Errant Gene Therapeutics, LLC et al v. Soan-Kettering Institute for Cancer Research
Filing
187
MEMORANDUM OPINION AND ORDER: For the foregoing reasons, the Court overrules EGT's objections, and affirms the January 2 fee determination of $88,339.00. The Clerk is directed to enter judgment for attorney's fees in favor of SKI in that amount. (As further set forth in this Order.) (Signed by Judge Alison J. Nathan on 6/21/2018) (cf)
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·UNITED STATES DISTRICT COURT
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Errant Gene Therapeutics, LLC,
Plaintiff,
15-CV-2044 (AJN)(SDA)
-vMEMORANDUM
OPINION AND ORDER
Sloan-Kettering Institute for Cancer Research,
Defendant.
ALISON J. NATHAN, District Judge:
On January 2, 2018, Magistrate Judge Stewart D. Aaron issued an Opinion and Order
granting Defendant Sloan-Kettering Institute for Cancer Research's ("SKI") motion for
attorney's fees, and ordering Plaintiff Errant Gene Therapeutics, LLC ("EGT") to pay SKI the
sum of$88,339.00. See Dkt. No. 181 [hereafter, "January 2 Order"]. On January 16, 2018,
Plaintiff filed objections to the Magistrate's determination.
Having reviewed Plaintiffs objections, for the following reasons the Court overrules the
objections and upholds the attorney's fees award in full.
I.
BACKGROUND
The Court assumes the parties' familiarity with the facts at issue. For more background,
the Court refers the reader to Judge Ellis's orders of June 5, 2017 and October 16, 2017, see Dkt.
Nos. 149, 177, and Judge Aaron's January 2 Order. For the limited purpose here, the Court
offers the following summary.
Magistrate Judge Ronald L. Ellis, to whom the matter was assigned for general pretrial
supervision prior to his retirement, heard arguments on the parties' proposed protective orders,
and issued an Opinion and Order on September 2, 2016 defining the scope of the "Attorneys'
1
Eyes Only" (AEO) designation to include highly confidential research, development, and
commercial information. See Dkt. No. 77. On November 3, 2016 and February 8, 2017, SK.I
filed two motions to enforce the Court's Protective Order and to sanction EGT for using
protected information to initiate actions in other jurisdictions. See Dkt. Nos. 100, 134. In its
November 3 motion, SK.I alleged that EGT's complaint against BlueBird Bio, Inc., filed in the
Circuit Court of Cook County, Illinois on September 27, 2016, used information learned in
discovery that was designated AEO and confidential. In its February 8 motion, SK.I alleged
another violation of the protective order with respect to information EGT used in filing a
complaint in the New York Supreme Court on January 26, 2017.
On June 5, 2017, Judge Ellis issued an Opinion and Order finding that EGT did indeed
violate the protective order in using AEO and confidential information obtained through
discovery when filing both its Illinois and New York complaints. See Dkt. No. 149 at 7, 10
[hereafter, "June 5 Order"]. Judge Ellis enjoined EGT from further misuse of the AEO and
confidential information obtained in this case, and ordered that EGT pay SK.I's "reasonable
attorneys' fees and costs of bringing these two motions for sanctions." Id. at 11.
Shortly thereafter, on June 16, 2017, SK.I filed another motion asking the Court to issue
an Order to Show Cause why EGT should not be held in contempt of Court for continuing to
prosecute the New York action. Dkt. No. 150. Judge Ellis held a contempt hearing, called for
post-hearing briefing on certain issues, and issued two opinions on October 16, 2017, the first
denying EGT's request to de-designate 17 documents' AEO designations and to order
reclassification of other documents, Dkt. No. 176, and the second denying SK.I's request to hold
EGT in contempt. Dkt. No. 177 [hereafter, the "October 16 Order"]. In the latter order, Judge
Ellis held that EGT had met its burden of demonstrating that it had an independently-developed
2
factual basis for the allegations in its amended New York complaint and that EGT had not
violated the Court's June 5 Order. October 16 Order at 17.
On January 2, 2018, Judge Aaron, to whom the referral was reassigned following Judge
Ellis's retirement, disposed of the lingering issue of an appropriate fee award following the June
5 Order. In his Opinion and Order, Judge Aaron considered SKI' s application for $122,100.20
in fees, adjusted downward the hourly rates and number of hours sought, and ordered EGT to
pay $88,339 to SKI on its fee application. See January 2 Order at 4-6.
