Rates Technology Inc. v. Broadvox Holding Company, LLC et al

Filing 181

OPINION AND ORDER re: 142 MOTION for Attorney Fees filed by Broadvox Holding Company, LLC, Cypress Communications Operating Company, LLC, 163 MOTION for Sanctions Pursuant to 28 USC 1927 And The Inherent Power Of The Court Against Defendants And Their Counsel filed by Milton Springut, Scott Spencer, Tal S Benschar, 171 MOTION for Default Judgment as to Plaintiff Rates Technology Inc. filed by Broadvox Holding Company, LLC, Cypress Communicatio ns Operating Company, LLC. For the foregoing reasons, Broadvox's motion for attorneys' fees and nontaxable costs against RTI is DENIED and Springut's motion for sanctions is DENIED. The Clerk of the Court is directed to close these motions [Dkt. Nos. 142, 163, 171]. SO ORDERED. (Signed by Judge Shira A. Scheindlin on 10/7/2014) Copies Sent by Chambers.(ajs)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

----------------------------------------------------- )(
RA TES TECHNOLOGY INC.,
Plaintiff,
OPINION AND ORDER
- against 13 Civ. 0152 (SAS)
BROADVO)( HOLDING COMPANY,
LLC, CYPRESS COMMUNICATIONS
OPERATING COMPANY, LLC, AND
ABC COMPANIES, 1TO10,
Defendants.

----------------------------------------------------- )(
SHIRA A. SCHEINDLIN, U.S.D.J.:
I.

INTRODUCTION
On June 9, 2014, I dismissed the patent infringement suit brought by

Rates Technology Inc. ("RTI") against Broadvox Holding Company, LLC and
Cypress Communications Operating Company, LLC (collectively "Broadvox"). 1
Two weeks later, on June 23, 2014, Broadvox moved, under section 285 of Title 35
of the United States Code, to collect attorneys' fees and nontaxable costs from RTI
and its former counsel, Springut Law PC ("Springut"). 2 However, on August 1,
See 619114 Order at 2 [Dkt. No. 140].
2

See Motion of Defendants Broadvox Holding Company, LLC and

Cypress Communications, LLC for Order Under 35 U.S.C. 285 Declaring This an
1

2014, Broadvox withdrew its motion as to Springut.3 Nonetheless, Broadvox now
moves for attorneys’ fees and nontaxable costs against RTI.
Springut, in a separate motion, moves under section 1927 of Title 28
of the United States Code, as well as under the Court’s inherent authority, for
sanctions, in the form of attorneys’ fees, against Broadvox and its counsel.4 For
the reasons that follow, Broadvox’s motion for attorneys’ fees and nontaxable
costs against RTI is DENIED, and Springut’s motion for sanctions is DENIED.
II.

BACKGROUND
A.

RTI’s Patents
In January 2013, RTI initiated this litigation by bringing a patent

infringement suit against Broadvox.5 RTI, a Delaware company, owns several
patents in the telecommunications field, including the two telecommunications
patents at issue, United States Patent No. 5,425,085 (the “‘085 Patent”) and United
States Patent No. 5,519,769 (the “‘769 Patent”).6 Both the ‘085 Patent and the
Exceptional Case and Awarding to Defendants Their Attorneys’ Fees and
Nontaxable Costs (“Broadvox Notice of Motion”) at 1-2.
3

See generally 8/1/14 Notice of Withdrawal of Motion as to Springut
Law P.C. (“Springut Withdrawal”) [Dkt. No. 160].
4

See 8/7/14 Notice of Motion for Sanctions (“Springut Motion”).

5

See First Amended Complaint ¶ 6.

6

See id. ¶¶ 11, 19.
2

‘769 Patent have less than two years remaining until they expire.7 RTI’s president
and shareholder, Gerald Weinberger, has authority from RTI’s board of directors to
enforce, at his discretion, the patents at issue.8 However, the upcoming expiration
of the patents at issue, and the resultant effect that will have on RTI’s profitability,
has led Weinberger to question his job security.9
B.

RTI’s Business
RTI’s current businesses include the “support[] [of] several of its old

customers with rate chip updates for their private pay telephones,” “some
consulting work,” “work on some new inventions,” and the “enforce[ment] of its
patents.”10 The rate chip updates, however, only consist of “giv[ing] away” chips
to customers — approximately a hundred chips to twenty-five customers in 2013.11
RTI has not received payment for a rate chip in almost a decade.12 Nor do records

7

See Markman Hearing Transcript (“Markman Tr.”) at 5:2-9.

8

See Deposition Transcript of Gerald Weinberger (“Weinberger Tr.”)

at 91:4-11.
9

See id. at 92:24-93:15.

10

Id. at 27:12-21.

11

Id. at 29:23-31:3. RTI’s distribution of rate chips has “rapidly
diminish[ed]” in recent years. Id. at 32:19-33:3.
12

See id. at 31:4-15.
3

exist that document the distribution of chips.13 Moreover, RTI refuses to reveal the
identity of its chip customers.14
RTI’s consulting work includes “advi[sing] [people] with respect to
various telecommunication issues.”15 RTI received “a few hundred thousand
dollars” in compensation for its consulting work from 2009 through 2013.16
However, no contracts exist to memorialize the consulting work,17 and RTI either
did not retain the documents relating to its compensation for the consulting work,
or it included the documents in a storage bin produced to Broadvox.18 And again,
RTI refuses to identify its consulting clients.19
RTI’s work on new inventions has not generated any revenue from

13

See id.

14

See id. at 31:16-32:7. Magistrate Judge Sarah Netburn ruled that RTI
need not identify its customers. See id. at 78:15-81:24.
15

Id. at 32:8-15.

16

Id. at 34:7-35:5. RTI’s compensation for consulting work accounts
for a “relatively small” percentage of RTI’s total revenue. Id. at 39:3-19.
17

See id. at 32:16-18.

18

See id. at 35:6-11. Broadvox has not confirmed whether these
documents do in fact remain in the storage bin. Weinberger stated that the
compensation from consulting work would have appeared on RTI’s tax returns.
See id. at 35:15-19. Broadvox has not confirmed this statement.
19

See id. at 35:20-38:9.
4

2009 through 2013.20 RTI cites its inability to obtain patent protection for its new
products as the obstacle to generating revenue.21
In relation to its patent enforcement, RTI derives a relatively large
amount of its revenue from companies that pay RTI for covenant not to sue
agreements (“CNS agreements”).22 These companies may or may not infringe
RTI’s patents, and have chosen to settle with RTI rather than litigate the issue.23
The CNS agreements provide for a one-time payout, rather than an ongoing royalty
payment.24
RTI also “continue[s] to try to move forward [with] products that [it]
designed, developed and manufactured in conjunction with other companies.”25
RTI seeks to enter into joint ventures with companies that will provide RTI’s
products or products that contain RTI’s technology. 26 These products include

20

See id. at 38:10-39:2.

