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The Eclipse Group LLP v. Target Corporation

United States District Court, S.D. California

May 12, 2017

THE ECLIPSE GROUP LLP, Plaintiff,
v.
TARGET CORPORATION, et al, Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO COMPEL DEPOSITIONS AND FOR SANCTIONS [ECF Nos. 97, 98, 100]

          Hon. Barbara L. Major United States Magistrate Judge

         Currently before the Court is Defendants' April 7, 2017 motion to compel deposition of Intervenor Stephen M. Lobbin [ECF No. 97-1 (“Lobbin MTC”)], motion to compel deposition of Plaintiff's Federal Rule of Civil Procedure (“Fed. R. Civ. P.”) 30(b)(6) witness [ECF No. 98-1 (“30(b)(6) MTC”)], motion to compel deposition of Mr. Edward O'Connor [ECF No. 100-1 (“O'Connor MTC”)], Plaintiff's opposition to the motion to compel the deposition of Edward O' Connor [ECF No. 113 (“O'Connor Oppo.”)], Plaintiff's opposition to the motion to compel 30(b)(6) witness deposition [ECF No. 114 (“30(b)(6) Oppo.”)], and Intervenor's opposition to the motion to compel deposition of Intervenor [ECF No. 115 (“Lobbin Oppo.”)]. For the reasons set forth below, Defendants' motions to compel are GRANTED IN PART AND DENIED IN PART.

         BACKGROUND

         The instant matter was initiated on June 26, 2015, when Plaintiff, who is represented by Mr. Edward O'Connor, filed a complaint for breach of quasi-contract, quantum meruit, and unjust enrichment. ECF No. 1. Plaintiff filed an amended complaint for the same claims on June 2, 2016. ECF No. 50 (“FAC”). Plaintiff alleges that in early 2012, it was retained to represent a group of aligned parties[1] in various patent matters referred to as Worldslide litigation.[2] Id. at 2. Plaintiff represented the parties for almost three years and successfully defended them in patent litigation involving three patents. Id. at 3. Plaintiff also alleges that Manley, Aquawood LLC has not paid Plaintiff on any of its invoices since 2013 and now has a past due balance of $91, 418.71, plus interest as explained in the engagement letter between Manley, Aquawood LLC and Plaintiff. Id. Plaintiff states that the amount due is based on hourly rates that were well below market value due to the relationship between Manley and Plaintiff and that the actual value of the services is about twice the invoice amounts. Id. Plaintiff further alleges that it was retained in early 2012 to represent aligned parties[3] in a patent case called Aviva Sports, Inc. v. Menard, Inc. et al., Case No. 09-cv-1091-JNE (D. Minn.). Id. at 4. Plaintiff represented the parties in the Aviva litigation for almost three years and again successfully defended the parties against claims of false advertising and patent infringement. Id. Manley, Aquawood LLC has failed to pay any invoices for the Aviva litigation since 2013 and owes $145, 629.41. Id. As with the Worldslide litigation, Plaintiff alleges that the amount due is below market value. Id. Finally, Plaintiff alleges that it was retained to represent Target in a putative class action called Adams v. Target Corporation, Case No. 13-cv-5944-GHK-PJWx (C.D. Cal.). Id. at 5. The successful representation lasted for almost two years and Manley, Aquawood now has a past due balance of $250, 589.66 that represents hourly rates well below market value. Id.

         On June 1, 2016, Stephen M. Lobbin filed a motion for permission to intervene that was granted on September 15, 2016. ECF Nos. 49 and 57. In his motion, Intervenor stated that he is asserting a claim against Target and Kmart for breach of quasi-contract for quantum meruit. ECF No. 49 at 4. Intervenor filed his complaint on September 19, 2016.[4] ECF No. 58. Intervenor alleges that he worked as an attorney pursuant to a contractual relationship with Plaintiff which entitled Intervenor to 60% of attorney fee revenues collected from Intervenor's clients payable the month after the revenues were collected by Plaintiff. Id. at 3. In early 2012, Intervenor was retained to work on the Worldslide, Aviva, and Adams litigation and at no time did Defendants “request or propose that Intervenor or Plaintiff waive or relinquish their right to recover attorney fees directly from the represented parties under the time-honored requirements of quasi-contract, quantum meruit and/or unjust enrichment” nor did Plaintiff or Intervenor do so. Id. at 3-4. Intervenor alleges that Defendant Target “assented explicitly to the representation and advocacy of Intervenor and Plaintiff, which lasted for almost two years.” Id. at 6. Intervenor further alleges that he is entitled to $50, 000 of the $91, 418.71 past due balance of Manley, Aquawood LLC for the Worldslide litigation, $90, 000 of the $153, 458.95 past due balance for the Aviva litigation, and $100, 000 of the past due balance for the Adams litigation. Id. at 4-7. Finally, Intervenor alleges that “Plaintiff and its counsel in this action are one-in-the- same; that is, both are very small entities managed by the same individual.” Id. at 7.

