SONICblue Inc.

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For The Northern District Of California
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MEMORANDUM DECISION AND ORDER ON SIXTH INTERIM APPLICATION
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re:
SONICBLUE INCORPORATED,
DIAMOND MULTIMEDIA SYSTEMS,
INC., REPLAYTV, INC., and SENSORY
SCIENCE CORPORATION,
Debtors.
Cases No. 03-51775, 03-51776,
03-51777, and 03-51778-MM
Chapter 11 cases
Jointly administered
MEMORANDUM DECISION AND
ORDER ON SIXTH INTERIM
APPLICATION OF PILLSBURY
WINTHROP LLP FOR
COMPENSATION AND EXPENSE
REIMBURSEMENT
I NTRODUCTION
Before the court is the sixth interim application of Pillsbury Winthrop LLP for compensation and
reimbursement of expenses as general bankruptcy counsel for the chapter 11 debtors, SonicBlue
Incorporated, Diamond Multimedia Systems, Inc., ReplayTV, Inc., and Sensory Science Corporation.
Pursuant to 11 U.S.C. § 330, Pillsbury Winthrop requests approval of professional fees in the amount
of $621,623.50 and expense reimbursement of $18,014.59. 	Having considered the sixth interim
application, the report by Stuart, Maue, Mitchell & James, Ltd., the court appointed fee auditor, of its
review and analysis of the sixth interim fee application, and the response of Pillsbury Winthrop to the
audit report, the court allows interim compensation in the amount of $545,345.60 and expense
reimbursement of $18,014.59 and defers ruling on $10,723 in fees.
The following constitutes
the order of the court. Signed July 20, 2006
Marilyn Morgan
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
July 24, 2006
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
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MEMORANDUM DECISION AND ORDER ON SIXTH INTERIM APPLICATION
BACKGROUND
The debtors, which designed and marketed consumer electronic products, commenced these
jointly administered chapter 11 cases on March 21, 2003 when they were unable to meet their maturing
financial obligations. Pillsbury Winthrop LLP was appointed as counsel for the debtors on April 11,
2003. These are liquidating chapter 11 cases. Projecting that they would exhaust their cash reserves
by April 20, 2003, the debtors immediately sought and obtained court approval of the sales by auction
of their three primary operating businesses, the Go Video, ReplayTV, and Rio product lines, for more
than $40 million.
Following the sale of the three operating business lines, the debtors also sold their modem
product line, graphics patents portfolio, computer component inventory, and shares of stock in United
Microelectronics Corporation (UMC), which are traded on the Taiwan Stock Market. Substantially all
assets of the estates have been liquidated except for avoidance actions. The debtors hold in excess of
$75 million in funds, most of which are unencumbered. Secured claims have been paid in full from the
proceeds of sale. Unsecured creditors assert claims exceeding $400 million, of which more than $130
million are disputed. More than $392,000 in priority claims and $104 million in unsecured claims were
disallowed or withdrawn as a direct result of the applicant’s services during this application period. The
debtors continue to address disputed claims.
SonicBlue has been engaged in concurrent litigation and settlement negotiations with VIA
Technologies and S3 Graphics, a common joint venture, over the breach of the investment agreement
creating the joint venture. Both VIA and S3 assert claims in the amount of $70 million for breach of
the investment agreement by failing to pay certain accounts payable, offering non-ordinary course
discounts to accelerate the collection of receivables, failing to turn over receivables collected on behalf
of the joint venture, and failing to contribute certain assets to the joint venture. They also assert that
they are entitled to liquidated damages if they are enjoined prospectively from enjoying the rights under
a patent license between SonicBlue and Intel Corporation, to which the joint venture is entitled under
the investment agreement. SonicBlue asserts that VIA and S3 breached the investment agreement by
failing to pay assumed obligations, that VIA breached its fiduciary duty in connection with the
operations of the joint venture and the settlement of patent litigation with Intel Corporation, and that S3
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MEMORANDUM DECISION AND ORDER ON SIXTH INTERIM APPLICATION
aided and abetted the breach of fiduciary duty. It seeks compensatory and punitive damages, equitable
subordination of VIA’s and S3's claims, restitution, and an accounting. The various claims reportedly
involve complex, disputed facts. Pillsbury Winthrop has been particularly active in the litigation during
this application period. It responded to VIA’s and S3's dismissal motions, exchanged initial disclosures,
developed a discovery plan, commenced discovery, and engaged in settlement negotiations.
SonicBlue is also engaged in litigation and settlement negotiations with Intel Corporation
concerning the parties’ respective rights under the patent license, which grants reciprocal rights to use
certain graphics patents in the other’s portfolio. 	Intel seeks to terminate the patent license while the
debtor seeks to assume it under § 365.
The debtors are winding down their limited remaining operations and are focusing their efforts
on addressing claims and recovering avoidable transfers. 	During this application period, Pillsbury
Winthrop has continued to advise the debtors with respect to their limited remaining operations,
including compliance with the requirements of the Securities Exchange Commission, the Corporations
Code, and the Bankruptcy Code, maintenance of the debtors’ intellectual property, and termination of
a 401(k) plan. Two consultants remain employed by the debtors to assist in the liquidation of assets and
the administration of the estates.
The Official Committee of Unsecured Creditors is actively participating in and monitoring the
cases. Although the debtors have completed a draft of a proposed disclosure statement and plan, in
consultation with the Committee, they have suspended those efforts in light of the uncertainty regarding
the impact of the sizable claims of VIA Technologies and S3 Graphics on the confirmability of and
distributions under a plan. Other strategic issues also affect timing, including the possibility of limiting
the damages claims through a confirmed plan and more accurately estimating distributions by fixing the
amount of claims.
To date, the court has awarded to Pillsbury Winthrop on an interim basis $2,885,088.58 in fees
and $245,589.85 in expense reimbursement and has deferred ruling on $73,687.50 in fees related to the
preparation of the plan and disclosure statement. By its sixth interim application, Pillsbury Winthrop
requests approval of additional fees in the amount of $621,623.50 incurred between February 1, 2005
and September 30, 2005 and expense reimbursement of $18,014.59.
