FD Special Opportunities V, LLC v. Silver Arch Capital Partners, LLC

Background

FD Special Opportunities V, LLC and FD GP Investment, LLC sued Silver Arch Capital Partners, LLC, Jeffrey Wolfer, and Matthew Cole, asserting claims involving breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, and violations of New York’s consumer-protection law.

The parties were referred to mediation and had scheduled depositions to follow it. The defendants then filed a motion for a protective order, which is a request to limit or control discovery, concerning topics for the deposition of Silver Arch Capital Partners, LLC under Federal Rule of Civil Procedure 30(b)(6). The defendants filed the motion two days before the scheduled mediation and one week before the depositions, even though they had received the deposition topics about four months earlier. The court denied the protective-order motion as untimely and invited the plaintiffs to seek expenses under Rule 37(a)(5).

Attorneys’ Fees

Rule 37(a)(5), together with Rule 26(c)(3), permits a court to require the losing party on a protective-order motion to pay reasonable expenses, including attorneys’ fees, incurred in opposing the motion. The court may decline to award expenses if the motion was substantially justified or if an award would be unjust. A motion is substantially justified when there is a genuine dispute or reasonable disagreement about the challenged conduct.

The court found that the defendants’ conduct was not substantially justified. The defendants had four months to object to the deposition notice but waited until shortly before the depositions, after the plaintiffs’ counsel had made travel and hotel arrangements. The defendants argued that they became concerned the plaintiffs might use deposition information in violation of an existing protective order. After reviewing the relevant communications, the court found that the plaintiffs’ counsel’s statement did not show an intention to violate that order. The court also stated that, even if the statement had shown such an intention, the appropriate course would have been to seek court relief after the depositions rather than shortly before them.

Fee Calculation and Disposition

The plaintiffs requested $1,040 for drafting, revising, and filing their response to the protective-order motion. The court applied the lodestar method, which calculates a presumptively reasonable fee by multiplying the hours worked by a reasonable hourly rate. The plaintiffs submitted billing records showing 3.6 hours of work by two associate attorneys. The court found the requested hourly rates—$300 for Alex Duncan and $250 for Jen Mook—and the time spent to be reasonable.

Judge Ona T. Wang granted the plaintiffs’ request for attorneys’ fees from the defendants in the amount of $1,040.