PAR PHARMACEUTICAL, INC. et al v. LUITPOLD PHARMACEUTICALS, INC. et al
AMENDED OPINION. Signed by Judge William H. Walls on 4/24/17. (sr, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
PAR PHARMACEUTICAL, [NC., PAR
STERILE PRODUCTS, LLC, and ENDO
PAR IM’OVATION COMPANY, LLC,
Civ. No. 16-02290 (WHW)(CLW)
LUITPOLD PHARMACEUTICALS, [NC.,
DAIICHI $ANKYO, INC., and DAIICHI
SANKYO COMPANY, LTD.,
Walls, Senior District Judge
The facts of this case are more fully recounted in the Court’s January 18, 2017 Opinion
granting Defendant’s motion for judgment on the pleadings under Fed. R. Civ. P. 12(c). ECF No.
105. In short, this case arises out of a patent dispute between Plaintiffs Par Pharmaceutical, Inc.,
Par Sterile Products, LLC, and Endo Par Innovation Company, LLC (collectively, “Par” or
“Plaintiffs”), and Defendants Luitpold Pharmaceuticals, Inc., Daiichi Sankyo, Inc., and Daiichi
Sankyo Co., Ltd (“Defendants”). Par is the assignee of several patents for Adrenalin®, a product
containing 1 mg of the active ingredient epinephrine, which is used primarily to treat allergic
reactions. Am. Compl., ECF No. 70 ¶J 34—39. In early 2016, Defendant Luitpold filed an
Abbreviated New Drug Application (“ANDA”) with the Food and Drug Administration
(“FDA”), which sought approval to market a generic version of Par’s Adrenalin® product. Id.
46. By letters dated March 9, 2016 and July 7, 2016, Luitpold submitted to Par notices of
certification under 21 U.S.C.
§ 355U)(2)(B)(ii) and 21 C.F.R. § 314.95(c) regarding its proposed
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generic epinephrine product as specified in its ANDA. Id.
JJ 47—50. Par then initiated this suit
under the Drug Price Competition and Patent Term Restoration Act (the “Hatch-Waxman Act”),
asserting that Luitpold’s ANDA submission constituted an act of infringement of their patents
and seeking a declaration that Luitpold’s Future Generic Product
sold after FDA approval
would infringe Par’s patents. Id.
the drug to be marketed and
¶J 65—80. Luitpold’s Answer to Par’s
Complaint denied infringement and asserted four counterclaims. ECF No. 13. Luitpold sought
declaratory relief that it had not and was not infringing Par’s Adrenalin® patents; that the
Patents-in-suit were invalid under 35 U.S.C.
101; that Luitpold was entitled to a defense to
infringement based on earlier commercial use, and that the case was exceptional under 35 U.S.C.
§ 285. Id. ¶J 115—118.
On September 9, 2016, Luitpold filed a motion for judgment on the pleadings, ECF No.
41, which the Court granted on January 18, 2017, ECF No. 105. The Court dismissed Plaintiffs’
patent infringement claims with prejudice and granted Luitpold’s counterclaim seeking a
declaratory judgment of non-infringement because, as Par admits, Luitpold’s current ANDA
formulations do not infringe Par’s Adrenalin® patents. ECF Nos. 105—06, 119—20. The Court
also dismissed Par’s claims under the Declaratory Judgment Act without prejudice as unripe,
finding they were “premised on speculation that future, uncertain amendments to Luitpold’s
ANDA will infringe Par’s patents.” ECF No. 105 at 14; ECF Nos. 119—20. In the Court’s March
8, 2017 Order amending the Court’s January 18, 2017 Order granting Luitpold’ s motion for
judgment on the pleadings, the Court also dismissed Luitpold’s Second and Third Counterclaims
without prejudice at Luitpold’s request. ECF No. 120.
Defendants moved for attorney fees under 35 U.S.C.
§ 285 on February 21, 2017. ECF
No. 112. Defendants argue that they are prevailing parties under 35 U.S.C.