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MEMORANDUM DECISION AND ORDER ON SIXTH INTERIM APPLICATION
LEGAL DISCUSSION
Section 330 of the Bankruptcy Code provides that the court may award to a trustee, an examiner,
or a professional person employed under §§ 327 or 1103 reasonable compensation for actual, necessary
services rendered and reimbursement of actual, necessary expenses. 	In determining the amount of
reasonable compensation, the court considers the nature, extent, and value of the professional’s services,
taking into account all relevant factors, including whether the services were necessary to the
administration of, or beneficial at the time at which the service was rendered toward the completion of,
a case and whether the services were performed within a reasonable amount of time commensurate with
the complexity, importance, and nature of the problem, issue, or task addressed. 11 U.S.C. § 330(a)(3).
The applicant bears the burden of establishing entitlement to an award and demonstrating that the fees
are reasonable. Hensley v. Eckerhart, 461 U.S. 424, 437 (1983).
A. 	Voluntary Reductions
In this application, Pillsbury Winthrop voluntarily reduced its fees by $6,093.50 for timekeepers
whose total billings in the case were less than $1,050. It also voluntarily reduced its request for expense
reimbursement by $2,147.42 for word processing, printing, and imaging charges and by $1,017.94 for
express courier and messenger services. 	In response to the audit report by Stuart, Maue, Pillsbury
Winthrop has further voluntarily reduced its request for fees by $233.50 for duplicate time entries.
B. 	Compensation for Preparation of Plan and Disclosure Statement is Premature
To establish its entitlement to compensation, counsel must demonstrate that the services were
necessary or reasonably likely to benefit the estate at the time they were rendered. In re Mednet, 251
B.R. 103, 108 (B.A.P. 9 th Cir. 2000). 	The necessity of the services is dictated in part by the
reasonableness of the request in view of the governing law and the probability of success. 	See
Unsecured Creditors’ Comm. v. Puget Sound, Plywood, Inc., 924 F.2d 955, 959 (9th Cir. 1991). Counsel
further has an obligation to consider the potential for recovery and to balance the effort required against
the results that might be achieved. Id. at 961. Within these parameters, the court must examine the
circumstances and the manner in which services are performed and the results achieved in order to arrive
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at a determination of a reasonable fee allowance. Mednet, 251 B.R. at 108.
As the court has previously indicated, it is premature to determine whether the fees incurred in
connection with the preparation of the debtors’ plan and disclosure statement are reasonable. The court
is unable at this juncture to balance the efforts expended against the results achieved. The debtors, in
consultation with the Committee, have determined to suspend activity on the plan and disclosure
statement pending further progress in the litigation with VIA Technologies, S3 Graphics, and Intel
Corporation and on objections to claims. The court reserves ruling on fees in the amount of $10,723
associated with preparation of the plan and disclosure statement, as well as related requests to extend
the exclusivity period, pending further progress toward plan confirmation.
C. 	Time Devoted to Supplemental Employment Application is Excessive
When applying for fees, counsel has a duty to exercise good billing discretion. 	Hensley v.
Eckerhart, 461 U.S. at 436. In determining a reasonable fee allowance, the court must consider whether
the services were necessary or beneficial at the time they were rendered. Mednet, 251 B.R. at 108. It
must also examine the circumstances and the manner in which the services are performed and the results
achieved. Id. Hours that are excessive, redundant, or unnecessary in view of the services performed
should not be compensated.
The debtors identified in excess of $63 million in transfers to approximately 348 different
creditors in the 90 days preceding the commencement of these cases. Since unsecured creditors would
be directly affected by the recovery of avoidable transfers, the Committee desired that the estate pursue
the avoidance actions on a contingent fee basis. 	To retain the representation, Pillsbury Winthrop
negotiated with the Committee the terms of a contingent fee arrangement whereby Pillsbury Winthrop
and Committee counsel would jointly represent the estate in pursuing avoidance actions. 	Pillsbury
Winthrop submitted a supplemental employment application to obtain court approval of the contingent
fee arrangement. 	Finding that the proposed fee structure was excessive, not reasonable, and not
competitive with the terms of comparable representation in similar matters, the court declined to
approve the terms. Thereafter, the Committee entertained an alternate proposal by other counsel. The
court ultimately approved the retention of Pillsbury Winthrop and Levene, Neale, Bender, Rankin &
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Brill to prosecute avoidance actions on a contingent fee basis after the original terms were modified to
be more aligned with the alternate proposal.
The applicant previously sought court approval of $15,681.50 in fees incurred in connection
with negotiating the terms of representation, preparing the supplemental employment application,
responding to an objection and to the court’s concerns, and restructuring the terms. The court found the
fees to be excessive and allowed a total of $4,000. Pillsbury Winthrop now seeks an additional $1,227
incurred during this application period in connection with the supplemental employment application.
Having previously allowed $4,000, the court disallows the additional fees in this category, the entries
for which are set forth below.
Date 	Time-
Keeper Description 	Hours 	Amount
Retention of Professionals
02/02/05 	Freeman 	Review revised Employment Order on preference
actions and transmit to Salvucchi and Smith. 0.60 	309.00
02/04/05 	Houle 	Telephone conference with C. Rankin re
submission of order on preference employment. 0.20 	84.00
02/09/05 	Freeman 	Telephone conference with R. Bender regarding
employment order. 0.20 	103.00
02/09/05 	Freeman 	Review and revise declaration regarding entry of
employment order. 0.40 	206.00
03/02/05 	Barbarosh 	Conference call with R. Bender and M. Choi
(judge’s law clerk) re judge’s comments to
proposed order.
0.20 	105.00
03/14/05 	Barbarosh 	Analysis of supplemental disclosure to be made
in support of employment application. 0.20 	105.00
03/16/05 	Barbarosh 	Analysis re additional disclosures in support of
employment application. 0.30 	157.50
03/25/05 	Barbarosh 	Analysis re additional disclosures to be made in
support of employment application. 0.30 	157.50
TOTAL 	2.40 	1,227.00
D. 	Time Expended Conducting Research On Automatic Stay Is Excessive
In exercising good billing discretion, hours that are excessive, redundant or unnecessary should
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be excluded from fee applications. To determine whether the hours are excessive, the court considers
whether the services were performed within a reasonable amount of time commensurate with the
complexity importance, and nature of the problem, issue or task addressed. 	§ 330(a)(3)(D). In the
VIA/S3 Litigation project category, timekeeper A.N. Damonte spent 3 hours on August 4, 2005 to
conduct “research re: application of automatic stay to counterclaims,” incurring $1,005 in fees.
