Opinion
CIVIL NO. 13-1325 (PAD)
2022-03-31
CASCO, INC., Plaintiff, v. JOHN DEERE CONSTRUCTION & FORESTRY COMPANY, Defendant.
Heriberto J. Burgos-Perez, Mariano A. Mier-Romeu, Ricardo F. Casellas, Casellas, Alcover & Burgos PSC, San Juan, PR, Carla S. Loubriel, Hato Rey, PR, for Plaintiff. Carmen M. Alfonso-Rodriguez, Eduardo A. Zayas-Marxuach, Henry O. Freese-Souffront, McConnell Valdes, LLC, San Juan, PR, for Defendant.
Heriberto J. Burgos-Perez, Mariano A. Mier-Romeu, Ricardo F. Casellas, Casellas, Alcover & Burgos PSC, San Juan, PR, Carla S. Loubriel, Hato Rey, PR, for Plaintiff.
Carmen M. Alfonso-Rodriguez, Eduardo A. Zayas-Marxuach, Henry O. Freese-Souffront, McConnell Valdes, LLC, San Juan, PR, for Defendant.
OPINION AND ORDER
Delgado-Hernández, District Judge.
Before the court is Casco, Inc.’s ("Casco") "Renewed Motion and Memorandum of Law in Support of Verified Application for Attorney's Fees and Costs" (Docket No. 333), which John Deere Construction & Forestry Company ("John Deere") opposed (Docket Nos. 336, 347 and 354). Casco replied (Docket Nos. 346 and 355), and John Deere sur-replied (Docket No. 358). Casco also filed a "Motion for Leave to Supplement Casco, Inc.’s Renewed Application for Fees and Costs (D.E. 333)" (Docket No. 361), which the court granted (Docket No. 362). John Deere subsequently filed an opposition (Docket No. 363), which the court reviewed. For the reasons explained below, Casco's motion for fees and costs is granted in part, in the amount of $855,979.57.
I. BACKGROUND
Casco sued John Deere under the Puerto Rico Dealers Act, Law 75 of June 24, 1964, as amended, P.R. Laws Ann. tit. 10 §§ 278 et seq. ("Law 75"), for unjust impairment and termination of a 1986 Dealer Agreement (the "Dealer Agreement") (Counts 1 & 2), as well as for dolus under the Puerto Rico Civil Code, P.R. Laws. Ann. tit. 31 (Counts 3 & 4). John Deere denied liability and counterclaimed against Casco for collection of unpaid invoices due. A highly contested litigation ensued, which included a request by Casco for preliminary injunctive relief that was denied (Docket Nos. 11, 23, 24 and 29); motions for summary judgment by both parties that were denied (Docket Nos. 64, 66, 74, 77, 85, 103 and 117); motions in limine by both parties that were granted in part and denied in part (Docket Nos. 156, 162, 163, 164, 177, 180, 185, 186, 187, 188 and 193); and additional disputes prior to trial regarding pretrial stipulations, disclosures, the counterclaim, and on whether witnesses should testify in the English language rather than through an interpreter (Docket Nos. 198, 200, 201, 202, 203, 208, 206, 213, 218, 228, 235 and 236).
During the nine-day jury trial, the court granted John Deere's request under Fed.R.Civ.P. 50(a) to dismiss Casco's Civil Code claims (Counts 3 & 4) and to enter judgment on its counterclaim (Docket No. 235). The jury found in favor of Casco on its main claims under Law 75 and awarded $1,763,934.00 in impairment and termination damages (Docket No. 243). The court entered judgment for Casco accordingly, together with $216,912.92 for John Deere's counterclaim (Docket No. 249). Thereafter, the court denied Casco's post-judgment motions to vacate dismissal of its Puerto Rico Civil Code claim and to dismiss John Deere's counterclaim (Docket Nos. 264 and 303-1, pp. 4-15).
Further, the court partially granted John Deere's post-judgment motions, to remit the amount awarded by the jury as compensation for John Deere's unjust impairment of the Dealer Agreement from $323,400.00 to $58,000.00 and increase the amount of the award on the counterclaim from $216,919.92 to $219,913.00 (Docket Nos. 269 and 333-1, pp. 22-24 and 26). However, the court denied John Deere's remaining motions to vacate the jury's liability determinations and for remittitur or a new trial on termination damages (Docket Nos. 269 and 333-1, pp. 16-22 and 24-26).
Both parties asserted "prevailing party" status and filed applications for costs under Fed.R.Civ.P. 54, with Casco also seeking attorney's fees under the fee-shifting provision of Article 7 of Law 75, P.R. Laws Ann. tit. 10, § 278e (Docket Nos. 251 and 260). The court denied John Deere's application for costs, concluding that, considering the issues at stake, Casco had prevailed, and that, even considering the feasibility of apportionment, John Deere was not entitled to the amounts it sought to recover as costs under 19 U.S.C. § 1920 (Docket No. 303-1, p. 27). As for Casco's request for attorney's fees and costs, on John Deere's motion, the court dismissed, without prejudice, Casco's request as premature under Local Civil Rule 54 (Docket No. 303-1, pp. 29-31).
The parties appealed to the First Circuit, which affirmed the court's rulings (Docket No. 330). Following the First Circuit's mandate, as prevailing party, Casco moved for recovery of attorney's fees incurred through post-judgment briefing, on appeal, and to litigate its request for fees request ($770,145.59), expert witness fees ($70,621.15), and costs ($17,012.83), for a total amount of $857,779.57 (Docket No. 333, as revised at Docket No. 355 and supplemented at Docket No. 361). John Deere opposed Casco's renewed request (Docket Nos. 336 and 347).
II. DISCUSSION
A. Adjudicatory Framework
Motions for attorney's fees are subject to Fed.R.Civ.P. 54(d). Regarding costs, the Rule provides that "[u]nless a federal statute, these rules, or a court order provides otherwise, costs – other than attorney's fees – should be allowed to the prevailing party." As for attorney's fees, it specifies that they must be requested "by motion unless the substantive law requires those fees to be proved at trial as an element of damages." Fed.R.Civ.P. 54(d)(2)(A). In a diversity action like the one at bar, state law governs "[t]he grant of attorney's fees." Marrero-Ramos v. Univ. of P.R., 46 F.Supp.3d 127, 131 (D.P.R. 2014).
To this end, Puerto Rico Rule of Civil Procedure 44.1(d) permits the award of attorney's fees to a prevailing party only when the court finds that the losing party, or its counsel, has acted "obstinately or frivolously." P.R. Stat. Ann. tit. 32, App. V, § 44.1(d). Article 7 of Law 75 contains a fee-shifting provision permitting prevailing dealers to recover "attorney's fees" and "expert's fees." P.R. Laws Ann. tit. 10, § 278e. Where, as here, none of the parties have moved for a hearing, the issues have been thoroughly briefed and can be resolved on the papers, the matter is ripe for adjudication on the present record. See, In re Thirteen Appeals Arising Out of San Juan Dupont Plaza Hotel Fire Litig., 56 F.3d 295, 303 (1st Cir. 1995) ("When the written record afford an adequate basis for a reasoned determination of the fee dispute, the court in its discretion may forgo an evidentiary hearing").
B. Contractual Waiver and Contracts Clause
John Deere objects to the concession of costs or fees to Casco arguing, as a threshold matter, that Casco is contractually barred from recovering those items under the terms of the Dealer Agreement (Docket Nos. 336, pp. 2-4; 347, pp. 2-8). Article 20 of the Dealer Agreement reads:
20. COSTS AND FEES . The Dealer shall be responsible for the payment of all costs, fees and disbursements, including, without limitation all costs of collection, any stamp or other taxes or fees which are required and all reasonable fees and disbursements of counsel for the Company, which are incurred by the Company in connection with the enforcement or termination of this Agreement or the enforcement of any other document required to be executed and delivered hereunder.
(Docket No. 11-1, p. 9). John Deere alleges that under this provision, Casco is responsible for its own costs, fees and disbursements in connection with any dispute under the Agreement regardless of the outcome, and even in the event of termination (Docket Nos. 336, pp. 3-4; 347, p. 3). Casco counters that the article would require Casco to pay John Deere's costs and fees in case John Deere initiated an action to enforce or terminate the Dealer Agreement (Docket No. 355, p. 5).
With the comma placement, Article 20 imposes upon Casco the obligation to pay for all of John Deere's costs and fees if John Deere actively moved to enforce the contract. The word "termination" is placed between "enforcement" left and right, a word that BLACK'S LAW DICTIONARY (10th Ed.) defines as "[t]he act or process of compelling compliance with a law, mandate, command, decree, or agreement." A word is known by the company it keeps. Moving forward, and in keeping with this language, those enforcement actions would presumably call on John Deere to outlay resources in the form of costs and fees, and by extension, to recover them under Article 20. John Deere, however, was not enforcing anything here, but merely defending against the charge that it unjustly impaired and terminated the Dealer Agreement under Law 75.
