Malem Medical, LTD. et al v. Theos Medical Systems, Inc. et al

Filing 160

ORDER by Judge Edward M. Chen Granting in Part 143 Plaintiffs' Motion for Attorneys' Fees and Costs. (emcsec, COURT STAFF) (Filed on 11/7/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 Plaintiffs, 8 9 10 ORDER GRANTING IN PART PLAINTIFFS’ MOTION FOR ATTORNEYS’ FEES AND COSTS v. THEOS MEDICAL SYSTEMS, INC., et al., Docket No. 143 Defendants. 12 For the Northern District of California United States District Court 11 Case No. 13-cv-05236-EMC MALEM MEDICAL, LTD., et al., 13 On March 8, 2017, Plaintiffs Malem Medical, LTD. et al. filed a motion for Order to Show 14 Cause asking the court to hold Defendants, Theos Medical Systems, Inc. et al., in contempt. See 15 Docket No. 84. On August 10, 2017, this Court issued an order finding the Defendants in civil 16 contempt for making disparaging statements to various regulatory agencies. See Docket No. 132. 17 Subsequently, Plaintiffs filed a motion for $156,169.00 in attorney fees and costs incurred by 18 Plaintiffs in pursuing the motion for contempt. See Docket No. 143 (“Motion”). Because some of 19 the time entries submitted by Plaintiffs’ attorneys are duplicative, irrelevant, or vague, and because 20 $156,169.00 is excessive considering the limited amount of actual court filings, the Court applies a 21 25 percent discount to Plaintiffs’ requested amount, which results in $117,126.75, and GRANTS 22 IN PART the motion for attorneys’ fees and costs. 23 24 I. BACKGROUND On July 14, 2015, this Court signed a Consent Decree and Order providing injunctive relief 25 to Plaintiffs, the enforcement of which this Court retained jurisdiction. See Docket No. 83 26 (“Consent Decree”). The Consent Decree required that Defendants not disparage Plaintiffs or any 27 of their products. Consent Decree ¶ 9. Plaintiffs and Defendants also entered into a Settlement 28 Agreement which stipulated that the prevailing party or parties in an action relating to the 1 enforcement of the Agreement or the Consent Decree shall be entitled to recover their reasonable 2 attorney fees and costs. See Docket No. 85-1 (“Settlement Agreement”) at 9. In 2016, Plaintiffs 3 were subject to a FDA inquiry based on 85 MedWatch complaints received by the FDA beginning 4 in Fall 2015. See Motion at 3. Plaintiffs believed that Defendants were responsible for falsely 5 filing those complaints to FDA and four other governmental agencies. Id. Around the same time, 6 a number of suspicious reviews of Malem products also started to appear on Amazon. Id. The 7 complaints and the Amazon reviews contained substantially similar language. Motion at 4. Thus, 8 Plaintiffs also believed that Defendants were responsible for those Amazon reviews. Id. 9 Plaintiffs’ attorneys started preparing for the motion for contempt one year before filing. See 10 On March 8, 2017, Plaintiffs filed a Motion for Order to Show Cause, asking the Court to 12 For the Northern District of California United States District Court 11 Docket Nos. 144-2, 145-2. hold Defendants in contempt for filing false complaints to five governmental agencies in violation 13 of the Consent Decree. See Docket No. 84. On April 2, Plaintiffs filed a second motion to reopen 14 discovery to determine if Defendants had violated the Consent Decree by posting disparaging 15 comments on Amazon. See Docket No. 89. On April 13, Defendants filed an opposition denying 16 that the complaints to government agencies and the Amazon reviews were made by or attributable 17 to the Defendants. See Docket No. 99. On July 31, a bench trial was held and three witnesses 18 testified. Plaintiffs did not present any evidence regarding the Amazon reviews. See Opposition, 19 Exh. A. On August 10, this Court issued an order finding the Defendants in civil contempt for 20 making disparaging statements to various regulatory agencies. See Docket 132 (“Order”). 