Judge: Mark A. Young, Case: SC128899, Date: 2022-12-13 Tentative Ruling

Case Number: SC128899    Hearing Date: December 13, 2022    Dept: M

CASE NAME:           Sky Lift Aero., et al., v. Lockheed Martin Corp., et al.

CASE NO.:                SC128899

MOTION:                  Motion for Attorneys’ Fees/Motion to Seal

HEARING DATE:   12/13/2022

 

Legal Standard

 

Sealing

 

The sealing of trial court records is governed by California Rules Court, rules 2.550 and 2.551. (Mercury Interactive Corp. v. Klein (2007) 158 Cal.App.4th 60, 68.) Pleadings, motions, discovery documents, and other papers may not be filed under seal merely by stipulation of the parties—a prior court order must be obtained. (CRC, Rule 2.551(a); see H.B. Fuller Co. v. Doe (2007) 151 Cal.App.4th 879, 888.)

 

To seal a record, the following requirements are imposed: (1) the party must file a motion or application for an order sealing the record, which must be accompanied by a memorandum and a declaration containing facts sufficient to justify the sealing; (2) the party must serve a copy of the motion on all parties who have appeared in the case; and (3) the party requesting that a record be filed under seal must lodge it with the court when the motion or application is made unless the record has previously been lodged. (CRC, Rule 2.551(b).)  

 

The Court must make the following express factual findings in order to seal records: (1) an overriding interest exists that overcomes the right of public access to the record; (2) the overriding interest supports sealing the records; (3) a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) the proposed sealing is narrowly tailored; and (5) no less restrictive means exist to achieve the overriding interest. (CRC, Rule 2.550(d).) These findings embody constitutional requirements for a request to seal court records, protecting the First Amendment right of public access to civil trials. (NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1217-1218.)

 

An order sealing the record must specifically state the facts that support the findings and direct the sealing of only those pages and documents or, if reasonably practicable, portions of those documents and pages, that contain the material that needs to be placed under seal, and all other portions must be included in the public file. (CRC, rule 2.550(e).) 

 

Once sealed, a record can only be unsealed by order of court. (CRC, Rule 2.551(h)(1).) So long as it remains under seal, all parties must refrain from filing anything not under seal that would disclose the sealed matter. (Id., Rule 2.551(c).) If a party files a new document referring to sealed matter, it must submit an unredacted version of the document under seal and a redacted one for the public record. (Id., Rule 2.551(b)(5).)

 

Attorneys’ Fees

 

With respect to attorneys’ fees and costs, unless they are specifically provided for by statute (e.g., CCP §§ 1032, et seq.), the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties.¿(CCP § 1021.) The prevailing party on a contract, which specifically provides for attorney fees and costs incurred to enforce the agreement, is entitled to reasonable attorney fees in addition to other costs.¿(Civ. Code § 1717(a); CCP §§ 1032, 1033.5(a)(10)(A).)¿The court, upon notice and motion by a party, shall determine the prevailing party and shall fix, as an element of the costs of suit, the reasonable attorney fees.¿(Civ. Code § 1717(a), (b).)¿Any notice of motion to claim attorney fees as an element of costs under shall be served and filed before or at the same time the memorandum of costs is served and filed; if only attorney fees are claimed as costs, the notice of motion shall be served and filed within the time specified in California Rules Court, rule 3.1700 for filing a memorandum of costs.¿(CRC 3.1702; Gunlock Corp. v. Walk on Water, Inc. (1993) 15 Cal.App.4th 1301, 1303, fn. 1.) 

 

“It is well established that the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court, whose decision cannot be reversed in the absence of an abuse of discretion. [Citation.]” (Melnyk v. Robledo (1976) 64 Cal.App.3d 618, 623 624.) The fee setting inquiry in California ordinarily “begins with the ‘lodestar’ [method], i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate.” (Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 154.) “[A] computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award.” (Margolin v. Reg’l Planning Comm’n (1982) 134 Cal.App.3d 999, 1004.) The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided. (See Serrano v. Priest (1977) 20 Cal.3d 25, 49 [discussing factors relevant to proper attorneys’ fees award].) Such an approach anchors the trial court’s analysis to an objective determination of the value of the attorney’s services, ensuring that the amount awarded is not arbitrary. (Id. at 48, fn. 23.) The factors considered in determining the modification of the lodestar include “(1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, (4) the contingent nature of the fee award.” (Mountjoy v. Bank of Am. (2016) 245 Cal.App.4th 266, 271.) 

