W.L. Gore & Associates Inc. et al v. C.R. Bard Inc.

Filing 710

MEMORANDUM ORDER re 625 Bard's Fees Motion is GRANTED IN PART. Signed by Judge Leonard P. Stark on 2/8/17. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
W.L. GORE & ASSOCIATES, INC.,
Plaintiff,
Civil Action No. 11-515-LPS

v.

C.R. BARD, INC. and BARD
PERIPHERAL VASCULAR, INC.,
Defendants.

MEMORANDUM ORDER
At Wilmington this 8th day of February, 2017:
Having reviewed the parties' briefing (D.I. 625, 626, 627, 628),relating to Defendants
C.R. Bard, Inc. and Bard Peripheral Vascular, Inc. 's ("Bard") motion for attorneys' fees ("Fees
Motion") incurred in having to respond to Plaintiff W .L. Gore & Associates, Inc.' s ("Gore")
motion for sanctions ("Sanctions Motion"), IT IS HEREBY ORDERED that Bard's Fees
Motion (D.I. 625) is GRANTED IN PART.
1.

On December 7, 2015, on the morning that a jury trial on non-damages issues was

scheduled to commence in this patent infringement action, Bard represented to the Courl that it
had recently discovered, from publicly available sources, important documents from Gore's state
tax proceedings that were relevant to Gore's claim for lost profits damages and to secondary
considerations of non-obviousness. (D.I. 620 at 3-4) One such document that had been
submitted by Gore in those tax proceedings was. a 2008 Expert Report by David Teece ("Teece
Report"), which listed the patent-in-suit (Gore's '892 patent) in a, table of "Proud Patent[s]" with·
a "[r]anking" of "Minor." (D.I. 420, ex. 16 at Table 3; see also D.l. 620 at 4) The Court
ultimately (and reluctantly) granted a joint request for a continuance of trial after it became clear

that additional discovery relating to this issue was warranted. (D.I. 620 at 4; see also D.I. 503 at
34) 1
2.

On January 4, 2016, Gore brought its Sanctions Motion (D.I. 509), claiming that

Bard had made "numerous misrepresentations to this Court" with regard to the Teece Report and
related documents, and seeking "[s]erious [s]anctions" against Bard - such as the entry of default
judgment on liability and the disqualification of Bard's counsel. (D.I. 510 at 3, 17-20) Gore
contended that Bard's attorneys had violated several ethical rules in three main ways. First, Gore
a~serted

that the Teece Report had been in Bard's possession since at least August 2009, when

Bard's attorney, Steven Cherny, had affirmatively used the Teece Report in litigation between
these same parties in federal district court in Arizona, and further asserted that Bard had been
deliberately sitting on the Teece Report ever since, only to spring it on this Court at the last
minute in order to "blow up" the trial. (Id. at 3; see also D.I. 620 at 24) Second, Gore argued
that Bard's Delaware counsel, Jack Blumenfeld, made misrepresentations to the Court when he
stated that Bard had only recently obtained the Teece Report and other documents from publicly
available sources. (D.I. 510 at 13; see also D.I. 620 at 27) Third, Gore alleged that, in an effort
to present to the Court its "'surprise discovery"' story regarding the Teece Report, another Bard
attorney, Charles Wineland III, surreptitiously and improperly gained access to sealed documents,
including the Teece Report, in the Cecil County Courthouse in Maryland. (D.1. 510 at 9, 16; see

also D .I. 620 at 28)
3.

Bard opposed the Sanctions Motion, characterizing Gore's allegations as a

1

Trial was subsequently rescheduled and is now set to begin on March 1, 2017. (See D.I.
613 at 3)
2

"confected conspiracy theory" amounting to "false accusations against respected members of the
Bar," and submitting detailed declarations from Mr. Cherny, Mr. Blumenfeld, and Mr. Wineland
(among others). (D.I. 516 at 1; D.I.

517-~19)

Bard also requested that it be awarded the

attorneys' fees it incurred in having to respond to Gore's "unfounded assertions." (D.I. 516 at 3)
' 4.

The Court heard oral argument on Gore's Sanctions Motion on March 17,

2016 (D.I. 553 ("Tr.")), and issued a Memorandum Opinion on July 27, 2016 denying the motion
(D.I. 620 at 31). The Court was persuaded by Bard's counsel's declarations, which contained
"corroborated" and "entirely plausible" explanations; by contrast, the Court found "Gore's
contrary suggestion [of a massive conspiracy by Bard's counsel] ... entirely implausible." (Id. at
26-30) With respect to Bard's request for attorneys' fees, the Court stated that "[t]his may well
be a request that should be granted" since "Gore's [Sanctions] Motion leveled serious [but
unsupported] accusations of misconduct against highly-experienced attorneys." (Id. at 30) The
Court ordered additional briefing on the issue (D.I. 621 at 2), which the parties completed on
August 10, 2016 (D.I. 625, 626, 627, 628).
5.

