Joshua David Mellberg LLC v. Will

• Court: District Court, D. Arizona
• Decided: March 24, 2021
• Docket: 4:14-cv-02025
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 Joshua David Mellberg, LLC, et al., ) 9 ) Plaintiffs, ) 10 ) No. CIV 14-2025-TUC-CKJ vs. ) 11 ) ORDER Jovan Will, et al., ) 12 ) Defendants. ) 13 ) 14 Plaintiffs (collectively “JDM”), Defendants Jovan Will, Tree Fine, Fernando 15 Godinez and Carly Uretz (collectively, “Individual Defendants”) and The Impact Partnership 16 (“Impact”) have each filed Motions for Attorneys’ Fees (Docs. 565, 568, 570). Responses 17 (Docs. 580, 581, 584, 585) and Replies (Doc. 586, 587, 594) have been filed. Additionally, 18 the JDM has filed a Motion to Strike (Doc. 583), to which Impact has filed a Response (Doc. 19 592) and JDM has filed a Reply (Doc. 595). Supplemental documents have also been filed. 20 The Court declines to schedule this matter for oral argument. See LRCiv 7.2(f); 27A 21 Fed.Proc., L. Ed. § 62:361 (March 2021) ("A district court generally is not required to hold 22 a hearing or oral argument before ruling on a motion."). 23 24 Motion to Strike (Doc. 583) 25 JDM requests the Court to strike certain statements from the Declarations of William 26 P. Eiselstein and Stephen W. Odom, Jr. that were offered in support of Impact’s fee motion 27 because the statements disclose settlement discussions between the parties. Indeed, the 28 applicable rule states: 1 (a) Prohibited Uses. Evidence of the following is not admissible — on behalf of any party — either to prove or disprove the validity or amount of a disputed claim or to 2 impeach by a prior inconsistent statement or a contradiction: * * * * * 3 (2) conduct or a statement made during compromise negotiations about the claim — except when offered in a criminal case and when the negotiations 4 related to a claim by a public office in the exercise of its regulatory, investigative, or enforcement authority. 5 Fed.R.Evid. 408(a). However, the rule also states: 6 (b) Exceptions. The court may admit this evidence for another purpose, such as 7 proving a witness’s bias or prejudice, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution. 8 Fed.R.Evid. 408(b). 9 While this evidence is offered for another purpose, this is not a delineated purpose of 10 the rule. Although the exceptions are not exhaustive, the Court considers this in determining 11 that Arizona’s public policy interests of protecting the confidentiality of settlement 12 negotiations, Grubaugh v. Blomo ex rel. Cty. of Maricopa, 238 Ariz. 264, 268 (App. 2015) 13 (recognizing Arizona has a “robust policy of confidentiality of the mediation process”); 14 Miller v. Kelly, 212 Ariz. 283, 287 (App. 2006) (recognizing that “[Arizona’s] strong public 15 policy encouraging settlement of lawsuits . . . would be thwarted by disclosure of information 16 intended to remain confidential”), outweighs any relevance of this evidence. The Court will 17 grant the Motion to Strike. 18 19 Attorneys’ Fees and Non-Taxable Costs 20 An award of reasonable attorneys’ fees to the prevailing party may be made in 21 “exceptional cases” pursuant to the Lanham Act 15 U.S.C. § 1117(a). The Supreme Court 22 has stated that an “‘exceptional’ case is simply one that stands out from others with respect 23 to the substantive strength of a party’s litigating position (considering both the governing law 24 and the facts of the case) or the unreasonable manner in which the case was litigated.” 25 Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014) (emphasis 26 added). “[D]istrict courts analyzing a request for fees under the Lanham Act should examine 27 the ‘totality of the circumstances’ [under a preponderance of the evidence standard] to 28 1 determine if the case was exceptional.” SunEarth, Inc. v. Sun Earth Solar Power Co. Ltd., 2 839 F.3d 1179, 1181 (9th Cir. 2016), en banc. Nonexclusive factors to consider include 3 “frivolousness, motivation, objective unreasonableness (both in the factual and legal 4 components of the case) and the need in particular circumstances to advance considerations 5 of compensation and deterrence.” Id., internal citations and quotations omitted. 6 The prevailing party “is the party who prevails as to the substantial part of the 7 litigation.” Testa v. Village of Mundelein, Ill., 89 F.3d 443, 447 (9th Cir.1996); see also 8 Slane v. Mariah Boats, Inc., 164 F.3d 1065, 1068 (7th Cir.1999) (“[W]hen one party gets 9 substantial relief it ‘prevails' even if it doesn't win on every claim.”). Indeed, as pointed out 10 by Impact, an award of costs to a defendant that loses on a counterclaim but succeeds in 11 warding off a predominant claim is appropriate. See Hashimoto v. Dalton, 118 F.3d 671, 12 677 (9th Cir. 1997) (“It is enough that [the party] succeeds “on any significant claim 13 affording some of the relief sought.”); Ira Green, Inc. v. Military Sales & Service Co., 775 14 F.3d 12, 29 (1st Cir. 2014) (“Compared to the amount of time, effort, and resources devoted 15 to the [Plaintiffs’] claims. . . the counterclaims. . . were a sideshow.”). 16 Impact and Individual Defendants prevailed in the initial litigation. Although JDM 17 prevailed in the countersuit, the Court cannot say the issues of the countersuit were close and 18 difficult. Further, while the Court declines to conclude any party litigated in bad faith for the 19 purposes of determining the prevailing party, see e.g. Christiansburg Garment Co. v. Equal 20 Emp't Opportunity Comm'n, 434 U.S. 412, 421-22 (1978) (“It is important that a district 21 court resist the understandable temptation to engage in post hoc reasoning by concluding that, 22 because a plaintiff did not ultimately prevail, his action must have been unreasonable or 23 without foundation. This kind of hindsight bias could discourage all but the most airtight 24 claims, for seldom can a prospective plaintiff be sure of ultimate success.”), the Court does 25 not find that an award would chill future litigation. 26 Arizona law provides that the Court may award the successful party in a contested 27 action arising out of a contract reasonable attorneys’ fees. A.R.S. § 12-341.01(A). Indeed, 28 1 “[t]he intent of this statute is for the successful party to recover under ordinary 2 circumstances." Velarde v. Pace Membership Warehouse, Inc., 105 F.3d 1313, 1318 (9th 3 Cir. 1997), n. 5, quoting G & S Investments v. Belman, 145 Ariz. 258, 268, 700 P.2d 1358, 4 1368 (App. 1984). The Court has the discretion to determine the circumstances appropriate 5 for the award of fees. Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570, 694 P.2d 6 1181, 1184 (1985). However, “there is no presumption that a successful party should be 7 awarded attorney fees under § 12-341.01.” Motzer v. Escalante, 265 P.3d 1094, 1095 (Ariz. 8 Ct. App. 2011); see also Manicom v. CitiMortgage, Inc., 336 P.3d 1274, 1283 (Ariz. Ct. App. 9 2014) (holding that an award of attorneys' fees under A.R.S. § 12-341.01(A) “is permissive” 10 and “not mandatory”). Indeed, the Court of Appeals of Arizona has stated, “when enforcing 11 a contract that provides for reasonable attorney fees and costs, a trial court retains broad 12 discretion to evaluate the reasonableness of requested attorney fees and costs . . .” Tucson 13 Ests. Prop. Owners Ass'n v. Jenkins, 247 Ariz. 475, 480 (App. 2019), review denied (Mar. 14 31, 2020). 15 An award of attorneys’ fees may also be appropriate for a claim of misappropriation 16 pursuant to A.R.S. § 44-404(1).1 A showing that the trade secret claim was made in bad faith 17 or the opposing party was guilty of willful and malicious misappropriation must be made. 18 True Ctr. Gate Leasing, Inc. v. Sonoran Gate, L.L.C., 427 F. Supp. 2d 946, 951 (D. Ariz. 19 2006). 