§ 285, that the case
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should be considered exceptional, and that the Court should exercise its discretion to award fees
because (1) “Par asserted an objectively baseless theory of inifingement”; (2) “Par knew its
allegations were false before filing suit”; (3) The Complaint improperly joined the Daiichi
$ankyo Defendants” (4) Par abused discovery to attempt to monitor Defendants’ competitive
activities”; and (5) the case “violates public policy favoring prompt resolution of Hatch-Waxman
cases.” ECF No. 128 at 4—9. Par responds that “Luitpold is not the prevailing party with respect
to Par’s claims based on Luitpold’s Future Generic Product” and that Par’s case against Luitpold
is not exceptional because (1) Par had reason to believe Luitpold would change its drug
formulation; (2) Par’s legal positions were neither objectively baseless nor inconsistent with case
law; (3) Par’s allegations were never false; (4) the Complaint properly joined all Defendants; (5)
Par did not abuse discovery and received almost no substantive discovery in the case; and (6)
Par’s case does not violate the public policy underpinning Hatch-Waxman cases. ECF No. 116 at
§ 285 authorizes courts to award reasonable attorney fees to the party
prevailing in patent litigation in an “exceptional case.” To satisfy the statute, Defendants must
establish: (1) they are the prevailing party; (2) the case is exceptional; and (3) the fees are
reasonable. Machinery Corp. ofAmerica v. GuilfiberAB, 774 F.2d 467, 471 (Fed. Cir. 1985).
Defendants bear the burden to establish the exceptional nature of the case by a preponderance of
the evidence. Octane Fitness, LLCv. ICON Health & Fitness, Inc., 134$. Ct. 1749, 1758 (2014).
“[A]n ‘exceptional’ case is simply one that stands out from others with respect to the
substantive strength of a party’s litigating positions (considering both the governing law and the
facts of the case) or the unreasonable manner in which the case was litigated.” Id. at 1756.
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Exceptionality is determined by courts “in the case-by-case exercise of their discretion,
considering the totality of the circumstance.” Id. An award of fees may be justified where a case
“present[s] either subjective bad faith or exceptionally meritless claims,” or where a party has
engaged in misconduct, whether or not that conduct is independently sanctionable. Id. at 1757. In
assessing the totality of the circumstances, courts can consider “nonexclusive factors,” including
“frivolousness, motivation, objective unreasonableness (both in the factual and legal components
of the case) and the need in particular circumstances to advance considerations of compensation
and deterrence.”Id. at 1756 n.6 (citing Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19. (1994)).
While “there is no precise rule or formula” for determining if a case is exceptional, Octane
Fitness, 134 S. Ct. at 1756, “fee awards are not to be used ‘as a penalty for failure to win a patent
infringement suit.” Gaymar Indus., Inc. v. Cincinnati Sub-Zero Prods., Inc., 790 F.3d 1369,
1373 (Fed. Cir. 2015) (citations omitted). Even if a district court determines that a case is
exceptional, it remains within the court’s discretion to deny a fee award based on its familiarity
with the matter and the interest ofjustice. Icon Health & Fitness, Inc. v. Octane Fitness, LLC,
576 F. App’x 1002, 1005 (Fed Cir. 2014).
A. Defendants are prevailing parties
The Court granted Luitpold’s motion for judgment on the pleadings, resulting in the
dismissal of Counts I and III of Par’s Amended Complaint with prejudice, the dismissal of
Counts II and IV of Par’s Amended Complaint without prejudice for lack of ripeness, and a
declaration that Luitpold has not and is not now infringing Par’s ‘$76 and ‘657 patents. ECF No.
120. All claims against the Daiichi Sankyo Defendants are based upon claims that Luitpold’s
Abbreviated New Drug Application constitutes an act of infringement of Plaintiffs’ Orange Book
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listed patents, Compi., ECF No. 70 ¶J 65-80. The Order granting Luitpold’s motion for judgment
on the pleadings, ECF No. 120, is also dispositive for all of Par’s claims against Daiichi Sankyo,
Inc. and Daiichi Sankyo Co., Ltd. Because Defendants “receive[d] at least some relief on the
merits, which alterted] the legal relationship of the parties,” they are prevailing parties under 35
§ 285. Inland Steel Co.
v. LTVStee1 Co., 364 F.3d 1318, 1320 (Fed. Cir. 2004) (quoting
Former Employees ofMotorola Ceramic Prods. v. United States, 336 F.3d 1360, 1364 (Fed.