Case law interpreting fee-shifting clauses with analogous language as that in Article 20, permits parties to recover fees only when the party has sued to compel or make effective an agreement on account of the other party's breach. See Housing Auth. of Champaign Cnty. v. Lyles, 395 Ill.App.3d 1036, 335 Ill.Dec. 463, 918 N.E.2d 1276 (2009) (recovery of fees warranted only if party sued "to compel or make effective the covenants of the lease"); Bank of Am., N.A. v. Oberman, Tivoli & Pickert, Inc., 12 F.Supp.3d 1092, 1096 & 1099-1100 (N.D. Ill. 2014) (customer obligated to pay fees incurred by the prevailing bank in connection with enforcement of the loan agreement).
By the same token, the beneficiaries of these types of clauses (here, John Deere) are not entitled to fees if they are the ones who breach the agreement (or, as here, illegally impair and terminate the dealer), force the other party to sue them (here, Casco), and then lose, which is the fact pattern at issue in this case. See BKCAP, LLC v. CAPTEC Franchise Trust 2000-1, 688 F.3d 810, 815-816 (7th Cir. 2012) (noting that " ‘enforcement’ means more than just participating in a lawsuit" or "being sued," and requires an offensive or coercive act to compel observance or obedience; thus, "[t]he district court did not abuse its discretion by reading the reimbursement provision to mean that the Lender could not breach, force the Borrowers to sue on the notes, win in court, and then, despite [the Borrowers’] unqualified victory, still be required to cover the Lender's attorney's fees").
The result is sensical. See, Union National Life Ins. Co. v. Smith, 1998 WL 911764, *3 (N.D. Miss. Oct. 16, 1998) (awarding attorney's fees to employer pursuant to a contract providing for expenses incurred to enforce non-compete clause); Kayem v. Stewart, 2003 WL 22309466, *6 (Tenn. App. Ct. Oct. 9, 2003) (award of attorney's fees in matters relating to enforcement of covenant not to compete). This is particularly so, because allowing a principal to force a dealer to pay for the principal's defense in suits brought by dealers for illegal impairment or termination actions under Law 75 would effectively neutralize the statute out of existence, particularly in cases where, as here, the dealer prevails.
Assuming public order tolerated that scenario – a question the court need not address today – to sustain that outcome, the contract had to be clearer, explicitly providing for that solution. But Article 20 is silent on whether, as a non-prevailing defendant, John Deere would be entitled to recoup attorney's fees, costs, and disbursements from a prevailing-dealer plaintiff. Compare with, Durham Life Ins. Co. v. Evans, 1997 WL 535187, *11 (E.D. Pa. Aug. 4, 1997) (in accordance with covenant not to compete, prevailing party entitled to recover costs, expenses and attorney's fees incurred in connection with litigating enforceability of covenant); Ales v. Anderson, Gabelmann, Lower & Whitlow, PC, 728 N.W.2d 832, 841 (Iowa 2007) (pursuant to non-compete agreement, prevailing party entitled to reimbursement of costs and attorney's fees incurred in pursuing or defending a claim or dispute brought to arbitration or to a court of competent jurisdiction under the agreement); McMann v. McMann, 942 S.W. 2d 94, 96 (Tex. Ct. App. 1997) (agreement incident to divorce decree provided for reasonable attorney's fees and expenses to party who successfully prosecuted or defended suit under the agreement).
As well, Article 20 cannot be interpreted as a waiver by Casco to recover its own fees as a result of an action it carried forward due to John Deere's unjust impairment and termination of the Dealer Agreement. Casco could not have waived that right, for the simple reason that the right did not exist when the contract was executed in 1986. Rather, it came into being in 2000, by way of Law 288 of September 1, 2000. And no one can waive a right that does not exist. See, Fenning v. Tribunal Superior, 96 P.R.R. 602 (1968)("To constitute a waiver it is essential that there be an existing right, benefit, or advantage. It does not constitute a valid waiver if it is not established that such right, benefit, or advantage was existent at the time the waiver was constituted"). Id. at 608-609 (emphasis and citations omitted); BLACK'S LAW DICTIONARY, supra (stating in context of "waiver," that "[t]he party alleged to have waived a right must have had both knowledge of the existing right and the intention of forgoing it)." Id. at p. 1813.
The only right to recovery of attorney's fees that could be said to have existed in 1986 so as to fall under John Deere's reading of Article 20, is to fees on account of frivolousness or temerity pursuant to Rule 44.1(d) of the Puerto Rico Rules of Civil Procedure. But that is not what Casco is after in this case.
As for costs, in 1986 a prevailing party could have recovered them by operation of Fed.R.Civ.P. 54. This Rule "codifies a venerable presumption that prevailing parties are entitled to costs." Marx v. General Revenue Corp., 568 U.S. 371, 377, 133 S.Ct. 1166, 185 L.Ed.2d 242 (2013). Thus, a contractual waiver of costs may only be enforced "where it is unequivocal." Roger v. First Health Corp., 2010 WL 11509054, *8 (C.D. Cal. Mar. 26, 2010) (citing in part Saunders v. Washington Metropolitan Area Transit Authority, 505 F.2d 331, 334 (D.C. Cir. 1974) ). A waiver is not unequivocal unless it explicitly references the costs of suits generally awarded to a prevailing party under Fed.R.Civ.P. 54. Id. And that is not what Article 20 states. In all, there is no contractual bar to Casco's recovery of costs under Fed.R.Civ.P. 54 and of fees under Article 7 of Law 75.
Given this result, it is unnecessary to analyze Casco's argument that because the right to recover fees under Article 7 of Law 75 is of a public order, it cannot be waived (Docket No. 377, pp. 9-10). See, e.g., Puerto Rico Civil Code, P.R. Laws Ann. tit. 31, § 3372 )("The contracting parties may make the agreement and establish the clauses and conditions which they may dem advisable, provided that they are not in contravention of law, morals, or public order"); P.R. Laws Ann. tit. 10, § 278c (Law 75) ("The provisions of this chapter are of a public order and therefore the rights determined by such provisions cannot be waived"); Parker Waichman LLP v. Salas, 263 F.Supp.3d 369, 378 (D.P.R. 2017) ("The Supreme Court of Puerto Rico has pristinely defined the concept of public order as a cause for the nullification of contracts executed in violation of that principle") (quotations and citations omitted).
John Deere asserts that applying Law 288 in this case would be contrary to the Puerto Rico Supreme Court's decision in Warner Lambert v. Superior Court, 101 D.P.R. 378 (1973), 1 P.R. Offic. Trans. 527 Docket No. 347, pp. 5-7. In Warner Lambert, the Supreme Court held that application of the Law 75 requirement of just cause for termination to a distribution contract that predated Law 75's enactment in 1964 would violate the Contracts Clause. Id. at 561, 101 D.P.R. 378. The Court observed that the contract in question authorized unilateral termination. Id. at p. 536, 101 D.P.R. 378. Further, the law in force at the time that the parties executed the contract permitted that type of termination. Id. at 555-556, 101 D.P.R. 378.
In this setting, the Supreme Court pointed out that Law 75's definition of just cause for termination had the effect of "depriving the principal of the right to terminate the contract at any time." Id. at 556, 101 D.P.R. 378. As such, it substantially modified the contract, taking away from that party a contractual right of considerable economic value and transferring it from one patrimony to another, exposing the principal to liability based on a complex formula of damages. Id. at 556-557, 101 D.P.R. 378. Thus, the Court concluded that applying the statutory just cause requirement to the contract violated the constitutional guarantee against impairment of contractual obligations. Id. at 561, 101 D.P.R. 378.
Yet, as mentioned earlier, there is no waiver in the Dealer Agreement prohibiting recovery of fees by Casco as the prevailing party in an action to enforce the terms of the Dealer Agreement under Law 75. By extension, application of the fee-shifting provision would not affect contractual rights arising before the [statutory] enactment." Landgraf v. USI Film Prods., 511 U.S. 244, 278, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994) (disallowing application of newly enacted provisions of Civil Rights Act creating, inter alia , right to recover compensatory and punitive damages, in contrasting situation of a case that was already pending on appeal when the statute was enacted). All things considered, applying Article 7 to this case does not constitute a "substantial modification" (i.e., substantial impairment) of the Dealer Agreement under the Contracts Clause.
C. Law 75's Fee-Shifting Provision
John Deere argues that the concession of fees under Article 7 should be denied because the concession is not mandatory; no special circumstances exist such as obstinacy or temerity by John Deere to justify an award of fees; and the lodestar method that Casco relied on to sustain its request is inapplicable as a matter of Puerto Rico law to a fee award under Law 75 (Docket No. 347, pp. 8, 17, 19).
To be sure, an award of attorney's fees under Law 75 is "discretionary". B. Fernández & Hnos., Inc. v. Kellogg USA, Inc., 516 F.3d 18, 28 n.7 (1st Cir. 2008). The statute states as much: "In every action filed pursuant to the provisions of [Law 75], the court may allow the granting of attorney's fees to the prevailing party, as well as a reasonable reimbursement of the expert's fees." P.R. Laws Ann. tit. 10, § 278e (emphasis added). But this does not mean that awarding fees to Casco would be inappropriate. Quite the opposite.
