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Case: 1:18-cv-06133 Document #: 419 Filed: 01/22/21 Page 1 of 11 PageID #:5839
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`
`
`
`
`
`Case No. 18-cv-6133
`
`Judge Mary M. Rowland
`
`
`
`
`
`
`
`
`
`
`LiiON, LLC,
`
`Plaintiff,
`
`v.
`
`VERTIV GROUP
`CORPORATION et al.,
`
`Defendants.
`
`
`MEMORANDUM OPINION AND ORDER
`On July 6, 2020, the magistrate judge issued an order awarding fees to Vertiv
`
`
`
`Group Corp. (Vertiv) in the amount of $57,026.70 based on discovery violations by
`
`Plaintiff. (Dkt. 385). Vertiv has filed an objection to the amount of the fee award.
`
`(Dkt. 387). For the following reasons, this Court adopts in part and rejects in part the
`
`magistrate judge’s fee award.
`
`A. Background
`
`
`
`LiiON, LLC (LiiON) alleges in its Second Amended Complaint that it supplies
`
`“customers with innovative stored energy solutions designed for data center, telecom,
`
`uninterruptable power system, and cable and wind/solar applications.” (Dkt. 135, Sec.
`
`Am. Compl. ¶ 2.) LiiON developed proprietary algorithms for controlling lithium-ion
`
`systems, (Id. ¶¶ 40-41), and around 2014, entered into a joint venture with
`
`Defendants so that LiiON’s technology could be integrated into battery cabinets. (Id.
`
`¶¶ 60–67.) According to LiiON, Defendants misappropriated its trade secrets,
`
`
`
`1
`
`

`

`Case: 1:18-cv-06133 Document #: 419 Filed: 01/22/21 Page 2 of 11 PageID #:5840
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`including “methods, software systems, and components operating together to form
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`the basis of LiiON’s lithium-ion smart solutions,” and divulged them to third parties,
`
`including Samsung. (Id. ¶¶ 100–109.) That conduct was a violation of the parties’
`
`mutual nondisclosure agreement. (Id. ¶¶176–79.) In response to the lawsuit, Vertiv
`
`alleges LiiON breached a contract related to purchase orders for lithium-ion battery
`
`cabinets, breached the implied covenant of good faith and fair dealing, and tortiously
`
`interfered with business relationships. (Dkt. 38, Counterclaims ¶¶ 37–79.)
`
`B. Discovery disputes
`
`
`
`The magistrate judge has presided over the contentious discovery since
`
`November 2018. (Dkt. 26). During discovery, the parties filed a total of nine (9)
`
`motions to compel and Vertiv filed an additional two (2) motions to enforce. On
`
`February 28, 2020, the magistrate judge issued a twenty-five (25) page Report and
`
`Recommendation granting in part and denying in part Vertiv’s Motion for Discovery
`
`Sanctions. (Dkt. 367).1
`
`
`
`In summary, the magistrate judge found that LiiON’s failure to seek
`
`documents from Hoffman, Corcoran, Hankin, Kostan, Sosin, Hehn and Gray
`
`sanctionable. The Court rejected Vertiv’s remaining arguments regarding document
`
`gathering and production. (Dkt. 367 at 5–10). While the magistrate judge rejected
`
`several allegations that LiiON made misrepresentations in certain interrogatory and
`
`document request responses, he did find that LiiON made misrepresentations in
`
`
`1 Neither party objected to these findings, and the Court adopted them on May 8, 2020. (Dkt. 374).
`2
`
`
`
`

