Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

M-I Drilling Fluids UK Ltd. v. Dynamic Air Inc.

United States District Court, D. Minnesota

January 26, 2018

M-I Drilling Fluids UK Ltd. and M-I LLC, Plaintiffs,
v.
Dynamic Air Inc., Defendant.

          Adam D. Swain, Scott J. Pivnick, Alston & Bird LLP, The Atlantic Building, Patrick J. Flinn, Alston & Bird LLP, One Atlantic Center, and Casey A. Kniser and Eric H. Chadwick, Patterson, Thuente, Christensen, Pedersen, PA, for M-I Drilling Fluids UK Ltd. and M-I LLC

          Alan G. Carlson, Nathan Louwagie, and Todd S. Werner, Carlson, Caspers, Vandenburgh, Lindquist, & Schuman, PA, for Dynamic Air Inc.

          REPORT AND RECOMMENDATION FILED UNDER SEAL

          HILDY BOWBEER, United States Magistrate Judge

         I. Introduction

         This matter is before the Court on Defendant Dynamic Air Inc.'s (“DAI”) Motion for Attorney Fees and Costs [Doc. No. 285]. The matter has been referred to the undersigned for a Report and Recommendation under 28 U.S.C. § 636 and District of Minnesota Local Rule 72.1(a) [Doc. No. 358]. For the reasons set forth below, the Court recommends granting the motion in part and denying it in part.

         II. Background

         Plaintiffs M-I Drilling Fluids Ltd. and M-I LLC[1] (“M-I”) filed this case in late 2014, accusing DAI of infringing five of its U.S. patents. (Compl. [Doc. No. 1].) Approximately three years into the litigation, the parties negotiated a settlement pursuant to which M-I agreed to dismiss its case and covenanted not to sue DAI on the asserted patents. (Order and Opinion at 1 [Doc. No. 268].) Chief District Judge John R. Tunheim granted M-I's motion to dismiss on September 20, 2016 [Doc. No. 269]. DAI filed a motion seeking to recover attorneys' fees and costs on the ground that the case was exceptional under 35 U.S.C. § 285 [Doc. No. 228]. This Court agreed, issuing a Report and Recommendation finding the case exceptional and concluding that DAI was entitled to recover its fees and costs. (R&R [Doc. No. 270].) Judge Tunheim adopted that Report and Recommendation and directed DAI to file this motion itemizing its request for fees and costs and providing supporting documentation. (Order [Doc. No. 281].) The Court incorporates by reference the detailed factual and procedural background set forth in its Report and Recommendation and in Judge Tunheim's Order.

         The Court now considers in this Report and Recommendation how much DAI should recover of the more than two million dollars in attorneys' fees and costs it states it expended in responding to M-I's claims. M-I has objected to the reasonableness of the amounts claimed overall, but has also objected to recovery for certain activities M-I contends were not reasonably necessary or were not reasonably related to the federal court litigation, including fees incurred for work done after October 15, 2015, for work done on an unsuccessful request to file a motion for early summary judgment, and for work done in connection with Defendant's petition for inter parties review (IPR) of the patents-in-suit before the U.S. Patent and Trademark Office (“PTO”). M-I also objects to DAI's request for costs in its entirety. In sum, M-I argues that the most DAI is entitled to is an award of $541, 428.50 in fees. (Pls.' Mem. Opp'n [Doc. No. 303].)