As Casco correctly points out, the language of Article 7 tracks that of fee-shifting statutes in federal civil rights laws, which the Puerto Rico Legislature explicitly used as a model to enact Article 7. To this end, the Statement of Motives of Law 288, which amended Law 75 to add the fee-shifting provision as Article 7, reads:
Act No. 75 of June 24, 1964, as amended, was promulgated to protect local distributors from abusive practices by manufacturers who arbitrarily put an end to their relationships after having created a favorable market for their products or services.
In spite of the protections offered by said legislation, at times it is extremely onerous for a local distributor to legally face the big companies that assume ownership of his/her subsistence in order to vindicate their rights. For said reasons, the Legislature deems it necessary to allow the granting of attorney's fees to the prevailing party under parameters similar to those under Title VII of the Civil Rights Act of 1964, as amended.
See, Docket No. 333-5. Likewise, and although John Deere contends otherwise, it would be an abuse of discretion for the court to disregard the Puerto Rico Legislature's clear intent to allow the granting of attorney's fees to the prevailing part under Law 75 by way of Article 7 of the statute "under parameters similar to those under Title VII ," or analogous fee-shifting provisions. Id. (emphasis added). Along this line, Title VII of the Civil Rights Act of 1964, as amended, provides in part, that "[i]n an action or proceeding" under the Act, "the court, in its discretion, may allow the prevailing party ... a reasonable attorney's fee as part of the costs." 42 U.S.C. § 2000e-5(k) (emphasis added). In fact, the same language is found in the Civil Rights Attorney's Fee Act of 1976 ("Section 1988"). See, 42 U.S.C. § 1988 ; Hensley v. Eckerhart, 461 U.S. 424, 433 n. 7, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983) ("The provision for counsel fees in § 1988 was patterned upon the attorney's fees provisions contained in Title II and VII of the Civil Rights Act of 1964," and "[t]he standards for awarding fees under Section 1988 and Title VII are the same").
As the First Circuit has explained, although these fee-shifting provisions are "couched in permissive terminology" (i.e., the court "may allow" instead of "shall allow"), "awards in favor of prevailing civil rights plaintiffs are virtually obligatory." Gay Officers Action League v. P.R., 247 F.3d 288, 293 (1st Cir. 2001) (citing First Circuit case law regarding prevailing civil rights plaintiffs’ presumptive entitlement to fee awards). That is so, because once a plaintiff achieves prevailing party status, "[t]he burden is on the defendant to show that unusual conditions would make an award unjust or inappropriate." De Jesús Nazario v. Rodríguez, 554 F.3d 196, 200 (1st Cir. 2009) (quoting United States v. Cofield, 215 F.3d 164, 171 (1st Cir. 2000) ). Those conditions are "narrowly circumscribed" to outrageous, inexcusable, or bad faith conduct on the part of the plaintiff or its counsel during the litigation, or if a grant of fee-shifting might impose an undue hardship. De Jesús Nazario, 554 F.3d at 200-201 (citations omitted). The rationale for this is that "Congress meant to encourage such lawsuits, because of their public purpose." Cofield, 215 F.3d at 170 (quoting Newman v. Piggie Park Enter., Inc., 390 U.S. 400, 402, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968) ); Hensley, 461 U.S. at 429, 103 S.Ct. 1933 (purpose of fee award is to "ensure ‘effective access to the judicial process’ for persons with civil rights grievances")(citation omitted). The court sees no reason on the present record for why the same rationale should not apply to Article 7 of Law 75.
The Puerto Rico Legislature expressed in Law 288's Statement of Motives that Article 7 is meant to address the "extremely onerous" nature of legal suits for local distributors to vindicate their rights against the "big companies that assume ownership of his/her subsistence" (i.e., their distribution rights under contract) (Docket No. 333-5). And the First Circuit has acknowledged that Law 75 has the public purpose of "level[ing] the contractual conditions between two groups" that are economically unequal. V. Suárez & Co. v. Dow Brands, Inc., 337 F.3d 1, 7 (1st Cir. 2003) (quoting Walborg Corp. v. Superior Court, 104 D.P.R. 184, 4 P.R. Offic. Trans. 258, 265 (1975), overruled on other grounds, World Films, Inc. v. Paramount Pict. Corp., 125 D.P.R. 352 (1990) ); Triangle Trading Co., Inc. v. Robroy Industries, Inc., 200 F.3d 1, 2 (1st Cir. 1999).
John Deere invites the court to disregard Law 288's Statement of Motives because "Title VII's purpose and aim are materially different than those of Law 75" (Docket No. 347, pp. 16-17). It points to the fact that civil rights laws are meant to eradicate racism and discrimination, whereas the policy objectives of Law 75 are merely economic in nature and are not comparable to those underlying Title VII. Id. And it directs the court to language in Warner Lambert, to the effect that Law 75's Statement of Motives did not adduce sufficient facts to support its public policy objectives. Id. at 7. The court is not persuaded.
The material objectives behind the fee-shifting provisions of Title VII and Article 7 of Law 75 are in unison – to facilitate and promote plaintiffs’ vindication of their rights vis-à-vis a historically stronger opponent, when the latter has impermissibly encroached on those rights. Whether the rights at stake are to equal protection under the law or of a contractual nature, is beside the point. Similarly, the Puerto Rico Supreme Court's expressions in Warner Lambert about Law 75's public policy have not been sufficiently supported by facts, public hearings or debate, but rather were made as part of the Contracts Clause analysis, to assess the validity of a retroactive application of Law 75 to impair a pre-existing contract that permitted the principal to unilaterally terminate the contract consistently with the law in force at the time the parties executed the contract. See, Warner Lambert, 1 P.R. Offic. Trans. at 554-561, 101 D.P.R. 378 (analyzing topic).
Notwithstanding, Warner Lambert otherwise recognizes that the Puerto Rico Legislature has broad powers "to enact reasonable measures to safeguard the fundamental interests of the people and promote the common welfare." Warner Lambert, 1 P.R. Offic. Trans. at 550, 101 D.P.R. 378. And this court "is not free to reach conclusions contrary to those of the Puerto Rico Legislature concerning legislative facts bearing on the wisdom or utility of the Act." Pan Am. Computer Corp. v. Data Gen. Corp., 562 F.Supp. 693, 698 (D.P.R. 1983) (analyzing scope of holding in Warner Lambert in denying a due process challenge to Law 75; cataloguing as dicta expressions in Warner Lambert about the absence of factual basis for the legislative determination, for they were made in an impairment of contract setting; and noting that it has no binding effect in a different, due process context)(citations omitted).
John Deere maintains that concession of attorneys’ fees under Law 75 requires a finding of temerity under Puerto Rico Rule of Civil Procedure 44.1(d) (Docket No. 347, pp. 11-12, 18). As support, it relies on Cadierno Corp. v. Rowland Coffee Roasters, Inc., 2010 WL 3168203 (TCA 2010). In Cadierno, the principal appealed a granting of attorney's and expert's fees to the prevailing dealer. The Puerto Rico Court of Appeals affirmed the award, resolving the issue strictly under Rule 44.1(d), which as mentioned earlier, demands a showing of temerity. The Cadierno court did not cite, discuss, or in any way construe Article 7 of Law 75.
As well, in P.R. Oil Co. v. Dayco Products, Inc., 164 D.P.R. 486 (2005), 2005 WL 946554 (Slip P.R. Offic. Trans.), the Puerto Rico Supreme Court affirmed the appellate court's judgment denying attorney's fees to the dealer under Puerto Rico Rule of Civil Procedure 44.1(d) because the supplier had not been obstinate. The dealer in that case did not, however, request fees under Article 7 of Law 75, and none of the courts therein construed this specific statutory provision.
To boot, fee-shifting provisions of the type found in the federal civil rights laws, and on which Article 7 is based, have a compensatory, rather than a punitive, purpose. See Corpak, Inc. v. Ramallo Brothers Printing, Inc., 125 D.P.R. 724, 734-39 (1990) (Slip P.R. Offic. Trans. at 8-9) (contrasting compensatory purpose of federal fee shifting statutes and punitive nature of fees awarded under Rule 44.1(d) of Puerto Rico Rules of Civil Procedure). This means that attorney's fees may be recovered by a prevailing party under those statutes without having to show temerity or obstinacy, as otherwise required under Rule 44.1(d). Id. at 8 ; Declet Ríos v. Dpto. de Educación, 177 D.P.R. 765, 782 n. 9 (2009) (certified translation at Docket No. 333-6)(citing López Vicil v. ITT Intermedia, Inc., 143 D.P.R. 574 (1997) (certified translation at Docket No. 333-7)). In consequence, fees may be recovered by Casco in this case under Article 7 without having to prove John Deere's temerity, frivolity, or obstinacy. And there are no special circumstances on the record that would make an award of fees to Casco unjust or inappropriate.
