Judge Edward B. Moreton, Jr, Case Number: 21SMCV01083, Date: 2025-04-01 Tentative Ruling

Judge: Edward B. Moreton, Jr, Case: 21SMCV01083, Date: 2025-04-01 Tentative Ruling

Superior Court of California

County of Los Angeles – West District

Beverly Hills Courthouse / Department 205

PIERRE CALAND,

Plaintiff,

ALEXANDER J. DAVIS, et al.,

Defendants.

Case No.: 20SMCV00492

Hearing Date: April 1, 2025

[TENTATIVE] ORDER RE:

PLAINTIFF’S MOTION TO

TAX COSTS

This hearing is on Plaintiff’s motion to tax costs. Plaintiff argues that (1) the Court should limit Defendant’s “court reporter fees” to those “established by statute”; (2) the Court should tax unnecessary deposition costs including those related to Defendant’s overpayment defense which it withdrew before trial; (3) the Court should tax pro hac vice expenses for Defendant’s out of state counsel; and (4) the Court should tax Defendant’s requests for $313,536.1 in “other costs”, particularly for hotel stays, airfare, meals expenses, trial technology expenses, and a conference room.

Generally, a “prevailing party” is entitled to costs. (Code Civ. Proc., § 1032(b); Santisas v. Goodin (1998) 17 Cal.4th 599, 606.). “A prevailing party who claims costs must serve and file a memorandum of costs within 15 days after the date of mailing of the¿notice of entry of judgment… The memorandum of costs must be verified by a statement of the party, attorney, or agent that to the best of his or her knowledge the items of cost are correct and were necessarily incurred in the case.” (Cal. Rules of Court, rule 3.1700.)

The losing party may contest the costs that a prevailing party seeks. (Code Civ. Proc., §1034(a).) The challenging party has the burden of demonstrating that those costs are unreasonable or unnecessary. (Adams v. Ford Motor Co.,¿(2011) 199 Cal. App. 4th 1475, 1486; 612¿South LLC v. Laconic Limited Partnership, (2010) 184 Cal. App. 4th 1270, 1285.)

Code Civ. Proc. § 1033.5 sets forth the costs recoverable by the prevailing party. (Code Civ. Proc., § 1033.5.) “Allowable costs shall be reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation.” (Code Civ. Proc., §1033.5(c)(2); Perko’s Enterprises, Inc. v. RRNS Enterprises (l992) 4 Cal.App.4th 238, 244.) A “properly verified memorandum of costs is considered prima facie evidence that the costs listed in the memorandum were necessarily incurred.” (Bach v. County of Butte (1989) 215 Cal.App.3d 294, 308; see also Hadley v. Krepel (1985) 167 Cal.App.3d 677, 682.)

This puts the burden on the party seeking to tax costs to show that they were not reasonable or necessary. (Ladas v. California State Automotive Assoc. (1993) 19 Cal.App.4th 761, 773-74.) If items are properly objected to, they are put in issue, and the burden of proof is on the party claiming them as costs. (Id.)

The memorandum of costs need not contain invoices, billings, or statements. (Bach, 215 Cal.App.3d at 308; see also Cal. Rules of Court, Rule 3.1700(a)(1) (only verification required).) “Documentation must be submitted only when a party dissatisfied with the costs claimed in the memorandum challenges them by filing a motion to tax costs.” (Bach, 215 Cal.App.3d at 308.)

As a threshold matter, the Court addresses whether Plaintiff’s motion is timely. Defendant argues that the Court should deny the Motion because it fails to comply with the time requirements in Section 1005. Plaintiff served the Motion electronically, so he was required to file the Motion 16 court days plus two calendar days before the reserved hearing date. (Code Civ. Proc. § 1005(b).) Plaintiff scheduled the hearing for April 1, 2025, so the latest he could file the Motion was March 5. Plaintiff filed the Motion on March 10 — five days too late. Notwithstanding, the Court will consider the motion on its merits since Defendant was able to file a fulsome, well-articulated (and largely successful) opposition.