Pillsbury Winthrop prides itself in offering the resources and expertise to provide services in a
multiplicity of disciplines. However, rather than consult with a colleague in the bankruptcy department,
a litigation associate expended an inordinate amount of time researching a rather routine bankruptcy
issue. The entry will be reduced by 2.5 hours, reflecting the disallowance of $837.50 in fees for this
task.
E. 	Time Devoted to Clerical Services Is Not Compensable by the Estate
Section 330 contemplates compensation only for professional services. Services that are clerical
in nature are properly chargeable to the firm as an overhead expense and not to the bankruptcy estate.
Fees for services that are purely clerical, ministerial, or administrative should be disallowed. Missouri
v. Jenkins, 491 U.S. 274, 288 fn.10 (1989); Sousa v. Miguel, 32 F.3d 1370, 1374 (9th Cir. 1994).
Paragraph 18 of the Guidelines for Compensation and Expense Reimbursement of Professionals and
Trustees for the United States Bankruptcy Court, Northern District of California (“Fee Guidelines”)
expressly provides that time spent performing administrative tasks is not compensable.
Some of the services performed by the applicant, such as downloading files, indexing, locating
and retrieving, filing, electronically filing, organizing, forwarding or serving documents, conducting
PACER searches, preparing proofs of service, scheduling or calendaring, and filing and serving
pleadings are clerical in nature. Similarly, oversight of or supervising any of the foregoing activities
is also considered clerical. 	The application includes several entries by a paralegal to “research”
documents and to “finalize” pleadings. While the terms connote activities of a substantive legal nature,
a review of these entries in context makes it plain that the services are merely clerical. Use of the term
“research” generally refers to locating and retrieving documents while “finalize” appears to refer to
preparing pleadings for filing and service after an attorney has already drafted them. The time entries
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for services that are clerical in nature total $6,823.40 and are set forth in Exhibit I to the audit report.
In addition, the following entries, which total $10,925, are also for clerical services.
Date 	Time-
Keeper Description 	Hours 	Amount
Case Administration
04/11/05 	Breeden 	Correspond with OCC Counsel and Northern
District ECF Trainer regarding schedule for
training.
0.70 	119.00
04/25/05 	Breeden 	Correspond with Marilyn of Northern District
Bankruptcy Court regarding software questions
related to e-filings.
0.40 	68.00
08/01/05 	Breeden 	Research and review documents for TRG
Agreement and Patent Order and forward same to
M. Houle on expedited basis.
1.20 	204.00
08/02/05 	Breeden 	Correspond with M. Heath regarding rush
document request for M. Houle. 0.40 	68.00
08/05/05 	Breeden 	Research and retrieve pleadings for A. Barron of
O’Melveny and Myers on expedited basis. 0.90 	153.00
09/08/05 	Breeden 	Correspond with A. Barron of O’Melveny &
Myers regarding requested pleadings, locate
same and forward request.
1.20 	204.00
09/28/05 	Breeden 	PACER search regarding status of Sobrato
administrative claim and retrieval of documents
supporting same.
0.90 	153.00
Subtotal 	5.70 	969.00
Claims Administration/Objections
02/03/05 	Breeden 	Finalize objection to F. Robin McSurley claim,
serve and electronically file with bankruptcy
court.
0.40 	68.00
02/18/05 	Breeden 	Receive and organize 22 boxes of client
documents relating to vendor invoices for 2002
and 2003 payable.
1.40 	238.00
02/23/05 	Walker 	Follow-up on document copying for claims
review. 0.10 	43.00
04/27/05 	Breeden 	Prepare proofs of service, finalize pleadings,
serve and e-file notice of motion, motion,
stipulation and supporting declaration for order
approving stipulation among debtors and U.K.
Affiliate.
1.90 	323.00
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04/27/05 	Breeden 	Finalize notice to motion approving stipulation
among debtors and U.K. Affiliate and forward to
administar for service on all creditors.
0.90 	153.00
04/28/05 	Walker 	Instruct P. Breeden regarding finalization of
Dehon and Leagas stipulations. 0.10 	43.00
04/29/05 	Breeden 	Assemble exhibits to Stipulation and Order and
e-file Stipulation allowing claim of Leagas
Delaney and Proposed Order thereon.
0.80 	136.00
05/02/05 	Walker 	Confirm removal from court calendar of Merisel
claim objection. 0.20 	86.00
05/02/05 	Breeden 	Voice message to M. McGowan of U.S.
Bankruptcy Court regarding status of settled
claim of Merisel and removal from court’s
calendar.
0.10 	17.00
05/02/05 	Breeden 	Finalize stipulation, assemble exhibits and e-file
stipulated order and order regarding Dehon, Inc.
disputed claims.
0.80 	136.00
05/03/05 	Breeden 	Download signed stipulated order for Dehon, Inc.
and forward to claims administrator and OCC. 0.50 	85.00
05/05/05 	Breeden 	Correspond with servicing agent regarding
amended notice and forward same for service. 0.60 	102.00
05/05/05 	Breeden 	Conversation with M. McGowan regarding status
of Merisel matter still on calendar and report
same to M. Walker.
0.60 	102.00
05/16/05 	Breeden 	Download and forward conformed copy of
Citicapital Technology Claims order to claims
administrator and OCC.
0.30 	51.00
05/16/05 	Breeden 	Download and forward conformed copy of
Citicorp Vendor order to claims administrator
and OCC.
0.30 	51.00
05/25/05 	Breeden 	Finalize pleadings, assemble exhibits and e-file
request for entry of default order and order with
bankruptcy court.
1.10 	187.00
05/31/05 	Breeden 	Download entered Astra Datentechnick claims
order and forward to claims administrator and
OCC.
0.60 	102.00
06/03/05 	Breeden 	Prepare, mark, and download exhibits to
Declaration of M. Houle in support of request for
default order regarding DMSL motion, finalize
request and order, serve and e-file same.
3.10 	527.00
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06/08/05 	Breeden 	Finalize exhibits and e-file Stipulation to Allow
Claims among Debtors, Creditors Committee and
Peery/Arrillaga Limiting Claims and Waiving
Defense.
