DESIGN RESOURCES, INC. v. LEATHER INDUSTRIES OF AMERICA, et al
Filing
250
MEMORANDUM OPINION AND ORDER signed by CHIEF JUDGE WILLIAM L. OSTEEN, JR on 12/08/2015,that this court holds in abeyance Defendants' motions for attorneys' fees, (Docs. 239 , 242 ), and ORDERS that all parties engage in consultation regarding attorneys' fees, as required by Local Rule 54.2, within forty-five days of this Order. If the parties believe a mediator would be appropriate, this court will consider the appointment of a mediator. Finally, this court interprets consult to require a good-faith effort and not simply an exchange of emails, demands or refusals. If the consultation does not resolve this matter, the parties shall file one joint status report stating that a consultation was held and despite the good-faith effort of the parties and counsel, no resolution was reached. (Taylor, Abby)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
DESIGN RESOURCES, INC.,
)
)
Plaintiff,
)
)
v.
)
)
LEATHER INDUSTRIES OF AMERICA
)
and ASHLEY FURNITURE INDUSTRIES, )
INC.,
)
)
Defendants.
)
1:10CV157
MEMORANDUM OPINION AND ORDER
OSTEEN, JR., District Judge
This matter comes before the court on the Motion for
Attorney’s Fees in the amount of $530,412.50 filed by Defendant
Leather Industries of America (“LIA”), (Doc. 239), and the
Motion for Attorneys’ Fees in the amount of $594,684.45 filed by
Defendant Ashley Furniture Industries, Inc. (“Ashley”), (Doc
242), (collectively, “Defendants”). Plaintiff Design Resources,
Inc. (“DRI”) filed a Combined Response. (Doc. 246.) LIA and
Ashley each filed a Reply. (Docs. 249, 248.)
Plaintiff asserts three main procedural bars against
Defendants’ motions: (1) Defendants’ failure to plead with
particularity; (2) Defendants’ failure to file within Local Rule
54.2’s sixty-day timeframe; and (3) Defendants’ failure to
engage in consultation regarding attorneys’ fees, as required by
Local Rule 54.2. (Pl.’s’ Combined Resp. to Mots. for Att’ys’
Fees (“Pl.’s Combined Resp.”) (Doc. 246) at 1.) For the reasons
set out herein, this court will hold in abeyance Defendants’
motions for attorneys’ fees, (Docs. 239, 242), until the parties
consult together as required by Local Rule 54.2. Once the
consultation requirement is satisfied, this court will consider
the substance of Defendants’ motions.
I.
PLEADINGS AND PARTICULARITY
Federal Rule of Civil Procedure 54(d)(2) provides that “[a]
claim for attorney’s fees and related nontaxable expenses must
be made by motion unless the substantive law requires those fees
to be proved at trial as an element of damages.” Fed. R. Civ. P.
54(d)(2)(A). Plaintiff, however, asserts that Defendants’
failure to plead the attorneys’ fees claims with particularity
under Federal Rule of Civil Procedure 9(g) renders them
procedurally barred. (See Pl.’s Combined Resp. (Doc. 246) at
4-7.)1 This argument appears to cloud the relationship between
All citations in this Memorandum Opinion and Order to
documents filed with the court refer to the page numbers located
at the bottom right-hand corner of the documents as they appear
on CM/ECF.
1
-2-
Rule 9(g) and claims for attorneys’ fees.2
Further, Rule 54(c)
provides that “[e]very other final judgment [, other than a
default judgment,] should grant the relief to which each party
is entitled, even if the party has not demanded that relief in
its pleadings.” Fed. R. Civ. P. 54(c). Thus, in any case, Rule
54(c) allows this court to consider Defendants’ attorneys’ fees
motions. See Belk, Inc. v. Meyer Corp., U.S., Civil No.