John Deere cites Christiansburg Garment Co. v. Equal Opportunity Commission, 434 U.S. 412, 422, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978), a Title VII case where the defendant prevailed and sought attorney's fees, for the proposition that "a plaintiff should not be assessed his opponent's attorney's fees unless a court finds that his claim was frivolous, unreasonable, or groundless" (Docket No. 347, p. 14). But that only applies when a defendant is the prevailing party, which is not the situation here.
The only argument John Deere has come up with in that regard, is that Casco cannot claim to be on the same footing as a victim of discrimination who lacked the resources to retain paid counsel, because it was represented by competent counsel and experts, and was able to pay more than $800,000 in fees over the course of litigation (Docket No. 347 at p. 17). Even so, John Deere does not point to any language in Article 7 or its legislative history from which to conclude that the fee-shifting provision was meant to reward only those distributors that lack the resources to finance their litigation.
In fact, interpreting Section 1988, various circuit courts of appeals have recognized that "the ability of a party to bring a suit without a fee award is not a special circumstance rendering a fee award unjust." Jones v. Wilkinson, 800 F.2d 989, 992 (10th Cir. 1986) (endorsing decisions of Second, Fifth, Ninth, and Eleventh Circuits). And Supreme Court precedent interpreting Section 1988 confirms that "[p]laintiffs who can afford to hire their own lawyers, as well as impecunious litigants may take advantage of [the fee-shifting] provision." Blanchard v. Bergeron, 489 U.S. 87, 94, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989) (fee-shifting provision contemplates reasonable compensation considering all circumstances, regardless of actual fee agreement).
John Deere posits that the lodestar method, used by Casco in its fee application to calculate the reasonable fees that it incurred in connection with this case, does not apply as a matter of Puerto Rico law to an award under Law 75 (Docket No. 347, p. 19). As support, it cites Corpak, 125 D.P.R. at 724 (Slip P.R. Offic. Trans. at 1 ); and López Vicil, 143 D.P.R. at 574 (certified translation at Docket No. 333-7).
In Corpak, the Puerto Rico Supreme Court explained the distinction between using the lodestar method pursuant to federal fee-shifting statutes, which seek to "compensate the prevailing party for the expenses reasonably incurred in the judicial proceedings irrespective of the ‘conduct’ assumed by the losing party," and Rule 44.1(d) of the Puerto Rico Rules of Civil Procedure, which "depends exclusively" on "whether or not the losing party, or his counsel, acted in a ‘frivolous or obstinate manner.’ " Corpak, 125 D.P.R. at 736 (Slip P.R. Offic. Trans. at 8-10 ) (emphasis omitted). Because of that distinction, the Supreme Court indicated that nothing in Rule 44.1(d) supports the inference "that the amount the obstinate or frivolous party shall bear must necessarily match the actual attorney's fees paid by the prevailing party" (id., p. 9), which is what the lodestar method tends to reflect. Instead, the amount of fees awarded under Rule 44.1(d) corresponds to "the degree or intensity" of the obstinate or frivolous conduct. Id.
From this construction, far from "rejecting" application of the lodestar method in a case such as this, where Rule 44.1(d) is not at issue, Corpak supports the use of the lodestar as the preferred method for determining adequate compensation to the prevailing party for disbursements made to vindicate its rights pursuant to a compensatory fee-shifting statute such as Article 7 of Law 75. See, Coutin v. Young & Rubicam P.R., Inc., 124 F.3d 331, 337 (1st Cir. 1997) (noting that the lodestar method is the "strongly preferred method" when determining fee awards under Section 1988 ).
Along this line, in Lopéz Vicil, the Puerto Rico Supreme Court held that "ordinarily , the amount that the attorney of a winning worker in a claim pursuant to [Puerto Rico] Act No. 100 [of June 30, 1959, as amended, P.R. Laws Ann. tit. 29 § 146 et seq. ] ... shall be twenty five percent (25%) of the base compensation granted to the worker." 143 D.P.R. at 582 (emphasis added). At the same time, the Supreme Court acknowledged that, in cases involving great effort and a hostile defense, the attorney of the prevailing plaintiff may elect to request an amount greater than 25% of the base recovery, by relying on the lodestar method and submitting a sworn memorandum detailing the hours worked and the hourly rate so that the court may evaluate its reasonableness. Id. at 583-584.
Law 100 is Puerto Rico's "general discrimination statute." Ramos-Santiago v. WHM Carib, LLC, 2017 WL 1025784, *1 (D.P.R. Mar. 14, 2017).
Furthermore, the Supreme Court explained that "[t]he case may be that the calculation of hours per fee is less than twenty-five percent (25%) of the compensation. The attorneys have the option to claim under [the lodestar] method or receive the referenced percent. " Lopéz Vicil, 143 D.P.R. at 583 n.2 (emphasis added). On the whole, it is apparent that the Puerto Rico Supreme Court did not reject wholesale the use of the lodestar method to calculate fees in Law 100 cases, much less in all cases involving fee-shifting such as in Law 75.
D. Recoverable Fees
1. Expert Witness Fees
John Deere did not object to the amount that Casco requests as reimbursement for expert witness fees for the two experts that it engaged in this case (an economist and a damages expert), totaling $70,621.15. That amount is supported by a verified declaration of counsel (Docket No. 333-1, pp. 8-9) and verified declarations by the two experts regarding their rates and fees in this action (Docket Nos. 251-2, 251-6 and 251-27). The court finds reasonable Casco's request for $70,621.15 as reimbursement for those experts’ fees.
2. Attorney's Fees
Casco asks for payment of $770,145.59 in attorney's fees, including for work conducted on appeal, and to litigate this collateral fee dispute (Docket Nos. 333, pp. 15-17; 355, p. 38; 361, p. 2). Under compensatory fee-shifting statutes, fee recovery applies to proceedings in the trial court, including post-judgment motions and fee litigation, as well as fees for work performed on appeal. See Torres-Rivera v. O'Neill-Cancel, 524 F.3d 331, 340-341 (1st Cir. 2008) ; Souza v. Southworth, 564 F.2d 609, 613-14 (1st Cir. 1977). There is no reason for not following the same path here.
Casco submitted its calculation of attorney's fees using the lodestar method, which requires the court "to determine the base amount of the fee to which the prevailing party is entitled by multiplying the number of hours productively expended by counsel times a reasonable hourly rate." Lipsett v. Blanco, 975 F.2d 934, 937 (1st Cir. 1992) (citing Hensley, 461 U.S. at 433, 103 S.Ct. 1933 ). The computation is made "by ascertaining the time counsel actually spent on the case ‘and then subtract[ing] from that figure hours which were duplicative, unproductive, excessive, or otherwise unnecessary.’ " Lipsett, 975 F.2d at 937 (citation omitted). Hourly rates are then applied to the constituent tasks, based on "prevailing rates in the community for comparably qualified attorneys." Id. (citation omitted). As developed, the lodestar calculation "represents a presumptively reasonable fee, although it is subject to upward or downward adjustment in certain circumstances," id., including for the results obtained and awards in similar cases. See, Hensley, 461 U.S. at 435 & n. 9, 103 S.Ct. 1933 (referencing factors listed in Johnson v. Georgia Highway Exp., Inc., 488 F.2d 714, 717-719 (5th Cir. 1974) ).
Against this backdrop, in support of its proffered lodestar calculation, Casco submitted four verified declarations of counsel attesting to the hourly rates charged and the credentials of the attorneys (Docket Nos. 333-1, 333-2, 33-3 and 361-1), as well as detailed contemporaneous timecards describing the work performed by Casco's counsel in relation to the time invested in this case, from 2013 through March 2021 (Docket Nos. 251-1 through 251-4 and 251-16; 333-2, pp. 9-60; 333-4 and 361-2). John Deere does not challenge the hourly rates charged by Casco's counsels; the reasonableness of Casco's counsels’ staffing in the case; or their expertise to try this case through trial and on appeal. Nevertheless, it asks for a series of downward adjustments to the lodestar based on other objections, for a total a requested reduction of $112,987.10 (Docket No. 358-2).
a. Work Unrelated to the Case and Duplicate Time Entries.
John Deere draws attention to a series of time entries reflecting time charged for matters unrelated to this litigation ($1,086.88) and duplicate time entries ($4,479.00), objecting that these entries should be deducted from Casco's fee request (Docket Nos. 354, pp. 2-3; 354-2, pp. 2-3). Casco accepts these deductions, which it identified as $5,565.88, basing the adjustment for duplicate time entries on a calculation that John Deere made in Appendix II-b, as "Deducted Amount" (Docket No. 354-2, p. 3). In its sur-reply, however, John Deere clarified that the deduction for duplicate time entries should have been $6,279.00, and not $4,479.00 as miscalculated initially in the original Appendix (Docket No. 358 at p. 13), and submitted a revised Appendix (Docket No. 358-1). The court has independently verified these base numbers against the time entries and agrees that the proper deduction for duplicate time entries is $6,279.00. Applying the correct deduction, Casco's fee request must be further reduced by $1,800, which brings its total attorneys’ fee request down to $768,345.59.
b. Recordkeeping Objection.
