Stryker Corporation et al v. Prickett et al
Filing
186
MEMORANDUM OPINION Re Petition for Fees and Costs 177 and Objections to Statement Re Costs 181 ; signed by Magistrate Judge Phillip J. Green (Green, Phillip)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
STRYKER CORPORATION, et al.,
Plaintiff,
Hon. Robert Holmes Bell
v.
Case No. 1:14-cv-01000-RHB
WILLIAM PRICKETT, et al.,
Defendants.
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MEMORANDUM OPINION
This matter is before the Court on plaintiff Stryker Corporation’s (“Stryker”)
Petition for Attorneys’ Fees and Costs (ECF No. 177), filed pursuant to the Court’s
order of civil contempt against defendants William Prickett and Physician’s Choice
Medical Repair, Inc. (“PCMR”) (ECF No. 172). Stryker seeks $32,357.60 in fees and
$3,769.24 in costs associated with its motion for contempt and the related third-party
discovery. (ECF No. 177, PageID.2380). Defendants have not responded to the
petition.
Also before the Court is defendants’ Statement Regarding Costs. (ECF No. 180).
The Court ordered defendants to provide the actual costs incurred in generating
revenue from certain hospitals, which was obtained in violation of the preliminary
injunction, for the purpose of determining the amount of profits to be disgorged. (ECF
No. 172, PageID.1986).
Defendants claim $46,205.12 in costs (ECF No. 180,
PageID.2437), and they assert that invoices reflecting a total of $58,193.76 in revenue
should be exempt from disgorgement, as they were “not wholly attributable to the
provision of Stryker-related services, repairs, or parts.” (ECF No. 180-1, PageID.2439).
Stryker objects to the statement of costs, arguing that defendants failed to
independently verify the costs claimed, thus failing to meet their burden of proof.
(ECF No. 181, PageID.2441-42). Stryker also objects to defendants’ assertion that
some of the invoices should be exempt from disgorgement. (Id., PageID.2442-43).
Having considered Stryker’s petition for fees and costs, including its supporting
materials, and in light of defendants’ failure to object, Stryker’s petition will be granted
in full.
For the reasons articulated herein, Stryker’s objections to defendants’
statement of costs will be sustained.
Procedural and Factual Background
On June 17, 2016, Stryker filed a motion for contempt against defendants
William Prickett and PCMR. (ECF No. 107). Stryker accused defendants of violating
the Court’s October 22, 2014, preliminary injunction (ECF No. 24), as well as the
Court’s December 18, 2014, order compelling defendants to produce certain discovery
(ECF No. 40). (Pltfs’ Br. at 1, ECF No. 108, PageID.656). Specifically, Stryker
complained that defendant William Prickett violated the preliminary injunction by
continuing to service Stryker patient handling equipment at Nash General Hospital,
Wilson Medical Center, and Atlantic Gastroenterology.
(Id., PageID.659-60; see
Invoices at ECF No. 108-5, 108-6, and 108-7, respectively). Defendants opposed the
motion. (See ECF No. 144).
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The undersigned judicial officer conducted a lengthy hearing on July 11, 2016.
(Minutes, ECF No. 148). On July 22, 2016, the undersigned entered a Report and
Recommendation (“R&R”) certifying facts in favor of civil contempt, and recommending
that the Honorable Robert Holmes Bell adjudge defendants to be in civil contempt.
(ECF No. 152). The undersigned also recommended that Judge Bell consider imposing
certain enumerated sanctions. (Id., PageID.1326-27).
On August 18, 2016, Judge Bell conducted a hearing on Stryker’s motion for
contempt. (Minutes, ECF No. 171). During this hearing, defendants confirmed that
they had no objection to the R&R or to the sanctions recommended therein. (See
Aug. 19, 2016, Order, ECF No. 172, PageID.1985). After reviewing the R&R de novo,
as required by 28 U.S.C. § 636, Judge Bell adopted it as the findings and conclusions
of the Court. (Id., PageID.1986).