20 The Ninth Circuit allows prevailing parties to recover non-taxable costs where a 21 statute authorizes a fees award. See, e.g. Grove v. Wells Fargo Fin. Cal., Inc., 606 F.3d 577, 22 580 (9th Cir. 2010). As summarized by another court: 23 1Individual Defendants also argue for an award of attorneys’ fees pursuant to A.R.S. § 24 29-388(b). The statute in effect in the filing year of 2014 provided that where a derivative action 25 “was brought without reasonable cause” defendants may be awarded “reasonable expenses, including attorney fees, incurred by them in the defense of such action.” “‘Reasonable cause’ 26 to bring an action is an objective standard that asks whether any reasonable attorney would have thought the claim was tenable.” Cal X–Tra v. W.V.S.V. Holdings, L.L.C., 229 Ariz. 377, 412 27 (App. 2012). However, such an award of fees is discretionary. KCI Rest. Mgmt. LLC v. Holm 28 Wright Hyde & Hays PLC, 236 Ariz. 485, 490, 341 P.3d 1156, 1161 (App. 2014). 1 In Arizona, “a victim of a breach of contract may recover damages from the breaching party to compensate for the attorneys’ fees and costs it incurred in defending a 2 separate action initiated against it as a foreseeable result of the breach.” State Bar of Arizona, Arizona Attorneys’ Fees Manual, § 7.3.1 (6th ed. 2017); see Desert 3 Mountain Properties Ltd. P'ship v. Liberty Mut. Fire Ins. Co., 236 P.3d 421, 436 (Ariz. Ct. App. 2010), aff'd, 250 P.3d 196 (Ariz. 2011) (“[W]hen one party's breach 4 of contract places the other in a situation that ‘makes it necessary to incur expense to protect his interest, such costs and expenses, including attorneys’ fees, should be 5 treated as the legal consequences of the original wrongful act and may be recovered as damages.’ ”) (quoting Fairway Builders, Inc. v. Malouf Towers Rental Co., 603 6 P.2d 513, 529 (Ariz. Ct. App. 1979)). Plaintiffs have incurred attorneys’ fees and costs defending against Defendant [] in related cases . . . 7 In addition, Plaintiffs, as the successful party in a “contested action arising out of a 8 contract, express or implied,” are entitled to recover the attorneys’ fees and taxable costs incurred in litigating this matter. A.R.S. §§ 12-341, 12-341.01. . . 9 Dishon v. Gorham, No. CV-16-04069-PHX-ROS, 2020 WL 1244415, at *2 (D. Ariz. Mar. 10 16, 2020). 11 12 JDM’s Motion for Attorneys’ Fees (Doc. 565) 13 JDM seeks attorneys’ fees from Impact for JDM having to defend the baseless 14 Lanham Act false advertising counterclaim and the unreasonable and vexatious manner in 15 which Impact pursued the claim. JDM asserts Impact knew, when it filed the counterclaim, 16 the claim was baseless, the press release it was suing on was never distributed beyond six of 17 Impact’s employees, it had no evidence of anyone having read the challenged statements, and 18 had no evidence of being damaged. 19 In support of this argument, JDM points out that Impact did not seek preliminary 20 injunctive relief although, if meritorious, Impact should have had sufficient evidence from 21 the two year litigation in Georgia. JDM asserts Impact’s actions were taken to drive up 22 JDM’s litigation costs, create leverage in the case, and distract the Court’s attention from 23 Impact’s willful and malicious misappropriation. Impact, asserts, however, that this claim 24 was not so exceptional as to warrant an award of attorneys’ fees. 25 In examining the totality of the circumstances, the Court considers that Impact had a 26 basis to believe JDM had disseminated a press release that included disparaging information. 27 This belies JDM’s claim that Impact acted with an intent to increase litigation costs, create 28 1 leverage, or distract the Court’s attention. The Court also considers that the interactions 2 between the parties were at the heart of both JDM’s claims and Impact’s counterclaim. In 3 such circumstances, it was reasonable for Impact to act to advance considerations of 4 compensation and deterrence in a countersuit in this case. That Impact failed to persuade this 5 Court of the merits of the counterclaim does not make Impact’s positions unreasonable. See, 6 e.g., Reserve Media, Inc. v. Efficient Frontierts, Inc., No. 2-15-cv-05072-DDP (AGRx), 2017 7 WL 2562098, at *2 (C.D. Cal. June 12, 2017) (“[T]he fact of prevailing at summary 8 judgment alone is insufficient to entitle [a] party to fees under the Lanham Act.”), citation 9 omitted. In light of this, the Court cannot say Impact acted frivolously or unreasonably in 10 bringing the counterclaim. See e.g. Sarieddine v. Allen Visions E-Juice, Inc., No. CV 11 18-3658 PA (MAAx), 2019 WL 4316245, at *5 (C.D. Cal. June 14, 2019) (“[a] party's failure 12 to successfully persuade the court on the merits of its position does not render that party's 13 motivations suspect[ or] its claims frivolous ...”), citation omitted. 14 The Court finds JDM has failed to establish by a preponderance of the evidence that 15 Impact pursued unreasonable claims, engaged in fraudulent conduct, or conducted this 16 litigation in an unreasonable manner. In its discretion and considering all of the 17 circumstances, the Court finds this case is not exceptional and an award of attorneys' fees is 18 not appropriate. The Court will deny JDM’s Motion for Attorneys' Fees (Doc. 565). 19 20 Individual Defendants’ Motion For Award of Attorneys’ Fees And Non-Taxable Expenses (Doc. 568) 21 Individual Defendants assert they are entitled to attorneys’ fees based on Count 4, the 22 Breach of Contract Claim, as to Defendants Fine and Godinez. This claim addressed whether 23 Fine and Godinez breached confidentiality agreements with JDM. Individual Defendants 24 also argue they should be awarded attorneys’ fees as to Count 6, which alleged Defendant 25 Will breached duties he owed to Mellberg as members of AAA. 26 For purposes of the attorney fees statute, the “meaning of ‘arises out of contract’ is 27 broad[.]” ML Servicing Co. v. Coles, 235 Ariz. 562, 560 (App. 2014). An action arises out 28 1 of contract when a “plaintiff asserted a contract and the defendant successfully proved that 2 no contract existed[,]” when the claim would not exist absent the contract or when “the tort 3 could not exist ‘but for’ the breach or avoidance of contract.” SK Builders, Inc. v. Smith, 246 4 Ariz. 196, 204–05 (App. 2019), superseded by statute on other grounds, citations omitted. 5 In determining whether an action arises out of contract the Court considers whether the 6 plaintiff would have a claim even when a contract does not exist.” Ramsey Air Meds, L.L.C. 7 v. Cutter Aviation, Inc., 198 Ariz. 10, 15–16 (App.2000). A “tort claim will ‘arise out of a 8 contract’ only when the tort could not exist ‘but for’ the breach or avoidance of contract.” 9 Id.; see also Sparks v. Republic Nat'l Life Ins. Co., 132 Ariz. 529, 542–44 (1982) (“The fact 10 that the two legal theories are intertwined does not preclude recovery of attorney's fees under 11 § 12–341.01(A) as long as the cause of action in tort could not exist but for the breach of the 12 contract.”). 13 The Court finds Individual Defendants were the successful parties under A.R.S. § 14 12-341.01. In making such a determination, the Court considers the totality of the 15 circumstances and the relative success of the litigants is considered. Med. Protective Co. v. 16 Pang, 740 F.3d 1279, 1283 (9th Cir. 2013). Considering the “totality of the litigation” 17 between JDM and Individual Defendants, it is clear Individual Defendant achieved complete 18 success as to these claims. See e.g. Murphy Farrell Dev., LLLP v. Sourant, 272 P.3d 355, 19 365 (Ariz.App. 2012). Under A.R.S. § 12–341.01 the Court has discretion to award 20 Individual Defendants, the successful parties, reasonable attorneys' fees. Associated Indem. 21 Corp. v. Warner, 143 Ariz. 567, 570 (1985). Factors to consider in exercising its discretion 22 to award reasonable fees include: 23 (1) the merits of the unsuccessful party's defense, (2) whether “[t]he lawsuit could have been avoided or settled,” (3) whether a fee award would be “an extreme 24 hardship,” (4) whether the successful party prevailed completely, (5) the novelty of the legal questions, and (6) whether a fee award would discourage others with 25 legitimate claims. 