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Pipeline Productions, Inc. v. The Madison Companies, LLC

United States District Court, D. Kansas

July 19, 2019

PIPELINE PRODUCTIONS, INC., et al., Plaintiffs and Counterclaim Defendants,
v.
THE MADISON COMPANIES, LLC, et al., Defendants and Counterclaimants.

          MEMORANDUM AND ORDER

          ANGEL D. MITCHELL, U.S. MAGISTRATE JUDGE

         This matter comes before the court on Plaintiffs' Application for Attorneys' Fees in Connection with Their Motion for Sanctions (ECF No. 489). Plaintiffs Pipeline Productions, Inc., Backwood Enterprises, LLC, OK Productions, Inc., and Brett Mosiman (collectively “Pipeline”) seek $14, 595 in attorneys' fees resulting from the briefing on their motion for sanctions (ECF No. 462). Defendants The Madison Companies, LLC and Horsepower Entertainment, LLC (collectively “Madison”) argue that counsel's proposed hourly rates are excessive and that the time spent briefing the motion for sanctions is excessive. Madison proposes an award of $2, 420 to $2, 640. For the reasons stated below, Pipeline's motion is granted. The court orders Madison to pay Pipeline $14, 595 within ten business days.

         I. RELEVANT BACKGROUND

         The case arises out of the parties' business dealings relating to the Thunder on the Mountain country music festival (“Thunder”) in 2015. According to the Complaint, Pipeline is a well-known producer of live music festivals, including Thunder. Madison is a venture capital firm that was looking to invest in Pipeline's music festival business. The parties engaged in business dealings leading up to the then-planned Thunder festival in 2015. Shortly before the festival was scheduled to occur, those business dealings fell through. This lawsuit centers around whether, when, and the extent to which the parties incurred legally binding obligations to one another before the deal fell through. Pipeline asserts claims for breach of contract, breach of fiduciary duty, fraud, and tortious interference. As relevant to Pipeline's motion for sanctions, Pipeline alleges that, after the Thunder deal fell apart, Madison hired away key Pipeline partners, employees, and agents to drive Pipeline out of business. One of these key individuals was Nathan Prenger.

         On May 7, 2019, the court granted in part and denied in part Pipeline's motion for sanctions. See Pipeline Prods. v. Madison Cos., No. 15-4890-KHV, 2019 WL 2011377, at *1 (D. Kan. May 7, 2019). Madison failed to timely produce a draft consulting agreement between Mr. Prenger and Horsepower for work on the Kaaboo Del Mar music festival (“the draft agreement”). The draft agreement was responsive to Pipeline's Requests for Production (“RFP”) Nos. 9 and 24. The court found that Madison failed to comply with a court order compelling it to respond in full to RFP No. 9, thus triggering sanctions under Fed.R.Civ.P. 37(b)(2). The court also found that Madison's response to RFP No. 24 incorrectly stated that no responsive documents existed and/or that Madison failed to timely supplement this response once it learned this response was incorrect, thus triggering sanctions under Fed.R.Civ.P. 26(g)(3), Fed.R.Civ.P. 37(c)(1), or both. The court declined to adopt the most severe sanctions Pipeline proposed. However, the court stated that it would allow Pipeline the opportunity to conduct additional limited discovery to put Pipeline in the same position it would have been in if Madison had complied with its discovery obligations. Id. at *5. In addition, the court stated that it would award Pipeline its reasonable attorneys' fees and costs incurred in filing the motion. Id.

         The motion now before the court is Pipeline's request for attorneys' fees. Pipeline asks the court to award attorneys' fees in the amount of $14, 595 for the time three attorneys spent briefing the motion for sanctions. The proposed fees and time expended are as follows: 14 hours of time for attorney Jack McInnes at $550 per hour, 17.5 hours of time for attorney Anthony Bonuchi at $500 per hour, and 3.7 hours of time for attorney Jennie Carter at $450 per hour.

         In response, Madison argues Pipeline's requested hourly rates and hours spent are excessive. Madison urges the court to compute the number of hours reasonably expended by multiplying 1.1 hours per page times the number of pages of Pipeline's briefs on the motion for sanctions. Pipeline's opening brief was five pages (ECF No. 462) and its reply brief was three pages (ECF No. 474), for a total of eight pages. Madison argues a reasonable rate is $275 to $300 per hour. Madison therefore proposes an award of $2, 420 ($275 x 8 hours x 1.1 hours per page) to $2, 640 ($300 x 8 hours x 1.1 hours per page).