`

`Case: 1:18-cv-06133 Document #: 419 Filed: 01/22/21 Page 3 of 11 PageID #:5841
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`responding to document requests for communications with third parties. (Id. at 10–
`
`15). Finally, the Court considered Vertiv’s argument that LiiON failed to properly
`
`complete the corporate disclosures required by Federal Rule of Civil Procedure 7.1
`
`and Local Rule 3.2. After a thorough review of the record, the Court determined there
`
`was no discovery violation. (Dkt. 367 at 15–19).
`
`
`
`In fashioning a sanction, the Court correctly noted that the “guiding principal
`
`in this task is proportionality.” (Dkt. 367 at 19, citing Goss Graphics Sys., Inc. v. DEV
`
`Indus., Inc., 267 F.3d 624, 627 (7th Cir. 2001)). The Court noted that it need not
`
`impose the “least drastic sanctions” but should assign a sanction that reflects the
`
`severity of the misconduct. (Id. at 19–20, citing Rice v. City of Chi., 333 F.3d 780, 784
`
`(7th Cir. 2003). The Court recommended, in pertinent part:
`
`a monetary sanction in the amount of half the reasonable fees Defendants
`incurred in deposing the seven witnesses from whom LiiON neglected to collect
`documents, given that their depositions presumably could have been more
`efficient and productive had LiiON gathered relevant documents from them in
`discovery. [. . .] [and] a sanction in the form of half the reasonable fees
`Defendants incurred in filing this motion.
`
`Id., at 23.
`
`
`
`On June 5, 2020, Vertiv filed its petition for fees pursuant to the magistrate
`
`judge’s order (Dkt. 379).2 In total, Vertiv requested $139,370.89. Supported by billing
`
`records, this was the one-half of the mount paid by Vertiv for the tasks outlined in
`
`the magistrate judge’s Order. LiiON responded, objecting to the number of attorneys
`
`
`2 Vertiv filed a corrected petition for fees later that same day. (Dkt. 380).
`3
`
`
`
`

`

`Case: 1:18-cv-06133 Document #: 419 Filed: 01/22/21 Page 4 of 11 PageID #:5842
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`billing on assignments, the billing rates of those attorneys and the hours spent. (Dkt.
`
`384). The magistrate judge awarded $57,026.70. (Dkt. 385).
`
`C. Standard of Review
`
`
`
`Federal Rule of Civil Procedure 72 governs this Court’s review of rulings by
`
`magistrate judges. For non-dispositive matters, the District Court may only reverse
`
`a magistrate judge’s order when the order is “clearly erroneous or is contrary to law.”
`
`Fed. R. Civ. P. 72(a).
`
`
`
`In addition to this deferential standard, the Court is also mindful that the
`
`magistrate judge has considerable discretion in establishing the appropriate amount
`
`of a fee award. See Hensley v. Eckerhart, 461 U.S. 424, 437 (1983); Pickett v. Sheridan
`
`Health Care Ctr., 664 F.3d 632, 639 (7th Cir. 2011); Spegon v. Catholic Bishop of
`
`Chicago, 175 F.3d 544, 551 (7th Cir. 1999). The Seventh Circuit has consistently
`
`noted that “[b]y virtue of its familiarity with the litigation,” the District Court is in
`
`the best position to determine the number of hours reasonably expended. Seventh
`
`Ave., Inc. v. Shaf Int'l, Inc., 909 F.3d 878, 881 (7th Cir. 2018) (citing McNabola v.
`
`Chicago Transit Auth., 10 F.3d 501, 519 (7th Cir. 1993)).
`
`
`
`To determine “a reasonable attorney's fee,” the Seventh Circuit has instructed
`
`that “the district court must make that assessment, at least initially, based on a
`
`calculation of the ‘lodestar’—the hours reasonably expended multiplied by the
`
`reasonable hourly rate—and nothing else.” Johnson v. GDF, Inc., 668 F.3d 927, 929
`
`(7th Cir. 2012) (citing Pickett, 664 F.3d at 639). Vertiv is correct that there “is a strong
`
`
`
`4
`
`

