PepsiCo, Inc. v. Central Investment Corp.

216 F.R.D. 418, 2002 U.S. Dist. LEXIS 25764, 2002 WL 32123915
CourtDistrict Court, S.D. Ohio
DecidedApril 10, 2002
DocketNo. C-1-98-389
StatusPublished
Cited by4 cases

This text of 216 F.R.D. 418 (PepsiCo, Inc. v. Central Investment Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
PepsiCo, Inc. v. Central Investment Corp., 216 F.R.D. 418, 2002 U.S. Dist. LEXIS 25764, 2002 WL 32123915 (S.D. Ohio 2002).

Opinion

ORDER

BECKWITH, District Judge.

This matter came before the Court on April 5, 2002 for a hearing on Plaintiff Pepsi-Co, Inc.’s (“PepsiCo”) objections (Doc. No. 285) to Defendant Central Investment Corporation’s (“CIC”) submission of legal fees and expenses (Doc. No. 277). For the reasons that follow, PepsiCo’s objections are not well-taken and are OVERRULED.

CIC submitted a bill for fees and expenses in conjunction with an order issued by Magistrate Judge Hogan finding that PepsiCo had committed discovery abuses with respect to documents related to “Project Broncos,” a code name given by PepsiCo to a plan to consolidate its bottling operations. Magistrate Judge Hogan found that PepsiCo had withheld Project Broncos documents from CIC for strategic purposes, but found that the evidentiary sanction sought by CIC was inappropriate. Rather, Judge Hogan found that a monetary sanction, which did not affect the merits of the ease either way, was appropriate. Therefore, Judge Hogan directed CIC to submit the legal fees and expenses it incurred in preparing the motion to compel which eventually brought to the surface Project Broncos, and the motion for sanctions. In response, CIC submitted a bill for $101,519.00 in attorney’s fees and $1,537.98 in related expenses.

PepsiCo then objected to Magistrate Judge Hogan’s finding that sanctions were warranted and to the amount of the bill submitted by CIC. This Court, by order of February 13, 2002 (Doe. No. 296) affirmed Judge Hogan’s conclusion that PepsiCo withheld the Project Broncos documents from CIC in bad faith and that monetary sanctions were appropriate. The Court then directed that a hearing be held on PepsiCo’s objections to CIC’s submission of fees and expenses. The Court presided over the hearing on April 5, 2002. During the hearing the Court heard argument from counsel for both parties, as well as the testimony of former Ohio Supreme Court Justice Craig Wright, whom CIC presented as a expert on the reasonableness of its fees. The reasonableness of a sanction, however, is committed to the trial court’s discretion. See Taylor v. Medtronics, Inc., 861 F.2d 980, 985 (6th Cir. 1988) (imposing Rule 37 sanctions are reviewable only for abuse of discretion.). ■ Therefore, while the Court respects and appreciates the breadth of Justice Wright’s knowledge and experience, because the resolution of the issue is committed to the Court’s discretion, whether CIC’s legal fees are reasonable is not an appropriate topic for expert testimony. Thus, the Court has not considered Justice Wright’s testimony in reaching its conclusion.

In addition, PepsiCo submitted a notebook of exhibits which generally fall within one of two categories. The first group of exhibits (Exs.1-3) are colorful pie charts and bar graphs which purport to demonstrate that the fees that CIC incurred in extracting the Project Broncos documents from PepsiCo were minimal compared to the overall award sought. The second group of exhibits (Exs.4-10) were apparently submitted to reassure the Court that either a) Project Broncos is not the threat that CIC perceives it to be; or, b) that the Project Broncos documents were not withheld in bad faith. The first contention, however, is an issue that is properly reserved for the jury and the second contention is foreclosed by the Court’s finding that PepsiCo engaged in sanctionable conduct. Therefore, these exhibits have not entered into the Court’s deliberations either.

CIC’s legal fees of $101,519.00 break down into two components — $34,678.75 (157.80 total hours) in expenses incurred preparing the motion to compel and $66,840.25 (270.90 total hours) spent preparing the motion for sanctions. PepsiCo does not quarrel with the hourly rates charged by CIC’s attorneys. Rather, PepsiCo’s challenge to CIC’s legal fees is limited to contesting the reasonableness of the hours spent on each project. With regard to the hours spent on the motion to compel, PepsiCo argues that there must be a “nexus” between the hours spent briefing the particular discovery request and the overall sanction awarded. In this case, because discovery requests concerning bottler [420]*420consolidation plans occupied but a small portion of CIC’s original motion to compel, Pep-siCo argues that the sanction on the motion to compel should reflect that proportion. Next, with respect to legal fees based on the motion for sanctions, PepsiCo argues that because Judge Hogan awarded CIC a “lesser” sanction of legal fees and expenses, instead of the evidentiary sanction CIC originally sought, CIC’s motion for sanctions was not “successful.” Thus, PepsiCo essentially argues that CIC’s fees on the motion for sanctions should be reduced to reflect its degree of success on the motion. Overall, PepsiCo suggests that the overall sanction should be in the neighborhood of $10,000.

CIC counters that there is nothing in Magistrate Judge Hogan’s order which suggests that he awarded sanctions solely because PepsiCo withheld Project Broncos documents. CIC notes that it prevailed substantially overall on its motion to compel and that, therefore, it is entitled to recover all of its expenses on the motion. CIC also suggests that the fees it claims as a sanction are appropriate as a deterrent and punitive measure. Finally, CIC derides the notion that it should receive less than its total expenses because it did not get the relief it originally sought.

PepsiCo’s “nexus” argument comes from the U.S. Supreme Court’s decision in Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982), in which the Court stated:

Rule 37(b)(2) contains two standards — one general and one specific — that limit a district court’s discretion. First, any sanction must be “just”; second, the sanction must be specifically related to the particular “claim” which was at issue in the order to provide discovery. While the latter requirement reflects the rule of Hammond Packing [Co. v. Arkansas] supra, [212 U.S. 322, 29 S.Ct. 370, 53 L.Ed. 530 (1909)] the former represents the general due process restrictions on the court’s discretion.

Id. at 707, 102 S.Ct. 2099. We think it is possible that PepsiCo reads this case too narrowly by suggesting there must be an absolute correlation between the time spent on the discovery request and the overall sanction sought. The Court’s use of the word “claim” in the opinion may simply mean that the trial court may not as a sanction strike an entire multi-count complaint when a discovery request only relates to one claim for relief. The Sixth Circuit has suggested that this interpretation is correct; albeit in an unreported case. See Polanski v. Detroit Police, No. 85-1503, 1986 WL 17175, at *3 (6th Cir. June 6, 1986) (“The sanction of striking the appellant’s complaint is also specifically related to the ‘claim’ which was at issue.”). The Court further notes that in the Tenth Circuit, a nexus between the noncompliance with the rules and the amount of fees and expenses sought is required only in the absence of a finding of bad faith. See Turnbull v. Wilcken, 893 F.2d 256, 259 (10th Cir.1990).

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216 F.R.D. 418, 2002 U.S. Dist. LEXIS 25764, 2002 WL 32123915, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pepsico-inc-v-central-investment-corp-ohsd-2002.