         III. Attorneys' Fees

         DAI seeks $1, 563, 118 in attorneys' fees for litigation before this Court and $302, 548.50 in attorneys' fees associated with its IPR petition before the PTO. (Def.'s Br. Supp. Mot. Attorneys' Fees & Costs at 17, 27 [Doc. No. 286]; Ex. 6 [Doc. No. 292] (Bassford Remele fee invoices); Ex. 19 [Doc. No. 296] (Carlson Caspers federal court fee invoices); Ex. 20 [Doc. No. 297]) (Carlson Caspers inter partes review (“IPR”) fee invoices); Ex. 30 [Doc. No. 298] (Carlson Caspers federal court fee invoices).) M-I argues that the majority of the fees sought by DAI should be denied because it was not reasonably necessary or reasonably related to the federal court case, or because DAI could have taken steps earlier that would have ended the litigation. (Pls.' Mem. Opp'n at 1-2 [Doc. No. 303].) First, M-I argues that DAI dragged its feet in discovery, which prolonged the litigation and caused DAI's attorneys to expend unnecessary hours of work beyond the October 15, 2017, date by which M-I asserts the lawsuit could have been resolved. (Pls.' Mem. Opp'n at 10-14 [Doc. No. 303].) Second, M-I argues that DAI is not entitled to any attorney fees incurred in connection with its IPR petition because it was neither reasonably necessary nor sufficiently related to the lawsuit. (Id. at 18.) Third, M-I argues that certain work performed by the Bassford & Remele law firm should be excluded from any attorneys fee award because it was duplicative of other work done by the Carlson Caspers law firm. (Id. at 18-19.) Fourth, M-I argues that the attorneys' fees stemming from DAI's attempted early motion for summary judgment should be excluded because the motion was premature and procedurally improper. (Id. at 19-20.) Fifth, M-I argues that DAI should not be able to recover fees expended researching antitrust counterclaims and Rule 11 sanctions, because those claims were never brought. Lastly, M-I argues that both the hourly rates charged and the number of hours spent on the litigation were unreasonable, and should be reduced accordingly. (Id. at 21-40.) The Court will address each of these arguments in turn.

         A. Legal Standard

         Under the American Rule, each party to a lawsuit generally bears its own expenses unless an applicable statute authorizes fee shifting. Hensley v. Eckerhart, 461 U.S. 424, 429 (1983). Section 285 of the Patent Act, applicable here, authorizes the award of attorney fees to the prevailing party in “exceptional cases, ” 35 U.S.C. § 285, [2] which courts determine “in the case-by-case exercise of their discretion, ” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1758 (2014). An exceptional case under § 285 is “simply one that stands out from others with respect to the substantive strength of a party's litigating position . . . or the unreasonable manner in which the case was litigated.” Octane Fitness, 134 S.Ct. at 1756. A patent suit “presenting either subjective bad faith or exceptionally meritless claims may sufficiently set itself apart from mine-run cases to warrant a fee award.” Id. at 1757. Additionally, a case need not necessarily involve sanctionable conduct to be deemed exceptional. Id. at 1756-57.

         Once a case has been found to be exceptional, appropriate attorneys' fees must be measured based on the “totality of the circumstances and not just discrete acts of litigation conduct.” Homeland Housewares, LLC v. Sorensen Research, 581 F. App'x 877, 881 (Fed. Cir. 2014) (quotation omitted). The lodestar calculation provides the “guiding light” for determining reasonable attorneys' fees. Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 551 (2010). Under the lodestar method, an appropriate award of attorneys' fees is calculated by multiplying the number of hours reasonably expended on the litigation by a reasonable hourly rate. Id. The number of hours reasonably expended should exclude hours that are “excessive, redundant, or otherwise unnecessary, just as a lawyer in private practice ethically is obligated to exclude such hours from his fee submission.” Hensley, 461 U.S. at 434. In determining the overall amount of a fee award, “the most critical factor is the degree of success obtained” and courts may “reduce the award to account for the limited success.” Id. at 436-37. However, if “a prevailing party ‘has obtained excellent results, his attorney should recover a fully compensatory fee. Normally this will encompass all hours reasonably expended on the litigation.'” Mathis v. Spears, 857 F.2d 749, 755 (Fed. Cir. 1988) (quoting Hensley, 461 U.S. at 435).

         B. Attorneys' Fees for Work Taking Place After October 15, 2015

         M-I argues that DAI should not receive any of the $1, 324, 238 in fees it incurred after October 15, 2015, the date M-I estimates it would have decided to dismiss the case had it been timely provided with discovery it alleges was withheld by DAI.[3] (Pls.' Mem. Opp'n at 10-12 [Doc. No. 303].) In particular, M-I asserts that DAI failed to produce documents describing how the Accused Systems worked by the August 14, 2015, deadline set in the Pretrial Scheduling Order, and only provided them in early 2016 after a motion to compel. (Id. at 10-11; see also Pretrial Scheduling Order at 2 [Doc. No. 44]; Mot. Compel [Doc. No. 135]; Order [Doc. No. 185].) M-I also faults DAI for failing to promptly provide a Rule 30(b)(6) witness who could explain and reconcile evidence that appeared to suggest, contrary to DAI's litigation position, that DAI was involved in the allegedly infringing activities of its Brazilian affiliate Dynamic Air Limitada (“Limitada”).[4] (Pls.' Mem. Opp'n at 11 [Doc. No. 303].) Had DAI accommodated these discovery requests, M-I insists, it would have been able more quickly to evaluate DAI's claims of non-involvement and thereby learn it did not have a viable case to pursue. In other words, M-I argues that the hours expended after October 15, 2015, were “otherwise unnecessary, ” see Hensley, 461 U.S. at 434, and therefore should be excluded from the attorneys fee award.