21

See id.

22

See id. at 39:16-40:9.

23

See id.

24

See id. at 237:15-239:6.

25

Id. at 42:11-14.

26

See id. at 43:4-7.
5

private pay telephones, BUSY BUSY telephones, and the plug product.27 RTI has
manufactured all three of these products within the last ten years.28 However, RTI
never sold the plug product.29 RTI has not received revenue from the sale of
private pay phones in approximately four or five years,30 from the sale of BUSY
BUSY telephones in seven or eight years,31 nor from the rights to manufacture
BUSY BUSY telephones in the last two and a half to three years.32
C.

RTI Contacts Broadvox
In December 2012, Weinberger, without the assistance of counsel,33

began to contact Broadvox about Broadvox’s possible infringement of RTI’s
patents.34 In the course of their communications, neither Weinberger nor Broadvox
divulged anything other than self-serving assertions regarding the merits of RTI’s

27

See id. at 42:14-19.

28

See id. at 44:5-7.

29

See id. at 44:10-11.

30

See id. at 49:23-50:6.

31

See id. at 50:9-20.

32

See id. at 50:23-51:6.

33

See id. at 113:11-12; 114:7-9; 118:7-18.

34

See generally RTI’s Weinberger E-mails (“Weinberger E-mails”), Ex.
H to Declaration of George Pazuniak in Support of Defendants’ Motion for
Sanctions (“Pazuniak Decl.”).
6

infringement allegations.35 Weinberger urged a settlement, but Broadvox declined
to settle on account of RTI’s unwillingness to share the basis of its infringement
allegations.36 In one email to Broadvox, Weinberger explained that Broadvox has
“a lose-lose business proposition. No settlement, big unrecoverable legal
expenses, and a huge risk of substantial loss at trial.”37 Weinberger concluded the
email with “[c]ongratulations. No way out; you lose!”38 Weinberger, in a
subsequent email, reiterated that the “lose-lose proposition really sucks[,] that’s
why companies settle their differences.”39 Weinberger instructed Broadvox to
“stop [its] carping. Relax, and enjoy [the] holiday time; we will have the next four
to five years to address our respective differences.”40
Furthermore, in a telephone conversation between Weinberger and
Broadvox’s counsel, Alex Gertsburg, Weinberger conveyed to Broadvox that RTI
had tested Broadvox’s network and systems “[b]y making contact with
35

See generally id. at 3; 12/18/12 Letter from Broadvox to Weinberger
(“12/18/12 Letter”), Ex. I to Pazuniak Decl.; 12/27/12 Letter from Broadvox to
Weinberger (“12/27/12 Letter”), Ex. J to Pazuniak Decl.
36

See Weinberger E-mails at 4.

37

Id. at 3.

38

Id.

39

Id. at 1.

40

Id.
7

[Broadvox’s] customers.”41 Weinberger, however, refused to identify these
customers, instead saying that Broadvox “will get that information obviously in
discovery.”42 Weinberger later testified at his deposition, in response to “[w]hich
Broadvox customers have you spoken with?”, that RTI looked at Broadvox’s
website and “noted . . . that 17 of [Broadvox’s ‘Partners’] were already people who
have . . . been covered under [RTI’s] patents[.]”43 Weinberger further testified that
he could not remember which of those “Partners” he contacted, but “if . . . showed
the list[, he] could pick them out.”44
Weinberger also represented during his telephone call with Gertsburg
that two law firms had each provided to RTI a formal written opinion detailing
Broadvox’s alleged infringement of RTI’s patents.45 However, Weinberger later
testified that RTI “didn’t get written [opinions] . . . [RTI] got reviews and opinions

41

12/20/12 Transcript of Conversation between Weinberger and
Gertsburg (“Gertsburg Tr.”), Ex. A-10 to Declaration of Alex Gertsburg in Support
of Motion of Defendants Broadvox Holding Company, LLC and Cypress
Communications, LLC for Order Under 35 U.S.C. 285 Declaring This an
Exceptional Case and Awarding to Defendants Their Attorneys Fees and
Nontaxable Costs (“Gertsburg Decl.”), at 5.
42

Id.

43

See Weinberger Tr. at 124:13-25.

44

Id. at 131:8-12.

45

See Gertsburg Tr. at 6.
8

from . . . two firms.”46 Weinberger refused to reveal the name of either firm.47
Weinberger further represented in his telephone call with Gertsburg
that RTI had “done testing by two independent testing groups[.]”48 Weinberger
testified at his deposition that these two independent testing groups consisted of an
independent consultant, Shlomo Shur, and RTI.49 Weinberger asserted that RTI
“substituted [itself] in this area [because it] felt particularly knowledgeable[.]”50
D.

Broadvox’s Rule 11 Motion
After RTI filed the complaint in this case, Broadvox moved for

sanctions under Federal Rule of Civil Procedure 11, arguing that RTI had not
conducted a reasonable pre-suit investigation.51 RTI opposed the Rule 11 motion
by detailing the various steps it and its now-retained counsel, Springut, took to

46

Weinberger Tr. at 255:3-9.

47

See id. at 255:10-256:11.

48

Gertsburg Tr. at 6.

49

See Weinberger Tr. at 258:17-259:15.

50

Id. at 259:13-14.

51

See generally Defendants’ Motion for Sanctions Under Rule 11 of the
Federal Rules of Civil Procedure; Defendants’ Memorandum of Law in Support of
Motion for Sanctions Under Rule 11 of the Federal Rules of Civil Procedure.
9

investigate any possible infringement.52 I denied Broadvox’s Rule 11 motion
because Broadvox did not comply with Rule 11’s safe harbor requirement.53 I also
held that “because RTI conducted a pre-suit investigation to ascertain information
about defendants’ system and found that infringement may exist, it should not be
sanctioned for filing suit and seeking discovery to confirm its suspicion.”54
E.

RTI’s Adjournment of the 30(b)(6) Deposition
In December 2013, RTI had intended to depose Broadvox pursuant to

Federal Rule of Civil Procedure 30(b)(6).55 However, in the days preceding the
scheduled deposition, RTI informed Broadvox that Broadvox’s discovery remained
incomplete and, as a result, RTI needed to adjourn the deposition.56 Broadvox

52

See Plaintiff’s Memorandum of Law in Opposition to Rule 11 Motion

at 7-8.
53

See Rates Technology Inc. v. Broadvox Holding Co., No. 13 Civ.
0152, 2014 WL 46538, at *5 (S.D.N.Y. Jan. 6, 2014). Rule 11 provides that “[a]
motion for sanctions . . . must not be filed or be presented to the court if the
challenged paper, claim, defense, contention, or denial is withdrawn or
appropriately corrected within 21 days after service or within another time the
court sets.” Fed. R. Civ. P. 11(c)(2).
54

Rates, 2014 WL 46538, at *5.

