John Doe 1 v. East Side Club, LLC

Background

The opinion determined the amount of sanctions previously imposed against Plaintiff John Doe 1 and his former counsel, Johnmack Cohen and the Derek Smith Law Group (together, “DSLG”). The earlier sanctions ruling found that John Doe 1 had provided false and misleading information about a separate lawsuit in New York State court. He was pursuing emotional-distress damages in both cases but did not disclose the other lawsuit, did not account for potentially overlapping damages, and testified that no other factors contributed to his emotional distress. The court also found that DSLG failed to conduct basic investigation and later made material misrepresentations to the court and the defendants.

John Doe 1 later voluntarily withdrew the lawsuit. The court had already determined that sanctions were warranted under its inherent authority, under Rule 37 of the Federal Rules of Civil Procedure as to John Doe 1, and under 28 U.S.C. § 1927 as to DSLG. This opinion addressed only the amount of attorneys’ fees and costs resulting from that misconduct.

Fee Calculation

The defendants sought reimbursement for attorneys’ fees and litigation expenses. John Doe 1 and DSLG argued that the defendants should receive nothing or substantially less. The court rejected their attempts to relitigate the earlier sanctions ruling and rejected DSLG’s argument that its liability should be limited to work directly concerning the separate lawsuit.

The court found that defense attorney Thomas D. Shanahan’s hourly rates of $350 and $425 were reasonable but declined to enhance those rates. Applying the lodestar method—multiplying reasonable hourly rates by the reasonable hours worked—the court found that the billing records included administrative and clerical tasks, block-billed entries that made review difficult, and work that could have been performed by a more junior attorney. The court therefore imposed an across-the-board 18% reduction in the attorneys’ fees.

The court also allowed reasonable fees for preparing and litigating the fee petition and for responding to John Doe 1’s reconsideration motion and DSLG’s motion to stay. It concluded that the defendants’ documented costs were recoverable, but deducted an unexplained opening balance of $2,441.66 from the requested costs.

Ruling

Judge Katherine Polk Failla awarded the following amounts:

- Against John Doe 1: $100,230.98 in attorneys’ fees and $18,623.55 in costs. - Against DSLG: $81,439.34 in attorneys’ fees and $1,123.00 in costs. - John Doe 1 and DSLG were jointly and severally liable for $46,410.00 of the attorneys’ fees, meaning each could be responsible for that shared amount.

The court declined to award prejudgment interest because the sanctions had been found warranted earlier but were not quantified until this opinion, and the court’s delays in resolving the matter—including delays related to the COVID-19 pandemic—should not increase the amounts owed. The court stated that post-judgment interest would apply, entered judgment, terminated pending motions, adjourned remaining dates, and closed the case.