         DAI counters that, far from adopting a strategy of prolonging the case, it had every incentive to end the litigation as quickly as possible, and made several attempts to do so. (Def.'s Reply Br. Supp. Mot. Attorneys' Fees at 2 [Doc. No. 351].) First, DAI points out that it moved to dismiss the case on jurisdictional grounds at the very outset of the litigation. (Id.; Mot. Dismiss [Doc. No. 16].) Later, still in the hope of bringing the litigation to an expeditious end, DAI attempted to file an early motion for summary judgment. (Def.'s Reply Br. Supp. Mot. Attorneys' Fees at 2 [Doc. No. 351].) According to DAI, both steps make clear that its litigation strategy was geared toward resolving the case as quickly and economically as possible. (Id.)

         DAI also disputes M-I's contention that it delayed producing technical documents, and asserts that it promptly produced all responsive engineering drawings in its possession, as indicated in its September 2015 letter to M-I. (Def.'s Reply Br. Supp. Mot. Attorneys' Fees at 2-3 [Doc. No. 351]; Werner Letter [Doc. No. 353-2].) As for the disputed Rule 30(b)(6) deposition sought by M-I, DAI contends there was no unreasonable delay; rather, it had legitimate objections to the scope of M-I's Rule 30(b)(6) deposition notice, objections that underlay its Motion for Protective Order and Stay of Discovery [Doc. No. 106]. (Def.'s Reply Br. Supp. Mot. Attorneys' Fees at 3 [Doc. No. 351].) DAI stresses that M-I noticed 86 different topics for the Rule 30(b)(6) deposition at issue, many of which were based on information predominantly if not solely in Limitada's possession. (Def.'s Reply Br. Supp. Mot. Attorneys' Fees at 2 [Doc. No. 351]; see also Werner Decl. Ex. 18 [Doc. No. 112-3].)

         The Court's task, then, is to determine if and to what extent the work that took place after October 15, 2015, was “excessive, redundant, or otherwise unnecessary.” Hensley, 461 U.S. at 432. Appropriate attorneys' fees must be measured taking into account the “‘totality of the circumstances, ' and not just discrete acts of litigation conduct.” Homeland Housewares, LLC, 581 F. App'x at 881. In exercising this discretion, “[t]here is no precise rule or formula for determining attorney's fees.” Evans v. Jeff D., 475 U.S. 717, 735-36 (1986) (citations omitted). However, to arrive at a reasonable attorneys fee award, courts must consider, inter alia, “what hours were reasonably expended on what claims, whether that expenditure was reasonable in light of the success obtained, and what is an appropriate hourly rate for the services rendered.” Id.

         Here, based on the surrounding circumstances of the litigation and the various factors that made it difficult for DAI to comply with M-I's discovery requests, and with one exception discussed below, the Court finds that DAI did not improperly delay discovery and that the work that took place after October 15, 2015, was not per se unreasonable. As DAI consistently maintained throughout the litigation, DAI and Limitada operate independently of each other, with no overlap in officers or employees, and keep their files separately on different computer networks. (Steele Decl. ¶¶ 8-12 [Doc. No. 109].) Under those circumstances, it was reasonable for DAI to object to discovery seeking documents not within its possession or control, as DAI did here.[5] With respect to M-I's argument that DAI's obstructionist tactics delayed the taking of the Rule 30(b)(6) deposition, DAI's objections to the scope of that deposition, set forth in its motion for a protective order [Doc. Nos. 106, 108], and its refusal to make its corporate representative available until the scope had been resolved, were also reasonable. M-I sought to depose a DAI designee on dozens of topics as to which no employee at DAI had personal knowledge. For instance, the deposition sought to cover the design, development, and manufacture of the Accused System and its installation on the U.S. flagged ships. (Third Notice Deposition Def. Fed.R.Civ.P. 30(b)(6) ¶ 8 [Doc. No. 112-3].) But the Accused System was solely developed and implemented by Limitada in Brazil with neither oversight nor direction from DAI. It was therefore not unreasonable for DAI to seek a ruling from the Court in advance of the deposition regarding whether it was required to prepare its corporate representative to testify about information uniquely within the ken of Limitada, which would have required a Limitada employee to fly from Brazil to the United States to help prepare a DAI designee. (Mem. Supp. Mot. Protective Order at 13 [Doc. No. 108].) Therefore, the Court cannot conclude that DAI's work after October 15, 2015, was per se excessive, redundant, or otherwise unnecessary.