2
Instead, as observed by another court in this
circuit,
Rule 9(g) states that “[i]f an item of special damage
is claimed, it must be specifically pled.” And . . .
the Fourth Circuit has held that “attorneys’ fees are
items of special damage for Rule 9(g) purposes.” From
these two propositions, plaintiff completes the
syllogism, arguing that defendant's fee claim is
barred because it was not specifically pled in
defendant's answer. . . . [A]ttorney's fees are
special damages to which Rule 9(g) applies only when
the substantive law requires that the prevailing party
prove attorney's fees as an element of damages.
. . . .
. . . As plaintiff points out, the Fourth
Circuit, in Atlantic Purchasers, concluded that
attorney's fees are special damages for purposes of
Rule 9(g). Significantly, however, the court did so in
the context of an action in which the prevailing party
sought attorney's fees pursuant to the North Carolina
Unfair Trade Practices Act, which requires attorney's
fees to be proven as an element of damages.
Route Triple Seven Ltd. P’ship v. Total Hockey, Inc., No.
1:14-cv-30, 2015 WL 5123302, at *3 (E.D. Va. Aug. 28, 2015)
(citing Atlantic Purchasers, Inc. v. Aircraft Sales, Inc., 705
F.2d 712, 715, 716 n.4 (4th Cir. 1983)).
-3-
3:07-CV-168-DSC, 2010 WL 3474918, at *7 (W.D.N.C. Aug. 31,
2010).
II.
TIMELINESS UNDER LOCAL RULE 54.2
Plaintiff claims Defendants failed to file their motions
within the required time period, given that this court entered
final judgment on August 21, 2014. (Pl.’s Combined Resp. (Doc.
246) at 7.)
Local Rule 54.2 provides:
Within 60 days after the entry of final judgment,
(i) the parties shall file an appropriate stipulation
and request for an order if they have reached an
agreement on an award of statutory attorney’s fees; or
(ii) if the parties have not reached such an
agreement, the moving party shall file the statement
of consultation required by this rule and a motion,
supported by affidavits, time records, or other
evidence, setting forth the factual basis for each
criterion which the Court will consider in making such
an award.
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LR 54.2.3
When determining the sixty-day deadline, “the starting
point of the period is hard to pinpoint,” as “the phrase ‘entry
of final judgment[]’ . . . lacks precision.” Lynn v. West, No.
2:94CV00577, 2000 WL 1229752, at *2 (M.D.N.C. Aug. 8, 2000)
(citing Jackson v. Beard, 828 F.2d 1077, 1080 n.2 (4th Cir.
1987)). In evaluating proposed starting dates, Lynn v. West, No.
2:94CV00577, 2000 WL 1229752 (M.D.N.C. Aug. 8, 2000), observed
that “[w]hen a party prevails at the district court level, the
better view appears to be that the clock begins to run with
entry of the primary judgment, regardless of whether post-trial
motions are filed or appeal is taken”; however, “[a]n argument
the other way would be colorable . . . . [as h]andling fee
requests only after post-trial motions and appeals are resolved
3
Plaintiff also argues that “it is noteworthy that the
provision of the Lanham Act upon which Ashley and LIA rely in
claiming attorney fees itself contemplates ‘final judgment’ to
mean the primary trial court judgment.” (Pl.’s Combined Resp.
(Doc. 246) at 9 (citing 15 U.S.C. § 1117(c)).) In support,
Plaintiff cites section 1117(c), which provides for statutory
damages for use of counterfeit marks. 15 U.S.C. § 1117(c). In
(c) and (d), section 1117 provides for a plaintiff’s election of
statutory damages instead of actual damages “at any time before
final judgment is rendered by the trial court.” § 1117(c), (d).
These are the only instances where “final judgment” is used in
section 1117, and they focus on awards available to a plaintiff,
rather than on attorneys’ fees. The precedent and provisions
specific to attorneys’ fees are far more relevant to the issue
at hand and the filing timeline under Local Rule 54.2.
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has the advantage of allowing all the fees for a case to be
awarded at one time.” Id. at *2. Generally “an appeal should not
alter the time-line under which a motion for attorneys’ fees
must be brought.” Madey v. Duke Univ., No. 197CV01170, 2002 WL
1284303, at *5-6 (M.D.N.C. Apr. 29, 2002) (holding that the
timing issue need not be resolved because defendant nevertheless
failed to meet the attorneys’ fees standard).