         II. LEGAL STANDARD

         When imposing attorneys' fees as a sanction under Rule 11, the court considers four factors: “(1) the reasonableness of the proposed fees, (2) the minimum amount required to deter misconduct, (3) the offender's ability to pay, and (4) ‘other factors' as the court sees fit, such as the offending party's history, experience, and ability; the severity of the violation; and the risk of chilling zealous advocacy.” King v. Fleming, 899 F.3d 1140, 1155 (10th Cir. 2018) (citing White v. Gen. Motors Corp., 908 F.2d 675, 684-85 (10th Cir. 1990)). Discovery sanctions under Rules 26(g), 37(b)(2), and 37(c)(1) are all analogous to Rule 11 sanctions insofar as these rules all use the term “sanctions” and serve predominantly punitive purposes. Ocelott v. Del. Flood Co., 76 F.3d 1538, 1554 (10th Cir. 1996) (noting similarities in sanctions under Rule 11 and Rule 37(b) and concluding both are punitive in nature); see also Farmer v. Banco Popular of N. Am., 791 F.3d 1246, 1259 (10th Cir. 2015) (applying the White factors when evaluating an award of attorneys' fees as a punitive sanction pursuant to the court's inherent authority). This court is therefore guided by the factors set forth above and other case law involving Rule 11 sanctions in deciding what sanctions are appropriate. In re Byrd, Inc., 927 F.2d 1135, 1137 (10th Cir. 1991) (noting that courts often consider case law interpreting Rule 11 sanctions when considering Rule 26(g) sanctions); United States v. Perea, No. 08-20160-08-KHV, 2010 WL 11583172, at *5 n.13 (D. Kan. Jan. 7, 2010) (“While White involved sanctions under Rule 11, its principles apply equally to sanctions under other rules . . . .”).

         In determining what sanctions to impose, the court must consider the purposes to be served by sanctions. White, 908 F.2d at 683. Rule 37 sanctions are imposed not merely to reimburse the wronged party or to penalize the offending party, but to deter others from engaging in similar conduct. Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643 (1976). In this case, the sanctions were expressly meant to deter abusive conduct. Pipeline, 2019 WL 2011377 at *3. “The appropriate sanction should be the least severe sanction adequate to deter and punish the [wrongdoer].” White, 908 F.2d at 685.[1]

         The court therefore analyzes the four factors set forth above, mindful of the purposes for imposing the sanctions at issue.

         III. THE APPROPRIATE AMOUNT OF SANCTIONS

         A. Reasonableness of the Proposed Award

         The court must independently analyze the reasonableness of the requested attorneys' fees. King, 899 F.3d at 1155. “The proper procedure for determining a reasonable attorneys' fee is to arrive at a lodestar figure by multiplying the hours [] counsel reasonably spent . . . by a reasonable hourly rate.” Praseuth v. Rubbermaid, Inc., 406 F.3d 1245, 1257 (10th Cir. 2005); see, e.g., King, 899 F.3d at 1155; accord Case v. Unified Sch. Dist. No. 233, 157 F.3d 1243, 1249 (10th Cir. 1998); see also, e.g., Kayhill v. Unified Gov't of Wyandotte Cty., 197 F.R.D. 454, 459 (D. Kan. 2000) (using the lodestar method to calculate an award of attorneys' fees as a Rule 37 sanction).

         1. Hours Counsel Reasonably Expended

         To demonstrate reasonable time expended, the party seeking fees must submit “meticulous, contemporaneous time records that reveal all hours for which compensation is requested and how those hours were allotted to specific tasks.” Cadena v. Pacesetter Corp., 224 F.3d 1203, 1215 (10th Cir. 2000). The fee applicant should exercise billing judgment with respect to the number of hours worked and billed. Hensley v. Eckerhart, 461 U.S. 424, 437 (1983). Billing judgment consists of winnowing hours actually expended down to hours reasonably expended. Praseuth, 406 F.3d at 1257.

         Pipeline states that three attorneys spent more than 30 hours on the underlying motion for sanctions. Pipeline's counsel exercised billing judgment to reduce and exclude certain time, and Pipeline now seeks fees for 28.8 hours of work. The court has reviewed the time records submitted and finds ...


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