         Moreover, even though M-I takes issue with DAI's responsiveness to its discovery requests, the Court has already found that M-I did not have an objectively reasonable basis to bring its claims against DAI in the first place. A district court need not limit attorneys' fees to those hours expended responding to specific acts of litigation misconduct, and may measure attorneys' fees based on the totality of circumstances of the litigation. Homeland Housewares, LLC, 581 F. App'x at 881; Brasseler U.S.A. I.L.P. v. Stryker Sales Corp., 267 F.3d 1370, 1386 (Fed. Cir. 2001). As one court held,

Where a plaintiff's case is exceptionally weak on the merits, as here, rather than because of litigation misconduct, this rule counsels full fee-shifting from the time the case became exceptionally weak on the merits. The entire case from that point on is exceptional and the extra legal effort required to counteract the lawsuit includes the entirety of a vigorous defense.

Tech. Props. Ltd. LLC v. Canon Inc., No. 14-3640, slip op. at 5 (N.D. Cal. Apr. 12, 2017). Federal courts routinely award attorneys' fees under § 285 for work done after the point at which it can be determined a patent lawsuit lacked merit. See, e.g., Vehicle Interface Techs., LLC v. Jaguar Land Rover N. Am., LLC, No. CV 12-1285-RGA, 2016 WL 3436396, at *1 (D. Del. June 15, 2016) (awarding attorneys' fees from the date patentee had full notice its case was objectively baseless).[6] Awarding attorneys' fees for expenses incurred to litigate the meritless aspects of a patent lawsuit makes sense in view of the purpose of the Patent Act's fee shifting provision, which is to “compensate[e] the prevailing party for the costs it incurred . . . where it would be grossly unjust . . . to require it to bear its own costs.” Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., 687 F.3d 1300, 1310 (Fed. Cir. 2012), vacated on other grounds and remanded, 134 S.Ct. 1744 (2014). Here, M-I's case was “exceptionally unmeritorious from the time it filed the 2014 Complaint.” (R&R at 26.) Requiring DAI to bear all attorney fees incurred after October 15, 2015, on the ground that it should have produced discovery more quickly in a case it should not have had to defend in the first place would fly in the face of the statutory scheme. Therefore, the attorneys' fees expended by DAI for work done in connection with this litigation after M-I filed its complaint are potentially eligible for fee-shifting.

That being said, the Court notes that DAI's counsel represented at the pretrial scheduling conference on June 29, 2015, that DAI could and would produce engineering drawings and information concerning the materials conveyed by its systems (see Pretrial Scheduling Order at 2 [Doc. No. 44]), a representation that was at variance with DAI's later objections that it did not have control over those documents in Limitada's possession. While the Court does not waver from its conclusion that this litigation was meritless from the outset, the Court is persuaded that at least some of the expense associated with the subsequent discovery disputes could have been avoided but for that offer and the back-pedalling that followed. Therefore, the Court recommends that the fees sought by DAI in connection with the federal court litigation be reduced by $50, 000.

         This does not mean, however, that all other fees incurred after October 15, 2015, are necessarily reasonable and compensable. The Court turns, therefore, to the other objections raised by M-I.

         C. Attorneys' Fees for Inter Partes Review

         DAI seeks $302, 548.50 in attorneys' fees for 651.5 hours of work to prepare and file IPR petitions. (Def.'s Br. Supp. Mot. Attorneys' Fees & Costs at 27 [Doc. No. 286]; Carlson Decl. ¶ 41 [Doc. No. 297].) Inter partes review is a legal proceeding before the PTO's Patent Trial and Appeal Board (PTAB) whereby a petitioner seeks cancellation of some or all of the claims of a patent, either on novelty or non-obviousness grounds, based on prior art found in patents or printed publications. 35 U.S.C. § 311(b). Congress created IPR in 2011 to be a “quick and cost effective alternative[] to litigation.” H.R. Rep. No. 112-98, pt. 1, at 48 (2011). To that end, IPRs are often utilized as one line of defense against an infringement claim by contesting the validity of the patent asserted. See 35 U.S.C. § 315(b) (authorizing IPR within one year of petitioner being served a complaint alleging patent infringement); see also Brian J. Love & Shawn Ambwani, Inter Partes Review: An Early Look at the Numbers, 81 U. Chi. L. Rev. Dialogue 93, 103 (2014) (finding that 80% of IPRs correlate with underlying litigation on the challenged patent). In the instant case, M-I sued DAI for infringing five of its U.S. patents, and DAI responded in part by initiating an IPR to challenge each of the 117 claims of the asserted patents.

