1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 WHITEWATER WEST INDUSTRIES, Case No. 17-cv-00501 DMS (NLS) LTD., a Canadian corporation, 11 ORDER GRANTING IN PART AND Plaintiff, DENYING IN PART DEFENDANTS’ 12 MOTION FOR FEES AND vs. RELATED NONTAXABLE 13 EXPENSES UNDER FRCP 54(D)(2) RICHARD ALLESHOUSE, an 14 individual, YONG YEH, an individual, and PACIFIC SURF DESIGNS, INC., a 15 Delaware corporation, 16 Defendants. 17 18 19 This case comes before the Court on Defendants Pacific Surf Designs, Inc., 20 Richard Alleshouse and Yong Yeh’s motion for fees and related nontaxable 21 expenses under Federal Rule of Civil Procedure 54(d)(2). Plaintiff Whitewater West 22 Industries, Ltd. filed an opposition to the motion, and Defendants filed a reply. 23 The substantive basis for Defendants’ motion for fees and expenses is the 24 Employment Agreement between Plaintiff and Defendant Alleshouse. That 25 Agreement states: 26 If any legal action or other proceeding, including any bankruptcy 27 proceeding, is brought for the enforcement of the Agreement, or because with any of the provisions of this Agreement, the successful or prevailing 1 party shall be entitled to recover reasonable attorneys’ fees and other 2 costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled. 3 4 (Decl. of Manuel de la Cerra in Supp. of Mot., Ex. A-1 ¶9.) Plaintiff does not dispute 5 that Defendants are the prevailing parties under the Agreement and therefore entitled 6 to fees. However, Plaintiff does dispute whether Defendants are entitled to all of the 7 fees and expenses requested. 8 The fees and expenses requested fall into the following categories: (1) 9 attorneys’ fees in the amount of $1,227,630.12, (2) travel expenses in the amount of 10 $21,840.26, (3) copy costs, trial technology and support in the amount of 11 $36,848.13, (4) eDiscovery expenses in the amount of $50,687.14, (5) court reporter 12 fees in the amount of $3,142.40, (6) fees paid to Plaintiff’s expert witnesses in the 13 amount of $5,725.00, (7) courier costs in the amount of $650.95, (8) video deposition 14 costs in the amount of $7,600.90, and (9) rebuttal expert witness fees in the amount 15 of $224,642.86. Plaintiff responds that Defendants’ fees should be limited to the 16 breach of contract and declaratory relief claims only, and that Defendants’ request 17 for expenses should be limited by California Civil Procedure Code § 1033.5. 18 The Court rejects Plaintiff’s first argument that Defendants’ fees should be 19 limited to the breach of contract and declaratory relief claims only. As Defendants 20 point out, Plaintiff took the contrary position in its motion for fees following the 21 bench trial in this case. (See ECF No. 168 at 4-5) (arguing the fee provision in the 22 Employment Agreement covered all of Plaintiff’s claims). Having staked that 23 position in support of its own motion for fees, Plaintiff cannot argue now that 24 Defendants’ fees should be so limited. Other than this argument, Plaintiff does not 25 object that the amount of fees requested is unreasonable. Accordingly, the Court 26 grants Defendants’ request for fees in the amount of $1,200,302.12.1 27 1 Turning to Defendants’ expenses, the parties appear to agree that California 2 Code of Civil Procedure § 1033.5 governs which expenses are recoverable. As set 3 out above, the first category of requested expenses here are travel expenses in the 4 amount of $21,840.26. Those expenses cover transportation to and from 5 depositions, court hearings and meetings, and food and lodging as necessary. 6 California Civil Procedure Code § 1033.5(a)(3)(C) allows for recovery of travel 7 expenses to attend depositions, therefore the Court grants Defendants’ request to 8 recover those expenses. Expenses to attend court hearings are not specifically 9 provided for in section 1033.5, but given Plaintiff’s failure to object to those 10 expenses and Defendants’ submission, the Court finds those expenses were 11 “reasonably necessary to the conduct of the litigation,” Cal. Civ. P. Code § 12 1033.5(c)(2), and exercises its discretion to award those expenses, as well. See Cal. 13 Civ. P. Code § 1033.5(c)(4) (“Items not mentioned in this section and items assessed 14 upon application may be allowed or denied in the court's discretion.”) The Court 15 declines to allow Defendants to recover the other expenses in this category, however. 16 Those expenses include travel costs for matters other than depositions and court 17 hearings, (see, e.g., Decl. of Charanjit Brahma in Supp. of Mot. (“Brahma Decl.”), 18 Ex. B2 at 70) (travel to meet with Mr. de la Cerra), travel expenses for the client, 19 (see, e.g., id. at 228) (airfare for Mr. Yeh), and expenses that appear to be related to 20 another matter. (Id. at 97, 110) (listing allocation for Flowrider v. Pacific Surf). 