Wyers, et al v. Greenberg Traurig, LLP et al

Filing 47

ORDER. ORDERED that Defendants' Objection To Magistrate Judge's Order Re: Defendants' Motion To Strike, Restrict Public Access, And For Extension To Answer 25 , is OVERRULED. The Amended Complaint shall be filed on or before Friday , December 21, 2012. ORDERED that the original complaint 5 shall remain on the record and shall remain restricted at Level 1. ORDERED that the defendants shall respond to the Amended Complaint on or before Wednesday, January 2, 2013. ORDERED that Plaintiffs' Unopposed Motion To Stay Consideration Of Portion Of Defendants' Rule 12(b)(6) Motion To Dismiss And Renewed Motion To Strike 30 , is DENIED AS MOOT by Chief Judge Wiley Y. Daniel on 12/12/12.(jjhsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Wiley Y. Daniel
Civil Action No. 12-cv-00750-WYD-CBS
PHILIP W. WYERS, and,
WYERS PRODUCTS GROUP, INC.,
Plaintiffs,
v.
GREENBERG TRAURIG, LLP;
MARK L. HOGGE;
LAURA M. KLAUS; and,
ROBERT P. CHARROW,
Defendants.

ORDER

THIS MATTER comes before the Court on Defendants’ Objection To Magistrate
Judge’s Order Re: Defendants’ Motion To Strike, Restrict Public Access, And For
Extension To Answer [ECF No. 25], filed on May 23, 2012.
BACKGROUND
On December 30, 2011, plaintiffs, Phillip P. Wyers and Wyers Products Group,
Inc., filed a legal malpractice action against defendants, Greenberg Traurig, LLP, Mark
L. Hogge, Laura M. Klaus, and Robert P. Charrow (“the defendants”) in the District
Court for the City and County of Denver, State of Colorado1, in connection with the
defendants’ legal representation of plaintiffs during the appeal of a patent infringement
case before the United States Court of Appeals for the Federal Circuit. On March 26,

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Wyers, et al., v. Greenberg Traurig, LLP, et al., Case No. 2011-CV-8834.
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2012, the defendants removed the action to the United States District Court for the
District of Colorado [ECF No. 1]. On April 14, 2012, the defendants filed a motion to
strike, to restrict access, and for an extension of time to answer the plaintiffs’ complaint
[ECF No. 14]. In their motion, the defendants requested that the Court: (1) strike
paragraphs 35, 38, 40-46, 49-53, and 69-74 of the plaintiffs’ complaint because they
allegedly reveal confidential mediation communications; (2) restrict public access to the
plaintiffs’ complaint; and, (3) grant them an extension of time to answer the plaintiffs’
complaint. On May 18, 2012, Magistrate Judge Shaffer issued an Amended Minute
Order [ECF No. 24] in which he: (1) denied the defendants’ motion to strike paragraphs
35, 38, 40-46, 49-53, and 69-74 of the plaintiffs’ complaint; (2) denied the defendants’
request for an extension of time to respond to plaintiffs’ complaint; and (3) granted the
defendants’ request to restrict public access to the complaint, and ordered that the
complaint be restricted at Level 12 until I rule on the defendants’ anticipated objection to
his May 18, 2012, Order. On May 23, 2012, the defendants filed an objection to
Magistrate Judge Shaffer’s May 18, 2012, Amended Minute Order, moving this Court to
enter an Order overruling Magistrate Judge Shaffer’s decision on their motion to strike,
restrict access, and for an extension of time to file an answer [ECF No. 25].
ANALYSIS
A. Legal Standard for an Objection to a Magistrate Judge’s Order
District courts review Magistrate Judges’ Orders regarding non-dispositive
motions under a “clearly erroneous or contrary to law” standard. 28 U.S.C. §
636(b)(1)(A); Rule 72(a) of the FEDERAL RULES of CIVIL PROCEDURE. Under this