         M-I argues that DAI is not entitled to any fees it incurred in petitioning for IPR. (Pls.' Mem. Opp'n at 18 [Doc. No. 303]; Conneely Decl. ¶ 32 [Doc. No. 329].) Courts have awarded attorneys' fees under § 285 for legal services rendered in connection with proceedings before the PTO where doing so was reasonably necessary or related to the underlying patent lawsuit. See PPG Indus., Inc. v. Celanese Polymer Specialties Co., 840 F.2d 1565, 1568 (Fed. Cir. 1988); see also Chaffin v. Braden, No. 6:14-0027, 2016 WL 5372540, at *2 (S.D. Tex. Sept. 26, 2016). Here, however, M-I asserts the IPR proceedings had no bearing on the outcome of the case. (Pls.' Mem. Opp'n at 18 [Doc. No. 303]; Conneely Decl. ¶ 32 [Doc. No. 329].) The parties settled the lawsuit while the IPRs were still pending, and M-I claims they did not play a significant role in the settlement. (Pls.' Mem. Opp'n at 18 [Doc. No. 303].) Further, M-I posits that DAI pursued the IPR process for a purpose unrelated to this litigation, i.e., hoping that if the PTAB invaliDated: least some of the asserted claims, it would reduce potential liability for DAI's subsidiary Limitada. (Id; Pivnick Dec. ¶ 14 [Doc. No. 305].) By either view, M-I argues that the IPRs were decided too late to affect the outcome of this lawsuit, and therefore were not reasonably necessary or related to the lawsuit.

         M-I additionally argues that DAI should not recover attorneys' fees for its IPR petitions because it did not move to stay the federal court proceedings while the IPRs were pending. (Pls.' Mem. Opp'n at 16 [Doc. No. 303].) M-I suggests that if no stay is sought, IPR-related fees are extraneous because they do not properly allow the IPR determination to shape the outcome of the litigation. They note that this distinguishes the instant case from the PPG Industries case, in which the Federal Circuit held that an award of attorneys' fees for proceedings before the PTO was appropriate when the PTO proceedings essentially “substituted for the district court litigation.” PPG Indus., Inc., 840 F.2d at 1569. See also, Deep Sky Software, 2015 WL 10844231, at *4 (awarding attorneys' fees incurred in connection with PTO proceedings where the district court stayed the litigation to await PTO guidance that could influence the outcome of the litigation).

         DAI argues that a prevailing party in an exceptional case is entitled to attorneys' fees for IPR petitions so long as those petitions relate to the suit, regardless of whether the case was stayed in the meantime, and regardless of whether the IPR decision directly influenced the outcome of the lawsuit. (Def.'s Br. Supp. Mot. Attorneys' Fees & Costs at 27 [Doc. No. 286].) Cf. Cent. Soya Co. v. Geo. A. Hormel & Co., 723 F.2d 1573, 1578 (Fed. Cir. 1983). DAI urges that its IPR-related attorneys' fees are directly related to the suit because they were incurred in support of a patent invalidity defense to the infringement claims M-I asserted in its complaint. Moreover, DAI argues, it actually attempted to save money by seeking inter parties review because IPR proceedings are more cost effective than federal court litigation. (Def.'s Br. Supp. Mot. Attorneys' Fees & Costs at 15 [Doc. No. 286].) As for its failure to file a motion to stay, the PTAB did not institute the IPR until after M-I had agreed to dismiss the case. (Pivnick Decl. ¶ 12-14 [Doc. No. 305].)