55

See generally E-mails Regarding the Scheduling of the Deposition,
Ex. A to Pazuniak Decl.
56

Id. at 7-8.
10

disputes the truthfulness of RTI’s reason for adjourning the deposition. 57
F.

Markman Hearing
On December 27, 2013, I held a Markman hearing in this case.58 The

following month, on January 28, 2014, I issued an Opinion and Order construing
the claim terms in the patents at issue.59
G.

Springut Withdraws as RTI’s Counsel
On February 28, 2014, Springut moved to withdraw as counsel for

RTI, citing RTI’s failure to pay for legal services rendered by Springut. 60 On
March 4, 2014, I granted Springut’s motion to be relieved as RTI’s counsel, and
allowed RTI thirty days to obtain new counsel.61 On April 4, 2014, I granted RTI

57

See Memorandum in Support of Motion of Defendants Broadvox
Holding Company, LLC and Cypress Communications, LLC for Order Under 35
U.S.C. 285 Declaring This an Exceptional Case and Awarding to Defendants Their
Attorneys Fees and Nontaxable Costs (“Broadvox Mem.”) at 20-21.
58

See Rates Technology Inc. v. Broadvox Holding Co., No. 13 Civ.
0152, 2014 WL 323256, at *1 (S.D.N.Y. Jan. 28, 2014) (“Broadvox II”).
59

See id.

60

See Memorandum of Law in Support of Motion by Springut Law P.C.
to Be Relieved As Counsel, Dkt. No. 128, at 1. Springut has sought to recover its
legal fees from RTI by initiating an action against RTI in state court. See
Counsel’s Memorandum of Law in Support of Motion for Sanctions Against
Defendants and Their Counsel (“Springut Sanctions Mem.”) at 1.
61

See generally 3/4/14 Memo Endorsement [Dkt. No. 130].
11

additional time to obtain counsel — until April 28, 2014.62 On May, 8, 2014, I
further extended RTI’s deadline to obtain new counsel to June 6, 2014. 63 On June
9, 2014, RTI had still not obtained new counsel, and because corporations may not
appear pro se in the Southern District of New York,64 I dismissed RTI’s case
against Broadvox.65 To date, RTI has not obtained new counsel.66
H.

Broadvox Moves for Attorneys’ Fees and Nontaxable Costs
Against RTI and Springut
After I dismissed the case, on June 23, 2014, Broadvox moved against

RTI and Springut for an order declaring this case “exceptional” under section 285
and for an award of attorneys’ fees and nontaxable costs.67 Broadvox’s
Memorandum of Law in support of its motion discussed almost exclusively section
285 as a legal basis for awarding attorneys’ fees to Broadvox.68 Broadvox also

62

See generally 4/4/14 Endorsed Letter [Dkt. No. 133].

63

See 6/9/14 Order at 2 [Dkt. No. 140].

64

See Representing Yourself in Federal Court (Pro Se),
http://www.nysd.uscourts.gov/courtrules_prose.php (“[C]orporations and
partnerships must be represented by an attorney.”).
65

See 6/9/14 Order at 2 [Dkt. No. 140].

66

No new counsel has entered an appearance for RTI as of the date of
this Opinion and Order. See generally 13 Civ. 0152 (SAS).
67

See Broadvox Notice of Motion at 1-2.

68

See Broadvox Mem. at 7.
12

mentioned briefly two other legal bases: (1) section 1927; 69 and (2) the Court’s
inherent authority.70 However, Broadvox’s Notice of Motion contained neither of
those legal bases in its caption.71
On July 21, 2014, Springut filed its opposition arguing, among other
things, that Broadvox cannot prevail against Springut because (1) section 285 does
not apply to counsel,72 and (2) Broadvox cannot rely on section 1927 or the Court’s
inherent authority because (a) those bases did not appear in the caption of the
Notice of Motion as required under Local Civil Rule of the United States District
Courts for the Southern and Eastern Districts of New York (“Local Civil Rule”)
7.1(a)(1),73 and (b) Broadvox’s brief mention of those bases does not legally

69

See id. at 7 (“For the same reasons as those supporting the
‘exceptional case’ finding, Broadvox is also entitled to its fees and expenses under
28 U.S.C. § 1927 . . .”).
70

See id. at 30 (“District courts have broad power under § 285, as well
as under their inherent authority, to award taxable costs, nontaxable costs and
attorneys’ fees in patent infringement cases.”).
71

See Broadvox Notice of Motion at 1.

72

See Counsel’s Memorandum of Law in Opposition to Motion for
Attorney’s Fees and Costs (“Opp. Mem.”) at 1.
73

See id. at 5. Local Civil Rule 7.1(a)(1) provides, in relevant part, that
“all motions shall include . . . [a] notice of motion . . . which shall specify the
applicable rules or statutes pursuant to which the motion is brought[.]”
13

suffice to place them before the Court.74 Simultaneously with its opposition, 75
Springut served Broadvox with a motion for sanctions under Rule 11,76 but did not
file it with the Court in compliance with the safe harbor provision in Rule 11.77
On August, 1, 2014, Broadvox withdrew its motion as to Springut, but
maintained it as to RTI.78 Springut in turn withdrew its Rule 11 motion against
Broadvox.79 In its reply brief, Broadvox stated that it felt the proper focus of its
motion should be RTI exclusively and that notwithstanding Broadvox’s
withdrawal, the Court could have imposed sanctions against Springut under section
1927 or the Court’s inherent authority. 80
I.

Springut Moves for Sanctions Against Broadvox
Springut, in response to Broadvox’s motion under section 285, now

74

See Opp. Mem. at 5.

75

See generally 9/3/14 Email from Milton Springut, counsel for
Springut and former counsel for RTI, to the Court (“Springut Email”).
76

See Springut Sanctions Mem. at 1.

77

See id.; see also supra note 53.

78

See generally Springut Withdrawal.

79

I assume Springut withdrew the Rule 11 motion as Springut never
filed it with the Court.
80

See Defendants’ Reply Brief in Support of Its Motion for Declaration
of Exceptional Case and Granting Sanctions Against Plaintiff (“Broadvox Reply”)
at 1, 3.
14

moves against Broadvox for sanctions under section 1927 and the Court’s inherent
authority, claiming that Broadvox filed its motion against Springut in bad faith.81
Springut seeks, as sanctions, attorneys’ fees in the amount it expended to oppose
Broadvox’s motion.82
J.

RTI Fails to Oppose Broadvox’s Motion
As RTI has still not obtained legal counsel, it cannot appear before the

Court to oppose Broadvox’s motion against it.83 And with the deadline for
opposing the motion having elapsed on July 21, 2014, Broadvox has failed to
timely oppose Broadvox’s motion.84 Broadvox now moves unopposed for an
award of attorneys’ fees and nontaxable costs against RTI.85
III.