Although litigants generally bear their own costs of action, when an attorney

"multiplies the proceedings in any case unreasonably and vexatiously," he "may be required by
the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred
because of such conduct." 28 U.S.C. § 1927. The Third Circuit has interpreted§ 1927 to permit
fee awards where "an attorney has (1) multiplied proceedings; (2) in an unreasonable and
vexatious manner; (3) thereby increasing the cost of the proceedings; and (4) doing so in bad
faith or by intentional misconduct." In re Prudential Ins. Co. Am. Sales Practice Litig. Agent
Actions, 278 F.3d 175, 188 (3d Cir. 2002). Additionally, it is inherent in the court's discretionary

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power to award attorneys' fees "when a party has acted in bad faith, vexatiously, wantonly, or for
oppressive reasons." Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991) (internal quotation
marks and citation omitted). Courts have used§ 1927 and their inherent authority to sanction
attorneys who file meritless motions. See, e.g., In re Prosser, 777 F.3d 154, 157, 162-63 (3d Cir.
2015) (affirming award for attorneys' fees to party opposing "inflammatory submissions"); In re
Elonex Phase II Power Mgmt. Litig., 279 F. Supp. 2d 521, 525 (D. Del. 2003) (awarding
attorneys' fees to party opposing "facially meritless Rule 60(b) motion").
6.

Bard's Fees Motion presents a very difficult decision. On the one hand, the Court

credits Gore's counsel's repeated representations that it brought the Sanctions Motion "in
complete good faith" and with the belief that the underlying facts should be presented to the
Court for its "independent assessment." (D .I. 625 at

~

("Under the circumstances, we felt it was

the right thing to do - as officers of the court and advocates for our client - to bring the matter to
the Court for its independent assessment."); see also D.I. 627 at 1) The Court can understand
r

.

how Gore's discovery of Bard's counsel's reliance on the Teece Report in 2009 in the Arizona
litigation, and Bard's subsequent use of the same report six years later on the eve of trial in this
case, might initially give Gore's counsel pause. 2 On the other hand, however, the advancement
of serious charges of misconduct involving an alleged conspiracy by multiple attorneys must be
supported by evidence and not mere suspicion or coincidence - especially when a party decides
to file such an attack in Court, leveling potentially career-ending allegations in a public forum.
7.

In resolving this close call, the Court finds a number of factors to be particularly

2

In Gore's view, "it seemed like too big a coincidence for the same lawyers to
independently discover the same confidential document from the same unusual source in two
different cases, and then use that document offensively in both cases." (D.I. 625 at 2-3)
4

pertinent. First, the Teece Report is a Gore document- and it is a Gore document that Gore did

not produce (until after Bard found it through its own efforts). One of the shakiest aspects of the
implausible theory on which Gore built its Sanctions Motion was the implication that Bard's

counsel, Mr. Cherny, simply had to have recalled in the course of this litigation that he had once
seen and used the Teece Report in a case between these same parties six years earlier._ But if, as
Gore has insisted (see, e.g., D.I. 502 at 57-58; D.I. 503 at 19-20; see also D.I. 620 at 4 (noting
Gore's statement that it did not even search tax cases for relevant documents)), the Teece Report
was not sufficiently relevant to the instant case for it to have occurred to anyone associated with
Gore even to produce it here, it should not have struck Gore's counsel as unbelievable that Mr.
Cherny did not recall the document. As importantly, it cannot be. that Mr. Cherny committed the
sort of egregious misconduct over which his career should be threatened by having not recalled
the document. 3 Even assuming it was fair to make this allegation at first, it should not have been
pressed with the vigor with which Gore pursued it after hearing Mr. Cherny's explanation.
8.