On January 16, 2018, EGT filed objections to the January 2 Order arguing, first, that it
was unreasonable to award any legal fees to SKI in light of the subsequent ruling in the October
16 Order that EGT had an independent factual basis for its allegations, and, second, that the
amount awarded was unreasonable or unjustified on various grounds. See generally Objections
to Order of Magistrate Judge Awarding Attorneys' Fees ("Obj."), Dkt. No. 182. On January 30,
2018, SKI responded to EGT's objections. See SKI's Response to EGT's Objections to Order of
Magistrate Judge Determining Amount of Attorneys' Fees ("Resp."), Dkt. No. 184.
II.
STANDARD OF REVIEW
As an initial matter, the parties dispute whether the January 2 Order is a nondispositive
matter, review of which is governed by Federal Rule of Civil Procedure 72(a), or a dispositive
matter under Rule 72(b). If nondispositive, review of the Order is subject to the standard of
"clearly erroneous or contrary to law." Fed. R. Civ. P. 72(a). If dispositive, the Court must
conduct a de novo review of any part of the disposition that has been properly objected to. Fed.
R. Civ. P. 72(b).
The Order is nondispositive. SKI's two motions for sanctions at issue in the June 5 Order
were brought pursuant to Federal Rules of Civil Procedure 16 and 37, which govern sanctions for
3
discovery violations. "Monetary sanctions pursuant to Rule 37 for noncompliance with
discovery orders usually are committed to the discretion of the magistrate, reviewable by the
district court under the 'clearly erroneous or contrary to law' standard." Thomas E. Hoar, Inc. v.
Sara Lee Corp., 900 F.2d 522, 525 (2d Cir. 1990). While there are certain circumstances in
which discovery sanctions have been deemed dispositive, those circumstances are inapplicable
here. See, e.g., Flame SA. v. Indus. Carriers, Inc., 39 F. Supp. 3d 752, 757 (E.D. Va. 2014)
(deeming sanction designating one party the alter ego of another dispositive); Cardell Fin. Corp.
v. Suchodolski Assocs., Inc., 896 F. Supp. 2d 320, 324 n.3 (S.D.N.Y. 2012) (treating a contempt
ruling as dispositive); Cardiff v. Nat. Grange Mut. Ins. Co., 881 F. Supp. 2d 266,268 (D.R.I.
2012) (striking portions of interrogatory answers as sanction merits de novo review). The only
authority EGT has offered for the proposition that a monetary sanctions order of the type at issue
here is dispositive is Kiobel v. Millson. 592 F.3d 78 (2d Cir. 2010). However, Kiobel focuses on
Rule 11 sanctions, and at the very least, the two judges writing in Kiobel agree that the
imposition of most sanctions under Rule 37 is nondispositive. See id. at 88 (Cabranes, J.,
concurring); id. at 97 (Leval, J., concurring); accord Cleversafe, Inc. v. Amplidata, Inc., 287
F.R.D. 424,429 (N.D. Ill. 2012) ("[A]II three members of the Kiobel panel agreed that Rule 37
sanctions were nondispositive matters, although they could not agree on how Rule 11 sanctions
should be treated."). The only reason EGT provides for why this order is dispositive is that the
action has been dismissed, but EGT offers no authority for the proposition that this requires the
Court to treat the January 2 Order any different than it would another monetary sanctions order
for a discovery violation.
Accordingly, the Court reviews Judge Aaron's January 2 Order under the "clearly
erroneous" or "contrary to law" standard set forth in Rule 72(a).
4
III.
DISCUSSION
EGT proclaims that "[t]he evidentiary hearing (which was forced by SKI) established that
there is no basis for imposition of any sanctions and the award of any legal fees to SKI is
unreasonable." Obj. at 4. Plaintiffs essential argument is that because Judge Ellis found that
EGT had an independent factual basis for the information in the amended complaint it filed in
New York, it necessarily follows that the violations highlighted in his June 5 Order with respect
to the previous complaints filed in New York and Illinois are somehow vitiated. Accordingly,
Plaintiff argues that attorney's fees are no longer warranted. 1
This interpretation reads the October 16 Order too broadly. Judge Ellis specifically
distinguished his findings with respect to the amended complaint from the prior two sanctions
orders. October 16 Order at 17 ("Unlike the prior two sanctions orders, here EGT has overcome
the presumption that it improperly used protected material in another action because it attached
its independently-verifiable documents as exhibits to the Amended New York State
Complaint."). In fact, and as SKI notes, EGT purposefully amended the New York complaint to
avoid use of the same discovery material that had placed them in hot water the first time. Resp. at
9, n.8 (citing Contempt Hearing Tr. 6:18-7:4).