However, under the Middle District of North Carolina’s cost
rule, Local Rule 54.1, a “litigant who prevailed at the district
court level [had] to wait until the resolution of the appeal
before seeking costs.” Lynn, 2000 WL 1229752, at *2 (citing
Hoots v. Sara Lee Corp., No. 1:98CV00025, 2000 U.S. Dist. LEXIS
20336 (M.D.N.C. Mar. 20, 2000)). Local Rule 54.1 specifically
provides for a 30-day timeline beginning either after the
expiration of time for an appeal or after the action on appeal
has been terminated. See LR 54.1. Hoots v. Sara Lee Corp.,
1:98CV00025, 2000 U.S. Dist. LEXIS 20336 (M.D.N.C. Mar. 20,
2000), explicitly emphasizes the significance of the start-date
alternatives to this rule’s interpretation and its ultimate
holding. 2000 U.S. Dist. LEXIS 20336, at *2 (“Why include the
second alternative if the first can be used even in appealed
cases?”). Local Rule 54.2, in contrast, does not provide
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start-date alternatives. Further, Defendants argue that the
rationale behind this reading of Local Rule 54.1 — that
“[n]either party has fully prevailed,” id. — also supports Local
Rule 54.2 having an implied start date of when final judgment is
rendered as to the appeal, if any. (See Def. Ashley’s Reply
(Doc. 248) at 5-6; cf. Def. LIA’s Reply (Doc. 249) at 7-8.) In
that way, the court would wait until a party had fully prevailed
— either at the district court or, if appealed, at the circuit
court — before beginning the attorneys’ fees analysis.
Mercer v. Duke University, 401 F.3d 199 (4th Cir. 2005),
considered the timeliness of a fee petition under Local Rule
54.2. Id. at 212 n.7. The Fourth Circuit affirmed the district
court’s refusal to strike a fee petition filed more than sixty
days after the appellate court’s opinion but fewer than sixty
days after the appellate court’s mandate. Id.4 In support, the
Fourth Circuit cited United States Fidelity and Guaranty Co. v.
Lawrenson, 334 F.2d 464 (4th Cir. 1964), determining that the
district court is the “best judge of its own rules,” Mercer, 401
4
As noted by the Fourth Circuit, the advisory committee
notes to Rule 41 of the Federal Rule of Appellate Procedure
provide that “[a] court of appeals’ judgment or order is not
final until issuance of the mandate; at that time the parties’
obligations become fixed.” Fed. R. App. P. 41, advisory
committee's notes to 1988 Amendments; see Mercer, 401 F.3d at
212 n.7.
-7-
F.3d at 212 n.7 (citing Lawrenson, 334 F.2d at 467), and Hicks
v. Southern Maryland Health Systems Agency, 805 F.2d 1165 (4th
Cir. 1986), supporting the potential that the filing date could
begin at issuance of the appellate court mandate. See Mercer,
401 F.3d at 212 n.7 (citing Hicks, 805 F.2d at 1167).
The advisory committee note to Rule 54 of the Federal Rules
of Civil Procedure furnishes further support, providing that,
after a case is appealed, a district court “may rule on the
claim for fees, may defer its ruling on the motion, or may deny
the motion without prejudice, directing under subdivision
(d)(2)(B) a new period for filing after the appeal has been
resolved.” Fed. R. Civ. P. 54 advisory committee’s note (1993
amendments); see Madey, 2002 WL 1284303, at *3 (“Taken at face
value, the note plainly states that the Court may, after an
appeal is taken, defer its decision as to fees, or rule on the
issue of fees notwithstanding the pending appeal.”).
Here, Defendants filed for attorneys’ fees on September 8,
2015, (Docs. 239, 242), within the sixty-day window after the
Fourth Circuit issued its mandate on July 10, 2015. (Doc. 234.)
Thus, in keeping with prior cases in this district, in keeping
with Fed. R. Civ. P. 54, and in coordination with Local Rule
54.1, Defendants’ motions are timely under Local Rule 54.2.