21 In preparing for the contempt proceeding, Plaintiffs hired two attorneys, Mr. Levin and Mr. 22 Craigie, to represent them. Mr. Craigie, as the lead attorney, was mainly responsible for 23 contacting clients, appearing before the court, and taking depositions. He seeks $94,155.00 for 24 210.70 hours of work with a $450 hourly rate for the contempt proceeding. See Docket No. 145 25 ¶ 5. Mr. Levin was responsible for researching and drafting the pleadings. He claims $39,390.00 26 for 98.45 hours of work with a $400 hourly rate for the contempt proceeding. See Docket No. 144 27 ¶ 6. Mr. Levin also hired a personal investigator, Mr. Hodgson, to investigate those reports and 28 reviews and locate possible witnesses, which resulted in $4,079.50 in fees. Id. ¶ 8. Plaintiffs also 2 1 incurred $3,029.60 in costs related to the contempt proceeding. Motion at 4. In addition, Mr. 2 Craigie spent 17 hours working on the motion for fees, and Plaintiffs requested an additional 3 award of attorneys’ fees in the amount of $7,650.00. See Docket No. 153 ¶ 6. In total, Plaintiffs 4 seek $156,169.00 in attorneys’ fees and costs. See Docket No. 151 at 6. 5 II. LEGAL STANDARD Attorneys’ fees are available to a party where specifically authorized by a contract. Int’l 6 7 Union of Petroleum & Indus. Workers v. W. Indus. Maintenance, Inc., 707 F.2d 425, 428 (9th Cir. 8 1983). Attorney’s fees can also be awarded as compensatory damage to the prevailing party in a 9 civil contempt motion within the discretion of the district court. Perry v. O’Donnell, 759 F.2d 10 702, 705 (9th Cir. 1985). Reasonable attorneys’ fees are generally calculated using the lodestar method, whereby the 12 For the Northern District of California United States District Court 11 court multiplies a reasonable number of hours worked by a reasonable hourly rate. Perdue v. 13 Kenny A. ex rel. Winn, 559 U.S. 542, 546 (2010). The fee applicant bears the burden of 14 establishing entitlement to an award and documenting the appropriate hours expended and hourly 15 rates. See Gates v. Deukmejian, 987 F.2d 1392, 1397 (9th Cir. 1992). “Those hours may be 16 reduced by the court where documentation of the hours is inadequate; if the case was overstaffed 17 and hours are duplicated; [or] if the hours expended are deemed excessive or otherwise 18 unnecessary.” Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986). It is within 19 the district court’s discretion to deal with these problematic entries. For example, the district court 20 can apply a reduction rate to duplicative hours. However, if the reduction is more than 10%, the 21 court must give a “specific explanation.” See Moreno v. City of Sacramento, 534 F.3d 1106, 1112 22 (9th Cir. 2008).1 23 /// 24 /// 25 1 26 27 28 Plaintiffs have a valid basis for attorneys’ fees and costs under both California law and federal law. California law is materially similar to federal law in determining the reasonableness of attorneys’ fees. Both California law and federal law require the court to calculate a lodestar figure and then adjust the figure based on similar factors. See Gracie v. Gracie, 217 F.3d 1060, 1070 (9th Cir. 2000); cf. Serrano v. Priest, 20 Cal. 3d 25 (1977). Since the California and federal approaches are the same, the Court cites federal law in the analysis for consistency. 3 III. 1 ANALYSIS The Court finds that Plaintiffs should recover reasonable attorneys’ fees and costs based on 2 3 the Settlement Agreement as well as the Court’s inherent power. The Court also finds the 4 attorneys’ rates are reasonable. However, some of the claimed hours are unreasonable for the 5 following reasons. 6 A. Problematic Time Entries 7 1. 