GMS Industrial Supply, Inc. v. G&S Supply, LLC

District Court, E.D. Virginia·Decided August 23, 2022·No. 2:19-cv-00324·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Norfolk Division

GMS INDUSTRIAL SUPPLY, INC., ) Plaintiff, ) v. ) Civil Action No. 2:19-cv-324 (RCY) ) G&S SUPPLY, LLC, et al., ) Defendants. ) ) MEMORANDUM OPINION

This matter is before the Court on GMS Industrial Supply, Inc.’s Petition for Award of Plaintiff’s Reasonable Attorney’s Fees and Costs Incurred in Preparing its Motion for Sanctions (ECF No. 290). The motion has been fully briefed, and the Court dispenses with oral argument because the materials before it adequately present the facts and legal contentions, and argument would not aid the decisional process. E.D. Va. Loc. Civ. R. 7(J). For the reasons stated below, the Court will grant in part and deny in part GMS Industrial Supply, Inc.’s Petition for Award of Plaintiff’s Reasonable Attorney’s Fees and Costs Incurred in Preparing its Motion for Sanctions. I. BACKGROUND AND PROCEDURAL POSTURE The facts of this case have been thoroughly laid out in prior Opinions. (See ECF Nos. 250, 252.) Thus, only a brief recapitulation of the facts and procedural posture is necessary here. GMS Industrial Supply, Inc. (“GMS” or “Plaintiff”) is an industrial sales company that sells its products almost exclusively to military customers throughout the United States, Europe, and Asia. (Op. at 1, ECF No. 250.)1 In order to sell its products, Plaintiff utilizes sales agents who operate within specified territories where they contact personnel in areas that need industrial goods. (Id.) In April of 2019, GMS Industrial Supply, Inc. discovered that two of its sales agents started a company

1The Court employs the pagination assigned by the CM/ECF docketing system to the parties’ submissions. named G&S Supply, LLC (“G&S”). (Id. at 2.) Plaintiff further discovered that the pair had also recruited several of Plaintiff’s other sales agents to sell goods for G&S. (Id.) Upon discovery of G&S, GMS sent letters to the sales agents working with G&S terminating their sales agent agreements with GMS. (Id. at 3.) Among the sales agents that were terminated was Westly Greer (“Greer”), Plaintiff’s former Director of Sales. (Id.) On April 3, 2019, Plaintiff sent Greer a letter

that informed him of his termination from GMS as a sales agent as well as his legal obligation to preserve all potentially relevant information and suspend any document destruction policies or automatic deletion functions. (Id.) On April 17, 2019, Plaintiff sent Greer another letter directing him to return GMS’s property, including a laptop computer, desktop computer, a computer tablet, and two computer monitors (collectively, “the Computer Equipment”). (Id.) Upon receipt of the Computer Equipment, Plaintiff discovered that that all user-created files had been deleted from the laptop and that the tablet was inaccessible due to password protection. (Id.) Subsequently, Plaintiff hired BDO USA, LLC (“BDO”), a digital forensics and cyber investigations firm, to conduct a forensic examination on Greer’s GMS-issued electronic devices. (Id. at 3 n.2.) BDO’s forensic

examination uncovered that on April 19, 2019, Greer connected a USB storage device to the desktop computer. (Id. at 4.) Shortly thereafter, Greer ran a Google search for the term “fileshredder,” visited the File Shredder website, and downloaded and installed the file shredding program. (Id.) Greer then ran the file shredding program, thereby permanently deleting 3,397 files from the computer. (Id.) On July 13, 2021, Plaintiff filed a Motion for Sanctions against Defendants Westly Greer and G&S Supply, LLC, seeking recovery for Greer’s spoliation of evidence (“Spoliation Motion”). (ECF No. 195.) On March 22, 2022, the Court granted Plaintiff’s Motion for Sanctions, finding that Greer’s actions displayed an intent to deprive GMS of all information, including possibly relevant documents. (Op. at 16, ECF No. 250.) Accordingly, the Court awarded Plaintiff its reasonable attorneys’ fees and costs incurred in preparing its Motion for Sanctions. (Order at 1, ECF No. 249.) On May 26, 2022, Plaintiff filed Petition for Award of Plaintiff’s Reasonable Attorney’s Fees and Costs Incurred in Preparing its Motion for Sanctions and a Memorandum in Support (ECF Nos. 290, 292.) On June 23, 2022, Greer and G&S (“Defendants”) filed the