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III. CONSULTATION REQUIREMENT UNDER LOCAL RULE 54.2
Local Rule 54.2 provides that this court:
will not consider a motion to award statutory
attorney’s fees until moving counsel shall first
advise the Court in writing that after consultation
the parties are unable to reach an agreement in regard
to the fee award. The statement of consultation shall
set forth the date of consultation, the names of the
participating attorneys, and the specific results
achieved.
LR 54.2. Failure to engage in consultation can render a request
for attorneys’ fees defective. Cf. Cincinnati Ins. Co. v.
Dynamic Dev. Grp., LLC, 336 F. Supp. 2d 552, 573 (M.D.N.C.
2004); Basnight v. Diamond Developers, Inc., 178 F. Supp. 2d
589, 594 (M.D.N.C. 2001).
Because this court is not satisfied that the consultation
required under Local Rule 54.2 took place in this case, this
court will hold the motions for attorneys’ fees in abeyance.
Further, this court will direct that the parties consult in
person and as required by the Local Rules before proceeding
further with the attorneys’ fees motions.
Simply believing that consultation will be futile does not
excuse a party from this procedural requirement under Local Rule
54.2. Basnight, 178 F. Supp. at 594 (finding it to be procedural
failure to not engage in “the required consultation” under Local
Rule 54.2, even though defendant “claim[ed] that the
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consultation was disregarded because, after a series of
discussions he engaged in with Plaintiff and her counsel, he did
not feel further consultation was warranted”). The parties may
also have different allegations of the facts surrounding
consultation. Lynn v. West considered disagreement about whether
the parties failed to consult before filing or whether the
consultation “was rebuffed” to be “a factual dispute” requiring
a hearing. 2000 WL 1229752, at *3-4; cf. Madey, 2002 WL 1284303,
at *5 n.6 (discussing the factual dispute over whether defendant
did not consult at all or if “Defendant made a reasonable effort
to consult . . . and was rebuffed,” but deciding on other
grounds since defendant failed to establish the standard for
attorneys’ fees).
Defendants argue that DRI “never responded” to their
“request[s] for consultation” and thus they could not “compel an
unresponsive DRI to meet-and-confer.” (Def. Ashley’s Reply (Doc.
248) at 9; see also Def. LIA’s Reply (Doc. 249) at 9-10.) Thus,
Defendants assert that, because they “made a substantial and
good faith effort to comply with the consultation requirement of
LR 54.2, DRI cannot use its own refusal to comply with the rule
as a basis to deny [their] motion[s].” (Def. LIA’s Reply (Doc.
249) at 10.) More importantly, both LIA and Ashley filed
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statements of consultation pursuant to Local Rule 54.2, stating
that attempts were made to contact and consult with DRI, which
did not reply. (See Docs. 241, 244.) DRI argues that Defendants
merely “sent demand letters” and “made no genuine effort.”
(Pl.’s Combined Resp. (Doc. 246) at 10.) DRI emphasizes that
Defendants “fail[ed] to initiate any actual consultation” under
Local Rule 54.2, and specifically “no effort [other than the
“demand letters”] was otherwise made by Ashley’s or LIA’s
counsel to initiate or schedule a consultation, and no telephone
message attempting to schedule or initiate a consultation was
ever left for DRI’s counsel.” (Id. at 10-11.)
LIA’s August 5, 2015 letter contains language describing it
as “LIA’s initial effort to meet the consultation requirement”
and then states, “[p]lease advise when you are available for a
telephone conference to discuss. We would like to have the
consultation by August 12, 2015.” (Decl. of John R. Neeleman in
Resp. to Defs.’ Mots. for Att’ys’ Fees, Ex. B (Doc. 247-2) at
3.) Similarly, Ashley’s July 24, 2015 letter contains language
describing it as “constitut[ing] our initial effort to meet-andconfer” and stating “please advise when you are available for a
telephone conference to discuss. We would like to have the
consultation no later than August 7, 2015.” (Id., Ex. A (Doc.