         I. MOTION TO COMPEL DEPOSITION OF INTERVENOR, STEPHEN LOBBIN

         Defendants seek an order from the Court compelling Intervenor to appear for his deposition and to pay $2, 992.50 in sanctions to Defendants. Lobbin MTC at 17.

         A. Relevant Background

         On March 2, 2017, Defendants served notice for the deposition of Intervenor for April 3, 2017. Lobbin MTC at 5; see also ECF No. 97-2, Declaration of Jason Cirlin In Support of Defendants' Motion to Compel the Attendance of Stephen M. Lobbin at Deposition (“Cirlin Decl.”) at 2, Exh. A. Almost three weeks later, on March 21, 2017, Intervenor responded to the notice telling Defendants that he was unavailable for a deposition on April 3, 2017 due to his children's spring break. Lobbin MTC at 5; see also Cirlin Decl. at 2, Exh. B. On March 23, 2017, defense counsel attempted to meet and confer with Intervenor via email to reschedule the deposition and stated that unless Intervenor was “agreeable to re-schedule [his] deposition, we intend to ask the court to compel your attendance at deposition.” Cirlin Decl. at 2, Exh. C. On March 24, 2017, Intervenor provided his formal objections to the deposition to defense counsel and stated that his response to the initial notice was delayed because defense counsel failed to contact him prior to serving the notice and, therefore, it was unexpected and he did not notice it. Id. at 2, Exh. D. Intervenor objected to the deposition on the grounds that the notice was untimely because he was entitled to thirty days to respond in writing to the request for production of documents contained in the notice, Defendants did not meet and confer regarding his availability prior to serving the notice, and Defendants were not diligent in conducting discovery. Id. at Exh. D.

         On March 28, 2017, District Judge Janis L. Sammartino issued an order granting Defendants' ex parte motion to continue the hearing date and briefing schedule for Intervenor's motion for summary adjudication in part so that Defendants could complete the discovery necessary to respond to the motion. Cirlin Decl. at 2, Exh. E; see also ECF No. 87. That same day, defense counsel emailed Intervenor asking him to provide alternate dates and times for his deposition. Cirlin Decl. at 3, Exh. F. Intervenor responded the next day that he was unavailable that week and the following week due to his vacation with his children and that he could not agree to schedule a deposition beyond the Court's discovery deadline, “but if the Court decides to extend discovery generally, we could then discuss availability in late April or May.” Cirlin Decl. at 3, Exh. G. Defense counsel followed-up via email on March 29, 2017 stating that he left a voicemail for Intervenor and wanted to meet and confer about his deposition. Id. at 3, Exh. H. Intervenor responded on March 30, 2017 that, as previously mentioned, he was on vacation and unable to work or take phone calls. Id. at 3, Exh. I.

         On March 30, 2017, counsel for Plaintiff, Mr. Edward F. O'Connor, and counsel for Defendants, Mr. Jason N. Cirlin, jointly contacted the court regarding the instant discovery dispute.[5] ECF No. 89. In accordance with the Court's briefing schedule, the parties timely filed their motions, oppositions, and reply. See Lobbin MTC, and Lobbin Oppo. Fact discovery closed on April 3, 2017. ECF No. 68 at 1.

         B. Legal Standard

The scope of discovery under the Federal Rules of Civil Procedure is defined as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.

Fed. R. Civ. P. 26(b)(1).

         District courts have broad discretion to determine relevancy for discovery purposes. See Hallett v. Morgan, 296 F.3d 732, 751 (9th Cir. 2002). District courts also have broad discretion to limit discovery to prevent its abuse. See Fed.R.Civ.P. 26(b)(2)(c)(i-iii)(instructing that courts must limit discovery where the party seeking the discovery “has had ample opportunity to obtain the information by discovery in the action” or where the proposed discovery is “unreasonably cumulative or duplicative, ” “obtain[able] from some other source that is more convenient, less burdensome, or less expensive, ” or where it “is outside the scope permitted by Rule 26(b)(1)”).

         Fed. R. Civ. P. 30(a)(1) provides that “[a] party may, by oral questions, depose any person, including a party, without leave of court except as provided in Rule 30(a)(2).[6]” Civil Local Rule (“CivLR”) 83.4(a)(1)(g) states that “[a]n attorney in practice before this court will: [w]hen possible, confer with opposing counsel before scheduling or rescheduling hearings, depositions, and meetings and notify all parties and the court, as early as possible, when hearings or depositions must be cancelled.”

