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Nelson v. LeBlanc

United States District Court, E.D. Louisiana

April 30, 2019

TAMARA G NELSON, INDIVIDUALLY AND ON BEHALF OF ALL OTHER PERSONS SIMILARLY SITUATED; ET AL.; Plaintiffs,
v.
WALTER J LEBLANC, IN HIS OFFICIAL CAPACITY AS CITY PROSECUTOR FOR THE CITY OF GRETNA; ET AL. Defendants.

          IVAN L.R. LEMELLE JUDGE

          ORDER AND REASONS

          Janis van Meerveld United States Magistrate Judge

         Before the court is Plaintiffs' Motion to Fix Fee for Deposition of Defendants' Expert Witness. (Rec. Doc. 92). For the following reasons, the Motion is GRANTED in part and DENIED in part. Oral argument set for May 1, 2019, is cancelled.

         Background Plaintiffs in this lawsuit challenge the operation of the Mayor's Court of the City of Gretna, Louisiana. They assert that the prosecutors and magistrates of the Mayor's Court are appointed by the Gretna City Council and serve at the pleasure of the Gretna Mayor. They allege that these officials are incentivized to maximize arrests and multiply prosecutions to generate fines and fees that fund the City of Gretna. They allege that in the 2014-2015 fiscal year, fees and fines from the Mayor's Court accounted for over 13.5% of the total revenue in Gretna's General Fund. Plaintiffs complain that a disproportionate number of those arrested are African American citizens of Gretna. Plaintiffs further challenge the Deferred Prosecution Program operated by the Defendants, which offers arrestees accused a violating a municipal ordinance the opportunity to have their charges dismissed in exchange for an agreement to pay a fine that is typically less than the fine upon a finding of guilt. But there is no Deferred Prosecution Program for those who cannot afford to pay the Program's fees. The named Plaintiffs are participants in the Mayor's Court and seek to represent themselves and others similarly situated in asserting a due process challenge to the alleged financial conflict of interest in the Mayor's Court, an equal protection and due process challenge to the Deferred Prosecution Program, and an equal protection and due process challenge to the summary suspension of drivers' licenses. Trial is set to begin on June 3, 2019. The discovery deadline passed on April 16, 2019.

         The present motion concerns the fee of defendants' expert witness Harold Asher. Mr. Asher is a certified public accountant (“CPA”) who was retained to provide an expert opinion and financial analysis of the City of Gretna's budgeting, which Defendants have submitted in opposition to Plaintiffs' Motion for Summary Judgment. The report consists of two pages detailing Mr. Asher's assumptions, materials reviewed, and conclusions; six pages listing cases where Mr. Asher has previously testified; a signature page listing exhibits; a one-page exhibit of financial data analysis; and the curriculum vitae of Mr. Asher and his partner Jeffrey Meyers. The report is dated March 18, 2019. Plaintiffs noticed the deposition of Mr. Asher, but the deposition has been unable to proceed because Plaintiffs have refused to pay Mr. Asher's stated fee of $930 for the first hour of deposition and $465 for each additional hour or part thereof, and Mr. Asher has refused to appear without a guarantee that he will be compensated at his preferred rate.

         Law and Analysis 1. Standard for Award of Expert Fees Under Federal Rule of Civil Procedure 26(b)(4)(A), a party may depose any person who has been identified as an expert who may testify at trial. The rules require that, unless manifest injustice would result, a party seeking a discovery from the expert must “pay the expert a reasonable fee for time spent in responding to discovery under Rule 26(b)(4)(A) or (D).” Fed. R. Civ. Proc. 26(b)(4)(E). In determining whether a fee is reasonable,

courts consider seven criteria: (1) the witness's area of expertise; (2) the education and training required to provide the expert insight that is sought; (3) the prevailing rates of other comparably respected available experts; (4) the nature, quality, and complexity of the discovery responses provided; (5) the fee actually charged to the party who retained the expert; (6) fees traditionally charged by the expert on related matters; and (7) any other factor likely to assist the court in balancing the interest implicated by Rule 26.

Borel v. Chevron U.S.A. Inc., 265 F.R.D. 275, 276 (E.D. La. 2010). “‘Ultimately,' however, ‘it is in the court's discretion to set an amount that it deems reasonable.'” Id. (quoting Fisher-Price, Inc. v. Safety 1st, Inc., 217 F.R.D. 329, 333 (D. Del. 2003)). For example, in Borel, the court reduced the fee of plaintiff's expert safety witness in a personal injury case from $500 per hour to $210 per hour where the expert had 40 years of experience in the oilfield safety industry and no college education, where others in the field charged $230 per hour to $325 per hour for depositions, and where other courts had severely limited and even excluded his testimony. Id. at 276-77.

