Sparks et al v. Oxy-Health, LLC, et al

Filing 133

ORDER denying 120 Motion for Bill of Costs and 121 Motion for Bill of Costs - Signed by District Judge Louise Wood Flanagan on 12/17/2015. (Baker, C.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:13-CV-649-FL

AMY SPARKS, individually, and
ROBERT D. SPARKS, as Personal
Representative of the Estate of Jarred
B. Sparks,
Plaintiffs,
v.
OXY-HEALTH, LLC and OXYHEALTH CORPORATION,
Defendants.

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ORDER

This matter is before the court on motions for costs and attorney fees made by defendants
Oxy-Health, LLC and Oxy-Health Corporation (collectively “defendant” or “Oxy-Health”). (DE
120 & 121). The issues raised have been briefed fully and in this posture are ripe for ruling. For
the reasons stated more specifically below, defendant’s motions are denied.
BACKGROUND
Plaintiffs are the mother and father of Jarred Sparks, a 19-year old who asphyxiated inside
a hyperbaric chamber while receiving hyperbaric oxygen therapy (“HBOT”). Jarred’s mother sued
for negligent infliction of emotional distress in her individual capacity, while Jarred’s father brought
product liability claims, under N.C. Gen. Stat. §§ 99B–5 & –6, as well as a claim for violation of the
North Carolina Unfair and Deceptive Practices Act (“UDPA”), N.C. Gen. Stat. § 75–1.1, in his
capacity as administrator of Jarred’s Estate. Defendant distributes a variety of hyperbaric chambers,

including chambers like the one at issue in this case (the “Chamber”) under its “Oxy-Health” line.
The Chamber was manufactured by a third party, Hyperbaric Technologies Incorporated.
On December 1, 2014, defendant filed a motion for summary judgment. On September 15,
2015, the court entered order granting defendant’s motion in its entirety. See Sparks v. Oxy-Health,
LLC, __ F. Supp. 3d __, 2015 WL 5773591 (E.D.N.C. 2015). As pertinent here, the court granted
summary judgment on the Estate’s product liability claims, at least in part, because the Estate failed
to establish that the Chamber’s defective design, or lack of warning, was the proximate cause of
Jarred’s death. On the Estate’s UDPA claim, the court held that plaintiffs had failed to establish
actual reliance on any allegedly deceptive misrepresentation. In granting defendant’s motion as it
addressed the Estate’s UDPA claim, the court struck an affidavit filed by plaintiff Amy Sparks under
the “sham affidavit” doctrine, concluding that the affidavit was in conflict with plaintiff Amy
Sparks’s prior deposition testimony. See Sparks, 2015 WL 5773591, at *28.
On September 29, 2015, defendant filed the instant motions for costs and attorney fees. On
October 5, 2015, plaintiff appealed. On October 12, 2015, plaintiffs filed a motion to stay decision
on defendant’s motions until resolution of their appeal. On November 16, 2015, the court denied
plaintiffs’ motion to stay. See generally Sparks v. Oxy-Health, LLC, No. 5:13-CV-649, 2015 WL
7281623 (E.D.N.C. Nov. 18, 2015).
COURT’S DISCUSSION
A.

Attorney Fees under the UDPA
Defendant first moves for attorney fees under the UDPA. Section 75–16.1 provides that “the

presiding judge, in [her] discretion, [may] allow a reasonable attorney fee to the duly licensed
attorney representing the prevailing party . . . upon a finding by the presiding judge that . . . [t]he

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party instituting the action knew, or should have known, the action was frivolous and malicious.”
N.C. Gen. Stat. § 75–16.1(2). “A claim is frivolous if a proponent can present no rational argument
based upon the evidence or law in support of [it]. A claim is malicious if it is wrongful and done
intentionally without just cause or excuse or as a result of ill will.” McKinnon v. CV Indus., Inc.,
228 N.C. App. 190, 199 (2013); Blyth v. McCrary, 184 N.C. App. 654, 663 n.5 (2007). A party
“should know” that a claim is frivolous and malicious where he or she can put forward no facts to
support it. See Castle McCulloch, Inc. v. Freedman, 169 N.C. App. 497, 504 (2005).
Defendant, the undisputed prevailing party, contends that the Estate’s claim was “frivolous
and malicious” because plaintiffs had no evidence to support the legal theories asserted in their brief
in opposition to defendant’s motion for summary judgment. In support of this contention, defendant
points to the court’s order on summary judgment, which struck as a sham the sole piece of evidence
tendered in support of the Estate’s claim.
To succeed on an unfair trade practices claim, a plaintiff must show 1) that the defendant
committed an unfair or deceptive act or practice; 2) that the action in question was in or affecting
commerce; and 3) that the act proximately caused the plaintiff injury. Bumpers v. Cmty. Bank of
N. Va., 367 N.C. 81, 88 (2013). When the “unfair or deceptive act or practice” is a deceptive
misrepresentation, the proximate cause element requires proof that the plaintiff actually and
reasonably relied on the representation. Id. at 89–90. When the court struck plaintiffs’ evidence,
an affidavit executed by plaintiff Amy Sparks, as a sham, no other cited evidence demonstrated
actual reliance.
Nevertheless, defendant’s reliance on the court’s order striking the affidavit as a sham is
misplaced. While the court, in its discretion, concluded that the affidavit contradicted plaintiff Amy