John Deere requests a deduction of $1,955.25 corresponding to what it characterizes as "time billed [that] does not match the actual time of those tasks" (Docket No. 354, p. 3). The requested deductions are four time entries relating to work performed on key depositions by Casco's counsel: John Deere's Rule 30(b)(6) deposition (11 hours billed, while deposition lasted 6.9 hours); the deposition of a John Deere employee, Diego Rozo (2.5 hours billed, while deposition lasted 1.5 hours); the depositions of Casco personnel, Johanna Rive and Gil Melecio (8.25 hours billed, while two depositions lasted 5 hours total); and the deposition of Casco's damages expert, Reynaldo Quiñones (4 hours billed, while deposition lasted 2.75 hours). Each of these time entries describe the work performed generally as "taking of" or "conducting" the pertinent deposition, and accounts for more time than was spent in the actual deposition, as reflected in each deposition transcript (Docket No. 354, pp. 3-4). On this basis, John Deere argues that the time charged in excess of the hours spent at the deposition itself should be deducted. Id.
Casco responds that the work relating to "taking" or "conducting" these depositions reasonably included time spent ahead of the deposition to prepare, and time spent afterwards to collect work product impressions, discuss the deposition with the client, and other legitimate and reasonable tasks related to "taking" or "conducting" each deposition, which was block-billed with the time spent at deposition (Docket No. 355, pp. 24-25). The court is persuaded by Casco's explanation, given that counsel's timecards reflect other instances of block billing for pertinent tasks that John Deere is not disputing. In the court's experience, the descriptions provided by Casco sufficiently encompass legitimate work to prepare and debrief in relation to the "taking" or "conducting" of the pertinent depositions, and they are not "so nebulous" that they prevent the paying party from determining their accuracy, or the reasonableness of the time spent. Cf. Lipsett, 975 F.2d at 938.
c. Work on Unsuccessful Claims or Motions
John Deere prays for deductions involving time spent on "failed claims or motions," totaling $79,857.63 (Docket No. 354, pp. 4-7). In this way, it bids for the deduction of time entries related to Casco's request for injunctive relief ($33,960.50, see, Docket No. 354-2, pp. 7-9); Casco's post-trial motion practice and cross-appeal on the dolus claim and the counterclaim ($5,698.75 and $3,180.38, respectively, id. at pp. 10-11); Casco's motion for summary judgment ($28,379.25, id. at p. 12); and Casco's motion in limine ($4,683.75, id. at p. 13). John Deere asserts that "work on an unsuccessful claim cannot be deemed to have been expended in pursuit of the ultimate result achieved ... and therefore no fee may be awarded for services on the unsuccessful claims" (Docket No. 354, p. 4)(quoting Hensley, 461 U.S. at 435, 103 S.Ct. 1933 )(citing Gay Officers Action League, 247 F.3d at 293 ).
However, as John Deere recognizes in its opposition brief, the rationale for discounting hours spent on failed claims applies only where the successful and unsuccessful claims arise from a different core of facts or are based on unrelated legal theories (Docket No. 354 at pp. 4-5, citing Gay Officers Action League, 247 F.3d at 293 ). Properly stated, under the doctrine of "interrelatedness," when "the losing claims included a ‘common core of facts’ or ‘were based on related legal theories’ linking them to the successful claim ... the award may include compensation for legal work performed on the unsuccessful claims." Hensley, 461 U.S. at 435, 103 S.Ct. 1933 ; Gay Officers Action League, 247 F.3d at 298 n. 7. In addition, "[w]hen interrelatedness is in question, the overall degree of the prevailing party's success is an important datum." Lipsett, 975 F.2d at 941.
John Deere submits that there is no interconnectedness because Casco's failed dolus claim was premised on the argument that Casco could have pursued a constructive termination claim in 2009, which it contends happened " well before the events that lead to the termination of the distribution agreement in 2013 and the cancellation of a machine order in late 2012" that were the basis of the successful Law 75 claims (Docket No. 358, p. 16 n. 10)(citing Docket No. 330 at p. 17) (emphasis in the original). Further, it cites Figueroa-Torres v. Toledo-Davila, 232 F.3d 270, 278-279 (1st Cir. 2000), for the proposition that the court would not be justified in aggregating those claims to determine the appropriate amount of attorney's fees, because the facts and the law necessary to prevail or prove damages on Casco's unsuccessful non-Law 75 claims were different than those necessary for Casco to prevail or prove damages on its successful Law 75 claims (Docket No. 358, pp. 15 and 17-18).
The facts proven at trial, and on which the parties focused the bulk of their legitimate discovery efforts and pre- and post-trial motion practice, included events from 2002 through 2013 involving John Deere's withdrawal of commercial support to Casco because its owners carried a competitive product line (e.g., revoking monetary contributions for promotional activities, unilateral modification of payment terms, lack of access to annual dealer conferences and to John Deere's computerized training system), and Casco's actions over the same period, which John Deere characterized as breaching essential obligations (e.g., noncompliance with NMQ requirements and untimely payment).
Those facts were relevant to John Deere's just cause defense under Law 75, for termination of the Dealer Agreement in March of 2013, and to Casco's factual theory that John Deere's reasons for terminating the agreement were pretextual (see, Docket No. 303-1, pp. 18-22; 330, pp. 12-13). And they were also pertinent to the dismissed dolus claim, for that claim (had it not been dismissed, or had Casco prevailed in its post-judgment motions or on appeal to reverse the dismissal) would have required proving a continuous pattern of deceit by John Deere since or around 2005 and after the Settlement Agreement that the parties signed in 2009, based on the same facts used by Casco to establish that John Deere's reasons for terminating the Dealer Agreement were pretextual. See, Joint Pretrial Report, Docket No. 197, pp. 26-29. Likewise, the counterclaim on which John Deere succeeded revolved around Casco's failure to pay certain invoices to John Deere as of March 2013, which was indispensable to John Deere's ultimately unsuccessful theory of just cause under Law 75 to terminate the Dealer Agreement on March 29, 2013 (id. at p. 82; Docket Nos. 303-1, pp. 26, 21-22; 330 at p. 11). Thus, the claims were "so factually imbricated ... as to make separate treatment of the constituent attorney time inappropriate." Wagenmann v. Adams, 829 F.2d 196, 225 (1st Cir. 1987).
Taking note of the degree of interrelatedness underlying the claims and Casco's success on the Law 75 claims, it is not necessary to deduct time allocated to any particular unsuccessful claim. Still, according to the verified declarations of its counsel, Casco already applied a deduction or downward adjustment of $59,017.55 (see, a Docket No. 355, p. 29 n.16), anticipating potential deductions for unsuccessful claims in this case and its loss on the counterclaim (Docket No. 333, p. 16). Over Casco's objection, John Deere requests that this be interpreted as an admission by Casco that such deductions are warranted, and for the court to complete the deductions it advocates for (Docket No. 354, p. 5). The court declines this invitation, finding that Casco was not legally required to make this kind of deduction because all the claims were factually interrelated. For the same reason, the court will not deduct time spent on what John Deere terms the "failed" motions for injunctive relief, summary judgment or in limine , as these were all necessary steps to Casco's ultimate victory. And given its degree of success, it is entitled to those fees. See, Cabrales v. County of L.A., 935 F.2d 1050, 1053 (9th Cir. 1991) ("[A] plaintiff who is unsuccessful at a stage of litigation that was a necessary step to her ultimate victory is entitled to attorney's fees even for the unsuccessful stage").
d. Time entries related to settlement negotiations
John Deere seeks a reduction of $3,581.63, corresponding to 16.25 hours dedicated by Casco's counsel to unsuccessful settlement discussions or negotiations with John Deere's counsel. As support, it relies on Janney Montgomery Scott LLC v. Tobin, 692 F.Supp. 2d 192, 198 (D. Mass 2010) and Osorio v. Mun. of Loíza, Civil No. 13-1352 (BJM), 2016 WL 3264122, *7 (D.P.R. June 14, 2016), where the courts concluded that settlement negotiations should not normally be considered in the lodestar calculation (Docket No. 354, p. 7). Casco opposes, arguing that the reasoning of Osorio and Janey Montgomery Scott lacks persuasive weight and should not be followed (Docket No. 355, p. 33).
In Pérez-Sosa v. Garland, 22 F.4th 312 (1st Cir. 2022), the First Circuit observed that Janey Montgomery Scott and Osorio, stand for two closely aligned propositions: that ‘[s]ettlement negotiation are not normally considered in the lodestar calculation’ and that the ‘institutional policy favoring settlement’ requires deducting settlement time from the fee award so as not to ‘discourage parties from engaging in such negotiations.’ " Id. at 322. The First Circuit, though, expressed that those decisions did not represent the weight of authority, and rejected the propositions for which they stood, concluding that a court should include time reasonably expended in settlement negotiations within the lodestar when calculating attorney's fees. Id.