0.90 	153.00
06/16/05 	Mayfield 	Coordinate transfer of data from one vendor to
new vendor for processing. 0.50 	82.50
07/05/05 	Breeden 	Research claims database and forward pdf copies
of proofs of claims to M. Smith. 0.80 	136.00
08/02/05 	Breeden 	Download and forward signed claims order of
State Street Bank to Administar. 0.60 	102.00
09/13/05 	Breeden 	Download and forward Stipulation between
Debtors and Right management Allowing and
Disallowing Claims to N. Weil at Administar for
processing.
0.40 	68.00
09/15/05 	Breeden 	Research, download and forward claims from
SonicBlue relating to Tennessee Department of
Revenue for M. Walker.
0.90 	153.00
Subtotal 	17.90 	3,144.50
Compensation of Professionals
03/05/05 	Houle 	Draft multiple correspondence to P. Breeden re
filing and service of Perisho fee application. 0.30 	126.00
03/09/05 	Breeden 	Prepare proof of service for fifth interim fee
application of Pillsbury Winthrop, electronically
file and serve thereon.
1.10 	187.00
03/09/05 	Breeden 	Finalize, prepare proof of service for final fee
application of Perisho Tombar, electronically file
and serve thereon.
0.90 	153.00
03/23/05 	Breeden 	Finalize Amended Fee Notice and electronically
file same. 1.20 	204.00
03/23/05 	Breeden 	Prepare final version of affidavit from servicing
agent regarding amended notice of hearing and
electronically file same.
1.60 	272.00
03/31/05 	Breeden 	Finalize pleadings, prepare proof of service,
serve and e-file First and Final Fee Application
of Mohler Nixon et al.
0.90 	153.00
04/25/05 	Breeden 	Finalize Order and e-file Fee Order of Perisho,
Tombar and Loomis. 0.60 	102.00
04/25/05 	Breeden 	Finalize Order and e-file Fee Order of Pillsbury
Winthrop. 0.60 	102.00
04/25/05 	Breeden 	Finalize Order and e-file Fee Order of Mohler
Nixon. 0.60 	102.00
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06/01/05 	Breeden 	Review Judge’s fee application calendar and
forward proposed dates to M. Houle. 0.20 	34.00
08/19/05 	Breeden 	Prepare fee application memos to S. Urricarriet
regarding e–filing and service of sixth interim fee
application.
1.00 	170.00
08/19/05 	Houle 	Conference with P. Breeden regarding filing and
service of fee application. 0.20 	84.00
09/30/05 	Breeden 	Prepare proof of service, serve, e-file and
courtesy copy to chambers of Response to Stuart
Maue regarding Pillsbury’s Fifth Interim Fee
Application, supporting declaration with exhibits.
1.20 	204.00
Subtotal 	10.40 	1,893.00
Retention of Professionals
04/20/05 	Breeden 	Prepare proof of service to Supplemental
Declaration Regarding Conflicts, serve and e-file
with bankruptcy court.
2.90 	493.00
07/13/05 	Breeden 	Finalize and prepare proof of service, serve and
e-file Fourth Supplemental Disclosure
Declaration.
2.80 	476.00
07/19/05 	Breeden 	Research supporting employment declaration
pleadings for M. Houle. 0.80 	136.00
07/26/05 	Houle 	Draft correspondence to P. Breeden regarding
filing of fifth supplemental conflicts declaration. 0.20 	84.00
07/27/05 	Breeden 	Finalize declaration, prepare proof of service,
serve and e-file fifth supplemental declaration of
William Freeman.
2.20 	374.00
Subtotal 	8.90 	1,563.00
VIA/S3 Litigation
04/07/05 	Damonte 	Assemble and e-file stipulation re: continuance
of hearing on motions to dismiss. 0.30 	100.50
06/10/05 	Damonte 	Arrange for service of and e-filing of Opposition
to Dismiss. 0.70 	234.50
07/05/05 	Loran 	Fax to A. Boro of aiding and abetting case law. 	0.20 	102.00
07/06/05 	Damonte 	Telephone call from Clerk’s office re: transcript. 	0.30 	100.50
07/15/06 	Damonte 	E-file and arrange for service of same. 	0.30 	100.50
07/19/05 	Loran 	Email PDF’s of August 2000 letters to VIA’s
counsel and O’Melveny attorneys, together with
transmittal.
0.20 	102.00
Case: 03-51775 Doc# 1881 Filed: 07/20/06 Entered: 07/24/06 10:02:54 Page 11
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MEMORANDUM DECISION AND ORDER ON SIXTH INTERIM APPLICATION
08/01/05 	Houle 	PACER search regarding Trepton Group sale for
D. Gershon deposition for Intel litigation. 0.20 	84.00
08/01/05 	Houle 	File review regarding sale order regarding
preparation for D. Gershon deposition for Intel
litigation.
0.80 	336.00
08/02/05 	Houle 	File review regarding Trepton Research Group
purchase agreement regarding D. Gershon
deposition for Intel litigation.
0.20 	84.00
08/09/05 	Houle 	File review regarding best data purchase
agreement for D. Gershon deposition. 0.30 	126.00
08/15/05 	Catz 	Organizing documents to begin drafting
responses to 120 document requests. 3.50 	1,067.50
09/03/05 	Loran 	Organize and review working file documents to
draft discovery requests. 1.20 	612.00
09/20/06 	Loran 	Schedule telephone conferences with O’Melveny
attorneys and Heller attorneys. 0.20 	102.00
09/30/05 	Loran 	Send fax to VIA and S3 attorneys re: extension
of time. 0.40 	204.00
Subtotal 	8.80 	3,355.50
TOTAL 	10,925.00
The applicant asserts in its response to the audit report that the charges attributable to clerical
services are minimal, and the tasks could not have been performed or delegated more efficiently. It
submits that it is more efficient for a professional to perform a clerical task than for that professional
to suspend an activity, delegate and supervise the administrative task, and then resume the professional
activity. 	The court acknowledges that performing a clerical task uninterrupted is frequently more
efficient than delegation; however, the professional is not entitled to bill the estate at a professional’s
hourly rate to perform that clerical task. 	The maxim prohibiting compensation from the estate for
clerical services applies without regard to whether an attorney, a paralegal, or a legal secretary performs
the task. 	For these reasons, fees in the amount of $17,748.40 incurred in connection with the
performance of clerical services are disallowed.
