EarthCam, Inc. v. OxBlue Corporation et al
Filing
324
OPINION AND ORDER granting in part 311 Motion for Attorney Fees. After applying the deductions required by this Order, OxBlue is awarded attorneys' fees and expenses in the total amount of $292,611.17. IT IS FURTHER ORDERED that enforcement of this judgment is stayed until Plaintiff EarthCam, Inc.'s appeal to the Eleventh Circuit is concluded. Signed by Judge William S. Duffey, Jr on 12/29/2015. (anc)
Defendants’ Motion for Attorneys’ Fees and Expenses [322] (the “Additional
Adverse”).1
I.
BACKGROUND2
On August 1, 2013, OxBlue served an offer of compromise (the “Offer”) to
EarthCam in accordance with O.C.G.A. § 9-11-68(a). (See Mot. at Ex. A).
EarthCam did not respond to the Offer within 30 days of service. (Id. at Ex. B).
OxBlue, therefore, deemed the Offer rejected under O.C.G.A. § 9-11-68(c). (Id. at
1).
On September 22, 2014, the Court entered an Order [292] granting OxBlue’s
Motion for Summary Judgment on all of EarthCam’s claims. EarthCam thus did
not recover anything in this action, and, on March 31, 2015, judgment was entered
in favor of OxBlue [309]. On April 30, 2015, EarthCam filed its Notice of Appeal
[313] from the judgment in this case.
On April 14, 2015, OxBlue filed its Motion seeking attorneys’ fees and
expenses under O.C.G.A. § 9-11-68. OxBlue argues that, because EarthCam did
1
EarthCam filed, on May 1, 2015, its Response in Opposition to Defendants’
Motion for Attorneys’ Fees and Expenses [316]. The arguments set out in this
response are included in the Additional Adverse.
2
The Court here recites only those facts pertinent to OxBlue’s Motion. A full
explanation of the facts of this case is laid out in the Court’s Order granting the
OxBlue Defendants’ Motion for Summary Judgment. (September 22, 2014, Order
[292]).
2
not recover at least “75 percent of [OxBlue]’s offer of settlement,” OxBlue “[is]
entitled to recover reasonable attorneys’ fees and expenses incurred by [OxBlue]
from the date of the rejection of the offer of settlement through the entry of
judgment[.]” O.C.G.A. § 9-11-68(b)(1). EarthCam opposes the Motion on the
grounds that: (1) O.C.G.A. § 9-11-68 conflicts with federal law and therefore
should not be applied; (2) OxBlue’s Motion is “premature under the plain
language” of O.C.G.A. § 9-11-68; and (3) if the Court applies O.C.G.A. § 9-11-68,
the application should be limited in scope, taking into account the varied federal
and state claims and counterclaims in this action. (Resp. [316] at 1-2).
II.
DISCUSSION
A.
Applicability of O.C.G.A § 9-11-68 in Federal Court
The Court first addresses whether O.C.G.A. § 9-11-68 applies to this case.
EarthCam argues that Fed. R. Civ. P. 68 (“Rule 68”) preempts O.C.G.A.
§ 9-11-68. (See Resp. at 3-7). The Court disagrees.
Under the Erie3 doctrine, a federal court adjudicating state law claims must
apply state substantive law and federal procedural law. See Gasperini v. Ctr. for
Humanities, Inc., 518 U.S. 415, 427 (1996). This rule applies also where a federal
court decides supplemental state law claims. Lundgren v. McDaniel, 814 F.2d
3
Erie R. Co. v. Tompkins, 304 U.S. 64 (1938).
3
600, 605 (11th Cir.1987); see also United Mine Workers of Am. v. Gibbs, 383 U.S.
715, 726 (1966) (indicating that the Erie doctrine applies to supplemental state
claims litigated in federal courts); Mace v. Van Ru Credit Corp., 109 F.3d 338, 346
(7th Cir.1997) (holding that in reviewing a state claim pursuant to supplemental
jurisdiction, federal courts apply state substantive law and federal procedural law).
In the Eleventh Circuit, to determine whether state or federal law should be
applied to a particular issue, the Court must engage in a multi-part analysis. See
Wheatley v. Moe’s Sw. Grill, LLC, 580 F. Supp. 2d 1324, 1327 (N.D. Ga. Sept.
