Intellect Wireless, Inc. v. HTC Corporation et al

Filing 374

Opinion and Order: Defendants' motion for judgment 363 is granted in part and denied in part. The Clerk of the Court is directed to enter judgment in favor of defendants HTC Corporation and HTC America, Inc. and against plaintiff Intellect W ireless, Inc., and attorneys Raymond Niro, Paul Vickrey, Paul Gibbons, and David Mahalek jointly and severally in the amount of $4,090,030.53 representing attorney fees, costs, expenses, and prejudgment interest on the costs and expenses. Signed by the Honorable William T. Hart on 7/21/2015:Mailed notice(clw, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

INTELLECT WIRELESS, INC.,
Plaintiff,
v.
HTC CORPORATION and HTC
AMERICA, INC.,
Defendants.

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No. 09 C 2945

OPINION AND ORDER
This case is before the court for a final determination as to the amount of
fees and costs plaintiff Intellect Wireless, Inc. ("IW") and its former attorneys
(collectively "Niro") must pay to defendants HTC Corporation and HTC America,
Inc. (collectively "HTC" or "defendants") pursuant to, respectively, 35 U.S.C.
§ 285 and 28 U.S.C. §1927. See Intellect Wireless, Inc. v. HTC Corp., 2015 WL
136142 (N.D. Ill. Jan. 8, 2015) ("January Fee Ruling"). In the January Fee
Ruling, it was determined that the liability of IW and Niro was joint and several
and the amount due is the same under both fee statutes. Various rulings were
made regarding the calculation of the amount of fees and costs. While no specific
amount was determined, the parties were directed to apply the rulings to the

claimed amounts and to attempt to agree on the specific total that would result.
While the parties were unable to fully agree as to the appropriate application, they
did substantially narrow the dispute to less than $400,000. Defendants now
contend the amount to be awarded should be $4,098,286.40 while IW and Niro
both contend the amount should be $3,700,000.00.
For the first time, defendants now seek to hold Daniel Henderson, the
owner and principal of IW, personally liable for the fee award that will be entered
against IW. Relying on Texas law, which is where IW is incorporated, defendants
seek to pierce the corporate veil of IW. Citing Nelson v. Adams USA, Inc.,
529 U.S. 460 (2000), Henderson and IW contend it would violate Henderson's due
process rights to now add him as a party and hold him liable. On the other hand,
Niro agrees with defendants that the judgment for a fee award should be entered
against Henderson.
Henderson's individual liability will be addressed first. In their motion
to hold IW liable for fees based on this being an exceptional case, defendants
contended that IW (and Niro) were liable; it did not seek a finding that Henderson
himself was personally liable. See Order dated June 12, 2014 [299]; Defs.
Renewed Motion [232]; Defs. Reply [248]. See also Defs. Motion [329] at 1;

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Defs. Original Fee Motion [226] at 15. No written request to hold Henderson
personally liable was raised until the latest briefing on fees. See Defs. Motion for
Judgment [363] (April 30, 2015). Contrary to Henderson's contention, there is no
due process problem because, unlike the situation in Nelson, this court would not
enter judgment against him without first giving him adequate opportunity to
respond. Henderson was provided the opportunity to respond to defendants'
Motion for Judgment, but only argued that the issue of piercing the corporate veil
should not be addressed; Henderson did not address the merits of whether the veil
should be pierced. See Pls. Response [369].
In any event, for other reasons, this court declines to presently consider
whether Henderson should be held personally liable. This case was filed in
May 2009. HTC first filed a countercomplaint in August 2009. Henderson was
not named as a counterdefendant in the initial countercomplaint nor any
amendments thereto. On September 6, 2012, judgment was entered in HTC's favor
based on a finding that IW, through Henderson, had engaged in inequitable
conduct. See Intellect Wireless, Inc. v. HTC Corp., 910 F. Supp. 2d 1056
(N.D. Ill. 2012). HTC promptly moved for fees against IW, see Defs. Motion
[226], but briefing was held in abeyance pending resolution of IW's appeal of the

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dismissal of the case, see Order dated Nov. 29, 2012 [228]. In October 2013, the
dismissal was affirmed, Intellect Wireless, Inc. v. HTC Corp., 732 F.3d 1339
(Fed. Cir. 2013), and the mandate was returned in November. In November 2013,
HTC filed a renewed motion for a fee award against IW and Niro. An award
against Henderson was not requested. Further discovery was taken and, after IW
conceded liability pursuant to § 285, an amended motion [329] was filed and
briefed regarding Niro's liability for fees as well as the specific amount of a fee
award. In 2015, the January Fee Ruling was issued, finding Niro liable pursuant
to § 1927 and the parties were directed to attempt to settle remaining issues or at
least attempt to agree on the appropriate amounts based on the January Fee Ruling.
Not being able to come to an agreement, on April 30, 2015, HTC filed the
presently pending fee motion in which, for the first time, a personal judgment
against Henderson is sought. At this point, nearly three years after a judgment
dismissing the case was entered, the court declines to consider adding an
additional party to the case. Moreover, to the extent this is properly characterized
as a post-judgment, ancillary proceeding seeking to pierce the corporate veil, that
is an inappropriate proceeding on which to base supplemental jurisdiction. See
Peacock v. Thomas, 516 U.S. 349 (1996); Cygnus Telecomm. Tech., LLC v.