26 Freeport Mins. Corp. v. Corbell, No. 2 CA-CV 2016-0226, 2017 WL 3623257, at *5 (Ariz. 27 Ct. App. Aug. 23, 2017), citing id.; see also Orfaly v. Tucson Symphony Society, 209 Ariz. 28 1 260, 265-55 (App. 2004), citing Associated Indem. Corp., 143 Ariz. at 570. An award need 2 not equal or relate to the fees actually paid. A.R.S. § 12-341.01.B. 3 Although JDM’s Count 4 ultimately proved unsuccessful, the Court does not find it 4 was unmeritorious. Rather, there were confidentiality agreements between JDM, Fine, and 5 Godinez. It was not unreasonable for JDM to pursue that claim. However, as to Count 6, 6 JDM’s claim lacked evidentiary support or a sound legal basis; this claim was without merit. 7 Additionally, the actions of JDM and counsel resulted in unclear theories being presented and 8 delayed/denied discovery. 9 The Court disagrees with JDM’s argument that Individual Defendants’ action were 10 superfluous to the litigation. Rather, although the claims against Individual Defendants were 11 intertwined with the claims against Impact, counsel for Individual Defendants had to 12 determine where they could rely upon the arguments of Impact and where specific issues as 13 to Individual Defendants needed to be addressed by Individual Defendants themselves. 14 Additionally, because JDM has been willing to expend significant sums to pursue this 15 litigation, it does not appear an award would be an extreme hardship to JDM. However, the 16 Court does not place significant weight on this factor as there is no evidence before the Court 17 to confirm this supposition. Additionally, Individual Defendants were successful in 18 defending against these claims. Although JDM argues Individual Defendants only won 19 because of a procedural issue, this fails to acknowledge that the failure to establish damages 20 was an element JDM failed to adequately plead and support with evidence. In light of the 21 facts of this case, an award of fees would not discourage others with legitimate claims. 22 Lastly, the claims against Individual Defendants were based on agreements with JDM. 23 Although JDM asserts Defendant Uretz was not sued for breach of contract and, indeed, 24 Uretz did not sign an agreement with JDM, the claims against Uretz were premised on Uretz 25 conspiring and aiding and abetting other Defendants for the alleged breach of their 26 agreements. The Court also considers the nature of the claims and that the different claims 27 against different Defendants are interwoven. See Skydive Arizona, Inc. v. Hogue, 238 Ariz. 28 1 357, 369 (App. 2015) (Fee award is appropriate where contract and tort claims are 2 interwoven. “Claims are interwoven when they are based on the same set of facts and 3 involve common allegations, which require the same factual and legal development.”). The 4 Court finds Individual Defendants are entitled to an award of attorneys’ fees pursuant to 5 A.R.S. §12-341.01. 6 Individual Defendants also argue an award of attorneys’ fees as to Counts 4 and 6 7 pursuant to A.R.S. § 44-404(1) is appropriate. Further, they request an award of attorneys’ 8 fees as to Count 6 pursuant to A.R.S. § 29-833(B).2 Because the Court has found an award 9 of attorneys’ fees pursuant to A.R.S. § 12-341.01, the Court declines to consider the 10 arguments on the alternate theories for a basis for an award of attorneys’ fees. Modular 11 Mining Sys., Inc. v. Jigsaw Techs., Inc., 221 Ariz. 515, 523, 212 P.3d 853, 861 (Ct. App. 12 2009), citation omitted. 13 Factors to consider in determining whether attorneys’ fees are reasonable include: 14 (A) The time and labor required of counsel; 15 (B) The novelty and difficulty of the questions presented; 16 (C) The skill requisite to perform the legal service properly; 17 (D) The preclusion of other employment by counsel because of the acceptance of the action; 18 (E) The customary fee charged in matters of the type involved; 19 (F) Whether the fee contracted between the attorney and the client is fixed or 20 contingent; 21 (G) Any time limitations imposed by the client or the circumstances; 22 (H) The amount of money, or the value of the rights, involved, and the results obtained; 23 (I) The experience, reputation and ability of counsel; 24 (J) The "undesirability" of the case; 25 26 2A repeal of this statute was effective September 1, 2020. As the Court declines to 27 address whether an award of attorneys’ fees is appropriate pursuant to this theory, the Court need 28 not determine the effect of the repeal in this case. 1 (K) The nature and length of the professional relationship between the attorney and the client; 2 (L) Awards in similar actions; and 3 (M) Any other matters deemed appropriate under the circumstances. 4 LRCiv 54.2(c). This case involved protracted discovery and extensive motion practice. This 5 required a significant expenditure of time by counsel. The claims addressed in this case were 6 not novel, but JDM’s attempts to modify the claims and the continued denial and delay of 7 discovery reasonably required defense counsel to expend significant efforts to defend against 8 the claims. Because of the contentious nature of this litigation, the Court finds the skill 9 required to properly defend the case was substantial. The lengthy nature of the litigation 10 necessarily precluded possible other employment by counsel. Additionally, although the 11 amount of damages sought by JDM repeatedly changed, the sums were significant. 12 While a “successful party in a contract action is entitled to recover fees for ‘every item 13 of service which, at the time rendered, would have been undertaken by a reasonable and 14 prudent lawyer to advance or protect his client's interest[,]’” Schweiger v. China Doll Rest., 15 Inc., 138 Ariz. 183, 188, 673 P.2d 927, 932 (App.1983) (quoting Twin City Sportservice v. 16 Charles O. Finley & Co., 676 F.2d 1291, 1313 (9th Cir.1982)), the Court considers that the 17 level of success is also relevant in determining whether attorneys’ fees are reasonable under 18 the circumstances of a case. SWC Baseline & Crismon Inv'rs, L.L.C. v. Augusta Ranch Ltd. 19 P'ship, 228 Ariz. 271, 287, 265 P.3d 1070, 1086 (Ct. App. 2011). Individual Defendants 20 were completely successful in defending the claims against them. 21 The Court has reviewed the itemized objections to Individual Defendants’ requested 22 fees. The Court agrees with Individual Defendants that a “block bill” need not necessarily 23 be denied. Advanced Reimbursement Sols. V. Spring Excellence Surgical Hosp., LLC, No. 24 CV-17-01688-PHX-DWL, 2020 WL 2768699, at *6 (D. Ariz. May 28, 2020) (“Courts tend 25 to award fees despite the presence of block-billing where the billing is for ‘closely related 26 tasks, each covering no more than a few hours.’”). However, the Court finds the following 27 entries constitute block billing and, as such, the Court, in its discretion, finds these fees are 28 1 unreasonable: 2 4/25/2014 MC2 Correspondence with Billy Eiselstein 1.80 $365.00 $657.00 regarding timing of defamation 3 lawsuit; directions to assistants regarding motion practice and 4 additional engagement and joint defense agreements 5 9/25/2017 MSW Review drafts of Joint Status Report 5.00 $350.00 $1750.00 6 provided by Mellberg's counsel; communications with B. Eiselstein 7 re: same; work on defendants' portions of Joint Report; review 8 additional insertions proposed by B. Eiselstein, and incorporate same into 9 draft of Joint Report; telephone conferences with B. Eiselstein and 10 Mellberg's counsel re: same; forward revisions to Mellberg's counsel; 11 telephone conference with Court staff and other counsel re: additional time 12 needed to complete Joint Report; telephone conference with all counsel 13 re: Plaintiffs' response to defendants' portions of Joint Report; review 14 updated draft from Mellberg's counsel, and send final comments 15 prior to filing Joint Report with the Court. 