Gaby's Bags, LLC v. Mercari, Inc.

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 GABY’S BAGS, LLC, Case No. 20-cv-00734-WHA (TSH)

8 Plaintiff, DISCOVERY ORDER 9 v. Re: Dkt. Nos. 236, 242, 257, 280, 281, 282, 10 MERCARI, INC., 283, 284, 285 11 Defendant.

12 13 This order resolves the outstanding discovery disputes, as well as a pending motion for 14 attorneys’ fees. 15 A. ECF No. 236: Mercari’s Motion for Attorneys’ Fees 16 Federal Rule of Civil Procedure 37(a)(5)(A) states that if a motion to compel is granted, 17 “the court must, after giving an opportunity to be heard, require the party . . . whose conduct 18 necessitated the motion, the party or attorney advising that conduct, or both to pay the movant’s 19 reasonable expenses incurred in making the motion, including attorney’s fees,” unless certain 20 exceptions apply. Similarly, Federal Rule of Civil Procedure 26(g)(1) provides that “[e]very . . . 21 discovery . . . response, or objection must be signed by at least one attorney of record . . . . By 22 signing, an attorney or party certifies that to the best of the person’s knowledge, information, and 23 belief formed after a reasonable inquiry,” a discovery response or objection is (to paraphrase) 24 consistent with the rules and reasonably warranted by the law and lacks an improper purpose. If a 25 certification violates that rule without substantial justification, the court “must impose an 26 appropriate sanction on the signer, the party on whose behalf the signer was acting, or both. The 27 sanction may include an order to pay the reasonable expenses, including attorney’s fees, caused by 1 On February 22, 2021, Mercari moved for fees under Rules 26 and 37. Mercari says it is 2 entitled to these sanctions to recoup its expenses resulting in four discovery orders, ECF Nos. 144, 3 194, 222, 230. Mercari seeks $116,252.50 for discovery litigation expenses, plus $38,680 for 4 litigating the sanctions motion. Five thousand of that $38,680 is the estimated cost of attending 5 the hearing, and the Court didn’t have one, so we can lower the fees associated with the sanctions 6 motion to $33,680, making the overall sanctions request $149,932.50. 7 Let’s think a bit about the fees being requested. (And, despite the references to fees “and 8 costs” scattered throughout the motion, it is just a request for fees.) They span the time period 9 May 8, 2020 to February 9, 2021, and one of Gaby’s Bags’ objections is that this motion was not 10 “made as soon as practicable after the filing party learns of the circumstances that it alleges make 11 the motion appropriate,” as Civil Local Rule 7-8 requires. Under the Court’s Discovery Standing 12 Order, “[n]o motion for sanctions may be filed until after the moving party has complied with the 13 requirements above” concerning discovery letter briefs. And under Rule 37, a party is not entitled 14 to fees unless it prevails on the discovery dispute. This means that Mercari had to exhaust the 15 letter brief procedure and then win before it could seek sanctions. And perhaps more to the point, 16 the moment Mercari achieved that victory it knew of all the circumstances that made a sanctions 17 motion appropriate, so it was required to file that motion as soon as practicable. 18 The Court’s order at ECF No. 144 was mostly a win for Mercari. It wasn’t a complete win 19 because Gaby’s Bags prevailed on some issues, but for the most part Mercari prevailed. However, 20 that order issued on August 24, 2020, and Mercari waited six months to move for sanctions, 21 including for fees associated with the discovery disputes addressed in the August 2020 order. 22 That’s a long time, and Mercari offers no reason or explanation for the delay. The Court finds that 23 Mercari did not comply with the local rule, and its request for fees in connection with the August 24 2020 order is untimely. 