Northwest Osteoscreening, Inc. et al v. Mountain View Hospital, LLC et al

Filing 52

MEMORANDUM DECISION AND ORDER denying 40 Defendants Motion for Attorney Fees; denying as moot 41 Defendants Motion for Attorney Fees; denying 45 Defendants Motion for Attorney Fees; denying 46 Defendants Post-Judgment Motion for Attorney Fees. 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 (cjs)

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF IDAHO

NORTHWEST OSTEOSCREENING,
INC., an Idaho corporation, directly and
derivatively in its capacity as a member of
IDAHO HEALTH SCREENINGS AND
VACCINATIONS, LLC, an Idaho limited
liability company, PREVENTATIVE
HEALTH, LLC, an Idaho limited liability
company, and DANIELLE BENNION,
Plaintiffs,
v.
MOUNTAIN VIEW HOSPTIAL, LLC, a
Delaware limited liability company,
BENJAMIN WOOD, JAMES
ADAMSON, JOSH TOLMAN,
SIASCONSET, LLC, an Oregon limited
liability company, PREVENTATIVE
HEALTH, LLC, a Delaware limited
liability company, WELLNESS
SCREENINGS, LLC, an Idaho limited
liability company, and DOE ENTITIES I –
X,
Defendants.

MEMORANDUM DECISION AND ORDER - 1

Case No. 4:13-cv-00414-BLW
MEMORANDUM DECISION AND
ORDER

I
Plaintiffs brought suit against Defendants alleging violations of the federal
Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968,
and twenty-one state-law claims. Amend. Compl., dkt. 28. Defendants moved to dismiss
Plaintiffs’ RICO claims for failure to state a claim, and to dismiss the state-law claims
without prejudice pursuant to 28 U.S.C. § 1367(c)(3). The Court granted the motion in
its entirety. Oct. 2, 2014 MDO, dkt. 39.
Having prevailed on their motion to dismiss, Defendants now move for attorney
fees and costs. See Dkts. 45 & 46.1 Because RICO provides for attorney fees to
prevailing plaintiffs, not defendants, and because Defendants have not established an
alternative authorization for fees, the Court will deny Defendants’ request for attorney
fees. The Court further concludes that Defendants are not entitled to costs.
II
RICO authorizes district courts to award “a reasonable attorney[] fee” to
prevailing plaintiffs, but it does not authorize an award to a party who successfully
defends against a RICO claim. Chang v. Chen, 95 F.3d 27, 28 (1996); see also 18 U.S.C.
§ 1964(c). “Courts, however, have never construed this provision as precluding a
prevailing defendant from recovering attorney[] fees when authorized elsewhere.”
Chang, 95 F.3d at 28. The alternative authorizations to which Defendants point are (A)
1

Defendants filed two prior motions for attorney fees and costs. Dkts 40, 41. These motions are
substantially identical to the motions listed at dkts 45 and 46. The Court determines that the
motions at dkts 45 and 46 are the operative motions before the Court. The Court will deny as
moot Defendants’ prior motions. Dkts 40, 41.
MEMORANDUM DECISION AND ORDER - 2

Idaho Code § 12-120(3), which mandates an award of attorney fees to the prevailing
party in a commercial dispute, see BECO Constr. Co. v. J-U-B Eng’rs, Inc., 184 P.3d
844, 851 (Idaho 2008), and (B) the “Professional Services Agreement” (“PSA”) between
Idaho Health Screenings & Vaccinations, LLC and defendant Mountain View Hospital,
LLC. Neither of these authorities authorize a fee award.
A.