16 9/29/2017 MSW Review Plaintiffs' supplemental Brief 4.20 $350.00 $1470.00 17 re: spoliation/J.Will's JFI laptop, costsharing, etc.; communications 18 with B. Eiselstein re: same; review Plaintiffs' proposed search terms; 19 prepare for Telephonic Status Conference; attend Telephonic Status 20 Conference; telephone conference with B. Eiselstein re: same, 21 additional discovery, scope of search terms, etc.; retrieve message and 22 return call to J. Will re: producing emails and other documents. 23 24 25 26 27 28 1 10/11/2017 MSW Communications with Mellberg's 3.40 $350.00 $1190.00 counsel re: Joint Report, files to be 2 searched, estimated data size, forensic examination protocol, etc.; 3 follow-up on production of load files for Will/Fine personal emails; 4 telephone conference with B. Eiselstein re: search parameters and 5 protocol, estimated expense for third-party vendors, etc.; review 6 proposed lists of search terms from Plaintiffs and Impact; 7 communications with J. Corso (D4) re: estimated volume of data to be 8 searched after extraction, culling, etc. of imaged drives, and cost for 9 preliminary extraction of selected file types; email to all counsel re: same; 10 communications with counsel re: keywords for searching imaged 11 drives, additional services by ESI vendors, and costs for standard and 12 additional services. 13 10/13/2017 MSW Read email from B. Eiselstein re: 3.00 $350.00 $1050.00 proposals for keyword searching; 14 review filed version of Joint Status Report; communications with D4 re: 15 scope of forensic examination proposed by Plaintiffs; draft 16 Supplement to Joint Status Report; communications with B. Eiselstein 17 re: scope of forensic examination, final list of keyword search terms, 18 etc.; communications with Plaintiffs' counsel re: proposed instructions and 19 information to potential ESI vendors; review initial draft of scope of work/ 20 instructions to vendors; revisions to scope of work/instructions to 21 vendors, and forward same to Plaintiffs' counsel; further 22 communications with counsel re: same; communications with D4 re: 23 Intake Report for J. Will's laptop, and collection methods used for forensic 24 image; finalize Scope of Work and related terms re: disclosure, inquiries 25 from vendors, etc.; forward Scope of Work with additional instructions to 26 D4. 27 28 1 11/8/2017 MSW Work on Submission of Additional 2.30 $350.00 $805.00 Information re: apportioning costs of 2 ESI discovery and forensics; communications with IT Department 3 re: same; email to B. Eiselstein re: third-party hosting, load files, etc.; 4 review and revise Plaintiffs' draft of proposed Order re: appointment of 5 D4; review B. Eiselstein's comments on Submission of Additional 6 Information, and revisions to same; forward revisions to proposed Order 7 to Plaintiffs' counsel; communications with Plaintiffs' 8 counsel re: final draft of proposed Order, and copies of Exhibits to 9 proposed Order. 10 2/12/2018 MSW Read various emails re: ESI 1.80 $350.00 $630.00 discovery, keyword searches of 11 "jdmellberg" email accounts, documents produced by Advisors 12 Excel, etc.; review prior emails in preparation, and participate in 13 telephone conference with A. Burgett, L. Archibald and L. Jones re: 14 instructions to D4 re: production protocol, natives v. images with 15 metadata, metadata fields, etc.; read email re: JDM's claim of privilege for 16 communications with J. Rowe; preliminary review of documents 17 produced by Advisors Excel; telephone conference with B. 18 Eiselstein re: document production and protocol, depositions of Mellberg 19 witnesses, additional discovery needs, etc.; review D4's list of 20 proposed metadata fields for ESI production files; communications 21 with A. Burgett and L. Jones re: same. 22 23 24 25 26 27 28 1 3/19/2018 MSW Continue review of prior document 4.00 $350.00 $1400.00 productions, Liquidfiles links and 2 receipts, forensic exam notes, etc.; communications with Mellberg's 3 counsel re: same, additional productions with metadata and 4 images for delivery via Liquidfiles; communications with Mellberg's 5 counsel re: follow-up questions to D4 re: forensic examination reports and 6 additional examination of particular devices, stipulation to designate 7 results of forensic exams as "Attorneys' Eyes Only" and updates 8 to Aug. 2017 production files; participate in lengthy Status 9 Conference with Court and all counsel. 10 4/26/2018 MSW Conference with L. Jones and K. 2.00 $350.00 $700.00 11 Fitzpatrick re: technical issues with previous document productions; 12 communications with Mellberg's counsel re: conference call to address 13 technical issues; review proposed additional search terms for D4; 14 review list of documents from D4 production that Mellberg's counsel 15 requests be reduced from "Attorney's Eyes Only" designation to 16 "Confidential" for review by parties. 17 6/6/2018 MSW Read emails re: searching of Josh 4.00 $350.00 $1400.00 Mellberg's email accounts; prepare 18 for Telephonic Status Conference; telephone conference with other 19 counsel re: depositions of Impact and individual defendants; 20 communications with clients re: same; participate in Telephonic 21 Status Conference re: pending E-Discovery issues, depositions, 22 production of Arceo's computer image, etc. 23 24 25 26 27 28 1 6/11/2018 MSW Conference with L. M. Jones re: 2.80 $350.00 $980.00 Court-Ordered logs from D4 2 production #2; review email from Ricoh re: initial results from search 3 of Josh Mellberg's email accounts; review D4 second search results and 4 work on preparing logs of documents not produced (non-responsive and 5 "tech issue"); communications with D4 re: exporting logs as required by 6 recent Court Order; communications with Mellberg's counsel re: logs from 7 D4's second set of keyword searches; review exhibit to deposition of L. 8 Chiagouris (Mellberg's digital marketing expert) re: "inaccuracies" 9 in Spyfu data; communications with Impact's counsel re: depositions of 10 individual defendants and Impact officers; review documents produced 11 by M. Pulido in response to subpoena re: computer forensics licenses and 12 training; continue research for motions for summary judgment as to 13 "trade secrets" and related claims; review Impact's Supplement to 14 Motion to Compel Testimony and Documents re: Jeff Rowe. 15 8/7/2018 MSW Communications with Impact's 1.40 $350.00 $490.00 16 counsel and S. Carroll re: response to Motion for Spoliation sanctions in 17 GA Case; research re: response to objections to Magistrate's Order on 18 non-dispositive matters; telephone conference with Impact's counsel re: 19 contact by former Mellberg employee seeking legal assistance for wrongful 20 termination claim; telephone calls to District Court law clerks re: 21 procedure for responding to objections to Magistrate Judge's 22 Order; read email from Impact's counsel re: Joint Motion related to 23 Mellberg's communications with T. Fine and C. Uretz; preliminary 24 review of draft of Motion. 25 26 27 28 1 10/29/2018 MSW Communications with Impact's 1.50 $350.00 $525.00 counsel re: coordination of efforts for 2 upcoming Joint Motions for Summary Judgment; 3 communications with Plaintiffs' counsel re: deficiencies in 4 supplemental production of emails and updated privilege log; 5 communications with Impact's counsel re: deposition of Dr. 6 Moine (in Los Angeles); work on outlines/summaries for upcoming 7 motions for summary judgment. 8 1/9/2018 MSW Review Orders re: filing exhibits 1.40 $360.00 $504.00 under seal in support of Defendant's 9 MSJ, and Mellberg's MSJ re: counterclaim; attempt to retrieve 10 sealed exhibits from Court online; communications with Impact's 11 counsel re: same; review Impact's Notice of errata re: request for oral 12 argument; review Order setting oral argument on Motion to Exclude 13 Untimely Damage Opinions; review statute and local rules on duties of 14 Magistrate Judge; communications with Impact's counsel re: Judge 15 Jorgenson hearing Motion to Exclude. 