Defendant seeks $30,758.44 in court reporter fees incurred with Veritext court reporting service. Plaintiff argues these costs should be taxed because they far exceed the allowable costs under the civil fee schedule which only allows for $764 for a fully day and $382 for a half day. The Court disagrees.

The court reporter fees listed in Civil Fee Schedule apply only to “Family Law” and “Probate” cases. (See Civil Fee Schedule (Public), p.5, lines 108–09 (under “Family Law Fees”), p.8, lines 184–85 (under “Probate Fees”).) They are the cost litigants in family law and probate cases pay for “official court reporters” provided by the superior court. “In the Civil division, where a¿court¿reporter¿is privately hired and appointed by the court pro tem, the compensation of the court reporter is not limited by the court’s¿fee¿schedule.” (Rosalind St. Amant Moore v. Kia Am., Inc., 2024 Cal.Super. LEXIS 49456 (April 4, 2024).)

For certified shorthand reporters, “[t]he fees and charges of the certified shorthand reporter shall be recoverable as taxable costs by the prevailing party as otherwise provided by law.” (Gov. Code § 68086(d)(2) (emphasis added).) In other words, Defendant is entitled to recover the fees and costs actually charged by the trial reporter. (Code Civ. Proc. § 1033.5(a)(11); Gov. Code § 68086(d)(2); see also Vargas v. Gallizzi (2023) 96 Cal.App.5th 362, 376 (affirming award of court reporter fees at daily rate of $1,390 for a Los Angeles trial).)

In reply, Plaintiff argues that “Los Angeles courts routinely use these statutorily-authorized fees [in the Civil Fee Schedule] to calculate ‘court reporter fees as established by statute’ for purposes of the cost awards, as there are no other ‘established’ dollar amounts.” (Reply at 1:26-28.) Plaintiff, however, fails to provide any case cites for this proposition.

Accordingly, the sole basis Plaintiff has provided for taxing Defendant’s court reporter fees is without merit, and the Court declines to tax these costs.

Plaintiff argues that the Court should tax costs for the depositions of Marc Wolf (one of Plaintiff’s experts), Ilya Strebulaev (Defendant’s expert), Baker Tilly (Disruptive’s auditor), Phillip Caputo (Disruptive’s CFO) and Disruptive’s corporate representative because those depositions related to the “overpayment” defense that Defendant withdrew before trial. Defendant argues that because the depositions were necessary at the time they were taken, they should be allowed. The Court agrees with Defendant.

Initially, there is some dispute about whether the deposition of Disruptive’s corporate representative was related solely to the “overpayment” defense and whether the deposition of Wolf was necessitated because Plaintiff refused to stipulate to the withdrawal of the overpayment defense. The Court ultimately does not need to decide these issues because the depositions were necessary at the time they were taken, even if they were no longer needed after the overpayment defense was withdrawn.

The question of whether costs are reasonable and necessary must be determined “at the time of incurring” them, using a “pretrial vantage point.” (Nelson v. Anderson (1999) 72 Cal.App.4th 111, 132 (quoting Brake v. Beech Aircraft Corp. (1986) 184 Cal.App.3d 930, 940). It is error for a court to make this “determination based upon the [witness’s] usefulness at trial.” (Id.) In other words, the depositions need only be reasonably necessary at the time they are taken for the prevailing party to recover costs. Indeed, Section 1033.5 “authorizes the recovery of costs for taking, videotaping and transcribing necessary depositions (whether or not actually used at trial) . . . .” (Seever v. Copley Press, Inc. (2006) 141 Cal.App.4th 1550, 1559, disapproved on other grounds by Segal v. ASICS Am. Corp. (2022) 12 Cal.5th 651.)

Under this framework, the costs for Wolf and Dr. Strebulaev were reasonable and necessary at the time the depositions were taken because they were deposed (on October 30 and November 5) before Defendant withdrew the overpayment defense (on November 14) and before Plaintiff’s counsel confirmed he would not call Wolf as a witness (during the second week of trial). Additionally, Plaintiff cannot complain about Defendant’s requested costs for Caputo’s deposition, the two Disruptive depositions and Baker Tilly’s representative because those depositions were taken by Plaintiff. Plaintiff cannot seriously argue that these depositions were not “necessary” at the time he took them. Accordingly, Defendant is entitled to the costs requested for each deposition.