Case: 03-51775 Doc# 1881 Filed: 07/20/06 Entered: 07/24/06 10:02:54 Page 12
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MEMORANDUM DECISION AND ORDER ON SIXTH INTERIM APPLICATION
F. 	The Court May Disallow Compensation for Participation by Multiple Attorneys in
Conferences
Unnecessary duplication of services results in excessive time that cannot be justified and is not
compensable. § 330(a)(4). Normally, it is appropriate for only one attorney from a firm to attend a
meeting, conference, or hearing. Absent an explanation, participation by multiple attorneys in the same
meeting, conference, or hearing constitutes non-compensable duplicative services. Paragraph 16 of the
court’s Fee Guidelines provides that the court may allow compensation only for the professional with
the lowest billing rate but not for the attorney with the higher billing rate.
The applicant has requested compensation for the services of more than one professional who
participated in certain conferences. The time entries for these services are set forth below.
Date 	Time-
Keeper Description 	Hours 	Amount
Claims Administration/Objections
02/22/05 	Walker 	Telephone conference with D. Reiss regarding
claim objection process. 0.20 	86.00
Subtotal 	0.20 	86.00
VIA/S3 Litigation
02/07/05 	Loran 	Prepare for and participate in telephone
conference with O’Melveny attorneys in
preparation for February 8 telephone conference
with creditors’ counsel.
0.40 	204.00
02/08/05 	Loran 	Prepare for and participate in telephone
conference with S. Uhland, D. Gershon, A. Boro,
re: adversary proceeding issues.
0.30 	255.00
02/14/05 	Freeman 	Participate in conference call with all hands
regarding VIA and Intel. 0.50 	257.50
02/28/05 	Freeman 	Participate in conference call with all parties
regarding Intel negotiations. 0.30 	154.50
02/28/05 	Loran 	Participate in telephone conference with
creditors’ counsel and O’Melveny re: Intel
settlement strategy.
0.30 	153.00
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MEMORANDUM DECISION AND ORDER ON SIXTH INTERIM APPLICATION
03/21/05 	Boro 	Telephone conference with D. Eberhart,
S.Uhland, M. Powers of O’Melveny & Myers
and T. Loran, A. Damonte and J. Catz of
Pillsbury to discuss discovery coordination
between adversary proceeding and cross-license
motion and upcoming Rule 26 meeting in
adversary proceeding.
1.50 	682.50
03/21/05 	Damonte 	Conference call with O’Melveny regarding
discovery and strategy issues. 1.50 	502.50
03/21/05 	Loran 	Prepare for O’Melveny & Myers telephone
conference and conference outside of office with
A. Damonte, A. Boro, J. Catz re: same;
participate in O’Melveny & Myers telephone
conference.
2.70 	459.00
04/07/05 	Boro 	Telephone conference with S. Uhland of
O’Melveny and Myers and T. Loran regarding
strategies in litigating adversary proceeding
against VIA and joint ventures.
0.50 	227.50
04/07/05 	Boro 	Participate in Rule 26(f) conference with
attorneys for VIA and joint venture on initial
disclosures, discovery schedule, and mediation.
0.70 	318.50
04/07/05 	Boro 	Telephone conference with S. Uhland of
O’Melveny and Myers and T. Loran regarding
discovery proposals from Rule 26(f) conference
with VIA and joint ventures.
0.40 	182.00
04/07/05 	Loran 	Telephone call with A. Boro, S. Uhland, re: Rule
26(f) subjects. 0.50 	255.00
04/07/05 	Loran 	Appear and participate in Rule 26(f) conference. 	0.70 	357.00
04/07/05 	Loran 	Telephone call with A. Boro, S. Uhland re:
results of Rule 26(f) conference. 0.40 	204.00
04/26/05 	Loran 	Appear at telephonic status call and prepare for
same. 0.30 	153.00
05/02/05 	Barbarosh 	Participate in all-hands conference call with
O’Melveny & Myers to discuss VIA strategy. 0.50 	262.50
05/09/05 	Loran 	Telephone call with Marcus Smith, A. Boro, S.
Uhland re: letter to Intel. 0.60 	306.00
05/18/05 	Freeman 	Telephone conference with Marcus Smith
regarding VIA-Intel negotiations. 0.40 	206.00
05/26/05 	Barbarosh 	Participate in conference call with O’Melveny &
Meyers re litigation strategy. 0.50 	262.50
05/26/05 	Loran 	Telephone conference with O’Melveny and
creditors’ attorneys re: Gibson proposal. 0.50 	255.00
Case: 03-51775 Doc# 1881 Filed: 07/20/06 Entered: 07/24/06 10:02:54 Page 14
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MEMORANDUM DECISION AND ORDER ON SIXTH INTERIM APPLICATION
06/03/05 	Loran 	Telephone call with M/ Powers re: creation of
joint database. 0.20 	102.00
07/29/05 	Loran 	Prepare for and participate in telephone
conference with A. Boro, O’Melveny attorneys
re: Intel’s Rule 30(b)(6) deposition of Sonicblue.
0.70 	357.00
08/09/05 	Loran 	Prepare for and participate in telephone call with
D. Gershon, A. Boro re: “books and records”
issues, negotiations.
0.70 	357.00
08/11/05 	Loran 	Conference outside of office with A. Boro, M.
Smith, A. Wolfe and eight representatives of VIA
and S3 to engage in settlement negotiations.
5.30 	2,703.00
08/17/05 	Barbarosh 	Participate in all-hands call to discuss case. 	1.00 	525.00
08/17/05 	Loran 	Prepare for and participate in telephone
conference with defense group. 1.00 	510.00
08/18/05 	Loran 	Telephone call with S. Uhland and A. Boro re:
contested matter discovery. 1.00 	510.00
08/31/05 	Loran 	Telephone call with E. Slizewski and A. Boro re:
September 15 settlement meeting. 0.30 	153.00
09/15/05 	Loran 	Attend settlement conference, including client
telephone calls. 4.60 	2,346.00
09/15/05 	Loran 	Strategy post-meeting with respect to process for
settlement. 0.90 	459.00
09/20/05 	Loran 	Telephone call with A. Boro, M. Smith, S.