16 17 The parties also disagree to what extent defense counsel’s actions regarding the 18 Georgia case should be reimbursed in this case. The Court agrees with Individual 19 Defendants that some cross-knowledge between the cases is appropriate. This also applies 20 to the litigation initiated by B. Matthew. However, the Court finds the following entries to 21 be excessive: 22 3/9/2017 MSW Review Impact's Motion to Compel .40 $350.00 $140.00 23 in Georgia lawsuit, including attached emails between counsel and 24 "responses" by Mellberg. 25 7/25/2017 MSW Review 30(b)(6) Notice to Mellberg .2 $350.00 $70.00 in Georgia case (0.2). (modified) 26 27 28 1 11/2/2017 MSW Meeting with T. Loehrs (M. Pulido's .80 $350.00 $280.00 former employer) re: forensic images, 2 company licenses, etc.; conference with B. Eiselstein re: same, 3 depositions of additional fact witnesses, additional discovery, etc.; 4 communications with C. Uretz re: potential deposition in Georgia 5 defamation case; review Order re: joint submission of proposed Order 6 appointing D4 to provide e-discovery services, and additional submissions 7 re: apportionment of costs between parties; email to B. Eiselstein re: 8 same. 9 2/9/2018 LMJ Review of emails from Atlanta firm .40 $205.00 $82.00 regarding production. 10 11 Additionally, the Court finds the following entries are not reasonable: 12 5/15/2014 MC2 Correspondence with Carly regarding .60 $365.00 $219.00 13 FBI agents and follow-up call to Agent Callimanis (0.6) 14 (modified) 15 10/13/2014 MC2 Conference with Carly Uretz’s Dad. .30 $365.00 109.50 10/19/2016 RBH Review email from M. S. Woodlock 1.70 $405.00 $688.50 16 and review proposed stipulated protective order (.6); review for 17 comments (.7); preparation of email to M. S. Woodlock (.4). 18 5/11/2018 LMJ Prepare document re-production. 7.60 $205.00 $1558 19 20 Individual Defendants also seek an award for computerized legal research. The Court 21 finds these fees are reasonable and should be reimbursed. See Ahwatukee Custom Estates 22 Management Ass’n v. Bach, 193 Ariz. 401 10 (1999). Additionally, the Court finds out-of- 23 pocket expenses are also appropriately ordered. Chalmers v. City of Los Angeles, 796 F.2d 24 1205, 1216 n. 7 (9th Cir. 1986). The affidavit of counsel Michael S. Woodlock adequately 25 documents and supports the request for fees and expenses. 26 The Court finds Individual Defendants are entitled to an award of attorneys’ fees and 27 non-taxable costs. Individual Defendants seek an award of $619,889.40 for attorneys’ fees, 28 1 which includes attorneys’ fees for preparation of the request for attorneys’ fees and costs, and 2 an award of $25,012.00 for costs. However, the Court finds the requested amount of 3 $619,889.40 to not be reasonable. The Court finds it appropriate to reduce this amount by 4 $16,698.00 as delineated herein for an amount of $603,191.40. Additionally, an award of 5 attorneys’ fees need not equal or relate to the fees actually paid. A.R.S. § 12-341.01.B. The 6 Court considers the Local Rule factors, along with the facts that counsel did not work well 7 together, which contributed to the protracted litigation, there was a factual and legal basis for 8 JDM to pursue the claims despite the fact they ultimately did not survive summary judgment, 9 and that this litigation necessarily overlapped somewhat with the Georgia litigation. These 10 factors provide a “reasonable basis” to reduce the attorneys’ fees amount. See generally 11 Associated Indem. Corp. v. Warner, 143 Ariz. 567, 571 (1985); see also Worden v. Klee 12 Bethel, M.D., P.C., No. 1 CA-CV 08-0490, 2009 WL 2003321, at *5 (Ariz. App. July 9, 13 2009) (reduced fee award affirmed). 14 In light of this, the Court will reduce the amount of attorneys’ fees by 30% for a 15 reasonable attorneys’ fees award of $422,233.98. Additionally, the Court will award 16 Individual Defendants an award for costs in the amount of $29,874.49. The Court finds a 17 total award for attorneys’ fees and costs in the amount of $452,108.47 to be appropriate and 18 will grant in part Individual Defendants' Motion For Award of Attorneys' Fees And 19 Non-Taxable Expenses (Doc. 568) to award Individual Defendants this amount. 20 21 Impact’s Motion for Attorneys’ Fees and Related Non-Taxable Expenses (Doc. 570) 22 Impact requests this Court award it attorneys’ fees because JDM’s claim were made 23 in bad faith, A.R.S. § 44-404, and because the claims arose out of contract or were so 24 intertwined with the contract claims, A.R.S. § 12-341.01. 25 The parties disagree whether the claims arise out of contract. JDM argues that only 26 one claim (which was not alleged against Impact) was for breach of contract and that 27 “attorneys’ fees are not appropriate based on the mere existence of a contract somewhere in 28 1 the transaction.” See Morris v. Achen Const. Co., Inc., 155 Ariz. 512, 514 (1987). The 2 Arizona Supreme Court stated: 3 Where, however, the duty breached is not imposed by law, but is a duty created by the contractual relationship, and would not exist “but for” the contract, then breach of 4 either express covenants or those necessarily implied from them sounds in contract. Sparks, supra; Lewin, [v. Miller Wagner & Co., 151 Ariz. 29, 725 P.2d 736 5 (App.1986) ], supra. The essence of such actions arises “out of a contract,” eligible for an award of fees under the statute. 6 Id. Additionally, citing Morris and Buxton Arlington Pet, LLC v. Butler, No. 1 CA-CV 7 16-0260, 2017 WL 4897456 (Ariz. App. Oct. 31, 2017), JDM asserts that a tort claim does 8 not arise out of contract where “the parties to the litigation are not the parties to the contract, 9 and there is no contention, as between them, that any contract is invalid.” Buxton Arlington 10 Pet, at *2. However, that bright line rule applies to “awards of attorney fees in fraud in the 11 inducement cases.” Id. Indeed, the same year in which the Buxton Arlington Pet case was 12 issued, the Arizona Supreme Court stated in another case that “[s]ection 12–341.01(A) does 13 not have a privity requirement for claims ‘arising out of’ a contract.” Sirrah Enterprises, 14 LLC v. Wunderlich, 242 Ariz. 542, 547, 399 P.3d 89, 94 (2017). 15 In this case, agreements central to claims against Individual Defendants was at issue. 16 Further, the allegations of conspiracy and aiding and abetting against all Defendants are 17 based on those agreements. Moreover, the misappropriation claims against Impact were 18 based on a contractual relationship between Impact and a competing venture, JFI, LLC 19 (“Annuity Angel”). The Second Amended Complaint alleged that the agreement between 20 Impact and Annuity Angel and the actions taken pursuant to that agreement (i.e., Cashflow 21 College sales presentation) were virtually identical to JDM’s training program. In support 22 of their claims, JDM attached the Cashflow College Subscriber Agreement to the SAC. 23 Arizona courts have recognized that, “when the contract in question is central to the issues 24 of the case, it will suffice as a basis for a fee award.” Hiatt v. Shah, 238 Ariz. 579, 584 (App. 25 2015), quoting In re Larry's Apartment, L.L.C., 249 F.3d 832, 836–37 (9th Cir.2001); see 26 also Ajman Stud v. Cains, No. CV-15-01045-PHX-DJH, 2020 WL 5034219, at *2 (D. Ariz. 27 July 21, 2020) . Moreover, Arizona courts have “broadly interpreted which types of actions 28 1 arise from a contract.” Hiatt, 238 Ariz. at 584, citing Marcus v. Fox, 150 Ariz. 333, 335 2 (1986). The Court finds the action arose out of contract. 