`

`Case: 1:18-cv-06133 Document #: 419 Filed: 01/22/21 Page 5 of 11 PageID #:5843
`
`presumption that the lodestar calculation yields a reasonable attorneys’ fee award.”
`
`Pickett, 664 F.3d at 639. However, it is equally true that once the Court has
`
`established an attorney’s appropriate hourly rate, it next assesses the attorneys’ time
`
`entries and should “exclude hours that are ‘excessive, redundant or otherwise
`
`unnecessary.’” Small, 264 F.3d at 708 (quoting Hensley, 461 U.S. at 434). What
`
`qualifies as a “reasonable” use of a lawyer's time “is a highly contextual and fact
`
`specific enterprise,” and the court has “wide latitude” in awarding attorneys’ fees.
`
`Sottoriva v. Claps, 617 F.3d 971, 975 (7th Cir. 2010) (internal quotation marks
`
`omitted). The Seventh Circuit has observed, “[t]here is no one correct formula for
`
`determining a fee award.” Tomazzoli v. Sheedy, 804 F.2d 93, 97 (7th Cir. 1986).
`
`However, a Court may not arbitrarily cut a fee request; “a concise but clear
`
`explanation of its reasons for any reduction” is required. Id. (internal quotation
`
`omitted).
`
`D. Depositions
`
`
`
`The magistrate
`
`judge undoubtedly thoroughly reviewed the parties’
`
`submissions regarding depositions. He determined the attorneys that conducted each
`
`deposition and the amount of time each deposition lasted by reviewing Vertiv’s
`
`timesheets. Although he did not say so specifically, he then determined that the time
`
`spent preparing for each deposition was unreasonable. For instance, with respect to
`
`the Corcoran deposition, it is clear the magistrate judge reviewed the time records
`
`and the parties’ arguments and found 65 hours excessive for a 6 ½ hour deposition.
`
`As LiiON notes “even after Mr. Bedell, Mr. Walsh and Ms. Watson Moss had
`
`
`
`5
`
`

`

`Case: 1:18-cv-06133 Document #: 419 Filed: 01/22/21 Page 6 of 11 PageID #:5844
`
`collectively spent nearly 20 billable hours just preparing materials and documents
`
`for the deposition, Ms. Wrigley, a senior partner, then spent another 22 hours just to
`
`prepare for this one deposition.” (Dkt. 384 at 5). The magistrate judge’s finding that
`
`the time spent by Vertiv preparing for each deposition was excessive is not clearly
`
`erroneous.
`
`
`
`The depositions ran in length from 6 ½ hours to 9 hours including breaks.
`
`Vertiv chose to send two attorneys to most of the depositions. Including the time spent
`
`at the deposition, counsel billed: 65.25 hours for Robert Corcoran’s deposition; 52.75
`
`hours for Roger Hankin’s deposition; 36.75 hours for Linda Hehn’s deposition; 108.25
`
`for Jerry Hoffman’s deposition; 55.25 hours for Kathryn Gray’s deposition; 125.35 for
`
`Dean Kostan’s deposition and 89.25 for Andrew Sosin’s deposition. In each instance,
`
`the Court finds no error with the magistrate judge’s conclusion that the time spent
`
`on deposition preparation was excessive.
`
`
`
`Instead of discussing the time spent preparing for each deposition, the
`
`magistrate judge applied a formula. He “multiplied the actual number of hours for
`
`each deposition by three” to account for preparation and actual deposition time and
`
`then divided by two, to divide the hours between the two attorneys who attended the
`
`deposition. (Dkt. 385) (citations omitted). The Court believes this was erroneous. The
`
`Court believes a more tailored approach is required.3
`
`
`3 The magistrate judge multiplied this number of hours by the hourly rate of the two attorneys who
`deposed the witness or attended the deposition on behalf of Vertiv. (Dkt. 385). In so doing, the
`magistrate judge accepted the billing rates Vertiv paid the attorneys. The Court does not believe that
`was erroneous and accepts these billing rates. (Dkt. 380 at 4).
`6
`
`
`
`

