Fleming v. Escort, Inc. et al
Filing
208
MEMORANDUM DECISION Plaintiff Fleming's fee request is reasonable, and the Court will add the sum of $93,505.50 to the existing award of $248,143.50 to arrive at a sum of $341,649.00 for attorney fees. The Court will order that the sum be paid immediately. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (jp)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
HOYT A. FLEMING,
Plaintiff,
v.
Case No. 1:12-CV-066-BLW
MEMORANDUM DECISION
ESCORT, INC., et al.,
Defendants.
INTRODUCTION
The Court has before it a motion to compel and a petition for attorney fees filed by
plaintiff Fleming. The motions are fully briefed and at issue. For the reasons explained
below, the Court will grant in part the motion to compel and award $341,649.00 in
attorney fees to Fleming.
Petition for Attorney Fees
The Court will turn first to Fleming’s petition for attorney fees. In an earlier filed
decision, the Court found that Escort and its defense counsel – Gregory Ahrens and Brett
Schatz – knowingly misled Fleming, warranting a sanction of attorney fees. See
Memorandum Decision (Dkt. No. 178). Specifically, they falsely claimed that the source
code identified as ESC17363 was the current operating source code for Escort’s
commercially sold products and that it provided a complete defense to Fleming’s
infringement charges. That false claim affected 17 filings made by Fleming; the Court
Memorandum Decision – page 1
identified those 17 filings and directed Fleming to submit a petition describing the fees he
incurred in drafting those 17 filings.
The context of this sanction is important – this is not the first time the Court has
sanctioned these two attorneys. In a separate case, involving separate conduct, the Court
found the same two attorneys guilty of vexatious conduct and awarded $125,424.85 in
attorney fees to Fleming. See Fleming v. Escort, Case No. 1:09-cv-105-BLW, Amended
Judgment (Dkt. No. 417).
In responding to the petition now before the Court, Escort did not dispute the
reasonableness of the hourly rate and total hours expended by Fleming’s counsel Michael
Dowler. The Court finds that those rate and time figures are reasonable, and will
therefore award the sum sought by Dowler for his fees, $248,143.50.
Fleming seeks an additional $93,505.50, representing the time spent by the
plaintiff Fleming, who is an attorney with computer expertise, billing at the same hourly
rate as Dowler. Escort objects, citing cases holding generally that a plaintiff can charge
only for his counsel’s time, not for his own time. The Court finds those cases
distinguishable. As the Court noted in its prior decision, the misconduct of counsel
caused Fleming “to scour thousands of lines of source code (22,110 lines contained in
961 pages)” to “hold Escort to account” for its misleading conduct. See Memorandum
Decision, supra, at pp.9-10. Plaintiff Fleming had the expertise to conduct that extensive
review of the source code, and so it was reasonable for him to undertake that task. If he
did not do it, Dowler would have been forced to hire outside help, and their fee would
Memorandum Decision – page 2
have been part of the sanction.1 So either way, the fee was going to be incurred due to
the bad faith conduct of counsel. Hence, plaintiff Fleming’s fee request is reasonable,
and the Court will add the sum of $93,505.50 to the existing award of $248,143.50 to
arrive at a sum of $341,649.00.
Fleming also seeks interest and a doubling of this sum. The Court finds those
requests unreasonable under the circumstances of this case. Hence, the final sum
awarded will be $341,649.00. Escort asks the Court to delay the award, but the Court
rejects that request and will order that the sum be paid immediately. The Court will enter
a separate Judgment for Interim Payment of Attorney Fees.
Fleming’s Motion to Compel Pursuant to Crime-Fraud Exception
Fleming seeks discovery of a wide variety of documents and communications in
an effort to determine if Escort fabricated ESC17363 and falsely represented that it was
created in the normal course of product development. Escort responds that all of the
material sought by Fleming is protected by the work product doctrine and the attorney
client privilege.