21 With those exceptions, the Court awards expenses in this category in the amount of 22 $18,135.67. 23 The next category of expenses is for copy costs and trial technology and 24 support. Defendants request $36,848.13 for these expenses. Plaintiff does not 25 specifically object to this request. The Court has reviewed the evidence submitted, 26 27 1 and finds these expenses are recoverable under California Code of Civil Procedure 2 § 1033.5(a)(13). Accordingly, the Court awards these expenses. 3 Next, Defendants request expenses for eDiscovery in the amount of 4 $50,687.14. Plaintiff argues Defendants have not met their burden to show these 5 expenses are recoverable, and thus the Court should deny this request. 6 Defendants concede section 1033.5 does not specifically provide for the 7 recovery of expenses related to eDiscovery. Accordingly, Defendants bear the 8 burden to show these expenses “were reasonable and necessary.” Foothill-De Anza 9 Cmty. Coll. Dist. v. Emerich, 158 Cal. App. 4th 11, 29 (2007) (citing Nelson v. 10 Anderson, 72 Cal. App. 4th 111, 132 (1999)). To meet this burden, Defendants rely 11 on a handful of district court cases that allowed for recovery of eDiscovery expenses, 12 (see Mem. of P. & A. in Supp. of Mot. at 12) (citing cases), and a California case 13 that did the same. See Hooked Media Group Inc. v. Apple Inc., 55 Cal. App. 5th 14 323, 353-54 (2020). Plaintiff relies on a recent Supreme Court case that disallowed 15 recovery of eDiscovery expenses, see Rimini Street v. Oracle USA, Inc., ___ U.S. 16 ___, 139 S.Ct. 873, 878 (2019), and district court cases following that decision, and 17 argues the California case does not mandate recovery of these expenses in this case. 18 Clearly, there is case law to support either side’s position here. This Court 19 therefore relies on the burden of proof to resolve the dispute. As stated above, 20 because eDiscovery costs are not specifically allowed under section 1033.5, and 21 because Plaintiff objects to recovery of these expenses, Defendants bear the burden 22 to show these expenses were “reasonably necessary to the conduct of the litigation 23 rather than merely convenient or beneficial to its preparation[.]” Cal. Civ. P. Code 24 § 1033.5(c)(2). Here, the only evidence submitted in support of the reasonable 25 necessity of these expenses is Mr. Brahma’s Declaration, in which he offers a 26 conclusory assertion that these costs “were reasonably necessary to the conduct of 27 this litigation.” (Brahma Decl. ¶38.) That assertion does not satisfy Defendants’ 1 WL 12732457, at *10 (C.D. Cal. Dec. 10, 2015) (“Stating in a conclusory fashion 2 that electronic discovery services are necessary does not satisfy CBSI's burden of 3 proof and persuasion as to this cost.”). Thus, the Court denies Defendants’ request 4 to recover these expenses.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 WHITEWATER WEST INDUSTRIES, Case No. 17-cv-00501 DMS (NLS) LTD., a Canadian corporation, 11 ORDER GRANTING IN PART AND Plaintiff, DENYING IN PART DEFENDANTS’ 12 MOTION FOR FEES AND vs. RELATED NONTAXABLE 13 EXPENSES UNDER FRCP 54(D)(2) RICHARD ALLESHOUSE, an 14 individual, YONG YEH, an individual, and PACIFIC SURF DESIGNS, INC., a 15 Delaware corporation, 16 Defendants. 17 18 19 This case comes before the Court on Defendants Pacific Surf Designs, Inc., 20 Richard Alleshouse and Yong Yeh’s motion for fees and related nontaxable 21 expenses under Federal Rule of Civil Procedure 54(d)(2). Plaintiff Whitewater West 22 Industries, Ltd. filed an opposition to the motion, and Defendants filed a reply. 23 The substantive basis for Defendants’ motion for fees and expenses is the 24 Employment Agreement between Plaintiff and Defendant Alleshouse. That 25 Agreement states: 26 If any legal action or other proceeding, including any bankruptcy 27 proceeding, is brought for the enforcement of the Agreement, or because with any of the provisions of this Agreement, the successful or prevailing 1 party shall be entitled to recover reasonable attorneys’ fees and other 2 costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled. 3 4 (Decl. of Manuel de la Cerra in Supp. of Mot., Ex. A-1 ¶9.) Plaintiff does not dispute 5 that Defendants are the prevailing parties under the Agreement and therefore entitled 6 to fees. However, Plaintiff does dispute whether Defendants are entitled to all of the 7 fees and expenses requested. 