25 The second order that forms the basis for this motion is ECF No. 194, which the Court 26 issued on November 17, 2020. That order was for the most part a defeat for Mercari. Although 27 the Court compelled one interrogatory and several RFPs, the Court ruled against Mercari on 1 part, the Court “may” apportion the reasonable expenses for the motion. Here, where the motions 2 were largely a defeat for Mercari, the Court declines to do an apportionment because it does not 3 want to reward the filing of motions that were mostly meritless. That would undermine the 4 purposes of Rule 37. Further, the Court’s order was critical of Mercari for presenting undeveloped 5 arguments and, on two occasions, for misrepresenting Gaby’s Bags’ discovery responses. For 6 these reasons, the Court finds that awarding Mercari any expenses in connection with the Court’s 7 order at ECF No. 194 would be unjust. 8 This means we’re now down to the time entries from December 17, 2020 to February 9, 9 2021, which led to the Court’s orders at ECF Nos. 222 and 230. These orders were largely wins 10 for Mercari. In ECF No. 222, Mercari obtained substantial relief on several of its interrogatories. 11 For the issues it prevailed on, Gaby’s Bags’ positions were not substantially justified, Mercari did 12 not run into court before trying to work out the dispute through meet and confer, and other 13 circumstances do not make an award of expenses unjust. Still, the Court did rule against Mercari 14 on its request for privilege logs and with respect to interrogatories 20, 23 and 24, and Mercari 15 obtained no relief on its motion to compel at ECF No. 219. The Court estimates that Mercari 16 obtained about two-thirds of the relief it was seeking in ECF No. 222. By contrast, in ECF No. 17 230, Mercari obtained all of the relief it sought. And for ECF No. 230, Gaby’s Bags’ positions 18 had no substantial justification, Mercari did not jump into court too soon, and an award of 19 expenses is just. 20 The Court’s review of Mercari’s time entries indicates that all of them between December 21 17, 2020 and January 21, 2021 (the date of the order in ECF No. 222) relate to the issues litigated 22 in that order. Accordingly, the Court sums up those entries ($19,440.00) and multiplies them by 23 two-thirds to account for the partial success to get $12,966.00. The Court’s review of the time 24 entries after January 21, 2021 and through February 9, 2021 (the date of ECF No. 230) indicates 25 that they all relate to the issues litigated in that order. Accordingly, the Court sums them up 26 ($16,400.00) with no discount. That amounts to $12,966.00 plus $16,400.00, or $29,366.00 in 27 fees awarded in connection with these two discovery orders. 1 as that some of the requested fees are associated with the Court’s order at ECF No. 221 (dated 2 January 21, 2021) that denied Mercari’s request for fees in connection with its reconsideration 3 motion on the ground that the motion was unsuccessful. None of the time entries between 4 December 17, 2020 and February 9, 2020 relate to the reconsideration motion. The December 17 5 date cutoff also moots Gaby’s Bags’ objections that Mercari is seeking fees for adverse orders 6 entered earlier in 2020. 7 Gaby’s Bags’ other challenges to the time entries between December 17 and February 9 8 are not persuasive. Gaby’s Bags says it wants to take discovery concerning Mercari’s fee request, 9 but there is no need for that, and discovery would just increase the expense associated with this 10 motion. Gaby’s Bags says it wants to cross-examine any witnesses Mercari is relying on, but 11 there is no need to depose opposing counsel. Mercari has provided the time entries for the 12 discovery litigation at issue, and those entries provide an appropriate basis to assess the fee 13 request. The Court does not agree that Mercari’s billing is excessive. Gaby’s Bags complains that 14 Mercari normally has two partners on meet and confer calls, but since Gaby’s Bags constantly 15 accuses Mercari of misrepresenting what Gaby’s Bags said during meet and confer, Mercari would 16 be foolish not to have two attorneys on those calls. 