 

In challenging attorney fees as excessive because too many hours of work are claimed, it is the burden of the challenging party to point to the specific items challenged, with a sufficient argument and citations to the evidence.¿(Premier Medical Management Systems, Inc. v. California Ins. Guaranty Assoc. (2008) 163 Cal.App.4th 550, 564.)¿General arguments that fees claimed are excessive, duplicative, or unrelated do not suffice. (Ibid.) 

 

SEALING

 

Lockheed Martin Corporation (LMC) has filed two motions to seal certain portions of the moving papers and the reply to Plaintiffs’ opposition to the attorneys’ fees motion.  The Court advances the January 20, 2023, and March 17, 2023, hearings on these motions to this date.

 

The motions are accompanied by a declaration and memorandum, which were served on all parties who have appeared in the case. LMC also lodged unredacted copies with the Court.

 

LMC seeks to seal its invoices from outside counsel, which LMC contends discloses confidential information regarding LMC’s billing and fee agreement. LMC further argues that there is an overriding interest in protecting its confidential and proprietary details because there is a substantial probability that LMC and Crowell’s interests would be prejudiced if this information is disclosed to their competitors, customers, and vendors. (Niv. Decl., ¶¶ 7-8.) The invoices have been designated as “Highly Confidential” under the Stipulated Protective Order, entered by the Court on October 28, 2019 (the “Protective Order”).

 

The Court finds that because the Crowell Invoices contain highly confidential rate information, which is unknown to LMC and Crowell’s competitors, unsealing it would result in immediate and tangible harm to LMC and Crowell’s business interests. Moreover, the proposed sealing is narrowly tailored, and there does not appear to be any less restrictive means to achieve the overriding interest. The only information redacted pertains to LMC’s confidential retention agreement and fee arraignment and it previously has not been made public. Only the specific monetary figures are redacted. 

 

Accordingly, LMC’s two motion to seal are GRANTED.

 

ATTORNEYS’ FEES

 

LMC seeks to recover $1,588,594.44 in attorney’s fees that were reasonably incurred in defense of Plaintiffs’ claims. This amount includes: (1) fees requested in LMC’s moving papers of $1,455,495.94; (2) LMC’s fees incurred from September 1, 2022 through November 30, 2022 of $114,487.00; (3) an estimated additional $20,000.00 for fees that will be incurred in December 2022; and (4) minus $1,388.50 of fees that LMC withdrew.

 

Entitlement to Fees

 

Plaintiffs’ claims arise from the Proprietary Information Agreements (“PIAs”) entered into between the parties, which contain a broad attorney’s fees clause that permits the prevailing party to recover of fees incurred in “any proceeding or lawsuit . . . for violation of obligations under this Agreement.” (Holmer Decl., Exs. 1-2, § 13.) There is no reasonable dispute that LMC is the prevailing party in this proceeding, which was brought by Millennium and Sky Lift for alleged violations of obligations under the PIAs.

 

Plaintiffs’ claims all share a common factual basis: the alleged acquisition, use, or disclosure of Plaintiffs’ confidential information, which was protected from disclosure pursuant to the PIAs. The Court’s analysis in Defendant’s motion for summary judgment necessary found that the claims were intertwined. The complaint alleged improper acquisition, use, or disclosure of confidential information, which underlaid all of the claims. As such, the issues in the action are so interrelated that it would be impossible or impracticable to separate them.

 

Plaintiffs note that some of their theories relied on the fact that Lockheed prevented them from pursuing the Hybrid Airship with any of Lockheed’s competitors, such as Boeing, which would have the resources necessary to bring the hybrid airship to reality before Lockheed and that Lockheed could not risk that Plaintiffs bring their ideas, market knowledge and financing resources to a competitor. (FAC ¶¶1, 2, 125, 129.) For instance, Plaintiffs’ fraud cause of action was based on allegations that Lockheed “engaged in course of conduct designed to have Plaintiffs believe that it was going to be the exclusive partner with Lockheed in the design manufacture and sale of the Hybrid Airships by making false statements regarding Lockheed’s intentions of going forward as a joint venture partner on the Hybrid Airship project with Millennium and Sky Lift.” (FAC ¶ 104.) However, there is a substantial overlap between the conduct targeted by these claims and substantive violations of the PIAs, since Lockheed prevented Plaintiffs from pursuing competitors by engaging Plaintiffs in the PIAs.