Judge Bell ordered, among other things, that Stryker file a petition “for
reasonable costs, including attorneys’ fees, associated with the motion for contempt
(ECF No. 107) and the third-party discovery, including Rule 30(b)(6) depositions,
relating to the invoices obtained from Nash General Hospital, Wilson Medical Center,
and Atlantic Gastroenterology.” (ECF No. 172, PageID.1987). Judge Bell advised
defendants that failure to file a timely response will result in a waiver of the issues
raised in the petition. (Id.). Defendants have filed no response.
Judge Bell also ordered, as a sanction, that defendants disgorge profits they
obtained from the three hospitals in question (ECF No. 172, PageID.1986), which are
reflected in invoices contained in Exhibits E, F, and G to Stryker’s contempt motion
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(ECF No. 108-5, 108-6, and 108-7, respectively). The profits are to be determined by
subtracting defendants’ “actual costs,” as proven by defendants, from the amounts
billed in the invoices. (See id.).
Discussion
A.
Stryker’s Petition for Attorneys’ Fees and Costs
Under the Federal Rules of Civil Procedure, the Court has discretion to impose
a number of sanctions for violations of its discovery orders. See FED. R. CIV. P.
37(b)(2)(A). Among those sanctions are “treating as contempt of court the failure to
obey any [such] order.” FED. R. CIV. P. 37(b)(2)(A)(vii). In addition, “the court must
order the disobedient party . . . to pay the reasonable expenses, including attorney’s
fees, caused by the failure, unless the failure was substantially justified or other
circumstances make an award of expenses unjust.” FED. R. CIV. P. 37(b)(2)(C). A
finding of civil contempt for violating the Court’s preliminary injunction provides an
independent basis for awarding fees and costs resulting from the violation. See TWM
Mfg. Co. v. Dura Corp., 722 F.2d 1261, 1273 (6th Cir. 1983) (“The award of attorney’s
fees and expenses to a successful movant may be appropriate in a civil contempt
proceeding.”).
The Court having already found a sufficient basis for awarding fees and costs,
the only remaining issue is the reasonableness of the amount sought. The Supreme
Court has explained that “[t]he most useful starting point for determining the amount
of a reasonable fee is the number of hours reasonably expended on the litigation
multiplied by a reasonable hourly rate.” Hensley v. Eckerhart, 461 U.S. 424, 433
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(1983). This is the “lodestar method” of calculation. See Perdue v. Kenny A., 559 U.S.
542, 546 (2010); Adcock-Ladd v. Sec’y of Treasury, 227 F.3d 343, 349 (6th Cir. 2000);
Isabel v. City of Memphis, 404 F.3d 404, 415 (6th Cir. 2005).1
The Sixth Circuit has identified a dozen factors to assist trial courts in
determining the reasonableness of an hourly rate, as well as the number of hours
worked:
(1) time and labor required; (2) the novelty and difficulty of the questions
presented; (3) the skill needed to perform the legal service properly;
(4) the preclusion of employment by the attorney due to acceptance of the
case; (5) the customary fee; (6) whether the fee is fixed or contingent;
(7) time and limitations imposed by the client or the circumstances;
(8) the amount involved and the 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) awards in “similar cases.”
Isabel, 404 F.3d at 415. This Court has considered each of these factors in analyzing
the reasonableness of Stryker’s fee petition. The party requesting attorney’s fees bears
the burden of establishing that the number of hours and the hourly rate are
reasonable. Hensley, 461 U.S. at 437.
1.
The Reasonableness of the Hourly Rates Sought
The Court begins this analysis by determining a reasonable hourly rate.
“Ordinarily, courts look to ‘[rates] prevailing in the community for similar services by
lawyers of reasonably comparable skill, experience, and reputation.’” Hadix v. Johnson,
The Sixth Circuit “rel[ies] on precedents involving attorney fees without
regard to whether they involved Title VII or some other federal statute.” Isabel v. City
of Memphis, 404 F.3d 404, 415 (6th Cir. 2005).
1
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65 F.3d 532, 536 (6th Cir. 1995) (quoting Blum v. Stenson, 465 U.S. 886, 896 n.11
(1984)). There is a presumption in favor of the community market rates. See, e.g.,
Blum, 465 U.S. at 895 (“‘[R]easonable fees’ . . . are to be calculated according to the
prevailing market rates in the relevant community, regardless of whether plaintiff is
represented by private or nonprofit counsel.”); Adcock-Ladd, 227 F.3d at 350 (“A trial
court, in calculating the ‘reasonable hourly rate’ component of the lodestar
computation, should initially assess the ‘prevailing market rate in the relevant
community.’” (quoting Blum, 465 U.S. at 895)) (emphasis in Adcock-Ladd); Coulter v.