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Pursuant to D.C.COLO.LCivR 7.2(B)(5), Level 1 restriction permits access only to the Court and the
parties.
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standard of review, a Magistrate Judge’s finding should not be rejected merely because
the Court would have decided the matter differently. See Anderson v. City of Bessemer,
470 U.S. 564, 573 (1985). A district court must affirm a Magistrate Judge’s decision
unless ‘“on the entire evidence[, the district court] is left with the definite and firm
conviction that a mistake has been committed.’” Ocelot Oil Corp. v. Sparrow Indus., 847
F.2d 1458, 1464 (10th Cir. 1988) (quoting United States v. U. S. Gypsum Co., 333 U.S.
364, 395 (1948)).
B. The Defendants’ Motion to Strike
The defendants moved to strike paragraphs 35, 38, 40-46, 49-53, and 69-74 of
the plaintiffs’ complaint pursuant to Guideline 5 of the United States Court of Appeals for
the Federal Circuit’s Appellate Mediation Program Guidelines. Guideline 5 states in
pertinent part:
The substance of mediation is confidential and may not be
disclosed by the mediator or any participants, except in the
course of litigation concerning the enforceability of any
agreements reached through mediation. The fact that a
case is in mediation is not confidential.
The defendants argued that the above referenced paragraphs should be struck from the
complaint because they allegedly reveal confidential communications between the
parties that took place while participating in the United States Court of Appeals for the
Federal Circuit’s Appellate Mediation Program. The challenged paragraphs of the
complaint state the following:
35. On August 12, 2009, Defendant Hogge informed Mr.
Wyers that he had a 87.5% chance of winning the appeal
against Master Lock. He later told Mr. Wyers that he had a
95% chance of winning in the appeal.

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38. The Defendants failed to spend any time preparing Mr.
Wyers for the settlement conference and never interviewed
Mr. Wyers in order educate themselves regarding his risk
tolerance and various financial factors that would have
justified a settlement instead of risking a reversal of the
judgment on appeal.
40. At the settlement conference, counsel for Master Lock
offered Wyers roughly $3,500,000 to end the appeal.
41. The mediator told Mr. Wyers that Master Lock would
pay $4,500,000 to settle the appeal.
42. Counsel for Master Lock repeated its offer on October
29, 2009.
43. At the settlement conference, Defendant Hogge
instructed Mr. Wyers that settlement in these financial
ranges would be foolhardy and then proceeded to spend
most of his time at the conference talking on the phone to
another client.
44. Despite the apparent likelihood of being able to secure a
settlement in the $3,500,000 to $5,000,000 range,
Defendant Charrow condescendingly told Mr. Wyers that
Master Lock did not respect his judgment, that the appeal
would be won and that all further negotiation should be
terminated.
45. Despite purporting to have extensive knowledge and
experience with patent appeals before the CAFC,
Defendants failed to apprise Wyers of the potential risks
associated with an appeal.
46. The Defendants told Mr. Wyers that the appellate court
would be unlikely to overturn the jury’s decision, which they
said was entitled to deference on appeal.
49. As lawyers who possess the degree of knowledge, skill
and judgment ordinarily attributed to members of the legal
profession with their level of expertise and training, when
representing a client in settlement negotiations in the face of
an appeal of an $8.7 million judgment, Defendants should
have known or educated themselves prior to the settlement
conference to determine the following:

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a. They should have thoroughly reviewed the trial
record to determine any potential pitfalls for the
appeal and so advised Mr. Wyers;
b. They should have determined that the question of
invalidity was subject to de novo review and that the
case was not a “simple substantial evidence” appeal
and so advised Mr. Wyers as to the risk of de novo
review;
c. They should have interviewed Mr. Wyers to
determine his risk tolerance, financial goals and the
extra-appellate benefits associated with a settlement;
d. They should have advised Mr. Wyers that any
patent judgment entered after the U.S. Supreme
Court’s decision in KSR Int’l Co. v. Teleflex, Inc., 550
U.S. 398 (2007), was subject to a trend of heightened
judicial reversal that made risk assessment difficult
instead of advising Mr. Wyers that he had a 90-95%
chance of appellate affirmation; and,
e. They should have provided a written analysis of
the risks and benefits of not accepting a significant
financial offer of settlement in a manner that
accurately stated the relevant law and specific factual
details of the trial court record relevant to the law
relative to Mr. Wyers’ risk tolerance, financial goals
and extra-appellate benefits.
50. The Defendants failed to fulfill these duties and thereby
breached the applicable standards of care.
51. If Defendants had apprised Wyers of the substantial risk
of proceeding with the appeal to CAFC, and had Wyers
known that the issue of obviousness which was hotly
litigated at trial was subject to de novo review on appeal,
Wyers would have either accepted Master Lock’s
$3,500,000 settlement offer or continued to negotiate per the
mediator’s advise [sic] until he received a higher acceptable
sum.
52. Master Lock is a large publicly held corporation that was
willing and able to pay a cash settlement of $3,500,000 or
more. If Wyers had accepted its offer, his prompt receipt of
the full amount of the settlement would have been certain.
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There was no collection risk in this case in the event that a
settlement was reached.
53. Because of Defendants’ negligence in adequately
advising Wyers of the risks of litigation the appeal of his
verdict on the merits, Wyers refused Master Lock’s offer of a
certain $3,500,000, abandoned the prospect of negotiating
for a larger sum, and stepped away from settlement
negotiations to litigate the appeal on the merits.
69. The Defendants had an incentive to prevent the case
from settling because at the time of the settlement, they had
only billed 10% of their initially estimated fees in the case.
The Defendants also had an incentive to take a hard line in
settlement negotiations to enhance the settlement position of
future clients without regard to the best interests of Wyers
and to enhance their personal reputations as lawyers for
taking a hard line in settlement negotiations.
70. On information and belief, it is more likely than not that
the atypical conduct of the Defendants in their very forceful
advocacy in favor of rejecting a settlement offer for a very
large sum of money was motivated, or at least influenced, by
these potential conflicts.
71. The Defendants, in fact, manipulated their statements
regarding the strength of Wyers’ case and pushed Wyers’
[sic] to take an unrelenting position in settlement
negotiations with Master Lock because Defendants had yet
to perform any serious work on the case, which meant that a
settlement for Mr. Wyers would not have produced any
significant income to the Defendants. The Defendants did
not obtain the informed consent from Mr. Wyers to engage in
this conduct that constituted a conflict of interest and a
breach of their fiduciary duty to Mr. Wyers.
72. Wyers suffered other damages in addition to either the
loss of a proposed settlement or the affirmation of the trial
court’s $8.7 million judgment. These additional damages
include the loss of the validity of the patents, which would
not have occurred in the event of a settlement or a favorable
appellate ruling.
73. A determination of validity through settlement of
judgment would have greatly enhanced the likelihood that

