Case Law Alert: Legal Fees Allocation Case Prompts Proportionality Analysis in Law Firm Discovery Dispute

You might expect law firms that collaborated to win a major Fair Labor Standards Act case could agree on what a proportional e-discovery process would look like; but, in Stephan Zouras LLP v. Marrone, the Court had to address a motion to compel and remind the parties of their responsibilities in discovery.

Overview

After victoriously collaborating as co-counsel for plaintiffs in a class action Fair Labor Standards Act (FLSA) case against chemicals industry giant duPont, the Zouras and Moremarrone law firms could not reach agreement on how to divide the almost $1.8 million attorneys’ fee award issued in the case.

One of the defendants in this lawsuit, the Moremarrone law firm, was entrusted with the award and the obligation to disburse payment to the plaintiff, but it only allocated approximately $325,000 to its former partners. The plaintiff (the Zouras law firm) argued that it was entitled to at least $573,000. As a result of this dispute, the plaintiff filed a lawsuit alleging breach of contract and fraud, among other claims, against defendants.

The Court described discovery in the fee dispute as somewhat contentious, with plaintiff producing more than 73,000 pages of documents and defendants producing only 13 documents for a time period between 2012 and 2018. Plaintiff moved to compel production of documents supporting the defendants’ fees claimed in the underlying class action, and the Court agreed that those documents had “obvious relevance.” In granting the motion, the Court also reasoned that the requests were appropriately tailored and sought necessary documents.

The Court additionally relied on the Sedona Principles to remind the parties of their “reciprocal responsibilities” in discovery.

Ruling

• Information sought is “relevant and discoverable.” In what is fundamentally a contractual dispute, the Magistrate Judge found that “all parties should be permitted to thoroughly examine the degree to which hours claimed by counsel have contemporaneous documentary support.”
• Discovery request “appropriately tailored.” Despite defendant’s argument that searching through over 122,000 emails was “unduly burdensome,” the Magistrate Judge found the plaintiff’s motion justified. The hundreds of thousands of dollars at stake demanded a thorough review. “Given the nature of the parties' dispute, a thorough examination of the documentary support for these fees… is not only proportional; it is necessary.”
• “Reciprocal discovery… directly proportional.” Given that the plaintiff had produced more than 73,000 pages of material to support its claims, the Court determined that plaintiff was justified in requesting defendants also be required to produce more than the 13 documents (over a six-year period) already produced by the defendants.

Expert Analysis from Patricia Antezana, Counsel, ReedSmith LLP

Courts expect litigants to work cooperatively in discovery. Defendants claimed that searching the email server would require sifting through more than 122,000 emails to determine relevance. The Court reminded defendants of advancements in technology, however, and cited Sedona Principles as part of instructing the parties to use collaborative strategies like search terms or technology assisted review and sampling to assess the accuracy of searches to mitigate the burden of discovery.

Case Law Tip

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