17 In addition to the fees involved in litigating the underlying discovery disputes, Mercari 18 says it spent 57 hours drafting its sanctions motion and 16 hours drafting the reply. The expense 19 of bringing the sanctions motion was “caused by” Gaby’s Bag’s conduct that lacked substantial 20 justification, Fed. R. Civ. Proc. 26(g)(3), because this motion is the only way to recover the 21 attorneys’ fees permitted under Rules 26 and 37, but spending 57 hours on the moving papers is 22 shocking and excessive. The Court reduces each attorney and paralegal’s hours by 75% in 23 connection with drafting the motion. Sixteen hours for the reply is unreasonable, but not as 24 excessive, so the Court will cut each attorney’s hours by half. Thus, the permitted fees associated 25 with the sanctions briefing are: Motion [(Whipple: 17 hours *$510 *.25) + (Javidzad: 10 hours 26 *$710 *.25) + (Grabowski: 30 hours *$285 *.25)] + Reply [(Whipple: 10 hours *$510 *.5) + 27 (Javidzad: 6 hours *$710 *.5)] = $10,760.00. 1 fee applicant to produce satisfactory evidence – in addition to the attorney’s own affidavits – that 2 the requested rates are in line with those prevailing in the community for similar services by 3 lawyers of reasonably comparable skill, experience and reputation.” Blum v. Stenson, 465 U.S. 4 886, 895 n.11 (1984). Here, Mercari does that through a combination of an attorney affidavit and 5 citations to recent decisions in this District approving rates as reasonable for attorneys of 6 comparable skill, experience and reputation. Bety Javidzad’s declaration states that she is a 7 partner at Dentons, has been practicing in California for 16 years, and specializes in complex 8 commercial disputes. Her hourly rate is $710. Her declaration states that Jacqueline Whipple is 9 also a partner at Dentons, has been practicing law for nine years, and also specializes in complex 10 commercial disputes. Her hourly rate is $510. Paralegal Adriana Grabowski’s hourly rate is 11 $285; Discovery Manager Fabian Menendez’s hourly rate is $350; and his ediscovery support staff 12 Tracy Myrck’s hourly rate is $175. These hourly rates are in line with (and, indeed, are low 13 compared to) those prevailing in the community for similar services by lawyers of reasonably 14 comparable skill, experience and reputation. See Proofpoint, Inc. v. Vade Secure, Incorporated, 15 2020 WL 7398791, *3 (N.D. Cal. Dec. 17, 2020) (approving “hourly rates rang[ing] from 16 approximately $590 per hour to approximately $675 per hour for associates, and from 17 approximately $880 per hour to approximately $915 per hour for more senior attorneys. The court 18 finds that these rates are reasonable for the type of work involved in this case. Specifically, these 19 hourly rates are well within (if not below) the range of prevailing rates in this district for attorneys 20 of comparable skill, experience, and reputation.”) (citing cases); Balsam Brands Inc. v. Cinmar, 21 LLC, 2016 WL 7101940, *3 (N.D. Cal. Dec. 6, 2016) (“Numerous cases in this District have 22 found reasonable rates ranging from $475-$975, and even higher, for partners in the Bay 23 Area.”). 24 Finally, Gaby’s Bags argues that if fees are awarded, they should be awarded only against 25 the party and not its lawyer, Andrew Shapiro. The Court disagrees. Rule 37(a)(5)(A) says that 26 expenses should be awarded against “the party . . . whose conduct necessitated the motion, the 27 party or attorney advising the conduct, or both,” and Rule 26(g)(3) says the same thing. The Court 1 finds that Gaby’s Bags and Shapiro1 are both equally to blame and that their guilt is inseparable. 2 Shapiro carried out discovery abuse since day one in this lawsuit, forcing nearly every dispute to 3 motion practice. He should have known better than this. His client, Gaby’s Bags, while not a 4 large, sophisticated company, went along for the ride and was content to largely refuse to produce 5 documents or provide information unless ordered to do so by the Court. Accordingly, both Gaby’s 6 Bags and Shapiro should be held responsible. 7 For these reasons, the Court grants Mercari’s motion for sanctions in part and awards 8 Mercari $40,126.00 in sanctions, for which Gaby’s Bags and Andrew Shapiro are jointly and 9 severally liable. 