Defendant seeks “rough” and “expedited” charges for the depositions of Wolf, Daughters and Dr. Strebulaev in the MOC include “rough” and “expedited” charges because they were taken so close to the exhibit and witness list deadline, the final status conference, and trial. Courts routinely award those costs. (See Chaaban v. Wet Seal, Inc. (2012) 203 Cal.App.4th 49, 55 (affirming award of cost to expedite transcript for expert deposition taken day before motion in limine deadline and two weeks before trial); Heller v. Pillsbury Madison & Sutro (1996) 50 Cal.App.4th 1367, 1396 (same for experts deposed less than one month before trial, recognizing “expert witnesses are customarily deposed soon before the trial date, thereby necessitating expedited transcripts”).)

Plaintiff next argues that Defendant’s purchase of the videotape of his own deposition for $1,303 was unnecessary because Defendant could not have used the videotape at trial under the hearsay rule, and the costs Defendant incurred to videotape the depositions of Plaintiff’s experts Steve Daughters (for $2,383) and Marc Wolf (for $2,068), were similarly unnecessary because they were not used at trial. The Court disagrees in part.

Deposition costs are allowable even if the deposition was not used at trial. Section 1033.5 “authorizes the recovery of costs for taking, videotaping and transcribing necessary depositions (whether or not actually used at trial) . . . .” (Seever, 141 Cal.App.4th at 1559.) Because the depositions of Daughters and Wolf were “necessary” when they were taken, the video costs are recoverable by statute. (Code Civ. P. § 1033.5(a)(3)(A).) As to the videotape of Defendant’s deposition, however, while that deposition was necessary, the videotape could have never been used at trial. Section § 1033.5 cannot conceivably be read to allow for costs for items that could under no scenario have been used. Accordingly, the Court will tax $1,303 in deposition costs.

Next, Plaintiff asks the Court to disallow an extra $6,221.15 for “Realtime services” during one deposition. Plaintiff argues the service is not “reasonably necessary” and was specially requested only by Defendant’s counsel merely for his “convenience.” (Cal. Civ. Proc. Code §1033.5(c)(2).) Plaintiff’s counsel attests he did not use “Realtime services” during any of the depositions because it is unnecessary. (Valle Decl. ¶ 7). The Court disagrees.

Realtime services are reasonably necessary to assist counsel in following up on a witness’ testimony or objecting to questions, as it allows the counsel to see the transcribed testimony in real time. The use of such services is commonplace. (Leduc v. W. Anaheim Med. Cntr., 2015 WL 5007720, at *3 (Cal. Ct. App. Aug. 24, 2015) (unpublished) (affirming award of “‘real-time’ deposition transcripts” as “reasonably necessary”).) However, the Court agrees with Plaintiff that these real time charges are only reasonably necessary for the attorney taking the deposition, and real time charges incurred by additional assisting attorneys (while useful) are not reasonably necessary. These charges amount to $2,294.90, which the Court taxes.

In sum, most of Defendant’s deposition costs relate to depositions that were reasonably necessary at the time they were taken, and therefore, the Court will not tax costs associated with these depositions, except as to real-time expenses incurred by attorneys who were not taking the deposition ($2,294.90) and the videotape of Defendant’s deposition ($1,303).

Pro Hac Vice Expenses

Plaintiff argues that Defendant’s pro hac vice filings for its out of state attorneys should be disallowed because it was not necessary to retain out of state attorneys when there were equally competent in-state lawyers. The Court disagrees.

