Overzealous Lawyers Learn a Valuable e-Discovery Lesson

Overzealous Lawyers Learn a Valuable e-Discovery Lesson

In this contract dispute, the prevailing defendant, ChoicePoint, moved for attorneys’ fees, including fees for document review and production.

The plaintiff, Corinthian Mortgage Corporation, d/b/a, SouthBanc Mortgage (“SouthBanc”), and Defendant ChoicePoint Precision Marketing, LLC (“ChoicePoint “), a mailing list broker, entered into an agreement (the “Service Agreement”) wherein ChoicePoint  agreed to assist in developing a methodology for creating lists of names and individuals to whom SouthBanc could mail targeted promotional materials. Soon after, Theresa Ritter (“Ms. Ritter”), Vice President at SouthBanc, was terminated. Ms. Ritter formed a competing company in Virginia, Summit Financial LLC (“Summit”). Subsequently, Summit requested names from ChoicePoint, using name selection criteria similar to SouthBanc’s. ChoicePoint  provided the requested information to Summit and continued to supply names. Of course SouthBanc was not happy and sued ChoicePoint, alleging that ChoicePoint violated the covenant of good faith and fair dealing (Count I), violated Massachusetts’ Unfair Trade Practices Act (Count II), and breached the Contract between the parties (Count III).

Most importantly, the Service Agreement provided that, if litigation between the parties arises out of it, the prevailing party “shall be entitled to an award of its reasonable attorneys’ fees and costs.” ChoicePoint argued that per its Service Agreement, SouthBanc is obligated to reimburse the costs ChoicePoint incurred in its successful defense. Among the costs incurred, ChoicePoint  claims to have incurred $86,769.92 in expenses related to copying, delivery, production, court reporters, travel expenses, and legal research costs. In addition, ChoicePoint’s damages expert cost $ 76,112. Overall, ChoicePoint requests attorneys’ fees of $ 887,882.58 and costs and expenses of $ 162,881.92.

Court’s Analysis:

The Court used the 12-factor Johnson test to determine the reasonable hourly rate and reasonable number of hours spent working on the litigation.

The Johnson factors are:

  1. The time and labor required;
  2. The novelty and difficulty of the questions;
  3. The skill requisite to perform the legal service properly;
  4. The preclusion of other employment by the attorney due to the acceptance of the case;
  5. The customary fee;
  6. Whether the fee is fixed or contingent;
  7. Time limitations imposed by the client or the circumstances;
  8. The amount involved and the results obtained;
  9. The experience, reputation, and ability of the attorneys;
  10. The “undesirability” of the case;
  11. The nature and length of the professional relationship with the client; and
  12. Awards in similar cases.

See Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974).

SouthBanc does not question the reasonableness of ChoicePoint ‘s showing with respect to the Johnson factors, except for ChoicePoint ‘s analysis of factors (1) and (8), regarding the time and labor required and the amount involved and results obtained in the litigation, respectively.

In support of its claim that its counsel expended a reasonable amount of time on the litigation, ChoicePoint notes that the case involved ten substantive motions requiring research, briefing, and argument. Mainly, ChoicePoint argues that its time spent on discovery was reasonable because: (1) more than 2.6 million document pages were reviewed in order to produce 1.2 million pages; (2) it took extra care to avoid spoliation, used an outside vendor, and assembled a team of 8-10 associates that worked for several weeks to begin producing the documents; and (3) its review of the SouthBanc’s documents was hindered by the plaintiff’s disorganized fashion of production.

SouthBanc counters, arguing that of the 1.2 million pages ChoicePoint claims to have produced, most of the pages were part of large spreadsheets and reports irrelevant to the case. For example, ChoicePoint read 800,000 pages of printed paper received from SouthBanc, which was related to a subpoena for Ritter’s documents from the previous litigation, but that were also produced electronically. SouthBanc argues that it shouldn’t have to pay for ChoicePoint’s decision to copy the paper documents and review them individually. In addition, SouthBanc claims it produced most documents in searchable native format or with Summation load files that allow electronic searching. According to SouthBanc, they were not produced in a disorganized fashion.

The Court agreed with SouthBanc that the hours spent on production by ChoicePoint were excessively high and that full compensation for such work would inflate the total fee award to an unreasonable extent. The Court agreed that ChoicePoint’s motion for reconsideration, motion to strike, and defense against SouthBanc’s spoliation motion were each somewhat part of its ultimately successful defense on the merits against claims “related” to the breach of contract claim. The Court, however, found the excessive attorney hours spent on each of them were unreasonable because they were “unrelated” to ChoicePoint ‘s ultimate success. Therefore, the Court reduced the fee for discovery and document production and for the motion to reconsider, the motion to strike SouthBanc’s expert, and fees related to SouthBanc’s motion for sanctions. The Court found for a $165,000 reduction in the requested fee, partly by using SouthBanc’s estimates for the costs associated with the motion for sanctions, the motion to strike, and its estimated range of costs associated with discovery. In addition, the Court discounted the attorney hourly rate fees charged by ten percent to bring the hourly rates down to an amount the Court believes to be reasonable. In conclusion, the final amount granted to ChoicePoint included attorneys’ fees and award fees of $641,595 and costs of $140,279.20.

Overzealous lawyers are sometimes appreciated by their clients, as is the “leave no stone unturned or theory untested” approach to litigation. However, it is always important to convince the Court that discovery in a case was handled in a manner that was efficient and uncumbersome.

Tanya Basu is a Pharmacist and a third year student at Seton Hall Law School, focusing on Health and Intellectual Property Law.

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