Raymond v. Blair et al

Filing 226

ORDER granting 123 Motion for Attorney Fees; granting 125 Motion for Attorney Fees. IT IS FURTHER ORDERED that the entire record of this matter be unsealed. Signed by Judge Mary Ann Vial Lemmon on 4/4/12. (ala, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JOHN G. RAYMOND,
INDIVIDUALLY AND D/B/A
DISCIPLES CROSS, LLC

CIVIL ACTION

VERSUS

NO: 09-5507

CHARLES AND KIMBERLY BLAIR,
D/B/A AUTHORIZED-DCNAILBENDERS, ET AL.

SECTION: "S" (1)

ORDER AND REASONS
The court, having considered Defendants’ Motions for Attorneys’ Fees and Costs (Docs.
#123, 125), the record, the applicable law, the United States Magistrate Judge’s Report and
Recommendation (Doc. #196), and the objections to the Magistrate Judge’s Report and
Recommendation made by defendants and plaintiffs’ former counsel Scott Jones, hereby approves
the United States Magistrate Judge’s Report and Recommendation and adopts it as its opinion in this
matter.
IT IS ORDERED that Defendants’ Motions for Attorneys’ Fees and Costs (Docs. #123,
125) are GRANTED, and they are awarded $69,982.50 in attorneys’ fees and $1,588.56 in costs,
plus interest, against plaintiffs and their former attorney, Scott Jones, with Jones being required to
personally satisfy $64,182.89 of the award, plus interest. The balance of the award, plus interest,
is to be paid by plaintiffs, John G. Raymond, individually and d/b/a Disciples Cross, LLC.
IT IS FURTHER ORDERED that the entire record of this matter be unsealed.

BACKGROUND
This matter comes before the court on objections to the United States Magistrate Judge’s
Report and Recommendations regarding attorneys’ fees and costs (Doc. #196). On January 10,
2012, the Magistrate Judge recommended that the court award the prevailing defendants, Lora
Boozell, Charles Blair, Kimbre Blair, Don Johnson, Sharon Maness, Melodie Serflaten, Dawn
Hartwig, Eric Evans, Eric Louk, and Melissa Wittington, $69,982.50 in attorneys’ fees and
$1,588.56 in costs. The Magistrate Judge recommended that plaintiffs’ former counsel, Scott Jones,
pay $64,182.89,of the attorneys’ fees and costs, and that plaintiffs, John G. Raymond and his
company, Disciples Cross, LLC (“Disciples Cross”), satisfy the remainder. Jones and the prevailing
defendants filed objections to the Report and Recommendations.
Plaintiffs hold a patent and copyright on a jewelry design known as the disciples’ cross, a
cross constructed from bent nails and wire. Plaintiffs market and sell the crosses through the website
www.disciplescross.com.
Additionally, plaintiffs’ website offers individuals the opportunity to operate their own
home-based businesses making disciples’ crosses. To start the business, an individual purchases a
starter kit that contains a limited supply of nails and wire and an instructional video on how to make
the crosses. After the individual executes a Producer’s Agreement and submits a certain number of
crosses that meet Disciples Cross’ quality assurance standards, he or she becomes a “producer.” A
disciples’ cross producer may sell his or her crosses back to Disciples Cross for a small profit on
those crosses that pass the quality assurance test, or sell the crosses to others at whatever market