`

`Case: 1:18-cv-06133 Document #: 419 Filed: 01/22/21 Page 7 of 11 PageID #:5845
`
`
`
`This Court has reviewed the arguments submitted to the magistrate judge,
`
`(Dkt. 380, 384), as well as those submitted to this Court. From the outset the
`
`magistrate judge determined that an appropriate sanction would be compensation at
`
`one-half of the reasonable fees incurred for the depositions. This has not been
`
`challenged and will be applied to the calculations below. Having carefully reviewed
`
`the billing records and all the briefing, the Court allows the following:
`
`Robert Corcoran: It was unreasonable and excessive to bill 65.25 hours for five
`
`separate lawyers to locate documents, prepare deposition materials, prepare exhibits,
`
`and prepare for this deposition. The Court will allow for the time billed by attorneys
`
`Walsh (16 hours) and Wrigley (28.5 hours), only.
`
`Attorney
`Walsh
`Wrigley
`
`
`
`
`
`Hours
`
`16
`28.5
`
`
`
`Billable Rate
`$214.50 / hour
`$507.00 / hour
`Sum Total:
`50 % of Sum Total:
`
`Total
`$3,432.00
`$14,449.50
`$17,881.50
`$8,940.75
`
`Roger Hankin: It was unreasonable and excessive to bill 52.75 hours for this
`
`deposition. The Court will allow the time for attorney Walsh (33.25 hours) only,
`
`rounding to the nearest cent.
`
`Attorney
`Walsh
`
`
`
`
`Hours
`
`33.25
`
`
`Billable Rate
`$214.50 / hour
`50 % of Sum Total:
`
`Total
`$7,132.125
`$3,566.06
`
`Linda Hehn: It was unreasonable and excessive to bill 36.75 hours for this 5-hour
`
`deposition, including breaks. The Court will allow the time spent preparing for and
`7
`
`
`
`

`

`Case: 1:18-cv-06133 Document #: 419 Filed: 01/22/21 Page 8 of 11 PageID #:5846
`
`taking the deposition by attorney Letkewicz on June 17, June 18 and June 19 only,
`
`rounding to the nearest cent (22.25 hours).
`
`Attorney
`Walsh
`
`
`
`
`Hours
`
`22.25
`
`
`Billable Rage
`$448.50 / hour
`50 % of Sum Total:
`
`Total
`$9,979.125
`$4,989.56
`
`Jerry Hoffman: It was unreasonable and excessive to bill 108.25 hours for three
`
`separate lawyers to locate documents, prepare deposition materials, prepare exhibits,
`
`and prepare for this deposition. The Court will allow attorney Connolly’s billed time
`
`except for June 11, 2018 (34.75 hours). The Court will also allow attorney DePizzo’s
`
`time billed in June 2018 (36.5 hours). Time billed in April of 2018 is not allowed.
`
`Attorney
`Connolly
`DePizzo
`
`
`
`Hours
`
`34.75
`36.5
`
`
`
`Billable Rate
`$585.00 / hour
`$300.30 / hour
`Sum Total:
`50 % of Sum Total:
`
`Total
`$20,328.75
`$10,960.95
`$31,289.70
`$15,644.85
`
`
`Kathryn Gray: It was unreasonable and excessive to bill 55.25 hours for three
`
`separate lawyers to locate documents, prepare deposition materials, prepare exhibits,
`
`and prepare for this deposition. The Court will allow only the time attorneys Walsh
`
`(17.75 hours) and Wrigley (19 hours) billed, rounded to the nearest cent.
`
`Attorney
`Walsh
`Wrigley
`
`
`
`Hours
`
`17.75
`19
`
`
`
`Billable Rate
`$214.50 / hour
`$507.00 / hour
`Sum Total:
`50 % of Sum Total:
`
`Total
`$3,807.375
`$9633.00
`$13,440.375
`$6,720.19
`
`8
`
`
`
`
`
`

