Export Development Canada v. East Coast Power & Gas, LLC

Background

This action seeks to enforce a consent judgment. In an earlier order, the court found that East Coast had mischaracterized the Kowal Report on its privilege log and withheld it as protected by attorney-client privilege or the work-product doctrine. The court ordered production of the report and awarded Export Development Canada (EDC) attorney’s fees under Rule 37 of the Federal Rules of Civil Procedure for successfully compelling production.

The earlier order directed EDC to seek only fees and expenses specifically connected to obtaining the Kowal Report, rather than fees related to every alleged problem with East Coast’s privilege log. EDC submitted a fee application, and East Coast opposed it. The corrected order resolved which work qualified, the reasonable amount of fees, and who would be required to pay.

Qualifying Work

The court found that all eight categories of work listed in EDC’s application were specifically connected to compelling production of the Kowal Report. They included EDC’s letter motions, briefing concerning the Kowal Declaration submitted by East Coast, responses to East Coast’s requests to change factual findings, filings seeking fee-shifting, and the fee application itself.

Fee Calculation

The court used the lodestar method, which generally calculates fees by multiplying reasonable hours by a reasonable hourly rate. EDC sought compensation for work by David Mannion of Blakely LC. The court found Mannion’s hourly rate of $465 reasonable. EDC’s records showed 129.4 hours and $59,802.50 in fees before reductions. EDC had already applied discounts and waived certain amounts, including all paralegal time.

The court agreed that the two briefs concerning the Kowal Declaration should receive an additional 20 percent reduction because some of the work involved tasks that could have been performed at a lower rate. The resulting award was $37,979.95, representing approximately 82 hours of work. The court found that amount reasonable because East Coast’s privilege claim led to several rounds of letters and briefing over many months.

Who Must Pay

Rule 37 permits a court to impose discovery-related fees on the disobedient party, the attorney advising that party, or both. The court found that East Coast was initially and directly responsible for labeling the report as privileged and work product, and for supporting that position through the Kowal Declaration. The court also found that East Coast’s attorneys were responsible because reasonable review of the report should have shown that it was a financial analysis about winding down the business, not a document containing legal analysis, legal advice, or material prepared for anticipated litigation. The attorneys also continued to resist production through multiple rounds of briefing.

The court rejected East Coast’s arguments that the lawyers should not be sanctioned because EDC had initially focused its request on East Coast and because one attorney handling the matter had become seriously ill. The court noted that East Coast was represented by a firm with multiple attorneys and that the illness argument did not explain the conduct at issue.

Disposition

The court awarded EDC $37,979.95 under Rule 37. East Coast Power & Gas, LLC is solely responsible for paying $18,990.00. East Coast and its counsel of record, Levitt LLP, are jointly and severally liable for the remaining $18,989.95, meaning each is responsible for that entire portion as against EDC, subject to the allocation stated in the order. The court stated that East Coast’s other arguments were either moot or without merit.

Correction

The footnote states that the only change from the order issued on October 9, 2024, was changing the first sentence to refer to a consent judgment.