10 B. ECF Nos. 242, 257: Plaintiff’s Redacted Documents 11 The Court has reviewed the nine documents in question in camera. For GB00051232, 12 GB00054446, GB00057118, GB00059576, Gaby’s Bags may redact columns D-I and N, but no 13 others. The existing redactions to GB00051061, GB00051003, and GB00051039 are fine. The 14 redactions to GB00051015 are fine except that Gaby’s Bags cannot redact its business address in 15 line E in Schedule C. The Court does not see any redactions in GB00051125 and orders Gaby’s 16 Bags to file a letter brief within two days explaining what was redacted. The Court orders Gaby’s 17 Bags to produce corrected redactions in compliance with this order within seven days. 18 C. ECF No. 280: Mercari’s RFPs 19 Mercari moves to compel Gaby’s Bags and the Yates Counterclaim Defendants (“CCDs”) 20 to produce documents in response to RFPs that it says the Court has already compelled responses 21 to. Once again, we face the recurrent problem that Gaby’s Bags (and the Yates CCDs) has been 22 boycotting the joint discovery letter process throughout discovery. The Court’s Discovery 23 Standing Order requires discovery letter briefs to be submitted jointly. The Standing Order 24 assumes that counsel will in good faith work together to get a joint letter on file. In a spectacular 25 display of bad faith that has persisted throughout discovery in this case, Gaby’s Bags has refused 26 more times than the Court can count to join in a discovery letter brief that Mercari wants to file. 27 1 The Court even issued an order spelling out the exact process the parties need to use to get a joint 2 letter on file, ECF No. 131, but it made no difference. This is part of Gaby’s Bags’ larger strategy 3 throughout this case of doing as little as possible in discovery and trying to drag everything out as 4 long as possible. The big tell is that when Mercari finally does file its half of what should have 5 been a joint letter brief, it’s not like Gaby’s Bags rushes to Court to file its responsive portion, 6 eager to rebut the accusations against it. Instead, it does nothing, and will only file its half of the 7 letter brief if the Court orders it to do so. Gaby’s Bags’ approach to litigating discovery resembles 8 someone fleeing from an opponent and trying to slow them down by rolling barrels down the 9 hallway at them. The Court has had enough. The Court treats Mercari’s motion as unopposed. 10 Mercari says that the Court ordered the Yates CCDs to produce for RFPs 1-5, 7, 14-15, 17- 11 19, 22-27 and 40, with some limitations. This is true. See ECF No. 251. Mercari says the Court 12 ordered Gaby’s Bags to produce for RFPs 1-3, 6, 11, 20-25, 37-38, 45-46, 49, and 51 in ECF Nos. 13 144, 194 and 251. That’s not quite true. ECF No. 144 did not order Gaby’s Bags to produce 14 documents; the order concerned the form of its written RFP responses. ECF No. 194 ordered 15 Gaby’s Bags to produce for RFPs 3, 23, 37 and 38 (among others), but it denied Mercari’s motion 16 to compel as to RFPs 1, 2, 21, 22, 24 and 25, which are the subject of the current motion. ECF 17 No. 251 ordered Gaby’s Bags to produce for RFPs 45, 46, 49 and 51 (among others). The Court is 18 unaware of an order compelling production as to RFPs 6, 11, 20 and 23. 19 Mercari asserts that Gaby’s Bags and the Yates’ CCDs’ document productions are 20 incomplete and provides several examples of the types of documents that are missing. As noted, 21 Gaby’s Bags declined to join in a joint brief to address those accusations. Fifteen days have now 22 gone by since Mercari filed its half of the letter brief, and Gaby’s Bags has not filed a response. 23 That’s longer than the period to oppose a fully briefed motion under Civil Local Rule 7, and of 24 course the whole point of requiring parties to file joint discovery letter briefs is to have a truncated 25 briefing process so discovery disputes can be resolved faster. The Court grants Mercari’s motion 26 (as modified per the previous paragraph) and orders the Yates CCDs to produce for RFPs 1-5, 7, 27 14-15, 17-19, 22-27 and 40 with the limitations discussed in ECF No. 251 within seven days. The 1 D. ECF No. 281: Gaby’s Bags’ Motion to Compel Additional Depositions 2 Mercari says that Gaby’s Bags’ has already taken the 10 depositions allowed by Rule 30 3 and lists each witness by name and date. Gaby’s Bags does not address that point, nor does it 4 argue that it should be given leave to depose more than 10 witnesses. In light of that, Gaby’s Bags 5 has failed to persuade the Court that its motion to compel should be granted. 