         The parties have not cited any cases within this district addressing the fee of a CPA or forensic accountant under Rule 26(b)(4)(A). The court has not found any. The bankruptcy court in this district considered the fee charged by a CPA who testified at trial regarding standard accounting procedures utilized when representing an entertainment artist. In re Porter, No. 10-13553, 2014 WL 585962, at *9 (Bankr. E.D. La. Feb. 14, 2014). The court found the stated fee of $5, 000 for review of materials and preparation of the report to be reasonable but rejected the hourly rate of $500 for depositions and trial appearances. Id. The court took “judicial notice of the fact that the upper limit rate for services of a CPA in this district is $300 per hour” and reduced the rate to this amount. In re Porter, No. 10-13553, 2014 WL 585962, at *9 (Bankr. E.D. La. Feb. 14, 2014). Of note, however, the bankruptcy court was not applying Rule 26 and did not consider the Borel factors.

         As to compensation for preparation time, most courts hold that experts are also entitled to payment for the reasonable time spent preparing for the deposition. See id. at 277 (listing cases). A court in the Northern District of Illinois concluded that “[t]ime spent preparing for a deposition is, literally speaking, time spent in responding to discovery” and is therefore compensable under the rule. Collins v. Vill. of Woodridge, 197 F.R.D. 354, 357 (N.D. Ill. 1999). In Borel, for example, the court found the expert safety witness should be compensated for preparation time but reduced the time from the three hours claimed to one-and-a-half hours, finding it difficult to believe that the expert spent three hours to prepare for a three-hour deposition. 265 F.R.D. at 278.

         2. Parties' Arguments

         Plaintiffs argue that Mr. Asher's $930 hourly rate is not reasonable under the Borel factors. Mr. Asher's area of expertise is accounting. Plaintiffs submit that Mr. Asher has calculated the net revenue of the Mayor's Court by subtracting the court's total annual expenses from the total annual revenue it generates. They say these are relatively simple calculations that do not warrant a fee of $930 per hour. They cite Payne v. Brayton, where the court found a vocational rehabilitation expert's $6, 825 in fees for deposition preparation unreasonable where the witness was not a medical doctor or Ph.D., “the subject matter of the testimony was not particularly complex, ” and there was no evidence of the level of education necessary for the testimony, rates of other experts, quality of the discovery responses, or the typical fee charged by the expert. No. 4:15-CV-00809, 2017 WL 434312, at *2 (E.D. Tex. Feb. 1, 2017). They also cite Profile Products LLC v. Soil Management Technologies., Inc., where the court reduced the forensic accountant's hourly fee from $475 per hour to $250 hour, held that the time spent by the expert's associate was not compensable, and held that the expert was entitled to be compensated for preparation time, but reducing that time to two hours because “it is impossible to believe that [the] simple damages computation in an ordinary contract case requires anything like the amount of preparation time that [the expert] claims.” 155 F.Supp.2d 880, 887 (N.D. Ill. 2001).

         Plaintiffs argue that the prevailing rate for local experts is substantially less than $930 per hour. They point out that Mr. Asher's partner and co-author of the report, Jeffrey Meyers, charges a general hourly rate of $315, while charging $630 for the first hour of any deposition. They have attached the declaration of a legal extern who contacted two local CPA firms. Susan Kliebert, a CPA and certified forensic accountant with Kushner LaGrazie, CPA, informed the extern that her firm charges a deposition fee of $195 to $325 per hour. J.C. Tuthill, a CPA and certified forensic accountant at Legier and Company informed the extern that her firm charges the same hourly rate for depositions as they do for other services, with those rates ranging from $100 to $495 per hour. Tuthill informed the extern that forensic accountants who testify at depositions typically charge around $200 per hour.

         Defendants oppose, arguing that Mr. Asher's fee is reasonable. They point out that Mr. Asher's deposition rate of $930 for the first hour includes one hour of preparation time and one of hour of deposition time at his usual hourly rate of $465. They say that Mr. Asher's expertise goes beyond that of an ordinary accountant. They cite his curriculum vitae, which reflects his experience in the field since 1976, his education (including a Masters in Business Administration with a concentration in accounting and finance), and his certifications (including being an Accredited Business Valuator, a Certified Valuation Analyst, a Certified Fraud Examiner, a Forensic CPA, and having a Certification in Financial Forensics). They submit letters from two experts described as “comparably respected.” Kenneth Boudreaux, PhD, is a consulting economist who indicates that his fee for depositions is $1, 250 for preparation and the first hour of deposition, with his regular rate applying thereafter if the deposition occurs at his office. The letter adds that “[o]therwise, I bill depositions the same as any other consulting time ($585.00 per hour), with a $1, 250.00 minimum.” They also cite to the rates of Dan M. Cliffe, a CPA who charges $385 per hour for ...


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