3 Even if the Court did not find the action arose out of contract, an award of attorneys’ 4 fees pursuant to A.R.S. § 12-341.01 would be appropriate because the nature of the claims 5 and the different claims against different Defendants are interwoven. See Skydive Arizona, 6 Inc. v. Hogue, 238 Ariz. 357, 369 (App. 2015) (Fee award is appropriate where contract and 7 tort claims are interwoven. “Claims are interwoven when they are based on the same set of 8 facts and involve common allegations, which require the same factual and legal 9 development.”). The Court of Appeals of Arizona stated in a similar case: 10 It is undisputed that the central claims in this litigation were the trade secrets claim and the breach of employment contract claims. The record demonstrates these claims 11 were based on the same set of facts, involving the common allegation that Jigsaw had misappropriated and made use of Modular's trade secrets. Accordingly, as Jigsaw 12 asserts, these claims “required the same factual development and research work,” and “all depositions and all other work related to discovery and disclosure w[ere] 13 necessary in connection with both claims.” 14 The legal issues concerning these claims were also intertwined and overlapping. First, the trade secrets claim was premised on the asserted misappropriation of 15 Modular's trade secrets, which was allegedly committed primarily by the individual defendants' breaching the confidentiality provisions of their employment agreements 16 and using Modular's “inside information.” Similarly, whether the commands Modular claimed as trade secrets were in fact “trade secrets” for purposes of the 17 Uniform Trade Secrets Act was likewise substantially dependent on the confidentiality provisions of the employment agreements. Finally, Modular's unfair 18 competition and tortious interference claims were based on the same set of facts as its trade secrets claim. As Jigsaw explains, those claims “were completely dependent 19 upon Modular's ability to prevail on its misappropriation claims” and “required no separate legal services.” 20 Modular Mining Sys., Inc. v. Jigsaw Techs., Inc., 221 Ariz. 515, 522–23 (App. 2009), 21 footnotes omitted. Similarly, in this case, the central claims addressed allegations regarding 22 trade secrets and breaching confidentiality agreements. These claims were based on the same 23 set of facts, which required the same factual development and research work. Further, 24 discovery as to the claims and damages related to both these central claims. Additionally, 25 the legal issues concerning these claims were intertwined and overlapping. 26 Ultimately, JDM’s claims were not meritorious. This conclusion is supported by 27 JDM’s presentation of unclear legal theories and the delay and denial of complete discovery 28 1 throughout the case. In light of this, this lawsuit could have been avoided or settled. 2 Additionally, this case did not present novel legal issues and a fee award would not 3 discourage others with legitimate claims. The Court also considers that the nature of the 4 claims and the different claims against different Defendants are interwoven. See Skydive 5 Arizona, Inc., 238 Ariz. at 369 (Fee award is appropriate where contract and tort claims are 6 interwoven.). The Court finds Impact is entitled to an award of attorneys’ fees pursuant to 7 A.R.S. §12-341.01. 8 Because the Court has found an award of attorneys’ fees pursuant to A.R.S. § 12- 9 341.01, the Court declines to consider the argument on the alternate theories for a basis for 10 an award of attorneys’ fees. Modular Mining Sys., Inc., 221 Ariz. 515 at 523. 11 In determining whether attorneys’ fees are reasonable, the Court considers that this 12 case involved protracted discovery and extensive motion practice, which required a 13 significant expenditure of time by counsel. The claims addressed in this case were not novel, 14 but JDM’s attempts to modify the claims and the continued denial and delay of discovery 15 reasonably required defense counsel to expend significant efforts to defend against the 16 claims. The skill required to properly defend the case was substantial because of the 17 contentious nature of the litigation. Further, the protracted nature of the litigation necessarily 18 precluded possible other employment by counsel. Additionally, although the amount of 19 damages sought by JDM repeatedly changed, the sums were significant. See LRCiv 54.2(c). 20 The Court also considers that the level of success is also relevant in determining 21 whether attorneys’ fees are reasonable under the circumstances of a case. SWC Baseline & 22 Crismon Inv'rs, L.L.C., 228 Ariz. at 287. Although Impact was successful in defending 23 against JDM’s claims, it was not successful in the prosecution of its counterclaim. 24 Weighing all factors, the Court finds Impact is entitled to an award of attorneys’ fees 25 pursuant to A.R.S. §12-341.01. However, the Court does consider that there necessarily 26 would have been some overlap between the litigation in this case and Georgia litigation, 27 which affects the hours reasonably expended in representing Impact. LRCiv 54.2(c)(3)(A); 28 1 Jenkins, 247 Ariz. at 480. 2 JDM has not provided itemized objections to Impact’s requested fees.3 JDM generally 3 object to entries, however, based on block billing, actions taken in furtherance of the 4 counterclaim, multiple interoffice conferences, and actions taken on behalf of Individual 5 Defendants. The Court finds the multiple interoffice conferences to be reasonable. 6 Additionally, in light of the joint defense, the Court finds cross-actions between defense 7 attorneys are reasonable. 8 As to the block billing, a block bill need not necessarily be denied. Advanced 9 Reimbursement Sols., 2020 WL 2768699 at *6. The Court has reviewed the entries, 10 considering whether the tasks are related and the total amount of time to complete the 11 delineated tasks. The Court finds the following entries constitute block billing and, as such, 12 the Court finds these fees are not reasonable: 13 3/31/2014 WE 1.8 $425.00 $765.00 Telephone call with AZ counsel regarding strategy, possible AZ counsel 14 for individual defendants; discussions with M. Kohler regarding same and 15 regarding plans for removal and possible claims; reviewing outline of possible 16 arguments on motion to dismiss from M. Visan; telephone call and follow-up 17 email with Attorney Collins regarding representation of individual defendants; 18 reviewing motion for injunction and emails to AZ counsel regarding same. 19 20 21 22 23 24 3Impact’s Reply refers to specific objections made by JDM. However, comparing JDM’s 25 Opposition to Individual Defendants’ Motion for Award of Attorneys’ Fees And Non-taxable Expenses (Doc. 581) to Opposition to Defendant the Impact Partnership’s Motion for Attorneys’ 26 Fees and Related Non-taxable Expenses (Doc. 580), the Court notes the Individual Defendants Objection includes a declaration that refers to an exhibit that specifically objects to entries. The 27 declaration attached to the Impact Objection does not include such a reference. A review of 28 other entries on the docket sheet fails to include specific objections. 1 4/16/2014 GK 2.6 $485.00 $1261.00 Analyze state court purported First Amended Complaint and compare to 2 original complaint; review research regarding standards for injunctive relief 3 in federal court; telephone conference with B. Eislestein and M. Collins 4 regarding status and strategy; telephone call to Plaintiff's' counsel D. Bray and T. 5 Thomason; review materials regarding Judge C. Pyle in connection with issue of 6 consent to Magistrate; read Plaintiffs' Demand for Jury Trial. 