LEGAL STANDARD
The Second Circuit recently articulated in Jackson v. Federal Express

that, in the context of an unopposed motion for summary judgment, “[a]
81

See generally Notice of Motion for Sanctions (“Springut Motion”).

82

See generally id.

83

See supra note 64.

84

See 7/2/14 Scheduling Order at 1 [Dkt. No. 152]. RTI, through
Weinberger, has on several occasions attempted to oppose Broadvox’s motion pro
se. See generally 7/18/14 Letter from Weinberger; 9/3/14 Letter from Weinberger
to the Court (attaching a prior email from Weinberger to the Court).
85

See Notice of Motion for Default Judgment at 2 (requesting a total
award of $364,950.71).
15

non-response does not risk a default judgment[.]”86 Rather, “[b]efore summary
judgment may be entered, the district court must ensure that each statement of
material fact is supported by record evidence sufficient to satisfy the movant’s
burden of production even if the statement is unopposed.”87 The district court has
discretion to “rely on other evidence in the record even if uncited.”88 The district
court must also “determine whether the legal theory of the motion is sound.”89
District courts in the Southern District of New York have applied a
similar standard in contexts other than an unopposed motion for summary
judgment.90 For that reason, I extend the Jackson standard to an unopposed motion
86

— F.3d —, 2014 WL 4412333, at *3 (2d Cir. Sept. 9, 2014).

87

Id.

88

Id.

89

Id.

90

See, e.g., Trustees for the Mason Tenders Dist. Council Welfare Fund,
Pension Fund, Annuity Fund and Training Program Fund v. Odessy
Constructioncorp, No. 14 Civ. 1560, 2014 WL 3844619, at *2 (S.D.N.Y. Aug. 1,
2014) (“[U]nopposed confirmation petitions must fail where the undisputed facts
fail to show that the moving party is entitled to judgment as a matter of law.”)
(citations and quotations omitted); Sulzer Mixpac USA, Inc. v. Shanghai NSJ
Hardware Ltd., No. 09 Civ. 9705, 2013 WL 5997707, at *3 (S.D.N.Y. Nov. 13,
2013) (“Although NSJ has not opposed the instant motion for contempt sanctions,
the Court has the responsibility to ensure that the damages and fine sought by
Sulzer are appropriate.”) (citations omitted); Stengel v. Black, No. 10 Civ. 8661,
2011 WL 4975767 (S.D.N.Y. Oct. 18, 2011) (evaluating Rule 11 motion on the
merits despite lack of opposition); Martell v. Astrue, No. 09 Civ. 1701, 2010 WL
4159383, at *2 n.4 (S.D.N.Y. Oct. 20, 2010) (“This Court recognizes its obligation
16

for attorneys’ fees and nontaxable costs under section 285.
IV.

APPLICABLE LAW
A.

Sanctions Under 35 U.S.C. § 285
Section 285 provides, in its entirety, that “[t]he court in exceptional

cases may award reasonable attorney fees to the prevailing party.” In Octane
Fitness, LLC v. ICON Health & Fitness, Inc., the Supreme Court eschewed the
former interpretation of section 285, and articulated a new, more flexible standard
by which to assess sanctions under section 285.91 The Court held that
an “exceptional” case is simply one that stands out from others
with respect to the substantive strength of a party’s litigating
position (considering both the governing law and the facts of the
case) or the unreasonable manner in which the case was litigated.
District courts may determine whether a case is “exceptional” in
the case-by-case exercise of their discretion, considering the

to review the record before granting an unopposed motion [for judgment on the
pleadings.]”); Haas v. Commerce Bank, 497 F. Supp. 2d 563, 564 (S.D.N.Y. 2007)
(“[F]ailure to oppose a 12(b)(6) motion cannot itself justify dismissal of a
complaint.”) (citations and quotations omitted). Cf. Baptiste v. Sommers, — F.3d
—, 2014 WL 4723272, at *1 (2d Cir. Sept. 24, 2014) (holding that the district
court must still consider the five-factor test in Lucas v. Miles, 84 F.3d 532, 535 (2d
Cir. 1996), before granting dismissal for failure to prosecute under Federal Rule of
Civil Procedure 41(b), even where the plaintiff had “a long and unexplained
delay”).
91

134 S. Ct. 1749, 1756 (2014) (“Th[e] [former interpretation]
superimpose[d] an inflexible framework onto statutory text that is inherently
flexible.”).
17

totality of the circumstances.92
Under this standard, “a district court may award fees in the rare case in which a
party’s unreasonable conduct — while not necessarily independently sanctionable
— is nonetheless so ‘exceptional’ as to justify an award of fees.”93 Section 285
“demands a simple discretionary inquiry; it imposes no specific evidentiary
burden, much less such a high one.”94 However, “[t]he purpose of section 285,
unlike that of Rule 11, is not to control the local bar’s litigation practices . . . but is
remedial and for the purpose of compensating the prevailing party for the costs it
incurred in the prosecution or defense of a case where it would be grossly unjust,
based on the baselessness of the suit or because of litigation or Patent Office
misconduct, to require it to bear its own costs.”95
Section 285, in essence, may require “in exceptional cases . . . the
losing party to reimburse the prevailing party its attorney fees.”96 However, “no
92

Id.

93

Id. at 1757.

94

Id. at 1758.

95

Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., 687 F.3d 1300,
1310 n.1 (Fed. Cir. 2012), vacated and remanded, 134 S. Ct. 1744 (2014); see also
Gametek LLC v. Zynga, Inc., No. CV 13–2546 RS, 2014 WL 4351414, at *3 (N.D.
Cal. Sept. 2, 2014) (citing Highmark, 687 F.3d at 1310 n.1).
96

Phonometrics, Inc. v. ITT Sheraton Corp., 64 Fed. App’x 219, 222
(Fed. Cir. 2003).
18

legal basis [exists under section 285] for entering a fee award against the losing
party’s attorney.”97
B.

Sanctions Under 28 U.S.C. § 1927 and the Court’s Inherent
Authority
Apart from section 285, two additional bases for sanctions exist.