30, 2008). “The first step is for the court to determine whether state and federal
law conflict with respect to the disputed issue.” Id. (citing Esfeld v. Costa
Crociere, S.PA., 289 F.3d 1300, 1306 (11th Cir. 2002)). “If no conflict exists, then
the analysis need proceed no further, for the court can apply state and federal law
harmoniously to the issue at hand.” Esfeld, 289 F.3d at 1306-1307. If the laws
conflict, the Court must determine whether a congressional statute or Federal Rule
of Civil Procedure addresses the disputed issue. Wheatley, 580 F. Supp. 2d at
1327 (citing Hanna v. Plumer, 380 U.S. 460, 469-70 (1965)). “If a federal statute
or rule does directly cover the disputed issue, the court is to apply federal law. If
no federal statute or rule is on point, then the court must determine whether federal
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judge-made law, rather than state law, should be applied.” Id. (internal quotation
marks and citations omitted).
In Tanker Mgmt., Inc. v. Brunson, 918 F.2d 1524, 1528 (11th Cir. 1990), the
Eleventh Circuit applied a “direct collision” test to determine whether a Florida
statute similar to O.C.G.A. § 9-11-68 conflicted with Rule 68:
Appellant’s argument in favor of Rule 68 fails initially because Rule
68 is not in “direct collision” with the portion of F.S.A. § 45.061
applicable in this case. Rule 68 concerns only interest and offers of
judgment, while the Florida statute concerns attorney’s fees, offers of
judgment and settlement offers. Thus, the circumstances here are
similar to those in Walker v. Armco Steel Corp., 446 U.S. 740
[(citations omitted)] (1980), in which the Court in a diversity action
was asked to determine whether the federal court should follow state
law or, alternatively, Fed. R. Civ. P. 3 in deciding when an action is
commenced for the purpose of tolling the state statute of limitations.
In the course of holding that Oklahoma law controlled, the Court
stated: “‘[T]he scope of the Federal Rule [is] not as broad as the
losing party urge[s], and therefore, there being no Federal Rule which
cover[s] the point in dispute, Erie command[s] the enforcement of
state law.’” 446 U.S. 740, 750 [(citations omitted)] (1980) (citing
Hanna v. Plumer, 380 U.S. 460, 472 [(citations omitted)] (1965)).
Tanker, 918 F.2d at 1528.
In Wheatley, the Court applied Tanker to determine that “Rule 68 and
O.C.G.A. § 9-11-68 are not in ‘direct collision’ with one another. Rule 68 is
available only to a party defending against a claim, whereas O.C.G.A. § 9-11-68 is
available to both plaintiffs and defendants.” 580 F. Supp. 2d at 1328. The Court
also determined that the two provisions differ in allowing recovery of costs as well
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as in allowing the offeror to place conditions on the acceptance of an offer of
settlement. Id. at 1328-29. The Court noted that “Rule 68 authorizes offers of
judgment, not offers of settlement, as is the case with O.C.G.A. § 9-11-68.” Id. at
1328. The Court determined that O.C.G.A. § 9-11-68 “creates a substantive right
to attorney’s fees . . . .” Id. at 1329. Because the law is substantive and “does not
conflict with federal law or rule or procedure, the Court is bound to apply it to this
case.” Id.
EarthCam argues that Tanker is not controlling, because it concerns the
application of a Florida statute to purely state law claims. While Tanker concerned
the application of a Florida statute, EarthCam concedes the statute is similar to
O.C.G.A. § 9-11-68. (See Resp. at 4). More importantly, while the holding of
Tanker is not controlling in this case, the Court is required to apply Tanker’s
“direct collision” analysis.4 In Wheatley, the Court conducted this analysis with
respect to O.C.G.A. § 9-11-68, and found that it did not conflict with Rule 68.
4
Because the Court is required to apply the “direct collision” analysis as it is
applied in Tanker, the Court rejects EarthCam’s argument that the Court should
apply the purportedly narrower standard articulated in Gil de Rebollo v. Miami
Health Ass’ns, Inc., 137 F.3d 56, 65 n.5 (1st Cir. 1998). EarthCam concedes that
the Eleventh Circuit’s interpretation of the “direct collision” standard is binding on
the Court. (Resp. at 6). Indeed, the Eleventh Circuit recently reaffirmed the
approach it took in Tanker. See Menchise v. Senterfitt, 532 F.3d 1146, 1152 (11th
Cir. 2008).
6
EarthCam has not offered a compelling reason for the Court not to apply this
precedent. The fact that both Tanker and Wheatley were “pure diversity case[s],”
(Resp. at 5), does not change the analysis. The Erie doctrine applies—and the
analysis is identical—where the Court has supplemental jurisdiction over the state
law claims. See Palm Beach Golf Center-Boca, Inc. v. John G. Sarris, D.D.S.,
P.A., 781 F.3d 1245, 1259 (11th Cir. 2015) (“It is well established that . . . the Erie
doctrine also applies to pendent state claims litigated in federal courts.” (internal
quotations omitted)).