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247-1) at 3.) LIA asserts in its Reply that it “made multiple
requests for [] DRI [to] engage in the consultation required by
LR 54.2: first by email on August 5, 2015, and second by letter
sent via FedEx on August 7, 2015.” (Def. LIA’s Reply (Doc. 249)
at 8; see also Def. LIA’s Br. in Supp. of Mot. for Att’y’s Fees
(“LIA’s Br.”) (Doc. 240) at 16-17.) In its statement of
consultation filed with this court, LIA asserts that it
“informed DRI that it would be seeking its attorney’s fees in
this action by letter sent via email and overnight delivery on
August 5, 2015.” (Doc. 241 at 1 (emphasis added).) The hardcopy
letter was received on August 7, 2015. (Id.) Thus, LIA’s
declaration that it made multiple attempts to engage in
consultation on separate dates is an oversimplification of the
factual record, which instead shows that the same letter was
sent electronically and in hard copy and this was the full
extent of LIA’s efforts. (See Decl. of Cameron R. Argetsinger
(Doc. 240-1) ¶ 14 and Exs. 6-8 (declaring “letter dated August
5, 2015 sent . . . via overnight delivery on August 6, 2015”);
see also LIA’s Br. (Doc. 240) at 16 (“LIA informed DRI that it
would be seeking its attorney’s fees in this action by letter
sent via email and overnight delivery on August 5, 2015.”).)
Ashley’s statement of consultation does not assert any further
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efforts to contact DRI beyond its July 24, 2015 letter. (Doc.
244 at 1-2 (asserting “[t]o date, DRI has not responded to
Ashley’s emailed or mailed requests”); see also Doc. 241 at 1;
Def. Ashley’s Reply (Doc. 248) at 8.)
The cases describing factual situations that potentially
fail to satisfy Local Rule 54.2’s consultation requirement use
the same verb: rebuffed. See Madey, 2002 WL 1284303, at *5 n.6;
Lynn, 2000 WL 1229752, at *4. The Oxford English Dictionary
defines the verb “rebuff” as “[t]o reject (a person or thing) in
an abrupt and ungracious manner.” Oxford English Dictionary
Online, http://www.oed.com/view/Entry/159277?rskey=iI01U9&result
=2#eid (last visited Dec. 7, 2015). This definition shows rebuff
to be an active verb, encompassing a negative act or deed,
rather than passive behavior. In contrast to the active
rejection depicted by “rebuff” in prior cases, see Madey, 2002
WL 1284303, at *5 n.6; Lynn, 2000 WL 1229752, at *4, Defendants
here, at best, recount mere passivity by Plaintiff. While losing
parties cannot simply refuse to respond to consultation attempts
in an effort to render futile attempts to comply with Local Rule
54.2, neither can prevailing parties make a one-time
communication, receive no response, and simply abandon any
future consultation attempts. Both parties should comply with
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the letter and the spirit of Local Rule 54.2, rather than
exchanging pro forma notices.5
IV.
CONCLUSION
For these reasons, IT IS HEREBY ORDERED that this court
holds in abeyance Defendants’ motions for attorneys’ fees,
(Docs. 239, 242), and ORDERS that all parties engage in
consultation regarding attorneys’ fees, as required by Local
Rule 54.2, within forty-five days of this Order. If the parties
believe a mediator would be appropriate, this court will
consider the appointment of a mediator. Finally, this court
interprets “consult” to require a good-faith effort and not
simply an exchange of emails, demands or refusals. If the
consultation does not resolve this matter, the parties shall
file one joint status report stating that a consultation was
held and despite the good-faith effort of the parties and
counsel, no resolution was reached.
This court recognizes that sixty days can be a relatively
short time frame at the conclusion of a case. Furthermore, what
constitutes a reasonable effort at consultation can be
subjective. Within that framework, and because this court
believes a consultation would be a better use of counsel’s time
than an evidentiary hearing, this court is directing that the
parties meet and try to resolve this matter.
5
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This the 8th day of December, 2015.
______________________________________
United States District Judge
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