7 5/7/2014 WE 1.9 $425.00 $807.00 Interview with C. Uretz regarding 8 background and response to allegations in complaint; telephone call with M. 9 Collins regarding AZ case issues; reviewing revisions to joint defense 10 agreement; report to M. Kohler regarding Uretz interview, case status; telephone 11 call with S. Odom regarding case status; consideration of possible counterclaim4 12 4/29/2015 TK 5.6 $240.00 $1344.00 Conferences with B. Eiselstein for 13 purposes of identifying issues related to Second Amended Complaint and 14 developing arguments for use in support of motion to dismiss on behalf of 15 Defendant Impact; research regarding whether knowledge of employees may be 16 imputed to corporation for possible use in support of motion to dismiss; 17 conference with M. Kohler regarding deficiencies in Second Amended 18 Complaint and arguments that could be used in support of motion to dismiss on 19 behalf of Impact; review and analyze allegations in Second Amended 20 Complaint for use in support of motion to dismiss on behalf of Impact; research 21 in support of Impact motion to dismiss. 22 23 24 25 26 27 4This entry also combines actions related to the defense against JDM’s claims with the 28 actions related to the prosecution of the counterclaim. 1 8/10/2015 TK 4.5 $240.00 $1080.00 Telephone conference with B. Eiselstein revisions to draft of Joint Report; 2 follow-up email to B. Eiselstein; multiple emails and conferences with M. 3 Woodlock and G. Krauja concerning status of Joint Report; review and 4 analyze Plaintiff's final draft of joint report; conference with E. Rumfelt to 5 assist with drafting section of Joint Report addressing ESI; Telephone call to 6 opposing counsel, M. Patel, for purposes of addressing issues related to Joint 7 Report; supplement, edit, revise, and finalize Joint Report in preparation for 8 filing; draft email to opposing counsel and individual defendants attaching 9 Impact's proposed changes and additions to Plaintiffs' draft of Joint Report 10 7/20/2016 GK 2.9 $485.00 $1406.50 Telephone conference with Mr. 11 Eiselstein regarding status and strategy for Scheduling Conference; review Joint 12 Scheduling Memorandum and briefing on pending motion to prepare to address 13 possible questions from Judge Kimmins; attend scheduling conference in court 14 before Judge Kimmins. 15 3/8/2017 JC 2.8 $225.00 $630.00 Analysis of case law on secrecy of trade secrets in order to draft questions for 16 corporate depositions; preparation of motion for filing; analysis of deposition 17 questions; analysis of various lawsuits Mellberg is also involved in; review of 18 discovery responses. 19 3/29/2017 JC 4.9 $225.00 $102.50 Drafted communication with expert concerning information for rebuttal 20 report; analysis of retention contract, analysis of further documents needed for 21 expert; analysis of documents produced by clients and need for production of 22 certain documents. 5/3/2017 JC 2.3 $225.00 $517.50 Communication with Impact personnel 23 concerning certain files and email address issues; analysis of certain 24 witnesses with information and contact information; analysis of Mellberg 25 lawsuits and various other issues. 26 27 28 1 2/8/2018 WE 2.9 $480.00 $1392.00 Telephone call with L. Archibald regarding search terms to propose for 2 search of JDM emails; discussion regarding additional discovery issues; 3 meet with M. Kohler and R. Kurtz to prepare for depositions; emails regarding 4 forensic reports of individual defendants' devices; telephone call with M. 5 Woodlock; review of AE documents. 6 4/12/2018 WE 2.7 $480.00 $1296.00 Telephone call with M. Kohler regarding 7 follow-up from Rowe deposition, case strategy; telephone call with M. 8 Woodlock regarding discovery and ESI issues; multiple emails regarding same; 9 review search terms requested of JDM and JDM information on search terms 10 allegedly used; reviewing D. Morgan deposition regarding efforts to search for 11 documents; draft email to opposing counsel regarding JDM documents and 12 search terms. 13 4/30/2018 WE 2.4 $480.00 $1152.00 Review discovery requests and email opposing counsel regarding need to 14 produce documents regarding "whistleblower" packet; telephone call 15 with M. Kohler regarding same; review court filing on discussions between JDM 16 and individual defendants regarding metadata; prepare case status update and 17 reviewing court orders regarding deadlines; telephone call with M. 18 Woodlock regarding communications with opposing counsel; email L. 19 Archibald regarding motion to compel JDM email search; emails regarding 20 attempts to serve S. Hilger with deposition subpoena. 21 5/8/2018 WE 9.6 $480.00 $4608.00 Prepare for and take deposition of J. Tye, 22 plaintiff's expert; discussion with M. Woodlock in preparation for 5/9 status 23 conference; prepare for deposition of P. Russo; planning for Chiagouris 24 deposition. 5/9/2018 WE 6.8 $480.00 $3264.00 Preparing for and taking deposition of P. 25 Russo; discussions with M. Woodlock in preparation for status conference; 26 participate and status conference. 27 28 1 5/31/2018 WE 7.2 $480.00 $3456.00 Email with A. Pringle regarding JDM email search; reviewing court order and 2 search terms in connection with same; email with litigation support and L. 3 Archibald; preparing for deposition of L. Chiagouris; reviewing expert reports and 4 deposition transcripts in connection with same; discuss strategy and upcoming 5 events with M. Kohler; travel Atlanta/New York for Chiagouris 6 deposition. 7 6/13/2018 WE 5.2 $480.00 $2496.00 Planning for Impact depositions with M. Kohler, review and consider topics on 8 30(b)(6) notice; telephone calls with S. Craig and E. Williams regarding same; 9 followup email to E. Williams; reviewing Mellberg supplemental 10 disclosure regarding damages; discussion with M. Woodlock and M. Kohler 11 regarding same; reviewing court order on Rowe communications; telephone calls 12 with M. Woodlock regarding discovery issues; emails regarding deposition 13 scheduling; emails regarding Ricoh search of Mellberg emails; review hit-list 14 and consider limitations. 15 7/2/2018 WE 2.7 $480.00 $1296.00 Check on deadlines for JDM email review; reviewing JDM motion to 16 reconsider ruling on individual defendants' documents; review local 17 rules on motions to reconsider and email with M. Woodlock; review notice of 18 subpoena to F. Stokes; discuss status with M. Kohler, discuss possible forensic 19 review of J. Marshall computer; review information regarding F. Stokes; emails 20 with co-counsel regarding depositions; research possible use of special master 21 for JDM discovery issues; multiple emails with opposing counsel regarding 22 sample set review, non-compliance with court deadlines; discuss sample review 23 issues with R. Musumeci. 24 25 26 27 28 1 7/13/2018 LA 3.6 $260.00 $936.00 Prepare for and attend conference call with RICOH and opposing counsel 2 regarding preparation of sample sets for review by opposing counsel; confer with 3 B. Eiselstein regarding results of same; draft summary of results of same and 4 next steps; confer with co-counsel, RICOH, and opposing counsel regarding 5 same; review Court order related to discovery disputes and status conference; 6 confer with R. Musumeci regarding document review status, preparation of 7 additional document batches, and status of additional production sets. 8 7/13/2018 LA 2.6 $260.00 $676.00 Confer with B. Eiselstein and R. 9 Musumeci regarding document review status and completion time frame; confer 10 with reviewers regarding same; confer with B. Eiselstein regarding opposing 11 counsel's response to status report; begin review of potentially privileged 12 documents. 13 7/17/2018 RM 2.4 $215.00 $516.00 Assist with deposition prep review; review supplemental Will production, 14 modify load file to ensure update of database records; review all other 15 instances of produced, non-redacted tax returns to delete records and images to 16 accomplish the intent of the supplemental production. 17 7/17/2018 LA 3.5 $260.00 $918.00 Assist with deposition prep review; 18 review supplemental Will production, modify load file to ensure update of 19 database records; review all other instances of produced, non-redacted tax 20 returns to delete records and images to accomplish the intent of the 21 supplemental production. 