1993). 26 “Generally, the forum district represents the relevant legal community.” J & J Sports Productions 27 Inc. v. Cervantes, 2019 WL 935387 at *2 (E.D. Cal. Feb. 26, 2019) (citing Gates v. Deukmejian, 28 987 F.2d 1392, 1405 (9th Cir. 1992) (further citations omitted). The fee applicant bears the 1 burden of producing satisfactory evidence “that the requested rates are in line with those 2 prevailing in the community for similar services by lawyers of reasonably comparable skill, 3 experience, and reputation.” Blum v. Stenson, 465 U.S. 886, 895 n. 11 (1984). “Affidavits of the 4 plaintiff[’s] attorney and other attorneys regarding prevailing fees in the community, and rate 5 determinations in other cases, particularly those setting a rate for the plaintiff[’s] attorney, are 6 satisfactory evidence of the prevailing market rate.” United Steelworkers of Am. v. Phelps Dodge 7 Corp., 896 F.2d 403, 407 (9th Cir. 1990). 8 III. ANALYSIS 9 SMI seeks an award of $116,110.00 in attorney’s fees.

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E. & J. Gallo Winery v. Strategic Materials, Inc., (E.D. Cal. 2019).

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