Accordingly, because O.C.G.A. § 9-11-68 is substantive, and because it does
not conflict with Rule 68, O.C.G.A. § 9-11-68 must be applied.
B.
Timeliness of OxBlue’s Motion
EarthCam next argues that OxBlue’s Motion “is premature under the plain
language of the statute.” (Resp. at 2). O.C.G.A. § 9-11-68(d) states, in relevant
part, that “if an appeal is taken from [the] judgment, the court shall order payment
of such attorney’s fees and expenses of litigation only upon remitter affirming such
judgment.” EarthCam cites two cases, Hall v. 84 Lumber Co., No. CV409-057,
2012 WL 1058875, at *1 (S.D. Ga. Mar 28, 2012) and Wheatley, 580 F. Supp. 2d
at 1325, in support of its argument that the determination of attorneys’ fees and
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expenses must wait until EarthCam’s appeal is concluded. Neither case is
controlling, and neither case is directly on point.
In Hall, the Southern District of Georgia determined that an award of
attorneys’ fees under O.C.G.A. § 9-11-68 was premature because the court “ha[d]
yet to enter any final judgment.” 2012 WL 1058875, at *1. The Hall court’s
conclusion that an award of attorneys’ fees was premature was “reinforced by the
requirement that a court may only order payment of fees and expenses after either
the judgment has been affirmed on appeal or the time to file an appeal has lapsed.”
Id. The Hall court, however, did not directly address whether an award of
attorneys’ fees is premature if a final judgment has been entered.
In Wheatley, the Court noted, in passing, that it had “reserved ruling on
Defendants’ motion until a final disposition was reached by the Eleventh Circuit.”
580 F. Supp. 2d at 1325. The Court did not address its reasons for reserving
ruling, and did not address the issue whether a ruling on a motion for attorneys’
fees under O.C.G.A. § 9-11-68 is premature prior to a disposition on appeal.
The parties have not cited, and the Court is unable to find, any controlling
cases on this issue. The statute states that “the court shall order payment . . . only
upon remitter affirming such judgment.” O.C.G.A. § 9-11-68(d). The plain
language of the statute bars the Court from ordering payment until its judgment is
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affirmed. The statute does not preclude OxBlue from filing its Motion, and does
not preclude the Court from ruling on it before EarthCam’s appeal is concluded. In
the absence of controlling precedent, the Court concludes it is permitted to rule on
OxBlue’s motion, but not require payment until EarthCam’s appeal is concluded.
C.
Challenge to Specific Fee and Expense Amounts under O.C.G.A.
§ 9-11-68
Finally, EarthCam argues that the attorneys’ fees and expenses for which
OxBlue seeks to be reimbursed should be reduced because: (1) the attorneys’ fees
claimed include “substantial time on work related to the federal question claims”
(EarthCam’s copyright infringement and Computer Fraud and Abuse claims, and
OxBlue’s copyright infringement and Lanham Act claims); (2) the attorneys’ fees
claimed “include work on Defendant Richard Hermann’s motion for summary
judgment on Count VI of EarthCam’s complaint that Mr. Hermann agreed he
would absorb”; and (3) the attorneys’ fees claimed include charges for
non-litigation work, which OxBlue’s counsel agreed to exclude.5 (Additional
Adverse at 2-3). The Court considers these arguments separately.
5
EarthCam advances additional arguments in the body of the Additional
Adverse, which the Court also considers in this Order.
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1.
Federal Question Claims Work
The claims asserted by EarthCam in this case rest on claimed intrusions by
OxBlue into Plainitff’s computer system to wrongfully obtain information about
EarthCam products. On this set of facts, EarthCam asserted federal and state law
claims based on the alleged intrusions and claimed resulting damages. These
claims, the Court found, failed and were dismissed. EarthCam now seeks to
deconstruct the claims alleged to support its argument that a substantial portion of
the attorneys’ fees and expenses claimed by OxBlue were for defending
EarthCam’s summary judgment motion on its federal claims. OxBlue argues that
the interrelationship of EarthCam’s federal and state claims resulted in all of the
work performed to litigate the federal claims on summary judgment applying
equally to litigation of EarthCam’s state law claims, thus allowing OxBlue to claim
all of the fees and expenses it incurred in this matter from September 1, 2013, to
that date judgment was entered in OxBlue’s favor on all claims. Put another way,
OxBlue argues that all work performed was required for the state law and federal
law claims in this case and because no work applied to the federal claims alone, all
of the attorneys’ fees and expenses charged are reasonable under O.C.G.A.