8 The fees and expenses requested fall into the following categories: (1) 9 attorneys’ fees in the amount of $1,227,630.12, (2) travel expenses in the amount of 10 $21,840.26, (3) copy costs, trial technology and support in the amount of 11 $36,848.13, (4) eDiscovery expenses in the amount of $50,687.14, (5) court reporter 12 fees in the amount of $3,142.40, (6) fees paid to Plaintiff’s expert witnesses in the 13 amount of $5,725.00, (7) courier costs in the amount of $650.95, (8) video deposition 14 costs in the amount of $7,600.90, and (9) rebuttal expert witness fees in the amount 15 of $224,642.86. Plaintiff responds that Defendants’ fees should be limited to the 16 breach of contract and declaratory relief claims only, and that Defendants’ request 17 for expenses should be limited by California Civil Procedure Code § 1033.5. 18 The Court rejects Plaintiff’s first argument that Defendants’ fees should be 19 limited to the breach of contract and declaratory relief claims only. As Defendants 20 point out, Plaintiff took the contrary position in its motion for fees following the 21 bench trial in this case. (See ECF No. 168 at 4-5) (arguing the fee provision in the 22 Employment Agreement covered all of Plaintiff’s claims). Having staked that 23 position in support of its own motion for fees, Plaintiff cannot argue now that 24 Defendants’ fees should be so limited. Other than this argument, Plaintiff does not 25 object that the amount of fees requested is unreasonable. Accordingly, the Court 26 grants Defendants’ request for fees in the amount of $1,200,302.12.1 27 1 Turning to Defendants’ expenses, the parties appear to agree that California 2 Code of Civil Procedure § 1033.5 governs which expenses are recoverable. As set 3 out above, the first category of requested expenses here are travel expenses in the 4 amount of $21,840.26. Those expenses cover transportation to and from 5 depositions, court hearings and meetings, and food and lodging as necessary. 6 California Civil Procedure Code § 1033.5(a)(3)(C) allows for recovery of travel 7 expenses to attend depositions, therefore the Court grants Defendants’ request to 8 recover those expenses. Expenses to attend court hearings are not specifically 9 provided for in section 1033.5, but given Plaintiff’s failure to object to those 10 expenses and Defendants’ submission, the Court finds those expenses were 11 “reasonably necessary to the conduct of the litigation,” Cal. Civ. P. Code § 12 1033.5(c)(2), and exercises its discretion to award those expenses, as well. See Cal. 13 Civ. P. Code § 1033.5(c)(4) (“Items not mentioned in this section and items assessed 14 upon application may be allowed or denied in the court's discretion.”) The Court 15 declines to allow Defendants to recover the other expenses in this category, however. 16 Those expenses include travel costs for matters other than depositions and court 17 hearings, (see, e.g., Decl. of Charanjit Brahma in Supp. of Mot. (“Brahma Decl.”), 18 Ex. B2 at 70) (travel to meet with Mr. de la Cerra), travel expenses for the client, 19 (see, e.g., id. at 228) (airfare for Mr. Yeh), and expenses that appear to be related to 20 another matter. (Id. at 97, 110) (listing allocation for Flowrider v. Pacific Surf). 21 With those exceptions, the Court awards expenses in this category in the amount of 22 $18,135.67. 23 The next category of expenses is for copy costs and trial technology and 24 support. Defendants request $36,848.13 for these expenses. Plaintiff does not 25 specifically object to this request. The Court has reviewed the evidence submitted, 26 27 1 and finds these expenses are recoverable under California Code of Civil Procedure 2 § 1033.5(a)(13). Accordingly, the Court awards these expenses. 3 Next, Defendants request expenses for eDiscovery in the amount of 4 $50,687.14. Plaintiff argues Defendants have not met their burden to show these 5 expenses are recoverable, and thus the Court should deny this request. 6 Defendants concede section 1033.5 does not specifically provide for the 7 recovery of expenses related to eDiscovery. Accordingly, Defendants bear the 8 burden to show these expenses “were reasonable and necessary.” Foothill-De Anza 9 Cmty. Coll. Dist. v. Emerich, 158 Cal. App. 4th 11, 29 (2007) (citing Nelson v. 10 Anderson, 72 Cal. App. 4th 111, 132 (1999)). To meet this burden, Defendants rely 11 on a handful of district court cases that allowed for recovery of eDiscovery expenses, 12 (see Mem. of P. & A. in Supp. of Mot. at 12) (citing cases), and a California case 13 that did the same. See Hooked Media Group Inc. v. Apple Inc., 55 Cal. App. 5th 14 323, 353-54 (2020). Plaintiff relies on a recent Supreme Court case that disallowed 15 recovery of eDiscovery expenses, see Rimini Street v. Oracle USA, Inc., ___ U.S. 16 ___, 139 S.Ct. 873, 878 (2019), and district court cases following that decision, and 17 argues the California case does not mandate recovery of these expenses in this case. 18 Clearly, there is case law to support either side’s position here. This Court 19 therefore relies on the burden of proof to resolve the dispute. As stated above, 20 because eDiscovery costs are not specifically allowed under section 1033.5, and 21 