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price he or she can obtain, as long as he or she buys the materials from Disciples Cross and affixes
the Disciples Cross name tag to the crosses.
In July 2004, Charles Blair, purchased a starter kit from Disciples Cross and became a
producer. On July 13, 2004, he executed a Producer’s Agreement. Charles Blair purchased materials
from Disciples Cross until October 31, 2005. Additionally, he sold completed crosses back to
Disciples Cross in 2004. After becoming a producer, Charles Blair began operating the website
www.authorized-dc-nailbenders.com, on which he sells completed crosses and the supplies to make
disciples’ crosses. Kimbre Blair is not a disciples cross producer and does not have an ownership
interest in the website, but she does help her husband run his business.
In the summer of 2004, Hartwig, obtained a starter kit from Disciples Cross. She did not sign
and return the Producer’s Agreement. In September 2004, she began making crosses and sold them
at craft fairs and church events in Minnesota. She did not sell back any to Disciples Cross. Hartwig
purchased materials for the crosses from Charles Blair through his website.
In 2004, Boozell purchased a starter kit from Disciples Cross and signed a Producer’s
Agreement. She made crosses, sent them back to Disciples Cross for approval, sold some back to
Disciples Cross, and sold some on her own.
On August 12, 2009, plaintiffs filed this suit against the Blairs, Hartwig, Boozell, and others,
alleging that they “have sought to defraud and cheat Disciples Cross by producing crosses of their
own after they have learned the patented method of making the crosses from Disciples Cross and
marketing said crosses under different names” and/or by supplanting “Disciples Cross as the
suppliers of materials for the crosses.” Plaintiffs alleged that defendants communicated with each
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other via the Yahoo! chatboard identified as [e-mail], and conspired to violate
plaintiffs’ patent and copyright. Plaintiffs asserted claims against defendants under the Racketeer
Influenced and Corrupt Organizations Act (“RICO”) 18 U.S.C. §§ 1961-68, and alleged that
defendants are liable for defamation for advising “countless individuals on how to cheat Disciples
Cross, LLC by purchasing materials elsewhere.”
On August 14, 2009, the Clerk of Court issued the RICO Standing Order, requiring plaintiffs
to file a RICO case statement within 20 days of the date of the order.1 Plaintiffs never filed a RICO
case statement.
On January 4, 2010, and February 24, 2010, the Blairs and Hartwig, respectively, filed
motions to dismiss arguing that the court lacked personal jurisdiction over them, and that plaintiffs’
patent was invalid. After plaintiffs attempted to convert the motions to dismiss into motions for
summary judgment, the Blairs and Hartwig withdrew their motions as to the patent’s validity and
proceeded with their motions to dismiss based on a lack of personal jurisdiction. On May 17, 2010,
the court granted their motions to dismiss finding that they were not subject to personal jurisdiction
in Louisiana. Thereafter, plaintiffs filed a motion to reconsider, which the court denied finding that
plaintiffs were rehashing the arguments they made in opposition to the motions to dismiss.

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By standing order of this court dated June 3, 1987, a plaintiff who files a complaint containing
RICO claims must file a RICO case statement within 20 days of the entry of the RICO Standing Order in the
case. In the RICO case statement, the plaintiff must include the facts upon which he relied in initiating the
RICO complaint as the result of the “reasonable inquiry” that is required by Rule 11. Further, the plaintiff
must provide specific details, in a specific form, regarding defendants’ alleged conduct, the pattern of
racketeering activity, a description of the enterprise, and other items that are required to state a RICO claim.
The Untied States Court of Appeals for the Fifth Circuit has stated that the RICO case statement “is a useful,
sometimes indispensable, means to understand the nature of the claims asserted and how the allegations
satisfy the RICO statute.” Marriott Bros. v. Gage, 911 F.2d 1105, 1107 (5th Cir. 1990).

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On August 18, 2010, Boozell moved to dismiss the complaint arguing that: (1) plaintiffs
failed to state claims upon which relief could be granted; (2) plaintiffs ignored the RICO Standing
Order; (3) plaintiffs’ claims were time barred; and (4) the patent was invalid. On October 8, 2010,
the court granted Boozell’s motion as to all of plaintiffs’ claims except the copyright infringement
claim. Specifically, the court found that: (1) the patent was invalid because the crosses had been for
sale for more than a year before the patent application, as admitted by plaintiffs’ on their website;
(2) plaintiffs failed to file a RICO case statement; (3) plaintiffs did not plead fraud with particularity;
(4) the contracts demonstrated that the parties anticipated that defendants would purchase the
materials from sources other than plaintiffs; and (6) plaintiffs did not properly allege a claim for
defamation against Boozell.
On October 20, 2010, Boozell’s counsel sent a letter to plaintiffs’ counsel pursuant to Rule
11(c)(2) of the Federal Rules of Civil Procedure demanding that he voluntarily dismiss with
prejudice all of the remaining claims against the remaining defendants within 21 days. On
December 1, 2010, a stipulation and consent of voluntary dismissal of all remaining claims was
entered, and all claims were dismissed with prejudice.
On January 4, 2011, Boozell filed a motion for attorneys’ fees and cost (Doc. #123). The
other defendants filed a similar motion on January 6, 2011 (Doc. #125). On March 25, 2011, Jones
moved to withdraw as plaintiffs’ counsel, and moved to stay the proceedings while plaintiffs sought
other counsel. The motions for attorneys’ fees and costs and the motion to stay were referred to the
Magistrate Judge. Jones’ motion was denied.

