Cardwell v. Davis Polk and Wardwell LLP

Background

The order addresses the amount of monetary sanctions connected to the defendants’ motion to compel discovery. In an earlier order, the court had determined that the discovery deficiencies were the type that should ordinarily be resolved without court intervention and that fees were appropriate under Federal Rule of Civil Procedure 37(a)(5). The court had asked the defendants to submit billing records so it could determine the proper amount.

The defendants submitted records seeking compensation for 121.4 hours of work, totaling $99,565.20 at the billed rates.

Fee calculation

The court first excluded time spent preparing for a meet-and-confer and a pre-motion conference because the prior sanctions ruling concerned the cost of briefing the motion to compel, not the entire discovery dispute. This reduced the compensable time by 9.3 hours for one attorney, 7.5 hours for the senior associate, and 5.4 hours for the junior associate, leaving 99.2 hours for briefing the motion.

The court found 99.2 hours excessive because the legal issues were relatively simple, even though the discovery deficiencies required the defendants to organize substantial materials. The court found the partner time reasonable but reduced each associate’s time by 20%, reducing the junior associate’s time from 66 hours to 52.8 hours and the senior associate’s time from 23.1 hours to 18.48 hours.

The court used the attorneys’ billed rates because the defendants represented that those were the rates offered to and paid by the client. Applying those rates to the adjusted hours produced a lodestar of $62,858.88. A lodestar is the number of reasonable hours multiplied by a reasonable hourly rate and is generally the starting point for calculating attorney-fee awards.

Allocation and final sanction

The court stated that it had broad discretion to allocate discovery sanctions between a party and the party’s lawyer. It concluded that the sanction should fall principally on Cardwell’s counsel because the motion resulted from disputes involving Cardwell’s misunderstanding of the discovery rules, rather than an alleged failure by Cardwell personally to conduct an adequate search.

The court accepted Cardwell’s evidence that he was unemployed after his termination from Davis Polk, had no savings, could not afford his rent, and could not pay a sanction of any amount. The court therefore did not impose a monetary sanction on Cardwell.

The court also recognized that a substantial sanction could financially harm David Jeffries, Cardwell’s lawyer, who was handling the case without charging a fee. But the court found that Jeffries’s affidavit did not establish that he could not pay any sanction because it lacked supporting financial information. The court concluded that some sanction was appropriate under Rule 37 to discourage unnecessary discovery disputes, while reducing the amount because Jeffries was handling the case without charge and other equitable considerations applied.

Disposition

Judge Gregory H. Woods imposed a $4,000 sanction on David Jeffries, payable to the defendants. The amount was a substantial reduction from the requested fees and represented 6.3% of the calculated lodestar. The court requested that the parties propose a reasonable payment schedule.