Opinion
98 Civ. 7724 (RPP)
November 9, 2000.
OPINION
Now pending before the Court is Plaintiffs' application for reimbursement by Defendant Wal-Mart Stores, Inc. ("Wal-Mart") of certain legal fees and expenses.
Background
On March 28, 2000, the Court granted Plaintiffs' motion for sanctions in the form of reimbursement of "all plaintiffs' expenses and legal fees unnecessarily expended due to defendant's failure to make an accurate disclosure of its computer capabilities in December 1998," and ordered Plaintiff's to make an application for such expenses and legal fees. (Mar. 28, 2000 Op. Order at 5.)
On May 31, 2000, Plaintiff's submitted this application for reimbursement of its legal fees and expenses in the amount of $245,549.36) (Declaration of Louis S. Ederer, dated May 31, 2000 (here in after "Ederer Deci. 5/31/00) ¶ 2.) Plaintiff's specify that they seek reimbursement of fees and expenses that fill into six categories:
In addition to the $245,549.36 reimbursement that Plaintiff's requested in their May 31, 2000 Memorandum, Plaintiff's submitted a supplemental request on August 25, 2000 for an additional $33, 921.24 for expenses incurred after the initial memorandum (Declaration of Louis S. Ederer, dated August 25, 2000 (here in after "Ederer Decl 8/25/00") ¶¶ 7-11) for a total request of $279,470.60. The supplemental request will be considered separately at the end of the Opinion.
• "All fees and expenses incurred in attempting to compel Wal-Mart to produce back-up documentation of local purchases of goods bearing plaintiffs' trademarks, after Wal-Mart insisted that such information could not be retrieved from its computer system." (Id. ¶ 2(a).)
• "All fees and expenses incurred in the pursuit of discovery from Wal-Mart's suppliers, which became necessary due to Wal-mart's failure to provide documentation of the requested transactions." (Id. ¶ 2(b).)
• "All fees and expenses incurred in reviewing documents from a sample of Wal-Mart stores (75 in all) that had purchased counterfeit Fubu merchandise from one suppher, Turnovers, Inc." (Id. ¶ 2(c).)
• "All fees and expenses incurred in plaintiffs' preparation for and taking of discovery of Wal-Mart personnel regarding the capabilities of Wal-Mart's computer systems and the availability of computer records regarding local purchases, including fees incurred in the retention of experts from PriceWaterhouseCoopers LLC, which assisted counsel in its preparation." Id. ¶ 2(d).)
• "All fees and expenses incurred in the making of plaintiff motion to compel and for sanctions, which resulted in the Court's March 28. 2000 Order." (Id. ¶ 2(e).)
• "All fees and expenses incurred in plaintiffs' counsel's preparation for and execution of the on-site inspection [of Wal-Mart's computer records] . . . including fees paid to plaintiffs' expert, Computer Forensics, Inc" (Id. ¶ 2(f).)
Defendant submitted a Memorandum in Opposition to Plaintiff's Request for Reimbursement of Legal Fees and Expenses on June 29, 2000. In its memorandum, Defendant argues that five categories of legal fees and expenses should be subtracted from Plaintiffs' calculation, either because Plaintiff would have incurred those expenses even if Defendant had disclosed the information about its computer capability in a timely manner or because the expenses are too vague to be attributed to activities relating to the inaccurate information provided by Defendant. (Defs.' Mem. in Opp. at 2.) The five categories are: 1) legal fees and expenses incurred in seeking and reviewing transactional documents; 2) legal fees and expenses incurred in seeking discovery from third-party suppliers; 3) legal fees and expenses incurred during the depositions of Sallie L. Stroud and Jim Branam; 4) legal fees and expenses incurred as a result of settlement discussions between Plaintiff's and Wal-Mart; and 5) general discovery-related charges and charges that are too vaguely described to determine their basis. (Id. at 3-9.) In addition, Defendant argues that Plaintiffs' damages should be reduced to one-third of legal fees and expenses incurred, pursuant to the settlement with Plaintiff's PRL U.S.A. Holdings. Inc. and Nautica Apparel, Inc. (Id. at 9-10.)
As a preliminary matter, the total legal fees and expenses that the Court determines Plaintiff's incurred prior to April 4, 2000, because of Defendant's inaccurate information regarding its computer storage capabilities covering the purchase and sales of goods in its Local Purchase Program, shall be reduced by two-thirds, pursuant to the settlement between PRL U.S.A. Holdings, Inc. and Nautica Apparel, Inc. and Defendant. On April 4, 2000, Plaintiffs' counsel wrote a letter to Defendant's counsel stating that, "due to the settlement of Nautica's and Polo's claims, defendant will be required to pay over to GTFM. Inc. only one-third of the any award(s) of fees and costs granted by the Court pursuant to the Court's ruling on plaintiffs' motion for an on-site inspection of Wal-Marts computer facilities and for sanctions." (Def.'s Mem. in Opp., Ex. A.)