The pro hac vice applications were clearly necessary for the litigation. Defendant’s out-of-state attorneys were required to obtain pro hac vice admission to represent him in this case. (See Cal. R. Ct. 9.40; Cal. Bus. & Prof. Code § 6125.) All of the attorneys who appeared pro hac vice were heavily involved in the case. Matthew Dontzin was lead counsel from June 2021–January 2024. Michael Mulvaney was lead trial counsel beginning in January 2024. Walter Dodgen was second chair at trial, handled multiple witnesses and took the lead in multiple hearings. John Bethay, III took and defended multiple depositions and attended trial. Zachary Mardis assisted in all aspects of this case and attended trial. Without Davis’s counsel being admitted pro hac vice, they could not have done this.

Ultimately, Plaintiff’s complaint boils down to the fact that Defendant retained out-of-state counsel, rather than using in-state attorneys which would have reduced Defendant’s costs. But as one California court aptly noted when considering a similar argument challenging attorneys’ fees charged by an out-of-state attorney: “We do not agree with First Look that NBN could have saved money by hiring a California lawyer and delegating 100 percent of the responsibility to the California lawyer. A client is entitled to its choice of counsel and cannot be compelled to relieve a lawyer who is well versed in the client’s business for a stranger, simply to save the losing party some expenses.” (North By Northwest Productions, Inc. v. First Look Studios, Inc., 2010 WL 4056851, at *6 (Cal. App. 2d Dist. Oct. 18, 2010) (unpublished).

The same is true here. Defendant’s trial attorneys have a significant history with him and Disruptive and were in the best position to take over this case shortly before trial. Mulvaney, Dodgen, Bethay and Mardis all represented Davis’s company at trial in Delaware in KT4 Partners, LLC et al. v. Palantir Technologies, Inc. and Disruptive Technology Advisers LLC. (Dodgen Decl., ¶ 2). Dodgen, Bethay and Mardis represented Disruptive in a FINRA arbitration in 2020, and in several other business disputes between 2019 and the present. (Id.). Bethay has also counseled Davis and Disruptive on numerous employment-related matters. (Id., ¶ 3). And Maynard Nexsen’s Birmingham office has provided significant advice to Disruptive on corporate, securities and regulatory matters for years. (Id.) Accordingly, the Court declines to tax the pro hac vice costs.

Plaintiff argues that the Court should deny Defendant’s “unreasonable” request for $313,536.21 in “Other” costs, which are not expressly authorized by Section 1033. According to Plaintiff, the largest driver of these “Other” costs is Defendant’s decision to bring in a team of four out-of-state lawyers shortly before trial, fly them back and forth across the country, and put them up for a month in a luxury 5-star hotel in Beverly Hills. The Court disagrees.

California courts have explained that Section 1033.5 does not discriminate against non-local counsel seeking to recover travel and lodging expenses. In Thon v. Thompson (1994) 29 Cal.App.4th 1546, the plaintiffs moved to tax travel and hotel costs incurred by attorneys from Bakersfield to attend depositions in San Diego County, where the suit was pending. The court denied the motion to tax, reasoning that Section 1033.5 “does not limit reimbursement for deposition travel to travel by attorneys practicing in the court’s jurisdiction.” (Id.) So it is here. Plaintiff is asking the Court “to read into a statute a provision it does not contain,” a prohibition of travel and hotel expenses incurred by out-of-state counsel. (Id.)

As to Plaintiff’s complaint that it should not have to pay for lodging at a “five-star hotel” in Beverly Hills, Defendant argues that the trial was in Beverly Hills — an expensive destination from the outset with few moderately price options available. Defendant negotiated a discount from L’Ermitage’s standard rate of roughly $700/night to $579.39 ($495.00 plus taxes and fees). (Dodgen Decl., ¶ 5). According to Defendants, that was half the nightly rate of other hotels near the courthouse like the Four Seasons (~$1,000), the Maybourne ($945), the Beverly Hills Hotel ($1,245+) and the Beverly Wilshire ($1,100+).

