Karsch v. Blink Health LTD

Background

Defendants Blink Health, Ltd., Geoffrey Chaiken, and Matthew Chaiken requested discovery sanctions against plaintiff Michael Karsch and his attorneys at Sack & Sack, LLP. The request followed an earlier ruling that Karsch had lost electronically stored information from a server maintained by his affiliate, Karsch Capital Management, LP; that Sack & Sack had lost electronically stored information on devices provided by former client Charles Jacoby; and that Karsch and Sack & Sack had violated several discovery orders.

The earlier ruling required Karsch and his attorneys to pay defendants’ expenses, including attorneys’ fees, caused by the violations and permitted defendants to present evidence to the jury about the lost information. Defendants later requested $30,496.13 from Sack & Sack alone for work caused by its violation of the July 12, 2018 order; $363,968.63 from Karsch and his attorneys jointly and severally for work caused by violations of later discovery orders; and $22,178.99 for consultant Stroz Friedberg’s work searching Stephen Karsch’s AOL account.

Arguments and legal standard

The court evaluated whether the requested amounts were reasonable under Federal Rule of Civil Procedure 37(b)(2)(C), which provides for reasonable expenses caused by violations of discovery orders, and Rule 37(e)(1), which permits expenses necessary to address prejudice from lost electronically stored information. The court calculated reasonable attorneys’ fees by multiplying reasonable hours by reasonable hourly rates.

Karsch argued that defendants sought compensation for work that was not caused by the discovery violations, and challenged the time records as vague, excessive, block-billed, and overstaffed. He also argued that the hourly rates were unreasonable. He did not challenge the consultant costs or the proposed allocation of fees between Karsch and his attorneys.

Court’s analysis

The court applied hourly rates of $625 for attorney Laura K. O’Boyle and $425 for attorney Justine M. Goeke, consistent with rates used in an earlier fee ruling. It reduced attorney Grace E. Hart’s proposed rate from $521.25 to $350 because the underlying work involved discovery disputes rather than dispositive motions or trial. It reduced attorney Orin Snyder’s proposed rate from $1,046.25 to $825 for the same reason.

The court imposed a 25% reduction on hours relating to violations of the later discovery orders because some work would have occurred even without the violations, including reviewing documents after they were produced. The court also imposed separate 5% reductions for vague entries, block-billing, and occasional excessive billing. It did not reduce the award for alleged overstaffing or clerical work, finding that the staffing was not entirely unreasonable and identifying no clerical entries warranting a reduction.

The court awarded the full $22,178.99 consultant cost because Stroz Friedberg retrieved 790 responsive documents from Stephen Karsch’s AOL account, most of which had not previously been produced. The opinion states that Karsch did not oppose reimbursement of this cost.

Disposition

The court awarded defendants $18,151.75 in attorneys’ fees as sanctions against Sack & Sack alone. It separately awarded $174,529.49—comprising $152,350.50 in attorneys’ fees and $22,178.99 in costs—as sanctions against Karsch and Sack & Sack jointly and severally, meaning each was responsible for the full amount subject to payment and allocation between them. Payment was due within forty-five days of the order. This order addressed discovery-related fees and expenses rather than the underlying claims’ merits.