         Taking into account the “totality of the circumstances” of this case, the Court recommends that DAI not be awarded its attorneys' fees incurred to prepare and file its IPR petitions.[7] DAI overgeneralizes the circumstances in which courts have been willing to award IPR-related attorneys' fees in exceptional cases. In the handful of district court cases DAI cites, courts typically awarded attorneys' fees associated with PTO proceedings either where there was a stay of the related district court case, such that the PTO proceedings effectively took the place of the federal court litigation, [8] or where the court determined the PTO's decision played a central role in determining the outcome of the federal court case.[9] While in one case cited by DAI, the district court awarded attorneys' fees for a reexamination based on “the extent of the effort required to defend against the objectively baseless claim, ” the court did not comment on whether the outcome of the reexamination was central to the court's ultimate conclusion regarding the merits of the case. IA Labs CA, LLC v. Nintendo, No. CIV. PJM 10-833, 2012 WL 1565296, at *4 (D. Md. May 1, 2012), aff'd, 515 F. App'x 892 (Fed. Cir. 2013). Here, the basis for the Court's determination that the case was objectively baseless was the absence of sufficient grounds to believe that DAI was itself involved in any of Limitada's allegedly infringing activity. The Court did not find - and DAI did not argue - that the lawsuit was baseless because M-I should have known the patents were invalid. While, as will be discussed in greater detail below, DAI was not required to “pick just one horse” and forgo developing other litigation defenses to M-I's claims, the Court concludes under the circumstances of this case that an award of attorneys' fees incurred in connection with DAI's attack on the patents in an entirely different forum, while the lawsuit continued in the district court and was ultimately resolved for reasons that had nothing to do with the IPR proceedings, would go too far.[10] Accordingly, the Court recommends that the $302, 548.50 in attorneys' fees incurred in connection with the IPR petitions be excluded from the award of attorneys' fees to DAI.

         D. Bassford Remele's Fees Incurred after May 6, 2015

         DAI seeks $5, 016 in fees for time billed by Bassford Remele after May 6, 2015. (Pls.' Mem. Opp'n at 19 [Doc. No. 303].) Attorneys from Carlson Caspers began billing on this matter on April 22, 2015, and entered an appearance on May 5, 2015. (Id.; Ex. 6 [Doc. No. 292].) Attorneys from Bassford Remele continued to bill on the matter for an additional five months “to help the attorneys at Carlson Caspers get up to speed.” (Hickey Decl. ¶ 6 [Doc. No. 289].) M-I argues that nearly all of this time duplicated work being done by attorneys at Carlson Caspers. M-I cited one case in support of this argument, Howes v. Med. Components, Inc., 761 F.Supp. 1193, 1198 (E.D. Pa. 1990). In that case, the court found that co-counsel duplicated efforts and that the fee claimants failed to prove the services were reasonably expended. Here, the Court finds the $5, 016 expended by Bassford Remele after May 6, 2015 to be reasonable. In complex patent litigation spanning two continents, it does not seem unreasonable that there should be some moderate amount of overlap in tenure between the original counsel and the team of patent litigators subsequently hired to take over the suit, to assure that the latter are fully briefed on what had transpired before they entered the fray, and to allow for consultation during the transition as new questions arose. Therefore, the Court recommends that the district court not exclude from the award to DAI the $5, 016 in fees billed by Bassford Remele after May 6, 2015.

         E. DAI's Summary Judgment Motion

         M-I argues that DAI should not be reimbursed for $47, 827.50 in fees in connection with its attempt to file an early motion for summary judgment of non-infringement. (Pls.' Mem. Opp'n at 19 [Doc. No. 303].) It points out that the attempted motion was procedurally improper because DAI failed to ask for permission to file it, as required by the Pretrial Scheduling Order, [11] and because DAI had not produced overdue discovery. (Pls.' Mem. Opp'n at 5, 19-20 [Doc. No. 303].) M-I further contends the motion could not have been successful in any event because the evidence M-I had in its possession at that point created a genuine dispute of material fact that precluded summary judgment of non-infringement. DAI acknowledges it failed to seek permission from the Court before filing the motion, and that the Court denied its belated request for permission on the ground that discovery was not yet complete. (Order Den. Def.'s Mot. Summ. J. [Doc. No. 122].)

         It is difficult to estimate how much DAI would have incurred in attorney fees had it followed the process required by the Pretrial Scheduling Order. A prevailing party is entitled only to reasonable attorneys' fees, and thus extraneous or unnecessary fees should be excluded from any award. Hensley, 461 U.S. at 434. Legal fees incurred preparing a procedurally improper motion certainly involve unnecessary expense. If DAI had followed the requirements of the Pretrial Scheduling Order, asking permission rather than forgiveness, the motion would not have been filed. On the other hand, at least some of the work associated with preparing the motion would have been necessary in any event to prepare a meaningful request for permission. Therefore, the Court recommends reducing by 75% the $47, 827.50 in attorney fees billed in connection with the summary judgment motion, leaving $11, 956.88 to be included in the award to DAI.