The holding in Pérez-Sosa disposes of John Deere's argument and, applying the holding here, defeats John Deere's claim. Although John Deere criticizes Casco's settlement strategy, John Deere does not challenge the amount of time spent on settlement efforts by Casco's counsel in this complex case (16.25 hours) as excessive or not tailored to the needs of this case. In fact, it describes a settlement negotiation process spanning various stages, beginning with the filing of the complaint in 2013 and ending with the First Circuit's mandatory settlement program (Docket No. 358, p. 19). As such, the fees at issue are reasonable and recoverable in the lodestar.
e. Block-Billed Time Entries Comprising Work on Unsuccessful Claims or Motions
John Deere calls on the court to apply a percentage discount to block-billed time entries that correspond to work on both the unsuccessful claims or motions that John Deere deems unrecoverable and work that it does not object. Initially, John Deere pled for a total deduction of $29,265.69, after applying a variety of percentage discounts, ranging from 14% to 60% depending on the type of unsuccessful claim or motion at issue (Docket No. 354, pp. 7-10). In its sur-reply briefing, however, John Deere acquiesced to a minimum percentage discount of 20% to all the block-billed time entries it identified as containing work on the unsuccessful claims or motions, for a total requested deduction of $14,849.83 (Docket No. 358, p. 19). And, it argues that the court may adjust block-billed entries "to achieve an equitable result." Id. (citing Torres-Rivera, 524 F.3d at 340, and E.E.O.C. v. AutoZone, 934 F.Supp.2d 342, 354-355 (D. Mass. 2013). Casco objects to any deductions, pointing out that deductions for block-billed time entries do not proceed automatically, or simply because a time entry describes more than one task (Docket No. 355, p. 35).
Ideally, time-keeping should itemize the time expended on each individual task, as doing otherwise may make it difficult to ascertain the number of reasonable hours spent on those tasks. See, 2 Fair Employment Practices § 15:163, p. 6 (discussing topic). The idea behind the equitable downward adjustment of block-billed time entries responds to that difficulty. But John Deere seeks to deduct time for work reasonably performed in this case, albeit partially spent on unsuccessful claims or motions. Applying the same logic as in Part II.D.3, the court accepts Casco's counsel's block-billed time entries as reasonably encompassing work on interrelated claims. Hence, the requested deductions are not warranted.
f. Litigation of the Fee Request
Casco submitted a supplemental verified declaration of counsel on July 12, 2021, with corresponding contemporaneous timecards, reflecting an additional amount of $35,205.37 in fees incurred by Casco for services rendered after March 12, 2021, up to June 21, 2021, to defend Casco's interests in the collateral fee dispute (Docket Nos. 361-1 and 361-2). It argued that time reasonably expended in connection with fee applications is itself compensable, a proposition with which the court agrees. See Torres-Rivera, 524 F.3d at 340. Accordingly, Casco updated the amount it asks for in attorney's fees to $770,145.59 in its motion for leave to supplement (Docket No. 361).
John Deere opposes Casco's supplementary fee application, arguing that certain work included by Casco was not properly connected to litigating the application (Docket No. 363). Specifically, that Casco's counsels represented that the supplementary application included fees for "[o]ther work invoiced and due as payable by Casco after March 12, 2021, in connection with this case ..., including work to compel Deere to pay the amended judgment and a draft motion for execution of the judgment because of Deere's delays in payment and satisfaction in full of the jury's verdict" (Docket No. 361-1, ¶ 5).
John Deere avers that, because it negotiated with Casco to pay the applicable post-judgment interest rate without the need for motion practice, such work by Casco was unnecessary (Docket No. 363, ¶¶ 9-10). Yet, John Deere requests that the entirety of Casco's supplemental fee request be denied. Id. at pp. 3-4. And the court will not "ferret through" the timecards to find support for John Deere's objections. Vélez v. Escuela de Medicina San Juan Bautista, 2008 WL 11357811, *7 (D.P.R. Mar. 31, 2008).
g. Comparative Reasonableness of the Lodestar Calculation
As part of its claim that it is entitled to a setoff, a topic discussed below, John Deere states that, as of January 11, 2021, it had paid its attorneys here, $1,283,690.40 in fees invoiced as of November 30, 2020 (Docket Nos. 347, p. 3 n. 2; 347-1, ¶ 4). Casco responds that John Deere's admission that it spent over $500,000.00 more to litigate this case than what Casco is requesting to be reimbursed as part of the lodestar ($768,345.59, as corrected in this Order), has a "significant bearing" on the reasonableness of Casco's fee request, as it proves that Casco successfully litigated the case more efficiently, with similar resources and at a lower hourly rate (Docket No. 355, pp. 14-15). To this end, it cites Méndez v. Radec Corp., 818 F.Supp.2d 667, 668 (W.D.N.Y. 2011), and other district court cases dealing with the discoverability of the opposing party's fees for comparative purposes. Id. John Deere did not rebut this argument and stated in its opposition to Casco's supplemental fee request, that the total amount sought by Casco in fees and costs was excessive as representing "a whopping 67% of the net judgment in Casco's favor" (Docket No. 363, ¶ 5).
When the fees requested are opposed as excessive in a complex case involving unique facts, the time spent by the opposing party's own counsel on equivalent tasks is relevant to a finding of reasonableness. See Chicago Pro. Sports Ltd. P'ship v. Nat'l Basketball Ass'n., No. 90 C 6247, 1996 WL 66111, *3 (N.D. Ill. Feb. 13, 1996) (when "litigation has been long and complex, involving both unique facts and novel questions of law ... the defendant's fees may provide the best available comparable standard to measure the reasonableness of plaintiffs’ expenditures in litigating the issues of the case")(citing Henson v. Columbus Bank & Trust Co., 770 F.2d 1566, 1575 (11th Cir. 1985) ). Along the same line, the court finds that the total amount of fees incurred by John Deere to try the same case ($1,283,690.40) is a comparable standard by which to conclude that an award of fees to Casco totaling $768,345.59, which is already reduced from the amount actually incurred, is reasonable.
Besides, although the amount awarded in attorneys’ fees is substantial in this case, it is not out of step with awards in similar cases, especially given how spiritedly the parties contested each other's claims. See, e.g., Skytec, Inc. v. Logistic Systems, Inc., 2019 WL 1271459, *4 (Law 75 fee award of $883,353). Taking a "hard-nosed approach to litigation" can have a significant downside, and "[t]he defendants suffer the adverse effects of that downside here." Lipsett, 975 F.2d at 941 (affirming attorney's fee award under Section 1988 that yielded more dollars for counsel ($545,281.37) than the damage award yielded for plaintiff ($525,000)). On this record, John Deere has presented no concrete reasons for why additional downward adjustments to the lodestar calculation are warranted.
E. Taxable Costs
As prevailing party, Casco requests $17,012.83 in taxable costs, under Fed.R.Civ.P. 54(d)(1) and 28 U.S.C. § 1920 (Docket No. 333). The amounts requested are supported by the verified declarations of counsel (Docket Nos. 333-1, ¶¶ 28-31; 333-3, ¶¶ 2, 6-7, 10(e) and 11), and corroborative documentation submitted with the original bill of costs that was incorporated by reference (Docket Nos. 251-6; 251-12 to 251-15; 251-17 to 251-25). Notwithstanding, John Deere raises objections to the recovery of costs as to various items.
1. Photocopies
John Deere challenges the amount of $7,392.29 sought as taxable photocopy expenses (Docket No. 251-5), arguing that the costs of making copies of any materials may only be taxed if "necessarily obtained for use in the case." 28 U.S.C. § 1920(4). It cites to the court's prior Opinion and Order on the post-judgment motions, indicating that "photocopy costs for the convenience, preparation, research or records of counsel may not be recovered" (Docket No. 303-1, p. 28). And it contends that Casco's renewed motion for costs and accompanying declarations of counsel do not provide sufficient description or identification of the copies; which costs Casco seeks to recover; or their purported use, to justify the award (Docket No. 336, pp. 5-6).
In response, counsel for Casco attests, with reference to the submitted copy vendor invoices and pertinent docket entries in this case, that such copies were used for initial disclosures and discovery responses required under the Federal Rules; the taking of necessary depositions, including as use for exhibits during the same; and for use as exhibits at trial, as required by the court. See, Docket Nos. 196, p. 2)(requiring each party to provide two binders with exhibits and documents for identification); 346, p. 7 & n. 5 to n. 8). Also, Casco directs the court's attention to Rodríguez-García v. Dávila, 904 F.2d 90, 100 (1st Cir. 1990), where the First Circuit explained that Section 1920(e), which permits costs to be awarded for duplication of documents used in the case, is not limited to "copy costs for documents actually filed," and "decline[d] to accept so narrow an interpretation of the statute." Id. In the end, "if the costs were reasonably necessary to the maintenance of the action, then they are allowable." Id. After reviewing the invoices in question and citations to the court's record provided by Casco's counsel, the court is satisfied that the photocopies were "necessarily obtained for use in the case." 28 U.S.C. § 1920(4).