Cir.2003) (internal quotation marks omitted)).
B. The case is exceptional
Defendants argument that the case is exceptional is primarily based on their contention
that Par’s legal theory was baseless and that “Par abused discovery to attempt to monitor
Defendants’ competitive activities.” ECF No. 128 at 4—8. Defendants contend that Par asserted
an objectively baseless theory of litigation because “no reasonable litigant’ in Par’s shoes ‘could
reasonably expect success on the merits” ECF No. 128 at 4 (citing Highmark, Inc. v. Aitcare
Health Mgmt. Sys., Inc., 687 F.3d 1300, 1309 (Fed. Cir. 2012)). Defendants urge that Par abused
the discovery process by pushing ceaselessly for highly competitive business information
unrelated to the issues in the case, including filing a motion to compel during the pendency of
Luitpold’s motion for judgment on the pleadings, and after Luitpold’s director of R&D provided
testimony that Luitold had never tested a drug formulation including a bisulfite antioxidant and
had no plans to do so. ECF No. 128 at 8—9. Par answers Defendants by stating that it “had good
reason to bring the lawsuit” because it believed Luitpold “would change its formulation,” to
infringe Par’s patents, ECF No. 116 at 6—7, and that Par did not abuse discovery because it
received virtually no “substantive discovery.” Id. at 25—26.
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Plaintiffs have consistently maintained in briefing throughout this case that their primary
concern is that Defendants will seek and receive FDA approval for an epinephrine product that
infringes their ‘$76 and ‘657 patents. See, e.g., ECF No. 116 at 17 (“Thus, the key question in
Par’s case—and the question that helps to determine whether future infringement is ‘immediate’
and ‘real’—was how Luitpold intended to obtain FDA approval of its generic version of Par’s
ADRENALiN®.”). But contrary to this stated purpose, Plaintiffs’ Complaint and Amended
Complaint alleged, without any factual basis, that Defendants’ current ANDA infringed the
patents-in-suit. See ECF No. 1
¶J 62—65, 70—73;
ECF No. 70 ¶J 65—68, 73—76. While Plaintiffs
repeatedly argued that it only alleged current patent infringement to trigger Hatch-Waxman
review of “the product that Defendant Luitpold will likely market if its ANDA receives final
FDA approval,” ECF No. 70 ¶ 53, the Court found that Par’s legal theory was completely
unsupported by case law and ignored the existing legal safeguards against Defendants’ potential
future infringing conduct,t ECF No. 105. See In re Cyclobenzaprine Hydrochloride ExtendedRelease Capsule Patent Litig., No. CIV. 09-MD-211$-$LR, 2012 WL 95592, at *2 (D. Del. Jan.
12, 2012) (finding a patent case “exceptional” under 35 U.S.C.
§ 285 when plaintiffs agreed that
defendant’s product, as formulated in its ANDA, did not infringe, but insisted on maintaining the
suit to “police” against possible reformulations). Moreover, in response to Luitpold’s First
Counterclaim, which sought a declaration that Luitpold had not and was not currently infringing
the patents-in-suit, Par refused to admit non-infringement of Luitpold’s operative ANDA. ECF
iWhen an ANDA filer makes an alteration or amendment to its application, for example, by changing the drugs
formula, the FDA requires ANDA filers to provide a new Paragraph IV Certification and re-notice the patent holder
and drug owner. See, e.g. Ben Venue Labs., Inc. v. Novartis Pharmaceutical Corp., 146 F. Supp. 2d 572, 580—8 1
(D.N.J. 2001); Paddock Labs., Inc. v. Ethypharm S.A Civ. No 09—3779, 2011 WL 149860, at *3 (D.N.J. Jan. 18,
2011); see also 21 C.F.R. § 314.96(d).