 

Moreover, “‘[a]ttorney’s fees need not be apportioned when incurred for representation on an issue common to both a cause of action in which fees are proper and one in which they are not allowed.’”  (Dane-Elec Corp., USA v. Bodokh (2019) 35 Cal.App.5th 761, 771.) “‘Apportionment is not required when the claims for relief are so intertwined that it would be impracticable, if not impossible, to separate the attorney’s time into compensable and noncompensable units.’”  (Id. at 771-72.)  The Court concludes that this case is such a situation where the fees are so intertwined that it would be impracticable to separate them.

 

The Court also notes that Plaintiffs sought fees for themselves on the same contract. Thus, Civil Code § 1717 provides for reciprocal fees. (See Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 894 [term “on a contract” is liberally construed to include any action that “involves” a contact].)  Thus, LMC is entitled to reasonable attorneys’ fees in defending this suit based on the contract at issue.

 

While the Court does conclude that attorney’s fees are recoverable based upon the PIAs, the Court does not find that the lawsuit was brought in bad faith, such that fees are recoverable under California Uniform Trade Secrets Act (“CUTSA”). (See Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal. App. 4th 1249, 1253 [Courts have interpreted “bad faith” in this context to include maintaining a claim for misappropriation of trade secrets in bad faith].) In arguing that this suit was brought in bad faith, LMC contends that the undisputed evidence at the summary judgment proceeding demonstrated that Plaintiffs had actual knowledge of their potential claims against LMC and wanted to sue LMC by January 2014, more than a year outside the three-year statute of limitations based on Plaintiffs’ February 26, 2018 filing of the original complaint. (See Holmer Decl. Ex. 4.) While Plaintiffs failed to present sufficient evidence presenting a dispute of fact as to their knowledge in 2014, Plaintiffs still may have maintained this action in good faith. Plaintiffs had attempted to dispute this issue at summary judgment and while the Court did not accept these arguments, the Court cannot say that they were frivolous.

 

Reasonable Fees

 

LMC meets its initial burden to demonstrate entitlement to fees by presenting verified time records and invoices from counsel. (See Holmer Decl., ¶¶ 10-16, Ex. 14-66.) LMC presents evidence that Crowell Moring’s hourly rate range falls below that held reasonable in Los Angeles for comparable work. Plaintiffs do not dispute that the rates charged by LMC’s counsel are reasonable.

LMC also argues that the time spent litigating this case was reasonable, since this matter was complex, complicated, hard-fought, and lengthy. The litigation included filing of four amended complaints, multiple demurrers, an extremely large number of documents to be retrieved, produced and reviewed, fourteen days of depositions, discovery motions, and a motion for summary judgment. (See Homer Decl., ¶¶19-22,) Almost all of these motions were opposed and argued, and many were filed under seal.  

 

Plaintiffs argue that there is excessive billing because, despite that counsel billed Binns and Hybrid Enterprises separately for certain tasks, once Crowell started representing Binns and Hybrid Enterprises in addition to Lockheed, there was a significant amount of time incurred on tasks that benefitted all three Defendants and not just Lockheed. Plaintiffs posit that it would be “manifestly unfair to award all those fees to Lockheed when neither Binns nor Hybrid Enterprises are a part of this motion nor did they have a contract with Plaintiffs that provided for attorney’s fees to be awarded to them.” Accordingly, Plaintiffs contend that this Court should use its discretion to reduce the fees claimed by Lockheed since February 18, 2020 by two-thirds -- to reflect the amount that reasonably was attributable to solely Lockheed.

 

However, Plaintiffs do not demonstrate that it would be reasonable to do so under these circumstances.  First, as noted by Plaintiffs, counsel apparently took care to separate out bills attributable to its representation of Hybrid and Binns using a distinct billing number. (Holmer Decl. ¶ 16.) Second, the fact that some work performed by LMC’s counsel for LMC may have also “benefitted” Hybrid or Binns is irrelevant. Plaintiffs present no authority which suggests this mutual benefit analysis would warrant reduction in fees owed.  Otherwise, Plaintiffs did not make any specific objections to the reasonableness of any entries.

 

As to reply fees, LMC’s fees incurred from September 1, 2022 through November 30, 2022 were $114,487.00. These fees are verified by a reply declaration. (Exs. 67-68.) Of course, this means that Plaintiffs did not have the opportunity to review such fees before the opposition. Notably, fees incurred prior to October 4, 2022, could have been presented in the moving papers. Thus, the Court will entertain any specific objections to the reasonableness of any of these fees at the hearing.

 

LMC did not present any evidence of fees incurred in December. Thus, the Court is not inclined to grant the $20,000.00 for “anticipated” fees in December. The Court will deduct this amount from the requested fees.

 

Accordingly, the Court grants the motion in the amount of $1,568,594.44.