First, under section 1927, a court may require any attorney “who so multiplies the
proceedings in any case unreasonably and vexatiously . . . to satisfy personally the
excess costs, expenses, and attorneys’ fees reasonably incurred because of such
conduct.”98 Second, a court “may exercise its inherent power to sanction a party or
an attorney who has ‘acted in bad faith, vexatiously, wantonly, or for oppressive
reasons.’”99
To impose either of these sanctions, “a court must find clear evidence
that (1) the offending party’s claims were entirely without color, and (2) the claims
were brought in bad faith — that is, ‘motivated by improper purposes such as

97

Id. Generally, “[w]hen a fee-shifting statute that authorizes the courts
to award attorneys’ fees to prevailing parties does not mention an award against the
losing party’s attorney [as is the case in section 285], the appropriate inference is
that an award against attorneys is not authorized.” Healy v. Chelsea Resources,
Ltd., 947 F.2d 611, 624 (2d Cir. 1991).
98

28 U.S.C. § 1927 (2012).

99

Ransmeier v. Mariani, 718 F.3d 64, 68 (2d Cir. 2013) (quoting
Chambers v. NASCO, Inc., 501 U.S. 32 (1991)).
19

harassment or delay.’”100 A claim entirely without color “lacks any legal or factual
basis.”101 A colorable claim, however, “has some legal and factual support,
considered in light of the reasonable beliefs of the individual making the claim.”102
To establish bad faith, sanctions under section 1927 and a court’s inherent
authority require a similar showing — “bad faith may be inferred ‘only if actions
are so completely without merit as to require the conclusion that they must have
been undertaken for some improper purpose such as delay.’”103 Moreover, “[t]he
court’s factual findings of bad faith must be characterized by ‘a high degree of
specificity.’”104
In practice, sanctions under section 1927 and sanctions pursuant to a
court’s inherent authority materially differ only in that “awards under [section]
1927 are made only against attorneys or other persons authorized to practice before

100

Eisemann v. Greene, 204 F.3d 393, 396 (2d Cir. 2000) (quoting
Schlaifer Nance & Co. v. Estate of Warhol, 194 F.3d 323, 336 (2d Cir. 1999)).
101

Sierra Club v. United States Army Corps of Eng’rs, 776 F.2d 383, 390
(2d Cir. 1985) (citing Nemeroff v. Abelson, 620 F.2d 339, 348 (2d Cir. 1980)).
102

Nemeroff, 620 F.2d at 348.

103

Schlaifer Nance, 194 F.3d at 336 (quoting Shafii v. British Airways,
PLC, 83 F.3d 566, 571 (2d Cir.1996) (quotations omitted)).
104

Milltex Indus. Corp. v. Jacquard Lace Co., 55 F.3d 34 (2d Cir. 1995)
(quoting Oliveri v. Thompson, 803 F.2d 1266, 1272 (2d Cir. 1986) (quotations
omitted)).
20

the courts while an award made under the court’s inherent power may be made
against an attorney, a party, or both.”105
V.

DISCUSSION
A.

Springut’s Motion for Attorneys’ Fees Against Broadvox
1.

Broadvox Did Not File Its Motion for Attorneys’ Fees in
Bad Faith
a.

Although Broadvox Brought Its Motion Against
Springut Under a Faulty Legal Theory, That Does
Not Require a Finding of Bad Faith

Broadvox’s motion for attorneys’ fees and nontaxable costs against
RTI and Springut relied predominantly on section 285 as a legal basis for
sanctions.106 Broadvox, however, failed to address the applicability of section 285
to counsel. Both Broadvox and Springut agree that section 285 does not authorize
sanctions against counsel. Thus, Broadvox incorrectly relied upon section 285
when asserting its claims against Springut.
Springut argues that because section 285 does not apply to counsel,
“bad faith may be inferred [because Broadvox’s motion was] so completely
without merit as to require the conclusion that [it must have been filed] for some

105

Oliveri, 803 F.2d at 1273.

106

See Broadvox Mem. at 2-3 (making no mention in the table of
contents of any legal basis for sanctions other than section 285).
21

improper purpose such as delay.”107 However, this standard does not require an
inference of bad faith, it merely authorizes one. For the following reasons, I
decline to draw this inference.
b.

Equally Plausible Scenarios Exist Other than Bad
Faith

Springut argues in its motion for sanctions against Broadvox that
Broadvox’s failure to discuss the applicability of section 285 to counsel amounted
to more than just “mere incompetence.”108 Springut believes that Broadvox moved
in bad faith.109 Springut claims that Broadvox knew that section 285 did not apply
to counsel, and that Broadvox “surreptitiously invoked alternative bases [that is,
section 1927 and the Court’s inherent authority], and then by sleight-of-hand,
sought to use the more liberal standard of Section 285 . . . to apply to those other
bases.”110
Springut bases its “sleight-of-hand” argument on a number of factors:
(1) Broadvox’s Notice of Motion only cited section 285, not section 1927 or the

107

See Springut Sanctions Mem. at 4.

108

Id. at 5.

109

See id. at 4.

110

Id. at 7.
22

Court’s inherent authority,111 (2) Broadvox’s Memorandum of Law extensively
discussed section 285 to the exclusion of section 1927 or the Court’s inherent
authority,112 (3) Broadvox placed great emphasis on the newer, more liberal
standard under section 285 that the Supreme Court recently articulated in Octane
Fitness,113 (4) Broadvox acknowledged in a footnote that Rule 11 has a more
stringent standard than section 285, and thus it would not proceed under Rule 11
for sanctions against Springut,114 and (5) Broadvox’s failure to provide the
respective legal standards for section 1927 or the Court’s inherent authority, as
well as apply any of the facts to those standards.115
Springut argues that these factors evidence Broadvox’s effort to
invoke section 1927 and the Court’s inherent authority (both of which apply to
counsel), but focus only on section 285, which has a lower threshold of liability
than either section 1927 or the Court’s inherent authority, in order to conflate the
standards and prevail on the basis of the relatively easier section 285 standard. 116

111

See id. at 5.

112

See id.

113

See id. at 5-6.

114

See id. at 6.

115

See id.

116

See id. at 7.
23

Springut argues further that Broadvox’s acknowledgment that Rule 11 has a more
stringent standard117 than section 285 indicates that Broadvox should not have
relied upon section 1927 or the Court’s inherent authority, both of which have
standards even more stringent than Rule 11.118
Springut’s “sleight-of-hand” argument, however, fails to satisfy the
legal standard required to impose sanctions under section 1927 and the Court’s
inherent authority — clear evidence of bad faith characterized by a high degree of
specificity. Here, Springut has not provided clear evidence of bad faith; rather, on
the facts as presented, more than one equally plausible scenario exists. Springut
urges the Court to conclude that Broadvox acted in bad faith, but absent clear
evidence with a high degree of specificity, I cannot impose sanctions against
Broadvox.
c.

One Plausible Scenario — Poor Lawyering
i.