Uhland, D. Eberhardt, re: settlement strategy. 0.40 	204.00
09/20/05 	Loran 	Participate in part of telephone conference with
VIA attorneys. 0.30 	153.00
09/21/05 	Loran 	Telephone conference with VIA and O’Melveny
attorneys and prepare for same. 0.30 	153.00
09/22/05 	Loran 	Prepare for and participate in telephone
conference with A. Boro, O’Melveny attorneys
and VIA attorneys re: draft settlement term sheet.
0.50 	255.00
09/27/05 	Freeman 	Participate in all-hands conference call with
Committee and debtor representatives regarding
VIA settlement terms.
0.30 	154.50
09/27/05 	Loran 	Telephone conference with creditors re: VIA
term sheet. 0.30 	153.00
Subtotal 	31.30 	14,751.50
For each of the foregoing entries, at least one other professional in the firm who has a lower billing rate
participated in the same conference. Where the attorney with the lower billing rate billed fewer hours
Case: 03-51775 Doc# 1881 Filed: 07/20/06 Entered: 07/24/06 10:02:54 Page 15
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MEMORANDUM DECISION AND ORDER ON SIXTH INTERIM APPLICATION
to the conference than the attorney with the higher rate, the court has disallowed only the number of
hours during which there was an overlap in services. The applicant explains that given the complexity
of the issues, multiple attorneys are necessary to provide services across a broad spectrum of expertise,
and they need to engage in some degree of coordination. However, it has failed to explain adequately
the respective roles of the multiple attorneys participating in the various conferences or the necessity
of their participation. 	In one instance, for example, as many as four attorneys participated in a
conference, two of whom billed at an hourly rate in excess of $450. 	The fees attributable to these
services total $14,837.50 and are disallowed.
G. 	Editing Time Records Is Not Compensable
While time expended to prepare a fee application, including drafting the narrative, is
compensable, time expended to review and edit time entries is not. 	Where the time entries require
revision to conform to the court’s standards, the editing services are administrative functions that are
not compensable even if they are performed by a professional. In Re CF & I Fabricators of Utah, Inc.,
131 B.R. 474, 485 (D. Utah 1991). The applicant incurred $15,448 in fees to review and edit its time
records, which entries are set forth below. These services are not compensable from the estate.
Date 	Time-
Keeper Description 	Hours 	Amount
Compensation of Professionals
02/09/05 	Breeden 	Review and edit time entries from October 2004
prebills relating to pending fee application. 1.80 	306.00
02/09/05 	Breeden 	Review and edit time entries to November 2004
prebills relating to pending fifth interim fee
application.
2.20 	374.00
02/14/05 	Breeden 	Review and edit December 2004 prebills for
pending fifth interim fee application. 2.80 	476.00
02/14/05 	Breeden 	Edit and revise January prebills in preparation for
fifth interim fee application. 1.70 	289.00
03/04/05 	Breeden 	Edit time entries to finalize invoice for fifth
interim fee application. 0.80 	136.00
Case: 03-51775 Doc# 1881 Filed: 07/20/06 Entered: 07/24/06 10:02:54 Page 16
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MEMORANDUM DECISION AND ORDER ON SIXTH INTERIM APPLICATION
03/07/05 	Breeden 	Multiple edits to Exhibit A final invoice for
exhibits and application. 1.20 	204.00
03/07/05 	Breeden 	Correspond with C. Barbarosh regarding write
offs and edits to time entries. 0.50 	85.00
03/07/05 	Breeden 	Correspond with E. Van Dette regarding billing
partner’s requested edits to time entries. 0.50 	85.00
03/08/05 	Breeden 	Analyze revisions to Exhibit “A” to fifth interim
fee application and edit application pleading
accordingly.
3.20 	544.00
03/08/05 	Breeden 	Numerous correspondence with E. Van Dette
regarding revised figures and invoice. 0.60 	102.00
03/08/05 	Breeden 	Numerous correspondence with M. Houle
regarding edits to time entries and revised
figures.
1.60 	272.00
05/05/05 	Barbarosh 	Review and analyze April 2005 prebill. 	0.40 	210.00
06/01/05 	Breeden 	Review, edit and revise time entries for February
2005 prebills. 4.20 	714.00
06/02/05 	Breeden 	Review, edit and rewrite time descriptions of
March 2005 prebills in anticipation of sixth
interim fee application.
4.20 	714.00
06/02/05 	Breeden 	Correspond with E. Van Dette regarding
February and March prebills and time to be held
for avoidance action matters.
0.80 	136.00
06/03/05 	Breeden 	Commence review and editing of April 2005
time descriptions in preparation of pending fee
application.
2.00 	340.00
06/06/05 	Houle 	Review and revise billing invoices regarding
preparation of 6th interim fee application. 0.50 	210.00
06/06/05 	Breeden 	Assemble and prepare working copies of
avoidance action time to be reviewed by M.
Houle and M. Walker.
1.00 	170.00
06/06/05 	Breeden 	Edit and re-write April 2005 time entries relating
to sixth interim fee application. 3.40 	578.00
06/07/05 	Breeden 	Commence review and edits to May 2005
prebills in preparation of pending sixth interim
fee application.
3.20 	544.00
06/08/05 	Breeden 	Edit and re-writes to May 2005 time entries in
preparation of sixth interim fee application. 2.60 	442.00
06/09/05 	Breeden 	Multiple correspondence with E. Van Dette
regarding edits to time entries. 1.00 	170.00
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MEMORANDUM DECISION AND ORDER ON SIXTH INTERIM APPLICATION
06/09/05 	Breeden 	Continued edits and revisions to both fees and
expenses on final invoice to sixth interim fee
application.
3.20 	544.00
06/20/05 	Freeman 	Review and revise time entries in support of 6th
interim fee application. 0.90 	463.50
06/20/05 	Barbarosh 	Review and revise fee statement for interim fee
application. 0.40 	210.00
06/20/05 	Houle 	Review and revise invoices for 6 th interim fee
application. 0.50 	210.00
06/21/05 	Houle 	Review and revise timekeeper entries regarding
sixth fee application. 0.20 	84.00
07/12/05 	Barbarosh 	Review and analyze June, 2005 billing statement. 	0.50 	262.50
08/04/05 	Breeden 	Commence review and editing of June pre-bill. 	2.80 	476.00
08/05/05 	Breeden 	Review and edit July pre-bills in preparation of
filing of fee application. 3.10 	527.00
08/08/05 	Breeden 	Assemble time entries for claims and avoidance
action categories for review by M. Walker and
M. Houle.
1.20 	204.00
08/08/05 	Breeden 	Continue edits to June and July pre-bills. 	1.50 	255.00
08/10/05 	Breeden 	Review and revise prebills in preparation of
filing sixth interim fee application. 3.80 	646.00
08/11/05 	Walker 	Read prebills to confirm time correctly charged. 	0.30 	129.00
08/11/05 	Walker 	Four e-mails to H. Mayon regarding seeming
error in time entry. 0.30 	129.00
08/11/05 	Breeden 	Numerous correspond with N. Basco regarding
edits to prebills in preparation of sixth interim fee
application.
