United States District Court, D. Idaho
NELSON-RICKS CHEESE COMPANY, INC., an Idaho corporation, Plaintiff,
LAKEVIEW CHEESE COMPANY, LLC, a Nevada limited liability company, Defendant.
MEMORANDUM DECISION AND ORDER
C. Nye, U.S. District Court Judge.
before the Court is Defendant Lakeview Cheese Company
LLC's (“Lakeview”) Motion for Sanctions. Dkt.
83. Upon review, the Court will GRANT IN PART and DENY IN
PART Lakeview's Motion as outlined below.
September 29, 2017, Nelson-Ricks Cheese Company, LLC
(“NRCC”) notified Lakeview that it had served
subpoenas on fifteen Lakeview customers seeking financial
information related to Lakeview's sales over a five-year
period. On October 20, 2017, Lakeview filed an Emergency
Motion to Quash the Subpoenas. Dkt. 47. The Court granted the
Motion to Quash and issued a Protective Order on October 26,
2017. Dkt. 57.
decision on the Motion to Quash, the Court found that the
subpoenas were improper, that NRCC issued them in violation
of the protective order in place at the time (by not
including a copy of the protective order), and that the
subpoenas directed the customers to tender their responses to
Greenberg Cheese Company-a non-party to this lawsuit, a
direct competitor of Lakeview's, and the principle place
of business of NRCC's CEO, Michael Greenberg.
Id. The Court concluded that Lakeview, not the
fifteen non-party customers, was the correct party from which
to get this information and that the customers might have
inadvertently disclosed sensitive financial information as a
result of the subpoenas.
light of the Court's decision, Lakeview filed a Motion to
Amend Answer (Dkt. 66), seeking to add a counterclaim against
NRCC for abuse of process. In its discretion, the Court
denied the Motion (Dkt. 81), but ruled that it would
entertain a motion for sanctions. Relying on Rule 1 and the
Court's duty to “secure the just, speedy, and
inexpensive determination of every action and proceeding,
” Fed.R.Civ.P. 1, the Court reasoned the additional
time and expense of a counterclaim outweighed any possible
benefit. However, the Court recognized Lakeview's need
for appropriate recovery and granted it leave to file the
instant Motion for Sanctions. Id.
Rule 26 of the Federal Rules of Civil Procedure, a Court can
impose Rule 37 sanctions in order to financially compensate,
or make whole, an aggrieved party who had to defend against
improper tactics used by another party during discovery.
Rule of Procedure 26(c)(3) provides that Rule 37(a)(5)
applies to the award of expenses in regards to protective
orders. Rule 37(a)(5), in turn, outlines that, when a Court
grants a protective order, “the Court . . . must
require the party . . . whose conduct necessitated the motion
. . . to pay the movant's reasonable expenses incurred in
making the motion, including attorney fees.”
also allows for recovery when a party issuing a subpoena
fails to “take reasonable steps to avoid imposing undue
burden or expense on a person subject to the subpoena.”
Fed.R.Civ.P. 45(d)(1). When a violation occurs, the court can
“impose an appropriate sanction-which may include lost
earnings and reasonable attorney's fees- on a party or
attorney who fails to comply.” Id.
determining that a basis exists for a proper award of
attorney fees, the Court must calculate a reasonable fee
award. Hensley v. Eckerhart, 461 U.S. 424, (1983).
Generally, the Court utilizes the “lodestar figure,
” which multiplies the number of hours reasonably
expended on the litigation by a reasonable hourly rate.
Id. The Court can then adjust the lodestar figure if
necessary, based upon the factors set forth in Kerr v.
ScreenExtras Guild, Inc.,526 F.2d 67 (9th