§ 9-11-68. The amount for which OxBlue is allowed to be compensated under
O.C.G.A. § 9-11-68 is between these two outlier positions.
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It is impossible to reconstruct the time allocated to each different claim in a
case like this where federal and state claims, arising from the same essential
operative facts, substantially overlap and where the litigation activity benefits
advocacy on both sets of claims. In the Court’s practice and judicial experience in
cases like these, the better approach is to evaluate what legal services and expenses
would have been incurred if EarthCam had not asserted its federal claims, and
relied only on its state law causes of action. Considering the contentiousness of
this litigation, the level of legal services and fees to litigate the federal claims only
moderately added to the litigation activity required in this action after
September 1, 2013, and thus a substantial portion of the attorneys’ fees and legal
services claimed by OxBlue were incurred to litigate state law-based claims.
OxBlue’s “we are entitled to all the award we claimed” approach itself
ignores that it necessarily incurred some attorneys’ fees and expenses that were
required solely because of the federal law claims EarthCam asserted. The Court
agrees that arguments in pleadings relating to EarthCam’s federal claims, drafting
of a discussion of the legal claims asserted, and a discussion of the facts relating to
the federal claims were activities uniquely required by the fact federal claims were
asserted. These activities must reasonably be deducted from the attorneys’ fees
claims OxBlue asserts.
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The Court reviewed the annotated statements attached to EarthCam’s
Additional Adverse and the arguments set out by both parties. Based on this
review and applying the Court’s litigation and judicial experience in assessing
attorneys’ fees and expenses in civil litigation, the Court concludes that OxBlue’s
attorneys’ fees and expense claim should be reduced by $23,000 to reflect work
reasonably allocated to its litigation of only the federal claims asserted in this
action.
2.
Hermann Summary Judgment Motion Attorneys’ Fees and
Expenses
EarthCam argues that the Consent Order entered in this action on
March 31, 2015, precludes an award of attorneys’ fees and expenses incurred by
Defendant Hermann’s separate counsel. The Court is satisfied that the charges
EarthCam challenges were related to OxBlue’s litigation of the claims in which it
was involved, and EarthCam’s request to exclude them is denied.
3.
Smith Fees
OxBlue agrees it is not entitled to be compensated for services performed by
Ms. Smith on March 3, 4 and 14, 2014. EarthCam’s request to exclude these fees,
in the amount of $1,065.00, is granted.
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4.
Gregory’s Travel Expenses
EarthCam contends OxBlue is not entitled to be compensated for the work
and travel performed by an attorney for OxBlue who was employed in OxBlue’s
counsel’s Jacksonville, Florida office. EarthCam argues that “clients often do not
pay for travel time even for trips required by litigation events such as out-of-state
depositions.” (Additional Adverse at 16). OxBlue represents that Gregory’s travel
and work was specific to this case and Gregory was assigned to perform it because
it was efficient and cost effective to do so. EarthCam’s argument, nitpicking at
best, does not provide any basis to exclude the amount claimed for Gregory’s
work.
5.
Pre-September 1, 2013
Finally, EarthCam seeks to reduce OxBlue’s claim for two transcripts of
depositions taken in August 2013, and one meal consumed in August 2013, before
OxBlue’s demand under O.C.G.A. § 9-11-68 was deemed rejected. OxBlue states
that it is “not seeking to recover attorneys’ fees and expenses that occurred in
August 2013,” and does not specifically oppose the reduction of the transcript and
meal expense. (Reply [323] at 13). The amounts, totaling $6,931.85, are required
to be deducted from OxBlue’s claim for expenses.
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III.
CONCLUSION
For the foregoing reasons,
IT IS HEREBY ORDERED that Defendants OxBlue Corporation,
Chandler McCormack, Bryan Mattern and John Paulson’s (together, “OxBlue”)
Motion for Attorneys’ Fees and Expenses Pursuant to FRCP 54(d), L.R. 54.2 and
O.C.G.A. § 9-11-68 [311] is GRANTED IN PART AND DENIED IN PART, as
stated in this Order. After applying the deductions required by this Order, OxBlue
is awarded attorneys’ fees and expenses in the total amount of $292,611.17.
IT IS FURTHER ORDERED that enforcement of this judgment is stayed
until Plaintiff EarthCam, Inc.’s appeal to the Eleventh Circuit is concluded.
SO ORDERED this 29th day of December, 2015.
_______________________________
WILLIAM S. DUFFEY, JR.
UNITED STATES DISTRICT JUDGE
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