Malloy v. Trileaf Corporation et al

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
DEBORAH MALLOY, )
)
Plaintiff, )
)
v. ) No. 4:24 CV 506 CDP
)
TRILEAF CORPORATION, et al., )
)
Defendants. )
MEMORANDUM AND ORDER
After I granted defendants summary judgment, they timely filed a bill of
costs requesting that $19,807.14 in recoverable costs be taxed against plaintiff,
Deborah Malloy. As Malloy concedes that there is no basis to challenge
defendants’ claimed costs, I will direct the Clerk of Court to tax the costs set out in
defendants’ bill.
In a separate Memorandum and Order, I also granted defendants’ motion for
sanctions for Malloy’s misconduct committed during the discovery process, and I
determined to assess defendants’ reasonable attorney’s fees against Malloy and her
attorney, Matthew Ghio, as a remedial sanction. (ECF 91, Memo. & Ord., Jan.
14, 2026.) I therefore directed defendants to file a verified statement of attorney’s
fees they reasonably incurred on account of Malloy’s misconduct. In her
amended declaration and statement of fees, defendants’ counsel, Joy D. McMillen,
requests $54,475.50 in fees representing 106.5 hours of the defense team’s work
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that she declares were necessitated solely because of Malloy’s discovery
misconduct. Malloy objects to the requested fees.
At the outset, I again reject Malloy’s argument that her discovery
misconduct was not serious, as I again reject her argument that defendants
conducted excessive discovery because they were attempting to “punish” her
through the discovery process. Instead, this is a case where an employee (who
was the Director of Human Resources) was fired for legitimate reasons, including
improper handling of protected employee information and lying about it. Shortly
after deciding to fire Malloy, defendants discovered extensive additional
misconduct, including that she had emailed company personnel documents to her
home email, that she failed to properly handle security notices when employees
left, and that she had cancelled her own and her daughter’s background checks.
Malloy argues that because defendants already knew of this “after-acquired”
evidence before she sued them, and because defendants had obtained a state court
order compelling her to return company property, defendants should not have
undertaken thorough discovery in this litigation.
In addition to simply being wrong, Malloy’s argument that defendants’
discovery was needlessly thorough ignores the seriousness of her now-abandoned
allegations of false imprisonment against defendant T. Scott Muschany, the CEO
and president of defendant Trileaf Corporation. Malloy’s complaint alleged that
Muschany had restrained her in his locked office on more than three dozen
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occasions, during which time he intimidated and berated her. In response to
defendants’ motion for summary judgment, however, Malloy conceded that
defendants were entitled to summary judgment on that claim.1
The allegations in the complaint, coupled with defendants’ knowledge of
Malloy’s dishonesty during her employment, gave defendants ample reason to
seriously question and attempt to verify Malloy’s discovery responses. As it
turned out, many of those discovery responses were also false and misleading; and
it is for that reason, as I previously ordered, that sanctions are appropriate.
Of course, as I explained in my Order granting sanctions, this sanctions
award is for misconduct during discovery in this litigation and not for Malloy’s
pre-suit behavior. I will, therefore, reduce somewhat defendants’ claim for
attorney’s fees because it is not clear to me that all of the claimed fees were
incurred solely because of Malloy’s misconduct during discovery. For the reasons
that follow, instead of painstakingly reviewing the entries to parse between fees
that are permitted and those that are not, or directing defendants to provide more
detail in another amended statement (and thus incur even more attorney’s fees), I
will apply a one-quarter reduction to the requested fees.
1 Malloy says she made this concession because she realized the claim was barred by Missouri’s
Worker’s Compensation Law, citing Brock v. Dunne, 637 S.W.3d 22 (Mo. banc 2021). (ECF
80, Pltf.’s Resp. to Deft.’s Sum. Judg. Mot. on Cts. III and IV.) But as I ruled earlier in this
case, Brock did not hold that intentional torts such as false imprisonment were barred by the
Worker’s Compensation Law. (ECF 16, Memo. & Ord. at pp. 5-7.)
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Discussion
A district court has wide discretion in determining the proper amount of
reasonable attorney’s fees to be awarded in a case where a party has been
sanctioned. Wescott Agri-Prods., Inc. v. Sterling State Bank, Inc., 682 F.3d 1091,
1094 (8th Cir. 2012). In evaluating whether a fee award is reasonable, courts
begin with the lodestar, “which is calculated by multiplying the hours reasonably
expended by the reasonable hourly rates.” Jet Midwest Int’l Co. v. Jet Midwest
Grp., LLC, 93 F.4th 408, 420 (8th Cir. 2024); Indep. Contractors of Maverick
Transp., LLC v. Great W. Cas. Co., No. 4:24-CV-338 HEA, 2025 WL 1423598, at
*2 (E.D. Mo. May 16, 2025).
Here, Malloy does not challenge the hourly rates charged by attorney
McMillen and the rest of the defense team, which comprises a member of the
Lewis Rice law firm, two associate attorneys, and a paralegal.2 Based on my
general familiarity with rates charged by attorneys in St. Louis and my experience
in fee disputes, I find that the rates charged by defense counsel and legal staff in
this case are reasonable and well in line with rates charged by other attorneys in St.
Louis for similar services.
I view the reasonableness of hours expended through the lens in which I
determined that assessing attorney’s fees was warranted, that is, as a remedial
2 McMillen and the Lewis Rice member billed at $550/hour; the associate attorneys billed at
$395/hour; and the paralegal billed at $280/hour.
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award for sanctionable misconduct. Therefore, to constitute the basis for that
remedial award, the claimed hours must have been expended solely because of
Malloy’s unethical behavior. (See ECF 91, Memo. & Ord.) On the information
before the Court, it is unclear whether all the claimed hours meet that criterion.