Turning then to the January 2 Order at issue, EGT objects that Judge Aaron "neglected to
take into consideration" the October 16 Order. Obj. at 1. This is incorrect. In the January 2
Order, Judge Aaron writes:
EGT seems to argue that it should no longer be sanctioned pursuant to the June 5
Order, in view of Magistrate Judge Ellis's Opinion and Order, dated October 16,
1
Judge Aaron dismissed EGT's arguments against the fee award in part because he viewed EGT as
bringing a challenge to the June 5 Order "not properly before the Court," January 2 Order at 2, n.3, a possible
grounds for overruling EGT's objections that SKI emphasizes here. See Resp. at 2-4. The Court need not reach this
procedural issue, because whether the objections are timely or not, the Court concludes on the merits that Judge
Aaron committed no clear error.
5
2017 (the "October 16 Order"), wherein Judge Ellis declined to hold EGI [sic] in
contempt. ... [T]he October 16 Order draws a distinction between the situation
presented in the October 16 Order and that presented by the "prior two sanctions
orders," one of which was the June 5 Order.
January 2 Order at 2, n.3.
Thus, Judge Aaron addresses exactly this issue, and not only is his conclusion not
"clearly erroneous," the Court would uphold this determination even under de nova review. 2
EGT also objects to the specific monetary determination of the appropriate fee award,
arguing that: 1) SKI offered no justification for the amount of hours billed by associates; 2) SKI
did not meet its burden of establishing the reasonableness of fees claimed for its motion based on
the Illinois complaint; 3) the Order failed to account for SKI' s improper over-designation of
documents; and 4) SKI's application was impermissibly vague.
"A finding is 'clearly erroneous' when although there is evidence to support it, the
reviewing court on the entire evidence is left with the definite and firm conviction that a mistake
has been committed." United States v. US. Gypsum Co., 333 U.S. 364, 395 (1948). None of
EGT's objections establish clear error on the part of Judge Aaron. Judge Aaron's thoughtful
analysis considered whether the hourly rates requested were reasonable, and whether the number
of hours billed by the partner and associates were reasonable, and made certain adjustments on
each account, including, most significantly, reducing the number of hours billed by associate
Leonie Huang from 172.2 down to 150 hours. January 2 Order at 4-5. EGT minimizes the
complexity of the motions and underscores its mitigation of the harm done in the Illinois action
by moving to voluntarily nonsuit, but, as Judge Aaron noted, "[t]he essential goal in shifting fees
(to either party) is to do rough justice, not to achieve auditing perfection." January 2 Order at 3
2
With one very minor caveat: The Court understands Judge Ellis's reference to the "prior two sanctions
orders" to be referring solely to the June 5 Order, which disposed of two motions for sanctions. Accordingly, Judge
Aaron's phrase "one of which was the June 5 Order" may be in error.
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(quoting Fox v. Vice, 563 U.S. 826, 838 (2011)). The fee award is reasonable to do "rough
justice" and the Court cannot find Judge Aaron's conclusions clearly erroneous. Nor does this
Court find SKI' s contemporaneous time entries so vague as to require a finding that Judge Aaron
committed clear error in not reducing SKI's recovery as a result.
Moreover, EGT' s argument that the fee award fails to take into account SKI' s alleged
"over-designation" of documents as AEO is unavailing. There has been no judicial
determination made of over-designation, 3 and so there is no basis for this Court to find that Judge
Aaron committed clear error.
Finally, SKI argues that the Court, having been asked to review EGT's objections to the
fee award, should now augment the fee award by $5,000 as a reflection of the additional fees
SKI incurred in defending the award against the present objections. Resp. at 11-12. EGT' s
objections, while not persuasive, were also not frivolous, and the Court, in its discretion, declines
to modify the award. See Goldberger v. Integrated Res., Inc., 209 F.3d 43, 47 ("What constitutes
a reasonable fee is properly committed to the sound discretion of the district court[.]").
IV.
CONCLUSION
For the foregoing reasons, the Court overrules EGT's objections, and affirms the January
2 fee determination of $88,339.00. The Clerk is directed to enter judgment for attorney's fees in
favor of SKI in that amount.
SO ORDERED.
'd...\ ,
Dated: June
2018
New York, New York
3
In fact, regardless of the grounds for his ruling, Judge Ellis denied EGT's request to have documents dedesignated. Dkt. No. 176.
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