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Advanced Analytics, Inc. v. Citigroup Global Markets, Inc.

United States District Court, S.D. New York

January 8, 2020

ADVANCED ANALYTICS, INC., Plaintiff,
v.
CITIGROUP GLOBAL MARKETS, INC., et al., Defendants.

          AMENDED OPINION & ORDER

          SARAH L. CAVE, United States Magistrate Judge.

         Before the Court is the application of Defendants Citigroup Global Markets, Inc. and Yield Book, Inc. (“Defendants”) for an Award of Expenses Pursuant to the Court's Partial Grant of Motion to Strike the Fourth Declaration of Jianqing Fan (the “Application”). (ECF No. 242). For the reasons set forth below, Defendants' Application is GRANTED in part and DENIED in part.

         BACKGROUND

         Given this action's lengthy history, the Court assumes the reader's familiarity with the background of this case and references only facts necessary to explain this opinion. A comprehensive recitation of the events giving rise to this action is set forth in the Honorable Henry B. Pitman's Opinion and Order dated March 26, 2014 granting Defendants' motion for expenses. (ECF No. 235).

         This action has been pending for over fifteen years and stems from the allegations of Advanced Analytics, Inc. (“AAI”) that Defendants misappropriated AAI's sequences of numbers used to aid in pricing mortgage-backed securities and incorporated them into Defendants' software, the Yield Book, or used them to create new sequences for use in the Yield Book. (ECF No. 235 at 3). In January 2012, Magistrate Judge Pitman set a revised discovery schedule ordering the submission of AAI's expert disclosures by May 17, 2012 and completion of all discovery by July 17, 2012; he also admonished the parties to raise discovery disputes promptly. (Id.). Despite these instructions, on July 18, 2012, AAI attempted to submit a “reply expert report from Dr. Jinqing Fan, ” past the May 17, 2012 deadline (the “Fan Reply”). (Id. at 3-4). (See July 18, 2012 Disc. Conf. Tr., ECF No. 226 at 121, 146-49). Defendants moved to strike the Fan Reply as untimely and not constituting “a proper ‘reply,' because it contained new information and opinions that were not within the scope of either parties' prior expert disclosures.” (Id. at 4). Magistrate Judge Pitman issued an Order granting Defendants' motion (ECF No. 174), AAI objected, and on February 8, 2013, the Honorable Laura T. Swain, United States District Judge, overruled AAI's objections. (ECF No. 214).

         The parties then briefed Defendants' “motion for summary judgment and their Rule 702/Daubert motion to exclude Dr. Fan's initial report and testimony based on that report.” (ECF No. 235 at 5). AAI's “opposition to both motions included the Fourth Fan” Declaration, which incorporated by reference and relied on the entire previously stricken Fan Reply (the “Fourth Fan Declaration”). (Id. at 6). On June 10, 2013, Defendants requested a conference for their “anticipated motion to strike the Fourth Fan [Declaration] on the grounds that it was untimely and contained entirely new bases for AAI's claims.” (Id.). On June 17, 2013, AAI requested a conference for its “anticipated motion for sanctions against defendants . . . based on allegations of discovery misconduct set forth in the Fourth Fan [Declaration].” (Id.). AAI sought to use the Fourth Fan Declaration in support of its motion for sanctions. (Id. at 15). On June 19, 2013, Magistrate Judge Pitman “directed the parties to complete their briefing on Defendants' motion to strike the Fourth Fan [Declaration] and . . . deferred consideration of AAI's contemplated motion for sanctions until the dispute concerning the Fourth Fan [Declaration] was resolved.” (Id. at 7).

         On July 10, 2013, “pursuant to Rules 16, 26, and 37 of the Federal Rules of Civil Procedure, ” Defendants moved to strike the Fourth Fan Declaration, to “exclude Dr. Fan's 2007 Report and testimony concerning the opinions set forth in that report, ” and for an award of “their expenses, including attorney's fees and costs, incurred in connection with” the motion. (ECF No. 235 at 1-2).

         On March 26, 2014, Magistrate Judge Pitman held that AAI was precluded from using the Fourth Fan Declaration to oppose Defendants' motion summary judgment “or in connection with any other dispute involving the merits of the claims and defenses” because it was “untimely under [his] scheduling Order and was served in violation of Rule 26(a)(2), ” and went “beyond Dr. Fan's timely produced expert disclosures.” (ECF No. 235 at 16, 23, 30-31). Magistrate Judge Pitman also held that AAI could use “section G, ¶¶ 257-73” of the Fourth Fan Declaration to respond to “Defendants' rule 702/Daubert motion, ” but “[g]iven the age of this matter, the fact that the Fourth Fan [Declaration] does not rely on information first produced after the close of discovery, [his] admonition in January 2012 that discovery disputes be raised promptly and the almost year-long gap between the close of discovery and the earliest date on which a sanctions motion could possibly have been made, ” AAI could not use the Fourth Fan Declaration in support of its motion for sanctions. (Id. at 32, 34, 36). Accordingly, Magistrate Judge Pitman found that Defendants are “entitled to recover some of their attorney's fees and costs” from “AAI and its counsel, ” but only half of “the fees and costs incurred in making” their motion “as a result of AAI's failure to comply with the Scheduling Order and Rule 26(a)(2).” (Id. at 36-37).