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Even if Par’s intention was limited to anticipated patent infringement by a possible future
formulation of Luitpold’s product, Par’s claims were meritless because Par provided no basis for
its allegations that absent declaratory relief, Par faced irreparable harm from Defendants’
infringing activities. Par’s claims for declaratory relief rested only on its own experience of the
FDA approval process and speculation that the FDA would require Defendants to change their
drug formulation in a manner that would infringe Par’s patents. ECF No. 70 ¶J 69—72, 77—80.
Par failed to allege that Defendants were engaged in any specific activities to alter their drug
formulation to infringe the patents-in-suit and even acknowledged in briefing that the focus of
the case was to determine through discovery how Par intended to proceed through the FDA
approval process. See ECF No. 116 at 17. Ultimately, the absence of credible allegations or
evidence that Par would face immediate, irreparable harm absent declaratory relief, caused the
Court to conclude the declaratory judgment counts were “not ripe for adjudication.” ECF No.
Finally, upon filing of the Complaint, Par vigorously attempted to engage in overbroad
discovery of highly confidential, competition information. Despite having a complete copy of
Luitpold’s ANDA and assurances that Defendants were complying with Local Patent Rule 3.6(j)
and turning over all new communications to and from the FDA within seven days, Par requested
(1) all documents and information relating to Defendants’ injectable epinephrine compositions,
including past, current, and “contemplated” formulations whether or not they contained
ingredients that would infringe Par’s patents, including business development documents, ECF
No. 128 Ex. C, RFP Nos. 2—8, 12, 27 and Interrogatory No. 4; (2) all “research, development,
formulation, design, testing, manufacture, quality control, production, studies, or evaluations”
without regard to whether the epinephrine products contained the bisulfite antioxidant used in the
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patents-in-suit, Id. at RFP Nos. 3, 6—7, 30 and Interrogatory No. 5; (3) “all documents reflecting
Luitpold’s criteria, policies, or practices for selecting products for which it files ANDAs,” Id. at
RFP No. 25; and (4) “market data, meeting minutes, guidelines, and regulatory plans” and “all
analyses! projections of the epineplirine market,” Id. at RFP Nos. 13, 24. Par pursued this
overbroad information by a motion to compel discovery, ECF No. 85, even after Luitpold’s
director of R&D responded to one of Par’s interrogatories by swearing Luitpold had not changed
its drug formulation, had not added any antioxidant, and had not conducted any testing using
sodium bisulfite or any other bisulfite component, ECF No. 128 Ex. D, Luitpold’s Response to
Par’s Third Set of Interrogatories, Interrogatory No. 5. Par’s conduct is not mitigated by Par’s
argument that it pursued this discovery mostly unsuccessfully.
For these reasons, the Court finds the case to be “exceptional” within the meaning of 35
§ 285. Plaintiffs’ unjustified maintenance of this suit and attempts to use discovery to
police Defendants’ future conduct makes an award of fees appropriate to the extent Defendants’
fee request is reasonable.
C. Defendants’ fee request is reasonable
Par did not argue that Defendants seek unreasonable fees; however, the amount of a fee
award is assessed at the discretion of the district court. See Lumen View Tech. LLC v.
Findthebest.com, Inc., 811 F.3d 479, 483 (Fed. Cir. 2016). “In determining the reasonableness
of the award, there must be some evidence to support the reasonableness of, inter alia, the billing
rate charged and the number of hours expended.” Lam, Inc. v. Johns-Manville Corp., 718 F.2d
1056, 1068 (Fed. Cir. 1983). Local Civil Rule 54.2 governs fee awards, and requires the party
seeking fees to provide certain materials to the Court, including affidavits setting forth the nature
of services rendered, a record of the dates and times of services rendered, a description of the
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services rendered on each date, a description of the professional experience of each person
rendering services, the normal billing rate for each person rendering services, any fee
agreements, and the amounts actually billed to the client and paid by the client. See LCiv.R.
54.2(a)—tb). In the 35 U.S.C.
§ 285 context, Courts generally consider hourly time records and
expense statements along with documentation in support of the movant’ s billing rates as
compared with those prevailing in the community for similar work, taking into account the
attorneys’ skill and experience. See Source Search Techs., LLC v. Kayak Software Corp., No.