6 E. ECF Nos. 282, 283, 284 and 285: Gaby’s Bags’ RFPs 7 The Court addresses ECF Nos. 282-85 together because it is the same brief four times. On 8 March 12, 2021, in the closing days of fact discovery, the Counterclaim Defendants (for simplicity 9 the Court will refer to them collectively as “Gaby’s Bags”) served 46 RFPs on Mercari covering 10 basically every issue in the case. For most of the RFPs, Mercari asserted objections, but then 11 stated it had already produced at least some responsive documents and listed examples by Bates 12 number. For six of the RFPs (20, 21, 36, 41, 42, 43) it did not list documents by Bates number. 13 For RFPs 22, 34 and 39, Mercari said it had nothing responsive. Mercari declined to produce 14 anything only for RFPs 24, 25 and 35. Gaby’s Bags now moves to compel on RFPs 1-23 and 26- 15 44. It filed these motions to compel on the last day to do so under Civil Local Rule 37-3. 16 Before turning to the merits, the Court notes its displeasure with this manner of litigating 17 discovery. One of two unacceptable things has happened here. The first possibility is that Gaby’s 18 Bags took essentially no document discovery for nearly the entire fact discovery period, and then 19 attempted to do it all in one fell swoop at the end. The other possibility is that these RFPs are 20 entirely duplicative of earlier RFPs, and this was an attempt to redo all of the document discovery 21 right at the end. Mercari’s objections suggest the latter. In any event, bringing sweeping motions 22 to compel concerning nearly every subject in the case after fact discovery is over and on the last 23 day to move to compel is a sign that something has gone wrong. 24 Procedurally, Gaby’s Bags argues that Mercari waived all of its objections to these RFPs 25 because Gaby’s Bags received them on Tuesday, April 13, 2021 at 12:23 a.m. Pacific time/3:23 26 a.m. Eastern time, when they were due April 12. Mercari observes, correctly, that its RFP 27 responses have a certificate of service that states the responses were served on April 12, and 1 Regardless, while a failure to object to discovery within the time required constitutes a waiver of 2 any objection, the Court may excuse the failure to timely respond for good cause. See LegalForce 3 RAPC Worldwide P.C. v. Demassa, 2019 WL 2232580, *1 (N.D. Cal. May 23, 2019). “In 4 determining whether a party has shown good cause, a court should evaluate relevant factors, 5 including: (1) the length of the delay, (2) the reason for the delay, (3) the existence of bad faith, (4) 6 the prejudice to the party seeking the disclosure, (5) the nature of the request, and (6) the 7 harshness of imposing the waiver.” Id. Even if Mercari did serve its responses late, these factors 8 counsel in favor of finding good cause to excuse the failure. If there was any delay, it was 9 minimal; if there was any delay, it seems accidental and there is no sign of bad faith; Gaby’s Bags 10 suffered no prejudice; and a finding of waiver would be unduly harsh. Accordingly, the Court 11 rejects Gaby’s Bags’ waiver argument. 12 Turning to the merits, to say that Gaby’s Bags’ substantive briefing in these motions is 13 unhelpful is an understatement. Even though it has spread its motions to compel across four letter 14 briefs, giving it a combined 10 pages to discuss the 42 requests it is moving on, Gaby’s Bags’ 15 arguments are cursory and undeveloped. The Court is referring to arguments such as these: “RFP 16 17-22, 26, 35, 36, 41-44 seek discovery relevant discovery, are not burdensome, and are 17 appropriate.” (ECF No. 82); “RFP 13, 27-30, 37, 38, and 46 all seek similar discovery that was 18 already allowed in the Order, and these RFPs seek discovery that is relevant to GB’s damages 19 (including punitive damages, lost sales and profits and disgorgement/restitution), are not 20 burdensome, and are appropriate.” (ECF No. 83); “RFP 1-6, 9-12, 14-16, 33 seek discovery 21 relevant to GB’s and Mercari’s claims, are not burdensome, and are appropriate. The discovery 22 sought will help demonstrate GB’s false ad/fraud claims (including Mercari’s intent, knowledge of 23 falsity of its claims/ads, and concealment of same) and address Mercari’s claims regarding 24 businesses.” (ECF No. 84); “RFP 7, 23, 32, 34, 39-40 all seek discovery directly relevant to GB’s 25 claims, are not burdensome, and are appropriate. Discovery pertaining to the creation or use of 26 advertising at issue in this case (including any confusion or inquiries regarding same) is highly 27 relevant and any suggestion otherwise by Mercari is unsupported.” (ECF No. 85). 