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On January 10, 2012, the Magistrate Judge issued a Report and Recommendation in which
she recommends that the District Judge award defendants $69,982.50 in attorneys’ fees and
$1,588.56 in costs, with Jones personally satisfying $64,182.89 of the award. The Magistrate Judge
found that plaintiffs and Jones knew or should have known that the patent upon which this litigation
was based was invalid, rendering the patent infringement claim and the derivative claims frivolous.
Then, she applied the lodestar method to calculate the reasonable attorneys’ fees and costs. She
reduced the fees requested to arrive at the recommended amount.
Jones argues that defendants are not entitled to attorneys’ fees because the litigation was not
vexatious. He argues that he relied on the presumed validity of an issued patent in filing and
pursuing the case. He contends that he did not have an affirmative duty to research his client or the
claims made in connection with the patent. Jones also argues that Raymond told him that the public
statements on the website regarding the sale of the crosses in the early 1990's were untrue, but he
was doubtful of this “admission” and did not include it in his pleadings. Alternatively, he argues
that defendants’ award of attorneys’ fees and costs should be limited to those fees and costs that
directly relate to the patent issue, which he contends are $9,402.50 in attorneys’ fees and “a fraction
of the $1,205.74" in Westlaw charges.
Defendants accept the Magistrate Judge’s calculation of the attorneys’ fees and costs. They
objected to the Report and Recommendation, seeking interest on the award and asking that the entire
record in this matter be unsealed. Portions of the record regarding Raymond’s alleged admission
that the statements on his website regarding the date on which he began selling the crosses were

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false were sealed to protect plaintiffs. Defendants argue that the seal interferes with the public’s right
to knowledge of the court record, and aids Raymond in perpetuating a fraud on the public.
Defendants argue that the plaintiffs have waived their right to object to the Report and
Recommendations by failing to file timely objections. They also argue that Jones’ objections should
be overruled because there is clear and convincing evidence that plaintiffs and Jones knew or should
have known that the patent was invalid rendering the litigation vexatious. In a document that
plaintiffs and Jones possessed titled “U.S. Patent Assertion of Validation and Ownership,” Troy
Vinson, the original patent holder, stated that he began selling the crosses in 1994. Vinson filed the
patent application more than one year later in 1997. Raymond relied on these statements in applying
for a copyright. Further, defendants argue that Vinson’s statements demonstrate that he perpetrated
a fraud on the patent office by failing to disclose that he had been selling the crosses for three years
prior to filing the patent application.2 Defendants argue that they are entitled to attorneys’ fees and
costs related to defending against all of plaintiffs’ claims because the claims were all based on an
invalid patent.

2

Pursuant to 35 U.S.C. § 102(b), a person is not entitled to a patent for an invention if it was in
public use or on sale in the United States for more than one year prior to the date of the patent application.
Also, Attorneys’ fees may be awarded under 35 U.S.C. § 285 if the patent involved in the litigation was
secured by inequitable conduct or fraud.

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ANALYSIS
1.