§ 12-120(3)
Defendants’ argument for attorney fees under Idaho Code § 12-120(3) starts from

a flawed premise. They argue that a federal district court with jurisdiction over state law
claims, here pursuant to 28 U.S.C. § 1367, applies the law of the forum state to award
attorney fees. Defendants invoke the Erie doctrine, but they mistake it for a jurisdictional
rule.
Erie R. Co. v. Tompkins, 304 U.S. 64 (1938), and its progeny require federal
courts to apply substantive state law in certain circumstances. See Alyeska Pipeline Co v.
Wilderness Soc’y, 421 U.S. 240, 260 n.31 (1975). However, “the basis of a federal
court’s jurisdiction over a state law claim is irrelevant for Erie purposes.” In re Exxon
Valdez, 484 F.3d 1098, 1100 (9th Cir. 2007).
Instead, it is a choice-of-law rule. “‘Where state law supplies the rule of decision,
it is the duty of federal courts to ascertain and apply that law.’” Id. The rule is most
often applied where a federal court adjudicates a state-law claim under its diversity or
supplemental jurisdiction, but the rule is not isolated to those situations. At times, a
federal court exercising its original jurisdiction over a federal question is required to

MEMORANDUM DECISION AND ORDER - 3

apply state law as well. See 19 Wright, Miller, et al., Federal Practice & Procedure §
4520 (2d ed.).2
Regardless of the basis of its jurisdiction, a federal court is not required to
ascertain and apply state substantive law, see id., and those state rules which “affect the
enforcement of the right as given by the State,” Guaranty Trust Co. of N.Y. v. York, 326
U.S. 99, 109 (1945), until that right is actually adjudicated. Before the right comes into
play, there is no risk that the party claiming the right will be denied equal protection of
the law. Absent that risk, there is no justification to invoke the Erie doctrine.3 See
Hanna v. Plumer, 380 U.S. 460, 467 (1965) (“The Erie rule is rooted in part in a
realization that it would be unfair for the character of result of a litigation materially to
differ because the suit had been brought in a federal court.”). Just as a litigant should not
be able to thwart the “substantial policy of the state” regarding attorney fees by litigating
a dispute over state-created rights in federal court, Alyeska Pipeline, 421 U.S. at 260 n.31,
2

RICO provides a good example as well. For a defendant to be liable under RICO’s substantive
provisions, he must have committed a “pattern of racketeering activity.” See H.J. Inc. v. Nw.
Bell Tel. Co., 492 U.S. 229, 232-33 (1989). “Racketeering activity” includes certain “specified
state-law crimes.” Id. at 232. Whether or not a defendant’s conduct violated an enumerated
crime is controlled by that state’s law. See 18 U.S.C. § 1961(1)(A) (defining racketeering
activity to include “any act or threat involving murder, kidnapping, gambling, arson, robbery,
bribery, extortion, dealing in obscene matter, or dealing in a controlled substance or listed
chemical (as defined in section 102 of the Controlled Substances Act), which is chargeable
under State law and punishable by imprisonment for more than one year” (emphasis added));
United States v. Carrillo, 229 F.3d 177, 186 (2d Cir. 2000) (noting without deciding that the text
of § 1961(1)(A) “seem[s] to require of a predicate act based on state law that the act include the
essential elements of the state crime”).
3

Equal protection of the law is not the only concern of Erie and its progeny. “The decision was
also in part a reaction to the practice of ‘forum shopping’ which had grown up in response to the
rule of Swift v. Tyson.” Hanna, 380 U.S. at 467. However, forum shopping is not a relevant
concern in this case.
MEMORANDUM DECISION AND ORDER - 4

a litigant should not be allowed to shoehorn a state’s policy into a dispute over federal
rights. A contrary result would deprive the opposing party of her reasonable reliance on
the American rule regarding attorney fees, see id. at 247, and disregard Congress’s
judgment on the matter, all without any substantial justification for the departures.
Idaho Code § 12-120(3) represents Idaho’s allocation of the “cost[s] of using the
court system to resolve disputes in specified types of commercial transactions.” Sanders
v. Lankford, 1 P.3d 823, 828 (Id. Ct. App. 2000), overruled in part on other grounds by
BECO Constr. Co. v. J-U-B Eng’rs, Inc., 184 P.3d 844 (Idaho 2008) (quoting DeWils
Interiors, Inv. v. Dines, 678 P.2d 80, 83 (Idaho 1984)). “In effect,” §12-120(3) is a
statutory “adjunct to the underlying commercial agreement between the parties.” Griggs
v. Nash, 775 P.2d 120, 127 (Idaho 1989). Plaintiffs’ federal RICO claims, however, were
not a dispute over the PSA or the commercial rights of the parties. RICO “serve[s]
independent federal purposes . . . .” United States v. Zemek, 634 F.2d 1159, 1164 n.4 (9th
Cir. 1980). It exists to combat organized crime and racketeering. See Sedima, S.P.R.L. v.
Imrex Co., Inc., 473 U.S. 479, 498 (1985); Russello v. United States, 464 U.S. 16, 26-29
(1983); see also Chang, 95 F.3d at 29 (holding that plaintiffs’ “RICO action did not arise
out of any one of the [underlying] contracts,” because “RICO’s pattern requirement could
be satisfied only because there were three land transactions”). Defendants’ position as
the prevailing party to the RICO claims does not implicate the judgment the Idaho
legislature made when it enacted § 12-120(3). This is all the more true when one