         C. Parties' Positions

         Defendants argue that Intervenor should be compelled to appear for his deposition because he is a party to the litigation, a central figure in the dispute between the parties, and has information directly at issue in the matter that is necessary for Defendants' defense and opposition to Intervenor's motion for summary judgment. Lobbin MTC at 12. Defendants also argue that CivLR 83.4 does not provide grounds for Intervenor to refuse to appear for his deposition and that Intervenor himself violated the local rule when he failed to “notify all parties and the court, as early as possible, when hearings or depositions must be cancelled.” Id. at 13 (quoting CivLR 83.4(a)(1)(g)). Defendants note that Intervenor's behavior is what made rescheduling the deposition before the close of discovery impossible. Id. Defendants further argue that Intervenor is not excused from complying with the deposition because he served objections to the deposition. Id. at 15. Defendants assert that the burden was on Intervenor to seek relief from attending the deposition if he could not come to an agreement with Defendants, but that Intervenor “neither offered alternative dates for his deposition or obtained relief from the court.” Id.

         Intervenor objects to Defendants' motion and argues that an order requiring his deposition is unwarranted and undeserved. Lobbin Oppo. at 3-4. Intervenor explains that he did not immediately respond to the deposition notice because he was preoccupied with work in another matter and did not read the notice until March 21, 2017. Id. at 2. Intervenor contends that this would not have occurred if defense counsel, in accordance with CivLR 83.4(a)(1)(g), had met and conferred with Intervenor regarding his availability prior to sending the notice. Id. Intervenor also contends that this failure and the failure of defense counsel to meet and confer with him prior to filing the instant motion, should result in the denial of Defendants' motion. Id. at 3-4. Intervenor next asserts that Defendants' own lack of diligence lead to scheduling problems as Defendants chose to notice Intervenor's deposition for the last day of the discovery period without knowing if he was available. Id. Intervenor contends that Defendants waived their right to argue that Intervenor failed to seek a protective order. Id. at 5. Intervenor states that he did not offer alternative dates for the deposition because he could not agree to violate the Court's scheduling order which set an April 3, 2017 discovery cut-off. Id. Finally, Intervenor contends that since he has already filed several declarations in this matter there is no reason to have a deposition which “would be a waste of time, and not proportional to the needs of the case.” Id. at 6. Intervenor states that there is no basis for sanctions. Id.

         D. Discussion

         Defendants' motion to compel the deposition of Intervenor is GRANTED. Contrary to Intervenor's arguments, the deposition of Intervenor seeks relevant information and is proportional to the needs of this case. Further, the fact that Intervenor has signed and filed declarations does not negate Defendants' right to depose Intervenor. Accordingly, the parties are ORDERED to meet and confer regarding a deposition date for Intervenor. The deposition must occur by May 26, 2017. If the parties are unable to agree on a date for the deposition, the deposition must take place on May 24, 2017 at 9:30 a.m.

         Defendants properly and timely served the notice for Intervenor's deposition. While Defendants should have contacted Intervenor to coordinate the scheduling of Intervenor's deposition, Defendants repeatedly advised Intervenor that they were willing to reschedule his deposition to a convenient date. Intervenor, on the other hand, refused to work with Defendants to find a new date. This behavior is unacceptable. It only would have taken Intervenor a few minutes to look at his calendar and send defense counsel a list of dates he was available to be deposed, on the condition that defense counsel obtain court approval for the deposition to occur after the close of discovery. Intervenor's refusal to coordinate with defense counsel and his insistence that Defendants file the instant motion to compel warrants the imposition of sanctions.[7] See Fed.R.Civ.P. 30(d)(2) (providing that a court “may impose an appropriate sanction - including the reasonable expenses and attorney's fees incurred by any party - on a person who impedes, delays, or frustrates the fair examination of the deponent.”); see also Fed.R.Civ.P. 37(a)(5) (requiring a court to order “the party or deponent whose conduct necessitated the motion, the party or attorney advising that conduct, or both to pay the movant's reasonable expenses incurred in making the motion, including attorney's fees” unless the movant failed to meet and confer, the objection was substantially justified, or other circumstances militate against awarding expenses.).

         E. Sanctions

         If a motion to compel discovery is granted, Rule 37(a)(5) requires a court to order the “party or deponent whose conduct necessitated the motion, the party or attorney advising that conduct, or both to pay the movant's reasonable expenses incurred in making the motion, including attorney's fees” unless the movant failed to meet and confer, the objection was substantially justified, or other circumstances militate against awarding expenses. See Brown v. Hain Celestial Group, Inc., 2013 WL 5800566, *5 (N.D. Cal. Oct. 28, 2013) (“[t]he party that loses the motion to compel bears the affirmative burden of demonstrating that its position was substantially justified”) (internal citations omitted). Rule 30(d)(2) provides that a court “may impose an appropriate sanction - including the reasonable expenses and attorney's fees incurred by any party - on a person who impedes, delays, or frustrates the fair examination of the deponent.” Bicek v. C & S Wholesale Grocers, Inc., 2013 WL 5673418, *6-8 (E.D. Cal. Oct. 17, 2013) (finding sanctions appropriate under both Rules 30 and 37 as a result of counsel's delaying, impeding and frustrating depositions, and for causing opposing counsel to seek the court's intervention to resolve the dispute).

