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ENVIROSOURCE, INC. v. HORSEHEAD RESOURCE DEV. CO.

January 5, 1998

ENVIROSOURCE, INC., Plaintiff, against HORSEHEAD RESOURCE DEVELOPMENT COMPANY, INC., Defendant.


The opinion of the court was delivered by: GRUBIN

 SHARON E. GRUBIN, United States Magistrate Judge:

 This decision concerns plaintiff's application for sanctions in the amount of $ 203,000 or, in the alternative, $ 141,985 incurred as legal fees through June 5, 1997, as a result of defendant's failure to complete production of documents. Familiarity with my opinion of July 16, 1996 is assumed, and the cheerless history of defendant's conduct in this case to that date as described therein will not be repeated. It suffices for current purposes to quote one passage from that opinion:

 
In over 12 years on the bench, I have rarely imposed sanctions. I believe they should be used very sparingly and as a last resort. When I awarded them herein, I did not do so lightly. (The conduct for which they were imposed was so inexplicable that I was troubled and thought for some time that perhaps I misunderstood what was occurring. Sanctions were not imposed until I determined, unfortunately, that there was no misunderstanding.) Nor do I lightly provide for their possible increase after 30 days herefrom. This has been one of those rare cases, as I have tried to express summarily above, where the violation of discovery orders and the flouting of the rules of discovery has been extraordinary and, I believe, inexcusable and has prejudiced the plaintiff, both because this conduct has delayed the case and because it has presumably forced plaintiff to incur further expense insofar as plaintiff's counsel has had continually to contact the court for assistance.

 Envirosource, Inc. v. Horsehead Resource Development Co., 1996 U.S. Dist. LEXIS 9924, No. 95 Civ. 5106 (AGS)(SEG), 1996 WL 399823 at *4. At that time, an order requiring payment of $ 500 per day by defendant until it completed production was in effect (and remains so at this time). That opinion directed that production be completed within 30 days thereof or sanctions would be increased.

 I have carefully considered the parties' submissions on the pending application and find that plaintiff is entitled to compensation for attorney's fees in the amount of $ 84,950.70. I do not intend to address in detail herein all the various argument and contentions advanced by the parties. Some of them are merely quibbles and others, especially defendant's, are unmeritorious positions that I have rejected time and again over the last two years. For the parties' benefit, however, I will address the main issues they raise.

 The sanctions orders were always intended by me to be compensation to the plaintiff for the expense incurred in its continual need to apply to the court and otherwise pursue defendant so that defendant would do simply what it was required to do as a matter of course. Not only did defendant fail to comply with its obligations under the Federal Rules and the local rules of this court, but it thereafter boldly failed to comply with my orders (and Judge Schwartz's) that attempted to correct the situation. As I had stated orally on many occasions and then in my July 16, 1996 opinion, "the violation of discovery orders and the flouting of the rules of discovery...has prejudiced the plaintiff both because this conduct has delayed the case and because it has presumably forced plaintiff to incur further expense insofar as plaintiff's counsel has had continually to contact the court for assistance." 1996 U.S. Dist. LEXIS 9924, 1996 WL 399823 at *4. The amount of sanctions was what I believed would serve to ensure reimbursement of plaintiff for amounts incurred. The increase from $ 100 per day to $ 500 per day reflected the increasing time spent by plaintiff in pursuit. I also believed that the sanctions, and especially the increase, would bring about prompt compliance, so that, if defendant had produced its documents by the dates I continued to set, the sanctions would have stopped accruing. Unfathomably, however, defendant did not, so that an amount clearly beyond plaintiff's incurred expense has accrued on paper under the terms of my orders. Plaintiff is entitled to compensable expenses, but not to a windfall.

 I reject defendant's argument that the accrual of sanctions should be deemed to have ended on September 30, 1996 because at that time it had made "substantial compliance" with its document production obligations. The "substantial compliance" phrase is one that defendant has used at least since March 1996 and at every conference and argument thereafter. It was consistently the case, however, that plaintiff has had to uncover that "substantial compliance" had not been made. Moreover, although I do believe substantial compliance was eventually made by October 1996, defendant seems to continue to ignore the fact that my orders for production, entered almost two years ago, directed that all documents, except those to which objections had been made (which objections have long since been ruled upon), were to be produced. The orders consistently directed "complete " production. *fn2" A lawsuit can hardly proceed with a party's having provided only "substantial" discovery (by which, in this case, defendant always referred to numbers of documents produced, not to numbers of relevant, material documents). Moreover, although I was informed by defendant in September 1996 that production was complete, except for approximately ten "just discovered" boxes, eight months later, at the June 5, 1997 conference, defendant's counsel admitted that he had only "recently" learned of hundreds of boxes in storage that had never been searched. Whether or not those boxes contain relevant documents that are not duplicative of what had already been produced (a question as to which the record is silent) is not the point. What is at issue is defendant's continuing failure to perform its obligations in the diligent, methodical and good faith manner required by law. Because of that failure, plaintiff had to continue to analyze what was produced in an effort to learn what was not and then apply to the court for assistance.

 I reject defendant's contention that plaintiff's press release, indicating its intention to withdraw this action, and subsequent motion for voluntary dismissal mandates a denial of fees. Whether or not plaintiff pursued this suit improperly is an issue in that motion which is currently pending before Chief Judge Griesa, and I express no view on it. If defendant should ultimately prevail on the issue, it will presumably be provided an adequate remedy at that time. The issue has no bearing herein.