I have carefully reviewed the file and the evidence and argument submitted
on defendants’ motion for sanctions, and it appears that the earliest date that
defendants could have discovered that Malloy provided false and misleading
information under oath – which they claim triggered their need to further
investigate – was November 21, 2024, when Malloy answered defendants’ first
interrogatories and request for production. It thus appears that the claimed hours
that predated November 21, 2024, were part of defendants’ general course of
discovery and not expended solely because of Malloy’s discovery misconduct.
That timeline also causes me to question whether all the claimed hours
related to Malloy’s Social Security authorization form were expended solely
because of Malloy’s discovery misconduct. In their motion for sanctions,
defendants averred that they sought SSA records “after Plaintiff disclosed in
written discovery answers that she had not filed any tax returns since 2020, and
produced only two W-2 statements from any employer other than Trileaf.” (ECF
69 at p. 1.) But a review of the file shows that defendants requested the SSA
authorization from Malloy on November 4, 2024, which was 17 days before
Malloy answered any discovery. (See ECF 69-4, Defts.’ Third Req. for Prod.)
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Indeed, in their motion to compel filed November 19, 2024, defendants argued that
as of that date, “Plaintiff has still not provided any answers responses [sic] to
Defendants’ First Written Discovery. Likewise, Plaintiff has not yet produced a
single responsive document in discovery.” (ECF 23 at ¶ 15.) It appears,
therefore, that the SSA authorization request directed to Malloy on November 4,
2024, was part of general discovery practice, and that defendants’ follow-up with
Malloy’s counsel in December 2024 regarding the form’s late production was
likely part of that general course of discovery and not necessitated solely because
of misconduct. And I cannot conclude that the wrong birthdate and false
declaration on the SSA form caused that December 2024 work because defendants
did not become aware of those falsehoods until late April 2025. (ECF 69 at p. 1.)
The examples set out above leave me with uncertainty as to whether all the
hours defendants claim for attorney’s fees as a remedial sanction meet the
requirement that they be “incurred and caused solely because of Malloy’s false and
misleading answers to interrogatories and deposition testimony” regarding certain
specified matters, “and by the provision of incorrect information on Social Security
Administration form SSA-7050-F4 (11-2022), signed under penalty of perjury on
December 16, 2024.” (ECF 91, Memo. & Ord. at p. 7.)
There is no doubt that the majority of defendants’ claimed fees directly
relate to and were caused by Malloy’s discovery misconduct. For example,
Malloy provided employment and earnings information in answers to
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interrogatories which defendants quickly determined was inconsistent with
information that Malloy provided in more than one bankruptcy filing. (See ECF
69, Defts.’ Memo. in Supp. of Mot. Sancs. at pp. 3-4.) When defendants
investigated the discovery responses further, they determined that Malloy had
provided them – as well as others – with fabricated letters of recommendation.
(Id. at pp. 4-5.) Further investigation revealed that Malloy had lied, both in her
interrogatory answers and her deposition, about her educational background. (Id.
at p. 7.) Because of these lies and others, defendants very reasonably saw the
need to conduct third-party discovery and additional investigation into her
background.
Malloy argues that defendants’ continued investigation was not needed
because, even without it, defendants would have been able to limit Malloy’s
damages because of the after-acquired evidence they already had. But Malloy’s
credibility would have been a central issue at trial. It was therefore appropriate for
defendants to investigate her false statements during discovery to determine the
truth and to prepare for challenging her credibility, and not just for the purpose of
challenging Malloy’s amount of claimed damages. Nevertheless, some of the fee-
statement’s time entries – such as follow-up communications with Malloy’s
counsel regarding late or missing discovery responses – do not appear to be
directly caused by Malloy’s discovery misconduct.
Where inadequate or unclear documentation hinders a court’s ability to
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conduct a meaningful review for an award of reasonable attorney’s fees, the court
may apply a percentage reduction to the requested fees. Miller v. Woodharbor
Molding & Millworks, Inc., 174 F.3d 948, 949-50 (8th Cir. 1999) (per curiam)
(remanding to district court to request more detail or apply percentage reduction
based on vague billing entries); see also Axiom Prod. Admin., Inc. v. O’Brien, No.
4:20-CV-01333-MTS, 2024 WL 1655389, at *5 (E.D. Mo. Apr. 17, 2024)
(reducing requested fees by 30 percent because the specific amount of time
“actually devoted to enforcing rights under the contract is still unclear. . . . [I]t is
not the duty of the Court to tirelessly review the time entries provided in support of
Plaintiff’s attorneys’ fees to determine what amount was actually incurred in
enforcing the contract claims.”).
Given the timing discrepancies in defendants’ request for fees, it remains
unclear whether all the fees they claim were incurred “solely because of Malloy’s
false and misleading answers to interrogatories and deposition testimony” and
untruthful information on the SSA form. I will therefore reduce the requested
lodestar amount by one-quarter and assess attorney’s fees as a remedial sanction in
the amount of $40,856.63 against Malloy and her attorney, Matthew Ghio, jointly
and severally.
For the reasons set out in my Memorandum and Order granting sanctions
(ECF 91), I reject Malloy’s request that I award only $1000 as sanctions as well as
her argument against a fee award in general.
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Accordingly,
IT IS HEREBY ORDERED that the Clerk of Court shall tax the costs as
set out in defendants’ bill of costs [92].
IT IS FURTHER ORDERED that defendants Trileaf Corporation and T.
Scott Muschany shall recover attorney’s fees in the amount of $40,856.63 as a
remedial sanction from plaintiff Deborah Malloy and her attorney, Matthew Ghio,
jointly and severally.
CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE
Dated this 18th day of March, 2026.
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