because Plaintiff objects to recovery of these expenses, Defendants bear the burden 22 to show these expenses were “reasonably necessary to the conduct of the litigation 23 rather than merely convenient or beneficial to its preparation[.]” Cal. Civ. P. Code 24 § 1033.5(c)(2). Here, the only evidence submitted in support of the reasonable 25 necessity of these expenses is Mr. Brahma’s Declaration, in which he offers a 26 conclusory assertion that these costs “were reasonably necessary to the conduct of 27 this litigation.” (Brahma Decl. ¶38.) That assertion does not satisfy Defendants’ 1 WL 12732457, at *10 (C.D. Cal. Dec. 10, 2015) (“Stating in a conclusory fashion 2 that electronic discovery services are necessary does not satisfy CBSI's burden of 3 proof and persuasion as to this cost.”). Thus, the Court denies Defendants’ request 4 to recover these expenses. 5 The next category of expenses are court reporter fees in the amount of 6 $3,142.40. Plaintiff does not object to these expenses, and they are recoverable 7 under section 1033.5(a)(11). Accordingly, the Court grants Defendants’ request to 8 recover these expenses. 9 The next item of expense is $5,725.00, which is the amount Defendants paid 10 to depose Plaintiff’s expert witnesses. Defendants fail to cite any provision of 11 section 1033.5 that allows for the recovery of expert witness fees. Instead, they 12 appear to be relying on the Court’s discretion to award expenses under section 13 1033.5(c)(4). Defendants ignore, however, section 1033.5(b)(1), which specifically 14 states expert fees are not recoverable as costs “except when expressly authorized by 15 law[.]” Cal. Civ. P. Code § 1033.5(b)(1). Here, Defendants have not shown these 16 fees are otherwise allowable by law, and thus, the Court denies Defendants’ request 17 to recover these fees. 18 Next, Defendants request $650.95 in courier fees, again subject to the Court’s 19 discretion. Plaintiff does not object to these fees, but Defendants have not shown 20 they were reasonably necessary to the conduct of the litigation. Accordingly, the 21 Court declines to award these fees. 22 The next item of expense is $7,600.90 in video-related deposition costs. 23 Plaintiff does not object to these fees, and they are recoverable under section 24 1033.5(a)(3)(A). Accordingly, the Court awards Defendants’ these expenses. 25 The final item of expense is $224,641.86 in fees Defendants paid to their 26 experts. Defendants request that the Court exercise its inherent power to award these 27 fees because Plaintiff’s claims against Defendants were baseless. Obviously, 1 Plaintiff disagrees with that assertion, and objects to Defendants’ request for 2 recovery of these fees. 3 The parties spend a considerable portion of their briefs arguing about the 4 merits of Plaintiff’s claims, but the Court declines to wade into the deep end of that 5 discussion. Suffice it to say that although Defendants prevailed on appeal in this 6 case, this Court does not believe Plaintiff’s claims were baseless. The broader 7 litigation between the parties also does not support a finding that Plaintiff’s claims 8 in this case were baseless. Although Judge Benitez awarded Defendants fees under 9 35 U.S.C. § 285 in Flowrider Surf Ltd. v. Pacific Surf Designs, Inc., Case No. 10 15cv1879 BEN(BLM), (see Case No. 15cv1879, ECF No. 308), he also declined to 11 find that Plaintiff or its counsel acted in bad faith in that case. Judge Benitez also 12 recently denied Defendants’ motion for an exceptional case finding in Whitewater 13 West Industries, Ltd. v. Pacific Surf Designs, Inc., Case No. 17cv1118 BEN(BLM). 14 (See Case No. 17cv1118, ECF No. 383.) Given this Court’s familiarity with the 15 facts and parties in this case, and Judge Benitez’s rulings in the other cases, this 16 Court declines to find that Plaintiff’s claims in this case were baseless such that 17 Defendants are entitled to recover their expert witness fees. Accordingly, that 18 request is denied. 19 In light of the above, the Court grants in part and denies in part Defendants’ 20 motion for fees and related nontaxable expenses. Specifically, the Court grants 21 Defendants’ request for attorneys fees in the amount of $1,200,302.12, for travel 22 expenses in the amount of $18,135.67, for copy costs and trial technology and 23 support in the amount of $36,848.13, for court reporter fees in the amount of 24 $3,142.40, and for video-related deposition costs in the amount of $7,600.90, for a 25 / / / 26 / / / 27 / / / 1 total recovery in the amount of $1,266,029.22. Defendants’ request for eDiscovery 2 ||expenses, courier costs and expert fees is denied. 3 IT IS SO ORDERED. 4 ||Dated: May 27, 2021 \ g f a Yn. S Hon. Dana M. Sabraw, Chief Judge 6 United States District Court 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28