1 1-3388(NLH/KMW), 2016 WL 1259961, at *9 (D.N.J. Mar. 31, 2016). The party seeking an
award of fees has the burden to provide evidence supporting the hours worked and rates claimed.
Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). To the extent the affidavits and supporting
documentation submitted by the party seeking fees “leaves any doubt as to the amount of fees to
be awarded, these doubts shall be resolved against an award of fees.” Spectrum Produce
Distributing, Inc. v. Fresh Marketing, Inc., Civ No. 11-06368 (JBS/ KNW), 2012 WL 2369367,
at *3 (D.N.J. June 20, 2012) (quoting Veneziano v. Long Island Pipe Fabrication & Sitpply
Corp., 487 F. Supp. 2d 683, 695 (D.N.J. 2002)).
1. Calculation of Fees
The Court begins its determination of a reasonable attorneys’ fee award by calculating
the lodestar amount. Penn Env ‘t Def Found. V. Canon-McMillan Sch. Dist., 152 F.3d 228, 231
(3d Cir. 1998). The lodestar is the “number of hours reasonably expended on the litigation
multiplied by a reasonable hourly rate.” Hensley, 461 U.S. at 433. The Court first determines the
appropriate hourly rate for the services rendered. “To show the reasonableness of a requested
rate, counsel must produce satisfactory evidence
in addition to their own affidavits
requested rates are in line with those prevailing in the community for similar services by lawyers
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of reasonably comparable skill, experience, and reputation.” Spectrum Produce, 2012 WL
2369367, at *4 (internal modifications omitted) (quoting Blum v. Stenson, 465 U.S. 886, 896
a) Hourly Rate
Defendants submitted billing records that show that nine different individuals performed
work on this matter. ECF No. 130. The rates Defendants seek for the work performed on this
case range from $2 15/ hour to $950! hour. ECF No. 134-1. Defendants also submitted a
declaration from Howard P. Janis (“Janis Declaration”), Director of Strategic Pricing and
Analytics at Defendants’ law firm, Dentons, which states that the billing records reflect time
worked on the case by attorneys and paralegals. ECF No. 130 ¶ 10. Defendants provided the
Court with biographies of the attorneys. Long Decl., ECF No. 129 Ex. 2. Only four biographies
were provided. See id. Because no information was provided about the five remaining time
keepers, the Court used the billing records to determine the type of work each contributed.
To establish the prevailing rate for this type of litigation, Defendants refer to excerpts
from PricewaterhouseCoopers’ Billing Rate and Associate Survey Salary (“BRASS Report”) for
peer IP litigation firms. See Janis Declaration, ECF No. 130 Ex. 1. This data reveal that Dentons’
associate rates rank near the bottom of peer IP litigation firms, but that its partner rates venture
into the first quartile of IP litigation rates. Compare ii with ECF No. 134-1. The Court finds that
$925! hour is unreasonable, especially in light of the fact that much of the work charged at this
rate consisted of reviewing others’ work product and tending to emails. See ECF No. 134-1. The
documentation shows that most of the work performed on this matter was billed by attorneys at
an hourly rate between $300 and $800. Id. The Court will therefore award fees at a rate of $550!
hour for all attorney work credited by the Court based on the invoices submitted by Defendants.
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finally, the BRASS Report only provides evidence of attorney billing rates. See ECF No. 130
Ex. 1. Because Defendants submitted no documentation justifying a paralegal rate, the Court
awards fees at a rate of $125! for all work it has identified as the kind typically performed by
paralegals. See UA. Local 322 Pension Fund v. JR. McGee Plumbing Ltd. Liab. Co., No. CV
16-373 8 (RMB!KMW), 2017 WL 498692, at *4_5 (D.N.J. Feb. 7, 2017) (awarding attorney fees
for paralegal work at the hourly rate of $125).
b) Time Reasonably Expended
The Court next determines how much time was reasonably expended on the matter.