Broadvox’s Motion

117

The Second Circuit has held that “[t]he standard for triggering the
award of fees under Rule 11 is objective unreasonableness and is not based on the
subjective beliefs of the person making the statement.” Star Mark Mgmt., Inc. v.
Koon Chun Hing Kee Soy & Sauce Factory, Ltd., 682 F.3d 170, 177 (2d Cir. 2012)
(citations and quotations omitted).
118

See Springut Sanctions Mem. at 6 (“If Rule 11 was too stringent to
support [Broadvox’s] motion for fees (as conceded by Broadvox), then a fortiori
Section 1927 and inherent authority are too stringent. Yet, notwithstanding
disclaiming reliance on Rule 11, Broadvox invoked the other two bases!”).
24

One plausible scenario is that Broadvox’s counsel were not as careful
as they should have been. It is plausible that Broadvox mistakenly relied upon a
faulty legal theory — section 285 — as a basis for sanctions against Springut. 119
And as an alternate theory of liability, Broadvox invoked section 1927 and the
Court’s inherent authority, but failed to discuss these theories extensively because
it felt confident in its argument on section 285 grounds. Or Broadvox may have
mistakenly invoked section 1927 and the Court’s inherent authority without
realizing that the standards differed for each.120 Or, as Broadvox articulates in its

119

Springut argues that, in reality, Broadvox merely sought to include
Springut in the motion in order to collect against “deep pockets,” given that
Broadvox had noted that RTI likely had no remaining assets. See id. at 5.
However, assuming that Broadvox mistakenly, yet not in bad faith, relied upon
section 285 as a basis for sanctions against Springut, Broadvox likewise could not
have — in bad faith — included Springut in the motion because Broadvox
legitimately, although incorrectly, believed that the Court could sanction Springut
under section 285.
120

Springut argues that Broadvox knew that the standards differed from
each other, and that Broadvox deliberately conflated the standards in order to “pull
the proverbial ‘fast one’” on the Court. Id. at 7. Springut evidences this argument
by pointing to a footnote in which Broadvox admits that Rule 11 has a more
stringent standard than section 285, and that therefore Broadvox would not proceed
under Rule 11 against Springut (and RTI) — presumably because Broadvox felt
that it could not meet the higher Rule 11 standard. See id. at 6. Springut then
draws the inference that if Broadvox would not proceed under Rule 11, then
certainly Broadvox would not proceed under section 1927 and the Court’s inherent
authority, both of which have standards even more stringent than Rule 11. See id.
However, if Broadvox truly did not appreciate the differences between the
standards under section 285, section 1927, and the Court’s inherent authority, then
Springut cannot prove that Broadvox’s admission of the stringent standard under
25

opposition to Springut’s motion, Broadvox believed (and may still believe) that
many similar factors overlap across the three standards, and thus Broadvox felt it
had adequately invoked and applied section 1927 and the Court’s inherent
authority.121
ii.

Springut’s Opposition

Springut served its opposition and Rule 11 motion on Broadvox,
arguing that section 285 does not apply to counsel, 122 and that Broadvox cannot
rely on section 1927 or the Court’s inherent authority because (1) Broadvox did not
include these bases in the Notice of Motion — a violation of Local Civil Rule
7.1(a)(1),123 and (2) Broadvox’s brief invocation of these bases does not legally
suffice to bring them before the Court.124
Rule 11 has any impact on Broadvox’s understanding of the standards under
section 1927 and the Court’s inherent authority.
121

Springut argues that Broadvox continues to evidence bad faith by
conflating the various standards. See id. at 7-8. However, I cannot conclude that
Broadvox acted in bad faith simply because Broadvox’s argument as to the
interpretation of the various standards may not prevail on the merits.
122

See Opp. Mem. at 3-5.

123

See id. at 5. See also supra note 73.

124

See Opp. Mem. at 5. Springut cites three district court cases to
support this proposition. See Tutor Time Learning Ctrs. v. GKO Group, Inc., No.
13 Civ. 2980, 2013 WL 5637676 (S.D.N.Y. Oct. 15, 2013); Chevron Corp. v.
Donziger, No. 11 Civ. 0691, 2013 WL 4045326, at *1 n.3 (S.D.N.Y. Aug. 9,
2013); Lyn v. Incorporated Village of Hempstead, No. 03–CV–5041, 2007 WL
26

Springut argues that “Broadvox’s [t]reatment [o]f [t]he [a]lternative
[b]ases [i]t [i]nvoked [w]as [n]o [m]ere [c]aptioning [e]rror,” but rather Broadvox
had been acting in bad faith.125 However, Broadvox’s actions do not clearly
evidence bad faith. Careless lawyering, once again, can explain both Broadvox’s
error in not including section 1927 and the Court’s inherent authority in the Notice
of Motion, as well as Broadvox’s insufficient invocation of the alternative bases.
iii.

Broadvox’s Reply

Springut argues further that had Broadvox really intended to invoke
section 1927 and the Court’s inherent authority, Broadvox should have elaborated
on those bases in its reply brief.126 However, Broadvox has the prerogative not to
pursue a given claim. Springut believes Broadvox’s failure to pursue sanctions
under section 1927 or the Court’s inherent authority proves that Broadvox moved
initially in bad faith.127 But, as previously stated, such an inference does not
amount to clear evidence of bad faith. Broadvox may have plausibly decided not
to move forward under section 1927 and the Court’s inherent authority because it

1876502, at *16 n.13 (E.D.N.Y. June 28, 2007).
125

Counsel’s Reply Memorandum of Law in Support of Motion for
Sanctions Against Defendants and Their Counsel (“Springut Reply”) at 2.
126

See id. at 5.

127

See id.
27

felt that although the Court might find in its favor, the likelihood was low. Or
Broadvox, as it states in its papers, may have honestly felt that the proper focus
should be on RTI and not Springut,128 and therefore decided to withdraw all of its
claims against Springut, even though the claims may have been meritorious.129
Springut has therefore failed to clearly evidence Broadvox’s bad faith.
d.

Broadvox’s Withdrawal Favors a Finding of No Bad
Faith

When Broadvox realized the deficiencies in its motion for attorneys’
fees, it timely withdrew its motion as to Springut.130 While Broadvox’s withdrawal

128

See Broadvox Reply at 1 (“Although RTI’s counsel was the active
agent for the conduct reflected in the record and was remunerated for those efforts,
the proper focus of the action should be the principal/client, RTI, and not its
agents.”).
129

Springut argues that Broadvox disingenuously believes that the proper
focus should be on RTI, as opposed to Springut. See Springut Reply at 4-5.
Springut asserts that Broadvox certainly did not think the focus should only be on
RTI when Broadvox moved initially for sanctions against both RTI and Springut.
See id. Springut claims that Broadvox only “conveniently discover[ed]” the proper
focus when faced with a Rule 11 motion. Id. at 5. However, this argument is
speculative. Broadvox could plausibly have had a change of heart, or, more
practically, decided that its chances of recovering against Springut were poor and
deemed it more appropriate to proceed only against RTI.
130

See generally Springut Withdrawal. Broadvox withdrew its motion as
to Springut eleven days after Springut served Broadvox with both an opposition
and a Rule 11 motion. See id. (dating the Notice of Withdrawal August 1, 2014);
see also Opp. Mem. (dating the opposition July 21, 2014); Springut Email (“The
Rule 11 papers were served on July 21, 2014”).
28

does not by itself immunize Broadvox from sanctions, withdrawing, rather than
maintaining, the motion dispels the notion that Broadvox acted in bad faith. When
combined with the equally plausible scenarios detailed above, Broadvox’s
withdrawal does not support the kind of bad faith plot Springut describes in its
papers.131 Springut has not demonstrated through clear evidence that Broadvox
acted in bad faith.
e.