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Wyers would prevail against two or three other infringers in
amounts collectively comparable to that of Master Lock.
74. Further, a defeat on the merits on appeal denied Wyers
future royalties on sales by Master Lock. The additional
damages, which were proximately caused by the
Defendants’ professional negligence, have an economic
value in the range of $3 million to $4 million in addition to the
lost lump sum settlement, lost jury verdict and attorneys’
fees paid to Greenberg Traurig.
Magistrate Judge Shaffer denied the defendants’ motion to strike in its entirety.
With respect to the defendants’ argument regarding Guideline 5, Magistrate Judge
Shaffer stated that Guideline 5 is “designed to govern procedures in [the United States
Court of Appeals for the Federal Circuit].” ECF No. 34, p. 38, l. 1. Magistrate Judge
Shaffer further stated, “[s]o at the end of the day, this is not governed by the Federal
Circuit’s rules. It’s governed by our Local Rules.” Id. ll. 4-5.
I agree with Magistrate Judge Shaffer. This Court is bound by the local rules for
the United States District Court for the District of Colorado. Neither Magistrate Judge
Shaffer, nor I, can depart from rules that govern this Court merely because a party cites
a local guideline that governed a process which occurred outside this Court’s
jurisdiction. I find that Magistrate Judge Shaffer’s denial of the defendants’ motion to
strike was not clearly erroneous or contrary to law. With that said, and after careful
consideration of the complaint, I order the plaintiffs to file an Amended Complaint which
sets forth the allegations against the defendants, but is void of any settlement offer’s
numerical value and void of any allegations of specific statements made during the
mediation process. The plaintiffs shall file the Amended Complaint on or before Friday,
December 21, 2012. The Amended Complaint shall be the operative pleading in this
matter.
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C. The Defendants’ Motion to Restrict Access
The defendants moved to restrict access to the complaint, arguing that Guideline
5 and protecting the integrity of the mediation process warrant Level 1 restriction. In
response to the defendants’ arguments, Magistrate Judge Shaffer stated:
At the end of the day, I am fundamentally concerned with the
process of this case. And the United States Supreme Court,
not the Federal Circuit, not some guideline, the United
States Supreme Court has said on countless occasions that
federal trials are public processes, that there is an absolute
belief in the public being accessible to what we do in this
building. And the Supreme Court has said that that process
is so important and so paramount it can be restricted only
under the most extraordinary circumstances.
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And I cannot allow what is fundamentally a private process,
i.e. conciliation [mediation between the parties], to be the tail
that wags the dog of public process which is trial. I can’t do
that.
ECF No. 34, p. 69, ll. 5-13, 21-24. Magistrate Judge Shaffer then ordered that the
original complaint be restricted at Level 1 until I ruled on the defendants’ anticipated
objection to such Order.
I agree with Magistrate Judge Shaffer’s ruling. Pursuant to D.C.COLO.LCivR
7.2(B), a party seeking to restrict access to a document must, inter alia, show that the
interest to be protected outweighs the presumption of public access. Here, the
defendants have failed to do so. Further, my Order directing the plaintiffs to file an
Amended Complaint void of any settlement offer’s numerical value and void of specific
statements made in connection with mediation, prevents public access to the
information the defendants seek to protect. Hence, there is no need to restrict the
Amended Complaint. Magistrate Judge Shaffer’s Order that the complaint be restricted
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at Level 1 until I rule on the defendants’ objection to such Order was not clearly
erroneous or contrary to law. The original complaint shall remain in the record and
remain sealed at Level 1. The Amended Complaint shall be unrestricted.
D. The Defendants’ Motion for Extension of Time to Answer Plaintiff’s Complaint
The defendants moved for an extension of time to answer the complaint, citing
concerns for potential violations of the Guideline 5. Magistrate Judge Shaffer denied
this motion. I find that Magistrate Judge Shaffer’s denial was not clearly erroneous or
contrary to law. More importantly, Magistrate Judge Shaffer’s May 18, 2012, Amended
Minute Order [ECF No. 24] specifically states that, “[t]he defendants shall be required to
file an answer to the original complaint no later than June 7, 2012 [sic].” As of
Wednesday, December 12, 2012, the defendants have not filed an answer to the
original complaint. I take note of the defendants’ failure to adhere to Magistrate Judge
Shaffer’s Order. What I find more troubling is the possibility that such failure was
calculated and not unintentional. While I express no opinion as to whether or not the
defendants’ answer would have violated Guideline 5, the defendants failed to adhere to
a clearly defined Order by Magistrate Judge Shaffer. Any future disregard of this
Court’s Orders will result in immediate sanctions.
Accordingly, I order the defendants to respond to the plaintiffs’ Amended
Complaint on or before Wednesday, January 2, 2013.

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CONCLUSION
After careful consideration of the matters before this Court, it is
ORDERED that Defendants’ Objection To Magistrate Judge’s Order Re:
Defendants’ Motion To Strike, Restrict Public Access, And For Extension To Answer
[ECF No. 25], filed on May 23, 2012, is OVERRULED. It is
FURTHER ORDERED that the plaintiffs shall file an Amended Complaint which
sets forth the allegations against the defendants, but is void of any settlement offer’s
numerical value and void of any allegations of specific statements made during the
mediation process. The Amended Complaint shall be filed on or before Friday,
December 21, 2012, and shall be the operative pleading in this matter. The Amended
Complaint shall be unrestricted. It is
FURTHER ORDERED that the original complaint [ECF No. 5] shall remain on the
record and shall remain restricted at Level 1. It is
FURTHER ORDERED that the defendants shall respond to the Amended
Complaint on or before Wednesday, January 2, 2013. It is
FURTHER ORDERED that Plaintiffs’ Unopposed Motion To Stay Consideration
Of Portion Of Defendants’ Rule 12(b)(6) Motion To Dismiss And Renewed Motion To
Strike [ECF No. 30], filed on June 22, 2012, is DENIED AS MOOT.
Dated: December 12, 2012.

BY THE COURT:

s/ Wiley Y. Daniel
Wiley Y. Daniel
Chief U. S. District Judge

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