         “To determine if sanctions are warranted under Rule 30, the court's inquiry is twofold. First, the court must determine whether a person's behavior has impeded, delayed, or frustrated the fair examination of the deponent.” Lucas v. Breg, Inc., 2016 WL 2996843, at *2 (S.D. Cal. May 13, 2016) (quoting Dunn v. Wal-Mart Stores, Inc., 2013 WL 5940099 (D. Nev. Nov. 1, 2013), citing Fed.R.Civ.P. 30(d)(2)). Second, the Court must determine an appropriate sanction. Id. “The Ninth Circuit provides District Courts with wide discretion to fashion appropriate sanctions for discovery violations under the Federal Rules.” Brady v. Grendene USA, Inc., 2015 WL 5177760, at *2 (S.D. Cal. Sept. 4, 2015) (citing Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001)).

         For the reasons set forth above, the Court finds that Intervenor's actions “impeded, delayed, or frustrated the fair examination of the deponent.” The Court further finds that paying defense counsel its reasonable fees for drafting the motion to compel Intervenor to attend deposition and supporting papers constitutes an appropriate sanction. Defense counsel Mr. Cirlin declares that “[a]ttorneys working under my supervision have spent 13.3 hours drafting the motion to compel Lobbin to attend deposition and supporting papers. My firm's hourly rate for this case is $225 per hour.” Cirlin Decl. at 3. Intervenor does not object to the hourly rate Mr. Cirlin's firm is charging for this case or to the number of hours spent drafting the motion and related papers. See Lobbin Oppo. In addition, this Court and other courts in this district have found comparable and even higher rates to be reasonable and the Court finds that in light of the nature of the discovery dispute and the pleadings filed, the 13.3 hours worked by defense counsel was reasonable. Accordingly, the Court finds it appropriate to award the full amount of costs and attorney's fees requested. Intervenor is hereby ordered to reimburse defense counsel in the amount of $2, 992.50 on or before June 2, 2017. Intervenor is ordered to file a declaration verifying said payment no later than June 9, 2017. Failure to comply with this order may result in the imposition of additional sanctions.

         II. MOTION TO COMPEL DEPOSITION OF MR. EDWARD O' CONNOR

         Defendants seek an order from the Court compelling Mr. Edward O'Connor to appear for his deposition and to pay $2, 092.50 in sanctions to Defendants. O'Connor MTC at 15-16.

         A. Relevant Background

         On March 2, 2017, Defendant served a deposition notice on Plaintiff for the deposition of Mr. O'Connor on March 30, 2017. O'Connor MTC at 5; see also ECF No. 100-2, Declaration of Jason Cirlin In Support of Defendants' Motion to Compel Deposition of Edward O'Connor at Deposition (“Cirlin O'Connor Decl.”) at 2, Exh. A. Mr. O'Connor is counsel for Plaintiff and was formerly a partial owner of Plaintiff.[8] O'Connor Oppo. at 3. On March 13, 2017, defense counsel emailed Mr. O'Connor to determine if he would be attending the Fed.R.Civ.P. 30(b)(6) deposition as Plaintiff's designated witness. Cirlin O'Connor Decl. at 2. Mr. O'Connor clarified that he would be attending the deposition by phone as counsel for Plaintiff and that Ms. Jennifer Hamilton would be the 30(b)(6) witness. Id. at 2-3, Exh. B. On March 23, 2017, defense counsel emailed Mr. O'Connor stating that Defendants wanted to depose Mr. O'Connor because he has personal knowledge of the matters at issue and seeking to meet and confer about the deposition. Id. at 3, Exh. B. Mr. O'Connor responded that he only had information from privileged communications and no personal knowledge. Id. Defense counsel responded that Mr. O'Connor's deposition was “reasonable and appropriate” and Mr. O'Connor did not respond. Id. On March 29, 2017, the day before the noticed date of the deposition, Mr. O'Connor's paralegal emailed defense counsel stating that Mr. O'Connor would not be attending the deposition since he was not subpoenaed and lives in Florida and that Mr. O'Connor wished to meet and confer prior to defense counsel filing any motions. Id. at 4, Exh. C. In light of the email, defense ...


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