John Deere claims that a substantial amount of the costs claimed by Casco are for charges unrelated to actual copy making (Docket No. 336, p. 6). It observes that $2,225.55 of the total photocopy costs requests are actually for tasks "such as (a) ‘computer disks;’ (b) ‘costs for the convenience, preparation, research or records of counsel;’ (c) and ‘miscellaneous expenses, such as messenger services.’ " Id. (citing to Docket Nos. 251-17 to 251-24, and the Court's Taxation of Costs Guidelines ("Guidelines"), pp. 6, 8, and 9). Casco retorts that photocopy costs are not necessarily limited to the costs of making paper copies and may properly include digitalization and other electronic reproduction costs, given that "ESI discovery costs associated with the conversion of ESI into readable format, such as scanning or otherwise converting a paper version to an electronic version ... are compensable under § 1920(4)." Massuda v. Panda Express, Inc., No. 12 CV 968, 2014 WL 148723, *6 (N.D. Ill. Jan. 15, 2014). John Deere does not challenge this interpretation.
On this inquiry, Casco questions how John Deere reached the computation of $2,225.55 as the amount that, in its view, should be deducted on this account, as none of the invoices that Casco submitted with its request for photocopy costs references "messenger services," for example (Docket No. 246, p. 5 n.3). Indeed, the court has reviewed the documents to which John Deere refers (Docket Nos. 251-17 to 251-24) and could find no reference to any such charge on the invoices, although some of them do reflect charges for document scanning ("Doc Scan_Tiff_PDF," "Searchable/OCR") and other document handling fees of the copy vendor, including for Bates-stamping. See, Docket Nos. 251-17 to 251-20, totaling $1,176.94). The court, however, is disinclined to reduce Casco's request for costs by the amount corresponding to such charges by the copy vendor for document scanning, Bates-stamping, and the like, as it already concluded that the copy costs incurred by Casco, as evidenced in the reply brief, were "reasonably necessary to the maintenance of the action." Rodríguez-García, 904 F.2d at 100.
2. Trial Transcripts
John Deere takes exception to Casco's request for taxation of $4,253.89 in trial transcript costs (Docket Nos. 251-6; 333-3, ¶¶ 6-7). To its way of thinking, those transcripts correspond to "daily transcripts of court proceedings," "obtained for the convenience of counsel" and per the court's prior Opinion and Order on the post-judgment motions not taxable as costs, (Docket No. 303-1, p. 7)(citing Paul N. Howard Co. v. P.R. Aqueduct and Sewer Authority, 110 F.R.D. 78, 81 (D.P.R. 1986). Furthermore, John Deere avers that Casco's renewed application does not sufficiently support taxation of daily transcript costs based on their need "for counsel to properly and successfully handle the post-judgment arguments raised by [John] Deere ..." (Docket No. 333-3, p. 4), because the court denied a similar argument by John Deere in its prior Opinion and Order.
In turn, Casco advances that the situations are entirely different. To begin, in Casco's case, the trial transcript costs at issue were necessarily incurred for counsel to properly handle the post-judgment arguments raised by John Deere to overturn the jury verdict, because those arguments were highly fact-dependent. On that end, John Deere sought to overturn the verdict on the Law 75 claims arguing that the evidence presented at trial was insufficient, as a matter of law, to sustain it. See, Docket No. 269. And Casco included in its counsel's verified declaration at Docket No. 333-3, references to the record showing actual uses of the transcripts in Casco's post-judgment motion and the court's own Opinion and Order resolving those motions, which further demonstrates the relevance of the transcripts to resolving those controversies (Docket No. 333-3, ¶ 7).
Further, counsels for Casco attested in the reply brief that the same transcripts were indispensable for Casco to properly oppose John Deere's appeal to the First Circuit, which was based on the same fact-dependent arguments (Docket No. 346, p. 7). John Deere did not refute this proffer. In contrast, as the court noted in its Opinion and Order on the post-judgment motions, transcripts were not needed for John Deere to defend dismissal of Counts 3 and 4 of the complaint, or to sustain the verdict in John Deere's favor on the counterclaim, because the controversies surrounding those claims in the post-judgment stage were purely legal (Docket No. 303-1, 28 n.11).
Finally, John Deere takes issue with the evidence of payment on the pertinent invoices produced by Casco, arguing that evidence of payment had only been produced for $728.63 (Docket No. 336, p. 8). However, with its original and renewed motion for costs, as well as in reply to John Deere's opposition, Casco submitted all of the invoices from counsel showing the pertinent charges from the court reporters, which were advanced by counsel and then reimbursed by Casco (Docket Nos. 251-4, p. 21; 334-4, pp. 5 and 11; 346, p. 10); the verified declaration of counsel to the effect that those amounts "were necessarily incurred and expended" by Casco (Docket Nos. 333-1, ¶¶ 28-30; 333-3, ¶¶ 2, 6 and 7); and court reporter invoices to counsel for Casco that corroborate the charges (Docket Nos. 251-13, 251-14 and 346-1). All said, the request for costs is duly supported.
3. Deposition Transcripts
John Deere charges that Casco "has not demonstrated that it took depositions for a purpose other than discovery or preparation," and failed to provide evidence or an explanation as to why the deposition transcripts were necessary, such that its request for taxation of $4,144.65 incurred in deposition transcript costs should be denied, based on the court's prior reasoning in the Opinion and Order regarding the post-judgment motions (Docket No. 303-1, p. 28). But Casco's counsel's verified declaration at Docket No. 333-3 provides evidence to support deposition transcript costs as necessarily incurred for use in this case, including as evidence at trial. The declaration details, with references to the record, how Casco used the deposition transcripts as direct and impeachment evidence at trial, and points to the testimony of Casco's expert indicating the importance of the deposition testimony to his own analysis of Casco's damages, also used at trial (Docket No. 333-3, ¶ 7 and n.4).
The only deposition transcript that was not used directly at trial for which Casco seeks taxation of costs, is that of the deposition of Mr. Diego Rozo, who was John Deere's Territory Customer Support Manager for Central America and the Caribbean, including Puerto Rico, at the time of the termination, and during the period immediately preceding it. The court, however, has discretion to tax deposition costs when a deposition is not introduced into evidence or used at trial, if "the deposition reasonably seemed necessary at the time it was taken." Pan Am. Grain Mfg. Co. v. P.R. Ports Authority, 193 F.R.D. 26, 38 (D.P.R. 2000) (citations omitted).
Casco proffered, focusing attention on the parties’ Joint Initial Scheduling Conference Memo, that Mr. Rozo was disclosed at the beginning of the case by John Deere as a person with knowledge, whom John Deere would likely use to prove its just cause defense based on Casco's failure to meet the NMQ requirements (Docket No. 47, p. 19, ¶¶ 27 et seq.). John Deere in fact used Mr. Rozo as a witness in its defense at trial (Docket No. 258, Trial Transcript of 3/8/16, pp. 120 et seq.). Given the above, the court finds that the taking of Mr. Rozo's deposition "reasonably seemed necessary at the time it was taken," and the related deposition transcript costs may therefore be taxed under 28 U.S.C. § 1920. Pan Am. Grain Mfg. Co., 193 F.R.D. at 38. No deductions are warranted.
4. Document Translations
Citing Taniguchi v. Kan Pacific Saipan, Ltd., 566 U.S. 560, 132 S.Ct. 1997, 182 L.Ed.2d 903 (2012) and Dávila Feliciano v. P.R. State Ins. Fund, 683 F.3d 405 (1st Cir. 2012), John Deere asks that the court "deny Casco's request for taxation of $3,053.60" in document translation costs, as listed in its original bill of costs (Docket No. 251-6). Nonetheless, recognizing the impact of Tanaguchi and Dávila-Feliciano on the non-recoverability of document translation costs in its renewed motion for costs and fees, Casco explicitly deducted that line item from its prior request for costs (Docket Nos. 33, p. 18; 333-3, ¶ 11). That being so, there is nothing to deduct for this item.
F. The Setoff
In a footnote to its opposition in response to Casco's renewed motion for attorneys’ fees, John Deere expressed, for the first time in this case, that it reserved "the right to seek payment of the fees, costs and disbursements incurred and paid in connection with this litigation concerning enforcement and termination of the Dealer Agreement," and argues that it is entitled to offset under Puerto Rico law any fees the court determines to be owed to Casco under Article 7 of Law 75, pursuant to Article 20 of the Dealer Agreement (Docket No. 347, p. 3 n. 2). Specifically, as elaborated in its sur-reply brief, John Deere's position is that, if the court adopts Casco's reading of Article 20 of the Dealer Agreement, then it is entitled to recover from Casco the costs, fees and disbursements incurred (a) defending its termination of the agreement and (b) enforcing its right to collect on Casco's outstanding balances (the counterclaim) (Docket No. 358, p. 10). As previously noted, John Deere submits that it paid $1,283,690.40 in fees to litigate this case (not just the counterclaim), as of January 11, 2021 (Docket Nos. 347, p. 3 n. 2; 347-1, Declaration of Counsel at ¶ 4).