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Sparks’s earlier testimony, where in the affidavit she mentioned for the first time her reliance on
materials given to her at a 2009 autism conference, it does not follow that the Estate’s UDPA claim
was “frivolous and malicious.” Rather, plaintiffs put forth a spirited and well reasoned, albeit
unavailing, argument that the affidavit merited consideration. On the facts of this case, the court is
unwilling to conclude that the Estate’s UDPA claim was frivolous and malicious and will not award
attorney fees under § 75–16.1
B.

Attorney Fees under § 1D–45
Section 1D–45 provides that the court “shall award” attorney fees “resulting from the defense

against [a] punitive damages claim, against a claimant who files a claim for punitive damages that
the claimant knows or should have known to be frivolous or malicious.” N.C. Gen. Stat. § 1D–45.
“Frivolous” and “malicious” are defined as under the UDPA. See Rhyne v. K–Mart Corp., 149 N.C.
App. 672, 689 (2002).
Punitive damages is not an independent cause of action. See Cloaninger v. McDevitt, 555
F.3d 324, 336 (4th Cir. 2009). An award of punitive damages may be based on a finding of either
fraud, malice, or willful or wanton conduct “related to” the ultimate injury suffered. N.C. Gen. Stat.
§ 1D–15. Given North Carolina’s unclear product liability law, the court cannot conclude that
plaintiffs’ request for punitive damages was frivolous and malicious. In addition, although the
causation issue at the heart of the court’s analysis favored defendant, it was not so one sided that the
court can conclude only that plaintiffs had no rational argument in support of their position. Cf.
Philips v. Pitt Cnty. Mem’l Hosp., 775 S.E.2d 882, 884 (N.C. Ct. App. 2015) (concluding plaintiff
had no rational argument in support of his punitive damages claim where the evidence presented by

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defendant clearly belied any liability). Thus, defendant’s motion for attorney fees under § 1D–45
is denied.
C.

Costs
Defendant requests the court tax against plaintiffs in excess of $19,000.00 in costs. Federal

Rule of Civil Procedure 54(d) provides that costs, other than attorney fees, “should be allowed to
the prevailing party.” Fed. R. Civ. P. 54(d). Thus, costs typically are allowed as a matter of course.
Cherry v. Champion Int’l. Corp., 186 F.3d 442, 446 (4th Cir. 1999).
Nevertheless, costs “may be denied when there would be an element of injustice in a
presumptive cost award.” Id. The decision to deny all, or part, of a cost award is guided by several
factors, misconduct by the prevailing party, the losing party’s inability to pay, the excessiveness of
costs relative to the circumstances of the case, the limited value of the prevailing party’s victory, and
the closeness and difficulty of the issues decided. Id. at 446–47.
The court turns first to the preliminary matter of good faith. The losing party’s “good faith”
is a “virtual prerequisite” to receiving relief from a cost award. Id. at 446. Although the court
concluded that plaintiffs had submitted a sham affidavit, it does not necessarily follow that plaintiffs
acted in bad faith. Rather, the court concluded only that the affidavit conflicted with plaintiff Amy
Sparks’s prior deposition testimony. Where a finding of bad faith does not necessarily follow, and
defendant does not raise any independent argument on the issue, the court is unwilling to conclude
plaintiffs submitted the affidavit in bad faith.
Plaintiffs contend that the court should deny defendant an award of costs in this case because
of their inability to pay such award, as well as the closeness or complexity of the issues decided.
As to plaintiffs’ first contention, their inability to pay, the court is not persuaded. As the court stated

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in its order denying plaintiffs’ motion to stay decision on these motions pending appeal, the affidavit
submitted by plaintiffs is nonspecific and self serving. Sparks, 2015 WL 7281623, at *2. It lacks
enough information from which the court meaningfully could determine plaintiffs’ purported
inability to pay the cost award. See 10 Charles Alan Wright, et al., Federal Practice & Procedure
§2668 nn.12–14 & accompanying text.
As to plaintiffs’ second contention, the closeness of issues decided, on review of the record
as a whole, the court agrees. The court’s order granting defendant’s motion for summary judgment
relies heavily on proximate causation. Although the court believes the legal issues were decided
correctly, that fact does not alter the difficulty or closeness of the issues presented by this case.
Moreover, as explained above, the court’s decision to strike the declaration at issue was a close one.
Accordingly, given the closeness of the issues presented, defendant’s motion for costs is denied.
CONCLUSION
Based on the foregoing, defendant’s motions for costs and attorney fees (DE 120 & 121) are
DENIED.
SO ORDERED, this the 17th day of December, 2015.

_____________________________
LOUISE W. FLANAGAN
United States District Judge

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