Awarding Attorneys Fees’ and Costs
Pursuant to 35 U.S.C. § 285, “[t]he court in exceptional cases may award reasonably attorney

fees to the prevailing party.” In Digeo, Inc. v. Audible, Inc., 505 F.3d 1362, 1366-67 (Fed. Cir.
2007), the United States Court of Appeals for the Federal Circuit explained that:
The determination of whether a case is exceptional and, thus, eligible
for and warranting an award of attorney fees under § 285 is a twostep process in which the district court must (1) determine whether
there is clear and convincing evidence that the case is exceptional, a
factual determination reviewed for clear error, and (2) if so, then
determine in its discretion whether an award of attorney fees is
justified . . .
An exceptional case is one in which “there has been some material inappropriate conduct related to
the matter in litigation, such as willful infringement, fraud or inequitable conduct in procuring the
patent, misconduct during litigation, vexatious or unjustified litigation, conduct the violates Fed. R.
Civ. P. 11, or like infractions.” Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378,
1381 (Fed. Cir. 2005). If there is no misconduct during the patent prosecution or the litigation,
sanctions may be imposed against a patent plaintiff “only if both (1) the litigation is brought in
subjective bad faith, and (2) the litigation is objectively baseless.” iLOR, LLC v. Google, Inc., 631
F.3d 1372, 1377 (Fed. Cir. 2011) (quoting Brooks Furniture, 393 F.3d at 1381). To recover
attorneys’ fees the defendant must prove by clear and convincing evidence that the plaintiff’s case
had no objective foundation, and the plaintiff actually knew it. Id. (citing Wedgetail Ltd. v.
Huddleston Delux, Inc., 576 F.3d 1302, 1304 (Fed. Cir. 2009)). There is a “presumption that the
assertion of infringement of a duly granted patent is made in good faith.” Brooks Furniture, 393 F.3d
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at 1382 (citing Springs Window Fashions LP v. Novo Indus., L.P., 323 F.3d 989, 999 (Fed Cir.
2003)).
Further, 28 U.S.C. § 1927 provides that any attorney “who so multiplies the proceedings in
any case unreasonably and vexatiously may be required by the court to satisfy personally the excess
costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.”
All of plaintiffs’ claims in this litigation arise out of the patent. Raymond and Jones knew
or should have known from the inception of this litigation that the patent was invalid. Raymond and
Vinson both made public statements that demonstrate that the crosses were in commerce for more
than a year prior to Vinson’s patent application. Also, Vinson stated in an affidavit that he used the
crosses in commerce three years prior to applying for a patent, and Raymond used that affidavit to
secure copyright protection. Jones was in possession of these documents that clearly demonstrated
the patent’s invalidity. Further, once the Blair defendants raised the validity of the patent in their
motion to dismiss, Raymond and Jones were on notice that there were issues regarding patent’s
validity and should have more closely scrutinized all of their claims before continuing the litigation
against all defendants. Although he was on notice that there were issues with the patent’s validity,
Jones continued aggressively to pursue the case by filing multiple pleadings pertaining to claims
that were predicated upon the patent’s validity. Because Raymond and Jones knew or should have
known that the patent was invalid, the litigation was brought and continued in bad faith, making
them liable for attorneys’ fees and costs pursuant to the patent act. Additionally, Jones unreasonably
and vexatiously multiplied the proceedings, making him personally liable for reasonable attorneys’
fees and costs incurred by defendants because of his conduct pursuant to 28 U.S.C. §1927.
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Therefore, the court accepts the Magistrate Judge’s recommendation that plaintiffs and Jones pay
reasonable attorneys’ fees and costs to defendants.
2.

Lodestar Method
Determination of the reasonableness of defendants' fee applications is a two-step process that