         Magistrate Judge Pitman ordered Defendants to submit their Application within 20 days of his order with AAI's response due 20 days thereafter. (ECF No. 235 at 38). Defendants timely submitted their Application under seal requesting an award of $91, 246.55 (ECF No. 242 ¶6), and AAI timely submitted their response under seal. (ECF No. 246).

         LEGAL STANDARD

         A party and its counsel can be held liable for attorney's fees and costs incurred for violating the court's scheduling order or Federal Rule of Civil Procedure 26(a). Fed.R.Civ.P. 16(f), 37(c)(1). Under Federal Rule of Civil Procedure 16(f)(2), “in addition to or instead of sanctions, the court may award ‘reasonable expenses - including attorney's fees - incurred because of noncompliance with this rule, unless the noncompliance was substantially justified or other circumstances made an award of expenses unjust.'” Tessemae's LLC v. Atlantis Capital LLC, No. 18 Civ. 4902 (KHP), 2019 WL 2635956, at *2 (S.D.N.Y. June 27, 2019) (quoting Fed.R.Civ.P. 16(f)(2)). Under the law of this Circuit, identical language in Rule 37 of the Federal Rules of Civil Procedure imposes on the disobedient party the “burden to show that his failure is justified or that special circumstances make an award of expenses unjust.” Id. at *3 (internal citation omitted). The prevailing party is also entitled to costs, including “reasonable out-of-pocket expenses incurred by attorneys and ordinarily charged to their clients.” Kreisler v. Second Avenue Diner Corp., No. 10 Civ. 7592 RJS), 2013 WL 3965247, at *2 (S.D.N.Y. July 31, 2013) (internal citation omitted).

         The district court has broad discretion to determine the amount to be awarded. Vincent v. Comm'r of Soc. Sec., 651 F.3d 299, 307 (2d Cir. 2011). In Arbor Hill Concerned Citizens Neighborhood Ass'n. v. Cnty. of Albany, 522 F.3d 182 (2d Cir. 2008), the Second Circuit articulated the method for calculating reasonable attorney's fees: a reasonable hourly rate multiplied by a reasonable number of hours extended on the work constitutes the “presumptively reasonable fee, ” also known as the “lodestar.” Kreisler, 2013 WL 3965247, at *1. A court using the lodestar method sets the lodestar, then considers “whether, in light of variables such as the difficulty of the case, it should adjust the lodestar before settling on the reasonable fee.” Arbor Hill, 522 F.3d at 187.

         To aid in the court's analysis, a fee application should be supported by “contemporaneous time records” relaying the rates charged and hours worked by each attorney. N.Y. State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1154 (2d Cir. 1983). The attorneys “should maintain billing time records in a manner that will enable a reviewing court to identify distinct claims.” Hensley v. Eckerhart, 461 U.S. 424, 437 (1983); see Themis Capital v. Democratic Republic of Congo, No. 09 Civ. 1652 (PAE), 2014 WL 4379100, at *7 (S.D.N.Y. Sept. 4, 2014) (reducing hours by twenty percent for “impermissibly broad” block billing). A court should look at the “nature of the legal matter and context of the fee award in considering the reasonable rate and reasonable time spent on the matter.” Tessemae's LLC, 2019 WL 2635956, at *3.

         To determine the hourly rate, a court considers “what a reasonable, paying client would be willing to pay, given that such a party wishes to spend the minimum necessary to litigate the case effectively.” Bergerson v. N.Y. State Office of Mental Health, Cent. N.Y. Psychiatric Ctr., 652 F.3d 277, 289-90 (2d Cir. 2011) (internal citation omitted). In addition, the Second Circuit has a “forum rule” requiring the use of “hourly rates employed in the district in which the reviewing court sits in calculating the presumptively reasonable fee.” Id. at 289 (internal citation omitted). The court's determination of the reasonable hourly rate is aided by the rate “prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation.” Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984). “Courts in this District have determined that hourly rates ranging from $250 to $1, 260 per hour, for attorneys' work on a commercial litigation matter were reasonable” depending on complexity, experience, and skill required. Tessemae's LLC, 2019 WL 2635956, at *4 (collecting cases). The court may adjust base ...


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