Second, the manner in which Gore presented its Sanctions Motion did not at all

make it appear as if Gore's counsel were solely, or even primarily,. interested in presenting
potentially troublesome conduct to the Court for its "independent assessment." Instead, it
reasonably appeared to Bard and the Court that Gore had decided for itself, from the beginning,
that Bard was guilty. In Gore's first communication to Bard on the topic, Gore described

3

See also D.I. 620 at 27 ("As Bard emphasizes, the Teece Report was a Gore document
which Gore failed to locate and produce in this litigation, despite being responsive to Bard's
discovery requests asking for documents related to the '892 patent. It is unreasonable for Gore to
hold Bard to a higher standard for remembering and finding a Gore document from the Arizona
litigation when Gore itself did not (in the relevant time) find and produce the pertinent
document.") (internal citation omitted).
5

"numerous statements Bard made to Chief Judge Stark [that] ... were false," insisting that there
had been "a very serious violation of Bard's duty of candor to the Court." (D.I. 628-1 at 1-2
(Dec. 17, 2015 letter)) And the opening brief Gore filed gave no sense of being written by
counsel who were hesitant to make their accusations and were primarily concerned with deterring
future misconduct, filled (as it is) with confident assertions of Bard's guilt (see, e.g., D.I. 510 at
3-4, 10-13, 17) and a request for the most severe of sanctions (including judgment against Bard
and disqualification of Bard's counsel) (see id at 17-18). For instance, Gore declared in its
"Introduction and Summary of Argument" that Bard's explanations are "not plausible" and that
"the only realistic explanation for Bard's numerous misrepresentations" is that ~ard was
pursuing a "deliberate[] plan[]" to "blow up" trial, thereby "caus[ing] a major disruption in this
case through direct violations of the ethical rules." (Id at 3-4) As Bard writes, Gore could have
instead "raised its concerns by simply laying out the facts - without any inferences - and allowed
the Court to decide whether misconduct had occurred" (D .I. 628 at 1), but this is not the path
Gore chose.
9.

Third, Gore continued to pursue its accusations of serious misconduct even after

its receipt and review of Bard's counsel's unrebutted declarations, which provided detailed,
entirely credible explanations for their conduct. Indeed, Gore admits in its briefing on the Fees
Motion that these declarations provided additional details with regard to the circumstances
surrounding Bard's prior use of the Teece Report and Mr. Wineland's experience in Cecil
County. (D.I. 625 at 2; D.I. 627 at 2) At that point, a full and thoughtful reassessment of the
entire record - unimpaired by hopes of benefitting from the situation by having sanctions
imposed on an opponent- should have led Gore's counsel to the conclusion that the Sanctions

6

Motion should be withdrawn. Instead, Gore seemed to "double-down" on its accusations,
insisting that the attorney declarations lacked credibility (see D.I. 528 at 3-5; Tr. at 11-12) and
continuing to pursue "powerful" sanctions (see, e.g., D.I. 528 at 9-10; Tr. at 24). Gore's
continued pursuit consequently required Bard, and the Court, to prepare for a lengthy hearing on
the Sanctions Motion, and later for the Court to decide that motion (and now Bard's Fees Motion
as well).
10.

Thus, pursuant to the Court's inherent authority and§ 1927, the Court finds that

Gore's conduct following its receipt and review of Bard's counsel's declarations warrants the
imposition of sanctions. Those detailed, unrebutted declarations should have made it clear to
Gore that there were reasonable explanations for Bard's conduct, and that Gore's accusations did
not rest on actual evidence. Therefore, while the Court credits Gore's representations that itfiled
its Sanctions Motion in good faith, it finds Gore's continued aggressive pursuit thereafter of its
serious accusations - despite completely unrebutted evidence to the contrary- warrants requiring
Gore to reimburse Bard for its reasonable attorneys' fees incurred in connection with opposing
the Sanctions Motion from after the date Bard filed its brief in opposition to the Sanctions
Motion. See Skinner v. E.l du Pont de Nemours & Co., Civ. No. 07-384-SLR, 2009 WL
783329, at* 1-2 (D. Del. Mar. 25, 2009) (explaining that court can infer bad faith that increased
costs of proceedings "where a litigant continues to pursue a claim in the face of an irrebuttable
defense") (internal quotation marks and citation omitted). From that point forward (i.e., after
January 22, 2016), Gore multiplied the proceedings, in an unreasonable manner, increasing costs,
by intentional misconduct.
11.

For these reasons, the Court GRANTS IN PART Bard's Fees Motion and will

7

award reasonable attorneys' fees to Bard for the fees it incurred in relation to Gore's Sanctions
Motion after the filing of its brief in opposition to the Sanctions Motion. The parties shall meet
and confer and shall, no later than February 13, 2017, submit a proposed order setting forth the
timing with which Bard will submit briefing and supporting documentation with respect to the
specific amount of attorneys' fees sought, to which Gore will have an opportunity to respond,
and for Bard to reply.

HON. LEONARD P. STA
UNITED STATES DISTRJCT COURT

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