Under the crime-fraud exception, communications are not privileged if the client
seeks the advice of counsel to further a criminal or fraudulent scheme and the
communications are sufficiently related to and made in furtherance of that scheme. In re
1
Escort did not argue, or present any proof, that a less expensive source code review could have
been conducted by someone other than Fleming. Generally, the party in Escort’s position has the burden
of proving the defense of mitigation of damages. See Ninth Circuit Model Jury Instruction 5.3. Escort
has not carried that burden here.
Memorandum Decision – page 3
Icenhower, 755 F.3d 1130, 1141 (9th Cir. 2014). Escort argues that the crime-fraud
exception does not apply to communications protected by the work product doctrine, but
the Ninth Circuit has rejected that argument. See In re Grand Jury Proceedings, 867
F.2d 539 (9th Cir.1989). Escort also argues that the exception does not apply because the
Court limited its holding to Escort’s counsel and not to Escort itself, but that conclusion
can nowhere be found in the Court’s decision that cites extensively from the sworn
submissions of Escort employees. Escort is correct, however, that the “preponderance of
the evidence” standard is required for outright disclosure of communications pursuant to
this exception, while the lesser “prima facie” standard only applies when in camera
review is sought. In re Napster, Inc. Copyright Litig., 479 F.3d 1078, 1094-95 (9th
Cir.2007), abrogated on other grounds by Mohawk Indus., Inc. v. Carpenter, 558 U.S.
100 (2009). Fleming is seeking outright disclosure rather than in camera review, and so
the preponderance standard governs here.
The Court has already found by a preponderance of the evidence that Escort
falsely claimed that (1) the source code found in ESC17363 was the current operating
source code for Escort’s commercially sold products; (2) ESC17363 provided a complete
defense to Fleming’s infringement challenges; and (3) Escort had produced all the source
code. This is just the type of fraud that opens up all communications related to
ESC17363 to discovery. Those communications are discoverable because Escort’s false
claims raise a substantial question – not yet answered – whether ESC17363 was a
complete fabrication. While Escort eventually conceded that ESC17363 was never a
current operating code for any product, Escort claimed that it created that source code in
Memorandum Decision – page 4
the normal course of product development. But that claim is naturally called into
question by the fraudulent way that Escort portrayed ESC17363 as a complete defense.
Fleming intends to test Escort’s representations – made in sworn statements submitted to
the Court – by examining all of Escort’s communications regarding ESC17363. If
ESC17363 was a complete fabrication, that would raise a substantial question as to
whether other source codes submitted by Escort as a defense to the infringement charges
were similarly fabricated. Under these circumstances, Fleming has the right to outright
disclosure of all communications related to ESC17363.
Fleming is asking, however, for far more than just communications related to
ESC17363. For example, Fleming seeks all communications related to the following
subjects concerning the four Escort products at issue: (1) “infringement”; (2)
“willfulness”; (3) “damages”; (4) “source code design”; (5) “design-around efforts”; (6)
“product testing”; (7) “compilation and installation of code”; (8) “production/disclosure
of code to Mr. Fleming”; (9) “briefing and supporting documents”; and (1) “all
communications concerning [these] . . .subject matters.”
These categories sweep too broadly. The crime-fraud exception applies only to
documents and communications that were themselves in furtherance of illegal or
fraudulent conduct. Napster, 479 F.3d at 1090. The Court must be careful not to sweep
within the exception entirely legitimate attorney-client communications. See U.S. v.
Zolin, 491 U.S. 554, 562 (1989).
To strike that balance, the Court will not order production under the broad
categories advocated by Fleming. Instead, the Court will compel Escort to produce all
Memorandum Decision – page 5
communications and documents that mention or relate to ESC17363. This includes not
only communications between Escort and its counsel, but also material that counsel
prepared, as the case law cited above makes clear that even work product is discoverable
under this exception. Accordingly, the Court will, to this extent, grant Fleming’s motion
to compel in part and deny the remainder.
Because the Court is preparing a separate Judgment to resolve the pending petition
for attorney fees, the Court will set forth its ruling on the motion to compel in that same
Judgment.
DATED: January 9, 2015
_________________________
B. Lynn Winmill
Chief Judge
United States District Court
Memorandum Decision – page 6
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