begins with determination of the “lodestar” amount. A lodestar is calculated by multiplying the
number of hours reasonably expended by an appropriate hourly rate in the community for such work.
After making this calculation, the court may decrease or enhance the lodestar based on the relative
weights of the twelve factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714,
717-19 (5th Cir. 1974). The lodestar may not be adjusted due to a Johnson factor, however, if the
creation of the lodestar award already took that factor into account. Such reconsideration is
impermissible double-counting. Heidtman v. County of El Paso, 171 F.3d 1038, 1043 (5th Cir.
1999); Shipes v. Trinity Indus., 987 F.2d 311, 319-20 (5th Cir.1993).
The Johnson factors are: (1) the time and labor required; (2) the novelty and difficulty of the
issues; (3) the skill required to perform the legal services properly; (4) the preclusion of other
employment by the attorney; (5) the customary fee; (6) whether the fee is fixed or contingent; (7)
the time limitations imposed by the client or circumstances; (8) the amount involved and results
obtained; (9) the experience, reputation, and ability of the attorneys; (10) the undesirability of the
case; (11) the nature and length of the professional relationship with the client; and (12) the award
in similar cases. Johnson, 488 F.2d at 717-19.
Of the aforesaid Johnson factors, the court should give special heed to the time and labor
involved, the customary fee, the amount involved and the result obtained, and the experience,
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reputation and ability of counsel. Migis v. Pearle Vision, Inc., 135 F.3d 1041, 1047 (5th Cir.1998).
Three of the Johnson factors, complexity of the issues, results obtained and preclusion of other
employment, are generally fully reflected and subsumed in the lodestar amount. Heidtman, 171 F.3d
at 1043; Shipes, 987 F.2d at 319-22 & n. 9). Additionally, since the Johnson decision issued, the
Supreme Court of the United States has barred any use of the sixth factor (i.e., whether the fee is
fixed or contingent). Walker v. United States Dep't of Housing & Urban Dev., 99 F .3d 761, 772
(5th Cir.1996) (citing City of Burlington v. Dague, 112 S.Ct. 2638 (1992) and Shipes, 987 F.2d at
323).
The lodestar is presumptively reasonable and should be modified only in exceptional cases.
Watkins v. Fordice, 7 F.3d 453, 459 (5th Cir.1993); Heidtman, 171 F.3d at 1043. Although the party
seeking attorneys’ fees bears the initial burden of submitting adequate documentation of the hours
reasonably expended and of the attorneys’ qualifications and skills, the party seeking reduction of
the lodestar bears the burden of showing that a reduction is warranted. Hensley v. Eckerhart, 103
S.Ct. 1933, 1939 (1983); Wegner v. Standard Ins. Co., 129 F.3d 814, 822 (5th Cir.1997); Louisiana
Power & Light Co. v. Kellstrom, 50 F.3d 319, 329 (5th Cir.1995).
The Magistrate Judge properly applied the loadstar method in this case. She determined the
reasonable amount of time the attorneys worked, applied billing judgment, and used a reasonable
hourly rate. Therefore, the court accepts the Magistrate Judge’s recommendation regarding the
amount of attorneys fees and costs, and awards $69,982.50 in attorneys’ fees and $1,588.56 in costs
to defendants from plaintiffs and their former attorney, Scott Jones, with Jones personally satisfying
$64,182.89 of the award.
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3.

Interest
Under 28 U.S.C. § 1961(a), “[i]nterest shall be allowed on any money judgment in a civil

case recovered in a district court.” The phrase “any money judgment” includes an award of
attorneys’ fees. Mathis v. Spears, 857 F.2d 749, 760 (Fed. Cir. 1988). This provision is intended
to “deter[] use of the appellate process by the judgment debtor solely as a means of prolonging its
free use of money owed the judgment creditor.” Id. Interest on an award of attorneys’ fees runs from
the date of the judgment establishing the award, not the date of judgment establishing its quantum.
Id. (citing Cooper Liquor, Inc. v. Adolph Coors Co., 701 F.2d 542, 544-45 (5th Cir. 1983) (en
banc)). Therefore, defendants are entitled to interest on their award of attorneys’ fees and costs
running from the date of this order.
4.

Unsealing the Record
Defendants contend that the entire record should be unsealed. Neither Jones nor plaintiffs

objected to the request. Therefore, the record shall be unsealed.
CONCLUSION
IT IS ORDERED that Defendants’ Motions for Attorneys’ Fees and Costs (Docs. #123,
125) are GRANTED, and they are awarded $69,982.50 in attorneys’ fees and $1,588.56 in costs,
plus interest, against plaintiffs and their former attorney, Scott Jones, with Jones being required to
personally satisfy $64,182.89 of the award, plus interest. The balance of the award, plus interest,
is to be paid by plaintiffs, John G. Raymond, individually and d/b/a Disciples Cross, LLC.
IT IS FURTHER ORDERED that the entire record of this matter be unsealed.

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4th
New Orleans, Louisiana, this _____ day of April, 2012.

____________________________________
MARY ANN VIAL LEMMON
UNITED STATES DISTRICT JUDGE

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