Plaintiff notes, however, that there are several hotels within a 5 minute drive of the courthouse that charged much less, including Beverly Hills Plaza Hotel ($257), Beverly Hills Marriott ($245), Sofitel Los Angeles at Beverly Hills ($246), and Kimpton Hotel Palomar ($236). The Court agrees with Plaintiff that defense counsel could have stayed at a cheaper hotel. Using the rate of $257, the hotel charges would have been $30,069, instead of $67,788.63, a difference of $37,719.63 in hotel costs, which the Court will tax.

Plaintiff next argues that Defendant should not be able to recover for 30 nights at the hotel for each defense attorney when the trial lasted only 13 days. Plaintiff’s argument ignores the trial schedule. Although there were only 13 “trial days,” trial spanned more than three weeks from November 18th–December 9th. Mulvaney, Dodgen and Mardis arrived in Beverly Hills on November 7, 2024, the day before the Final Status Conference (“FSC”), and Bethay arrived on Sunday, November 10th. The week between the FSC and trial, they remained in Beverly Hills and worked around the clock preparing for trial. It is not reasonable nor realistic that defense counsel should have left Beverly Hills every weekend during trial and returned before it resumed the following Monday. In any event, this would have resulted in extra airfare charges that Defendant would have been entitled to recover. However, the Court agrees with Plaintiff that he should not bear the hotel costs (4 nights) during the Thanksgiving break, when Defendant’s legal team were in Alabama for the holidays. This amounts to $9,270.24 which will be taxed.

Plaintiff also claims that Defendant should not recover for his own hotel stay. Davis was the named defendant and one of two witnesses that testified for the defense, and he was on the witness stand across four days of trial. At the time the complaint was filed and throughout the case, Davis was living in Texas. There is no supported basis for Plaintiff’s speculation that Davis could have stayed “with family or friends” for 20 nights during trial. Plaintiff “presents no evidence to show” that was a legitimate option for Defendant “beyond the bald assertion” that it was. (Doe, 37 Cal.App.5th at 694.) “This is insufficient to meet [his] burden to show the cost was not proper.” (Id.) However, the Court will only award these costs at the rate of $257 per night (the rate for Beverly Hills Plaza Hotel) and only for 13 nights, as unlike counsel, Davis was not required to stay for the entire preparation period. Accordingly, the Court will tax $8,246,80.

Plaintiff faults Defendant for having two attorneys appear in person at the post-trial hearing on February 5, 2025 because that hearing “could have easily been handled by one attorney, with the other participating remotely.” (Motion at 8–9). Yet Plaintiff sent two attorneys to attend the same hearing. As Plaintiff acknowledges, this post-trial hearing was the “equitable phase” of trial. (Motion Requesting Ruling on Equitable Claims, at 4). Given the importance of this hearing, it was reasonable and necessary for both of Defendant’s primary trial attorneys to attend the final “phase” of trial and arrive in time to prepare for that hearing and avoid potential flight delays. (Dodgen Decl., ¶ 9).

Plaintiff also argues that Defendant, his four attorneys, their trial technician and the witnesses who traveled to Beverly Hills should have shuttled back-and-forth from their hotel to Maynard Nexsen’s Los Angeles office in Century City every time they needed to meet for trial and witness preparation or print materials for trial. The Court agrees with Plaintiff. Century City is immediately adjacent to Beverly Hills and would have been a feasible location for a conference (“war”) room. Accordingly, charges for the L’Ermitage conference room are taxed in the amount of $36,135.