Tennessee, 805 F.2d 146, 149 (6th Cir. 1986) (“We . . . apply the principle that hourly
rates for fee awards should not exceed the market rates necessary to encourage
competent lawyers to undertake the representation in question.”). The so-called
“community market rule” has the “principle virtue of being the easiest way to cope with
the ‘inherently problematic’ task of ascertaining a reasonable fee in a situation where
‘wide variations in skill and reputation render the usual laws of supply and demand
inapplicable[.]’” Hadix, 65 F.3d at 536 (quoting Plyler v. Evatt, 902 F.2d 273, 277
(4th Cir. 1990)).
Having determined that the community market rule applies here, the next step
is determining the prevailing market rate in the Grand Rapids, Michigan, area. In
order to determine the local market rate, the court should rely on a combination of its
own expertise and judgment. Garber v. Shiner Enterprises, Inc., 2007 WL 4557857, *1
(W.D. Mich. Dec. 21, 2007) (citing United States ex rel. Educ. Career Dev., Inc. v. Cent.
Fla. Reg’l Workforce Dev. Bd., Inc., 2007 WL 1601747, *6 (M.D. Fla. June 1, 2007)).
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The court may consider proof of rates charged in the community under similar
circumstances, as well as opinion evidence of reasonable rates. See Garber, 2007 WL
4557857 at *1 (citing Educ. Career Dev., Inc., 2007 WL 1601747 at *3). Other relevant
sources include the attorney’s actual billing rate and fee awards from prior cases. See
Payton v. New Century Mortgage Corp., 2004 WL 524693, at *2 (N.D. Ill. Mar.11, 2004).
Stryker seeks reimbursement of its attorneys’ fees for two of its counsel at
hourly rates of $495 and $334, respectively. (ECF No. 177, PageID.2377). Stryker
cites to a number Western District of Michigan cases approving fee rates between $375
and $450. (See id. (citing Duran v. Sara Lee Corp., 2014 WL 12279518, *2 (W.D. Mich.
March 5, 2014) (awarding $450 per hour); Waldo v. Consumers Energy Co., 2012 U.S.
Dist. LEXIS 45058 (W.D. Mich. March 30, 2012) (awarding $400 per hour); Huizinga
v. Genzink Steel Supply & Welding Co., 984 F. Supp. 2d 741 (W.D. Mich. 2013)
(awarding $375 per hour); In re Stover, 439 B.R. 683 (W.D. Mich. 2010) (awarding $450
per hour to lead counsel); Worthing v Reliance Std. Life Ins. Co., 2009 U.S. Dist. LEXIS
52296 (E.D. Mich. 2009) (awarding $400 per hour); Streamline Packaging Sys. v.
Vinton Packaging Grp., Inc., 2008 U.S. Dist. LEXIS 5523, at *6 (W.D. Mich. Jan. 25,
2008) (awarding $390 per hour to lead counsel); Crosby v. Bowater Inc. Retirement
Plan, 262 F. Supp. 2d 804 (2003) (vacated on other grounds) (awarding $400 per
hour)).2
But see Stryker Corp. v. Ridgeway, 2015 WL 3969816, *5 (W.D. Mich.
June 30, 2015) (finding a $300 hourly rate sufficient to compensate Stryker for a
relatively simple, straightforward motion to compel).
2
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The $495 hourly rate Stryker seeks for its lead counsel, Michael Wexler, is at the
highest end of that obtained by attorneys in the Grand Rapids area. The 2014 edition
of the State Bar of Michigan’s Economics of Law Practice in Michigan reports that the
2013 billing rate for Grand Rapids attorneys in the 95th percentile was $510. See
https://www.michbar.org/file/pmrc/articles/0000151.pdf (last accessed December 4,
2016). Mr. Wexler has sixteen years’ experience representing Stryker in non-compete
and trade secret litigation, having served the company as lead counsel in a number of
such matters. (Wexler Decl. at ¶¶ 4-5, ECF No. 177-1, PageID.2384). The discounted
billing rate he charges Stryker is $631. (See id. at ¶ 7). In light of Mr. Wexler’s
recognized expertise, and given that defendants have not challenged the rate sought,
the Court will use the proposed $495 hourly rate for his work in this matter. Based on
a review of Robin Marsh’s declaration (ECF No. 177-2), and the lack of any objection,
the Court finds that her $334 hourly rate is reasonable.