`

`Case: 1:18-cv-06133 Document #: 419 Filed: 01/22/21 Page 9 of 11 PageID #:5847
`
`Dean Kostan: The court recognizes the complexity of taking this deposition over
`
`two days and the fact that Kostan was involved in creating source code. But it was
`
`unreasonable and excessive to bill 125.35 hours for five separate lawyers to locate
`
`documents, prepare deposition materials, prepare exhibits, and prepare for this
`
`deposition. The Court will allow the time billed by attorneys Letkewicz (22.6 hours)
`
`and Wrigley (32.75 hours) in August 2019, rounded to the nearest cent.
`
`Attorney
`Letkewicz
`Wrigley
`
`
`
`
`
`Hours
`
`22.6
`32.75
`
`
`
`Billable Rate
`$448.50 / hour
`$507.00 / hour
`Sum Total:
`50 % of Sum Total:
`
`Total
`$10,136.10
`$16,604.25
`$26,740.35
`$13,370.18
`
` Andrew Sosin: It was unreasonable and excessive to bill 89.25 hours for three
`
`separate lawyers to locate documents, prepare deposition materials, prepare exhibits,
`
`and prepare for this deposition The Court will allow the time billed by attorneys
`
`Walsh (19.25 hours) and Wrigley (32 hours) between June 15 and July 1, 2019,
`
`rounded to the nearest cent.
`
`Attorney
`Walsh
`Wrigley
`
`
`
`
`
`Hours
`
`19.25
`32
`
`
`
`Billable Rate
`$214.50 / hour
`$507.00 / hour
`Sum Total:
`50 % of Sum Total:
`
`Total
`$4,129.125
`$16,224.00
`$20,353.125
`$10,176.56
`
`E. Motion for Sanctions.
`
`
`
`The magistrate judge thoroughly reviewed the billing records and determined
`
`that spending 265.75 hours was excessive. This Court agrees. The magistrate judge
`9
`
`
`
`

`

`Case: 1:18-cv-06133 Document #: 419 Filed: 01/22/21 Page 10 of 11 PageID #:5848
`
`deleted the time spent by those attorneys who spent the least amount of time on the
`
`motion: Bedell’s 9.5 hours; Walsh’s 7.5 hours; Wrigley’s 22.75 hours; and Connolly’s
`
`21.25 hours. He allowed all of Watson Moss’s 74.25 hours and Letkewicz’s 25.75 plus
`
`the paralegal’s 20 hours. He allowed each of these three individuals to be billed at
`
`their respective hourly rates. It was not clear error to award 100 hours of attorney
`
`time and 20 hours of paralegal time for an 18-page motion and a 17-page reply,
`
`particularly when much of the motion was rejected on the merits. (See Dkt. 367 at 1
`
`“only a small subset of the conduct [Vertiv] highlight[s] is sanctionable.”) As ordered
`
`originally, this award was reduced by 50% to a total of $20,664.70. The Court will not
`
`disturb this portion of the award.
`
`F. Conclusion
`
`
`
`The Court therefore awards a total of $63,408.15 for the time spent preparing
`
`for and taking the pertinent depositions. The Court affirms the magistrate judge’s
`
`award of $20,664.70 for the work performed on the motion for sanctions. The total
`
`award is $84,072.85. The magistrate judge ordered that $57,026.70 of this was to be
`
`paid by December 11, 2020. (Dkt. 392). The balance shall be paid as follows: $10,000
`
`by February 15, 2021; $10,000 by March 15, 2021; and $7,046.15 by April 15, 2021.
`
`
`
`
`
`
`
`
`
`10
`
`

`

`Case: 1:18-cv-06133 Document #: 419 Filed: 01/22/21 Page 11 of 11 PageID #:5849
`
`Total
`
`$8,940.75
`$3,566.06
`$4,989.56
`$15,644.85
`$6,720.19
`$13,370.18
`$10,176.56
`$20,664.70
`$84,072.85
`$57,026.70
`$10,000
`$10,000
`$7,046.15
`
` E
`
`
`
` N T E R:
`
`Billable Time
`Corcoran Deposition
`Hankin Deposition
`Hehn Deposition
`Hoffman Deposition
`Gray Deposition
`Kostan Deposition
`Sosin Deposition
`Motion for Sanctions
`
`Sum Total Due:
`Paid per Judge Kim’s Order:
`Due February 15, 2021:
`Due March 15, 2021:
`Due March 15, 2021:
`
`
`
`
`
`
`
`Dated: January 22, 2021
`
`
`
`
`
`
`
`MARY M. ROWLAND
`United States District Judge
`
`
`
`11
`
`

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