MEMORANDUM DECISION AND ORDER - 5

considers that Plaintiffs have refiled the majority of their state-law claims in state court,
and that court can make the proper fee award once those claims have been adjudicated.
Furthermore, the Supreme Court has made clear that “whether a court has subjectmatter jurisdiction over a claim is distinct from whether a court chooses to exercise that
jurisdiction.” Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639 (2009). “With
respect to supplemental jurisdiction in particular, a federal court has subject-matter
jurisdiction over specified state-law claims, which it may (or may not) choose to
exercise.” Id. Here, at Defendants’ request, the Court chose not to exercise its
jurisdiction of the state claims and dismissed them without prejudice. In this situation, §
12-120(3)’s mandate does not apply.
B.

The PSA
Defendants argue that they are entitled to attorney fees under the PSA, which

states, “The prevailing party shall recover its reasonable costs and attorney[] fees.” PSA,
dkt. 46-5, at 10. However, as Defendants concede, this statement “is specifically tied to
the requirement for mediation or binding arbitration.” Def.’s Memo., dkt. 46-1, at 9. The
parties chose not to follow the agreed upon method of dispute resolution, and the Court is
powerless to “revise the contract in order to change or make a better agreement.” McKay
v. Boise Project Bd. of Control, 111 P.3d 148, 156 (Idaho 2005) (internal quotation mark
and citation omitted). Therefore, Defendants are not entitled to an award for attorney
fees under the PSA.

MEMORANDUM DECISION AND ORDER - 6

III
Defendants also request costs in the amount of $6,879.96 for computerized legal
research and $4,242.99 for the production of IHSV’s client records pursuant to Fed. R.
Civ. P. 54(d)(1) and Local Rule 54.1(c)(8). Defendants argue that the cost of the
computerized research is recoverable as part of their attorney fees. Because Defendants
are not entitled to attorney fees, the Court will disallow this request.
The Court will also disallow the costs for copying and producing IHSV’s client
records. “In this district, the Court has chosen to limit costs for copies to those attached
to a document required to be filed and served.” Boise Tower Assoc., LLC v. Wash.
Capital Joint Master Trust Mortgage Income Fund, No. 03-141-S-MHW, 2007 WL
4355815, at *7 (D. Idaho Dec. 10, 2007). “‘The cost of reproducing . . . other routine
case papers is not taxable.’” Id. (quoting Dist. Id. Loc. Civ. R. 54.1(c)(5)). This includes
Defendants’ costs for reproducing IHSV’s client files as part of discovery.
ORDER
IT IS ORDERED THAT:
1.

Defendants’ Motion for Attorney Fees and Costs (dkt. 40) is DENIED as
moot.4

2.

Defendants’ Motion for Attorney Fees (dkt. 41) is DENIED as moot.

4

Because of a mix-up in the timing of the filing of the Judgment in this case, each defendant
filed two separate motions for attorney fees. After an informal discussion with the Court’s staff,
the parties and the Court agreed that the initial set of motions would be denied as moot, and the
Court would address the second set of motions, which are substantively the same as the first set
of motions.
MEMORANDUM DECISION AND ORDER - 7

3.

Defendants’ Motion for Attorney Fees (dkt. 45) is DENIED for the reasons
stated herein.

4.

Defendants’ Post-Judgment Motion for Attorneys’ Fees and Costs (dkt. 46)
is DENIED for the reasons stated herein.

DATED: February 9, 2015

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

MEMORANDUM DECISION AND ORDER - 8