2.
The Reasonableness of the Hours Expended
The next inquiry addresses the number of hours claimed. In order to accept the
claimed time expenditures, “the documentation offered in support of the hours charged
must be of sufficient detail and probative value to enable the court to determine with
a high degree of certainty that such hours were actually and reasonably expended in
the prosecution of the litigation.” United Slate, Tile & Composition Roofers Ass’n Local
307 v. G. & M. Roofing & Sheet Metal Co., 732 F.2d 495, 502 n.2 (6th Cir. 1984).
The Court has considered the declarations of attorneys Michael Wexler (ECF
No. 177-1) and Robyn Marsh (ECF No. 177-2), and it has reviewed the billing records
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submitted in support of the fee petition (ECF No. 177-1, PageID.2387-2412). The total
attorney time sought for bringing the contempt motion, conducting the third-party
discovery, and in preparing the petition is 82.9 hours. (ECF No. 177, PageID.2378).
This breaks down to 29.0 hours for Mr. Wexler and 53.9 hours for Ms. Marsh. (Id.).
The time expended is reasonable to the purposes for which it was expended.
Accordingly, and in light of the absence of any objection from defendants, the Court
will compensate Stryker for the total time billed.
3.
The Reasonableness of the Costs
Stryker seeks to recover $3,769.24 in costs its attorneys incurred for airfare,
hotels, and meals while conducting the underlying third-party discovery in North
Carolina and Ohio, as well as the Court’s hearings on July 11, 2016, and August 18,
2016.
(ECF No. 177, PageID.2379-80).
The Court has reviewed Mr. Wexler’s
declaration and the supporting documentation. (See ECF No. 177-1). These costs
appear reasonably related to the third-party discovery and Stryker’s contempt motion,
and defendants have lodged no objection. Accordingly, these costs will be awarded.
B.
Defendants’ Statement of Costs
As one of the contempt sanctions, the Court ordered that defendants disgorge
all profits they obtained in violation of the preliminary injunction with respect to Nash
General Hospital, Wilson Medical Center, and Atlantic Gastroenterology. (ECF No.
172). Accordingly, to assist in ascertaining the amount of profits to be disgorged, the
Court ordered defendants to file:
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[A] statement with the Court enumerating the actual costs incurred in
generating the gross revenues relating to the provision of service, repairs,
or sales of parts, after October 22, 2014, to Nash General Hospital,
Wilson Medical Center, and Atlantic Gastroenterology (including any
service agreement), as reflected in the invoices contained in Exhibits E,
F, and G to Stryker’s motion for contempt (ECF Nos. 108-5, 108-6, and
108-7).
(ECF No. 172, PageID.1986).
The Court noted that “[t]he burden shall be on
Defendants to prove actual costs.” (Id.).
The total amount of revenue reflected in the invoices is $112,217.05. (See ECF
Nos. 108-5, 108-6, and 108-7).3 Defendant William Prickett filed a statement of costs
on behalf of defendants, asserting a total of $46,205.12 in costs. (ECF No. 180,
PageID.2430-37; see William Prickett’s Verification Under Oath, PageID.2437).
Stryker objects to the lack of any supporting receipts, arguing that defendants have
failed to meet their burden of proof. (ECF No. 181, PageID.2441-42). A review of
defendants’ filing confirms that it is simply a generic list of purported costs
unsupported by documentation of any kind. (See ECF No. 180, PageID.2430-37).