Broadvox’s Alleged Misrepresentations Do Not
Evidence Bad Faith

Springut also claims that Broadvox’s motion papers contain “false
statements, half-truths and misleading statements” about Springut’s conduct over
the course of the litigation.132 Springut argues that this further evidences
Broadvox’s bad faith.133 However, these “false statements, half-truths and
misleading statements” that Springut complains of merely represent attorney
argument, and at most slight exaggeration.134 None of the statements contained in
131

See Springut Reply at 7 (“Defendants’ [argument that withdrawing the
motion should grant it immunity from sanctions] would allow an attorney to
burden his adversary with the costs of opposing a frivolous motion brought in bad
faith, and then escape sanctions merely by withdrawing the motion before ruled
upon.”).
132

Springut Motion at 7.

133

See id. at 8.

134

For example, Springut highlights Broadvox’s statement that the Court,
in a prior opinion, rejected “each and every one” of RTI’s proposed claim
29

Broadvox’s motion amount to bad faith.
f.

Broadvox’s Failure to Oppose Counter-Arguments
Does Not Evidence Bad Faith

Lastly, Springut argues that Broadvox failed to address various
counter-arguments posited by Springut in opposition to Broadvox’s motion.135
However, this too cannot qualify as bad faith. Failure to address counterarguments may have been a tactical, albeit risky, decision by Broadvox. But, as
discussed above, a finding of bad faith requires clear evidence. Springut has again
failed to provide the Court with clear evidence.
2.

Springut Could Have Avoided This Situation Entirely

Although Broadvox initially filed a motion against Broadvox under a
legal theory that did not apply to counsel, Springut had the opportunity to dispose
of the motion in multiple ways that would have avoided the costs of opposing
Broadvox’s motion. Springut, however, chose not to. Springut could have
contacted Broadvox and explained the legal error in Broadvox’s motion, and

constructions. See id. at 7-8. Springut notes that Broadvox did not in fact prevail
on “each and every one,” but rather the Court adopted two of RTI’s proposed claim
constructions out of fourteen disputed terms. See id. at 7; see also Broadvox II,
2014 WL 323256, at *1. This “misrepresentation,” as Springut labels it,
constitutes the most egregious statement by Broadvox. Nonetheless, it falls short
of proving bad faith.
135

See Springut Motion at 9.
30

Broadvox may have withdrawn the motion with no further action by Springut. Or
Springut could have written to the Court and asked for a conference to discuss
whether Broadvox’s motion could proceed against Springut under section 285. 136
Or Springut could have served its Rule 11 motion in advance of its opposition,
which would have allowed Broadvox the opportunity to withdraw its motion
before Springut filed an opposition. In any of these scenarios, Springut could have
avoided the cost of filing an opposition.
Springut argues, however, that its motion for attorneys’ fees under
section 1927 and the Court’s inherent authority does not have the same safe harbor
requirement as a Rule 11 motion.137 Springut asserts that it does not have to afford
Broadvox the opportunity to withdraw, especially given that Broadvox “directly
attacked [Springut with a] frivolous, bad faith motion filed on the public record.”138

136

Springut in fact set the briefing schedule for Broadvox’s motion, as
well as contacted the Court several times before filing its opposition. See generally
6/27/14 Letter from Tal S. Benschar, counsel for Springut and former counsel for
RTI, to the Court, Dkt. No. 151; see also generally 7/14/14 Letter from Tal S.
Benschar to the Court, Dkt. No. 153; 7/18/14 Notice of Change of Address, Tal S.
Benschar, Dkt. No. 155; 7/18/14 Notice of Change of Address, Milton Springut,
Dkt. No. 156. Thus, in any of those instances, Springut could have raised the issue
of whether Broadvox’s motion had a legitimate legal basis, but deliberately chose
not to.
137

See Springut Reply at 7 (citing Star Mark, 682 F.3d at 176). See also
supra note 53.
138

Springut Reply at 7.
31

None of Springut’s arguments have merit. While section 1927 and the
Court’s inherent authority do not provide a safe harbor provision, if Springut truly
desired to avoid the cost of filing an opposition, it could have taken any of the
approaches specified above. And if Springut felt concerned that Broadvox’s
allegations would remain on the public record, Springut could have gone on record
at a conference before the Court. But even Springut’s insistence on setting the
record straight lacks force, given that Broadvox would have withdrawn its motion,
and along with it its allegations. Springut’s decision to file an opposition rather
than pursue an alternative course of action has only resulted in more legal fees for
every party, as well as a greater consumption of judicial resources.
B.

Broadvox’s Motion for Sanctions Against RTI
1.

RTI’s Failure to Oppose Broadvox’s Motion for Attorneys’
Fees and Costs Does Not Allow for a Default Judgment
Against RTI

Although RTI, by virtue of its lack of representation, has failed to
oppose Broadvox’s motion for attorneys’ fees and costs, Broadvox is not
automatically entitled to a default judgment against RTI. Rather, Broadvox must
still show that RTI’s conduct meets the standard for sanctions under section 285.
For the reasons that follow, I find that RTI’s conduct does not meet the section 285

32

standard.139
2.

RTI’s Conduct Did Not Cause Broadvox to Incur
Additional Attorneys’ Fees and Costs

RTI, whether acting through Weinberger or through Springut, did not
commit any wrongdoing that resulted in needless attorneys’ fees or costs to
Broadvox. Sections 285 is intended “not to control the local bar’s litigation
practices[,]” but to “compensat[e] the prevailing party for the costs it incurred . . .
where it would be grossly unjust, based on the baselessness of the suit . . . to bear
its own costs.”140 Broadvox, however, makes several arguments. First, Broadvox
complains of RTI’s pre-suit conduct141 — namely, among others, Weinberger’s
“misrepresentations” about RTI’s pre-filing investigation,142 and Weinberger’s
“threats” that Broadvox might face significant financial distress if it did not settle
with RTI.143 However, given that Springut, once retained, conducted additional

139

I do not consider whether RTI’s conduct meets the standards under
section 1927 or the Court’s inherent authority because Broadvox failed to include
those legal bases in its Notice of Motion as required under Local Civil Rule
7.1(a)(1). See supra note 73.
140

Highmark, 687 F.3d at 1310 n.1 (emphasis added).

141

See Broadvox Mem. at 9-14.

142

See supra Part II.C.