As discussed in Part II.B of this Opinion and Order, under the terms of Article 20 of the Dealer Agreement, John Deere is not entitled to recover any costs, fees, or disbursements for defending against Casco's claims under Law 75. The express language of the article covers enforcement, not defensive actions and participation in a suit. Id. That leaves the counterclaim brought by John Deere against Casco for the collection of unpaid invoices, as to which John Deere was ultimately successful, and which would ostensibly provide a basis for the recovery of the fees and expenses incurred by John Deere under Article 20 of the Dealer Agreement in pursuing that claim.
In view of the fact that John Deere's fees and expenses to prosecute the counterclaim are sought under the terms of a contract, they are an element of damages to be proven at trial. See House of Flavors, Inc. v. TFG-Michigan, L.P., 700 F.3d 33, 37 (1st Cir. 2012) (noting distinction between ordinary requests for fees that must be made by motion within 14 days of judgment, and those that are "to be proved at trial," and recognizing that the latter includes fees "sought under the terms of a contract")(quoting Fed. R. Civ. P. 54(d)(2) and Advisory Committee Notes on 1993 Amendment). John Deere stated in its counterclaim that it sought recovery of the amounts due by Casco under the unpaid invoices, "together with reasonable costs and attorney's fees" (Docket No. 28, pp. 17-18), which could be read as reserving a claim for fees under the contract. However, John Deere did not present that claim as part of its case in chief on the counterclaim in the final pretrial conference report (Docket No. 197) or during trial.
In addition, John Deere's post-judgment motions made no reference to its entitlement to fees and expenses stemming from the contractual breach, nor was that mentioned in its Bill of Costs and related contemporaneous briefing. After issuance of the final Amended Judgment, the parties’ appeals from that judgment, and the First Circuit's mandate, the judgment is final and the court is barred from entertaining John Deere's claim for contractual fees, which "was necessarily implied in [its] claim in the original suit." Sprague v. Ticonic Nat. Bank, 307 U.S. 161, 168, 59 S.Ct. 777, 83 L.Ed. 1184 (1939) (reasoning that such is not the case for attorney's fees in equity, which are independent from the original proceeding and would not constitute a request for modification of the original judgment). John Deere's failure to prosecute these fees as part of the merits of the counterclaim at trial, in its post-judgment motions, or in its prior appeal, operates as a waiver. Sprague, 307 U.S. at 168, 59 S.Ct. 777.
John Deere filed a Bill of Costs under Rule 54(d)(1) in this case after judgment issued and submitted reply briefing after Casco opposed the request for costs, dealing precisely with John Deere's argument that it was a prevailing party as to the counterclaim (Docket Nos. 260; 280; 303-1, pp. 26-27). Yet, John Deere made no mention of its contractual right to fees or expenses under Article 20 of the Dealer Agreement in those filings.
See also House of Flavors, Inc., 700 F.3d at 37-38.
At any rate, even if John Deere's entitlement to fees and expenses under the Dealer Agreement were not considered itself part of the merits of its counterclaim that had to be proved at trial, John Deere never filed a motion for the recovery of fees and related nontaxable expenses within fourteen (14) days after the issuance of judgment in March 2016, as required by Rule 54(d)(2). See Fed.R.Civ.P. 54(d)(2)(A) ("A claim for attorney's fees and related nontaxable expenses must be made by motion unless the substantive law requires those fees to be proved at trial as an element of damages" (emphasis added)); Fed.R.Civ.P. 54(d)(2)(B)(i) ("Unless a statute or a court order provides otherwise, the motion must: (i) be filed no later than 14 days after the entry of judgment ") (emphasis added). Nor did John Deere move for fees within fourteen (14) days after issuance of the mandate on March 23, 2021 (Docket No. 332), i.e., by April 6, 2021, as required by the court's current Local Rule 54(b) (effective Dec. 21, 2020) or its predecessor, Local Rule 54(a), which was in effect at the time that judgment issued in this case. See, Docket No. 303-1, p. 29).
Both versions of Local Rule 54 provide that, in cases where the parties take appeal from the judgment, "[a]n application for attorneys’ fees ... shall be filed within fourteen (14) days after issuance of the mandate ." (emphasis added).
John Deere's insertion of a reservation of rights in a footnote of its opposition to Casco's motion, also filed beyond the 14-day limit, on April 16, 2021, and without any of the corresponding time sheets to evaluate which fees correspond to John Deere's prosecution of the counterclaim, hardly qualifies as a timely motion under the applicable procedure. Cf. Gray v. Evercore Restructuring L.L.C., 544 F.3d 320, 327 (1st Cir. 2008) (holding that the statement, "in the event that the Court finds that the Amended Complaint fails to state a claim, Plaintiff requests leave to replead" in an opposition motion "does not constitute a motion to amend a complaint").
At this late stage, John Deere has waived any opportunity to seek an award of fees and related non-taxable expenses in connection with its counterclaim under the terms of Fed.R.Civ.P. 54(d)(2) and Local Rule 54. See, e.g., Venegas v. Peer Int'l Corp., Civil No. 01-1215 (JAF), 2006 WL 2950493 (D.P.R. Oct. 16, 2006) (refusing to consider motion for fees filed past Local Rule 54 ’s deadline, noting that allowing departure from deadline where no special circumstances are present "would depreciate [opposing party's] right to prompt notice of its opponent's intent to seek attorneys’ fees"); Pérez y Cia. De Puerto Rico, Inc. v. C&O Brokerage, 672 F.Supp.2d 257, 260 (D.P.R. 2009) (same, where motion for extension of time was filed one day late); Crowley v. L.L. Bean, Inc., 361 F.3d 22, 27-28 (1st Cir. 2004) (district court is not required to excuse a late filing under its local rules).
In its sur-reply, John Deere mentions that it has not waived its right to offset any amounts owed to Casco as prevailing party fees or expenses under Article 7 of Law 75 from those owed by Casco to John Deere under Article 20 of the Dealer Agreement, "because no such right to setoff has accrued and will not accrue unless the Court rules that Casco is entitled to attorney's or expert's fees" (Docket No. 358, p. 11). The court is not persuaded. The fact that Casco requested and is now awarded fees in this case under Article 7 of Law 75 against John Deere is not what triggers John Deere's right to collect fees and expenses regarding the counterclaim under Article 20 of the Dealer Agreement. That provision is not conditional or contingent on Casco's claiming its own fees in an action to enforce the agreement at all.
Likewise, an award of fees to Casco does not operate to revive John Deere's right to fees or expenses regarding the counterclaim under Article 20 of the Dealer Agreement, which it failed to assert according to the Rules and is now waived. As John Deere has no live claim to fees and expenses in this case against Casco for its prosecution of the counterclaim, it will not become a "mutual creditor" of Casco's in that respect. By extension, it has no right to offset that amount under Puerto Rico law. See Fed. Deposit Ins. Corp. v. Arrillaga-Torrens, 212 F.Supp.3d 312, 349 (D.P.R. 2016) (discussing elements of setoff under Puerto Rico law).
G. Post-Judgment Interest
Post-judgment interest under 28 U.S.C. § 1961 on a money judgment is obligatory and also accrues on awards of attorney's fees and costs. See City of Lowell, Mass. v. City of Lowell, Mass., 948 F.2d 10, 21-22 (1st Cir. 1991). Where, as here, the Amended Judgment did not incorporate a decision on the prevailing party's entitlement to fees or costs, post-judgment interest accrues from the date when this court enters a final order establishing Casco's entitlement to fees and costs. See Radford Trust v. First Unum Life Ins. Co. of America, 491 F. 3d 21, 24 (1st Cir. 2007) (quoting Jenkins v. Missouri, 931 F.3d 1273, 1276 (8th Cir. 1991) (attorney's fees accrue interest when the right to fees is established)). That would be from the day that this Opinion and Order is entered on the Docket and correspondingly notified to the parties through record counsel.
III. CONCLUSION
Casco did not contractually waive the right to recover fees or costs as the prevailing party under Law 75. The statute's fee-shifting provision is not being retroactively applied in violation of the Contracts Clause. Considering the record, the court exercises its discretion under Article 7 of Law 75 and awards Casco (1) expert witness fees in the amount of $70,621.15; and (2) reasonable attorneys’ fees based on the lodestar calculation in the amount of $768,345.59, as well as taxable costs in the amount of $17,012.83. John Deere waived recovery of any amounts it incurred to litigate its counterclaim. In consequence, Casco's request for fees and costs at Docket No. 333, as supplemented at Docket No. 361, is GRANTED IN PART . John Deere shall pay the total amount of $855,979.57 awarded to Casco, with post-judgment interest accruing from the date that this Opinion and Order is docketed and thus notified to the parties through counsel, until payment in full.