Advanced Analytics, Inc. v. Citigroup Global Markets, Inc.

Background

Advanced Analytics, Inc. alleged that Citigroup Global Markets, Inc., Yield Book, Inc., and other defendants misappropriated sequences of numbers used to help price mortgage-backed securities and incorporated them into the Yield Book software or used them to create new sequences. This opinion addressed only defendants’ application for litigation expenses after an earlier ruling concerning AAI’s Fourth Declaration of Jianqing Fan.

In 2012, the court had set deadlines for AAI’s expert disclosures and completion of discovery and instructed the parties to raise discovery disputes promptly. AAI later attempted to submit a reply expert report after the deadline. The court struck that report, and the district judge overruled AAI’s objection. AAI then included the previously stricken material in the Fourth Fan Declaration submitted in opposition to defendants’ summary-judgment and expert-evidence motions.

In a March 26, 2014 order, Magistrate Judge Henry B. Pitman ruled that AAI could not use the Fourth Fan Declaration for the merits of the claims and defenses because it was untimely and violated the expert-disclosure requirements. He allowed AAI to use one specified section to respond to defendants’ expert-evidence motion, but not to support AAI’s planned sanctions motion. He concluded that defendants were entitled to recover half of certain fees and costs caused by AAI’s failure to comply with the scheduling order and disclosure rule.

The application and parties’ positions

Defendants requested $91,246.55, described as one-half of an aggregate $182,493.09 in fees and expenses. Their categories included work on the motion to strike and reply, communications and briefing related to that motion, review and redaction of the Fourth Fan Declaration, and preparation of the fee application.

AAI asked the court to deduct $12,663.59 for reviewing and redacting the declaration and argued that the 241.5 hours claimed for the motion to strike and reply, as well as the hours spent preparing the application, were excessive. The court rejected AAI’s argument about the review and redaction expenses. It interpreted the earlier order as limiting recovery to fees and costs associated with the motion to strike and the fee application, not all expenses connected to AAI’s failure to comply.

Legal standard

Federal Rule of Civil Procedure 16(f)(2) permits a court to award reasonable expenses, including attorney’s fees, caused by noncompliance with a scheduling order unless the noncompliance was substantially justified or an award would otherwise be unjust. The court explained that reasonable attorney’s fees generally are calculated using the “lodestar”: a reasonable hourly rate multiplied by a reasonable number of hours. Courts may reduce time that is excessive, redundant, or unnecessary and may award reasonable out-of-pocket costs.

Court’s analysis

For the motion to strike and reply, the court treated $103,759.88 as the maximum aggregate amount subject to the earlier order’s one-half limitation. It found that the attorneys’ hourly rates, ranging from $425 to $940, and the staff rates were reasonable given the complexity and long history of the litigation. It also found that 241.5 hours over roughly seven weeks and the involvement of ten timekeepers were reasonable.

The court deducted $522.50 for a 1.1-hour associate entry whose entire description was redacted because the court could not award an undescribed fee. It also declined to award $238.14 for document duplication because defendants had not explained why the duplication was reasonable. After those deductions and the one-half limitation, the court awarded $51,499.62 for preparing and filing the motion to strike and reply.

For the fee application, the court found that 37 hours over an 18-day period and the use of seven timekeepers were reasonable. It awarded one-half of the $11,542.58 incurred for that work, or $5,771.29.

Disposition

Magistrate Judge Sarah L. Cave granted in part and denied in part defendants’ application. She awarded defendants $57,270.91 in attorney’s fees under Rule 16(f)(2), which AAI was ordered to pay by Monday, January 6, 2020. The Clerk was directed to close the application docket entry.