1 documents and all communications reflecting Mercari’s goals and projections for GMV or gross 2 merchandise value (including but not limited to any studies, presentations, internal notes, and 3 memos).” In response, Mercari asserted objections and then said: “Subject to and without 4 waiving any of its objections, Mercari states that it has previously produced documents reasonably 5 responsive to this Request, including MERCARI000366, 371, 372, 373, 374, 375, 765, 1088, and 6 1092, and directs Counterclaim Defendants to those documents.” Well, is that a good response or 7 not? Gaby’s Bags never explains the delta between what Mercari has already produced and what 8 further documents Gaby’s Bags is seeking through this motion. Gaby’s Bags does not make any 9 arguments in the form: “They gave us A, B and C, but they should also give us D, E and F” or 10 “They looked for responsive documents in locations X and Y, but they should also have looked in 11 Z.” Rather, Gaby’s Bags moves on the full scope of 42 RFPs and says nothing about why 12 Mercari’s existing document productions are inadequate. The Court is unable to discern if Gaby’s 13 Bags is asking for relevant and important information that it has been unfairly denied, or if it is 14 asking for documents it already has, or if it is asking for documents that are duplicative and 15 cumulative of what it already has. This is particularly a problem because Gaby’s Bags served 16 these RFPs right at the end of fact discovery, when the Court would assume that document 17 production was largely complete. For these reasons, for every RFP where Mercari said it had 18 already produced at least some responsive documents, Gaby’s Bags has failed to explain why it is 19 entitled to more than that.2 In addition, for the RFPs where Mercari said it had nothing 20 responsive, Gaby’s Bags does not explain why the Court should believe otherwise. 21 That leaves the RFPs to which Mercari agreed to provide nothing (24, 25 and 35) and of 22 those, Gaby’s Bags moves only on RFP 35, which seeks “All documents and all communications 23 exchanged between you and any expert upon which you intend to rely in connection with this 24 Lawsuit.” In a previous order, the Court expressed skepticism about a Mercari interrogatory that 25 asked for similar information. ECF No. 351 at 5 (“Rog 19 (communications with experts) at least 26

27 2 This order should come as no surprise. It’s the same thing the Court did when Mercari did 1 superficially looks improper, and Mercari has not briefed the privilege issues associated with 2 || discovery regarding a consulting expert or issues under Rule 26(b)(4) with respect to discovery 3 about a potential trial expert. The Court will not grant a motion to compel on rog 19 without some 4 || briefing on those issues.”). The Court can see that Gaby’s Bags remembers this order, see ECF 5 || No. 82 n.3, but Gaby’s Bags has similarly failed to brief the privilege issues. The main thrust of 6 || Gaby’s Bags’ motion to compel RFP 35 is that Mercari should have to produce “all” responsive 7 documents, and it is clearly not true that all communications with retained experts are 8 discoverable. See Fed. R. Civ. Proc. 26(b)(4)(C). Moreover, the exceptions to work product 9 || protection (expert’s compensation, facts or data considered, and assumptions relied on) are 10 || normally disclosed in the expert’s report. Gaby’s Bags has made no showing that it needs fact 11 discovery on those issues. 12 Accordingly, Gaby’s Bags’ motions to compel are denied. 13 IT IS SO ORDERED. 14 |) Dated: April 30, 2021 16 AY \ - Lj, □ 5 Ur se S. HIXSON nited States Magistrate Judge 18 19 20 21 22 23 24 25 26 27 28