1.20 	2024.00
08/11/05 	Breeden 	Review, revise and move time entries in
preparation of sixth interim fee application. 2.80 	476.00
08/12/05 	Breeden 	Correspond with N. Basco regarding numerous
revisions to invoice for Sixth Interim Fee
Application.
0.60 	102.00
08/23/05 	Freeman 	Review and revise fee entries for Sixth Interim
fee application. 1.40 	721.00
09/20/05 	Breeden 	Edit time entries and prepare exhibit in support
of response to Stuart Maue regarding fifth
interim fee application.
2.20 	374.00
09/23/05 	Breeden 	Review and edit time entries to September 2005
pre-bill in preparation of sixth interim fee
application.
4.20 	714.00
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MEMORANDUM DECISION AND ORDER ON SIXTH INTERIM APPLICATION
09/28/05 	Breeden 	Correspond with N. Basco and review and
correct time entry of Sonicblue timekeeper for
pending sixth interim fee application.
0.60 	102.00
TOTAL 	70.10 	15,448.00
H. 	Services Related to Prosecution of Avoidance Actions is Duplicative of Contingent Fee
Arrangement
The applicant incurred fees of $740 in connection with services related to the pursuit of
avoidance actions. However, these services are duplicative of those for which the court approved a
contingent fee arrangement. Additional compensation for these services, the time entries for which are
set forth below, is disallowed.
Date 	Time-
Keeper Description 	Hours 	Amount
Business Operations
03/07/05 	Houle 	Telephone conference with D. Reiss regarding
procedures for preference litigation. 0.20 	84.00
Subtotal 	0.20 	84.00
Claims Administration/Objections
02/09/05 	Breeden 	Research addresses for agents of service of
process of defendants in preference claims. 1.80 	306.00
02/24/05 	Breeden 	Correspond with client regarding additional
information requested relating to preference
claimants’ contact information.
0.30 	51.00
Subtotal 	2.10 	357.00
Creditor Communications
06/06/05 	Houle 	Telephone conference with E. O’Brien for 1350
regarding preference complaint. 0.20 	84.00
Subtotal 	0.20 	84.00
VIA/S3 Litigation
07/21/05 	Walker 	Read and analyze J. Todd settlement documents
to check for waiver of avoidance claims. 0.30 	129.00
07/21/05 	Walker 	Advise Mr. Loran regarding effect of J. Todd
settlement documents on avoidance claims. 0.20 	86.00
Subtotal 	0.50 	215.00
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MEMORANDUM DECISION AND ORDER ON SIXTH INTERIM APPLICATION
TOTAL 	740.00
I. 	Compensation for Services That Are Not Adequately Described is Disallowed Without
Prejudice
The applicant bears the burden of describing the services performed in sufficient detail to enable
the court to make a meaningful assessment whether those services were actual, necessary, and beneficial
to the estate and whether they were performed within a reasonable amount of time. Paragraph 13 of the
Fee Guidelines provides that the timekeeper must include in each time entry, at a minimum, descriptions
of the services performed and the subject matter involved. To enable the court to determine whether
the services are compensable, the timekeeper is also expected to identify the other party to the
conference, meeting, telephone call, or correspondence. 	Where the time entry omits some critical
element describing the services performed, it is not compensable. Time entries that contain such vague
characterization of the services performed as “attention to” and “work on” fail to adequately describe
the services provided. Consequently, the court is unable to determine whether the task is necessary and
the compensation sought is reasonable. The table below identifies time entries in which the services are
not adequately described. The fees attributable to these entries total $3,133 and are disallowed without
prejudice.
Date 	Time-
Keeper Description 	Hours 	Amount
Employee Benefits/Pension/KERP
02/11/05 	Partrick 	Work on IRS filing in connection with 401(k)
plan termination. 0.70 	157.50
02/18/05 	Webster 	Attention to preparation of Form 5300 and
related issues. 0.20 	91.00
03/09/05 	Partrick 	Attention to costs incurred in connection with
Diamond Plan notice and final distribution. 0.40 	90.00
03/14/05 	Webster 	Attention to preparation of Diamond plan
distributions and related issues. 0.20 	91.00
03/17/05 	Webster 	Attention to missing participants and emails
regarding same. 0.20 	91.00
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03/18/05 	Webster 	Attention to finalizing Diamond distributions. 	0.20 	91.00
03/21/05 	Webster 	Attention to preparation for Diamond plan
distributions and related issues. 0.20 	91.00
05/05/05 	Partrick 	Work on 5310 application. 	0.40 	90.00
05/1/0/05 	Webster 	Attention to preparation of IRS determination
letter application and review documentation
regarding same.
0.20 	91.00
07/06/05 	Webster 	Attention to correspondence and analysis of
issues regarding Diamond Plan distributions and
treatment of missing participants.
0.30 	136.50
07/08/05 	Webster 	Attention to treatment of missing participants and
correspondence regarding same. 0.20 	91.00
07/14/05 	Webster 	Attention to preparation of revised letters to IRS
and participants regarding Diamond distributions
and related issues.
0.30 	136.50
07/28/05 	Webster 	Attention to making distributions from
SonicBlue 401(k) plan and related issues. 0.20 	91.00
08/10/05 	Webster 	Attention to preparation of correspondence to
participants and related Department of Labor
guidance.