8 Mr. Craigie billed a significant amount of time for reviewing Mr. Levin’s drafts and other 9 Duplicative and Excessive Hours documents. See, e.g., Docket No. 145, entry for 1/27/2017 (time spent on reviewing a letter to the FDA). As Mr. Craigie and Mr. Levin are of comparable experience, see Docket Nos. 144, 145, 11 this time was duplicative. 12 For the Northern District of California United States District Court 10 In addition, Mr. Craigie billed numerous hours for communication with Mr. Levin. See 13 e.g., Docket No. 145-2, entries for 7/11/2016, 7/20/2016, 7/21/2016, 12/13/2016, 1/18/2017, 14 1/27/2017. If a lawsuit is complicated and implicates areas of law in which several of plaintiffs’ 15 attorneys had varying levels of expertise, billing for frequent communication may be justified. See 16 L.H. v. Schwarzenegger, 645 F. Supp. 2d 888, 898 (E.D. Cal. 2009). The contempt proceeding, 17 however, was simple and straightforward. It took about three months to adjudicate, with only a 18 few motions and a one-day bench trial. Due to the simplicity of the contempt proceeding, the 19 hours billed on inter-counsel communication is excessive. 20 2. Irrelevant Entries 21 The district courts have commonly held that a plaintiff’s recovery of attorneys’ fees should 22 be sufficiently related to events, issues, and behaviors giving rise to the contempt hearing. See, 23 e.g., Trustees of the Southern California IBEW-NECA Pension Plan v. Pro Tech Engineering 24 Corporation, No. SA CV 15-0637-DOC (Ex), 2016 WL 3453014, at*6 (S.D. Cal. June 20, 2016). 25 However, both attorneys have spent time working on other claims. For instance, Mr. Levin has 26 spent 2.33 hours researching defamation, anti-SLAPP, and other possible claims for new or 27 amended action. See Docket No. 144-2, entries for 12/23/2015, 5/15/2017, 5/16/2017, 6/22/2017. 28 In addition, Mr. Craigie has spent 5.75 hours on an anti-SLAPP claim. See Docket 145-2, entries 4 1 for 5/31/2017, 6/16/2017, 6/26/2017, 7/6/2017, 7/11/2017. Plaintiffs can only recover attorneys’ 2 fees arising out of the contempt proceeding. Hours spent on the defamation and anti-SLAPP 3 claims are irrelevant to this contempt proceeding and are therefore excluded. 4 3. Vague Entries 5 The Supreme Court held in Hensley that counsel is not required to record in great detail 6 how each minute of time is expended but should at least identify the general subject matter of his 7 time expenditures. Hensley v. Eckerhart, 461 U.S. 424, 437 (1983). “Work entries are 8 inadequately vague when the district court is unable to discern how the time spent is attributable to 9 the case at hand.” Center for Food Safety v. Vilsack, No. C–08–00484 JSW, 2011 WL 6259891, reasonableness of the billing entries like “conferences,” “telephone calls,” or “review of 12 For the Northern District of California at *8 (N.D. Cal. Oct. 13, 2011). Courts have held that they were unable to determine the 11 United States District Court 10 documents” without describing the subject of the call or correspondences. Id. Therefore, such 13 entries are vague and should be deducted or reduced. Id. 14 Mr. Levin’s time entries contain vague entries such as “research,” “review documents,” 15 “correspondence,” “Phone call with Peter Craigie,” and “Phone call with client.” See Docket 144- 16 2, entries for 1/19/2016, 2/1/2016, 3/16/2016, 6/3/2016, 7/29/2016, 12/14/2016, 12/15/2016, 17 4/7/2017, 5/10/2017, 6/12/2017, 6/29/2017, 7/10/2017, 8/24/2017. The Court is unable to 18 determine the reasonableness of those hours without knowing the subjects of those research, 19 documents, and correspondence. Moreover, there are also vague entries like “draft motion,” “draft 20 pleadings,” and “draft discovery documents.” See Docket 144-2, entries for 2/23/2016, 3/9/2016, 21 3/10/2016, 3/11/2016, 3/14/2016, 3/18/2016, 3/24/2016, 3/28/2016, 4/5/2016, 7/19/2016, 22 7/20/2016, 7/21/2016, 10/5/2016, 10/18/2016, 12/13/2016, 1/5/2017, 1/19/2017, 1/25/2017, 23 2/3/2017, 2/4/2017, 2/9/2017, 2/15/2017, 3/1/2017, 3/2/2017, 3/3/2017, 3/4/2017, 3/5/2017, 24 3/8/2017, 3/17/2017, 3/22/2017, 4/29/2017, 7/14/2017, 7/17/2017, 7/20/2017. 