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Lopez v. Mauisun Computer Systems Inc.

United States District Court, D. Arizona

February 10, 2016

Lupita Lopez, et al., Plaintiffs,
Mauisun Computer Systems, Inc., et. al., Defendants.

Bernardo p. Velasco United States Magistrate Judge

Pending before the Court are Plaintiffs Maria Cornejo and Yareli Sierra’s Application for Attorney’s Fees Re Motion to Compel (Doc. 147) and Motion for Finding of Contempt and Sanctions (Doc. 172). Defendant Mauisun Computer Systems, Inc. (“Defendant”) has filed responses (Docs. 157, 180) to the motions and Plaintiffs Cornejo and Sierra (“Plaintiffs”) have filed replies (Docs. 162, 183). The motions came on for oral argument on January 28, 2016.

I. Plaintiffs’ Application for Attorney’s Fees Re Motion to Compel Discovery (Doc. 147)

On May 6, 2015, this Court entered an order granting Plaintiffs Cornejo and Sierra’s Motion to Compel Discovery (Doc. 145) pertaining to Defendant’s financial information. Pursuant to Fed.R.Civ.P. 37(a)(5)(A), Plaintiffs Cornejo and Sierra (“Plaintiffs”) now seek $7, 230.00 in attorney’s fees incurred with regard to their Motion to Compel Discovery (see Docs. 147, 162). Under Rule 37(a)(5)(A), if a motion to compel discovery is granted:

the court must, after giving an opportunity to be heard, require the party or deponent whose conduct necessitated the motion, the party or attorney advising that conduct, or both to pay the movant's reasonable expenses incurred in making the motion, including attorney's fees. But the court must not order this payment if:
(i) the movant filed the motion before attempting in good faith to obtain the disclosure or discovery without court action;
(ii) the opposing party's nondisclosure, response, or objection was substantially justified; or
(iii) other circumstances make an award of expenses unjust.

Fed.R.Civ.P. 37(a)(5)(A); see also Marquis v. Chrysler Corp., 577 F.2d 624, 641-42 (9thCir. 1978) (“When a party's conduct during discovery necessitates its opponent's bringing motions which otherwise would have been unnecessary, the court may properly order it to pay the moving party's expenses unless its conduct was ‘substantially justified’ or other circumstances make the award ‘unjust.’”) (quoting former version of Rule 37). Whether to award fees is within the trial court’s discretion. Marquis, 577 F.2d at 643.

Plaintiffs argue they are entitled to fees because the Court granted their motion to compel in full and because Defendant was not substantially justified in opposing the motion, nor is an award of expenses unjust. Defendant opposes Plaintiffs’ request for fees on the grounds that its argument opposing the discovery motion was substantially justified and that the amount of fees requested is unreasonable. (Defendant’s Response to Plaintiffs’ Motion for Attorney Fees (Doc. 157)).

A. Substantial Justification

Defendant contends that its refusal to provide the requested discovery was substantially justified. Substantial justification exists where the losing party shows that it raised an issue about which reasonable minds could genuinely differ on whether that party was bound to comply with the discovery rule. See Charles Alan Wright, Arthur Miller, et. al., 8B Federal Practice & Procedure '2288 (3d ed.).

With their Motion to Compel, Plaintiffs sought responses to Requests for Production 7, 8, and 9 seeking certain financial information.[1] (See Plaintiff’s Motion to Compel Discovery (Doc. 137); see also Plaintiffs’ Position Statement Re Discovery Dispute (Doc. 128) Exh. 2, p. 4 (Doc. 128-1, p.18)). Defendant did not to respond to the discovery request. After informal attempts to resolve the matter failed, Plaintiff filed a Motion to Compel Discovery. Defendant opposed the Plaintiffs’ Motion to Compel Discovery on the ground that a defendant’s wealth is not a sufficient basis for awarding punitive damages. (Defendant’s Response in Opposition to Plaintiffs’ Motion to Compel (Doc. 139), p. 3 (citing State Farm Mutual Auto. Ins. Co. v. Campbell, 538 U.S. 408, 428 (2003) and Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672 (7th Cir. 2003)). According to Defendant, “[i]f it bears no relationship, then discovery on this issue should not be compelled.” (Id.). Additionally, Defendant avowed that it did not have some of the requested documents because it had not prepared annual reports, profit and loss statements, or balance sheets.[2] (Doc. 139, p. 2). With regard to the issue of punitive damages, this Court disagreed with Defendant’s position. (Doc. 145, p. 2 (“A defendant’s ‘financial information is relevant’ where a plaintiff states a claim for punitive damages.” See EEOC v. Cal. Psych. Transitions, 258 F.R.D. 391, 384-95 (E.D. Cal. 2009) (citing City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 267 (1981)).

The cases Defendant cites to support its position do not discuss the issue at the discovery stage but, instead, address the reasonableness of the amount of punitive damages actually awarded. Defendant cites no case supporting its position that discovery about the defendant’s wealth is off limits in a punitive damages case. The Campbell Court, on which Defendant relies, merely recognized that the wealth of a defendant, alone, could not justify an otherwise unconstitutional punitive damages award. SeeCampbell, 538 U.S. at 427. The Court went on to acknowledge that the use of wealth is neither “‘unlawful [n]or inappropriate; it simply means that this factor cannot make up for the failure ...

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