 Defendant continues to ignore the fact that the issue is not whether sanctions should be awarded; they were awarded long ago for its flagrantly improper actions. The only issue now is the amount of those sanctions. Even if defendant were correct in its interpretation of plaintiff's motives in this lawsuit, defendant did not have the right to flout all discovery obligations and orders of this court. I further note that it unilaterally decided to grant itself a discovery stay purportedly on the very same basis -- that plaintiff brought an unmeritorious suit for improper motives -- even after both I and Judge Schwartz ruled otherwise. Its motion to dismiss the action on those grounds, inter alia, was rejected by Judge Schwartz. Defendant continued thereafter to violate the discovery orders. In opposition to the payment of sanctions, defendant now pulls out every argument it can devise to deny plaintiff compensation for the legitimate expenses it incurred, inter alia : no payment should be awarded because plaintiff's motives were improper; no payment should be made because plaintiff's time records are deficient; if paid, payment should be to the court, not plaintiff, because of the reasons for the sanctions; if paid to plaintiff, payment should be in a reasonable amount which, in defendant's minimalist view, comes to $ 14,010. All its arguments are without merit for numerous reasons apart from the salient fact that they ignore we are not considering whether sanctions should be awarded. That issue was decided in no uncertain terms in March 1996, and events since that time have only served to confirm the correctness of the decision. *fn3"

 Defendant ignores another critical fact, which is that the Federal Rules of Civil Procedure essentially mandate an award of attorney's fees under the instant circumstances. Federal Rule 37(a)(4)(A) provides that if a motion to compel discovery is granted, "the court shall...require the party whose conduct necessitated the motion or the party or attorney advising such conduct or both of them to pay to the moving party the reasonable expenses incurred in making the motion including attorney's fees...." The exceptions to this requirement are not pertinent herein. See, e.g., Fund Comm'n Svc., II, Inc. v. Westpac Banking Co., 1996 U.S. Dist. LEXIS 11937, No. 93 Civ. 8298 (KTD)(RLE), 1996 WL 469660 at *5 (S.D.N.Y. August 16, 1996); Bowne of New York City, Inc. v. AmBase Corp., 161 F.R.D. 258, 262 (S.D.N.Y. 1995). Beyond expenses of the motions and applications that plaintiff was forced to make for over one and one-half years, defendant is also liable for expenses under Rule 37(b)(2) for its inexcusable violation of the court's orders requiring disclosure. That rule also makes an award of attorney's fees mandatory in the instant situation. I might also note that an award is mandatory as well herein under the provisions of Rule 16(f) because the scheduling orders in this case were continually violated by defendant which simply granted itself a stay of discovery because it had filed a motion for dismissal; continued to "stay" discovery even after I overruled that position several times; persisted even after Judge Schwartz rejected a subsequent "motion for a preliminary injunction" to stay discovery; and continued to miss discovery deadlines after its own justification for doing so, its motion to dismiss, was largely denied. *fn4" This case is in a procedural posture that it should have reached about 18 months ago. *fn5"

 In determining reasonable attorney's fees, a court must first calculate a "lodestar" figure based upon the number of hours reasonably expended by counsel multiplied by a reasonable hourly rate. Luciano v. Olsten Corp., 109 F.3d 111, 115 (2d Cir. 1997) (citing Blanchard v. Bergeron, 489 U.S. 87, 94, 103 L. Ed. 2d 67, 109 S. Ct. 939 (1989)). The fee applicant bears the burden of documenting the hours expended and the hourly rate. See, e.g., Cruz v. Local Union No. 3 of Int'l Bhd. of Elec. Workers, 34 F.3d 1148, 1160 (2d Cir. 1994) (citing Hensley v. Eckerhart, 461 U.S. 424, 433, 76 L. Ed. 2d 40, 103 S. Ct. 1933 (1983)). To establish hours spent by each attorney at a firm, the fee applicant is to furnish contemporaneous time records specifying the date, the hours and the nature of the work done, New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1154 (2d Cir. 1983), although typed listings drawn from computerized billing records or attorney affidavits based on contemporaneous records will suffice if they "provide a fully detailed itemization of the dates that work was performed, a description of the work done, and the time expended." Cruz v. Local Union No. 3 of Int'l Bhd. of Elec. Workers, 34 F.3d at 1160; see also S.J. Berwin & Co. v. Evergreen Entertainment Group, Inc., 1994 U.S. Dist. LEXIS 12897, No. 92 Civ. 6209 (WK), 1994 WL 501753 at *2 (S.D.N.Y. Sept. 14, 1994); David v. Sullivan, 777 F. Supp. 212, 223 (E.D.N.Y. 1991).

 The hourly rates are to be determined by the rates "prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation." Luciano v. Olsten Corp., 109 F.3d at 115 (quoting Blum v. Stenson, 465 U.S. 886, 896 n.11, 79 L. Ed. 2d 891, 104 S. Ct. 1541 (1984)). The applicable community is the district in which the court sits, id., and while affidavits from other practicing, similarly situated attorneys are "desirable," they are not indispensable in order to establish the appropriate hourly rate. Cruz v. Local Union No. 3 of Int'l Bhd. of Elec. Workers, 34 F.3d at 1160. A court may rely on its own knowledge of hourly ...


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