Moreover, the identification of the purported costs is, for the most part, too
cryptic to allow for any meaningful review. For example, Mr. Prickett includes
approximately 100 entries for “parts” in which none of the “parts” are identified or
linked to any invoice. (See ECF No. 180, PageID.2430-37). In the majority of the
“parts” entries, Mr. Prickett does not identify the parts supplier. (See id.). The “fuel”
Defendants’ total of $133,642.82 (ECF No. 180, PageID.2437) includes
duplicate invoices. Stryker acknowledges the partial duplication of invoices, and it
asserts that the total amount should be $112,217.05 (ECF No. 181, PageID.2441 at
n.1). The Court will use the lesser amount.
3
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costs consist of the amounts Mr. Prickett purportedly paid to gas stations, apparently
to fill his gas tank. Mr. Prickett makes no effort to explain how these fuel costs relate
to any of the invoices at issue – and he provides no mileage information relating to his
travel to any of the three hospitals involved. He includes charges for “cleaning
supplies” without identifying the nature of the supplies, much less how they may have
been used to generate the income reflected in the invoices.
In sum, Mr. Prickett’s statement of costs is woefully inadequate, he having failed
to heed the Court’s admonition that he bears the burden of proof. He leaves the Court
no choice but to sustain Stryker’s objections. Common sense suggests that Mr. Prickett
incurred actual costs in generating the income reflected in the invoices. Unfortunately,
the Court cannot speculate as to the nature or reasonableness of those costs. By filing
such a perfunctory statement of costs, Mr. Prickett has waived his right to challenge
the invoices Stryker provided the Court. See Clemente v. Vaslo, 679 F.3d 482, 497 (6th
Cir. 2012) (holding that issues “ ‘adverted to . . . in a perfunctory manner,
unaccompanied by some effort at developed argumentation’ ” are waived (quoting
Langley v. DaimlerChrysler Corp., 502 F.3d 475, 483 (6th Cir. 2007) (internal quotation
marks omitted)).
Mr. Prickett also seeks to exempt certain of the invoices relating to “Nash
Health Care” (Nash General Hospital) and “Wilson Medical (Center),” totaling
$58,193.76 in revenue, claiming that these invoices are not “wholly attributable to the
provision of Stryker-related services, repairs, or parts.” (ECF No. 180-1, PageID.2439)
(emphasis supplied). Mr. Prickett does not explain what he means by this statement,
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nor does he indicate to what extent the invoices are partially attributable to the
provision of Stryker-related services, repairs, or parts. Accordingly, this issue is
waived. See Clemente, 679 F.3d at 497; Langley, 502 F.3d at 483.
The Court need not dwell on Mr. Prickett’s cryptic assertion, however. Among
other things, the preliminary injunction prohibited defendants from “engaging in or
participating in any employment or activity competitive with Stryker, insomuch as
such activity is with, directed to or designed to provide services to, solicit or divert any
of Stryker’s customers and/or any customers that Prickett serviced while in Stryker’s
employ during the 24 months prior to June 30, 2014.” (Oct. 22, 2014, Preliminary
Injunction at ¶ 5, ECF No. 24, PageID.206). As this Court has already found, Mr.
Prickett serviced both Nash General Hospital and Wilson Medical Center during the
24 months preceding his June 30, 2014, resignation from Stryker. (See R&R, ECF
No. 152, PageID.1314-20). The Court also found that he continued servicing these
hospitals after the entry of the preliminary injunction. (Id.).
The Court’s contempt order requires the disgorgement of all profits made in
violation of the preliminary injunction. (See ECF No. 172, PageID.1986). These profits
are reflected in the invoices of all three hospitals, including Nash General Hospital and
Wilson Medical Center. (See id.). It is irrelevant whether these profits are “wholly
attributable to the provision of Stryker-related services, repairs, or parts.”
Accordingly, Stryker’s objection to defendants’ effort to exclude $58,193.76 in revenue
is sustained.
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Conclusion
For the reasons set forth herein, Stryker’s petition for attorney’s fees and
expenses (ECF No. 177) will be granted in full. Defendants shall be ordered to pay
Stryker $32,357.60 in fees and $3,769.24 in costs.
Stryker’s objections to defendants’ statement regarding costs are sustained.
Defendants shall be ordered to pay Stryker $112, 217.05 as disgorgement of profits
obtained in violation of the preliminary injunction.
Date: December 5, 2016
/s/ Phillip J. Green
PHILLIP J. GREEN
United States Magistrate Judge
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