Travel costs to attend trial are also recoverable. (Doe, 37 Cal.App.5th at 696; United States v. Int’l Fidelity Ins. Co., 2019 WL 9050959, at *9 (C.D. Cal. Dec. 19, 2019) (awarding travel costs incurred by Florida attorneys attending a scheduling conference, pretrial conference and trial).) As discussed above, all of Defendant’s Alabama attorneys were actively involved at the trial itself — either in the courtroom or behind the scenes. (Dodgen Decl., ¶¶ 7–8). They could not “have been replaced,” and their “presence at trial was reasonably necessary to conduct the litigation[.]” (Doe, 37 Cal.App.5th at 696.) Plaintiff claims that Defendant should not be entitled to recover these costs at all, because he should not have hired out-of-state attorneys. For reasons stated above, the Court rejects this argument. In the alternative, Plaintiff argues that Defendant should only be entitled to recover $1000 for two attorneys or $2000 total in airfare expenses. Plaintiff does not provide any basis for this reduction. Plaintiff claims, however, that once he moved to tax these costs, it is now Defendant’s burden to prove these airfare expenses were “reasonable in amount” while he failed to do, because he submitted no documentation showing: (1) which flights his lawyers took, (2) how much they paid on each flight, and (3) whether they flew coach or first class. But Plaintiff moved to tax these costs entirely, and did not raise issues with the actual costs of the flight themselves. Accordingly, Defendant was under no obligation to provide documentation for the costs of the flights when that was not the basis of Plaintiff’s objections.

Plaintiff also challenges the request for meal expenses. Defendant only seeks costs for lunches on trial days. Plaintiff relies on one case which reasoned that “attorneys have to eat, whether they are conducting litigation or not.” (Ladas v. Cal. State Auto. Ass’n (1993) 19 Cal.App.4th 761, 774.) But Ladas dealt with lunches “consumed while attending local depositions” — not during trial. (Id.) More on point is Doe, in which the appellate court affirmed an award of meal expenses incurred during trial. (Doe, 37 Cal.App.5th at 695 (distinguishing Ladas).) In distinguishing Ladas, Doe noted that meal expenses incurred by attorneys while attending out-of-town depositions, have been held to be recoverable. (Id., citing Howard v. American National Fire Ins. Co.¿(2010) 187 Cal.App.4th 498, 541, and Gorman v. Tassajara Development Corp.¿(2009) 178 Cal.App.4th 44, 72.)¿ In Doe, the meal expenses at issue were incurred during trial, which was located approximately 90 miles from defense counsel's office in Oxnard.¿ (Id.) Here, the trial was roughly 1,500 miles away from Dallas, Texas and more than 2,000 miles away from Birmingham and Huntsville, Alabama.

Plaintiff also seeks to tax Defendant’s trial technology expenses. Plaintiff does not dispute that trial technology is now commonplace and reasonably necessary for the effective presentation of evidence. (See Bender v. Cty. of Los Angeles (2013) 217 Cal.App.4th 968, 991; Green v. Cty. of Riverside (2015) 238 Cal.App.4th 1363, 1374 (“Use of such technology . . . has become commonplace, if not expected by jurors.”).) Indeed, both sides used the services of a trial technology vendor.

However, Plaintiff argues Defendant’s requested amount of $63,750.00 is unreasonable given Plaintiff obtained identical services from a reputable, highly-qualified, highly-experienced Los Angeles-based trial technology firm (TrialRel, Inc.) for $38,433.75.00. (Valle Decl. ¶ 12, Ex. A (TrialRel’s Invoices)). Based on the invoices supplied by Plaintiff, his trial technician’s hourly rate was $195, while Defendant’s technician charged $200, only $5 higher. (Dodgen Decl., ¶ 10). Accordingly, the real dispute lies in the number of hours billed by Defendant’s technician.

Because the motion to tax challenged Defendant’s request for $63,750.00 in trial technology costs, the burden shifted to Defendant to prove that these costs were necessary and “reasonable in amount.” (Nelson, 72 Cal. App. 4th at 131; Ladas, 19 Cal. App. 4th at 774.) In response, Defendant failed to submit invoices from his trial technology team. The absence of the supporting invoices makes it impossible for this Court to determine (1) which exact services comprised $63,750.00, (2) what was charged for each item of service, and (3) how many technicians worked on this trial and at what rate. Defendant chose not to attach his trial technology invoices – even after Plaintiff challenged those charges and attached the invoices of his own trial tech firm, and accordingly, Defendant has not carried his burden of proof on this issue. (Nelson, 72 Cal. App. 4th at 131-133; Ladas, 19 Cal. App. 4th at 774.) Accordingly, the Court will only allow $40,000 in technology expenses, as Plaintiff requests in its moving papers.