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Totalaxcess.com, Inc., 345 F.3d 1372, 1377-79 (Fed. Cir. 2003); Abbott Labs. v.
CVS Pharmacy, Inc., 290 F.3d 854, 858-59 (7th Cir. 2002); Nat'l Mar. Servs.,
Inc. v. Straub, 776 F.3d 783, 786-88 (11th Cir. 2015). The fee award claim
against Henderson personally is denied without prejudice as to any other
proceedings.
Without citing any authority, see Niro Br. [370] at 5-6, Niro contends1
HTC is not entitled to any fees incurred after September 2014 because that time
was devoted to pursuing the fee award. The January Fee Ruling, 2015 WL
136142 at *5, indicated in passing that fees for pursuing fees are permitted. Such
fees are awardable under both § 285, Cent. Soya Co. v. Geo. A. Hormel & Co.,
723 F.2d 1573, 1578 (Fed. Cir. 1983), and § 1927, Harter v. Iowa Grain Co.,
1997 WL 126842 *1 (N.D. Ill. March 18, 1997). When a fee provision permits
fees for pursuing fees, this also includes time reasonably expended on successful
or unsuccessful attempts to negotiate the amount of fees. Mich. v. U.S. E.P.A.,
254 F.3d 1087, 1096 (D.C. Cir. 2001); Salazar v. D.C., 991 F. Supp. 2d 39, 58
(D.D.C. 2014); Westendorp v. Indep. Sch. Dist. No. 273 (Edina, Minn.), 131 F.

1

As to the appropriate amount of fees, IW joins in Niro's contentions.
IW did not raise any separate arguments of its own regarding the amount of fees.

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Supp. 2d 1121, 1125, 1127 (D. Minn. 2000). Fees will be awarded for time
expended through the conclusion of the fee dispute. Since Niro raises no specific
objection to fees incurred in the post-September time period, the amount requested
by HTC for that time period will be awarded.
As to the June through September 2014 time period, Niro contends that
Mueller's hours should be reduced by 19.05 and S. Korniczky's by .5. See Niro
Exh. E at 3 [370-5, p. 4]. Niro, however, does not identify the dates for those
hours. Since Niro's objection lacks specificity, no reduction will be made to the
fees presently requested by HTC.
This leaves the objections to costs and expenses which are set forth in
Niro Exhibits E [370-5 p. 4-6] and F [370-6]. Both taxable costs and nontaxable
expenses are included in HTC's Exhibit 3 [365-3]. The total amount is
$501,520.96.2 Nothing is double-billed. The double billing objections of Niro are
denied.
As to some of the objections now raised by Niro, HTC contends that they
were not previously raised. To the extent any purportedly newly raised objection
necessitates only a response that HTC can now provide, the objections will not be

2

In their reply, defendants reduce the amount requested by $600.00.

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treated as waived. However, newly raised contentions that supporting receipts are
not provided will not now be considered since that would require providing
additional submissions, not just an explanation or argument. Also, when the court
set forth applicable principles in the January Fee Ruling, those principles were to
be applied consistently, not solely to items specifically mentioned in that ruling.
Thus, all premium car services should have been eliminated, not just those for the
Smithsonian witnesses. Expenses will be reduced by car service items listed on
page 6 of Niro's Exhibit F which total $2,441.37.3
It is unclear why hotel expenses were paid for Smithsonian employees on
dates other than when brought here for trial. But the same rule for reducing hotel
expenses should be applied. HTC's claimed amount will be reduced by $343.18.
HTC's representations that no first class airfare is included other than the
$600 they agree to remove are accepted. No further reduction will be made to
airfare expenses.
The expenses for translating documents are permitted.

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HTC states that it should instead be allowed the equivalent taxi fare,
but it fails to provide those amounts and final resolution of the award will not be
delayed for such submission.

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It was previously held, that the time billed for attorney George Kanabe at
trial would not be allowed. January Fee Ruling, 2015 WL 136142 at *8.
$5,223.56 in related expenses also will not be allowed.
$7,812.79 listed on page 7-8 of Niro Exhibit F have either already been
eliminated or are proper. No further reduction will be made.
Applying the foregoing rulings, HTC's award for costs and expenses is
$493,512.85. Correspondingly, the appropriate prejudgment interest calculated
through June 30, 2015 would be $56,957.64. Since the judgment will be entered
in mid-July, another half -month of interest at 3.25% per annum will be added,
which is an additional $745.43.
HTC will be awarded $3,538,814.61 in fees and $551,215.92 in costs
and expenses (including prejudgment interest) for a total of $4,090,030.53.
IT IS THEREFORE ORDERED that defendants' motion for judgment
[363] is granted in part and denied in part. The Clerk of the Court is directed to
enter judgment in favor of defendants HTC Corporation and HTC America, Inc.
and against plaintiff Intellect Wireless, Inc., and attorneys Raymond Niro, Paul
Vickrey, Paul Gibbons, and David Mahalek jointly and severally in the amount of

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$4,090,030.53 representing attorney fees, costs, expenses, and prejudgment
interest on the costs and expenses.
ENTER:

UNITED STATES DISTRICT JUDGE

DATED: JULY 21, 2015

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