25 While the vague time entries recorded after March 2017 match the timeline of the 26 contempt proceeding, it may be inferred that most of the “motions” and “pleadings” in those 27 entries refer to the contempt proceeding. However, as noted above, both attorneys indicate that 28 they were also working on other claims such as the defamation and anti-SLAPP claims. Vague 5 1 entries make it difficult to verify all the claimed hours pertained to the contempt charge only. The 2 hours with vague entries account for 25 percent to 30 percent of the hours submitted by Mr. Levin. 3 Without more specific details, it is difficult for the Court to determine the reasonableness of these 4 hours. 5 4. Block Billing 6 If the party engages in block billing, it is reasonable for the district court to reduce the 7 hours, since it is difficult to determine how much time was spent on particular activities. Welch v. 8 Metropolitan Life Ins. Co., 480 F.3d 942 (9th Cir. 2007); see also Fischer v. SJB–P.D. Inc., 214 9 F.3d 1115, 1121 (9th Cir. 2000) (holding that a district court may reduce hours to offset “poorly each, Mr. Craigie combined multiple tasks within blocks of time in numerous entries, making it 12 For the Northern District of California documented” billing). Instead of individually listing the task and the amount of time spent on 11 United States District Court 10 impossible to evaluate the reasonableness of these entries. See, e.g., Docket No. 145-2, entries for 13 3/8/2017, 3/30/2017, 3/31/2017. 14 B. The Limited Scope of the Filings on Contempt In addition to the four major problems identified in the attorneys’ records, the Court finds 15 16 $156,169.00 in attorneys’ fees and costs is excessive compared to the limited amount of court 17 filings and court appearances for the contempt proceeding. Plaintiffs’ counsel filed a total of 7 18 briefs and a handful of declarations. See Docket Nos. 84, 89, 92, 100, 120, 126, 127. The 7 briefs 19 total 34 pages. The declarations vary from 2 to 4 pages. The contempt motion resulted in a one- 20 day bench trial with only three witnesses testifying. Even including the fees-on-fees, $156,169.00 21 is excessive for the limited scope of the contempt filings and trial. Mr. Craigie argued that what 22 makes this case unique is the difficulty in investigating the complaints and the Amazon reviews. 23 However, investigating facts should be conducted by an investigator or at an investigator’s rate. 24 This Court has already included the investigator’s fees as a reasonable cost incurred in this 25 contempt proceeding. The need for investigation in this matter did not justify the amount of 26 attorneys’ fees incurred and claimed herein. 27 /// 28 /// 6 IV. 1 2 CONCLUSION Accordingly, for all the reasons stated above, the Court finds fees and costs are warranted, 3 but the request for $156,169.00 for attorneys’ fees and costs is excessive and unreasonable. The 4 Court GRANTS IN PART the motion for attorneys’ fees, applies a 25% discount to Plaintiffs’ 5 requested amount, and awards the Plaintiffs $117,126.75 for attorneys’ fees and costs. 6 This order disposes of Docket No. 143. 7 8 IT IS SO ORDERED. 9 10 12 For the Northern District of California United States District Court 11 Dated: November 7, 2017 ______________________________________ EDWARD M. CHEN United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7

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