7/19/2018 WE 2.7 $480.00 $1296.00 Planning for depositions; reviewing T. 22 Fine documents in preparation for deposition; reviewing prior Fine 23 testimony; telephone call with M. Woodlock regarding deposition 24 preparation and discovery issues; email with D. Bray regarding 30b6 scheduling; 25 confer with M. Kohler regarding same; draft potential response to D. Bray; 26 communications regarding JDM settlement overture to C. Uretz. 27 28 1 7/30/2018 WE 6.3 $480.00 $3024.00 Reviewing court-ordered deadlines; submit status report to court; emails with 2 opposing counsel regarding information required under court order; reviewing 3 documents produced in response to Mellberg email search; discussion of 4 damages issues with R. Kurtz and M. Kohler; multiple communications 5 regarding Wenk deposition; telephone call with M. Woodlock; communications 6 with L. Archibald regarding preparation for depositions, document review, email 7 searches. 8 8/1/2018 WE 5.2 $480.00 $2496.00 Preparing for J. Simonds deposition; reviewing document regarding Simonds; 9 communications with L. Archibald regarding email searches, planning for 10 depositions and possible motion for Mellberg rule violations; reviewing J. 11 Will documents and select documents for deposition preparation; emails regarding 12 same; participate in deposition preparation of F. Godinez and J. Will. 13 8/9/2018 LA 6.1 $260.00 $1586.00 Draft summary of status and arguments 14 in preparation for telephonic hearing; review and revise correspondence to 15 opposing party regarding errors in production sets; confer with B. Eiselstein 16 regarding same; attend telephonic hearing; confer with opposing counsel 17 regarding revised sample search export instructions; draft Uretz declaration in 18 support of motion related to Russo communications with represented 19 parties. 20 21 22 23 24 25 26 27 28 1 9/24/2018 GK 2.5 $520.00 $1300.00 Read individual defendants' summary of anticipated motions for summary 2 judgment; update review of Ninth Circuit law supporting dismissal of the 3 Computer Fraud and Abuse Act claim as a matter of law, and send correspondence 4 to Mr. Woodlock; review The Impact Partnership's Lanham Act counterclaim 5 as basis for federal court jurisdiction if Computer Fraud and Abuse Act claim is 6 dismissed; read Order regarding motion for protective order and additional 7 deposition of Mr. Russo; read correspondence regarding Defendants' 8 respective statements of areas they intend to address in motions for summary 9 judgment.5 10 11/16/2018 WE 8.8 $480.00 $4800.00 Prepare for Moine deposition; telephone call with opposing counsel regarding 11 possible mediation, schedule; travel Atlanta/Los Angeles for Moine 12 deposition; reviewing Evans deposition for facts to use in summary judgment 13 motions. 14 5/9/2019 WE 2.2 $525.00 $1155.00 Review and edit motion regarding M. Bush expert witness; discuss changes 15 with R. Kurtz; email with R. Parekh regarding motion for summary judgment 16 on damages; email and telephone call with M. Woodlock regarding same; 17 email to H. McIntyre regarding settlement conference with magistrate 18 judge; discuss same with M. Kohler. 19 The Court finds the following entry does not clearly indicate the actions were taken 20 in defense of JDM’s claims against Impact, as opposed to in furtherance of the counterclaim, 21 and therefore, cannot be said to be reasonable: 22 23 3/26/2014 WE .8 $425.00 $340.00 Email with T. Thompson regarding draft complaint against JD Mellberg; review 24 and comment on AZ counsel proposed engagement letter; emails with M. 25 Kohler and T. Thompson regarding next steps. 26 27 5This entry includes actions related to both the defense against JDM’s claims and the 28 prosecution of the counterclaim. 1 Additionally, the Court finds there necessarily would have been additional overlap in 2 the actions between the claims Impact was defending against and prosecuting the claim 3 against JDM (e.g., document requests, deposition questions). Lastly, the Court recognizes 4 that some entries have been reduced. See e.g., Itemization: Fennemore Craig, P.C. (Doc. 5 570-2), Entries 344, 353. 6 Impact also seeks an award of non-taxable costs in the amount of $102,857.99. JDM 7 argues, however, that because both parties prevailed on their Summary Judgment motions, 8 neither party should be considered the prevailing party. While it is within the discretion of 9 a district court to require each party to bear its own costs in a mixed judgment case, Amarel 10 v. Connell, 102 F.3d 1494, 1523 (9th Cir. 1996), as amended (Jan. 15, 1997), JDM’s claims 11 were the significant focus of this case and JDM failed to succeed on any of their claims. 12 Under a totality of litigation review, Impact achieved far greater success than JDM. Carl 13 Karcher Enterprises, Inc. v. Stine Enterprises, Inc., No. 1 CA-CV 09-0078, 2010 WL 14 3571535, at *2 (Ariz.App. Sept. 14, 2010); compare Gen. Cable Corp. v. Citizens Utilities 15 Co., 27 Ariz.App. 381, 385 (1976). The Court finds, in its discretion, an award of non- 16 taxable costs is appropriate. 17 The Court finds Impact is entitled to an award of attorneys’ fees and non-taxable 18 costs. Impact seeks an award of $1,891,003.40 ($1,754,635.40 for Miller Martin, PLLC, and 19 $136.368.00 for Fennemore Craig, P.C.) for attorneys’ fees and an award of $102,857.99 for 20 costs. However, the Court finds the requested amount of $1,891,003.40 to not be reasonable. 21 The Court finds it appropriate to reduce this amount by $45,916.50 as delineated herein for 22 an amount of $1,845,086.90. Additionally, an award of attorneys’ fees need not equal or 23 relate to the fees actually paid. A.R.S. § 12-341.01.B. The Court considers the Local Rule 24 factors, along with the facts that counsel did not work well together, which contributed to the 25 protracted litigation, there was a factual and legal basis for JDM to pursue the claims despite 26 the fact they ultimately did not survive summary judgment, and that this litigation necessarily 27 overlapped somewhat with the Georgia litigation. Although Impact excluded and reduced 28 1 || entries, see Motion, (Doc. 570, p. 17), the Court finds the factors provide a “reasonable 2 || basis” to reduce the attorneys’ fees amount. See generally Associated Indem. Corp. v. 3 || Warner, 143 Ariz. 567, 571 (1985); see also Worden v. Klee Bethel, M.D., P.C., No. 1 4 || CA-CV 08-0490, 2009 WL 2003321, at *5 (Ariz. App. July 9, 2009) (reduced fee award 5 || affirmed). 6 In light of this, the Court will reduce the amount of attorneys’ fees by 30% for a 7 || reasonable attorneys’ fees award of $1,291,560.83. Additionally, the Court will award 8 || Impact an award for non-taxable costs in the amount of $102,857.99. The Court finds a total 9 || award for attorneys’ fees and non-taxable costs in the amount of $1,394,418.82 to be 10 || appropriate and will grant in part Impacts’ Motion for Attorneys’ Fees and Related 11 || Non-taxable Expenses (Doc. 570) to award Impact this amount. 12 13 Accordingly, IT IS ORDERED: 14 1. JDM’s Motion to Strike (Doc. 583) is GRANTED. Statement included in the 15 || declarations of William P. Eiselstein and Stephen W. Odom, Jr., related to settlement 16 || discussions between the parties are stricken and will not be considered by the Court. 17 2. JDM’s Motion for Attorneys’ Fees (Doc. 565) is DENIED. 18 3. Individual Defendants’ Motion For Award of Attorneys’ Fees And 19 || Non-Taxable Expenses (Doc. 568) is GRANTED IN PART. Individual Defendants are 20 || awarded attorneys’ fees and non-taxable costs from JDM in the amount of $452,108.47. 21 4. Impact’s Motion for Attorneys’ Fees and Related Non-Taxable Expenses (Doc. 22 || 570) is GRANTED IN PART. Impact is awarded attorneys’ fees and costs from JDM in the 23 || amount of $1,394,418.82. 24 DATED this 24" day of March, 2021. 25 A. ig L On gorsnore? 27 Cindy K. Jor§€énso 38 United States District Judge

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