0.60 	273.00
09/12/05 	Partrick 	Attention to determination letter for 401(k) plan
termination. 0.20 	45.00
09/13/05 	Webster 	Attention to preparation of determination letter
application. 0.20 	91.00
09/19/05 	Webster 	Attention to preparation of determination letter
application and related notices. 0.30 	136.50
Subtotal 	5.00 	1,884.00
SEC Compliance
07/13/05 	Mayon 	Attention to Form 8-K. 	0.25 	76.25
09/09/05 	Mayon 	Attention to Form 8-K. 	0.25 	76.25
Subtotal 	0.50 	152.50
VIA/S3 Litigation
03/08/05 	Ragan 	Attention to inquiry for Potshner matter history
for OCC claim. 0.10 	55.00
06/01/05 	Damonte 	Work on getting Rule 26(a) initial disclosures
together. 2.50 	837.50
07/20/05 	Loran 	Review S. Uhland email. 	0.10 	51.00
08/29/05 	Loran 	Review and respond to D. Gershon email. 	0.10 	51.00
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09/20/05 	Loran 	Review A. Boro email to VIA attorneys; revise
same. 0.20 	102.00
Subtotal 	3.00 	1,096.50
TOTAL 	3,133.00
J. 	Time Entries That Are Clumped Are Disallowed Without Prejudice
The clumping of disparate services in a single time entry renders problematic the court’s review
of the application. See In re Dutta, 175 B.R. 41, 46-47 (B.A.P. 9th Cir. 1994). It impedes the court’s
ability to determine whether each task was completed within a 	reasonable amount of time. 	Each
discrete task should be separately described in its own time entry. See id. Paragraph 14 of the Fee
Guidelines provides that if a number of separate tasks are performed in a single day, the application
should disclose the time spent for each separate task. Numerous time entries in the application are not
in conformity with Paragraph 14 of the Fee Guidelines. These entries totaling $9,225.50 are set forth
below and are disallowed without prejudice.
Date 	Time-
Keeper Description 	Hours 	Amount
VIA/S3 Litigation
02/07/05 	Damonte 	Confer with A. Boro regarding discovery; revise
memo regarding discovery and confer with A.
Boro and T. Loran regarding discovery.
2.20 	737.00
02/09/05 	Damonte 	Revise discovery memo; review Sonicblue files
(discovery review) and confer with A. Boro
regarding same.
2.10 	703.50
02/11/05 	Palarczyk 	Responding to requests from Tom Loran e boxes
from Marina Parks’ office, meeting with Al Boro
and Ana Damonte re review files for OMM,
assisting Ana Damonte in review of files,
processing documents for David Eberhart.
4.00 	800.00
02/14/05 	Palarczyk 	Organizing and indexing boxes and files
regarding Sonicblue and Intel issues, processing
documents after review, responding to requests
from Ana Damonte, searching for missing files.
7.00 	1,400.00
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02/15/05 	Palarczyk 	Meeting with Ana Damonte, review of boxes and
files regarding Sonicblue and Intel issues,
searching for missing files.
5.50 	1,100.00
02/17/05 	Palarczyk 	Meeting with Ana Damonte; review files
regarding VIA’s claims an SB complaint. 6.00 	1,200.00
04/19/05 	Damonte 	Draft opposition to motion to dismiss; consider
issues re Case Management Conference
statement and e-file same; submit Case
Management Conference statement to chambers.
2.70 	904.50
04/27/05 	Damonte 	Revise amended complaint; arrange for service
of same and e-file same. 1.50 	502.50
07/15/05 	Loran 	Edit, analyze and arrange filing of proposed
second amended adversary complaint. 1.10 	561.00
08/15/05 	Damonte 	Revise and e-file reply to VIA’s counterclaim. 	0.80 	268.00
08/16/05 	Damonte 	Prepare and e-file stipulation re: JV Sub counter
claim. 0.40 	134.00
09/14/05 	Catz 	Gathering and reviewing documents in support of
settlement meetings. 3.00 	915.00
TOTAL 	36.30 	9,225.50
K. 	Time Spent Performing Conflicts Check is Not Compensable
Time expended by counsel in performing the firm’s conflicts check is not chargeable to the
bankruptcy estate. In re Act Manufacturing, Inc., 281 B.R. 468, 490 (Bankr. D. Mass. 2002). The
applicant incurred fees in the amount of $2,124.50 during this application period to conduct the firm’s
conflicts check. The time entries for these services are set forth below, and the fees are disallowed.
Date 	Time-
Keeper Description 	Hours 	Amount
Compensation of Professionals
04/07/05 	Freeman 	Review spreadsheets regarding Shaw Pittman
clients that are potential creditors and edit
declaration to Court regarding conflicts.
0.70 	360.50
Subtotal 	0.70 	360.50
Retention of Professionals
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04/01/04 	Houle 	File review regarding preparation of conflicts
declaration and notice of firm name change. 0.30 	126.00
04/04/05 	Houle 	Analysis regarding Shaw Pittman conflicts
regarding disclosure declaration. 0.60 	252.00
04/06/05 	Houle 	Analysis regarding potential conflict for
disclosure declaration of Pillsbury employment
application.
1.00 	420.00
07/11/05 	Houle 	Analysis regarding potential conflict with
Synnex. 0.80 	336.00
07/19/05 	Houle 	File review regarding supplemental disclosure of
representation of DNNA. 1.00 	420.00
07/26/05 	Houle 	Analysis regarding potential conflicts. 	0.20 	84.00
09/01/05 	Houle 	File review regarding potential conflict with
Bergeson LLP. 0.30 	126.00
Subtotal 	4.20 	1,764.00
TOTAL 	2,124.50
CONCLUSION
For the reasons set forth above, the court denies approval of fees in the amount of $65,321.40,
$12,358.50 of which is denied without prejudice, and defers ruling on $10,723 of the fees requested in
the sixth interim application by Pillsbury Winthrop. Taking into account the voluntary reductions by
the applicant, the court allows interim compensation in the amount of $545,345.60 and expense
reimbursement in the amount of $18,014.59.
Good cause appearing, IT IS SO ORDERED.
* * * END OF ORDER * * *
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Case No. 03-51775-MM
SERVICE LIST
CRAIG A BARBAROSH
PILLSBURY WINTHROP LLP
650 TOWN CENTER DRIVE 7TH FLOOR
COSTA MESA CA 92626-7122
RON BENDER
LEVENE NEALE BENDER RANKIN &
BRILL LLP
1801 AVENUE OF THE STARS STE 1120
LOS ANGELES CA 90067
JAMES P QUINN
LINDA K COOPER
STUART MAUE MITCHELL & JAMES
3840 MCKELVEY ROAD
ST LOUIS MO 63044
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