Public Interest Research Group ofN.i, Inc. v. Winall, 51 F.3d 1179, 1188 (3d Cir. 1995). To
establish the reasonableness of the time spent litigating this matter, Defendants’, at the Court’s
request, submitted unredacted invoices, containing a narrative description of each task
performed. ECF No. 134-1. Defendants request compensation for 485.4 hours of work. Id. The
Court has determined that 66.1 of the requested hours constitute tasks typically performed by
paralegals, such as compiling documents for attorney review, updating case files, researching
local filing rules, and preparing motion exhibits. See id. The invoices establish that the remaining
419.3 hours reflect attorney work. See id. Though a majority of the requested hours was
reasonable, the Court finds Defendants’ billing unreasonable in part and reduces the hours total
to 55.4 hours of paralegal work and 364.65 hours of attorney work.
The Court finds Defendants’ billing unreasonable to the extent it includes hours
incorrectly billed to this matter, hours billed for unnecessary tasks, hours billed due to
inexperience, and hours billed for tasks that should have been performed by specialized or more
cost-effective actors. See Spectrum Produce, 2012 WL 2369367, at *5_b. Defendants state in a
letter to the Court that the invoices submitted for the Court’s review include 14.4 incorrectly
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billed hours from the July billing period. ECF No. 134. The Court finds that 13.6 of these hours
are attorney work hours and .8 are paralegal work hours. Additionally, the Court’s review
revealed that a number of Defendants’ June and July invoices refer to work performed in an
Eastern District of New York case involving the same parties. See ECF No. 134-1. Where these
invoices referred solely to work for the parallel case, the Court struck the requested hours. Where
the invoices made clear that work was performed in both cases, the Court reduced the hours by
half. In total, the Court reduced the requested paralegal hours by 7.4 and the attorney hours by
2.25 based on the time-keeper references to work performed for the E.D.N.Y. case.
Courts in this district have held that attorneys cannot bill for work product that was not
considered by the Court. See TB. v. Mount Laurel Bd. OfEduc., No 09-4780, 2012 WL 107908$
(D.N.J. Mar. 30, 2012). Defendants’ invoices reflect work performed in August 2016 for a
motion to dismiss, work completed in September and October related to an FTO opinion and
“prior art chart,” and research performed in November concerning “first to file exclusivity” and
an extraneous patent number. See ECF No. 134. Defendants did not raise the factual or legal
issues reflected in these billing narratives before the Court. As such, the Court reduces the
attorney work hours by 23.2 and the paralegal hours by 2.4 to account for time spent on these
tasks. See Id.
Finally, the Court does not award attorneys’ fees for time billed due to inexperience, and
for tasks that should have been performed by specialized or more cost-effective actors.
Defendants’ invoices reflect 1.9 paralegal hours spent setting up ECF notifications and .2
attorney hours for supervising the filing of requests for ECF notifications in September 2016. See
id. The Court awards no fees for the extraordinary amount of time spent filing a form letter with
the Court. The invoices also reflect 1.8 attorney hours spent preparing and serving courtesy
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copies and supervising the filing of a consent Order in September 2016. See Id. The Third Circuit
has held that it is unreasonable for an attorney to claim an attorney reimbursement rate for tasks
that could be effectively performed by less expensive individuals. Loughner v. University of
Pittsburgh, 260 F.3d 173, 180 (3d Cir. 2001). These tasks are more properly performed by a
paralegal, or by an attorney at a paralegal rate. Therefore, the 1.8 hours billed in September 2016
for filing and preparing courtesy copies will be billed at the $125! hour rate previously set forth
for paralegal work.
Applying the rules articulated above, the Court awards Defendants $200,557.50 in fees
for attorney hours and $6,925 in fees for paralegal hours for a lodestar total of $207,482.50.
2. Award of Costs
Defendants further petition the Court for $4,580.93 in costs expended in the delivery of
service and documents, payment of filing fees, travel to an in-person hearing, and necessary
document reproduction. See ECF No. 134. These costs were all rendered necessary by the nature
of this litigation and the Court finds them to be reasonable. The Court awards Defendants their
requested costs of $4,580.93.
Defendants’ Motion for Attorney fees, ECF No. 112, is granted in the reduced amount of
$207,482.50 in fees and $4,580.93 in costs. An appropriate order follows.
William H. Walls
Senior United States District Court Judge
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