Discussion
Wal-Mart argues that Plaintiff's would have had to seek and review the transactional documents even if Wal-Mart had provided accurate infonnation about its computer capabilities. "Plaintiff would have had to seek and review these documents even if Wal-Mart had produced the requested sales information originally." (Def.'s Mem. in Opp. at 3.) Due to Wal-Mart's failure to disclose in November 1998 its computer capability to determine the identity of Wal-Mart's sales of locally purchased goods over the preceding year, Plaintiffs' attorneys had to conduct the document discovery by utilizing Wal-Mart's current inventory records in an effort to identify earlier Wal-Mart transactions, which, by their abbreviated description, were indicative of being likely transactions involving possible counterfeit goods bearing Plaintiffs' trade names. This search was required because Plaintiff's had found "counterfeit" goods in a number of Wal-Mart stores in early fall 1998. Thus, the current inventories and transactional documents reviewed thereafter were far greater than those required to prove actual sale of counterfeit goods by Wal-Mart. Wal-Mart's argument overlooks the fact that the Wal-Mart computerized information for the Local Purchase Program would have enabled Plaintiff's to establish the supplier's identity and the extent of goods purchased and sold in a prompt and efficient fashion without the painstaking review of inventory and transactional documents relating to possible purchases of what might or might not be copies of Plaintiffs' goods. Plaintiffs' review of transactional documents in the sample group of stores (seventy-five stores) known to have engaged in transactions involving counterfeit goods was also an effort to establish what could have been readily proven by computer discovery had Wal-Mart cooperated initially in discovery. Accordingly, Plaintiffs' review of transactional documents was necessitated by Wal-Mart's failure to disclose its computer's capability to reveal the extent and nature of all purchases in its Local Purchase Program.
The Court's review of the Plaintiffs' counsel's time charges and expenses totaling $49,626.06, of which Wal-Mart states there is no means of determining the basis for such charges, and the general discovery related charges, of which Plaintiff's claim $8,948.78 would have been incurred any way, leads the Court to conclude that these charges did relate to attempted discovery of Wal-Mart records in lieu of Plaintiffs' inability to review the Wal-Mart computer records. No explanation is given by Wal-Mart of any discovery into other matters being conducted by Plaintiff's in this litigation that would lead to these expenses. Therefore, Plaintiff's are entitled to those charges. Because, however, Plaintiff's have included no explanations of the necessity or nature of three American Express charges totaling $2489.90, that amount will be subtracted from the amount of fees and expenses which shall be reimbursed to Plaintiff's because no explanation is given as to why those charges should be attributed to Defendant's misrepresentation.
Despite Defendant's claim to the contrary, the deposition of Sallie L. Stroud was relevant in part to the issue of Wal-Mart's computer capabilities in that portions of her deposition were submitted to the Court and considered in connection with Plaintiffs' original application for sanctions and for an order compelling on-site inspection of Wal-Mart's computer records. Accordingly, only part of those costs will be deducted from Plaintiffs' fee application.
Plaintiff's are also entitled to fees and expenses for their counsel's trip to Bentonville, Arkansas with Plaintiffs' computer expert to determine if the computer tape for the local purchase program, now known to have existed in December 1998, could be retrieved ($28,100.99). This expense is deemed reasonable in view of the prior repeated misinformation provided by Wal-mart concerning the availability of information about purchase for the Local Purchase Program. Plaintiff's are also entitled to be reimbursed for their attorneys' fees in preparing this application for attorneys' fees and expenses ($5,820.25). The total of these additional expenses is $33,921.24.
The Court agrees with Wal-Mart that Plaintiffs' total expenses for such discovery should be reduced by:
(1) the costs of discovery relating to the motion by Turnovers, Inc. to quash for Plaintiffs' failure to comply with Local Rule 3.02(a) of the Middle District Court of Florida ($3,887.86)(Wal-Mart should not have to pay for Plaintiffs' counsel's failure to abide by the local rule);
(2) the cost of third-party suppliers' discovery ($5,989.32) (this discovery would have had to have been undertaken in any event);
(3) part of the Arkansas deposition of Sallie Stroud and all of the deposition of Jim Branam ($5,522.08) (most of these expenses were not caused by Wal-Mart's failure to disclose its computer capability); and
(4) settlement discussions ($162.50).
Conclusion
Accordingly, Plaintiff's are awarded attorneys fees one-third the amount of $245,549.36, after deduction of: fees for Turnovers' discovery motion ($3,887.86); fees for third-party suppliers' discovery ($5,989.32); part of deposition costs of Stroud and Branam ($5,522.08); unexplained American Express charges ($2,489.90); and settlement discussions ($162.50). That one-third total equals $75,832.57. In addition, Plaintiff's are awarded $33,921.24 for fees and expenses incurred during the trip to Bentonville and for preparing this motion for attorneys' fees. These fees and expenses were all caused by Wal-Mart's failure to provide accurate discovery information in response to valid discovery requests. A total of $109,753.81 shall be paid to GTFM, Inc. by Defendant Wal-Mart for these expenses.
These two items occurred after the Wal-Mart settlement with the other Defendants.
IT IS SO ORDERED.