Response of Defendants Greer and G&S Supply in Opposition to Petition for Award of Plaintiff’s Attorney’s Fees and Costs Incurred in Preparing its Motion for Sanctions (ECF No. 324). On June 29, 2022, Plaintiff filed a Reply in Support of its Motion for Attorney’s Fees (ECF No. 327). II. LEGAL STANDARD The Fourth Circuit utilizes a three-step framework for calculating reasonable attorneys’ fees. First, the court must “determine a lodestar figure by multiplying the number of reasonable hours expended times a reasonable rate.” Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th Cir. 2009). Second, the court should “‘subtract fees for hours spent on unsuccessful claims unrelated to successful ones.’” Grissom v. The Mills Corp., 549 F.3d 313, 321 (4th Cir. 2008)

(quoting Johnson v. City of Aiken, 278 F.3d 333, 337 (4th Cir.2002)). Third, “[o]nce the court has subtracted the fees incurred for unsuccessful, unrelated claims, it then awards some percentage of the remaining amount, depending on the degree of success enjoyed by the plaintiff.” Johnson, 278 F. 3d at 337. Here, Defendants do not challenge the reasonableness of Plaintiff’s rates. (Defs.’ Resp. at 6, ECF No. 324.) Thus, the Court turns to the main source of disagreement as identified by the parties, the extent of the work for which Plaintiff seeks reimbursement. Defendants argue that Plaintiff’s attorneys’ fees request must be reduced because Plaintiff is entitled only to its reasonable fees and costs incurred in preparing the Spoliation Motion. (Id. at 5.) Specifically, Defendants dispute costs incurred before Plaintiff began drafting its Spoliation Motion on June 1, 2022, and activities that Defendants claim bear little to no relationship to the Spoliation Motion. (Id. at 6.) Further, Defendants argue that the fees for tasks undertaken on or after June 1, 2022 that pertain to Plaintiff’s Spoliation Motion must also be scrutinized for reasonableness under the Fourth Circuit’s three-step framework. (Id.) The Court will examine each of Defendants’

objections in turn. III. ANALYSIS a. Recovery of Costs Incurred Before Plaintiff Began Drafting its Spoliation Motion Defendants argue that accepting Plaintiff’s submitted billings, the first day that Plaintiff began drafting its Spoliation Motion was June 1, 2021. (Id. at 5.) Defendants aver that Plaintiff should not recover for any fees incurred prior to this date. (Id.) Plaintiff argues that courts have recognized that attorneys’ fees and related costs are appropriate where they are incurred by the movant in the course of developing the record necessary to bring a sanctions motion. (Pl.’s Reply at 6, ECF No. 327.) Plaintiff points to the Court’s use of Goodman v. Praxair Servs., 632 F. Supp.

2d 494 (D. Md. 2009), to support the award of fees and costs. (Id. at 7.) Plaintiff asserts that Goodman indicates that courts are expected to compensate the parties injured by spoliation for more than just the fees directly associated with drafting and filing a motion. (Id.) Plaintiff offers the affidavit of Plaintiff’s expert on attorneys’ fees and costs, James R. Harvey, III (“Harvey”), which explains the process necessary for Plaintiff to undertake in order to make its Spoliation Motion.

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GMS Industrial Supply, Inc. v. G&S Supply, LLC, (E.D. Va. 2022).

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