143

See id.
33

pre-filing investigation144 — that I later found reasonable145 — and that Broadvox
did not ultimately settle with RTI, Broadvox cannot claim any unnecessary
financial injury based on Weinberger’s “misrepresentations” and “threats.”
Second, Broadvox contends that RTI’s suit was frivolous and that
RTI’s claim construction positions were baseless.146 With respect to the underlying
suit, this Court’s decision to dismiss the case based on RTI’s failure to obtain
counsel, was not based on an evaluation of the merits and made no finding as to
whether the suit was frivolous. Moreover, the record contains no more than
conclusory statements by Broadvox that its products do not infringe RTI’s
patents.147 Without a merits determination in this litigation and without evidence
of non-infringement in the record, I cannot find that RTI’s suit had no merit.
Regarding RTI’s claim construction positions, I do not and did not
find them baseless. Although I ruled against RTI when construing many of the

144

See supra note 52.

145

See supra note 54.

146

See Broadvox Mem. at 16-17, 25-27.

147

For example, Broadvox, in its moving papers, argues that one of
RTI’s patents requires both “a housing and a disconnection from a telephone jack”
and that “Broadvox’s systems demonstrably did not have either of these.”
Broadvox Mem. at 27. However, Broadvox provides neither a citation to the
record nor to documentary evidence. A review of the record confirms that
Broadvox has not proffered any such evidence in this case.
34

claim terms,148 RTI supported its positions with relevant case law.149 Because
Broadvox has failed to show that RTI’s suit and claim construction positions had
no merit, I cannot find that Broadvox incurred needless costs in litigating the suit
or preparing for and conducting the Markman hearing.
Third, Broadvox argues that RTI is a non-practicing entity and hyperlitigious.150 However, even if these contentions are accurate, the absence of any
evidence in the record demonstrating that RTI’s claims were frivolous precludes
Broadvox from asserting that it should not have had to incur the costs of defending
this litigation. If RTI’s claims had merit, its status as a hyper-litigious nonpracticing entity should not prevent it from bringing suit.151
148

See generally Broadvox II.

149

See generally Plaintiff Rates Technology Inc.’s Opening Claim
Construction Brief [Dkt. No. 73]. I also found merit to RTI’s case law application
at the Markman hearing. See Markman Tr. at 10:14-15 (“Your discussion of
means plus function, the cases seem to support much of what you said. I have no
problem with that.”).
150

See Broadvox Mem. at 22-23; see also supra Part II.B (detailing
RTI’s business).
151

Broadvox also argues that RTI has a history of bringing suit, draining
its opponent’s financial resources, and then defaulting on its own legal fees, as has
happened in this case. See Broadvox Mem. at 22-23. However, I do not find that
RTI intended, from the outset, not to pay its legal fees. Broadvox evidences RTI’s
history of not paying legal fees by citing to a complaint from over ten years ago.
See id. Moreover, Springut, in its complaint against RTI for unpaid legal fees,
admits that RTI did in fact pay Springut for a portion of the suit. See Copy of
Summons and Complaint, Ex. A to Declaration of Milton Springut, at 4. Thus,
35

Fourth, Broadvox takes exception to RTI’s adjournment of the
30(b)(6) deposition.152 RTI, in adjourning the deposition, had noted that
Broadvox’s document production — specifically on the issue of infringement —
remained inadequate.153 Broadvox argues, however, that the deposition’s purpose
consisted, in part, of testing whether Broadvox had in fact produced all the relevant
documents.154 Broadvox also argues that had the deposition occurred, Broadvox
would have dispositively demonstrated non-infringement, and the Markman
hearing would have been unnecessary.155 However, given that Broadvox has failed
to cite to any documentary evidence of non-infringement, I find that RTI had good
reason to adjourn the deposition as it appears likely that Broadvox had not
produced all of the relevant documents. Had RTI continued with the deposition,
RTI would only have confirmed Broadvox’s lack of production thereby
necessitating a second deposition once Broadvox had produced the relevant
documents. As such, Broadvox cannot argue that it had to incur additional fees or
Broadvox offers nothing other than speculation that RTI never intended to pay its
legal fees in this case.
152

See Broadvox Mem. at 20-21.

153

See generally 12/16/13 Letter from Springut to Gertsburg, Ex. A-8 to
Gertsburg Decl.
154

See Broadvox Mem. at 21.

155

See id.
36

costs due to the adjournment of the deposition.
In Octane Fitness, the Supreme Court counseled district courts to
consider the totality of the circumstances when deciding whether to deem a case
“exceptional” and award attorneys’ fees to the prevailing party.156 Here, none of
RTI’s actions, misrepresentations, or threats rise to the level of “exceptional.” As
explained above, Broadvox did not suffer any unwarranted attorneys’ fees or costs
as a result of RTI’s conduct.157 I therefore do not find this case “exceptional” and
deny the award of attorneys’ fees and costs to Broadvox.

156

See Octane Fitness, 134 S. Ct. at 1756.

157

While Weinberger’s pre-suit conduct certainly exceeded the bounds of
commonplace ethical behavior, his status as a non-attorney precludes the finding of
any professional conduct violation. See, e.g., New York Rules of Professional
Conduct, N.Y.C.R.R. § 1200.00 R. 4.1 (truthfulness in statements to others); ABA
Ethical Guidelines for Settlement Negotiations R. 4.1.1 (false statements of
material fact). Furthermore, with respect to Weinberger’s statements that litigating
this case would impose substantial costs on Broadvox, the ABA notes that “[i]t is .
. . proper to remind the opposing party of the ordinary costs of proceeding to trial
and to suggest that it may be in the opposing party’s interest to avoid these costs by
agreeing to a settlement.” Id. at R. 4.3.2 committee note.
37

VI.

CONCLUSION
For the foregoing reasons, Broadvox' s motion for attorneys' fees and

nontaxable costs against RTI is DENIED and Springut's motion for sanctions is
DENIED. The Clerk of the Court is directed to close these motions [Dkt. Nos.
142, 163, 171].

Dated:

New York, New York
October 7, 2014

38

-AppearancesGerald Weinberger (Pro Se):
President of Rates Technology Inc.
Fairfield Village Plaza
50 Route 111, Suite 210
Smithtown, New York 11787
[phone]
For Springut Law PC:
Milton Springut, Esq.
Tal S. Benschar, Esq.
Scott Spencer, Esq.
45 Rockefeller Plaza, 20th Floor
New York, New York 10111
[phone]
For Defendants Broadvox Holding Company, LLC and Cypress
Communications Operating Company, LLC:
Andriy R. Pazuniak, Esq.
Carter Ledyard & Milburn LLP
2 Wall Street
New York, New York 10005
[phone]
Alex Gertsburg, Esq.
The Gertsburg Law Firm Co., LPA
36 South Franklin Street
Chagrin Falls, Ohio 44022
[phone]
George Pazuniak, Esq.
O’Kelly Ernst & Bielli, LLC
901 N. Market Street, Suite 1000
Wilmington, Delaware 19801
39

[phone]

40