         F. Fees for Unasserted Antitrust Counterclaims and a Rule 11 Letter

         DAI seeks $32, 856 in fees for time billed in connection with exploring possible antitrust counterclaims and a Rule 11 violation letter; the former were never asserted and the latter was never served. Courts have recognized generally that fees should be awarded only for hours “expended in furtherance of successful claims, or of claims closely related to successful claims.” Whitworth v. Nat'l Enter. Sys., No. CV 08-968-PK, 2010 WL 1924505, at *6 (D. Or. Apr. 21, 2010), R&R adopted, 2010 WL 1923673 (D. Or. May 11, 2010) (citing Sloman v. Tadlock, 21 F.3d 1462, 1474 (9th Cir. 1994)). However, courts have also recognized that parties should not be penalized “for pursuing one defense theory over another.” Kinglite Holdings Inc. v. Micro-Star Int'l Co., No. CV1403009JVSPJWX, 2016 WL 6953449, at *3 (C.D. Cal. Aug. 31, 2016) (citing Home Gambling Network, Inc. v. Piche, No. 2:05-cv-610-DAE, 2015 WL 1734928, at *9 (D. Nev. Apr. 16, 2015). Here, the Court does not find these exploratory forays, the output of which apparently did not see the light of day in this litigation, to be sufficiently related to the underlying patent infringement matter. Accordingly, the Court recommends that the fee award to DAI not include the $32, 856 in fees related to unasserted antitrust counterclaims and the unserved Rule 11 violation letter.

         G. Litigation of Disputes Relating to Inspection of the Accused Systems

         M-I argues that DAI filibustered its efforts to inspect the Accused Systems located on two ships that were in port in Brazil, resulting in unnecessary litigation expense for which M-I should not be compensated. (Pls.' Mem. Opp'n at 20 [Doc. No. 303].) In the late summer of 2015, M-I and DAI engaged in a contentious dispute regarding whether and how M-I would be able to gain access to and inspect two ships-the HOS Resolution and the HOS Pinnacle-upon which the Accused Systems had been installed. (R&R 33-35; Pivnick Decl. ¶¶ 15-24 [Doc. No. 305].) M-I contends DAI prevented it from inspecting the ships, made no effort to attempt to comply with M-I's June 26, 2015, Notice of Inspection, did not fully comply with this Court's order requiring that it attempt to facilitate an inspection, and provided incomplete or misleading information regarding a scheduled inspection that ultimately was not successful. (Pivnick Decl. ¶¶ 15-24 [Doc. No. 305].) According to M-I, at each step DAI obstructed or delayed its efforts to seek discovery to which it was entitled, and the $158, 045.50 fees incurred by DAI in doing so were unnecessary and should not be reimbursed. (Pls.' Mem. Opp'n at 21 [Doc. No. 303].)

         For its part, DAI insists it had no power to arrange the inspections M-I demanded, and, given the circumstances, it did the best it could to accommodate M-I's requests. (Def.'s Reply Br. Supp. Mot. Attorneys' Fees at 4 [Doc. No. 351].) Further, DAI asserts that it reiterated this point to M-I throughout the litigation, making clear it had no power to grant the inspections. The ships in question were owned by Hornbeck Offshore Services, Inc. and leased to Petrobras, the Brazilian government-owned oil company. DAI stressed to M-I that it had no involvement with the ships at all, and even Limitada's operations constituted only a small portion of the activities performed on the ships. (Carlson Decl. Ex. 31 ¶¶ 1-4 [Doc. No. 295-22].) With these considerations in mind, this Court previously determined in its February 2, 2017, Report and Recommendation that DAI did not act in an obstructive manner during the inspections, finding that, although “DAI and its counsel may well not have done all that the Court's Order required, ” there was no reason to believe additional efforts by DAI would have secured the inspections M-I sought. (R&R at 35 [Doc. No. 270].) Granted, the fees attributed to this chapter of the case are high. But the docket contains no less than two dozen entries relating to the disputes over the requested inspections, most of which are motions or responses to motions brought by M-I that seek sanctions up to and including default judgment against DAI for the “spoliation of evidence” allegedly resulting from DAI's failure to arrange for the inspections. See, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.